The Chocolate Finance Meltdown- MAS Querying On Instant Withdrawal Representation.

Wow, I suddenly noticed a huge surge in readers on my previous post (Why I Am Not Taking Part In the Guaranteed Interest Rate Product Offered by Chocolate Finance?) in July 2024 on Chocolate Finance.  In case some folks who are too busy and not sure what is happening, the recent talk of the town over the past 2 days is about a "bank run" on Chocolate Finance which forced it to halt its instant invested cash withdrawal feature. The panic cash withdrawal was primarily triggered off by the videos posted by Kelvin Learn to Invest and Sethisfy where both social influencers informed their followers that they are withdrawing from Chocolate Finance. 

1. Quick Thoughts

I thought that both Kelvin and Seth could have been more discrete and low profile in their handling of this epsiode instead of putting out the videos and then bringing up integrity issue among the management team of Chocolate Finance due to the withdrawal of the miles programme using AXS payment. I also believe that both have previously been paid by Chocolate Finance to promote their products last year. Unfortunately, triggering a stampade of mass exodus of funds and investors will not look too good on them- apparently they have underestimated their influence. 

In addition, both finfluencers also risk exposure to potential lawsuit by Chocolate Finance and also retail investors who followed them in the event that there are any financial losses arising out of this entire fiasco. While probability of Chocolate Finance going after them is extremely low as it will further damage their business reputation, I do not think that it is worth the trouble to even expose oneself to such needless potential legal lawsuits. Even if one thinks he/she will surely win any law suits, there will be initial non-recoverable legal consultation costs and also invaluable time wasted in such an event.

2. Will Investors Get Back Their Money?

Since the CEO of Chocolate Finance has come out to defuse the entire situation, I believe that retail investors will be able to get back all their money eventually if the panic withdrawal subside.  Nevertheless, I am still pessimistic about the product offered by Chocolate Finance as aforesaid mentioned in my previous post. 

Parting Thoughts

There is no doubt that there is already a certain degree of branding damage to Chocolate Finance due to it not honouring the instant withdrawal feature that was being marketed. Personally, I will continue to stay far far away from Chocolate Finance. For excess funds, it maybe better to just park them in real banks where the first S$100K is entirely covered by the Singapore Deposit Insurance Corporation ("SDIC") for piece of mind. 

Credit Card Miles Reward and Unrealised Capital Gain from Stocks Now Counted As Passive Income?

I thought that it is rather interesting to come across a You Tube video with the video creator talking about her impressive 9 streams of passive income that contributed $8,500 per month for her. Yes, you did not see wrongly, 9 streams of passive income that she had was the subject header she shared in her video.  

2 very intriguing "passive income streams" that caught my eyes:

1. Credit Card Miles Reward

Bonus miles points from credit card sign up and spending helps one to reduce cost of air tickets for travelling overseas. Hence miles reward are arguably also passive income.

2. Stocks Unrealised Capital Gain

Apparently, unrealised capital gain is also be counted as passive income because one can sell off the stocks to realise the gain and then use it.

For those interested, can watch the "9 Passive Income Ideas That Make Me S$8,500/Month in 2025" by The Krazy Koala. Her passive income stream number 9 is very interesting and forms the bulk of her S$8.5K passive income. Income stream number 9 is apparently derived from fixed term certificate of deposit ("CD") in a US digital bank earning around 5.1%-5.2% interest rate. Hence her capital amount, after some mental acrobatics, is probably between $750K to $800K which is no doubt remarkable. The capital invested as per the creator is protected by FDIC insurance up to $250K. So, this is the perfect high return and low risk financial instrument.

Upcoming US Recession and SREIT Rally From Lower Interest Rate Fallacy.

Wow, this is really bad news! Early US economic data for the first quarter of 2025 is pointing towards negative growth, according to the Federal Reserve Bank of Atlanta. If we have 2 consecutive quarters of negative growth, then techincally, the US would be in an economic recession. What this means is that the probability of two or even more Federal Reserve rate cuts has just increased drastically. 

1. The Call to Buy REITs as Interest Rate Cuts Will Mean Huge Savings in Financing Cost is a Fallacy.

Interestingly, a number of folks on social media have mentioned that now maybe the best time to buy into REITs which have been performing badly and in the doldrums. Nevertheless, it is important to note that a financing cut may not lead to a rally in SREIT market price because the main factor is still whether the REIT can continue to generate sustainable rental income. Many businesses will be severely impacted and there will be increased in bankruptcy from firms and consumers. There will also be widespread retrenchment of staff (which we are already seeing for a number of years).   

Not suprisingly, during past recessions, most of the REITs will have substantial drop in their market price (along with the broad market sentiment) despite a lower interest rate environment. So far, I have not seen REITs price rally in past recessions. Do remember that REITs are still equities afterall and underlying business fundamentals are still the essential determinant of its market price. This is unlike bonds instrument whereby their market price soar when interest rate is being cut- this is the basic 101 inverse relationship of bond price vs the market financing rate.  

2. REITS I Will Try Avoiding During Recession

Personally, I will be avoiding the following REITs sector:

(1) Hospitality REITs- if everyone is struggling with bread and butter, no one will be in the mood for travelling; demand will thus plunge. 

(2) Office Commercial REITs- Too cyclical and unpredictable.

Instead, I think that shopping mall REITs (Frasers Centrepoint Trust and Lendlease REIT) as well as Industrial REITs (backed by Temasek Holdings) will be a safer buy while waiting for the market to recover.  Special theme REIT like strip malls with grocery focused business (United Hampshire US REIT) should also be a safer place to ride out the recession. 

Parting Thoughts

With a narrowing net interest margin spread, bank stocks like DBS, UOB & OCBC will find their earnings dipping soon as they have peaked. SREITs will also be in the doldrum for at least another year or two. So will you folks be making any adjustment to your current portfolios?

Investment Portfolios Updates (28 February 2025) - Net Investment of S$722K and Projected Annualised Passive Income of S$47K.

My total gross investment rebounded back to over S$1Mil while net investment after margin loan hovers around S$722K. While SREITs continue to perform miserably with a steep drop again recently, the overall portfolio was propped up by a sudden +S$30K rally in my China stock holdings of Alibaba, Ping An, Link REIT, Bank of China ("BOC") and Industrial & Commercial Bank of China ("ICBC"). 

1. Portfolio 1- Stocks held in SGX Central Depository 

Not much changes here except to mention about Haw Par Corporation which declared a special S$1 per share of dividends on top of the usual dividends. This announcement led to a sudden spike in the share price of Haw Par.

2. Portfolio 2- Margin purchased securities

(Note: My margin purchased securities has grown to a sufficient scale to sustain itself and can pay off annual financing charges as well as to gradually pay down the margin loan through dividends generated.) 

Mapletree Industrial Trust ("MIT") crashed recently to below S$2 per unit due to analysts report that its US Data Centres will have tenants exiting and the vacancy will rise. This maybe a good opportunity to buy more of MIT which has a high distribution yield of 6.85%. Even with the upcoming fall in occupancy from its data centres in US, there will be enough buffer cushion for a 5.5% to 6% yield. The market perception of MIT prospects seems extremely pessimistic. 

3. Portfolio 3 (with Tiger Brokers and MooMoo) 

(Venture into higher risk as well as capital growth stocks here)

Alibaba finally came roaring back to life after the Deep Seek. It has strangely morphed into an AI Tech company. 

4. Portfolio 4 (Endowus Unit Trusts & Other Investments)

I have continued to put in additional capital into the Endowus Higher Income Portfolio since the last update in December 2024. 

Parting Thoughts

I have approximately S$13.2K of dividends payment for re-deployment in March 2025. Out of these, I intend to utilise S$6.7K to pay down the margin loan. Another S$6.5K will be used for either reinvesting into SREITs which are at rock bottom or buying into Endowus bond funds. 

The Mysterious Woman Behind the City Development Ltd Family Dispute.

I was surprised to read that Mr Kwek Leng Beng, 84 years old, is still helming City Development Ltd ("CDL") as Executive Chairman- I would have retired at age 65 years old (if not 55 years old ideally) to enjoy my old age.  Worst still, Mr Kwek Leng Beng has brought a lawsuit against his son, Mr Sherman Kwek, for attempting a coup and wanting to remove him as Group CEO of CDL. This seems surreal and something that only happens in Hong Kong TVB drama. As a result of the chaos, investors are jittery over the future of CDL.

1. Mysterious Woman That Caused the Rift Between Father and Son
Since ancient times, disputes between human beings have always revolved around 3 matters, namely, (i)Money; (ii) Power and (iii) Woman. Mr Sherman Kwek had mentioned that Dr Catherine Wu, who had a "long relationship" with his father Kwek Leng Beng, interfered in matters "well beyond her scope". The attempted removal of Dr Catherine Wu seems to be the main trigger of the current legal battle between father and son as per Mr Sherman Kwek. 

2. CDL Share Price Disasterous Performance Over the past 5 years. 

CDL's share price has been a disaster for the past 5 years which saw it plummenting from S$9.77 per share in February 2020 to the current S$5.12 per share as at 27 February 2025. Mr Kwek Leng Beng has mentioned disasterous foray into China property market which saw the group losing S$1.9 billion dollars as part of a series of missteps of Sherman Kwek. The elder Kwek pointed to past business decisions under his son's leadership that have "put CDL in a precarious position", including a S$1.9 billion loss from CDL's investment in Chinese developer Sincere Property in 2020 and poor returns from UK property ventures.

Parting Thoughts

Interestingly, CDL net assets per share as at last publised 2024 results is S$10.17 per share. Hence current market price is 50.3% off its NTA per share. If CDL's share price crash further due to the current legal fiasco, maybe it will present a good opportunity to acquire some CDL shares with additional safety buffer. Afterall, CDL is a long standing organisation with well functioning internal structures in place. Once the dust is off the board of directors infighting, CDL will be up and running as per normal. 

United Hampshire US REIT Released Another Set Of Disappointing Numbers for FY2024.

I thought that United Hampshire US REIT ("UHREIT) released another poignant set of of 2nd half and also full year 2024 results amidst the inflation nightmare as well as the higher interest rate environment driving up financing cost. I am heavily vested in UHREIT, hence keeping a close eye on it. Despite grave disappointment over the past 3 years where we saw the market price of UHREIT as well as its distributable income dropping non-stop, there is still some consolation in that its latest balance sheet has strengthen with aggregate leverage ratio declining to 38.9%. This is certinaly remarkable given that it used to be towering near the 42%+ range. Let me just do a quick recap of the financial summary from FY2022 to FY2024 below.

1. 2023 vs 2022- Spike in Finance Cost Dragging Down Overall Results in 2023

2023 vs 2022

Finance cost was a major killer in FY2023 which increased by a whopping +32.2% from US$12.2 Mil in 2022 to US$16.1 Mil in 2023.

2. 2024 vs 2023- Spike in Finance Cost Gradually Stabilising and Hidden Unknown Downside Impact.

2024 vs 2023

For FY2024, finance costs of UHREIT continue to increase by +17% from US$16.1 Mil to US$18.9 Mil thus exerting downward pressure on Net Income before tax, fair value & gain on divestment of investment properties. If the 2 US rate cuts that was widely anticpated in FY2025 materialise, then rental escalation will finally be able to catch up to the higher interest rate environment.   

Nevertheless, there is one hidden downside from the back to office mandate from Donald Trump for government employees as well as US Corporate Bosses. On slide 8 of the power point deck, UHREIT management team has always been asserting that "On the other hand, the Strip Center sector has benefitted from the remote work arrangements trend as the additional flexibility has increased demand for the goods and services offered in Strip Centers, ranging from grocery shopping to dining. Strip Center sector values have increased 22% since June 2020".  So, does this mean valuation will head south soon given the back to office drive in US?

3. Distribution by UHREIT and Key Dates

For those still hanging on to UHREIT, do take note that the Ex-date of 2nd half distribution is on 26 February 2025 while the payment date is 28 March 2025. Distribution per unit will be US$ 0.0205 per unit.

Parting Thoughts

Well, 2025 may turn out to be the much anticapted "breakthrough" year for UHREIT to deliver better results and meaningful higher DPU to long suffering unit-holders. Let's keep our fingers crossed that UHREIT will roar back to life in this new year of 2025!

Pritam Singh Found Guilty of Lying- Looks Like Aljunied GRC Will Remain with Workers' Party.

First and foremost, I have originally no intention to comment on the guilty judgement by the local judiciary. But as a layman, I am just extremely curious on how the issues on hand can be decided by trial to determine whether something is a lie or not a lie. The only 100% certainty thing that can convince everyone is if there are videos taken or conversation recording to prove what he or she had said or not. Else everything becomes pretty judgemental albeit circumstantial evidences and witness statements, is it not? Anyway, I am not a lawyer, so I am resigned to being clueless on how these legal thingy works.  

Additionally, worst thing is does this issue even matter when there are larger issues at stake for Singaporeans such as high inflation effect on daily bread and butter matters. Personally, I thought that it is an enormous waste of public resources and time. Also, I read that Mr Singh is going to launch an appeal to the higher courts with regard to the judgement....so the soap opera continues. 

This trial of Mr Pritam Singh will only lead to more support and sympathy vote for him during the upcoming General Election. So looks like Aljunied GRC will remain with the opposition for another term.