Sunday, August 28, 2016

Is investing in Singapore market better than in HK market now?


Over the last six months, Hang Seng Index edged up 12.5 percent more than Straits Times Index and the analysis in my blog that H-shares were the best bet has been vindicated.

From The Business Times Weekend, the p/e of STI at 2857.65 now is 12.24x and the p/e of HSI at 22909.54 is 12.17x. They are almost equal now.  Still, H-shares are the better bet. Why?

I can think of the following reasons:
1. GDP of China at more than 6.5% is still much higher than that of Singapore which is of anything lower than 2%.
2. the average p/e of H-shares is lower than that of HSI.
3. The Shenzhen and HK Stock Connect will propel H-shares to close up the current A- and H-shares gap of 24.96%.
4. The anticipation of Fed Chair Yellen to jack up the US interest rates alone will strengthen the US and HK currencies and thus the influx of foreign funds to HK. Singapore currency, on the contrary, should be weakening due to poor NODX figures.

However, what with the interest rates moving in the opposite direction of the performance of stock markets, and with HSI moving higher, we have to reduce our investment in the stock market unless you can find another phenomenal growth stock like Tencent 腾讯 (Ticker: 700) about 10 years ago.

Superphang

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