Shopping during the Mid-Autumn Festival

Wanted to pen down my thoughts, even as the broader STI makes its rise above the 3200 level. I was relatively active in the last 2 months given that the market took a nose dive due to trade uncertainties, HK protests as well as the shock from inverted yield curve.  

During this period I added the following counters,

Koufu – Averaged down at the resistance line of $0.7. I had initially added at the previous resistance of $0.75. But the bearish sentiments broke the counter further down. I am looking forward to its next quarterly report to see how well its expansion is doing.

CRCT – Subscribed to more than 10x my allocation and was given full allocation. To be honest, if I had known that the upper limit for allocation was higher I would have added more. Not looking to add more at the current valuation. Will wait till next quarter to see the impact of falling RMB on the Reit’s DPU.

OCBC – Added when the price dipped below $10.70. Small position given that I believe that it has the highest potential to run given its small dividend payout ratio and potential acquisitions.

HK land – Added this counter as the final laggard before the STI moved above 3100. I think the risk are overblown considering that it has a diversified portfolio and the fact that the HK protest would not go on indefinitely.

This period was also not without error.

Sembcorp Marine – Added after news broke of its involvement in the ongoing Brazillian corruption probe. Initial gap down was greeted by reversal in the following week, missed a clear sign to exit before the gloom. I guess I got emotional/greedy. While the 10% loss was painful, I still consider myself lucky to cycle out of the stock and rotate to other counters above.

Not looking to add anymore till the next downturn. Just adding to depleted war chest.

New HDB grants announced

The government just announced two new measures to make public housing more affordable and accessible to more Singaporeans. First, is the raising of income ceilings of eligible buyers for HDB and ECs, the second, is the merging of the Special Housing Grant (SHG) and Additional Housing Grant (AHG) into the new Enhanced Housing Grant (EHG).

The first measure of raising the income ceiling makes the newer HDB projects nearer the city more affordable. Which helps us connect the dots considering that the government has made a commitment to offer more units in mature estates including the much anticipated Greater Southern Waterfront (GSW) project in the near future.

I foresee that these units will increasingly be filled with the semi-affluent sections of the population. Also, it allows the government to raise prices in these areas thereby allowing the HDB to reap the full economic benefit of these plots as well as avoiding the issue of the ballot “windfall”, where lucky bidders were able to buy under priced properties in good locations.

The unintended consequence is that because of affordability issues, these areas will become enclaves of the higher middle income and encourage stratification of society. One could also argue that poorer households of these developments would sell their units anyway, leaving the base case unchanged.

For the second measure, given that the grant payout quantum are low compared to the overall cost of buying homes, I don’t expect it to have too much of an impact on the resale market.

But given that BTO prices are not expected to move upwards immediately especially in non-mature estates, I suspect the earliest beneficiary of the EHG would be the mature/resale estate market.

It remains to be seen how much more the prices in the RCR regions are able to appreciate given that so much of this would trickle down into the central area and already mature estates.