[sgbuffett]

Guess which country has cheapest stocks now compared with its history?....none other that Singapore.

Let me explain this chart a bit. It shows % of time in history stocks is cheaper by country. For Singapore it is 16%  ...means out of our 40+yrs stock market history stocks has been cheaper only in 6 out of the 40+yrs 

The Metric used is CAPE. If you adjust for interest rate, Singapore Market has only been cheaper than it is now twice. During Asian crisis and Financial Crisis. 

The reason why Singapore stocks is so cheap is because international investors are not interested and Singaporeans have given up. Singapore stocks also have limited growth due to our small addressable market. More than half the stocks are trading below book value.

Also, notice that amoung countries that are cheap by valuation, many of these economies are slowing due to ageing demographics. This is a long term headwind.

What strategy should be applied with this information:

1. Because cheap markets are neglected it is easier to find stocks one can invest for good long term returns. So if one is is a good value investor you will be able to find these.

2. Should one buy broad indices for cheap valuation countries. Depends on what the head winds and whether you can buy sectors. If you look at China, it is cheap but the political risk is high due to the leadership. They engage trade war, massive property sector restructuring, regulatory storm of Internet companies. But if you look at Singapore and Hong Kong its relative simple, the index composition is property and banks...will be steady and offer good yields and safety margins due to discount to book value for property stocks. Both are decent buys to lock in good long term total returns at lower risk.

3. Among the "cheap" countries, I am keen in Poland which does have a positives like cost advantages over rest of Europe and higher growth.