Index Value Rainbow

16 Feb 2023

This indicator is used to estimate Index valuation based on each countries base money supply M0. The chart will compare how the index value will move alongside with base money supply for comparison study. The chart presented here is just a relative comparison with some scaling and shifting so it doesn't refers to any real measurement. However it can be used to track the index whether it's too cheap or too expensive in relative to money supply available in the market.

- The gray line represent the money supply M0
- The rainbow above the gray line represent the multiplication factors from 1x, 2x, ..., 10x
- The rainbow below the gray line represent the division factors from 0.8x, 0.6x, ..., 0.2x

This indicator can only be used with specific indices mentioned below. Currently can be used to estimate the value of largest indices by market cap:
- US Index - based on Fed Balance Sheet (SPX, NDX, DJI, RUI, RUT, RUA, ES1!, NQ1!, YM1!, RTY1!)
- EU Index - based on M1 Money Supply (N100, EU500)
- JP Index - based on M0 Money Supply (NI225, NKY)
- CN Index - based on M0 Money Supply (000001, 399001)
- HK Index - based on M0 Money Supply (HSI)
- SG Index - based on M0 Money Supply (STI)
- CA Index - based on M0 Money Supply (TSX)
- AU Index - based on M0 Money Supply (ASX200, AUS200)
- ID Index - based on M0 Money Supply (COMPOSITE)

Check other script to value stock and index:
- Stock Value Rainbow: script to value stock based on book value, earning, dividend and cash flow
- Index Value Rainbow: script to value index based on fed balance sheet and base money supply
- Gold Value Rainbow: script to value gold based on global money supply
- Stock Value US: script to check US stock value
- Stock Value EU: script to check EU stock value
- Stock Value JP: script to check JP stock value
- Stock Value CN: script to check CN stock value

22 Feb 2023

Nota Keluaran

Adding other European Indexes: Stoxx 600 (SXXP), Stoxx 50 (SX5E), Germany DAX, French CAC40, FTSE100, UK100

Currently can be used to estimate the value of largest indices by market cap:

- US Index - based on Fed Balance Sheet (SPX, NDX, DJI, RUI, RUT, RUA, ES1!, NQ1!, YM1!, RTY1!)
- EU Index - based on M1 Money Supply (N100, EU500, SXXP, SX5E, DAX, CAC40)
- UK Index - based on M0 Money Supply (FTSE100, UK100)
- JP Index - based on M0 Money Supply (NI225, NKY)
- CN Index - based on M0 Money Supply (000001, 399001)
- HK Index - based on M0 Money Supply (HSI)
- SG Index - based on M0 Money Supply (STI)
- CA Index - based on M0 Money Supply (TSX)
- AU Index - based on M0 Money Supply (ASX200, AUS200)
- ID Index - based on M0 Money Supply (COMPOSITE)

4 Mac 2023

Nota Keluaran

Adding some commentary

22 Nov 2023

Nota Keluaran

Update the formula to factor in Federal Home Loan Bank and Federal Reserve balance sheet as main liquidity provider. So to provide more accurate circulating liquidity in the US economy.

Net Liquidity = FHLB Balance Sheet + Fed Balance Sheet - Treasury General Account - Reverse Repo

15 Ogo 2024

Nota Keluaran

The latest update on the Index Value Rainbow indicator. We remove the valuation based on Net Liquidity because it is only applicable for US market only. Due to recent carry trade impact on US stock, we consider using multiple country money supply to value stock index on each country. We weighted the stock value based on local money supply as well as abroad money supply. Each are weighted on how much percentage of foreign ownership on local stock market.
We used M0/M1/M2/M3 Money Supply to benchmark the value of a few stock market indices ranked by their market cap. Here is the list of supported stock market index:

- US Index - main investor 60% local + 40% abroad (SPX, NDX, DJI, RUT, ES1!, NQ1!, YM1!, RTY1!)
- EU Index - main investor 50% local + 50% abroad (N100, EU500)
- CN Index - main investor 95% local + 5% abroad (000001, 399001)
- JP Index - main investor 70% local + 30% abroad (NI225, NKY)
- HK Index - main investor 60% local + 40% abroad (HSI)
- UK Index - main investor 60% local + 40% abroad (UKX, UK100)
- CA Index - main investor 85% local + 15% abroad (TSX)
- AU Index - main investor 75% local + 25% abroad (ASX200, AUS200)
- ID Index - main investor 65% local + 35% abroad (COMPOSITE)