12 Things You Have To Know About Singapore’s Stock Market

It’s been said by some that the financial markets looks ahead and not backwards. So, what then is the value of knowing history when it comes to stocks? Well, as my colleague Morgan Housel recently wrote, “So much of doing well in the stock market comes down to knowing what to expect.”

And, stock market history is what lets us know the things that we can expect to face when we invest. It’s for this reason that I had a thought in May this year to collate important historical facts and figures about Singapore’s stock market into a single article.

That idea was the driving force behind a piece I published on 29 May 2015 that is titled 6 Things You Have To Know About Singapore’s Stock Market. In the article, I wrote that it “will be a work in progress, something which I’d update whenever I come across new information.”

Over the past few months, I’ve steadily added to it and have brought the fact-count to 11 (see here, here, here, here, and here for all the updates). Here’s the 12th.

12. What stocks have done can’t tell you much about what it will do in the future.

Take a look at the colour-coded table below for the yearly returns of Singapore’s market barometer, the Straits Times Index (SGX: ^STI), from 1993 to 2014.

Green cells are for those years in which the index had gained 10% or more while red cells are for years in which the index had lost 10% or more. Those without colour are for years when the Straits Times Index was relatively quiet with returns of between 10% and -10%.

Straits Times Index annual gain table
Source: S&P Capital IQ; author’s calculations

As you can see, stocks in Singapore have done very poorly in some of the years that come immediately after bad years. Some notable pairings in this category include 2000-2001 and 2001-2002. But, there have also been years when the stock market had followed up a horrible year with a muted reaction or huge jumps; 1997-1998 belonged to the former category while 2008-2009 is an example of the latter.

What these statistics show is that what the market has done tells us very little about what it’d do next. This is important to keep in mind the next time you’re spooked about the market’s loss in any given year in the future or euphoric over any strong gains that have just been made.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn't own shares in any companies mentioned.