Dear readers, in a recent post, I shared how under former Prime Minister and now Senior Minister, Mr Lee Hsien Loong’s tenure of 20 years, the Singapore stocks markets, as measured by the benchmark indicator, the Straits Times Index (STI) has grown by a reasonably decent margin at around 70%.
I carried out the above analysis given that this blog is intrinsically linked to the Singapore stocks and Singapore stocks markets (one of the reasons why this blog is called SG Stocks Investing) and it is hence interesting to note the changes to the Singapore stocks market under the tenure of different Singapore Prime Minister.
Please note that I am not suggesting how well a local stock markets fares is an indicator of just how well a country has progressed. In fact, it is risky to have bulk or all of one’s monies invested in stocks given stock investing carries an element of risk. And also, Singapore stock market is small and limited and more often than not, the fluctuations of the much larger overseas stock markets will have an impact on Singapore stocks markets and economy.
Rather, my analysis is really in the spirit of having set up the Singapore Stocks Markets, the aim shall, be similar to all things in life, to eventually make the stocks markets better!
Singapore has passed the peak of fast pace of urbanisation and industrialisation and hence the good gains in the Singapore stocks markets that we have achieved in totality from the industrialisation decades may not be easily replicated. Also, the world today has its fair share of social and economical challenges. But having said these, I hope in the next 20 years, the Singapore Straits Times Index (STI) will continue to be higher than now.
It could be possible to achieve a higher level of our Straits Times Index 20 years from now, from the current level but one thing for sure is that the stock markets are likely to need to weather the usual ups and downs, typical of stock markets cycle before they head up higher.
The drivers of Singapore stock markets, to the understanding of many are in the three largest banking stocks in Singapore: DBS, OCBC and UOB. Hence will it be possible that one day, the benchmark of the Singapore Stocks Markets is constituted in a totally different manner such that the STI will reflect not just the largest and defensive stocks in Singapore stocks markets but also reflect a more balanced view of high growth but smaller-cap stocks? This is especially important as I believe right now, there is a growing consensus that to grow our Singapore economy further, there is a need to have a more entrepreneurial ecosystem where start-ups and fast-growing companies are a norm.
I find PM Lawrence Wong an inspiring leader and in his maiden speech as PM, he has said that he is willing to explore and welcome new ideas to take Singapore forward. So, I really hope that we can do something about the Singapore stocks markets, where an open secret is that it is a largely defensive markets and lacks vibrancy. And my humble way of doing this is to explore whether there is a need to re-examine or update the formulation of the Straits Times Index, as previously mentioned in line with the new modern world today.
To add, I am not suggesting to make the STI a dynamic indicator so that if fluctuates and offers some trading zone for investors to trade! Rather, could the idea of pegging the STI to only largest Singapore stocks be revisited?
Could we have, beside some % of the STI allocated to the favourite banking stocks, have some % allocated to fast growing potential stocks? And what about allocating some of our STI to stocks that may perform when most in the stock markets go down as a hedge?
Let’s make our Singapore stocks markets even better under the charge of PM Wong!