19 June 2014

My Thought of Investment - June 2014

FED stayed on course with its accommodate monetary policy, while guiding for a modest pick-up in economic growth and interest rates. The VIX Index or Wal Street’s fear gauge dropped 12% to 10.61, its lowest level since 2007.
Markets took a lift after the Fed left benchmark fed funds rate unchanged at 0-0.25%, lowered its long term interest rate estimate, and expressed confidence that the recovery is on track despite cutting its 2014 economic growth forecast to 2.1-2.3% from an earlier projection of 2.8-3%. FED Chairwoman Janet Yellen also downplayed a pick-up in inflation as any sign to tighten monetary policy and argued that the the improving unemployment rate remains elevated.
As widely expected, the FED kept to its plans to wind down its stimulus program and scaled back its bond purchase for the 5th straight month to US$35 Billion.

I believe that the stock market in this year would be stabilized, as more people believe that this would be another record year for DowJones Index & S&P Index. The impact of scaling back bond purchase remains little doubt here, as optimism growing among the investors. 

For Singapore market, it is still largely affected by local policy (e.g. foreign worker tightening & property cooling measurement). I believe that Singapore is still in the transition period which focus on higher technology and reducing reliance on low cost workers. It is seen a price tag cut by 10% - 20% for relaunched private properties in Singapore, and we would expect further normalization of property market in Singapore, so that every citizen could have a nice and affordable home in Singapore. 

Meanwhile, there are some issues in Iskandar Malaysia, where some experts worry of over supply of homes here where job market is playing a catch up against the property market here. With lots of high rise properties targeted to be completed by year 2015 and 2016, it certainly would give some pressure on resale and rental market. Nonetheless to my understanding, commercial rental market in Johor Bahru remains strong and it is a good sign of strong retail / commercial activities in Iskandar Malaysia. 

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