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Tuesday, August 9, 2022

Why did I decide to leave Singapore stock market?

SGX

First of all, please don't get me wrong. Singapore is my home and I love Singapore. What I am referring here is just the stock market itself. Like many others, I started off my first investment in the home market. I was not sure what I was doing at that time; in fact, I am still not 100% sure now too (i.e. we should always be humble and be prepared that we may be wrong). 

I recall that my first few investments in the home market are mostly the blue-chip companies such as Keppel (SGX: BN4), Sembcorp Industries (SGX: U96), SingTel (SGX: Z74), ST Engineering (SGX: S63and other more "adventurous" stocks at that time. And it was a pretty plain vanilla strategy (i.e. buy and hold). To be fair, this strategy served me well at that time; I just need to hold them and reinvest my new capital to grow my portfolio over time. 

However things start to crack later on. I am not referring to the stock market crash ignited by the US subprime crisis. In fact, Singapore stocks staged a decent recovery post the subprime crash. I am referring to the business model of several blue-chip companies caused by technological advancement and new business models that disrupt many businesses. Suddenly WhatsApp (NASDAQ: META) is the new telephone giant, AirBNB (NASDAQ: ABNBis the new hospitality giant, Netflix (NASDAQ: NFLXis the new media giant and so forth; you know what I mean. 

To be fair, this disruption is not just affecting the local companies but many others outside of Singapore too. However, it really prompted me to relook into my portfolio when I notice that even our local tech companies have chosen to list their shares outside of Singapore such as US and HK. One can argue that this is normal as it has better valuation over there but isn't this precisely the point? Why is the valuation outside of Singapore better; why not locally? 

One can also argue that local companies usually have better dividends and they are "safer". While I agree that dividend should be considered in our overall return, I come to realization that growth and dividend hardly come together. If we want growth, we get less or no dividend. If we want dividend, we get less or no growth. This is a big topic by itself and it took me a while to be convinced too. As for safety, have you noticed one interesting behavior in our local stock market? When the US is down, SG is usually down but when the US is up, SG may not necessary be up. (tweet it) We can just look at the STI vs S&P500 return over time (see below) and the choice is clear. Hence I have decided to exit most of my positions from the home market; at least for now.
 
STI vs S&P500

Again, please don't get me wrong; there are still some good and growing local companies such as iFast (SGX: AIY), CapitaLand Investment (SGX: 9CI), our local banks and etc but the choices are comparatively limited. So have I made a mistake? Of cos' I could have but I think I have made the best choice for my portfolio at this point. So I shall let the time take its nature course for now. Thanks for reading and please follow my blog if you enjoy this article.
 
Disclosure: I own shares in STEng, CLI, Meta and AirBnB as of this writing.
 

4 comments:

Unknown said...

I am glad i leave this sillypore market 10 years ago and now in great profitability even after this sell down.

This SGX suck big time.

peter tan

Anonymous said...

sorry this is a follow up to my first post. After i leave i bought AAPL AMZN GOOG and FB, and of course a few more like TSLA and many more.

Good luck to u.

peter tan

The True Freedom said...

No problem, Peter. Glad to hear from you.

Anonymous said...

Agreed
then why i only buy dbs.
The only one.

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