Sunday, January 24, 2010

Economic Updates

1) Singapore property

I am sure many people would have seen that the Singapore property market is building up rapidly again from recent newspaper reports, especially the private property market.

Just some statistics that I find interesting : Foreign home buyers from different countries have different price preference for property.
  • Westerners (UK,US and Australia) and Indonesians preferring houses in the $1.5 million to $5 million.
  • As for the rest of the people from the region, like Malaysia, China and India, its between $500,000 to$1 million.
  • Malaysian owns the most number of property in Singapore, followed by Indonesians. However if you were to compute the effective dollars invested, Indonesians beat the Malaysian hands down.
Below is the place where I got the statistics from.

2) People are ditching China for the US

Was reading an article from The Business Times on Friday. Apparently many people, about 60%, are now optimistic about the US economy as compared to the majority who had a pessimistic view when polled in Oct 2009. In addition, many people believe China is building a bubble.

China is said to be building up inventory at a rate which no country/region can follow. This means that even though they might be seen to be growing, eventually if no one else buys from them, they will be in deep trouble.

3) China is seeking ways to invest their Foreign reserves

China has about US$2.4 trillion of reserves and will be looking to grow it. In 2008, Beijing transferred US$200 billion to sovereign wealth fund China Investment Corp in or to seek higher returns.

So if they continue to move more money out of China to invest, I personally would think that it would definitely help the region, especially Hong Kong and Singapore, as we are major financial hubs in the region.

3) China curbing rampant bank lending by increasing its reserve ratio

This has cause the region's stock market to drop the last few trading sessions. However as you can see from the graph above (taken from a report from Phillip Capital), the China government has actually been doing much in curbing speculation. However as long as China is truly growing, the stock market will definitely rise strongly. Hence, if you still believe the China has room for more growth, these few days of weakness is a really a good time to buy in.

4) Below is a table of predicted economy GDP growth for the major countries. Note that all are expected to be positive. ( Courtesy of Citibank)

I just realized that all of my topics have China in them. China is really making much headlines with its growth. And I believe it is worthwhile keeping watch on it.

On a side note, do invest with cation this year. Many reports that I have been reading warns of a correction in the middle of this year, but eventually all is expected to be well by the end of the year. So do trade with care.

However in my opinion, if something major does go wrong again, we could be in for a major correction as I feel that the stock market is recovering a little tooooo fast. Remember, preservation for capital is crucial for long term growth!

Friday, January 22, 2010

Stop Loss Hit!

Personally I have hit all my trailing stop losses and have exited with quite a good profit.

Even though this time round, it seems like a healthy correction but my gut tells me that it will last longer than the mini corrections that we have seen in the past few months. ( It's just a gut feeling, so I will just be buying with greater caution)

However, these stocks are nearing or at their support lines. (Not very speculative stocks, so rather good for trading if your are low to medium risk takers) So I might actually be buying in soon for trading purpose, depending on the market conditions next week.
  • Jardine C&C
  • Keppel Land
  • Suntec REIT
  • Parkway REIT

Tuesday, January 12, 2010

SPDR Gold Shares

This share caught my eye recently after watching a certain Youtube video about how bad the USD is going to devalue in a few years time.

With the expected depreciation in the USD, many countries are switching to gold as their reserves (besides switching away from USD as their foreign reserves), hence with a limited supply of gold in the world, and increasing demand, price of gold will have to go up!)

This has the same theory as land prices in Singapore will eventually go up over the years. With a limited supply of land, and more people, land prices can only go upwards!

This SPDR Gold Shares is trade on the Singapore stock exchange, under the name GLD 10US$.

One stock is approximately 1/10 ounce of gold. This is because, at the start of this gold fund, it is exactly 1/10 ounce of gold per stock. However over the years, with the management fee of around 0.4% per year, they have to sell some gold to pay for it, so the total amount of gold gets lesser though the number of stock stays the same. Hence the value of stock drops slightly every year, around 0.4%.

Main Advantages:
  • It is more cost effective to most investors (due to the small amount that we buy) to buy these shares, instead of buying the actual gold, and finding storage and getting insurance
  • This stock is liquid, meaning that there is always a buyer on the stock market, so that you can dispose of it quickly
  • Because of the high price of the stock, around USD110 per stock, it is not trade in denominations of 1000, but rather in 10.
Disadvantages :
  • It is traded in USD. Hence when u see the stock listed on the market as '110' it means 110 USD and you are subjected to the currency conversion of the brokerage firms, unless you have a foreign exchange account. Good thing is that, I have checked, their rates are better than the banks.

Here is the link to the site : SPDR Gold Shares

Some thoughts of mine....

Since gold is denominated in USD.
  1. With the depreciation in USD, and the 'worth' of the gold staying the same, the numerical USD value of the gold will go up.
  2. However, even with the numerical USD going up, say you want to change it back to SGD, you will actually get back the same amount, due to a bad exchange rate.
  3. Aren't we back to square one?
But I would think the most important thing is that gold has a limited supply and an every increasing demand. Unless someone happens to be able to 'make' gold, gold being scarce commodity that is readily used in commercial and retail industry, will continue to have a strong demand, leading to an increase in price.

Thursday, January 7, 2010

Attended an Auction by GoIndustry Dovebid

Today is the first time I attended an auction of a textile company's assets. ( I happened to see a notice of this auction in yesterday's classified ads, in the 'Notice' section). I must say that, I felt really really young at the auction. The average age of the people must be at least 45 years old. Most of the people there looks like old uncles who are into the trading business, where they buy and sell stuff 2nd hand clothes.

This auction is done by an auctioneer, from GoIndustry DoveBid, on behalf of a textile company. I would think that the company has closed down, because they are selling everything, from all their clothes, accessories, to the computers, desks,whiteboard and such, and even their van.

Frankly, the goods that you can get here are really cheap. It starts off with a period of time for your to look at the goods and value it. The auction is rather informal, with one man standing on a stool with a mic and shouting out people's bid, and encouraging people to bid higher. (this is because they get a cut of 10% of the bid). I.e if a person bids $1000, he has to pay $1100 in the end, whereby $100 goes to the person auctioning on behalf of the company.

Things there are really cheap, For example a full size white board with rollers went for $10, and few hundred shirts together with cuff-links, bow ties, few hundred ties in a lot that went for like $2000. If I actually had a shop, I would definitely buy the stuff!

Also, people who are at the auction are goods specific. This means that the moment all the clothes are sold, you can see 'clothes' people starting to leave, leaving behind all the electronics stuff to people who are interested in electronics.

One interesting thing to note is that, you can actually 'advise' the auctioneer to bundle items. For example, you can advise the person to bundle together the table and chair and maybe all the furniture, instead of auctioning them separately, thus creating a better deal!

In all, this has been an eye opener for me, and for those of you out there who are looking for cheap 2nd stuff, this is really worth a visit. However, most of the things are sold in bulk, and hence it will put off many people. But I believe at the end of the auction, you can negotiate with the people who won bids on individual stuff that you might want to purchase. And most likely, this will still be cheaper than buying the stuff from a bazaar and cash converters.

An upcoming auction is by Knight Frank Pte Ltd, on behalf of the Singapore Police Force. It is stated to be selling various goods like confiscated and unclaimed items, jewelery, digital cameras motor vehicles etc. I believe the goods should be relevant enough for most of the public.

Details as follows:

Venue: Presidential Room, Hotel Royal (level 15) 36 Newton Road S 307962

Date and time: 13 Jan 2010, wed, starts at 10am

Viewing dates and time: 11 & 12 Jan 2010, mon/tue 10am-12noon and 2pm-4pm