From early next year, the scope of insurance coverage will be expanded from $20,000 to $50,000 for each depositor. This will cover 91 per cent of depositors under the scheme.

As part of the enhancement, other non-bank depositors, such as companies, will also have their deposits protected under the same deposit insurance scheme.

Currently all bank deposits here are 100% guaranteed till 31st Dec 2010 as part of an emergency guarantee proposed and implemented during the financial crisis of 2008.

Review of Deposit Insurance (DI) Scheme (MAS response to consultation)

It was further clarified that this rule will also apply to an owner of a foreign property. Meaning if you own a foreign property, you will need to dispose it within six months of buying your HDB unit.

Frankly, I am not sure how this is going to be enforced but it sends out a clear message that if you can afford to own a private property, you should not be buying a HDB.

On a separate note, Monetary Authority of Singapore (MAS) said that a buyer with a home loan for an overseas property will not be subject to the new financing rules when they are buying an additional property here.

Foreign Homes, Same Rules (Straits Times)

Capital Plus (CPN21) is a single premium short-term savings plan with guaranteed returns. This plan has tenure of 3 years, with a guaranteed maturity benefit. It also provides cover against death and total & permanent disability (TPD).

CPN21 offers a guaranteed return of 1.4% p.a. for a policy term of 3 years. There is an early surrender penalty of about 10% if the plan is surrender before maturity.

Capital Plus is available from ages 16 to 80 (last birthday), for amount starting from S$10,000, up to a maximum of S$1,000,000.

Upon death or TPD within the first policy year, the benefit payable will be the single premium. The death or TPD benefit payable after the first year up to maturity is 105% of single premium. For TPD, the benefit is payable if it occurs before age 65 (last birthday) or maturity, whichever is earlier.

Note that the tranche size is small and it is likely to be taken up in a very short time.

Capital Plus is available for cash and SRS only.

“realises that he has missed a window of opportunity, when every man on the street have their own theories on property investment…the next downturn perhaps…..”

And then yesterday, the government announced several measures to cool our property market.

Compared to previous measures, these measures are quite significant and will help to moderate the demand among property investors. Coupled with plans to increase the supply of new flats, hopefully we can prevent a property bubble from developing further.

A summary of the changes are as follows:

1. Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.

2. For property buyers who already have one or more outstanding housing loans at the time of the new housing purchase:

(a) Increase the minimum cash payment from 5% to 10% of the valuation limit; and

(b) Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%.

Further, HDB has also announced additional restrictions on the co-ownership of HDB flats and private properties.

3. The minimum occupation period (MOP) of non-subsidised flats for resale and subletting of flat will be increased from 3 to 5 years.

4. Buyers of non-subsidised flats will be disallowed from concurrently owning both an HDB flat and a private residential property within the MOP.

All these measures took immediate effect from yesterday.

More details here:

MND Press Release

HDB Changes

Those households earning $8000 to $10000 will be allowed to buy flats under the Design-Build-and-Sell Scheme (DBSS) and executive condominiums. However, they will still not be allowed to buy Build-to-order (BTO) units.

A typical four-room BTO flat costs $300,000, a DBSS flat around $500,000 and an executive condominium around $700,000.

PM Lee also mentioned that there will be 22,000 BTO units to be built next year.

There will also be moves to further cool the property market. These will be announced later today.

HDB to Raise Income Ceiling (Straits Times)

This is a long term (15 or 25 years) structured deposit that can give you equity-like returns via exposure to the CIMB Evergreen II Index.

The CIMB Evergreen II Index tracks a wide range of markets across major economic regions and asset classes which adopts a Risk/Return Optimisation strategy by finding the best possible asset class allocations to maximise returns with controlled volatility (Standard Deviation) of around 10%.

It also adopts a Long/Short strategy which proactively trades when markets are bullish or bearish.

If you look at the CIMB Evergreen II Factsheet, you can see that the historical returns is quite impressive. It managed to return 13.15% even in 2008 (probably via a number of short positions) when the market was down severely. However, the returns for 2009 was more muted at 2.36% (probably still held on to the shorts).

The Max InvestSave brochure gives some projections of the returns. The investment is 100% protected if held to maturity so if the index does not perform, you will end up with your original invested sum. If you add in the bonus units (given during the promotion now), the annualized returns works out to be about 0.9% p.a.

You should take the higher projections with a pitch of salt because ultimately, your final returns will be dependent on the performance of the CIMB Evergreen II index (which is not guaranteed). Note that the index has a 2% annual management fee and there is also a 5% performance fee.

There is also a performance lock-in feature built in which guarantees the returns based on the highest market price achieved during the product lifespan if held to maturity. While this is a nice feature to have, note that it does not come free as CIMB will have to find some way to guarantee this return.

I’m not too sure how they do it but one way it can be done is to allocation a higher proportion of the assets to fixed income as a higher price is achieved. This might cap reduce future upside of the index.

One fund that has a similar lock-in benefit that was launched in the past was the AXA Secure Ascent 2020. Unfortunately, it was launched at a very bad time in April 2008 before the market collapsed. The fund was designed to be a 12-year investment giving moderate exposure to equities but because of the market collapse, it now has an allocation of almost 90% to fixed income with the remaining 10% in leveraged equities.

The high fixed income allocation is necessary is in order to give the guaranteed maturity return of 1.00455 based on the lock-in price (current price is about 0.96287). I think investors in the Secure Ascent 2020 fund might see limited upside potential from now till the fund matures in 2020.

Overall, the CIMB Max InvestSave structured deposit allows you to gain exposure to higher risk assets with the potential of higher returns but without the downside risk as long as you hold it to maturity. As the product duration is fairly long, you need to make sure these are funds that you won’t be drawing on in the immediate future.

Of course, you will also need to mind in mind the worst case scenario which is if CIMB goes bust as a structured deposit does not fall under the protection of the Singapore Deposit Insurance Scheme.

Previously, these institutions had been banned by MAS from selling structured notes for a year.

MAS Lifts Ban (MAS announcement)

MAS Lifts Notes Ban on Six Institutions (Today)

Six financial institutions can resume selling structured notes (CNA)

Date: 28th August 2010 (Saturday)

Time:  1200hrs to 2100 hrs

Venue:  Suntec Convention Centre Level 2 Ballroom 1 and 3

Learn how:

• to achieve your investment goals using SGX products
• to trade beyond stocks
• to identify the most suitable SGX product for capital gains or yield income

Talks from 1330hrs with seats allocated on a first-come-first-served basis.

1.30 pm – Welcome Address
Mr Magnus Böcker, CEO, Singapore Exchange

1.45 pm – Where Do We Go From Here?

Global markets and economies recently went through a dive on the back of the European sovereign debt issue. While this issue has receded somewhat, another issue has surfaced. And this is the fear of a double dip recession in the US economy. Is this a false alarm? Hear from economist Dr Tan Kee Wee who will tell you the various scenarios we all face.

Guest Speaker: Dr Tan Kee Wee, Independent Economist and Presenter of MediaCorp Radio 938LIVE’s ‘Money Talks’

2.30 pm – Beyond Volatility : Opportunities in Asia

As the fiscal positions of many European economies go under scrutiny one by one, and uncertainties cloud around the global growth trajectory, 3Q10 will likely present an inflection point. Buying opportunities will present once confidence drops to its lowest in the quarter. Cyclicals bear the brunt of earnings downgrades while Consumer sectors will be lifted by robust domestic economies, lower interest rates and oil prices. Opportunities are in Asia as focus switch to domestic demand theme in 2H10. Find out from Joanne Goh how to identify and tap on these bountiful opportunities.

Guest Speaker: Ms Joanne Goh, Regional Equity Strategist, Group Research, DBS Bank

3.15 pm – Broaden Your Investment Portfolio. Trade Beyond Stocks

To most people, SGX is a platform for trading stocks. But do you know that you can build a diversified portfolio using financial instruments listed on SGX? Find out from Elgin Ting how this can be done using ETFs, REITs and Structured Warrants.

Mr Elgin Ting, Vice President, Securities, Singapore Exchange

In recent years, ETF’s popularity has surged because of their liquidity, low cost and transparency.

In this sharing session organised by iFast, the speakers will explore the global recovery story, why and how to participate in markets using ETFs, in addition to unit trusts.

Date : 27th August 2010 (Friday)
Time : 6.30pm (Registration)
Venue : SGX Centre 1, 2 Shenton Way, SGX Auditorium, Singapore 068804
Level 1 (Registration Booth)
Level 2 (Seminar Room)

To register, please SMS 83647133 by 25th August 2010 in the following format:

ETF Name NRIC

For example: ETF JamesLim S1234567A

Seats are limited and available only on a first come first served basis.

Session Outline

6.30 – 7.30pm Registration and Light Refreshment

7.30 – 7.50pm Expected New Highs In Corporate Earnings – New Highs In Stock Markets Too?
Lim Chung Chun, CEO, iFAST Financial Pte Ltd

7.50 – 8.10pm Growth of ETFs Around the World
Andrew Ler, Senior Vice President, Securities, SGX

8.10 – 8.30pm Accessing China ‘A’ Shares Through ETFs; One of The Best Times To Invest
Eddy Wong, Research Manager, iFAST Financial (HK) Limited

8.30 – 8.50pm Asset Allocation – How ETFs Can Enhance Your Portfolio
Jack Chin, Investment Planning Manager, iFAST Financial Pte Ltd

Currently, CPF members can use up to 40 per cent of their Ordinary accounts to pay for their children’s education in local tertiary institutions only.

No CPF for Studies Abroad (Straits Times)