Bear Market Singapore

Bear Market Singapore

A bear market is a prolonged period of falling prices — typically defined as a decline of 20% or more from recent highs — in equity markets, REITs, or other asset classes. Understanding bear markets helps Singapore investors prepare, stay calm, and potentially capitalise on lower prices. Not financial advice.

Table of Contents

Contents — Click to expand
  1. What Is a Bear Market?
  2. Bear Markets in Singapore
  3. Impact on S-REITs
  4. Strategies for Bear Markets
  5. Bear Market vs Correction
  6. FAQ

What Is a Bear Market?

A bear market is conventionally defined as a decline of 20% or more in a broad market index from its most recent peak, sustained over at least two months. It reflects widespread pessimism, falling earnings expectations, and risk-off investor behaviour. Bear markets can affect equities, REITs, bonds, and commodities — sometimes simultaneously (as in 2022), though bonds often serve as a partial buffer during equity bear markets driven by recession fears.

Bear Markets in Singapore

The Straits Times Index (STI) has experienced several notable bear markets in recent decades: the Asian Financial Crisis (1997–1998, -60%+), the Dot-com bust (2000–2002, -40%+), the Global Financial Crisis (2007–2009, -60%+), and the COVID-19 crash (2020, -35% in ~1 month before a rapid recovery). Each of these events was followed by eventual recoveries, though the timeframes varied significantly.

Singapore’s economy — heavily linked to global trade, finance, and property — makes the STI sensitive to global shocks. S-REITs, in particular, can decline sharply in bear markets as investors reprice risk and rising interest rates compress REIT valuations (by increasing the discount rate applied to future distributions).

Impact on S-REITs

S-REITs tend to be particularly affected by bear markets driven by rising interest rates, as higher rates make REIT yields less attractive relative to risk-free alternatives (T-bills, SSBs). During the 2022–2023 rate-hiking cycle, many S-REITs declined 30–50% from their peaks as the 10-year Singapore government bond yield rose sharply. DPUs (distributions per unit) remained relatively stable for most S-REITs, meaning the yield on cost improved for investors who bought during the downturn.

Strategies for Bear Markets

Common strategies Singapore investors use during bear markets include:

  • Continue DCA: Dollar-cost averaging into the STI ETF, S-REITs, or global ETFs ensures you buy more units at lower prices during downturns.
  • Review gearing: For S-REITs, check that aggregate leverage (gearing) remains well within the 50% MAS limit, reducing refinancing risk.
  • Hold cash reserves: Maintaining 3–6 months of expenses in SSBs or T-bills provides liquidity for opportunistic buying without forced selling.
  • Avoid panic selling: Historical data shows that missing the best 10 trading days in a decade dramatically reduces long-term returns.

Bear Market vs Correction

A market correction is a decline of 10–19% from recent highs — significant but not as severe as a bear market. Corrections are common (occurring roughly every 1–2 years) and often resolve within weeks to months. Bear markets are rarer, more severe, and typically linked to recessions or structural economic shifts. Both are normal parts of the market cycle and provide long-term investors with entry opportunities.

Related: Dollar-Cost Averaging (DCA) Singapore, REITs vs Stocks Singapore, Singapore REITs Interest Rate Sensitivity, Gearing Ratio (REITs), Singapore Savings Bonds.

FAQ — Bear Market Singapore

What defines a bear market in Singapore?
A bear market is defined as a decline of 20% or more from a recent market peak, sustained over at least two months. For Singapore, this typically refers to the Straits Times Index (STI) or specific asset classes like S-REITs. Bear markets differ from corrections (10–19% declines) in their severity and duration.
How have past bear markets affected the STI?
The STI has seen several significant bear markets: the Asian Financial Crisis (1997–98, -60%+), the GFC (2008–09, -60%+), and the COVID crash (2020, -35% in weeks). Each was eventually followed by a recovery. The GFC took approximately 5–6 years for the STI to fully recover, while the COVID crash saw a partial recovery within 12 months due to unprecedented stimulus.
How do bear markets affect S-REIT distributions?
Bear markets affect S-REIT unit prices significantly, but DPUs (distributions per unit) are typically more stable, as rental income from tenants continues. The 2022–2023 rate-hiking bear market saw S-REIT prices fall 30–50% but DPUs remain relatively steady, effectively increasing the distribution yield for new buyers. However, recessions that hurt tenant incomes can reduce DPUs directly.
Should I continue DCA during a bear market in Singapore?
Most long-term passive investors benefit from continuing dollar-cost averaging (DCA) during bear markets, as it lowers the average cost per unit over time. Stopping DCA during downturns (or panic selling) typically locks in losses and means missing the recovery. Historical data shows that consistent investors who maintain DCA through bear markets outperform those who try to time the bottom.
What is the difference between a bear market and a correction?
A correction is a market decline of 10–19% from a recent high, typically shorter-lived (weeks to a few months). A bear market is more severe — 20%+ decline — and often signals broader economic weakness or structural shifts. Corrections are common and occur roughly every 1–2 years; bear markets are rarer and more psychologically challenging for investors to endure.