SGD FD Rates as of 26Sep11

First of all, I want to say a big thank you to all the visitors. I can see from the website traffic that FD rates are of great interest to many, and I would try to post new tables more often. Please continue to give me your feedback.

From your feedback, I have added two more financial institutions (FI), Hong Leong Finance and Singapura Finance. Please let me know if any other FIs with a strong track record of giving high interest rates should be featured.

FD interest rates have generally fallen, since the July reading. 

Best in class Maybank and BOC are now offering only 0.35% for 3 months tenure (less than $50k) compared to 0.4% previously. CIMB now has the best rates for deposits of 1 year tenure, drawing with SBI and Maybank for some deposit sizes. 3 year tenures have held its best in class rate, from 1.25% to 1.35%, with Maybank coming in tops (drawing with RHB in the below $50k size). Our new entrants HLF and SF do offer attractive rates though they are not best in class for any tenures or deposit sizes.

You might also notice that some FIs, such as Citi, have a lower interest rate for a longer tenure compared with a shorter one. While this might fly in the face of what seems logical (longer tenures should command higher interest rates since your funds are committed for longer, though in a decreasing rate environment, it might not hold true), it is due to these FIs requiring funds only for that particular period and having too much funds for other periods. Hence it is important to do your homework before selecting an FI to park your fixed deposits at.

My previous general comments still hold so for new visitors, please do take a look.

SGD FD	Below $50,000				$50,000-$99,999				Remarks
	3 months	6 months	1 year	3 years	3 months	6 months	1 year	3 years
Maybank	0.350%	0.500%	0.700%	1.250%	0.350%	0.500%	0.750%	1.300%	iSAVvy FD
SBI	0.300%	0.450%	0.700%	1.100%	0.350%	0.550%	0.800%	1.150%
BOC	0.350%	0.450%	0.600%	0.725%	0.350%	0.450%	0.600%	0.725%
UOB	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
OCBC	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
DBS	0.150%	0.200%	0.350%		0.150%	0.200%	0.350%
Citibank	0.150%	0.200%	0.050%	0.200%	0.150%	0.200%	0.050%	0.200%
CIMB	0.150%	0.250%	0.800%		0.150%	0.250%	0.800%
StanChart	0.100%	0.200%	0.350%	0.420%	0.100%	0.200%	0.350%	0.420%
RHB	0.313%	0.375%	0.625%	1.250%	0.375%	0.438%	0.688%	1.250%
HSBC	0.080%	0.120%	0.260%		0.080%	0.120%	0.260%		HSBC Premier
HongLeong	0.150%	0.250%	0.450%	0.700%	0.180%	0.280%	0.750%	1.000%
Singapura	0.150%	0.200%	0.475%	0.700%	0.180%	0.275%	0.680%	1.000%
	$100,000-$250,000				$250,000-$499,999
Maybank	0.350%	0.500%	0.750%	1.300%	0.350%	0.500%	0.800%	1.350%	iSAVvy FD
SBI	0.350%	0.550%	0.800%	1.150%	0.350%	0.550%	0.800%	1.150%
BOC	0.350%	0.450%	0.600%	0.725%	0.350%	0.450%	0.600%	0.725%
UOB	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
OCBC	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
DBS	0.150%	0.200%	0.350%		0.150%	0.200%	0.350%
Citibank	0.150%	0.200%	0.050%	0.200%	0.150%	0.200%	0.050%	0.200%
CIMB	0.230%	0.400%	0.800%		0.230%	0.400%	0.800%
StanChart	0.100%	0.200%	0.350%	0.420%	0.100%	0.200%	0.350%	0.420%
RHB	0.375%	0.500%	0.750%	1.250%	0.375%	0.500%	0.750%	1.250%
HSBC	0.080%	0.120%	0.260%		0.080%	0.120%	0.260%		HSBC Premier
	$500,000-$999,999
Maybank	0.600%	0.720%	1.000%	1.850%					iSAVvy FD
BOC		0.680%	1.180%
SBI	0.500%	0.600%	0.900%	1.100%
UOB	0.150%	0.250%	0.450%	0.700%
OCBC	0.150%	0.250%	0.450%	0.700%
DBS	0.150%	0.250%	0.450%	NA
Citibank	0.150%	0.250%	0.250%	0.350%
CIMB
StanChart	0.250%	0.250%	0.350%	0.950%
RHB	0.375%	0.500%	0.750%	1.250%
HSBC	0.180%	0.280%	0.510%	NA					HSBC Premier
HongLeong	0.180%	0.280%	0.790%	1.000%	0.180%	0.280%	0.790%	1.000%
Singapura	0.180%	0.275%	0.680%	1.000%	0.180%	0.275%	0.680%	1.000%
Savings a/c	Type	Interest	Remarks
Maybank	Isavvy	0.4484	>$100k. Int over int approximated
StanChart	Esaver	0.3	>$200k
Updated	26-Sep-11

Banks: Is It Time to Play?

Image: Getty Images @ Forbes

For investors hoping to scoop up European banking assets on the cheap, here's some info gathered from Forbes, who mysteriously presented the same info in a difficult to compare set of pictures. Pretty but not useful. Nonetheless, their article does highlight some important cautions: the report where they gathered the info from only considered sovereign exposures, and neither the corporate debt exposure or derivative positions, nor the knock-on effects of a sovereign default. Value play or value trap, it's hard to decide at this present moment. Nonetheless, here's a better table.

American banking assets are also trading cheaply these days, for its own sets of reasons - changing regulatory rules which would impact the big boys, mortgage issues still bubbling, and economy still reluctant to show signs of a sustained recovery. Do investigate these if you wish to make a play on banking, it might work out to be a better deal.

On Luck

Image: wallpaper-s.org

This article from Forbes got me thinking about what luck meant. I, like the author, don't quite believe in luck, or the way luck is usually defined, as a random streak brought about by chance as opposed to as a result of any effort by the protagonist. Sure, random things do occur and some of them do turn out to be good things (just as much as they can be bad things), but for the most part, we make our own luck, or so I would like to believe. Or as some others would say, luck is all about good attitude. 

By definition, luck is something that occurs by chance or is random, and hence is not something predictable or within our control. Perhaps another attitude towards luck is just one of ambivalence or even agnosticism, where it doesn't matter if there is or is not such a thing since it is uncontrollable and unpredictable. But while I do think there is such a thing as luck, I like the way Edward Gibbon puts it:

"The winds and waves are always on the side of the ablest navigators.”

 On that note, I would be having a hiatus of 2 weeks so good luck to all and happy investing.

Michael Mauboussin on Investment Approach and Philosophy

This video comes highly recommended by me. Steve Forbes interviews Michael Mauboussin, Adjunct Professor at Columbia Business School and Chief Investment Strategist at Legg Mason and the video is filled with insights on behavioural biases, efficient markets, stock-picking, value investment - watch it and compare that with how you think about investments. Go here for the transcript.

One of my favourite bits is:

"So you go to the horse race and there are odds on the tote board.  That is the expectation of the performance of the horse.  And then there’s fundamentals: How fast that horse is going to run.  Now, if you studied tens of thousands of horse races, it turns out the markets are pretty efficient.  The ordinal finishes of the horses, first, second, third, as predicted by the odds, is pretty much what happens.  But from time to time, we know, there are mis-pricings.  There are odds on the tote board that just don’t well describe how that horse is likely to run. And that’s what the sharp handicappers are after.

Bring that over to the world of investing, and that’s the same thing.  We don’t have odds on the tote board, but we have something called the stock price.  So we reverse engineer the expectations built into that price. We say, “What has to happen for that to make sense?"

And then we look at how the fundamentals are likely to unfold.  It’s a probabilistic exercise. That would be the first piece.  The second piece, analytically, is bet size, which is once you have an edge, how much do you bet in your portfolio?  That’s a second key component which is often overlooked."

Tiger Airways: Not a Value Candidate

Image: Tiger Airways

Tiger Airways has been in the news alot lately, due to its planes being grounded by Australian regulators. To add insult to injury, it doesn't even turn a profitable operation there. With its high capex requirements, and the cyclical nature of the industry, throw in a short track record, and the highly competitive (and often unprofitable) nature of the airline industry. Tiger makes for a poor value investment candidate.

Best SGD FD rate

Saving money is an important way to begin or continue a financial journey. Einstein has reputedly said that compound interest is the most powerful force in the universe. Regardless of whether he actually spouted these words of wisdom, savings lay a foundation for security and investment. While we lament the rock-bottom interest rates, it is also a stimulant for corporates to borrow money and is a boost to corporate profitability.

Currently, it looks like State Bank of India and Maybank offers the best SGD fixed deposit rates. Red indicates best of class. Please contact the bank directly for its latest rate or promotions, and to make any deposits. Also note that bank deposits are only guaranteed up to a maximum of SGD 50,000 per bank (NOT per account), and so there can be tail-risk even in such a plain vanilla deposit.

I have included also some internet-based accounts, which has no lock-in periods to aid comparisons. For short-tenures, it might make absolutely no sense to use an FD.

SGD FD	Below $50,000				$50,000-$99,999
	3 months	6 months	1 year	3 years	3 months	6 months	1 year	3 years
Maybank	0.350%	0.500%	0.700%	1.250%	0.350%	0.500%	0.750%	1.300%
SBI	0.400%	0.450%	0.800%	1.000%	0.450%	0.550%	0.850%	1.050%
BOC		0.480%	0.980%			0.580%	1.080%
UOB	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
OCBC	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
DBS	0.150%	0.200%	0.350%		0.150%	0.250%	0.450%
Citibank	0.150%	0.250%	0.250%	0.350%	0.150%	0.250%	0.250%	0.350%
CIMB	0.150%	0.230%	0.800%		0.150%	0.230%	0.875%
StanChart	0.150%	0.250%	0.350%	0.750%	0.150%	0.250%	0.350%	0.750%
RHB	0.313%	0.375%	0.625%	1.250%	0.375%	0.438%	0.688%	1.250%
HSBC	0.180%	0.260%	0.450%		0.180%	0.260%	0.450%
	$100,000-$250,000				$250,000-$499,999
Maybank	0.350%	0.500%	0.750%	1.300%	0.350%	0.500%	0.800%	1.350%
SBI	0.450%	0.550%	0.850%	1.050%	0.450%	0.550%	0.850%	1.050%
BOC						0.680%	1.180%
UOB	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
OCBC	0.150%	0.250%	0.450%	0.700%	0.150%	0.250%	0.450%	0.700%
DBS	0.150%	0.250%	0.350%		0.150%	0.250%	0.350%
Citibank	0.150%	0.250%	0.250%	0.350%	0.150%	0.250%	0.250%	0.350%
CIMB	0.230%	0.400%	0.800%		0.230%	0.400%	0.800%
StanChart	0.150%	0.250%	0.350%	0.750%	0.150%	0.250%	0.350%	0.750%
RHB	0.375%	0.500%	0.750%	1.250%	0.375%	0.500%	0.750%	1.250%
HSBC	0.180%	0.260%	0.450%		0.180%	0.260%	0.450%
	$500,000-$999,999
Maybank	0.600%	0.720%	1.000%	1.850%
BOC		0.680%	1.180%
SBI	0.500%	0.600%	0.900%	1.100%
UOB	0.150%	0.250%	0.450%	0.700%
OCBC	0.150%	0.250%	0.450%	0.700%
DBS	0.150%	0.250%	0.450%	NA
Citibank	0.150%	0.250%	0.250%	0.350%
CIMB
StanChart	0.250%	0.250%	0.350%	0.950%
RHB	0.375%	0.500%	0.750%	1.250%
HSBC	0.180%	0.280%	0.510%	NA
Savings a/c	Type	Interest	Remarks
Maybank	Isavvy	0.475304	>$50k. Int over int approximated
StanChart	Esaver	0.35	>$200k
Updated	11-Jul-11

HP: Has it Become Oversold?

Image: HP

From HP's website: 

"The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure at the convergence of the cloud and connectivity, creating seamless, secure, context-aware experiences for a connected world"

HP has recently tested new 52 week lows, and are now priced at what seems to be a ridiculous 8.5x forecasted (forecasted by HP, that is) 2011 earnings. This is close to its lowest levels in the last 10 years. Generally, "old" tech companies have become rather cheap, with many of the major names like Microsoft, Cisco, and HP becoming unloved, despite their strong and consistent profitability. 

Disclosure:  I currently have no holdings in HPQ.

Forbes Interview with Greenblatt on Value Investing

Joel Greenblatt appears on Forbes, and discusses his new book, the Big Secret for the Small Investor. He is more commonly known for his Little Book of Investing that Beats the Market, part of the little book series. More on that here.

He explains why, among other things, while the stock market is forward looking, why studying backward looking financials can make sense, and why opportunities can arise such as companies with strong return on capital and earnings yield can be selling cheap. He feels that when such opportunities arise, it is because the market is pricing in low expectations. Hence if there is any neutral to good news coming out of that company, it would be rewarded while since negative expectations are already priced in, it would not have much further downside. Have a watch, he also has some interesting insights into how short-term-inism can sideline one's portfolio.

KLA Tencor: Buy, Hold or Sell?

Image: KLA Tencor

KLA Tencor (NASDAQ: KLAC) is currently trading at low valuations, on a back of a robust earnings year, and moving to its record, with healthy capex spending from semi-conductor majors like Intel and TSMC. 

With a yield management products being an almost must have for its customers, is KLAC currently cheap to buy, or is capex going to slip leading to a deflated stock price for KLAC? 

Disclosure: I have no holdings in KLAC currently.

Effortless Computing by Apple

Image: Apple

Apple is the best loved technology company today, with its array of sleek design, and cool user interfaces. Its users are rabid defenders of the company, and are in fact their best advertising, while developers can't stop building app after endless app to try to ride the wave. The other tech companies seem to be playing an losing game of catchup, and appear to be at least 1 generation behind every time Apple launches something new. 

Its revenues are growing faster than its cost base, and growth investors might find Apple actually cheap, but from a value investing point of view, Apple certainly does not have enough safety margin to embark on a new investment now. Read more below.

Disclosure: I currently have no holdings in APPL, though I do own its competitors such as MSFT, which APPL has played no small part in making them into value-plays by reducing them to what seems like yesterday's technologies. I also am writing this on an iMac.  

Over-reaction - an INefficient Market

Image: The Economist in 1997

Pheim Asset Management's Chief, Dr Tan Chong Koay, says “I need a crash to do well,”.

At this talk at SMU, he speaks about his brand of value investment, where he believes market timing plays an important role in getting his market beating results, and from my perception, he really is a GARP investor (Growth at a Reasonable Price).

He also does not believe that markets are perfectly efficient, in fact, precisely the lack of efficiency is what allows profits to be made.

"Now, not every stock market player can have the courage to plough in when everybody else is selling. There is always the element of risk but savvy investors will know how to assess their chances. “If you want to make money, you need to take calculated risks, and you do not want the market to function efficiently and perfectly. If you believe the equity market is efficient, you will never be a star,” said Tan. However, attempts to time the market perfectly might be futile too. “Trying to buy the shares at the lowest price and sell at the highest is unrealistic,” he said, and after careful study of the company’s fundamentals and making that crucial ‘buy’ decision, “investors need patience to wait for the companies to prove themselves” – and to allow the price to move up to its fair value."

On a separate note, here's another piece I wrote, for those interested in how re-insurance works.

This Book Claims to STILL be Beating the Market

A great little book to read, for some laughs, The Little Book that Still Beats The Market has been lauded as a much needed back to basics for me. See my review here.

Lest we state the obvious, the book in one sentence is "Buying good businesses at bargain prices is the secret to making lots of money."

Greenblatt, the author, goes on to explain in about 100 pages what is a good business, and how to recognise what do bargain prices look like, with 2 metrics - earnings yield (trailing EBIT / Enterprise Value) and return on invested capital (trailing EBIT / (Net Working Capital + Net Fixed Assets)). 

Will Groupon Ever Be Profitable?

Image: Getty Images via @daylife

Forbes examines whether Groupon has any merit at all in coming to IPO. It asks whether Groupon meets these 3 criteria:

• "Value Creation happens when customers use a product because it meets their needs better than the competition’s. An example is Netscape’s Web browser. For much of the mid-1990s Netscape was the market leader.
• Value Capture is when a product’s price exceeds its makers’ costs to design, produce, sell and ship it. Since Netscape gave away its browser for free, it succeeded in creating value but failed at capturing it.
• Value Renewal occurs (rarely) when a company adapts to new technology, changing customer needs, and upstart competitors. Steve Jobs renewed Apple’s (AAPL) value brilliantly starting with 2001′s iPod introduction and kept doing so with iTunes, the iPhone and the iPad."

They have a really good point with Value Capture. It seems many internet companies are creating value, but failing to capture or monetise it. Twitter and Facebook comes to mind. In fact, I wonder whether anyone has done a survey to figure out how much money is paid by advertisers to advertise online, and how much revenues those advertisements bring.

Print Your Own Food?

3D printing, or what is known in the engineering community as rapid prototyping, is according to the video, on the edge of reaching the all important consumer market. These machines used to be so expensive that only engineering production firms own them, and they usually just outsource it as these machines are.... expensive. Well, these guys at 3D Systems are looking to bring them into your homes. And at first, you wonder, what the heck am I going to do with it? Well, same thing you could have said with the IPad, what the heck am I going to do with it? And then you realise what things you can do with it.

Even if it doesn't find its way into every consumer's home, I would believe that schools would find this pretty useful. Or maybe there wouldn't be so much printing required that every home needs one, but printing centres can spring up to cater to those who want to print something, the way we used to bring our film into processing centres to be developed.

Is 3D printing in our future?

Is Money a Lousy Motivator?

Here's something to think about. 

Besides the cute animation, Dan Pink (the originator) says that more money actually decreases performance for cognitive tasks. Essentially, he says that money is the wrong kind of motivator. Instead, people want purpose, self-mastery and autonomy! 

Which explains in part why we write these blogs for example, or why people do stuff like learn new languages (which seem to find no immediate usage in their lives). It's for the satisfaction! 

Is it true? And can such ideas be profitable for investors?

Of Accounting Fraud and China

The Great Wall might well symbolise
the accounting veracity barriers
in China
Image: www.crystalinks.com

Those looking to play the China mega trend would do well to read this from Reuters. Singapore-based investors would be familiar with the tale of the remiss S-chips even though Reuter's perspective is of those listed on the American bourses.

It talks about accounting irregularities bordering on outright fraud, and how even international accounting firms have seem to fail to detect these, leaving it to certain smaller research firms to investigate and then short the companies profitably (which also spells another conflict of interest and gives potential room for abuse). 

1: For any firms (including those outside of China) where the financial statements cannot be depended upon to be reliable, the only thing  for an investor to do is to avoid it like the plague, regardless of how profitable the trade might seem. The reason might be obvious, but let me say it loud and clear: If the financial statements are not reliable, there is no means of knowing what is going on in the business, unless you are an insider.

2: Reputation is actually worth something. This doesn't mean that one should only invest in well-known firms, indeed great opportunity might lie in small unknown firms. But then there might be a need for a larger discount factor to take into account any unknown risks. Or to put it another way, the expected profits from such less known investments should be fairly large, to compensate for the higher "risks".

3: Another point to note from the Reuters' article is, for those Chinese firms that are formed out of reverse mergers, they did not undergo the rigours of the American IPO process, which thus give rise to such abuses. 

4: There are other ways to play China than to invest directly in the country's companies. International firms doing business in China, or selling their products in China (or for that matter the other countries in rapidly growing countries), can be a safer way to get the China exposure, without the Chinese accounting issues.