Why I feel confident about Singapore stock market going forward in the coming years

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In recent years, many Singapore retail investors have moved away from our local stock market to overseas markets, especially the U.S stock market.

This is a natural development given the wide returns between the two markets since the 2008 financial crisis. The easier and cheaper access to overseas markets, thanks to brokers like Interactive Brokers, Tiger Brokers, Moomoo, accelerated this trend.
It is not only investors who have migrated. Even our entrepreneurs have migrated. Promising local companies are choosing not to list on the Singapore stock exchange. Some notable examples are Sea Holdings, Razer, Grab.
Delistings have grown, although it is a global phenomenon.

It is natural to feel pessimistic about the future of our Singapore stock market.

However, I feel confident about the Singapore stock market going forward. Why?

Mean reversion.

A Singaporean who retires at the beginning of 1997 and mainly depending on local stocks for financial support will be living through a heart-rending time in the next 6 years.

image.png


During this period, STI fell 40% and 5 out of 6 years were down years. Many people will be swearing off stocks.

What happened in the subsequent 5 years?

image.png


From beginning of 2003 to end of 2007, STI rose 159.7%. Mean reversion at work. I confess I am cherry-picking the time period to bring across the point about mean reversion. In 2008, STI crashed 49%. This is why I personally do not practise buy-and-hold even for stock indices but that discussion is for another day.

The valuation of Singapore stocks, in general, are undemanding compared to U.S and China stocks. When a secular bull market begins, there is plenty of room to run up from a low valuation base.

Present bearish sentiments about the Singapore stock market is a good sign of an impending bull market. When investors finally give up and capitulate on a market, this usually marks the bottom. In 2020, there were many online discussions with topics like "Why I am avoiding Singapore stocks?" Last year 2021, STI was one of the better performing Asian stock indices. This year 2022 as of 11Feb2022, it is the best performing stock index among major markets. Despite the better performance in 2021, we still have bearish news articles about once bitten, twice shy retail investors moving away from the local bourse. See how bearish sentiment is despite good performance.

There are some aspects about the Singapore market which attract me as an investor at the moment. Zero taxes on dividends, generally lower valuation and higher dividend yield, no expensive stamp fee like Hong Kong's 0.13% tax. The main complaint about our market is the low liquidity which makes it difficult for investors with relatively large fund sizes to put their money to work in a diversified portfolio. I am not comfortable concentrating most of the portfolio in Singapore banks and REITs. Liquidity should return when a strong secular bull market makes a comeback.

Singapore is a well-governed country. Singapore is one of the leading financial hubs in Asia. Our Singapore dollar is strong and I feel personally safe to have a substantial portion of my net worth in SGD. There is no good reason why mean reversion will not happen eventually for the Singapore stock market. I do not know when. The best clue will come from the price action of the market itself.

PS: This is a biased post because as a Singaporean, I want to see our local bourse and local companies succeed. When local companies make money, I hope our local investors participate in the wealth creation process. I also prefer to pay the much lower GST tax from Singapore stock trades than the much higher 0.13% stamp fee from Hong Kong stock trades.
 
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sohguanh

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Can I just add a simple point? How does SGX deal with penny stock (share price is 20,10,1 cent or even less) ? A lot of investors (including me) years ago lost a lot in penny stock trading. If penny stock are without merit why don't SGX delist them instead of making them still up for trade? Is it becuz due to the super cheap share price a lot of investors like to trade huge lots and that translate to good exchange fees to be earned by SGX? After all every buy/sell transaction will give some fees to SGX and that form part of their revenue?

If an exchange is to be viewed favorably by investors, they need to check what kind of companies are listed and for penny stock they should not even let them trade. Some are suspended I know but still some are under watchlist and still up for trading. Ain't this group of penny stocks "tarnish" the reputation of an exchange?

Due to this reason, I have long ago move off from SGX. Only time I invest is in the REIT stocks and nothing else. However my CDP holdings still reflect those penny stock (some are still trading, some are like suspended forever) to remind me of the painful lesson. I will hold them until they get delisted or RTO for some.
 

joshua182

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I fail to see how any argument based on data matter when the sole propelling factor for the behavior of any capital market in the world is the incessant injection of money supply. It's printers going BRRRRRRR. Your stocks go up not because economies and businesses are doing well, but simply because of the fed juggernaut. QE infinity keeps the going going, until one day it doesnt.
 

elvintay07

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In recent years, many Singapore retail investors have moved away from our local stock market to overseas markets, especially the U.S stock market.

This is a natural development given the wide returns between the two markets since the 2008 financial crisis. The easier and cheaper access to overseas markets, thanks to brokers like Interactive Brokers, Tiger Brokers, Moomoo, accelerated this trend.
It is not only investors who have migrated. Even our entrepreneurs have migrated. Promising local companies are choosing not to list on the Singapore stock exchange. Some notable examples are Sea Holdings, Razer, Grab.
Delistings have grown, although it is a global phenomenon.

It is natural to feel pessimistic about the future of our Singapore stock market.

However, I feel confident about the Singapore stock market going forward. Why?

Mean reversion.

A Singaporean who retires at the beginning of 1997 and mainly depending on local stocks for financial support will be living through a heart-rending time in the next 6 years.

image.png


During this period, STI fell 40% and 5 out of 6 years were down years. Many people will be swearing off stocks.

What happened in the subsequent 5 years?

image.png


From beginning of 2003 to end of 2007, STI rose 159.7%. Mean reversion at work. I confess I am cherry-picking the time period to bring across the point about mean reversion. In 2008, STI crashed 49%. This is why I personally do not practise buy-and-hold even for stock indices but that discussion is for another day.

The valuation of Singapore stocks, in general, are undemanding compared to U.S and China stocks. When a secular bull market begins, there is plenty of room to run up from a low valuation base.

Present bearish sentiments about the Singapore stock market is a good sign of an impending bull market. When investors finally give up and capitulate on a market, this usually marks the bottom. In 2020, there were many online discussions with topics like "Why I am avoiding Singapore stocks?" Last year 2021, STI was one of the better performing Asian stock indices. This year 2022 as of 11Feb2022, it is the best performing stock index among major markets. Despite the better performance in 2021, we still have bearish news articles about once bitten, twice shy retail investors moving away from the local bourse. See how bearish sentiment is despite good performance.

There are some aspects about the Singapore market which attract me as an investor at the moment. Zero taxes on dividends, generally lower valuation and higher dividend yield, no expensive stamp fee like Hong Kong's 0.13% tax. The main complaint about our market is the low liquidity which makes it difficult for investors with relatively large fund sizes to put their money to work in a diversified portfolio. I am not comfortable concentrating most of the portfolio in Singapore banks and REITs. Liquidity should return when a strong secular bull market makes a comeback.

Singapore is a well-governed country. Singapore is one of the leading financial hubs in Asia. Our Singapore dollar is strong and I feel personally safe to have a substantial portion of my net worth in SGD. There is no good reason why mean reversion will not happen eventually for the Singapore stock market. I do not know when. The best clue will come from the price action of the market itself.

PS: This is a biased post because as a Singaporean, I want to see our local bourse and local companies succeed. When local companies make money, I hope our local investors participate in the wealth creation process. I also prefer to pay the much lower GST tax from Singapore stock trades than the much higher 0.13% stamp fee from Hong Kong stock trades.
Another one take history books and come talk all the cock. Not say I don’t want to support this theory. You just plot the graph between US and SGD, you will know what I mean. If lim peh is Biden, I ask US s&p500 top 30 companies come STI and list, STI also won’t go to the moon. The problem is you got no liquidity. Tomorrow u tell Warren Buffett got 10 companies machiam Coca Cola in STI, he also won’t come invest. I met my uncles/ aunties and cousins during CNY. We discussed how our Ah Gong like god mode invest in SGX, DBS, OCBC and created millions for his descendants. All my cousins burst out laughing. I think if those shares where sold 10 years later, I don’t think the AUM will still be millions.
I really want to support your theory but really cannot support. You do a poll on those below 30s. Let me know who is interested to invest in STI. Haha!
 

aiptasia

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TS fails to recognize the fact that it is institutional funds rather than retailers that are the market makers and shakers. If the Singapore bourse doesn’t not attract such funds to invest in its listings, it doesn’t matter one jot how low the stamp duties and taxes are. Even Temasek spreads its eggs around the world in different baskets. Hence, why would a Fidelity Contrafund or a Blackrock Capital bother with a tiny bourse like the SGX? Your ah ma and ah Pek retailers ain’t gonna move the needle much if at all.
 

limster

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I have invested in STI ETF for 10+ years, average price under $2.50 plus collect yearly average dividend of 3%+

So I haven't lost any money yet. Thats good enough for me, so I am happy to hold onto STI ETF. I'm sure some investors have higher returns than STI ETF, and I'm equally sure there are some investors with lower returns.

There are different ways to financial independence, pls DYODD. Myself, I can say I reached FI with STI ETF as my top holding 😅 🏧 💲 📈
 

Orobas

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lol what mean reversion? only two things determine if price go up or down in the long term:

1. market perception of the stock's current and future value (or in this case, the country's stocks' value)
2. market sentiment

do you feel that singapore stocks has a lot of good current and future value? do you feel that sg is able to attract investors (incl. local) like what one of the posters mention above?
 

iceblendedchoc

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In recent years, many Singapore retail investors have moved away from our local stock market to overseas markets, especially the U.S stock market.

This is a natural development given the wide returns between the two markets since the 2008 financial crisis. The easier and cheaper access to overseas markets, thanks to brokers like Interactive Brokers, Tiger Brokers, Moomoo, accelerated this trend.
It is not only investors who have migrated. Even our entrepreneurs have migrated. Promising local companies are choosing not to list on the Singapore stock exchange. Some notable examples are Sea Holdings, Razer, Grab.
Delistings have grown, although it is a global phenomenon.

It is natural to feel pessimistic about the future of our Singapore stock market.

However, I feel confident about the Singapore stock market going forward. Why?

Mean reversion.

A Singaporean who retires at the beginning of 1997 and mainly depending on local stocks for financial support will be living through a heart-rending time in the next 6 years.

image.png


During this period, STI fell 40% and 5 out of 6 years were down years. Many people will be swearing off stocks.

What happened in the subsequent 5 years?

image.png


From beginning of 2003 to end of 2007, STI rose 159.7%. Mean reversion at work. I confess I am cherry-picking the time period to bring across the point about mean reversion. In 2008, STI crashed 49%. This is why I personally do not practise buy-and-hold even for stock indices but that discussion is for another day.

The valuation of Singapore stocks, in general, are undemanding compared to U.S and China stocks. When a secular bull market begins, there is plenty of room to run up from a low valuation base.

Present bearish sentiments about the Singapore stock market is a good sign of an impending bull market. When investors finally give up and capitulate on a market, this usually marks the bottom. In 2020, there were many online discussions with topics like "Why I am avoiding Singapore stocks?" Last year 2021, STI was one of the better performing Asian stock indices. This year 2022 as of 11Feb2022, it is the best performing stock index among major markets. Despite the better performance in 2021, we still have bearish news articles about once bitten, twice shy retail investors moving away from the local bourse. See how bearish sentiment is despite good performance.

There are some aspects about the Singapore market which attract me as an investor at the moment. Zero taxes on dividends, generally lower valuation and higher dividend yield, no expensive stamp fee like Hong Kong's 0.13% tax. The main complaint about our market is the low liquidity which makes it difficult for investors with relatively large fund sizes to put their money to work in a diversified portfolio. I am not comfortable concentrating most of the portfolio in Singapore banks and REITs. Liquidity should return when a strong secular bull market makes a comeback.

Singapore is a well-governed country. Singapore is one of the leading financial hubs in Asia. Our Singapore dollar is strong and I feel personally safe to have a substantial portion of my net worth in SGD. There is no good reason why mean reversion will not happen eventually for the Singapore stock market. I do not know when. The best clue will come from the price action of the market itself.

PS: This is a biased post because as a Singaporean, I want to see our local bourse and local companies succeed. When local companies make money, I hope our local investors participate in the wealth creation process. I also prefer to pay the much lower GST tax from Singapore stock trades than the much higher 0.13% stamp fee from Hong Kong stock trades.
based on your post, i will invest $1 in G3B every month.
 

elvintay07

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I have invested in STI ETF for 10+ years, average price under $2.50 plus collect yearly average dividend of 3%+

So I haven't lost any money yet. Thats good enough for me, so I am happy to hold onto STI ETF. I'm sure some investors have higher returns than STI ETF, and I'm equally sure there are some investors with lower returns.

There are different ways to financial independence, pls DYODD. Myself, I can say I reached FI with STI ETF as my top holding 😅 🏧 💲 📈
Lol! Even those Orchard tower freelancers also double or triple their investment in 2020 and 2021. You up 3% so euphoria. No wonder those freelancers laugh at us.
 

limster

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Lol! Even those Orchard tower freelancers also double or triple their investment in 2020 and 2021. You up 3% so euphoria. No wonder those freelancers laugh at us.

if you think my return is only 3% there is something wrong with your maths? :s13:
 

stanlawj

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TS should have posted the msg during Apr 2020 to Oct 2020 when we needed hope the most.
Now approaching full recovery of Singapore economy:
20190107_fm_Sector_Rotation-1080x616.png


Let's see if STI is also topping.

Grab listing in US instead of Singapore is clear downvote for SG and upvote for US capital markets.
 
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skpuppy

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I think after Mar STI will be gone. US market has great volatility due to inflation. End of the year results will be known.
 

limster

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TS should have posted the msg during Apr 2020 to Oct 2020 when we needed hope the most.
Now approaching full recovery of Singapore economy:

FTFxvNx.jpg

sIecSE8.jpg

bLM4IMK.jpg



Ok7u9Vb.jpg


Here are my messages from Mar-Apr 2020! (closed thread cannot do multi-quote/quote, so have to screenshot)

I also posted screenshot of my STI ETF trades.
My weakness as mentioned is that I am bad at selling. But this time round, I think I am going to practice selling and will sell 10k STI ETF at $3.60 and convert the cash to VWRD.
 

[M]aiev

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FTFxvNx.jpg

sIecSE8.jpg

bLM4IMK.jpg



Ok7u9Vb.jpg


Here are my messages from Mar-Apr 2020! (closed thread cannot do multi-quote/quote, so have to screenshot)

I also posted screenshot of my STI ETF trades.
My weakness as mentioned is that I am bad at selling. But this time round, I think I am going to practice selling and will sell 10k STI ETF at $3.60 and convert the cash to VWRD.

1) I did all in DBS via CPF when STI was 2400. 1st batch I purchased was $20, $18 onwards I all in liao.

2) I went in very heavily when spx down 25% from peak(It was down 33% from peak). As I am unable to time the best price, I bought as much as I could because I have year(s) of emergency funds and mentally prepared to diamond hand for 3 years at least for my case. Same as recent correction. Of cause hindsight wise it managed to bounced off in V shape at 2020 which was great for me but I again I oledi mentally prepared if market went down like 2008 GFC or worst than that.

As above, I never use margin and invest my surplus inside the market with 3 years at least of monies set aside for emergency use. If I have crystal ball, I would have all in my emergency fund liao on top of margin.
 
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zzTiny

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So you guys been holding all your dry powder all these years for this moment? lol
 

skpuppy

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1) I did all in DBS via CPF when STI was 2400. 1st batch I purchased was $20, $18 onwards I all in liao.

2) I went in very heavily when spx down 25% from peak(It was down 33% from peak). As I am unable to time the best price, I bought as much as I could because I have year(s) of emergency funds and mentally prepared to diamond hand for 3 years at least for my case. Same as recent correction. Of cause hindsight wise it managed to bounced off in V shape at 2020 which was great for me but I again I oledi mentally prepared if market went down like 2008 GFC or worst than that.

As above, I never use margin and invest my surplus inside the market with 3 years at least of monies set aside for emergency use. If I have crystal ball, I would have all in my emergency fund liao on top of margin.
Aiya! I also bought the 3 banks at a super low during crisis and then just sold off few days ago for super gains. But what is the point? Personally very opportunistic and I bought 3 banks because of 0 interest and diversification. In 2008, I bought Berkshire Hathaway at a low below $80 (I didn’t even manage to catch the low or I would say quite far off), today is $320 without even me doing anything. I haven’t talk about Apple, Tesla etc….let’s say u god like and bought SIA at $8 during 2007 financial crisis, today how much only? I see them as hitting $3 10 years down the road. Ok, then we take the top stock in SG vs top stock in US.
DBS from $8 in 2008 to $37 today. Wa! Impressive right…wa! Feel good
Oh wait! Then AAPL is $4 in 2008 and today $168. 42 times lo. Compare what?
I see the chart all 3 banks overrun already. Want to showhand now don’t later kana trap
The reason why people invest in US? It is not about economy etc. it is about innovation and succession. For every 1 top company that bite dust, another top company will emerge to replace. I don’t see that happening in Singapore. Although government did a great job bringing in MNCs. But these ppl are here to tap on cost and tax savings. They won’t do anything to STI
 

zzTiny

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You know why I am not confident about Singapore stock market? Almost 50% of STI are 3 banks. I don't think any single country outside has this kind of poor diversification. It just shows me that the market sentiments simply think that Singapore market cannot grow. Banks are a sector that is difficult to grow and beholden to interest rates.

The more people throw monies to banks, the more I am fearful.
 
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