As we come to a close for the 1Q ’16, perhaps it is time to take check and see where we stand. The three months flew past quite quick for me, and it has been quite a volatile , yet interesting first quarter. I did not buy as much as I would love to due to other priorities and opportunities that came up.
I am sure most of the people can still recall in the beginning of the year. At the point of writing, things seem to have pick up a bit, relatively. But no one has a crystal ball, we can only the benefit of 20/20 hindsight to decide if we have made the right choices.
My earlier posts have mentioned that I am slowing shifting a percentage of my portfolio into bonds/ETF. I am done on the local portion, but still researching on the international portion. So far, it has been quite interesting, and have been communication with some of the more experienced bloggers. Will update again when that is completed.
For me, the upcoming key events:
- MAS monetary policy statement (exact date unconfirmed)
- outcome of the FOMC meeting on 26-27 April.
I am watching closely on the movement of the USD as I have vested interest in the USD. I believe, it is a matter of time before FED increase the rates again, and the SIBOR will go up. Those with existing home mortgage, should consider switching to the FHR.
I am long on the USD, and waiting for it to hit 1.4+ again. (sorry folks, who are fervent amazon buyers, your purchases might get a bit more expensive in time to come)
The outcome of both events will affect the direction of the Singapore Dollar. This in turn influences the flow of funds into or away from risky assets including equities. The decline in the USDSGD from a high of 1.44 in January to as low as 1.35 recently helped fuel a flow of funds to Singapore equities.
With inflation in Singapore likely to remain negative for most of 2016 and with downside risks to growth, our economist expects MAS to ease the exchange rate policy by shifting to a zero (from gradual) appreciation path for the Sing NEER policy
band. If true, investors’ anticipation ahead of the event should result in a rebound in the USDSGD from its recent low of 1.35. This in turn could halt or reverse the funds inflow into Singapore equities.
The outcome of the 2-day FOMC meeting on 26-27 April will be the other event to watch. Our economist sticks to his view for 3 rate hikes this year. Core CPI inflation is back at pre-crisis level and well above the Fed’s 2% target. We expect the FED to hike
rates once in 2Q that will lift the FED funds rate to 0.75%. This should occur either at the April or June FOMC meeting
*as quoted by DBS Vickers