Singapore election will have little impact on stock market

Unlike regional countries where election results have investment implications for politically-linked stocks, the investment implications in Singapore are more spurious, says CIMB.

In four out of the last six elections, market reactions were muted. The exceptions were in 2001 and 2006. In the month immediately after the elections, the FSSTI went up by 25% after 2001 but fell by 9% in 2006.

The initial thought was to link 201 performance with the PAP's strong showing but that argument is flawed. The 2001 election happened in Nov 01, two months after 911 when markets had fallen significantly post-911.

The strong market showing in 2001 post-elections only reflected a concerted global equity market rebound during that period. Likewise, a weak market in 2006 post-elections was merely reflective of a period of profit-taking after three consecutive years of bull market, prior to the 2006 election.

CIMB perceives global issues as more important for the Singapore stock market in 2011.

The five main themes are:

1. Rising energy costs
2. Inflation
3. Sovereign risks
4. Singapore as an alternative tourism hub
5. Singapore as a magnet for investments

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