Today we head into Malaysia for 2 nights in Melaka and then on to Kuala Lumpur.

Singapore – what a great place. One of the notable few where the lack of land and natural resources has in no way impeded its economic development. It may have a hybrid ruling system, not fully democratic, but it is clear the government has achieved great things for the city-state. It is the 4th top financial centre in the world, the 5th largest trading port, and has a deliberately varied economy so it is not too reliant on one sector. It is amongst the least corrupt countries in the world with a very high standard of living. 20% of its inhabitants are millionaires, the highest ratio for a country. It is in the top 10 countries in the world in terms of its financial reserves and is a world leader in technology. There are rules to adhere to – no littering, spitting, jaywalking, racist slurs, and more – and capital punishment for certain misdemeanors, but the net result is a country that is very safe, respectful and clean. Customer service is also of  a very high standard and feels very genuine.

For me personally, the English language, left-hand driving and English products around gives it an instant familiarity – all thanks to the colonial history – but the 30 degree constant heat, exotic plants and animals, and multi-Asian influences made it feel equally exotic. There are now 5 million people living in the 274 square mile land mass, but is doesn’t feel overcrowded, but vibrant, and it is sufficiently cosmopolitan not to stand out as a tourist. I spent an evening with a portfolio manager who lives here and he stated that the population had really grown over the last decade thanks to an influx of foreigners. The result has been a ballooning of real estate prices, shown by the red line in the chart below.


Underlying source: SingaporePropertyCycle

The chart also shows the Singapore STI stock index, and I have added the price/earnings valuation history at the key peaks and troughs. It can be seen that there was one historic episode of a speculative mania to valuation excess, around 2000, tying in with the dot com peak. Since then we can see the global secular stocks bear market unfolding in terms of gradually cheapening valuations, even though the nominal index has an upward slant overall. Like other key indices, such as the Hang Seng and UK FTSE, it has formed a large triangle, which I have highlighted, and is likely to resolve one way or the other soon. I suggest, like the other indices, that this is going to resolve to the upside, with a breakout, pullback to the midpoint (triangle nose), and then a couple of years hence, break upwards from there into momentum secular bull. The p/e valuations achieved at the 3 triangle low points of between 5.5 and 8.8 are all extreme secular bear low valuations that suggest sufficient secular wash out to enable a secular bull. Once again, this casts doubt on any deep cyclical bear ahead, but more likely shallow. At current p/e of 11.8, the index is at the cheap end of what has been largely an oscillation over the years between 10 and 25. I have opened a single long position in the STI Index today, and will add to it on any significant falls.

Some pics below. Family Hampson in central Singapore. The amazing engineering of the Marina Bay Sands building. And an experience I hadn’t imagined for the kids – swimming with a monkey at the Shangri La Rasa Sentosa – thanks to the monkey for that freebie!

28 thoughts on “Singapore

    1. yes we all remember what happend back last time the bulls were all gone **insert big grin here* The guy from the FFT has been accurate with gold and market calls and he agrees with you too. Very smart chap.

      I think this is the signal for a very big rally coming in gold soon, we shall see.

  1. Thanks for your great work !
    I was wondering if you have opinion on Turkey this days. There is solid growth there since beginning of 2012. It seems being trade intermediary for iran could be a good business.
    Enjoy you vacation !

  2. Damn, should have let you know earlier that I live in Singapore. Would have been great tomeet you and take you out for some good food . Next time perhaps. Will show you the real Singapore

    1. Nice post. Let me know if you are in HK, Sydenh or Bangkok. Enjoy your time in Asia, the future of the world. Relax and have fun…

      That is because when you come back there will be a recession and a bear market waiting for all of us, I am one of those who thinks global stocks will break down. Elections are over now, so prepare yourselves guys!

      1. Apple is now down 20% from its all time high. I remember when bulls were beginning the market to give them a 5% pullback on Apple. They came on CNBC claiming that they would jump a gun at any chance of getting a bargain in Apple shares. Well here we are down more than 20%, but where are the buyers? Remember, when market darlings and bull market leaders start falling down hard, it is a sign of a major top. Personally, I wish I was smart enough to short Apple in late August! *smile*

  3. Elections are over and now I would not be surprised if the first order of business is a congressional lame duck session compromise on the fiscal cliff that will benefit the equities market.

  4. Thanks everyone!

    It is normal for the US stock market to rise on election day and fall the day after, so let’s see what happens now, once the dust settles. Gold is being talked up as a beneficiary due to continued easy monetary policy expectations, but I would rather be patient, and watch how things move over the next couple of days. Looks promising though due to the technical reversal of Friday’s steep falls together with the washout in sentiment. Lame duck congress 13 Nov to potentially address the fiscal cliff – concur with Jack.

    Pawel – I haven’t looked at Turkey. Maybe someone else could chip in on that.

    Tksg – Thanks for the offer anyway, I may end up back there.

    Tiho – Thanks, do you live/work in all 3 places? Congrats on your Apple short.

    Edwin – The cyclicals have strengthened in relation to the index despite the sell off, so share your view.

    1. I just heard that President Obama will comment on fiscal cliff on Friday Nov 9. Perhaps his comments will lift the market so Nov 8 may be the bottom. Let’s hope.

  5. Not live, but business and pleasure in all three, yes. Hong Kong and Sydney are usually on the live list, but in recent years it has been outback Australia too, because of the mining boom. I’m a part owner of an exploration company specialising in Coking Coal away from finance.

  6. The voyage looks fantastic so far. Singapore is a fascinating part of the world, so it’s great to see such in-depth analysis of it. Singapore seems to have very bullish indicators right now.

    In relation to Obama’s victory and the fiscal cliff, I’ve read more and more about Obama intending to allow tax cuts for the richest to expire in 2013, which I think Romney would have extended. If the Nov. 13th session sorts out this issue, I assume that, having Obama as President, things will be quite rosy.

    The Dollar is set to make a fall according to some traders over the next year, whilst stocks such as Apple, despite posting a 20% the other day, is greatly undervalued according to some, who think it could be trading at a share price of $1000, if its P/E value were around 20 in 2013

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