Bird Flu … Better be worried … How can Singapore stock market be unconcerned?
Illustration 1: Bird flu onset in Jan 2003 … Hang Seng & Straits Times Index plunge 15% to March-April 2003
Asianmacro remembered the dark days of SARS / bird flu onset circa January 2003. That was when there was a real sense of doom that is palpable in the air, especially in Singapore where NOBODY ever voluntarily wears a mask over one’s nose and mouth when he/she has a cold or flu (unlike in Japan or Hong Kong) … you can actually see people in that period in 2003 (if you are lucky to spot a few brave ones out doing grocery shopping!) wearing them.
From Illustration 1, both Hang Seng and Strait Times index plunged about 15% within the next 2 months. There is a new strain of bird flu with some deaths reported in China http://uk.reuters.com/article/2013/04/05/uk-birdflu-idUKBRE93402H20130405. Hang Seng is currently off by 600 points (approx -3%) while Straits Times is holding up very well and off only -0.10%. Looks like there must be a lot of ‘safe haven’ flows buying into Singapore stocks holding them up according to all the brokers!
Maybe it is an opportune time to remind ourselves, firstly, Singapore is not as good a safe haven as before both from an economic, political and geographical stand point. Secondly, when it comes to bird flu, it is different from bringing your money over from Cyprus, Luxembourg or any other tax-haven of dubious origins to Singapore as the bird flu virus do not differentiate between Hong Kong or Singapore. In fact, Singapore as a major transportation hub and also with a great number of its residents doing business in China and its companies depending on China, it is just as exposed to Hong Kong to such an exogenous event.
As the 2003 SARS / Bird Flu impact on Singapore stocks has proven before … this time, it shall not be any different. Anybody who claimed otherwise had better remember the last episode. as Singapore stocks is far too high up to justify its insulation from what that is panning out whether this bird flu is going to get worse or better, you can be sure that it is not going to get any better first and China always play down negative events!
Short SIMSCI April futures at current 372 level to 360 region as this represent a good risk-reward proposition now! *This is either a hedge against your underlying cash stocks or outright bet on a decline.
*Asianmacro is a beach bum managing his own wealth. Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself. While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith. Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.
Somebody just commented to me that typically, the Hong Kong chaps are the most savvy & sharpest in making or protecting their $$$$ … thus besides the onset of the ”Ting Hai (丁蟹) effect” that normally cause the stock market, Hang Seng to plunge …. they will ”Sell 1st & ask questions later!” with the onset of the latest China Bird Flu. However when it comes to Singapore, the chaps here have been molly-coddled from years of control and parenting by the government of the day such that they will always be in a state of denial or like a deer caught in the headlights and not react till the last minute …. so, perhaps the Straits Times index may be the last sucker to move when the Barbarians are at the Gate? Another person commented that the hot money inflows by the Russians or Cypriots into Singapore (whether real or imagined), these European inflows have no idea about SARS / Bird Flu …. maybe they will learn about it the hard way?
Somebody else commented to me that Singapore index blue chips will fare well .. Bird Flu or not. Anyway, if you look at the top 20 SIMSCI constituents by index weighting, all the banks have substantial earnings contribution from China/Hong Kong especially DBS at 30+%. Capitaland is a majority China play in its property portfolio now. Genting relies with SIA on people who feel safe enough to travel around or in visiting its casinos. SGX relies on listing of which the investment bankers ain’t gonna fly around to seal up that new IPO deal. Singapore is not a domestic focused market for its stocks unlike Indonesia or India. It is always better to be safe than sorry….
Ticker Name Index Weight(%)↑
DBS SP DBS Group Holdings Ltd 11.163120
ST SP Singapore Telecommunications Ltd 11.121109
OCBC SP Oversea-Chinese Banking Corp Ltd 10.582996
UOB SP United Overseas Bank Ltd 10.044034
KEP SP Keppel Corp Ltd 6.227443
GENS SP Genting Singapore PLC 3.449665
CAPL SP CapitaLand Ltd 3.426719
FNN SP Fraser and Neave Ltd 3.360385
SPH SP Singapore Press Holdings Ltd 2.845698
STE SP Singapore Technologies Engineering Lt 2.512858
SGX SP Singapore Exchange Ltd 2.507323
WIL SP Wilmar International Ltd 2.495367
SIA SP Singapore Airlines Ltd 2.226513
GLP SP Global Logistic Properties Ltd 2.171868
CIT SP City Developments Ltd 2.156497
AREIT SP Ascendas Real Estate Investment Trust 2.131543
JCNC SP Jardine Cycle & Carriage Ltd 2.113326
HPHT SP Hutchison Port Holdings Trust 2.052697
CT SP CapitaMall Trust 1.935829
SCI SP SembCorp Industries Ltd 1.923197
First suspected case of human H7N9 in Hong Kong.
IS THIS STRAIN LETHAL ??
Yes, the strain is lethal … 6 deaths in Shanghai already. China tweet space reporting more cases but clampdown on news at the moment over there.
Loan Restrictions Lifted Temporarily for Purchase of Pre-Existing Stock of Used Cars; Restrictions Extended to Credit Companies Not Regulated by MAS…. http://www.mas.gov.sg/news-and-publications/press-releases/2013/loan-restrictions-lifted-temporarily-for-purchase-of-preexisting-stock-of-used-cars.aspx.
It is actually quite amazing how Singapore in recent times have been introducing very reactive and poor policies and realizing the loopholes then further tightened them. There are so many negatives lining up for Singapore and unless this country has a force shield … there is no reason why it will not be rolling over soon especially with the weak U.S. employment report out earlier.
Reuters : China confident it can control bird flu outbreak
Relax !! China says no flu which means new cases will be re-classed ?
By Bloomberg News
April 7 (Bloomberg) — Shanghai reported two additional
infections of the H7N9 strain of bird flu today, bringing the
total cases to ten, the Shanghai government’s press office said
on its official microblog.
• One of the newly-added patients is a Shanghai inhabitant and another is from neighboring Anhui province
• Death toll from the virus in the city remains at four people, the government says
By Bloomberg News
April 7 (Bloomberg) — China’s agricultural ministry
doesn’t rule out the possibility of finding the H7N9 strain of
bird flu virus in more regions, the official China National
Radio reported today, citing Yu Kangzheng, the country’s chief
veterinary officer.
• It doesn’t rule out that the detected H7N9 bird flu virus from poultries and pigeons in China was originally from migrant birds, the report said, citing Yu
Looks like from the statistics below, it’s Shanghai, Nanjing, Hangzhou, Chuzhou, Suqian … this is only what is reported officially …
================================================================
Age Sex Location Reported/Illness Hospitalized Died
================================================================
87 M Shanghai 2/19 3/4
27 M Shanghai 2/27 3/10
38 M Hangzhou, Zhejiang 3/7 3/18 3/27
35 F Chuzhou, Anhui 3/15
45 F Nanjing, Jiangsu 3/19 3/27
48 F Suqian, Jiangsu 3/19 3/30
83 M Jiangsu 3/20
32 F Wuxi, Jiangsu 3/21
67 F Shanghai 3/22 3/24
67 M Hangzhou, Zhejiang 3/25
*59 M Shanghai 3/25 4/4
52 F Shanghai 3/27 3/29 4/3
48 M Shanghai 3/28 4/3
64 M Hangzhou, Zhejiang 3/29 3/31 4/4
61 F Nanjing City, Jiangsu 3/20
79 M Nanjing City, Jiangsu 3/21
*67 M Shanghai 3/29
4 n/a Shanghai n/a
74 M Shanghai 3/28
66 M Shanghai 3/29
Asterisks refers to latest reported cases