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Budgets: Three exit strategies (Singapore, Hong Kong, India) & tomorrow's Thailand

Thursday, 25 Feb 2010
Striking is that when it comes to the U.S., everyone - correctly - is focused on her monetary policy.  Her fiscal policy plays second or third fiddle. Meanwhile, in Asia, the fewest focus on monetary policy, while her fiscal policy gets a little more attention.  Yesterday we were meant to do a CNBC TV show on three budgets this week. Today, we outline some broad conclusions - and how to make money off these. You can see a video of the show by clicking here.   We also share our brief thoughts on what you should be doing in your portfolio about Thailand, given tomorrow's important event.

This week is witnessing three budgets in Asia:

  • Singapore's, which appeared on Monday;
  • Hong Kong's, which appeared yesterday, and
  • India's, which appears on Friday

Here is a brief sketch of each.

In Singapore, the emphasis was on enhancing productivity and on limiting more foreign Gastarbeiter coming to the Republic.  The key benefit here is that Singapore wants to keep sharpening her competitive edge by enhancing productivity; the government will achieve this by giving tax breaks and the like to selected industries.  

In Hong Kong, the emphasis was on seeking to reduce our property bubble.  The key benefit here is that the government will put (some) extra flats on to the market, thereby reducing our extraordinariily high property prices. The drawback is that these measures are so miniscule that they will be rendered ineffectual.

In India, the emphasis will be on reducing state subsidies for fuel, food and fertilizer. Nevertheless, the government will keep seeking to help the rural population by pumping money into rural villages and the like. The key benefit here is that India's government is  taking concrete measures to reduce her sizeable fiscal deficit.

It is difficult to pinpoint how to make money off these three budgets.  Some wild guesses are that

  • in Singapore, buy high-tech companies that will benefit directly off tax deduction for research and development
  • in Hong Kong, buy property companies: the government's "David-like" measures will not match the Goliath of strong money inflows from mainlanders wanting to get their money out of China, and
  • in India, avoid those quoted companies whose subsidies will be sharply curtailed by the budget.
Meanwhile, as an important aside, avoid Thailand.  Whilst no budget has been offerred yet, the key is that tomorrow, the Supreme Court hands down its verdict on whether Thaksin gets his money back from the sale of a portion of his company.  I am not close enough to the situation to report back; all that I can write, however, is that press reports suggest that civil unrest will rise precipitously.  So don't waste your hard-earned money roping around in the Thai stock market. 

 

 

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