Monday 8 October 2012

Will Singapore Property Stocks go down because of the MAS ruling?

Dear Friends,

Some friends are concerned whether the new ruling by the MAS will affect Singapore property price and in turn, on the Singapore property stocks.

Well, my opinion is that property prices and property stocks listed in Singapore may not be a straight forward correlation. 

Firstly, about Singapore property prices. It has not been new rules and regulations by the government to stop speculation. So far whatever rules that was laid down has not stopped the property prices from reaching new heights. This time round, I doubt it will too. Yes indeed it may stop some speculators, but for many that have the power to invest will still continue. The main reason is that FED interest rate is still at 0-0.25%, and FED has promised us it will remain that until 2015. With the QE3 ongoing, we think this prices temporarily will still continue its climb.

Do note that Mr Hu Li Yang thinks that property price will start to drop drastically only when interest rate reach 3.5%, a figure that will change investors' investment habits! It is still some time ahead before we reach that level. So for now, probably you do not need to dump your house in a hurry. But I really suggest if you have some purchasing power, look at commercial properties instead as we do not know what further measures will the government come up with. It seems never ending. I am sure the clever government will come up with something still.

Secondly, for property stocks. I encourage all to study your stocks' fundamentals. Property sector will be more affected by the market rather than this government measure. Temporarily I feel if the local property did manage to go down a bit, it might be a good bargain to buy cheaper. Study the fundamentals. 

Some stocks are more commercial based while some are more china based. For those which are commercial based, we probably do not need to care much about the residential measures. For those which are china based, we should study more to the measures and property situation in China like Yanlord.

Overall, I think the drop in stock prices of the property sector is probably a temporary government measures effect. With the influx of capital because of QE3, I believe that both property prices and property stocks (for some) will continue to march higher going forward.


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