STI took a hit early 2014, as the index declined 4% in January. Currently the STI trades at 3,027, which is 12% below the 3,464 high we saw last year, signaling that we are still in the bear territory.


The STI ETF trades at around 12.8 times earnings, with a decent dividend yield of 2.75%. At this level the STI is definitely not expensive, considering that the historical average PE is about 15 times.

However is the big question would be, is it cheap or just fairly priced?

I think the answer to that depends a lot on which blue chip you are looking at. If you are paying 20 times or higher earnings for solid monopolies like ST Engg or SGX, you get a decent yield but you wouldn't make a high return on your money.

Our local banks makes up about 30% of the index and ......