2007: Shoppers’ Paradise No More
Retailers are making more money this year.
Those interviewed by the Business Times say that sales have climbed by between 5% and 20% during this year’s festive season.
They attribute this to an improving job market, higher bonuses and record tourist arrivals.
People are also spending more on big-ticket items like jewellery.
So things are going swell for them right now.
And judging from how my girl friends are tearing through the shopping malls post-Christmas, I’d say going to stay like this all the way till the Chinese New Year.
But with the increase in Goods and Services Tax (GST) looming ahead, things are certainly going to change.
The proposed 2% hike will impact on how consumers spend, especially when major wage increases will not be rising in tandem with this.
If we don’t leisure-shop that much, it would also mean we wouldn’t eat and drink out that much, so good luck to the restaurants and eateries on that front.
Singaporeans aside, tourists from neighbouring countries would also find it less attractive to shop here.
They could easily fly to somewhere like Hong Kong for their next shopping holiday.
After all, Hong Kong has no GST, has recently dropped a plan for a similar tax, and is marketing itself as a shopping destination.
According to the BT, FJ Benjamin CEO Nash Benjamin said “and a 2% hike will, I feel, temper the business”.
Considering how affordable budget carriers are making travel to places like Hong Kong to be, even Singaporeans wouldn’t have any qualms taking short weekend trips there.
So retailers and eateries had better enjoy it while it lasts.
Because once the hike steps in, Orchard Road may look a quieter stretch.
Serene Lim
Those interviewed by the Business Times say that sales have climbed by between 5% and 20% during this year’s festive season.
They attribute this to an improving job market, higher bonuses and record tourist arrivals.
People are also spending more on big-ticket items like jewellery.
So things are going swell for them right now.
And judging from how my girl friends are tearing through the shopping malls post-Christmas, I’d say going to stay like this all the way till the Chinese New Year.
But with the increase in Goods and Services Tax (GST) looming ahead, things are certainly going to change.
The proposed 2% hike will impact on how consumers spend, especially when major wage increases will not be rising in tandem with this.
If we don’t leisure-shop that much, it would also mean we wouldn’t eat and drink out that much, so good luck to the restaurants and eateries on that front.
Singaporeans aside, tourists from neighbouring countries would also find it less attractive to shop here.
They could easily fly to somewhere like Hong Kong for their next shopping holiday.
After all, Hong Kong has no GST, has recently dropped a plan for a similar tax, and is marketing itself as a shopping destination.
According to the BT, FJ Benjamin CEO Nash Benjamin said “and a 2% hike will, I feel, temper the business”.
Considering how affordable budget carriers are making travel to places like Hong Kong to be, even Singaporeans wouldn’t have any qualms taking short weekend trips there.
So retailers and eateries had better enjoy it while it lasts.
Because once the hike steps in, Orchard Road may look a quieter stretch.
Serene Lim
The newspapers are full of fear
What this means for investors
Common wisdom dictates that the market is pulled up and down by greed and fear. When the market is having a run, traders and investors jump on board, greedy to cash in on the bull market. Similarly, when the market is turning down, they sell out in fear of losing their money. But what drives fear and greed into people's hearts and minds in the first place? The answer, in part, has to be predictions in the media about the economic outlook. And in that sense, I contend that all the forecasts you'll read in investment magazines, on websites and so on are a self-fulfilling prophecy. The reason we will have an economic slowdown next year is twofold: first, people who are directly affected by higher interest rates, higher oil prices, drought, the slowing US housing market, and the multitude of other factors that will reduce their spending on goods and services. Second, people who are not affected directly by these events, but read about them in the newspapers and start to worry.
Now, I'm certainly not suggesting that the economic issues above are trivial or imaginary. On the contrary, there seems to be a weight of evidence that suggests a number of factors will conspire to make people spend less. Further, it's healthy for there to be an ebb and flow in consumer spending and business investment. Not a boom-and-bust cycle, but a business cycle. It's these that keep us invigorated and agile when tough times do strike.
What I'm talking about is simply the fact that there will be people who will read in the newspapers that a slowdown is imminent, and even though they are not directly affected by the various factors I have mentioned, they will curb their spending out of fear that they will be affected. Ah, there's the operative word. And once this fear of a decline impacts their spending, the impact will result quite naturally.
This is certainly not a new theory, nor is it my theory, nor is it foolproof. Afterall, there is no practical way to test how much people would have spent if they had not read the newspapers predicting doom. But it's worth checking our own behaviour to see if we are changing our spending patterns, similarly to whether we are letting the terrorist threat affect our daily lives. Afterall, that is also about perceived fears, even though the chances of you being caught in a terror attack are probably just as high as you being impacted directly by the slowdown in the US housing market.
For contrarian investors, who are guided by fundamentals over a five year period and don't care much for the swings over a few days, weeks or even months, these times of fear provide real opportunity. There is no greater word of joy than "oversold". For technical analysts, there is no luckier number than 30, because when the Relative Strength Indicator dips below this number on any given stock it is one step closer to becoming interesting. So many good companies are trading at book and earnings multiples that are firmly out of reach of value investors. For us, a slowdown - perceived or real - would mean that stocks are 'on special' again.
In essence, Warren Buffet had it right when he said: 'when everyone's buying, I'm scared. When everyone's scared, I'm buying'.
'Go placidly amid the noise and haste…'
Mark Laudi
Now, I'm certainly not suggesting that the economic issues above are trivial or imaginary. On the contrary, there seems to be a weight of evidence that suggests a number of factors will conspire to make people spend less. Further, it's healthy for there to be an ebb and flow in consumer spending and business investment. Not a boom-and-bust cycle, but a business cycle. It's these that keep us invigorated and agile when tough times do strike.
What I'm talking about is simply the fact that there will be people who will read in the newspapers that a slowdown is imminent, and even though they are not directly affected by the various factors I have mentioned, they will curb their spending out of fear that they will be affected. Ah, there's the operative word. And once this fear of a decline impacts their spending, the impact will result quite naturally.
This is certainly not a new theory, nor is it my theory, nor is it foolproof. Afterall, there is no practical way to test how much people would have spent if they had not read the newspapers predicting doom. But it's worth checking our own behaviour to see if we are changing our spending patterns, similarly to whether we are letting the terrorist threat affect our daily lives. Afterall, that is also about perceived fears, even though the chances of you being caught in a terror attack are probably just as high as you being impacted directly by the slowdown in the US housing market.
For contrarian investors, who are guided by fundamentals over a five year period and don't care much for the swings over a few days, weeks or even months, these times of fear provide real opportunity. There is no greater word of joy than "oversold". For technical analysts, there is no luckier number than 30, because when the Relative Strength Indicator dips below this number on any given stock it is one step closer to becoming interesting. So many good companies are trading at book and earnings multiples that are firmly out of reach of value investors. For us, a slowdown - perceived or real - would mean that stocks are 'on special' again.
In essence, Warren Buffet had it right when he said: 'when everyone's buying, I'm scared. When everyone's scared, I'm buying'.
'Go placidly amid the noise and haste…'
Mark Laudi
StarHub scores goal with EPL rights
Having SingTel and StarHub battle it out would look like a Manchester United-Arsenal match.
This analogy couldn't be more apt when it comes to the bid for the Singapore rights to the English Premier League for three years.
The three bidders involved this time were SingTel, StarHub and ESPN Star Sports.
StarHub won the bid, which was estimated to be around S$125-200 mln.
But according to the Business Times today, it is said to have paid about S$250 mln for the EPL rights.
Is it worth it?
Given how it would be able to broadcast as many as 380 EPL matches over its cable TV, mobile and online platforms, I'd say yes.
Sports (especially soccer) is a big part of our local consumer lifestyle.
People would be more likely to head home for an EPL match than the season finale of Lost.
And that's precisely why buying telecast rights to sports programmes is getting increasingly high.
Of course, this will also mean we would have to foot a higher monthly cable fee if we want to enjoy our dose of sports.
The Business Times said analysts predicted that StarHub might raise its monthly subscription fee for its sports group from S$15 to S$20, but they wouldn't be surprised if it went up even higher.
Bad for our pockets, but very good for StarHub.
SingTel will definitely be trying to fight back with its IPTV launch.
But if StarHub wants to, it can bundle its newly-acquired cash cow with its broadband and other services to go head-on-head with the reds.
So I think StarHub's S$250 mln purchase is justified.
And judging from the screams and jeers I hear around my HDB block everytime a team scores a goal during an EPL match, it's sure going to be fun watching the players score against each other.
Serene Lim
This analogy couldn't be more apt when it comes to the bid for the Singapore rights to the English Premier League for three years.
The three bidders involved this time were SingTel, StarHub and ESPN Star Sports.
StarHub won the bid, which was estimated to be around S$125-200 mln.
But according to the Business Times today, it is said to have paid about S$250 mln for the EPL rights.
Is it worth it?
Given how it would be able to broadcast as many as 380 EPL matches over its cable TV, mobile and online platforms, I'd say yes.
Sports (especially soccer) is a big part of our local consumer lifestyle.
People would be more likely to head home for an EPL match than the season finale of Lost.
And that's precisely why buying telecast rights to sports programmes is getting increasingly high.
Of course, this will also mean we would have to foot a higher monthly cable fee if we want to enjoy our dose of sports.
The Business Times said analysts predicted that StarHub might raise its monthly subscription fee for its sports group from S$15 to S$20, but they wouldn't be surprised if it went up even higher.
Bad for our pockets, but very good for StarHub.
SingTel will definitely be trying to fight back with its IPTV launch.
But if StarHub wants to, it can bundle its newly-acquired cash cow with its broadband and other services to go head-on-head with the reds.
So I think StarHub's S$250 mln purchase is justified.
And judging from the screams and jeers I hear around my HDB block everytime a team scores a goal during an EPL match, it's sure going to be fun watching the players score against each other.
Serene Lim
Sling-shooting the STI
Skeptics like me were expecting the market to fall sometime soon, but not to yesterday's extent.
The downturn on the Singapore market last evening was unexpected and, for lack of a better word, scary.
It followed the Thai stock market crash after the Thai central bank unveiled measures to curb speculative trading on the Thai baht.
The scene was reminiscent of how the 1997 Asian Financial Crisis started – right after the devaluation of the baht.
According to Bloomberg news, Thai Finance Minister Pridiyathorn Devakula today said the government would abandon the new requirements for banks to lock up 30% of new foreign currency deposits for a year, but that the rules would stay put on other investments including bonds and property.
It's just a week and a half to the new year.
Seriously, this is too much action for the holiday season and mood.
Though investors could probably take comfort in how the market would have gained enough momentum from yesterday's fall to propel itself to new heights in the remaining sessions on the Singapore market.
It's like a sling shot, when you stretch the bullet (or steel ball) all the way back, let go, and propel it to oblivion.
Looks like there's hope for the STI to shoot past 3000 after all.
Serene Lim
The downturn on the Singapore market last evening was unexpected and, for lack of a better word, scary.
It followed the Thai stock market crash after the Thai central bank unveiled measures to curb speculative trading on the Thai baht.
The scene was reminiscent of how the 1997 Asian Financial Crisis started – right after the devaluation of the baht.
According to Bloomberg news, Thai Finance Minister Pridiyathorn Devakula today said the government would abandon the new requirements for banks to lock up 30% of new foreign currency deposits for a year, but that the rules would stay put on other investments including bonds and property.
It's just a week and a half to the new year.
Seriously, this is too much action for the holiday season and mood.
Though investors could probably take comfort in how the market would have gained enough momentum from yesterday's fall to propel itself to new heights in the remaining sessions on the Singapore market.
It's like a sling shot, when you stretch the bullet (or steel ball) all the way back, let go, and propel it to oblivion.
Looks like there's hope for the STI to shoot past 3000 after all.
Serene Lim
Beware the Christmas euphoria
Looks like yet another week of euphoria for us on the Singapore bourse.
Besides feeling fine and dandy (in spite of the rain) in the days leading up to Christmas, it's just been reported that Singapore non-oil domestic exports rose 8.1% from a year earlier.
Salaries are increasing, but so is turnover.
Almost half of 500 the local companies surveyed by Mercer Human Resources Consulting said they upped their headcount in Q3.
Considering how gloomy our physical environment has been, the market seems to have a lot to cheer about.
But I'm skeptical (or pessimistic, however you choose to see it).
Every evening I find myself pulling my hair out over why the market isn't crashing.
It's the end of the year, people should be going on holiday, the stock market should be quiet as hell.
But no.
Look at the volumes, the run-up on the Straits Times Index and the relatively healthy amount of news we're getting from the listed companies.
People sure are working hard this holiday season.
I'm no financial analyst but man, I'd still stay clear.
How much further can the market run upwards before it comes crashing down?
I think some very rich people are just caught up in the euphoria of a bull run at the end of the year and not thinking straight.
Too much late-night shopping, perhaps.
Serene Lim
Besides feeling fine and dandy (in spite of the rain) in the days leading up to Christmas, it's just been reported that Singapore non-oil domestic exports rose 8.1% from a year earlier.
Salaries are increasing, but so is turnover.
Almost half of 500 the local companies surveyed by Mercer Human Resources Consulting said they upped their headcount in Q3.
Considering how gloomy our physical environment has been, the market seems to have a lot to cheer about.
But I'm skeptical (or pessimistic, however you choose to see it).
Every evening I find myself pulling my hair out over why the market isn't crashing.
It's the end of the year, people should be going on holiday, the stock market should be quiet as hell.
But no.
Look at the volumes, the run-up on the Straits Times Index and the relatively healthy amount of news we're getting from the listed companies.
People sure are working hard this holiday season.
I'm no financial analyst but man, I'd still stay clear.
How much further can the market run upwards before it comes crashing down?
I think some very rich people are just caught up in the euphoria of a bull run at the end of the year and not thinking straight.
Too much late-night shopping, perhaps.
Serene Lim
There's hope for the future of the SGX
In recent days I've been hearing a number of people express pessimism about the Singapore stock market. Their downbeat view has not so much to do with the level of the Straits Times Index or the rise and fall of share prices, but simply the lack of a critical mass of retail investors. Trading commissions have stabilised around 0.275% or S$25 per trade. Adding value-added services are the only way to grow revenue (check out the feature in the upcoming edition of Pulses).
This argument is certainly not without foundation. In our country of 4.5 million people only 100,000 are active traders, another 500,000 are investors with a handful of stocks in their portfolios that they rarely touch and another 600,000 people have depository accounts that are empty (the account holders probably don't even know they have an account. It would have been opened for them when SingTel listed 14 years ago. They sold the SingTel shares and left the CDP account standing). The stockmarket is seen by many as still too risky, and requiring too much time, expertise and money to be attractive. Consequently, it is people with a lot of time and savings on their hands who are most active: retirees and housewives in their 40s and over.
The Singapore Exchange is trying to encourage greater participation, by treating traders and investors as their own customers, rather than customers of brokers. They have launched a call centre and recently invited the top traders and investors aged 21-35 to the Ministry of Sound for what turned out to be a great night out (disclaimer: I was the emcee).
However, the SGX and others can take heart in the number of young people who are interested in becoming active in the stockmarket, as traders or investors. This morning, the three varsity investment clubs under the I-cube umbrella launched their own online stock market game (I was again the emcee). The I-Cube OCBC Securities Online Stock Challenge 2006 runs for one month and offers cash prizes. Already 2,500 students from the universities, as well as polytechnics and junior colleges signed up to take part. And here's the most interesting part: they are questioning the usefulness of mutual funds.
Mutual funds or unit trusts have been very successful in Singapore. Time-poor people have been happy in the past to put their money into the hands of a fund manager, after paying 5% in upfront sales fees and 1.5% or so in annual management fees. The major banks have acted as distributors, collecting a substantial part of the sales fee. The banks have the retail exposure and the client base to push these products on to. But as one of the guests at the event this morning pointed out to me in conversation, the fees have been under pressure as more people get smart. They question the value proposition of throwing money at a unit trust for such a hefty sales fee when the returns are not necessarily all that much better than the benchmark index.
Young people are increasingly saying: I want to be my own fund manager. I want to do the research myself. I want to be responsible for my decisions. They are willing to risk their own money. Afterall, losing your own money, although bad, is not as bad as someone else losing your money.
Not all these young people are going to stick with stocks. Some will invest in unit trusts for diversification, or simply because they run out of time, patience, or whatever else. But to my mind, saying the retail market in Singapore cannot support the local industry ignores some of these important trends.
Mark Laudi
This argument is certainly not without foundation. In our country of 4.5 million people only 100,000 are active traders, another 500,000 are investors with a handful of stocks in their portfolios that they rarely touch and another 600,000 people have depository accounts that are empty (the account holders probably don't even know they have an account. It would have been opened for them when SingTel listed 14 years ago. They sold the SingTel shares and left the CDP account standing). The stockmarket is seen by many as still too risky, and requiring too much time, expertise and money to be attractive. Consequently, it is people with a lot of time and savings on their hands who are most active: retirees and housewives in their 40s and over.
The Singapore Exchange is trying to encourage greater participation, by treating traders and investors as their own customers, rather than customers of brokers. They have launched a call centre and recently invited the top traders and investors aged 21-35 to the Ministry of Sound for what turned out to be a great night out (disclaimer: I was the emcee).
However, the SGX and others can take heart in the number of young people who are interested in becoming active in the stockmarket, as traders or investors. This morning, the three varsity investment clubs under the I-cube umbrella launched their own online stock market game (I was again the emcee). The I-Cube OCBC Securities Online Stock Challenge 2006 runs for one month and offers cash prizes. Already 2,500 students from the universities, as well as polytechnics and junior colleges signed up to take part. And here's the most interesting part: they are questioning the usefulness of mutual funds.
Mutual funds or unit trusts have been very successful in Singapore. Time-poor people have been happy in the past to put their money into the hands of a fund manager, after paying 5% in upfront sales fees and 1.5% or so in annual management fees. The major banks have acted as distributors, collecting a substantial part of the sales fee. The banks have the retail exposure and the client base to push these products on to. But as one of the guests at the event this morning pointed out to me in conversation, the fees have been under pressure as more people get smart. They question the value proposition of throwing money at a unit trust for such a hefty sales fee when the returns are not necessarily all that much better than the benchmark index.
Young people are increasingly saying: I want to be my own fund manager. I want to do the research myself. I want to be responsible for my decisions. They are willing to risk their own money. Afterall, losing your own money, although bad, is not as bad as someone else losing your money.
Not all these young people are going to stick with stocks. Some will invest in unit trusts for diversification, or simply because they run out of time, patience, or whatever else. But to my mind, saying the retail market in Singapore cannot support the local industry ignores some of these important trends.
Mark Laudi
Genting wins Sentosa bid:
We all win
At the risk of sounding like a press release, I am extatic at the Genting consortium winning the bid to build the Sentosa integrated resort and casino. Genting is not the only winner, after its US$3.1 bln proposal was accepted by the government on Friday. We all win: shareholders, the government, and the rest of us in Singapore.
Here's why:
Shareholders win, and not just shareholders in Genting International, and its consortium partners Star Cruises and Universal Studios. Genting shareholders saw their stocks rise 24.1% or 10 cents to 51.5 cents on the SGX today. StarCruises shares doubled to 10 US cents. And CapitaLand, which teamed up with one of the losing bidders, Kerzner? It fell just 1.6% or 10 cents to S$6. As Roger Tan from SIAS Research commented in the Business Times this morning, they are going to be big winners from the extra customers its property developments in Singapore are going to get. To use the analogy of the gold rush, CapitaLand lost the bid for the big nugget, but it's still there selling pick axes and shovels.
The government wins, because it proved all those early predictions wrong that Government-Linked Companies would have the inside running. None of the GLCs that teamed up with international players were part of a winning bid. Las Vegas Sands, which won the bid for the Marina Bay casino some months ago, went alone. Genting simply had the best proposal, in my personal opinion. Getting Universal Studios on board, and getting StarCruises to commit to boosting the cruise line business, were the trump cards (plus they didn't give their proposal the dumb and extremely politically incorrect name Harry's Island). I would not have expected the government to do anything but base their decision on the merits of the proposals at hand.
But deeper, politically, handing the proposal to a Malaysian company was brilliant. It should silence all those critics on the other side of the Causeway who say Singapore companies have free reign in Malaysia, while Malaysian companies barely get a look-in in Singapore. Further, it ties the two countries closer together. And that's where we all win.
Here's why:
Shareholders win, and not just shareholders in Genting International, and its consortium partners Star Cruises and Universal Studios. Genting shareholders saw their stocks rise 24.1% or 10 cents to 51.5 cents on the SGX today. StarCruises shares doubled to 10 US cents. And CapitaLand, which teamed up with one of the losing bidders, Kerzner? It fell just 1.6% or 10 cents to S$6. As Roger Tan from SIAS Research commented in the Business Times this morning, they are going to be big winners from the extra customers its property developments in Singapore are going to get. To use the analogy of the gold rush, CapitaLand lost the bid for the big nugget, but it's still there selling pick axes and shovels.
The government wins, because it proved all those early predictions wrong that Government-Linked Companies would have the inside running. None of the GLCs that teamed up with international players were part of a winning bid. Las Vegas Sands, which won the bid for the Marina Bay casino some months ago, went alone. Genting simply had the best proposal, in my personal opinion. Getting Universal Studios on board, and getting StarCruises to commit to boosting the cruise line business, were the trump cards (plus they didn't give their proposal the dumb and extremely politically incorrect name Harry's Island). I would not have expected the government to do anything but base their decision on the merits of the proposals at hand.
But deeper, politically, handing the proposal to a Malaysian company was brilliant. It should silence all those critics on the other side of the Causeway who say Singapore companies have free reign in Malaysia, while Malaysian companies barely get a look-in in Singapore. Further, it ties the two countries closer together. And that's where we all win.
S$100 plays the stock market
People misunderstand investment, especially when it comes to the stock market.
Though I have to admit that they are a lot better informed now than they were two years back.
My generation (I'm an '80s baby) used to think you needed to be rich to be able to invest.
In other words, we thought one needed at least S$10,000 to effectively invest in the market.
That is true if you are looking at lots of big caps like DBS, which costs about S$20 per share.
You'd need at least S$20,000 buy just one lot.
But the sheer volume of smaller companies listed locally now means small time retail investors have a lot more choice in those they want to invest in.
Their picks may vary according to the companies' fundamentals, business or even how much the stock price is.
Thing is: You really only need to set aside about S$100 to buy one lot of shares.
And if you play your cards right, your returns might be substantial, especially in the wake of the current capital raising boom.
Of course, you shouldn't expect such counters to pay out high dividends, or even dividends at all because they are probably small and growth companies.
For every big company with a certain business you are interested in, there is probably a small one in the same business, just like your Carrefour and your neighbourhood Econ Minimart.
Take Time Watch Investments (formerly known as Wee Poh Holdings).
I am not giving investment advice, simply using this counter to explain the above analogy.
Time Watch is was last done at S$0.005, so you can imagine how many lots you can buy with S$100.
Sincere Watch was last done at S$0.945, so you could scrape by with one lot for S$1000.
Of course, affordability isn't the only thing you should consider when investing.
Depending on how risk-averse and how much time you are able to spend monitoring market movements, you can pick a nice mix of slightly bigger companies and smaller caps to make up your portfolio.
On that note though, please only invest with money you can spare.
Don't dump your entire life's savings into the stock market because it is, after all, still a gamble.
So make that your new year's resolution, or at least, spring clean your portfolio if you've got way too many counters to keep track of.
Remember, if you can't afford a watch from Sincere, you wouldn't do too badly with a Casio either.
Serene Lim
Though I have to admit that they are a lot better informed now than they were two years back.
My generation (I'm an '80s baby) used to think you needed to be rich to be able to invest.
In other words, we thought one needed at least S$10,000 to effectively invest in the market.
That is true if you are looking at lots of big caps like DBS, which costs about S$20 per share.
You'd need at least S$20,000 buy just one lot.
But the sheer volume of smaller companies listed locally now means small time retail investors have a lot more choice in those they want to invest in.
Their picks may vary according to the companies' fundamentals, business or even how much the stock price is.
Thing is: You really only need to set aside about S$100 to buy one lot of shares.
And if you play your cards right, your returns might be substantial, especially in the wake of the current capital raising boom.
Of course, you shouldn't expect such counters to pay out high dividends, or even dividends at all because they are probably small and growth companies.
For every big company with a certain business you are interested in, there is probably a small one in the same business, just like your Carrefour and your neighbourhood Econ Minimart.
Take Time Watch Investments (formerly known as Wee Poh Holdings).
I am not giving investment advice, simply using this counter to explain the above analogy.
Time Watch is was last done at S$0.005, so you can imagine how many lots you can buy with S$100.
Sincere Watch was last done at S$0.945, so you could scrape by with one lot for S$1000.
Of course, affordability isn't the only thing you should consider when investing.
Depending on how risk-averse and how much time you are able to spend monitoring market movements, you can pick a nice mix of slightly bigger companies and smaller caps to make up your portfolio.
On that note though, please only invest with money you can spare.
Don't dump your entire life's savings into the stock market because it is, after all, still a gamble.
So make that your new year's resolution, or at least, spring clean your portfolio if you've got way too many counters to keep track of.
Remember, if you can't afford a watch from Sincere, you wouldn't do too badly with a Casio either.
Serene Lim
The Straits Times Index revamp:
It's about time.
I must admit I couldn't contain myself when I saw the announcement that the Singapore Exchange, Singapore Press Holdings and FTSE were going to revamp the Straits Times Index, and create a suite of additional indices. It's about time. Our Straits Times Index replaced the Straits Times Industrials Index in 1998. That might fill you with pride. But international investors look to benchmarks and comparing "apples with apples". For them, the Straits Times Index fills them with horror. Consider this: a basket of 49 stocks in which the three top banks and SingTel hold about as much sway over the index level as the remaining 45 counters. The Straits Times Index has been useful, but in an increasingly global investment market Singapore can ill-afford to stick to this archaic index. Having witnessed a similar sale of an exchanges indexing business in Australia, I can only say congratulations.
Standard & Poor's bought the Australian Stock Exchange's indexing business seven years ago. First, it grouped stocks according to Global Industry Classification Standards (GICS), so international investors had some idea what they were getting into when investing in a particular stock. Second, it replaced many of the old ASX indices with ones branded S&P/ASX, which took into account the percentage of issued shares that were free-floating and therefore tradeable, while discounting shares held by cornerstone shareholders or government (freefloat considerations are already part of the STI's makeup. How differently FTSE's calculation of freefloat will be from SPH's is up for debate).
Third, it created a new benchmark in the S&P/ASX-200. It lists more than 90% of stocks by market capitalisation as its constituents. The All Ordinaries Index was retained but revamped to include the stocks in the ASX-200 and the next 300 stocks by market capitalisation. Some sections of Australia's commercial media still refer to the All Ordinaries Index, but frankly that's more tradition and a reflection of the sophistication of their audiences than necessity.
Reclassification and the creation of additional indices will put the SGX's indices on par with mature markets. Plus it will create the opportunity to create new and exciting indices, such as a "China Index" (currently, SGX CEO Hsieh Fu Hua's former colleagues at PrimePartners offer this index) and others, allowing new products to be created around them.
There will certainly be the usual crowd of critics and habitual whiners about how disruptive the index changes will be. It'll take time to get to the new set of FTSE/SGX indices, but it'll be worth it.
Mark Laudi
Standard & Poor's bought the Australian Stock Exchange's indexing business seven years ago. First, it grouped stocks according to Global Industry Classification Standards (GICS), so international investors had some idea what they were getting into when investing in a particular stock. Second, it replaced many of the old ASX indices with ones branded S&P/ASX, which took into account the percentage of issued shares that were free-floating and therefore tradeable, while discounting shares held by cornerstone shareholders or government (freefloat considerations are already part of the STI's makeup. How differently FTSE's calculation of freefloat will be from SPH's is up for debate).
Third, it created a new benchmark in the S&P/ASX-200. It lists more than 90% of stocks by market capitalisation as its constituents. The All Ordinaries Index was retained but revamped to include the stocks in the ASX-200 and the next 300 stocks by market capitalisation. Some sections of Australia's commercial media still refer to the All Ordinaries Index, but frankly that's more tradition and a reflection of the sophistication of their audiences than necessity.
Reclassification and the creation of additional indices will put the SGX's indices on par with mature markets. Plus it will create the opportunity to create new and exciting indices, such as a "China Index" (currently, SGX CEO Hsieh Fu Hua's former colleagues at PrimePartners offer this index) and others, allowing new products to be created around them.
There will certainly be the usual crowd of critics and habitual whiners about how disruptive the index changes will be. It'll take time to get to the new set of FTSE/SGX indices, but it'll be worth it.
Mark Laudi
Biomedical stocks take centrestage
Singapore was never quite known for its medical prowess, save for the separation of the Nepalese twins and our famed plastic surgeon, Woffles Wu.
And when it came to initial public offerings, people would bet on sure things like manufacturing.
Even tech and water were quite volatile before investors started gaining keener interest in them.
The same goes for biomedical stocks.
Thanks to the relative pioneers in locally-listed biomed stocks like AsiaPharm and Pharmesis, investors have become more open-minded to this genre of listings.
So this is the perfect time for companies like International SOS (ISOS) and Rockeby Biomed to list on the Singapore market.
If they had attempted IPOs 5 years back, they may just pull a Chemoil because no one knew what they did or the potential they held.
The Business Times said in an article today that ISOS is considering a listing in Singapore, in addition to one in London and another on the Nasdaq in New York.
Rockeby Biomed CEO Dr Tan Sze Wee told me last Friday that his company is now considering a listing here because people are more in tuned with biomed counters.
This, in addition to how all his major shareholders are Singaporeans and they encouraged a local listing.
It's currently listed on the Australian Stock Exchange.
So while these companies haven't yet lodged their prospectuses with the Monetary Authority of Singapore, you may just want to pack aside some dough from your Christmas and Chinese New Year red packets for this genre of stocks.
Because it sure looks like an exciting new year for the biomedical industry in Singapore.
Serene Lim
And when it came to initial public offerings, people would bet on sure things like manufacturing.
Even tech and water were quite volatile before investors started gaining keener interest in them.
The same goes for biomedical stocks.
Thanks to the relative pioneers in locally-listed biomed stocks like AsiaPharm and Pharmesis, investors have become more open-minded to this genre of listings.
So this is the perfect time for companies like International SOS (ISOS) and Rockeby Biomed to list on the Singapore market.
If they had attempted IPOs 5 years back, they may just pull a Chemoil because no one knew what they did or the potential they held.
The Business Times said in an article today that ISOS is considering a listing in Singapore, in addition to one in London and another on the Nasdaq in New York.
Rockeby Biomed CEO Dr Tan Sze Wee told me last Friday that his company is now considering a listing here because people are more in tuned with biomed counters.
This, in addition to how all his major shareholders are Singaporeans and they encouraged a local listing.
It's currently listed on the Australian Stock Exchange.
So while these companies haven't yet lodged their prospectuses with the Monetary Authority of Singapore, you may just want to pack aside some dough from your Christmas and Chinese New Year red packets for this genre of stocks.
Because it sure looks like an exciting new year for the biomedical industry in Singapore.
Serene Lim
The Moon: It cannot dictate your investment decisions
When it comes to buying stocks, people have various formulae they swear by.
Some of their deduction practices even bother on being incredulous.
So when someone tells you he makes his money off the stock market by looking at the moon, you'd probably think he's kidding.
But according to a Straits Times article published yesterday, US academics who took a close look at this “lunar cycle” theory in relation to stocks found investors do get better returns at certain times of the lunar month.
They conducted two studies which found the differences in returns can be up to 10% a year, on average.
These studies were highlighted in a November article in the Harvard Business Review and reported by the New York Times.
Now surely there must be some substantiality to this.
One of the studies, conducted by the University of Michigan, said this effect is more likely to occur outside the US.
The other study, by the University of California, said this “appears strongest for small-cap stocks”.
This may be so because of the demographics of those who track small-caps.
Bigger investors in blue-chips tend to be immune to such.
The reports note investors get higher returns “during the 15 days of the lunar month closest to the new moon”.
“If it is true that you can grow your money just by following lunar cycles, everyone will be very rich,” CIMB-GK research head Song Seng Woon told the Straits Times.
Even if this lunar cycle thing works, it is a hard thing to study for the uninitiated.
Questions like these will come up:
1)Do we have to discount public holidays and the festive seasons to work out 15 days worth of “make money” trading sessions?
2)When it comes to investing/trading, would my mood really play a part? (Since the phases of the moon apparently affects our behaviour and mood.)
Yes, if it were really that easy, I'd be rolling in the cash right about now.
And, if the lunar cycle theory were true, you have between 13 Dec and 27 Dec this year to work on your portfolio.
In the new year, the “hot period” would be between 12 Jan and 26 Jan.
But do remember it's Christmas in between, and come late January, we'll be approaching the Chinese New Year.
Another tip stemming from lunar-cy:
One dealer noted the current year of the Fire Dog saw a revival in China plays and record highs by the Straits Times Index.
He expects the market to rally further and sectors like property, hotel and high-tech industries to come into play in the new year of the Fire Pig.
Now, just remember to consult your nearest licensed financial analyst before you make any investment decisions.
Serene Lim
ArchivesSome of their deduction practices even bother on being incredulous.
So when someone tells you he makes his money off the stock market by looking at the moon, you'd probably think he's kidding.
But according to a Straits Times article published yesterday, US academics who took a close look at this “lunar cycle” theory in relation to stocks found investors do get better returns at certain times of the lunar month.
They conducted two studies which found the differences in returns can be up to 10% a year, on average.
These studies were highlighted in a November article in the Harvard Business Review and reported by the New York Times.
Now surely there must be some substantiality to this.
One of the studies, conducted by the University of Michigan, said this effect is more likely to occur outside the US.
The other study, by the University of California, said this “appears strongest for small-cap stocks”.
This may be so because of the demographics of those who track small-caps.
Bigger investors in blue-chips tend to be immune to such.
The reports note investors get higher returns “during the 15 days of the lunar month closest to the new moon”.
“If it is true that you can grow your money just by following lunar cycles, everyone will be very rich,” CIMB-GK research head Song Seng Woon told the Straits Times.
Even if this lunar cycle thing works, it is a hard thing to study for the uninitiated.
Questions like these will come up:
1)Do we have to discount public holidays and the festive seasons to work out 15 days worth of “make money” trading sessions?
2)When it comes to investing/trading, would my mood really play a part? (Since the phases of the moon apparently affects our behaviour and mood.)
Yes, if it were really that easy, I'd be rolling in the cash right about now.
And, if the lunar cycle theory were true, you have between 13 Dec and 27 Dec this year to work on your portfolio.
In the new year, the “hot period” would be between 12 Jan and 26 Jan.
But do remember it's Christmas in between, and come late January, we'll be approaching the Chinese New Year.
Another tip stemming from lunar-cy:
One dealer noted the current year of the Fire Dog saw a revival in China plays and record highs by the Straits Times Index.
He expects the market to rally further and sectors like property, hotel and high-tech industries to come into play in the new year of the Fire Pig.
Now, just remember to consult your nearest licensed financial analyst before you make any investment decisions.
Serene Lim
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