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Archive for June, 2010|Monthly archive page

Footie fans get screwed: SingTel mgrs rake in millions

In Telecoms on 30/06/2010 at 7:54 am

Can’t blame me from being cynical can you?

At least, they are locals. The only FT runs Oz ops.

Not unlike DBS, where FTs run amok.

Buying for dividends: diversify too

In Investments on 30/06/2010 at 5:25 am

Just because a company pays a dividend now is no guarantee that it will forever, or that the company will even continue to exist. Nor is it any guarantee that the underlying stock is stable.

Again and again, we’ve seen out-of-nowhere scandals and crises and accidents bring big companies to their knees. Why, given the overwhelming evidence that these things do happen once in a while, would you not extract your dividend income from a low-cost, broadly diversified mutual fund that specializes in dividends?

The moral of the story, as always, is to diversify within each asset class you own, whether it’s dividend-paying stocks or municipal bonds or the emerging-market countries where you’re rolling the dice for big gains. Then, diversify your retirement income, too. The more sources the better, whether it’s dividend income, interest income, annuity income, rental income or periodic (and tax-savvy) outright sales of stocks or other assets.

Even this sort of diversification might not have protected you from the pain in 2008. But it can shield you from the ruin of betting too heavily on a single security like BP.

NYT article

More value in buying fund mgrs than their products?

In Uncategorized on 29/06/2010 at 6:52 am

PAUL SAMUELSON, the late Nobel laureate in economics, compared mutual funds to a saloon.

“I decided that there was only one place to make money in the mutual fund business, as there is only one place for a temperate man to be in a saloon: behind the bar and not in front of it,” he told Congress in 1967. It made sense to invest in mutual fund companies, Mr. Samuelson said, but not in mutual funds.

NYT article

PM says flooding will happen: but govt planning more underground projects

In Uncategorized on 28/06/2010 at 6:20 pm

Yet, Singapore is studying the feasibility of building a huge underground warehousing and data centre at Tanjung Kling, near Jurong Bird Park, BT has learnt.

The logistics and data centre will be the third underground facility which Singapore is planning. Construction is already underway on the first phase $1 billion Jurong Rock Cavern to store oil and chemicals on Jurong Island, while a feasibility study is being carried out for an underground science city at Kent Ridge.

So will these projects get priority in flood prevention over residential, commercial areas?


SMRT: More foot in the mouth comments

In Uncategorized on 28/06/2010 at 5:57 am

The British have one Tony Hayward.

We  got Ms Saw the CEO of SMRT. She told us commuters we got to play our “part” in securing SMRT’s trains, as though the break-in was our fault.

Now she tells us we have a choice whether to take the train.  I have the choice of using buses, but not all are so lucky.

And then this: Saw Phaik Hwa, CEO, SMRT, said: “This is something that can be considered, but it still needs to be discussed. But it depends on the amount and the quantum and it has to be an agreement between the two parties, SMRT and Fricker. I think we can say, as of now, there is no agreement one way or the other.”

I think Fricker has a good moral case for asking Ms Saw to take his place in prison and being  caned (BTW she seems to a lot more fat on the thighs). After all, he was just a vandal, it could be some Pakistani fanatic from the North West Frontier or Sentral that broke in, planting some bombs.

He exposed the flaw in the security system and no-one got her, well almost no-one: the mgt of SMRT have been shown up for their ineptness.

Update 3 July

The point is, in comparison with others, we’ve yet to push people into the train,” she said, referring to Japan and some parts of China, from Today.

I hope she realises that only MM is allowed to do jokes, not even PM can do jokes.

Innovation: We be rats

In Uncategorized on 27/06/2010 at 7:16 am

The EDB has a  strategy to make Singapore a ‘living lab’ for urban solutions. With $100 million set aside for EDB to facilitate private and public sector tie-ups to test-bed new clean energy, urban mobility, IT and public safety systems, te EDB hopes companies will develop urban solutions that can be exported.

And we are the lab mice?

How do you punish a losing footie team?

In Uncategorized on 26/06/2010 at 2:27 pm

Saddam Uday, head of the Iraqi football federation, had his own prison and torture chambers in the basement of the building of the Iraqi Olympic committee, which he chaired. Reports – rife at the time – that he beat and tortured players were confirmed in 2000 after the defection of Iraq’s star footballer Sharar Haydar.

Read more and other examples from BBC Online.

Parkway: M’sia v India, GIC being discrete?

In Uncategorized on 26/06/2010 at 6:02 am

Corporate Observer* quoting Reuters said GIC had decided to defer a preferential investment in the Indian healthcare group.

As the row between Fortis and Khanazah over control over Parkway is starting to sound like a row between India and M’sia (bank funding for Fortis seems to be like an all-India line-up); and getting nastier; and since GIC  has MM, PM finance minister, trade minister and an ex-DPM as directors (the last an executive director); and as S’pore is trying to settle a long-standing row with M’sia over some land, perhaps GIC decided that it had better not get caught up in India v M’sia.

Update 26 June 2010

‘GIC remains committed to Fortis through our substantial investment in Fortis’ convertible bonds. Like any other major investor, we constantly review our investments and will evaluate participating in the larger fund raising . . . and defer the current preferential investment until such time,’ GIC said in a statement released by Fortis to the Bombay Stock Exchange.

GIC currently has a 6.58 per cent interest in Fortis.

‘Fortis acknowledges the patronage of GIC and believes this development will be a better strategy for the company,’ the Indian group said.

Except from BT

*Who they? Run by two ex-local MSM journalists (considered by other journalists as smart and idealistic), one gets the impression that they are aiming to be a corporate version of Temasek Review without TR’s anti-government stance, inaccuracies, and misreps. Update: they even use the moniker “admin” to sign-off pieces: like TR.

Bosses who take responsibility

In Uncategorized on 25/06/2010 at 10:15 am

Marcello Lippi — Italy’s manager

“I take full responsibility. If I was part of the success in 2006, I have to take the blame for this failure too. If a team shows up at an important game with terror in its heart and head and legs, it must mean the coach did not train them as he should have done. I thought the men I chose would have been able to deliver something different but obviously I was wrong.”

Admiral Michael Mullen, the chairman of the joint chiefs of staff

“I strongly recommended General McChrystal to the secretary of defence and the president to assume this command. Certainly, from my vantage point I feel some responsibility here.”

Certainly not the response we got from the bosses of SMRT (public has to play “their part”), and PUB and Min of Water, and SingTel (thanks to CEO, we kanna screwed on footie).

Perhaps S’pore is as usual behind the curve*.

In the US, the view is now underperformers ought to be fired, to encourage the rest.

Temasek, GIC executives be afraid, very afraid: S’pore always apes the US (in time): look at the “free market” in finance.

*

Selling to multiple (pay-TV) retailers is the norm of the world. What Singapore is trying to do is to become the norm of a competitive, sophisticated pay-TV market,’ Michael Yap, MDA deputy chief executive, told BT.

‘We’re actually quite far off the norm.’

MDA was criticised by content providers after it ruled that from March 12, pay-TV operators that acquired any exclusive content would have to share it with their rivals. Besides trying to prevent bruising bidding wars, the authorities hope to put a stop to the existing practice of hogging popular programmes in an attempt to outdo the competition.

‘We (Singapore) seem to be the odd one out (by introducing cross-carriage) but the truth is that in every developed market from the US to Hong Kong, content is usually sold to more than one retailer,’ said Mr Yap.

‘More than 90 (pay-TV) channels (in Singapore) are available exclusively at one place. No other country in the world has that,’ he said.

Value in private equity? Truth v reality

In Private Equity on 25/06/2010 at 5:26 am

Private equity firms, where corporate takeovers are planned and plotted, today sit atop an estimated $500 billion. But the deal makers are desperate to find deals worth doing, and the clock is ticking.

Supposedly, Corporate buyout specialists generally raise money from big investors and then buy undervalued or underappreciated companies. Whatever the truth of the last sentence, To maximize investment returns, they typically leverage their cash with loans from banks or bond investors.

Private equity funds generally tie up investors’ money for 10 years. But they typically must invest all the money within the first three to five years of the funds’ life. For giant buyout funds raised in 2006 and 2007, at the height of the bubble, time is short. They must invest their money soon or return it to clients — presumably along with some of the management fees the firms have already collected. Some of the industry’s biggest players, like David M. Rubenstein of the Carlyle Group, Henry Kravis of Kohlberg Kravis Roberts and David Bonderman of TPG, have more than $10 billion apiece in uncommitted capital — what is known as “dry powder” — according to Preqin, an industry research firm.

Some buyout firms are asking their clients for more time to search for companies to buy. Many more are rushing to invest their cash as quickly as possible, whatever the price.

Many in the industry are getting caught in bidding wars. Firms are assigning surprisingly high valuations to companies they are acquiring, even though the lofty prices will in all likelihood reduce profits for their investors. A big drop in returns would be particularly vexing for pension funds, which are counting on private equity, hedge funds and other so-called alternative investments to help them meet their mounting liabilities.

Full story from NYT.

Why MM and Sands differ on rampup?

In Casinos, Economy on 24/06/2010 at 7:48 am

Sands disagrees with MM’s view that it will take 3-5 years for its casino to get to full speed.

It is aiming for 150,000 visitors a day, and soon. And to beat analysts expectations. {Last sentence is an update on 24 June evening]

The message Marina Sands seems to be sending: it is for locals.

Unless I make very unreasonable assumptions (and assign high probabilities to otherwise improbable events) about immigration and the length of stay of tourists, I do not see how the majority of the 150,00 visitors to Marino Sands are ever going to be tourists.

Based on the 2008 tourist numbers (2009 was a bad year) there were only 10 million odd tourists a year and S’pore is aiming for 17m a yr visitors by 2015. Let me know if you can make the majority of 150,000 visitors tourists or FTs.

(If I assume that 120,000 of these visitors are tourists that stay a week here and visit the complex every day, this means Sands alone will bring in 6.2m visitors a year to S’pore.)

Perhaps that is why MM’s projections defer so much from Sands. He expects less local traffic than Sands.

Oh and if Sands says high rollers are coming, why the aim of 150,000 visitors a day? 150,000 sounds like the grind market, not high rollers.

Update on 16 July 2010. But Thomas Arasi, president and chief executive officer of Marina Bay Sands, gave a more conservative forecast. “We expect to attract over 70,000 visits a day and 18 million visitors a year after we are fully open,” he said.

For now, the casino alone attracts some 25,000 visitors daily and close to 500,000 visitors this month, one-third of which are Singaporeans, with two-thirds being foreigners. However, as LVS chief operating officer Michael Leven said, that is “a false number.”
“As we develop our business I think we’ll have around 20 percent of locals and 80 percent of foreigners,” he forecasted.
LVS officials expected the majority of visitors to come from three market segments, but they are also aiming at countries outside Asia.
The primary concentric-circle comprises Singapore, Malaysia and Indonesia with the second being Vietnam, Thailand, Cambodia and Laos. Finally, the third segment comprises Hong Kong, Australia, New Zealand, China, Korea, Japan, India and the Philippines. However, some Middle East and European countries are also potential markets for LVS resort in Singapore. “There is more than enough business for us to succeed here,” Adelson stated.

Another reason why MM Lee loves FTs?

In Economy on 24/06/2010 at 7:20 am

And this time it is good reason.

In an article on Japan, FT’s Lex pointed out that What Japan needs is new and dependable sources of funding, of which there was scant evidence in the budget plan on Tuesday. Pets, which outnumber Japanese children by 6m, don’t pay taxes. Immigrants do.

With true-blue S’poreans refusing to breed for S’pore because they think “Breeding for S’pore” is breeding  slaves for the PAP, there has to be new supply of tax payers: what better than FTs?

Did BP outsmart Obama?

In Uncategorized on 24/06/2010 at 7:09 am

The British were once known as “Perfidious Albion”. They had a reputation of being devious and tracherous

Could this still be true today? (Note that many Iranians and Arabs today still believe that anything bad that happens today, is the result of British trickery: talk about soft power.)

It may be anything but a “shakedown.”

The more likely truth is that the White House may have actually helped BP by obtaining the oil company’s agreement to a $20 billion damage claims fund for the enormous oil spill in the Gulf of Mexico. The final details of this fund are still being negotiated by BP and the White House. But if BP negotiates well, this fund may permit the company to better manage a Herculean litigation process and reduce its ultimate costs.

From initial reports, the only notable concessions on BP’s part were twofold. First, BP explicitly confirmed to the White House that it would not argue to apply the $75 million liability cap under the Oil Production Recovery Act of 1990. Second, BP agreed to pay $100 million to compensate rig workers who are unemployed by President Obama’s six-month moratorium on drilling in the gulf.

After a more informed look, though, neither of these appears to be a significant concession. As Prof. Noah Hall writes at the Great Lakes Water Blog, “The $75 million cap does not apply if the companies have violated any federal safety or operational regulation (and it’s very likely that at least one minor safety violation will be shown).” In addition, the cap does not apply to any claims brought under state law. BP is simply acknowledging the legal reality with its admission that this cap will not apply and its liability will be greater.

Second, as The Wall Street Journal reported Monday, BP bargained to limit its voluntary compensation of the oil rig workers to $100 million after the White House requested fuller compensation. This is a relatively small amount for BP. Furthermore, BP can also try to offset this amount against any criminal and civil fines that are ultimately imposed upon it or argue that its generosity should be taken into account in setting any such penalty. (Peter J. Henning discussed these penalties at White Collar Watch.)

Of course, there is still the matter of $20 billion in payments to the fund. Even in this case, BP may come out a winner.

BP has managed to spread the payments over three and a half years. This allows the company to manage its cash flow over the period and avoid a significant shock to its operations. BP also states that “[t]he fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs.” This effectively covers all claims, which appear to be rapidly climbing into the billions of dollars. BP has thus merely moved money to pay claims that it would have to pay anyway, and the company will no doubt negotiate to allow it to use these funds quite broadly.

BP will also receive back any money that goes unpaid — assuming there is any money left. (The company has acknowledged that $20 billion is not a cap on claims.)

NYT Article.

High rollers take bus to Sentosa casino?

In Casinos, Economy on 23/06/2010 at 5:49 am

Genting S’pore’s share price has been strong presumably because of expected high takings at its Sentosa casino.

Well if takings are high, it ain’t from high-rollers.

Sunday Times carried an article saying that at Resorts World Sentosa there is a bus terminus for buses from various points in West Malaysia and back, and that the buses are used by Malaysian punters visting the Sentosa casino

Err these high rollers that Sentosa IR and S’pore government want? Looks more like the M’sian equivalent of the grind market gamblers that once travelled from the HDB heartlands to Genting Highlands. Oh and BTW, Genting use budget airline AirAsia to bring in “high rollers”, unlike Marina Sands that has its own jet based in Senai because Changi is too expensive.

Can you imagine high rollers taking the bus from Senai to the city? It’s a two hr ride at least.

PM make yrself, yr government and party popular with the “little” people: Lift the charges that make it expensive for the locals to gamble at the casinos. As to the problem gamblers that seem to the issue, treat them the way the government treats the homeless, destitute and unemployed: “It’s yr fault, you are that way. Be responsible.”

And admit to yrself that the IRs are being kept afloat by the” little” people of S’pore and Malaya, not the high rollers and money-launders.

You can declare it a success that the fact that high rollers and money launders are giving S’pore a miss:  the rules here on junket tours, money laundering and non-privacy are the toughest in the world.

Update 25 June

Why Marina Sands must be targeting locals and not high rollers and tourists — or why the numbers don’t add up http://atans1.wordpress.com/2010/06/24/why-mms-and-sands-views-on-casino-differ/

Yuan flexibility: winners & losers

In Economy on 22/06/2010 at 7:29 am

S’pore is a big winner because the world trade is the biggest beneficiary of greater yuan flexibility (better word than “revaluation”).

One loser — Overseas consumers of Chinese will likely pay higher prices.

Not certain if commodity producers will be winners or losers.

More

Update

Analysts at Credit Suisse reckon the renminbi is 50 per cent undervalued, while Chinese inflation recently hit a 19-month high. So, even if external pressure wanes as a result of its latest baby steps, the rationale for a bigger move is building.

With about 70 per cent of China’s foreign exchange reserves in dollars, mostly in Treasuries, maintaining the peg has helped keep the cost of US borrowing low in the face of record issuance. A quicker revaluation would act as a stealth monetary tightening not only in China but also the US. And, although isolated export industries in the US might benefit, the net effect on US equities would be negative if borrowing costs rise materially. Even commodities might suffer as lower Chinese fixed investment and damped US growth outweigh Chinese consumers’ enhanced buying power. Cheering markets should be careful what they wish for.

SGX v HKSx cont’d

In Uncategorized on 22/06/2010 at 6:26 am

BT reported last week that Hong Kong Exchanges & Clearing Ltd has met Mongolian mining companies seeking to list in the city, said chief marketing officer Lawrence Fok, who is in the North Asian country for a forum on corporate capital raising.

HKSx beat SGX to the Ruskies (SGX has only a few mths ago started marketing to the Russians after the mega float on HKSx in Jan. True the IPO was a dud but still a more than US$1bn IPO is nothing to sneer at. ) Now HKSx beating SGX to the Mongols.

Come on SGX, “me-too” not a viable strategy.

SMRT: So who will pay for higher security?

In Uncategorized on 21/06/2010 at 8:08 am

Now that the government has made clear that SMRT (and other cos including Delgro) must beef security at their own expense, not taxpayer expense, will we the commuting public have to play our “part” by paying more so that profit levels at SMRT can be maintained?

(Update at 6.30 pm: what with SMRT up 1.9% and Comfort Delgro up 4%, we can assume that investors expect us commuters to pay for security, not them.  Like other markets, market here was strong overall with STI up 52 points because of the Yuan flexibility announcement.)

Over to you SMRT.

BTW SMRT sack the PR teams (inhse and external) that told you to blame the public. PUB’s  PR team is a lot more kilat.

You can use the money to employ FT guards. Or deploy the China babe PRs executives to patrol the fence in their high-heels, and mini-skirts.

BTW trumpets pls http://atans1.wordpress.com/2010/06/14/delgro-smrt-profits-will-drop/

Why MM loves FTs?

In Uncategorized on 21/06/2010 at 5:23 am

Or why FTs give value for money.

This Chinese man works 12 hrs a six days a week. Imagine if S’pore stuffs its factories full of people like him. And has FT prostitutes that service casino clients 12 hrs a day,6 days a week.

Property prices will fly.

DBS: There be value?

In Banks on 21/06/2010 at 5:08 am

I’m putting DBS on my “Value?” watch”list. I’ve never ever owned DBS preferring HSBC and UOB (this via Haw Par).

I never regretted not owning DBS esp since 1998 when the CEO post became an FT only post and FTs  dominated senior mgt.

Fat gd it did DBS’s shareholders including Temasek. According to the Boston Consulting Group, DBS has had a total shareholder return between 2005 and 2009 at negative 4.6%. OCBC had 2.4% relative total shareholder return and UOB 0.4%. OCBC has an FT CEO, but the rest of senior mgt is largely “home-grown”. UOB is on its third CEO from the Wee family (where banking is in the blood?), but the rest of top mgt is also largely home-grown.

But based on the relatively new home-grown chairman’s comments reported last week, DBS could be a different animal, if the FTs are willing and can execute his vision, this and this.

But first, let’s add to the FT balls-up list. I’m not the only one amazed to read in BT  that only now is DBS is rethinking the way it does wholesale banking in the Middle East, Europe and the United States, and is planning to focus more on supporting the overseas ventures of Asian businesses and rich clients, instead of broad corporate lending.

The bank will still lend to local firms in those markets, but will seek out those looking to invest in Asia or set up operations here.

Hell’s bells, I’m surprised that DBS is only thinking about this juz now. OCBC and UOB have been doing this from the day they set up overseas branches in faraway places.  They never did corporate banking but focused on trade financing. So did OUB.

A major test of execution is what happens to the head of Consumer Banking, “Wealth Terminator” Rajan. He signed-off on the HN5 Notes and targeting their sale to fixed deposit customers.

But the appointment of the last CEO of POSBank is a gd sign, as is the chairman’s desire that the next CEO be “home -grown”.

Hopefully DBS will no longer be a place where “FTs rule OK”, but a meritocracy,that gives the same opportunities to home-grown staff as to FTs.

Value for investors: retirement age of 95 for workers

In Uncategorized on 20/06/2010 at 12:26 pm

Did you know that in the developed world, the retirement age should be 95?

I kid you not. It is based on the fact that the original retirement age of 70 in Germany set in the late 19th century was more than the life expectancy of the then average German worker. Even when it was lowered to 65 in the early 20th century, this was a few years more than the average life expectancy of the German worker.

So to keep up with the changes in life expectancy, we (S’pore is in developed world) should be 95 before we get our CPF money.

Just a matter of time when  yr CPF funds will only be available at 95, at least the portion that the employer funds. The employee’s side is forced savings, so shld be available earlier.

When the government changes the age of withdrawal, remember you first read it here.

Meanwhile remember how generous the government is: allowing you to withdraw at 55 and from 62 onwards.

Innovation: S’pore versus US style

In Uncategorized on 20/06/2010 at 5:58 am

Or soft skills versus hardware. Two stories from NYT

US style

In a class full of aspiring engineers, the big bad wolf had to do more than just huff and puff to blow down the three little pigs’ house.

To start, he needed to get past a voice-activated security gate, find a hidden door and negotiate a few other traps in a house that a pair of kindergartners here imagined for the pigs — and then pieced together from index cards, paper cups, wood sticks and pipe cleaners.

“Excellent engineering,” their teacher, Mary Morrow, told them one day early this month.

All 300 students at Clara E. Coleman Elementary School are learning the A B C’s of engineering this year, even those who cannot yet spell e-n-g-i-n-e-e-r-i-n-g. The high-performing Glen Rock school district, about 22 miles northwest of Manhattan, now teaches 10 to 15 hours of engineering each year to every student in kindergarten through fifth grade, as part of a $100,000 redesign of the science curriculum.

Spurred by growing concerns that American students lack the skills to compete in a global economy, school districts nationwide are packing engineering lessons into already crowded schedules for even the youngest students, giving priority to a subject that was once left to after-school robotics clubs and summer camps, or else waited until college.

Supporters say that engineering reinforces math and science skills, promotes critical thinking and creativity, and teaches students not to be afraid of taking intellectual risks. Full story.

S’pore style

This island city-state, thanks to its small size and a big public investment, could soon be the first country blanketed with a fiber optic infrastructure so fast that it would enable the contents of a DVD to be downloaded in only a few seconds.

BTW, consumers get screwed here vis-a-vis those in HK (and not juz in World Cup and EPL footie):

But analysts and market observers doubt whether new competition will really develop within the Singapore context, and whether prices of bandwidth for consumers will go down significantly for consumers as a result. Consumers now pay about 40 Singapore dollars per month for broadband access of six megabits per second, which is relatively high compared with Hong Kong, where some consumers pay about 200 Hong Kong dollars, or about 36 Singapore dollars, a month for service of one gigabit per second.

How a gd analyst (an MU fan) works

In Uncategorized on 19/06/2010 at 5:27 am

Or the reason why no new stars are required at MU?

Andy Green (an analyst in the City of London)  is the Manchester United supporter who first uncovered the extent of the Glazers’ debts. They are £1.1bn in debt – £400m more than previously known – after borrowing extensively against their shopping mall business, he believes to provide equity for their MU bid. It’s like using an overdraft or credit card to pay for the equity portion of yr mortgage.

First Allied is a private business and its accounts are not publicly available. But Mr Green discovered that the Glazers’ shopping mall mortgages had been bundled with other loans as Commercial Mortgage Backed Securities.

Those bundles are publicly traded and therefore require the Glazers to provide detailed information on all the mortgages, which are then publicly available in the US.

Mr Green found mortgages – confirmed by the BBC – on 63 of 64 First Allied shopping centres, totalling £388m ($570m).

Most of those were taken out with Lehman Brothers before the US investment banking giant went bankrupt, triggering the global banking crisis in 2008.

‘Watch list’

While Lehmans collapsed, the Glazers’ mortgage debt lived on and many of those shopping centres are not generating enough income to keep up with interest payments.

With falling commercial property values, many are also now in negative equity.

Banks have put 28 of the shopping centres on a watch list, meaning they are worried about the loans.

Four shopping centres – one each in Ohio, New Mexico, Texas and Georgia – have already gone bankrupt.

When they bought Manchester United in 2005, the Glazer family borrowed £500m and paid the remaining £272 million in cash.

Mr Green found that the Glazers had remortgaged 25 of their shopping centres in the six months before the takeover.

He believes the family borrowed against their US properties to pay for United: “At the time when they had to present a huge amount of cash over here in the UK they borrowed a huge amount of extra money in the US and publicly they didn’t buy anything else that year.”

A spokesman for the family did not respond to questions about the mortgages taken out by First Allied.

But with properties now worth about £380m ($550m) but mortgages valued at £395m ($570m), the shopping mall company now appears to be worth next to nothing.

‘Commercial expertise’

That financial picture has analyst Mr Green questioning how the Glazers will service their £1.1bn debt.

BBC Online article

GIC: US will not prosecute UBS

In Banks, GIC on 18/06/2010 at 6:52 am

Switzerland yesterday  ended months of uncertainty after the country’s parliament finally approved legislation allowing the transfer of 4,450 names of American clients suspected of evading taxes to be passed to the US authorities.

The decision followed days of parliamentary squabbles  that threatened to delay the treaty.

Switzerland promised to deliver the names by August 19. A failure  could have prompted US legal action against UBS, destroying shareholder value.

DBS: Why is it “reviving” POSB?

In Banks on 18/06/2010 at 6:20 am

Apparently it is fashionable in the West to return to  “simple” banking.

What can be more simple than PosBank’s model?

Hence the return of ex-CEO of PosBank CEO (a true blue S’porean) as adviser to FT-managed (badly) DBS. some FT fiascos.

Update

Juz read what the new chairman (another true blue S’porean) has said abt the next CEO being a local. The bad news is that it may take another 10 years. Let’s hope the FT countrymen don’t gang up and get rid of him. DBS has been one mother cow for them.

GIC/UBS: It’s going to be a long hot summer

In Banks, GIC on 17/06/2010 at 7:45 am

The Swiss upper house on Wednesday rejected the idea of a popular referendum to decide on the UBS client data deal, putting it at loggerheads with the lower chamber and casting doubt on how Bern will keep its promises to Washington.

NYT piece.

Reminder: So long as the deal is not approved, the danger is that the US may decide to prosecute UBS  for helping its US clients evade taxes. This could destroy UBS .

As MM is among Time’s 100 world’s influential people and ST is forever playing up his influence with US policy makers and as he is chairman of GIC, shouldn’t he be calling the US president? The US has an interest in S’pore’s continued stability under the present government.

SPACs can go wrong

In Uncategorized on 17/06/2010 at 6:18 am

SGX wants SPACS http://atans1.wordpress.com/2010/04/08/endangered-in-us-coming-to-sgx/

The quality controls for these cash-box floats is the quality of the promoter (usually in other countries, dealmakers with a reputation for making money for investors); the financial sponsor (usually investment banks with sterling reputations)  and the high % of shareholder approval. If 40% object to a deal, the deal is effectively dead in the US. Something SGX is imitating.

But things can go wrong.

In the US one SPAC that went badly wrong is the one that bot GLG Partners in 2007. The UK-based private equity got a US listing via a SPAC and a stock market valuation of US$3.4bn.

In May 2010, hedge fund manager Man Group agreed to buy GLG p for just US$1.6bn, and was criticised for paying 20x 2009 earnings.

Another problem is when shareholders have to cough up for a rights issue after the SPAC share price falls. In the  UK, an SPAC was launched to buy up insurance companies. It was listed at 100p a share but several deals later the  share price is 62p and the SPAC is buying another insurer. Shareholders cannot complain as that was the purpose of  SPAC.

Back to SGX, following the debacle of Pru’s secondary listing here, low volumes and (not SGX’s fault, cancellation of rights issue and change of Pru’s Asian strategy from “bet the ranch” to returning to its successful “growing organically” , SGX cannot afford any more balls-up.

This at time when S-Chips (remember this SGX initiative?) are imploding left right and centre: Sino-Environment is in judicial mgt,  SGX has also reprimanded investment holding company E3 Holdings and six of its directors for breaches of listing rules and failures of corporate governance*, and reported the directors to MAS>.

*SGX said E3 had failed to announce the disposal of its stake in Song Yuan Petrochemical to an interested person and for failing to seek shareholders’ approval for selling the stake. E3 had also not disclosed material agreement and accurate information on its investments in China.

Temasek: Vindication of its big bet on shale gas?

In Energy, Temasek on 16/06/2010 at 5:23 am

We’ve analysed that Temasek ignored MM’s warning against extractive industries (OK “mining” to be precise) when it went into shale gas http://atans1.wordpress.com/2010/05/21/temasek-ignoring-mm-iii/

The news sometime back that Shell is paying US$4.7bn for a shale gas firm confirms that Temasek and other SWFs are correct. Err except that the seller, private equity firm KKR, is reported to have paid US$350m juz 11 mths ago for a “significant minority interest”.  KKR invested via debt convertible into equity.

So jury is out on whether Shell, Temasek, etc. are bubble blowers and buyers.

One wishes Temasek were ahead of the curve (StanChart, Indonesian telcos, Asian banks) instead of being in the middle (hopefully — like the Chinese banks*) or at the back (Merrill Lynch, Barclays, ABC Learning, Shin: anything else?)

There are reports that Temasek will be a keystone investor in the AgriBank of China. If true this will be the third major investment in a Chinese bank. The other two have been good investments.

GIC: UBS-US tax deal approved (somewhat*)

In Banks, GIC on 15/06/2010 at 5:13 pm

GIC can relax. Much earlier than expected the Swiss parly approved the deal.

If it had not been approved, UBS shareholders could have said bye-bye to their money. The US was threatening to indict UBS for assisting in the evasion of US taxes.

Update 16 June

Opps spoke too soon.There is a proposal for a national referendum on the accord, leaving its ultimate fate in doubt.

Will be a long hot summer as GIC (and we S’poreans) wait to see whether the US prosecutes UBS.

*And title was updated too to reflect continued uncertainty.

DBS FTs: balls-up on top of cock-up?

In Banks, Corporate governance, Temasek on 15/06/2010 at 5:53 am

Islamic finance is set to play a bigger and more central role in global finance. This is because of greater awareness and adoption in more financial centres.

Trade and Industry Minister Lim Hng Kiang said this at the launch of the inaugural World Islamic Banking Conference Asia Summit in Singapore on Monday.

So why is DBS cutting back on the activities of its Islamic banking activities?

http://atans1.wordpress.com/2010/05/26/dbs-fts-goofed-again/

Temasek should sort out the “FT is best policy” that dominates the thinking at DBS. It is on its 6th FT CEO in a row. It’s costing Temasek (and ultimately us) shareholder value.

Remember it was an FT that overpaid for Dao Heng Bank, and messed up the takeover of OUB.  And the loss in market share in retail banking, so much so that the ex-CEO of PosBank has been brought back as adviser.

Other cock ups

http://atans1.wordpress.com/2010/05/14/dbs-fts-balls-up-contd/

Delgro/ SMRT: Profits will drop?

In Uncategorized on 14/06/2010 at 9:31 am

Mediacorp did everyone a favour by pointing out the security issues at bus interchanges. We have grown so use to these interchanges that no-one tot thru the security consequences of these post 911.

Imagine a friend of Mat Salleh planting a bomb under a bus?

Something has to be done to secure the interchanges but it will cost money as they are open areas.

Doubtless we the public will have do our “part” by paying higher fares.

But are they interested?

In Corporate governance on 14/06/2010 at 5:34 am

Some time back, BT pontificated:

The aim must be to gradually equip small investors with the skills needed to make more informed decisions and thus minimise losses and complaints when they occur. To do this, a fundamental mindset change is needed – dismantling contra and improving disclosure are only the first steps.

Changes have to be made with a mind to what small investors really need to be told instead of what the financial community wants to tell them.

My problem with this is that it lays the responsibility on anyone but the retail investor.  If he wants to punt mindless, let him accept the consequences.  Why spend money and effort trying to educate him when he isn’t interested?

A fool and his money is soon parted.

As the chairman of SGX, Pillay (he was one FT that contributed to S’pore — at SIA and as one of the contributors to and implementers of Dr Goh Keng Swee’s policies) said, retail investors have to take an interest in corporate governance. Ironically a report on his speech appeared in BT on the same page as the above rubbish.

RW Sentosa yet to call in the bomohs or shamans

In Casinos on 13/06/2010 at 9:45 am

Some moons ago, I posted this when RW World ran into a spell of bad — Tom Jones falling sick at concert,and attraction (still) not working http://atans1.wordpress.com/2010/03/27/genting-spore-help-needed/ suggesting it called in the bomohs or Red Indian shamans.

Obviously my advice was ignored as there is a problem with another attraction.

Well my tot that if the bad luck continues, someone may break the bank at RW Sentosa, could come true.

EPL: Eat yr heart out NBA

In Uncategorized on 13/06/2010 at 7:04 am

In the early 1990s, when Baff Akoto was sent away from his London home to attend school in Ghana, he found a country where young boys wanted to play basketball in the NBA.

Now, more than 15 years later, the Premier League is broadcast across Africa and the continent’s young boys dream of emulating the success of players like Didier Drogba and Michael Essien.

Full BBC Online story.

First Africa, then China. EPL rules OK. Unless Glazers, Hicks and friends are subversives? Destroying EPL clubs via debts to ensure NBA recaptures Africa and rules China.

GIC: Shld have read this before buying BP

In Energy, GIC on 12/06/2010 at 9:16 am

GIC may have lost as much as S$760 million dollars in its investment in British oil giant BP, according to data provided by Bloomberg. Story from Corporate Observer.

Obviously GIC is not aware of this analysis.

Once a company gets very large, its growth rate inevitably slows. Its success will have attracted admirers, inflating its valuation. And then there is “tall poppy” syndrome, the tendency for the leading company in an industry (Goldman Sachs, Microsoft) to be the subject of political and regulatory attack.

Rob Arnott of Research Affliiates has quantified this process. He looked at the Wall Street sectors between 1952 and 2009 and saw how the leading stock in the sector performed over subsequent one, three, five and 10 year periods. On average, the tall poppies underperfomed by 3-4 percentage points a year. Getting exposure to a sector by choosing its largest component is thus the quick route to underperformance. Interestingly, Mr Arnott found the performance was worse when government spending is rising; suggesting that active govcerment means more regulation which means bad news for the big stocks.

Given that sector leaders comprise around one-quarter of the market value of the Russell 1000, that means investors could outperform by almost a percentage point a year by owning the entire sector minus its leader.

MM is vindicated. A few yrs back, he said he doesn’t understand mining, hence GIC did not go into mining projects. What is oil exploration except mining by another name? Temasek better watch out http://atans1.wordpress.com/2010/05/21/temasek-ignoring-mm-iii/

Correlation is not cause

In Uncategorized on 12/06/2010 at 5:37 am

An elementary statistical misunderstanding—confusing a correlation with a cause.

Update

Great article on above.

World Cup’s top beneficiary?

In Uncategorized on 11/06/2010 at 5:29 am

According to the FT’s authoritative Lex column, South African listed Bidvest could be the commercial winner of the World Cup, ahead of cos like Coca Cola and Nike.

Bidvest, a company set to benefit directly but whose logo is not splashed all over TV screens. The behind-the-scenes logistics group, already well established in Europe and the Far East, provides everything from airport handling to food services. At 12 times prospective earnings, the group trades at a 16 per cent discount to global peers. It could prove to be this tournament’s dark horse.

SMRT: What has “public’s duty” to do with the price of eggs?

In Uncategorized on 10/06/2010 at 7:33 am

Never bot SMRT shares, even though this would be a gd hedge against rising public fare hikes, whether reasonable or not. As a value investor, I use public tpt, supplemented by taxi. But then I am not a slave, tied to office hours. I can use the system at-non peak hrs.

I always tot I was irrational for not buying the shares.But I realise I’m not. It seems  I “knew” that mgt was incompetent.

No, not over the security breach and vandalism. The alleged offenders are white, educated FTs. Juz the kind of creative, innovative people that the government wants, And I don’t mind having. And the vandalism was artistic.

These people spot systems failure that they can exploit. So let’s not be too hard on them or the people or systems that get shown up.

If they were Pakistanis from Taliban-land, I would be worried: after the carnage.

No: mgt was incompetently firstly  refusing to apologise. It never did It only “regretted”. Only some fool of an ST sub-editor could say that it was an “apology”.

To make things worse for itself (exposing further its stupdity), mgt tried to lay part of the blame on the public.

It shows how bad SMRT mgt is in coping with the unexpected.

What has public apathy to do with the breach of the security at the depot? And not reporting the “vandalism”. I mean if the train passes the muster of the staff before it goes out, and the public is not inconvenienced, why should the public complain abt some “artistic” designs.

Prayer: Seems a viable investment strategy

In Uncategorized on 10/06/2010 at 5:29 am

If New Creation Church can own Rock Productions (partnering CapitaLand Malls to develop a $1 billion civic, cultural and entertainment complex in Buona Vista) and Marine Cove, a  food and lifestyle cluster in East Coast Park;

And if pastors Kong Hee and J Prince, can provide their pastoral services for free because of their business activities (err how come Christian government ministers can’t offer this), then there could be something to prayer as the ultimate value investment strategy.

Maybe the congregation at this church are on to a gd thing. They are value investors

But maybe not. Somewhere in the New Testament Jesus is quoted as saying something along the lines of  “Many come but few are chosen”. Some may be Kong Hee and Prince are the “Elect of God” or outliers.

GIC: UBS remains in limbo

In GIC on 09/06/2010 at 7:26 am

A major tax agreement between the US and Switzerland has been rejected by the Swiss parliament.

The deal would have paved the way for Swiss banking giant UBS to disclose account details to US tax authorities.

The late vote by Switzerland’s lower house of parliament is unlikely to kill off the deal, but may mean weeks of delay.

In the mean time, UBS mgt will have to limp on, with the threat of US legal action that could destroy the bank continuing.  It will be a long hot summer for both mgt and GIC.

Are the IRs a flop?

In Casinos on 08/06/2010 at 6:03 am

[Updated on 7 September 2010 -- see last para]

Casinos would be allowed in Singapore only “over my dead body,” Lee Kuan Yew, the country’s founder and a fierce opponent of gambling, once said according to the opening paragraph of this NYT article on the casinos here

Well he allowed them in when still alive but will they be more than the living dead when it comes to attracting high rollers?

Maybe not

While hoping to draw free-spending Chinese, Indonesians and other foreigners to the establishments, the government has imposed strict reporting regulations that make it difficult for the casinos to draw high rollers, who typically make up a disproportionate share of casino revenues.

Casino revenues, experts say, could also be crimped by Singapore’s stringent restrictions.

In Asia, especially in Macao, high rollers are usually shuffled from one casino to another by tour operators who guarantee their privacy. But the government here requires tour operators to disclose gamblers’ names and passport and tax identification numbers. The regulations have effectively forced the casinos to seek high rollers on their own by inviting big-betting guests from their casinos outside Singapore.

And its not even attracting the tourists

So far, the news media here have reported that locals have accounted for a greater share of gamblers than had been expected; Sands, which opened in late April, attracted bad press when participants in the first conference held there complained of power failures and other problems. Whether the resorts eventually attract the sought-after buzz and foreigners, especially when they are fully running later this year, remains to be seen.

“If I were to hazard a guess, I think that those who were banking on the holistic concept of integrated resorts to bring an increased and diverse number of tourists may be disappointed,” Derek da Cunha, the author of “Singapore Places Its Bets,” a book on the casinos’ impact on Singapore, said in an e-mail message. “Insofar as tourism is concerned, what we largely have now is casino tourism.”

So what hope the  casinos would generate the kind of “buzz” found in London, Paris and New York.

“Their development is also part of our bigger plan to reinvent our city-state and turn it into an exciting, livable global city,” the Singapore Tourism Board said in a written reply to a question about the resorts.

The only gd thing

Through their sheer size and proximity to the city center, the casinos have already transformed Singapore’s landscape.

And if you were a friend of Dr Chee or his SDP, or TOC Choo another sign of PAP failure.

The truth is more wishy-washy.  It is too early to tell … whether they will succeed, as Singapore hopes, in transforming its image, culture and mind-set.

But the signs don’t look good.

Well based on Gentings performance as reflected in its share price, the casinos are making money. But the fiasco over the “tapping” of locals, shows that the aim to attracting foreigners and remaking S’pore is still “an aspiration” (to quote MM from another context).

Flight to safety: What to leh?

In Uncategorized on 08/06/2010 at 5:31 am

US treasuries are almost at zero yield because of the flight to safety — 2008 redux ? So time to go into equities or liquidate equities and go into bonds.

It is also sobering that a vast majority of economists and market strategists were forecasting a different chain of events. Treasury yields were universally expected to be rising, not falling, as the United States recovered from a deep recession. The domestic economy is, in fact, growing, and corporate profits have been rising, but the European crisis has overturned many expectations.

investment-grade bonds are very richly priced in comparison with stocks, several analysts said. Mr. Knapp says he expects that the S.& P. 500 will rise to 1,210 by the end of the year, or 13.6 percent from its current 1,064.88, and that the chances for strong longer-term stock returns are favorable. (The outlook for Treasuries is not positive, he said.)

… said that there is a very “strong correlation” between low Treasury yields and subsequent strong economic growth. And there is a weaker but still significant connection between low yields and high stock returns.

In short, at current prices, it would appear that there is some reason for long-term optimism for stock investors.

For the short run, alas, more volatility is probably in order. “The problems in Europe, for one, aren’t going away any time soon,” Mr. Knapp said.

Indonesia: Value investor bullish

In Emerging markets, Indonesia on 07/06/2010 at 5:17 am

Obama did it again. The  “Canceller-in-chief”,  has again postponed  his trip to Indonesia.  If I were an Ondonesian, I’d be upset. Waz so difficult abt vistiing the Gulf, do a tv special, explain that you have already postponed one trip to Indonesia,  http://atans1.wordpress.com/2010/03/20/our-neighbour-the-new-brazil/, and that a second postponement is an insult to the the new Brazil?

And Indonesia is impt — Mark Mobius says so.

Indonesia has a “good” outlook due to its resources and large population, putting the nation in a favorable position to attract investment, Templeton Asset Management Ltd.’s Mark Mobius said.

“Overall we have a positive take on investment opportunities there,” Mobius, who oversees about $34 billion in emerging markets as Templeton Asset Management’s Singapore-based executive chairman, wrote in his blog dated yesterday. “Indonesia has a young, growing population and Jakarta, the capital of Indonesia, is expected to be the largest city in the world within two decades.”

Full article from Bloomberg.

Footie: Best Youth Academy in EPL

In Uncategorized on 06/06/2010 at 5:18 am

West Ham’s youth academy has produced seven EPL stars. Find out who they are, and why it’s the best. Not helped prevent its relegation in the past and this season’s 16th place.

DBS: Finally an admission that FTs goofed?

In Banks, Uncategorized on 05/06/2010 at 11:19 am

In an implicit admission that the FTs have messed up POSB very badly,DBS has appointed Bertie Cheng, the former CEO of POSB, as an adviser on POSB.

True-blue S’poreans; POSB customers; and investors can only cheer the move! And ask, “Why not earlier?”

Bertie Cheng was the man who via POSB brought basic banking services to the majority of S’poreans with a blend of technology and personal service.

Update

Extract from BT article

(If POSB so damned gd under under “Blow up Treasured Clients” Rajan, why the recent initiatives mentioned below and Bertie Cheng’s return? A spin too far?

Mr Cheng, who during his tenure as CEO of POSBank had helped to craft its identity as a people’s bank, was appointed as adviser on Tuesday.

Said Piyush Gupta, CEO of DBS Group: ‘I am confident that Bertie will help POSB to build on its heritage as the ‘People’s Bank’ and further entrench itself in the hearts and minds of generations of Singaporeans.’

‘Cheng, the iconic leader of the former statutory board POSBank, was associated with the bank for over 31 years, with the last 23 years as its CEO before he retired in 1997,’ said POSB.

Mr Cheng said he hopes ‘to provide insights on how the bank can build on its past to serve Singaporeans of today, and also tomorrow’.

In recent months, DBS Group has acted to fix its consumer banking business, particularly the POSB network, which – plagued by long queues at bank branches and ATMs – has lost market share to rivals that chipped away at its customer base.

In May, POSB announced that it would expand its distribution network as part of its move to reach out to customers.

It also announced in April two initiatives to make banking more accessible to Singaporeans on the move – increasing the number of self-service machines available and launching a mobile-phone banking service.

SWFs: S’pore v Korea

In GIC, Temasek on 05/06/2010 at 5:16 am

Much more than Korea certainly.  The minister of finance said that the success of S’pore is due to S’poreans’ efforts.  More to the point the $ in our reserves are due to the recycled savings of Singaporeans http://atans1.wordpress.com/2009/12/26/where-gic-and-temasek-gets-their/

“Korea’s total foreign exchange reserves are about $280bn so it is only putting about 10 per cent into KIC*,” says Mr Kalb**. “Compare that with Singapore where the central bank keeps $150bn in liquid reserves and yet [of the country’s two SWFs] GIC is tasked with managing $250bn and Temasek $100bn.” $ = US$

*Korea Investment Corporation:  (Korea’s SWF)

** KIC’s CIO

Our SWFs: Another question our MPs should be asking

In GIC, Temasek on 04/06/2010 at 9:56 am

Some state pension plans have not adjusted their risk premium either since the financial crisis. They expect their equity portfolios to earn them more than 8% per year, a risk premium a bit larger than 5%. The state plans also have no incentive to lower their equity premium. If they do, their projected assets will fall and liabilities will rise. This means their funding ratios will plummet and they will have to start making larger contributions to the plan, which would likely mean higher taxes.

(Taken from link in previous post)

Our MPs should be asking if Temasek’s and GIC have adjusted their risk premiums. Remember the constitution has been changed to allow more of the returns from reserves to be used. Somehow I feel the people-in-blue will be the men-in -white clones on this issue. And our NMPs will not take up the slack. Miss Siew Kum Hong. Feminists and GLBT, you people shouldn’t have made him yr poster boy.   As for PAP MPs, what would you do to a dog that bites the hand that feed him or her unprovoked? Yes shoot the dog.

Will shares always outperform bonds?

In Uncategorized on 04/06/2010 at 6:17 am

As a value, contrarian or indeed any type of serious  investor or speculator, always ask questions.

One question to ask is if equities will outperform bonds?

It was once gospel that equities out-perform low-risk bonds. But if you invested in the stockmarket around 1999 the balance of your portfolio probably suggests otherwise. During the post-war era equity returns have been positive. Enough so that the equity-risk premium, the return equities generate in excess of the risk-free rate (which is normally short-term Treasuries), is often assumed to be between 5% to 8%. In my experience risk managers go silent when asked where exactly this number comes from. Usually it is based on some historical data with a dose of “sensible judgment”. Clearly, the size of the expected equity premium depends on the timeframe you use and the manager.

… If you use recent history in your estimation, you may end up with a zero or negative equity premium. No one wants to use this in their forecasts; otherwise projections look pretty dismal. If you’re selling a financial product or strategy that involves equity investment, a zero equity premium will not entice investors.

Full post.

Investing: Don’t get distracted by irrelevant info

In Uncategorized on 03/06/2010 at 5:24 am

Economists assume that people respond in approximately rational ways to the information available to them.

But behavioral research now challenges even that more limited claim. For example, even patently false or irrelevant information often affects choices in significant ways.

The NYT article also sheds light on why the local MSM is “constructive” or “nation-building”: the state’s ability to frame a discussion, any discussion, is vv impt.

Which makes one wonder why  ST  was giving extensive coverage to Dr Goh Keng Swee’s widow. Surely when they got married, it ran against the grain of the state’s version of S’pore’s values: a marriage is forever: hence the absence of publicity abt Dr Goh’s second marriage. So why publicise loudly this breach of S’porean values  after his death?

Maybe ST will be rebuked by the government: remember the rebuke to ST on the way ST covered the AWARE saga?

Or maybe it is to remind us that Dr Goh was only a mortal.

Sorry for this distracting and irrelevant discourse. But it goes to illustrate the point that it is easy to get distracted.

Yields in Singapore

In Uncategorized on 02/06/2010 at 12:49 am

S-Reits offer the best yields. Gd, useful article

Much safer than investing in prayer at City Harvest Church? So far no S-Reit manager has been raided or investigated by the cops. God be praised.

Update — excerpt from BT

MOODY’S Investors Service has revised its outlook for Singapore’s real estate investment trusts (S-Reits) to stable from negative, reflecting its view that the sector’s fundamental credit conditions will neither erode nor improve materially over the next 12 to 18 months. ‘The stable outlook is supported by three primary factors: the strong rebound in Singapore’s economy; the stabilisation of rents across the retail, office and industrial property sub-sectors; and the steady performance and lower refinancing risk of the rated S-Reits,’ said Peter Choy, a Moody’s vice-president and senior credit officer.

AIA/PRU Update at 700 hrs GMT

In Insurance on 01/06/2010 at 10:51 am

[Update: AIG tells Pru, "Bugger off on yr new price" ]

Reducing the price to 1.3 times its own estimate of AIA’s embedded value of $22bn (from 1.69 times) would be US$29bn, down from US$35.5bn*. Even at this new price there are UK investors unhappy with the deal.They say execution is difficult, or why risk it? But according to press reports, the Pru’s largest investor, Los Angeles-based Capital Group, indicated it will vote in favour of the deal if the price drops to US$31bn-US$32bn. Prudential declined to comment.

FT’s Lex reports Whispers among underwriters suggest AIG could sell just under half of AIA at 1.6 times its disclosed embedded value**, netting the group about $15bn.

*BTW GE Life is trading at 1.23X 2009 embedded value at its current price of $ 16.20.

**AIA’s 2009 EV is US$18.75bn but Pru has a higher number US$21.01 — 12% higher. No wonder shareholders are upset even though AIA is more traditionally more conservative than Pru. BTW at 1.6x GE is worth $21.

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