What is certain is that future is uncertain – investment climate

On Thursday, we learned that Singapore Gross Domestic Product (GDP) grew only 0.5 per cent in the second quarter compared to same quarter last year. When compared with first quarter this year, the economy contracted 7.8 per cent on seasonally-adjusted annualised basis. This was not good news. This was due to decline in manufacturing sector economic activities.

This news came after Tuesday, when major stock exchanges including Singapore, fell on news that the Eurozone debt crisis may spread to the larger economies such as Italy and Spain.

This is not all. US President Obama is currently locked in political deadlock with Republican lawmakers to raise federal debt ceiling. Failing to do so by 2 August will put US in government debt default.

So what is the investment strategy in the short-term?

The investment advice can be as varied as the number of investment houses. One said to stay invested. One said to avoid government bonds. One said to buy defensive equity stocks. One said not to hold on to cash, and so on. Who are we to believe?

Interest rate for deposits with banks still remain very low and seems to stay so till the end of the year as the global economy is still finding its feet from slow economic growth. When we were told on Monday that there was an investment product from NTUC Income that pays 1.4 per cent interest per year, within the same day the whole investment tranche was fully taken up. There is too much liquidity in the market and even at 1.4 per cent interest, which can be unexciting, it was still very popular.

So I have been inactive for a quite a while. I stay invested in most of my earlier portfolio and am looking at opportunities to invest in selective stocks with good credential and track records when prices head further south.

Back to the headline, it is uncertain indeed about the future and risk level has been raised. Tracking carefully is recommended. Less haste in investment decision is the way to go.

Copyright © 2011, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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