Anyway, the idea is just Temasek subsidiary to replace bond to minimize chance of default. If Sembcorp spark the discussion, then let's make it Singtel or SPH.
Top investment grade with good dividend payout?Why not? (SPH etc)
Another thing i want to point out is i'm assume lots of you had a good amount in saving/investment. So the purpose is more on capital preservation.
For 20s and 30s young investor, balance in taking "riskier" temasek backed stock and other stocks using "110-age seems" like a good way to growth?
Hang on. I think you're looking for us to say "yes you're right, buying Temasek-linked stocks is just as good as buying bonds, your idea is a good one". But that's wrong.
The problem is simply that stocks, no matter what stock they are, are riskier than bonds. When you're in your twenties or thirties, your portfolio's mostly in stocks already; buying more stocks is going to make your portfolio too risky.
With bonds, there's a guarantee (unless the company goes completely bankrupt) that the price will go back to $100. A stock can go down and stay down, and that's why you a) have some bonds, and b) buy a wide portfolio of stocks, like what you get from an ETF.
And a stock where Temasek is the primary owner is just as risky as any other stock - its price can go down and stay down, like Sembcorp's price has. We gave you an example of a Temasek-backed stock that's been a terrible investment, and you said "ok maybe not that stock, but other stocks!". But Temasek's had a lot of iffy investments: Stanchart, Merrill Lynch, Shin Corp, Olam, ... if you forget the idea that a Temasek investment is somehow a seal of approval, you'll understand why we're saying what we're saying.
well, if the bond maturity is 3-5 years, sembcorp will recover in 3-5 years too.
Someone remind me in five years to come back and have a look at this prediction.
Can anyone share why I would buy the bond etf on sgx vs buying any of the bonds issued by say venting/capitaland since the yield is way higher.
Couple of reasons. Firstly, the higher yield comes with a higher risk of default - and if they default, you're going to lose a big chunk of your money. That's the risk you take in return for the higher yield. Secondly, buying the A35 bond ETF gives you diversification across a few different names, so if one company
does default, it's going to be less painful.
Thanks limster and aspho!! Anyone considered ssb instead of the etf instead?
This is a fair question. We tossed this around on this thread a bit; the end result was that the SSB is good (it's got a couple of valuable embedded options that are worth money if interest rates go up), but A35 is slightly better - the yield is a tad higher for slightly less interest-rate risk. And there's no restriction on how much A35 you can buy.
Is there a scenario that as a Singaporean buying US stocks which would result in a double whammy, that is USD and US stocks both dropping?
The only one I can think of is Asia growth faster than US growth, but even so, ain't we cushioned by being both a US and a SG investor?
Yeah, that'd be the scenario I'd think of as well - Asia becomes trendy for whatever reason, money floods from DM into EM, EM currencies and stocks simultaneously go bid; sort of the mid-90s situation before everything went pear-shaped in '97-'98.
And yep, if that happened, your Singapore investments would perform very nicely.
