atans1

Posts Tagged ‘SGX’

Time to sell? New, inexperienced punters rushing in?

In Financial competency, Property on 03/07/2014 at 6:28 am

(Or “The bull SGX is spinning?”)

Serious mkt correction on the cards based on SGX’s boast that more than 68,000 new Central Depository accounts were opened last year as the largest number of new retail investors in the past five years “ventured into the stock market in the face of an uncertain property sector”? (For those seriously challenged for time, skip right to the end for my take.)

The number of accounts is a big jump from the year before, when about 51,000 new accounts were created. At a press briefing last week on Singapore Exchange’s ongoing retail initiatives, SGX’s senior vice-president for retail investors, Lynn Gaspar, said that about half of all CDP accounts or a record-high 844,000 actually held some shares.

BT reported earlier this week:

“Subscription to SGX’s My Gateway’s e-newsletter over the past 12 months has risen 21 per cent to 187,000 and the increase in unique visitors to our website has been 45 per cent over the same period,” she said.

However, she added that, notwithstanding the increase in interest, the proportion of Singaporeans who invested in the stock market is still low when compared with other markets.

“Only about 8-10 per cent of the population is in stocks, compared with 20-25 per cent in Hong Kong and 15-20 per cent in Australia,” said Ms Gaspar. “If you assume the potential retail investor population to be about three million people, only about one third has some direct involvement in stocks while 62 per cent has never been in the market. Of these people, about 400,000 are interested in getting into the market. Based on a survey we conducted in 2012, we found that the barriers to entry for these people are they don’t know how to start, don’t know where to start and don’t have the time or money.”


To help interested but inexperiened retail players gain some insights into the stock market, SGX has partnered local firm TradeHero, which offers a mobile market trading application that can be downloaded onto phones.

The exchange is also offering up to $198,000 in prize money in its StockWhiz contest which is open to Singapore residents aged 18 years and above, the aim of which is to allow the public to learn to trade with virtual money.

“TradeHero allows investors to trade using real-time prices,” said Ms Gaspar. “We feel this is a great chance for the public to gain risk-free experience on how to trade.”

Bull on stocks vis-a-vis property?

Today reported her as saying:“In an emergency, the ability for you to liquidate property takes a longer time. So, the stock market is a good alternative for people to be able to come in and invest in a higher-yielding asset, not without risk … But you can see the value of the asset you are investing in, you can make those decisions and there’s also liquidity,”

Whatever, given that SGX’s CEO and COO are FTs, and so are many of its senior executives, it’s ironic that SGX is boasting that it’s attracting local punters back. It’s the same Mgt that drove them away.

Now the solution to regenerate a dying, irrelevant regional mkt is to grow the retail mkt? Takes FTs to do this?

“T” stands for “Trash”? Juz look at the IPO mkt and the secondary listing of Gazprom, a dog with fleas if ever there was one.

Coming back to whether market is set for serious correction? Well volumes remain depressed*, so the accout-opening and education, doesn’t translate into activity. The little people are inactive. So the rush to open accounts is not a sign of trouble yet. Watch the volume (not $ value but shares traded).

The only reason to be wary is that with residential property prices expected to fall another 20% next yr, the prices of developers may not yet reflect this expectation. As UBS pointed out recently, the stock mkt is influenced by property prices and it affects more weakness in that sector.

——

*Update at 9.30am: Figures juz reported show that in June daily average value of securities traded on the SGX fell by 40% on the same month last year, to just S$978m.

 

DBS CEO proves worth of FT where “T” stands for Talent

In Banks on 25/03/2014 at 4:50 am

DBS Bank yesterday said that it will buy the Asian private banking business of Societe Generale for US$220 million, accelerating its ambition of becoming a leading wealth manager in Asia.

The deal will also widen the gap with DBS’s closest rival, the Bank of Singapore, a unit of OCBC Bank.

The price represents about 1.75 per cent of assets under management (AUM), based on the AUM of Societe Generale Private Banking Asia (SGPB Asia) of US$12.6 billion as at last Dec 31. This is a steal: OCBC in 2oio paid US$1.46bn which represents 5.8% of the unit’s assets under management, after adjusting for surplus capital of US$550m*.

Last Tuesday’s BT went on: DBS’s AUM will go up by about 23 per cent to S$85 billion from the current S$69 billion with the purchase, seven months after it was reported the French lender wanted to divest the business to redeploy capital into its core markets.

Swiss bank UBS is the largest private bank in Asia-Pacific, followed by Citi Private Bank and Credit Suisse, in that order according to trade journal Private Banker International in a 2012 survey.

That survey ranked DBS and Bank of Singapore ninth and 10th, respectively.

DBS is onto a winner with this FT and his FT COO. Well DBS deserves it, given the FTs it has had where “T” stands for Trash. SGX needs that kind of luck where both its CEO and COO are FTs where “T” certainly doesn’t stand for Talent. They did Temasek no favours by saying everything was kosher about the share price movements of Olam (More on this next week).

Coming back to OCBC. Its CEO is a Hongkie FT with great credentials. But he hasn’t shown whether the “T” is for Talent or Trash. So far the mkt inclines to the latter. OCBC’s share price crashed (and have yet to recover) when OCBC annced purchase of Hong Kong’s Wing Hang Bank few months ago. Deal is still pending. Hopefully, it dies a natural death.

My fav bank is still UOB where the chairman and CEO are true blue S’poreans. But UOB has limited visions which suits my taste here. DBS is for those who want to own a bank can be the leading regional bank in place of CIMB. It always had the vision but the FTs leading it let it down. Gupta has the talent (and luck) to make it the leading regional bank despite DBS not having significant presences in Indonesia and M’sia. It’s expansion plans in Indonesia were thwarted. S’pore has to play ball with Indonesia (allowing Indonesian banks more privileges here) for DBS to be able to buy Temasek’s Bank Danamon stake.

Finally, yesterday’s BT had a story about the difficulties our three banks were facing. UOB’s finance director said “Funding pressures will serve as a growth constraint for mid-sized banks like us outside of Singapore, particularly amid a backdrop of tightened liquidity conditions in the region. UOB has always emphasised funding stability. We must also be selective in the customer segment we engage in and avoid large concentration risks.” Taz straight talk.

So is [C]ompetition in US-dollar funding is likely to intensify, given the anticipated growth in trade financing, and the liquidity requirements of Basel III, says OCBC’s Mr Tan. Trade financing is still mostly greenback-denominated.

DBS’s Ms Chng says: “The so-called ‘balkani-sation’ of the financial landscape is an emerging risk, potentially resulting in captive capital and liquidity pools within each jurisdiction and impacting the pursuit of synergies across regional operations.”

But  sadly they couldn’t resist sprouting PR rubbish

“From a capital perspective,” says Darren Tan, chief financial officer of OCBC Bank, which is negotiating to buy Hong Kong’s Wing Hang Bank, “we prefer to acquire majority stakes where possible. However, in instances where a majority stake is not immediately available, we will still give the opportunity due consideration if there is strategic value in the acquisition.”

United Overseas Bank’s approach to overseas growth is to expand the platform for customers to tap trade flows within the region, says its CFO, Lee Wai Fai.

DBS puts priority on pursuing organic growth, and adopts “a disciplined approach” to M&A, says Chng Sok Hui, its CFO … She adds that DBS is adopting a digital strategy to expand its footprint in growth markets.

What do they mean?

——————————-

*My 2010 analysis: But maybe OCBC shld have waited. The purchase of ING’s Asian private banking business could come to haunt OCBC. A few days before this deal was annced, ING sold its European biz, at a fraction of the multiple that it got for Asia. Only time will tell if the growth in Asian wealth and OCBC’s ability to grow the private banking biz will justify the hefty premium that OCBC paid.

It paid US$1.46bn which represents 5.8% of the unit’s assets under management, after adjusting for surplus capital of US$550m. This compares with the 2.3% measure paid by Julius Baer for ING’s Swiss assets which is in line with another European purchase by an American private equity group of a smallish private banking outfit — RHJI’s purchase of Kleinworth Benson from Commerzbank.

http://atans1.wordpress.com/2010/03/17/ocbc-reward-for-avoiding-balls-up/

Trumpets pls. BTW, I don’t blame the previous FT CEO of OCBC, Richard O’Connor. He was retiring. In such circumstances, usually the CEO would not take the lead in such a move: he’d go with the flow. Rightly, as he wouldn’t be the person running the show.. This is what happened here, I’m reliably informed. BTW too, he did a great job. Ngiam Tong Dow (remember him) called him an honorary S’porean, I think.

Retail punters suffer ’cause SGX, MAS dysfunctional?

In Corporate governance, Malaysia on 29/10/2013 at 4:53 am

I waz surprised at the swiftness that SGX allowed Asiasons Capital, Blumont Group and LionGold Corp to resume normal trading, as I had expected a prolonged period under “designated trading”, allowing me time to think about and investigate Asiasons. (My initial tots on Asiasons).

My immediate reaction waz, “Shld have had the balls to buy at 12ish cents*” with cash upfront. My next reaction was “How come SGX come to conclusion everything halal so fast?”. My third tot was, “Wonder if SGX and punters are going to repent?”.

A few days after stocks cheonged following the lifting of trading restrictions, SGX and MAS announced investigations. On 26 October 2013, BT reported JUST as shares of Asiasons Capital, Blumont Group and LionGold Corp shares appeared to be clambering out of their doldrums, news of the Monetary Authority of Singapore’s (MAS) investigation into their trading activities dragged them down again.

“MAS and the Singapore Exchange (SGX) are conducting an extensive review of the activities around these stocks,” MAS said in a statement yesterday. “This episode has also surfaced broader issues regarding the market structure and practices which MAS and SGX intend to review thoroughly.”

All three stocks slid to their lowest level in a week as skittish investors took profit. Asiasons shares fell 18 per cent to 19 cents, Blumont stock dropped 19 per cent to 16 cents and LionGold shed 15 per cent to 25 cents by the close of trading yesterday. The three counters were among the five biggest percentage decliners on the SGX.

Why couldn’t the plans to investigate and the lifting of trading restrictions be announced at the same time? If necessary, the latter could have been delayed a few days, while SGX and MAS deliberated? No wonder MAS MD got only a B rating compared to his M’sian and Pinoy counterparts (A) http://www.tremeritus.com/2013/10/27/head-of-mas-ravi-menon-only-gets-a-b-grade/. Shamefully that S’porean is graded lower than Pinoy or M’sian.

And do remember that FTs hold the top two posts at SGX.

Anyway, I’m not complaining. Gives me time to think about and investigate Asiasons. But lifting the trading restrictions (implying everything halal) and, a few days later, saying that there were going to be investigations,  ain’t fair to punters.

SGX has publicly said it wants retail investors in the market. Great way to treat them. But then there were S-Chips. I remember the boast by one Larence Wong of SGX (now departed), in the early noughties, that only chinese companies with accounts certified by int’l auditors were to be listed. They were, but looked what happened? The perils of ang moh tua kee.

Related post: http://finance.yahoo.com/news/singapores-penny-stock-mystery-increases-210030112.html

*Closed at 0.147 yesterday.

Lions XII! Lions XII!: Where only talent counts

In Footie on 01/04/2013 at 6:40 am

Keep up the gd work. Show the FAS that the “S” stands for S’pore, not “Serbia”. And that S’pore has home-grown talent that can whack the M’sians. And that S’poreans welcome FTs where the “T” stands for “Talent” not “Trash” as in case of SGX.

Coming to SGX, waz point of having FTs as MD and COO (and wanting FTs for six more posts as of late last yr) when 60% of daily volume comes from retail investors (ST report today)? FTs were brought in to bring in foreign biz, not to live off the fat of local punters.

Where “T” in “FT” means “Talent”, not “Trash”

In Footie on 29/01/2013 at 5:29 am

This chap is going to be based here. http://online.wsj.com/article/BT-CO-20130122-712467.html?mod=WSJ_FinancialServicesAndInsurance_middleHeadlines

We welcome people like him, like we welcome footie players Bennett and Duric.

But not people like SGX CEO and his deputy. Not anywhere in IPO top 10 for 2012. Yet the CEO and president (both FTs where the “T” can only stand for “Trash” want to bring in six more FTs. I assume the “T” means “Trash” not “Talent”. But our MSM continues praising http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1249517/1/.html

From Economist http://www.economist.com/blogs/graphicdetail/2013/01/focus
IPO 2012

FTs running SGX wanted this turd

In Corporate governance, Financial competency, Uncategorized on 11/12/2012 at 6:40 am

Earlier this year F1 annced that it would list here. It then pulled back its listing citing market conditions. This could have been true as markets were volatile when it pulled its IPO. But F1 is now shown to be in one big legal mess.

On its face, the investment by CVC Capital Partners in Formula One seems like a winner. But thanks to recent lawsuits, “this enormously rewarding investment may now be in jeopardy,”Steven M. Davidoff writes in the Deal Professor column. A firm that was a competing bidder for Formula One, Bluewaters Communications Holdings, recently sued CVC, the bank BayernLB and Bernie Ecclestone, the Englishman who built the racing business. The claims are over a payment that has already been a source of legal headaches. Bluewaters says the payment was to “steer the sale of Formula One to CVC,” Mr. Davidoff writes, and the firm is “claiming at least $650 million in damages, the lost profit it would have earned had it bought Formula One.”

Well investors and S’pore have been spared this dog with fleas. No thanks to the CEO and COO of SGX, FTs all. And they are advertising in FT, six other posts hoping to get more FTs to keep them company.

And this despite S’pore slipping further down the IPO league tables, with KL at 5th place and HK at 4th. There are no FTs in KLSE.

Asean round-up

In Malaysia, Vietnam on 11/11/2012 at 7:49 am

Shareholders of KFC Holdings in Malaysia voted in favor of a US$1.7 billion bid by a group that includes CVC Capital Partners, REUTERS 

Msian IPO boom set to continue, leaving our SGX in the dust. The top two jobs in SGX are held by FTs where the “T” seems to stand for “Trash”. KLSE is run by a local.

QE-lenient world gives Vietnam financial pardon.

Why POTUS is visiting Burma.

SGX/ Bursa M’sia: Back to the future UPDATE

In Infrastructure on 06/09/2012 at 11:12 am

Err spoke too soon of returning to the old days. Today’s BT reports:

KEY questions about the long-delayed Asean trading link continue to confound investors even as the tie-up between the Singapore Exchange (SGX) and Bursa Malaysia (BM) is slated to finally begin in less than a fortnight.

Details about custody, costs and other operational matters are still unclear ahead of the Sept 18 launch, observers said. And while traders and investors on both sides of the border think the link could fly in the long term, no one, it seems, sees an immediate need for the change …  But the implication of the tie-up on basic operational details remains a mystery to many investors and professionals.

Sigh: SGX goofs again? Is SGX paying for Foreign Talents or Foreign Trash? The CEO is ang moh FT, while its president is Indian FT.

SGX/ Bursa M’sia: Back to the future

In Infrastructure on 06/09/2012 at 4:59 am

The Singapore Exchange (SGX) and Bursa Malaysia will once again be reconnected from September 18, allowing easy trading access to investors from both sides of the Causeway.

Thailand will join the system later.

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1223777/1/.html

I joined a stockbroking firm in S’pore in 1987. Then M’sian and S’porean shares were jointly listed. Then the two exchanges split and there was CLOB. Then in 1998, CLOB was closed.

Rot at SGX continues despite (or because of?) FT CEO & president

In Corporate governance on 01/09/2012 at 8:40 am

Not only are the two FTs unable to attract mega-IPOs, CIMB Research says the string of privatisations is likely to continue, helped by cash-rich buyers, highly-valued Asian consumer franchises and battered valuations for cyclical companies.

We have seen a few privatisation offers, the latest being Heineken for Asia Pacific Breweries and another from Thai energy firm PTT to buy out Sakari Resources.

CIMB said stocks that may receive privatisation offers include offshore marine firms CH Offshore and KS Energy, as well as property developers such as Bukit Sembawang and Ho Bee.

To identify privatisation situations, CIMB looked at stocks trading below 1 standard deviation from their historical trading ranges and shareholders with interest and means to de-list the companies.

“We believe that globally, corporates have been building up cash to prepare for the worst, ever since the global financial crisis. They have the means to make an offer.”

Related rant: http://atans1.wordpress.com/2012/08/28/rubbishing-msias-ipo-streak/

Rubbishing M’sia’s IPO streak

In Malaysia on 28/08/2012 at 5:06 am

The spate of M’sian IPOs rubbishewd by S’porea-based analysts.

http://www.cnbc.com/id/48797994?__source=ft&par=ft

Shumeone doing covert black ops. I mean SGX’s FTs have failed: No MU, no F1. IHH Medical was courtesy of Temasek being foundation investor and of presence of Parkway’s S’pore hospitals inside IHH.

But FTs hold top two posts in SGX.

http://atans1.wordpress.com/2012/08/26/double-confirm-f1-not-listing-here/

Double confirm, F1 not listing here

In Uncategorized on 26/08/2012 at 7:15 am

A few months ago, MediaCorp reported that it heard that F1 was not listing here, not juz postponing its IPO. 

On Friday MediaCorp reported, Singapore Exchange CEO Magnus Bocker said he expects a few big ticket initial public offerings (IPOs) to come into Singapore for the rest of 2012.

These listings are expected to come from local and regional companies. http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1221696/1/.html

F1 is not a regional or local company.

And “big ticket”? Not USA$1bn and bigger IPOs aka M’sia. We had two sub billion USD IPOs of Reits and another hospital Reit of similar size is coming. Reuters reports: “Religare Health Trust is set to launch an up to $400 million initial public offering in Singapore, a source said, in a move that will allow the backer of the trust, Indian hospitals group Fortis Healthcare, to cut its substantial debt level.”

When is the ang moh FT CEO and his Indian FT president (“Tonto” is his name?) going to deliver on a US$1bn IPO. S’pore has never played second fiddle to M’sia in capital markets, except in Islamic finance. Now in IPOs, the FTs have S’pore down.

Related rant: http://atans1.wordpress.com/2012/08/22/while-sgxs-ft-ceo-wanks-kl-bags-yet-another-mega-ipo/

While SGX’s FT CEO wanks, KL bags yet another mega IPO

In Infrastructure, Malaysia on 22/08/2012 at 5:30 am

1Malaysia Development Bhd., the state investment company known as 1MDB, plans to raise as much as $2 billion in an initial public offering of its power assets, Reuters reports. The IPO may take place in the first quarter of next year.

M’sia Boleh, what with Felda Global Ventures Holdings and IHH Healthcare completing two of the world’s three biggest IPOs this year. Companies have raised a combined US$5.1 billion in Kuala Lumpur this year, compared with US$2.9 billion in Hong Kong and US$2 billion in Singapore, according to data compiled by Bloomberg.

SGX’s ang moh FT has yet to get on his own bat a mega IPO. Can only talk.

Related rant on ang moh tua kee: http://atans1.wordpress.com/2012/08/15/another-msian-mega-ipo-2/

Another M’sian mega-IPO

In Malaysia on 31/07/2012 at 5:30 am

 (Or “No FTs, but still the mega IPOs come)

Astro All Asia Networks has applied for approval to go public. The IPO will be worth M$4.7bn (US$1.5bn or S$1.9bn) a deal that would add to Malaysia’s dominant position in IPOs this year globally. Part of Ananda Krishnan’s empire, it was once a listco before he took it private a few yrs ago,

And its bourse’s CEO is local, not an FT nor is his number 2, unlike on SGX.

Related rant

http://atans1.wordpress.com/2012/07/23/another-co-decides-not-to-list-on-sgx/

Another co decides not to list on SGX

In Corporate governance on 23/07/2012 at 6:48 am
Reliance Communications  postponed the Singapore listing of its undersea cable division. In a statement the group said it would “await supportive market conditions and easing of prevailing global uncertainties to proceed with the offering/listing at an appropriate time in the future”.
 
OK, so my headline is misleading. But MU too delayed its posting for a similar reason and now has gone to the US. F1 too delayed its listing and the constructive, nation-building MediaCorp reported that it might not be listing here after all.
 
And as I bitched earlier, the FT ang moh CEO’s contract has been renewed, and that his number two is also an FT.   http://atans1.wordpress.com/2012/06/27/sgx-learns-from-fas/ 
 
WTF!!!!!  Ang Moh and other FTs tua kee? 
 
Especially since the ang moh is talking big about attracting big IPOs (especially Asian ones). Missed maybe three in a row.  

What the MSM doesn’t tell you abt Shenzhen

In China on 07/07/2012 at 6:10 am

The number of listed companies has almost trebled from about 500 before the SME board started eight years ago, and the market value of listed companies soared to US$1.2 trillion at end-May … double the size of Singapore’s exchange.

http://in.reuters.com/article/2012/07/01/china-shenzhen-ipos-idINL3E8HF38F20120701

And no FTs in mgt!

FYI, NYSE is at US$12.5 trillion.

It’s Official: MU tells SGX to f***off

In Corporate governance, Footie on 04/07/2012 at 7:16 am

MU has applied to list on NYSE.

http://www.bbc.co.uk/news/business-18699885

So much for SGX’s prostitution of its principles. Three cheers for the central bank. http://atans1.wordpress.com/2012/06/14/you-wont-read-this-in-our-msm-mu-frustrated-with-sgx/

Related posts: http://atans1.wordpress.com/2012/06/27/sgx-learns-from-fas/, http://atans1.wordpress.com/2012/06/28/korean-and-jap-exchanges-are-eating-sgxs-lunch-in-asean/

Korean and Jap exchanges are eating SGX’s lunch in ASEAN

In Uncategorized on 28/06/2012 at 6:08 am

Korea Exchange, which runs the world’s 13th-largest stock market, is helping ASEAN countries set up exchanges in return for stakes in the bourses. It helped Laos (last year) and Cambodia (recently) open their stock market trading platforms.

The Cambodian government has a 55%ish stake in the Cambodia Securities Exchange, while the Korea Exchange which provided information-technology systems, owns the rest. It holds 49% in Lao Securities Exchange, while the Laotian government owns 51%.

It is hoping to do the same for Myanmar even though the Tokyo Stock Exchange and Daiwa Securities had negotiated a “memorandum of understanding” to establish a stock exchange and develop the country’s capital markets.

Korea Exchange said that it would do its best to win the Myanmar government’s confidence until Myanmar makes a final decision and enters into a binding agreement for the establishment of its exchange.

True, these are “peanut” deals, but they are the kind of deals one would expect SGX to do given that these nations are ASEAN members. And anyway, while SGX may think it is a global player, it hasn’t done anything globally. It made a dumb bid for ASX (dumb because no-one except SGX and ASX mgts tot the Oz authorities would allow the bid*); and had to close its dark pool joint venture Chi-East in May as business volumes were weak and unlikely to improve.

——

*The bid would have benefitted ASX’s shareholders, in the main brokers using ASX’s trading platform. Brokers are damned gd at getting non-brokers particularly foreigners to buy into them or their investments. British brokers made their fortunes in the 1980s (including one David Cameron’s father) by selling out to, in the main, US banks.

Happened in India recently.   Private equity firms (think Americans again), which had invested in Indian stock brokers between 2005 and 2008, are in the main, struggling to exit these investments as current valuations of broking firms are less than half of what they were during the stake purchases due to a drop in profits on account of declining trading volumes and shift in the business model to a capital-driven one. http://articles.economictimes.indiatimes.com/2012-06-15/news/32254600_1_pe-firms-broking-equity-firms

SGX learns from FAS?

In Footie on 27/06/2012 at 9:13 am

(Or “Uniquely S’porean? Rewarding Failure Again”)

A few weeks ago, the ang moh FT CEO of SGX got his contract renewed for another three years. This despite:

– Making a spectacular takeover bid for ASX which no-one tot would succeed. It didn’t because, as widely expected, the Oz authorities blocked the deal. 

– Failing to get mega-listings. MU is not listing here despite reports that SGX made huge concessions on corporate governance to attract MU. Apparently the central bank was not amused with the concessions. Now even KL is ahead of us in the Asian listings league. S’pore Tak Boleh?

– SGX’s dark pool joint venture Chi-East closed in May as business volumes were weak and unlikely to improve.

Meanwhile, the Hong Kong exchange agreed to buy L.M.E. for £1.38 billion (US$2.16 billion). It outbid several American rivals, including NYSE Euronext, for control of the 135-year-old London firm. SGX found the valuations too rich to play. To be fair, so do investors in the HKEx. Its share price dropped. But its plans to introduce Yuan-based contracts and Chinese players into the LME could work. Then the LME price would be cheap*.  

So one would have tot it would be about time for the ang moh FT to move on. Nope, he stayed on. Juz like in the case of the Lions where the ang moh FT coach remained despite years of underperformance while the players were moved on.

FYI, the number two at SGX is an ethnic Indian FT. The S’porean who was his equal moved on earlier this year. Not that the S’pore Gan was that gd: he allowed all the S-Chips to list.

Related posts: http://atans1.wordpress.com/2012/04/02/temasek-meritocracy-at-work/ 

http://atans1.wordpress.com/2012/03/29/fas-learn-from-chelsea/

*Update: FYI, HKSx paid 180 times last yr’s earnings, or 46 times forward earnings.

You won’t read this in our MSM: MU frustrated with SGX

In Footie on 14/06/2012 at 2:36 pm

“IFR said the club and its owners had become frustrated with long delays in approval from Singapore.” http://www.breakingviews.com/man-utds-ipo-transfer-keeps-owners-in-control/21023624.article

Another day, another sucker

In China, Corporate governance on 21/03/2012 at 8:53 am

First it was SGX, then US exchanges, now London’s AIM the target for Chinese IPO scammers?

http://www.reuters.com/article/2012/03/14/ipo-london-china-idUSL5E8E8A2220120314?feedType=RSS&feedName=financialsSector

FBI in US, SIAS, SGX here

In China, Corporate governance on 02/02/2012 at 8:49 am

FBI investigating adviser on Chinese reverse mergers following a spate of problems with these listcos. No such luck here for investors here in S-Chips, despite the well documented problems. Investors only got SIAS and SGX.

http://dealbook.nytimes.com/2012/01/27/f-b-i-searches-offices-of-n-y-adviser-on-chinese-reverse-mergers/?nl=business&emc=dlbkpma1

I mean even HK securities authority seems to be more active in taking action against Chinese listcos (see bit towards end of article).

http://www.bloomberg.com/news/2012-01-30/hong-kong-s-tiger-court-fight-tests-regulator-s-offshore-reach.html

Why are the Glaziers like the PAP?

In Corporate governance, Footie, Political governance on 22/09/2011 at 8:08 am

The antics of the Glaziers (the owners of MU, in case you are not into footie) in trying to ensure that post-IPO, they can “fix” minority shareholders reminds me of the PAP’s attempts in the late 1980s to restrict the choice of voters.

When faced with the possibilty of losing more than a few seats in Parly, they resorted to Group Representative Constituencies (GRCS), where voters were forced to vote for a group of MPs headed by one (possibly two) cabinet ministers, not an individual MP. Over the years, the system was used to introduce such MPs like Rin Tin Tin (aka Kate Spade), “Waz so great abt NS?” Puthu, and “No money, no dignity” Lim. GRCs worked for the PAP until this year, when the PAP lost a GRC, losing five seats. Two cabinet ministers and one junior minister lost their seats in Parly.

Well the attempt to introduce two classes of shares (with different voting rights) and when that failed, to issue non-voting preference shares (that unusually do not carry a dividend that is fixed and cumulative*) indicates that the Glazers are just as concerned as the PAP about the consequences of the unwashed masses having the vote to push them around.

Too bad for conspiracy theorists that the Glaziers are Jews. Otherwise, it could be spun that they are related to one Harry Lee, the master architect of the GRCs.   

But seriously, there is a link that conspiracy theorists can spin around. Our very own SGX that has been assidiously courting, then faciltating the Glazers, is 23.5%  owned by Temasek. Temasek cannot vote its Temasek shares, but that’s only a detail to conspiracy theorists. After all, a senior SGX official was from Temasek. And Temasek’s president was SGX’s ex-CEO. And conspiracy theorists know who owns Temask, don’t they?

*These characteristics make them more like common shares. The reason why preference shares carry fixed dividends and why dividends are cumulative is to make them safer investments. And to compensate holders for the absence of voting rights, and the inability to share in the gains that can accrue to ordinary shareholders. Absent  dividends that are fixed and cumulative; they are like common shares absent the voting rights and the potentially unlimited upside.

To be fair though,  if the company is liquidated, the preferential shareholders will have priority over ordinary shareholders when assets are divided. Unless the Glaziers have gotten rid of this too,

SGX: Things can only get worse

In Infrastructure on 21/04/2011 at 8:11 am

DBS lowered its target price from S$11.50 to S$10.50 while Deutsche Bank revised it from S$10.50 to S$9.50.

Credit Suisse said when maintaining its “Neutral” call, “The SGX lacks near-term organic catalysts and is also exposed to M&A risk after the failed ASX-SGX merger.” IIFL issued  a “Reduce” call on the stock and lowering its target price to S$7.40.

SGX: Money not enough

In Uncategorized on 12/04/2011 at 10:12 am

The deal between SGX and ASX was that the ASX’s shareholders would get top dollar for their shares. In return, SGX would get control over the joint entity.

It is clear that both sides tot that the ASX would be able to sell the deal to the Foreign Investment Review Board, the Treasury and Parliament. It clearly ain’t so.

So the deal’s off and SGX is S$20mn poorer, SGX is stuck with organic growth. But its shown that its track record in this field is medocre at best.  Hence its willingness to pay top dollar for ASX,

Time to short the stock?

Will MAS ever say this?

In China on 31/03/2011 at 6:39 am

Martin Wheatley, the outgoing head of Hong Kong’s securities market regulator, said today that sponsors’ due diligence of initial public offerings has been “inadequate” at times.

“In many cases, sponsors are spread too thinly in terms of the number of deals they’re bringing to the market at any one time”.

Hong Kong’s regulator may make sponsors of IPOs in the city liable for statements in their clients’ prospectuses to prevent fraud of locally listed Chinese companies.

Bloomberg story

Never ever heard any MAS official say there was anything wrong with sponsors’ due diligence despite some new listcos coming out with profit warnings shortly after being listed.

I’ve been told that MAS does not inspect sponsors to ensure that they are following “best practices”.  It is left to SGX. A few years ago, a then prominent IPO sponsor was “suspended” from bringing new listings to market.

The HK proposal to make sponsors of IPOs in the city liable for statements in their clients’ prospectuses is a gd one, and should be adopted to prevent fraud in listing S-Chips.

How can independent director of troubled S-Chip resign?

In China, Corporate governance on 28/03/2011 at 1:35 pm

Hongwei’s independent director Ji Yicheng has resigned saying,”personal reasons, heavy workload”.  If the director of a troubled listco can quit when the listco gets into trouble,  then what is corporate governance all abt? Such an action is making a mockery of the responsibilities of being an independent director

The SGX must do something to prevent an independent director of a troubled S-Chip, indeed any troubled listco, from resigning. Such a resignation must have the approval of SGX.

The directores at the time the company got into into trouble must sort out the mess.  They cannot be allowed to “move on”.

.

SGX: This is Plan B

In S'pore Inc, Temasek on 21/03/2011 at 1:54 pm

The SGX’s CEO is reported by the FT to have said that the SGX’s planned takeover of ASX is its Plan B. He clarified that Plan A was organic growth by introducing new products. A few months ago he said if the ASX bid failed, SGX “had other fish to fry”. This implied to people like me that Plan A was the SGX takeover and Plan B was some other takeover.

The fact that he has “clarified” his earlier comments shows that he is panicking. See the previous post for the reason.

S’pore Inc: SGX misread Oz

In S'pore Inc, Temasek on 20/03/2011 at 10:31 am

A A$7.3 billion ($7.1 billion) bid by the Singapore Exchange (SGXL.SI) to take over its Australian rival is faltering as the Australian government, the regulator and a key opposition party are all set to reject it, the Sydney Morning Herald said.  Reuters article

The SMH story is extremely credible was it was written by the paper’s chief political correspondent. 

This shows that SGX did not do its homework. Everyone who has a say in approving the bid seems against it. Reminder: the takeover needs the approval of the Foreign Investment Review Board, then the Treasurer (finance minister) and then Parliament (where the governing party does not a majority).

The only people in favour are the ASX board and the shareholders. They would wouldn’t they? The shareholders are being offered a huge premium.

SGX should cut its losses and move on. And sack is FT CEO who, I’ve been assured, is the moving force, behind the deal. It';s not the first time an FT CEO has messed up SGX. It had a previous FT CEO. But the in-between local-born CEO (now president at Temasek) doesn’t have a gd record too, S-Chips continued to be the primary source of new listings (numberswise) when he was CEO, even though evidence that there were problems with S-Chips was growing.

SGX: An approval too far?

In Uncategorized on 21/02/2011 at 5:53 am

Taiwan, HK, Korea draw unloved Singapore-listed Chinese firms while SGX does its version of Operation Market Garden, a military fiasco, immortalised in the movie “A Bridge Too Far”.

The plan required the seizure of bridges across three rivers and several more canals by airborne forces while armoured divisions made a dash along the road linking all the bridges.  All this while fighting the Germans, If the plan worked, the Allies would outflank the German’s Siegfried Line by driving into the Ruhr, Germany’s industrial heartland.

The operation failed because it  required all the main bridges to be captured and for the armoured divisions to overcome the German defences swiftly. But the terrain was ill-suited for armoured warfare.

Sounds like SGX”s bid for ASX. The takeover must be cleared by the Foreign Investment Review Board, the Treasurer and then enabled by legislation.  Taz like seizing all the bridges.

As to bad terrain, the Greens and independents don’t like it.. One reason they don’t like it is because the Singapore government is itself a shareholder in SGX through its investment arm, Temasek (it will own almost 15%  of the merged group).

Finally, there is the fact that the Oz government government has singled out sovereign investments in Australian companies as a concern.

So I’m glad to hear that SGX has other plans if its plans to takeover ASX fails.

GLP’s non-action:Implications for SGX’s bid for ASX & S’pore Inc

In Corporate governance, GIC, Logistics, S'pore Inc, Temasek on 16/12/2010 at 5:22 am

Global Logistics Properties has replied to a hack’s rant on why it should have disclosed GLP’s non-compete agreement with ProLogis in China and Japan in its prospectus. The GIC-linked company, which listed on SGX in October continues to contend that the “existence of the non-competition arrangement between the company and ProLogis is not material, and continues to be non-material to the ongoing business of the company”.  The quote is from its reply to BT who first exposed this agreement.

I won’t go into the legal issues involved except to say but I find the reply inconsistent. BTW the links to the  reply and rant may go walkabout in a few days’ time.

But what will SGX do? If it does nothing (putting the onus on the central bank: MAS approve prospectus leh), or investigates and then clears GLP, it will fuel Ozzies suspicions of the SGX takeover of ASX for two reasons. Read the rest of this entry »

Russians prefer HKEx

In Uncategorized on 01/07/2010 at 5:25 am

FT reports Renaissance Capital, the Moscow-based investment bank, is opening an office in Hong Kong in expectation that a wave of Russian companies will choose to sell shares in the city.

The move comes five months after Rusal, the aluminium group controlled by Oleg Deripaska, became the first Russian company to list on the Hong Kong stock exchange.

“There are a lot of large Russian companies looking at Hong Kong as a destination for a listing,” said Jeremy Sparrow, chief executive of RenCap’s Hong Kong office, the bank’s first in Asia.

“We’re going to encourage as many companies from emerging markets, primarily in resources and oil and gas, to come and look at Hong Kong,” he said. Mr Sparrow said clients were seeking to tap deeper pools of cash in China as the “apex” of financial markets began to move east from traditional centres in the west still struck by crisis. “It’s where the money is,” he said.

According to PwC, Hong Kong last year overtook London and New York as the world’s biggest centre for flotations, with companies raising about $32bn through initial public offerings.

SGX has no excuse missing out on Russians to HKSx.

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.

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.

SGX: Private equity to the rescue?

In Uncategorized on 04/05/2010 at 5:16 am

Last week tuesday, we reported SGX’s boast that MNCs wanted to list here.

SGX had also (FT reported) said that it was also expecting a flow of listing applications for Asian companies controlled by western private equity firms.

“We are getting more inquiries all the time,” he said. “Many of the private equity firms . . . need to find an exit. It has been three or four years since many of these investments, so now is a logical time for them [to come to the market] … Singapore had identified “a strong pipeline” of potential initial public offerings from China.

Add to that, the Special Purpose Acquisition Companies’ (SPACS’) IPOs that SGX wants to attract here, and one reasonably suspect that private equity is being looked upon as SGX’s saviour from the mediocrity of a second class exchange http://atans1.wordpress.com/2010/03/10/obvious-why-the-pru-chose-hkex-over-sgx-bt/

A special purpose acquisition company (SPAC) is an investment vehicle that allows  investors to invest in private equity type transactions via a listed vehicle. SPACs have no operations but are listed with the intention of merging with or acquiring a company with the proceeds of the SPAC’s IPO. http://atans1.wordpress.com/2010/04/08/endangered-in-us-coming-to-sgx/

Note in the US, SPACs have been used to buy Chinese and Indian businesses, allowing them to get listed in the US.

SGX: Cynical investors?

In Uncategorized on 27/04/2010 at 1:57 pm

Several large multinational companies based in Europe or North America are considering listing in Singapore after insurer Prudential of the UK, SGX said on Monday.

“We have already had inquiries from [other] large global firms based in the western hemisphere … It’s not really surprising because these people want global exposure …  If you are looking at a pure China exchange you will probably want to list in Shanghai or Hong Kong. But if you are looking at a more pan-Asian exposure, I think Singapore would probably be in very good shape.”

SGX declined to name any of the western companies that had approached it.

Err market obviously does not believe SGX as at the lunch break today, SGX shares are down 1.3%. Either that or market believes that these listings will not materalise, or if they do, will not make a difference.

Try harder SGX and fail harder. Misquoting Beckett.

However, he said the Pru’s decision to list in Singapore alongside Hong Kong and London was being watched “very closely” by other large western companies whose revenues in Asia were rising rapidly.

Sino-E: Could this happen?

In China, Corporate governance on 14/04/2010 at 6:04 am

If this can happen to a UK listco, which is part of the Hong Leong Gp, could happen to Sino-E or any other S-Chip that has or had management or corporate governance problems.  SIAS and SGX should ask listcos what steps they have taken to prevent sumething similar happening to them in China? FT reports

Millennium & Copthorne, the hotel group, underscored the challenges for western companies operating in China on Monday after it revealed that a former employee at one of its joint ventures there had allegedly sold $48m (£31m) of the venture’s assets without M&C’s permission.

The company said the employee, Cheung Ping Kwong, sold the assets – which included a hotel and development land – in spite of a Chinese newspaper advertisement issued by the joint venture warning that he had been removed from his position at the group and was not authorised to sell the holdings.

Sino-E: More $ down the drain?

In China, Corporate governance on 12/04/2010 at 5:03 am

Can’t understand why Sino-Environment spends $ on advisers* in connection with the proposed restructuring of the Company’s 4% convertible bonds due 2013 issued in an aggregate principal amountof S$149 million (the “Bonds”) and its debt obligations.

When it terminated nTan Corporate Advisory in March as the independent financial adviser (IFA ) to the Company, the board said, “In line with the Company’s cost-cutting measures, the Company has terminated the appointment of the IFA with effect from 18 February 2010. The Company’s newlyappointed chief executive officer, Mr Sam Chong Keen, will undertake the task of negotiating and liaising with the Company’s bondholders.”

I think the board owes the shareholders an explanation for this change of mind. And I hope SIAS or SGX will ask the board for an explanation. Though something tells me that nothing will happen.  Poor shareholders, they might reasonably think that  directors are spending shareholders’ money to ensure that the board doesn’t get sued.

Or that the board thinks CEO is not up to job?

*Ernst & Young Solutions LLP (“E&Y”) is the financial adviser. “E&Y’s scope of work will include, among other things:

(a) advising and assisting the Group on suitable options for discussion with the holders of the Bonds (the “Bondholders”) and providing assistance on the development of a comprehensive debtrestructuring plan of the Company’s existing borrowings and liaising and negotiating with the Bondholders in connection with the debt restructuring exercise; and

(b) undertaking a business and financial analysis on certain related matters.”

“The Company has also appointed Stamford Law Corporation as its legal adviser to act for the Group in relation to matters arising from the debt restructuring.”

Endangered in US, coming to SGX

In Uncategorized on 08/04/2010 at 7:25 am

Special purpose acquisition companies, a product of  boom-time financial engineering, are in danger of becoming extinct in the US. According to SPAC Analytics,  there are only seven left. Compare this to the boom year of 2007 when 66 SPACs went public raising US$12 billion.

But SGX wants them here.

A special purpose acquisition company (SPAC) is an investment vehicle that allows  investors to invest in private equity type transactions via a listed vehicle. SPACs have no operations but are listed with the intention of merging with or acquiring a company with the proceeds of the SPAC’s IPO. The stock exchanges that allow SPACs have rules to ensure that the SPAC returns most of IPO proceeds to investors if  the SPAC fails to do a deal within a fixed period. Shareholders of the SPAC also have to approve the deals.

SGX’s proposals are as follows:

Introduction of SPACs to the Listing Regime

SPACs are shell companies with no prior operating history, seeking an IPO to raise funds for the purpose of using these proceeds to acquire as-yetundetermined operating businesses (“business combination”). SGX has formulated a separate listing framework with safeguards for the introduction of such listed vehicles. Some of the proposed requirements for SPACs are set out below.

(a) Shareholding spread

At least 25% of a SPAC’s total number of issued shares must be held by at least 300 public shareholders.

(b) Quantitative criteria

In order to be listed, a SPAC must have a minimum market capitalisation of S$150 million based on the issue price and post-invitation issued share capital.

(c) IPO proceeds

A SPAC can only hold its assets in cash or cash equivalent short-term securities of at least A-2 rating (or equivalent) until completion of a business combination that meets SGX’s requirements.

Furthermore, at least 95% of the IPO proceeds must be placed in an escrow account to safeguard the assets of the SPAC, and such escrow amount and any interest thereon cannot be drawn down except for the purpose of the business combination.

(d) Issue of securities to founding shareholders

The equity interests which can be given to a SPAC’s founding shareholders without an equity contribution equivalent to that of public shareholders, will be capped at 10% of the SPAC’s post-invitation issued share capital.

A SPAC’s founding shareholders will be required to subscribe for shares amounting to at least 2% of the SPAC’s post-invitation issued share capital and/or purchase warrants amounting to 2% of the IPO proceeds.

(e) Business combination

The value of a business combination should amount to at least 80% of the net asset value of a SPAC (excluding any amount held in the escrow account representing deferred underwriting fees).

The business combination must be approved by a majority of votes cast by independent shareholders at a general meeting. For the purpose of voting on the business combination, the founding shareholders and their associates are not considered as independent.

Each independent shareholder voting against the business combination shall have the right to redeem his shares for a pro-rata share of the cash in escrow, provided that the business combination is approved and completed. If independent shareholders holding more than 40% shareholding interests choose to convert their shares into cash, the SPAC may not proceed with the business combination.

Where key executives resign prior to the completion of the business combination, the SPAC’s directors shall have the authority to review and determine an appropriate course of action, including liquidation of the SPAC.

A SPAC must complete a business combination that meets SGX’s requirements within three years. Otherwise, the SPAC will be liquidated and its assets distributed to shareholders. Founding shareholders and their associates are to waive their right to participate in the liquidation distribution in respect of all equity securities owned or acquired by them prior to or pursuant to the IPO.

Baker & McKenzie

Comparing SGX to HKSx cont’d

In Uncategorized on 24/03/2010 at 6:27 pm

Today our MSM told us that according to Ernst & Young, “public offerings (IPOs) in Singapore have raised nearly S$500m so far this quarter”. This works out to US$356.5m.

In January,  UC Rusal had an IPO worth US$2.2bn in HK.

Taz putting things into perspective.

Related post

http://atans1.wordpress.com/2010/03/10/obvious-why-the-pru-chose-hkex-over-sgx-bt/

New SGX ETFs for Indon and China exposure

In China, Economy, ETFs, Indonesia on 22/03/2010 at 5:21 am

Investors can now gain exposure to shares listed on the Indonesia stock exchange and on the Shanghai and Shenzhen exchanges.

Two Mondays ago, db x-trackers listed an  ETF tracking the MSCI Indonesia index on SGX. The ETF is Ucits III compliant. This means it is a product  that can be sold to EU retail investors because it meets European regulatory requirements on risk management and operational procedures.

It has also launched an ETF on  CSI 300, an index of leading Chinese stocks. This is also Ucits III compliant.

db x-trackers says its  management fee is only 0.5%.

db x-trackers must be concerned abt the liquidity of these new ETFs because it took out an ad in ST telling people abt these products last friday.

HKEx: Plan B when Shanghai overtakes it

In Uncategorized on 11/03/2010 at 5:48 am

Sounds (see below) bit like SGX’s strategy of playing second fiddle (although perish the tot of SGX admitting that it is  pursuing second tier status).

And it doesn’t need a Plan B, yet. Note that Prudential said that has made its application to the exchange for an introduction and said it would not offer any new ordinary shares. It had previous said it would apply for a dual listing after it stakeover of AIA. French cosmetics group L’Occitane is getting ready for an IPO in Hong Kong next month in a move that highlights rising consumer demand in Asia for luxury goods. It  could raise up to US$700m to bankroll its Asian expansion plans.And FT reports further, “A successful listing could re-ignite interest among other European luxury goods companies, including Prada and Ferragamo, which abandoned Hong Kong IPO plans ahead of the global downturn.”

Contrast this with SGX. It has now only started marketing to the Ruskies. Let’s hope some decent R-Chips come our way.Thinking of S-Chips: Sino-E and friends, I have my doubts.

From Reuters Breakingviews:

The Hong Kong Stock Exchange is the world’s second-biggest by market capitalization. Call it the China factor. Yet as the mainland’s own exchanges get bigger, Hong Kong can’t count on winning prize listings forever. It’s time for a Plan B.

Hong Kong has long been the destination for public offerings of China’s state-owned companies, because mainland rivals were deemed too small. But now, China wants to develop an international financial center on the mainland. Even Hong Kong stalwarts, like the lenders HSBC and Standard Chartered, plan to issue shares over the border. The next big bank to list, Agricultural Bank of China, may eschew Hong Kong altogether.

Hong Kong can’t get away from its Chinese roots. Efforts at diversification from Chinese public offerings have had little success. In 2009, mainland enterprises still accounted for more than 82 percent of all public offering money raised. The failure of the American International Group’s Asian life insurer, A.I.A., to go through with a planned listing may cut Hong Kong’s pipeline in half.

Charles Li, the exchange’s new chief executive — and a mainlander — says the exchange seeks to position itself against competition from London, New York and Shanghai by doing things that others can’t do. One way would be to focus less on initial public offerings and more on other businesses, like derivatives. As China’s own capital market deepens, the need for more sophisticated products will increase.

The real gold mine, though, could be for Hong Kong to focus on becoming China’s offshore renminbi capital. China is keen to push the renminbi internationalization agenda, but progress has been slow, mainly because of a lack of products for investment. Trading renminbi bonds offshore could be a good start. Stocks priced in renminbi could follow.

Hong Kong would need Beijing’s approval, and might have to accept a future without blockbuster public offerings. But better a partner than a rival.

ROB COX and WEI GU

Earlier posting on Shanghai’s ambitions http://atans1.wordpress.com/2010/03/01/spore-hk-have-competition/

Obvious why the Pru chose HKEx over SGX, BT

In Uncategorized on 10/03/2010 at 6:22 pm

I could not stop laughing when I read : “Prudential’s surprise announcement that it will list in Hong Kong, following its US$35.5 billion decision to buy over rival AIG’s Asian operations, has led market watchers here to wonder why the UK life assurance giant did not pick Singapore instead for its secondary listing.”

Come off it BT.  Isn’t it blinding obvious why the Pru chose HKEx?

You reported a few days ago that last year, HKEx was the global leader in new listings, raising more than US$30 billion worth in 73 IPOs. SGX’s 23 new listings raised US$2.35 billion, based on Bloomberg data.  And according to an Ernst & Young study, Singapore was falling behind Kuala Lumpur and Sao Paulo in terms of capital raised from IPOs up to November last year.

So isn’t it blinding obvious why the Pru chose HKEx?

OK you reached the above answer finally, but was there even a need for the article? I mean the only market watcher quoted was a retiree, small investor who often talks rubbish.

Oh and since I’m bashing BT, a few weeks ago, ST and BT reported that according to DBS, a S$ billion listing was coming SGX’s way. We now know that  China Real Estate Opportunities, one of the biggest companies on London’s AIM, may abandon its UK listing to be quoted in Singapore. I don’t know anything of this company, but I do know of some strange goings on at a couple of other China-related companies listed on AIM.

I sure hope these type of shenanigans remain out of S’pore. But looking at Sino-E and friends, I am not optimistic.

Update 2 May 2010

Pru is now doing a secondary listing on SGX, in addition to its HK primary listing. Rumour has alleged that GIC, an underwriter of Pru’s coming rights issue, persuaded Pru to this. Note that more Pru shareholders want to kill the deal on the ground that a champion dog  is buying a mongrel.

S-Chips: A warning on the prospectus?

In China on 26/02/2010 at 5:56 am

SIAS presient was reported in Wednesday’s ST as saying, “If ever a China company is listed in S’pore which has got business in China, management in China and money in China — please think 100 times before you put your money into the company.”

This should have been put on the prospectus of all S-Chips. But don’t you think it is too much to ask SGX to make this warning mandatory? It needs new listings, even tiny ones. At a time when there is talk of a billion dollar China co wanting to list here, HK is preparing for a US$20bn listing of AIG’s Asian life insurance operations. It could come as early as April this year.

But maybe responsible IPO managers should include this in bold lettering on the cover of future S-Chips IPOs?  And with the appropriate changes, for any IPO where only the listing is here?

Sino-E — Where are the managers, Doc?

In China, Corporate governance on 10/01/2010 at 11:01 am

If I were a small shareholder, I’d need some more information on what is happening.

Following last Sunday’s announcement that the three executive directors (EDs) had resigned, the independent directors (IDs), by then the only remaining directors, said mid-week they had made three new board appointments and re-appointed the former financial controller.  Two were IDs and one was a non-executive.

But till time of this post, nothing has been heard about who is managing the company in the absence of the CEO or any ED in China. And if no one is managing, who will manage it and when? Waz the point of all these directors based here? Everything of value is in China.

The IDs should be telling shareholders what they are doing to ensure that the assets of the company are not plundered or the business is not misrun in the absence of the EDs. If there are already gd managers on the ground, shareholders should be told. If there are none, why were there no plans for managers to replace the EDs? After all the IDs were seeking to remove the then  EDs.  And when will the new managers are expected to be in place? Shareholders need this information.

Surprised

  • SIAS not publicly commented on this;
  • SGX not publicly querying company; or
  • none of the usual corporate governance pundits are even raising this issue.

But who knows, maybe behind the scenes? Somehow I doubt it.

Is all this corporate governance activity by the two IDs and talk by others, Wayang or shadow puppetry in its most sophisticated form?

A small shareholder might very well think that. I couldn’t possibly comment

What happens if S-Chips can’t get IDs?

In Corporate governance, Investments on 11/12/2009 at 12:24 pm

I wonder if the SGX has thought thru its proposals on imposing more duties on independent directors of S-Chips (OK the proposals apply to all companies with major overseas units: but it seems reasonable to conclude that S-Chips were the intended targets of these measures.)

Will the S-Chips find IDs prepared to serve on their boards, if the proposals become the “law”? Already the chairman of the Singapore Institute of Directors has expressed concern that existing IDs may resign to avoid these additional duties? What happens if IDs resign and the S-Chips cannot find replacements?

What will SGX do? Suspend these companies, or delist them? And wouldn’t the losers be the retail gamblers , opps, investors?

If the S-Chips pay a lot of money, I’m sure they can get IDs. The issue is whether they got the cash to pat them. Many of them are SMEs; the bigger companies prefer HKSE.

Finally is there a problem? The president of SIAS was quoted recently as saying  that it would be unfair to view  “the 154 S-Chips” as being especially vulnerable to problems arising from weak corporate governance, only  a few were “problematic”.

He should know, shouldn’t he?

SGX-listed Oz Property Fund

In Property on 22/11/2009 at 1:43 pm
MacarthurCook Property Securities Fund is listed on the ASX and SGX.
81% of its assets are in Australia (with 45% in Victoria and NSW), with 29% of these assets in retail assets and 38% office assets. As at June 30, its published NTA was 39 Australian cents, or 50 Singpore cents. The share price was 13.5 Singapore cents on friday.
A steal at 13.5cents? Well on ASX it was trading at 9.5 Australian cents or 12 Singapore cents. The Singapore price is a 12.5% premium to the Oz price.
Do the Oz investors know something abt the state of the Oz assets, that Singaporean investors don’t? Or is it sheer illiquidity in both markets?

Preview of what to expect

In Uncategorized on 14/11/2009 at 9:38 am

For a preview of what I will be writing about below are some pieces I did in mid June for two weeks for a project that did not take off. They are in chronological order.

Winning whatever the price of oil

Last week, it was announced that PetroChina (subject to Chinese regulatory approvals) would buy from Keppel its entire stake of 46% in SPC for S$6.25 a share.

Immediately one thought of 2003, when Keppel sold a 28% in SPC to Hong Kong-based (but Indonesian owned) Kapital Asia for S$1.50 a share, and said it was considering divesting its entire stake.

In 2004 the price of oil took off and Keppel decided to keep the refiner to expand its oil and gas production in SE Asia. Could Keppel be repeating its mistake of selling SPC shares, just before the oil market takes off? It could.

But Keppel shareholders (especially Temsek) should not complain. In the announcement of the deal, it was said “PetroChina and Keppel also plan to explore opportunities in the offshore oil industry and in other areas of mutual benefit as such opportunities become available”.

Things like this are usually to be ignored as fluff. Maybe not in this case.

PetroChina is one of China Inc’s two flagship oil companies, tasked with developing oil and gas resources globally to meet China’s energy needs. The Chinese have been active recently making oil-for-loan deals with national oil companies of Brazil, Russia and Kazakhstan, all very good for the likes of PetroChina.

Keppel’s off-shore rig business, is only one of two world-class companies in Singapore Inc’s local portfolio. Should the value of SPC explode upwards, then Keppel has, at the very least, the goodwill of PetroChina when it bids to build rigs for projects where PetroChina has an interest.

And should the price of oil collapse, Keppel and its shareholders will have S$1.47 billion in the bank to fund the rig business.

And if anyone thinks that it is a no-brainer to buy SPC because PetroChina said it could serve as a platform for future transactions, suggesting it might try to use SPC to make takeovers that it would be blocked from making directly — think again.

There would still be concerns of takeovers by Chinese state-run firms, done directly or indirectly, through a Singaporean subsidiary.

Managers turn swashbucklers? Can pigs fly?

Short of plans to buy assets, NOL does not need the S$1.4b. NOL, which has S$400m in cash reserves, would have almost less than 2% net debt. (45% of equity at the end of 1Q) against container sector average between 60 and 65.

NOL intends to use about S$700m to repay debt, the remainder for investments and working capital.

But the prognosis for the entire shipping industry for 2009 and early 2010 remain gloomy, so likewise does NOL operational gearing.

Buying into NOL (its shares have risen from 0.85 in early March to 1.68 yesterday) is to believe that NOL’s management can use its great financial gearing into something tangible. EG buying ship at bargain prices from highly leveraged shippers in distress, and shipyards.

And increasingly its gearing again in the process.

Imagine going into the next cycle with cheaply acquired ships and a gearing of 45%. Wow Bam. This is an unproven thesis. NOL is one of the most conservative container lines and has taken a higher proportion of its ships out of service than other lines to tackle over-capacity.

Can cautious managers turn into swashbuckling asset buyers? There are the Greeks and Chinese buccaneers out there too on the prowl for ships.

Writer has some NOL shares in his CPF portfolio.

Looking a gift horse in the mouth or  Why new SAT shareholders should be grumpy

On May 14, SIA announced that it was going to distribute to its shareholders its 81% stake in SATS by way of a dividend in specie. Since then share price is up 5%. This comes after SATS has become cash poor.

In January 2009, SATS launched a takeover bid for its Temask stable-mate SFI. According to the takeover documents, the pro-forma balance sheet as at September 2008 would have shown that the net cash position of the SATS (including SFI) group deteriorated to minus S$21 from S$528. In particular, cash in fixed deposits would have fallen from S$573 million to S$64 million.

But SATS needs cash because “SATS is committed to growing its 2 core businesses of airport and food services”.

It could borrow big-time, pro forma net gearing is 0.04% from (0.35)%. But in Singapore, where debt is a dirty word in GLCs (NOL comes to mind), a rights issue is reasonably probable.

Temasek as the new controlling shareholder of SATS has $356 million from its sale of SFI shares to fund any rights issue. But do other new SATS shareholders have the cash?

Finally, looks like MM Lee gets his way. In 2004, he said SIA should divest itself of SATS and SIAEC. SIA’s management demurred.

Will SAEC be divested despite SIA mgt saying last night that the SAEC holding is strategic? Stay tuned.

Backward into the Future

November 8, 2009 [OK I did get this wrong, but it could still happen]

SIA announces that it is proposing a dividend in specie to its shareholders of the Company’s entire shareholding in SIA Engg.

“Distributing shares through an in specie dividend will unlock shareholder value by giving SIA shareholders direct ownership of SIA Engg at no cost to them.”

“The proposed distribution will allow SIA to concentrate on its airline business,”something advised by MM Lee in 2004.

“SIA Engg will be able to independently pursue opportunities to aircraft maintenance, repair and overhaul businesses. The Proposal will improve trading liquidity of SIA Engg  shares, potentially enhancing value.”

May 14, 2010

SIA Engg announces Acquisition of 100% of ST Aerospace from ST Engg

“Acquisition consistent with SIA Engg previously announced long-term strategic plan”

ST Aerospace is the “Largest aircraft MRO company by commercial airframe man-hours” and has “Strategic partnership with RSAF”

Rights issue with Temasek taking up its entitlement and prepared to subscribe for shares that other shareholders don’t want.

Remember you first heard it here. But based on the companies’ past performance, SIA Engg should only buy ST Aerospace, if the price paid reflected Aeo’s lower margins. SIA Engg’s margins are consistently better than those of Aero. EG In financial yr ending Dec 2008, Aero’s turnover was S$1.9b with PBIT of S$272m, while SIA Engg turnover was S$1.1b but PBIT of S$301m.

But what price another national champion? And financial engineering by Temasek?

Temasek’s recently revised investment priorities R SGX Listcos

Yes this was Temasek week, and we will end the week by looking to see which non-Temasek SGX-listcos fit into its recently revised investment priorities:

  • non-West (It got its timing wrong with Merrills and Barclays coming-in and exiting. And misanalysing ABC Learning),
  • poised to capitalise on the growth of middle class consumer credit in Asia, and
  • with plausible competitive advantages, following its reinvestment in Olam.

What about the following?

  • Bayan – manager and developer resorts, hotels and spas in the Asia Pacific.
  • Creative – remember its MP3 player predated iPOD and Apple paid it damages for breaching its patents. All it needs is a bit more Zen meditation and it could have a mega hit on its hands.
  • Eu Yan San – has reached the limits of what it can do with its resources in Chinese medicine. Needs outside capital, but family squabbles prevail. But Temasek is different.
  • Raffles Education – big in Chinese education (and indirectly in property). In a bit of bother now but controlling shareholder and manager has a track record.

Bayan, Creative and RE are run by home-grown and-bred entrepreneurs. What better way of encouraging the growth of entrepreneurs with global ambitions, then by supporting these three companies?  We will keep you posted as we trawl through SGX listcos.

This continuing series will help us fill the gaps on those days when we wake up late or have nothing more interesting to say.

Whither the markets?

Fund managers, analysts, traders and media pundits are struggling to contain their confusion at what global equity markets have been doing since March.

The markets’ upsurge defies all rational explanations: just ask Temasek’s scholars and foreign-talent MBAs.

The conventional view is that this is a bear market rally. There will be a double-dip recession – a so called “W” recovery, where there is a steep fall, followed by a steep recovery and then another fall before another recovery finally appears which becomes more sustained.

Pundits pont out that, while not widely reported in the regular news, the bond markets had a mini crash in May. There’s talk of the ending of the multi-decade bull market in bonds, what with all the debt that governments have to raise.

My views on whether we are in bear market rally are just as irrelevant as anybody’s else.

But I heard something interesting on the FT (my second favourite newspaper) website a few weeks ago.

The strategist, from CLSA, belived that we are in the midst of a bear market rally. Nothing new here. But unlike other pundits, he said this rally could run for another two years before collapsing. He cited what happened after the dotcom bubble bust in 2000/ 2001.

He said, with hindsight, it was clear that the recovery from 2003 to 2007 was a bear market rally. Bottom line: A bull run or bear market rally can only be predicted in hindsight. Seating tight and doing nothing is not an option for a fund manager unless he is Warren Buffett.

Another reason to remain invested in Singapore mkt?

Could the plans to celebrate big-time the 50th anniversary of self-rule be a signal that the PM wants to calls a GE in the first half of next yr?

Remember that 50 years of self-independence coincides with 50 years of PAP rule, something that the celebrations are sure to link.

Have a good time tonite. And the next insight will be on tues morning.

Tempting the shorts

“China’s property market has been bouncing back over the last several weeks,” reports a FT publication. “Statistics from the China Real Estate Index System showed that residential property sales in 30 large cities increased by 11.42% April from March and transaction prices for new residential developments were up 3% week on week to the highest level this year between May 11 to 17.”

So it was not surprising that the CEO of CapitaLand over the weekend implicitly reminded investors that CapitaLand is NOT a Singapore property play but a China (property) play, “In 2008, our China operations accounted for about 26% of total group assets and contributed approximately 45% of the group’s earnings”.

The target is for China to make up 40 or 45% of assets in the next few years and for more than 45% of earnings. (Incidentally, if China assets are at 45%, then China earnings should be at 90%)

Is he reminding himself how big a bet CapitaLand is putting in China?

CapitaLand has just secured a S$5b three-year credit line with Bank of China and Industrial and Commercial Bank of China. What this means is that CapitaLand is gearing up just after completing a rights issue a few months back. It had reduced its net debt from S$5.6b to S$4.6b, a 18% improvement. Its net debt to equity had fallen to 0.32 from 0.47.

Now, making an assumption on drawdown by end FY2009, it will have net debt of S$9.6b and net debt to equity of 0.67. All very good if the Chinese property continues its bull run

But if it implodes (note that China super bull, Jim Rogers, is avoiding recommending property to investors: in 2008 he was negative about Chinese property) and CapitaLand has not sold assets before the downturn: another rights issue?

Hedge funds who are negative on China property could do worse than start to build up short positions in CapitaLand.

The perils of buying NTA

The share price of United Engineers is falling after its high of S$2.37 on 29 May. This illustrates that buying a counter at a deep discount to its NTA can be problematic, if there is no catalyst to unlock value. To recap. As part of an asset rationalising swap, Straits Trading and its controlling privately-owned shareholder swapped assets.

12% of UE was sold to Tecity at around S$1.52 a share, and 7% of WBL Corp was sold to ST as part of the asset swap. ST ended up with 19% of WBL. BTW WBL has another 10% of UE.

There was speculation that Tecity had immediate designs on UE. UE’s shares are at a deep discount to its published NTA of S$3.43. They remembered Tecity’s bid for ST which ended with Tecity paying S$6.70 for assets (revalued) worth S$6.52 a share. What is forgotten is that Tecity busy coping with the consequences of having spent S$1.1bn to own 82% of ST; is not likely to want to reward other UE shareholders at Tecity’s expense.

Assuming it bids at published NTA, it would have to spend S$679m. And if, the other major shareholder, GE Life starts a bidding war, the cost could escalate, like in ST. In early 2008, there were estimates that UE’s NTA could be S$6. And if it did bid at NTA or more, any time soon, ST’s minority shareholders would rightly cry foul.

TeCity’s founder, the deceased Tan Chin Tuan, would spin in his grave hearing his heirs being accused of being unfair to minorities.

Incidentally the cost of selling UE’s assets are likely to be very high.

Maybe future UE annual reports should give an estimate of the costs of selling these assets to unlock the published NTA. And maybe advisers to the independent directors of a target company; and the acquirer should subtract the costs of liquidating the assets when toying with NTA values in their reports.

If this had been done in ST, Tecity could have got away with a lower bid.

What price growth?

Bharti’s proposed acquisition of a 49% stake in South African MTN would give SingTel (at 30% Bhart’s biggest shareholder) exposure to markets in Africa and the Middle East, where there are a lot more mobile phones than people. Australia and Singapore (its biggest markets) are the opposite.

But the complex deal involving cash and a cross-shareholding by MTN into Bharti would mean that SingTel’s share of Bharti would drop to 19%. SingTel has indicated that it wants to rebuild its stake back up to 30%, if the deal goes through. At current prices, this means coming up with about US$5.3bn or S$7.7bn.

It has net debt of S$6.5bn and net gearing of 24%. But raising net debt to S$14.2bn and net gearing to 52% is not an option in a GLC, though it could make sense in any other telco that has stable underlying cashflow. Qwest (albeit it is now trying to reduce debt) has a ratio of 110%. (more debt than equity).

So if the Bharti/ MTN deal goes through, a SingTel rights issue will be necessary.

As to how dilutive this will be — S$7.7bn works out to only Singapore 48 cents a share, or 16% of its market capitalisation based on yesterday’s closing price of S$2.95.

Not too dilutive for exposure to fast-growing markets where there are more people than phones.

Long short pair

DBS Research’s economist issued a report suggesting Asia is on its way to an economic recovery because the region’s production is rebounding in a V-shaped fashion. “Asia is perched on a recovery path at the moment … we do not expect a W-shaped path in the near term.”

DBS Vickers Securities raised its 12-month target price for the stock of Singapore Exchange (SGX) to S$9.10 – the highest now among the target prices of 20 analysts polled by Bloomberg.

But does how does SGX look in the medium term vis-a-vis its rival, HKSE? Remember HK would benefit from a V-shaped recovery too.

Traditionally, an important measure of the success an exchange vis-a-vis its peers is the new IPOs it attracts According to Dealogic, some US$1.6bn has been raised this year through eight listings in Hong Kong. And the outlook is improving By contrast, Singapore raised US$12.5m from 3 IPOs all second board (sorry “Catalyst”) IPOs: with gloom pervasive, “2009 may be the worst year in memory for the IPO market”.

Funnily this just when FT reports that “Asia is expecting a strong pick-up in market listings in the second half of this year thanks to a steady flow of flotations in Hong Kong and amid growing expectations that Beijing could soon allow domestic listings for the first time in almost a year.”. It quoted Dealogic’s Ken Poon, “Given the strong liquidity flows into the region, I would expect 2009 IPO volumes will exceed 2008 … As Asian IPO volumes in 2008 was US$23bn while in the first half of 2009, it’s less than US$2bn … That would mean a really surprising second half. Sentiment is strong and liquidity is there to support new issues.”

And Hong Kong can look forward in 2010 to the AIA listing, the $5bn-plus IPO of AIG’s Asian life insurance unit This IPO is set to be the world’s largest IPO since 2007, when incidentally thanks to the Chinese, more money was raised in HK than in New York. So shouldn’t hedgies be thinking of shorting SGX, and buying HKSE? Even though SGX’s forecasted PE is below 20x, while that of HKSE is closer to 30x.

SIA’s Investment Prowess

If SIA were not such a great airline operationally and financially, I should be worried about its: “still keeping an eye out for possible acquisitions in China and India, despite the current economic downturn”.

The last time it went on a buying spree between 1999 – 2001, it showed that investing in airlines was not a core competency.

In April 2000, SIA purchased a 25% stake in Air New Zealand for 426 million New Zealand dollars (352 million Singapore dollars), or NZ$3 a share. Yes it was the usual “strategic” investment. SIA also participated in a subsequent rights issue, paying an additional S$51 million, to avoid diluting its 25% stake. The original purchase plus rights amounted to S$403 million.

SIA in 2001 tried to invest more, failing only because the NZ government was dilatory in approving an increase in its stake in Air NZ. Phew!

When 100% owned subsidiary Ansett failed in late 2001, pulling AirNZ down with it, SIA’s unapproved offer of NZ$1.31 a share was still on the table.

And in late 1999, a cash-strapped Richard Branson sold a 49% stake in his airline, Virgin Atlantic, to SIA for £600m (US$960m), a very good price for Mr Branson. SIA still has the stake and the much talked about synergies have been quietly forgotten.

There were also rumours of rows between Mr Branson and SIA on Branson’s plans to muscle-in on SIA’s lucrative UK to Oz route. So has the idea of selling the stake, what with valuations of airlines falling.

But let’s be fair. The then CEO of SIA has moved on to become chairman of OCBC, not bringing with him his deal-making enthusiasm: for that OCBC shareholders should be happy.

And recently SIA kept its nerve and refused to up its offer for a stake in China Eastern Airlines, which is now in financil difficulties. So maybe SIA is a more disciplined investor.

But being disciplined has its perils. Ask PSA which refused to outbid the Arabs for a stake in a choice HK terminal, only to have play catch-up on a second-rate terminal.

Things might not be as they seem

Consoling yrself that higher petrol prices are the price to pay for a V-shape recovery? The Western and Chinese economies are on their way to recovery, and rising oil and commodity prices are foreshadowing this recovery.. Think again because this NYT article http://www.nytimes.com/2009/06/11/business/economy/11commodity.html?ref=business reports that growing evidence suggests that a sizable portion of this buying has been to build stockpiles in China, and may not be sustainable.

Core competency of new Temasek CEO

Could the new CEO of Temasek finally sort out the strangeness of Temasek having

  • two world class competing offshore rig builders in two separate listed listcos; two property listcos — one big, one tiny
  • two MRO aerospace cos – one listed and the other part of a listed conglomerate?

Surely the national interest could be served by merging these and creating national champs. Yes, these have discussed inside before, but nothing happened. Gossip says that the bosse at the helms of TLCs are protective of their turfs: bit like Chinese lawlords throughout history. It always took a great leader to unify China over and over again.

But this is unlikely to be his priority. Neither is going into natural resources.

When he was hired to be CFO of Melbourne-based miner BHP in 1999, the “Big Australian” had lost its way.  In the 1990s, it did a series of ill-conceived acquisitions and failed projects, amid historically low commodity prices.

The former investment banker was one half of an American duo. The other was CEO Paul Anderson, who came from Duke Energy.

In their first two years, BHP got rid of 2,000 jobs and A$6.9bn worth of assets. They then merged BHP with Billiton, createding the world’s biggest miner.

Goodyear then became CEO and a key legacies, analysts say, is the financial discipline he brought to BHP. He ensured it grew fast enough to capitalise on the commodities boom while avoiding the ill-conceived spending of the past; and all the while,  returning cash to shareholders.

Shortly after he took charge as CEO,  it was announced that BHP would increase its capital management programme by more than four times to US$13bn, beginning with a US$2.5bn off-market return in Australia.

With the Singapore government tapping the reserves, someone with a track record of returning  cash to shareholders while growing the portfolio is needed.

There is no Singaporean with these skills.

Follow

Get every new post delivered to your Inbox.

Join 210 other followers