The Next Big Crash - Are You Prepared?

[CY09]

Interesting thing about the STI components. No wonder STI has fallen so much few days, its because OCBC which contributes to 10% of the index (the largest component of STI) has fallen by 9%.

This also means STI's PE could be around 14 instead of 13 because OCBC has a one-off gain from its divestment of F&N and APB last FY.

[Ray168]

Yes, use each stock market cap weighted.

Anyway, refer the screenshot from Bloomberg for reference.

its because the Sti is market cap weighted
meaning the larger the size of company the heavier its weighted in the index

the top 6 counters alone make up about half the index already

they are the 3 locals banks + Singtel +Kep corp + Jardine Matheson = 50% of sti index

[felixleong]

yeah I think the one time big boost is counted too
since if I were to bet on the index I would probably be buying the sti etf
all the info can be found on http://www.spdrs.com.sg/etf/fund/fund_detail_STTF.html#
do note that they have some degree of tracking error

example the sti is now at 3184
in theory it should be trading at $3.19 or $3.20
however its nav is $3.23
meanings its holdings is not 100% identical to the index

[CY09]

the STI is tracked by the FTSE. You can check the weightage from the below link. (but its updated as of 29 Mar 2013 so will have to wait till june to get the most updated)

Source: http://www.ftse.com/Indices/FTSE_ST_Inde...eights.jsp

[camelking]

I guess doesn't really matter the different version of PE as long as they are not too far apart
(We can't have 8, 12 and 20 PE from different sources, can we?)

to me, it serves a guide on entry and exit points...
Not a exact science...

[CityFarmer]

Well, i am member of shareinvest.com, and the most-up-to-date numbers are

PE = 14.6 (number derived by Total Market Cap/Total Earnings of all companies in the index)
Rolling PE = 14.8 (base on last 4Q or 2HY data)
P/NAV = 1.5
Dividend Yield = 2.8%

IMO, the PE is around the long-term average of 15, neither too high nor too low.

[felixleong]

thanks for the info, I guess the sti is pretty fairly valued now at 15 times earnings, not too high nor too low

[Ray168]

STI's PER from ShareInvestor.

I guess the different is Bloomberg use yearly EPS data, whereas ShareInvestor use Quarterly data which is more up to date.

Well, i am member of shareinvest.com, and the most-up-to-date numbers are

PE = 14.6 (number derived by Total Market Cap/Total Earnings of all companies in the index)
Rolling PE = 14.8 (base on last 4Q or 2HY data)
P/NAV = 1.5
Dividend Yield = 2.8%

IMO, the PE is around the long-term average of 15, neither too high nor too low.

[swakoo]

I am very confused with the many different PE given to STI.

http://www.btinvest.com.sg/blogs/2013/01...he-market/

http://www.sharesinv.com/prices/index-sti/indicators

According the the BT article, STI PE was already 14.8 at 1 Jan 2013 at 3167pt. If that is the case, STI will be above 15 since the beginning of year. Based on Share Investment, the current weighted PE is 14.4. This will bring the PE to 15 at end of May.

So, which is correct?

In the BT article, Ms Teh wrote "in valuing the market using the PE, we need to remove the effects of business cycles. One way to do it is to take the average earnings of the market in the past 10 years, and compare it to the current price of the market" and produced the following chart:

[Image: 0197e7c1-page-001.jpg]

Using this approach, the average PE over the past 35 years is about 21. As the year-to-date STI's gains have been nearly wiped out in the past 2 weeks, the current PE should be close to that in Jan ie. about 15. Quite low compared to the average though a caveat pointed out in the article is that earnings could have been boosted due to the low interest rate environment.

[evolance]

[Image: 0197e7c1-page-001.jpg]

Using this approach, the average PE over the past 35 years is about 21. As the year-to-date STI's gains have been nearly wiped out in the past 2 weeks, the current PE should be close to that in Jan ie. about 15. Quite low compared to the average though a caveat pointed out in the article is that earnings could have been boosted due to the low interest rate environment.

In fact, the writer seems to suggest a strategy using buy signal at PE 15 and sell signal at PE 25

Does anyone know how is the orange line adjusted-STI in the graph being computed? Not sure how they adjust to business cycle