Historically, stock markets have bottomed when GDP contractions were at their steepest. As such, Yeo and Chua expect such a bottoming out to have occurred in 2Q2020 ended June when Singapore’s GDP contracted a significant 41.2% quarter-on-quarter or 12.6% year-on-year, according to official estimates.
Singapore’s stock market is in the “final ‘despair’ phase”, say DBS analysts Yeo Kee Yan and Janice Chua who think this stage begun on June 10 when the Straits Times Index (STI) was at 2,800 points.
“This is typical of the last phase of the bear market characterised by the worsening headline news, earnings losses, ‘no end in sight negative sentiment’ and investors’ disinterest in stocks,” the duo point out in an August 6 note.
