Effects of Dow Plunge, on Singapore’s Stock Market

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Over the past couple of years, Dow has had a drop in its overall performance average. The previous time it happened with a fall of more than 500 points was during Britain’s vote to exit the European Union. Before that, the Dow had experienced its most substantial plunge within 24 hours when it dropped 778 points on 29th September 2008. This drop was estimated to be at around 7%, and it happened at the worst time possible when there was a financial crisis.

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Recently, business people and traders from Asia woke up to discover the Dow had dropped. Dow Jones industrial performance, recently plunged by around 5% which is equitable to between 1000 to 1500 points. Dow’s plunge has culminated to Singapore’s Straits Time Index dropping by a whopping 122 points.

Singapore’s Market Prior to The Dow Plunge.

By mid-January this year, traders in Singapore had already upped the standard Strait Times Index to decade highs. After the index eclipsed the 3600 points on 24th January, traders started withdrawing off hastily to avoid risks.

The main reason was, most businesses announce their annual financial reports at about that time of the year, which depict the company’s performance.

Later on, when trading started, Singapore’s rate of sell-off was fast, this was primarily because of a drop in the U.S stock market.

Singapore’s Stock Market in Comparison to Other Asian Countries.

The Singapore’s Straits Times Index dropped by 122 points which reflects around a 1.4% drop. The Shanghai Composite Index, in China, for example, experienced a decline in trading. Hong Kong’s Hang Seng dropped by a percentage of round 3.77. In Tokyo, Japan, Nikkei’s decrease of 5.17% was by far the worst.

The sell-off Duration.

This is one of the leading questions lingering on the minds of many investors and traders within Singapore.

Professionals in stock markets, unanimously agree that index drops being experienced could be temporal. It could be self-re-alignment by the market itself after an extended period of the stock market rally, and the sell-off could be temporary

Backed up with the current earnings period which is still in progress, a host of market researchers do feel that robust financial outcomes could boost the market.

With the hope of the markets stabilizing, there are still fears that the estimated 5% drop could mutate into something bigger and wrong.

What Now?

In the past years, stock markets have dropped occasionally. Singapore’s Straits Time Index plummeted by more than 20% on ten times in the period between 1993 to 2016. What these statistics show is that investors and traders alike should always be prepared. However, this should not create panic as there will be good companies in the stock market even when the markets are not doing well.

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