Outlook of Value Investing Singapore 2017
The outlook of Value Investing Singapore 2017 and global market proved to be challenging in this year. There were full of dramatic surprises in the year of 2016. I reflected with the listing of events which freaked me out as follows:
- BREXIT and pound dropping
- US Presidential Election won by Donald Trump
- The hike in US Federal Reserve interest rate in Dec 2016 and another promising three hikes in 2017;
- The approach used by Philippines President, Duterte to hande US/China relationship
- The increasing South China Sea disputes
- Further Weakening of Ringgits
- The ups and downs of commodity market in particular oils and precious metals.
These surprises are potential risks to our investments. It is not a joke because any negative consequences arise from such surprises can really spoilt the whole global market economy and causing stock market to go spirally downhill. Being a value investor, we may be still quite ok with the backing of fundamental analysis. By now, I anticipate that most of the savvy value investors have probably cut down their stock portfolio and increase their cash portfolio accordingly by now.
What I am still holding on now are bank stocks (DBS and OCBC) , Nikko AM STI ETF, Keppel Corp, Singtel, Global Logistics Properties and a few of the local REITs with higher dividend payouts (First Reit, Ascendas Reit, Suntec Reit) as well as a new Phillip SGX APAC ex-Japan Dividend Leader REIT ETF (for diversification). With the hike of US federal interest rate starting from Dec 2016 and the high likelihood that there are three more potential hikes in US federal interest rate, bank sectors can be benefited from such interest rate hikes. You may already start to see that local banks are starting to take down their fixed interest rate to avoid the reducing profitability margin resulted from a further rise in US interest rate in 2017 and beyond.
As mentioned in the earlier posts on REITs, they will be definitely be impacted by these hikes in interest rates in 2017. If you are looking from collecting dividends point of view, it may not be a bad idea to keep some of these good REITs for value investing. Just apply what you have learnt for the correct value investing strategies and hold on to those value stocks. I think this should be fine over the long run anyway.
The trend of Singapore STI index was flat in 2016. There was a downtrend in the month of December 2016. It may be good if we can increase and hold our cash position a little longer in 2017. This will give us the opportunity to strike for better valued stocks in the uncertain year of 2017. The above is just my 2 cents opinion. Stay patient enough in your Value Investing Singapore 2017 journey. It will bear more fruits over time.
Happy Value Investing.