Singapore-04 OCT 2017: Singapore parliament building in core area night view

How Did The Stock Market Perform After A General Election In Singapore?

Alvin Chow
Alvin Chow

I am a stock investor and a Singaporean voter. I am curious about the connection between politics and the stock market – do general elections have an impact to the stock market performance?

Maybe not so for Singapore because it has been the same party ruling Singapore since independence. Policy continuity has ensured economic stability.

For curiosity sake, I wanted to see the data and present it to you too.

I began the review for the General Election in 1988 because Straits Times Index (STI) didn’t have history prior to that. I would check the 1 year performance of STI after a General Election has taken place, as well as the performance of STI between two elections.

3 Sep 1988

The PAP won 80 of the 81 seats with 63.2% of the total votes. This was the last election whereby PAP was led by Lee Kuan Yew. Chiam See Tong of SDP won the remaining seat. Low Thia Kiang debuted as WP’s candidate.

This was the year where the Straits Times Industrial Index (STII, the previous incarnation of STI) crossed the 1,000-points mark (23 Nov). The Singapore stock market was in the midst of a bull run, following the recovery from the Black Monday crash in the U.S. (1987). Some of the popular stocks were DBS Land (now part of Capitaland), NOL, Jurong Shipyard (now Sembcorp Marine) Tan Chong, Sime Darby (many Malaysian companies were listed on the Stock Exchange of Singapore).

The STI gained 28% one year after the General Election was held on 3 Sep 1988. Singapore’s GDP grew by 11.3% that year. Times were good.

STI gained 33% between the two elections held on 1988 and 1991.

31 Aug 1991

Goh Chok Tong led the PAP in this election and won 77 out of 81 seats with 61% of the total votes. Chiam See Tong’s SDP won 3 seats and Low Thia Khiang of WP won the seat at Hougang SMC.

The Stock Exchange of Singapore launched the Central Limit Order Book or CLOB in 1990. It was as a secondary market to trade Malaysian stocks after 182 of them were delisted from Singapore. CLOB faced early troubles when Kuala Lumpur Stock Exchange refused to acknowledged its legitimacy. The trading went ahead anyway.

The global economy just recovered from an oil shock when Iraq invaded Kuwait. A barrel of oil jumped from $16 to $37 and only to ease after U.S.’s successful intervention.

The STI was trading around the 1,420 at the time of the 1991 election and only to declined by 4% a year later. Singapore’s GDP grew by 6.7% in 1991.

STI gained 63% between the elections in 1991 and 1997.

2 Jan 1997

PAP won 81 out of 83 seats with 65% of the total votes. Low Thia Khiang of WP and Chiam See Tong of SPP won the remaining 2 seats.

The election took place 6 months before the Asian Financial Crisis. The Crisis started to unfold on 2 Jul 1997. Thailand had to unpeg Baht from USD and a capital flight ensued. It started a contagion in the region as a handful ASEAN countries were over-leveraged. Singapore suffered less impact but nevertheless she was still affected.

The STI tanked 31% one year after the General Election in 1997. The Singapore economy grew 8.3% in 1997 but contracted by 2.2% in 1998. On 31 Aug 1998, Malaysia banned trading of Malaysian stocks on CLOB. 200,000 investors were left with untradeable stocks overnight. Securities Investors Association (Singapore) SIAS was formed in 1999 to help affected investors get back their investments.

STI lost 40% between the elections in 1997 and 2001.

3 Nov 2001

PAP won 82 of the 84 seats with 75.3% of the votes. This is the last time Goh Chok Tong was leading PAP for elections. Low Thia Khiang of WP and Chiam See Tong of SDA won the remaining 2 seats.

The General Election was scheduled to take place in 2002 but was brought forward after the 9/11 terrorist attack in the U.S. The global stock market took a correction in 2002 with NASDAQ losing over 30%. U.S. also witnessed the big accounting scandals in Enron and Worldcom.

STI only managed to register a slight gain of 6% one year after the election. Singapore’s GDP contracted 1.1% in 2001.

STI gained 93% between the elections in 2001 and 2006.

6 May 2006

Lee Hsien Loong led the PAP and won 82 out of 84 seats with 66.6% of the total votes. Low Thia Khiang of WP and Chiam See Tong of SPP won the remaining 2 seats.

The economy was booming and the stock market was on a bull run. I jumped into the stock market in 2007 and I fondly remember Keppel Corp, Sembcorp, Sembcorp Marine, Cosco Corp and Yangzijiang were the darlings among investors. A barrel of crude oil was trading around $60, which had doubled in price from 3 years ago.

STI gained 31% one year after the election. Singapore’s GDP grew by 9% in 2006. This was prior to the financial crisis which unfolded in late 2007.

STI gained 30% between the elections in 2006 and 2011.

7 May 2011

The PAP won 81 seats out of 87 with 60.14% of the total votes. WP won the remaining 6 seats and this was the first time an opposition has won a GRC.

The global stock market began to see a correction in Aug 2011 due to the European debt crisis looming over several countries. Standard & Poor’s downgraded America’s credit rating from AAA to AA+ on 6 August 2011 for the first time. This caused investors to lose confidence and pulled them money from stocks. Gold price rose to US$1,750 in those uncertain times.

STI declined 8% one year after the election. Singapore’s GDP grew by 6.3% In 2011.

STI lost 9% between elections in 2011 and 2015.

11 Sep 2015

Lee Kuan Yew passed away on 23 Mar 2015. The election took place about 6 months following his death. This is the first time whereby all seats were contested. PAP won 83 of the 89 seats with 69.86% of the total votes. WP won the remaining 6 seats.

The Chinese stock market started a big correction in Jun 2015. The Shanghai stock market tanked 43% by Aug 2015. Stock markets around the world underwent corrections similarly.

STI was flat one year after the election. Singapore’s GDP grew by 2.9% in 2015.


Below are 2 charts to provide the overview of the past election milestones together with the STI movements.

There’s no convincing evidence that Singapore’s elections have an impact on the stock market a year after the election was held. In fact, Singapore’s stock market tends to be affected by global events such as the 1997 Asian Financial Crisis, the 2002 and 2015 global stock markets correction. Singapore is a small country and has an open economy – it is easy for other countries to influence Singapore but not the other way round. Hence, our politicians do not have powers to prevent economic and market shocks to Singapore.

In fact, I observed the opposite. Elections tend to be called following big negative events. For example, after the oil shock in 1991, post September 11 attacks in 2001, sovereign debt crisis in 2011, the death of Lee Kuan Yew in 2015 and the recent Covid-19 in 2020. I believe this is a strategy as voters seek safety during times of uncertainty, and likely to go with the party which has a proven track record.

STI1988 to 19911991 to 19971997 to 20012001 to 20062006 to 20112011 to 2015
Gain / Loss35%63%-40%93%30%-9%
STI gains and losses between elections

Lastly, the long term performance of the stock market is a reflection of the underlying economy. The economy is in turn shaped by government policies and plans. It might be fairer to gauge policy efficacy over a longer period as they take time to show the effects. Hence, I have also tracked the performance between elections which are several years apart. STI has performed well indeed, making an average of 26% between two elections. This means that you can even do market timing by buying during each General Election. You should be able to make money over the long run.

Alvin Chow
Alvin Chow
CEO of Dr Wealth. Built a business to empower DIY investors to make better investments. A believer of the Factor-based Investing approach and runs a Multi-Factor Portfolio that taps on the Value, Size, and Profitability Factors. Conducts the flagship Intelligent Investor Immersive program under Dr Wealth. An author of Secrets of Singapore Trading Gurus and Singapore Permanent Portfolio. Featured on various media such as MoneyFM 89.3, Kiss92, Straits Times and Lianhe Zaobao. Given talks at events organised by SGX, DBS, CPF and many others.
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2 thoughts on “How Did The Stock Market Perform After A General Election In Singapore?”

  1. Good morning, Mr Chow.

    I am Ignatius Oh and I would like to firstly thank you for the wonderful article. It was a great read and the conclusion is so true!

    However, I have some thoughts in mind as a beginner investor. Yes, global events will affect STI due to us being a small and an open economy. However, due to our unique relationships we have with every country, is there a way for us to gauge how much the STI will be affected for each global event that occurs? For example, how much would the STI be affected if US-China relations worsens, or in another case would be India-China relations etc…

    • You are right that global events have large impact to Singapore. But we cannot calculate the impact because there are too many variables happening at the same time. And there will always be both good and bad news. If you are concerned about risks, you can diversify your investments into different asset classes and countries.


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