South Korea will enter economic downturn in 2017 - Part 4

Lotte has about USD$8.5b investments in China and Lotte is expected to suffer a big chunk of loss in China.  The next to fall will be Samsung as China citizens are boycotting South Korean products.

Furthermore, Foxconn and TSMC are trying to decimate Samsung by combining efforts to buy Toshiba's nand flash business.  Once nand flash business falls into the hands of TSMC & Foxconn, Samsung business will be greatly affected as Apple will no longer use Samsung as its supplier because Apple views Samsung as a competitor.

Part 3:http://sg-stock.blogspot.sg/2017/02/south-korea-will-enter-economic_28.html

Israel! Please stop your aggression!

https://sg.news.yahoo.com/israeli-minister-us-warned-israel-annexing-west-bank-101039869--politics.html

After getting a UN's censure on Israel, USA had switched side finally.

Singapore stock calls for 7 March 2017

Australia doesn't want to get involved in South China Sea patrol. Why?

http://www.reuters.com/article/us-southchinasea-indonesia-australia-idUSKBN16E0D0

The real reason is that Australia also ignored PCA ruling in favour of East Timor and didn't recognise PCA jurisdiction.  Therefore, it's improper for Australia to continue to support PCA ruling in South China Sea or it would face a backlash.

North Korea fired 4 missiles during US-SK joint military exercise.

http://www.reuters.com/article/us-northkorea-missiles-idUSKBN16C0YU

http://www.bbc.com/news/world-asia-39175704

The US and South Korea started its massive joint military exercise involving 300,000 personnel and latest radars such as X-band and THAAD.  However, North Korea fired 4 missiles during the joint exercise as a sign of protest.  The NK missiles revealed critical flaws in the radars as they were not able to detect the types of NK missiles.  This put to questions about the effectiveness of THAAD defence system because it couldn't detect the types of missiles fired.

When you cannot detect the types of missiles, you cannot intercept them effectively especially for multiple-head missiles because the multiple-head missiles can contain real and dummy warheads.

Trade war between South Korea and China has started!

https://sg.finance.yahoo.com/news/south-korea-act-against-chinas-discrimination-against-south-020440494--business.html

https://sg.news.yahoo.com/koreas-lotte-says-4-retail-stores-china-closed-035044241--business.html

https://sg.news.yahoo.com/chinese-protest-against-south-koreas-lotte-100944110.html

The trade war is due to the stupid THAAD defence system which is ineffective against low-altitude rockets.  It is no joke when 1.4b people rallied against South Korea.

Kudos to China for containing its defence budget.

https://sg.news.yahoo.com/china-defense-budget-rises-slowest-pace-decades-report-045618739.html

China's defence budget: USD$151b.
USA's defence budget: USD$590b.

See who is the threat to the world?

Trump is busy bickering with Obama.

https://sg.news.yahoo.com/trump-renews-attack-obama-124628140.html

How will he have the time and effort to focus on the economy?

Singapore stock calls for 6 March 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.

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

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.

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.

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.

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.

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.

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.

Hoversurf from Russia is the new mode of transport to replace bike!

Wow! No more traffic jam!

Singapore stock calls for 3 March 2017

Singapore stock calls for 2 March 2017