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Make Big Money in Singapore’s Casinos, Without Gambling
Until she died a few years ago, I had a blue-eyed Siberian Husky named Misha. She was a headstrong little dog, and picked up an odd habit as a puppy when my wife and I lived in Dallas: She hunted frogs.
One of the strangest dogs I’ve ever owned. She’d bark to go out in the backyard, and soon enough you’d see her in a cat-like crouch, slinking across the grass … stalking … ever … so … slowly …
And pounce!
All you’d see was frog legs wildly springing toward a protective shrub, a possibly-deranged husky in mad pursuit. She rarely caught the critter, but never gave up the hunt.
I bring this up because I’m in Misha-mode these days: I’ve found a target and I’m in mad pursuit, and I’m not willing to let go …
Wild Growth in the City-State of Southeast Asia
Earlier this month, as some readers know, I visited Hong Kong and Singapore on a mission to dig up local investments and to check in on two of the major centers in my universe as an Asia-investor and writer.
I found myself particularly impressed with what’s happening in Singapore.
Now, I told you a little bit about Singapore in a recent piece I wrote on the real-estate investment trust sector there. But Singapore is more than REITS. The country is home to blue chip companies that directly benefit from the growth rampant in their home market and across Asia. And in a minute I’ll tell you about three I think you should grab now.
I was last in the tiny city-state two-and-a-half years ago. The place has changed.
Since my trip I’ve concluded that any investor who wants to be a part of the Asia Century must invest in Singapore.
So, like Misha with her frogs, I’m chasing Singapore all over the place. The opportunities are palpable.
A Winning Bet on a Richer Future
For much of its 35-year-history, Singapore has shone a vibrant island – a pocket of political and social stability in a part of the world where coups and chaos were commonplace…
Today, the energy is as thick as the equatorial humidity that bathes this place.
Singapore is fast growing, attracting residents, businesses and even new industries. It’s a leader in fields crucial to the emerging world – namely water desalination – and it is a global hub for shipping and marine services.
It’s also the jumping-off point for investors putting money to work in Southeast Asia and for tourists who want to shop and gamble.
Indeed, the vibe around the city’s two new casinos is particularly spirited. The roof deck atop the Marina Bay Sands Hotel, floating across three towers 55 floors above Singapore, is as “happening” as any New York City nightclub.
Marina Bay Sands infinity pool 55 stories above Singapore
Down below, the Sands casino is attracting thousands of gamblers from across Asia, particularly from the growing affluent classes in China and India.
A few miles away, a second casino operated by Genting Singapore is equally packed with punters. But it’s also a go-to destination for families because of shopping, dining and the Universal Studios theme park that are steps from the casino’s entrance. (More attractions coming soon.)
These two casinos comprised much of Singapore’s record 18% economic growth in the first half of the year. Exports, meanwhile, are kicking in a big dose of growth as well, with biomedical and electronics manufacturing playing a key role.
Overall, Singapore is the world’s fastest growing economy in 2010 – though tough that growth will slow, likely to the low-teens for the rest of the year and high single digits next year.
Nevertheless, the rise of casinos and tourism, and the growth of the knowledge-based economy have reset GDP at a higher starting point.
Casinos are part of the government’s larger plan to drive tourism and conventions by giving convention-goers reason to stick around and spend money.
That, in turn, is generating economic activity around the city, with cranes raising new office towers and heavy machinery constructing public-works projects, including a new subway line and a new coastal expressway.
Numbers Lie
Now, to a certain degree Singapore doesn’t carry the swagger of other Asian capitals. It’s a developed economy and the government manages the finances prudently, but it’s not an equity center like Hong Kong or Tokyo, meaning it’s not the first place stock-market investors gravitate to in Asia.
The country’s debt as a percentage of GDP is on par with Greece, which on the surface seems concerning. But raw data hides the reality. Singapore’s government sells bonds to maintain an active bond market to help shape the yield curve. That curve is necessary for investment managers in the region who need a fixed-income benchmark.
So Singapore debt isn’t the debt you find in places like Greece or the U.S. Indeed, even though Singapore technically has a lot of debt, it’s also home to one of the world’s 10 largest stashes of foreign-exchange reserves, at around US$210 billion.
The cash raised through the bond sales, my Singaporean contacts told me, goes into savings or back into the economy – such as those public works projects.
Playing the Singapore Trade
Singapore’s growth is real. And the government’s effort to push the economy to the next level is working.
The Singapore stock market is relatively small (markets in small countries like Korea and Taiwan are bigger), but it’s home to large, stable, local and multinational firms.
I recently wrote about how to play Asia through stable dividend-paying stocks in Hong Kong. And today I’m sharing one of my favorite, high-growth, dividend-yielding Singaporean companies.
- Singapore Air Terminal Services, or just SATS: A pure play on Singapore’s tourism and convention push, as well as the casino business attracting gamblers from all over the region. SATS basically manages what happens at Singapore’s Changi International Airport in terms of airfreight and baggage handling, passenger services, aviation security, food catering … basically everything at the airport. With Singapore’s tourism on the rise (visitors in a single month topped one million in August for the first time ever), more passengers and cargo are flowing through the terminals. SATS wins. P/E is about 14.5; yield is about 5%.
I’ll throw out two other Singaporean companies to consider, and which also represent good growth and pay dividends.
Wilmar International is the world’s largest palm oil processor. Rising affluence directly correlates with palm-oil consumption. Thus, Wilmar is a direct beneficiary of rise of the middle class in Asia, Africa, the Middle East and elsewhere.
Overseas-Chinese Banking Corp., OCBC, is one of Singapore’s biggest banks. It is a safe play on Singapore’s growth since banks benefit as economies grow, and it’s a “safe-haven” play since wealth from around the regions is flooding into the safety of Singapore and the Singapore dollar.
All three of these companies are pure plays on Singapore’s local growth and the city-state’s status as the hub of Southeast Asia.
Investors can trade these companies directly on the Singapore Exchange from the U.S. through Charles Schwab and EverTrade, both of which offer phone-based global-trading in Singaporean shares.
Until next time, keep a global view…
Jeff D. Opdyke
Editor, Emerging Market Strategist
Blog: http://globetrotter.sovereignsociety.com/
P.S. – A great way to “keep a global view” is to look at foreign currencies. And my colleague Evaldo just made his subscribers 602% gains in the last four months. To learn more, and save 60% when you try his Exotic FX Alert Risk-Free, click here now.
Other Posts from the Author
- How to Get More Income from Your Investments - May 16th, 2012
- What My “Air-Route Indicator” Says About the Next Big Investment - May 11th, 2012
- Profiting from Asia’s Growing Thirst - May 9th, 2012
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