Random Thoughts: Trade War and our Big 3 Banks, HK and Singapore ETF

In case you have been living under a rock for the last 2 years, the US and China are locking horns in a escalating trade war.

Here is a timeline from Bloomberg to help you get up to speed.

For those of you who have always wanted to buy into banks at their lows, the Big 3 banks have dropped about 20% off their recent 52 week highs. 

In addition, dividend yields for DBS and UOB have crossed the 5% threshold.

Here is what it looks like for the Tracker Fund of Hong Kong, and the SPDR Straits Times Index ETF

Time to think about opening the warchest...

Weekly Reads - Eagle Hospitality Trust IPO edition

Another week, another US hospitality trust IPO. Here are articles from news articles and bloggers who wrote about this.

IPO details from The Business Times

The offering price is US$0.78 per stapled security. A total of 580.6 million stapled securities are being offered, comprising an international placement of 535.7 million stapled securities to investors, including institutional and other investors in Singapore, and an offering of 44.9 million stapled securities to the public in Singapore.

EHT is a stapled group comprising Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust (EH-BT). It has an initial portfolio of 18 full-service hotel properties, with a total of 5,420 rooms and an aggregate valuation of about US$1.27 billion.

Projected annualised yield from 1st May 2019 to 31st Dec 2019 is 8.2%

Investmentmoats 

Financial Horse 

Probutterfly 

RiskNReturns 

Motley Fool 

Business Times 

Weekly Reads - 15 May 2019: Facebook, UFOs, Elizabeth Warren and BlackRock ETFs

Glowing Auras and ‘Black Money’: ThePentagon’s Mysterious U.F.O. Program - From the New York Times. The Navy is searching for UFOs

Cheap ETFs Are Hot, But BlackRock’s Premium Funds Pay the Bills - From Bloomberg. Not all ETFs are cheap

15 MONTHS OF FRESH HELL INSIDE FACEBOOK - From Wired. A look at the chaos in Facebook dealing with privacy scandals

The Making of Elizabeth Warren - From Politico. How Elizabeth Warren got started

Weekly reads - ARA US Hospitality Trust

There's some buzz around 2 upcoming US REIT IPOs. In case anyone is still making up their minds, better hurry up. If you didn't know about this, here are some articles to help you get started.

Issuing US$0.88 per stapled security, close at noon on May 7 

Starts trading 2pm on Thursday, May 9.  

The expected distribution yield is 8 per cent from May 1 to Dec 31, 2019, and 8.2 per cent for the projection year 2020.  

The Business Times

Financial Horse

KPO and CZM

Probutterfly

Motley Fool

RisknReturns

None of the above should be construed as investment advice. Do your own due diligence as I will not be responsible for any loss/risk.

Quick Notes: What is a Dark Kitchen?

Quick Notes: What is a Dark Kitchen?

Another step in the disruption of the traditional restaurant industry, dark kitchens are growing in popularity. Here is a listing of some points and relevant articles. This is not meant to be analysis.


What is a Dark Kitchen? 

Dark Kitchens contain purpose-built kitchens fit for delivery with each kitchen allocated to a different restaurant brand.

No seating areas for guests. Essentially a kitchen for servicing food deliveries.

Operator such as Deliveroo takes a larger cut of restaurant takings when they use dark kitchens, customers are charged a delivery fee.

Usually sited in non-prime areas, but close to the customers they are serving

Equipment provided by operators like Deliveroo, but the menus and staff are provided by individual restaurants that want to launch or increase their delivery capacity.

Food ordered via apps online and delivered by couriers

Points to note:

Delivering from restaurants require customers to live within a short distance, or food quality suffers. Dark kitchens get around this problem by moving the kitchen to where the customer is.

Food order data, and hence customer preferences can be shared with restaurants

Allows restaurants to test new recipes or even entire concepts at relatively low risk/cost.

Use of big data to decide what restaurants will do best in new locations, adapt to customer preferences. identify sources of high demand/low supply


Restaurants depend on Dark Kitchens operator for data on customer preferences. Dark kitchen operators own the relationship

Labour is "Amazonified", low wages, high stress, long hours, repetitive tasks. Could eventually be made by robots.

Low cost food leads to depressed wages for workers

Reference


Inside Deliveroo's dark kitchens, the food delivery fight's new front

Will Online Food Delivery Get “Amazoned”?

Are dark kitchens the satanic mills of our era?

How Deliveroo's 'dark kitchens' are catering from car parks

‘Dark kitchens’ spell trouble for the restaurant trade

Travis Kalanick’s new venture buys UK ‘dark kitchens’ business

Robots and delivery services take over a kitchen-free future, reports says

Dark kitchen - gastronomic revolutionaries | KTCHNrebel

Dark kitchens: is this the future of takeaway?

Weekly reads - 12th December 2018: Bernie Madoff edition

Nearly 10 years ago, on 11th Dec, 2008, Bernard Madoff was arrested after his gigantic Ponzi scheme was exposed. Here are some articles to refresh our memories of what happened and what has happened since.

What happened then - an article from the Economist explaining what happened when the fraud was exposed

Timeline of events, from The Guardian

Some not-so-rich people who were hurt by the fraud. 

Some rich people who were hurt by the fraud

What did Madoff do , as explained by Harvard Business Review

Red flags that might have alerted people that its a fraud

Interview with Harry Markopolos, the man who tried to expose Madoff

10 years later, where are they now?

A surprising amount of money is recovered since the fraud was exposed

Random thoughts - Government Linked Companies, how are they doing now?

Many people, rightfully or wrongly, view Government Linked Companies (GLCs) as blue-chip and safe investments. How are they doing in these troubled times?

Let's take a look at the FSSTI since the start of the year:

So basically not so good. 

How about the GLCs listed on the Singapore Stock Exchange?

Here is a list of companies that are considered GLCs.

-comparing their prices as of today against the 52 week lows, quite a number of them are at, or quite near these levels.

-looking at the dividend yields, a number of them appear quite juicy at the 4% or more range. Do note that special dividends may have been included in the data above, skewing some of them

-2009 was the nadir of the Great Financial Crisis and many stocks plumbed all time lows during the year. Comparing the current prices against the lowest price hit during that year, 1 company stands out: SIA

-taking the average price of the various companies during 2009, we can see that a large number of them are trading near the 2009 average levels. Some of them are trading lower than the average price during 2009


So price resilience wise, the GLCs are hit by the recent market turmoil, but on the bright side, stock pickers may wish to start checking some of them out.

None of the above should be construed as investment advice. Do your own due diligence as I will not be responsible for any loss/risk.

Weekly reads - 4th November 2018: Inflation, Grand Theft Auto and more

From Forager Funds - After a decade of extraordinary monetary policy, has everybody underestimated the threat of inflation?

A short profile of Houser Brothers. The guys behind Grand Theft Auto and Red Dead Redemption

Eddie Lampert interview after the Sears bankruptcy

John Authers moves from the Financial Times to Bloomberg

Jeff Gundlach speaks

Random thoughts - After last week's bloodbath..

Just a quick check on what some market indices look like. Looks like a correction (if  not a full blown bear) is in full swing.

And some local Singapore banking stocks. 

As well as a couple of ETFs tracking the Singapore and Hong Kong market

If we use dividend yields as a rough valuation guide, by plotting a graph of the dividend yields of the 2 ETFs from 2010 to now and comparing it against the average yield from 2010 to now,  it looks like the yield at current price is going above the average yield. 


STI ETF

The STI ETF yield is approaching a high, from 2010 onwards. Its yield is about 3.75% and if the ETF price hits 2.80, meaning the STI index drops to 2800, the yield would be about 4%.


Tracker Fund of Hong Kong

The Tracker Fund is surprisingly still not at a high if we look at the yields from 2010 onwards even though it has dropped close to 25% vs the 52 week high.

I guess this is the time when everyone's fortitude is tested. In such a market, most fundamental or value investors should start hunting for bargains.

None of the above should be construed as investment advice. Do your own due diligence as I will not be responsible for any loss/risk.

Temasek Bond addendum

Have to say, this Temasek Bond seems really interesting.
A lot of people have been posting on this.

Here is the list from my previous post:
financialhorse
investmentmoats
singularitytruth
investsingaporebonds
fifthperson
thesleepydevil
mysweetretirement

6 more new postings this weekend. Just in case anyone is still trying to make up your mind about to subscribe or not to subscribe:

bedokianportfolio
singapore-ipos.blogspot.com

risknreturns

The Tale of Azrael
sgyounginvestment
sgbudgetbabe

Jumping on the bandwagon - otherwise known as my 2 cents worth on the Temasek Bonds

A lot of bloggers have opined on this. The roll so far:

financialhorse
investmentmoats
singularitytruth
investsingaporebonds
fifthperson
thesleepydevil
mysweetretirement

I won't go into details about the bonds. If you have to pick a couple from the list above to read, go with FinancialHorse and Investmentmoats for their detailed explanation.

Here are some thoughts on the Temasek Bonds, from my personal perspective.

Here's a snapshot of the current levels of some stock indices, vs their 52 week highs. Some markets have entered a bear market (Hong Kong, China) or are pretty close (Singapore).

If you are familiar with the Singapore Savings Bonds, you will also note that the yields have been rising steadily this year.

Here is a list of the average interest rates for the Nov 2017 to Nov 2018 issues. The average interest rates are based on the assumption that you hold the bonds to year 5. The rates have risen from 1.56% to 2.22%, an increase of 0.66%.

Assuming the same rate of increase continues for 1 more year, the 5 year average rate for the Nov 2019 issue could be 2.88%, beating the 2.7% rate of the Temasek bond.

Given that the bear has arrived for some markets, it makes sense to start hunting for bargains. This means I should keep my warchest in liquid assets that will keep its value until I need it.

While I am not a prognosticator of market direction, I will go out on a limb and say that we are probably in a rising interest rate environment.

When interest rate rise, bond prices fall. So there is a chance that the price of Temasek bonds may fall, if you try to sell them at a later time. Also, the market for retail bonds are supposed to be terribly illiquid, so you may not get a good price if you have to sell.

So I won't be subscribing for these bonds, since opportunities are appearing in the equities markets.

None of the above should be construed as investment advice. Do your own due diligence