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An Accredited Investor is an individual:

1. Whose net personal assets exceed in value SGD 2 million (or it's equivalent in a foreign currency) with value of his/her primary residence capped at SGD 1 million, or

2. Whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or it's equivalent in a foreign currency), or

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If account value is less than USD 50,000 -

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If account value is more than USD 50,000 -

0.3% of account value charge is applicable, computed monthly on calendar month-end account value, charged quarterly and Custody and Asset Operating Fees at actuals charged to the Account by the Partner broker (i.e. Saxo Capital Markets).

Kristal Freedom Account Fund Movement Fee

Fee Item Kristal Freedom Account
Funds Deposit
USD Upto USD 25
SGD NIL
HKD NIL
AUD Upto USD 250
EUR Upto USD 250
GBP Upto USD 250
Deposit Threshold NIL (USD 1000 recommended)
Funds Withdrawal
USD Upto USD 50
SGD NIL
HKD NIL

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Where required shall be executed at 0.05% from the Market Rate. The Market Rate available to Kristal.AI is the Rate made available by the relevant brokers.

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If Sender indicates Sender charges = 0, sending cost will be deducted (in addition to the above) by the receiving bank and paid back to the Sending bank and/or its Correspondent bank as applicable.

Additional charges levied by Clients’ bank may apply on transfers and FX conversions done in Clients’ bank account.

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Non Fund Kristal account value if less than USD 50,000 -

Custody and Brokerage at actuals, charged to the Account by the Broker (i.e. Saxo Capital, Interactive Brokers).

Non Fund Kristal Account value if greater than USD 50,000 -

- 0.30%p.a. of A/C value > US $50,000, computed MONTHLY on calendar month-end account value, charged QUARTERLY.

- Custody and Brokerage at actuals, charged to the Account by the Broker (i.e. Saxo Capital, Interactive Brokers).

Fund Kristal fee in accordance with Factsheet.

Fee Item Kristal Private Wealth Account
Funds Deposit
USD Upto USD 50
SGD NIL
HKD N/A
AUD Upto USD 250
EUR Upto USD 250
GBP Upto USD 250
Deposit Threshold NIL (USD 25000 recommended)
Funds Withdrawal
USD Upto USD 50
SGD NIL
HKD NIL

FX Conversion

Where required shall be executed at 0.05% from the Market Rate. The Market Rate available to Kristal.AI is the Rate made available by the relevant brokers.

Note -

If Sender indicates Sender charges = 0, sending cost will be deducted (in addition to the above) by the receiving bank and paid back to the Sending bank and/or its Correspondent bank as applicable.

Additional charges levied by Clients’ bank may apply on transfers and FX conversions done in Clients’ bank account.

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Fixed Income account value is equal to or greater than 80% of Total account value -

0.20%p.a. of Total account value, computed MONTHLY on calendar month-end Total account value, charged QUARTERLY.

Fixed Income account value is less than 80% of Total account value -

0.50%p.a. of Total account value, charged QUARTERLY, computed MONTHLY on calendar month-end Total account value.

Brokerage Account operating and maintenance charges ADDITIONAL in accordance with your Agreement with Broker.

Money transfer and FX conversion charges in accordance with your agreement with Broker.

DISCLAIMER

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial institutions, large corporates, high net worth individuals and sophisticated investors.

By clicking “Proceed”, you confirm that you are an Accredited/Institutional Investor as defined under the Act and you agree to the Terms of Use for this website.

EXIT PROCEED

IC Speaks Mins Read

We Have A Cut, But…

kristal.ai-advisory-letter-banner

Advisory Letter: 1st August, 2019

 

The highly anticipated Fed meeting is over, and the proverbial cat is out of the bag with a 25bp lower sneak. Many had expected more (ca. 25% of the investor audience + Donald Trump), but the majority is happy with the cut. Or are they? 

donald-trump-fed-rate-cut-reaction-kristal.ai_.png
What the Donald Was Fed Up With the Fed.

I have been trying to figure out for a long time, what makes the Fed tick (no success there) and how would a central bank whose statuary mandate is to foster maximum employment and stable inflation be inclined to cut rates at a point in time where unemployment is at record numbers, and inflation steady; albeit a bit below the targeted 2% rate?

The short of it is the conclusion that the Fed simply over-tightened in the last cycle, raising rates too fast too high when they increased in late 2018 to the 2.25-2.50% range, and now we are in reverse mode.

Last night’s second major event that has gotten much less attention was the release of the Chicago PMI (Purchasing Manager Index – survey of senior executives in major corporations about their outlook for economic activity). As the next chart shows, this index tanked to levels we have seen only a few times in the past 20 years.

fed-rate-cut-CMPI-index-kristal.png
CPMI Index.

Ahead of the 2000/01 recession, 2007/08, 2015, and it indicates  increased risk of a recession coming. I agree with that notion, because we have entered a new paradigm of uncertainty from unpredictable politics (China, Iran, de-globalisation and pull back on free trade) that has fostered an environment in which business owners are not willing to take measured risks given that there is no clear path ahead for your investments in capital goods and/or people.

My two take-aways from last night’s Fed meeting are:

    1. the 25bp cut in the policy rate to 2.00-2.25% range; and
    2. bringing forward the end of quantitative tightening to September, which can be seen as a mini-cut

But the language in the statement by Powell – “mid-cycle adjustment<sic>” and “not the beginning of a long series of rate cuts<sic>” – are poor attempts to leave some bullets in the chamber for the Fed. I do think he dropped the ball here a little bit…

I am inclined to think that the Fed is left with little choice but to continue cutting rates as the year progresses. A few reasons: 

fed-rate-cut-opinion-kristal-advisors
The ‘$’ Smile Curve

1. USD is (rightly) going stronger in the initial reaction and will possible continue to do so.

We have entered the upper right hand corner of the “$ Smile” and the fact that this is the last developed country  in the world with positive rates will keep inflows intact, while the rest of the world is racing more and more into negative yield territory.

But what the U.S. needs now is a weaker USD to stimulate the economy and make this their neighbours problem, which will not happen unless rate cuts exceed the expectations.

 

The real trouble with a strong dollar, however, is the highly indebted borrowers from overseas, who need to keep buying USD to service their debt, and against the backdrop of low domestic growth across the globe, another 5% increase in your USD denominated obligations can cause trouble for some of the weaker  EM and HY borrowers.

At the same time, every dollar  rise in the exchange rate increases the probability of some sort of verbal or actual intervention by policy makers, causing a sharp reversal. So, stay nimble on that trade.

2. Increased likelihood of a stock market correction will put the ‘stimulus cut’ back into play at some point in time.

Funding for corporates to raise debt to buy  back their own stock (the game of the last decade) needs to be lower to support these dynamics, at the same time PMI and other leading indicators, clouded outlook, etc. will keep  any upside limited.

 

As always, time will tell who’s right and who’s wrong, but here’s what I like for the coming weeks – to play it safe and keep things close to home.

 

A set back in equities can be a good near term buy opportunity once it arises, but needs to be at least 5-10% lower from here. The higher $ move somehow puts the conviction about  long gold and silver into doubt, but even there I think that a correction in gold to the 1350 level is again a good long term buying opportunity (2-5yrs).

As for rates, likely that we will see a continuation of this years trend, albeit at a somehow slower pace, that will persist until the Fed stops pushing a half-hearted monetary policy across on a shoe-string.

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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Disclaimer

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial institutions, large corporates, high net worth individuals and sophisticated investors.

By clicking Proceed, you confirm that you are an Accredited/Institutional Investor as defined under the Act and you agree to the Terms of Use for this website.