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Ten Investing Ideas
Article Date: March 1-7, 2010 | The Edge Singapore - Personal Wealth

By: Kelvin Tan

Winning Ideas: From the World Cup and platinum ETFs to 2009’s Bordeaux releases, here are fresh new investing ideas for those struggling with out-of-steam equity markets

After a spectacular 2009, when most asset classes saw double-digit annual returns, generating similar gains this year could be a daunting task for most investors, who are already having a fret of late.

Indeed, the dramatic but fleeting plunge in prices of risky assets in mid-January to early February – largely triggered by China’s earlier-than-expected credit tightening measures as well as the debt crisis in Greece – has shown that global investors, after having made their money last year, are now more than willing to take profits and head for the door when uncertainties arise.

As such, extreme short-term market choppines, which some experts refer to as excess volatility, is likely to persist throughout 2010, given potential headwinds like the withdrawal of government stimulus  and the likely interest rate hikes by global central banks – all of which could weigh down investment sentiment in the coming months.

Nevertheless, attractive money-making investment opportunities can still be found across a number of asset classes, if investors know where to look.  The key to successful investing in the months ahead, according to experts, is to be highly selective in your investment choices.

For daring investors keen to exploit the limited windows of opportunities in the markets, here are 10 of the best investment ideas to consider.  These bets – selected by Personal Wealth with the help from strategists and investments experts – are spread across different asset classes, including traditional equities and bonds as well as alternative ones, such as commodities and investment grade wines.  Several ideas are recommended based on secular investment themes, while others are timed to take advantage of some major events happening this year...

1. Profit from the 2010 FIFA World Cup South Africa
2. Invest in Western blue chips with strong emerging market presence
3. Focus on dividend-yielding stocks
4. Bet on resource-rich countries
5. Go for agriculture commodities
6. Make a play for platinum which will outshine gold
7. Consider BRIC bonds and other sovereign-debt opportunities

8.  Buy Bordeaux first growths of 2009 vintage

After three years of ordinary vintages following the extraordinary 2005, the up-and-coming Bordeaux 2009 wines, which will be sold en primeur over the next few months, are likely to excite wine lovers and investors around the world.  Buying en primeur or “futures” effectively means pre-paying for the wines while they are still in barrels 12 to 18 months prior to delivery.

“The vintage 2009 [Bordeaux wines] are going to be outstanding,” says Herve Aymond, co-founder and director of Corndale Consultants, one of Singapore’s biggest wine merchants specialising in en primeur.  Aymond says the quality of the 2009 Bordeaux wines may even surpass those from the 2005 vintage.  “I was in Bordeaux in July and August, and the vines were amazingly beautiful.  Yes, 2005 was overall a great year, but it looks like 2009 could overshadow 2005.”

Corndale started receiving buy orders and queries from regional clients as early as October, months from the 2009 Bordeaux en primeur campaign.  “It is the first time that people started calling so early in the campaign,” Aymond says.  And, since the beginning of this year, more clients have been calling to reserve, on average, “two or five cases” of each first growths, namely Chateau Latour, Lafite Rothschild, Mouton Rothschild, Margaux and Haut-Brion.  “People are already pre-reserving, like we have never seen before; more so than 2000, 2003 and 2005 [en primeur campaigns],” he adds.

High demand is likely to drive up prices for the Bordeaux 2009 wines, especially the first growths, which are considered the blue chips of investment-grade wines.  Indeed, speculation is already rife that the Bordeaux 2009 first growths will be released near the high 2005 price levels.  “You can expect it to be quite expensive.  Maybe prices would be 10% to 15% lower than the expensive 2005.  But, prices will experience a very strong acceleration upon release,” Aymond predicts.  2005 Bordeaux wines, especially the first growths, set record prices during their en primeur campaigns as the chateaux released their clarets at exorbitant levels.  For instance, Chateau Latour was selling at nearly $1000 a bottle on its release during the 2005 en primeur campaign.

Without doubt, the prestige associated with fine wines, coupled with their surging prices in recent years, have turned these luxurious commodities into one of today’s hottest alternative investments in Asia.  Wine investors typically jump on the en primeur bandwagon to buy their targeted first growths at the lowest possible price, with the hope of reselling them at significantly higher prices later.

So, which first growth from the vintage 2009 will do best?  “It is too difficult to say at the moment,” says Aymond.  “But, Chateau Mouton [Rothschild], Margaux, Haut-Brion appear to be outstanding,” he says, adding that all the first growths would be good buys.  Shrewd wine investors will want to get their hands on the first tranche of the first growths, as the second and third tranches are likely to be 25% or even 50% more expensive.

With wealthy Chinese and Russians expected to buy strongly into the 2009 Bordeaux en primeur campaign, it looks like it is going to be a mad rush for wine collectors and investors.  “I think 2009 will be the first en primeur campaign where the Chinese will buy.  In 2005, they were not ready and they didn’t buy as many.  The Russians are also starting to buy en primeur.  So, do expect a very, very strong campaign,” says Aymond.

9.  Stick with commodity currencies
10. Hedge fund strategy: Macro and fixed income trading could do well