A guaranteed return with SGS Bonds

This is the first of a two-part series on SGS Bonds. If you are frightened of the see-sawing stock markets but don’t want your spare cash to be lying around doing nothing, what can you do to get a better return than the miserable 0.25% interest for your Singapore-dollar savings account?

Interest rates in Singapore have always been low.

Bank	Base Interest Rate
DBS Bank	0.25%
OCBC Bank	0.25%
May Bank	0.25%
HSBC	0.125%
Stanchart (eSaver)	0.40%

As of Feb 2009, a savings account with one of the bigger banks in Singapore will only get you a tiny 0.25% return on your deposits. The rates above are the basic rate that you get for the first S$2000 to S$10,000 deposited at each bank, the exact amount varies. DBS, for example charges 0.25% for the first S$3,000 deposited. To put this into perspective, if you really deposit S$3,000 with DBS, you will only get S$7.50 interest after one year. That’s only worth 3 bowls of wanton mee at most!

If you decide to put your money into an online-only account with no ATM card, the Stanchart eSaver account gives you a higher return of 0.40% for your first S$50,000. That’s slightly better!

“… the Stanchart eSaver account gives you a higher return of 0.40% for your first S$50,000.”

But, would you like to get a guaranteed return of 2.95% instead? No, it’s not fixed deposits but something even safer, SGS Bonds.

SGS Bond	Years to Maturity	*Indicative Yield %
N504100Z	0.59	0.02
N505100F	1.10	0.27
NX00100T	1.34	0.29
N506100E	1.93	0.52
NX01100H	2.34	0.55
N507100A	3.10	0.73
NX02100S	3.34	0.78
N507101E	3.59	0.87
N508100V	4.10	1.01
NX03100Z	4.34	1.02
NX04100F	5.34	1.22
N708100S	6.34	1.51
NY01100F	7.51	1.71
NY03100A	9.51	1.94
NY05100N	11.51	2.35
NY07100X	13.51	2.53
NZ07100S	18.01	2.96

SGS Bonds are “Singapore Government Securities”. They are safe investments guaranteed by the Singapore government and are often compared with fixed deposits. The NZ07100S SGS Bond currently has a yield of 2.96%, that’s a guaranteed return of 2.95% after taking into account the transaction fees you pay to purchase the bond. SGS Bonds will be particularly attractive to those who wants a return higher than what is available from savings or fixed-deposit accounts. Investors from outside Singapore can also invest in SGS bonds!

In the next post, CashBench will focus on some of the key tips that you need to take note of when investing in SGS Bonds. How to invest in SGS Bonds? Is it really safe? When should I sell these bonds? If you’re still scratching your head, look out for the sequel to SGS Bonds at CashBench.

Money & Business News @ CashBench

This short post highlights the side-bar on CashBench that you would have noticed by now. How relevant and updated are those news you see?

The global downturn right now is happening even though Asia did not start the ball rolling. Turn back the clock to 2007 and all we knew then was something called a ‘sub-prime’ crisis mushrooming in the United States. It was due to mortgage finance companies and banks extending loans even to those who want to buy a house but has questionable or negative credit history. Of course, that is distance memory now. All we are familiar with right now are job losses, cost cutting and depressed markets around the world.

With hindsight, some of us who have lost their jobs or money in the stock markets may have seen this coming if we keep ourselves updated with news not just by our local mass media but by the top money, business and finance news sources around the world.

CashBench helps by filtering relevant headlines and presenting them directly onto the side-bar to your right. In keeping with CashBench’s focus on Asia, these news are the latest feeds specifically focusing on Asia sent out by Channel NewsAsia and the Asian editions of Bloomberg, CNBC, Financial Times and the Wall Street Journal.

Of course, you can go to each of the individual news sites to get the same stories. But why waste time? Get a glance of all the top stories right at this moment at CashBench and only click on those that interests you. Note that you may need to subscribe/register to view the full stories on FT or the WSJ.

CashBench Forecast for SGX Property Stocks

Despite the pessimism over the economy and frequent calls by analysts to “sell into strength” and take short-term views, are there any shares really worth investing in the Singapore property sector for 2009?

It is no secret that the Singapore stock market has fallen over the cliff for the past one year. Of course, it’s not just Singapore but just about everywhere else. Many investors are jittery and are staying clear of the stock market. But surely, there must be some shares that have fallen too much and deserves a second look.

The last place we should start with is the property market, but even the property sector has shares that deserves your attention!

Stock	Share Price	EPS	P/E
Allgreen	0.45	0.28	1.60
Bonvests	0.58	0.43	1.36
Bukit Sembawang	3.80	0.65	5.82
Capitaland	2.38	0.45	5.33
City Dev	5.35	0.79	6.79
Heeton	0.16	0.04	4.46
Ho Bee	0.34	0.16	2.08
Keppel Land	1.36	0.32	4.31
MCL Land	0.62	0.32	1.95
Orchard Parade	0.62	0.13	4.91
SC Global	0.49	0.12	4.03
UOL Group	1.93	0.75	2.59
Yanlord	0.91	0.16	5.71

The table above lists 13 of the property related stocks on the Singapore exchange with their closing share price on 5 Feb 2009 and the latest earnings per share (EPS) and price-to-earnings ratio based on financial results over the past 12 months. Of course, the limelight is on Capitaland right now because of its rights issue announced on 9 Feb, causing a small surge in its share price, but where's the real bargain?

“… Bonvests is the best buy because it has the lowest P/E of 1.36? NOT TRUE!”

For beginning investors, FundSuperMart.com has a webcast introducing the P/E ratio. It’s really good if you have no idea what the P/E ratio is, but please do not follow the “chicken and eggs” example completely and come to the conclusion that Bonvests is the best buy because it has the lowest P/E of 1.36? NOT TRUE!

“... Focus on two stocks - Allgreen and Ho Bee”

Instead, CashBench has done a valuation for you and recommends that you just focus on two stocks – Allgreen Properties and Ho Bee.

Stock	Current Price	Price Target
Allgreen	$0.46	$0.85
Ho Bee	$0.355	$0.63

The CashBench recommendation is based on the current growth potential and risks for these two companies after taking into consideration the performance of their peers in the property sector.

Both has residential developments in Singapore. Allgreen’s current projects include Blossoms off Upper Serangoon Road, and One Devonshire in the future. Ho Bee is known for its Sentosa Cove projects such as Coral Island, Paradise Island, Seascape and the Pinnacle Collection. While sales will certainly be less forthcoming in the foreseeable future, these two companies deserves a higher share price.

Allgreen has fallen 66% since the past year, while Ho Bee has dropped 75% over the same period. These shares has been oversold based on CashBench’s valuations. Both should re-bound within the next 12 months to 2 years, barring any unforeseen bad news. This CashBench forecast is not for you if you are not able to hold onto these counters for that long. In this challenging period, be sure you have at least 6 months of buffer cash in case you lose your job. If you still have spare cash leftover, these are attractive shares for you to consider.

When did you last visit Australia?

Australia is just next door to Asia and gives us a glimpse of all things caucasian, without travelling to Europe or U.S. Many visit Australia to invest, travel, study and live. When was the last time you visited Australia?

Chart: Australian Dollar per S$1.

If you have visited Australia as recently as July last year, you'll find that the Singapore dollar can only get you about A$ 0.77, it's really not a lot to shout about,. But fast forward a few months later and things has changed for the better! Use your favourite currency converter today and you'll find that with the same Singapore dollar, you can get a whooping A$1.03, an increase of about 34%. Very attractive indeed if you're thinking of visiting the country or sending your kids there to study. Bad luck if you have invested in some properties there over the past few years though.

Chart: S$, RM and Baht rose against Australia Dollar.

Our Malaysian and Thai friends can take advantage of the Australian dollar weakness too. The movement of the Malaysian Ringgit and Thai Baht against the Australian dollar has been largely similar over the past 1 year, gaining at least 18% since a year ago.

Chart: Rupiah per A$1.

The advantage is not that clear for our Indonesian friends though. While the Rupiah has appreciated against the Australian dollar from a year ago, there are significant price swings.

Chart: Hong Kong Dollar per A$1.

Finally, the US$ has been strengthening against major currencies over the past few months and the HK$ certainly benefited from this as well. In fact, the HK$ has appreciated the most among the currencies discussed.

If you need some ideas on how to take advantage of the cheaper Australian dollar, try http://www.australia.com/ :P

[Photo: Col Adamson]

The Australian dollar is likely to remain weak for at least the next 12 months if commodity prices remains weak and the Reserve Bank of Australia continues to cut rates. It has just cut its key rate to 3.25% and there is still room for further rate cuts, unlike the U.S. However, there are some signs that demand for commodities is increasing from the recent rises of the Baltic Dry Index, it remains to be seen if this is sustainable.

What's the big deal about "Buy America"?

"Buy America" what? You must be thinking it's now more important to keep your bosses happy so that you still get paid monthly. You have no extra $$$ for Levi's and Timberland anyway! True true, so what's the fuss about the U.S. insisting on "Buy America", it don't seem to affect us in Asia, right? We're so far away?!

With a new president and a global recession, the U.S. is in a hurry to "stimulate" its economy. Pick up a copy of the Straits Times' Friday edition in Singapore (30 Jan) and you'll read that a "stimulus package" is working its way through the U.S. government that wants new bridges, highways and similar projects within the package to use U.S. steel only, even if it's 25% more expensive than steel from anywhere else in the world!

Yes, it sounds really strange. Deliberately spending 25% more when you can get the same thing at a lower price somewhere else? That don't sound like what an Asian will do at all! Across Singapore, Indonesia, Hong Kong, Malaysia, Thailand and elsewhere in Asia, many will queue for hours or even overnight to get a 25% discount (think cars or houses).

See this YouTube video to hear warnings about how a "Buy [insert country]" call is a bad idea.


More relevant to us in Asia is this. If "Buy [insert country]" gets popular around the world, we will suffer much more and the recession will remain with us even longer. More factories will shut down as demand for our (cheaper) products drops further. For this reason, China is clearly against "Buy America".



It is unlikely right now that "Buy America" will degenerate into a worldwide trend just yet. But if it does, more of us will be forced to take unpaid leave or receive retrenchment letters. :(