Interview With A Banker : The Marauding JPY Comes To Singapore

I seem to be keeping my days busy doing not much which does not exclude the prospect of meeting up with old friends for coffee. That was exactly what I did last evening when when first and only woman Prime Minister of UK, Margaret Thatcher, passed on. A loss for the world but I remain of the belief that Merkel cannot stand up to her on all counts. But what do I know ?

Japan

It was a pleasant surprise to receive Japanese candy in their immaculately wrapped packages but an bigger surprise that he had gone to Japan on business. What business does a bank have in Japan these days ?

Well, it is important with their 5 year 1 quadrillion (15 zeroes) purchase promise. BoJ will be buying more than the total issuance of JGBs this year at a rate of about 1.6 trillion JPY a week.

It has serious implications for the region especially with JPY attributable to 8-10% of the SGD NEER basket. The 15% depreciation so far would mean roughly 1.5% depreciation in the SGD which is his reason why 1.24 has proven to be a nice supportish level even if the USD would have SGD strengthen.

Some takeaways from Japan.

They are afraid of tsunamis ! (Ok, tell us something we do not know.) And so should we. Because the tsunami of Japanese cash has not even started to trickle into Asia yet.

The first port of call would be US and Asia and the Japanese are typically slow movers. Thailand, Indonesia and Malaysia would be typical targets, given the Japanese manufacturing presence there. Thus, it can be expected that Singapore will be included.

What type of investments ?

For the institutions, government bonds, of course. For the retail and pension fund accounts, we should expect them to invest in dividend and bond funds. Nothing funky to be expected.

(Note : We should not be holding out for Japan to be interested in our Olams and Swibers or spend time doing much homework on them)

What about property ?

Yes. Especially in Malaysia and Thailand which are increasingly seen as retirement destinations. Singapore’s cost of living is too high.

USD/SGD

He sees USD/SGD lower eventually. The 1.24 held by the JPY debasement, but the marauding JPY should send it lower.

Risks ?

This is a currency war approved by the IMF. Lets assume that it would succeed even if the Japanese race does not (stats show Japan sells more adult diapers than baby diapers now).

I pointed out that Abe has a 5 year term. He countered that 5 year is a long time to wrought some decent damage.

Final Comments on Property

As in almost every conversation involving Singaporeans, it has to end with property talk. My latest juicy titbit on the balloting for Bartley Ridges was met with a smug revelation that his sister had snagged a unit there.

But the more interesting fact is this.

THE HIGHER STAMP DUTY DOES NOT APPLY IF YOU SELL 6 MONTHS BEFORE THE T.O.P. .

That is why new launches with longer T.O.P. dates are still popular.

It is a simple enough decision. 3 years for a profit, if not then a suitable hedge for the kids against the 6.9 million other buyers ?

Another interesting discovery is that, before this new higher stamp duty charges came back, many foreign buyers escaped the foreign buyer stamp duties charges on account of their respective countries’ FTAs with Singapore. Now who would have thought of that ?

It only shows how behind the curve I am in these real estate regulatory matters. But does it matter, sometimes ? When you have dear old friends who is now walking tall in his new role, breathing a new lease in his career path,  whom you know you can always count on ?