White Paper on Population What It Means For Investments

Ever since the white paper on population came out, there has been a lot of debate on whether this is the best course for Singapore. On the ground, there has been a lot of unhappiness with regards to the sudden surge in population in the recent years. This post is not meant to debate whether the move is correct or not, but rather how we can invest smartly based on the trend provided.

If things go according to the plan, population growth would go from 5.3 mil today to 6.5-6.9 mil in 2030. Taking 6.7 mil figure, that would be about 78k per year or 1.3% compounded annual growth rate. The 6.9 mil figure looks large, but the growth is only 1.3% per year, so is that a large jump?

Anyhow, if population continues to grow at a stable rate, inflation is definitely a certainty. Investing in any assets which are inflation hedges will be a smart move to do.


Property is a time tested asset which is proven to be a good inflation hedge. The population growth will certainly drive up rentals and housing prices over time. While there is currently an interest rate anomaly which means prices will be uncertain in the mid term, the long term trend projected to as far as 2030 will definitely be up. For further reading on property investment, you can read 6 Reasons Why You Should Invest In Property


Stocks which operate businesses are also considered inflation hedges as the selling prices of good and services will generally go up as well over time. However, we should be selective on the type of stocks which will benefit from population growth in Singapore. There are a few categories which will benefit from the population growth.


1. Healthcare Services / Healthcare REITs

While healthcare services do not trade at a cheap valuation, they will be a primary beneficiary not just from population growth as it is a necessity. The ageing population also requires more healthcare services than a young population. Healthcare REITs can also be a major beneficiary as they own the hospitals which are rented out to healthcare providers.

Some examples are Raffles Medical/Q&M/Parkway REIT

2. Consumer Goods

With population growth, consumption of consumer goods will definitely increase. The general public has also gotten used to the fact consumer goods will increase in price over time due to inflation.

Some examples are QAF/F&N/APB

3. Consumer Retail

Like consumer goods, consumer retail especially supermarkets and hypermarkets are the key places for consumers to buy their daily necessities.

Some examples are Dairy Farm/Sheng Siong

4. Telcos

As population grows, there will be more and more people carrying mobile phones and using internet services. There are only 2 companies which can provide bundled services of mobile, internet, Pay TV etc.

Some examples are Singtel/Starhub

5. Retail REITs

Retail sector is most driven by population as compared to office and industrial space. In particular, suburban malls are very defensive as they provide daily necessities for the people living in the area. As population density increases, the malls will get more foot traffic, therefore leading to higher rentals as well.

Some examples are CapitaMall Trust / Fraser Centerpoint Trust


With inflation, the purchasing power of money will continue to go down over time. As such, it is important to invest as the continued population growth is one of the key signs that inflation will continue.


For further reading, you may be interested in:

6 Reasons Why You Should Invest In Property

Thoughts on Straits Times Article Is Monetary Policy Enough to Fight Inflation In Singapore?

Beating Inflation With Savvy Investments and Prudent Spending

Investment Ideas In Relation to Property Cooling Measures

Comments on Straits Times Article CPFIS Funds lose 4.06% in Q2

Property Cooling Measures Jan 2013

Additional Stamp Duty For Singapore Properties


10 thoughts on “White Paper on Population What It Means For Investments

  • February 1, 2013 at 10:45 AM

    Hi Calvin,
    Thanks for the useful writeup, many are at a loss what to buy and invest in today’s market, reits prices have been chased sky high and any stock that pay a decent dividend are all richly valued.
    I notice you did not mention IHH under your healthcare stock examples. They are the “big brother” in the healthcare sector in singapore and Malaysia, why don’t you like them?

    • February 2, 2013 at 12:58 PM

      Hi Mich, those are just examples. It’s not meant to say which is better. IHH should benefit as well, however valuations are also not compelling at this point.

    • February 4, 2013 at 6:19 PM

      Hi Mich,

      You said: “Reits prices have been chased sky high and any stocks that pay a decent dividend are all richly valued.”

      Not so!

      See some of the examples below:

      Ascott REIT
      Average yearly dividend for the last 3 years is $0.0848
      Adjusted High on 2nd July 07 was $2.13 per share.
      Today it trades @ $1.35
      Take $0.0848/$1.35 = 6.3% PA

      Capital Commercial Trust
      Average yearly dividend for the last 3 years is $0.078
      Adjusted High on 21st June 07 was $2.413 per share.
      Today it trades @ $1.64
      Take $0.078/$1.64 = 4.8% PA

      Frasers Commercial Trust
      Average yearly dividend for the last 3 years is $0.0624
      Adjusted High on 15th May 07 was $3.853 per share.
      Today it trades @ $1.34
      Take $0.0624/$1.34 = 4.7% PA

      Global Investment
      Average yearly dividend for the last 3 years is $0.013
      Adjusted High on 7th June 07 was $1.161 per share.
      Today it trades @ $0.18
      Take $0.013/$0.18 = 7.2% PA

      Keppel REIT
      Average yearly dividend for the last 3 years is $0.0676
      Adjusted High on 12th Mar 07 was $2.701 per share.
      Today it trades @ $1.38
      Take $0.0676/$1.38 = 4.9% PA

      Lippo Malls
      Average yearly dividend for the last 3 years is $0.0359
      Adjusted High on 29th Nov 07 was $0.591 per share.
      Today it trades @ $0.525
      Take $0.0359/$0.525 =6.8% PA

      The above are only some examples, there are many more.

      04.02.13 E&OE

      • February 6, 2013 at 12:41 PM

        Hi Winston, the REITs you have chosen as examples have higher yields than the rest, but for good reason.

        Ascott – Hospitality is considered cyclical as it is based on tourism

        CapitaComm, FrasersComm, Keppel is considered cyclical as they are office REITs.

        LippoMalls is due to the fact that it is all Indonesian assets which have currency and political risks.

        To take it from historical perspective –
        Average Keppel yield for past 5 years is around 6.0%, so 4.9% is below the average

        Average CapComm yield for past 5 years is around 5.2%, so 4.8% is also slightly below the average.

        The other REITs are quite similar in that most are trading below average yields.

        I wouldn’t touch Global Investment as the assets are mainly aircraft operating leases, collateralized debt obligations (CDOs) and junk bonds like MBS. Yield will definitely be high as these are high risk debts.

        • February 7, 2013 at 10:49 AM

          Hi Calvin,

          Agree, higher return comes with higher risk.

          I’m still looking for Investment Instruments that have higher returns and with lower risk.

          Better still if I can find some arbitrage instruments (Hard to find).

          Btw, do you play golf? I play 2 to 3 days a week in Malaysia. If you do play, we can arrange for some games together.

          Have “A Blessed Lunar New Year”.

          • February 8, 2013 at 6:28 PM

            Hi Winston, yup in general higher yields mean higher risk levels. However, when you can get good returns while maintaining similar risk levels, that’s a sign of undervaluation.

            Arbitrage strategies are actually available in many forms, such as long-short pairs, merger arbitrage etc. do exist at times, but trying to figure them out with accuracy is very difficult. Arbitrage is often used by hedge funds who generally specialize in certain strategies as it is not easy to be good in all of them.

            Happy Chinese New Year to you too!

        • February 10, 2013 at 2:38 AM

          Hi Calvin,
          How do you compute historical 5yr avg dividend yield? Whilst I can source the historical annual dividends paid out over the last 5 yrs from SGX website, I do not know which share price to use.
          Do I use the average share price of each year (far too tedious, and daily share prices for 5 yrs may not be available), or the share price on the last trading day of each year (inconsistent with the annual dividends used?), or the share price on XD dates in each year? Or none of the above?
          Hope to hear from you, as this metric is something I have been working on, but haven’t got the faintest idea how. Thanks very much for your help.

          • February 15, 2013 at 12:47 PM

            Hi jojo,

            There are a few ways to calculate it. Personally, my preferred manner is to take the annual dividends for that year and divide it by daily share prices. So you would need the dividend history and also daily historical stock price which can be downloaded from Yahoo. Another way is to use the low and the high price of the year. Another way is to use the average price for each year. Of course, the most tedious method would also be the most accurate.

            There is of course a shortcut, which is to look for research reports which has compiled such data. These are usually REIT industry reports and they can be pretty lengthy, so they are probably only issued once or twice a year by a IB/research house.

  • February 7, 2013 at 7:41 PM

    Hi Calvin,
    Do you think that internet shopping will be the trend of the future and shopping Malls will be redundant?

    • February 8, 2013 at 6:34 PM

      Hi s Lee, personally I don’t think that shopping malls as a whole will be made redundant. Some brick and mortar shops may be affected, for example CD stores, bookstores since many have already closed down. However, as a place for social gathering, family get together, dining and stuff, I think shopping malls will still have a place. In fact, when the population gets denser and houses get smaller, you will find more people just wondering around in malls as opposed to going home like in HK.


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