Singapore is a huge market for stock trading. At present, there are 693 companies listed in SGX and there are about 30 companies that come under blue chip stocks.
Blue Chip stock trading is the most favored stock portfolio diversification strategy by Singapore stock traders.
Let me first tell you what is the blue chip stock?
Blue chip stock is the company which is well established, large and financially stable, that has been running for many years. They usually have a market capitalization in billions.
There are many blue chip stocks in Singapore Stock Market where you can invest for example DBS group, OCBC, UOB, Singtel, Jardine etc. All these companies are the top listed company in SGX.
But just knowing the blue chip stock in the SGX won’t help you to become a successful stock trader. A potential Singapore Stock trader will do complete research on the pros and cons of trading in any kind of company whether it is blue chip stock or penny stock.
Everything in the world has some advantages and disadvantages of its own, blue chip stocks are not different. No doubt there are huge benefits of trading in blue chip stock but there are also some risks associated with blue chip stocks.
MMF Solutions has gathered information regarding the benefits and risk of trading in Singapore blue chip stocks.
Read on to know all new perspective of trading in blue chip stocks.
Lets first talk about good news.
Benefits of trading in Singapore Blue Chip Stocks
Stability of Blue Chip Stock
As we have already told you that blue chip stocks are the company with a strong balance sheet. Since they are well-established companies there is barely any chances of the closing of the company. In economic downtime, many traders rely on blue chip stocks. If you have blue chip stocks in your investment portfolio you will be safe in the bullish market and weak economic trend.
Blue chip stocks Singapore have stable earnings and cash flow which result in the active return to its shareholders. Therefore many Singapore stock trader prefers to trade in blue chip stock.
Dividends and Blue Chip Stocks
What is the favorite thing of stock trader or investors?
The main objective in trading or investing in stocks is to get returns and add some extra income in your bank account.
This is one of the most important benefits of trading in blue chip stocks. By trading in Singapore blue chip stocks, stock traders get the benefit of high dividend in on a regular basis. Dividend income with blue chip stock is high.
Big Earnings from Big Brands
Don’t worry about profit when you trade in blue chip stock. Blue chip stocks are famous and most of them represent a big brand. You may not recognize that but the most famous brands are the blue chip stocks. They have big business and therefore they have big earnings.
These blue chip stocks have the ability to hold their shareholders in the volatile market and during inflation.
There is Always Growth
Though Singapore blue chip stocks are a well-established company yet they are always growing company. They continually try to diversify themselves in the various sector in the various market. Because of this growing characteristics, blue chip stocks are promising and worth trading.
There are many Singapore blue chip stocks expanding their business overseas, for example, recently ComfortDelgro Group has signed a deal with Australian bus service to expand its business in Australia. Global development of the company builds the strong market sentiment and therefore the blue chip stocks always bring growth in the return as well.
Brilliant Management of Companies
Every time in an economic slowdown most of the Singapore traders moves towards blue chip stocks even though there are other performing seasonal stocks. The blue chip stocks offer security during a tough time.
Because of their brilliant management.
The management system is highly sophisticated, firmly built that even in the weak stock market they are able to manage to generate profits.
In the bullish market, blue chip stocks management system make them stand high and they are preferred trading companies by stock traders.
These are some benefits of blue chip stock trading. But they are not flawless, there are also some risks associated with the blue chip stock trading.
Risk of trading blue chip stocks in Singapore
Growth Stagnation Compare to the New Company
Suppose a new company of beverage joins the Singapore stock market, in the leading steps of any reputed Singapore blue chip stocks company say Thai Beverage.
The chances of growth of this new beverage company can be 50% to 100% whereas you will not get this growth factor in Thai Beverage. Why?
Because Thai Beverage is already well established. No doubt it will always be a growing company but the growth will be lesser than the new emerging company.
Blue Chip Stocks Are Old
Yes, they are.
They have established the market reputation because of their hard earn market strength from the years of effort.
But, there are new emerging companies in Singapore. They are not in a blue chip stock list but that does not mean they are not performing well. Before starting trading in the blue chip stock, it will be a wise decision to look for an emerging potential stock in Singapore.
The Disadvantage of Market Reputation
Blue chips stocks have a good reputation, therefore, any mistake done by the company is unforgivable by the public. As the investment is high, the loss is also high. blue chip stock traders, trade big amount in these companies and any kind of crashing in these companies can bring distrust and a huge loss.
Blue chip stock trading in Singapore is a highly preferred trading strategy by many potential stock traders. But it’s our duty to show you both sides of coins. blue chip stocks are always good for diversification but being a smart Singapore stock trader you should always do complete research before buying these stocks.
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