INVESTING · Singapore Investing Glossary

Value Investing Singapore

Value investing is a strategy of buying assets that trade below their intrinsic value — identified through fundamental analysis — with the expectation that the market will eventually correct the mispricing. Pioneered by Benjamin Graham and made famous by Warren Buffett, value investing has a strong following in Singapore, particularly among investors targeting S-REITs, banks, and blue-chip dividend stocks on SGX.

This article is for informational purposes only and does not constitute financial advice. Always consult a licensed financial adviser before making investment decisions.

Table of Contents

Core Principles of Value Investing

Value investing rests on three foundational ideas:

1. Mr. Market: Benjamin Graham’s allegory — the market is an irrational business partner who offers to buy or sell your shares every day at wildly fluctuating prices. Your job is to take advantage of his irrationality by buying when prices are unreasonably low.
2. Intrinsic value: The true worth of a business based on its assets, earnings power, and future cash flows — independent of its current market price.
3. Margin of safety: Only buy when the market price is significantly below your estimate of intrinsic value — the discount provides a buffer against valuation errors and unforeseen risks.

In Singapore, value opportunities frequently emerge during broad market sell-offs (like the COVID-19 crash in 2020), sector dislocations (S-REITs in 2022–2023 during the rate hike cycle), or company-specific events (rights issues, management changes) that cause temporary mispricing.

Key Valuation Metrics for Singapore Stocks

Value investors in Singapore use several metrics to identify cheap stocks:

For S-REITs, the key value metric is Price-to-Book vs 1.0 (below NAV signals potential undervaluation) and distribution yield relative to the 10-year SGS bond yield. When REIT yields exceed SGS bond yields by more than 3%, REITs are historically considered cheap. See our P/B Ratio REIT guide for details.

Singapore Value Investing: Banks, REITs, and Blue Chips

The SGX offers several classic value investing hunting grounds:

• Singapore banks (DBS, OCBC, UOB): Often valued on P/B and Return on Equity (ROE). At P/B of 1.0–1.2x with ROE above 12%, Singapore banks have historically offered value. DBS consistently trades at a premium due to its regional franchise and strong capital returns.
• S-REITs below NAV: When S-REITs trade below their Net Asset Value (NAV per unit), they offer a discount to the underlying property portfolio. Post-2022 rate hikes, many S-REITs traded at 20–30% discounts to NAV — classic value territory for patient investors.
• Singapore conglomerates: Companies like Jardine Matheson, Keppel Corporation, and Singapore Airlines have historically traded at conglomerate discounts — their parts are worth more than the whole. Sum-of-the-parts analysis can identify these.

Avoiding Value Traps in Singapore

The biggest risk in value investing is buying a “value trap” — a stock that is cheap for good reason and stays cheap (or gets cheaper). In Singapore’s context:

• Structural decline: Some Singapore retail mall operators and office landlords face structural headwinds from e-commerce and remote work. Low P/B does not mean cheap if the underlying asset values are declining.
• Poor capital allocation: Companies with cheap valuations but a track record of value-destructive acquisitions or high-related-party transactions should be avoided.
• Dividend cuts: A high dividend yield from a company with deteriorating earnings is a warning sign, not a value signal. Check dividend coverage — earnings per share divided by dividend per share should comfortably exceed 1.0x.
• Debt levels: A cheap-looking stock with high debt is vulnerable to rising interest costs. Check net debt-to-equity and interest coverage ratios. See our Interest Coverage Ratio guide.

Value Investing vs Growth Investing in Singapore

Singapore’s stock market has historically skewed toward value (property, banking, infrastructure, REITs) rather than growth (technology, biotech), unlike the US Nasdaq. This is both an opportunity and a constraint for local investors.

The STI is heavily weighted toward financials (DBS, OCBC, UOB) and REITs — sectors that tend to be valued on book value and yield rather than earnings growth. This means the Singapore market naturally suits a value investing approach, but also limits exposure to high-growth sectors.

For Singapore investors seeking growth exposure, combining a SGX value portfolio with global growth ETFs (such as CSPX — SPDR S&P 500) is a common approach. For more on building a complete Singapore portfolio, see our Asset Allocation Singapore guide.

Frequently Asked Questions

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