Covid-19

[Wildreamz]

Unexpected challenges indeed. But in aggregate (much lower traffic volume, slightly higher incident rate) still net positive (overall incident quantity) compared to before.

[Choon]

If a Singapore public company has received aid from the government (national reserves), is it fair for the public company to pay dividends to its shareholders.

Taking it even further, if a company cuts salaries of employees, is it right that it pays dividends to shareholders. Considering that the relationship between a company and its employees is a contract stipulating a fixed salary, while the relationship between a company and its shareholders is one of caveat emptor (accepted risks-and-rewards).

[Curiousparty]

https://markets.businessinsider.com/news...1029316498

Foolish to stand in the way of FED - I fully agree ..


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[Ben]

If a Singapore public company has received aid from the government (national reserves), is it fair for the public company to pay dividends to its shareholders.

Taking it even further, if a company cuts salaries of employees, is it right that it pays dividends to shareholders. Considering that the relationship between a company and its employees is a contract stipulating a fixed salary, while the relationship between a company and its shareholders is one of caveat emptor (accepted risks-and-rewards).

My take on this:

1. Paying of dividends depends on the financial situation of the company, and it's outlook. It does not depends on govt aid. If the company is doing OK despite the crisis, and it's outlook is OK, it should continue to pay dividends. Likewise, if it is doing badly, then it shouldn't pay dividends even if govt is giving aid. The more relevant question to ask is perhaps, if a company that is doing well in this crisis (eg supermarket, medical etc), should it continue to receive the govt aid?

2. A company that cuts employee salary can still pays dividends, but should also reduce the amount of dividends accordingly. That is of course if the same rationale in 1 above applies, ie, company must be doing well and outlook OK.

Bottom line is, companies should not use govt aid or saving from cutting employees salaries to pay dividends.

[Elty]

Payment of dividends is at the discretion of the company.

It is more important to evaluate the outlook of the business.

[specuvestor]

It's discretion of board to recommend and shareholders to approve. It is not written black and white but Optics has to be maintained that when employees, customers, community etc are hurting, it will have ripple effect if shareholders don't share the pain and vice versa when shareholders are hurting and management get pay rises

Thats's why governments clamped down on the dividend and pay of banks post GFC when mgt / shareholders don't get it or don't care about other vested interests

If a Singapore public company has received aid from the government (national reserves), is it fair for the public company to pay dividends to its shareholders.

Taking it even further, if a company cuts salaries of employees, is it right that it pays dividends to shareholders. Considering that the relationship between a company and its employees is a contract stipulating a fixed salary, while the relationship between a company and its shareholders is one of caveat emptor (accepted risks-and-rewards).

[Wildreamz]

[video=youtube]https://www.youtube.com/watch?v=u2PHy5h0geQ[/video]

"Robinhood investors cannot make the market change: Aswath Damodaran" Jun 20, 2020

"The fact that capital is flowing back to equities is that.. A pretty large subset of the market believes that, not only is the economy coming back, but a subset of companies will actually benefit from the crisis, in terms of having higher earnings after the crisis, compared to before the crisis."

[weijian]

It is all about thinking in probabilities. What are the odds?

The Anatomy of a Rally

I’m writing to take a closer look at the market’s rise and where it leaves us. The goal as usual isn’t to predict the future but rather to put the rally into perspective.

https://www.oaktreecapital.com/docs/defa...-rally.pdf

[Dosser]

It is all about thinking in probabilities. What are the odds?

The Anatomy of a Rally

I’m writing to take a closer look at the market’s rise and where it leaves us. The goal as usual isn’t to predict the future but rather to put the rally into perspective.

https://www.oaktreecapital.com/docs/defa...-rally.pdf

Meanwhile the STI is nearly 25% off January's high for the year, so it looks as if local sentiment is not buying into the US exuberance...and if the US tanks again, the STI is sure to follow, so we will get doubly hammered.

On a brighter note, today i was surprised to hear a US macro blogger identify Singapore and Russia as the two stock markets with the highest yield. Surprised mainly because I had no idea the Singapore market was even on the radar of any US investment analysts. I checked out her website, and yes her portfolio does include an allocation to Singapore. And I had thought our market was a long forgotten backwater, which is what it has felt like.

[Wildreamz]

Yes, sometimes I do hear Singtel mentioned on US centric websites like Seeking Alpha: https://seekingalpha.com/symbol/SGAPY

Edit:
As for local sentiments not buying into US exuberance. Need to understand that US equity market recovery is not homogeneous, and mainly centered around consumer defensive (think Walmart, Costco) tech (think Adobe, FAAMNG), healthcare (e.g. Johnson and Johnson), and more recently "reopening trades" (I don't know, Carnival Cruise?). The healthcare and tech sector alone makes up 40% of the S&P500. It's a vastly different from say STI (50-60% financials). The Financial Sector in the US (banks like Wells Fargo, Bank of America etc.) have been hit hard, and have not yet recovered; and are still like 20-50% off their Feburary highs.

Most of STI components do not have the perceived "tailwinds" that carried this recovery.

Edit 2:
We also experienced something similar with iFast and Sheng Siong. Investors in SG and US are looking at the same metric.