3 Things Investors Should Know About the Current Stock Market Crash

The market might seem like a falling knife right now. With all the 30 constituents of the Straits Times Index (SGX: ^STI) in negative territory so far in 2016, here are the top three things you might want to know about the current stock market crash.

First: The main concerns

Two main issues appear to be the main concerns for the market at the moment and they are China and the price of oil. Investors are worried about the slowdown in China’s economic growth, the seemingly inept management of its stock exchanges, and how crashing oil prices may dampen the outlook for the global economy.

These are indeed legitimate fears to have. But, is it fair that the shares of every single company in the Straits Times Index should suffer when some companies might not even be impacted by low oil prices or China’s gross domestic product (GDP) stepping up at a slower pace?

In fact, some companies might actually benefit from lower oil prices. And so, investors may want to ask themselves: “Why are the share prices of most companies falling in the stock market?”

Second: Companies that are likely to be unaffected by China and oil prices

It is hard to see how slower economic growth in China or lower oil prices might force consumers in Singapore to reconsider if they should be cancelling their mobile plans with a Singapore-focused telecommunications outfit like StarHub Ltd (SGX: CC3).  

Speaking from personal experience, I have yet to meet a person who manages his or her mobile plans based on the GDP of China or the price of oil. Nevertheless, the share price of StarHub has fallen by 21% to S$3.52 at the moment since peaking on April 2015.

Historically speaking, StarHub has tended to have stable revenues and operating cash flows.

Third: Companies that might benefit from low oil prices

The price of oil has fallen close to US$30 per barrel recently; this represents a steep decline from a price of more than US$100 in mid-2014.

One type of company that might benefit from this would be airlines as one of their largest category of operating costs would be fuel expenses. Thus, with the price of oil having fallen sharply, fuel-related savings for airlines such as Singapore Airlines Limited (SGX: C6L) can possibly be significant.

Singapore Airline's quarterly operating income
Source: S&P Capital IQ (click for larger image)

In fact, as the chart above shows, Singapore Airline’s quarterly operating income has been improving since the quarter ended 31 March 2014. Could the airline have an even better performance over the next few years? That’s a question worth pondering.

Foolish Summary

The stock market might be reflecting doom and gloom, yet the when we look into the fundamentals of individual companies within the Straits Times Index, some of the major concerns that investors have may not even be affecting some firms at all.

In fact, in some cases such as with Singapore Airlines, one of the market’s big fears might even be of benefit to them.

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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 Stanley Lim doesn't own shares in any company mentioned.