Traders Zone: Forex Outlook- EUR/USD Poised for more Upside?

Contributed By: The Big Fat Whale

The news of the week has been the Fed's decision to hold the Fed Rate unchanged, and more importantly, there could be a pivot from their policy (ie: a possibility of rates decreasing). 

However, with inflation still hovering around 4%, that is short of their 2% target. Thus, our view is that the Fed rate should not see a huge drift and would be stabilising at current rates perhaps till the end of the year.

For this forex outlook, our focus will be more on analysing the technical analysis of the major pairs to highlight trading opportunities for the week ahead.

 

EUR/USD Charting Analysis

Source: Investing.com

We look at the 4-hour chart for the EUR/USD, it seems there is a possibility for further upside for the week ahead.

We will be hunting for entries around the 1.065-1.07 region with a stop at 30 pips which is in line with the Average True Range. 

The hint of not only a pause in the hike of the Fed rate but a potential pivot has driven the surge in EUR/USD. They have successfully broken out of their consolidation range for the month of October.

Our target for EUR/USD for the week ahead will be 1.078-1.08 region.

 

USD/JPY Charting Analysis

Source: Investing.com

Our view of USD/JPY is that the uptrend is still intact. It is indeed a good time to be going to Japan for holidays given the weakness of the Yen. The last time Yen was this weak against the USD was in 1990.

As long as the 148 level holds, we will be looking to place trades on the long side. 

A reversal of the trend would need to see a convincing break below the 148 level.

 

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Disclaimer:

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. The content is not directed to any investor or potential investor and may not be used to evaluate or make any investment. Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stockbroker or financial advisor.

Retire in Style for Singaporeans in Malaysia- Johor Bahru

Contributed By: The Big Fat Whale

We believe that the escalating costs in recent times have really made us wonder if retirement is even possible. Do we have to work till much older than the legal retirement age of 63 years old? Are we able to retire in style?

Therefore, quoting from Bruce Lee, we should: "Be like Water", adapt to the conditions and be open-minded about the options available. We can create a greater lifestyle, lower our cost of living and embark on an incredible adventure.

With a lifestyle arbitrage, using the same amount of retirement funds, we could stretch our scarce funds or have an upgrade in living standards.

We decided to start a retirement series with Malaysia as our first coverage.

Our focus will be retiring on Johor Bahru as it might be one of the more viable options for Singaporeans. Other popular spots in Malaysia are Penang, Kuala Lumpur and Malacca.

 Malaysia Long Term Visa

So for a start, we will look at the requirements for a visa to have this sort of living arrangement.

For Singaporeans, there is no need for a visa if you do not intend to stay for a period exceeding 30 days. So in theory, you just have to clear the customs every month in order to renew your 30 days.

We are not sure if there will be issues if you keep crossing the border especially if you are still working. There could be a need for you to pop by your office a couple of days a week.

From the interviewees from this article by Channel News Asia, Work from home in JB: Some Singaporeans are relocating amid border reopening, hybrid arrangements, it seems there should not be too much of a problem with regards to not obtaining visas for Singaporeans intending to embark on this lifestyle.

Nonetheless, for those who want everything sorted out and be by the book, there are two visas that you could find applicable:

 

Malaysia My Second Home Program

To qualify for this program, the applicant must have liquid assets of at least MYR500,000, a monthly regular income of at least MYR10,000 and make a fixed deposit in a Malaysian bank of MYR300,000, half of which can be withdrawn to buy a house, purchase health insurance or pay for their children’s education.

After two years, part of the deposit may be withdrawn to use the car purchase concession, as long as a minimum balance of MYR150,000 is maintained during the entire stay in Malaysia under the program.

Click Here for the Full Article:

https://thebigfatwhale.com/retire-in-style-for-singaporeans-in-malaysia-johor-bahru/

Propnex A Value Play- Is Spore Property Prices Correcting?

Contributed by: The Big Fat Whale

• Propnex is trading at a PE of 11 and a dividend yield of 7.6%
• They have the largest amount of agents in Singapore
• Earnings have fallen by 18.8%
• Propnex Price has dropped 32% from their peak
• They have an impressive Return on Investment of 37%

Propnex has been a stock on our radar due to its great return on investment metric. Sadly, we have missed the good run that they had over the past 2 years. So with the recent correction in price, is it turning into a value play?

The stock market is a forward-looking proxy for the economy. Is the recent weakness in the price of Propnex an indication of a correction of Singapore Property Prices ahead?

We did an article on a likely property crisis in late 2022, and we still hold to the view that our thesis is valid.

We will dive into the different elements to hopefully unearth some useful insights. More importantly, we would like to know if Propnex at its current level is an investment worth considering.

 Property Price Trend- Singapore

Source: tradingeconomics.com

Let us first have a look at the property price trend in Singapore to have a better feel of the general direction. Looking at the URA Property Index which has done a coverage of private home prices, we are still seeing an uptick in the prices.

There was a slight decrease in 2023Q2 but for 2023Q3, the prices reverted back to their uptrend.

Looking through the charts from 2000, there were 3 evident corrections for the Singapore Property Market. They are in the early 2000s (9/11 and Sars), 2008 (Global Financial Crisis) and 2014 (Euro Crisis).

Source: HDB

The HDB (Public Housing) Price Index is showing an even stronger upward trajectory. There was no drop in prices for 2023Q2.

In essence, Singapore property prices are still in unchartered territories by reaching new highs. Even with the upsurge in interest rates, the government's restrictive policies (literally at 60% taxes for foreigners to buy a property- it has killed the interest of this segment), and big tech layoffs, the property market has remained resilient.

Click here for the Full Article:

https://thebigfatwhale.com/propnex-value-property-prices/

 

Is Paramount Warren Buffett’s Greatest Investment Mistake?

Contributed By: The Big Fat Whale 

• Buffett's Position is Down Close to 60%
• Streaming Business is still in transition
• Huge One-Off Losses from Programming Charges of 2.4 billion dollars
• An Interesting Turnaround Play

 

Paramount has been on a downward spiral since the start of 2021. Even Warren Buffett's endorsement and investment does not aid in slowing the decline. Berkshire Hathaway, as of this write-up, has a 15.4% stake in Paramount which makes it the biggest shareholder.

Based on Barron's estimate, Berkshire got their Paramount stake (93 million shares) at an average price of close to $30. Based on the current price of $12.5, Buffett is down by close to 60%.

The boiling question will be:

Is Paramount going to be Warren Buffett's Greatest Investment Mistake?

 

Video Streaming Industry Growth

Source: Statista

We have no doubt the streaming business is an extremely competitive industry. Only Netflix is able to churn out profits at this juncture.

Also, to keep consumers engaged, new content has to be regularly created in order to prevent subscribers from leaving their streaming network. So all these will require massive investments, not unlike the airline business. Amazon has budgeted 15 billion dollars on content creation for 2023.

Statista estimates that the revenue in the Video Streaming (SVoD) market is projected to reach US$95.88bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 9.47%, resulting in a projected market volume of US$137.70bn by 2027.

Grand View Research is more optimistic and is projecting an annual growth rate of 21.5% till 2030.

Source: FlixPatrol

Looking at the subscriber numbers, there is lots of room to grow for Paramount as they are currently in 7th position. With the combination of Paramount+ and Showtime, it would make it a more enticing package for consumers to onboard to Paramount's streaming offer.

However, we are of the view that consolidation is likely as there are just too many players. With the price war to gain market share, it will hurt the bottom line and only the fittest will survive. This explains why only Netflix is able to net a profit, likely due to their economies of scale.

Click Here for the Full Article:

https://thebigfatwhale.com/paramount-warren-buffett-investment-mistake/

Will Country Garden Collapse with their Debt Load?

Contributed By: The Big Fat Whale

Recent headlines from major publications such as Reuters, Bloomberg, CNA etc., have painted a bleak outlook for Country Garden. It seems to point that they would likely default on their debt which could potentially lead to a collapse of the whole company.

Country Garden was the largest real estate company in terms of sales in China last year. They generate 96% of their cashflows from real estate sales.

Headline numbers put them in debt of 196 billion US Dollars (1.4 trillion RMB). There have been also delays in the payment of interest on bonds and postponing the repayment of a key loan.

With the slowing of China's economy coupled with inflationary pressure on construction costs, it has been a tough time for China developers. Country Garden is also not in the most ideal target segment, 60% of their property projects are located in 3rd to 4th-tier cities.

This is the segment where prices have fallen the most and the target buyers have low purchasing power.

We decided to have a look at their financials to have a better sense of the situation. Before we move into the numbers, let's look at the background of Country Garden so we can paint a better narrative of their current predicament.

Background of Country Garden

Yang Guoqiang founded Country Garden in 1992 in Beijiao Town, Foshan City. He built the company from scratch, having previously worked as a farmer and on construction sites.

The company now has interests in property development, construction, fitting and decoration, property management, and hotel operations in a wide variety of global markets.

It was listed on the Stock Exchange of Hong Kong in 2007 with its annual sales exceeding RMB100 billion in 2013. The Company made it to the list of Fortune Global 500 for the first time in 2017.

In 2015, Chinese insurance giant Ping An became the second largest shareholder in Country Garden by acquiring 9.9% of the company for US$800 million.

Forest City Johor Bahru

China made up the bulk of their business with 3125 developments as compared to 31 overseas developments. But what we could relate to when we talk about Country Garden, will be their grandiose Forest City Project that is just across the Causeway in Johor Bahru, Malaysia.

Forest City is meant to be a US$ 100 billion dollars development that was hyped up to be a paradise with turtles and white-sand beaches. To date, only US$ 4.3 billion has been invested and housing less than 10,000 residents. It is a far cry from their 700,000 projection.

Click Here for the Full Article:

https://thebigfatwhale.com/country-garden-debt-load-collapse/