When Marc Faber speaks, I listen. Below is a hyperlink to the interview. He said the following:
1. Emerging Market stocks may fall 20 - 30%. They are overbought and failed to break a new high.
2. US equities will outperform for the next 2 - 3 months. They may not rise but they will fall only 10% max.
3. Take profit from mining sectors which are overbought.
4. Markets are signalling something wrong with the Chinese economy because it is not rising.
5. Still bullish on gold, but likely to fall 20% soon.
Fund managers, hedge fund managers have a big say in where markets head to. Their entries and exits move markets because of their deep pockets.
So far, only the VIX has gone back to 20. It hasn't broken past Nov 2010's high of 24. Other risk indicators are edging up, but they are still within the downtrend. They have not broken past their resistances. Besides, the QE2 is still in operation.
FYI, Indonesia, China, India, Latin America and Middle East have all broken below their supports. I am only bullish on China, Latin America and Middle East, but not the rest.
I will be on the edge of my seat this week, deciding which way the wind blows. Don't misunderstand, I'm still bullish, but I may decide to hedge my portfolio by locking in all my profits or buying a derivative to hedge myself.
http://www.bloomberg.com/video/66163222/
Monday, 31 January 2011
Saturday, 29 January 2011
Stocks Are Falling...
Fear not... The correction is unlikely to be deep. Indicators are pointing that this is a buying opportunity. Markets should rally on until June of 2011 when QE 2 ends. After that, a big correction of around 20% may occur. Whether stocks will move higher in the second half of 2011 will depend on whether inflation is under control. If inflation is benign, valuations low, growth in tact and yield curve steep, we may have a bull in 4Q2011 after a steep correction in 3Q2011.
It is also interesting to note that after news of Egypt's turmoil came out, stocks corrected steeply but commodity futures rallied. It shows that in political uncertainty, people flock to hard assets. Read on...
Bond Flows Have Turned Negative
Investors seem to be realizing that higher interest rates are not good for their bond investments. As we wrote in mid November in our article, Interest Rates On The Rise, higher interest rates translates into a declining value in the price of an investor's bonds. Recent mutual fund flow data shows investors have been placing less of their funds into bond mutual funds. The below chart shows the trend in the flow of funds into bond and equity funds through mid November. Bond inflows had essentially dried up.
Click to enlarge:
From The Blog of HORAN Capital Advisors
The below table from the Investment Company Institute shows that bond flows have now turned negative with a majority of the outflow occurring in municipal bond funds.
Click to enlarge:
From The Blog of HORAN Capital Advisors
This recent action reverses a long term trend of investors pouring investment dollars into fixed funds since 2006 and detailed by the red line in the below chart.
Click to enlarge:
If QEII Inflates Risky Assets, What Will Be When It Ends?
On August 27th of last year, Ben Bernanke gave a speech at the Jackson Hole, WY meeting that signaled the beginning of the Fed's second round of quantitative easing. Since the speech, the stock market has responded favorably for long equity investors.
Click to enlarge:
From The Blog of HORAN Capital Advisors
Source: Viewpoint-Fidelity
Not only have equity prices reacted favorably to the Fed Put, but many commodity assets have responded as well as noted in our post, More Evidence Of Inflation In The System.
I do not recall the source of the below chart; however, during the Fed's first round of quantitative easing, the market experienced strong upward returns. The market's positive return during QE1 could be viewed as a coincidence; however, the quantitative easing dollars need to flow somewhere, and risky asset prices seem to be the beneficiary. This has been a stated desire by the Fed as well.
Click to enlarge:
From The Blog of HORAN Capital Advisors
One question that comes to mind is what will be the market's reaction once QE2 comes to an end in June. One date that might be of importance is the Fed's Humphrey-Hawkins testimony before Congress in February. Given the change in the control of the House to the Republican side and their prior opposition to quantitative easing, might the Fed step up the QE program and have it end around the time of the Humphrey Hawkins testimony? Ron Paul, who has not displayed much favor for the Federal Reserve, has been named Chairman of the Subcommittee on Domestic Monetary Policy and Technology, the committee charged with overseeing the Federal Reserve.
It is also interesting to note that after news of Egypt's turmoil came out, stocks corrected steeply but commodity futures rallied. It shows that in political uncertainty, people flock to hard assets. Read on...
Bond Flows Have Turned Negative
Investors seem to be realizing that higher interest rates are not good for their bond investments. As we wrote in mid November in our article, Interest Rates On The Rise, higher interest rates translates into a declining value in the price of an investor's bonds. Recent mutual fund flow data shows investors have been placing less of their funds into bond mutual funds. The below chart shows the trend in the flow of funds into bond and equity funds through mid November. Bond inflows had essentially dried up.
Click to enlarge:
The below table from the Investment Company Institute shows that bond flows have now turned negative with a majority of the outflow occurring in municipal bond funds.
Click to enlarge:
This recent action reverses a long term trend of investors pouring investment dollars into fixed funds since 2006 and detailed by the red line in the below chart.
Click to enlarge:
On August 27th of last year, Ben Bernanke gave a speech at the Jackson Hole, WY meeting that signaled the beginning of the Fed's second round of quantitative easing. Since the speech, the stock market has responded favorably for long equity investors.
Click to enlarge:
Source: Viewpoint-Fidelity
Not only have equity prices reacted favorably to the Fed Put, but many commodity assets have responded as well as noted in our post, More Evidence Of Inflation In The System.
I do not recall the source of the below chart; however, during the Fed's first round of quantitative easing, the market experienced strong upward returns. The market's positive return during QE1 could be viewed as a coincidence; however, the quantitative easing dollars need to flow somewhere, and risky asset prices seem to be the beneficiary. This has been a stated desire by the Fed as well.
Click to enlarge:
One question that comes to mind is what will be the market's reaction once QE2 comes to an end in June. One date that might be of importance is the Fed's Humphrey-Hawkins testimony before Congress in February. Given the change in the control of the House to the Republican side and their prior opposition to quantitative easing, might the Fed step up the QE program and have it end around the time of the Humphrey Hawkins testimony? Ron Paul, who has not displayed much favor for the Federal Reserve, has been named Chairman of the Subcommittee on Domestic Monetary Policy and Technology, the committee charged with overseeing the Federal Reserve.
Monday, 24 January 2011
Gathering My Thoughts on What Will Happen Next
I am most optimistic about stocks, especially in the fastest markets and cheapest markets, namely; Russia, Latin America, China, Middle East and Indonesia. I am also bullish on US banks, properties, technology and healthcare on a tactical basis. Mining, energy and agricultural sectors also have high betas but their valuations are rich.
On the property front, I don't like leasehold mass market anymore. All others are fair game. Money is flowing into retail, office and industrial spaces but few realise that we have an even bigger supply glut in these sectors than for properties. For residential private property, we have about 4.5 years of supply. For retail and office, we have around 7 - 9 years! But for industrial, only 2.5 years. Yes, there is a shortage of industrial land, although I wouldn't call 2.5 years of supply a shortage!
I'll firm up my thoughts and discuss with those within my circle, my course mates, close friends, close clients etc. So please be nice to me!
On the property front, I don't like leasehold mass market anymore. All others are fair game. Money is flowing into retail, office and industrial spaces but few realise that we have an even bigger supply glut in these sectors than for properties. For residential private property, we have about 4.5 years of supply. For retail and office, we have around 7 - 9 years! But for industrial, only 2.5 years. Yes, there is a shortage of industrial land, although I wouldn't call 2.5 years of supply a shortage!
I'll firm up my thoughts and discuss with those within my circle, my course mates, close friends, close clients etc. So please be nice to me!
Wednesday, 12 January 2011
Fund Flows to Emerging Markets Soar in Q4
Published January 5, 2011
Fund flows to emerging markets soar in Q4
But some analysts now see stocks from developed markets as a safer 2011 bet
By NEIL BEHRMANN
IN LONDON
ASIAN and emerging market equities continued to find favour in the final months of 2010, but a growing number of analysts believe that developed market stocks could well be a safer way to go for investors this year.
Latest data from EPFR Global, an international fund flow consultant, show that net investment into Asian and emerging market equity funds surged in the fourth quarter.
Despite the inflows, however, total purchases of Asia (excluding Japan) equity funds declined to US$21.5 billion in 2010 from US$26.5 billion in 2009.
Moreover, almost half - notably US$10.2 billion of Asian inflows in 2010 - occurred in the fourth quarter.
Investment in global emerging market equity funds rose to a remarkable US$62 billion in 2010, with about a third of the inflows taking place in the fourth quarter of last year.
Including Asia, Latin America, Eastern Europe, Middle Eastern and African specialist equity funds, the inflows were a whopping US$92.1 billion in 2010, up from a similarly exceptional US$83.3 billion in 2009.
'Of the four major emerging markets fund groups only the diversified global emerging markets equity funds set a new record,' said Ian Wilson, managing director, fund data, at EPFR Global. These funds accounted for two-thirds of emerging market equity flows.
'Asia ex-Japan equity funds again absorbed the second largest amount of fresh money, but flows slipped off their 2009 pace as concerns about China's response to over-investment, inflation and asset bubbles dogged sentiment towards the region on and off all year,' Mr Wilson added.
Although there were much improved flows into US funds, helping the S&P 500 index and other indices close at the highs of the years - albeit with some window dressing - there were still sizeable outflows during the year.
Withdrawals in previous quarters from Japan specialist funds were reversed in the final quarter. There was a modest inflow with investors taking a contrary view about the Tokyo market's prospects.
Indeed, Japan equity funds extended their longest inflow streak since a 14-week one that ended in late March, according to EPFR Global.
A weaker yen and yet another stimulus package brightened the outlook for Japanese exporters and consumers.
The crisis in Europe predictably caused outflows in the fourth quarter. Outflows from European funds were US$22.1 billion in 2010 compared to inflows of US$1.24 billion in 2009.
German equity funds, however, enjoyed a record year as the nation was the best performing market in Europe, helped by a jump in exports and the flight to safety.
Despite inflows of US$28.4 billion into developed market funds in the fourth quarter, total outflows for the year amounted to US$62.4 billion in 2010 following redemptions of US$74 billion in 2009.
Flows into commodity funds soared to US$29.3 billion in 2010 following net investment of US$20 billion in 2009.
Fourth-quarter fresh money into these funds amounted to 41 per cent of the total inward investment in 2010 as growing numbers of institutional and retail investors anticipate inflation.
Traders within metals and other commodity markets caution that a dangerous bubble is developing in these markets and China's anti-inflation moves could end the speculation, they warn.
Funds involved in the healthcare/biotechnology sector again suffered the biggest redemptions among the major sector funds. The long-running political battle over healthcare reform in the US did these funds no favours, according to EPFR Global.
Efforts by European governments to get their finances in order also raised the spectre of cuts in reimbursement rates and publicly supported services.
Despite withdrawals from a bloated US bond funds in the fourth quarter, inflows into global emerging markets and high-yield bonds meant that investment into bond funds overall were still US$29.8 billion in the fourth quarter, boosting the annual total to a high US$372 billion compared with US$303 billion in 2009.
Bond funds have benefited from almost zero money market rates and outflows from money market funds, but the big danger is historically low yields and potential inflation from the dangers of loose monetary policies in the US, UK and Europe.
Fund flows to emerging markets soar in Q4
But some analysts now see stocks from developed markets as a safer 2011 bet
By NEIL BEHRMANN
IN LONDON
ASIAN and emerging market equities continued to find favour in the final months of 2010, but a growing number of analysts believe that developed market stocks could well be a safer way to go for investors this year.
Latest data from EPFR Global, an international fund flow consultant, show that net investment into Asian and emerging market equity funds surged in the fourth quarter.
Despite the inflows, however, total purchases of Asia (excluding Japan) equity funds declined to US$21.5 billion in 2010 from US$26.5 billion in 2009.
Moreover, almost half - notably US$10.2 billion of Asian inflows in 2010 - occurred in the fourth quarter.
Investment in global emerging market equity funds rose to a remarkable US$62 billion in 2010, with about a third of the inflows taking place in the fourth quarter of last year.
Including Asia, Latin America, Eastern Europe, Middle Eastern and African specialist equity funds, the inflows were a whopping US$92.1 billion in 2010, up from a similarly exceptional US$83.3 billion in 2009.
'Of the four major emerging markets fund groups only the diversified global emerging markets equity funds set a new record,' said Ian Wilson, managing director, fund data, at EPFR Global. These funds accounted for two-thirds of emerging market equity flows.
'Asia ex-Japan equity funds again absorbed the second largest amount of fresh money, but flows slipped off their 2009 pace as concerns about China's response to over-investment, inflation and asset bubbles dogged sentiment towards the region on and off all year,' Mr Wilson added.
Although there were much improved flows into US funds, helping the S&P 500 index and other indices close at the highs of the years - albeit with some window dressing - there were still sizeable outflows during the year.
Withdrawals in previous quarters from Japan specialist funds were reversed in the final quarter. There was a modest inflow with investors taking a contrary view about the Tokyo market's prospects.
Indeed, Japan equity funds extended their longest inflow streak since a 14-week one that ended in late March, according to EPFR Global.
A weaker yen and yet another stimulus package brightened the outlook for Japanese exporters and consumers.
The crisis in Europe predictably caused outflows in the fourth quarter. Outflows from European funds were US$22.1 billion in 2010 compared to inflows of US$1.24 billion in 2009.
German equity funds, however, enjoyed a record year as the nation was the best performing market in Europe, helped by a jump in exports and the flight to safety.
Despite inflows of US$28.4 billion into developed market funds in the fourth quarter, total outflows for the year amounted to US$62.4 billion in 2010 following redemptions of US$74 billion in 2009.
Flows into commodity funds soared to US$29.3 billion in 2010 following net investment of US$20 billion in 2009.
Fourth-quarter fresh money into these funds amounted to 41 per cent of the total inward investment in 2010 as growing numbers of institutional and retail investors anticipate inflation.
Traders within metals and other commodity markets caution that a dangerous bubble is developing in these markets and China's anti-inflation moves could end the speculation, they warn.
Funds involved in the healthcare/biotechnology sector again suffered the biggest redemptions among the major sector funds. The long-running political battle over healthcare reform in the US did these funds no favours, according to EPFR Global.
Efforts by European governments to get their finances in order also raised the spectre of cuts in reimbursement rates and publicly supported services.
Despite withdrawals from a bloated US bond funds in the fourth quarter, inflows into global emerging markets and high-yield bonds meant that investment into bond funds overall were still US$29.8 billion in the fourth quarter, boosting the annual total to a high US$372 billion compared with US$303 billion in 2009.
Bond funds have benefited from almost zero money market rates and outflows from money market funds, but the big danger is historically low yields and potential inflation from the dangers of loose monetary policies in the US, UK and Europe.
Tuesday, 11 January 2011
Last Day in Tokyo...
As we were about to fly home, the temperature in Tokyo plunged to 3 degrees again. I realised that if the temperature falls below 5 degrees, leather jackets just won't do, even with Uniqlo's Heat Tech shirt underneath. Down feather jackets are the most appropriate form of dressing.
As we walked to the Meiji Temple on a cold evening, memories of my student days in Christchurch came flooding back. The cold air that filled my lungs jolted my memory, reminding me of things that I missed back then. I made a choice to return to Singapore instead of staying in Christchurch to be just another Asian immigrant trying to make ends meet.
It's funny how the sun sets at 4.30pm in Tokyo around January. I think it sets at 4pm in February. The early darkness forced me to wake up at 7am and to leave the apartment at 9am to catch every bit of limited day light. Unlike the locals who hid in one super-heated shopping mall to another, I actually enjoyed standing in the cold outside. It just invigorated me. It made my mind alive. I could theorise about things that I couldn't figure out earlier. I'm just the kind that can't sleep if I can't understand something.
The people of Tokyo really take care of their appearance. Almost every lady puts on very thick eye mascara, false eyelashes that are stuck outside the far corners of their eyes to give an illusion that their eyes are bigger. A few gentlement even put on mascara and foundation. Tokyo is probably a place of high-fashion, as is Seoul or Hong Kong. People dress well. The girls wear cute dresses, not the elegant black leather the European women wear. The fashion in Tokyo/Seoul/Hong Kong is more varied than in Europe.
As I trudged reluctantly to the bus that brought us to the airport, I wondered what Shanghai would have been today had they made a different turn in history. It would probably be very different from what it is today. It would probably have been ultra decadent, ultra modern. Right now, China is still grappling with rampant air pollution, the tap water is not drinkable, and food safety is suspect. It would probably not be a place I want my future children to grow up in. Singapore is too hot and humid, surrounded by a rather unstable neighbourhood. Worst of all, I do not know how Singapore will cope with food shortage and rising sea levels. Perhaps we will be like Holland, where a third is below sea level but saved by the dams.
There aren't many places that give me a perfect blend of economic vibrancy, safety, a temperate climate and a good investment environment. I'm still searching. But Tokyo has set a high bar indeed.
As we walked to the Meiji Temple on a cold evening, memories of my student days in Christchurch came flooding back. The cold air that filled my lungs jolted my memory, reminding me of things that I missed back then. I made a choice to return to Singapore instead of staying in Christchurch to be just another Asian immigrant trying to make ends meet.
It's funny how the sun sets at 4.30pm in Tokyo around January. I think it sets at 4pm in February. The early darkness forced me to wake up at 7am and to leave the apartment at 9am to catch every bit of limited day light. Unlike the locals who hid in one super-heated shopping mall to another, I actually enjoyed standing in the cold outside. It just invigorated me. It made my mind alive. I could theorise about things that I couldn't figure out earlier. I'm just the kind that can't sleep if I can't understand something.
The people of Tokyo really take care of their appearance. Almost every lady puts on very thick eye mascara, false eyelashes that are stuck outside the far corners of their eyes to give an illusion that their eyes are bigger. A few gentlement even put on mascara and foundation. Tokyo is probably a place of high-fashion, as is Seoul or Hong Kong. People dress well. The girls wear cute dresses, not the elegant black leather the European women wear. The fashion in Tokyo/Seoul/Hong Kong is more varied than in Europe.
As I trudged reluctantly to the bus that brought us to the airport, I wondered what Shanghai would have been today had they made a different turn in history. It would probably be very different from what it is today. It would probably have been ultra decadent, ultra modern. Right now, China is still grappling with rampant air pollution, the tap water is not drinkable, and food safety is suspect. It would probably not be a place I want my future children to grow up in. Singapore is too hot and humid, surrounded by a rather unstable neighbourhood. Worst of all, I do not know how Singapore will cope with food shortage and rising sea levels. Perhaps we will be like Holland, where a third is below sea level but saved by the dams.
There aren't many places that give me a perfect blend of economic vibrancy, safety, a temperate climate and a good investment environment. I'm still searching. But Tokyo has set a high bar indeed.
Sunday, 9 January 2011
A City of Two Tales - Revisited
I've done some calculations on residential property demand / supply balance, but not for office. It appears that office prices are unsustainable. Hence, what I've suspected along is true, that the government wants to keep property prices stable; residential, commercial, office and industrial. If commercial property prices are allowed to escalate, the cost of running a restaurant or a Seven Eleven would have sky-rocketed. Many businesses would have failed. Food and convenience goods prices would have shot up and inflation skyrocket.
There are some differences for residential calculations. I calculated that Singapore's population will grow between 80,000 to 100,000 per annum on average. Let's take an average of 90,000 increase in population. The average household size has fallen to 3.5, which means that 25,700 residential units are needed, comprising private and public. These are my estimations of supply and demand through the years:
If the bull run ends in 2012, which coincides with oversupply of residential properties, then 2012 could be the perfect storm. The opportunity to buy residential property again may not manifest until end 2013 or early 2014.
Published January 8, 2011
http://www.businesstimes.com.sg/sub/premiumstory/0,4574,420925,00.html?
Wealth insight
A city of two tales - revisited
There are clouds on the horizon for both Singapore's office and residential markets
By JOSEPH CHONG
TWO years ago, in the midst of the greatest financial crisis since the Great Depression, I contributed a piece forecasting the performance of the residential and office property markets (BT, Dec 10, 2008, 'A city of two tales'). In essence, the prediction was that the residential market will recover briskly and outperform the office market. That has come about.
The generous land sales for offices recently will ensure no shortage beyond 2013 and that any rental increases will be muted. The office sector looks like a poor long term investment... Demand in the residential property market will be dominated by the need to control inflation in Singapore - in the near and long term.
Indeed, times are currently buoyant for the property market. Although conditions are expected to be good over the next 6-12 months, we need to look beyond 2011 to ascertain whether the current boom is an investment opportunity or the top of a cliff. As always, we need to invoke the old saw: demand and supply.
First, let's look at the overall global demand picture. Currently, the global demand picture looks encouraging. Leading economic data such as the Purchasing Managers Indices show continued moderate expansion in almost every major economy. This is expected to continue over the next 12 months because of unprecedented low interest rates and quantitative easing (QE) of some kind in the US, Europe and Japan. In response, equity markets around the world have risen fairly sharply over the past couple of months.
There has been much media ado about QE but it is in essence nothing special because it is an extreme extension of what central banks do on a daily basis. Central banks raise or reduce interest rates by manipulating the level of money circulating in the economy (money supply). Increasing money supply aggressively enough will lead interest rates to fall to zero.
Although interest rates cannot fall below zero, central bankers can achieve the effects of negative interest rates by printing money and buying assets such as debt issued by the government. The US Fed is doing this because there is a risk of deflation in the US. GDP growth is anaemic, core inflation has fallen to about 0 per cent and labour is in huge surplus with about seven million spare workers.
Indeed, according to the Taylor Rule, the appropriate Fed funds rate ought to be a negative number. The Taylor Rule is used by the US Fed to estimate the appropriate short-term interest rate for the economy.
Deflation is bad for stocks, as falling prices depress profits. The Fed and other central banks shooting for higher inflation is akin to granting stock market investors a put option - hence, the global rally in stocks. Nonetheless, there will be a comeuppance from the extremely low interest rates currently - but that is another story.
In short, global growth will probably revert to 2005-2006 (pre-crisis but pre-bubble) levels, but the shift is towards China, Asia-Pacific and other emerging countries away from the US. Ironically, however, stock markets in developed countries where growth is slower will probably do better than emerging countries in next 12 months. This is because developed countries are in easing mode due to disinflation whilst emerging countries need to tighten policy because of inflation.
Office market
In the past few months, quite a few property 'consultants' have been issuing bullish reports about the office market, predicting a sustainable rebound. I see the same data and hear the same government policy actions but I arrive at quite a different conclusion. Maybe it is because I have no office rentals or sales to broker.
The crux of the matter is the vacancy rate. Until the data signal that this is on the turnaround, rentals and capital values will stagnate with a downward bias over the next two years. Unfortunately, the data and policy actions signal that the rise in the vacancy rate has more to go.
From data published by the Singapore Department of Statistics, the labour force has grown at an annualised rate of about 4 per cent over the past 11 years. During this period, the service sector has grown even faster - by about 4.5 per cent annually. This was driven by the policy to allow the population and labour force to grow aggressively in 2005-2007. However, according to URA data, the demand for office space in Singapore has grown at an annualised rate of less than 2 per cent in the same period - demand for office space lagged employment growth considerably during the same period. The reason for this is most probably the changes in IT technology, allowing companies to economise on office space.
I expect the trend of more efficient usage to continue but continue to project a demand of 2 per cent per annum for the long term - about 120,000 square metres per annum. Again, this is probably unreasonably optimistic given the need to curb the labour force growth over the next few years.
Assuming an optimistic annual demand of 120,000 sq m, supply of completed properties will still swamp demand every year until 2013, according to URA data. 339,000 sq m is expected to be completed in 2011 - nearly three times annual demand. The cumulative surplus is expected to push the vacancy rate past 17 per cent by 2013 - roughly one in six buildings will be empty. It is to be noted that the vacancy rate was 16 per cent when the office market bottomed in 4Q 2004, when Raffles Place rentals bottomed at $5 psf/month.
The current bounce in offices is thus likely to be a technical one - an opportunity to sell and not to buy. Indeed, policy makers appear to have learnt the lesson from 2007 from the recent government tenders. The generous land sales for offices recently will ensure no shortage beyond 2013 and that any rental increases will be muted. The office sector looks like a poor long term investment. Perhaps, that is why savvy major office landlord CDL has been a net seller of office buildings.
Residential market
Demand in the residential property market will be dominated by the need to control inflation in Singapore - in the near and long term. In the near term, the Singapore dollar has been allowed to appreciate fairly sharply. Most of the appreciation has been against main export markets and competitors. This is not good for the manufacturing sector which was already moderating.
Longer term, inflation needs to be curbed because of excessive demand creation (overcrowding) in the aftermath of the 'go for growth' policy of 2005-2007. The population was allowed to balloon beyond the pace at which infrastructure could be built. Among other things, this caused property prices to rise far beyond economic fundamentals. Population growth needs to be curbed whilst enough hospitals, train lines, homes etc are being built. This structural correction will have to take its course over the next few years. The sharp increase in COE prices is the most immediate manifestation of the pain of this correction as overcrowding of roads needs to be resolved. The pain in residential properties is yet to come.
The same logic of this structural adjustment will have a negative impact on the residential property market where buyers have been too optimistic about future demand, whilst the government sells residential land and builds new HDB flats at a pace far above the level of expected future demand, in order to correct the earlier undersupply.
According to URA data, an additional 8,100 new private homes on average has been occupied every year since 1995. However, given the curbs by the government on population growth to alleviate the overcrowding, demand in the next few years will probably be below this historical number. Indeed, the most current URA data show that despite the economic rebound, we have already fallen to 8,100 already. The government has been quicker to curb housing demand than expected.
Assuming we stay at 1.2 million foreigners and a historical growth rate of 1.5 per cent in the resident population, demand for dwellings going forward from growth in the resident population will be about 55,000/3.5=15,714 per annum. 3.5 is the median household size.
Now, let's look at supply. According to the latest URA data, 6,714 units under construction will be completed in 2011. In 2013, 11,621 units under construction will be completed with 7,091 under planning. Given the spate of new launches in 2010, we should see a substantial portion of this 7,091 under planning being constructed and completed. Hence, we should assume that around 18,000 units will be completed in 2013.
We see a similar picture for 2014, where we could expect about 15,000 units to be completed. In both 2013 and 2014, completed supply is far greater than the historical demand of 8,100 units. The vacancy rate could rise as much as 4 per cent over a 12-month period when all the completed homes hit the market in 2013 and 2014.
Nevertheless, the main pressure of oversupply from 2013 will come from HDB. HDB has ramped up its BTO programme to more than 20,000 units annually over the next few years! We expect about 12,000 BTO units will be completed in 2013 and about 20,000 in 2014. HDB and the private sector combined will deliver some 30,000 in 2013 and 35,000 units in 2014 - far in excess of the required 15,714 units projected from resident population growth.
We expect an oversupply of completed dwellings by 2013. The fall in rentals and the impact on capital values could be significant in 2013 unless demand surges significantly. During the Asian financial crisis of 1997, the vacancy rate climbed by 4 per cent in 12 months - pushing capital values down by 40 per cent. We could see a similar fall in 2013 and 2014.
Maybe this is why residential property stocks such as Allgreen Properties are trading at more than 20 per cent discount to published NTA - up from a 10 per cent discount a year ago. Despite growing its NTA, the stock has underperformed the STI by some 10 per cent over the past one year.
The writer is CEO of financial adviser New Independent. He welcomes feedback at josephchong@ni.com.sg. This article is for information only. Readers should seek independent advice
There are some differences for residential calculations. I calculated that Singapore's population will grow between 80,000 to 100,000 per annum on average. Let's take an average of 90,000 increase in population. The average household size has fallen to 3.5, which means that 25,700 residential units are needed, comprising private and public. These are my estimations of supply and demand through the years:
If the bull run ends in 2012, which coincides with oversupply of residential properties, then 2012 could be the perfect storm. The opportunity to buy residential property again may not manifest until end 2013 or early 2014.
Published January 8, 2011
http://www.businesstimes.com.sg/sub/premiumstory/0,4574,420925,00.html?
Wealth insight
A city of two tales - revisited
There are clouds on the horizon for both Singapore's office and residential markets
By JOSEPH CHONG
TWO years ago, in the midst of the greatest financial crisis since the Great Depression, I contributed a piece forecasting the performance of the residential and office property markets (BT, Dec 10, 2008, 'A city of two tales'). In essence, the prediction was that the residential market will recover briskly and outperform the office market. That has come about.
The generous land sales for offices recently will ensure no shortage beyond 2013 and that any rental increases will be muted. The office sector looks like a poor long term investment... Demand in the residential property market will be dominated by the need to control inflation in Singapore - in the near and long term.
Indeed, times are currently buoyant for the property market. Although conditions are expected to be good over the next 6-12 months, we need to look beyond 2011 to ascertain whether the current boom is an investment opportunity or the top of a cliff. As always, we need to invoke the old saw: demand and supply.
First, let's look at the overall global demand picture. Currently, the global demand picture looks encouraging. Leading economic data such as the Purchasing Managers Indices show continued moderate expansion in almost every major economy. This is expected to continue over the next 12 months because of unprecedented low interest rates and quantitative easing (QE) of some kind in the US, Europe and Japan. In response, equity markets around the world have risen fairly sharply over the past couple of months.
There has been much media ado about QE but it is in essence nothing special because it is an extreme extension of what central banks do on a daily basis. Central banks raise or reduce interest rates by manipulating the level of money circulating in the economy (money supply). Increasing money supply aggressively enough will lead interest rates to fall to zero.
Although interest rates cannot fall below zero, central bankers can achieve the effects of negative interest rates by printing money and buying assets such as debt issued by the government. The US Fed is doing this because there is a risk of deflation in the US. GDP growth is anaemic, core inflation has fallen to about 0 per cent and labour is in huge surplus with about seven million spare workers.
Indeed, according to the Taylor Rule, the appropriate Fed funds rate ought to be a negative number. The Taylor Rule is used by the US Fed to estimate the appropriate short-term interest rate for the economy.
Deflation is bad for stocks, as falling prices depress profits. The Fed and other central banks shooting for higher inflation is akin to granting stock market investors a put option - hence, the global rally in stocks. Nonetheless, there will be a comeuppance from the extremely low interest rates currently - but that is another story.
In short, global growth will probably revert to 2005-2006 (pre-crisis but pre-bubble) levels, but the shift is towards China, Asia-Pacific and other emerging countries away from the US. Ironically, however, stock markets in developed countries where growth is slower will probably do better than emerging countries in next 12 months. This is because developed countries are in easing mode due to disinflation whilst emerging countries need to tighten policy because of inflation.
Office market
In the past few months, quite a few property 'consultants' have been issuing bullish reports about the office market, predicting a sustainable rebound. I see the same data and hear the same government policy actions but I arrive at quite a different conclusion. Maybe it is because I have no office rentals or sales to broker.
The crux of the matter is the vacancy rate. Until the data signal that this is on the turnaround, rentals and capital values will stagnate with a downward bias over the next two years. Unfortunately, the data and policy actions signal that the rise in the vacancy rate has more to go.
From data published by the Singapore Department of Statistics, the labour force has grown at an annualised rate of about 4 per cent over the past 11 years. During this period, the service sector has grown even faster - by about 4.5 per cent annually. This was driven by the policy to allow the population and labour force to grow aggressively in 2005-2007. However, according to URA data, the demand for office space in Singapore has grown at an annualised rate of less than 2 per cent in the same period - demand for office space lagged employment growth considerably during the same period. The reason for this is most probably the changes in IT technology, allowing companies to economise on office space.
I expect the trend of more efficient usage to continue but continue to project a demand of 2 per cent per annum for the long term - about 120,000 square metres per annum. Again, this is probably unreasonably optimistic given the need to curb the labour force growth over the next few years.
Assuming an optimistic annual demand of 120,000 sq m, supply of completed properties will still swamp demand every year until 2013, according to URA data. 339,000 sq m is expected to be completed in 2011 - nearly three times annual demand. The cumulative surplus is expected to push the vacancy rate past 17 per cent by 2013 - roughly one in six buildings will be empty. It is to be noted that the vacancy rate was 16 per cent when the office market bottomed in 4Q 2004, when Raffles Place rentals bottomed at $5 psf/month.
The current bounce in offices is thus likely to be a technical one - an opportunity to sell and not to buy. Indeed, policy makers appear to have learnt the lesson from 2007 from the recent government tenders. The generous land sales for offices recently will ensure no shortage beyond 2013 and that any rental increases will be muted. The office sector looks like a poor long term investment. Perhaps, that is why savvy major office landlord CDL has been a net seller of office buildings.
Residential market
Demand in the residential property market will be dominated by the need to control inflation in Singapore - in the near and long term. In the near term, the Singapore dollar has been allowed to appreciate fairly sharply. Most of the appreciation has been against main export markets and competitors. This is not good for the manufacturing sector which was already moderating.
Longer term, inflation needs to be curbed because of excessive demand creation (overcrowding) in the aftermath of the 'go for growth' policy of 2005-2007. The population was allowed to balloon beyond the pace at which infrastructure could be built. Among other things, this caused property prices to rise far beyond economic fundamentals. Population growth needs to be curbed whilst enough hospitals, train lines, homes etc are being built. This structural correction will have to take its course over the next few years. The sharp increase in COE prices is the most immediate manifestation of the pain of this correction as overcrowding of roads needs to be resolved. The pain in residential properties is yet to come.
The same logic of this structural adjustment will have a negative impact on the residential property market where buyers have been too optimistic about future demand, whilst the government sells residential land and builds new HDB flats at a pace far above the level of expected future demand, in order to correct the earlier undersupply.
According to URA data, an additional 8,100 new private homes on average has been occupied every year since 1995. However, given the curbs by the government on population growth to alleviate the overcrowding, demand in the next few years will probably be below this historical number. Indeed, the most current URA data show that despite the economic rebound, we have already fallen to 8,100 already. The government has been quicker to curb housing demand than expected.
Assuming we stay at 1.2 million foreigners and a historical growth rate of 1.5 per cent in the resident population, demand for dwellings going forward from growth in the resident population will be about 55,000/3.5=15,714 per annum. 3.5 is the median household size.
Now, let's look at supply. According to the latest URA data, 6,714 units under construction will be completed in 2011. In 2013, 11,621 units under construction will be completed with 7,091 under planning. Given the spate of new launches in 2010, we should see a substantial portion of this 7,091 under planning being constructed and completed. Hence, we should assume that around 18,000 units will be completed in 2013.
We see a similar picture for 2014, where we could expect about 15,000 units to be completed. In both 2013 and 2014, completed supply is far greater than the historical demand of 8,100 units. The vacancy rate could rise as much as 4 per cent over a 12-month period when all the completed homes hit the market in 2013 and 2014.
Nevertheless, the main pressure of oversupply from 2013 will come from HDB. HDB has ramped up its BTO programme to more than 20,000 units annually over the next few years! We expect about 12,000 BTO units will be completed in 2013 and about 20,000 in 2014. HDB and the private sector combined will deliver some 30,000 in 2013 and 35,000 units in 2014 - far in excess of the required 15,714 units projected from resident population growth.
We expect an oversupply of completed dwellings by 2013. The fall in rentals and the impact on capital values could be significant in 2013 unless demand surges significantly. During the Asian financial crisis of 1997, the vacancy rate climbed by 4 per cent in 12 months - pushing capital values down by 40 per cent. We could see a similar fall in 2013 and 2014.
Maybe this is why residential property stocks such as Allgreen Properties are trading at more than 20 per cent discount to published NTA - up from a 10 per cent discount a year ago. Despite growing its NTA, the stock has underperformed the STI by some 10 per cent over the past one year.
The writer is CEO of financial adviser New Independent. He welcomes feedback at josephchong@ni.com.sg. This article is for information only. Readers should seek independent advice
Saturday, 8 January 2011
Is Gold Pullback a Correction or a Contrarian Indicator?
Gold has little industrial use. It is used as a store of value and as jewellery mostly. For some reason, retail investors love it.
Here are the drivers of gold prices:
1. Its price rises when USD drops. USD is in a secular bear trend. Persistent trade deficit, budget deficit, QE. There may be a minor rebound of the USD against Emerging Market currencies when the stock market corrects but I don't think it will be much. At most, the USDSGD may rise to 1.33, which is less than 3% up. By end 2011, USD may fall to 1.20.
2. In times of war, investors flock to gold for safety.
3. When interest rates rise, gold price falls because investors would rather place money into an asset that gives yields. The USD interest rate yields virtually zero. But EM currencies are raising interest rates faster than you can say "Quantitative Easing". It's a mix bag in this area.
4. New supply. Many countries are raising capex into exploration for gold. Over several years, gold supply should creep up.
5. Jewellery demand is quite stagnant at the moment. India, the world biggest consumer of gold jewellery, has mostly held back its purchase.
6. government selling / buying. I do not think the Chinese government nor any government with big foreign reserves will be aggressively buying gold. They will probably be selling off US Treasuries, but buying foreign assets, especially mining reserves.
7. Technically, gold is hovering between USD1300 - USD1480/oz.
Conclusion: gold has limited upside. The numbers being talked about, USD2000, USD3000, will probably not occur in the next 1 - 2 years. Metals with industrial uses like copper, platinum, palladium, steel will probably have more upside. I would suggest taking some profit off gold and gold mining companies in the near term.
Is Gold Pullback a Correction or a Contrarian Indicator?
Anyone paying attention to CNBC these days may have noticed a disconnect between what guests say and what readers/viewers say.
Readers (judging by their comments) are decidedly bearish on the economy and the markets. For example, whether right or wrong, every comment (as of time of publishing) on recent bullish remarks by Richard Bernstein bashed his conclusion and credibility. The accusations are wild and it appears that rationality has been thrown out the window. There's 'bear fever' out there and retail investors don't want to hear anything that contradicts their view.
In another article, CNBC polls readers on today's gold pullback. The results are telling. 70% of respondents (as of time of publishing) see today's pullback in gold as 'just a short-term correction'. What this tells me is that the retail investor is buying gold on the dip and is bullish.
So retail investors (as represented by CNBC comments) are bearish on the U.S. and bullish on gold.
Viewing this from a strictly contrarian position, my conclusion would be that it may be time to lighten up on gold and buy U.S. equities. Clearly this conclusion does not consider anything but retail investor sentiment. And using investor sentiment to guide investing decisions isn't always accurate - but when at extremes, investor sentiment is often a useful contrarian signal.
So the real question is this: Are bearish retail views on the market/bullish views on gold at extreme levels yet?
Here are the drivers of gold prices:
1. Its price rises when USD drops. USD is in a secular bear trend. Persistent trade deficit, budget deficit, QE. There may be a minor rebound of the USD against Emerging Market currencies when the stock market corrects but I don't think it will be much. At most, the USDSGD may rise to 1.33, which is less than 3% up. By end 2011, USD may fall to 1.20.
2. In times of war, investors flock to gold for safety.
3. When interest rates rise, gold price falls because investors would rather place money into an asset that gives yields. The USD interest rate yields virtually zero. But EM currencies are raising interest rates faster than you can say "Quantitative Easing". It's a mix bag in this area.
4. New supply. Many countries are raising capex into exploration for gold. Over several years, gold supply should creep up.
5. Jewellery demand is quite stagnant at the moment. India, the world biggest consumer of gold jewellery, has mostly held back its purchase.
6. government selling / buying. I do not think the Chinese government nor any government with big foreign reserves will be aggressively buying gold. They will probably be selling off US Treasuries, but buying foreign assets, especially mining reserves.
7. Technically, gold is hovering between USD1300 - USD1480/oz.
Conclusion: gold has limited upside. The numbers being talked about, USD2000, USD3000, will probably not occur in the next 1 - 2 years. Metals with industrial uses like copper, platinum, palladium, steel will probably have more upside. I would suggest taking some profit off gold and gold mining companies in the near term.
Is Gold Pullback a Correction or a Contrarian Indicator?
Anyone paying attention to CNBC these days may have noticed a disconnect between what guests say and what readers/viewers say.
Readers (judging by their comments) are decidedly bearish on the economy and the markets. For example, whether right or wrong, every comment (as of time of publishing) on recent bullish remarks by Richard Bernstein bashed his conclusion and credibility. The accusations are wild and it appears that rationality has been thrown out the window. There's 'bear fever' out there and retail investors don't want to hear anything that contradicts their view.
In another article, CNBC polls readers on today's gold pullback. The results are telling. 70% of respondents (as of time of publishing) see today's pullback in gold as 'just a short-term correction'. What this tells me is that the retail investor is buying gold on the dip and is bullish.
So retail investors (as represented by CNBC comments) are bearish on the U.S. and bullish on gold.
Viewing this from a strictly contrarian position, my conclusion would be that it may be time to lighten up on gold and buy U.S. equities. Clearly this conclusion does not consider anything but retail investor sentiment. And using investor sentiment to guide investing decisions isn't always accurate - but when at extremes, investor sentiment is often a useful contrarian signal.
So the real question is this: Are bearish retail views on the market/bullish views on gold at extreme levels yet?
Thursday, 6 January 2011
Back to the Sauna
From a nice 3 degree centigrade, I came thumping down to earth with 28 degrees in Singapore. As I took a cab home from the airport this morning, I already broke out the first pearls of sweat from my forehead as the air conditioning of the cab was like an old drone that had seen its better days.
The brain functions best in colder temperatures. The head can lose up to half the body's heat. To warm up the brain, blood flows to the organ, making us energetic in cold climates. In humid tropics, brain flows away from the brain in an effort to keep the head cool. We feel sluggish as a result.
Singapore is a fantastic place, don't get me wrong. But the climate is such a let down and today's technology has not yet resolved this problem. I also have a bone to pick regarding its lack of MRT stations around the island but I'll reserve this for another entry.
Upon reaching home, I received a pleasant surprise as CWT, one of the stock that I've heald since June, suddenly broke up from S$1 to 1.15 in high volume. This is a classic breakout.
Here are the signs that convinced me to hold on to CWT:
1. Since the start of 2011, CWT's share price has been supported by strong interest, averaging around 3.6m shares daily since this week's Monday.
2. In fact, since Nov 2010, CWT has gained steadily by 12.5% from 0.915 to 1.03.
3. Strong interest in CWT could be attributed to its recent acquisition of a South African freight forwarder Quarius Shipping International. The earnings accretive acquisition is expected to contribute from 2011 onwards.
4. CWT is also actively pursuing commodities logistics expansion in Europe, Turkey and in particular Indonesia, where the group is building up its coal logistics business.
5. CWT's new strategic direction in commodities logistics offers a much higher yield as compared to their conventional warehousing and freight forwarding businesses.
6. On top of that, last year I saw strong share price support for CWT following its announcement of a sale and leaseback transaction. The market was upbeat on the prospects of a special dividend payout, and CWT reached a 2 year high of 1.15.
7. Investors should take note of another possible sale and leaseback transaction this year.
8. CWT currently has 2 warehouses under construction. We could see another sale and leaseback exercise within the year, which could lead to another bout of special dividend payments this year.
9. Lastly, management has also been purchasing CWT shares in the open market since Dec. Conventional wisdom reflects management's confidence in CWT's outlook
The brain functions best in colder temperatures. The head can lose up to half the body's heat. To warm up the brain, blood flows to the organ, making us energetic in cold climates. In humid tropics, brain flows away from the brain in an effort to keep the head cool. We feel sluggish as a result.
Singapore is a fantastic place, don't get me wrong. But the climate is such a let down and today's technology has not yet resolved this problem. I also have a bone to pick regarding its lack of MRT stations around the island but I'll reserve this for another entry.
Upon reaching home, I received a pleasant surprise as CWT, one of the stock that I've heald since June, suddenly broke up from S$1 to 1.15 in high volume. This is a classic breakout.
Here are the signs that convinced me to hold on to CWT:
1. Since the start of 2011, CWT's share price has been supported by strong interest, averaging around 3.6m shares daily since this week's Monday.
2. In fact, since Nov 2010, CWT has gained steadily by 12.5% from 0.915 to 1.03.
3. Strong interest in CWT could be attributed to its recent acquisition of a South African freight forwarder Quarius Shipping International. The earnings accretive acquisition is expected to contribute from 2011 onwards.
4. CWT is also actively pursuing commodities logistics expansion in Europe, Turkey and in particular Indonesia, where the group is building up its coal logistics business.
5. CWT's new strategic direction in commodities logistics offers a much higher yield as compared to their conventional warehousing and freight forwarding businesses.
6. On top of that, last year I saw strong share price support for CWT following its announcement of a sale and leaseback transaction. The market was upbeat on the prospects of a special dividend payout, and CWT reached a 2 year high of 1.15.
7. Investors should take note of another possible sale and leaseback transaction this year.
8. CWT currently has 2 warehouses under construction. We could see another sale and leaseback exercise within the year, which could lead to another bout of special dividend payments this year.
9. Lastly, management has also been purchasing CWT shares in the open market since Dec. Conventional wisdom reflects management's confidence in CWT's outlook
Tuesday, 4 January 2011
All Good Things Must Come to an End
Living in a temperate country is fantastic. I've been walking for 6 hours and didn't break a sweat. I'm all snuggly in a leather jacket that's padded with down feathers. Every now and then I stop by for a nice hot cuppa! The only snag is the sun sets rather early, around 4.30pm. But if you wake up at 6am and leave your hotel by 7am, you'd have a good 9 hours of day light.The temperature in Tokyo is fantastic. 2 degrees. Not snowy like in Europe. But nice and cold. The only times I perspired was when I entered shopping malls and they are heated to around 25 degrees!
All this while, stock markets worldwide have been running up thanks to QE 2. I don't think the party will end, at least until mid year. After that, we'll have several months of correction in the US due to the stoppage of QE and rate hikes. The money will flow to Asia / Emerging Markets and we'd have a fantastic rally from mid 2011 onwards. We might see another 70 - 150% of upside from current levels. Yes, you heard me right.
Japan is actually quite cheap now, thanks to decades of deflation. There are many 400 yen shops, which is about SGD6.70. This pair of Woody Alan specs that I'm wearing cost me 400 yen! Lots of down feather jackets in Uniqlo going for SGD80! In Singapore, Uniqlo down feather jackets would have cost double! I don't wanna mention Europe but it's worse! Similar items would have cost at least SGD250 even in a flea market in Camden, London.
Japan is a land of Hello Kitty. Lots of cutsey stuff, make up for ladies etc...
There was a vintage car exhibition at Odaiba and I took a picture with a De Lorean car from "Back to the Future".
Japanese people are largely friendly and polite. In Europe, I sometimes get very rude service. It sucks because after paying for so much, you still get such a service. And worse, in Paris and London, if you're on a budget, you can get food that's very bad! The streets are very safe in Tokyo, Kyoto and Osaka. I've never felt unsafe, unlike my experiences in Christchurch NZ, Geneva Switzerland, Paris or London where some areas are quite dangerous. There are no hoodlums or hoodies; kids that hang out as a big group, often rowdy and harassing others.
Of course, Japanese are very insular people. Language is a major challenge because many cannot even understand simple English. There are other peeves as with all other major cities. Overall, I'd give Japan's infrastructure 9/10, safety 8/10, friendliness 6/10, food 8/10.
Monday, 3 January 2011
Best Markets to Invest in 2011
Follow the money. Liquidity goes around the world looking for returns. Valuations usually play a part. To make good returns, one has to think like a fund manager. If you were one, where would you put your money? Obviously, the country with the highest dividends relative to its risk free rates, or the sector with the lowest valuation matrices.
I've come up with several countries / regions with very low valuation matrices, they are in descending order:
1. Russia
2. Latin America (Venezuela, Peru)
3. Middle East (Qatar)
4. China (HK listed)
5. Brazil
In terms of sectors, they are:
1. Mining
2. US banks (Citigroup)
3. US developers
Beware of buying commodity ETFs however. Their negative roll yield will eat into the returns. For example, if oil futures were to rise by 100%, oil ETF, e.g. USO will probably only rise by 50%... GO for energy stocks, mining stocks or commodity funds instead. The reason is a complex one. In a nut shell, ETFs buy the nearest to expire option, e.g. USO buys Jan 2011 expiry for oil at USD89. However, since ETFs cannot take physical delivery, they will have to sell their options at a predetermined date, e.g. on 17 Jan 2011. If all the oil ETFs sell at the same date, the price will fall on 17 Jan perhaps to 85. To roll over the next month, the ETF has to buy Feb 2011 expiry date, perhaps at 90. The loss is 5, the difference between Jan and Feb options. The difference is made greater by the fact that oil ETFs may all buy the Feb option at the same date, say 18 Jan 2011.
Fund managers take advantage of this by selling before the ETFs square off their options, and buying before the ETFs buy.
I've come up with several countries / regions with very low valuation matrices, they are in descending order:
1. Russia
2. Latin America (Venezuela, Peru)
3. Middle East (Qatar)
4. China (HK listed)
5. Brazil
In terms of sectors, they are:
1. Mining
2. US banks (Citigroup)
3. US developers
Beware of buying commodity ETFs however. Their negative roll yield will eat into the returns. For example, if oil futures were to rise by 100%, oil ETF, e.g. USO will probably only rise by 50%... GO for energy stocks, mining stocks or commodity funds instead. The reason is a complex one. In a nut shell, ETFs buy the nearest to expire option, e.g. USO buys Jan 2011 expiry for oil at USD89. However, since ETFs cannot take physical delivery, they will have to sell their options at a predetermined date, e.g. on 17 Jan 2011. If all the oil ETFs sell at the same date, the price will fall on 17 Jan perhaps to 85. To roll over the next month, the ETF has to buy Feb 2011 expiry date, perhaps at 90. The loss is 5, the difference between Jan and Feb options. The difference is made greater by the fact that oil ETFs may all buy the Feb option at the same date, say 18 Jan 2011.
Fund managers take advantage of this by selling before the ETFs square off their options, and buying before the ETFs buy.
Saturday, 1 January 2011
I'm Wishing for a White...
Let's start with a great quote from Mark Twain, "Patriotism is supporting your country all the time, and your government when it deserves it."
Spending Christmas and New Year over a winter is the best thing that can ever happen. I get skin problems in tropical climates. But here, every thing is dry and nice... no perspiration and oil to clog my skin. No problems with infection of hair follicles.
Living in a big country is fun. You can always get away for the long weekend without being robbed in a neighboring country... Mount Fuji is a beauty. This is the first time I saw it without clouds covering it.
We lived in a Ryokan in Atami and it was a good experience. Life in traditional Japan was spartan to say the least. The food was very healthy; grilled fish, miso soup, fruits, rice, pickles vege, raw tuna, salmon... steamed shitake mushrooms. No wonder there are very few fat Japanese around. The western diet has spoilt this great traditional diet. Hence, cancer rates and obesity is rising in Japan, China and Korea. There are more obese Singaporean kids these days thanks to McDonalds, KFC, Maturbak, etc... all the deep fried, cheese filled, butter fattened food. Avoid dairy products and live to a 100. Stick to a traditional diet of brown rice, steamed vegetables, lots of grilled eel and fish.
Ippudon could possibly have the spiciest and tastiest Ramen in Japan. I chose the spiciest Ramen which was made of Jalepano peppers. My god even I could not take it and had it diluted.
Osaka has many great food inventions. Above is a picture of a high school student making Okonomi-yaki for us.
Tako-yaki
This popular Japanese dumpling originates in Osaka and is made of flour batter and includes tako (diced octopus), tenkasu (tempura scraps), pickled ginger, and green onion. Once cooked into a ball, they are topped with Okonomi-yaki sauce, aonori (green laver), mayonnaise, and katsuobushi (bonito flakes.) Although Tako-yaki can be made easily at home with the right equipment, it is usually considered a fast food and is sold on the streets. In the Kansai region, Tako-yaki is eaten as a side dish with a bowl of cooked rice. Elsewhere in Japan, it is eaten without rice as a snack food.
Okonomi-yaki
Similar to Tako-yaki but flat, Okonomi-yaki means "as you like it.” With a variety of ingredients from seafood to pork and cabbage, these are flat cakes that resemble a cross between a pancake, pizza, and omelet that is topped with Okonomi-yaki sauce, aonori (green laver), mayonnaise, and katsuobushi (bonito flakes.) Osaka style is usually in the do-it-yourself form at small specialty restaurants. Tables are equipped with embedded hot plates and you will receive a bowl of ingredients that you would then cook "as you like it.”
Spending Christmas and New Year over a winter is the best thing that can ever happen. I get skin problems in tropical climates. But here, every thing is dry and nice... no perspiration and oil to clog my skin. No problems with infection of hair follicles.
Living in a big country is fun. You can always get away for the long weekend without being robbed in a neighboring country... Mount Fuji is a beauty. This is the first time I saw it without clouds covering it.
We lived in a Ryokan in Atami and it was a good experience. Life in traditional Japan was spartan to say the least. The food was very healthy; grilled fish, miso soup, fruits, rice, pickles vege, raw tuna, salmon... steamed shitake mushrooms. No wonder there are very few fat Japanese around. The western diet has spoilt this great traditional diet. Hence, cancer rates and obesity is rising in Japan, China and Korea. There are more obese Singaporean kids these days thanks to McDonalds, KFC, Maturbak, etc... all the deep fried, cheese filled, butter fattened food. Avoid dairy products and live to a 100. Stick to a traditional diet of brown rice, steamed vegetables, lots of grilled eel and fish.
Ippudon could possibly have the spiciest and tastiest Ramen in Japan. I chose the spiciest Ramen which was made of Jalepano peppers. My god even I could not take it and had it diluted.
Osaka has many great food inventions. Above is a picture of a high school student making Okonomi-yaki for us.
Tako-yaki
This popular Japanese dumpling originates in Osaka and is made of flour batter and includes tako (diced octopus), tenkasu (tempura scraps), pickled ginger, and green onion. Once cooked into a ball, they are topped with Okonomi-yaki sauce, aonori (green laver), mayonnaise, and katsuobushi (bonito flakes.) Although Tako-yaki can be made easily at home with the right equipment, it is usually considered a fast food and is sold on the streets. In the Kansai region, Tako-yaki is eaten as a side dish with a bowl of cooked rice. Elsewhere in Japan, it is eaten without rice as a snack food.
Okonomi-yaki
Similar to Tako-yaki but flat, Okonomi-yaki means "as you like it.” With a variety of ingredients from seafood to pork and cabbage, these are flat cakes that resemble a cross between a pancake, pizza, and omelet that is topped with Okonomi-yaki sauce, aonori (green laver), mayonnaise, and katsuobushi (bonito flakes.) Osaka style is usually in the do-it-yourself form at small specialty restaurants. Tables are equipped with embedded hot plates and you will receive a bowl of ingredients that you would then cook "as you like it.”
Shabu Shabu came from China. It's a hot pot of soup used to lightly boil vegetables and meat. It's healthy, hearty and tasty... Wagyu beef is popular but expensive in Japan. A plate of high grade Wagyu beef (about 200g) cost us S$15-20.
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