They chose financial independence over home ownership.

This is somewhat extreme but watch how this Canadian couple chose financial independence over home ownership.  They are in their 30s and,...

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What BREXIT means for my money?

Sunday, August 7, 2016

Many are worried about BREXIT and what it could do to an already anemic global economy. Many are also worried about the high level of liquidity in the system becoming more elevated and how ineffective it is in addressing the global economic malaise.

  • Reader:

    Notice that you have been accumulating stocks. Do you think that in the current climate the prices are distorted? The sentiment and the stock price seem to diverge. Also there is no optimism and extreme pessimism. But there are some heighten risk. Eg. Long term bonds seem to be over valued, EU seem weaker with the BREXIT and may trigger the rest of countries to exit euro, euro banks having high NPL, and current monetary policy seem ineffective.
  • Are you only nibbling? Or buying in big quantities? Mind if you share how the allocation of cash in this climate i.e. Your warchest. Small, moderate or large amount of cash allocation?

  • Assi AK
    Assi AK

    There is ample liquidity in the system. With BREXIT, there will probably continue to be more liquidity. Money needs to go somewhere.

    Global economic growth is anemic and the fundamentals are not fantastic. However, money still needs to go somewhere.

    There are relatively inexpensive offers in Singapore's stock market. Despite the negative news, I believe that DBS is now a bargain and at the current price, OCBC is also looking interesting.
    Nibble or gobble? Still nibbling.

What I am more concerned about is where my money should go for it to be treated better. 

Money needs to go somewhere and the next stock market rally here will most likely be a liquidity driven one.

Related post:
BREXIT and AK the investor.


Kevin said...

Hi AK,

DBS Q2 results will be out tomorrow morning. Will they be able to maintain the 30 cents per share dividend or increase it to appease the shareholders due to recent negative news?

I sure hope to see more bargains on the stock price after the results announcement. :P

AK71 said...

Hi Kevin,

Assuming the entire O&G sector goes kaput, DBS would have to write off 6% of its loan book. How likely is that? Even if that were to happen, DBS would still be a bargain. Of course, it could become even a better bargain. No one can say for sure.

I am ready. :)

Kevin said...

Hi AK,

Will you be opting for S$0.30 per ordinary share in cash or are you going to take part in the Scrip Dividend Scheme?

AK71 said...

Hi Kevin,

I would usually take cash unless the scrip is attractively priced.

SMK said...

i also think underpriced.

"There are relatively inexpensive offers in Singapore's stock market. Despite the negative news, I believe that DBS is now a bargain and at the current price, OCBC is also looking interesting."

AK71 said...

S&P said in a statement that Britain's assessment remained at 'AA' with a negative outlook, meaning that the agency could lower the rating in the medium term.

"In our opinion, Brexit presents a significant risk to the UK's track record of strong economic performance, and to its large financial sector in particular," S&P said. "The Leave result has also led to a less predictable and stable policy framework for the UK."

It added: "The outlook remains negative, reflecting the continued institutional and economic uncertainty surrounding Brexit negotiations, and what arrangements will emerge post-departure."

S&P also flagged uncertainty over the future of Britain's membership of the single market.

"The recent decision to exit the European Union - the destination for 44 per cent of the UK's goods and services exports - poses a potential risk to the UK's national income, as well as its fiscal and external balances," it said.

The agency added: "It is not clear if the EU will permit the UK access to the single market on existing tariff-free terms, or impose tariffs on UK products.


AK71 said...

Britain has cut its official forecasts for economic growth for the next two years, finance minister Philip Hammond said on Wednesday, as he delivered the country's first budget statement since voters decided to leave the European Union.

The weak public finances leave Hammond little room to ramp up public spending or make big cuts to taxes.

Indeed, Hammond said the government would need to borrow billion of pounds more over the next five years, with net public sector debt forecast to rise to a peak of 90.2 percent in 2017/18, up from a projection of 81.3 percent in March.

The Office for Budget Responsibility, Britain's independent budget forecasters, said gross domestic product would grow by 1.4 percent in 2017, down from an estimate of 2.2 percent made in March, before voters decided to leave the EU.


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