Over the past few days, the Sing Dollar has weakened a bit. It has also made my purchase of an additional 20,000 shares in Keppel Pacific REIT slightly more expensive.
Overseas Assets are Providing Higher Returns
As mentioned due to the diverging interest rate environment between Singapore and the rest of most economies, the yields and expected returns from other countries' assets are double that of ours. Both China and US assets are providing double the expected returns against Singapore's (7%-15% vs Singapore's 3%-8%)
Japan an Example
Japan is an economy that has a 0% interest environment rate while other economies are going at 3-5% risk free rate. It is no surprise that this is one of the main factors that has made the yen depreciated about 20% against other currencies. I too am expecting the same thing with the Sing Dollar if our country's interest rate continues. This is an additional factor why holding foreign assets may be better
Weakening Interest, Time to Buy Foreign Assets
For context, the Singapore SORA rates are now falling which reflects a lower risk free rate. Personally, i think the high interest rate environment globally means the Sing Dollar will depreciate a bit more as our local interest rate is falling.
For Singapore investors, it is a good time for us to take advantage of the Sing Dollar strength to accumulate stronger yielding companies to supplement dividends. There is a whole long list of dividend companies for us to capitalise on such as the China state banks such as ICBC (HK:1398), ABC (HK:1288), CCB (HK:939) or the foreign REITS such as Ireit, Keppel Pacific, Elite Commercial, Utd Hampshire (all listed in SGX). Beside me, a few bloggers have good evaluations in Ireit and Keppel Pacific.
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