1. Singapore Index - STI fell from recent high 3536 to current level 2851, technically STI is in bear market now because the STI index was fell below 2740 on 29/9/15. ( Bear market is 20% drop from the highest point which is 2828 points)
2. From chart, current pattern look very familiar like 2008, forecast STI might fall further in coming months, support will be 2600 and 2500. MACD at very low level, RSI still not yet oversold, most likely a downtrend chart with potential technical rebound. (Actually I hope this situation can be a correction more than a recession)
3. Singapore is likely slipped into a technical recession, the main reason is GDP fell in July and August which were -4.6% and -4.0%. Singapore, being a small open economy, it is useful as a barometer for the rest of South East Asia. Therefore its flash 3rd quarter GDP estimation which will release in the second week of this month become important to us. If the figure is bad again most likely other South East Asia country will follow suit. Review back the 2008 recession history, when Singapore fall into recession the rest of the South East Asia follow the trend in the next 3-6 months. Are we going to join the party again this round??? We need to monitor closely all the economy data in coming months and I will share again with all of you.
4. Price-Earnings Ratios of STI Constituents on SGX StockFacts
- Over the 12 months ending May, the Straits Times Index (STI) generated a 6.2% total return, lower than the 8.4% annualised return generated over the past 10 years.
- The component stocks of the STI currently average a P/E ratio of 22.5. The price-earnings (P/E) ratio shows what price investors are willing to pay for a stock based on every dollar the company earns.
- The STI stocks with the highest P/E ratios are Golden Agri-Resources, Noble Group, Singapore Airlines, Genting Singapore PLC and Olam International
(Information from SGX as at 03/06/2015.)
5. However, Singapore listed company shares buy back for 3rd quarter worth around $1 Billion, year-to-date shares buy back $1.7 Billion. The company with shares buy back most likely think their shares fell too much in current global selloff and it is worth to buy back. Top five stocks with the largest considerations in buybacks from 1 September to 18 September were Sinarmas Land, Wilmar International, Global Logistic Properties, CapitaLand, and DBS Group.
6. Buy when everyone scare to buy is what we learn from investment master. Now everyone scare to buy, are you going to buy? As a humble suggestion, do more homework on the shares you buy, know what you buy and start buying by using dollar-cost averaging method.
Reference:
1.
http://sdb.theedgemarkets.com/2015/SDBsetia/SDBsetia_20151005ihfabt.pdf
2.
http://www.tradingeconomics.com/singapore/gdp-growth
3.
http://www.tradingeconomics.com/singapore/inflation-cpi
4.
http://sias.org.sg/files/SGXMarketUpdates/03062015-Price-Earnings-Ratios-of-STI-Constituents-on-SGX-StockFacts.html
5.
http://sias.org.sg/files/SGXMarketUpdates/21092015-S$314million-in-Share-Buybacks-in-September-Month-to-Date.html
Above is all personal analyze and opinion, if you have any question kindly contact me for discussion and clarification. Thank You.From：林友志 （Lim Yu Chee)
