
Chart of the Day: Here's proof that Singapore stocks are still quite cheap
Singapore is one of the cheapest markets in Asia.
Local stocks are trading substantially below their long-term average in terms of market cap
The Singapore equity market is trading substantially below its long-term market capitalisation to GDP ratio, according to this chart from BNP Paribas.
Singapore's average market capitalisation to GDP ratio stands at 200%, the report showed. The ratio peaked in 2007 when it climbed to 300%, and hit bottom between 2008 and 2009 when it dropped to around 130%.
At present, the market capitalisation of locally-listed firms hovers at above 150%, making local stocks among Asia's cheapest.
Other Asian markets, such as China, Korea and Taiwan, are still trading markedly above their long-term market cap to GDP average. The most expensive markets in the region are Thailand and the Philippines, with their market cap to GDP ratio still incredibly elevated despite the recent stock rout.
Within the Singapore market, BNP Paribas is bullish on Global Logistic Properties, which is trading near trough valuations and does not belong in a high-risk sector.
"The equity and currency rout globally has depressed the valuations of some stocks so they are now nearing their all-time trough levels. While many are from traditionally risky sectors (materials, energy) or have over-leveraged balance sheets, a few across Asia have relatively healthy balance sheets and reasonably good growth opportunities, in our view,” said the report.