Saturday 10 December 2011

What ABSD property curb? It’s to curb hot money inflows and limit the rise of SGD!?

The recent “surprise” Additional Buyer's Stamp Duty announcement to me is more a measure to limit the hot money inflows when Europe and US start their own “money printing” – a rose by any other name is still a rose!

There is still a lot of liquidity out there. And when investors are spooked, they run to the “safe havens”.

Over here in Europe, I can see the Swiss government being very frustrated with the rise of the Swiss Franc… It’s very good for the Swiss citizens who can travel elsewhere in Europe to buy the “bargains” with their stronger currency.

But this is a double-edged sword… If you ask the Swiss retailers, hoteliers, and exporters – it’s a different story! They are the ones giving the Swiss government an earful…

When tourists and business travellers avoid holidays and business conferences in Switzerland, who suffer? The restaurants, hotels and the whole tourism sector…

Swiss retailers suffer when tourists don’t come (too ex!) and your own Swiss citizens go overseas to make purchases - like Singaporeans going to JB or Bangkok for eating and shopping? Talk about double whammy!

For Swiss MNCs who make the bulk of their revenues overseas, their repatriated overseas profits become “smaller” with every rise in the Swiss Franc… It’s similar to the Yen’s effect on Japanese exporters. Yen rise, Japanese exporters’ stock price drop; and vice versa.

I have access to CNN here in Athens. Nowadays, I see lots of TV advertisements in CNN to encourage holiday makers and businesses to visit Switzerland for pleasure and conferences – stressing the safety, efficiency, and “fine dining” experience.

The subliminal message is: “We know we are expensive; but you get the corresponding service in return!”

For Singaporeans, I guess beside the usual Japanese example, you can use the Australian example. The rise of the AUD against SGD is interesting (although it has come down a bit due to the China hard landing scare).

If you are going for an overseas education or holiday, would US or UK be “cheaper” than Australia now?

During Oct 2011 when I had my vacation at Santorini Island and touring the classical attractions of mainland Greece, 70% of the tourists I met were Australians!? Everywhere I go I hear Australian accents.

On the other hand, if you have invested in Australian hospitality related stocks… My sympathies… Is that why Qantas is also…

If my memory serves me right, during the 97 Asian financial crisis and 2008 Lehman credit crisis, SGD depreciated against USD and Euro. Our Singapore economy is still very much export and tourism driven…

Imagine if our SGD were to strengthen in the next downturn due to foreign hot money inflows?

As you can see, my viewpoint is from what I see and remember. I am definitely not an analyst or economist!

So when I heard this new property curb, I am not looking at the property counters or property prices per se. I am thinking that our ever so proactive Singapore Government must see what I don’t see. And more importantly, has ACTED in advance (unlike the politicians in US and Europe today).

It’s definitely bigger than the property sector.     

Or maybe I am seeing something out of nothing again. LOL!

P.S. That's why I don't think this winter will be colder than 2008. Property can have curbs, our SGX does not have curbs to foreign money (which is not a bad idea since I am 50% vested). However, all bets are off if SGD strenghtens instead of weakening!!!

The latest property curb is the smoke. I am looking at the fire. Thank you very much!


  1. Wah, SMOL. You good ah! I kowtow to you!

    You are thinking like the PAP government liao. I am a frog in a well and a myopic one too.


  2. Hi SMOL,

    very insightful. Hope you don't mind my next question, but "whats next"? No point reading the scenario but not profiting from it right?


  3. Hi SMOL,
    Singapore is not even equivalent to an ant when comparing to USA or Europe. We are the famous little "RED DOT" as given the name by a former President of Indonesia. i think even this name is already very "honorable".
    Being very, very tiny, we always have to keep on moving as fast as possible(comparing to others), if not we will be crushed to death.

  4. Hello AK,

    If you poking fun at me I don't friend you AGAIN! Nah, nana nah nah!

    I just sing song only. Just as long the grasshopper don't sing out-of-bound-markers kind of tunes,
    I can sing whatever I want. LOL!

  5. Hello sm@ll.fry,

    I'll email you my "what's next". I can be very open about myself (nothing to hide); but when it comes to positions, I prefer one-to-one discussions.

    I have more wrongs than right calls!

  6. Temperament,

    That's why I focus on taking care of myself. No one wakes up and say let's help make Jared's life a little profitable today!?

    With lots of humility, I am a bit puzzled by some investors. When don't have sweet, whine like nobody business. When got sweet, sing a different tune over night?

    And they will probably be thinking it's their whining that got the policy changed...

    Politics have not changed since the days of Cain and Abel.


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