SINGAPORE (Jan 29): At this point in the market, what should investors do? The market is up a lot, but prices continue to rise. Since the Straits Times Index’s  trough in January 2016, it has risen 41% in 24 months. According to Andrew Chow, head of research at UOB Kay Hian, the average length of a bull market in Singapore is 30 months.

“Over the past 32 years, we found that the trough-to-peak period is typically 30 months on average. The last market trough was in January 2016, so if there are no surprises, the market could see a top in July 2018,” he says. “Markets are never static. They tend to overshoot during bull phases. We’re seeing very strong GDP growth. A pickup in trade and consumption is a strong driver for an economy such as Singapore.

Using his sensitivity analysis, Chow estimates that the fair-value price target for the STI is 3,460. Its latest close was at 3,584. This values the STI at a 10% discount to its average long-term price-to-book ratio, and its mean price-to-earnings ratio (PER). If the STI reverts to its mean P/B ratio, the STI could see a target of 3,650, Chow says.

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