The Week In Numbers: Bubble Trouble

The combined value of Chinese shares climbed above US$10 trillion this week. It has risen by as much as US$6.7 trillion this year alone.

In the last 12 months, the Shanghai stock market has surged over 150%. It is currently valued at 26 times earnings. Meanwhile, the Shenzhen stock market has gushed almost 200%. Shares on China’s smaller stock exchange are valued at 77 times earnings. Did anyone say “stock-market bubble”?

Janet Yellen, the chair of the US Federal Reserve, has spoken. The Fed has hinted that a rate rise is likely this year. But Yellen said once rates start to rise, any increase would be gradual. The two keys to unlocking an interest-rate increase are further improvement in the labour market and that inflation would reach 2% in the medium term.

Retail sales in Singapore were up by 5% in April. The improvement was driven by an increase in the sales of motor vehicles, which could be just what the doctor ordered for motor dealer Jardine & Carriage (SGX: C07). Other areas that did well included sellers of telecoms equipment, computers and watches and jewellery. But food & beverage was on the back foot.

The currency of Singapore’s closest neighbour, Malaysia, has slumped to its lowest level since 1981. Since the start of the year, the Malaysian currency has depreciated by around 5% against the Singapore dollar. Currently one Singapore dollar buys about 2.79 Malaysian ringgit.

For some Singapore companies with operation across the causeway, the drop in value of the ringgit could be seen as disappointing. But Richard Eu, the boss of Eu Yan Sang (SGX: E02), is taking the slide in his stride. He said that while the company’s imports into Malaysia may be more expensive, operation costs have fallen, so “things kind of even out”.

The bonus number this week is 4. Singapore is the fourth most expensive country in the world for expatriates, according to a recent survey. The most expensive country is the Angolan capital, Luanda. However, other surveys have shown that Singapore was the most expensive, while Luanda did not even figure in the top five. Surveys – who needs them?

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