There was this article Cool Response to Smaller HDB Flats which stated that demand for smaller HDB flats is not as strong as expected.

The numbers from HDB show the application rates for smaller flat types ranged from about 40 per cent to three times the number of flats offered – less than the typical four to five times seen for four- and five-room units.

The article prompted a response from Leong Sze Hian, which was only published in the online version of Strait’s Times forum and not in the print version.

Cool response to smaller HDB flats: It’s not just a matter of preference – Leong Sze Hian

Mr Leong explained that the lower demand could be due to the household income cap of $2000 and $3000 for 2 and 3-room flats respectively.

He also questioned HDB’s argument that HDB flats are generally affordable as most people spend no more than 30% of their income to service their mortgage. Mr Leong pointed out that this argument is fundamentally flawed as it failed to take into account those who could not afford HDB flats because buying one would leave them with too huge a loan to service (more than 30% of income). Or those who give up their flats because they couldn’t service the loans.

If the people who own landed property spent only 30% of their annual income on their property, does that mean that landed properties are affordable?

A better indicator of affordability could be median and lower incomes as a multiple to HDB prices. Generally, the income levels have been lagging behind the rise in HDB prices.

As of September 2009, 30770 HDB loans were in arrears of over three months. This is 7% of the total number of HDB loans.The default rates for HDB bank loans are not available.

Among the few talks that I managed to attend on the second day were those by Costas Paris, South East Asia Bureau Chief of Dow Jones, Ken Chee, CEO of 8 Investment Pte Ltd and Leong Sze Hian, president of the Society of Financial Service Professionals.

Here are a few selected points from their presentation:

Market Outlook by Costas Paris

What the bulls are saying

• Banking crisis over
• US Economy showing signs of stabilization
• Chinese domestic demand robust
• Corporate earnings are recovering

What the bears are saying

• Earnings recovery driven by cost cutting, not growth
• Government stimulus only short-term
• Market overbought on techincals
• Risk of double dip recession
• Unlike 1998, no exports to rely on

Key themes in local Singapore market

• Commodity plays tend to be volatile with high beta. Good proxy for economic recovery. Trading sentiment driven by oil prices.
• Pick up in residential segment but worries over government intervention.
• Commercial property outlook still cloudy.
• Confidence of S-chips rocked by accounting scandals.

Ken Chee on How You Can Generate the Highest Returns with the Maximum Amount of Safety in the Equities Market

Basically, Ken shared with us some of the insights he gained from Warren Buffett when he attended this year’s Berkshire Hathaway AGM.

• Value shouts at you and if you need a computer to calculate the numbers, don’t invest. Keep it simple.
• If you think you are very smart in investing, you are headed for trouble. Always stay within your circle of competence.
• Investing is simple but not easy because of our emotions.
• Leverage can cause you to go broke.
• While Warren Buffett advocates a long term horizon, there are a few reasons why you would want to sell a stock:
  • Economic advantage of the business is eroding.
  • Management quality goes down.
  • Initial decision not valid anymore.
  • There is something more attractive that you can invest the money in.
• To protect against inflation, you can either increase your earning power or invest in a great business.
• Banks and financial institutions are too complicated to be valued by the average investor. Avoid if you do not have the time.
• Energy is one of those upcoming investment trend.
• If he has to teach a course about investing, Warren Buffett will cover these two things:
  • How to value a business
  • How to think about markets

Leong Sze Hian on Managing Wealth in Turbulent Times

• Market timing and prediction is next to impossible. It is far better to use a simple asset allocation strategy and rebalance it on a quarterly basis.
• Focus on risks, not returns.
• According to statistics published by CPF, 75% of investors who invest using their Ordinary Account (OA) do not beat the 2.5% p.a. return. This is based on numbers as of 2005, 11 years after the CPF was allowed to be used for investing.
• Be cautious of the claims of some trainers. Eg. “Attend a few days of training, pay a few thousand dollars, and you can make a few thousand dollars a day.”
• When you need money, sell those that have gone up the most.
• Be robot, not human, when it comes to investing.

Update: Videos added

Yesterday evening, more than 700 structured product ‘investors’ met up at Hong Lim Park for a gathering. I suppose that was the biggest turnout ever at Speaker’s Corner.

 

Mr Tan Kin Lian and Mr Leong Sze Hian addressed the crowd for a while before breaking them up into their respective groups.

I found it an irony that in “Speaker’s Corner”, proper speakers were not allowed to be used. Instead, a small mobile amplifier had to be used. As a result, many people in the crowd could not really hear the speech properly. Luckily, we have youtube so you can watch the recordings of the speech below.

As expected, the event was widely covered by the press and online websites. I have provided links to their stories below. Quoting a line from one of the reports:

A few elderly investors broke into tears saying they had lost a large portion of their retirement savings.

When I read that, I couldn’t help but shed a tear as well.

Sadly, there are still people who did not know they had lost money up to now. Some people depended on word of mouth to know about the Hong Lim Park gathering. How are these people going to initiate the dispute resolution process as prescribed by MAS?

If they can’t get their family members to help, they might have to seek help from their MPs.

Investors Hold Protest Here (Straits Times)

演说角落沸腾的一天 近千苦主聚集求援 (Lianhe Zaobao)

投资苦主芳林公园请愿 投资者应该向谁投诉？(Lianhe Zaobao)

Angry Lehman Investors Hold Public Meeting in Singapore (Reuters)

Singapore Investors Decry Losses From Lehman Bonds (International Herald Tribune)

Irate Investors Rally in Singapore (AFP)

Angry Investors Turn Up at Hong Lim Park to Seek Redress (The Online Citizen)

Click here to leave a comment.

The gathering for structured product investors has been confirmed:

Venue: Speaker’s Corner, Hong Lim Park
Date: Saturday 11 October from 5 to 7 pm.
Topic: Petition to Singapore Government on Credit Linked Securities.

Speakers:
1. Tan Kin Lian
2. Leong Sze Hian

As a large crowed is expected, it may not be possible for some investors to hear the speakers. The authorities allow a loud hailer to be used, but not a powered loudspeaker. Handouts will be provided to people who can’t hear.

Signs will be put up for the attendees to meet other investors who have invested in similar products, e.g. Minibond, High Notes, Pinnacle Notes, Jubilee Notes. The main purpose of this event is to show a large gathering of investors.

Hope to see you there and please help to spread the word to your friends.

Click here to leave your comments.

CPF Changes : Implications for Financial Planning – This was the title of the keynote presentation that was to be delivered by Mr Leong Sze Hian, President of the Society of Financial Service Professionals. With CPF being close to everyone’s mind, it was not surprising that this seminar at the Smart Expo was fully packed.

To everyone’s great disappointment, Sze Hian could not make it for the event and had to get one of his staff to be the replacement speaker.

The presentation material was probably prepared by him as it was filled with many facts and figures, not unlike his regular contributions to the Straits Times forum.

Unfortunately, that also meant the person delivering the presentation had to go in depth to deliver the message intended. With all due respect to the replacement speaker, this was something which she failed to do. This was understandable as being a last minute replacement, she probably didn’t have enough time to prepare.

She finished her presention in half the allocated time and quickly made her exit without taking any questions from the audience. As she run through the slides pretty fast, I couldn’t take down too much notes from them. These are some which I manage to “salvage”:

• The 3 main concerns of Singaporeans are retirement, housing and healthcare. The changes made in the 2007 Budget meant that we get more cash (from our salary) but less in CPF. This does not really address the main problems.
• Members had an average of only $66k in their CPF accounts, with the median even less at $20k.
• Based on half the minimum sum, we will get back $600/month (at 4%) or $720/month (at 5%) for twenty years after our retirement. With the new CPF Life scheme, we will get back $604 (for male) and $570 (for female) for life.
• According to statistics given by the government, the life expectency of someone born in 2006 is 78 for male and 82 for female. But what is the life expectency of someone who is already 50 now?

The last point is something I am very concerned about. Formulating a new policy based on the statistics of someone born today and applying it across the board for people born decades ago. Will it make the latter better or worse off? Only time will tell.

If you are like most average people and are confused by the mind boggling choices of the CPF Life scheme, please do not hesitate to seek advice from someone who is able to understand it well.

If not, you might choose the option that doesn’t meet your needs. Remember, your CPF money is also your hard-earned money.