It's a quiet December. No News is Good News

Merry Christmas and Happy New Year. Sorry for being late with the newsletter. The reason is because I want to update you on the new regulations set up by MAS, which will be implemented in 2012. 

Going into 2012 will be a set of new challenges and tricky waters. Despite all the doom and gloom predicted by economists and our dear government, there are still bright spots in the global economy. In any case, economists and our government have been giving lousy predictions since 2008: Maybe we should try a contrarion approach to all the predictions? December is a relatively quiet month. No news is good news in today context. Here are a list of the important economic events for the month.

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1)      Employment and manufacturing data from US turns out to be better than expected. US market rallied on hopes that the US economy is recovering faster than expected and is only marginally derailed by the Euro crisis.

2)      The European Union made little headway in December to solve the Euro Crisis. Italian unveiled a new austerity policy while the EU central bank cut their target lending rates. There is no glaring bad news, neither are there very good news.

3)      The death of North Korea’s dictator Kim Jong II caused intitial panic selling in Asia, especially in the South Korean market. However, the Asian market recovered quickly when no unexpected events took place in North Korea.

Short Look at 2011

History will look back at 2011 and name it as the year of the unexpected. Many conventional wisdom are broken and in many ways, rewrite the way which we look at the world. The rise of social media sparked of the Arab Spring and we had a quite a number of government change in Middle East. This created a lot of tension in the energy markets. The weakness of the western societies are exposed in both the US debt debacle and the EU debt crisis. The political brinkmanship of American politicians on the issue of raising the debt ceiling caused the every single markets to roiled in uncertainty. The subsequent downgrade of the American prized AAA ratings by SnP led to more uncertainties. The EU crisis, which started as a small solving problem called Greece, grew out of hand as EU politicians try on solve the issue on a piecemeal basis. The contagion spread and threatened to engulf every nation in the EU zone. A number of European political leaders met with their downfall thanks to the crisis. On the natural disaster front, 2011 was an extremely unlucky year for the Japanese. The April combo of earthquake, tsunami and nuclear meltdown crippled the world’s 3^rd largest economy and lead to a poor showing in the Asian markets. The Thailand flood affected one of the most vibrant economies in South East Asia and Japan companies, with many of their factories located in Thailand, are badly affected again. Combined with scares from US and Europe, the Asian markets are one of the worse performing markets globally due to a convergence of natural disasters and economic risks.

On the bright side, we see the US economy improving in almost on all front. Asian governments also started to loosen their monetary policies in anticipation of a slowdown in the global economy. Valuations of the equities market is very attractive and such valuations are unseen since the 2008 great recession.

To sum up, 2011 proves that we are still paying for the excesses of the financial crisis and global recovery is not really in sight yet. History has shown that such a deep recession will take some time to recover. It is similar to the human body. The worse the injuries are, the longer it will take to recover. The rewards will be very sweet for those who are patient.

I will delve a bit deeper in my annual investment report and the strategies to adopt for 2012.   

New Compliance Guidelines

From the 1^st January, MAS requires all investors who are Singapore Citizens and PR to take a Client knowledge Assessment. This is to ensure that advisers understand the depth of client’s investment knowledge so that they can give more appropriate advice. All investors are required to complete the assessment before they can make any buy transaction. Client’s only need to eligible for one of the factor or pass the assessment. The requirements for passing are as follows:

1)      Education Qualification in a finance related field: BBA, Diploma in business

2)      Professional finance related qualification: CFP, ACA

3)      Relevant investment experiences: Have made 6 transaction in the past 3 years

4)      Work Experience: Have 3 continuous years in working with investment products

If you do fail in the CKA, you will be required to take the advice from the adviser. Should you choose not to heed the advice, client will not be able to rely  on Section 27 of the FA Act to claim a civil claim on unreasonable or inappropriate advice. You do not need to fill in the CKA if you are a foreigner, a corporation or an accredited investor with more than 2 million of Networth.

 

Let’s all pray that 2012 will be a better year!