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Singapore stocks finish firmer, STI rises for 4th straight day

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ONLINE investment guide Investopedia defines the "January effect" as a seasonal increase in stock prices during the month of January that often occurs at the start of each year.

"Analysts generally attribute this rally to an increase in buying, which follows the drop in price that typically happens in December when investors, engaging in tax-loss harvesting to offset realised capital gains, prompt a sell-off," said Investopedia.

"Another possible explanation is that investors use year-end cash bonuses to purchase investments the following month."

Whatever the reasons for the phenomenon, the local stock market enjoyed its own version of the "January effect" this week when the Straits Times Index, which ended flat for 2016, burst into life during the first week of 2017, gaining a total of 81.87 points or 2.8 per cent, including Friday's 8.49 point rise.

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Turnover in this holiday-shortened week averaged S$1.1 billion, with Friday's total coming in at 2.2 billion units worth S$1.14 billion.

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