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Old 30-04-2019, 08:20 PM   #1186
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This is what I think SGX should do to compete with other exchanges;

- Give out market data free of charge
- provide fundamental data in XML or json format free of charge for easy analysis
- cut trading fees
- be a pioneer in electronic bond trading. Other exchanges are not so strong in this area
- lower IPO fees for companies
- lower annual listing fees for companies
Almost all of these ideas reduce the SGX's revenues, which means the SGX has that much less revenue available for investment in its business.

However, looking at the SGX's financial reports, they have net profit margins in the 43% to 45% range, yet they don't seem to be investing much in possible business growth. Is it fair to suggest their business strategy is to "milk the dying cow" as long and as hard as possible?

- have bi-annual reporting of financial results instead of quarterly reports. HKSE has bi-annual reporting. No problem.
This change would not be attractive to most investors. However, if there are situations when this difference matters, maybe it'd be OK to allow semiannual (I think you meant) financial reporting for up to 3 years after IPO, and for stocks that have both persistently low trading volume and persistently low market capitalization -- stocks nobody should care about, basically.
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Old 30-04-2019, 09:02 PM   #1187
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When a business is falling far behind its competitors, it has to take the risk, tolerate a few years of lousy profits or even losses to invest more in its own business than its competitors. Something like U.S tech start-up companies which prioritise growth over profits in the initial years. SGX has no choice but to make short-term pain for long-term gain assuming the bets take off. Otherwise, SGX will die slowly but surely. Milking the dying cow is an approach taken by selfish care-taker management nearing their retirement who refuse to take risk, milking the dying cow just in time for their retirement. I hope we have better men in charge of SGX today.

One more thing SGX can do is to cut dividends, issue more bonds to have more cash to revitalise itself. Having a more vibrant electronic bond exchange helps in this regard. The highly regarded SGD currency helps in developing a local bond market too.

A dying stock market and a global financial hub is inconsistent with each other. It is disgraceful. I attribute SGX's present disgrateful state to the old days when it had no quality control in inviting the many fraudulent S-chips in. This was before the time of Magnus Bocker whom I credit as a good CEO who developed SGX's derivatives business to compensate for the dying equity business.

Almost all of these ideas reduce the SGX's revenues, which means the SGX has that much less revenue available for investment in its business.

However, looking at the SGX's financial reports, they have net profit margins in the 43% to 45% range, yet they don't seem to be investing much in possible business growth. Is it fair to suggest their business strategy is to "milk the dying cow" as long and as hard as possible?


This change would not be attractive to most investors. However, if there are situations when this difference matters, maybe it'd be OK to allow semiannual (I think you meant) financial reporting for up to 3 years after IPO, and for stocks that have both persistently low trading volume and persistently low market capitalization -- stocks nobody should care about, basically.

Last edited by klarklar; 30-04-2019 at 09:05 PM..
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Old 30-04-2019, 09:10 PM   #1188
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I missed Challenger Tech, another electronics retailer (and another household name in Singapore). Challenger is filing this week to delist from the SGX.
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Old 30-04-2019, 10:05 PM   #1189
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Hi BBCW,

You’ve previously recommended an allocation of <20% for local equities during accumulation years, before shifting to a 50:50 mix between local and global equities starting 7 years before drawdown.

I would appreciate it if you could share your views on the following:
1) Would FX risk be a major concern if a Singaporean investor decides to keep the local equities allocation at <20% throughout his lifetime? (i.e not shift to a 50:50 local vs global equities mix)
2) Why the recommendation for 7 years and not longer or shorter?

Thank you!
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Old 30-04-2019, 11:33 PM   #1190
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1) Would FX risk be a major concern if a Singaporean investor decides to keep the local equities allocation at <20% throughout his lifetime? (i.e not shift to a 50:50 local vs global equities mix)
Assuming retirement in Singapore, it'd be a concern, but this concern could be mitigated in at least two ways (not mutually exclusive):

1. Increase the Singapore dollar denominated bond/bond-like allocation;

2. Tweak the stock portfolio such that the relative currency shares (based on sales or profits) of the companies in your stock portfolio closely align with the trade-weighted currency basket that the Monetary Authority of Singapore uses in its management of the Singapore dollar.

Approach #2 seems like it'd be very complicated, although "close enough" is probably plenty close enough for these purposes. It looks like it means overweighting Chinese stocks, for example.

I should also point out that we've seen a long-term secular appreciation in the Singapore dollar for many years -- decades, really. The Monetary Authority of Singapore seems to prefer operating this way. They call this aspect of Singapore dollar management the "crawl," if I'm not mistaken. If we look at the current SIBORs and U.S. dollar LIBORs, there's roughly a 60 basis point gap across the board, which is reasonable evidence that the markets expect a "crawl" of about this size going forward.

2) Why the recommendation for 7 years and not longer or shorter?
Vanguard starts its gradual, progressive portfolio adjustments in its target date index funds at the 7 year mark. If somebody is particularly conservative it's probably OK to start the portfolio adjustments as far ahead as 10 years away from drawdown age, but I personally like Vanguard's 7.

Some people like the 110 minus current age formula (stock/stock-like percentage), but that's too active for my tastes. I prefer fixed percentages (and "loose peg" rebalancing), then a progressive "glide" to retirement over the ~7 year period before retirement. That seems like it's easier (less work) and a little better optimized.
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Old 05-05-2019, 12:39 PM   #1191
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For those of you who have U.S. TreasuryDirect accounts(*), there was a pleasant surprise on May 1, 2019: the I Bond fixed rate remained at 0.50%. A lot of forecasters expected a decrease in the fixed rate, but it didn’t happen. So I Bonds remain moderately attractive, particularly if you want a temporary place to park U.S. dollars for U.S. tax qualified educational expenses you’re expecting to pay at least one year from now. (The minimum hold on I Bonds is just under 12 months, assuming you purchase the I Bond a few business days before the end of a calendar month.)

(*) To open a U.S. TreasuryDirect account you need a U.S. Social Security Number (SSN), a U.S. mailing address, and a U.S. bank or U.S. credit union account for linkage. SSNs are issued for life, so if you were ever issued one — if you went to the U.S. on a student visa, for example, and thus got a SSN — then it’s still yours.
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Old 05-05-2019, 04:55 PM   #1192
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For those of you who have U.S. TreasuryDirect accounts(*), there was a pleasant surprise on May 1, 2019: the I Bond fixed rate remained at 0.50%. A lot of forecasters expected a decrease in the fixed rate, but it didn’t happen. So I Bonds remain moderately attractive, particularly if you want a temporary place to park U.S. dollars for U.S. tax qualified educational expenses you’re expecting to pay at least one year from now. (The minimum hold on I Bonds is just under 12 months, assuming you purchase the I Bond a few business days before the end of a calendar month.)

(*) To open a U.S. TreasuryDirect account you need a U.S. Social Security Number (SSN), a U.S. mailing address, and a U.S. bank or U.S. credit union account for linkage. SSNs are issued for life, so if you were ever issued one — if you went to the U.S. on a student visa, for example, and thus got a SSN — then it’s still yours.
Hi BBCW, since you are on the topic of U.S. Treasury, I would like to hear your advice/opinions on buying them as I've never done that before.

I've CHF150k cash that I'll use to enlarge my DCA purchase of IWDA/EIMI over the next 15 months, or shorter if the market were to dip. So the idea is to buy ~10 chunks of bond, maturing one month apart from one another.

1) Let's say I choose a maturity date in June 2019, does it matter if it is a bill, note or bond? I assume the effective yield would be roughly the same?

2) In the event of multiple possible selections (tips/strips/interest/principal), do I choose the one with the largest issue number because newer bonds are more liquid and have narrower spread?

3) I find it a gamble to exchange all the CHF for USD in one go. Locking in a high USDCHF rate doesn't sound good to me. Are there better ways of handling the it, let's say some CHF bonds to park the money temporarily instead of going for U.S. Treasury?

Thanks!
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Old 05-05-2019, 05:00 PM   #1193
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Did a quick search for CHF government bond ETF and this one popped up first: https://www.ishares.com/ch/individua...ond-37-ch-fund

-0.67% YTM is quite WTF though.
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Old 05-05-2019, 05:05 PM   #1194
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Did a quick search for CHF government bond ETF and this one popped up first: https://www.ishares.com/ch/individua...ond-37-ch-fund

-0.67% YTM is quite WTF though.
Lol, precisely... with -0.67%, I rather keep my UBS account opened and let the bank charge me CHF30 per month as a non-resident!
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Old 05-05-2019, 06:01 PM   #1195
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I've CHF150k cash that I'll use to enlarge my DCA purchase of IWDA/EIMI over the next 15 months, or shorter if the market were to dip. So the idea is to buy ~10 chunks of bond, maturing one month apart from one another.
You could do that, but you’re locking in a particular CHF-USD exchange rate rather than directly Swiss franc cost averaging into your stock index fund positions.

Yes, I know, the nominal interest rate obtainable on U.S. dollars is higher, but “So what?” If the Swiss franc appreciates against the U.S. dollar over this particular interval, then that’d be compensatory.

I believe you’re able to park a certain number of Swiss francs at IB for 0% interest (no negative interest), and with SIPC coverage on the first US$250,000 of cash, in any currencies. However, anything above US$60,000 of U.S. estate taxable assets will be U.S. estate taxable, if that matters.

Please note there’s now a way to transfer Swiss francs to IB’s custodial account in the United Kingdom using Swiss domestic clearing and as Swiss francs, i.e. at low or zero charge. IB’s deposit instructions should now give you the correct code to use Swiss domestic clearing rather than SWIFT when you notify them you’re going to deposit Swiss francs. Perhaps you’re way ahead of me on that, but that’s a relatively recent piece of good news.

1) Let's say I choose a maturity date in June 2019, does it matter if it is a bill, note or bond? I assume the effective yield would be roughly the same?
It shouldn’t matter, correct, but the T-bills will likely have a little better liquidity.

2) In the event of multiple possible selections (tips/strips/interest/principal), do I choose the one with the largest issue number because newer bonds are more liquid and have narrower spread?
TIPS are a different thing altogether (real return bonds), and over this time interval you probably wouldn’t deal in them at all. Typically you’d just stick to bills for these purposes.

IB tends to have some liquidity issues on U.S. Treasuries when your block size is below US$100K of face value, but there are some reports in this forum that there’s enough trading interest in smaller block sizes if you’re patient enough.

Another possible approach is to move into a bond index fund of some sort, typically a short-term government bond index fund, then use that as the funding source for your stock index fund purchases.

3) I find it a gamble to exchange all the CHF for USD in one go. Locking in a high USDCHF rate doesn't sound good to me. Are there better ways of handling the it, let's say some CHF bonds to park the money temporarily instead of going for U.S. Treasury?
Some ideas above. You’re also allowed to spend less time buying the stock index fund shares if you wish.

Lol, precisely... with -0.67%, I rather keep my UBS account opened and let the bank charge me CHF30 per month as a non-resident!
I just looked, and IB allows up to 100,000 CHF on deposit at their 0% interest tier. For the amount above 100,000 CHF they’ll whack you with a negative interest rate, currently (as I write this) -1.472%. That’s roughly 63 CHF per month if my math is right (-1.472% per year times 50,000 CHF divided by 12), so at -30 CHF per month your current financial institution is treating you better. But if you want to move as much as 100,000 CHF over to IB, you can. Maybe 50,000 CHF chunks would be better, though, to stay below the U.S. estate tax threshold (and assuming this is your only pool of U.S. estate taxable assets).
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Old 05-05-2019, 08:12 PM   #1196
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You could do that, but you’re locking in a particular CHF-USD exchange rate rather than directly Swiss franc cost averaging into your stock index fund positions.

Yes, I know, the nominal interest rate obtainable on U.S. dollars is higher, but “So what?” If the Swiss franc appreciates against the U.S. dollar over this particular interval, then that’d be compensatory.
Thanks for your advice! My very first plan was to cost average Swiss franc directly into the ETFs, but given the extra fee charged by the bank, the cash sitting in the bank is now negative yielding, and I can't move everything into IB without the risk of attracting estate tax (quite an insignificant risk nevertheless, I wonder if I should be worried).

Please note there’s now a way to transfer Swiss francs to IB’s custodial account in the United Kingdom using Swiss domestic clearing and as Swiss francs, i.e. at low or zero charge. IB’s deposit instructions should now give you the correct code to use Swiss domestic clearing rather than SWIFT when you notify them you’re going to deposit Swiss francs. Perhaps you’re way ahead of me on that, but that’s a relatively recent piece of good news.
Yes, I have been using the domestic clearing for more than a year. But even before that, my CHF wire transfer into IB's GB account was free too. Surprisingly, I was never charged by UBS for outward transfer, nor did IB deduct anything from the full sum transferred. The only observable difference that comes the change is that the money now shows up in IB in less than an hour!

Another possible approach is to move into a bond index fund of some sort, typically a short-term government bond index fund, then use that as the funding source for your stock index fund purchases.
That's a good idea to look into, thanks. My only concern without fact-checking is DCA might suffer if short term bond index is sufficiently correlated with global equity index, no?
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Old 06-05-2019, 07:59 PM   #1197
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Hi BBC,

For the people that want to get global REIT exposure, they potentially have the following iShare offerings with essentially the same holdings:

DPYA - LSE listed accumulating ETF :
https://www.ishares.com/uk/individua...ucits-etf-fund

REET - US listed distributing ETF :
https://www.ishares.com/us/products/...lobal-reit-etf

  • DPYA expense ratio is 0.59% while REET has only 0.14% expense ratio.
  • DPYA has much lesser volume and wider spread compared to REET
  • DPYA has 15% WHT, while REET has 30%
  • Current dividend yield is 4.1%, DPYA (15% WHT) should have ~3.48% yield, while after the 30% WHT REET would be ~2.87%
  • DPYA is accumulating fund, save on reinvestment brokerage fee.
  • REET has up to 40% estate tax

Conclusion : DPYA has 0.45% higher expense ratio, but 0.615% saving on WHT, so still have a 0.165%, which might offset by wider spread, so cost wise is really the same.

It is still better to bet in DPYA, due to the accumulating feature and potential estate tax. Is my calculation and logic correct ?

Thank you.

Last edited by pmstudent; 06-05-2019 at 08:01 PM..
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Old 06-05-2019, 08:51 PM   #1198
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It is still better to bet in DPYA, due to the accumulating feature and potential estate tax. Is my calculation and logic correct ?
Bearing in mind that I'm not a huge fan of overweighting any sector, especially significantly, DPYA makes a little more sense than REET for non-U.S. persons, yes.
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Old 06-05-2019, 09:33 PM   #1199
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Bearing in mind that I'm not a huge fan of overweighting any sector, especially significantly, DPYA makes a little more sense than REET for non-U.S. persons, yes.
Hi BBC, thanks for your affirmation.
Agreed with you on the diversification part.
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Old 07-05-2019, 07:31 PM   #1200
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Hi BBCWatcher,

i'm only able to save like around $200 per mth sort of force savings
thinking to just get POSB Invest Saver G3B since the amount is small and can't do much
but unsure if this is the right track to start..

hoping to get some advice from you

Thanks in advance!
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