What is the growth rate of these companies and industries? STI is dominated by banks, US banks are trading at PE ratio of just 12x. Singapore banks are trading at 15-20x and you tell me STI is cheap? I already tell you need to compare apple to apple, not apple to oranges. S&P500 is a very different index compare to STI, tech always trade at a much higher PE ratio. That's why those who keep shouting US stocks are overpriced are looking at the wrong data for comparison. You take US banks and REITS to do comparison then see what does the results tell you.
I agree on these 2 points.
(1) Singapore is financial heavy while US is technology heavy
(2) technology, and thus US, should have higher P/E and P/B to be fair due to differences in GAAP accounting between financial and technology companies.
Singapore banks should however, by right, be trading at a higher P/E and P/B because it has
(1) a stronger base currency
(2) being in a higher growth region in Asia
(3) US banks distribute higher dividends compared to technology and jurisdiction with higher taxation on dividends should trade at lower P/E and P/B
Raw absolute P/E and P/B ratios between 2 markets should also be taken seriously cos academic studies show that value strategies where investments across a widely diversified portfolio of stocks over long period of time,
irregardless of sectors, portend higher future returns. This is pervasive across multiple time periods, countries, etc.
