Sentiments or value – How do you invest?

The SGX stock has been performing extremely well on the Singapore stock exchange even during the covid-19 circuit-breaker period in Singapore. At one point, the stock was rising ~20% and breaching the $10 mark when other stocks were declining. Why was this stock fairing so strong? Basically because trading activity was high during the lockdown period. Bargain hunters were active since almost all stocks lost 20-30% during that period. And the business of the SGX thrives on such activities.

Then one day, news came announcing that the MSCI products will no longer be traded on SGX. Overnight the SGX stock price dropped more than 10%. Was this warranted? I don’t think so. The SGX is well diversified in its range of products. It had a strong management team that will quickly plug the gap with another line of business or product.

I believe The sell off was unwarranted and purely based on sentiments. But this became a bargain opportunity for those who pursued intrinsic value in stocks. So if you are a seasoned investor who studies the true value of companies, go for such sudden sell downs. Understand what triggered it and determine for yourself whether the sell down was purely based on sentiment of true loss of value.

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