Avoiding Standard Chartered’s minimum commission for online equities trading

Standard Chartered (SC) announced in early June 2016 that it will start to charge a minimum commission with effect from 1st August 2016. When this news was announced, I can imagine that moan of those who are using this platform for dollar-cost-averaging (DCA) investing. If you would like to find out more about the changes,  you can find more details here (SC’s website), here (Yahoo News) and here (Investment Moats).

Only change is commission, SC is still not charging for custody fee
While there is a minimum commission, there is no change to the zero custody fees. This is the saving grace and I still think it is a strong selling point for Singapore investors who invest in overseas market.

My reaction: sign up for SC Priority Banking
I had been thinking of signing up for SC Priority Banking status for the slightly cheaper trading commissions. However, it does not make sense for me to park my cash in SC accounts because of the much higher interest from accounts such as the OCBC 360 and UOB One accounts.

With SC’s announcement, there was an impetus for me to sign up for SC’s Priority Banking status. In order to qualify for SC’s Priority Banking status, one has to have SGD 200,000 AUM with SC and this includes the equities under the custody for SC’s online equities trading platform. So, I transferred my cash into my SC bank account and went down to one of the branches to sign up.

So, what it means to be a SC Priority Banking customer?
Well, there will not be a minimum commission for all my trades on SC online equities platform. Another plus is that I get to see “Priority Banking” logo when I log into SC internet banking.

… a letter informing you of the Priority Banking status
sc_priority_envelope

… a SC Priority Banking Visa Infinite credit card
sc_priority_vi

…. a Priority Pass that comes with the SC Priority Banking Visa Infinite credit card
it comes with unlimited Priority Pass lounge access for principal card holder.
Priority Pass looks better than the Priority Pass from my DBS Altitude Visa and Citi Premiermiles Visa
sc_priority_pass

….. and additional perks from SC 360 Rewards programme
need to spend at least SGD500 on the SC Priority Banking Visa Infinite card to use earn additional 360 Rewards points
sc_priority_360_rewards

So, how many of you also signed up for SC Priority Banking status to avoid the minimum commission?
If not, what are the alternatives that you choose? Please share with me in the comments section!

 

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What happened to DrWealth’ automated investing service?

Hi all,

In Aug 2015, DrWealth published that it will be launching an automated investing service (here). I remember that there was a DrWealth booth at one of those investor fair.  Investment blog, Turtle investor, by Kevin Ling also mentioned it here.

However, it is has been about 9 months since the Aug 2015 announcement but still no news or updates about it.

Anyone knows what is happening?

Cheers,
Naro

Portfolio Update Jul 2015

About time to do a portfolio update for myself on this blog. When I started this blog, the equities made up a very small portion of my total portfolio. If you refer to the slide below, equities only made up 4% of my total portfolio.

Fast forward to 31st Jul 2015, equities made up a higher portion at about 9%. My equity portfolio consists of:
Ascendas REIT
Asian Pay Television Trust
Capitaland Commercial Trust
Ezion Holdings
Hutchison Port Holdings Trust
IHH Healthcare
Keppel Corp
Keppel REIT
New Silkroutes
Otto Marine
Sembcorp Industries
Sembcorp Marine

2015-07-31 portfolio update

My portfolio has a large exposure to the offshore marine and the REIT counters, which are two of the sectors which are currently on the down cycle (oil and real estate). As a result, my equity portfolio is facing a paper loss. However, I am positive on the long-term prospects of these two sectors.

Strategy moving forward
Currently, the market is quite volatile right now but I will be conservative in my approach to acquire counters bit-by-bit. I will look out for sectors which are on the down-cycle and sectors which will ride on the world’s mega trends.

The sectors are on the down-cycle are oil and gas and real estate sectors. For oil and gas, I believe the world’s demand for energy will continue. Oil majors like Royal Dutch Shell and Exxon Mobil are on my radar.  For the real estate sector,  I will acquire a bit more REIT and property developers like like Capitaland and Ho Bee Land are interesting.

Sectors which will ride on the world’s mega trends are the worlds demand for healthcare and healthcare services and growing middle class. Big pharma companies such as Pfizer and Novartis are interesting. However, the strengthening of the Swiss Franc made it less attractive. For the growing middle class, I am not looking luxury goods which are discretionary. Sporting goods (UnderArmor) and supermarket chains (Dairy Farm) are the sectors which I think will benefit from the growing middle class.

Disclaimer: I am not an equity analyst and the counters mentioned are not meant to be recommendations. Please do your own due diligence.

Strategy and capabilities

It has been a long time since my last post. I had been quite busy the last month due to work. For this post, I shall talk about strategy and capabilities as it is what I do for a living.  I have not explained about my work before but it largely involves business strategy.  The work is multi-faceted and it could involve how to build differentiating competencies, leveraging financial markets, identify strategy partners and strike win-win partnerships, just to name a few.

However, one of the key elements which all strategies depends on is capabilities. In particular, the capabilities of the people of the organisation.   In order to acquire the required capabilities, you can “build, borrow or buy”. You can read more about it at this INSEAD URL.

Build – train the current staff
Borrow – strike partnership and borrow other people’s capabilities
Buy – poach people with the required capabilities from competitor or related industry

How does this link to investment and stock analysis? Other than quantitative ratios of companies, the qualitative analysis portion of the intangibles of a company are mainly the management and intellectual property. I shall not mention about intellectual property as it’s difficult to analysis unless you are an industry expert and I have no knowledge of intellectual property.

Analysis of the management is all about this intangible asset which, as retail investors, we do not have the ability to put a finger to because we are not analyst who can request for a meeting with the C-suite executives of the companies. How can we then make this assessment?

For me, I will look at the history of the two or three key management personnel, the CEO, CFO and the COO.  CEO’s CV and his history will help to tell me how well he or she sets the direction for the company and then manage and find the right people for the right job.  CFO is very important because he or she manages the finance and think of ways to unlock, seek or grow capital required for business growth. COO is also important especially for company has a lot of operations in industries such as manufacturing, utilities and telcos. COO is important because he or she will be the person that ensures existing operations are running silky smooth and maintains or reduces the cost of operations.

Feel free to comment on my mode of management analysis and feel free to share some of the methods you use to analyse the qualitative part of the company, be it management or intellectual property!

Cheers!

Starting my foray into Hong Kong Stock Exchange

HKSE

 

 

 

 

As the post title suggests, I will be starting my foray into the Hong Kong Stock Exchange.

Origination
My wife has a lump sum of Hong Kong dollars during her two-year work stint in Hong Kong. I realized that there is 0% interest for Hong Kong Dollar deposits or any financial instruments. The money has been lying there for a couple of years! And she agreed for me to help her manage it.

Investment objective
My wife mentioned that the investment objective is capital preservation. She had already lost quite a lot due to forex rate and inflation. She was earning Hong Kong dollar when it was HKD5+ to SGD1 and now its HKD6+ to SGD1!

Investment approach
In terms of tools, I am going to use my SCB online equity trading account to invest in the Hong Kong Stock Exchange. The reason why I choose this is because I already have an SCB online equity trading account and the commission rate is one of the lowest around. I’ve read a little about Interactive Brokers which also have competitive rates, but it will be too much of a hassle to open a new account on a different platform.

HK REITs
Since my wife wanted to preserve capital, I think the HK REITs will be a good starting point. From my research, Hong Kong does not have capital gains tax and there is no withholding tax for dividends repatriated to Singapore.

There are currently 11 HK REITS
Champion Real Estate Investment Trust 2778:HKG
Fortune Real Estate Investment Trust 778:HKG (In case you’re wondering, its the same Fortune REIT on SGX as its dual-listed on HKSE & SGX)
Hui Xian Real Estate Investment Trust 87001:HKG
Link Real Estate Investment Trust 823:HKG
New Century Real Estate Investment Trust 1275:HKG
Prosperity Real Estate Investment Trust 808:HKG
Regal Real Estate Investment Trust 1881:HKG
Rreef China Commercial Trust 625:HKG
Spring Real Estate Investment Trust 1426:HKG
Sunlight Real Estate Investment Trust 435:HKG
Yuexiu Real Estate Investment Trust 405:HKG

I have done a brief scan of the property portfolio of the 11 HK REITs and two REITs stood out for me:

Champion Real Estate Investment Trust (2778:HKG)
Amongst the various types of REIT, I particular like Grade A office REITs and industry space REITs. Champion REIT has a portfolio of 2.85 million square feet of prime office and retail floor area by way of two properties in Hong Kong, Citibank Plaza and Langham Place, one on each side of the Victoria Harbour.  I quite like these two properties.  Quantitative wise, Champion REIT has a Price/Book value of 0.45 and dividend yield (ttm) of  5.83%, which is pretty decent.  Sounds like a “champion” to me! (pun intended!!)

Link Real Estate Investment Trust 823:HKG
Link REIT’s portfolio consists of properties with an internal floor area of approximately 11 million square feet of retail space and approximately 80,000 car park spaces. Other than the huge GFA, why LINK REIT stood out is because I’ve not really seen ‘car park spaces’ specifically mentioned inside the portfolio of a REIT.  From what I was told car park lots in Hong Kong is expensive. Link REIT has a Price/Book value of 1.03 and dividend yield (ttm) of 3.85%. From the first look, it may seem its fairly priced right now. But it will be interesting to research further into the REIT’s operations.

That’s all for now. I will be focusing some time on Hong Kong stocks. I will greatly appreciate any pointers that any experts in the comments below!

Regards,
Naro

How to start investing?

There are a lot of people who wants to invest, but do not know how to start their investment. I personally think that the best way to start to learn is to read investment books and online forums and there are many investing strategies, value investing, dividend investing, dollar-cost averaging.  This is confusing for many people, myself included. And how does one really start?

For myself, I cannot commit a huge amount of money at one go and am not experienced in analysis. Therefore, I think dollar-cost-averaging (DCA) is a good way to start off. One of the key factor for DCA is to find a broker which has the lowest commission. But most of the brokers in Singapore has a minimum charge per trade, usually S$25, and this will add up to a huge costs.

From my research, there are 3 ways for Singapore investors to do DCA.
i. OCBC’s Blue Chip Investor Plan (link) – 19 blue chip counters & 1 ETF (Nikko AM STI ETF)
ii. Philips Capital’s Share Builders Plan (link) – 20 counters
iii. POSB’s Invest-Saver (link) – 1 ETF (Nikko AM STI ETF)

My DCA method
Personally I like blue chip counters and the Nikko AM ETF. Blue chip counters have strong fundamentals and will grow steadily under a good management team. For blue chip DCA, I will be using the OCBC Blue Chip Investor Plan as it has lower fees than Philips Capital. Furthermore, I have a few OCBC bank accounts which makes it easier for me to manage. I believe this will allow me to own blue chip counters at a lower cost slowly. (Eg, each lot of Keppel Corp costs more than S$10k as of my time of writing now). Furthermore, DCA will allow me to reduce my timing risk.

For the Nikko AM STI ETF, I will be using Standard Chartered’s equity trading platform (link). This is because each lot of Nikko AM STI ETF  is 100 units and is more manageable and Standard Chartered’s fees is very low. So, I can purchase Nikko AM STI ETF whenever I want to.

Hopefully, with the above method, I will be able to build up a portfolio of blue chip counters and ETF over time.

Please feel free to comment on my above method.