Singapore General Election 2011 will be held on 7th May 2011 and with 82 out of 87 parliamentary seats to be contested. Unlike the past elections, the ruling party PAP will not return to power until the election is over.
The outcome of the election might have some short term effects on the stock market. If the opposition parties managed to win more than 2 seats this time round, the ruling party might have problems in getting their policies through smoothly. There are issues like adopting minimum wages and questioning the relying on manufacturing sector for Singapore growth would have impact on companies investing in Singapore.
Has the election outcome be in favor to the opposition parties, foreign monies invested in the stock market might be flowing out for the time being as a cautious while observing for more stability before returning. This could result in stock market correction a magnitude of 5% - 10% range.
However, regardless the outcome of the election, those local blue chips companies like KepCorp, SembMar, SembCorp, SIA, ST Engg, CityDev, Capitaland, Kepland, SingTel, DBS, UOB, OCBC, etc will still be the backbone of the Singapore economy as a whole and they will not be shifting their operation elsewhere.
A stock market correction due to the election outcome would present long term investors a very good opportunity to buy into those local blue chips at a cheaper price. As for short-term players, probably should exercise cautious ahead of the outcome of the election to avoid being caught in the unexpected.
