Thursday, August 21, 2008

Singapore's 40 Richest

Shanghai Stock ExchangeImage via Wikipedia <

Singapore's 40 Richest
Suzanne Nam
08.20.08, 11:00 PM ET

Singapore's export-dependent economy has been hit by the global economic malaise. With gross domestic product decelerating and inflation rising, the Straits Times Index is down 5% over the past year, and Singapore's wealthiest are feeling the pinch. Fortunes based on real estate have dropped significantly. Four property developers, including Chua Thian Poh and Zhong Sheng Jian, saw their net worths fall by 40% or more.

As usual, quite a handful built their fortunes with stake in property or finance-related industry. China's Rich List also is full of property and finance-related companies. To be a Singapore 40 this year, you need a minimum of USD$120 million, but to be in China's top 40, you need to have min. of USD$1 billion.

So, the size of the economy will directly reflect on the wealth of the company as a company is able to generate a very sizeable earnings just by concentrating on a single country. Thus, I feel investing in China banks and property firms will give me greater returns than being invested mainly in singapore-listed property and finance companies.

Further, USA currently holds around 30-40% of world's capitalization and China is tipped to overtake USA in 20 years time or less, that would mean more liquidity will flow into China related companies (with direct operations in CHINA). So the potential effect of that liquidity would be similar to what happened to USA when it became the de-facto market in the world by virtue of the size of its economy, most US finance & property companies have their capitalization multiplied liberally by the liquidity of the world's investors.

So, if you have a dollar today to invest, would you invest in a company with greater upside or limited upside? Of course, we are assuming you have a investment horizon of at least 5 years.

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