S’pore Inc: Hanging restricts investment options

The leader of the Greens in Australia said that the 2005 execution by Singapore of Australian drug trafficker Van Nguyen is an example of why Singapore’s human rights record should prevent SGX from acquiring the ASX.

As

— the Greens and the Liberals and independents can outvote the minority Labour Party govmin; and

— in a situation where the S’pore govmin does not have a voting stake in SGX (unlike in the case of GIC and Temasek where the govmin clearly has the power), its human rights record is an issue;

what chance for GIC, or Temasek or a group company, or any other GLC  getting approval to make a significant acquisition in the energy or mining sectors in Australia? Remember Temasek wants to expand its exposure in these sectors and GIC follows investment fashions and investing in natural resources is oh so hip. Oz is a “no-brainer” place to invest in given its abundance of natural resources, closeness to China geographically, its gd legal system and its political stability.

So maybe to widen our SWFs’ options, S’pore should promise Australia that it will never hang any Oz citizen for any crime. There is a precedent: a British man who fled to Oz was only extradited here only on condition that he wouldn’t swing if he was found guilty of murder.

It’s not as though there are that many other countries that have an abundance of natural resources, closeness to China geographically, gd legal systems and political stability.. Canada too is another place where judicial murder is frowned upon. That leaves only the US where judicial murder is fine.

So maybe my friends in Maruah should approach the SWFs for funding?

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Why yr remiser is useless

This doesn’t mean institutional salesmen are any better. All equity salesmen are the same. [Update on 30 Oct 2010]

Our findings support the thesis that cognitive factors have an effect on the decision-making on the financial market. In the present study, stock-brokers were guided more by past experience and existing beliefs than by logical thinking and rational decision-making. They had difficulties to disengage themselves from vastly anchored thinking patterns. However, we believe, that it is wrong to accuse the brokers for their ‘‘malfunctions’’, because such hard-wired cognitive principles are difficult to suppress even if the person is aware of them.

Citation: Knauff M, Budeck C, Wolf AG, Hamburger K (2010) The Illogicality of Stock-Brokers: Psychological Experiments

Give yr kid a head start in M&A

Be a private-banking client of StanChart.

Eighteen people aged 18 to 26 enrolled in the six-week program in Singapore, which ended Aug. 13. They were assigned to projects ranging from identifying potential acquisition targets for London-based Standard Chartered to developing ideas for branch design.

Casinos: Adding more pieces to jigsaw?

So we now know that locals constitute more than a third of daily visitors. Letter to Today from  regular TOC contributor. Marina Sands now tells analysts locals account for  38%. CLSA, a broker, says it this will “eventually” concern the the govmin.

But as the TOC writer has pointed out here and before, there are lots of info that is missing for anyone to make credible judgements on whether the casinos are doing what they are supposed to do: attract foreigners.

Here’s two pieces of info that could help in a tiny way:

1. Cannibalisation of existing gabling outlets. There is plenty of anecdotal evidence that the crowds at the Turf Club are thinning, and turnover is down . And that the clubs that have slot machines are suffering a decline in slot machine revenues, some significantly. Go ask operations and financial people at e.g. Polo Club, SRC and Guild Hse.

So plenty of cannibalisation of existing gambling biz? But the govmin won’t care, remember the levy for S’poreans and PRs?

2. Sentosa RW keen to dispel the impression that they were targeting heartlanders (remember free bus rides to casino From AMK, Bedok etc?) have been telling analysts that M’sians are the single biggest source of visitors, among the tourists.

Not that surprising to me as since before it opened RW Sentosa had been giving incentives to travel businesses to bring in visitors in from the small towns in West M’sia. All kind of attractive “freebies” including cheap hotel accommodation in JB are being offered by the travel agencies and bus companies.

BTW, CLSA expects RWS to report third quarter revenue of $749 million compared with $860.8 million in the second quarter.

So there are tourists coming, but not the kind the S’pore govmin, STB and the casinos had been telling us the casinos  are and will attract– James Bond figures; the very,very rich; and doctors and dentists and executives attending conventions. It’s the retail trade the casinos are attracting, at least at RW. No wonder the MS tables and machines are half empty, or so the staff tell me. But still MBS made “a record” $630.9m according to the Chairman of Sands Gp. It’s first time MBS is reporting its numbers since it opened.

Which begs a question, were the casinos had into spending too much for their facilities?  If the market turned out to be heartlanders and M’sian Chinese, lavish surroundings are of no interest and use. The stereotype is that these people would gamble on anything, given the chance.

But to be fair, the govmin wanted the casinos to attract sheikhs, tycoons, James Bond types, and the doctors, dentists executives and bankers attending conventions, not the grind mkt. So to get their licences, the casinos had to spend, spend. Who says our govmin is pro-biz?

So if it isn’t pro-biz and it isn’t pro-poor, what does it stand for? Maybe a variant of Robin Hood? Steal from the rich and give to its SWFs which are held on trust for all S’poreans?

When dealing with yr RM, broker or other financial low-life

15 rules that apply even if you have yr own private banker. Remember that most PBs are rewarded like brokers and relationship mgrs: The more they sell you, the bigger their pay. And the riskier the product, the bigger the commissions.

My favourites

15. There is no free lunch: Repeat after me: There is no free money, no riskless trade, no way to turn lead into gold. If you remember no other rule, this one will save your bacon time and again.

5. Motivation: What is the motivation of the person selling you any product? Is it the long term stability and financial health of your organization — or their own fees and commissions?

4. Asymmetrical Information: In all negotiated sales, one party has far more information, knowledge and data about the product being bought and sold. One party knows its undisclosed warts and risks better than the other. Which person are you?

3. Legal Docs protect the preparer (and its firm), not you

2. Overly Optimistic Assumptions: Imagine the worst case scenario. How bad is it? Now multiply it by 3X, 5X 10X, 100X. Due to your own flawed wetware, cognitive preferences, and inherent biases, you have a strong disinclination – even an inability — to consider the true, Armageddon-like worst case scenario.

1. Reward is ALWAYS relative to Risk: If any product or investment sounds like it has lots of upside, it also has lots of risk. (If you can disprove this, there is a Nobel waiting for you).

SGX: Will Ozzies trust it to do the right thing?

There have been allegations for years that SGX lowered listing standards to attract China listings in an attempt to keep up with HKEC. Of course SGX denies this. The mgrs in SGX would, wouldn’t they? And self-proclaimed small investors’ watchdog, SIAS, rightly pointed out that most S-Chips did not have regulatory problems. Local journalists blamed economic conditions for the disappointing performance of S-Chips.

But yesterday’s Lex in FT pointed out an interesting statistic, over the past 10 years, the FTSE-Straits Times index of Singapore-listed Chinese companies is down 34 per cent. Hong Kong-quoted Chinese stocks are up 685 per cent. It said SGX relaxed standards.

Anything to say central bank; SIAS; SGX; and our “nation-building”, “constructive” media?

Would Oz investors want S’pore standards on ASX, if SGX did relax standards?

MAS did not do a gd job on minibonds and other credit structured notes. It and its HK counterpart did not act when banks sold the notes using various practices later banned.  It did not force the banks to compensate investors. The HK regulator forced compensation.

This led to the absurd situation where DBS compensated HK investors, while giving the finger to S’poreans. https://atans1.wordpress.com/2010/08/06/what-abt-high-notes-sm-goh/ So waz a national champ for? To screw S’poreans?

If it is shown that MAS failed to prevent SGX from lowering IPO standards, it will cause problems for one Goh Chok Tong, the chairman of MAS, SM and hubby of “peanuts” Choo.

In turn this would reflect badly on the PAP, the governing party since 1959.

BTW why investors hate acquirers https://atans1.wordpress.com/2010/08/16/why-investors-dont-like-acquirers/

Think you hit a bad patch?

Just think of Texan Tom Hicks.

This year,  he had to sell his Texas Rangers in bankruptcy court. Then Liverpool FC was sold despite him screaming it was an “epic swindle”. He was co-owner of the Reds. Finally his Dallas Stars is for sale.

And last friday Hicks watched the Rangers win their first American League pennant. He had spent spent hundreds of millions of dollars building the team.

But don’t feel too much for him because he borrowed most of the money to buy the teams and to finance their buying of players. NYT article

And he has millions of dollars still.

“There was a sense that there was no amount of leverage that cannot be applied to a sure thing,” Bill Gross founder and co-CIO of Pimco the largest bond fund mgr told FT. “That was a lesson I learned in 1966 with blackjack, where although odds were many times in my favour, if you took too much leverage and had too much debt, then the house of cards will come tumbling down.”

Or as Omar Khayyam put it

Take thy good fortune, and thy bad withal;

Know for a surety each must play his game,

As from heaven’s dice-box fate’s dice chance to fall.

The numbers don’t stack up for SGX

No wonder SGX shares fell, and it’s not juz dilutive effect of issusing more shares.

There is little synergy. The two mkts remain separate. And cost savings is “peanuts” — US$30m in US$8.3 bn deal.

The deal only works because SGX

— will take on US$3.8bn of debt

— trades at 28x PE versus ASX 23x.

Article from Breakingviews

All in all, if it goes thru SGX shareholders are likely to be the losers. Great deal for ASX shareholders. What price S’pore Inc’s ambition for SGX  to try to keep up with HK’s stock exchange?

What are financial statements for?

A short and sweet explanation

http://alephblog.com/2010/10/08/financial-statements-have-one-major-purpose-each/

S’pore Inc: SGX’s bid for ASX

Wonder what will the Oz authorities think of this? SGX is part of S’pore Inc but S’pore Inc does not control it. After all Ozzies don’t believe in Santa Claus or the Tooth Fairy.

The largest shareholder of SGX with 23.45% of the shares is SEL Holdings.

But Pursuant to Section 11(2)(b) of the Exchanges (Demutualisation & Merger) Act 1999 (the “Merger Act”), SEL Holdings Pte Ltd (“SEL”), being the special purpose company set up under the Merger Act to hold the SGX shares for the benefit of the Financial Sector Development Fund, shall not exercise or control the exercise of votes attached to the SGX shares. Owing to the restriction in the exercise of votes attached to the shares, SEL is not regarded as a substantial shareholder of SGX.

Our central bank is responsible for the Financial Sector Development Fund. At one time, I think, Temasek was responsible for the fund.

China plays: Impact of interest rate rise

China  announced an unexpected increase of its key interest rates by 0.25 percentage point last week.

Local stockbroker DMG says

Some of the corporates we follow will be positively impacted by the interest rate hike:

There should be a net positive impact on China Essence Group (unrated) with higher borrowing costs likely to be more than offset by savings from US dollar- and Hong Kong dollar-denominated debts. China Essence is a potato starch manufacturer and derives most of its revenue from China’s domestic market. Interest-rate and foreign-exchange risks pertain mainly to its 690 million yuan (S$135 million) in outstanding debts, consisting of a US$50 million short-term bank loan; 90 million yuan in working capital loans; and HK$250 million (S$42 million) in zero-coupon convertible bonds due in December 2011 (with repayable amount at HK$378 million). With a significantly smaller yuan-denominated debt, we see net positive foreign exchange impact on weaker USD and HKD.

Why can’t our PM multi-task?

Those who learn more than one language multi-task better. In an interview with the BBC World Service … Professor Diamond said the study suggested that individuals reared bilingually were better able to focus in confusing situations … “An infant reared bilingually has to practice at paying attention which the rest of us don’t.”

So how come, our PM, who is at least tri-lingual, admits he cannot multi-task? At the last GE, he admitted he could not multi-task, telling us that if there was a decent Opposition, he couldn’t work for us, because he would be busy “fixing the opposition”?

After all his dad, who speaks several languages, has shown that he can multi-task: merger with Malaya, economic dev and “fixing” the communists and British. But maybe the age gap shows. When MM the merciless almighty was doing all all these and more, he was only in his thirties. His son is now in his 50s.

And MightyMind is living proof of another adv of speaking more than one language.

In another Canadian study … it was suggested that those who speak more than one language were less likely to develop forms of dementia, including Alzheimer’s … The possible explanation was that bilingual individuals were exercising their brains in ways which their monolingual peers were not, and thereby delaying dementia.

Article

But as PM was an exception to multi-tasking, maybe he will be to this too?

MU’s dynamic duo at their best

Bring on the trophies, while giving the finger to the Glazers and the board.

Alex and Roonie one-two

51. At 4:40pm on 22 Oct 2010, raihan_bbc wrote:

Lots of unanswered questions remain. This could all be a conspiracy between Ferguson and Rooney to apply pressure on Gill/the Glazers, and therefore ensure better funding for the team. This is a problem when large debts are leveraged against a football club in an economic crisis.

49. At 4:40pm on 22 Oct 2010, tomefccam wrote:

How obvious is this situation

Rooney, guided by Paul Stretford has known he can double his wages elsewhere. The Man Utd board offered him a deal, he thought he could get more out of the club.

How does he do this, says he wants to leave in August. The deal remains unsigned.

The board don’t improve their offer, reality sets in. SAF plays the media like a dream. I’ll confirm Wayne is intent on going, this will make the borad (who he deosn’t have a great relationship with) stump up more cash.

Of course they will stump up the cash when faced with the reality he could leave, and take with him the millions in revenue through shirt sales and image rights he carries.

Do this in a public forum, build media interest and that will make the board take notice.

Oh and while you’re at it Wayne, why don’t you say you haven’t had a an ankle injury to make it look like we really have fallen out.

Played out like a dream. mission accomplished. SAF keeps his player, Rooney gets his deal and the media get their story. Who loses out? The man utd fans who believed he actually would question the ambitions of a club who have dominated Englsih football for nearly 20 years.

From BBC Online

Our SWFs juz lost S’pore S$685million

Mapletree Industrial Trust was up 25% from its issue price on its first day of trading while GLP (Global Logistic Properties) was up 11% on the first day of trading last monday.

For MIT, this meant that Temasek could have gotten S$300m more and GIC S$385m more for the GLP shares it sold. Not peanuts.

What this means is that the IPOs were priced badly. Ideally an IPO should open at a modest premium from the issue price. 5% would be fair.The investors make a modest profit, while the issuers get a gd price. So my S$685 is an exaggeration, the loss should be S$651m.

Now investment banks will always try to underprice issues because they want happy investors and don’t want to be stuck with unsold shares. Usually they get away with underpricing because issuers don’t know the intricacies of corporate finance. But Temasek and GIC are full of financial whiz-kids, or sure so we are assured.

But then maybe they gave away such a big discount because the money wasn’t theirs?

“It wasn’t that hard for me, just so you know. I made the decision to use your money to prevent the collapse from happening.”

– President George W. Bush, speaking at the University of Texas at Tyler on Tuesday night, via the On the Money blog of The Hill.

http://dealbook.blogs.nytimes.com/2010/10/20/quote-of-the-day-bush-on-the-700-billion-bailout/

If Siew Kum Hong had been been an NMP, I’m sure a parly question would have been asked. But the people-in-blue, “My wife is entitled to my seat” man and the NMPS are likely to remain silent. Our only hope is for one of the whites to ask the question.

The case for Indonesia: incompetency notwithstanding

I’m sure we are all upset that the #$%^ Indons are at it again: promising yr after yr to control forest fires while doing nothing. And there are riots

But as FT’s Lex reports today To say that Indonesia has outperformed would be an understatement. A thousand dollars invested in the MSCI Asia ex-Japan index 10 years ago would be worth about $3,600 now, with dividends reinvested. The same sum invested in the Jakarta Composite would have grown to almost $13,000. $=US$

Indonesia’s core investment case remains compelling. Bigger than Brazil in population, and with a fractionally younger median age, Indonesia resembles India in the composition of its growth: powered not by net exports – just 1 per cent of gross domestic product in the first half – but by consumption and fixed capital formation. As it had no demand shock from which to recover, Indonesia may be one of a handful of regional economies to see gross domestic product growth accelerate next year.

True Foreigners sold a net $148m of Indonesian stocks on Tuesday, the biggest net sale in eight months, as police prepared the razor wire.

But even at near-record high valuations – Jakarta’s price/book ratio of 3.5 times is not far from the 3.8 it hit almost three years ago – this remains a tough market to underweight. Oligopolies in the consumer, financial, utility and resources sectors mean that aggregate returns on equity are Asia’s highest.  They will almost certainly be back.

How well-off are we?

Ronald Reagan won the 1980 US presidential election by asking Americans whether they were better-off than they were when his opponent President Carter entered the White Hse, four yrs previously.

He won because the data showed that Americans were worse-off.

Now this being S’pore where the “constructive, nation-building” media trumpets the govmin’s “achievements”, while avoiding analysis of govmin policies and actions, and the think-tanks are funded by govmin, and where even the govmin admits that the official stats miss out sensitive data,  we don’t know whether we are better off than when LHL became PM, or even going back further when the hubby of the  “Peanuts” lady became PM.

Maybe the very smart ex-hedgie who is now Sec-Gen of RP and his dynamic duo of scholars should try to tell us well S’poreans have done since MightyMind, the player manager, stepped off the pitch, preferring the sidelines*. Their manifesto shows that they are economic literate and have their hearts in the right places, unlike someone like VivianB.

Of course, their analysis would be suspect. They would say we were worse-off, wouldn’t they?

But it would force the govmin to respond and from this clash of ideas maybe some clarity can emerge.

* I know, I know bad analogy as he still in cabinet and on PAP central committee.

Feeling Bullish? Great chart

This will remind you the last time the general US equity market went up, but the index of US banking stocks went down. The general US mkt tanked shortly thereafter and Temasek and GIC lost billions. Chart

Recently the US general mkt is powering ahead, while bank stocks are falling.

Keep calm.

Africa: How big is it geographically?

Seems, US and China can fit into it with room to spare.

No wonder the Chinese are flocking there https://atans1.wordpress.com/2010/10/19/the-chinese-see-value-in-africa/

F1 & “nation-building, constructive” media

Today there was a news item that reminded that the govmin was studying the economic benefits of the F1 race before deciding on whether to proceed with more races after the present contract expires.

This reminded me of my initial reaction when the annc was first made a few months back: “Waz this? Could all the reports from SPH and Mediacorp abt all the benefits of the F1 races be nothing but spin and rubbish?’

There was nothing in the media reports abt anything other than that F1 was a success economically for S’pore. Surely the “thorough” study means that things were not as was reported.

SPH as a listco, pls remember that future profits partly depend on whether S’poreans can believe yr reporting on non-political issues. The Internet means that the quasi-monopoly that SPH enjoys, gets eroded.

The Chinese see value in Africa

The Chinese (people and state-owned enterprises (SOEs)) are flocking to Angola in darkest Africa. The latter are there for the natural resources that China needs, the former because they see the personal opportunities that they see the SOEs drive into China will bring them. Smart people, the Chinese.

So shouldn’t S’porean entrepreneurs and companies (TLCs, GLCs, and SWFs included) head for Africa? Rather than head for China, or Asia as the govmin keeps encouraging us to do? True Asia esp China waz the place to do in the 80s and 90s and early noughties, but if the Jews of Asia are moving on out of their country into Africa, shouldn’t we?

And admiral Cheng Ho was there in the 15th century.

Are our ministers on auto-pilot mode, or is there something they dislike abt Africans?

BTW when I was a student in London in the late 1970s, I got a lot of stick from African students. They tot one LKY was a racist. I argued that he was simply stating facts. This stance cost me dear: I wasn’t invited to partake of raw stakes of lion, zebra or antelope meat. I love steak tartar.

Importance of a “strong” share price

Why does mgt worry if the share price is weak?

— The founder of a public company here usually  owns a significant number listed shares. It’s also commonl for the management of a company to have  stock options tied to the company’s stock prices.

— The larger the market capitalisation of a company, the more analyst coverage the company will receive. Analyst coverage is a form of free (SGX fee-for-coverage scheme excepted) publicity and allows both senior managers and the company access to a wider audience.

— Poor stock performance could, over the medium to long term, be due to mismanagement. If the stock price consistently underperforms the shareholders’ expectations, the shareholders are going to look for management change. In extreme cases, shareholders can try to oust current management in a proxy fight.

— Creditors tend to look favorably upon companies whose shares are performing strongly: the company must be doing sumething right to attract investors will to chase prices. This treatment is in part due to the tie between a company’s earnings and its share price. Strong earnings are a good indication that the company will be able to meet debt requirements. The company will receive cheaper financing through a lower interest rate, which in turn increases the amount of value returned from a capital project.

— Strong price performance is useful for a company seeking additional equity financing. If there is demand, a company can always sell more shares to existing shareholders or new  investors to raise money. The higher the share price, the less shares it needs to sell.

— Listcos without a controlling shareholder are vulnerable to takeover  if they allow their share price to decline substantially. For this reason, companies would want their stock price to remain relatively strong to deter interested corporations from trying to take them over.

— A company whose shares are in demand,  has an advantage when looking to buy other companies. Instead of using cash to buy company will issue more shares to fund the takeover.

— Finally, managers  may aim to increase share simply to boost their egos, and marketability in the job market.

Minimum Wages: Yikes! PAP may be right!

The economic case for this isn’t as “open and shut” or the “no brainer” that RP, SDP and Tan Kin Lian make it out to be.

Recent academic research can be cited by NTUC minister and other ministers to prove that having a minimum wage increases unemployment. [Warning: the research is extremely dry and boring, as following the links  will show]

Wonder if Dr Chee, Tan Kin Kian, KennethJ etc have been keeping up with the latest academic research on this issue? I’m sure NTUC and MoM ministers would have been briefed by their staff on the evidence supporting the meanness thesis, sorry the “Being cruel to be kind” thesis.

Improving Workfare must be surely better? https://atans1.wordpress.com/2010/10/13/minimum-wages-missing-the-point/

BTW, I must thank Yawning Bread for changing my views on Workfare. I had confused the meanness with which it is implemented with the soundness of the principles behind it. Stupid me.

http://yawningbread.wordpress.com/2010/09/26/in-principle-workfare-is-better-than-minimum-wage/ put me right on the soundness of Workfare.

Why deals happen or don’t happen

What’s holding back deals? According to Mr. Leon Black from private equity firm Apollo Management. , three reasons:

• The prices seem too high
• The financing isn’t attractive enough
• There’s still an unstable economic environment*

“All these things factor in,” he told reporters.

The converse would need happen for deals to happen.

*And the mood has switched from positive to negative in six mths. Today’s FT reports Some of the world’s top business leaders are reversing plans for mergers and acquisitions due to a sharp deterioration in confidence over the past month amid fears of the uncertain macroeconomic outlook.

Austerity measures, increasing taxes, currency conflicts and regulatory concerns, among other issues, are undermining confidence in the global economy and reducing appetite for M&A, in spite of improved funding availability.

A number of mooted deals have collapsed in the past week. On Friday, HSBC, Europe’s biggest bank, ended talks to buy a £5bn ($7.3bn) majority stake in South Africa’s Nedbank, while attempts by Sinochem of China to put together a rival bid for Potash are faltering . [Update on 18 Oct]

Can you trust Citi?

Remember JR from Dallas?

He recently won US$11.1m++ from Citi. The arbitrator held that Citi’s broking arm had breached its fiduciary duty to him. This sum includes US$10m in puntitive damages.

And Terra Firma (a British private equity firm), is suing Citigroup over its disputed take- over of EMI for £4.2bn on the eve of the credit crunch. It is demanding compensation for EMI’s accumulated losses of £1.75bn and a punitive sum worth three times that figure, which would give TF £7bn.

The crux of Guy Hand’s case is that his private equity firm Terra Firma was allegedly tricked into buying EMI in 2007 by leading Citigroup financial adviser David Wormsley. Hands alleges that Wormsley tried to force up the price during the sale by telling him that another bidder … was still in the running. Guardian

And in 2008 in S’pore, Singapore Tycoon Oei Hong Leong, who was widely dubbed “The Man with the Midas Touch,” sued Citigroup for negligence and misrepresentation after he lost $1billion on foreign exchange and U.S. Treasury bond transactions last year.

The matter was settled out of court, in 2009.

Remember “The Citi never sleeps”?  Well so did the Eye of Sauron, the master of the orcs and other baddies  in Tolkien’s Lord of the Rings.

S$ cash is a call option against US$ etc

True  interest rates are miserable if you have S$ deposits, but against the USD, ringgit and HK$  it remains an appreciating asset.

The Monetary Authority of Singapore surprised markets yesterday by signalling that it will allow faster gains in the Singapore dollar to fight inflation, sending the currency to an all-time high against the US dollar

Reducing inequalities: rich benefit too

“The Spirit Level”, by Professors Picket and Wilkinson,  claims that countries with greater inequalities are causing chronic health and social problems for everyone, including the rich.

“The countries with the biggest gap between the rich and the poor have the highest level of whatever health and social problem it is we’re looking at,” said Professor Pickett.

Unequal societies “have more violence, they have higher teenage birth rates, they have more obesity, they have lower levels of trust, they have lower levels of child well-being, community life is weaker and more people are in prison,” adds Professor Wilkinson.

The argument is that inequality actually causes all these social problems, because unequal places like the UK or USA are more socially competitive places to live in than Sweden or Japan.

To support their argument, they use data from 23 countries, and 50 US states – in other words, societies already wealthy enough to provide the basics for their citizens, so it is obesity or heart attacks that are bigger worries than diseases caused by poverty.

BBC article

If they are even half correct (and their views are contested), the govmin should not look upon measures to reverse the growth in the Gini gap as wasted expenditure (as the social welfare minister implies  when he ridiculed the idea of increasing the poverty allowance by $50 by asking if the  the poor want to to eat hawker or restaurant food), but rather as an investment. In S’pore, “expenditure” is usually a dirty word, whereas “investment” is a gd word.

Hopefully our ministers will order their staff to read the book and summarise it for them, and people like Kenneth J, Dr Chee, Tan Kin Lian, and Goh Meng Seng read the book. Knowing Eric Tan of the WP, I’m sure he would have ordered the book, if not read it.

In the UK, the PM and leader of the Opposition quote from the book regularly.

And the Chinese Communist Party’s leaders are addressing the issue of narrowing the rich-poor divide. It seems they do not agree with MM that it is inevitable that the gap will grow. [Note this para is an update at 5pm 15 October 2010]

DBS:Takeover target?

Could DBS be a takeover target for StanChart? The latter has just launched a 3.2bn sterling rights issue which would make it one of the top 20 banks by market cap. Temasek would surely be glad that one of  its best performing investments relieves it of a dog of an investment. StanChart is itself the subject of talk that JPMorgan wants it.https://atans1.wordpress.com/2010/09/22/stanchart-a-takeover-target/

The only advantage for StanChart to own DBS is that it will finally have a market where it is the dominant player. It has never had a market where it dominated, unlike HSBC which parlayed its dominance in HK into being a global player.

As to DBS’s other biz, they are dross compared to similar biz owned by StanChart.

BTW, DBS is late to another party.

In June DBS Group annced that it was looking looking to expand its Global Transaction Services (GTS) biz by doubling its current annual revenue of S$800 million in less than three years.

The newly appointed, Thomas J McCabe, managing director of Global Transaction Services, said the expansion will be carried out in a two-pronged approach.

This involves both building on its current Internet banking platform for its corporate clients and grooming GTS staff to meet their clients’ growing needs.

The bank is investing S$9 million on a new technology platform, including smartphone applications, to make its Internet banking service more functional.

The problem is that this biz which covers such services as corporate cash management, foreign exchange, trade finance, global custody and hedge-fund administration, is the new in-thing for much bigger and experienced banks because it provides steady income and is not too capital-intensive,. Some banks have moved investment bankers into this dull biz.

Looks like DBS has not changed, moving late into a fashionable biz where it has no special expertise. BTW Merrill Lynch and Citi had a reputation of moving late into biz where they had no special skills. Subprime is a classic example. Here’s an article on Citi’s latest possible folly: spending on new biz. Remember many of DBS’s FTs are ex- Citibankers, as is OCBC’s CEO. Only UOB is run by a true-blue S’porean.

DBS Securities: M&A calls

Based on experience, when brokers’ start to make calls on potential takeover targets, it’s time to take some money off the table.

Likely candidates are found in the consumer, oil and gas and tech-related sectors. For the next PE investment cycle, we believe the consumer sector will rank highly on the buyers’ radar screen, as we are likely to see Asia’s rising disposable income and affluence growing over the next three to five years. A possible takeover candidate within this segment is Asiatravel.

The Singapore O&G sector caught our eyes for being the cheapest O&G basket globally. Excluding outliers such as Mermaid (100 times FY11), the Singapore O&G sector trades at 7.2 times PE, a 33 per cent discount to the global average of 10.8 times.

Although the sector’s near-term outlook is weakened due to macroeconomic factors, we believe buyers with a longer-term investment horizon can take advantage of the current lull to position for the eventual upswing in oil prices and demand sometime in 2012.

Mermaid Maritime is among the most undervalued stocks for privatisation or takeover. [Kinda weird this as in previous para this stock is reported as trading at 100xFY11].

For the shipyards, we think that JES’ net cash position and free cash flow by 2011 makes it an ideal privatisation target, especially when the owners hold 55 per cent of the issued share capital.

The recent furore over Armstrong Industrial’s takeover also reminded us that tech M&A deals could also heat up as cash-rich global MNCs look to acquisitions to accelerate growth and expansion into new geographies.

Possible targets with good technical strength and solid balance sheets are Hi-P, Meiban and STATS ChipPAC.

Other candidates which are not part of any top-down investment trends include Biosensors, Luye Pharmaceutical, Wheelock Properties and OKP.

Improve Workfare not press for Minimum Wage

By arguing the case for minimum wages, the SDP, Tan Kin Lian, RP etc are allowing the govmin to get away with being mean to the poor under the present arrangement which does have an element of “minimum wage”.

Tharman said in February this year that the enhanced Workfare scheme will cost the government S$100 million annually and benefit around 400,000 low-wage workers. S$100 million in the S’pore context is “peanuts”. It is 0.3% of the operating expenses under the latest Budget*.

And Workfare payments end up largely locked up in never-never CPF land. OK I’m being unfair, but the fact is that the poor need cash now. Yes they will need it in the future, but when you are living hand-to-mouth, and hungering for hawker or restaurant food (as the welfare minister insinuates), you need $ now.

So the Opposition and others like TKL  should be pressing for more to be spent on Workfare and for more $ to be disbursed today rather than at 65. The govmin cannot argue against Workfare, juz how much to give, and when to give it. The government will have a hard time defending the tiny amount set aside for Workfare.

BTW, I’m surprised that the do-gooders have not raised Kaushik Basu’s suggestion of how to help the poor.

Kaushik Basu of Cornell University and chief economic adviser to India’s finance ministry says it is not enough that the income of the bottom 20% rise at the same percentage rate as the average. Instead, they should get an equal absolute share of the income the economy.

Let’s translate this into S’pore terms.According to the CIA Fact Book, in US$ terms (using purchasing price parity) the S’pore’s GDP was US$235.7 billion. Based on MTI’s latest growth estimate of 4.5-6.5% growth in 2010, this would work out to GDP of US$246.3 — US$251.0bn. The increase would be S$10.6 — 15.3bn. If this formula were adopted the poorest 20% would get S$2.1 –3.1bn.

And election winner? A one-off transfer of US$2.1 or S$3.1 billion to the poorest 20% of S’poreans. Less than GIC’s paper loss on its investment on UBS or Temasek’s realised loss on Merrill Lynch.

And as it’s one-off, there is no fear of welfarism creeping in. The govmin is right to be fearful of welfare getting out of hand. The BBC reported that 40% of UK  govmin expenditure goes to welfare payments. Talk of entitlements running riot.

Update — Academic research supports PAP view

https://atans1.wordpress.com/2010/10/17/minimum-wages-yikes-pap-may-be-right/

Update in Dec 2010

*This may give the impression that that is all govmin spends on Workfare. If so I apologise.  “[A] total of $1.65 billion in the last five years, or $400 million a year, to help 400,000 low-income workers” ,the PM reminded in November. So the spending in Workfare is now S$500m or 1.5% of the operating expenses under the latest Budget. Still peanuts and remember the Kiddie Games cost S$387m. It was budgeted at S$122m. And yes I know that 1.65bn divided by 5, doesn’t equal 400m. Taz why I quoted PM.

Update on 4 January 2011

The meanness of Workfare in $

A gd writeup on the nitty gritty of WF

Evidence that mkt is at a turning point

The problem is which direction. No-one has a clue.

As evidence, I cite the fact that  the average share of “holds” across  five major markets was 39% t. Now it is 60% (from FT)

The reason in my view is that analysts dare not make calls to buy or sell because of uncertainty abt the global economy and markets. Assumptions underlying a buy or sell may be undermined by market dynamics or by changing economic fundamentals.

Better to sit on the fence.

Another piece of evidence is that gold, government bonds and bonds are all strong. Gold is up because of fears of inflation caused by govmins printing money (quantatative easing). This shld mean weaker govmin bond prices but bond prices are strong because of the fear of deflation. Fear of deflation shld mean weaker equity prices but equity prices are strong because the view is that fear of deflation is leading govmins to print more money.

As to the historical relationship between gold and stocks https://atans1.wordpress.com/2010/10/07/equities-and-gold-go-opposite-ways/ .  They go in opposite directions.

S’porean may own Liverpool FC

Peter Lim’s the name, and footie is his game? BBC article

OCBC: US broker very bullish

Morgan Stanley is very bullish on OCBC and neutral on UOB. It ignores DBS.

Why Overweight OCBC: Our analysis shows that OCBC is more geared to upside from improved global sentiment than UOB is. In particular, it is likely to benefit sooner from improved capital markets revenues, given its greater exposure (23% of total revenues, compared with 13% for UOB) and its reliance on wholesale and private banking rather than mass affluent wealth management. In addition, as a more geared bank, it would benefit more from falling risk premia for banks.

In addition, OCBC’s greater overseas contribution and stronger growth track record give us more comfort in our higher growth forecasts for this stock.

Catalysts aplenty: We see many possible triggers for a rerating. These include an improving global economic outlook(more in line with Morgan Stanley estimates) or a lift in rates. Also, the 3Q results, due on October 29 for UOB and on November1 for OCBC, could act as a catalyst if the rate of margin compression seen in Q210 eases, or if the weak 2Q trading profit trends are reversed.

The main risk to our relative call would be rising leverage premia for banks, putting more pressure on levered OCBC, or a share buyback from UOB, which we estimate has the potential to raise its valuation by 15%. However, with UOB’s management keen to hold on to capital, the latter looks unlikely, and we believe OCBC’s higher growth offers better probability of returns.

I never realised that OCBC had the weaker capital base. But then by global standards it is overcapitalised. MAS never bot into into the view that banks don’t need capital if they are well managed.

The dark side of a global city

Joel Kotkin shared his insights on the growing class divide in ‘global cities’ such as London…in a lecture at the Civil Service College on Thursday BT reported last Saturday. He is the Distinguished Presidential Fellow in Urban Futures at Chapman University, California.

He citied statistics on growing income inequality and poverty everywhere – US, Germany and even Japan

One gauge of how depressing these numbers are, he said, is to look at how unaffordable housing has become in some major cities. As a ratio of median home price to median family income, it will take 5.2 years to afford a home in Toronto, 7.1 years in London and 9.3 years in Vancouver.

[Aside: looks gd to S’poreans. Didn’t a minister say housing is affordable because S’poreans can afford to pay the 99-yr leases on their HDB flat in 30 yrs?]

… he showed London as the first- world capital with third-world realities. London has the highest child poverty rate of any region in England, and this pattern is repeated for working-age adults.

And we aspire to be another London, NY?

Maybe taz why MM says the gap between rich and poor will grow wider here. The govmin prefers to aim to be a London or NY, rather than aim for a narrower income gap or a better quality of life for us.

Yes: This has nothing to do with investing. But @#$%, I don’t want to live in a dangerous city in my old age. Looks like JB or Batam will be safer. I’ll rent there, living off the rental income from my private property here.

India doesn’t trust our SWFs

Once upon a time, India deemed GIC and Temasek to be one entity and there was a 10% on the joint holdings of both in Indian companies. The Comprehensive Economic Co-operation Agreement (CECA) which was signed in 2005 provided that Temasek and GIC were to be recognised as separate entities, i.e. each is entitled to each own up to a 10%  stake in a company.

There is a report in an Indian newspaper that the Securities and Exchange Board of India (SEBI) has ordered  that both Temasek and GIC could only own up to a combined 15% stake in a company, or takeover rules would be triggered.

Can you blame one MM for once being sceptical abt investing in India?

Link between 2 wannabe presidents

Heard of Fisca? It is Financial Services Consumers Association. It tries to educate people in the basics of financial literacy. A worthy cause.

It was set-up by one Tan Kin Lian who started a petition to get 100,000 people to ask him to be president.  He got about 1,200 signatures and the petition is still alive.  But we can reasonably say that this petition to self has failed.

He is the president of Fisca which he founded.

His VP is Andrew Kuan. Name sounds familiar? It should. Few years back, he tried to be a candidate for the presidency. He didn’t meet the criteria.

The conundrum of analysis

I’m reading the biography of  Sir Dick White who has the distinction of being the head (at different times) of Britain’s MI5 (counter intelligence agency) and SIS or MI6 (espionage). They were agencies with different traditions and the officers were from different social backgrounds.

He told his biographer that the classic conundrum of intelligence is that it is classified as unreliable if it does not confirm preconceptions.

I would say the same is true when it comes to any kind of analysis.  The analysis is doubted if it is not the conventional wisdom. Enron is a case in point. There were analysts and journalists who were screaming,  based on publicly available information, it was a house of cards. But they were ignored until the mood changed.

White said the only way to solve the intelligence conundrum was for the messenger to be trusted. Likewise in analysis. Another way of solving the problem is for the analyst to be shrewd enough to tailor his analysis so that it seems an extension of the conventional wisdom.

The film director,Stanley Kulbrick was a master of just being ahead of the tastes of his audience, slightly. As a result he made box-office hits — 2001: A Space Odyssey, Spartacus, Dr Stranelove, Paths of Glory, Lolita etc etc — that were also art house movies.

Of course this stretching of preconceptions is not always possible in analysis as in film making. A Clockwork Orange was considered too violent and he never won an Academy Award for best picture or director. Only one of his films got an Oscar: for special effects.

Netizens miss another ministerial goof

Vivian B has done it again. He goofed again, or rather his ministry did. The SDP is correct in rebranding the ministry: MCYS, now officially the Ministry of Clangers, Yuks, and Screw-ups.

OK a VB or MCYS balls-up is par for the course in golfing terms. But the Net seems to missed it.

ST reported on Wednesday that an Orchard Road mall is “desolate”. And the last para of extract from an ST article shows that it is in a busy part of Orchard Rd. MCYS goof

Shock, horror. Waz wrong?

The answer is that *Scape is an initiative of MCYS.

Maybe Netizens think the antics of VB and MCYS are not worthy of comment. It will be only news if they don’t screw-up.

Wondering what this post has to do with cynical investing? Stay away from investing in anything VB or the Ministry of Clangers, Yuks, and Screw-ups has any link to.

And it shows the importance of investing in companies that have decent mgt. Often a company is undervalued because of poor mgt. Replace the top man, and the results will often surprise. The fish rots from the head, or so I’m told. [This para is an update at abt 10.30am on 8 September 2010]

Better than gold?

If you believe the gold story but lack the balls to come in at the US$1300 level, why not try silver? The Economist sets out the case.

[S]ilver and gold have much of the same allure. The combination of a weak dollar, low interest rates and economic uncertainty that has convinced some to buy gold and pushed its price up to around $1,300 an ounce has also encouraged them to put their money into other likely-looking stores of value. Silver not only offers investors diversity but it is also supported by real industrial demand.

… 25-30% of gold is bought by investors, only about a tenth of global silver production goes the same way. Roughly half the world’s silver goes to industrial users (the balance is accounted for by jewellery and other silverware), although their identity has undergone a huge shift over the past decade.

Granted film (which uses a lot of silver)-based photography has been made extinct by digital photography but New uses for the metal plugged the gap left by film. Silver is widely used in electronics, whether in buttons for TVs, in membrane switches in computer keyboards or as a coating for CDs and DVDs. But the great hope for silver is the solar-power industry. Photovoltaic cells, the technology used in 70% of solar panels, contain silver. Although other technologies that do not use silver are on the rise, heavy government subsidies are forecast to help keep the solar industry growing.

Demand for silver is likely to keep rising in developing countries in particular: China, which used to export the metal, now imports it. The same cannot be said for supply …  three-quarters of the world’s supply comes as a by-product from copper, lead and zinc mines. So ramping up production is difficult. Total supplies of the metal in 2009, at 27,650 tonnes, were barely higher than in 2004.

But do remember that Warren Buffett has sold off the silver he bot in 2008. He could have some left but the bulk were sold last year.

Related posting

https://atans1.wordpress.com/2010/10/07/equities-and-gold-go-opposite-ways/

SPH: Civil war in the newsroom?

SPH is a blue chip investment so any mgt problem will affect investors esp those who bot it for its very decent dividend yield.

Are there mixed agendas in the newsroom?

The coverage of Mrs Kuan Yew death is a case in point. As is the case in matters deemed of “nation building” interest, ST went to town with pic after pic, and article after article of people mourning her death. I got the impression that tens of thousands of S’poreans paid their respects.

So I was surprised to be informed that the same ST reported that about 5000 people turned up. That in S’pore’s context is a good crowd. S’poreans are so lazy that they have problems turning out to protest their financial losses (example the minibond and HN5 fiasco). They even have problems signing online petitions (same example).

But what should worry investors is why after giving us the impression of a crowd of tens of thousands, ST went on to deflate the number.

Is this a sign of discord in ST (SPH’s flagship) or is it a balls-up? Either way I’m putting SPH on my “Could things go wrong here?” list.

Better for gold, worse for stocks

David Ranson of Wainwright Economics:

When gold was up more than 20% over five years, the median return from largecap stocks was 2.1%

When gold was up less than 20%, the median return from stocks was 44.7%

When gold was unchanged, the return was 52%.

When gold fell less than 20%, the return was 68.7%.

When gold fell more than 20%, the median return was 99%.

… the better for gold, the worse for stocks. Which makes the simultaneous strength of gold and equities today look all the odder.

Thanks Buttonwood

US can still go into recession

Equity markets’ are a’flying in the US on various pieces of good news.

But the Institute of Supply Managers (ISM) survey of US manufacturers suggests that this cycle has turned negative again. Almost without exception, whenever the ISM’s measure for inventories exceeds its measure for new orders, a recession comes soon after.

Almost a state funeral, but not quite

With her coffin lying in and  leaving from Sri Temasek, and being borne on a gun carriage to the incinerator, there is an air of a state funeral ala Goh Keng Swee, though legally Mrs Lee Kuan Yew’s funeral is not a state funeral.

I make no comment on whether she deserves this treatment.  One could argue reasonably that Sri Temasek was her official home, being once the official home of her hubby, and now her son. And it does look inappropriate for a coffin that was lying Sri Temasek to leave Sri Temasek in an ordinary hearse.

But I wonder why others who did sterling service for S’pore but were considered not worthy of a state funeral could not have been accorded the honour of a gun carriage?

As for Mrs Lee herself, people who knew her personally (and whose views I respect) tell me that she was a lady, always saying and doing the right thing.

Critics of MM’s views share his assumptions

I suspect that many of those who are upset by MM Lee’s comments about Singaporeans becoming “less hard-driving and hard-striving” and comparing them unfavourably to Chinese immigrants e.g.

http://tankinlian.blogspot.com/2009/12/here-is-interview-given-by-mr.html

http://www.temasekreview.com/2009/12/25/mm-lee-slammed-by-netizens-for-callous-remarks-on-singaporeans-made-in-national-geographic-magazine/

may not consciously realise that they share the same assumptions as he does — that it is a good thing to be “hard-driving and hard-striving”, hungry”, pushy parents etc.

They are upset because he thinks that Chinese immigrants to Singapore are better at these attributes than native Singaporeans. Their disagreement is not with the assumptions about hard work but about the view that the Chinese immigrants are more hard working than us.

What has this to do with this blog?

Investors must always be aware of the assumptions they are making. Don’t cut short the process by making decisions based on assumptions in the unconscioues mind. Think before you invest. You can lose money.

GIC’s dog investment will be less profitable

Switzerland has proposed new rules that will make UBS less profitable. As GIC is 45% underwater on its UBS investment, this means it may take longer for GIC to breakeven on this dog with fleas. MM’s talk of 30 years may be an understatement. And he was talking of profit not breakeven.

And GIC may have to invest more in UBS if it decides that it wants to maintain its present holding. These rules means UBS will have to raise capital.

Finance 101: the more capital is required to hold, the less funds it has to make money because capital has to be invested in very safe assets, normally government bonds of the supervising country.

UBS and Credit Suisse will have to accumulate billions of francs in extra capital under proposals from a Swiss expert group on the role of banks deemed “too big to fail.”

The recommendations will oblige Switzerland’s two top banks to maintain supplementary national capital standards far in excess of the Basel III rules agreed by international regulators last month. note

The proposals will oblige the banks to hold total capital equivalent to 19 per cent of the risk weighted assets on their balance sheets, based on their current figures.

Under the proposals, the first 10 per cent of capital will have to be strictly defined “common equity” – meaning capital of the highest quality. The requirement is three percentage points more than the 7 per cent proposed under Basel III for banks to pay bonuses. FT reports.

Related posts

https://atans1.wordpress.com/2010/10/01/gics-loss-on-ubs-and-citi-investment/

https://atans1.wordpress.com/2009/11/24/where-value-investing-can-go-wrong/

The second link talks abt GIC’s and Temasek’s pre -crisis strategy of investing in efficient (in hindsight thinly capitalised) banks.

Nomura: Is this wise?

According to the NYT, Nomura’s chief risk officer “held a similar post at Lehman”.

Kamikaze?

China: Great Morgan Stanley chartbook

Via www.hedgeanalyst.com.

Thanks guys.

GIC: Waz the point?

My dig at GIC and VB got a response that implied I didn’t know the theory about judging results by the entire portfolio https://atans1.wordpress.com/2010/10/01/gics-loss-on-ubs-and-citi-investment/

If GIC and our “constructive”, “nation building” media treat us S’poreans as morons, as this piece (albeit too rhetorical for my taste) points out, I don’t see why I should try to analyse  its portfolio performance. Disrespect begets disrespect.

The GIC report doesn’t give the data to make  a meaningful analysis. Now I am not asking for  more transparency, there could be gd national security grounds for being opaque. True Norway’s SWF is very transparent but Norway doesn’t have our neighbours: one with a record of aggression against its citizens, and other countries, and two jealous abt S’pore’s performance.

But MSM, GIC stop spinning that GIC’s performance can be analysed from the data provided.

BTW for the record, in January this year, NYT reported “The Government of Singapore Investment Corporation, which made a $575 million secondary loan, and invested as much as $200 million in equity, stands to lose all of that,” in an investment in NY City.https://atans1.wordpress.com/2010/01/27/gic-ny-loss-us100m-more/

Translated into S$, this is juz over S$1bn: can buy lots of abalone, sea cucumber and other goodies d for social welfare cases; or fund two-and-a-half Kiddie Games.

Counterintuitive analysis

Or why Statistics is a profoundly unnatural enterprise for most of us.

Waz wrong with this conventional view? Israeli Air Force flight instructor who told him that whenever he chewed out a student he got better performance the next time out, but whenever he praised a student he got worse performance.

Answer: a student who had just brilliantly executed a maneuver (and was thus praised for it) was less likely to perform better the next time around than a student who had just screwed up. Abnormally good or bad performance is just that — abnormal, which means it is unlikely to be immediately repeated. But … could also see how the instructor had come to his conclusion that punishment worked. “Because we tend to reward others when they do well and punish them when they do badly, and because there is regression to the mean … it is part of the human condition that we are statistically punished for rewarding others and rewarded for punishing them.”

Here’s an interesting piece on why our normal thinking can be wrong especially when statistics are involved. And the comments are worth reading as many disagree with the counterintuitive reasoning of one of the examples.

Liverpool’s off-field problem

Royal Bank of Scotland, or RBS, is Liverpool FC’s biggest creditor. The club has £280m of debt.

The club is up for sale but unless a deal can be agreed before the debts fall due on October 15, RBS will have to decide if it is ready to take control or extend the duration of  its  loans to allow more time. RBS reputation with other borrowers and fans will suffer if it just  extended the loans and left  Tom Hicks and George Gillett in place.

Putting Liverpool into administration is unlikely because the club would  incur lost points, and Liverpool supporters would not be happy. But Toffee fans would cheer RBS on.

Taking control the club would be problematic as RBS is majority- owned by the British government, The majority of tax payers are not ‘Pool fans. Can you imagine the uproar if RBS lends more money for the club to buy players to ensurethat the club gets into the Champs League next yr. Remember, a gd finish in the Champs League brings in the money.

Sity, Spurs, Villa and Toffee fans would have sumething to say.

GIC’s loss on UBS and Citi can fund 13 YOGs

The unrealised loss is S$5.5bn or 28.8% of the total investment in both banks. (S$18.1bn). This can fund slightly more than 13 of VB’s Kiddie Games and buy the poor (he berates) all the hawker and restaurant meals (sharks’ fin combs included) they will ever.

At last Friday’s closing price of US$3.90, Citi’s shares would be worth about US$4.4 bn, compared to the US$3.3 bn (S$4.3bn) cost. This gives  GIC a paper profit of US$1.1 billion (S$1.5bn). Gd job GIC. And I didn’t take into account the profit it made selling part of its stake.

But GIC’s investment of 11 bn Swiss francs (originally convertible notes issued by UBS) or S$14.8bn is showing an unrealised loss of 4.9 bn francs (S$6.6 bn) based on last Friday’s closing price, even taking into the 2 bn francs it received in interest.

GIC now owns 3.8% of Citi’s common stock and 6.4% of UBS’s common stock, GIC said at a briefing on its latest annual report on Tuesday.