Thoughts on Singapore Stock Market this Week

To start off this post, I would like t wish all teachers a happy Teachers' Day. While we may always get along with all of my teachers and there are some that we really can't stand, but we should thank them for the effort that they have put in :),

The market doesn't seem too happy about it though, it's declined for another week, with only one bright spot yesterday. It's been relatively quiet compared to last week, but there are some news floating around that we should be paying some attention to.

(Image source: https://en.wikipedia.org/wiki/Stock_market)

STI's 3 new constituent shares

The STI is going to replace Jardine Matheson Holdings (JMH), Jardine Strategic Holdings (JSH) and Olam International with Yangzijiang (YZJ), UOL Group and SATS. This announcement may be the reason for the increase in the shares prices of the 3 companies today while the STI as a whole was down for the day. The share price increase is possibly due to the index funds having to purchase the shares now as well as investors now viewing these 3 shares as blue-chips. The reverse is likely the case for the 3 shares that have been removed.

For some background info, their removal is due to their low trading volume and new STI regulations on turnover and liquidity. And this change is only taking effect on 21 Sept.

Increasing volatility in Chinese stock market

Just Wednesda, the Shanghai Composite Index started below 3050 but ended the day at 3160. This level of volatility does not bode well, especially when the increase is dependent on the government support for the share market. Constantly requiring government support to boost the stock market does not seem like a viable plan to me in the long run. Once the Chinese government decides that they've pumped enough money into the stock market, it is likely to fall and the rest of the world may fall along with it.

Looking at the US

These helped to boost the US market up on Wednesday, allowing it to increase more than a percent in the day. But this couldn't really help the US market as it closed lower for the week, which some articles I've read has attributed to fears over China. But then again, that's what people have been saying, it's all about China. If the US market goes up, fears of China have started disappearing while when it goes down its due to fears over China.

Final Thoughts

The market looks likely to be volatile in the near future. This is not necessarily negative, if the market swings down, we are able to buy up companies that are selling at a discount to their intrinsic value, while if the prices goes up then the value of our holdings would increase. I'm trying to be a long-term investor, so the short-term market volatility can either just pass by me or if a good buying opportunity arises then maybe I'll invest more.

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