Due to a combination of demand and supply factors, prices crashed below USD30 per barrel in 2016 and is still about 45% below its 2015 peak.
What caused the oil rout, and what opportunities are there in this low oil price environment?
We’ve gathered the key facts that every investor ought to know:
Want to find out more? Watch our video which explains the oil rout in detail and read our research reports for coverage of each sector and how they are impacted by oil prices.
Just like some people, organizations and governments need to borrow money in order to function. An organization may need funds to expand into new markets while the government may need money to improve the infrastructures. However, some organizations need more money than the bank can provide. This is why they have to issue bonds to the public market. After which, a number of investors can lend a portion of the capital needed. So in a sense, bonds are borrowed money with a fixed and stable rate of return.
EQUITIES
For an aggressive investor that embraces risks, consider purchasing equities. Equities are the shares sold by companies. Buying equities means you become a shareholder – an owner of a percentage of the company. But if the company gets bankrupt, an equity investor will get the last claim on its assets.
PROS
BONDS
Including bonds to your portfolio provides you periodic interest revenue for a certain length of time. Since its interest rate typically does not change, you will know what to expect.
In an unfortunate event that the company goes bankrupt, bondholders are the ones who get paid first because they are creditors with the first claim on the company’s assets.
There are various types of bonds to choose from such as government bonds, zero-coupon bonds, and corporate bonds.
EQUITIES
Since equity investors become owners of a percentage of the company, they are equipped with the highest possible returns.
You can profit it different ways such as gaining from the increase in share prices or dividend income (if the company declares dividends).
Depending on how huge your shares are, you may have power to vote in the company’s decisions and issues.
CONS
BONDS
Since the market changes and the bond’s interest rate relatively remains the same, it can lead you to getting lower investment returns.
If you are keen to sell a bond with an interest rate that is lower than the current market rate, you will have to sell it at a reduced or discounted amount that what you originally paid for.
EQUITIES
Equities are volatile and riskier than bonds. As much as equities can give you the highest returns, they can also give you greater losses.
Unlike bonds, there is no guarantee of dividend payment in equities. Based on the current market and business circumstances, the company can choose whether it pays the dividends or not.
According to Markit Ltd., Singapore’s 2016 dividend growth forecast is among the worst. On the other hand, the South Korea’s dividend growth forecast is among the best in the Asia-Pacific region. This is with the exclusion of countries such as Australia and Indonesia as they are foreseen to cut payouts.
For those of you who are less knowledgeable about the stock market, a dividend is the payout or the distribution of the company’s earnings to its stakeholders. These are issued as cash, shares of stock, or other properties.
Markit, a global provider of financial information services, based its dividends outlook on what is supposed to be reported in 2016. Thus, the year-on-year comparison is in accordance with the dividends reported in 2015 (FY14 final + FY15 interim) and in 2016 (FY15 final + FY16 interim).
Markit foresees Singapore to distribute S$15.865 billion in 2016 – only greater by 0.3% from last year’s S$15.824 billion. If specials are included, the distribution is predicted go down by 2.5% (S$16.2 billion) compared to 2015’s S$16.6 billion.
Continue to sleep well if you are a stakeholder at Singapore banks because as a sector, it remains to be the highest dividend payers.
Image Credits: Wikimedia Commons
In fact, a Markit analyst said that the three Singapore banks’ (i.e., DBS Group Holdings, OCBC Bank, and United Overseas Bank) contribution to the total dividends increased to 27.2% last year from about 25% since 2011. However, this number is estimated to go down slightly to 27.1% this 2016.
OCBC Bank and DBS Group Holdings are presumed to observe single-digit increases while United Overseas Bank is improbable to pay a special dividend in its final 2015 results. In the past few years, United Overseas Bank has paid special dividends of 5 cents in 2013-2014 and of 10 cents in 2012.
Image Credits: pixabay.com (License: CC0 Public Domain)
Once again, these numbers are solely based on the predictions of Markit and are not entirely carved in stone!
More than just a sparkling indulgence, investing on jewelry is an embedded tradition in many Asian cultures. In fact in Indian and Chinese cultures, jewelry can be given as gifts as individuals approach the marrying age.
To these cultures, investing in gold jewelry is a sound investment. Truly, gold has continued to rise, up to five-fold in a decade, in value despite the worldwide economic slowdown.
However, anyone who is considering jewelry as a means of investment needs to carefully contemplate on its advantages and disadvantages.
Here are some of them:
LABELS
It is not just about what jewelry pieces you buy but where you buy them. Pieces with designer labels are more susceptible to the erosion of value (over time) as you are paying mainly for the marketing costs.
For example, a sterling silver necklace sold by a lesser known retailer in the third world country may cost about S$15 while a sterling silver necklace sold by Tiffany & Co. in the first world country may cost about S$400! They are made of the same material but the branding and craftsmanship attached to it makes the difference.
PORTABILITY
Jewelry is an investment that you can wear. Whether it be gold rings, silver necklaces, and diamond earrings, you can always carry your wealth around wherever you go.
Image Credits: pixabay.com (License: CC0 Public Domain)
PRICES
The craftsmanship can add up to 30% on the price of the actual jewelry pieces. So if you want to benefit from the full price of gold alone, you can invest in products and funds that are associated to gold. For example, you can consider SPDR Gold Shares as they are backed by gold exchange-traded fund.
VINTAGE
Some pieces from the past are still fashionable today. Vintage jewelry from 1920s to 1930s have strong linear designs incorporating diamonds and platinum that can very much look modern!
Furthermore, second-hand jewelry (e.g., at auctions) are less expensive than contemporary pieces as they are not affected by the mark-up of the retailers. If you purchase this from a source that has low costs, it can prove to be profitable to own.
TRADITIONS
As said above, a positive side in jewelry investment is keeping one’s heritage. In fact, India is one of the world’s largest gold market due to the cultural demands during Deepavali and wedding season (i.e.,jewelry may be offered as wedding dowry).
The embedded notion is that jewelry retains (if not increases) its value over a long period of time. Although, this is not always the case.
Image Credits: pixabay.com (License: CC0 Public Domain)
The value of investments and gains can go up as well as down. Sometimes your may get back a value lesser than the amount you have invested. This is why it is recommended that you seek expert financial advice first before making any investment decisions.
Crowdfunding is a relatively new concept that has rapidly gained popularity in Singapore. It is a means by which a large number of people can finance a business via a platform.
There are four distinct types of crowdfunding, each of which caters to different requirements:
Maybank Kim Eng
Anna Agoncillo
MoneyDigest