Market watchers: Value to be had in stock market following big selloff

SINGAPORE - Investment market watchers believed the outlook is not all doom and gloom, and there are pockets of opportunities to tap.

The emerging market equities, including those in Singapore, have value to offer after the severe price drop in recent months, panelists speaking at a discussion on 2016 market outlook at the Singapore Exchange on Thursday (Jan 28).

"At this stage, with the markets having seen a great selloff, we think value is starting to emerge, in the United States and Europe, but also in Asia," OCBC wealth management senior investment strategist Vasu Menon said.

"The Asia ex-Japan (MSCI) Index is now down 30 per cent from its peak. Here in Singapore, the Straits Times Index is down 28 per cent from its peak. Dividend yield is around 4.5 per cent and price to earning ratios are looking reasonable. There is fear in the market, but very often, times like this is when opportunity appears," he added.

The Asian markets have been hit by fear around China's slowdown. But China is unlikely to trigger the next global financial crisis, Bank of Singapore chief economist Richard Jerram said during the panel discussion.

"The flow of capital in and out of China remains limited. When the US goes bust, it will have global repercussions, but not China… China does have a problem with bad loans, but we think the government has the ability to protect the system," Mr Jerram noted.

While equities may have room for rebound, property prices are set for further drop, Mr Menon cautioned, as he forecasted a 10 per cent drop in property prices in Singapore over the next two years.