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Turisk raised lending rate from 7.75% to 12%

Europe & America:

Turkish central bank raised its overnight lending rate to 12% from 7.75%.  It also increased the overnight borrowing rate to 8% from 3.5%.  The move claimed was intended to help stabilise the value of the lira, which plunged in recent days amid ongoing turmoil across emerging markets.  The lira immediately strengthened after the central bank announcement, to 2.2 lira to the US dollar, from 2.253.

Argentina and Ukraine have been working to stabilise their currencies in the face of investor nervousness.

Asia:
The Reserve Bank of India (RBI) raised the benchmark repo rate - the amount at which it charges to lend to commercial banks - to 8% from 7.75%.  The purpose was to stem inflation

The ringgit slumped to its historical low against the Singapore dollar to close at 2.6214 yesterday, declining further from last Friday’s close of 2.6066.  The ringgit had depreciated 0.03% to close at 3.3468 against the greenback. It briefly touched 3.3485 in the early trade, which was the lowest level since May 26, 2010. The ringgit traded lower against the euro to close at 4.5844 from 4.5004 last Friday.

Tapering:-
US, the Federal Reserve is expected to continue to withdraw its extraordinary stimulus measures at the end of a two-day meeting on Wednesday - which is causing some concern in the markets.

Many investors fear that as this programme is drawn down, interest rates not just in the US but around the world could rise, and adversely impact emerging economies in particular. The concern and fear are valid.  Just look at last year when fund pulled out from Asia, what happened to Indonesia, India, Thai and Malaysia currencies.  Interest rate goes up, borrowers are going to pay more.  Just look at the past Asia crisis.  Let say you loan one million from the bank.  Your monthly instalment is $2,000/months.  Interest rate gone up from 1.2% to 3%.  Ask yourself, how much more you need top up on top of that $2,000/month instalment.  Worst, you property value dropped by 20% and bank ask to offset the different.  See how Turkish raise the interest rate, is really a concern.  Yes, you see the impact on lira, but what about the other side of cons. 
 

HDB resales price falls for the first time in 8 years and private home price also fall in Q4

Yesterday, we saw this article “HDB resale prices fall for the first time in 8 years” and “Private home prices fall in Q4”.

 

Let me highlight some of the important data that were released.  HDB resale prices fell by 1.5% in the 4Q of last year.  For the whole of 2013, the resale price index registered a decline of 0.6%, the first time annual drop since 2005.  18,100 resale transactions last year, a 28% dip from 2012 and the lowest since 1997.  Luxury homes also shows signs of losing steam.  Data released by URA showed that private home prices fell by 0.9% from the previous quarter.  For more detail, you may refer to the website or yesterday newspaper.

 

Now, we started to see economists and analysts came out to say - watch out the property market……some analysts estimate there could be a fall by 5~10% for the private housing this year, HDB price could……….

 

Does this piece of news surprised me?  Those who follow my blog will know that in September I have already mentioned that the property price will come down.  http://achua138.blogspot.sg/2013/09/property.html  When everyone knows this piece of news, it is no longer a news.  As an investor, I don’t listen to others.  Whoever he is.  I do my own analysis.  I need to be on guard and act before others do so. 

 

Give you one example on what I mean on that.  Cash over valuation (COV) on the HDB housing. Two extreme examples, 4-room flat, Queenstown, in 4Q 2012 COV $65,900.  4Q2103 dropped to $37,900.  Non- mature estate Punggol, same 4 room unit 4Q2012 $45,000 and 4Q2013 dropped to $0.  These data I extracted out from yesterday article.  I mentioned that “some areas are selling with zero COV and some even to the extend of selling under valuation” in October.  http://achua138.blogspot.sg/2013/10/hdb-resales-price-drop-for-first-time.html

 

When I saw private developers eagerly lunching their unit with discount, gift…….respond by the developers on the new land bidding…….Singapore’s 3 main banks were been downgraded due to household debt …….government concerned about the continuous property price increase and started to implement cooling measured one after the other until they see result…... ……….I know the property peak is there.  Yes, I agree to some extend with some people saying that Singapore small island, no matter what the property price will go higher than what the price that they paid now.  When?  3 years later or 5 years later.  I will say before the crash or some people called it correction.  不要自我安慰。 If you can buy a unit whether is for investment or own stay with a 20~30% lower, why not, right?  Property prices are not thousand nor ten thousand dollars.  We are talking about few hundred thousand to millions.  20% is a lot.  

Game has begun.  HDB resale pricing is only the beginning.  Now we see private property housing got sucked in, so what next?  Industrial property, shop space prices………watch out on that.  As I said in my previous posted, investment products are inter-related with one and the others.  We see DOW dropped 500 points over the last 2 days.  Remember I said 小心， 小心再小心。 I will talk about equity market by end of January. 

Different between professional trader and normal investor.

This is the different between professional investors and normal investors. 

 

“真正的股市高手，对于卖掉赔钱的股票从不心疼；只要手中持股的走势与预期相反，哪怕只是下跌5~10%，一定会理智地执行停损，以免落入一波更大的跌幅之中。高手投资股票的第一原则是，宁可不赚，但绝不能大赔，一次都不可以！”

——胡立阳老师