08-11-2021, 07:23 PM
The one below is German DAX ...
USA, India, Taiwan etc looks the same.
![[Image: NKGWFTc.jpg]](https://i.imgur.com/NKGWFTc.jpg)
Singapore Market looks like this
.
![[Image: UigbKsm.jpg]](https://i.imgur.com/UigbKsm.jpg)
We are now near pre covid level.
But we are below 2 peaks the 2015 peak and 2007 all time high.
We have not cross the peak set 14 yrs ago!!!
The valuation in 2007 was not excessive we were not in bubble territory at all.
Given that interest rate today is way below 2007 level ....it is quite remarkable we spend such a long period without hitting new highs.
There are only 2 ways this can happen. Earnings of our index stocks have falling from 13 yrs ago or investors don't like Singapore and pay a lower PE multiple today than 13 yrs ago.
The first is not even possible given 13 yrs of inflation means that nominal earnings will grow by 30% from inflation alone.
The 2nd reason is likely to be the case.
Investors do not want to invest here due to various reasons ..pessimism about our economy, past fraud and stock scandals, or they are busy chasing US stocks.
Chart below shows the CAPE(cyclically adjusted PE ratio) or the Price/avg-10-yr-earnings.
Blue line is US and red is Singapore.
Investors are now payjng 2.5 times more for earnings in US vs Singapore.
This is the largest difference ever in history.
As much as assets in US are inflated...assets in Singapore is deflated.
This is reverse of situation in 1990s when Singapore stocks was inflated and US stocks was deflated ...and the Asian tigers story was game in town.
If history is anything to go by investors should now bet in Sjngapore and Hong Kong to outperform in the long term.
![[Image: bxpgipq.jpg]](https://i.imgur.com/bxpgipq.jpg)
USA, India, Taiwan etc looks the same.
Singapore Market looks like this
.
We are now near pre covid level.
But we are below 2 peaks the 2015 peak and 2007 all time high.
We have not cross the peak set 14 yrs ago!!!
The valuation in 2007 was not excessive we were not in bubble territory at all.
Given that interest rate today is way below 2007 level ....it is quite remarkable we spend such a long period without hitting new highs.
There are only 2 ways this can happen. Earnings of our index stocks have falling from 13 yrs ago or investors don't like Singapore and pay a lower PE multiple today than 13 yrs ago.
The first is not even possible given 13 yrs of inflation means that nominal earnings will grow by 30% from inflation alone.
The 2nd reason is likely to be the case.
Investors do not want to invest here due to various reasons ..pessimism about our economy, past fraud and stock scandals, or they are busy chasing US stocks.
Chart below shows the CAPE(cyclically adjusted PE ratio) or the Price/avg-10-yr-earnings.
Blue line is US and red is Singapore.
Investors are now payjng 2.5 times more for earnings in US vs Singapore.
This is the largest difference ever in history.
As much as assets in US are inflated...assets in Singapore is deflated.
This is reverse of situation in 1990s when Singapore stocks was inflated and US stocks was deflated ...and the Asian tigers story was game in town.
If history is anything to go by investors should now bet in Sjngapore and Hong Kong to outperform in the long term.