(By Roger Tan, SIAS Research)
Equity markets globally crashed this week as the amygdala took over the frontal lobe in investors worldwide in making investment decisions. Fear of further contagion from the Greek debt crisis continues to dominate investors’ attention even when many economies continue to release strong economic numbers in the week. For the week, the STI ended 5.4per cent lower, while the S&P 500 was 4.2 per cent lower.
With the STI now down by about 10 per cent from the recent high of 3000 points, the STI is beginning to look very attrac- tive. Investors should bear in mind that PE ratio of the STI has improved from about 24x to 14x with better financial results announced for FY09. We therefore suggest that investors consider loading up on STI ETF slowly and quietly over the next few weeks as others are busy watching football. There is a good chance that the STI will see some strength in June as funds window dress their books for their mid-year close.
As for individual stocks, we continue to like undervalued stocks such as Marco Polo Marine, but investors must be ready to hold on to such stocks for the long run and not trade in and out unnecessarily.
