Anyone Notice The Gaping Difference In Valuation Between US & SG Companies?

[juno.tay]

Hi there,

I have no idea what the mean will be like in the next few years. My main point is that from a historical perspective, anyone who buys USD now will be buying it very cheap based on the historical exchange rate.

There are 3 main scenarios which I see happening:

1) USD stays about the same - Not much difference to me here.
2) USD appreciates in value -> No real benefit to me as I have already allocated these funds to US equities.
3) USD continues to depreciate -> Alright with me since I plan to add to my positions over the years

As a bottoms up investor, I pay much more attention of the fundamentals of companies so I don't try to predict what's going to happen on a macro level. In either case, the USD appreciating or depreciating has no real impact on my investment strategy - nor does predicting the eventual exchange rate.

[freedom]

I agree with D123. Unless Asia economy goes through another major crisis even larger than Asian Finance Crisis, it is difficult for USD/SGD to be around 2 any more.

in the 1990s, Singapore was still largely an export-driven economy, something like what China is now. SGD was severely under-valued.

[juno.tay]

Thanks for your links on your other thread. I was only able to find data up till 1988 from MAS.

[Jared Seah]

"As a bottoms up investor, I pay much more attention of the fundamentals of companies so I don't try to predict what's going to happen on a macro level. In either case, the USD appreciating or depreciating has no real impact on my investment strategy - nor does predicting the eventual exchange rate."

Just sharing from personal experience of getting paid in HKD during my stinc working in Shanghai and now paid in Euros working in Athens, currency fluctuations have a big impact to my purchasing power after conversion to SGD That's why when Yen strengthens, Japanesse exporters drop; and vice versa. It's not small potatoes if the fluctuation is more than 10%... Just pretend you are now paid in USD instead of SGD to feel the effect personally month to month.

For the US companies you are vested, since you are more a bottom-up investor, you know how big currency losses/gains affect the bottom-line - depending on how the companies "hedge" their currency exposure. It's part of a company's "export competitiveness" or price margins - all fundamentals I would think


Let's say I plan to divest my USD portfolio in 5 years time to fund my property purchase in a currency that's not pegged to USD; I would either get extra "windfall" if USD strengthens, or I would find my USD doesn't go as far as I thought if USD weakens further...

A natural hedge would be that you plan to study, work, or emigrate to a USD pegged country in the future. If no, you may want to explore some hedging possibilities. If the company you worked for has a treasury dept, you can seek free advice!