Monday, March 6, 2017
USA may have sub-prime again if Chinese investors exited US market.
https://sg.finance.yahoo.com/news/coming-home-roost-chinese-property-210006427.html
There'll be an oversupply of housing and this will crash the housing market when Chinese investors exited US market. However, Asia will benefit out of this turmoil.
There'll be an oversupply of housing and this will crash the housing market when Chinese investors exited US market. However, Asia will benefit out of this turmoil.
Sunday, March 5, 2017
China has cut GDP growth for 2017. How will it impact the world?
http://www.reuters.com/article/us-china-parliament-idUSKBN16C007
IMF forecasts world GDP to be 3.1% for 2017 and China alone will contribute 39% of that 3.1% whereas USA will only contribute less than 10%. Therefore, any decline in China GDP will affect the world more than USA.
http://english.gov.cn/news/top_news/2017/01/16/content_281475542971540.htm
IMF forecasts world GDP to be 3.1% for 2017 and China alone will contribute 39% of that 3.1% whereas USA will only contribute less than 10%. Therefore, any decline in China GDP will affect the world more than USA.
http://english.gov.cn/news/top_news/2017/01/16/content_281475542971540.htm
Qualitative vs Quantitative analysis? Which is more important?
Quantitative analysis is about analyzing the facts and figures from the financial statements to derive a fair value on the company stock whereas qualitative analysis is about analyzing the business model and non-arithmetic aspects of the company and its industry to assess the feasibility and sustainability of the company.
Many financial analysts focus on quantitative analysis and neglect the qualitative aspects which often result in misjudgments.
For example, financial analysts like to tout shipping trusts to retail investors as value investment instruments because of their constant distribution yields that are akin to bond yields or fixed deposits. They always use quantitative analyses to justify for buying shipping trusts due to the long-term chartered contracts (7-10 years) and high distribution yields of 5-7%.
However, if we use qualitative analysis on shipping trusts, we will discover that shipping trusts cannot withstand economic downturns and recessions. The business model of shipping trusts is based on ship acquisitions to secure ever rising chartering rates to maintain the high distribution yields. The acquisition limit is usually restricted by its loan-to-value ratio rule that is around 70%. In a nutshell, the bank will only loan up to 70% of the ship value. Although shipping trusts usually require their customers to lock in long-term chartering contracts of between 7-10 years, the customers won’t honour these contracts during economic downturns or recessions because many of these customers cannot survive such hardships. When the customers start to breach these long-term contracts, shipping trusts are left with an oversupply of ships that are berthing and doing nothing. Then, the shipping trusts will be forced to sell the idling ships at lower rates and these ship values will decline significantly. Banks are usually cognizant of the latest developments in the shipping industry and will demand the shipping trusts to top up the differences in the fallen ship values. Conversely, some banks will even recall the ship loans to cut down their risk exposures to the shipping industry. All these events will start a vicious cycle in the shipping industry, which will lead to tremendous fall in shipping trusts’ prices and distribution yields. However, many financial analysts will omit these cold hard facts and information to the retail investors by not doing a proper qualitative analysis.
Therefore, you better think twice when you read analysts’ reports without proper qualitative analyses.
Saturday, March 4, 2017
Recession is coming this year!
http://finance.yahoo.com/news/fed-rate-hike-cycle-typically-lead-to-recession-160938484.html
FED rate hikes will cause recession according to historical records.
FED rate hikes will cause recession according to historical records.
US interest rate could rise to 6% in 2 years.
http://finance.yahoo.com/news/strategist-says-trump-policies-could-132906015.html
Yellen has indicated that she will raise more rates. This means she will counter Trump's fiscal policy with more interest rate hikes to rein in his expansionary plan.
Yellen has indicated that she will raise more rates. This means she will counter Trump's fiscal policy with more interest rate hikes to rein in his expansionary plan.
USA march rate hike is a fait accompli.
https://www.bloomberg.com/news/articles/2017-03-03/yellen-hints-fed-may-need-more-2017-rate-hikes-than-penciled-in?cmpid=yhoo.headline&yptr=yahoo
Janet Yellen has indicated that she will raise more rates in 2017.
Janet Yellen has indicated that she will raise more rates in 2017.
Baltic dry index - 939
Today, Friday, March 03 2017, the Baltic Dry Index climbed by 35 points, reaching 939 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.
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Related stocks: Sembcorp Marine & Cosco.
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.
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Related stocks: Sembcorp Marine & Cosco.
US rig count - 756
HOUSTON (AP) - The number of rigs exploring for oil and natural gas in the U.S. increased by two this week to 756.
A year ago, 489 rigs were active.
Houston oilfield services company Baker Hughes Inc. said Friday that 609 rigs sought oil and 146 explored for natural gas this week. One was listed as miscellaneous.
Texas increased by six rigs, North Dakota was up three, Louisiana gained two and Utah one.
Oklahoma declined by three, Pennsylvania and Wyoming each dropped two and Alaska, Colorado and New Mexico were off one apiece.
Arkansas, California, Kansas, Ohio and West Virginia were all unchanged.
The U.S. rig count peaked at 4,530 in 1981. It bottomed out last May at 404.
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Related stocks: Keppel Corp, Sembcorp Marine & Cosco.
Friday, March 3, 2017
Thursday, March 2, 2017
What stocks to buy in an interest rate rising environment?
In financial doctrine, we learn that a stable cashflow (low-volatility) company will be highly sensitive to interest rate compared to a high volatility company. This means that low volatility cashflow will be positively correlated and high volatility cashflow will be negatively correlated to the interest rate.
As banks and insurance companies have relatively stable cashflows, these companies will benefit in an interest rising environment.
Previous related post:
https://sg-stock.blogspot.sg/2017/02/who-will-benefit-in-high-interest-rate.html
As banks and insurance companies have relatively stable cashflows, these companies will benefit in an interest rising environment.
Previous related post:
https://sg-stock.blogspot.sg/2017/02/who-will-benefit-in-high-interest-rate.html
US stock markets are high on drugs now!
USA fundamentals have not changed much on the main street but wall street's euphoria is based on sentiments towards Trump's speeches insofar. Trump's fiscal stimulus will boost the economy but this ephemeral will be negated by Janet Yellen's rate rises and the stock markets will come crashing down hard. The US stock markets are like a house of cards now.
Wednesday, March 1, 2017
Advancement in robotic technology. What the latest robot can do!
Japan wants to tell USA to respect WTO rules.
https://uk.finance.yahoo.com/news/japan-tell-u-respect-wto-rules-pm-abe-045130597--business.html
What a joke!
There is no way for Japan to tell USA what to do. It's always USA telling Japan what to do.
What a joke!
There is no way for Japan to tell USA what to do. It's always USA telling Japan what to do.
Ezra's ECS bankruptcy will affect DBS & OCBC.
http://www.reuters.com/article/us-ezra-hldgs-affiliate-bankruptcy-idUSKBN16728C
DBS & OCBC have loan exposures to ECS. Ezra will have to write off its ECS investment of about USD$170m (40% stake in ecs). DBS's exposure is about USD$84.6m and OCBC's exposure is about USD$13.1m.
DBS & OCBC have loan exposures to ECS. Ezra will have to write off its ECS investment of about USD$170m (40% stake in ecs). DBS's exposure is about USD$84.6m and OCBC's exposure is about USD$13.1m.
UN is an useless organization now!
https://sg.news.yahoo.com/russia-china-veto-un-resolution-syria-sanctions-172339348.html
If the west especially USA don't work with China and Russia, UN will be a useless organization that cannot get work done because there must be not a single veto in any UN decision. When there are 2 vetoes from Russia & China, UN cannot carry out its ruling.
If the west especially USA don't work with China and Russia, UN will be a useless organization that cannot get work done because there must be not a single veto in any UN decision. When there are 2 vetoes from Russia & China, UN cannot carry out its ruling.
WTO is fast losing its credibility.
https://sg.finance.yahoo.com/news/trump-administration-ignore-wto-rulings-sees-anti-u-030245789--finance.html
WTO refused to honour its own contract with China to grant the market economy status automatically after 15 years. By setting such a bad example to the world, USA is just following suit by ignoring WTO rulings.
Why must other countries abide by WTO ruling when WTO refuses to abide by its own contract?
WTO refused to honour its own contract with China to grant the market economy status automatically after 15 years. By setting such a bad example to the world, USA is just following suit by ignoring WTO rulings.
Why must other countries abide by WTO ruling when WTO refuses to abide by its own contract?
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