Dear readers, the Singapore Straits Times Index (STI) closed yesterday at 2,463.29. From the recent trading sessions, it is evident that investors have become bearish and we note that there is indeed some selling with each trading day. The support of 2,500 has become a resistance and I believe there is more room for bearish move for Singapore stocks in the near-term.
Regular readers of SG Stocks Investing will know that I set the first support level of the Straits Times Index STI at 2,000 in an all-out stocks markets correction. Some readers doubt the Straits Times Index will hit this low but I hold the view that the STI could reach even lower than 2,000 with the next stocks markets correction since for me the 2,000 is the first support level only.
A possible bottom-most level of the STI could be 1,700 or even 600 in the event of a financial correction as I have shared earlier in this post “Will Straits Times Index correct to 600 in next stocks market meltdown”.
In this post, I will like to share another possible bottom-most level of the STI at 1,339 which is derived from the following.
The STI closed at 2,463.29 as of yesterday (22 Sep 20).
The Price-to-Earnings ratio of the STI as of 22 Sep 20 is 11.04 as could be inferred from the Price-to-Earnings ratio of SPDR Straits Times Index ETF.
The Price-to-Earnings ratio of the STI was about 6 in the previous stock market correction.
So if we scale the STI as of yesterday closing to a Price-to-Earnings ratio of 6, we obtain 2,463.29 x 6/11.04 = 1,339.
To me, the 1,339 bottom-most level of the STI is possible especially since it is between the two earlier bottom-most levels of 1,700 and 600 which I calculated previously.
Anyway, be it 2,000, 1,700, 1,339 or 600 for the bottom-most level of the STI in the next global financial meltdown, what is most important to all investors is to ensure you have liquidity to take advantages of the opportunities in stocks during the stocks markets corrections!
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
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