Singapore's asset bubble not likely to burst despite QE3
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Singapore Business Review – 27 minutes ago
But short term boost in buyer sentiment is expected with the QE3.
According to Colliers International, Singapore’s residential prices see relatively less correlation with compression of U.S. bond yields and are not historically vulnerable to QE announcements, as compared to Hong Kong.
During QE1 and QE2, Singapore’s residential prices edged up 7.5 per cent and 4.2 per cent, respectively, which were relatively milder than the home price inflation experienced in Hong Kong during the same period.
“Short term boost in buyer sentiment is expected with the QE3, but we think that the effects will be limited in Singapore and will likely peter out before the end of 2012,” says Ms Chia Siew Chuin (谢岫å�›), Director of Research & Advisory, Singapore.
Ms Chia adds, “Singapore’s housing market is not directly susceptible to foreign capital flows as approximately 80 per cent of the population resides in public housing apartments. This represents a sizeable housing stock under the government’s control.
In addition, the government has introduced five rounds of cooling measures to curb the overheated housing market since 2009, including the most recent one targeting foreigners and non-individuals (corporate entities) with an additional buyer’s stamp duty of 10 per cent . This has lowered the participation of foreigners in Singapore’s private housing market, where a mere six per cent of all purchases from January to August 2012 were made by foreign buyers.” -
wen some1 told u not to worry, u better be
wen was the last time u met a honest guy?
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Efforts to contain spiralling property prices have quite OBVIOUSLY FAILED badly. ( hopefully Khaw understands exactly what "fail" means- prices continue going up!) But on a postive note the Tax man collected another half a billion in stamp duties! You are affected and you lose that's your problem! Tax department gains one way or the other- brilliant!
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1 mllion dollars for a hdb flat.
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Life is surreal.
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Originally posted by charlize:
1 mllion dollars for a hdb flat.
They will tell you " oh! this is just an exceptional one -off unit sold at a high price." Oblivious to our stupid valuation methods which takes into account the "last done deal" as benchmark! It really test your patiences and makes you cringe when you hear such "out of touch"( either that or simply nonsense answer) answers! It doesn't matter how many rounds of cooling efforts they make , if the efforts are ineffective a wayangs just to placate the citizens. Australia is a continent with lots of land yet they know how to protect Australians from over the limit speculative prices from foriegners buying in( one rule you can buy but when you sell you got to sell to a citizen)Malaysia also protects its locals - certain percentage of any housing estate must go to lower cost housing for the Bumis. Thailand- foreigners can't buy land, you can only buy into a condo and even then you got to be careful about land rights and validity. What has Singapore done really to protect citizens effectively? Nothing much . Why? because in honesty - so many Singapore companies Glcs are into property development themselves- can they knock down their own business? -
Do not underestimate gravity.
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Get ready for influx of cash in markets
QE3 set to boost confidence but experts warn against simply loading up on equities
AARON LOW
BUY
With the amount of cash expanding in the system, there could be the risk of higher inflation and a fall in the value of currency. Real assets such as gold and other precious metals can act as inflation hedges -- ST PHOTO: KUA CHEE SIONG
AVOID
The flood of US dollars into the system through the latest round of quantitative easing will lead to a depreciation of the currency. Some analysts believe that cash in general, not just greenback, should be avoided. -- PHOTO: AFP
UNCERTAIN
Some analysts say the latest round of quantitative easing known as QE3 may keep the property market here resilient, but price rises will be capped. However, some say QE3 could end up boosting the appeal of US property -- PHOTO: BLOOMBERG
A river of cash is likely to wash over the global financial system soon, thanks to decisions by major central banks to unleash their monetary "bazookas" on the faltering global economy.
The money-printing ball started rolling last month when the European Central Bank (ECB) said it would make "unlimited" purchases of bonds from countries such as Italy and Spain.
The US Federal Reserve was next, announcing that a third round of asset purchases, known as quantitative easing (QE3), would start at the rate of US$40 billion (S$49.5 billion) a month until the job market recovers "significantly".
It was soon followed by the Bank of Japan, which said it will extend its asset-purchasing scheme by 10 trillion yen (S$158 billion).
A big chunk of that excess liquidity will likely flow into Asian financial markets as investors search for better returns, given the low interest rates in most countries.
It is tempting to think investors can simply load up on equities and ride a rally like previous rounds of quantitative easing but this is not so, say experts.
They believe that while QE3 will boost confidence and support markets, the euphoria will be checked by the reality that the real economy is in the doldrums.
The list of worries is long: China is decelerating fast, Europe remains mired in recession, and many US consumers are still looking for jobs.
With countervailing forces at work, wealth managers and analysts have plenty of ideas on what to buy and what to avoid.
Buy
• US, Asian equities
Analysts believe the flood of money will do much to support markets, but not all will do equally well.
UBS Wealth Management regional chief investment officer Kelvin Tay believes defensive bourses such as Singapore and Malaysia will do less well than markets such as Taiwan, Hong Kong and China.
He added that what is also likely to boost shares in Asia, outside of Japan, is simply that some stock markets look cheap, based on a metric known as price-to-earnings ratio.
Shares could rise 12 per cent from current levels, he said.DBS regional equity strategist Joanne Goh said the bank recently recommended an "overweight" for Chinese and Hong Kong stock markets, indicating that investors should buy into these markets.
These markets are likely to do well because they are large, open and undervalued, she added.
Analysts' views were slightly more mixed about US equities, with some believing they will get a boost from QE3, while others warned that the impact would be limited.
Mr Matthew Rubin, Neuberger Berman's director of investment strategy, said American shares do look relatively cheap compared with investment-grade bonds.
"The additional liquidity should further support a rise in prices," said Mr Rubin, who helps set strategy at the fund, which manages assets of US$194 billion.
But Mr Sean Quek, Bank of Singapore's head of equity research, said past experience shows that US equities benefit less from quantitative easing.
"Also, current valuations are less attractive versus previous QE periods as well as global peers," he said, adding that he has a neutral rating on American shares.
• Gold
Most analysts believe stocking up on gold and gold-related assets is a good move.
First, with the amount of cash expanding in the system, there could be the risk of higher inflation. And with the value of the currency likely to fall due to the huge amounts of cash flowing about, investors will want "real assets" to protect themselves. Mr Rubin noted: "Real assets such as precious metals will act as inflation hedges and are perceived as diversifiers to holding fiat currency."
Mrs Chew Soon Gek, head of strategy and economic research for the Asia-Pacific at Credit Suisse Private Banking, believes precious metals will outperform other commodities. "They are the most sensitive to monetary easing, inflation expectations and real interest rates," she said.
She tips gold to hit US$1,850 per ounce in a year, from the US$1,760 now.
• High-yield securities
With interest rates likely to stay near zero for the next two years, analysts believe that the demand for high-yielding securities will remain strong.
In particular, companies that pay a good dividend and have strong balance sheets are likely to attract investors, say analysts.
"With the QE expected to suppress yields and the Fed's commitment to keep interest rates low until mid-2015, dividends will remain an important driver of total returns," said Mr Quek.
He noted that firms giving investors good payouts have generally performed better in the past two years when rates have fallen.
Mr Rubin also believes that high-yield corporate bonds as well as real estate investment trusts are good places to park money.
"The search for yield in a low interest rate environment will continue," he said.
Avoid
• US dollar
If there is one asset class that most analysts believe is to be avoided, it is the greenback.
The flood of US dollars into the system through QE3 will lead to what analysts term a "debasement" of the currency - essentially a depreciation. In fact, Mr Rubin believes that cash, and not just the greenback, should be avoided.
"QE3 increases potential for inflation and depreciation of the dollar," he said.
This may also affect Singapore investors who have taken positions in US equities, as the currency may erode gains or increase losses due to the exchange rate.
Likewise, investors might want to avoid the euro.
The poor economic outlook and flood of cash into the market will likely send it down against Asian currencies such as the Singdollar.
Uncertain
• European equities
For investors who take a riskier approach to investing, European stock markets do offer an option.
After all, some of the best bargains are made when everyone else is deserting them, said Henderson Global Investors.
The asset management firm said that even though the outlook is gloomy, many firms remain healthy, with global operations.
But Mr Quek is cautious on the region, simply because many question marks over the overall health of the economy remain.
A recent run-up in share prices there, as a result of the ECB's unlimited bond purchase decision, has also made European stocks more expensive and less attractive, he noted. "As such, we are maintaining a negative stance on Europe."
• Property
While previous rounds of quantitative easing may have been one of the causes of property price inflation, this may not be repeated with this latest round.
Singapore has introduced the additional buyer's stamp duty of 10 per cent that foreigners incur when buying homes. Mr Tay thinks that while QE3 may keep property resilient, price rises will be capped.
But QE3 could still end up boosting the appeal of US property, says Dr Lee Boon Keng, head of the investment solutions group for Singapore at Bank Julius Baer, noting that the housing conditions were improving and rebounding from historical lows.
"The US economy continues a moderate recovery, aided by rising property prices which should have a multiplier effect on consumption and investment," he said.
invest, The Sunday Times, September 23 2012, Pg 35-36
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gravity.
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actually hor, they should build 2 diff type of houses, the affordable house for the local and the foreigner house for the foreigner.
so local buy local house and foreigner buy foreigner house lor.
if the housing bubble bust, only the foreigner kana wat, the local still wont get hit much because it is affordable ma.
best is they come out a rule for the foreigner housing, when it is 1st build. let the local buy 1st then sell it to the foreigner, like that the local also can make some money ma..
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Originally posted by BotaHead:
actually hor, they should build 2 diff type of houses, the affordable house for the local and the foreigner house for the foreigner.
so local buy local house and foreigner buy foreigner house lor.
if the housing bubble bust, only the foreigner kana wat, the local still wont get hit much because it is affordable ma.
best is they come out a rule for the foreigner housing, when it is 1st build. let the local buy 1st then sell it to the foreigner, like that the local also can make some money ma..
so where is the integration?
foreigners can stay in Ubin?
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let them integration into affordable housing after 5 years to show loyalty
buy and sell foreigner housing to make money after 10 years, lol
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Originally posted by BotaHead:
let them integration into affordable housing after 5 years to show loyalty
buy and sell foreigner housing to make money after 10 years, lol
Too complicated.
Just tell them they have to stay at least 20 yrs before they can sell otherwise if they want migrate out they just have to give it back to the govt.