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How Corporate Actions Affect Stock Prices More Than Anything Else

How Corporate Actions Affect Stock Prices More Than Anything Else

But first, what exactly is a corporate action? And why does it matter?

According to Investopedia,

A corporate action is any activity that brings material change to an organization and impacts its stakeholders, including shareholders, both common and preferred, as well as bondholders.

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Corporate actions includes:

  • Stock Split and reverse split (consolidation)
  • Spin-Offs
  • Dividend Payouts
  • Mergers and Acquisitions
  • Bonus Issue
  • Rights Issue
  • Share buybacks
  • IPO

Corporate actions are important source of indicators for the retail investors to monitor the company’s direction and effectively, the share price. There are some rules that investors and traders have to take note of, according to Li Guang Sheng (a top tier remisier and veteran community member):

  • Officers and employees of the Company two weeks before the announcement of the Company’s financial results for the first three quarters and one month prior to the announcement of the full year results (“Black-out Period”). Usually there will be internal memo to notify and remind all Directors, officers and employees of the Company on compliance with the best practices on dealing in securities pursuant to Listing Rule 1207(19)(c), in not dealing with the Company’s securities during the Black-out Period. The Company, its Directors and officers should be aware that the Company should not deal in its own securities (including undertaking any share repurchases) during the Black-out Period. Therefore, the Company would wish to complied with the Listing Rule 1207(19)(c) and not run foul with SGX.
  • If the players of the company shares belong to insiders, then during this period there may be less buyers and harder for you to run or sell your shares. Also if the company is undergoing share buyback and supporting the share prices through daily share buy back, the price may tank during the 2 weeks of no buying from the company or 4 weeks if it is the full year listing result period. So for those who trade heavy, be prepared to reduce your position 2 weeks prior to quarter result announcement due to less liquidity.
  • Also take note on listed company share buy back rules,
    • a) on-market purchases should not exceed 5% above the average closing market prices of the share over the last five market days;
    • b) details of purchases to be released to the SGX-ST, if it is non-market purchases, by 9am on the next market day, or, if an off-market acquisition, by 9am on the second market day after the close of acceptance.

Watch this quick video of Guang Sheng where he explains why corporate actions are so important:

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Impact Of Higher Interest Rates on Property and REITs

Impact Of Higher Interest Rates on Property and REITs

The US Federal Reserve just announced the second Interest Rate Hike in 2018. And it hints at least another 2 more hikes for the later part of the year.

 

Jerome Powell us fed chairman

With the increase of interest rates by 25 basis points from the FOMC meeting yesterday, the current federal funds rate is now at 2%.

The Federal Reserve signaled it will raise rates to 2.5 percent in 2018, 3.0 percent in 2019, and 3.5 percent in 2020.

Singapore manages an exchange rate based monetary policy, pegging the Singapore Dollar to a basket of currencies, which the US Dollar is a primary component. This explains why US interest rates have a strong positive correlation with Singapore’s interest rates as seen in the chart below:

correlation us fed interest rate and singapore SIBOR   Source:  www.mortgagewise.sg

What does this mean for Real Estate Investment Trusts? (REITs)

As REITs require borrowing to develop properties, a rise in interest rates would essentially mean a rise in the cost of borrowing. A higher cost of borrowing would mean that REITs are taking a higher risk of default.

interest rates hike us

The FTSE S-REIT Index has also began to show a sell down since the beginning of the year, when there was the first Fed rate hike of 2018. The FTSE S-REIT consists of 31 SGX-listed REITs.

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All you need to know about Temasek’s Astrea IV bonds

All you need to know about Temasek’s Astrea IV bonds

 If you don’t already know, Astrea IV is a wholly-owned subsidiary of Azalea Asset Management Pte. Ltd, which is indirectly wholly owned by Temasek Holdings.

Bonds have traditionally been viewed as less volatile investments, paying out regular income over a fixed period of time. This characteristic also makes them a useful investment for retirees to continue receiving visible cash flows for their daily living requirements. Of course, investors who prefer less uncertainty in price fluctuation will also be drawn to bond investments.

In fact, earlier this month, Temasek Holdings CEO Ho Ching described the upcoming Astrea IV PE Bonds as a good “way to grow (our) retirement nest egg”. Unlike most bonds, the Astrea IV PE Bonds will be the first-of-its-kind allowing retail investors to access the private equity investment class that is usually exclusive to high net worth individuals, large financial institutions and funds. Here is a short run down of the description of the Astrea IV PE Bond.

Temasek's Astrea IV bonds
From Temasek’s Astrea IV bond’s prospectus

THE Azalea Group, a Temasek unit specialising in investments in private equity, has launched its first PE-backed bond for retail investors, with a smaller-than-expected retail tranche of S$121 million according to Straits Times.

The retail tranche of Class A-1 bonds carries an interest rate of 4.35 per cent. Retail investors may subscribe via ATM with a minimum investment of S$2,000.

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Trump-Kim summit will cost Singapore about $20mil to host 🇸🇬️

Trump-Kim summit will cost Singapore about $20mil to host 🇸🇬️

It’s official: Trump-Kim summit will cost Singapore about $20mil to host 🇸🇬

North Korean leader Kim Jong Un and United States President Donald Trump both touched down in Singapore on yesterday, June 10th.

kim3For a summit that was planned months before.

This summit is significant because this is the very first time both Trump and Kim are meeting each other. This summit also lays out the possibilities that could impact the security of not only the Korean peninsula, but also the rest of the region and world. At this summit, the two leaders are expected to address the complete denuclearisation of the peninsula and possibly declare an end to the Korean War, which has been going on for nearly seventy years.

The summit is the first of its kind, for it is setting in motion a series of events that could have lasting global ramifications.

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trumplee-handshake

Prime Minister Lee Hsien Loong also said that the bill for hosting the historic Trump-Kim summit will come up to about $20 million. He added that this is Singapore’s contribution to an international endeavour that is “in our profound interest”, as cited by The Straits Times.

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What Type Of Investor Are You?

What Type Of Investor Are You?

Really, have you ever wanted to find out what type of investor are you?

Take This Personality Quiz To Find Out & Stand A Chance To Win This eBook! (Total 5 Lucky Winners)

This is a quick, 5-question quiz to reveal what type of investor you are.

No right or wrong answers!

Complete the quiz by 18th June, 12pm and 5 lucky winners will be selected randomly to receive the eBook: Create A Secondary Income Stream Through Long Term Shares Investing by veteran SGX academy trainer and investor, @chuaimin.

Winners will be contacted privately via FB messenger.

Start the quiz ↴

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Investors level up!


InvestingNote is the first and largest social network for investors in Singapore. Find out more about us here.

Check out our upcoming Mid-Year Market Outlook Free Seminar here.

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Top 11 Things Every Investor Must Know

Top 11 Things Every Investor Must Know

Top 11 Things Every Investor Must Know (before they really start stock investing).

Just to provide some context on why we decided to create this infographic; over the weekend, we attended the SGX’s My First Stock Carnival, held at Vivocity. This carnival was attended by many people who’re interested to start their investing journey.

SGX My First Stock Carnival
SGX My First Stock Carnival

This is a carnival meant for helping both the young and old to get started on investing in their first stock.

SGX My First Stock Carnival
SGX My First Stock Carnival InvestingNote

We also presented on how Fintech can help speed up the learning journey of a budding investor. Most investors do fundamental analysis (FA) for their stock selection criteria. There’s also global macro analysis which is essential in letting investors know about the overall sentiments of the stock market.

So, to help more people to increase their financial and investment literacy, we’ve created an infographic about the Top 11 Things Every Investor Must Know (before they start stock investing).

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Event Recap: The Rise of Artificial Intelligence – SIAS Investment Week

Event Recap: The Rise of Artificial Intelligence – SIAS Investment Week

This week is the annual Securities Investors’ Association of Singapore (SIAS)’s investment week!

For those who’re not familiar with SIAS, it is a non-profit organisation that acts as “the voice” for minority shareholders and engages with corporations falling short of good Corporate Governance practices. SIAS is also a Charity and an Institution of Public Character (IPC), and the largest organized investor group in Asia. It is run by an elected Management Committee comprising of professionals who are volunteers. It actively promotes Investor Education, Corporate Governance and Transparency and is the advocate for Investor rights in Singapore. SIAS also holds events and workshops to enrich and empower retail investors which many are free.

SIAS investment week
SIAS investment week 2018

We had the privilege and honour to be one of the speakers along with Stashaway, who presented on the topic of The Rise of Artificial Intelligence (AI) in Investing, held at Lifelong Learning Institute yesterday.

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New Subscription Launch: Strategic Investing – Taking Advantage Of Corporate Actions

New Subscription Launch: Strategic Investing – Taking Advantage Of Corporate Actions

Corporate actions like share consolidation, stock splits, dividends and rights issues happen frequently, and affect the stock prices of the associated companies.

So how can you seize the opportunity and capitalise on these corporate actions to your advantage and make profits?

We’ve just launched this Corporate Action Strategy Alert that tells you when exactly to capitalise on corporate actions when they happen.

That means you can apply this Corporate Action Strategy in any market condition (uptrend, downtrend or sideways).

This subscription is provided by Wealth Coach Academy, where the principal trainer is Li Guang Sheng @li_guang_sheng. He is a familiar face in the investment community and has more than 15 years of experience. Currently a Top Tier Remisier in Singapore, his forte lies in value investing and fundamental analysis. He also spends a considerable amount of time looking for opportunities in SGX companies through their corporate actions. Over the years, he has built a clientele base that includes high net worth individuals, retail investors, hedge funds, listed companies and clan associations.

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We’ve been Featured As The Top 20 Singapore Investment Blogs & Websites in 2018

We’ve been Featured As The Top 20 Singapore Investment Blogs & Websites in 2018

This is a milestone for us.

 

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We started this blog in 2016 to post stock and investing related-content shared by our community members on our platform.

Our goal is to educate and empower investors with free tools and information for them to become better investors. We also believe that people with no financial background or training, can be investors as long as they have the right knowledge and tools.

InvestingNote.com is more than just a blog: it is a strong community of investors and traders that actively contribute and share ideas on a daily basis.

Yet, we’ve managed to stay neutral; we’re representing the entire investing community which is cohesive and inclusive.

That’s how we derived our tagline: Connecting Investors For Better Investing Outcomes.

We’re proud to announce that we’ve made it to the Top 20 investment blogs & websites for investors in Singapore 2018 by Feedspot.

We’d like to take this opportunity all community members as well as readers for your constant support.

Stay tuned for more investment-related articles!


If you like this article, we’ve got more. Here’s an invitation to join our community and network of investors who’re actively sharing. It’s free and most importantly, these investors are out to help one another to get better investing outcomes.

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Hyphens Pharma IPO: Here’s 5 Quick Things You Need to Know

Hyphens Pharma IPO: Here’s 5 Quick Things You Need to Know

This post was original posted on smallcapasia.com and reproduced with permission from the author.

Hyphens Pharma IPO: Here’s 5 Quick Things You Need to Know

Hyphens Pharma is a speciality pharmaceutical and consumer healthcare group with a direct presence in five ASEAN countries, namely, Singapore, Vietnam, Malaysia, Indonesia, and the Philippines.

The company was incorporated in Dec 2017 as a private company. It sells speciality pharmaceuticals, a proprietary range of dermatological products and health supplement products through Hyphens and Ocean Health Singapore, and medical hypermart and digital supplies.

You can find the prospectus here.

Here Are 5 Quick Things you need to know about the IPO:

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