Southeast Asian Shares: The Bulls Are Running

Records Were Set Right And Left

It’s been a banner week for South-East Asian stock markets. The Straits Times Index (INDEX: ^STI) rose 0.26% on Friday, for a weekly gain of 0.67%; at 3,291.14 the index is higher than it’s been since November 2010 and less than a percentage point separates it from its five-year high. The Philippines and Indonesia stock markets achieved record highs on Friday, while Thailand set an eighteen-year high. Malaysia – the worst-performing regional market so far this year – was closed on Friday. Elsewhere in Asia:


Weekly Gain

Price-to-Earnings (1st Feb)*

Nikkei 225



Hang Seng Index (INDEX: ^HIS)



Shanghai Stock Exchange Composite Index






*Normalized earnings per share. Source: S&P Capital IQ

Last Sunday, Reuters reported that internal reviews by banks in Singapore have found evidence of collusion in rate-setting in the offshore foreign exchange market. The reviews are the result of the massive LIBOR rate-fixing scandal that has rocked several of the world’s largest banks. In Singapore, the focus is on non-deliverable forwards – derivatives used to hedge and speculate on currencies.

The largest actors in this market are mainly foreign banks, but they include DBS Group (INDEX: D05.SI). That didn’t seem to bother investors; DBS was one of the best-performing stocks in the index, with a weekly gain of 2.9%. That has helped to narrow its underperformance – the stock has gained less than 1% against close to 4% for the index. On the basis of their price-to-book value multiple, currently 1.20, the shares are roughly in the middle of the valuation range established since mid-2009.

This article was written by Alex Dumortier.  Alex Dumortier is a contributor.

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