Tuesday, October 27, 2020

My Thoughts On SG Banks and SG Investment

While I informed of my friends a possible correction ahead this week and the month ahead, one of them asked me if the SG banks will be falling as well? 

I gave him a long message and it goes like this:

"In US, the economy is protected via the stimulus. So when the 2nd stimulus is taking so long, economy get worse

In SG, it is a bit different. We are protected by government in terms of everything, to the point have keeping our job. We are in a bubble wrap economy in SG.

For example, just look at SIA, if government did not even come out with the stimulus plans, so many people will be out of job. The fact is - once this bubble is POKED and it will burst, the banks will be the 1st to hit. Big time.

There are really many policies that is protecting everyone - like the wage credit scheme, the temporary covid-19 act that allows deferment of loan payments, forbearance of loan payments for mortgage, Temporary bridging loan by Spring Singapore (90% risk sharing), etc. Banks knows this and is already - protecting themselves by having higher provision.

So with that, I am not saying the economy will fall. But I feel we should take calculated risk.

In my opinion, any new investment into SG banks must be slow and steady. Because I foresee lousy bad results next Feb/Mar, such as dividend drop etc...then people complain, share price fall...

If you wanna buy SG banks, go in slow, and take cost averaging strategy instead.

I am intending to reduce my OCBC holdings from 15% to 12.5% of portfolio. My US holdings is also really doing much better.

The conclusion is I see SG as a bond like feature investment right now - a protection base/a hedge against the soaring US market."

That was the conversation and I hope it provides some light to you as my reader into my thoughts of how I currently invest. 

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