Published April 15, 2011
Govt to grow suburb towns, add homes in Central, West
By UMA SHANKARI
(SINGAPORE) The government will boost Singapore's housing stock in tandem with the growth in population and expand towns such as Punggol, Sengkang, Yishun and Choa Chu Kang over the next 40 to 50 years, National Development Minister Mah Bow Tan said yesterday.
He also revealed that more homes will be built in the Central and West regions in a bid to take some stress off transport networks and reduce commuting times.
'Our current towns will be redeveloped and expanded to provide affordable and good quality housing in popular areas like Punggol, Sengkang, Yishun and Choa Chu Kang,' Mr Mah said. 'Beyond the medium term, we will also open up new towns in areas such as Tengah.'
Mr Mah, who was speaking at a seminar organised by the Urban Redevelopment Authority (URA), was giving industry players a peek at the Concept Plan 2011. The Concept Plan will be officially unveiled in the fourth quarter of this year. It will chart plans for land use and infrastructure development in Singapore over the next 40 to 50 years.
In addition to boosting housing supply, the government also plans to bring jobs closer to homes by having more equal job-to-worker distribution across the island.
More housing will be injected into the Central and the West regions of Singapore, where currently there are proportionately more jobs than homes. At the same time, the government will also put more commercial and industrial activities in the North and North-East, where there are currently more homes than jobs.
'Re-balancing the job-worker distribution will not resolve all our traffic issues, but it will take some stress off our transport networks and reduce commuting times,' Mr Mah said.
There are also plans to concentrate higher density housing around transport nodes, so that more people will benefit from direct access to public transportation.
Giving one example, Mr Mah said that his ministry could add more than 10,000 HDB flats and private homes in vacant land around three MRT stations - Bishan, Commonwealth and Queenstown - in the next decade and beyond. These homes will be high-rise developments of more than 30 storeys.
'Higher density housing can bring greater economies of scale, and support the development of more amenities in close proximity to homes,' Mr Mah said. 'As we build up our towns, we will expand our transport infrastructure, especially our rail network.'
Analysts said that the government is likely to increase the plot ratios for residential land in Singapore's Central regions and near MRT stations.
'In towns such as Punggol, Sengkang and in the West, there is still quite a bit of land left for development,' said Knight Frank chairman Tan Tiong Cheng. 'But around MRT stations and in the Central regions, residential plot ratios are likely to go up.'
A developer BT spoke to also said that residential plot ratios look set to be increased in the coming years. He added that he hopes the government will boost plot ratios for both private and public land.
In his speech yesterday, Mr Mah added that leisure options and greenery will be expanded.
The government will also take into account Singapore's ageing population in planning for various facilities such as healthcare, housing and social facilities at the national level. It will also review town planning strategies to facilitate ageing in place, he said.
Monday 18 April 2011
Will There be Life After QE2?
by: Steven Hansen April 10, 2011
If we take the noise coming out of the Federal Reserve as gospel, QE2 will end before the end of June 2011. In simple words, QE (aka quantitative easing) is in effect the same as government buying its own debt.
As we speak, the Federal Reserve holds $1.3 trillion of Treasuries (15% of the total $9 trillion outstanding) on its balance sheet. As a matter of fact, the Fed is not the government. As a matter of effect, the Fed has dual agency as the provider of currency (a government agent) and as a coordinating agent for the private sector (banking).
One caveat in looking at the above graph’s QE2 purchases (click to enlarge), it does not credit the expiring Treasury, Agency and MBS debt instruments – but the net effect of QE2 is to increase the Fed’s balance sheet by $600 billion. QE2 roughly removed $200 billion per quarter ($800 billion annualized) of “investment” from the private sector.
It could be argued QE2 provided capital to the private sector. The government increased debt by $600 billion. This debt was sold to the banks. The Fed then printed currency (Federal Reserve notes and credits) and bought the debt from the banks. The net affect: government debt increased by $600 billion and private currency in the banks increased by the same amount. This allowed this $200 billion per quarter to be “invested” elsewhere.
What happens when QE2 ends?
Fed Chairman Bernanke said QE2 has “contributed to a stronger stock market just as they did in March 2009 when we did the first iteration of this program.” Is it a stretch to believe it created a bubble which will correct once QE2 is terminated?
Will the USA economy contract or become less good?
The major reason for implementing QE2 were indications that the economy was contracting following termination of QE1. The economy is currently moderately stronger – and is on less life support relative to one year ago. Logically, removing a leg of economic support at any time should be economically negative. The government will stop increasing debt which had the function of pumping currency into the banking system.
Little of this $600 billion of QE2 made it directly into GDP. GDP measures roughly 1/3 of all money flows in the USA.
QE2 is more like a true stimulus with multiplier effects directed towards investing and money flows. Many have argued much of the effects of QE2 surfaced in emerging economies which were capable of soaking up this amount of stimulus, although with increasing inflation.
Would ending QE2 reverse this and begin repatriating dollars invested in emerging economies?
Depends on non-QE2 factors.
• rising central bank interest rates in China and Europe, or capital inflows to buy Treasuries affect the relative value of the dollar;
• will the Fed continue to maintain its balance sheet levels, or allow them to decay;
• the strength of the USA economy versus the global economy going forward – this effects the flow of investing money which seeks the highest return.
The bottom line is that there is no certainty except that the Fed will not sit by and watch the economy crash.
If we take the noise coming out of the Federal Reserve as gospel, QE2 will end before the end of June 2011. In simple words, QE (aka quantitative easing) is in effect the same as government buying its own debt.
As we speak, the Federal Reserve holds $1.3 trillion of Treasuries (15% of the total $9 trillion outstanding) on its balance sheet. As a matter of fact, the Fed is not the government. As a matter of effect, the Fed has dual agency as the provider of currency (a government agent) and as a coordinating agent for the private sector (banking).
One caveat in looking at the above graph’s QE2 purchases (click to enlarge), it does not credit the expiring Treasury, Agency and MBS debt instruments – but the net effect of QE2 is to increase the Fed’s balance sheet by $600 billion. QE2 roughly removed $200 billion per quarter ($800 billion annualized) of “investment” from the private sector.
It could be argued QE2 provided capital to the private sector. The government increased debt by $600 billion. This debt was sold to the banks. The Fed then printed currency (Federal Reserve notes and credits) and bought the debt from the banks. The net affect: government debt increased by $600 billion and private currency in the banks increased by the same amount. This allowed this $200 billion per quarter to be “invested” elsewhere.
What happens when QE2 ends?
Fed Chairman Bernanke said QE2 has “contributed to a stronger stock market just as they did in March 2009 when we did the first iteration of this program.” Is it a stretch to believe it created a bubble which will correct once QE2 is terminated?
Will the USA economy contract or become less good?
The major reason for implementing QE2 were indications that the economy was contracting following termination of QE1. The economy is currently moderately stronger – and is on less life support relative to one year ago. Logically, removing a leg of economic support at any time should be economically negative. The government will stop increasing debt which had the function of pumping currency into the banking system.
Little of this $600 billion of QE2 made it directly into GDP. GDP measures roughly 1/3 of all money flows in the USA.
QE2 is more like a true stimulus with multiplier effects directed towards investing and money flows. Many have argued much of the effects of QE2 surfaced in emerging economies which were capable of soaking up this amount of stimulus, although with increasing inflation.
Would ending QE2 reverse this and begin repatriating dollars invested in emerging economies?
Depends on non-QE2 factors.
• rising central bank interest rates in China and Europe, or capital inflows to buy Treasuries affect the relative value of the dollar;
• will the Fed continue to maintain its balance sheet levels, or allow them to decay;
• the strength of the USA economy versus the global economy going forward – this effects the flow of investing money which seeks the highest return.
The bottom line is that there is no certainty except that the Fed will not sit by and watch the economy crash.
Meditation
I was taking a plane ride in Lufthansa from Munich to Singapore just a week ago. The ride was uncomfortable because although I had more leg room by sitting at the front row, I was flanked by 2 humongous Europeans.
The inflight movie was bad, because less than 18 movies were available to me. I watched the new Tron. Jeff Bridges was the architect of the cyberworld where human flesh can enter. He was fighting against the evil programs that intended to invade the physical world. In his troubles, he meditated and maintained a peace of mind. He was able to make better decisions with his meditations.
I decided to renew my self-meditative habits. I used to take courses on self-hypnotism, Alpha brain waves etc. I felt calmer, more zen. External events affected me less. I wanted to watch a Chinese movie today, "let the bullets fly". It obviously didn't fit my schedule because I was supposed to visit my parents-in-law at 6pm. I gave up that quest because not watching it did not matter. True, it had good reviews because it was a political satires, and I like politics and satires, but it had little impact on me. Zilch.
At night, I woke up to catch Arsenal vs Liverpool in the second half. We went ahead at the 93rd minute but conceded a penalty at the 100th minute. It was infuriating. In the past, it would have made me moody for several hours. But it didn't matter to me so much now.
I can also meditate and visualise myself losing weight, lowering my blood pressure, as well as making better decisions when investing.
The inflight movie was bad, because less than 18 movies were available to me. I watched the new Tron. Jeff Bridges was the architect of the cyberworld where human flesh can enter. He was fighting against the evil programs that intended to invade the physical world. In his troubles, he meditated and maintained a peace of mind. He was able to make better decisions with his meditations.
I decided to renew my self-meditative habits. I used to take courses on self-hypnotism, Alpha brain waves etc. I felt calmer, more zen. External events affected me less. I wanted to watch a Chinese movie today, "let the bullets fly". It obviously didn't fit my schedule because I was supposed to visit my parents-in-law at 6pm. I gave up that quest because not watching it did not matter. True, it had good reviews because it was a political satires, and I like politics and satires, but it had little impact on me. Zilch.
At night, I woke up to catch Arsenal vs Liverpool in the second half. We went ahead at the 93rd minute but conceded a penalty at the 100th minute. It was infuriating. In the past, it would have made me moody for several hours. But it didn't matter to me so much now.
I can also meditate and visualise myself losing weight, lowering my blood pressure, as well as making better decisions when investing.
Picking Stocks to Keep Ahead of Inflation
Published April 13, 2011
Picking stocks to keep ahead of inflation
(NEW YORK) If investor behaviour foreshadows what's in store for the economy several months down the road, inflation could be a bigger threat than government figures now suggest.
Historically, stocks have been regarded as a decent inflation hedge.
The current numbers paint a rather benign picture, as core inflation in the United States has been growing at a modest annual rate of 1.1 per cent.
Even when volatile food and energy prices are factored in, overall consumer prices rose just 2.1 per cent over the year through February, the most recent period for which data are available.
Yet the market appears to be looking past this information. Since the end of December, investors have been pulling money out of mutual funds that invest in assets that fare poorly when inflation kicks up, like intermediate-term bonds and cash, according to an analysis of fund flows by Bank of America Merrill Lynch Global Equity Research.
At the same time, they've been pouring money into funds that invest in traditional inflation plays. Those include Treasury inflation-protected securities, commodities and, of course, stocks.
Equity funds alone have drawn US$30 billion in net inflows since the end of December, according to the Investment Company Institute, the fund industry trade group.
Of course, there is still a debate over whether these shifts make sense. Worrisome levels of inflation may not materialise at all.
Economists at IHS Global Insight, for example, are forecasting that consumer prices will grow at only around 2 per cent a year from 2012 through 2014. They say they believe that wage growth will be muted in a sluggish job recovery. My comments: You gotta be kidding. Inflation will hit US quickly, just like in 2007.
But some strategists are bracing for an inflation jump. Jason Hsu, chief investment officer at Research Affiliates, a consulting firm in Newport Beach, California, said he expected the numbers to rise in a little more than a year from now.
'We're talking about inflation hovering in the 4 per cent area,' he said, with a risk of it moving even higher. He pointed to the flood of stimulus that's been pumped into the economy by governments throughout the world.
Some central banks overseas have already reversed course and are raising rates to keep a lid on prices. The European Central Bank made such a move last week, citing worrisome levels of inflation in food and energy costs.
Even if Mr Hsu is right, though, there is still the question of how effective stocks will be in protecting portfolios amid rising consumer prices.
Historically, stocks have been regarded as a decent inflation hedge - at least relative to bonds and cash - because stock returns have outpaced inflation for most of the past century.
Yet it's not always the case. Ned Davis Research, based in Venice, Florida, recently analysed how the market performed in different inflationary environments over the past four decades.
While the Standard & Poor's (S&P) 500-stock index posted double-digit gains, on average, when inflation has been between one and 4 per cent, stocks fell at an annualised rate of 1.4 per cent when inflation jumped to between 4 and 9 per cent.
What's more, in periods when the inflation rate is accelerating, not all types of stocks perform the same way.
Sam Stovall, chief investment strategist at S&P's Equity Research, looked at periods since 1970 when the year-over-year change in the consumer price index was accelerating.
He found eight such sustained periods, and saw that half of the 10 market sectors, on average, gained ground during those times; the others declined or were flat.
Which types of equities are likely to outperform if inflation starts to heat up this time? Mr Hsu says he thinks large, domestically based multinational companies would look attractive if inflation really took off and the US dollar continued to weaken against other major currencies.
Although a weaker US dollar would effectively raise the cost of goods imported from overseas, it would lower prices for exports, thus benefiting the American multinationals My comments: I agree to a certain extent. US companies are usually brand owners, like YUM (KFC), Apple. So they are able to raise prices without the threat of consumers defecting to competitors. Asian companies do not have strong brand names. Android phones have many substitutes, like HTC, Samsung etc.
Aother promising area is dividend-paying stocks, said Kate Warne, investment strategist at Edward Jones in St Louis.
Since 1947, payouts issued by the S&P 500 companies have grown at an annual rate of 5.6 per cent, she said, outpacing the 3.7 per cent inflation rate during the period. But there is another reason to favour dividend payers, she said.
Businesses that stand to thrive during inflationary periods are those that have the power to pass along price increases to their customers.
And companies with growing dividends often have that ability. 'When you think about it,' she said, 'companies that have pricing power - and are thus able to maintain their profit margins - will be able to continue to raise their dividends.'
Brad Sorensen, director of market and sector analysis at Charles Schwab, said pricing power might be focused in certain sectors.
Historically, 'energy companies have proven they can raise prices pretty quickly at the pump if oil climbs', he said.
'On the other end of the spectrum, consumer companies have a hard time passing along price increases on things like clothes because there's so much competition.' If inflation spikes, energy has proved to be a good place to hide. My comments: Absolutely agree. My portfolio is full of commodity companies like energy stocks, e.g. Marathon Oil, Apache Oil, Rosneft, Gazprom, Tatneft.
But if the discussion moves from rising inflation to hyperinflation, other defensive areas of the market like health care and utilities would seem to make sense, Mr Stovall said. My comments: Not sure about that, but my sole healthcare stock, Humana, is doing well.
After all, no matter how expensive things become, people still need to see the doctor and turn on the lights. -- NYT
Picking stocks to keep ahead of inflation
(NEW YORK) If investor behaviour foreshadows what's in store for the economy several months down the road, inflation could be a bigger threat than government figures now suggest.
Historically, stocks have been regarded as a decent inflation hedge.
The current numbers paint a rather benign picture, as core inflation in the United States has been growing at a modest annual rate of 1.1 per cent.
Even when volatile food and energy prices are factored in, overall consumer prices rose just 2.1 per cent over the year through February, the most recent period for which data are available.
Yet the market appears to be looking past this information. Since the end of December, investors have been pulling money out of mutual funds that invest in assets that fare poorly when inflation kicks up, like intermediate-term bonds and cash, according to an analysis of fund flows by Bank of America Merrill Lynch Global Equity Research.
At the same time, they've been pouring money into funds that invest in traditional inflation plays. Those include Treasury inflation-protected securities, commodities and, of course, stocks.
Equity funds alone have drawn US$30 billion in net inflows since the end of December, according to the Investment Company Institute, the fund industry trade group.
Of course, there is still a debate over whether these shifts make sense. Worrisome levels of inflation may not materialise at all.
Economists at IHS Global Insight, for example, are forecasting that consumer prices will grow at only around 2 per cent a year from 2012 through 2014. They say they believe that wage growth will be muted in a sluggish job recovery. My comments: You gotta be kidding. Inflation will hit US quickly, just like in 2007.
But some strategists are bracing for an inflation jump. Jason Hsu, chief investment officer at Research Affiliates, a consulting firm in Newport Beach, California, said he expected the numbers to rise in a little more than a year from now.
'We're talking about inflation hovering in the 4 per cent area,' he said, with a risk of it moving even higher. He pointed to the flood of stimulus that's been pumped into the economy by governments throughout the world.
Some central banks overseas have already reversed course and are raising rates to keep a lid on prices. The European Central Bank made such a move last week, citing worrisome levels of inflation in food and energy costs.
Even if Mr Hsu is right, though, there is still the question of how effective stocks will be in protecting portfolios amid rising consumer prices.
Historically, stocks have been regarded as a decent inflation hedge - at least relative to bonds and cash - because stock returns have outpaced inflation for most of the past century.
Yet it's not always the case. Ned Davis Research, based in Venice, Florida, recently analysed how the market performed in different inflationary environments over the past four decades.
While the Standard & Poor's (S&P) 500-stock index posted double-digit gains, on average, when inflation has been between one and 4 per cent, stocks fell at an annualised rate of 1.4 per cent when inflation jumped to between 4 and 9 per cent.
What's more, in periods when the inflation rate is accelerating, not all types of stocks perform the same way.
Sam Stovall, chief investment strategist at S&P's Equity Research, looked at periods since 1970 when the year-over-year change in the consumer price index was accelerating.
He found eight such sustained periods, and saw that half of the 10 market sectors, on average, gained ground during those times; the others declined or were flat.
Which types of equities are likely to outperform if inflation starts to heat up this time? Mr Hsu says he thinks large, domestically based multinational companies would look attractive if inflation really took off and the US dollar continued to weaken against other major currencies.
Although a weaker US dollar would effectively raise the cost of goods imported from overseas, it would lower prices for exports, thus benefiting the American multinationals My comments: I agree to a certain extent. US companies are usually brand owners, like YUM (KFC), Apple. So they are able to raise prices without the threat of consumers defecting to competitors. Asian companies do not have strong brand names. Android phones have many substitutes, like HTC, Samsung etc.
Aother promising area is dividend-paying stocks, said Kate Warne, investment strategist at Edward Jones in St Louis.
Since 1947, payouts issued by the S&P 500 companies have grown at an annual rate of 5.6 per cent, she said, outpacing the 3.7 per cent inflation rate during the period. But there is another reason to favour dividend payers, she said.
Businesses that stand to thrive during inflationary periods are those that have the power to pass along price increases to their customers.
And companies with growing dividends often have that ability. 'When you think about it,' she said, 'companies that have pricing power - and are thus able to maintain their profit margins - will be able to continue to raise their dividends.'
Brad Sorensen, director of market and sector analysis at Charles Schwab, said pricing power might be focused in certain sectors.
Historically, 'energy companies have proven they can raise prices pretty quickly at the pump if oil climbs', he said.
'On the other end of the spectrum, consumer companies have a hard time passing along price increases on things like clothes because there's so much competition.' If inflation spikes, energy has proved to be a good place to hide. My comments: Absolutely agree. My portfolio is full of commodity companies like energy stocks, e.g. Marathon Oil, Apache Oil, Rosneft, Gazprom, Tatneft.
But if the discussion moves from rising inflation to hyperinflation, other defensive areas of the market like health care and utilities would seem to make sense, Mr Stovall said. My comments: Not sure about that, but my sole healthcare stock, Humana, is doing well.
After all, no matter how expensive things become, people still need to see the doctor and turn on the lights. -- NYT
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