Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Saturday, 31 December 2016

Top World News in 2016

As we near the end of the year, it is the time we recap the major news that occurred during this period. It is probably not a very good year. We started with Zika and ended with President Barrack Obama leaving the White House (bad to worse). But of course, there are some moments in 2016 that are worth rejoicing about - or at least there is ONE!

February: Zika Virus Epidemic
The World Health Organisation (WHO) declared Zika Virus outbreak as a Public Health Emergency of International Concern after it started spreading like wildfire in Latin America, America, Europe and parts of Asia. It was a huge concern because pregnant mothers infected with the virus would give birth to deformed babies. It has resulted in Governments in several countries advising its citizens to delay their intention to have a child and also advise their people not to travel to affected countries.
Although the WHO declared the end of the Zika outbreak in November 2016, many countries are still closely monitoring its citizens' health condition to ensure that Zika does not result in another epidemic again.



March: Artificial Intelligence beats human in Chess
An Artificial Intelligence (AI) developed by Google defeated the best chess player in the world. While we are often defeated by the AI in mobile chess Apps, this one is different in several ways.

1) The chess game Go is not just another chess game. It is one of the most complicated chess game in the world, requiring intuitive, strategic and creative thinking. Most chess games are "pre-programmed" certain steps to ensure victory. But for Go, it is impossible to "pre-program" because the number of possibilities is almost endless (2.08 x 10^170 to be exact).
2) Instead of "pre-programming" all possible moves in Go into the computer, the AI is instead fed with a huge amount of gameplay to "learn" how to play Go. The AI was also made to play against itself as part of its "learning process".

We are now another step closer towards a future where robots and AI perform tasks while humans enjoy the fruits of it. Of course, the opposite is also true: a future where humans are put out of jobs by robots and AI

FYI: the creators of this AI has no idea how the AI evaluate its every move. Isn't is just magical (or scary?)

April: Panama Papers Revealed
Panama Papers, or documents of confidential financial information that were leaked to the world in April. It contains the personal financial information of rich, famous and influential people around the world, from government officials like then President of UAE Khalifa bin Zayed Al Nahyan and relatives of government officials, to sports stars like Lionel Messi and billionaires like Seydou Kane. The documents were first made known to the Journalism world in 2015, and it underwent a year of analysis before being made public in 2016.

The Panama Papers reveals the major loophole in our current tax system, allowing much rich and/or influential people to hide their money away from tax authorities (evade taxes). Although this is not illegal, it is considered by many to be immoral because these people are not paying their fair share of tax despite benefiting from their host country. Personally, I do not see it as immoral but simply a flaw in our current global tax system. Then again, can we expect change when there are people in government who are benefiting from such shady and unclear tax laws?

June: Brexit, Britain votes to leave EU
Britain held a referendum and Britons voted to leave the European Union - which they regret almost immediately after the results were out and many wanted another chance to vote to stay in EU. Many had expected the Britons to vote to remain in the EU because it was a wise choice politically and economically. As it turns out, Britons did not wish to adhere to conventional wisdom, choosing to leave EU and fund their own fiscal budget with the money that was supposed to be for the EU.

Although UK's new Prime Minister has voiced her intention to leave the EU, the whole process of leaving take around 2 years to achieve. The EU was created to push Europe, a continent with a history of wars with one another, towards unity and cooperation. Brexit has paved a way for Europe's disintegration after 20 years of effort towards integration. As nationalistic populists continue to gain foot in European politics, government and citizens putting their own country's interest above Europe's interest, a much more divided Europe is not impossible in the next 10 years.


July: Pokemon Go Launches 
With all the unpleasant event that occurred in 2016, many must be glad that this was also the year the long awaited Pokemon Go was released! The craze lasted several months before it finally settled down, created its fair share of accidents, mishap, and misadventures, it also brought many fun moments, especially when it bonded families together to go on a Pokemon adventure and when it became a better motivator for people to walk than any other measures.

Financially, the game's popularity sent Nintendo's share rising more than double before settling at current levels of 25,000 yen per share, a 66% rise from a pre-PokemonGo price. Nintendo has also released Mario Run on Apple's App Store and is set to release event more games in 2017. Does it mean more potential upside for Nintendo's shares?

August: Brazil impeaches its President
Brazil's Senate voted to oust their President Dilma Rousseff out after months of debate over her alleged corruption charges and ineffectiveness in uplifting Brazil's economy. The President was suspected of falsifying the government's accounts. The impeachment process started in April and was only able to achieve the majority vote required to impeach President Rousseff in August. Under Brazilian laws, the country's Vice-President will take over the role of as interim President until an election is carried out and a new President elected - which is now scheduled to be in 2018.

The impeachment of President Rousseff has divided the country into 2 camps: those who support her and those who do not. A divided nation is not going to help pull Brazil's economy back from the dead. GDP has fallen for 6 consecutive quarters (worse since the Great Depression) and a Presidential scandal only made matters worse. But now that the political arena is sorted out, maybe the government can focus on what matters to the Brazilian people: a thriving economy and jobs!

September: US & China signs the Paris Global Climate Agreement
The US and China combine produce around 40% of the world's carbon emission. Their participation in being willing to cut their emission represents a huge step forward for the world to address climate change. Previously, both countries had been unwilling to join the Paris Agreement because both of them felt that it would be detrimental to their respective countries' economy if the other party did not join. The fact that both of them are now in the Agreement shows that the 2 biggest economies in the world agree and realise that climate change is real and has to be rectified; and two, are willing to communicate to achieve certain goals despite their differences.

Under the Agreement, countries are required to cut their carbon emissions EXCEPT there is no hard rule on how much to reduce (1% drop is also allowed). But of course, countries that joined the Agreement have agreed to cut by at least 10% on average. That is a good step forward towards a better world. With countries pushing their green agenda forward, the renewable energy field is going to see a much larger boom and financing in the future! Looks like Telsa bought SolarCity fairly cheap now doesn't it?

October: Death of Thai's King
On October 13, the passing of Thailand's beloved King made headlines in most of Asia's newspaper. The Thai Prime Minister declared that Thailand would mourn for its King for a year. Without the revered King serving as an icon of unity in deeply divided Thailand, it might not be long before clashes occur in Thailand between the 2 parties in Thailand (Red-shirt United Front for Democracy Against Dictatorship and the Yellow-shirt People's Alliance for Democracy).

The military might use the mourning of the King's death as an excuse to delay the elections in the country. The country has been under military rule since it ousted its previous government in 2014. This creates political uncertainty and instability within the country, which does not brood well for the country's worsening economy.





November: Donald Trump became the 45th US President
Donald J. Trump became the 45th President of the United States of America. While this came as a shock to most of the world, not all the shock was bad. While many are dumbfounded by how a man of his caliber could become the US President, others found him as a force of change in the White House. Financial markets, in particular, seemed absolutely happy that he won. The S&P500 rose 6% while the Dow rose 8.8% since after the election results were announced.

While it is good news that the financial markets are up, not all would be attributed to Donald Trump. Historically, there is evidence proving that in the year a Republican Presidential Nominee is elected, the stock markets ended positive. But the stock markets tanked in the year the Republican Nominee is inaugurated. We will just have to see if this is true in 2017.

December: 3 rate hikes next year
The US Federal Reserve Chair(wo)man Janet Yellen announced that the Fed will increase interest rates for 3 times at least next year. Last year, Janet Yellen said that we will experience 4 rate hikes in 2016. However, the Fed only raised interest rates by 4 times this year, from 0.5% to 1.375%. So far we have only seen 1 rate hike from 0.5% to 0.75%. Will we really see 4 rate hikes in 2017? Pretty sure it will be the usual "subject to the economic data of the US".

While an increase in Fed rates will increase borrowing cost for borrowers, it will also benefit savers (who are suffering from record-low interest rates). Maybe this might encourage more people to save money for rainy days (saving rates around the world is falling and indebtedness level rising).
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As we come to the end of 2016, from InvestmentStab, we wish you a Happy New Year and a wonderful financial journey in the next year!

Comment to us, or tell us, what are some of the big news that occur in 2016. Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?

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Wednesday, 28 December 2016

ShopBack: Save with Coupons, CashBack and more!


While I was googling for alternatives to reduce my expenses, I realised that apart from reducing takeout and preparing my own meals, there was an on-going trend of online retailers dealing in all kinds of products. They vary from groceries to mass e-retailer Amazon. With the introduction of these e-retailers, consumers now enjoy an additional option when it comes to shopping! The fierce competition between these new entries and the old brick-and-mortar retail stores have resulted in lower prices - this only stands to benefit consumers! Furthermore, these new entries also periodically give out coupons or hold one-off sales event to attract shoppers. 

One of the ways that I found was to shop through websites that provide promotions, discounts, and other perks. One startup that particularly caught my attention was ShopBack and the services they offer. What caught my eye about them was:
  1. Cash back on most online purchases
  2. Discounts on products from a range of retailers
  3. Best deals in town for the products you are looking for
The most interesting part about it is that ShopBack offers not just cash backs on item purchases (clothes or electronics on sites like Taobao) but also on travel purchases and food purchases e.g. food delivery and groceries.

Shopback uses the commissions it derive from the retailers it helped referred to provide these great bargains to consumers. While these rebates range from product to product, they do help consumers save a considerable amount of money. You can even double down on the benefits by paying via your credit card, earning rewards from both ShopBack and the financial institutions!

ShopBack however, is not all about cash back. There’s a whole depository of information of great offers and deals here at ShopBack and these deals range from categories like promotions on electronic products and dining deals to seasonal sales event.

Hence, besides the norm of complimenting credit card promotions and store promotions, here are the new 3 rules of augmenting the upcoming online trend:

1. ALWAYS google search for Coupons or Promo Codes


There are numerous sites that collate free coupons or promo codes for potential customers to save more on their purchases. Credit card newsletters may also now send you an email to notify you on their upcoming joint effort with online stores. An example was OCBC, where they would sometimes work with Zalora and offer further discounts which you can use if you happened to have an OCBC credit/debit card. You can also find a coupon code on a whole host of online retailers at ShopBack that allows you to benefit from transactions for things like travel at Agoda or groceries at HonestBee.

2. Go for Group-Buy
More often than not, online stores offer group discounts. This is if you buy more than 1 items, there will usually be a bulk purchase discount. You may then relate this to the concept of Groupon. Many other individual sites also offer their own kind of similar sale whereby if you buy more of the same items, there will be a slight discount in terms of per-unit purchase.

3. Stack on Credit Card Discounts


As I said previously, banks and financial institutions are now working in tandem with online stores to offer greater savings for their customers. This might come as a regular promotion or an attempt to increase the use of their credit/debit card. This would often be stackable with other vendor promotions.

At the end of all this, we hope that this would be able to help our readers achieve their financial goals through savings and cashback.

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Monday, 19 December 2016

Singapore Stocks Market: Outlook

I was browsing through the different stock prices as usual. Given the recent spate of local M&As and delisting manoeuvres, it seems to me that the number of quality stocks have decreased in our local bourse. With well-known local companies such as OSIM, SMRT and Eu Yan Sang International delisting, is the local market valuation truly too low as compared to the global valuations?

A simple Google search can give you the results. Here's what I found (Credits to My Stocks Investing Journey Blog): Singapore's STI had the lowest PE ratio of 12.01 relative to the global average PE ratio of 23.35 in Oct 16. Now that's real cheap! Almost similar to a Black Friday Sale of 50% discount!

With that in mind, then the acquisitions of Super Group and delisting of companies are not illogical at all and may even be at a bargain. Using a case study from OSIM, while the founder Ron Sim may have taken the company private at a trailing PE ratio of 19.7, this is a far-cry from its peak performance, where in comparison it is only 9.6x its peak earnings. It is also done at a time where OSIM's earnings have taken at hit of 50%. Hence, it could be strategically planned to be taken private at OSIM's business trough.

Hence, without doubt, next year's overarching theme will be on mergers and acquisitions to capitalise on these inefficiencies in Singapore market. One dominant strategy following this theme will be to identify undervalued companies with strong business moats (competitive advantages) that cannot be easily replicated. Referencing Super Group as a case study, the company has a strong brand image and offers a wide spectrum of consumer products with regional presence in South-East Asia. These are difficult to replicate and take years to build. A perfect acquisition target in this low valuation market.

Even the Singapore investment arms have realised this and urged Global Logistics Properties (GLP) to boost its share prices to better reflect its underlying valuations. You can read more information here: http://www.businesstimes.com.sg/companies-markets/glp-doing-strategic-review-to-enhance-shareholder-value-on-request-from-gic

It is also worthy to note the company's insider holdings as potential acquisitions and merger candidates are those with higher institutional shareholdings. This characteristic usually allow easier takeover bids and negotiations. However, retail minority shareholders' interest may be compromised as a result. Investors should know their rights and avenues to seek redress.

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Friday, 16 December 2016

Hu Li Yang's Half by Half Theory


Hu Li Yang's theory:
1) If an index's price drops by 50% from its peak, it has entered an "fair value" price point
2) If an index's price drops to around 25% from its peak, it has entered a "extremely undervalue" price point
3) When recovering from the bottom, the index will always face selling pressure at 2x the bottom price
4) During a bear market rebound, you can forget about fundamentals and enjoy the collective rising stock prices.
5) Many more theories listed on his book (30 theories/techniques)!
*click on the image to buy a copy of his book to learn more about his investing tactics

Examples of his theories
S&P500 peaked at 1,550 in September 2007, fell to 735 on Feb 2009 before it experience a rebound
Straits Times Index  peaked at 3,800 on October 2007, fell to 1700 on March 2009 before it rebound
Shanghai Composite rebounded in October 2008 at 1,730 from a peak of 5,900 in October 2007 (around 25%)
Hang Seng Index peaked in November 2007 at 30,450, fell to 11,900 in March 2009, then rebound

The Godfather of Asian Stock market, Hu Li Yang, will be back in
Singapore next year January for a talk on his outlook for 2017! 
Spend 1 full day learning from the Man himself as he would discuss his
views and how investors should position their portfolio for the rest of 2017!

Mr Hu previously held the position of Vice-President of Securities in
 Merrill Lynch in the 1980s, then the biggest securities firm in America.
In 1986, he gave up his high paying job and return home to Taiwan to
develop and educate its people on investing in the stock market.
Since then, he has been regarded as the 'Godfather of Asian Stock Market' and
have went on to published best-selling books on stock market investing.

Do note that the talk will be in Chinese

Investing Opportunities for Year 2017 
by Hu Li Yang
Event Details:
Date: 14 January 2017 (Saturday)
Location: STI Auditorium, Capital Tower level 9
Time: 09.00AM  4.30PM (registration starts from 8.30AM)
Price:
DateEvent TicketEvent Ticket
+
Tea Session with Hu Li Yang
Register before 23 December$88$138
Register after 23 December$148$198

First 80 readers who subscribed to the Tea Session stands a chance to win a mystery gift!
The Event ends at 3.30pm
Tea Session starts from 3.30pm to 4.30pm

Click HERE to sign up for the Event!
Click HERE to sign up for the Event + Tea Session!

Limited Seats!
Sign Up Now!

Friday, 9 December 2016

Stop Advertisement Letters in Mailbox in 3 Steps

Are you tired of seeing a large number of advertisement mails in your letterbox?
There is a way for you to opt out of the service!

Simply click on the link below and follow the steps:

LINK

Step 1:













Follow the image and fill in the boxes

Step 2:


















Fill up your contact details and your address

Step 3:















Confirm you wish to opt out of the advertisement mail and submit your enquiry

Recommended Post: Are you Over-Insured by $46,000?

Do note that however, sometimes, there are certain useful advertisements that ends up in your letter box - like the fast-food coupons that you might not wish to opt out of.

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Thursday, 8 December 2016

Godfather of Asian Stock Market is Back!

The Godfather of Asian Stock market, Hu Li Yang, is back in Singapore to
share with us his view on the investment opportunities and risks in the year 2017!
Spend 1 full day learning from the Man himself as he would discuss his views
and how investors should position their portfolio for the rest of 2017!

Mr Hu previously held the position of Vice-President of Securities in
 Merrill Lynch in the 1980s, then the biggest securities firm in America.
In 1986, he gave up his high paying job and return home to Taiwan to
develop and educate its people on investing in the stock market.
Since then, he has been regarded as the 'Godfather of Asian Stock Market' and
have went on to published best-selling books on stock market investing.

He accurately predicted that:
the Dow Jones Index will rebound on 2009 March,
the Taiwan stock market will exit a bear market on 2009 November,
Gold's temporary peak on 2009 December,
and many more!

Some of the topics he will be discussing includes:
1) 2017, a year possibly filled with investment headwinds and traps
2) Quantitative Easing has ended, where is the hot money flowing to?
3) How would we position our portfolio and set our asset allocation in 2017?
4) When should we rebalance our portfolio and asset allocation?

Do note that the talk will be in Chinese

Investing Opportunities for Year 2017 
by Hu Li Yang
Event Details:
Date: 14 January 2017 (Saturday)
Location: STI Auditorium, Capital Tower level 9
Time: 09.00AM  4.30PM (registration starts from 8.30AM)
Price:
Date Event Ticket Event Ticket
+
Tea Session with Hu Li Yang
Register before 23 December$88 $138
Register after 23 December $148 $198

First 80 readers who subscribed to the Tea Session stands a chance to win a mystery gift!
The Event ends at 3.30pm
Tea Session starts from 3.30pm to 4.30pm

Click HERE to sign up for the Event!
Click HERE to sign up for the Event + Tea Session!

Sign Up Now!

Wednesday, 7 December 2016

Major news last week, what it means for Singapore stocks: #ICYMI

07:00 No comments
Last week, oil rallied to its highest level in the year at $54 a barrel. This was mainly due to the OPEC's agreement to cut its output by almost 1.2 million barrels. The oil price rally was also due to the expectation where the market did not expect an agreement to be reached, as well as the more-than-expected production cut.

Though an agreement has been met, there has been much skepticism as to whether the members will hold to the production levels as there are numerous times where its members have violated the group's decisions for self-interest. This is a classical example of games theory. Just a short summary, if members of a group expect others to cheat on the rules set due to huge self benefits, then it would be more wise to first violate the rules and have a more prominent hand although this course of action will definitely guarantee lower profits compared to the group's collective decision. The picture below shows an example referencing Saudi Arabia in their perspective of games theory.

Image result for opec games theory

Based on current context, it is more probable that the members will stick to the group decision as the previous record low oil prices have hurt the profits of the members. Being accustomed to the higher prices, it may seem that the members are not prepared to take a hit on government profits for too long, even though the initial intention was to flush out the frackers from US using low prices. Hence, the recent decision may provide a higher motivation to bolster their coffers before implementing the next action to grapple the increase in alternative supplies from frackers.

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Singapore has a number of oil and offshore companies and they are deeply hurt by the low oil prices which lasted longer than they believed. This is evident from the recent Swissco case. The recent rally could provide light in the tunnel, though there are uncertainties as to how long it will last. Companies that are better managed will also stand to benefit the most. However, even with the recent "co-operation" from OPEC, it might still be too soon to conclude that it will be the end of the oil slump. As stated above, once each members may deem that their self-interest outweighs the group collective interest and they might violate the agreement.

Possible counters that are SembCorp and Keppel Corp where they are the global heads in offshore and marine industry, mainly dealing in oil rigs. While oil exploration companies are also likely to benefit from the affilation to oil prices, these pose high risks pertaining to whether they can find oil in the first place.

Recommended Post: Godfather of Asian Stock Market is back in Singapore!

Source: http://www2.owen.vanderbilt.edu/lukefroeb/2003/mgt722/topics/game/game.html

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Thursday, 1 December 2016

The next big rally

As the Malaysian Ringgit drops to record lows, it may imply a lack of economic stability in the country. However, there seems to be an opportunity that lies within this cheap currency, and as all standard economics students would tell you that cheap currency valuation would tend to highlight cheaper exports value relative to other countries. Malaysia is one of the top exporters for crude palm oil and naturally, with palm oil being the most used vegetable oil globally in consumer products.

With positive outlook from the Malaysian Palm Oil Board (MPOB) director-general, where global consumer demand will still outpace supply, and the natural climate effects (El Nino and El Nina) pressuring supply and production levels, palm oil prices are bound to increase, especially after being beaten badly by the market in the past few years.

Recommended Post: 6 Singapore Public Transport Tips

Besides the above reason, there is also signs of increasing demand in China, evident from the recent metal prices rally and, real estate and domestic infrastructure spending within China. Given Trump's Presidential win in the US, where one of his campaign promises is also to increase infrastructure spending in the US, this also adds to further speculation on increasing demand.


Source: Bloomberg

So how are the current performances of palm oil companies?


























Source: Chart Nexus

The above charts are Golden Agri, Bumitama Agri and Wilmar International respectively. As you can see, all 3 of them are hammered badly over the past few years but have made higher highs recently with Golden Agri breaking through the descending trendline which forms a descending triangle. The other 2 seems poised to do the same as well. This suggests bullishness in terms of technical analysis. Another possible catalyst is the reduction of short sellers in Golden Agri, leading to its break out.

However, there must be caution in undertaking positions in these companies as there are still risks in investing.

Recommended Post: Are you Over-Insured by $46,000?

Note: the author currently has an investment position in Golden Agri.


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