Wolf Money(Portfolio update for end April 2024)part 1
Bye Singapore! Hi Malaysia, 2026
This write-up was inspired by a video posted on YouTube. The video talks about Hong Kong hollowing out by Shenzhen. The recent phenomenon of Hong Kongers going to Shenzhen to play, eat and stay is gathering pace with close to 2 millions making the crossing to Shenzhen during the recent Easter Holiday. That is close to 30% of the current HK population leaving for Shenzhen. With deflation taking root in China, things are much cheaper in Shenzhen. The poor economy in HK is another push factor with Hong Kongers trading down their consumption. One traveller from HK mentions his spending in the mainland only cost him 1/3 of the usual price he paid in Hong Kong. Hong Kongers are shopping at Sam’s Club in Shenzhen buying everything from groceries to electronics. The commentator interviewed restaurants and shop owners in HK, most experienced a 30% drop in sales during the holiday.
*The video about Hong Kongers going mainland to spend, having an impact on the local economy. Do note the channel always painted the Chinese economy in a bad light(below).
https://youtu.be/CRdIysIWjCg?si=UpVl7IVS0cGNQwgi
If I post this question to my readers, what will the convenience of the JB-SG RTS/MRT bring to Malaysians working in Singapore when the service is available late 2026? Businesses who need Malaysian workers will cheer the convenience, it allows a greater flow of workers into Singapore which, makes hiring easier. All those conveniences have their downside.
Has anyone wondered what if Singapore got hollowed out by Johor, similar to the situation HK is facing? The favourable exchange rate of 1 SGD to RM 3.5 is a huge incentive for people to go Malaysia to spend their Singapore dollars. If 1 to 3.5 exchange rate hasn’t drawn your interest, what about 1 to 4? I could foreshadow Malaysian workers who are currently renting housing in Singapore giving up their lease to go back to their JB homes and stay rent-free due to the convenience of the MRT. Every dollars they save on renting a place in Singapore is going to have an impact on their savings. Imagine saving SGD $1000 in room rental per month. That will be RM3500 extra saved for a Malaysian working in Singapore. We have roughly 700,000 Malaysian working here, making up a sizeable tenants’ pool locally. If the rental in Malaysia is more attractive, some expats working in Singapore not on a huge pay package might even consider up rooting for Malaysia. What will happen to our property market in a reduced market for landlords? On the flip side, a cooling property market will help the new generation get onto the property ladder.
The disruption doesn't confine to Malaysians choosing to head back. Singaporeans facing cost of living pressure will be heading to JB to shop, eat and stay. It costs half to get your groceries done in Malaysia. I am not so keen on traveling to JB due to the perpetual jam at Woodland Causeway, but if the MRT takes me directly to JB with ease, I might consider a weekly trip to JB to do my grocery shopping. If a household spent SGD $300 a week on groceries, a 50% saving will amount to an extra $600 a month. There are other services which face potential disruption not limited to hairdresser, dentistry, retail and F&B. The RTS/MRT is a game changer. One possible scenario is for a Singaporean company to have an office in JB near the RTS station, employing Malaysian instead. A Malaysian employee could take a MRT to see his client in Singapore if it requires client facing. How about a bake shop near JB station employing a delivery worker making daily delivery to Singapore customers via MRT. A SGD 60 cake becoming a RM 80 cake. How is the bake shop in Singapore going to compete with the substantially lower price offered by Malaysian baker? How about a tourist coming to Singapore checking into a JB hotel near RTS station that offers much lower room rates instead of staying in a Singapore hotel, coupled with the ease of traveling to Singapore using JB RTS? There are so many ideas i can think off to save money once the RTS/MRT is up and running. Going through the hassle may well be well worth the effort. Where is my passport? Err….Singaporeans don’t need one to go to Malaysia soon.
The lack of workers in Singapore will be solved eventually not because of the ease of Malaysians coming to Singapore to work, but due to lack of openings in Singapore. Many businesses in Singapore can’t survive and compete with those low-cost businesses operating out of Malaysia as more Malaysian and Singaporeans head to Malaysia to stretch their dollars. Especially those living in the North around Woodland and Yishun. The residents can take a train to JB easily to have their HDL hotpot that costs half in Malaysia. With those cheaper alternative, will the local HDL see a drop in their sale? How about Johorians coming to our side to have HDL? Totally possible, provided there is a 50% discount coupon! If the travel up north is restricted to weekend only, many local f&b and retail can’t survive without the weekend revenue. Cheaper service and goods in Malaysia will hit our market, more so near border towns. What will happen to our local retail and service sectors? The Singaporean businesses likely to benefit from the MRT extension into JB are our casinos. Many JB gambling gods, JB “Yan Fei”, Du Shen(god of gamblers) uncles and aunties making daily trip to Singapore. The direct economic benefits are likely to concentrate in our gaming sector, an industry that produces few winners and many losers. Pun intended.
(Image credit: CNA)
The flood gate will be opening late 2026. A strategy needs to be ironed out. Any business in Singapore should incorporated a JB business plan. Our government might charge GST for hand-carry goods coming into Singapore(speculation), but it is not going to shift the attractive dynamics of a weak ringgit brings. Empty shops and properties is a real possibility in Singapore. Our stock market is property and REITs heavy, a weak property market will hit their share prices. HDB, an important retirement asset with many Singaporean retirees renting out their rooms to Malaysian workers as a supplement to their income will face potential challenges, hit by lower demand. As reported in the mainstream media recently, housing agents have to work harder to close a rental deal even before the JB-SG station is up and running. The current high rental is enough for some Malaysians to pack up and make the trip back to JB.
With the high mortgage rate and the potential disruption by the free flowing border bought on by JB-SG RTS/MRT. As an investor, one should asked, is buying a second property locally with tenants paying your mortgage still work in the future? With a stubbornly high interest rate and lower demand, is investment property and REITs still a viable investment option in the future? There are signs the big corporations with huge exposure to local properties divesting their assets. DBS, CDL and DFI have been selling off their strata shops recently. One should watch the development closely. Shopping malls may face weaker local spending due to huge price differences across the causeway. I bought my pants at more than 30% lesser at Uniqlo, Penang.
To solve the manpower crunch in Singapore, are we sacrificing a garden for a tree by making border crossing free flowing to address the workers shortage? Given the strong SGD, there is already a long queue of Malaysians wanting to seek employment opportunities in Singapore. A change of dependancy ratio in the employment act will have achieved the desire outcome. Is it going to be a case where Singapore dollars is earned but spending is done in Malaysia with very little money staying behind to help the local businesses? I don’t know the answer. What I do know, money always seek the most efficient way out. Bye Singapore, Hi Malaysia, 2026. HSR anyone? Ho Seh, Ringgit! Just like any coin with two sides, a Ringgit Sen has two sides too. There is no perfect solution to a problem, our eagerness to solve the manpower crunch might have opened a pandora box to other potential problems.
Part 2 will be coming up shortly
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