Range-bound scenario likely for STI as it begins new decade

WHAT can we expect from the Straits Times Index (STI) in 2020? The STI has not been making much headway in the aftermath of the 2008 global financial crisis. We saw a huge accelerated drop from 3,906 to the low of 1,455 in Q1 2009. Although there was a recovery in Q2 2009, the rally was not strong. The rise was eventually capped at 3,300 in Q4 2010. This resulted in an extended period of slow growth and it has capped the STI in the range for the last 11 years. Although there are traces of recovery from 2016 to 2018 from 2,528 to 3,641.58, the STI recovery is not considered strong.

The STI performance over the past decade looked less positive compared to the other Asean indices such as Kuala Lumpur Composite Index, Jakarta Composite Index and PSE Composite Index. All three indices managed to break new highs during this period.

Technical analysis