Dead STI cat bouncing?

My lengthy absence is due to a torrent of work. It did not help that the index went into a sustained free fall the past few weeks after the General Elections. In between, I managed to read Subhas Anandan's two books, The Best I Could and It's Easy to Cry. I found his book very illuminating, giving us a lawyer's view of Singapore's justice system. I felt him talking to me through his book mainly because he was somewhat a media personality and that I saw him in person in his later years. Once, I was on a bus towards Holland Village and saw him seated at a back of a Jaguar. I immediately recognised his face, his white hair and beard. The other time, he was in a hospital robe with his family in the SGH. From the book, I learnt that he had heart problems even from an early age. 

Anyway, my portfolio has declined 17% on a year-to-date basis. I thought of bailing out at some point of time, but I remember that we have to sell in strength. My short view is that April 2015 was the peak of the secular bull and we should expect a bear market to last for 10-18 months. So far, we are only six months into the bear market at the recent uptick I believe is just a technical rebound. Keep cash and wait a bit more.

Singapore GE2015 Prediction: PAP to retain super-majority in new Parliament (77-12-0)

The table above shows predictions of each of the wards contested. Highlighted in blue are the constituencies where Mothership said would be interesting to watch. Predicted vote share in red red text represents the constituencies where PAP is at-risk of losing.

My prediction will be that WP will be able to retain all the seats (7) where it was the incumbent as well as secure East Coast GRC (4) and MacPherson SMC (1). Sources other than Facebook tell me that East Coast GRC has become even more receptive to the Workers' Party in their area. Does not help the PAP that Lim Swee Say has made remarks that can be and has been construed by Malaysia and China as slightly offensive. For MacPherson, while it is a three-cornered fight, the NSP candidate has more or less wrote himself out of the competition with his remarks about PAP's Tin Pei Ling. I am getting more positive about WP's Bernard Chen given the WP's daily rallies.

Although Marine Parade GRC and Fengshan SMC are according to me at-risk of being lost by the PAP, I think it is still slightly in PAP's favour. For Marine Parade GRC, Goh Chok Tong will still be the main draw, rather than Tan Chuan Jin. The PAP team has also been aggressively campaigning. For Fengshan SMC, I saw the the WP candidate's rally speech and I think he is not as inspiring as the rest of the WP slate. The PAP's Cheryl Chan's grassroot experience should shift the results in her favour.

Analysis of PAP’s GE2015 lineup reveals insecurities

Recently, the PAP announced its lineup of 89 candidates for each SMC and GRC for the upcoming general election to be held on 11 September 2015 (GE2015). Although the PAP said it would name 24 new candidates, I counted only 21 new candidates. I had deducted Koh Poh Koon from the list announced by CNA, as he had participated in the Punggol East by-election. Chan Hui Yuh and Kahar Hassan were not named as candidates for GE2015 despite strong signals they would run in Aljunied GRC.

The purpose of this post is to analyse how the PAP has deployed its candidates, to uncover the PAP’s outlook of winning a SMC or GRC. This is done by looking at the age of the candidates, how many years each candidate has served as an MP, and the replacement of candidates and comparing it against the previous election performance (GE2011). For GRCs, the average age and years in service as an MP is used, although there is a high degree of correlation between a candidate’s age and his/her years in service.

Loss of Aljunied GRC a defining moment

Many considered PAP’s loss of Aljunied GRC in GE2011 to be a defining moment because compared to an SMC, it has been a safe channel to bring new candidates into parliament. GRCs were introduced in 1988 after PAP for the first time, lost two seats in in the 1984 elections and since then, until GE2011, no GRCs had fallen into opposition control. Given the relative certainty of winning a GRC, candidates identified to have ministerial calibre have often entered parliament through a GRC.

With the loss of Aljunied GRC, it means that the PAP will now have to assessment the possibility of their GRC candidates not being elected, along with that for the SMCs. This leads me to believe that if the PAP is not confident of winning or winning back a GRC or SMC, it is unlikely to place new candidates that it considers important for the next parliament in that respective GRC or SMC. With respect to Aljunied GRC, I believe that the PAP will field a team that can run in elections after GE2015, because while it may not win at the first try, it may at the second time of asking. This has happened in Potong Pasir SMC.

Understanding PAP’s outlook for GE2015

The rest of the section will look at the profile of the PAP candidates lined up for GE2015.

The average of a PAP GE2015 candidate is 48.2 years. The youngest candidate is Tin Pei Ling (32, MacPherson SMC) and the oldest candidate is Goh Chok Tong (71, Marine Parade GRC). Most of the new candidates except for Chong Kee Hiong (47, Bishan Toa Payoh GRC) and Victor Lye (52, Aljunied GRC).

Slightly more than half the 89 candidates have not yet served as an MP or have served only one term. Another 18 candidates served three or four terms as MPs. Goh Chok Tong has served the longest as an MP for the current PAP candidate lineup (39 years), followed by Lee Hsien Loong (31), K Shanmugam (27) and Charles Chong (27).

Of the MPs, that are not running for GE2015, Wong Kang Seng (31 years) is the most senior, followed by Mah Bow Tan (27 years). Four MPs are not running for GE2015, having served only two terms. Lui Tuck Yew is the most prominent as he was the recent-past Transport Minister.

The next table below is the most interesting because it compares the data described above with the PAP’s performance in GE2011. Jalan Besar GRC, Marsiling-Yew Tee GRC and Tanjong Pagar GRC do not have GE2011 results because they are new or were not contested. Aljunied GRC is the only GRC to be under opposition control. The GRC most at risk of falling into opposition control is East Coast GRC, followed by Marine Parade GRC, Bishan Toa Payoh GRC and Tampines GRC.  GRCs placed after Tampines GRC can be considered “relatively safe”.

PAP not confident of regaining Aljunied GRC

None of the previous candidates that stood in Aljunied GRC in GE2011 returned to contest in this GRC for GE2015, hence a 100% replacement rate. Ong Ye Kung, the only candidate from Aljunied GRC in GE2011 has been redeployed to Sembawang GRC. On the other hand, Yeo Guat Kwang has been redeployed from the relatively safe Ang Mo Kio GRC, into Aljunied GRC. None of the remaining four candidates have been described to possess minister qualities. Consistent with my beliefs, the PAP most likely feels that its chances of winning back the GRC are low. Given that the team is of the average age, it is very likely most of the team will return to run in Aljunied GRC in the next elections, should they not win in GE2015.

Using the replacement rates as an indicator, the most at-risk PAP GRC is East Coast GRC, followed by Marine Parade GRC, Tampines GRC and Bishan Toa Payoh.

PAP very cautious of retaining East Coast GRC, Marine Parade GRC

Should a 6.5% occur in GE2015 as it did on average against the PAP in GE2011, East Coast GRC will fall under opposition control. The candidates for East Coast GRC in GE2015 are the same as for GE2011 save for Raymond Lim, as his Fengshan ward has been carved out into an SMC. Without replacements, the East Coast GRC is also one of the older teams amongst all the other PAP GRCs. Consistent with my beliefs, the PAP is very cautious about its prospects of retaining the East Coast GRC. One minister and two ministers of state are at risk should East Coast GRC comes undone.

For Marine Parade GRC, the PAP has brought in Edwin Tong from the recently disbanded Moulmein-Kallang GRC. At the same time, Tin Pei Ling’s MacPherson ward has been carved into a SMC. With no new candidates introduced, aside from a redeployment, it suggest that the PAP is cautious of retaining Marine Parade GRC. The question remains, why Edwin Tong is brought in to the GRC.

Shaken and stirred

I had not posted anything since 20 June mainly because I was very busy with my office work. I had to rush my reports out before I went for my in-camp training in July. This was quickly followed by another holiday in Perth, Australia. In-camp was exceptionally hectic this time and this was not helped by the fact the camp location remains ulu. My Perth holiday went real well and I might have sometime to do an update over the weekend. I even managed to do a wisdom teeth extraction, the second surgery for 2015!

Of course, the market tanked rather badly in between. When I was in Australia, all I saw on the news was the Yuan devaluation and its impact on the market. When I managed to log in to my account, I saw that all my accumulated gains have been wiped out, save a hair cut. If we have past the bull market (earlier than I had expected) and that we are in a slow decline, I suggest it is time to accumulate cash. If 15th April was the peak of the market, we have at least 12 more months of bear market to follow. I am looking at selling in strength and buying in due course (but I forgot my brokerage account!)

Straits Times Index: Will MERS cause STI to do a SARS?

On 20 May, South Korea reported the first case of MERS in the country and since then it has spread throughout Asia with Thailand being the latest country to be affected. Singapore’s Lee Hsien Loong has also warned that it is inevitable that MERS “will reach our shores”.

To see if there are any clues how the stock market has and will perform in a period of highly infectious disease, I have in the above chart, superimposed the STI on the corresponding trading day that Singapore reported its first SARScase (1 March 2003) with the trading day when South Korea reported its first MERS case (20 May 2015). Based on 2003 historical trends, I have projected that period’s performance onto the closing STI on 19 June 2015 to create a forecast.

For the 60 trading days before MERS was reported in South Korea, the STI performed in a volatile and mostly positive manner. When news of MERS in South Korea broke out, the index was rather unmoved but has been on a downwards trend since then.

For the corresponding period in 2003, the STI was similarly volatile but in a negative manner. When SARS broke out in Singapore, the index suffered a same day plunge but quickly recovered. It then fell for the next 20 trading days before staging a broad market recovery.

Judging by the immediate trading days before SARS, should MERS hit Singapore, we can expect the STI to plunge rather sharply. However, the market is expected to rebound short-term. However, unlike in 2003, I caution against expecting a longer term recovery because that 2003 period coincided with one of the greatest secular bull markets of our time.

Therefore, the verdict therefore is that you should look at the bigger picture. MERS will benefit day-traders as it provide the catalyst for short-term massive fluctuations as fear initially permeates and sets in. After a while, this information should be priced into the market, with broader factors dictating its longer-term movement.