US hegemony declining?

The US may soon be self-sufficient in energy.

Antidote to Hard Truths

Get hold of Lee Kuan Yew: The Beliefs Behind the Man by Michael Barr if you want to find out and understand the assumptions behind Hard Truths.

BTW, dipping in and out of MM’s book, I find this ST report abt the heroism of the journalists challenging MM extremely funny. Got no balls, juz keep quiet. Don’t pretend, pretend. The book shows MM was not challenged. It he was, it would have been a better book.

Or were the challenges taken out in the editing? Because MM could not counter them? Or because they showed how “spastic” the journalists were? I suspect the latter?

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Overheating economy: Gd excuse for VAT rise?

Morgan Stanley thinks that the economy here is overheating. Other countries in this category are China, South Korea and Argentina.

Expect more FTs to dampen wage inflation. And a stronger S$. Taz the usual policy response from this government.

It’s also Economics 101 (although not Politics 101) to raise taxes. Higher VAT (after elections)? You heard abt the possibility of higher VAT here first.

Yes, I’m assuming the PAP will will the next GE.

MM on Muslims: He has a point

When this can happen in M’sia to Muslims who belong to a minority branch of Islam

The Constitution guarantees freedom of religion, but when it comes to Islam, the country’s official religion, only the Sunni sect is permitted. Other forms, including Shiite Islam, are considered deviant and are not allowed to be spread.

Mr. Mohammad was one of 130 Shiites detained by the religious authorities in December as they observed Ashura, the Shiite holy day commemorating the death of the Prophet Muhammad’s grandson Ali, in their prayer room in an outer suburb of Kuala Lumpur.

… While sectarian divisions are associated more with countries such as Iraq and Pakistan, Islamic experts say Malaysia is a rare example of a Muslim-majority country where the Shiite sect is banned. They say the recent raid reflects the religious authorities’ reluctance to accept diversity within Islam, and was part of the authorities’ continuing efforts to impose a rigid interpretation of the religion.

NYT article

Worse than insurance or used car salesmen

This is how this blogger describes investment bankers.

If you want a piece of the deal, and the mouthwatering fees and bragging rights that come with it, you will suck up as shamelessly as possible to the beautiful lady and tell her anything she wants to hear.

The client holds all the cards in these situations, and the most an investment banker can hope to do is hop a ride on the gravy train and ladle off as much as he can. It is not a scenario which encourages or supports professionalism, integrity, or carefully weighed judgment. It encourages blatant prostitution.

investment bankers are pretty good salespeople, and we will use our sales wiles on our own clients when we think it’s necessary. Accordingly, we will try to overcome any objections (like price, terms, etc.) a client may come up with that may stand in the way of closing a deal. For another, investment bankers are highly motivated to close deals, because in almost every instance that’s the only way we get paid. A client should never hire an investment banker for pure, unbiased advice as to whether it should do a deal, because often the right answer to that question is no, and that’s just not what we’re selling.

Coming EGM: There goes the Malay vote

In the 2006 GE, the PAP did rather worse than expected: 67% of the popular vote and 67% of the votes in PM’s GRC. An NTUC minister had said that the PM would get over 80%  of the vote in PM’s GRC.

The one consolation was that the Malays had finally swung behind PAP.  And juz in time too. They saved BG Yeo from the shame of losing a GRC to the WP.

But since then relations  between the PAP and the Malay community have gone downhill. The Malays were disappointed that they didn’t get the second cabinet seat that they tot shld have been their reward for preventing the WP from winning a GRC.

Then when the recession hit, the word is that the Malays suffered disproportionately when it came to the repossession of HDB flats. They were less prudent than other races when it came to managing their finances: they bot bigger flats than they could comfortably afford to service.

Then MM wrote them out of history late last yr, when he told a Moscow audience that the two main racial gps here were Chinese and Indians. The Malays at 14% of the population are the second largest group.

Then we have MM’s latest comments, the lest said abt the better.

What can swing the Malays behind the PAP again? What abt promising them that the next president will be a Malay of gd standing in the community, if they vote PAP?

But is there any Malay that MM trusts enough for the job, given that the job is more than ceremonial.  And if there is such a Malay, is he of gd standing in the Malay community?

Update at 5.39:

Juz read this by the Minister for Malay Affairs trying to explain MM’s words. Don’t think he succeeded.

Right idea, wrong audience

To “win fans and friends” for the Republic, the Ministry of Information, Communications and the Arts (MICA) will be going where it has never gone before: For the first time, it has appointed a public relations consultancy to help come up with a strategy “to market Singapore holistically”, Today reported.

Juz like VivianB to goof up., was my initial tot.

The target audience should be S’poreans. Tell us why we should continue voting for VivianB and his friends?

Or maybe, and more likely, the cabinet tot abt it, but concluded that a mere PR agency (with all its airhead China babes) was not up to the task? And that anyway it would be unconstitutional. One cannot use government money to perputuate PAP rule.

Hence the wheeling out of MightMind and his “Hard Truths”?

Genting S’pore: Give it a break

Recently, there was an ant–terrorist exercise at RWS. Shouldn’t it have been held at Marina Sands?

In addition to being a casino, there are two more compelling reasons for it being a target for Paki terrorists. It is owned by an American and a church uses part of the place on Sundays to hold services.

Genting on the other hand is HQed in a Muslim nation and is no friend of Flipper — “The enemy of an enemy is my friend”.

Casinos: Trouble at Marina Sands?

CEO is going, This would be second major resignation in months.

Could it be that MM waz right that the ramp up in Sands would be slower than what mgt expected?

Or that mgt couldn’t get the little people from M’sia, Indonesia and S’pore to patronise the casino? Too ang moh for their taste?

Muslims: Cut MM sume slack

MM has a point abt some younger Muslims refusing to eat at where non-halal food was being eaten. “And they tend to sit separately so as not to be contaminated. All that becomes a social divide.”

And remember last yr juz before CNY, a Malay principal was overruled when he made the school tuckshop halal. Only halal food could be sold. And kids were not allowed to bring non-halal food to school. His reasoning waz that over 50% of students were Muslims.

This and this are replies from Muslim organisations, but this Hard Truth of MM was not addressed, Why?

Because it is a Hard Truth?

BTW, I find the silence of the minister for Malay matters, PM and SM worrying on this point worrying. They may disagree with MM on the other points he makes abt Muslims, but on this point they should support MM.

And where is the “constructive, nation-buiding” on this issue? Most reports omit the bit, “And they tend to sit separately so as not to be contaminated. All that becomes a social divide.”

Come on ministers and media, rally behind MM!

[Last two paras added at 8.30am, after I skimmed thru the papers]

First Reit — First among equals?

OCBC Securities issued a report a few days ago.

First Reit’s Q4 2010 results were within expectations. Gross revenue declined 0.2 per cent y-o-y but increased 0.2 per cent q-o-q to $7.65 million; net property income decreased 0.3 per cent y-o-y but increased 0.5 per cent q-o-q to $7.56 million; while distributable income increased 2.8 per cent y-o-y and 1.6 per cent q-o-q to $5.43 million. FY2010 gross revenue increased 0.4 per cent to $30.27 million, which was 0.2 per cent above our estimates; it would have increased 4.4 per cent to $31.49 million if we include the deferred rental income from Pacific Cancer Centre’s asset enhancement initiative. Net property income grew 0.1 per cent to $29.88 million, which formed 99.9 per cent of our estimates.

Distributable income for the same period rose 1.8 per cent to $21.35 million and was 1.4 per cent higher than our forecast.

First Reit’s growth was largely driven by higher rental income from its Indonesian properties, thanks in part to the variable rental component in its master leases. First Reit’s Indonesian properties formed 86.7 per cent of its gross revenues (including the deferred income from Pacific Cancer Centre) for FY2010, and we expect Indonesia to play an even more pivotal role in First Reit’s development.

Risks in the global economy

A gd roundup.

India and China may get it wrong in their fight to control inflation. Too tight policies will badly affect growth round the vworld. Too loose, and bubbles are a’coming.

MM and Lucky Tan could both be wrong

MM and Lucky Tan disagree on many things (see this piece by Lucky) But as the piece shows they agree that if the PAP cannot deliver material prosperity, it will get kicked out fast. They of course disagree on whether the PAP is delivering prosperity, and what is prosperity

But they both could be wrong on the PAP quickly losing power if the PAP cannot deliver prosperity. Think Japan and the LDP. After holding power continuously from its inception in 1955 (with the exception of a ten-month period in 1993–1994), Japan’s Liberal Democratic Party (LDP) lost control of the national government only in September 2009. This despite failing to fix the economy for 16 years. An economy that had crashed after a huge bubble had burst in the early 1990s.

One reason, among several. The people knew the LDP was incompetent but they tot the Opposition was worse. So they kept voting LDP, in the hope that the LDP would get its act together, until they decided that the Opposition could not do any worse. Note the party in power, the JDP, since 2009 has been lurching from crisis to crisis.

Don’t enter the dragon

To avoid being shafted.

I was reading these Shanghai Asia related letters to the press a couple of weeks was and preening myself myself for giving Shanghai Asia a miss several yrs ago. What attracted me then was that the company was making foil paper for cigarette manufacturers. And the Chinese were (and are) smoking all the way to hell.

But fast forward to today and this business is being sold at an unattractive price. Minority shareholders are rightly upset but can’t do anything because the controlling shareholder supports the deal.

I gave it a miss because S-Chips were then in the Wild, Wild West when it came to corporate governance. They still are it seems, notwithstanding the efforts of SGX and the SIAS, the shareholders’ champ, to assure us that S-Chips are well regulated.

Even Chinese companies listed in the US are considered dodgy by this widely followed writer on all things investments.

So let’s give S-Chips that have everything in China except a few independepent directors here a miss, shall we?

Starhill Reit: Worth a look at?

Yield of 6.2%  is decent, even though one can find reits with higher yields, even within its sub-sector,.

But it trades at 64.5cents, a large discount to its lasyed reported RNAV of 89 cents. There is room to gear up further given its gearing is 31%. In other words it doesn’t need to calls a rights issue to fund run-of-the mill acquisitions.

Better still rents along Orchard Rd are likely to go up further by another 3-5% yearly (no new supply) likely, analysts say. Remember Starhill generates two-thirds of its revenue from Ngee Ann City and Wisma Atria.

Kim Eng is bullish on Starhill noting that about 20% of its retail leases in Singapore are expiring this year and that so far, the rates of those leases are about 30 per cent below rentals in the fourth quarter of last year. Kim Eng sees a positive rental revision in the next two years.

Might buy some for myself. Better than keeping money with CPF.

Election goodies: What to judge them against

Well the goodies bandwagon is rolling with S$235m in educational goodies. Then there was last yr’s annc that HDB had budgetetd S$550 million budget under its Main Upgrading, Interim Upgrading and Lift Upgrading programmes: around 54,000 flat owners in Pasir Ris, Hougang and Tampines can expect new amenities in their neighbourhoods, including new car porches, covered linkways and children’s playgrounds.

S$785mn so far on election goodies.Any other smaller ticket items I missed out YPAP*?

Sounds pretty decent.

But in analysing the amount S’poreans are getting back, S’poreans should judge the figures against the total of two numbers

— S$8.7bn that Temasek lost on Barclays and Merrill Lynch. In financial year ending March 2008  the government injected abt S$10 billion into Temasek. This sum was more or less equal to the amount that the government took in property sales for that year. “Easy come, easy go, Ho, Ho Ho,” because in the following yr Temasek could have lost as much as S$7bn on Merrill Lynch. And S$ 1.7bn  on Barclays. Err not much change left over from injection: only S$1.3bn, “peanuts” as Mrs GCT might have put it, except she didn’t.

— S$4.8bn that went into govmin coffers (net of welfare spending) as a result from the increase in GST from 5 to 7%. See RP’s Tony Tan analysis. Don’t look down on scholarship winners, juz because PM and Mah Bow Tan won scholarships. Scholars usually have great analytical skills.

Let’s see if govmin gives us goodies close to S$13.5bn, or juz “peanuts”.

Or if we want to be absolutely fair, see if the goodies exceed the S$4.8bn from the GST increase. After all, we all know that gambling is risky, and that the S$8.7bn loss could have been a gain. Ho,Ho,Ho.

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*You people might as well do sume useful work for the PAP, rather than embarrassing the party by the crass, boorish and stupid behaviour of yr members.

Why partying hard is better than studying too hard

Or why the party animals do so much better than the swots. At the very least, they have more fun.

New York Times columnist David Brooks says that while practising a piece of music for four hours requires focused attention, a sleepover with a group of 14-year-old girls is far more intellectually demanding.

“Managing status rivalries, negotiating group dynamics, understanding social norms, navigating the distinction between self and group – these and other social tests impose cognitive demands that blow away any intense tutoring session or a class at Yale.”

Cheo Ming Shen and me

Not exactly. It’s abt me and one of his co’s, Nuffnang. I heard a Cheo pontificating on BBC on Nuffnang (he was founder and CEO) , which spotted the chance to put advertising in blank spaces on online blogs.

Anyway, make up yr mind abt him based on my experiences with Nuffnang.

On 21 December 2010 I emailed Nuffnang. I had some queries on whether their ad services could help me and them make money. I got this response:

Our office is closed from 6 December till 10 December for team building trip and we’ll have no access to the Internet. As such, we’ll not be able to respond to your ticket immediately.

However, rest assured that all tickets submitted will be responded to latest by 13 December.

We apologize for any inconvenience caused. Thank you.

Your support ticket has been created and sucessfully dispatched to the Blogger Enquiries/Suggestions department. Your ticket information is as follows:

I replied

Hi, note today is 21 Dec.

Hit the booze early?

As it was the hols, I promptly forget abt Nuffnang until I saw Cheo Ming Shen’s name and pics all over the blogsphere. I googled and found that he and founder of Nuffnang waz the same person.

Can sumeone tell Cheo to tell Nuffnang to reply to me?

FSLP: For the brave heart

First Ship Lease Trust offers a  gd yield (a shade under 11%%) and trades (46.5cents) at a respectable discount below last reported RNAV of 57cents.

But as DBS Sec which calls it “Hold” says

While the distribution per unit (DPU) payout was maintained at 0.95 US cents for the quarter, the trust had to draw down US$0.7 million of working capital to distribute the US$5.7 million to unitholders, after the usual quarterly loan repayment of US$8 million.

The product tankers continue to be deployed in the spot voyage markets, but utilisation rates and net bareboat equivalent income remain below expectations. While freight income was higher q-o-q in Q4 2010, expenses were higher as well and the two tankers generated bareboat charter equivalent revenue of US$0.2 million in Q4 2010, compared to the US$3.8 million revenue per quarter applicable during the original charter. With tanker rates unlikely to perform in the near term, we choose to remain conservative on our earnings assumptions from these vessels in FY2011.

While the trust did not provide an update on fleet valuation of US$700 million as at end-Q3 2010, a big change is unlikely. This puts the current value- to-loan ratio at 154 per cent, and implies about 160 per cent coverage at the end of the waiver period in June 2011, above the requirement of 145 per cent. We expect DPU payouts to remain at the current level in the near term, and given that we have not yet seen any acquisition funded by the US$28 million placement proceeds raised in FY2009, we maintain our ‘hold’ call at an unchanged target price of $0.45.

TOC & the Economist

[Update at 9.51 am

The article (with a govmin rejoinder dated 21 January has appeared dated 19th January. Funnily it wasn’t there on Saturday or on Sunday. Ah well, this is S’pore]

TOC has published an extract it claims comes from the Economist on its gazetting.

As a subscriber to the Economist, I can’t find the original article.

I’ve even used the search engine to try to locate the piece. No luck.

Someone has also queried TOC. No response. In fact TOC repeats the claim.

Kingmaker is deluded?

Harbinger of a gd yr for US and the world?

With its diverse portfolio of business and finance units, including the nation’s largest nonbank financial institution, G.E.’s latest report presented a glimpse of expectations for US economy as it recovers from the downturn, and for the potential of global markets where the company is aggressively looking around for opportunities. Witness China where it is prepared to sell advanced avionics even if it transfers technology to China, a tranfer that can be used to hurt US commercial and military interests. “The Capitalists will sell us the rope with which we will hang them,”Lenin said.

Results

George, S’poreans can multi-task?

Singapore is likely to hold general elections in the second quarter of this year, Foreign Affairs Minister George Yeo said ruling out the third quarter because of the presidential election due by August.

Waz so difficult abt voting on two separate issues if we have to*, George?

And George, not all of us are like the PM.

Backgrounder:  the PM in the last GE implied that he couldn’t multi-task. He said if we voted in more opposition candidates, he would be too busy fixing opposition, to gd things for S’pore.

Going by the unhappiness of S’poreans on public tpt overcrowding, rising HDB prices, influx of FTs, and the failure to capture a terrorist suspect, and the presence of three Opposition MPS , PM was right, wasn’t he abt his multi-tasking skills?

But let’s give it him. He is humble abt his abilities, not like KennethJ, the wannabe leader of the Opposition. More like the destroyer of the SPP and SDA, if you ask me.

—-

*I mean we have had only one election for the post of elected president. It’s president by nomination, not election. Let’s see if Tan Kin Lian tries to stand. His petition to himself still exists .

Sounds like PAP govmin

The Sunday Telegraph has a story about the owner of a Bournemouth gift shop who says business is booming after he put up a sign saying customers can buy two but pay for three. BBC Online

Church Of Our Saviour on a roll

First it was AWARE, ST and then TOC. Who next?

Remember several years ago some members of COOS hatched the takeover of “anal sex and being gay are normal”AWARE? They lost that battle but they got what they wanted: MoE took AWARE off the list of organisations allowed to provide sex education in schools, and tightened the criteria for admission to that list. I understand that organisations teaching traditional Christian values  now dominate the list. Not because they are Christian, but because what they teach resonates with the PAP’s family value ethos. None of this “anal sex and being gay are normal” subversive stuff.

ST got scolded by a minister for its coverage of the AWARE story: too pro gay and ant-Christian. ST denied this. It would deny it, would it?

TOC was a big supporter of the AWARE people that retook control of the mgt. Now TOC is gazetted*.

Looks like the god COOS worships is powerful. Enemies of COOS got beaten up thrice.

Now what will “If God is with us, who can be against us?” COOS do for an encore?

Cause problems for Siew Kum Hong? Why Kum Hong? He was at the AWARE EGM, supporting the  “anal sex and being gal is normal” team against the people of COOS. He also presented a petition to parly on behalf of the GLBT gang.

What can the god of COOS do?

God of COOS makes his hair sprout again? He will lose brand recognition. BTW, he had a full head of hair in first yr law school.

Or the Siews having a baby accidentally? If  COOS’ god can do virgin births, he can do accidental births. Now that will bugger up Kum Hong’s civil society activities. For one he will have a lot less sleep.

—

*Wonder if Pastor Derek Hong offered a public prayer of thanks for this and were hosannas sung?

Dying for other S’poreans, an alternative?

Err wonder if MM minds if I buy his latest book instead of being willing to die “for each other”?

Seriously, why should I be willing to die for Malaysian Chinese who live here for yonks, profess to hate M’sia but refuse to become citizens?

Or for light-skinned Aryan PRs or citizens who call my fellow S’poreans, “low caste Hindus”.

Or an Indian FT telling me and a policeman (Tamil S’porean) that S’pore laws didn’t apply to her. She was Indian.

Or for new citizens from Pakistan who say they only became S’poreans because they wanted the S’pore passport: less likely to be quizzed at immigration for being terrorists.

MM should remember why British soldiers had a reputation for not willing to admit that they were beaten. They served in regiments from a particular region or sometimes same occupation (In WWI, there was a regiment of artists, I kid you not). The soldiers belonged to a community and were filling to die for one another.

With a third (going to a half) of the population being foreigners, is there a community of S’poreans in S’pore? One was forming (with the active encouragement of the government) until the government (thinking they could get away with community and low wages) decided to let the foreigners in.

China: Not selling US treasuries

Juz buying via London

If S’pore is as close to China as MM, PM, SM and other ministers, and our “constructive, nation building” media say they are, surprised that the Chinese do not do it via S’pore.

China: Link between weak currency and inflation

A gd explanation from a biased economist. He wants to use tariffs to “fix” China.

[I]nflation is the market’s way of undoing currency manipulation. China has been using a weak currency to keep its wages and prices low in dollar terms; market forces have responded by pushing those wages and prices up, eroding that artificial competitive advantage. Some estimates I’ve heard suggest that at current rates of inflation, Chinese undervaluation could be gone in two or three years — not soon enough, but sooner than many expected.

A mainlander, Taiwanese, Hongkie & S’porean

A mainlander, a Taiwanese, a Hongkie and a S’porean all sit on a chair with a nail pointed up.

The mainlander yells, then picks up the nail and tosses it away.

The Taiwanese says “ah a nail!” and puts it into his pocket because it might be useful later.

The Hongkie says “ah a nail!” and puts it into his pocket because he thinks he can sell it.

The S’porean just sits down right on top of it and stays there because he thinks that is the way the things are supposed to be.

And what does the Malaysian Chinese do? He puts it away, planning to put it on a chair that another M’sian, or a S’porean will sit on.

Casinos: Flies in the ointment

The casinos have done better than anyone could have dreamed of. Marina Bay Sands and Resorts World Sentosa generated $420 million in net revenue for the government between April and November last year.And also collected $130 million in casino entry levies on behalf of the Tote Board for the same period.

Too bad Turf Club and clubs scan0009.

But it could have been better. I’m saying this as sumeone who tot S’pore had missed the cruse boat on casinos first by refusing to allow them until 2004 (mid 1990s would have been “betterest”) and by insisting that casinos play down the mass market side of the trade with the integrated resort and high roller concepts. The govmin wanted casinos as part of IRs. It wanted high rollers in dinner jackets, dancing gals and dolphins, fancy eating places: anything but the ordinary punter.

The numbers show that casino and hence the tax revenues could be higher if not for the govmin. As Sentosa has shown with a vengeance, the ordinary punters from M’sia and S’pore with the help of middle class Indon tourists  are the main stay of the casinos, not the high rollers the govmin wanted. And they don’t go there because of the food or gals or for anything else. They go to gamble.

And one problem why the high rollers are not coming: the rules on junket operators have not been finalised.

This takes me to the second “fly in the ointment”. Too tight the rules, and the operators will not bring in the high rollers. Too lax the rules, and there goes the banking and wealth mgt aspirations or worse. A reputation as a money laundering centre will kill the banking and wealth mgt industry overnight. The fear and danger is that  serious money can be laundered by a few unscrupulous junket operators, the majority of whom focus on servicing genuine high rollers.

Uniquely S’pore: having as major driver-industries, gambling on one hand, and banking and wealth mgt industry on the other.

MM: not mean, juz trying to show affection?

Maybe S’poreans are daft to misunderstand MM’s comments about S’poreans that many take to be “disrespectful”, “unfair”  (Tan Kin Lian for one I think) and “mean-spirited”.

Maybe MM picked up the British sense of humour, along with with a Double First (with Star) and Mrs Lee when he was at uni there?

Anyone from anywhere can be cruel, anyone from anywhere can be witty, but there is something particularly British about cruel wit. John Lennon, with his withering remarks about Ringo Starr (“Not even the best drummer in The Beatles”) and the avant-garde (“French for bullshit”), had it. Writers past (Evelyn Waugh) and present (AA Gill) have it. George Osborne, the chancellor of the exchequer, has it, and gets into political scrapes when he flaunts it.

The anything-goes approach applies as much to everyday conversation as it does to comedy, where the subject of British irreverence has been analysed to death … It feels natural to those of us who grew up with it, but British banter—the playfully barbed conversational style adopted by groups of friends in bars, offices and even classrooms up and down the country—can baffle and perturb foreigners. It is especially jarring when set against the popular image of Britain as a more decorous and civil place than most. Even tamer badinage in this country can, to a foreign ear, sound like enmity. The moment the ice is truly broken between two newly acquainted Britons is when one teases the other about something. Reginald D Hunter, an American comedian who does most of his work over here, says Britain is the only country where people will introduce you to a friend by saying, “This is my mate Barry, he’s a bit of a twat.”

Economist blog

Declaration of interest: I like the British way. Yes it’s mean and cruel but it is fun.

China: What we don’t hear from our MSM

In their new book, “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise” (John Wiley & Sons), Carl E. Walter and Fraser J.T. Howie paint a troubling portrait of China’s economy and its financial system. Despite the nation’s mind-boggling growth and images of gleaming skyscrapers and luxury cars, the authors say China’s growth model is flawed and fragile, and they warn about substantial risks accumulating in its banking system.

Q&A

Backgrounder: S’pore Inc has big bets on China

Citibank: What our MSM doesn’t tell us

Our MSM focused on the fact that last yr was Citi’s first profitable yr since 2007. But it didn’t say much abt fact that Citi’s latest quarterly profits disappointed the mkt because they are due to a tax credit and a transfer from its reserves, nothing to do improving operations.

Could it be because GIC stills owns a lot of it? And with a GE coming, the “constructive, nation building” media don’t want to remind us that returns for shareholders are not going to be great for some time?

20-sumethings don’t do gratitude

As you will be aware, UMNO in Malaysia has, since the mid 1990s, been losing the support of younger Malay voters. In an attempt to correct this, UMNO in the early and mid noughties conducted dialogues between the senior politicians and Malay voters in their 20s. An intellectual who attended a few of these sessions told me how they went: comically tragic.

The politicians reminded the young Malays of what UMNO had done for the Malays and told them that they shld be grateful for the affirmative policies and vote UMNO.

The young responded by saying, “Why should we be grateful? We were born after the implementation of these policies. If you remove these policies, you are the bigger losers, not us. What concerns us is the future and not history.” They then went on to list their grievances: lack of job opportunities, inflation, corruption and so on.

My friend says the politicians couldn’t accept this answer and called the young, ungrateful and rude. Something he said that did the UMNO no good. UMNO did not get their votes. But he says post-2008, UMNO is learning to accept that young Malays don’t do gratitude, and has begun addressing their concerns, rather than lecturing them, telling them that they should be grateful.

Translating this into our context, reading the ST articles on their collaboration with MM on his latest book, I get the sense that MM is not happy with younger S’poreans because he thinks that they do not appreciate (and are not grateful) for what he and the PAP have done for them.

S’pore equities: Can’t argue with this safety first approach

UOB Kay Hian says that with the prospect of slowing economic growth and reasonable stock market valuations in 2011, investors should balance their portfolio with a combination of high-yielding large-cap and mid-cap counters that offer a higher margin for growth.

Despite the moderate earnings [8%} outlook for Singapore compared with its regional peers, we think Singapore’s safe haven status will continue to attract selective investor interest amid the uncertain external outlook.

Investors will be best served by having a balanced portfolio comprising firstly of counters that promise high and sustainable dividend yields.

These would be local telcos StarHub and M1, along with real-estate investment trusts K-Reit, Sabana Reit and CapitaCommercial Trust.

And’laggard’ large-cap stocks that offer good growth prospects eg. the banks. Its top pick in this segment is OCBC, followed by DBS. (I prefer Haw Par because of its stake in UOB).

Investors should also be on the lookout for the so-called Garp (growth at a reasonable price) stocks in both the mid-cap, like  Ezra and Ezion, CDL Hospitality Trusts, First Resources and Super Group, and large-cap space.

Its ‘sell’ calls include Keppel Corporation, SingTel, Tiger Airways and CapitaLand. Surprised abt Keppel call because the offshore marine sector is looking gd, what with firm oil prices and offshore projects in Brazilian waters.

2011: In the shadow of the volcano

Great description of the situation: In the shadow of the volcano

The central theme was that we shouldn’t be gulled by the clear evidence of recovery into thinking it’s business as normal again.

There are signs of new bubbles being pumped up – in China, for example. Perhaps more importantly, the structural flaws to the global financial system (banks that are under-capitalised and remain too big to fail, the excessive indebtedness of the West, and so on) have not yet been fixed.

Watch the video embedded in Robert Preston’s blog posting.

SGX: Don’t count yr chickens before they are hatched

Hutchison Whampoa, one of the flagship companies of the Hong Kong billionaire Li Ka-Shing, said that it would spin off some of its busiest container port operations in what could be one of the biggest stock market listings in Asia this year, reports The New York Times.

The expected US$6bn business trust is planned to be listed on SGX. HK doesn’t have laws for business trusts only Reits.

Well that can be changed. Juz cut and paste S’pore’s lawa and listing rules.

Let’s wait until the fat lady sings. I don’t see HK rolling over on this.

Valuations: There is an element of subjectivity my dear

A lady wrote in to ST complaining that valuations shld be based on “fundamentals”, not “sentiment”. Two different valuations that differed by $200,000 on the same property, she seems to be saying. Can’t be sure, scan0010

Well valuation is an art, not a science. Subjective factors like “sentiment” are a factor.

And taz why gd investors like Peter Lim and Warren Buffett are so rare. They see the same numbers as any other investor but they got that extra bit of insight.

British humour at its best

And the oh-so politically correct American critics, the targets hate it.

“It’s going to be a night of partying and heavy drinking – or as Charlie Sheen calls it, breakfast.”

While introducing Robert Downey Jr – “Many of you in this room probably know him best from such facilities as the Betty Ford Clinic and Los Angeles County Jail.” … Downey Jr quipped in return: “Aside from the fact that it’s been hugely mean-spirited, with mildly sinister undertones, I’d say the vibe of the show is pretty good so far, wouldn’t you?”

BBC report on Ricky Gervais as Golden Globes host

It will have you in stitches.

The iPAD is Chinese

According to a report by a pair of economists out of the Asian Development Bank Institute, the success of Apple’s iPhone plays a major role in contributing to the USA’s trade deficit with China. The Wall Street Journal (login required) explains that while sales of the iPhone show around a billion trade surplus with China on paper as of 2009, the actual figure is a lot less because the iPhone is only assembled in China, not designed there. While the wholesale price of an iPhone is 8.96, the value of the only truly “Chinese” part is assembly, valued at .50 per unit. But because the iPhone ships from inside China, the entire value gets added into the trade figures, thus showing the billion trade surplus. If the numbers actually accounted for the true value coming out of China, the surplus for 2009 would have been about million instead — meaning in reality there is an almost billion trade deficit just from the iPhone alone.

The iPHONE is Japanese

“He is the equivalent of Nelson Mandela to Singaporeans”

Not only do netizens don’t appreciate this comparison, but I don’t think MM would appreciate the comparison either.

MM is a believer in realpoltik, the art of the possible. He would be comfortable being associated the legalism strand of Chinese philosophy. Mandela is an idealist. He aims for the impossible, and sometimes gets it to the consternation of those who are cynical or skeptical or fans of the All Blacks.

Example: Rugby is a religion to the white Afrikaan tribe. And the greatest rival to the SA Springboks is the NZ All Blacks. In 1994, the rugby world cup was held in South Africa. The black South Africans were planning to cheer on the ABs, because they wanted the Springboks to lose. The Boks were a symbol of everything they hated about the white Afrikaans who had until very recently oppressed them.

But then Mandela wore a Bok jersey and visited the Boks. He said the Boks were South African. The blacks swung behind the Boks and the Boks upset the ABs. The Afrikaans were grateful to Mandela and the black majority for supporting the Boks to victory. And the racial wars that many predicted didn’t happen.

Even his most devoted acolytes would admit that MM could not pull this off.

No, LKY would, I think, like to be compared with the likes of Richard Nixon (the statesman who opened China to the West and initiated détente with the USSR, not the president who resigned in disgrace over Watergate), Zhou Enlai, Deng Xiopeng and Henry Kissinger. Men who were pragmatists, not idealists.

Be afraid, very afraid Cheo. MM does not like dumb flattery. I’ve heard of foreign tycoons being told off when the flattery they lavished on him rubbed him the wrong way.

The iPhone is Japanese

Flip over your iPhone: “Designed … in California, assembled in China.” What it doesn’t say is that it was largely made by Japan. Components produced by Toshiba and Murata account for about a third of the iPhone’s total bill of materials, a higher proportion than from any other country. Courtesy of the FT’s Lex

MM got it right, Temasek got it wrong

As this article shows, Temasek shld not have been so hasty in selling its stake in BoA, which it got after BoA bot Merrill Lynch where Temasek had a big investment. BOA is doing the things that attracted it to spend US$5.9 bn buying shares in Merill Lynch. Temasek lost US$4.6 bn, it was reported.

Shortly before Temasek sold, MM had said that S’pore Inc’s investments in Citi, UBS, and Merill Lynch had a time-frame of 30 yrs. Temasek held its ML investment for over a yr. GIC still owns shares in Citi (profitable), and UBS (big loss).

(Aside so why should the young listen to him, when Temasek doesn’t? Other instances). Neither does it seem does the local media)

Bank of America is headed for its best year [2011]advising on mergers and acquisitions in Asia-Pacific since 2005, and arranging initial public offerings since 2007, data compiled by Bloomberg show. The combined companies have generated 30 percent more revenue from traditional investment-banking businesses in the region than they did as separate entities …

Dolphins: cash for freedom?

Resorts World Sentosa and the Gentings gp have not been getting gd publicity on the dolphins’ issue. There was unfavourable media coverage from the local media, of all people and the govmin has weighed in stating that Gentings have to comply with all the int’l rules on captive dolphins. When these two disassociate themselves from a money-making machine like RWS, Gentings gp needs to take note.

The dolphins are now believed to be somewhere in the Philppines, having been quietly airfreighted ASAP from Langkawi. The int’l media and animal rights activists are trying to find out where they are. Now if one or more were to fall seriously ill or, worse, die, Gentings would face more bad publicity. And punters may think it bad luck to gamble at a place that hurt or killed Flipper’s friends.

Genting S’pore shld ask the govmin how much it will cost Genting to get the condition that it has to have dolphins in the IR removed. And if the govmin refuses or demands too much money, Genting can tell the world, “We tried.”

Whatever the outcome, institutional investors in the West will be more receptive to buying Genting S’pore shares. Now they run the risk of  being associated with a “Killing Flipper” investment. The other listcos in the Gentings gp also run the risk of being accessories to the murder of Flipper.

As to paying out money, Genting is rumoured to be used to it. It is widely believed in M’sia that the attacks by the Malaysian Chinese Association on the busing of M’sian gamblers to Sentosa, is motivated by money. With an election coming, the MCA wants money from Gentings. In return, the attacks will cease.

Forecasts are rubbish? What to do?

It’s the time of yr when forecasts are a dime a dozen. What shld be our attitude towards them? Treat them to way many netizens treat MM Lee’s pearls of wisd0m?

Byron R. Wien, the veteran strategist who has been issuing market forecasts for decades … says the quick answer is this: Don’t take these forecasts too seriously, and don’t view them as the literal truth.

“Few people get forecasts right very often,” he says. “I certainly don’t. I don’t even attempt to make a literal forecast. I try to come up with some ideas that are provocative, and worth thinking about.”

Benjamin Graham, the late Columbia professor and path-breaking value investor, gave some thought to market forecasts. He didn’t dismiss them entirely, but he didn’t place much store in them, either. In his classic

Coming EGM: wealth creation and social justice

We can’t build economic efficiency or social justice simply in the way we have tried before. It won’t be enough to rely on a deregulated market economy providing the tax revenues for redistribution … The critical insight of Labour in my generation is that both wealth creation and social justice need to be built into the way our economy works. The leader of the UK Opposition, Ed Milband recently.

I hope the PM realises that wealth creation and social justice need to be built into the way our economy [and public administration*] works. (*My addition.)

I concede that economically, the PAP got most things right. My main grouse is that the casinos should have come a decade earlier.

It’s on social justice that I fault the PAP.

Take Workfare. I prefer Workfare to Minimum Wage in principle. But the take home pay component is pathetic — $250 a year in one case . True poor people need money in old age (if they don’t starve to death or die prematurely thru malnutrition in the meantime) but they also need money now.

Building wealth creation and social justice into the fabric of the economy and public administration can help govmin achieve its policy objectives. Social justice shld not be looked at as mere expenditure. E.g. if poorer S’poreans felt that there was social justice, they would be less resistant to the liberal immigration policy, or the call to be “cheaper, better faster”. Economy grows, govmin is happy and so are the people.

And help the ambition of the PAP to continue dominating politics here. Do the right thing wealth creation and social justice, not juz say it; and I for one wouldn’t mind another 50 years of the PAP in power.

I’m in my mid 50s and all things considered I would have voted PAP from 1959 to 1991, based on what the PAP did in terms of wealth creation and social justice. From then on, I wouldn’t, because social justice became mere words.

It’s When You Start And When You Finish

Tan Kin Lian, Fisca and yrs sincerely are strong advocates of investing via low-cost ETFs. Hey we not that smart: Warren Buffett advises retail investors to buy low-cost index funds. ETFs are a form of index funds.

But it’s not a no-brainer, risk-free investment strategy. You still can lose money. This US-centric illustration shows why: It’s When You Start And When You Finish.

There are no easy answers when building an egg-nest for yr retirement. Buying life insurance packaged with an investing element is not an easy answer. It is expensive and often is not the answer to building an egg nest. The returns that the agent shows you are not guaranteed. They juz example leh.

Taz why Fisca and TKL advocate by term insurance and invest the rest in ETFs.

Have the Reds come to this?

Alan Hansen, a former ‘Pool star and now footie commentator writes, If Liverpool play as they have done recently there will be nothing there for them against an Everton side who can be as good or as bad as anything around, but if they defend well then it is certainly within the capabilities of Dalglish’s team to get a result. I think how Liverpool defend will have a big influence on the outcome of the game. Article

This team must be from a parallel universe, where the Toffees are the top team on Merseyside, with a trophy room full of European, and English trophies.

‘Pool fans I met yesterday expect a loss today.

Another cute Pandas’ pix

Babies.

Adopt Arsenal money model – Uefa

Err but where are the trophies? Fans, and owners (most of them unless they are Americans) want glory before money. Footie is more than abt money. It’s abt trophies and loyalties.

Arsenal have been held up as a shining example by Uefa as European football’s governing body prepares to implement tough new financial restrictions.

From the 2011-12 season clubs must break even over a rolling three-year period or risk a possible ban from Uefa European competitions.

Uefa compared Arsenal’s approach to that of clubs with super-rich owners.

“What model waits for a knight rider on a horse and then rides away?” said Uefa general secretary Gianni Infantino.

Arsenal boss Arsene Wenger’s meticulous and sensible approach to spending has helped the north Londoners strengthen their finances over the last 10 years, as some of their rivals’ own position has weakened.

BBC Online article

Thaipusam: “stop this brutality”?

I did a double take when I saw this pix on ToC’s front page and below it “We must stop this brutality,” says Human Rights Lawyer.

I tot “Oh no. Not another attack on Thaipusam”.

I clicked the story and it turned out that the lawyer meant the recent curbs on the Thaipusam procession, not the body piecing spikes.

I must admit I shudder and feel ill whenever I see pixs of khavadi carrying devotees. They may not feel the pain, but I do.

But no, I do not want the practice to stop. It’s the devotees’ religion, not mine.

S’pore Inc: One up on Korea Inc

National Pension Service, South Korea’s biggest investor, may set up a private equity fund with the nation’s business groups, including Samsung Group and Hyundai Motor Group, to invest in overseas resource development.

Sorry Korea, S’pore beat you to these type of ventures. GIC and OCBC’s insurance arm (Great Eastern) joined a group led by U.S. private equity firms KKR and TPG Capital in buying Morgan Stanley’s 34.3% stake in top Chinese investment bank CICC.

GIC bought 9% and 5% stake went to Great Eastern. GreatE paid US$144.3m. Post acquisition, GIC, which already had a 7.35% stake in CICC, will become the second-largest shareholder in the Chinese investment bank. Central Huijin Investment Ltd., an investment arm of China’s sovereign-wealth fund, is CICC’s largest shareholder, with a 43.35% stake.

Internet investing: from heloo to zeloo

Or the brutality of the Net. Or “Easy come, easy go”.

Remember MySpace? Latest woes — cutting half of staff.

MySpace valuation: That would put the valuation at about $500 million to $1.2 billion–with the lower end being LESS than Rupert paid for it, and the upper end being twice what he paid for it (hardly the steal of the century).
Read more: http://www.businessinsider.com/henry-blodget-myspace-worth-zero-2010-2#ixzz1An0bhJ6J All in US$ and Murdoch paid US$580m for it

Facebook is now valued at US$50bn. But only a few yrs ago MySpace was “valued” at US$65bn, though the foot notes said US$5bn.

Suzhou IPO: Missing from media reports

The local media reported that the company managing Suzhou Industrial Park (SIP) could be slated for an initial public offering (IPO) of at least 4.5 billion yuan ($883.3 million), going by conservative estimates.

The project started off with Singapore taking a dominant 65 per cent stake and the Chinese taking the minority interest of 35 per cent. But its shareholding reform in 2001 saw this structure reversed with China taking the majority 65 per cent. Singapore’s interest has since been pared down to 28 per cent following capital injection by new investors.

MM in 2004 listed out four success indicators for the SIP. They are attracting businesses and investments; urban planning and development; ‘software’ transfer; and finally, a public listing. (Extracts from BT, but others too covered story)

Funny none of them reminds us that S’pore Inc invested US$147m in the park as of 2000, and that the losses then were US$90m. Sumething ST reported years ago.

Could it be because the 28% S’pore Inc owns could be worth US$153m (after dilution)? Financially S’pore Inc could have made some money (US$6m), not taking into account its share of the US$90m accumulated loss. If the loss is taken into account, it would have lost US$52m.

Either way a marginal gain or loss (I’m assuming S’pore Inc didn’t invest more), taking into account, if true, the goodwill that our teaching “tai kor” would have generated among the Chinese, something our ministers and our media constantly like to remind us of.

And S’porean self-haters (many on the internet) would be banging their balls in frustration that S’pore Inc didn’t lose big time. Though they would be consoled a lot of ministers and senior civil servants spent plenty of time on this project.

So it’s very strange that our “constructive, nation building” media did not report this triumph of S’pore Inc? Or am I missing sumething?

But then our media is not first world class, only fourth world class. Everything must be “betterest”. Another example

The economy did 14.7%, highest in Asia. This was trumpeted by our MSM last week.

If our stock market was tops (or near) in Asia, there would be the usually trumpets.

But our mkt as measured by STI only did 10.1%.

In(do)(ia)n bulls: noticed?

Indon mkt is down 8% this yr after doing 46% last yr, one of world’s best.

Reason: investors are worried that authorities are too complacent abt inflation. The Reuters article also tells us that the mkt collapsed in previous bouts of inflation, though the analysts say this time is different (“They would say that, wouldn’t they?)

So might want to curb yr bullishness on all things Indon* on SGX here.

The Indian stock market has fallen more than 7%  from a record high set in November, as investors have grown increasingly concerned about inflation and corruption scandals that have paralyzed the country’s Parliament. The Nifty 50 stock index did close up 1.9 percent on Wednesday, but that came after a six-day losing streak.

I’m still a bull on these countries owning Lippo-Mapletree and Ascendas I (despite it trading above last reported RNAV).

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*I missed buying First Reit. I tot it would trade at 0.71 (theoretical price taking into account massive rights issue) for a while. No hurry to buy. In New Yr it moved to juz above its last reported RNAV of 0.76. Sigh. Penny wise, pound foolish.

Innovation is not juz for geeks

It’s in services.

Sumehow don’t see SIA doing this. SIA is fairer to customers.

Passengers checking in online or at airport kiosks are offered the chance to participate in what could be described as a sealed-bid multiple-unit reverse auction. Bidders enter a price they are willing to accept to be bumped, but are unaware of the extent to which their flight has been oversold and have no knowledge of the bids of other passengers. Bids are transmitted directly to gate agents, who take the lowest first and rebook passengers as necessary.

Delta’s move is very clever. Airlines currently have a weak bargaining position. Passengers know that if nobody steps forward, offers will escalate, and the statutory payment isn’t bad if airlines have to pull people off flights against their will.

FTS I want here

Why we love pandas?

Facebook: The Chinese boy who got screwed

Wayne Chang’s lawsuit claims he is entitled to a portion of the original $65m settlement made with Facebook.

The 27-year-old formed a file-sharing network called i2hub while studying at the University of Massachusetts, Amherst, which he later merged with their social network ConnectU in 2004.

ConnectU was bought by Facebook as part of the settlement and Mr Chang said that means he is due a share of the deal.

Mr Chang said he was “back-stabbed” and that he has been treated the way the Winklevosses claim they have been treated by Facebook.

BBC Online article on the Facebook story.

One way to get mkt to recover?

Rioting by investors worked in this case. Mkt up 15%.

Fearing further widespread protests, the government … relaxed rules for the banks and for individual investors so that they could borrow more money against shares.

Wikileaks: Don’t be a tease George

Mr Yeo … revealed he had called his Malaysian counterpart Anifa Aman following a report in Channel NewsAsia, quoting Mr Anifa as saying that the WikiLeaks incident has a created a setback in bilateral relations … told Mr Anifa that “there were significant inaccuracies in some of the leaked reports”. CNA report

Don’t like that leh George. Tell him and us what were the “significant inaccuracies in some of the leaked reports”

Second time you teasing us. Last time you told us leak cables had to be seen in context. Never did tell us the context did you?

And are you on medication?

Describing WikiLeaks as “disastrous” for US diplomacy, Mr Yeo acknowledged that Singapore officials would need to be more guarded, not just in their talks with the US but with any country …

Err you forgot that the US is the hegemon, and S’pore is a ‘little red speck”? Or you believe all the ST stuff that MM teaches the US realpolik and that the PAP teaches the Chinese Communist Party how rule retain power*. I mean the US became a super power when MM was still at uni and the CCP came into power in 1949 (before PAP was founded) by way of a civil war.

—————

*During the festive hols, ST had several pages on how PAP tot the CCP how to manage China. It was covering Lee Yi Shyan’s trip to China. He was using his PAP avatar, not that of junior minister.

Managing people, the S’pore way

In the English, Italian, German and Spanish footie leagues, if a team does badly,  the manager gets the sack. The view is that the manager is responsible for managing the players to get them to perform at thier best.

In S’pore, the manager retains his job, the players get the sack, even if the manager has been around for almost a decade.

In Western democracies, the ruling party gets replaced if voters are unhappy.

In S’pore, the ruling party creates GRCS, then super-GRCs, all the time telling the voters they are daft and lazy. And, juz to make sure, imports voters. Reminds me of what Bertold Brecht, a famous playwright and Marxist activist wrote:

After the uprising of the 17th of June

The Secretary of the Writers Union

Had leaflets distributed …

Stating that the people

Had thrown away the confidence of the government

And could win it back only

By redoubled efforts. Would it not be easier

In that case for the government

To dissolve the people

And elect another?

He was writing about the East German government after its soldiers had shot some protesters.

At least here, the unhappy voters are not shot, juz ignored, and threatened with a military coup if there is a” freak election result”.

Uniquely S’porean, this method of managing people.

“Pride goes before destruction, a haughty spirit before a fall”

Too bad sumeone associated with TOC decided to ignore the wisdom of the bible. (During his tenure of Chief Editor, posters were banned from quoting the bible. Don’t know if ban is still in place.)

As you will be aware TOC has been gazetted “a political organisation”.

Can one be surprised seeing that TOC now admits that its ex-Chief Editor could have said “TOC to be a “kingmaker” of the opposition”? The fact that the reporter may not have been entitled to use the quote, doesn’t detract from fact that a person closely associated with TOC seems to have said sumething like that. Anyway neither the reporter nor her rag has responded to the charge of unethical behaviour.

Meanwhile, the consequences of bragging have to be accepted.

MIIF: Unnoticed China play

Macquarie Int’l Infrastructure Fund has transformed itself into a China play with infrastructure assets in China and Taiwan. In 2010, it sold all kinds of investments like nursing homes in Canada.

It promises to be a Asian infrastructure play.

It’s latest presentation (Nov 2010) says it has 37cents in cash, RNAV of 80 cents a share, and no borrowings at MIIF level. But if it’s share of its investments borrowings are included gearing is 57%. Taz the catch.

Got to find out how its investments are valued and its plans for its cash.

Let you know. Wary as MIIF has been a dog with fleas. And if one annualises its Sept dividend payment, it yields abt 5%. Bit low for trust that was promising gd payouts at IPO time.

MIIF prior to the restructuring showed the problems of the model that Temasek and CitySpring mgt aped. Macquarie group was a pioneer of the model of using lots of debt to buy boring utility assets, and then spinning the assets off into trusts. Investors got income, Macquarie got fees at every level. Then the economic crisis struck and all lost out.

CitySpring: The problems of borrowing up to the eyeballs

When it listed a few years back, and even nowadays, CitySpring makes two points abt itself:

— Its very high level of debt (94% of debt, 6% of equity at listing*) does not matter because most of the debt is non recourse project financing. If it defaults, CS is not liable to repay because the lenders can only seize the assets and sell them. if there is a shortfall, tough for the lenders.

— It’s the cashflow, stupid. “We measure our performance using cash earnings, instead of accounting profits or losses. Cash earnings is a better indicator of our performance to our Unitholders on the basis that this more accurately reflects the cashflow generated by the businesses, and removes the effect of the accounting treatment of non-cash items on our financial statements.”

Investors now know that while these statements are true, there are nasty side effects to high debt levels.

Debt has to be refinanced periodically and the market may demand a higher interest rate to refinance, and shorter durations. The former has already happened.

And cashflow can be reduced by operational issues and higher interest rates. These happened too. These will effect payouts.

CS shows that the investment model of buying boring utility assets that have strong cashflow with lots of debt only works when credit is easily available and cheap, and there are no expectations of change. Too bad for investors in CS that Temasek decided to follow this model juz before the benign environment was to turn nasty.

Putting in more equity is not the solution because it reduces the yield to unattractive levels.

As to Temasek injecting another asset, this will only help if the trust can get very long-term project financing at very fine fixed rates.

Bottom line for shareholders  — pray for a return the benign conditions prior to 2007/ 2008.

Earlier posting

*Bit like residential property loans?

Market falls, investors riot

Police have baton-charged investors in the capital of Bangladesh after the country’s stock market saw its biggest one-day fall in its 55-year history.

Trading on the Dhaka Stock Exchange index was halted after it fell by 660 points, or 9.25%, in less than an hour.

The benchmark index had climbed by 80% in 2010 but has since recorded some sharp falls in the past month.

BBC Online article

Forget emerging mkts, buy US?

“Ten years ago, we probably had less than 20 percent exposure to the U.S. Now it’s in excess of 40 percent,” said Cindy Sweeting, a manager of the $16.7 billion fund [Templeton Growth Fund], which can invest in companies located anywhere in the world. “Many U.S. companies are well positioned globally, and valuations are about as attractive as they have been in a decade.”

Four American giants — Microsoft, Oracle, Amgen and Pfizer — were among the fund’s top five holdings as of Nov. 30. The fifth is Accenture, the consulting company that operates widely in the United States ….

NYT on why buy American.

Two personal investment ratios to watch and fix

The majority of S’poreans are mortgaged to their eye-balls, if not to their hair-lines.

They shld be thinking of pushing up their  Capital to Income Ratios and pushing down  their Mortgage to Income Ratios.

This US-centric piece explains the ratios and why they are impt.

Capital to Income Ratio. It’s simple to calculate. I just add up all my investment capital and divide that number by my annual income. My investment capital means the money I’ve saved in my … brokerage accounts and savings accounts. It doesn’t include any equity I have in my home because my home isn’t available as an investment in retirement. In fact, my home is really an expense, not an investment. Note you shld include as savings yr CPF Special acct and MediSave Acct.

See who is publicising BLYC

The official publication* of the PAP chose to publicise the YouthClub@BoonLay’s activities.  Doesn’t it look strange that a political party’s official publication would publicise the activities of a non political club? The existence of this article in Petir supports the point Kum Hong was trying to make.

For those who were planet hopping and who have juz returned to earth: Siew Kum Hong wrote an article that school and grassroots work (as commonly understood by the public) do not mix. He was commenting on an ST article abt YouthClub@BoonLay. ST had reported that mummy, a PAP MP, had successfully lobbied a minister for MoE to approve her son’s club as a CCA. Boon Lay is in her GRC.

The piece  got denials (implicit in case of MoE) that the club’s activities were political from MoE (it would say this, wouldn’t it?), from a parent and Victor.

Declaration of interest: I admire Kum Hong for his civic society activities. Funny as a Rafflesian, he doesn’t seem to have learnt the lesson that most Rafflesians are taught: worship Mammon.

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*Many S’poreans will be surprised to learn that Petir is the only official publication of the PAP, and that none of  the  SPH or MediaCorp publications, stations or channels are the official voices of the PAP. They are only “constructive, nation building” organs.

Poor China: screwed again

China is being shafted again.

China lends money to the US so that Americans can buy Chinese gds. It’s the biggest holder of US govmin bonds, losing billions yearly.

Now it’s lending to EU countries so that EU can buy Chinese. Article China’s support appears aimed at curbing losses on its growing financial investments in Europe, as well as helping to thwart a deeper downturn in an economic bloc that has overtaken the United States as China’s largest trading partner.

All this lending doesn’t reflect that china is the financial hegemon

Lord Keynes said, “If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.” The quotation means that if someone owes a large amount of money, the borrower too is at risk.

HSBC doesn’t think M’sians, Indons and PAP are daft

Malaysia and Indonesia will move into the top 20 list of economies by 2050.

S’pore is doomed unless more FTs are let in.

Daily Telegraph article.

S’pore Inc: Think like a M’sian Chinese

Skip the bits in italics if you are tired of hearing the words “UBS report”.

The UBS study on Prices and Earnings, ranks S’pore as the 11th most expensive city for Price Levels (what with S$500,000 HDB flats not uncommon), but 43rd for Wage Levels (all those FTs forcing down wages).

What this means is that S’pore is first world in expenses but third world in wages.”Neither fish nor fowl” as Jesus would have put it.

This divergence influences M’sians from becoming Stayers.

This piece tells how M’sians game the system. Hubby remains PR here, wife becomes citizen. Both get benefits of citizenship of the two countries.

And who can blame them based on the comparisons between S’pore and KL? Certainly not me. If I were in their shoes, I would do the same. But who can blame the Bumiputeras for thinking that the M’sian Chinese will cheat them, given half the chance?

As to the economics of living in M’sia: Kuala Lumpur is ranked the 68th most expensive city. And 57th in Wages. KL is third world in both. Conclusion: KL people got better standard of living taking into account both expenses and wages.

This conclusion is supported by fact that Malaysians have more purchasing power than us. KL is ranked at 47th,  Singapore at 49th place for Domestic Purchasing Power.

So working here but planning to retire in M’sia is very logical.

Not everything is lost for local-born S’poreans. There are various packages for retirees to “move on” to M’sia. And there are many S’poreans who have retired to M’sian informally. They can extend their stays indefinitely with any problem, so far.

There are even S’poreans who live in JB and commute here daily without problems with the M’sian authorities. One such is a high-ranking but low flying civil servant. Yes, it is a hassle. But then only daft S’poreans think that everything should be convenient or free*.

But if you get killed in a racial riot, or yr mansion gets burned down (Bumiputeras might mistaken you for a cunning local Chinese), or yr assets get seized, don’t blame me. Blame those cunning M’sian Chinese whom the Bumiputeras have gd reason to mistrust.

And remember, the system there hates you.  “You will be proud that you own a house, rather than a small pigeon hole in another country,” a M’sian Chinese judge told some S’pore litigants recently. They got doubly screwed.

And who shld S’poreans blame for making so many S’poreans daft that they can’t be as cunning as M’sian Chinese? PAP? You can certainly think it, but you’re not hearing it from me.

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*”Remember that you are a S’porean, and have consequently won first prize in the lottery of life.”A paraphrase of a statement made 100 years ago by Cecil Rhodes. Substitute “an Englishman” for “a S’porean” will you get the true quote.

Rebalancing can lock-in profits, trim losses

What is rebalancing?

Rebalancing a portfolio involves setting a fixed portfolio allocation before you even invest. So, for example, if you have a fund dedicated to S’pore equities and S$ deposits, you first need to fix your allocations. Say you are an aggressive investor and allocate 95% of yr portfolio into S’pore equities by buying an STI ETF, and 5% into money market fund and S$ deposits.

Then, at the end of a fixed period (say every six or 12 mtrhs: you must choose a time frame and stick to it), you buy or sell the STI ETF until you have the 95%/ 5% allocation again: i.e you rebalance. And you must  do this consistently.

Alternatively you can rebalance whenever the STI ETF moves a certain %age  say 20%  (you must choose a %age and stick to it).  Say the STI ETF falls to 20% (yr predetermined level), you use yr cash deposits to buy more ETF shares to maintain the 95/5 balance: this is rebalancing. If it goes up 20%, you sell the 20% increase, and put the money on deposit.

Another example. You have an equity portfolio using ETFs that is aligned with the MSCI World Indices. This means 42% is invested in a US ETF, 45% in an ETF of other developed countries, and 15% in developing markets. Periodically you buy or sell to retain this original balance. Or alternatively you can rebalance when the proportions move out line by a certain %age

Why do it?

What rebalancing forces you to do is to take profit from your best performing investments, and invest more into the underperforming ones. This is a mechanical, non-discretionary method that works on the principle (or observation?) that markets, sectors and asset classes are cyclical: that nothing  will ever be the best performer all the time,  and neither will any market or asset class be a dog all the time.  Bit like the wheel of reincarnation or the saying, “This too will pass”.

The expectation (hope?) is that “the method will eventually result in you buying more of a market when that market is low, and selling some of the market that has gone up sharply. Thus, it ultimately results in an investor buying low and selling high, which is the recipe for a successful portfolio,” Fundsupermarket GM in a BT article.

And yes, the fixing of time periods or%ages can be arbitrary but at least they give you some fixed points of reference.

S’pore Inc: Hard work for little reward?

Sounds like S’pore: Hard work for little reward backs China’s economic growth

These vignettes from the article could easily be said of S’pore too

— “Compared to the last generation, my impression is that this generation is under more pressure,” she says.

“The current generation has to worry about so many things.

— “In the workplace, if you don’t work hard enough, somebody else may replace you and you may lose everything.”

“I work long hours … There’s no compensation for extra work. I think I should get paid for it.”

— “Normally it will cost a whole family’s savings to pay the down payment and then they have to work 20 or 30 years.”

He says that makes Chinese workers “mortgage slaves”, working to pay off their mortgage until they are in their forties or fifties, but then having to worry about their children’s housing problems.

“It’s like an endless circle,” he says.

“The only way you can try to get ahead is to do as much overtime as they’ll pay you for.”

— a student in his final year at the university, says that if he is lucky enough to get the job he wants, he will not have any choice but to work as hard as he can.

“If there is one thing that mostly makes the people work hard here, it’s the feeling of uncertainty about their life in the present or in the future,” he says.

Investing: Five easy steps

One of the authors  of “The Investment Answer: Learn to Manage Your Money & Protect Your Financial Future” was a top bond trader but after he retired, he found out that he knew little up until that point about basic asset allocation among stocks and bonds and other investments or the failings of active portfolio management is shocking, until you consider the self-regard that his master-of-the-universe colleagues taught him. “It’s American to think that if you’re smart or work hard, then you can beat the markets,” he said.

The book asks readers to make just five decisions.

First, will you go it alone? The two authors suggest hiring an adviser who earns fees only from you and not from mutual funds or insurance companies …

Second, divide your money among stocks and bonds, big and small, and value and growth. The pair notes that a less volatile portfolio may earn more over time than one with higher volatility and identical average returns. “If you don’t have big drops, the portfolio can compound at a greater rate,” …

Then, further subdivide between foreign and domestic. Keep in mind that putting anything less than about half of your stock money in foreign securities is a bet in and of itself, given that American stocks’ share of the overall global equities market keeps falling.

Fourth, decide whether you will be investing in active or passively managed mutual funds. No one can predict the future with any regularity, the pair note, so why would you think that active managers can beat their respective indexes over time?

Finally, rebalance, by selling your winners and buying more of the losers. Most people can’t bring themselves to do this, even though it improves returns over the long run.

NYT article

Whatever you do attend Fisca’s talks

What is a fair price?

Via S’pore Daily, I’ve been laughing at Tan Kin Lian’s grumbles on what he considers expensive fees.

His comments reminded me about a story about a locksmith. Dan Ariely, a professor of psychology and behavioural economics at Duke University and an author of books on behavioural psychology aimed at the layman, tells the story of how an apprentice locksmith used to take 30 minutes to mend a lock. When he finished, his clients would thank and tip him.

When he became more experienced, he could mend a lock in a minute. He charged the same rate. But now customers complained about his rates and refused to tip him.

Then there is a story of a famous US Supreme Court judge. The first time he was assigned to write a judgement, he wrote his judgement quickly (he had a reputation for delivering speedy judgements as a lower court judge) and circulated it to the other judges. His piece was criticised as superfical, not worthy of a Supreme Court judge. He was told to rewrite. He did no such thing. A few months, he circulated it again. The piece was praised for its scholarship. Subsequently, whenever assigned, he would write quickly but keep the pieces in his drawer, circulating them months later.

It’s about our perception of value. The longer it takes, the more valuable, is one perception.

Well in investing the holy grail is buying undervalued assets that are unfairly priced by the market, and selling them when the market overvalues them, again unfairly pricing them.

Time to convert yr housing loan from floating to fixed rate interest?

Warren Buffett is doing this for his loans.

Nearer to home, I knew someone in SPH who opted for a fixed rate loan, 20 yrs ago. Others there said he was “daft”. He reminded them of their comments when in 1994 the Fed tightened rates and they found their interest payments doubling or tripling.

There are times when paying a premium in return for certainty is a better option. Taz how S’pore prospered. You know what you get from the PAP. Can’t say the same for UMNO or an Indonesian government. There you pay and take yr chances. E.G. it is a lot cheaper to build storage tankers in Johor or Batam, than here. Yet S’pore is the preferred site oil farms. Oil traders even rent tamkers and park them off S’pore when the oil farms are full.

The trouble with auditors

Today’s financial industry may be too complex and too subject to opinions for the accountants to get right, even if they want to. Witness PricewaterhouseCoopers, which audited both Goldman Sachs and AIG. At the height of the financial crisis, the exact same securities on each firms’ books were valued at radically different prices. In other words, there was no way to compare the two firms’ results.

The complexity makes the accountants even more susceptible to pressure from management. That pressure is all too real. And the problem in Enron’s case was never the consulting business. It’s that the accountants forgot who they were working for. They’re supposed to work for investors, not management. Their job is to make sure investors have a fair chance at assessing a company’s financial condition.

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Put simply, the unfortunate truth is that corporate bad behavior often pays. Thus, if accountants always behave like homo economicus — the hyper-rational, purely opportunistic hero of economic theory — rampant frauds are only to be expected.

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NYT article

Why Doctor Goh didn’t believe in economic stimulus packages

This tale would illustrate his thinking.*

1. It is a slow day in a small town, and the streets are deserted.

2. Times are tough, everybody is in debt, and everybody is living on credit.

3. A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

4..1 As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

4.2 The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

4.3 The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

4.4 The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.

4.5 The hooker rushes to the motel and pays off her room bill with the motel owner.

4.6 The motel proprietor then places the $100 back on the counter so the traveller will not suspect anything.

5. At that moment the traveller comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

6. No one produced anything. No one earned anything… However, the whole town is now out of debt and you can look to the future with a lot more optimism.

Now you know how economic stimulus packages works…….nothing really!

In other words, economic stimulus packages, expand claims on wealth, not wealth itself. They don’t help the economy.

Instead Doctor Goh believed that reserves should be used to keep the economy going in bad times.

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*He did not tell this story. I use this story, which a friend sent me recently, to illustrate his thinking. I’ve read many of his speeches and essays. They are gd, easy reading.

Insider trading: Extending the doctrine

What US prosecutors are targeting

On May 22, 2009, an unnamed investment professional rang up James Fleishman, a salesman at the consulting firm Primary Global Research.

The anonymous executive was seeking a very particular type of service: an expert who could provide specific, timely information about a particular company. In other words, someone with a “pretty good handle on what’s happening.”

Three weeks later, Mr. Fleishman’s firm had set up for its client a phone call with a manager at Dell, who divulged sensitive information like sales figures and monthly forecasts.

Such conversations — recorded for federal investigators and described in a criminal complaint filed on Thursday — underpin the newest batch of insider trading arrests. With the latest round of charges, authorities have indicated that they are taking aim at so-called expert networks, firms that offer paid access to professionals with deep knowledge of their industries.

Invest in the neighbourhood in 2011?

Seems sophisticated investors are looking beyond the ‘BRIC’ countries (Brazil, Russia, India and China). I’ve seen predictions that by 2020, the “Future 7” (F7) countries (Argentina, Egypt, Indonesia, Mexico, South Africa, Turkey and Vietnam) will account for 1-in-10 global consumers, and per capita disposable income will rise by 52% in real terms. The F7 are characterised by youth and urbanised populations, combined with rising incomes and the expansion of the middle class.

Well two of them are neighbours: Indonesia and Vietnam.

Lippo-Mapletree Reit, First Reit,  Berlian Laju and Samudera are Indon plays listed on SGX.

There is one Vietnam play, Latitude.

On you can invest via an EFT listed here.

Go do yr homework. You might make money without investing on a foreign exchange.

BTW I got some Lippo-Mapletree.

S’pore Inc: Are local talents emigrating too fast?

We have been told that the reason why we need immigrants is because the economy is creating more jobs that there are S’poreans to fill them; we are picky abt the jobs we are willing to do; we are “less hard-driving and hard-striving” because “the spurs are not stuck into the hide”; and society is greying fast because we are not breeding fast enough. If the flood of immigrants lessens, we will end up like this https://atans1.wordpress.com/2010/12/28/a-ghost-city-state-or-why-fts-are-needed/

But many S’poreans believe that the reason for the liberal policy is that the govmin wants to keep wages down, and to ensure a vote bank for the PAP.

Here’s another possible reason: the government is worried that too many S’poreans are migrating for the economy’s gd.

Yesterday I was reading this by Ng Kok Lim. The following bit at the end of the article caught my attention

Emigrant stock as % total population 6.1% (S’pore)  5.3% (M’sia)

Emigrant stock as % non-immigrant stock 10.4%(S’pore) 5.8% (M’sia)

The stock of emigrants of Singapore origin is 10.4% of our non-immigrant population. This percentage is far higher than Malaysia’s 5.8%. If high emigration rate is worrying, then Singapore has more to worry than Malaysia.

Well I know M’sia is worried by its emigration numbers. In 2010, I attended several seminars on M’sia’s latest development plans*. In all these seminars, a major concern of the M’sian officials present was the loss of talent going overseas**. There were plans to attract M’sians back.

If Kok Lim’s S’pore numbers are reliable*** then we could have the unspoken, unpublicised reason for S’pore’s very liberal emigration policy: the government is worried that S’poreans are cashing in on their properties and moving on. Local talent is being lost, and foreigners are needed to replace them.

Not a gd ad for S’pore as an attractive place to live and work, neh? Or for government policies?

Update on 5 January 2011: And doctors lead the way out of S’pore. My mum juz told me that one of the doctors at clinic we use is “moving on” overseas. Her hubby (another doc) is going abroad.

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*I used to flog M’sian equities to fund mgrs in London and Milan and retain an interest in all things M’sians despite being a true blue S’porean by birth.

**One official said the M’sian govmin realised that something was wrong when the data showed Malays emigrating. It wasn’t juz the usual unhappy Chinese and Indians. BTW, the officials also said the spike in property prices here in 2008  coincided with an increase in the numbers of M’sians coming here. There was a recession here, but things were worse in M’sia. There was a recession and concerns abt racial riots.

***The M’sian numbers he quoted are in line with what the M’sian officials were saying at the seminars.

Investing in Reits

BT published a long piece that could serve as a primer on how to invest in Reits. Reit Primer.

Two complaints abt piece.

One is that it doesn’t talk abt buying Reits that trade at big discounts to latest reported RNAV. True there may be gd reasons why some Reits trade way below RNAV. But savvy investors can make $ buying Reits that they think shld not trade way below RNAV and holding them until they trade above or juz below RNAV, while getting good payouts while waiting. Useful Reit table for yields and RNAVs.

Those who bot Ascendas India Trust (trumpets pls) when it was trading way below its RNAV have made gd capital gains. I should have sold  out but the yield is pretty decent.  And India is now hot and RNAV could rise.

The other complaint abt the piece is that Reits can use the low interest environment to refinance their debts at lower rates and for longer tenures. Analysts from DBS and OCBC are saying this is happening.

BTW, high-yielding Reits  courtesy of ST scan0004. Declaration of interest: I own units in three of them. (Update on ^ January 2010: Now own four of them.)

Update on 4 January 2010

Must read — a summary of Soro’s piece (many yrs ago) on the danger of buying a Reit trading above RNAV (and attraction).

Another gd Reit table.

Quitter’s view of FTs

A Quitter who left S’pore when the PAP came into power was here to see his relatives who were Stayers. (BTW, he is the richest person in the family.)

He said it was interesting to note that the Indians were the most hated of the FTS here.

The local Chinese hated them because they were Indians. I pointed out that it wasn’t racial. An FT had told me and the police that she didn’t care abt S’pore’s laws because she was an Indian FT. Her unmuzzled German Shepherd had attacked my dog.

The local Indians hated them, he said, because the FTs looked down on the local Indians as “low caste” Indians. I said the local Indians had a point. The Indian FTs (largely fair-skinned) are snotty towards local Indians who are darker. One Aryan from Nepal is rumoured to have asked Tamils in the ST newsroom if they were high caste Hindus, saying she was a high caste Hindu.

And the Malays hate them, he said, because they tot that the inflow of Indians was to further marginalise the Malays. They are presently second with 19%, even though MM has written-off the Malays saying in September last year that “We’re largely Chinese and Indians”.

A more appropriate symbol for the PAP?

SDP’s Danny (and nothing to do over the hols other than partying) got me thinking of 21st century symbols for the other parties.

As MM Lee believes that local-born S’poreans are “less hard-driving and hard-striving” because “the spurs are not stuck into the hide”, and as the other PAP  ministers, and GLC CEOS are forever scolding S’poreans (taking the cue from MM?)  https://atans1.wordpress.com/2010/11/20/spore-inc-can-pap-go-beyond-scolding/, maybe the PAP should buy over the Hammer symbol of the Workers’ Party?

The Hammer can be used as the 21st  century equivalent of the Hammer of Thor. Once owned by the PAP, the Hammer will automatically change from a symbol of the power of the working class (not that many around nowadays, everyone’s middle class nowadays), into a symbol of hammering into shape “less hard-driving and hard-striving” local-born S’poreans into “more hard-driving and hard-striving” S’poreans that the PAP (especially MM) can be proud of.

BTW, did anyone notice that the lightning bolt of the PAP looks like this?

Add another one and we have a sign associated with the Nazis (National Socialists): the SS, a Nazi military unit that had two distinct branches. One branch were elite fighting men, feared and respected by the Allies in WWII. The other butchered Jews and other

Citibanking: S’pore leads the way

NY follows.

Citi executives celebrated the new branch, which was modeled after high-tech branches in Singapore and Hong Kong that were apparently very well received by customers there.

Err OK HK too.

May you have the fortune of the fisherboy

One day Shah Mahmud, riding with the Wind
A-hunting, left his Retinue behind,
And coming to a River, whose swift Course
Doubled back Game and Dog, and Man and Horse,
Beheld upon the Shore a little Lad
A-fishing, very poor, and Tatter-clad

Key signs of mkt top

Interesting reminder of what to watch out for.

Gd fortune in 2011.