Monday, January 18, 2016

UBS outlook for 2016.

UBS 2016 Houseview

UBS has make their houseviews available online if you are interested.

Take a pinch of salt.

They are only as good as you and me.. hehe.. I don't think there is any edge.

Structured Deposits?

Understand capital-guaranteed products

capital-guaranteed product is a structured product created by a bank to be sold mainly to retail investors. It is issued usually for a term of 5 years, is invested in the manner spelled out in a prospectus and carries a guarantee from a bank that the invested sum will be returned on maturity.
Several products of this nature were created and sold by many banks in Singapore to retail investors during the years 2000 to 2005. The interest rate on bank deposits fell below 2 percent during this period and investors wanted a higher return for their savings, without taking risk. The capital-guaranteed products appeared to meet their needs.
Most retail investors did not read the prospectus as they trusted the bank guarantee and the assurances given by the marketing staff of their trusted bank.
Several billion dollars were invested in these products during these years. On the maturity of most of these products, the investors were disappointed with the meagre returns — usually less than 2 percent for 5 years, or 0.4 percent per year. This was even lower than the yield on fixed deposits.

Not a bad read on the ills of a structured products sold by banks. Only buy if you really really know what you are doing.

Sunday, September 13, 2015

Implication of PAP Landslide for Your Investment.

After the landslide victory by the incumbent, how do we position our investment?

The resounding mandate given by the people means the government can proceed with its current goal of managing the Singapore with ECONOMIC GROWTH as its priority.

The government will continue with its way of increasing GDP thru' increase labour  participation.

Some things that will happen :-
1) 6.9mil population is a GO-Ahead. I would think 10 mil population is the stretch goal the government is aiming for within the next decade.
2) Foreign labour quotas will once again be relaxed to cope and free market mechanism will be at work. Your wages will have to be competitive vis-a-vis the foreigners.
3) Infrastructure spending will be full-steam ahead to cope with the increase in population.

Implication for investment :-
1) Properties will be a good long-term investment once again. Your $1mil property (at 6 mil population) will become $2mil property (at 10 mil population) once population stretch goal is achieved. So, buy properties once cooling measures are relaxed. Your rental will be supported by the increase in tenants (since most foreigners are working here and will not be buying). The buyers will probably be your global investors who will once again be convinced Singapore is a pro-investment country managed by a competent team of leaders well supported by its the citizens.

2) Shares in general (I will try to focus on the GLCs and banks and telcos and property/reits companies) will be a good buy for the long term as they will be able to take advantage of the increased in labour at a cheap price while having an increased consumption demand from the increase population. Your companies bottom line will be improving yearly till 10mil population stretch goal is achieved.

With this win, I have 100% confidence in the above 2 investment classes in Singapore. I will stay invested.