Bet big in times of crisis: GCP Global's Gabriel Yap

Singapore

WHETHER you are actively trading or making long-term investments, bet big in times of crisis, said veteran investor Gabriel Yap. He was speaking at a seminar organised by ShareInvestor on Saturday.

In his keynote address, Mr Yap, the executive chairman of investment firm GCP Global, urged investors to reap the opportunities presented by subsequent corrections in the stock market after an event such as the Asian financial crisis of 1997.

One year after the crisis, "the market went up 252 per cent from the low", he pointed out. "And then there's the 95 per cent up from the global financial crisis."

As a result, distressed times will smash share prices to irrational values, but investors have to be rational enough to buy at these irrational prices, said Mr Yap.

First, however, investors must choose a market bottom. He gave an example of how he profited from investing in carpark buildings in the central business districts of Adelaide and Melbourne when the Australian dollar fell against the Singdollar.

"In the preceding 15 years, the Aussie had crashed from 3.30 to 0.84 against the Singapore dollar. In fact, in the last 15 years, you have never seen the Aussie dollar drop to this level, except for a very brief 14-day period during the Asian financial crisis," said Mr Yap, adding that he had bought the Australian dollar with Singapore dollars prior to the fall.

"I did not know what to do, so I invested in carparks."

Mr Yap said later in a panel discussion that whether someone actively trades or makes long-term investments would also depend on the asset class that they are looking at.

He revealed that the value of his carparks in Melbourne has gone up four times. "When I first bought them way back in 2004, a single carpark in central Melbourne was A$22,000. Right now, the price has gone up to A$90,000 ... if I had actively traded, I wouldn't have made that kind of money," said Mr Yap.

But he also reminded investors that active trading will occur when the market presents the opportunity. For instance, the slight easing of property cooling measures last month caused property stocks to surge. "You have to ask yourself: Is this the normal trading range? If not, then you would probably want to sell," he said.

Asked about his outlook for this year, Mr Yap said that a stock market crash is unlikely.

"Look at all the crashes and the interest rate environment at the time," said Mr Yap. "Our federal funds rate (FFR) now is 0.5 per cent. The lowest FFR when the market crashed is actually 5.5 per cent."

"So yes, it's a 10-year anniversary (since the global financial crisis), and it sounds very sentimental, but I have to ask you to look at all the other indicators as well."