Investors Road to Singapore Profits
Stock-Markets / Investing 2010 Jul 21, 2010 - 10:14 AMBy: Tony_Sagami
The warning signs about the U.S. economy are really starting to pile up.
The Philadelphia Fed’s widely-watched index of economic activity plunged in June to 5.1, about half the expected 10.0 reading the Wall Street crowd was counting on. Plus, the index of new orders dropped to a NEGATIVE 4.3.
Americans have stopped spending. Retail sales dropped 0.5% in the month of June after falling 1.1% in May, the first back-to-back monthly decline since early 2009.
Now that the first time home buyers credit is gone, real estate sales are tanking. The Mortgage Bankers Association index of loan activity fell to 163.3, the lowest reading since December of 1996.
The U.S. economy is in big, big trouble and things are about to get, in my opinion, much uglier. However, the United States isn’t the only economic game in town.
Meanwhile … across the Pacific Ocean
The Chinese economy grew by 10.3% in the second quarter of this year. Yup, 10.3%.
Now, a 10.3% economic growth rate is pretty darn impressive, but it pales in comparison to the numbers that came out of Singapore in its second quarter.
The Singapore economy expanded by an astounding 19.3% in the second quarter of 2010. That isn’t a misprint … 19.3%! And it was well above the 16.5% that the Wall Street experts were expecting.
Try to get your hands around this number, though. Manufacturing output expanded by 58.6% in May compared to the same period a year ago. Not only does that break the 49.7% record in April, it is the FASTEST growth since records started being kept in 1980.
Singapore is so hot that the Singaporean government raised its full-year forecast from 13% to 15%.
There’s more. Singapore’s unemployment rate is at its lowest level in 18 years and inflation remains well under control with consumer prices expected to rise 2.5% to 3.5% this year.
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| Singapore’s economy grew by an astounding 19.3% in the second quarter, making it one of the best places on Earth to invest your money. |
And hey, if you’re worried about the slowing U.S. and European economies, Singapore is an oasis of stability. Of all its exports, almost 80% of them go to its Asian neighbors, especially to China, Malaysia, Indonesia, and Japan.
FACT: In the month of June, exports to China soared by 39% and by a whopping 75% to Japan.
That tells me that not only is Singapore one of the best places in the world to invest your money, it is also one of the safest economic hiding places.
In my view, the double-dip recession is darn near a sure thing for the U.S. and Europe but Singapore’s sizzling economy will keep it on track and ultimately reward its investors.
There are several ways you could add some Singapore to your portfolio. The easiest way would be to invest in an exchange traded fund with a big chunk of Singapore in it.
- iShares FTSE EPRA/NAREIT Dev Asia Index (FAS), which allocates 12.6% of its assets to Singapore
- WisdomTree Pacific ex-Japan Total Dividend (DND), which allocates 11.4% of its assets to Singapore
- iShares S&P Asia 50 Index (AIA), which allocates 10.3% of its assets to Singapore
The purest play is the MSCI Singapore Index (EWS), which is 100% invested in Singapore .Through the first six months of 2010, EWS is up 11.6%. Here are some of the fund’s majoring holdings:
Company |
% |
Capital Land |
4.3% |
City Developments |
2.8% |
DBS Bank |
12.3% |
Keppel Incorporated |
4.5% |
Overseas China Banking Corp |
11.1% |
Singapore Air |
3.8% |
Singapore Exchange Limited |
3.5% |
Singapore Telecommunications |
11.6% |
United Overseas Bank |
12.1% |
Wilmar |
3.9% |
EWS is heavily weighted with Singaporean banks (DBS, Overseas China Banking, and United Overseas Bank) and Singaporean real estate development companies (Capital Land, City Developments, Keppel Corporation).
If you really are high on Singapore, perhaps the biggest bang for your buck will come from investing in the Singapore Stock Exchange itself, a publicly traded company.
The Singapore Exchange was started in 1999 from the merger of The Stock Exchange of Singapore and Singapore International Monetary Exchange. In 2000, the Singapore Exchange became the first Asian stock exchange to go public.
As of January 31, 2010, the Singapore Exchange had 774 listed companies with a combined market capitalization of S$650 billion. In the first six months of 2010, the Singapore Exchange reported a profit of $165.8 (Singapore) million, 7% higher than last year.
The Singapore Exchange is currently trading for a little more than $5 a share and is available on the U.S. over-the-counter market under the ticker SPXCF.PK. Remember to always use limit orders whenever you buy or sell on the bulletin board or pink sheets.
Lastly, I am not recommending that you rush out and buy any of these ETFs or stocks tomorrow morning. As always, you need to do your own homework and decide if these investment ideas are right for your situation.
More importantly, you should wait for them to go on sale before jumping in. The only time you can truly control the price of an investment is when you buy it so be patient.
Best wishes,
Tony
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