Tuesday 15 August 2023

Finance Investment Movement 36

The political space in Singapore had been in overdrive in the past few weeks with various scandals and investigations happening. This is not the staid environment that I'm accustomed to where our government operates with a robotic touch. While the rumour mill continued to swirl, my focus was elsewhere. I watched the National Day speech with keener interest. Even though it was a short one, the sneak preview given by the Prime Minister will generate even more excitement until the rally date on 20 August. That's because he had touched on two issues closest to every citizen's heart; HDB and CPF. It meant something was brewing and the status quo no longer worked. I had mentioned before (over here) about my observations and glad the government is going to address such sensitive topics. My guess is there will be some measures to help the poor and elderly (maybe singles as well), tweaking eligibility rules and enhancing retirement. There's just too many areas and possible solutions (A side note: I don't support higher grants). In my opinion, the housing issue must be tackled now as any misstep will lead to a disastrous outcome, affecting the entire society strata as a house is the most expensive asset/liability. In about two decades, when more HDB flats come close to reaching lease expiry, the anxiety will be felt if nothing is done to reset expectations. Obviously, the government will not want to crash the market but neither should it allow seemingly unabated price increase. Therefore, it must start shifting existing policies to allow time to sink in, hopefully transitioning within a decade. As per Singapore style, let's put in another decade as buffer. Because if things don't work out, 20 years from now, the generation of new home buyers, existing home owners and retirees of that time will look back and ask "what if" questions with regret. I believe given the long term vision of our wise leaders, they have a plan and hope to gift the incoming Prime Minister a nice platform to begin a new era. Otherwise, I see this as the biggest sabo of a lifetime.

There is something unusual in the bank deposit rates. As the US Fed raised interest rates, our local banks have gone in the opposite direction by offering lower mortgage and deposit interest. Corporate financing rates remained high at around 6.5%, which meant the banks earned about 3% in interest income for such transactions. Why is this possible? I reckoned that's to do with the status of Singapore as a safe financial hub. Given the uncertainties in other countries, global depositors have basically transferred excess cash into Singapore based banks, causing an indigestion, so much so that DBS could even lend money to MAS! To small retail customers, the banks could afford to be stingy such as the HSBC EGA bonus program being taken away or GXS reducing its interest rate to 2.68%. I think the banks will be even more selective, thus it's important to lock in quickly if a good deal presents itself. My investment since the last update was adding another $1000 into the Pimco GIS Income Fund. At the end of the month, I will subscribe to the SSB as it can be used to replace an older tranche that gave a lower coupon rate.

Tip: Vergelegen Chardonnay 2020, lemon and toasty, heavy acidity and dry

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