The age of eternal night is coming! What an exciting week it had been. Singapore REITS continues its free fall. The other Blue Chips counters also decline. But the rate of decline is no longer as crazy as the first 3 weeks of March 2020 but unfortunately, the worst does not seem to be over. There is no need to have the fear of missing out the boat by rushing and pumping all the money one has into stocks right now. As a matter of fact, the next few quarters is going to get worse with many companies going bankrupt and more workers losing their jobs. The STI looks set to eventually crash below the 2,000 mark despite herculean effort by the Singapore Government to rescue companies and save jobs.
From the historical STI performance chart above on major crisis, we can see that STI once hit around the 1,600 low point during the Global Financial Crisis (GFC). I am sure that everyone agrees by now that the current crisis is unprecedented since World War 2 with many major economies undergoing shutdown which are extremely disruptive to economic activities and that it appeared to be similar if not worse than the GFC in 2008. Some are even calling this an economic "depression" instead of recession.
Our STI is at around 2,389 points as at 3 April 2020 (Friday). Based on the last GFC recession of 1,600 points, we maybe looking at another crash of 33% if we are lucky and assume government intervention by major economies will be sufficient to save us from the Great Depression. This is shaving off another one third of whatever is left on one's current portfolio valuation. The recent announcement of closure of businesses from 7th April 2020 to 4th May 2020 deals another severe blow to the Singapore economy. A final nail into the coffin perhaps?
However, not all is lost. The United States of America has already invested another USD 1 billion in Johnson and Johnson to prepare for vaccine production capacity of 1 billion vials upon successful testing. Hence, this is not a situation whereby global economies have to shut down for years with no hope in sight. Many vaccine developers are rushing to complete safety and efficacy testing work by next year. I am optimistic that 2021 will be whereby the green shoots start appearing while we try to survive the crisis this year. Stay united and we should eventually overcome the dreaded COVID-19 induced economic crisis.
永夜降至，人间浩劫。
但光明不灭，昊天长存！
Yeah, Sporean better prepare for the worst. We are seeing unprecedented events never witness by anyone since industrialization take root in our current economy..
ReplyDeleteEven 1929 depression is not as worse which lasted as long after WW2 is over...Right on TV front, we are seeing unprecedented events like schools are closing all over, all cruise ships have stopped sailing, cross-atlantic passenger airplanes stop flying since modern aviation was available, all sport events like NBA in US , soccer games all over Europe cancelled, all top tourist attractions emptied , all entertainments like Casino ,concert hall closed down, brothel and Broadways for the first time are lighting out. Large numbers of workers would lose employment in coming months and will never find a job again...Singapore has no natural resource to hunker down the coming storm and rely completely on free flow of capital and open international commerce for its prosperity since independence..When global economy abruptly stopped, damage is already done because this crisis is going to last for months but its scar will last for decades.... Most Spore businesses are not setup to last without 2 months of revenue... we have a backdrop that companies and personal debt is at the highest level in 2020..Some will lose their entire fortune including the old fortunes.. When stock market reacted so violently , it is already predicting a tsunami of business failure and personal bankruptcy resulting in financial meltdown...
Hi GPI, things are indeed looking very bad. Let's hope the past few days of stock market rally is not a fake rally before the STI crashes again. :)
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