How has the STI performed for the last 5 months?

The STI has not done too badly and has outperformed several key markets with the exception of Shanghai Composite and Nasdaq. Ytd, the STI is up 5.4% vs 1.7% for the Dow, 1.4% for the Hang Seng, 8.4% for Shanghai Composite and 2.9% for the KLCI. We had expected the STI to be volatile but the timing and velocity of its moves has been a surprise. After an early rally of 14.5% from 2650 to 3000 level, the index then went through a consolidation phase before tumbling below 2800 to its current level. The rally was in our opinion a bit too rapid and a correction was probably overdue. However this dip is unlikely to be a mere correction and looks to drag on pending developments in Europe.