- On a P/E basis, the Straits Times Index (STI) is now trading at a 50% discount to the S&P 500 Index (SPX). This is the lowest level in history, even when taking the GFC and COVID in to account. With the US Fed seen pivoting to a dovish stance following its 23 Dec meeting and with the dot plots pointing to interest rate cuts in 2024, we think this gap is not sustainable going forward.
Valuations ultra-cheap, but balance sheets resilient
- - Read this at SGinvestors.io -
- - Read this at SGinvestors.io -
- Importantly, from a quality perspective, the Singapore market offers clear differentiation, in our view. Balance sheets are strong with debt levels falling. Total debt to EBIT has fallen from a 2021 peak of 12.9x to 7.7x in 3Q23. Corporates have conservatively de-geared and repaid loans in a high interest rate environment and conserved cash.
- Indeed, of all the corporates listed on the SGX, nearly 40% have net cash balance sheets. This provides significant opportunities for M&A and capital return going forward, in our view.
Modest growth with a dash of upside
- Read more at SGinvestors.io.
