Foreign Exchange for small investors

If you have only $2000, yet want to feel the foreign exchange market, what will you do? You may buy foreign currency notes from an "authorized money changer", and then put them at home. When the notes worth more, you go to that money changer to change back SingDollar.

However, the selling rate and buying rate may differ much at the money changers. Your potential profit is eroded much by them. Same problem exists in banks. And banks apply minimal amount of exchange when you do so.

I was always looking for an investment tool for small investors. It doesn't require minimal contract size. Yet it provides short spread of selling and buying rate. Money changers' selling and buying rate may have 250 ticks for US dollar. That is selling rate at i.e. 1.7000 and buying at 1.6750.

Finally such investment tool is introduced by POEMS Company. Its new product - FX INVEST provides a spread of only 50 ticks. The balance of your account even has interests. You use "bill payment" function of any bank's internet banking to transfer money to your FX INVEST account. You submit online request via POEMS website and POEMS will issue cashier's order to your designated bank account.

Bank Of Singapore

If you are a foreigner, you might think "Bank of Singapore" is a big bank in Singapore, or at least, it is one of the largest banks. Many banks of "country_name" are central banks of that country. While in Singapore, if you ask a person in the street what the bank of Singapore is, he or she will be lost definitely. When I downloaded a document from bankers association of Singapore, I found at surprise that there were five local banks. Besides the big three: DBS, UOB, and OCBC, there were two others: Far Eastern Bank and Bank of Singapore. Because many of UOB materials include Far Eastern Bank, I know FEB is a subsidary of UOB. But OCBC seldom talks about Bank of Singapore. Until recently the interest battle of online banking accounts shall I know that Bank of Singapore is offering attractive interest rate of 1.9% p.a.

Bank of Singapore is actually 100% owned by OCBC. Its issued Cashier's Order is in name of OCBC to give reciever more confident. I think OCBC shall advertise more on its online e-bank arm.

Online Fund Transfer Security

When it comes to online banking, people often worry about that his money would be transferred out without his notice. So some people disabled the "fund transfer" service. His internet banking only serves for balance enquiry purpose. Thanks to innovative thinking, now all banks force another way of verifying when customers wish to do online fund transfer. First, you must set up the potential payee. Then bank offers you a one time password to activate the setup. Only after that can you transfer money to that payee.

Different banks in Singapore provide quite different methods of obtaining the additional online password.

(1) DBS, UOB, and Citibank send the password to customer's mobile phone via SMS.

(2) OCBC and Maybank need customer to use phone banking to get the password.

(3) Standard Chartered Bank wishes customer to dial a dedicated number using his mobile phone, then listen the password be read out.

(4) ABN AMRO bank is the only bank that requires additional hardware ( a portable device ) to do online banking. The device will generate a dynamic password, together with your userid and static password to log in. After you login, you can setup the payee without other passwords.

Bank Deposits in Singapore

Today I talk about 100% capital guaranteed investment. That's it! Bank deposits.

(1) eSaver - Standard Chartered Bank.
It is a saving account. You can withdraw money anytime. No minimal balance to maintain. The drawback is that you must transfer fund to other account to withdraw money. To withdraw over counter will incur $5 fee. The promotion rate is 2.45% per annual till 31/12/05. They haven't announced the rate for next year. The normal rate is 1.28%.

(2) iSAVvy - Maybank
Competing product with eSaver. But an ATM card is provided so that you can withdraw cash from ATM without charge. Nothing comes with no price. You should maintain at least $500 to avoid $2 monthly admin charge. To enjoy first three month high interest rate, the minimal balance is $5000. The rate is 2.38% for first 3 months. After that it is 1.38% ( balance must be over 5000, otherwise the rate is only 0.25% ). Today they even announced online Time Deposit: 2.88% for 12-month tenure. $25,000 to start.

(3) 10-month and 10-day fixed deposit - OCBC
Only $40,000 to open the account. High promotion interest rate at 2.79% per annual. May apply admin charge if withdraw premature.

(4) CPF fund - UOB
This is for those who have a lot of money in their CPF. Total $105,000 to open it. Interest rate is about 2.78%, higher than CPF board 2.5% rate.

(5) Unfixed time deposit - Citi Bank
$50,000 to open. Tenure is 1 year. After one month, you can withdraw partially without admin charge. The withdrawn part has 1.88%. The mature part has 2.68%. I like this one best. It can lock high rate for 1 year, while at same time you are free to withdraw. ( You can't close the account premature. You must leave there at least 5000 )

Reviews of Aug posts

Although few people have visited my blog, I still post my reviews relating to previous passages.
(1) Lasseters disappointed me by declaring so little dividend. But if we pay attention to that it owns a lot of bank loans, little dividend is reasonable. I sold this counter.
(2) Best world did have peaked. Its price never reach 70 cents. Goh bak heng is keeping reducing his holdings.
(3) Eu Yan Sang hit record price after it released full financial report.
(4) Nera Tele and Nera Elec will report 3Q results this Friday. If they still make improvement on net profits, I will buy them during month Oct. to Dec. Their dividend ratio is attractive.

Last, if anyone has a good way to promote my blog, please leave comment to me. Big thanks.

Nera Tel and Nera Elec

I find these two counters are very suitable to my investment appetite.

(1) I like those companies who have had net profit for many years. This means in the following years they much probably continue to make money. Nera Tel had profit for at least five years from 2000 to 2004. Even during 911 and SARS period they still had done well.

(2) Nera Tel doesn't borrow money. Since they don't need to expand, owing money is nothing but lost interest. This feature may be not attractive to those investors who wish gain money from companies merge and takeover.

(3) They had history of paying dividend since listed. As an investor, all I want is return. Nera Elec raised dividend to 1cent last FY. Nera Tel paid special dividend in 2002 when they got Nera Elect listed on SGX. These mean the board is not stingy to minor shareholders.

(4) Last, the share prices are quite stable. The movement range is between 50%, yet you still have chance to have much capital appreciation.

Lasseters International

Lasseters is going to release its FY04/05 result soon. As the only casino concept stock that is listed at SGX, its price performance was not encouraging since its IPO last year. It moved within a thin range of 22c - 27c. While its financial result is not bad according to FY03/04 and 1H of FY04/05, will it report a glaring result and declare a good dividend?

(1) Firstly, we saw one of the directors was keeping buying its share. This shows they wish to boost its share price.

(2) Secondly, please read what they said in last FY annual report:

As a newly-listed company, we intend to utilise our
internal funds and IPO proceeds for further expansion
and investments through mergers and acquisitions. Hence,
the Directors have decided not to declared dividends for
the financial period just ended.
However, we are mindful that as a growing company, a
fine balance has to be struck between retaining funds
for expansion and cash for dividend payout, depending
on the situations and opportunities.

Lasseters has acquired some stakes in many projects. So i believe they will declare dividend this year.

(3) Besides the negative goodwill, last FY they gained 1Ac per share. This FY they will make at least 2.5Ac per share. Let's assume it will declare 1Ac dividend, the return/investment ratio is 5.2% already.

Low risk investments in Singapore

The US interest rate has been raised to 3.5%. But here in Singapore the rate is still the lowest when it dropped to as low as 0.7% P.A. in year 2003. Thanks to foreign banks who put some good stuff to this stagnant market.

(1) eSave in Standard Chartered Bank is my first choice. It doesn't require minimal deposit, doesn't require fixed term. The rate is 1.88% P.A. But it is a pity that it will be down to 1.28% since 1 Sept. Another inconvenience is that it requires internet banking or phone banking to transfer funds.

(2) CitiBank gives us another choice. With a 12-month term deposit, you can enjoy the rate of 2% P.A. What's more, you can withdraw partial saving while keep the rest intact. The drawback is that the minimal deposit is $50,000. If I had that money i will repay my home loan first.

(3) Maybank gave me a shock when I saw its ad in June. It offered 2.3% at 2-year term with minimal sum of $20,001. And it pays interest in advance. So its effective interest rate is 2.4%. Today when I visit its website the ad has gone. So it is a good idea to visit their website frequently to see if they have any promotions.

(4) The last one is not a bank deposit actually. NTUC income is offering a single premium insurance. It matures in 2 years. You get total 4% return if you invest at least $30,000. If you invest $10,000, the rate is 1.95% P.A. Because it is NOT a deposit, if you withdraw it before mature, you could lose some capital.

Best World prices

After its IPO at price of 30c, BWI was traded under water for almost one year. Until recently it went up like a rocket to 62c. If counting in bonus shares, the price actually reached 74c. What can we learn from it?

(1) Of course, firstly, the good financial results back it. It released 100% up net profit for 1H 2005 on July 28. But its price started to rise as early as June 15. So is there anything that hints us it will release good result?

(2) The board of directors is generous. Last year when issuing interim result, they didn't recommend dividend. But later they declared 0.625c interim dividend. Perhaps they wanted to boost share price by distribution. Good yield shares are always welcomed by investors.

(3) Another import event is that strategic investors, Dr Derek Goh and Mr. Goh Tiong Yong, had entered the game. Dr Tan & Dr. Hoan described them as friends.

(4) Last but not least, I think its share had peaked. I concluded this by: (1) Goh Bak Heng is selling his shares; (2) The Price Earning ratio is over 10 based on 62c; (3) The return is not attracting too, standing at 1c interim plus 2c final ( i guess ), that is 5% only.

Eu Yan Sang - hit record high price

I think it is much possible due to my experience:

(1) Last FY it added dividend from 0.6c to 1.25c. This shows that the board is not stingy to minor shareholders.

(2) It used optimal words in 2Q and 3Q unaudited financial results and press releases. Like "Eu Yan Sang On Track for Record Earnings in FY2005".

(3) A substantial shareholder is accumulating its shares in recently months. It is Aberdeen Asset Management Asia Ltd.

(4) Last but not least, its share price has gained from 40c to 45c in last month. It is usually a positive sign when a stock gains before it releases financial report.