Saturday, 4 July 2020

What Will Happen to STI After The Election? - Peek Back 20 Years!

The Singapore election is just less than one week away. I am trying to analyse if there is any particular market trend of STI worth noting, looking back at the past elections.

All the charts below are from Yahoo finance. 

2020 Election, 10 July, Friday



Corona Virus Crisis; 29 Mar 2020 low: 2389 -> current: 2652 -> ???

NOW, let us take a look at previous years Singapore general election. 


2015 Election, 11 Sep, Friday



China Yuan Devaluation, Oil Crisis; 6 Sep 2015: 2888 -> up 26 Oct 2015: 3083 -> plunged 7 Feb 2016: 2539 -> soared above 3500 until mid 2018.

PS: After the election of Sep 2015, market rise 6-7%. But within the next one year, STI plunged from above 3000 to below 2600 (fall of more than 15%). It then rally for next two years or so until peak in Mid 2018 above 3500. (rise of 35%)

2011 Election, 7 May, Saturday


Euro Debt Crisis; 6 May 2011: 3099 -> down 2 Oct 2011: 2640 ->  soared until Apr 2015 above 3500.   

PS: After the election of May 2011 in the midst of Euro Debt Crisis, market is down close to 15% within five months. Then STI rallies for next three and half years rising more than 30% before peak in Apr 2015.

2006 Election, 6 May, Saturday

 


7 May 2006: 2620 -> down 4 June 2006: 2337 -> soared until Oct 2007 above 3800 points -> Great Financial Crisis

PS: After the election of May 2006, market went down 10% one month later below 2400. But it rallies for next one year or so until peak in Oct 2007 above 3800, recording a more than 60% increase, before the GFC sent stocks crashing.

2001 Election, 3 Nov, Saturday




Dot Com Crisis; 28 Oct 2001: 1341 -> up 24 Mar 2001: 1803 -> September 11 2002 -> down until 2 Mar 2003: 1226 (SARS)

PS: After the election of Oct 2001 which is during the Dot Com Crisis, market rise close to 35% in the next 5 months. Then come the 911 crisis and SARS crisis late 2002 to early 2003 with market plunging. After that, STI climbed above 3800 in Oct 2007, a 100% increase since 2001.


CONCLUSION

2015 Sep Election – if you keep stocks for the next 2.5-3 years, STI rise more than 35%
2011 May Election – if you keep your stocks for the next 3.5-4 years, STI appreciates more than 30%
2006 May Election – if you keep your stocks for the next 1-1.5 years, STI surge more than 60%
2001 Nov Election – not so relevant due to the 911 and SARS crises that are temporary plunging the stock market, but the stock market quickly recovers thereafter. 

In my opinion, I do not think there is any particular trend of the Singapore stock market after the Singapore General Election. But perhaps coincidently, the market always seem to appreciate after the election if you keep your stocks for more than one year or so. It could be that the general election year for the past two decades, always happen to be in the year of crisis or period just after crisis. 

Hence maybe a simply strategy is to hold stocks (or STI ETF) and take profits after a 30% appreciation from its bottom during the election year. 






3 comments:

  1. PAP picking crisis time as best time for election?

    ReplyDelete
  2. Yeah that is their strategy, but Hougang residents remain largely loyal to WP for so many years. Let's see if this year, HG will remain under WP? Your vote counts! hehe

    ReplyDelete