Phase 3 Reopening – What this means for Singapore Investors?


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As you would have heard, PM Lee announced Phase 3 reopening earlier today.

Phase 3 Reopening for Singapore

The key details are:

  • Starts on 28 Dec
  • Gatherings of up to 8 people
  • Up to 250 people (in zones of 50) for religious service and public venues
  • Eased capacity limits on public places like malls, attractions, places of worship

More details in the infographic from Today:

Free Vaccine for Singaporeans (by Q3 2021)

And on the Vaccine front:

  • Singapore will provide free vaccinations for all Singaporeans and long-term residents
  • Priority will go to the elderly first
  • First batch will arrive by end Dec
  • Target to have “enough for everyone” by Q3 2021

3 Quick Thoughts on the Singapore Phase 3 Reopening

I wanted to share 3 quick thoughts, and then talk briefly about the implications for Singapore investors.

  1. The start of the end of COVID (faster than expected)
  2. 6 to 12 months more of COVID restrictions – What is the economic impact?
  3. The “easiest” recession in Singapore’s history?

The start of the end of COVID (faster than expected)?

In an earlier article, we talked about how the COVID vaccine marked the start of the end of this COVID saga.

The latest details from the Phase 3 and vaccine details supports this view, and even accelerates the timeline.

My original base case was for life in developed countries to normalize in the second half of 2021.

So Singapore’s target of vaccinating the entire population by Q3 2021 is actually really aggressive, and really bullish because it’s even ahead of this base case.

Granted, Singapore is probably ahead of the curve because of our (1) small population size and (2) high GDP per capita that allows us to afford the vaccinations. Most other large countries will probably take up till end 2021 to fully immunize their populations.

But I don’t think the impact of this timeline should be understated.

Once a person has been vaccinated, with a >90% efficacy vaccine, technically international travel should start becoming possible again (perhaps with limited restrictions).

This could mean limited restart of airtravel globally in the second half of 2021, for vaccinated persons.

And judging by the recent staycation demand, I suspect people will be dying to travel again once the restrictions lift.

Really bullish stuff.

6 to 12 months more of COVID restrictions – What is the economic impact?

That said, we’re still looking at a minimum of another 6 months of “limited” COVID restrictions (ie. Phase 3), best case.

More likely, it will be somewhere from 9 to 12 months.

Whether that’s good or bad depends on the industry you’re in.

If you’re in eCommerce, you probably don’t mind another 12 months of lockdown because business is brisker than it’s ever been.

If you’re in tourism or cinemas, then well, that 6 months cannot pass quickly enough.

The big question is whether governments will be able to do enough to avoid permanent structural damage to the economy.

Will we be able to keep the tourism and cinema operators afloat until 2H2020 when activity starts to normalize for these guys?

My gut feel, is that some will survive, but some won’t.

So there will be some permanent scarring to the economy, but it may not be catastrophic because of the heavy government support.

What might be more worrying though, is what consumer trends have changed – and will never come back?

People watching Netflix instead of movies in a Cinema. Is that permanent, or temporary? What about buying stuff on Shopee instead of a shop? What about working in an office v working at home?

Trying to figure out what’s temporary and what’s permanent might be a key theme in the next 6 – 12 months.

The “easiest” recession in Singapore’s history? Government stimulus will prevent defaults

Government stimulus this time around was “unprecedented”.

It kept countless workers at their jobs, and it kept countless companies afloat.

Loan default rates are virtually unchanged from a year ago, from before COVID.

Unbelievable stuff.

Given that the government stimulus has got us here to end 2020, I would be very surprised if they decide to turn it off, when the light at the end of the tunnel is so close.

I mean, it’s just 6 to 9 more months and large chunks of the world may be vaccinated? That’s a lot easier to justify than back in June when no one knew how long this would last.

Which means that we may see a lot of these “unprecedented” measures stay around for a bit more until mid/end 2021.

What would the impact be from this?

DBS, UOB and OCBC have each set aside billions in loan loss provisions. They’ve barely even touched them so far, because the default rate has been so low.

If this keeps up, those loan loss provisions are going to look very silly.

We could be going into 2021 with pent up consumer demand, excess bank reserves (due to untouched loss provisions), easy liquidity, and interest rates at 0%.

Sounds like a recipe for a stock market bubble?

What are the Implications for Singapore Investors?

Stocks are forward looking

Stocks are forward looking, about 6 months on average.

So in the world of stocks, it’s already June 2021, with the vaccine rollout in full swing, and things are looking a lot more rosy.

Details are starting to emerge on what 2021 will look like – reducing uncertainty

Events like today are starting to supply information on what the world in 2021 will look like, and it’s starting to look a lot more optimistic than many base case predictions.

As the uncertainty goes away, well, that becomes more bullish for markets.

No significant change to investing strategy

From a big picture perspective though, I don’t think today’s news changes my investing strategy in a big way.

I’ve been averaging in since March, and that doesn’t change going forward.

If anything, this news may actually incentivize me to speed up the rate of purchase, because it indicates my base case needs to be accelerated.

And going forward, I still want to hold inflation hedges, I want to hold value stocks and REITs, and I want to hold growth stocks.

The big picture doesn’t change from today’s news, but it does alter the timing.

How will this affect the Pandemic winners?

A big question I had though, is on how would this affect the pandemic winners?

The logistics REITs, the eCommerce players, the tech platforms etc. You know, the guys that benefit from COVID lockdowns and staying at home?

If COVID was great for them, wouldn’t it mean that the end of COVID is bad for them?

Again, my suspicion is that it’s not that straightforward, because a lot of these consumer trends may have become permanent.

So again – 2021 seems to be the year that we sift through the carnage of COVID, and figure out what the new world would be like.

What trends are permanent, and what trends are temporary.

And invest accordingly.

Love to hear your views!

BTW – We just launched a massive Christmas Promotion for all investing courses.

If you’re stuck in Singapore in December, why not learn to invest? 2021 will not be straightforward for markets – likely with lots of opportunities for investors!

Check it out here!


  1. Hi FH,
    The market appears to be overvalued against historical measures, however,
    1) The vaccine’s release would open up the economy to travel again and likely push the market higher,
    2) opening to phrase would likely have a similar effect
    3) if a second stimulus in the US does come, the market would likely be pushed higher as well

    In case, I missed it, are there any factors suggesting otherwise that the market may crash again?


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