Global Stock Market Indices PE Ratio At a Glance (26 Dec 2016)

  • US: Dow Jones Industrial, S&P500, NASDAQ, Russell 2000
  • Europe: FTSE100, CAC40, DAX
  • Asia: KLCI, STI, HangSeng, ASX200, CSI 300, JCI, SET, KOSPI, NIKKEI 225, SENSEX, TWSE, NZX50, PSEi
  • Best Performer: Japan Nikkei 225 up for 8.13% with PE Ratio of 23.36.
  • Worst Perfomer: Philippines PSEi down for -7.13% with PE Ratio of 19.13
  • Singapore STI has the PE ratio of 11.99 compare to the rest of the world in the following table.
  • Russia MICEX has the lowest PE ratio of 9.98 in the tracking table.
  • Added Emerging Market Stock Market Indices: Mexico MEX IPC, Brazil IBX, Argentina MAR, Russia MICEX.
  • It is obvious to see the stock market rallied in DM (Developed Market) and sold off in EM (Emerging Market) for past 1 month after Donald Trump won the US Presidential Election.

 

  •  PE  = Price Per Earning

See Nov-2016 Global Stock Market PE Ratio here.

stock-market-key-indices-pe-ratio-dec26-2016shiller-pe-ratio-dec26-2016

Original post from http://mystocksinvesting.com

See other event here. http://mystocksinvesting.com/events/

How investments are reacting to ‘surprising’ US events

My view on Singapore REIT sector in 2017 on The New Paper .

Merry Christmas and Wish everyone a Prosperous 2017 !

 

By Linette Heng

The Fed’s interest rate hike and Mr Trump’s victory are impacting ETFs, Reits and Forex here

Many people were expecting the US Federal Reserve to raise interest rates this month.

But what caught them and stock markets around the world by surprise was the Fed saying it would likely raise the interest rates another three times next year.

Considering that the Fed had raised them twice since 2006, the announcement was indeed a surprise. But surprises seem to be the new norm.

Tycoon Donald Trump’s stunning win in the US presidential election last month initially drew jitters of a possible stock market crash.

Instead, his conciliatory victory speech, which sparked expectations of him increasing fiscal spending to spur economic growth, was the catalyst for a global stock market rally.

The Straits Times Index (STI) has gained around 4 per cent since the election on Nov 8.

In light of these two “surprising” events, here are how three common investment products have reacted so far.

EXCHANGE-TRADED FUND (ETF)

ETFs are investment funds listed and traded intraday on a stock exchange that provides exposure to international markets and asset classes that may be inaccessible to individual investors.

Most Asian equity markets slumped after the Fed’s announcement, the Singapore Exchange (SGX) noted in a market update last week.

India was particularly badly hit – foreign investors have been trimming their holdings of Indian stocks since Prime Minister Narendra Modi’s move last month to demonetise the country’s high-denomination currency notes – 500 and 1,000 rupees.

Gold prices, which tend to move inversely against the US dollar, were also affected by the greenback’s recent strength. They are heading for a sixth weekly decline and hovering at a 10-month low.

As a result, some of the most active ETFs on SGX in the December month-to-date were iShares MSCI India Index ETF and SPDR Gold Shares ETF.

US ETFs were previously in the spotlight in anticipation of the Fed’s interest rates hikes, according to an SGX report on Dec 10. Earlier this month, the db x-trackers S&P 500 Inverse Daily UCITS ETF was the most active, registering a 33-fold surge in turnover from the year-ago period.

REAL ESTATE INVESTMENT TRUST (REIT)

In theory, Singapore Reits are sensitive – like any other real estate investments – to rising interest rates as they leverage on debt to generate rental income.

The sector is also facing headwind as the Singapore economy is not doing well, and there is an oversupply in commercial office and industrial property, explained financial blogger and investment coach Kenny Loh, who specialises in Reits.

Due to mounting expectations of an interest rate hike, the SGX S-REIT Index has corrected by 5 per cent since its year-to-date peak in early September, SGX said in a market update last week.

After the Fed’s announcement, the sector did not see any knee-jerk reaction because the expectation had already been priced in, said Mr Loh.

He pointed out that not all sectors and Reits are facing challenges because some portfolios in the healthcare or industrial sectors are more defensive in nature.

kenny-loh-reit-investment

OCBC analyst Deborah Ong recommended hospitality Reits because the current price levels are looking attractive for some of the Reits under coverage.

Her picks included Ascott Residence Trust and CDL Hospitality Trusts.

“In particular, OUE Hospitality Trust looks attractive to us, with anchor tenants Michael Kors and Victoria’s Secret finally open at Mandarin Gallery, and the potential for increased contributions from Crowne Plaza Changi Airport following the opening of Terminal 4 in the second half of 2017,” she said.

Mr Loh urged retail investors to understand their investment objective and do a risk profile first before deciding which Reit to invest in.

“Without understanding themselves, retail investors tend to be emotionally influenced by news and market volatility, and thus panic sell at the wrong time, which results in losing money in Reits.”

FOREIGN EXCHANGE

Three currencies – the Malaysian ringgit, South Korean won and Singapore dollar – have led the decline against the US dollar when compared with levels prior to Mr Trump’s victory, noted a report by IG Markets this week.

The Fed’s rate signal triggered a renewed rise in US bond yields, boosting the dollar and stoking worries about the risk of capital outflows from emerging markets in Asia, reported Reuters on Monday.

The ringgit fell to its weakest level since the 1998 financial crisis, while the South Korean won hit a nearly six-month low on Monday.

The Singapore dollar sank to a near one-year low against the US dollar last week – right after the Fed raised interest rates.

Yesterday, it tumbled to its weakest in seven years – at about 5pm, the greenback was fetching 1.4444 Singapore dollars.

What US Fed rate hike means for S’pore

The US Federal Reserve raised a key interest rate by a quarter of a percentage point last week, and indicated another three increases next year, one more than originally projected.

This is the first time rates have been raised since December last year and only the second time in a decade.

The more aggressive approach in 2017 signals the Fed’s confidence in the US economy’s recovery, but it could mean trouble for Singapore.

Local businesses and consumers can expect more belt-tightening in the coming year as borrowing costs here will grow amid forecasts of slower economic growth.

The three-month Sibor, or Singapore interbank offered rate, which is used to price home loans and is typically highly correlated with US interest rates, is now at about 0.96, about 10 per cent higher than last month and its highest rate since June.

Check out next Singapore REIT Investing course in 2017 here.

Major Events that Affected Commodities in 2016

Marcus TJ

At the beginning of 2016 the World Bank slashed its price forecast for 80% of major global commodities. Crude oil, precious metals and many more were all predicted to continue dropping in value, as the commodities slump which has been ongoing since 2011 didn’t look like slowing down at all this year.

Much of that prediction has rung true, but once again there have been a number of important events that have significantly affected the volatility of commodity prices. These are some of the major ones which have introduced a lot of risk to commodity trading, some of whose impact will still be felt in 2017.

commodity

Brexit

As one of the most popular safe-haven investment options, it was little surprise that the price of gold increased in the aftermath of Brexit. After years of debate the UK finally had a national referendum at the end of June regarding its EU membership. This in itself was always going to inject some volatility for commodity traders, but the somewhat surprising result added an extra amount.

Along with gold experiencing a sharp spike in the days after Brexit, other commodities such as oil, copper and more all dropped. The uncertainty of the Brexit decision and what would happen regarding trade between the UK and other nations triggered such falls in value.

US Election

Political events always cause price fluctuations across many markets, and as arguably the biggest in 2016 the US election had a large impact on commodities. Historical data has shown that in the weeks following an election the price of oil generally slides after the election and gains again after their inauguration.

In a similar way to Brexit, the election of Donald Trump was something of a surprise. Plus, with oil prices already struggling before the election, it made it harder to determine which factors were most responsible for falling oil prices.

Demand in Emerging Markets

Supply and demand have a major impact on commodity prices as they are traded assets. If demand outstrips supply or vice versa then they can swing massively one way or the other. Emerging markets had been growing and supporting the commodities market but in 2016 they became a little bit more divergent.

Commodity-exporting emerging markets such as Brazil had been riding a positive wave, but its output was predicted to contract in 2016 as demand fell. On the other hand, for Mexico it was forecast to grow, mainly due to the strong performance of the USA, as its largest trading partner.

Chinese Action

As the largest country on the planet and one of the fastest growing economies, whatever China does seems to impact upon commodities. By 2014 it was responsible for 47% of world metals consumption, while also one of the largest manufacturers and exporters.

In 2015 China shocked the world by devaluing its own currency which led to a sharp downturn in commodity prices. In 2016 the country continued to devalue its currency but at a much smaller rate, while its manufacturing levels were down as well, resulting in supply and demand fluctuations and consistent price changes.

Global Storms

Weather can have a big impact on commodities such as wheat, coffee, rice and many more. Supply can be limited when storms hit certain regions, destroying crops and these commodities while the demand for them is likely to remain at the same level.

There were many hurricanes, storms and other forms of destructive weather in 2016 that hit areas known for producing some of these commodities. There are always scares about there being a lack of certain commodities but for the most part these storms did not have too bad an effect on the production or price of commodities.

Monetary and Environmental Policies

Monetary and policy imbalances will be reflected in a supply and demand imbalance, leading to price fluctuations in the commodities market. China devaluing its currency created one such imbalance, while worries about what would happen to the US dollar and its other policies when Trump takes charge was another factor. Environmental policies were being rolled out by many nations to tackle climate change and global damage, which also impact upon the production of certain commodities.

Consider how these events affected the commodities market in 2016 and begin planning your trading strategy for 2017 based around future possibilities.