How attractive are Singapore stocks now?


#1

A few weeks back, the yield curve inversion became the talk of town. Investors around the world reacted with fear upon the yield curve inversion as stock markets retreated.

Last week however, stock markets seems to be singing a different tune. The fear seems to dwindle down and instead burst into optimism as global stock markets rallied on the back off positive Chinese PMI data and positive US-China trade talks.

Despite the recovery, there are questions still lingering in our minds:

Are we in a bull market now? Or should we be cautious about the rally?

How will Singapore stocks perform relative to other stock markets going forward?

Are Singapore stocks still attractive for domestic and foreign investors?

In my recent post, I shared my thoughts on the outlook of our SG stock market.

The key points I’ve made are:

  • From relative valuation perspective, Singapore remains one of the most undervalued Asian markets in the region. Here, I showed a comparison against ASEAN peers and a yield spread comparison with the rest of Asia.
  • In terms of economic activity and business conditions, situation remains uncertain despite the recent bump in global PMI. The SG PMI is still in expansion despite its downtrend since mar18, the recent uptick in march does not indicate a permanent recovery yet. The SG electronics PMI however, is still in contraction since nov18 but inched up closer to expansion in march. Overall, the uptick in march PMI is not a signal that we are in a bull market, however investors should keep an eye for further recovery.
  • I also discussed about the impact of the proposed investment on our Integrated Resorts (IR), this could spark growth catalyst for our economy and the primary beneficiaries are construction, banks (potentially), tourism, retail and hospitality sectors. The investment could also see a revival of our construction stocks which have been struggling over the past few years. On that note, it may be a good time to revisit our construction stocks for bargain hunts.

These are just my own thoughts and observations, feel free to share yours if you have any. Full article here.