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PR Newswire
26-09-2018, 08:51 PM
Ten years has passed since the GFC, and quite a few market watchers are saying that the next recession/crash is around the corner. Actually, such predictions were already being made 1-2 years ago. But nothing seems to be happening, yet.
History shows that major market selloffs are always caused by 'negative' events. And so people go around looking for possible 'negative' events. But not all such 'negative' events eventually lead to major selloffs. So many 'bad' things have happened over the past 10 years, and more 'bad' things continue to happen today. Some have caused minor corrections, others have caused more painful corrections. But the market has not crashed (although some stocks have, for their own reasons). How useful is it for a long-term investor to always be on the look out for the cause of the next crash?
The venerable WB says that investors are better off focusing their attention on the analysis of companies vis-a-vis their price.
While just about anything could trigger a selloff, they are usually limited if valuations are not high to begin with. So how expensive is the Singapore stock market, and the stock markets around the world, based on p/e and p/b ratios?
Asian Developed p/e p/b 2017 gdp growth (%)
Straits Times Index: 11.53 1.13 3.5
Hang Seng Index: 10.53 1.30 3.8
KOSPI: 11.26 0.97 3.1
Taiwan SE: 14.20 1.71 2.8
TOPIX 500: 14.14 1.38 1.7
Australian SX 300: 17.49 2.02 2.4
New Zealand Ex: 23.57 2.08 3.0
Asian EM p/e p/b 2017 gdp growth (%)
Bursa Malaysia: 19.09 1.89 5.9
Jakarta Composite: 19.73 2.24 5.0
Stock Ex of Thailand: 17.33 2.07 3.9
Ho Chi Minh Stock Index: 18.14 2.80 6.8
Philippines Stock Ex: 18.67 1.99 6.6
Large Asian EM p/e p/b 2017 gdp growth (%)
Shanghai Stock Ex: 13.21 1.49 6.9
BSE SENSEX: 23.98 3.0 6.7
US & EU p/e p/b 2017 gdp growth (%)
S&P 500: 23.08 3.52 2.3
UK FTSE All Share: 17.21 1.83 1.8
France CAC: 18.41 1.73 1.9
German DAX: 14.56 1.73 2.2
Italia All Share: 13.17 1.22 1.5
Spain IBEX: 13.92 1.41 3.0
Compared to most of the markets, Singapore looks cheap. But Singapore is not the only cheap one. Others include Hong Kong, Taiwan, and to a lesser extent South Korea and Japan. With the exception of Japan, these were the 'tiger' economies of yesteryear. The 'cheapness' of these markets, however, seem to stem from the expectations of slower growth in these economies. The Asian emerging markets, while priced higher, is commensurate with higher growth rates. So Asian markets seem sensibly/correctly priced. Perhaps there is some opportunity in China, if the bad things happening there now don't turn out half as bad.
On the other hand, some of the old developed economies of US and Europe which are still experiencing generally slow growth, have comparatively higher valuations. The situation seem less sensible here; no doubt the effect of monetary easing.
History shows that major market selloffs are always caused by 'negative' events. And so people go around looking for possible 'negative' events. But not all such 'negative' events eventually lead to major selloffs. So many 'bad' things have happened over the past 10 years, and more 'bad' things continue to happen today. Some have caused minor corrections, others have caused more painful corrections. But the market has not crashed (although some stocks have, for their own reasons). How useful is it for a long-term investor to always be on the look out for the cause of the next crash?
The venerable WB says that investors are better off focusing their attention on the analysis of companies vis-a-vis their price.
While just about anything could trigger a selloff, they are usually limited if valuations are not high to begin with. So how expensive is the Singapore stock market, and the stock markets around the world, based on p/e and p/b ratios?
Asian Developed p/e p/b 2017 gdp growth (%)
Straits Times Index: 11.53 1.13 3.5
Hang Seng Index: 10.53 1.30 3.8
KOSPI: 11.26 0.97 3.1
Taiwan SE: 14.20 1.71 2.8
TOPIX 500: 14.14 1.38 1.7
Australian SX 300: 17.49 2.02 2.4
New Zealand Ex: 23.57 2.08 3.0
Asian EM p/e p/b 2017 gdp growth (%)
Bursa Malaysia: 19.09 1.89 5.9
Jakarta Composite: 19.73 2.24 5.0
Stock Ex of Thailand: 17.33 2.07 3.9
Ho Chi Minh Stock Index: 18.14 2.80 6.8
Philippines Stock Ex: 18.67 1.99 6.6
Large Asian EM p/e p/b 2017 gdp growth (%)
Shanghai Stock Ex: 13.21 1.49 6.9
BSE SENSEX: 23.98 3.0 6.7
US & EU p/e p/b 2017 gdp growth (%)
S&P 500: 23.08 3.52 2.3
UK FTSE All Share: 17.21 1.83 1.8
France CAC: 18.41 1.73 1.9
German DAX: 14.56 1.73 2.2
Italia All Share: 13.17 1.22 1.5
Spain IBEX: 13.92 1.41 3.0
Compared to most of the markets, Singapore looks cheap. But Singapore is not the only cheap one. Others include Hong Kong, Taiwan, and to a lesser extent South Korea and Japan. With the exception of Japan, these were the 'tiger' economies of yesteryear. The 'cheapness' of these markets, however, seem to stem from the expectations of slower growth in these economies. The Asian emerging markets, while priced higher, is commensurate with higher growth rates. So Asian markets seem sensibly/correctly priced. Perhaps there is some opportunity in China, if the bad things happening there now don't turn out half as bad.
On the other hand, some of the old developed economies of US and Europe which are still experiencing generally slow growth, have comparatively higher valuations. The situation seem less sensible here; no doubt the effect of monetary easing.