Why are local stocks on a roll despite Singapore’s bleak growth outlook?

Investors are fleeing to quality stocks.

The local bourse has been unexpectedly strong in the past three weeks, in spite of less-than-flattering reports earlier in January when the central bank lowered its growth forecasts for 2015.

Data from CMC Markets show that equities in Singapore have had a somewhat steady rally these past weeks. From a low of 3300 in mid-January, the STI has picked up almost 3.5%, breaking through its 3380 resistance and consolidating above that level for almost two weeks. The STI is now trading at its 52-week high.

“Perhaps interest in the local bourse is due to the ‘flight to quality and stability’ status which it has enjoyed from time to time, when other options were choppy. Should the 3380 level continue to hold, it could provide support for a more aggressive climb to test the May 2013 high of 3478. Singapore banks, due to report this week, may offer the catalyst that the markets need for an assault on this two-year high,” stated a report from CMC Markets.