For 2Q, USA pretty much dominated the headlines again, with Trump - China trade tariff threats, Trump - Mexico tariff threats, Trump - EU tariff threats. Note: I said Trump - XX tariff threats, and not USA - XX tariff threats for a good reason. This is Trump and his inner circles view alone and not the consensus of the major population and companies. Trump, as plain as all can see (I hope), does not accept losing as a word in his dictionary. I find this article quite a good read. Tearing up deals, burning bridges that predecessor painstakingly built is a common theme of Trump's rule for the past 3 years. I pray for the future presidents of USA to rebuild the relationship that was lost or soured just because of 1 man action. On a hindsight, because of the economic uncertainty due to the trade wars, I fear a recession (perhaps a mild one) could be coming soon. USA may truly need to start cutting its public debt to make it sustainable.
DJI ended at 26599, a rise of 671 points (+2.58%) compared to 1Q. For Singapore, STI ended at 3321, an increase of 109 points (+3.39%) compared to last quarter. Generally, the stock market has been shielded from the trade war that has been going on and USA economic results till now has been resilient to these negative news, as shown in the continue upward trends of stocks. However, market indicator of late has began to show signs of coming possible recession. Consumer and business confidence are dropping, Purchasing Managers Index has also been dropping, and more subtly defensive counter such as reits and high yield stocks are recording all time high in these past 2 months in Singapore, probably due to influx of fresh funds for less risky yields. (Update 01-Jul-19: This article summarises what I just said, looks like defensive counters rise is not limited to just Singapore market)
Trump has always view the USA economy and stocks performance as a report card for his president tendency. With the upcoming 2020 presidential election, I believe he will do anything to achieve that, probably proposing popular measures such as more tax cuts. I wonder how USA is going to fund the tax income shortfall except with piling more debt? Well, Trump certainly will not be around to solve this debt issue when it spiral out of hand. For the immediate 1 year (till 2020 where Trump's term will end), I believe the market will be leaning to positive due to Trump's positive interference. G20 meeting is currently on-going in Osaka, lets see if Trump will compromise with China to make a Great Deal that USA will win as what he has been trumpeting on.
For Q2 2019, I am focused on opportunistic stocks that have an attractive price to enter and hopefully sell them off when I deem their full value is matched. With the recent CDP lending rule change, I will also be building up my current portfolio to meet the lending requirement: either $10,000 in market value per counter or holding 10,000 shares per counter. Hopefully, this can provide me with additional lending income.
Transaction 1: Bought in one batch of China Everbright in April and June.
China has been going on their environmental sustainability activities for some time and industrial waste treatment has been a long term project with increasing focus by the government. With this company effectively 70% state-own, they have been bagging projects after projects, with their recurring profits on managing the plant and treatment of the waste water on a 30 years Build-Operate-Transfer Scheme. On a hindsight, due to the low valuation they get on SGX, I think they may delist and shift entirely to HKSE in 1 year time.
Transaction 2: Participated in Fraser Centerpoint preferential share subscription in May.
Did not expect them to purchase the holding company of Asia Malls but this deal surely increase the value of FCT. Now, they have a pipeline of potential Asia Malls to purchase. The purchase of 33.3% interest in Waterway point has been a long time rumor and they managed to put it to reality with the purchase announcement straight after the Asia Mall holding company purchase. The last pipeline remaining is Northpoint City (South Wing). When will they call the purchase?
Transaction 3: Bought in one batch of Sasseur Reit in June.
Still find the 8+% yield tempting at current price. Just purchase this counter to beef the total holding to meet the CDP lending requirement.
That is all for now. See you all in Q3 2019 update and thank you for reading this long long post. =) Now, I need to think of the next 3 year plan (2020 - 2022) to grow my passive income.
