Thank you for your comments Thinking Man.
You asked if you have invested in Singapore equities at the start of the year, should you sell now or not?
Please allow us to share our perspective with you. You need to look at the following aspects: -
1. Benchmarking
2. Singapore Economy
3. Strategy
1. Benchmarking
Since you have invested in Singapore equities, then your natural benchmark index should be the Straits Times Index. Year to date, the Straits Times Index has posted a gain of 24%, hence, this is the benchmark in which you should evaluate your investments. Now, whether you have invested directly in Singapore equities or through unit trusts or mutual funds, you need to first evaluate how your investment has done, also how much value adding your broker, banker or financial advisor has done?
If your investments have performed less than 24%, then, you have not done well for this year. You would have been better off just buying ETF - Exchange Traded Funds or Index Options which usually track the performance of the Straits Times Index.
2. Singaopre Economy
Singapore will post a GDP growth of 8.3% to 8.5% for 2006 which is outstanding. However, with global growth slowing down next year, the forecast for Singapore is in the region of 5% to 5.5%. This is a potential marked slowdown.
What does this mean for us if we are invested in Singapore equities? Let's remember that equity prices is the present value of all discounted future cashflows/earnings. Therefore, if the future earnings prospects for Singapore corporates in 2007 is lesser than 2006, then, naturally, the price of Singapore equities will consolidate downwards next year.
Yes, there is a possibility that equity prices could continue to rise by another 10% through to March/April 2007, which is the reporting season for most Singapore corporates. The euphoria could run up to then.
3. Strategy
If you have been invested since the start of this year, we would strongly advice and encourage you to take some 'profit off the table' as they say. Keep half of your holdings to ride up the last 10% into Q1 2007.
When the market consolidates in Q2 2007, then, selectively start picking up equities again. We would also recommend diversifying into bonds and REITs for good yields and potential capital gains as interest rates fall in Q4.
You asked if you have invested in Singapore equities at the start of the year, should you sell now or not?
Please allow us to share our perspective with you. You need to look at the following aspects: -
1. Benchmarking
2. Singapore Economy
3. Strategy
1. Benchmarking
Since you have invested in Singapore equities, then your natural benchmark index should be the Straits Times Index. Year to date, the Straits Times Index has posted a gain of 24%, hence, this is the benchmark in which you should evaluate your investments. Now, whether you have invested directly in Singapore equities or through unit trusts or mutual funds, you need to first evaluate how your investment has done, also how much value adding your broker, banker or financial advisor has done?
If your investments have performed less than 24%, then, you have not done well for this year. You would have been better off just buying ETF - Exchange Traded Funds or Index Options which usually track the performance of the Straits Times Index.
2. Singaopre Economy
Singapore will post a GDP growth of 8.3% to 8.5% for 2006 which is outstanding. However, with global growth slowing down next year, the forecast for Singapore is in the region of 5% to 5.5%. This is a potential marked slowdown.
What does this mean for us if we are invested in Singapore equities? Let's remember that equity prices is the present value of all discounted future cashflows/earnings. Therefore, if the future earnings prospects for Singapore corporates in 2007 is lesser than 2006, then, naturally, the price of Singapore equities will consolidate downwards next year.
Yes, there is a possibility that equity prices could continue to rise by another 10% through to March/April 2007, which is the reporting season for most Singapore corporates. The euphoria could run up to then.
3. Strategy
If you have been invested since the start of this year, we would strongly advice and encourage you to take some 'profit off the table' as they say. Keep half of your holdings to ride up the last 10% into Q1 2007.
When the market consolidates in Q2 2007, then, selectively start picking up equities again. We would also recommend diversifying into bonds and REITs for good yields and potential capital gains as interest rates fall in Q4.
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4 comments:
I enjoyed reading your analysis on the Singapore equties market. I agree with the diversification into bonds and REITs. More importantly, I agree with the trailing profit sell strategy.
I agree with the benchmarking and will evaluate my bankers accordingly.
I agree with the strategy trailing profit-taking. Although, admittedly i am stuck with some second and third liners. What can I do?
Please advice on REITs and bonds? Sincerely, KS
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