Earlier this month, China’s credit-rating outlook was lowered from stable to negative by Moody’s as it highlights the country’s surging debt burden and questioned the government’s ability to enact reforms. This came days after China's central bank resumed its easing cycle by cutting the reserve requirement ratio by 50 basis points.
Oil has recently taken on the role of an economic indicator for an economic slowdown. In the past 18 months, there has been a strong correlation between high yield bonds’ spreads and oil price. Credit Suisse thinks that macro trades on the performance of major economies has been tied closely to oil price.
The year to date performance of SGX All Healthcare Index has declined 8.2 percent, trimming the price-earnings (P/E) ratio of the Index to 41, from 43 at the end of 2015. Yet, DBS sees growth opportunities in healthcare stocks.
While 4Q results have not been stellar, the STI has been gaining back losses in the past weeks. If the past two months’ behaviour of equity markets is anything to go by, the Year of the Fire Monkey is likely characterised by ‘wide swings’. DBS believes that the current market has been bearish for too long and expects to see a break in the bearish trend with a temporary relief rally.
With heightened economic uncertainty from low oil prices and slowing growth in China, S-REITs outshine the STI amidst the current market volatility as investors seek “safe havens”. The near term performance will be firm and largely macro-driven, with increasing expectations of a delay in further Federal Reserve interest rate hikes to be positive for share prices in the near term.
In the past 25 years, the Price-Earnings (P/E) ratio of STI has only reached single digit on one occasion, i.e. during the global financial crisis. With the STI PE ratio currently standing at 10.67, the STI is closing in on the PE low seen during the global financial crisis.
According to Maybank, if there is one sector to look out for as oil prices tumble, it would be the aviation sector.
China has been awfully quiet in the past week, partly due to the surprising announcement from BOJ to introduce negative interest rate, and the falling oil prices.
The MSCI All-Country World Index (ACWI) fell into a bear market last week, with its year on year decline from early last year totalling more than 20 percent. But are we really in a bear market?
Goldman Sachs, the investment bank that previously made a call that oil will hit US$20 a barrel, is now saying that the low oil price signals a reversal of trend. Goldman Sachs sees an oil bull market being born in the current depressed oil prices.