Thursday, June 10, 2010

Where are the markets headed?

Hi guys! Many of you have asked me what is happening in the investment markets now. So Ihave decided to split my blog in two sections. One about starting businesses and related stuff. The other will just be pure investments focused.

The stock and property markets seems to in a limbo at the moment. Good news on the domestic front with GDP growth forecasts of 9 to 11 percent is giving cheer. But the European economies, especially Greece and the other PIIG countries, are making people worried.

However, it is not the PIIG economies that should be keeping you awake. To put things in perspective, they are insignificant compared to the European giants. Thus the impact they have will not be that severe. The governments have also gotten much smarter in containing economic issues and taking measures to pre-empt major impact.
It is the China factor that is worrying me. The Chinese are coming here in droves and they are a significant source of demand for our private housing. They are also propping up commodity prices and the China markets will be a key story going forward in the next decade. The China government measures are starting to take effect but the developers are resisting any drop in prices as their landbank has been very expensively acquired.

What does this mean for you? I don’t expect prices to rise like they have in the last year. Many investors have already invested and I suspect the market will have to go through a period of consoalidation. What will support the markets will be the significant wealth effect created by the HDB increase in prices. Regional economies are also doing well and their nationals are still looking to invest in Singapore. These two factors will form a support base.

Whether you like it or not foreign demand is contributing to Singapore’s real estate demand. Many Indonesians, Malaysians, Thais especially the Chinese want a just in case option. This is my longest entry in a long time. I will be traveling to Ho Chi Minh City tomorrow to look at several properties there. Prices have fallen more than 50% since the last high.

Till the next time, take care my friends.

Andy Ong