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Friday, September 13, 2019

Trump knows who are his friends and foes now.

Multiple bankruptcies had taught Trump a few things in life.

Let me surmise what are the things you can learn from multiple bankruptcies.

1st bankruptcy - You will learn and know who your real friends are because many of your "friends" will avoid you during your bankruptcy for fear that you will borrow money from them.  You can tell who your friends and foes are by now.

2nd bankruptcy - You will learn and understand more about yourself because you know what you can and cannot do in life by now.  In short, you know your own capabilities after your 2nd bankruptcy.

3rd bankruptcy - You will learn and understand this world better than other people after having gone through the vicissitudes of life.  You will know how this world works by now.  This was also the reason Trump got elected to be the US president because he understood how the US system was like after his numerous bankruptcies.

Trump knew who would make him lose his presidential and had fired a few hawkish people in his team.

The hawkish people are:
James Mattis
Steven Bannon
John Bolton

The remaining hawkish people in his team are feeling apprehensive now because they are fearful of their dismissals if they continue to be aggressive.

Let's see how this will affect future US political policies.

Monetary easing (ME) policy should be used as a last resort, not as a first resort.

Central bankers are abusing the monetary easing policy nowadays and using it as a first resort to solve their economic problems.

Basically, the monetary easing policy is used to increase the money supply in the banking and financial system with the ensuing outcome to depreciate the currency and cause inflation.  Therefore, it will become an invisible tax (higher inflation) on ordinary consumers who don't borrow the "new" money with lower interest rates to invest.

The monetary easing policy should be used as a last resort because it is supposed to be implemented when the economic projection is very bleak.  If the economic projection is very bleak, business investments and consumer spendings must be encouraged.  The business owners are able to borrow the new money at lower interest rates for their investments and consumers' propensity to spend will also be higher because of higher inflation expectations.

However, the ME policy is a double-edged sword because when the economic projection is very bleak, the job security is also expected to be low and this may deter consumer spendings and consumers may end up saving more for rainy days.  Consequently, the ME policy will encourage more savings than spendings instead because it is signalling to the general public that the future economy is very weak.  For example, if the bank is adopting a ME policy of negative interest of -1%, how many people will borrow from the bank to buy a property even when the bank is paying the borrower an interest?  The borrower will be worried that he will lose his job anytime and won't buy a big-ticket item because taking on additional debt in a bad economic situation is a bad idea.

Therefore, the ME policy is to be used as a last resort since the outcome is uncertain.  When the economic situation is in dire straits, then the ME should be used and hope that the best outcome prevails.

ECB cut rates and restarted QE.

https://www.businessinsider.sg/ecb-launches-fresh-round-of-stimulus-with-10-basis-point-cut-2019-9/?r=US&IR=T

ECB has cut its rate to -0.5% and restarted a quantitative easing of EU$20B per month.

This ECB move has angered Trump and his fury is flaring.

https://www.express.co.uk/news/world/1177150/EU-news-European-Central-Bank-ECB-Donald-Trump-euro-dollar-Eurozone-latest-forecast

It is not surprising that the ECB cuts its rates because the EU is sliding into a recession.  Germany, the strongest and biggest economy, will enter into a recession this quarter and the rest of Europe will follow suit.  Therefore, the EU is in a dire need of a strong stimulus package to revive itself.

http://sg-stock.blogspot.com/2019/09/germany-will-enter-into-recession-this.html

However, this reprise is only temporary and can be as short as 6 months.  Thereafter, a recession will creep in after March 2020.  Why?

http://sg-stock.blogspot.com/2019/03/what-is-targeted-longer-term.html

The 2nd TLTRO will end in March 2020 and this reduces the efficacy of the oomph.  Furthermore, the ISM PMI has just contracted in the US (below 50).  The US economy will feel the impact of the PMI contraction (reported in Sept 2019) in as short as 6 months time (March 2020).  Thus, the USA and the EU are in a precarious situation after March 2020 if nothing is being done to prevent the impending recession in 2020.

http://sg-stock.blogspot.com/2019/09/ism-pmi-analysis-for-us-economy-in.html


Trump demanded FED to cut rates to zero!

https://sg.finance.yahoo.com/news/trump-demands-fed-to-cut-interest-rates-to-zero-or-less-121700558.html

Either Trump doesn't understand economics or he has seen the latest GDP numbers for him to demand FED to cut rates to zero.

Trump is wishfully thinking that he can refinance the national debts at zero interest rates after the US FED cuts them to zero.  He has mistaken the national debts with mortgage debts.  National debts are non-callable while mortgage debts are callable.  Therefore, the US government can only buy back the national debts from the treasuries market and re-issue new bonds at lower interest rates if the US interest rates are at zero.

However, something is amiss in Trump's thinking.  First of all, the US government doesn't have the money to buy back all the national debts because it doesn't even have enough money to pay all the federal employees resulting in a potential government shutdown.  Next, the US government has to pay much higher prices to buy back the national debts in the open market and this will wipe out all the interest savings or incur more losses.  Third, this buyback action will disrupt the treasuries market and create big chaos for the international markets.

In this regard, Trump shows his innateness and lack of proper economics understanding.

In another perspective, Trump must have seen the latest GDP numbers which were so bad that he panicked and demanded FED to cut rates to zero from 2-2.25%.

We had indicated a very bad GDP number for the US after the PMI report.

http://sg-stock.blogspot.com/2019/09/ism-pmi-analysis-for-us-economy-in.html

Thursday, September 12, 2019

SGX - Stock calls

Date Analyst Company Last Target Call Valuation
01/04/19 phillip SGX 7.15 9.01 Buy
01/25/19 CIMB SGX 7.5 7.9 Add PER22.1x FY20
01/25/19 DMG & Partners SGX 7.5 8.2 Buy PER22x FY20
01/28/19 phillip SGX 7.57 8.36 Buy PER23.2x FY19
01/28/19 OCBC SGX 7.57 7.98 Buy PER22x F19/20
02/22/19 Citibank SGX 7.87 7.8 Hold
03/12/19 Citibank SGX 7.46 7 Sell
03/14/19 DBS Vickers SGX 7.26 7.05 Hold DDM, PER20x CY20
03/19/19 phillip SGX 7.31 8.17 Accumulate PER23.2x
04/05/19 DMG & Partners SGX 7.42 8.1 Buy PER23x FY20
04/26/19 OCBC SGX 7.26 7.6 Hold PER21x FY20
04/26/19 DBS Vickers SGX 7.26 7.05 Hold DDM, PER20x FY20
04/26/19 Kim Eng SGX 7.26 8.79 Buy PER23x FY19
04/29/19 phillip SGX 7.4 8.09 Accumulate PER21.4x
04/29/19 CIMB SGX 7.4 7.9 Add PER22.1x FY20
06/28/19 DBS Vickers SGX 7.95 7.05 Hold DDM, PER20x FY20
07/15/19 phillip SGX 7.99 8.09 Accumulate PER21.4x
08/01/19 DMG & Partners SGX 7.92 8.1 Neutral PER23x FY20
08/01/19 DBS Vickers SGX 7.92 8.3 Buy DDM
08/02/19 phillip SGX 7.78 8.09 Accumulate PER21x
08/05/19 CIMB SGX 7.98 8.1 Hold PER21.5x

Sembcorp Marine - Stock calls

Date Analyst Company Last Target Call Valuation
01/10/19 DIR Sembcorp Marine 1.62 1.62 Hold Cut from $1.78, PB1.8x FY19
01/22/19 Amfrasers Sembcorp Marine 1.66 2.5 Buy
02/01/19 UOB Kay Hian Sembcorp Marine 1.6 1.83 Hold PB1.7x FY19, Buy @ $1.50
02/04/19 DBS Vickers Sembcorp Marine 1.59 2.4 Buy PB2.1x FY19
02/21/19 CIMB Sembcorp Marine 1.68 2.21 Add PB2x CY19
02/21/19 OCBC Sembcorp Marine 1.68 1.77 Hold
02/21/19 phillip Sembcorp Marine 1.68 1.76 Neutral PB1.6x
02/21/19 Lim & Tan Sembcorp Marine 1.68 0 Hold
02/26/19 Amfrasers Sembcorp Marine 1.72 2.48 Buy
04/09/19 Amfrasers Sembcorp Marine 1.7 2.48 Buy
04/09/19 DBS Vickers Sembcorp Marine 1.7 2.4 Buy
05/03/19 CIMB Sembcorp Marine 1.69 2.21 Add PB2x
05/06/19 phillip Sembcorp Marine 1.67 1.76 Neutral PB1.6x
05/06/19 OCBC Sembcorp Marine 1.67 1.77 Hold
05/06/19 Amfrasers Sembcorp Marine 1.67 2.48 Buy
05/06/19 DBS Vickers Sembcorp Marine 1.67 2.4 Buy PB2.1x FY19
05/30/19 OCBC Sembcorp Marine 1.45 1.6 Hold PB1.45x
06/04/19 DMG & Partners Sembcorp Marine 1.39 1.99 Buy PB1.8x FY20
07/03/19 CIMB Sembcorp Marine 1.54 1.75 Add PB1.6x CY19
07/03/19 OCBC Sembcorp Marine 1.54 1.6 Hold
07/04/19 Macquarie Sembcorp Marine 1.41 1.57 Neutral
07/04/19 DBS Vickers Sembcorp Marine 1.41 2.4 Buy
07/31/19 DBS Vickers Sembcorp Marine 1.36 1.9 Buy PB1.8x FY19
07/31/19 Amfrasers Sembcorp Marine 1.36 1.59 Neutral PB1.6x FY19
07/31/19 DMG & Partners Sembcorp Marine 1.36 1.8 Buy PB1.64x FY20
07/31/19 CIMB Sembcorp Marine 1.36 1.16 Reduce PB1.1x
07/31/19 UOB Kay Hian Sembcorp Marine 1.36 1.32 Hold DCF, Buy @ $1.25
08/06/19 Macquarie Sembcorp Marine 1.28 1.4 Neutral PB
09/03/19 UOB Kay Hian Sembcorp Marine 1.16 1.22 Hold Buy @ $1.10
09/03/19 DMG & Partners Sembcorp Marine 1.16 1.63 Buy PB1.48x FY20
09/09/19 CIMB Sembcorp Marine 1.19 1.26 Hold PB1.2x CY19

Sembcorp Industries - Stock calls

Date Analyst Company Last Target Call Valuation
01/10/19 DIR Sembcorp Industries 2.64 3.05 Outperform Sum of parts, cut from $3.26
01/15/19 UOB Kay Hian Sembcorp Industries 2.63 3.2 Buy Sum of parts
01/23/19 CIMB Sembcorp Industries 2.69 3.49 Add
02/01/19 UOB Kay Hian Sembcorp Industries 2.59 3.2 Buy
02/04/19 DBS Vickers Sembcorp Industries 2.58 3.7 Buy
02/21/19 Lim & Tan Sembcorp Industries 2.66 0 Hold
02/25/19 DBS Vickers Sembcorp Industries 2.67 3.9 Buy RNAV (10% discount), PB1x
03/13/19 UOB Kay Hian Sembcorp Industries 2.57 2.8 Hold Sum of parts, Buy @ $2.35
03/18/19 Lim & Tan Sembcorp Industries 2.52 0 Hold
04/09/19 DBS Vickers Sembcorp Industries 2.75 3.9 Buy
05/16/19 OCBC Sembcorp Industries 2.54 3.13 Buy Sum of parts
05/16/19 DBS Vickers Sembcorp Industries 2.54 3.9 Buy Sum of parts, PB1x
05/16/19 CIMB Sembcorp Industries 2.54 3.41 Add Sum of parts
05/17/19 phillip Sembcorp Industries 2.55 3.75 Buy Sum of parts
06/04/19 OCBC Sembcorp Industries 2.38 3.03 Buy Sum of parts
07/03/19 OCBC Sembcorp Industries 2.47 3.03 Buy
07/04/19 Macquarie Sembcorp Industries 2.41 2.84 Outperform
08/15/19 CIMB Sembcorp Industries 2.26 2.83 Add Sum of parts
08/15/19 UOB Kay Hian Sembcorp Industries 2.26 2.34 Hold
08/16/19 DBS Vickers Sembcorp Industries 2.26 3.2 Buy Sum of parts (10% discount), PER16x FY19, PB0.8x FY19
09/12/19 DBS Vickers Sembcorp Industries 2.21 3.2 Buy Sum of parts (10% discount), PER16x FY19, PB0.8x FY19
09/12/19 Lim & Tan Sembcorp Industries 2.21 0 Buy

Stock calls for 12 September 2019

Date Analyst Company Last Target Call Valuation
09/12/19 DMG & Partners APAC Realty 0.495 0.65 Buy
09/12/19 DMG & Partners City Developments 9.9 9.2 Neutral
09/12/19 DBS Vickers Sabana 0.455 0.48 Hold DCF
09/12/19 DBS Vickers Sembcorp Industries 2.21 3.2 Buy Sum of parts (10% discount), PER16x FY19, PB0.8x FY19
09/12/19 Lim & Tan Sembcorp Industries 2.21 0 Buy

Wednesday, September 11, 2019

Cathy Pacific to cut capacity because HK travel falls.

https://sg.finance.yahoo.com/news/1-cathay-pacific-cut-capacity-091425705.html

Cathy Pacific has only itself to blame for the predicament it is facing.

Cathy Pacific management supported its employees to be anti-government protestors.  This airliner has about 3,000 potential terrorists on its payrolls and this will create a flight risk for passengers.

http://sg-stock.blogspot.com/2019/09/cathy-pacific-is-high-risk-airliner-fly.html

If Cathy Pacific doesn't eradicate this large group of potential terrorists by re-educating and re-retraining, the mainland passengers won't have the faith to take this airliner because the employees are emotionally disturbed.

Germany will enter into a recession this current quarter.

https://sg.finance.yahoo.com/news/german-institutes-see-recession-cut-092552134.html

We had anticipated in January 2019 that the EU would slip into a recession much faster than Asia and we followed up with the same issue again in March 2019.

http://sg-stock.blogspot.com/2019/01/north-america-and-europe-will-slip-into.html

http://sg-stock.blogspot.com/2019/03/germany-will-enter-into-recession-in.html

The German Institute IFW has predicted that Germany will slide into a recession this current quarter which corroborates our conclusion.

SATS - Stock calls

Date Analyst Company Last Target Call Valuation
01/04/19 UOB Kay Hian SATS 4.59 5.6 Buy
01/11/19 OCBC SATS 4.94 5.23 Hold DCF
02/08/19 UOB Kay Hian SATS 4.8 5.6 Buy
02/14/19 phillip SATS 4.98 5.47 Accumulate DCF, PER24.6x FY19
02/14/19 OCBC SATS 4.98 5.23 Hold
02/14/19 CIMB SATS 4.98 5.46 Add PER20.3x
02/14/19 Lim & Tan SATS 4.98 0 Hold
02/14/19 DBS Vickers SATS 4.98 5.59 Buy DCF & PER22x FY19
02/14/19 Kim Eng SATS 4.98 5.8 Buy
02/15/19 Citi Research SATS 5.08 6 Buy
03/26/19 UOB Kay Hian SATS 5.06 5.6 Buy
04/15/19 Kim Eng SATS 5.31 5.8 Buy
05/13/19 UOB Kay Hian SATS 5.27 5.6 Buy
05/17/19 OCBC SATS 5.22 5.35 Hold
05/21/19 phillip SATS 5.08 5.47 Accumulate DCF, PER24x FY19
05/21/19 UOB Kay Hian SATS 5.08 5.05 Hold Buy @ 4.60
05/21/19 DBS Vickers SATS 5.08 5.44 Buy DCF & PER22x FY20
06/03/19 UOB Kay Hian SATS 5.07 5.05 Hold Buy @ $4.70
06/06/19 DBS Vickers SATS 5.04 5.44 Buy
06/12/19 Kim Eng SATS 5.04 6.1 Buy DCF
06/17/19 CIMB SATS 5.14 5.4 Add PER21.9x CY20
07/05/19 Kim Eng SATS 5.36 6.1 Buy DCF
07/15/19 UOB Kay Hian SATS 5.37 5.05 Sell
07/19/19 UOB Kay Hian SATS 5.32 4.8 Sell
07/19/19 DBS Vickers SATS 5.32 5 Hold DCF
07/19/19 CIMB SATS 5.32 5.4 Hold PER21.9x CY20
07/22/19 OCBC SATS 5 5.28 Hold FCFF
07/22/19 phillip SATS 5 5.47 Accumulate
07/22/19 Lim & Tan SATS 5 0 Hold

Sasseur - Stock calls

Date Analyst Company Last Target Call Valuation
02/20/19 Kim Eng Sasseur 0.74 0.9 Buy DDM
02/20/19 DBS Vickers Sasseur 0.74 0.97 Buy DCF
04/03/19 CIMB Sasseur 0.78 0.92 Add
06/25/19 Kim Eng Sasseur 0.79 0.9 Buy
08/08/19 DBS Vickers Sasseur 0.8 0.97 Buy DCF
08/13/19 CIMB Sasseur 0.805 0.94 Add DDM

Sanli Environmental - Stock calls

Date Analyst Company Last Target Call Valuation
05/06/19 Tayrona Sanli Env 0.18 0.234 Overweight

Stock calls for 11 September 2019

Date Analyst Company Last Target Call Valuation
09/11/19 UOB Kay Hian A-Reit 3.14 3.25 Hold DDM
09/11/19 DMG & Partners CDL Hospitality 1.63 1.79 Buy
09/11/19 Amfrasers Frencken 0.675 0.81 outperform PER10x FY20
09/11/19 DMG & Partners Fu Yu 0.215 0.24 Buy
09/11/19 DMG & Partners Manulife US Reit 0.915 0.98 Buy
09/11/19 Lim & Tan Overseas Edu 0.29 0 Buy
09/11/19 DMG & Partners Oxley 0.31 0.41 Buy
09/11/19 DMG & Partners Sheng Siong 1.2 1.32 Buy
09/11/19 DMG & Partners ST Engineering 3.9 4.7 Buy
09/11/19 DMG & Partners Suntec Reit 1.94 2.08 Buy
09/11/19 DMG & Partners UOB 25.77 29.5 Buy
09/11/19 Macquarie Venture 15.33 17.7 Outperform Roe-g/Coe-g,PER14x FY19
09/11/19 DMG & Partners Wilmar 3.8 4.5 Buy

Tuesday, September 10, 2019

Roxy-Pacific - Stock calls

Date Analyst Company Last Target Call Valuation
01/17/19 DBS Vickers Roxy-Pacific 0.405 0.39 Hold
02/25/19 OCBC Roxy-Pacific 0.415 0.41 Hold
04/17/19 OCBC Roxy-Pacific 0.4 0.41 Hold
05/09/19 OCBC Roxy-Pacific 0.405 0.41 Hold
05/10/19 DBS Vickers Roxy-Pacific 0.405 0.39 Hold RNAV (55% discount)
07/15/19 OCBC Roxy-Pacific 0.385 0.41 Hold
08/05/19 DBS Vickers Roxy-Pacific 0.39 0.39 Hold RNAV (55% discount)

Riverstone - Stock calls

Date Analyst Company Last Target Call Valuation
02/27/19 CIMB Riverstone 1.1 1.22 Add PER16.7x FY20
02/27/19 DBS Vickers Riverstone 1.1 1.19 Hold PER16x FY19
05/14/19 CIMB Riverstone 0.995 1.22 Add PER16.5x FY20
05/16/19 DBS Vickers Riverstone 0.975 1.03 Hold PER16.8x FY19/20
08/13/19 DBS Vickers Riverstone 0.9 1.16 Buy PER14.5x FY20

Raffles Medical - Stock calls

Date Analyst Company Last Target Call Valuation
01/23/19 phillip Raffles Medical 1.11 1.16 Accumulate
02/20/19 UOB Kay Hian Raffles Medical 1.12 1.3 Buy DCF
02/26/19 DMG & Partners Raffles Medical 1.12 1.02 Neutral DCF
02/26/19 OCBC Raffles Medical 1.12 1.25 Buy
02/26/19 DBS Vickers Raffles Medical 1.12 1.12 Hold Sum of parts, PER27x FY18/19
02/26/19 phillip Raffles Medical 1.12 1.09 Neutral DCF
04/30/19 DMG & Partners Raffles Medical 1.07 1.02 Neutral
05/02/19 phillip Raffles Medical 1.08 1.09 Neutral DCF
05/02/19 DBS Vickers Raffles Medical 1.08 1.12 Hold Sum of parts
05/14/19 Kim Eng Raffles Medical 1.02 1.13 Hold DCF
06/12/19 CIMB Raffles Medical 1.02 1.1 Hold
07/30/19 UOB Kay Hian Raffles Medical 1.03 1.27 Buy DCF
07/30/19 DMG & Partners Raffles Medical 1.03 1.02 Neutral
07/30/19 DBS Vickers Raffles Medical 1.03 1.12 Hold Sum of parts
07/31/19 phillip Raffles Medical 1.04 1.09 Neutral DCF

Stock calls for 10 September 2019

Date Analyst Company Last Target Call Valuation
09/10/19 DMG & Partners Avi-Tech 0.31 0.31 Neutral DCF
09/10/19 Amfrasers CSE Global 0.46 0.64 Outperform Sum of parts, PER12x, PB2x
09/10/19 Lim & Tan SPH 1.99 0 Hold
09/10/19 DBS Vickers UOL 7.47 8.53 Buy RNAV (35% discount)
09/10/19 UOB Kay Hian Yangzijiang 0.98 1.46 Buy PB0.84x

Monday, September 9, 2019

Q & M - Stock calls

Date Analyst Company Last Target Call Valuation
01/23/19 phillip Q & M 0.495 0.513 Neutral

Propnex - Stock calls

Date Analyst Company Last Target Call Valuation
02/27/19 UOB Kay Hian Propnex 0.565 0.66 Buy
04/01/19 UOB Kay Hian Propnex 0.595 0.66 Buy
05/16/19 UOB Kay Hian Propnex 0.505 0.6 Buy DCF, PER10x FY19
06/03/19 phillip Propnex 0.5 0.63 Buy DCF
06/07/19 CIMB Propnex 0.49 0.64 Add
08/16/19 UOB Kay Hian Propnex 0.505 0.5 Hold
08/19/19 phillip Propnex 0.5 0.59 Buy DCF

Perennial Reit - Stock calls

Date Analyst Company Last Target Call Valuation
02/14/19 DBS Vickers Perennial Reit 0.645 0.83 Buy RNAV (55% discount)
04/24/19 DBS Vickers Perennial Reit 0.65 0.83 Buy RNAV (55% discount)
05/13/19 DBS Vickers Perennial Reit 0.64 0.83 Buy RNAV (55% discount)

Stock calls for 9 September 2019

Date Analyst Company Last Target Call Valuation
09/09/19 CIMB CSE Global 0.465 0.68 Add
09/09/19 Kim Eng IHH Healthcare 1.85 2.1 Hold Sum of parts, Ringgit $6.30 target price
09/09/19 DBS Vickers Keppel Pacific 0.75 0.9 Buy
09/09/19 DBS Vickers Mapletree Commercial 2.24 2.4 Buy DCF
09/09/19 CIMB Sembcorp Marine 1.19 1.26 Hold PB1.2x CY19
09/09/19 Kim Eng Venture 15.48 18.88 Buy Roe-g/Coe-g, PB2.2x FY19

The HK protestors have revealed their true aim of their protests.

https://sg.news.yahoo.com/hong-kong-protesters-plan-march-022648940.html

The true aim of the protests is to break away from China and gain independence but HK has always been part of China.

Who are the organizers of these protests?

1. HK institute of human resource management
2. HK confederation of trade unions
3. HK journalists association
4. Civic party
5. Labour party
6. Democratic party

What do these organizers have in common?

They all received fundings from NED.

http://sg-stock.blogspot.com/2019/07/the-truth-behind-hk-protests.html

Sunday, September 8, 2019

Why is making an interest rate policy a difficult task in China?

China has different provinces with different economic growth and each province has different tiered cities (tier 1, tier 2 & tier 3) which have different property prices.

2018 GDP numbers in China provinces:

China was growing at 6.6% in 2018 but its provinces were growing at different rates.  Tianjin was growing at 3.6% (below the country 6.6%) while Guizhou and Tibet were growing at 9.1% (above the country 6.6%).  Each province has its own tiered cities with different property prices.

When China cuts/raises its interest rates, the rates will have to be applied across the board and each province will be impacted differently.  For example, if China cut its interest rates, Tianjin's GDP growth (3.6%) might grow closer to the national rate (6.6%) which was good for Tianjian but Guizhou's GDP growth (9.1%) might be inflated to the extent that it became an overheating economy which was bad for Guizhou.  The interest rate changes would also impact the property prices in the different tiered cities in each province.

Therefore, the Chinese government has to assess the interest rates' impacts in each province first before making any change to the current interest rates.  The assessments will take time since every mayor has to report the impacts back to the central government for better decision making.

The SG government is glad that it is not facing such a difficult task.  Can you imagine SG has different GDP growth in each town?  What if Ang Mo Kio had a 9.1% growth while Chua Chu Kang had a 3.6% growth and each town had its own tiered cities?  Would the SG government be able to implement the property measures so easily?

When will China reduce its interest rates?

When the US and the rest of the world are in a rate-cutting frenzy, China cannot alienate itself and hold its rates perpetually.  Thus, it is a question of when will China do it instead.

In order for our readers to understand this better, it is best that the readers read and understand the rationale and logic of China not reducing its interest rates at this moment.

https://sg-stock.blogspot.com/2019/06/china-has-started-to-sell-us-treasuries.html

What had  China done insofar to stimulate its economy after the US cut the FED rates?

China had implemented the new LPR and reduced the RRR.

http://sg-stock.blogspot.com/2019/08/why-is-renminbi-rmb-depreciating-again.html

http://sg-stock.blogspot.com/2019/09/china-has-just-cut-banks-rrr-by-50bp.html

Please read our post on RRR to understand its impact.

http://sg-stock.blogspot.com/2019/05/how-china-rrr-cut-will-impact-its.html

China does not have runaway inflation, so China can afford to cut its interest rates.  However, China is not doing it now. Why?

If you think that China doesn't cut its interest rates because of its simmering inflation, then I must say that you are wrong because you do not understand China's economic structure well enough.

The properties constitute a large part of the people's assets and the property sector is the Achilles heel of China.  Therefore, any disruption to the property sector will disrupt the economy severely.

As we can see, China has been trying to avoid any disruption to the property sector by implementing LPR and reducing RRR instead of cutting its interest rates because these 2 policies have minimal impacts on the property sector.

China will only cut its interest rates after it has figured out how to rein in the property prices with new property policies and measures because cutting the interest rates will create a buying frenzy to inflate the property prices.  A skyrocketing property market will create social unrest and China is trying to maintain stability in the country.

Saturday, September 7, 2019

Baltic dry index - 2462

Today, Friday, September 06 2019, the Baltic Dry Index decreased by 37 points, reaching 2462 points.
Baltic Dry Index is compiled by the London-based Baltic Exchange and covers prices for transported cargo such as coal, grain and iron ore. The index is based on a daily survey of agents all over the world. Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793. The lowest level ever reached was on Wednesday the 10th of February 2016, when the index dropped to 290 points.
================
Related stock: Sembcorp Marine, Cosco & Pan ocean.

US rig count - 898

Related stock: Keppel Corp, Sembcorp Marine & Cosco.

The Hong Kong protest continues after HK CE's telecast.

https://sg.news.yahoo.com/hong-kong-protesters-aim-stress-test-airport-210048026.html

We had already stated that the HK protest would not end because the protestors were paid to protest.  Those protestors are not interested in the extradition bill because it is never the goal of their protests.  Their goal is to make quick money out of these protests.

https://sg-stock.blogspot.com/2019/09/latest-hk-chief-executives-telecast.html

https://sg-stock.blogspot.com/2019/09/the-hk-protestors-have-rejected-hk-ces.html

We hate to be right in our analysis for this kind of situation.

China has just cut the bank's RRR by 50bp!

https://www.scmp.com/economy/china-economy/article/3026064/china-cuts-banks-reserve-requirements-latest-effort-boost

China has just cut the bank's RRR by 50bp to stimulate its economy.

Many analysts had expected China to cut its interest rates to stimulate its economy and they were proven to be wrong when China didn't do as they concluded.  We had stated in June 2019 that China wouldn't cut its interest rates but would reduce its RRR further.

http://sg-stock.blogspot.com/2019/07/will-china-cut-its-bank-interest-rates.html

Please read our economic analysis in June to understand the rationale for China not to cut its interest rates.

https://sg-stock.blogspot.com/2019/06/china-has-started-to-sell-us-treasuries.html