My continuous belief that the STI would continue to head down, first to 3,000 and then to 2,880 would be not a matter of whether but a matter of when since US President Trump announced that there might be a new set of trade tariffs against China. Coupled with the slow but steady US interest rate hike, the bearish outlook in emerging markets, there are macro risks ahead for global and Singapore stocks. Thus, investors should not rush to buy stocks now, thinking that it is a bargain now. Remember the saying: don’t fight against a macro market trend. And the current trend now is downward.
Even at the current 3,100 level after the Singapore stocks markets have somewhat “corrected”, I believe this level is still not “low enough”. This is because year 2017 was an exceptionally good year for global equities and the Singapore stocks markets have rallied to a good high of around 3,600 for the STI ETF.
The previous financial crisis in year 2008 was resolved mainly via quantitative easing of “printing of monies” and this was akin to “kicking the can down the road”. Liquidity or the printing of liquidities have not solved the most fundamental problems. In fact, somewhere I read, someone said the 2008 stocks crisis should be left unaided, to be corrected, no matter how ugly it would be for the global stocks markets since at least the real fundamental root of the problem would have been resolved.
The next stocks markets corrections in my opinion would be here soon. All the necessary ingredients to ignite this correction are more or less there. All it takes is for a spark from any front to ignite and the stocks markets would be sent in a tailspin. Only this time round, I don’t know what governments have in their arsenals to remedy the stocks markets. Join the emailing list to receive regular Financial and Singapore stocks newsletters too! Like" me on Singapore Stocks Investing Facebook page to receive all posts on your Facebook as well as read more articles. Follow me on Twitter too.
