The late British prime minister Margaret Thatcher once noted that if nations were ranked by the natural resources they possess, Russia and Brazil would have been among the richest countries on earth.
But this is not the case. Her observation was made more than 20 years ago but it remains true.
Mrs Thatcher's remark flashed through my mind when I read a report by a United States financial website, Sovereign Man, that created a buzz among remisiers and traders here.
It asks why Singapore has a "dirt cheap stock market" even though it is regarded as one of the richest countries in the world with more millionaires per capita than anywhere else on the planet.
Mrs Thatcher felt that even though a country possesses abundant natural resources, it may not be wealthy unless it has entrepreneurs who can work out how to bring the resources to profitable use as they did with the oil under the North Sea and the sands of the Middle East.
In some sense, a similar logic may well apply to the moribund stock market here. Singapore may be crammed full of millionaires and its stock market may be "dirt cheap", but unless it has a compelling story to draw in investors, it may continue to languish.
Sovereign Man, which claims to have over 100,000 subscribers, observes that there are several positive points about the Singapore stock market.
One big plus is that it barely trades above book value - the value we get if we add up all the assets such as cash, real estate and inventory and deduct the liabilities, which include bank borrowings, taxes and money owed to suppliers.
This makes the Singapore market a great bargain compared with United States-listed stocks such as Facebook, McDonald's and Boeing, all of which are trading at several multiples of their book values.
Then there is the attractive dividend payout offered by blue chips here. Sovereign Man noted, for example, that the iShares MSCI Singapore ETF, which trades in New York and tracks a basket of Singapore blue chips, pays a dividend of 4.4 per cent.
Better still, there is the prospect of foreign exchange gain for international investors as the Singapore dollar strengthens against the greenback.
Hence, Sovereign Man concludes that it may be a win-win situation loading up on local blue chips. It said: "If the company share prices increase from these lows, you will make money. If the currency appreciates, you will make even more. And while you wait, you will receive a solid dividend yield that puts regular cashflow in your pocket."
But that begs the question: If there is such a compelling argument to buy into the Singapore market, why are investors not taking big bites into it?
On the big picture front, there are plenty of uncertainties. Just to name a couple: There is the perennial worry over a possible slowdown in China and the pall this would cast over regional economies, and the regular fixation over the US central bank's next move on interest rates. This has soured investors on Asian equities and convinced them to hang onto their cash.
Even analysts here are not buoyant about the local stock market's prospects for now.
DBS Vickers analyst Janice Chua wrote in a recent report: "With Singapore's economic growth remaining uncertain and local corporate earnings revision trend still on a downward path, we see little justification for the recent rally to extend further."
Still, economic uncertainties aside, there may be other forces at work to explain why the Singapore market now barely trades at its book value.
One discernible investment trend last year was the enthusiasm investors showed towards pursuing new-economy stocks in the US, such as Alphabet (the former Google) and Facebook.
One trait shared by such companies is their ability to deploy fewer assets and human resources to expand their businesses once they achieve a certain size of operation.
Facebook, for example, has been able to pull over one billion users to its website daily even though it has only around 10,000 staff. It has also taken advantage of the rich valuations ascribed to its shares to buy up other businesses such as WhatsApp to further increase its clout in the social media network space.
In contrast, markets such as Singapore are clogged full of old-economy stocks such as contract manufacturers that are struggling to wring value out of their assets while fending off nimbler opponents trying to steal their turf.
Thus, even though these stocks have fallen to so-called attractive valuation levels, investors are not exactly snapping up their shares because of their uncertain business prospects.
There is also the plunging appeal of the offshore and marine sector, which had been one of the biggest draws to the local stock market in recent years, on the back of sinking oil prices that have caused exploration activities to contract sharply.
Even oil's rebound to around US$40 a barrel has not improved investors' appetite for stocks in the sector.
If anything, it has led to research houses urging their clients to pare down their exposure to the sector.
Maybank Kim Eng noted that the rally in crude prices is unlikely to propel orders for new rigs, adding that, in fact, the industry faces a glut in rig supply.
Still, if history is any guide, there should be a pickup in the Singapore stock market valuations eventually.
When dot-com counters were all the rage 16 years ago, lots of old- economy stocks here languished unloved and neglected by investors.
However, in the subsequent dot-com crash, they enjoyed a huge comeback as investors learnt to appreciate once again the wisdom of evaluating a business using yardsticks such as book value and cashflow.
Sure, the Singapore market may look unsexy right now but as Sovereign Man notes, at such low valuations, investors would be buying with a significant margin of safety, with much of the downside already priced in.
Investors will, however, have to be patient and wait for a new market cycle to emerge. How long that will take is anyone's guess.
This article was first published on April 4, 2016.
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