facebookWhy are so many blue chip company’s shares so stagnant? It seems like the shares of most singaporean companies have moved sideways over the past 10 years? - Seedly

Anonymous

29 Apr 2020

General Investing

Why are so many blue chip company’s shares so stagnant? It seems like the shares of most singaporean companies have moved sideways over the past 10 years?

Why is this the case? Would you still invest in blue chip stocks now?

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Colin Lim

29 Apr 2020

Financial Services Consultant at Colin Lim

Singapore economy is small... and thus most blue chip companies are stagnant because they are only serving in Singapore only.

If you look at the bigger economies like US, CHINA and INDIA....their economies are huge and have potential of growth. If you want growth in your investment den go for the bigger economies.

It is the nature of the economy in Singapore. We are limited by our population and unless there is a huge technological advancement, the trend will continue or worsen. Growth is achieved by becoming more efficient. Efficiency will improve until a point it cannot be improved further due to technological limtations or human factors. Developing and emerging economies on the other hand have huge growth potential, but comes with the added the risk.

This can be good and/or bad. Bad in the sense, although you will be profiting from the stock market over long periods, it falls short significantly compared to other countries. However, it can be ideal for dividend income since there is a consistent stream of payouts in the form of dividends while the stock price remains consistent.

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