TheEdge Mid-Year Investment Forum 2019 Q&A

I am extremely thankful to be once again invited to speak at TheEdge Mid-Year Investment Forum 2019. Once again, I thought it would be a good learning experience to share the Q&A with the public for learning purposes. If you are interested in reading the previous year’s Q&A, do click here.

Question: How do you see the issuing of digital bank licenses affecting our local banks.

This question is probably in reference to the latest article from the Singapore Government here, where the MAS is exploring to issue 5 new digital bank licences. This comprises of up to 2 digital full-bank licences, and up to 3 digital wholesale bank licences. Furthermore, they must all meet the same capital requirements as local banks.

It is my opinion that while this may cause some disruptions to our local banks, it is probably limited to the payment space in the meantime. Furthermore, the payment space comprising of the wallet, transfer of money and payment of goods and services is only a minor part of the banking industry. The bulk of it where individuals mortgage their homes or refinancing of property will largely still be part of the traditional banking model. If you think about it, how many of us would be willing to mortgage our homes to a company that we have not heard of?

That said, we do see our traditional banks becoming more competitive in the payments space, where banks are rolling out e-wallets, being able to transfer money much more seamlessly despite the many offerings out there – PayNow, PayLah, PayAnyone etc.

Question: What’s the presenters view on this current trade war. 

Many of the other presenters presented on the effects of the trade war and how the supply chain has been disrupted. Given the amount of information the other presenters shared on this topic, I felt that I could not further value add to this other than sharing a piece of history.

In the past, when Britain was still the economic superpower of the world, they too had a huge trade deficit with China due to their cravings for tea. In response to this, Britain introduced opium in China, resulting in many Chinese people being addicted to it.

This resulted in Lin Zexu, setting these opium stocks ablazed and banning the trade of opium within the Canton region illegal. Britain seeing this as a threat, sent their forces into China and this sparked the First Opium War.

This was the modus operandi of Britain back then. If they were unable to win using proper means, they would resort to underhand tactics.

While this is not entirely comparable to the current Trade War, I do see similarities. One thing we can definitely take away, is that over history, China have faced many obstacles and one would realise that China have emerged much stronger after each obstacle. Therefore, this Trade War, to a long-term investor is really just another obstacle. If I had to bet on one side, I would definitely be betting on the Chinese.

Question: You emphasised on the capital cycle, where are we currently at in the cycle?

One thing we have to note is that different industries can follow a different cycle. This is because it all boils down to demand and supply within each industry.

Given that I talked about the property market during the presentation, I assumed that the question was directed at the Singapore property cycle and at which stage we are at.

Once again it is in my opinion that we are in the late stages of the property cycle. This is because if we were to look at supply of new residential housing, we will be witnessing a large supply of housing coming online in the next few years.

However, I do have to state that we are in the late stages of the property cycle only if there is no changes in demand. Demand can change instantaneously. If the Government were to change immigration policies and become pro-immigrant once again or if they were to roll back cooling measures, this could lead to a spur in demand for housing. However, one thing we know for sure would be that a huge supply of housing will be coming online in the next few years. I shall talk more about this in a separate post in the future.

For readers interested in following me in terms of my speaking schedule, do check out our events page here. I will try to update it as regularly as possible, so do check back from time to time to see when I will be speaking next or what are some of my upcoming workshops that I do in collaboration with SGX Academy. Additionally, you may follow me on Instagram @investingnook to get more updates on my speaking schedule!