Friday, January 9, 2015

Weekly Update - 10 Jan 2015

1. Unit Trust Transactions
  • 2 Jan - I bought $5,095.77 United SGD Fund ($5000 fresh fund, $95.77 dividend reinvested)
  • 5 Jan - I bought $500 Allianz US High Yield AM Dis H2-SGD(SGD). With the monthly distribution of 6 cents and per unit cost of $9.34, the yield was at 7.7% p.a. The yield looked attractive to me.

2. Fierce Rally on Gold Mining Stocks & Funds

Over the week, there was increased volatility in risk assets. Major stock index such as DJI, S&P, STI, Hang Seng saw fierce sell off, followed by quick recovery. The volatility was triggered by further drop in oil price below psychological support of USD 50.00.

The perceived risk caused flight to safety with buying seen on assets that were considered "safe haven" such as gold, treasury bills, and USD. As a result yield on US 10 year T-bills dropped below 2%.

Fortunately for my portfolio, United Gold and General fund that invested in gold mining companies acted as a hedge. Apparently the buying in gold also spread into buying bashed down gold mining stocks. Many gold mining stocks rallied more than 5% in 1 day. Most of them were at 1 month high and some were at 3 month high. I think gold mining stocks may be bottoming and probably in initial phase of medium & longer term reversal.

3. Spike in SIBOR

As a result of USD strengthening and sell off in EUR, SGD was also impacted because it is pegged to a basket of currencies. The sell off in SGD, caused the SIBOR to spike. Those who are over leveraged due to years of low interest rate may want to be cautious. The spike may be a start of trend reversal in years to come.

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