Yes, I know. The Straits Times Index dropped from a “high” of 3,374 points to end off the week at a disappointing 3,288. Correspondingly, SPDR STI ETF closed at $3.30 while Nikko AM STI ETF closed at $3.36.

Yadda yadda yadda. No, I don’t use THAT price to determine whether the STI is expensive or not. Hey, wait a minute, don’t we always use the price to see if something is cheap or expensive? Well, in this case, of course not!

On the other hand, Price/Earnings Ratio (PE Ratio), while not perfect, at least gives a more meaningful view of the Singapore stock market.

Price/Earnings Ratio

The price-to-earnings ratio, or P/E ratio, is an equity valuation multiple. It is defined as market price per share divided by annual earnings per share. – from Wikipedia

Did you know that you can also find out the PE Ratio of the Singapore Straits Times Index?

Head over to Bloomberg (register an account if you don’t have one) and add it to your watchlist. Then, from your watchlist, click on the Fundamentals tab and there it is! Both the web-version and the app-version can give you the PE Ratio. Simple eh?

Singapore Straits Times Index PE Ratio

As of right now, the PE Ratio of STI is estimated to be about 13.67 while the historical average PE Ratio is about 16 according to The Motley Fool Singapore.

Just for fun, do you know that one of the most well-known company in the world has a staggering PE Ratio of 454? Looking at the list below, guess which is the “cheaper” company?

  1. Google : 568.770 USD | PE Ratio : 21.51
  2. Facebook : 73.0600 USD | PE Ratio : 45.23
  3. Twitter : 43.1300 USD | PE Ratio : 454.00

For your reading pleasure :
http://www.fool.sg/2013/11/04/a-simple-guide-to-future-returns-for-the-straits-times-index/

 

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