Tuesday, August 13, 2019

Market Thoughts

Recently, there have been a lot of ups and downs in the market. The first thing that caught my eye was the falling yuan which broke the seven level against the US dollar, which signaled the current monetary policy in China. The casualties today were Mapletree NAC which dropped 4.48% and CapitaR China which dropped 1.99%. The drop in RMB also meant it dropped against SGD which means it will affect the two reits' profits.

Hong Kong also saw the escalation of protests in the airport where Cathay Pacific got the brunt in the falling HK market. It dropped about 7-8% these few days as flights were blocked.

But interestingly, US market has rebounded today due to simmering of US-China trade tensions and yields and stocks prices are soaring.

I am focusing on Bank of China at the moment which is 2.97 HKD and giving a 7% yield. At point of writing, SGDHKD is 5.67 which might go lower if USD is going to strengthen further this year (assuming if USDHKD peg remains intact).

Moreover, SIA seems to be an interesting point too since the HK airport protests will affect airlines (albeit not as much as Cathay),  but currently at 9.05 and today had a 52-week low of 8.95.

Probably HK market will rebound (briefly) due to the rebound in the US. But I believe in the short term the HK market is probably going to breach new lows as the protests do not seem to be subsiding.

Sunday, August 4, 2019

STI and HSI Red Amidst the Trade War

A short read today showed that the STI plunged 2% due to escalating tensions in the US-China trade war. This could be contributed to the tariffs which Trump promised on Friday, which includes a 10% tariffs on US$300 billion worth of goods. On the contrary, the Federal rate cut did not give the expected stimulus to the stock market, which might not be unexpected as based on current market conditions, a rate hike should have been more logical.

As I am very interested in the STI constituents, I decided to see which stocks were bearing the brunt today.

The first stock is SIA which is hovering near its 52-week low of 9.01. At this point of writing, its current price is 9.02.

The second stock (which I have mentioned before) is SATS which is hovering near its 52-week low of 4.55. At this point of writing, its current price is 4.74.

Other notable stocks include DBS which had a 3.2% drop today.

Another point of interest will be the HK market, where today, 5th of August, is notably the biggest strike in Hong Kong's history. I think it is a double whammy for HK as they have to deal with the twin reasons of the trade war and the ongoing protests.

I am currently looking at Bank of China, which has broken its previous 52-week low of 3.19 to 3.05, which makes it even more appealing to go in. (Let us bear in mind that BOC is actually based in China and is just a H-share) I will be looking at other HK banks but I will be probably avoiding those banks based in HK such as the BOC (HK) holdings and Hang Seng Bank etc.

Just a superficial thought.

Friday, July 19, 2019

SATS- Trap or Opportunity?

What caught my eye in the market was SATS, whose price took a great hit of 6% due to earnings dropping with a drop of 14.4% in net profit. However, the closing price of 5 on Friday was notably still higher than the 52-week low of 4.55. I previously wrote about SATS here a few months ago and many of the points I mentioned remain salient.

From my previous post:

'A superficial observation would be that SATS derives most of its income from airlines and the Singapore market. The airline industry has not been very rosy too, where higher oil prices have taken its toll in the industry. Airlines will then be forced to save up on costs, where SATS will continue to feel the pressure.'

'The largest risk here would be the trade war between US and China, which might blow up and affect SATS especially in its gateway services (air cargo services) where they will suffer from a decrease in trade volumes due to tariffs. Passengers travelling on business class might also be affected as less trade might mean less flow of passengers for business.'

Based on the UOB report here, main reasons for the drop in earnings include the grounding of Jet Airways, low volume of air cargo and the grounding of the Boeing 737 Max airplanes. I think the low volume of air cargo is an effect arising from the trade war but the first and third factors were pretty unexpected reasons in play.

EPS dropped from 5.7 cents to 4.9 cents but I think dividend payout should remain safe in the short term unless the three factors mentioned greatly exacerbate. At closing price of 5, dividend yield is 3.6%.

For me, the game plan is to enter below 52-week low of 4.55, perhaps at 4.5 levels for a 4% yield. If these factors snowball badly, a higher margin of safety is going in when the price hits 4. We will see if the trade war will still continue to persist or cease to exist.

Tuesday, July 16, 2019

Next US President- How will Financial Markets Fare?

The 2020 US election is coming and I am sure this is important as it will bring about effects to the financial markets.

As much as Trump is controversial, his policies have been beneficial to the US market with the tax cuts that were recently implemented, which brought an influx of corporate money into the markets. He might be lacking in other moral areas such as 'climate change being a hoax' and his womanizing but undoubtedly, his tax cut policies have benefited the stock market. The only risk he is bringing to the US markets is his constant threat of trade wars and his volatility of positions on certain pertinent issues.

Other popular politicians include Bernie Sanders, who is a 'socialist', and advocates for more socialist policies such as Medicare for All and minimum wage. He even proposes high taxes on Wall Street to cover the rising student debt. Morally, I will agree with his policies, but from a financial market perspective, if he is elected, I believe the market will spiral downward due to higher taxes imposed.

I am not too sure about the other candidates, but I believe Joe Biden will just be a mere continuation of the Obama days (which probably means less trade wars) which is good. I am not sure if Bernie will ensue trade wars with China though.

What do you all think?

Wednesday, July 10, 2019

Federal Rate Cuts Possibility

Had a good read today about the current situation. Indeed quite worrying to see the rate cuts persist when the current situation is about trade wars and other factors. 'If trade wars are what’s causing the uncertainty, the only solution is to resolve that uncertainty, not paper over it with cheap money. Neither the price of credit nor the access to credit is restraining the economy, so how does a rate cut help?'

But it looks like the rate cuts will persist due to Trump's pressure, which might further contribute to the increasing amount of debt in the market. This might not look well in the long term.

Another bet will be on gold which has already been trading above $1,400 since the announcement of the rate cuts. Other safe haven assets include Japanese yen and Swiss franc which might be good to hold due to their close to 0% rate policy. By their extension, that also means Japanese and Swiss equities. Lower rates also mean the interest rate spread is lower, which means these assets are more attractive.

This is my opinion now, would to love to hear other comments. :)

Wednesday, July 3, 2019

Treasury Yields Dropping- A Sign?

I was reading an article which mentions the drop in Treasury Yields towards 1.95%. In my opinion, I think this means an inclination towards safe haven assets. Reading this article too hints at a late bull market rally.

My portfolio now is inclined towards Singapore Saving Bonds, and I am thinking if I should up my stake there (however the rates aren't very appealing). Singapore REITs look expensive which might not be a best way to put my money. All my other ideas are pretty high now, therefore I am still holding onto my warchest. I think the closest thing I am interested in is actually Singapore banks and HK stocks at the moment.

Any ideas?

Thursday, June 27, 2019

G20 Today!

Quite meaningful to me, since I just came back from Osaka 2 weeks ago. This article really sums up how I feel about G20, probably another round of photos and talk but no action. Interestingly, the article is inclined towards holding gold and real estate, which may prove to be safe havens during a potential recession.

The debt in the market is so far quite worrying too which further supports the proposition of holding safe haven assets.

Personally, I am still waiting for a downturn which might happen sooner than we think. Singapore might not be spared too, where GDP growth will worsen this year. This can contribute to the downturn.

On a superficial glance, REITs now look very overpriced and I am steering clear of my previous picks of Suntec REIT and Mapletree NAC.

Still waiting while holding bonds!

Monday, June 24, 2019

Reading Financial News

Recently, I got hooked into reading financial news and I would love to hear about where y'all might read news (if it interests you).

I have been reading a few websites.

1) CNBC Finance

2) Marketwatch

3) Bloomberg

4) Reuters

5) Barrons

I am also thinking if I should get a paid subscription too, because for example Bloomberg limits 10 articles per month.

What's your take?

Tuesday, June 18, 2019

Economy, Trade-War

Some quick thoughts on the general economy!

Rate cuts seem to be pretty likely, supported by factors such as the trade war and pressure from Trump which could lead to a boosting of the economy. However, a slowdown in the global economy seems likely as I think stocks now are generally overvalued.

Had a look at the STI stock list too and it seems that most stocks now are hovering pretty high above their 52-week lows with exceptions which are highlighted below.

Generally, I will be looking to the market to drop further for Singapore as I think some stocks are really too expensive (double digit % difference from their lows) and I think there are more buying opportunities in Hong Kong which I mentioned in my previous post.

Trade safe everybody.

Tuesday, June 11, 2019

HK investing Thoughts

I have always thought about investing in Hong Kong shares as a form of diversification out of Singapore. Furthermore, this could increase my pool of opportunities to buy undervalued stocks since the population of choices is increased (perhaps by a lot of times) since HK market capitalization greatly exceeds that of SG.

Source: Pexels Free Stock Photos

Let me start with a disclaimer that I am not paid in any way for my post, these are purely my thoughts.

During my travels, I have been using the DBS Multicurrency Account (DBS MCA) and I realize that by creating a Hong Kong Dollar (HKD) wallet, I am able to convert SGD into HKD and buy stocks directly.

A quick check at DBS website tells me that the rate I am offered is 1 HKD for 0.1762 SGD, or 1 SGD = 5.675 HKD.
Source: DBS Exchange Rate Website

I then log on to my DBS ibanking (this is an example).
Source: My own DBS ibanking portal

Do note the deviation from the market rate and whether it is a comfortable deviation. For example:

Source: Yahoo Finance (SGDHKD)

Presuming I am investing SGD 10,000 which will equate into HKD 56,750.

So why am I talking about all of these? There is a HK stock which currently interests me, Bank of China. It is currently trading at 3.26 HKD but its NAV is 6.205 which suggests undervaluation. 52-week low is also at 3.19 which further supports this premise. Dividend payout is according to 6.2% and all statistics are from InvestingNote.

This is just a preliminary look for me and I think some of the risks here is firstly: the controversial extradition bill which caused a rally of 1 million people in the streets here. The loss of investor confidence in HK markets might be bearish for stocks and is something worth looking at. Secondly, if HKD depreciates against SGD, there will be a reduced profit. Since HKD is pegged to USD and there have been rumors of rate cuts, we might expect further depreciation of USD and similarly HKD.

These are my current thoughts now but always happy to hear new ideas about how you will invest in the HK market.

Friday, June 7, 2019

Thoughts about Prices

Back from Japan! Here is a snapshot of Yokoamicho Park in Tokyo.

In Japan, consumption is subjected to a 8% tax unless you are a tourist and you shop at duty free shops such as Uniqlo with a minimum of 5,000 yen. Therefore, when I dine, some restaurants show the before tax prices and some restaurants show the after tax prices.

After tax price:

Before tax price:

Would you prefer to see a all-in-one price or a price without taxes? Please share!

Market Thoughts

Recently, there have been a lot of ups and downs in the market. The first thing that caught my eye was the falling yuan which broke the seve...