STI looking cautiously bullish

THE Straits Times Index (STI), a capitalisation weighted index that tracks the performance of the top 30 companies listed on the Singapore Exchange, has been trading near price-to-book (PB) ratio of one despite US indices reaching ballooned PB ratios of above 3.3 in recent record high trading days. This suggests a clear sign of valuation disparity.

Driven by real estate investment trust (Reits), developers and financials, STI has recovered from the bottom of 2,993 in January to this year's peak of 3,415 in April and recent …