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Sheng Siong's IPO and the American debt ceiling.

Monday, August 1, 2011

I received two emails today from readers. The first asked me about Sheng Siong's IPO and the second commented on how the Americans have come to a compromise on raising the debt ceiling.

To the first reader, I said that it has been a long time since I took part in any IPO, believing that they do not offer good deals for investors most of the time. I rather wait and see if I could get the shares when they provide better value for money.

Many believe Sheng Siong's business to be recession proof and that is probably correct. However, the business might be recession proof but the share price could be less so.

The business could be quite robust but negative sentiments in the broader market could drive prices down all the same during hard times. Mr. Market is given to extreme emotions, after all. I would buy if the shares become undervalued.

To the second reader, I said that I would not be too sure about the Americans raising their debt ceiling successfully until President Obama signs on the dotted line. After all, remember how "rebels" within the Republican ranks were unhappy with the compromises made?

Now, how will the Democrats react to some concessions made by President Obama to the Republicans? Apparently, he gave in and agreed not to increase taxes on the rich.

Of course, I am playing the Devil's advocate here but, like I always say, never say never. We can only hope for the best.

Read article here.


financialray said...

Actually from what Timothy Geithner replied last week to questions posed to him, the markets in Singapore and HK seem to be able to hold their feet steady.
Unfortunately, now that Obama cannot have his wish to tax the rich, it just increases the likelihood of a QE3. But I would not say QE3 is a foregone conclusion yet.
Looks like the roller coaster ride will just get more exhilarating. Sit tight if there is a QE3.

AK71 said...

Hi financialray,

Although I feel that it would be irresponsible for the Fed to have QE3, my place is just to see how to benefit from it if it should take place. :)

Inflation would really get out of whack if there should be a QE3 and the US$ could devalue.

financialray said...

Yes, we cannot control how BIG decisions are made but we can certainly strategize to take advantage of the situation.
In fact, China will probably be more upset than you or me.
So now it is important for us to sniff out the signs that QE3 is forthcoming in the next few months and take our positions.

AK71 said...

Hi financialray,

China will be so upset BIG TIME. Haha.. Oh well, we are only the little people and we have to take care of ourselves. :)

Looking around said...

Pardon me, why would China be upset if there is a QE3?

AK71 said...

Hi Looking around,

China holds the most US Treasuries (i.e. they are the largest lender to the USA).

QE3 will probably see the US$ declining further in value. China will basically be giving money away to the USA in such a case. ;)

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