CPO Plantation Shares benefited by weak grain prices

6 March 2016

Dear Fellow Investor,

The Singapore dragon woke up last week from its long slumber. It roared ahead from 2539 on 2 December 2015 to 2837 as of Friday 4 March 2016 a powerful move of 298 points. The Hang Seng has done likewise while the KLSE remains in congestion.

I congratulate those who held your course and did not get caught up in the panic.  You sat there unemotional and collected your dividends.   We are now recovering.

Singapore is not in recession as it was in the 1998 and 2008 collapses.  The authorities are easing credit and instituting policies to stabilize housing prices according to Prof Singh who is a friend of mine and is a member of the Singapore Economic Council.

The other catalyst has been the crude oil recovery.  One of the most powerful technical signals is when a market refuses to go down on bearish news. Never has news been so bearish:  Increasing supply, reduced demand, lack of agreement among the producers such as US, Russia and OPEC Members, bankruptcy among fracking companies, energy loan and bond defaults etc…

What affected Singapore sentiment is that Singapore is the shipment hub for crude oil to Asia so even such solid banks such as OCBC/ DBS were affected. When there is a mad panic investors sell everything. Upon examination Singapore banks have virtually no exposure to crude oil companies/ energy bonds but they were sold anyway.

Another trigger for the China/ HK and Singapore rallies was the drop in reserve requirements by the Bank of China.  This also favoured the gold bulls.

Gold prices are up 17 % this year after wakening from a 5 year bear.  In a world of zero interest rates where 40 % of countries in Europe have this policy where else to put your money?

Commodities are also recovering as the CRB index which represents a basket of 22 world commodities has also pulled away from a multiyear floor.

This may benefit CPO/ plantation shares which have been affected by weak grain prices.

If you wish to add to your PGWA Singapore accounts, please inform me. There are some good bargains on offer offering high dividends and the chance for capital gain.

Invest well and grow your wealth,

Bill

 

 

 This smart cat has found a warm spot to take his rest.