US fed reserve has just slashed its benchmark Fed funds rates to near zero. This signals the US readiness to keep rates low for some periods of time. With further contraction of the US economy and further deflationary pressures, banks have been charging one another below 0.5% for overnight loans. All tools have been tried. What else is there to try?
Where will the Sing dollar be heading towards? Please share your thoughts on the impact on Singapore.
Terence Seah
Terence,
My take is the Sing Dollar will be comparatively weaker
against the Euro and Yen for the whole period of next
year though stronger, albeit mildly, against other
Asean currencies.
For stocks, the STI should flunctuate between the mid-
1,600points to mid 1,800points.
Regards
Stock Market Humour – Very Timely, In This Day And Age!!! (from a SHC member name)
1. The US has made a new weapon that destroys people but keeps the building standing,. Its called the stock market – Jay Leno
2. Do you have any idea how cheap stocks are ?? Wall Street is now being called Wal Mart Street – Jay Leno
3. The difference between a pigeon and a London investment banker. The pigeon can still make a deposit on a BMW
4. What’s the difference between a guy who lost everything in Las Vegas and an investment banker? A tie!
5. The problem with investment bank balance sheet is that on the left side nothing’s right and on the right side nothing’s left.
6. I want to warn people from Nigeria who might be watching our show, if you get any emails from Washington asking for money, it’s a scam. Don’t fall for it – Jay Leno
7. Bush was asked about the credit crunch. He said it was his favourite candy bar – Jay Leno
8. The rescue bill was about 450 pages. President Bush’s copy is even thicker. They had to include pictures – Jay Leno
9. President Bush’s response was to meet some small business owners in San Antonio last week. The small business owners are General Motors, General Electric and Century 21 – Jay Leno
10. What worries me most about the credit crunch, is that if one of my cheques is returned stamped ‘insufficient funds’. I won’t know whether that refers to mine or the bank’s
New Stock Market Terms
CEO –Chief Embezzlement Officer.
CFO– Corporate Fraud Officer.
BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry.
P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.
BROKER — What my broker has made me.
STANDARD & POOR — Your life in a nutshell.
STOCK ANALYST — Idiot who just downgraded your stock.
FINANCIAL PLANNER — A guy whose phone has been disconnected.
MARKET CORRECTION — The day after you buy stocks.
PROFIT — An archaic word no longer in use
Now to Terence serious question of what we is happening and what we can do.
Firstly the financial system is almost total panic and synchronsied chaos, that is what the bailouts are all about.
Noone knows what to do the about the business anymore so they take what they can and leave the problem to the
government to be responsible to the employees.
Even big companies are not immune as we all know from the recent minibonds saga and now the case of Bernard Madoff,
being investigated by U.S. regulators over a $50 billion Ponzi scheme, a big fraud even
Great Eastern is amongst the one of the victims, what more of ordinary people.
Why the US was going strong earlier, when the US economy was heading towards the great depression? Reason was,
so is Europe too, Japan, China, Asia so there was total panic looking at the US$ as a safe haven. Now, everyone
knows how bad the US is having to cut interest rate to almost O% and heading towards giving the lenders interest to
borrow US$. So the major currencies are finally returning to normalcy.
But then again who knows when panic will set in again and what will happen to the US$, Aus, NZ and Spore Dollars ?
What can you do to prevent losing and how can you maybe protect the value of your savings to cover for such devaluations
and inflation, stagflation or now deflation?
Only way is to be educated on financial management and options available besided fixed deposits in S$ or dual curreny
deposits. One recommendation is to go the many island wide Philips Securities branches and look at the range of free
seminars avaiable and focus on education of “Forex Invest”. Opening such an account gives you the option to buy any
foreign currency at the lowest price and selling in at the best price you think is rewarding to you. For more info
check the website below and their agenda on free seminars.
http://www.poems.com.sg/FinancialMarket/sgxaccount.asp?value=sgx
Cheers
Great humour RonW.
Appreciate the pointer as to Philips, will check it out.
Maybe a small group of like minded SHCians can get together and brainstorm this idea……Jie
It was, I believe, in an early 2008 exchange with KT that i thought the Fed Reserve was doing a fat (cat) resolve to keep cutting rates each time the US economy showed signs of strain…….you cant possibly have anything to cut at 0.
At 1 stage it was so easy to make money. You printed bonds and buyers rushed in droves elbowing each other out to buy, egged on by what they saw was a fabulous AAA rating by say Standard & Poor……and so standard poor many have become today, frustrated and frazzled.
Ours is essentially an export economy so it makes sense to price our goods and service to sell which means that our currency cant rise too much against our export marts.
When a different music is played, it starts a brand new game of musical chair, possibly involving new players. Our traditional trading partners may have played theiur last game………if say the US cant pay us (or if we dont see the good in their currencies bcos everybody else is selling it) then even if their demand for our goods & services remain strong, we still wont want to sell to them…if a populous nation makes a good export mart we wd have for years been selling to the islands nearby for their currencies.
The world is in a flux, a transition and it will take a while to stabilise itself, to find its bearing and an “equilibrium”. Which economy will emerge eventually as the next global leader, we may have the same names rolling on our lips.
I think as a nation, we will weather thru. I think there will be help packages for many as, personally, I did see more tangible help rendered to the needy over the last 2 years than the lip service paid years ago.
Like Sengh, I am thinking of a sojourn to Batam on or about Xmas, to sight the Star which the 3 Wisemen managed to do and it now becmoes a day to be celebrated……………any like-minded who is keen can join me.
Tim, if China stops or no longer offers loans to the US, and if what we see today, with the US dollar weakening and doing an about turn against the other currencies, the Singapore dollar, together with other Asian currencies, should strengthen.
Looks like 1.6 to the USD wont come true for a long time. Any sooth sayer out there who believes a 1.4 can come true?
Terence Seah
Just a little thought, the great impact on Singapore when US dollars fall, it is the worst market crash in 3 decades, Singapore is officially in a technical recession, the same was in 2002, the MTI has cautioned that Singapore’s export has dropped drastically due to rising unemployment and slumping home prices in the US.
According to the report, MAS has shifted SGD to a neutral stance making it cheaper in relation to other currencies to make domestic export competitive, nevertheless, in the other side, the import of the daily foodstuff is more expensive making our life even tougher.
In the current crisis, some firms may wind up their business and run leaving people in the lurch, take for an example, today’s ST, foreigners are left hungry, unpaid and abandoned, bigger firms are pushing their responsibilities to the smaller firms, what I am concerned now is, more crimes will be convicted, the impact of the situation will bring us more fear, more anxiety and more stress.
Sengh, China is holding trillions in renminbi equivlent of US treasury bonds which they might reluctanly if push comes to shove, burns as hades currency. When there’s little or no benefit in a lending, nobody will lend, and China is obviously not a philantropist.
The Americans are a very intelligent and enterprising people……..and so were the Mesopotamians, the Romans, the people of the Great British Empire once.
China. Russia, the Middle Easterners, the Latin Americans may emerge as the next economic superpowers, we dont know. What we can say for sure is, times ahead will be hard esp for those who are unemoloyed and have no savings. there wont be an early reprieve and it looks like a long drawn doldrums many will find themselves in.
I will be looking for the shining Star that will lead me to the next new born child, unlikely to be found in a manger this time…………at Hans? Maybe.
Dear fellow members of shc
Merry Christmas………
May Peace, Hope and Love
be with you guys Today,Tomorrow and Always
bdw, any comments on DBS rights issue at S$5.42 (Strait Times 23 dec 08)is it attractive to buy n keep ha???
cheers
I am looking at a 3-year hiberntion for the economy. So whoever has that bit of extra money which he/she will lock away somewhere anyhow, it’s quite safe to buy DBS’s rights at $5.42, or for that matter, any of the listed local banks as well as blue chips like keppel or some other wildcards.
With money, many things are ripe for the pciking in the next 2 years at rock bottom prices. Even patronage at geylang is dwindling and some operators there are looking dolefully to washington for another rescue package. See, these people are the first to buy the official stance to cut wages before retrenchment which is translated into paying $60 for a cinderlella or snowwhite, smthg unimaginable just 3 mths ago.
It is very easy for investors to get tempted by the prospect of buying discounted shares with a rights issue. But it is not always a certainty that you are getting a bargain. I think one must get to know the ex-rights share price, the purpose of the additional funding before accepting or rejecting a rights issue.
You need also to look for a compelling explanation of why the rights issue and share dilution are needed as part of the recovery plan. A rights issue can offer a quick fix for a troubled balance sheet, but it isn’t necessarily mean management will address the underlying problems that weakened the balance sheet in the first place.
Shareholders should be cautious.
There’s no real discount in a rights issue just like in a bonus issue except that in a rights, the price the subscribers pays will be added to the earnings and spread out even over the enlarged ex-rights capital base.
The ex-rights share price which one can calculate is at best notionally as market sentiments will determine whether to pusg it up or dump the shares on the 1st ex-rights trading day.
In a dour dull market like this, the purpose of the rights money is of little relevance. To me, it’s a buy into the future – my take is a lock-up for 3 years – and the basis for the buy is the brand name.
In this market, it’s futile to do an academic exercie of going thru all that one has learned from the guru, and start analysing fundamentals, sectors etc. It’s very much a gamble, and I reiterate, gamble only if you have that bit extra cash to lose (chances are you wont lose if you buy into the blue blue labels)
Thanks Tim #9/11 and Nancy #10 for the sharing……
Does anyone here feel DBS is not as competitive as UOB and have a less stronger future than its competitors? just wondering what would be a good target value to buy into UOB.
cheers
Fredalim,
It’s difficult to compare but I certainly look at pedigree……….we are living in a world which talks a load about connections, with who you’re related.
So for as long as DBS isnt a target for Temasek to divest – and it’s unlikely to happen for a long long time, DBS being its financial flagship – this bank shdnt fare any worse than UOB.
Talking abt UOB, I like the man at the helm (his son, with good pedigree, shd also continue with his good work). He is one of the 2 bank stalwarts who is still holding court and with his acumen, the bank is my number 1 local bank.
UOB shares hit a high of abt $21 (low of abt $10) and currently hovering at abt $12. My take is, the dust hasnt settled and downward consolidation is likely. So, if it were to hit a new low of say $8, it’s time to go in. But for those who cant wait (in case the day of it hitting $8 does not come), an entry at $10 is safe as the downside risk is quite limited…………and also if you look at how cheap it is from $21.
I am writing from my hunch………….no reference to either analysts’ guide books or my kiddo’s comic books.
Hi Tim #13
thanks for sharing……around 9 this morning,DBS was trading at $8.10….
cheers
Freda, if I am any good with stocks & shares, i wdnt hv lost all I had on black minday 0ct 19, 1987. My ex made money buying what I discarded and selling what I bought. In short, I hv ass-luck for myself insofar as equity trading is concerned.
But I do firmly believe that whoever has no urge to use that spare money he/she has, an entry at UOB $8 (if it does drop to that level) is a very safe bet………take it like putting into a 3-year safe deposit, taking home some $13 or more for every $8 he/she puts in.
Good Morning Tim #9 and #15
I think Guys are generally more daring in terms of “gambling”. As far as Shares is concern i consider this as gambing as i know nuts about shares…..I re read a msg i recd in my inbox sometimes ago n i decided to give HG Metal right issue a missed……..cheers
“If the rights issue is ignored…..
If you choose to do nothing and keep the your shares, the bad scenario is that your shareholding will be diluted (in value) thanks to the extra shares issued. This of course assumes the Company is not trying a scam. A public listed company needs approval from their board of directors and SGX before any rights issue can be offered and the value on the announced date would be the average market price for the last 3 days or one week, I am not sure, There is no scam, but the company or their bankers or trust can stand to loss as well if no one subscripts or insufficient funds are raised besides share-holders loss owing to dilution on the enlarged capital.
If the market reacts well, the subsequent share price (before dilution) could rise and you would have lost nothing except missed on on gain from the value “invested” in the rights issue not taken up.
Is this a correct view? No, either way you loose if you do not do anything that is in the event that rights issue price fail to keep-up with market expectation and in which case it will be cheaper for one to buy from the open market. In this case the issuer will need to pay a penalty to call-off the rights issue and refund to all those who had subscribed and the issuer has to weigh the cost on whether to proceed or stop. There is no scam as protected by SGX regulations.
For example, in the DBS Bank rights’ issue which was announced in December 2008 at $5.24 per share and offered about a month and close about 2 weeks ago, a share holder in this instance stands to make at least $3/- per share. If you have 1000 units of shares you are allocated 500 rights (2:1) costing you 5.24 x 500 = $2,620 which you could technically sell for more than $4,000/- in the open market. Your gain does not end here because you stand to apply for excess rights to make one lot of 1000 which is usually given and with the poor market sentiments and ignorant share-holders you could apply for more excess rights if you can afford as it is a good gamble to gain from it.”
Good morning to you too, Freda. Usually, I’ll only reply to a comment after moderation is done and thru but seeing nothing objectionable in your posting, I think it will be published very shortly; hence my rejoinder now.
I dont think I had any comment on rights issue being a scam attributable to me. In fact lately the SGX has simplified rights issue approval process so that it can be out in a month, from the previous average of abt 3 months.
Well, as I have conceded many times already, stocks 7 shares investment isnt my game and whoever plays against the position I take, invariably makes money.
Interestingly, a certain writer of the ST took a view yesterday (2nd page) that the worst is bottoming out. I think this view is a tad too optimistic but I do see a bottoming out not now but probably by September 2009. But what does this mean to me?
To me, a bottoming means a bottoming. It’s not synonymous to a recovery, a pick-up where every listed share is ripe for the picking. It will be a very prolonged, protracted recovery. One can believe in a dead cat bounce but it’s still a dead cat which wont come nack to life.
So with the recovery slow – although the sinking may have ceased – the pain will still be deep and excruciating for those without $ or a job to earn the money bcos they still need to live thru this trying time when few new jobs are created.
In short, while the bleed will probably stop in Sep 09, the medication will still take a long while to reach the casualty. Oe will just have to keep oneself alive for a wee bit longer.and this “wee bit” can be very very long………..
Greetings Tim #15
UOB……$9.00 coming?
cheers
Greetings FredaLim………..I wont know but reckon you’re not a contra player but will hold shares for the mid…….long term so dont see any risk even if there may be a range fluctuations, mindful also of results announcement which certainly dont look too rosy for all banks (with few escapees in other stocks) this year. Like this stock bcos of good pedigree.
For now , the talk is will Man U made to lick their wounds tonite, Arsenal down on their knees crying ai si liao and Barca looking to Lyon for black bra………….or bira??
Hi tim
Thanks……
Quote” Yeah, the Special One will prevail and Arsenal will be down and out. Barca, … will tame the Lyon.” unquote
cheers
FredaLim, my ex has recently committed on a slightly $600k with units all snapped up within 2 days of launch……I called it madness but she said it’s a smart investment. She cd be right as she too may be the Specialne and I the Mad One………Case in point was my investment of $100 5 hours ago on Gombak Utd to win 3-1. Gombak did win by a solitary goal.
So the point is, if you have done your calculations, even if you lose you will still psyche yrself to feel a winner.
Last, not least, thanks for not only agreeing with me but standing by my side to chant as well. Little wonder why yr man stands by you all his life………….