The Right Time To Enter In Singapore Stock Market After The Sell-off?

The STI was hit hard by financial misfortunes that saw UOB, DBS, and OCBC all shutting down at 2.5 percent.

Overall, Singapore exchanged 2.1 billion shares valued at S$1.6 billion on Thursday. Gainers outnumbered losers at 429 to 72.

No matter what angle you take it, the selling of speculators is easy to see. This includes rising loan costs in America, rising exchange rates between China and the United States, and IMF alerts regarding global money security and development risk.

The Straits Times Index (SGX STI), fell 141 or 4.4% to 3,069.2 a few weeks ago. The list fell 2.7% on Thursday (11/10/10). The list has dropped by 2.7% in the last week alone, and around 7% since the start of the year.

A lot of this decay was due to the poor performance of three bank stocks, which make up a large level of the file. DBS Group Holdings Ltd. (SGX: D05), and Oversea Chinese Banking Corp. are the two major banks currently in decline. Restricted (SGX O39) and Oversea-Chinese Banking Corp. have fallen 16.9% and 12.1% respectively since the start of the year. United Overseas Bank Ltd (SGX U11) has fallen 9.7% since the beginning of the year.

Because of this shortcoming in stock exchange, financial experts may wonder how small it is right now. We may be able to make better speculation decisions by knowing whether the share trading system costs too much or too little.

There are two ways to determine if Singapore shares are too risky at this stage. First, compare the market’s current cost with profit (PE), to the market’s long-term normal PE ratio. The second method involves looking at the number of net-net stocks on the stock exchange.

PE valuation strategy:

It is difficult to find the past PE proportions for STI every day, so the PE proportions in SPDR STI (SGX:ES3) can be used as an intermediary. The SPDR STI ETF (trade exchanged store, ETF) tracks the essentials of STI.

The SPDR STI ETF’s PE ratio was 10.7 as of 12 October 2018. These are some of the essential PE ratios we need:

  1. The long-term normal PE ratio: From 1973 to 2010, the STI’s average PE percentage was 16.9.
  2. Example of a high PE ratio for the STI is: In 1973, the record’s pe proportion was 35.
  3. The case of a low PE ratio for the STI: At 2009’s beginning, the file was valued at 6x trailing profit.

We can see from the above that Singapore stocks Market is currently less expensive than usual.

Net-net stocks technique:

This technique will allow us to take a look at the number of net-net stock available on the local securities exchange. You can find out what a net stock is by clicking here. If there are many net stocks, it could indicate that stocks may be shabby.

Next is a diagram showing the net-net stock checks in Singapore since 2005.

The net-net stock count is low at the point where the Straits Times Index reaches a peak (like in the second half of 2007). This is also true for the main portion 2009, when the Straits Times Index is low. The net-net stock included was below 50 in the second half of 2007, while it was just over 200 in the main portion 2009.

There were 107 netnet stocks as of 12 October 2018. This is roughly where the net-net stock count’s peak and lowest point are, from 2005 to today.