S-Reits: What can go wrong?

S-Reits are the flavour of the moment. Witness this gushing report.

“The current yield gap between S-Reits and the 10-year government bond is attractive to us at 5.1 percentage points versus 0.8 percentage point during the 2007 boom, and an average of 3.4 percentage points over the past seven years,” said Royal Bank of Scotland analysts in a report last week.

The report put S-Reits yields for 2011 and 2012 at 6.7 per cent and 7.1 per cent respectively. The high yields now being provided by S-Reits are well supported by a stable rental outlook, low interest costs and acquisitive growth potential, the RBS analysts said.

RBS has an ‘overweight’ call on the S-Reit sector.

As reported earlier https://atans1.wordpress.com/2011/08/21/cimb-on-reits/, CIMB is “neutral” on developers as a whole but “overweight” on S-Reits.

So what can go wrong? Nomura Singapore said that one of the current concerns of investors in the Reits space is the potential risk of recapitalisation if asset values were to fall significantly. In simple English, investors are afraid of rights issues if the gearing of Reits goes sky high if property values supporting the loans collapse. This happened in late 2008.

Even if property values don’t collapse, Reits could face banks refusing to renew their credit facilities, and asking for their money back if the banks face a liquidity crunch. This too happened in late 2008.

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PM’s repeated calls for unity, what he means

Prime Minister Lee Hsien Loong again appealed for national unity after an intense campaign dominated by calls from critics for an independent president who can act as a check on the PAP, “Now that the election is over, we should all come together again as Singaporeans, to tackle the challenges that Singapore faces, and take our nation forward”.

Forgive me for being extremely cynical but I had heard something similar thrice since the 7 May 2011 general election.

Immediately after the election, the PM had promised that the ruling party would do some intense soul-searching and find better ways to reach out and connect with Singaporeans. He urged Singaporeans to close ranks and work together with the government to achieve the overriding objective of improving the lives of the people.

In August, during his National Day Rally speech, the PM had further committed his government to getting its politics and policies right.

Then two weeks ago, he called for a “harmonious political system where we make decisions in the best interest of Singapore and Singaporeans and keep ourselves safe in this uncertain environment.” Singapore was “too small to afford an impasse and gridlock, to have two sides blocking one another, so you can’t move, you can’t solve problems, you can’t go ahead”.

So one would think the government would have played its part in fostering national unity. But consider the evidence.

One minister called us netizens the “lunatic fringe”, while the PM called internet communities “cowboy towns”, insultiing the inhabitants of those towns and showing his lack of knowledge of Westerns. Those towns were reasonably civilised places. They, at least, didn’t have respectable senior citizens burying hatchets into other folks. The town sheriff or a visiting US Marshall would have shot such a person dead, or arrested him; or the citizens would have lynched him.

Then we learnt that two statutory government agencies, the HDB and the PA (where the PM is the chairman),  tried, almost immediately, after the May GE to fix the WP that had won a GRC by taking away from the WP town council the right to lease out prime common spaces for community functions.

So let’s take PM’s latest message for unity with a big pinch of salt. He must mean unity on his and the PAP’s terms: unconditional surrender by the sheep (swing voters who constitute 45% of the voters) and the asses (the 20% who will vote for any ass if it is an anti-PAP ass) to the donkeys (the 35% who will vote for Tin Pei Ling because she is a PAP donkey).

But ironically, our very own Mr Bean, has got 65% of us animals united against him and the other leaders of the donkeys. So the joke is on our PM, aka Mr Bean. I’m being mean? Google up pixs of both and decide if they look alike.

Financial Competency: What TKL is gd at

Hopefully after losing his deposit, he will focus on what he is very gd at.Teaching S’poreans especially the young on how to plan for their financial future.

Examples

http://tankinlian.com/admin/file.aspx?id=553

http://tankinlian.com/admin/file.aspx?id=434

Warren Buffett’s past reincarnation?

Mycroft Holmes is the elder brother (by seven years) of the famous Sherlock Holmes. He has greater deductive powers than Sherlock Holmes, but according to Sherlock,  he is unwilling to put in the physical effort necessary to bring cases to their conclusions.

Given that Warren Buffett doesn’t like to exert himself but is a genius at spotting investments by deductive means, he could be a reincarnation of Mycroft Holmes. If so the spirit of Mycroft Holmes has found the the perfect use for his deductive skills, and reclusive and indolent nature: investment genius.

“Divining tonite’s results”: where it all went wrong

This https://atans1.wordpress.com/2011/08/27/divining-tonites-results/, was written on the morning of 27th August. The predictions of the various percentages went badly wrong, but the conclusions (see below) didn’t.

But first where the divination methods let me down badly. The two Drs between them only got 70% of the votes cast , not the 85% divinated. They only got between them the 35% of the electorate that will vote for any donkey, so long as it is a PAP donkey, and 35 percentage points of the sheep (swing voters who constitute 45% of the total votes). TT must have got all the donkey votes and TCB all but 10 percentage points of sheep votes.

Anyway, did get it right that it was too close to call between the two Dr Tans.

Tot that the ass vote (20% of the electorate) would be be split between TKL and TJS. TJS got all the ass votes (any ass so long as it is an Opposition ass). To great surprise, 5 percentage points of the sheep supported him. Had tot that no sheep would vote for a former SDP candidate. But then Nicole Seah supported him. Young sheep adore her.

Right in thinking that TKL would lose his deposit, but didn’t expect any sheep to vote for him. But it would seem he got his votes (5% of the total votes)  from the sheep. Must be super daft sheep.

Very, very wrong in thinking that 5 percentage points of the asses would vote for Dr Tan Cheng Bock. They remained solidly in the TJS camp. Tot that not all asses were daft, was wrong.

Finally an even bigger majority, 65%, are not happy with PM, not the 50ish% predicted.

Conclusion

PM better wake up his his ideas. The majority of S;poreans are unhappy about the

– unjustified commuter fare rise;

– repeated failures to secure MRT carriages and depots;

– attempts to tell us how we should vote on 27 August;

– Central Mediation Centre’s and MinLaw’s refusal to tell FTs that they are guests here, not our overlords, and must tolerate our culture and eating habits; and

– continued fixing of the Opposition by the PA (a government agency of which he is the chairman).

The vast majority of S’poreans are too smart to buy into the Kin Lians and Jee Says of this world. They know when people talk rubbish.

The vast majority of S’poreans are conservatives.

Brand PAP is toxic.

Mandate for PM to carry on fixing?

If I were a PAP spin doctor (which regrettably I’m not, they pay very well while I only have my CPF and dividend income to live on), this is how I’d spin Tony Tan’s very narrow win over Cheng Bock (7,000 votes*) with only 35% of all the votes cast and Jee Say’s good showing (30%?)**.

During the 2011 General Election, the PAP only got 60% of the popular vote. The Opposition got between them 40%. During the presidential election, the two candidates that had only just resigned from the PAP, got between them 70% of the votes. This is 10 percentage points more than the PAP got during the GE.

Not only that, but Kin Lian, the PAP member who resigned several yrs ago when his job specification no longer needed him to be a PAP member, and who has since been attacking the party, did badly. He may even lose his deposit***. It could be spun that S’poreans don’t like PAP traitors espec9ally those that did well from being PAP members. He was CEO of NTUC Income for 30 yrs.

So the PM can reasonably argue that he has a mandate from 70% of the voters to use government agencies to fix the Opposition something the PA (where he is chairman) and the HDB did in Aljunied. And he can allow:

— every TLC, or, or government department or agency to raise their charges until the pips squeak;

— LTA and SMRT to get away with repeated failures to secure MRT carriages and depots; and

— Central Mediation Centre and MinLaw to continue telling FTs that FTs can be intolerant of our culture and eating habits.

Carry on as usual PM, 70% of S’poreans are on yr side. Sigh.

Update on 28August 2011 at 9.25am

*7,269 to be precise

**25%

***lost his deposit with only 4.9% of the vote.

Masterclass in analysis: Buffett’s BOA deal

When Warren E. Buffett invests in a troubled company, he gets a good deal. Dealbreaker’s Matt Levine crunched the numbers on Mr. Buffett’s Bank of America investment and estimates that the bank’s implied stock price in the $5 billion deal was $5.28 per share, more than $2 lower than where it currently trades. Note the way he uses less than precise assumptions to avoid getting into complications.

http://dealbreaker.com/2011/08/how-much-did-warren-buffett-pay-for-bofa-anyway/

Divining tonite’s results

(Update on 28 August 2011, 7.15am –My divination methods let me down badly. The two Drs between them only got 70% of the votes cast , not the 85% I expected.

I also got wrong the belief that the swing voters would not vote TJS, abt 10% seems to have done so. I was very wrong in thinking that 5 percentage points of the asses would vote for Dr Tan Cheng Bock. They remained solidly in the TJS/  TKL camps.

What I got right — TKL could lose his deposit, and my conclusions. It’s even worse for PM. Bigger majority, abt 65%, not happy with him, not the 50ish% I predicted.)

Assumptions

35% of the voters will vote for any donkey so long as it is a PAP donkey; 20% of the voters will vote for any Opposition ass if it is an Opposition ass; and the remaining 45% are the sheep who think they can think for themselves.

Predictions

The two doctors will between the two of them get 85% of the votes. The donkeys and mules will vote for either of them, and 5 percentage points of the asses will vote for Dr Tan Cheng Bock. The result will be a close one, with neither of the doctors getting an absolute majority of the total votes cast by the animals.  I hope TCB wins but it’s only a hope. Dr Tony Tan could win.

The remaining asses will vote for either Tan Jee Say or Tan Kin Lian. It is very highly probable that TKL will lose his deposit. But TJS could also lose his deposit.

Conclusion

PM better wake up his his ideas. The majority of S;poreans are unhappy about the

– unjustified commuter fare rise;

– repeated failures to secure MRT carriages and depots;

– attempts to tell us how we should vote on 27 August;

– Central Mediation Centre’s and MinLaw’s refusal to tell FTs that they are guests here, not our overlords, and must tolerate our culture and eating habits; and

– continued fixing of the Opposition by the PA (a government agency of which he is the chairman).

The vast majority of S’poreans are too smart to buy into the Kin Lians and Jee Says of this world. They know when people talk rubbish.

The vast majority of S’poreans are conservatives.

Brand PAP is toxic.

Slicing the Apple

http://www.economist.com/blogs/dailychart/2011/08/apple-and-samsungs-symbiotic-relationship

See how much Apple screws its suppliers, manfacturers

Why S’poreans must unite and send another message to PM

Since 27 August is only a few days after the 100th day of PM’s cabinet being sworn in, we should use that day to tell the PM that we will not tolerate the:

— unjustified commuter fare rise;

— repeated failures to secure MRT carriages and depots;

— attempts to tell us how we should vote on 27 August;

— Central Mediation Centre’s and MinLaw’s refusal to tell FTs that they are guests here, not our overlords, and must tolerate our culture and eating habits; and

— continued fixing of the Opposition by the PA (a government agency of which he is the chairman).

TJS and TKL supporters, please vote with yr minds, not yr hearts. Do you seriously think yr candidate can win?

You may hate Dr Tan Cheng Bock, but hold yr noses and vote for the Tan that swing voter (45%) are most comfortable with, and who is not the preferred candidate of the PAP.

PAP supporters, by not voting for Tony Tan you will help those members of the CEC who want the party to change. Remember the PM has said he will work with the winner, but do you want the winner to be TKL or TJS? TCB was until recently one of the MIW.

Anyway Tony Tan is meant for bigger things (like returning to GIC). The presidency is too small for him.

S’poreans vote tactically. Vote for the Tan who the PAP doesn’t want to win but who is not a radical or a friend of the SDP and Dr Chee, or who is from the Dark Side, pretending to be the “People’s Voice”.

Vote for Dr Tan Cheng Bock, the guy who wants to unite us thru footie and multiracialim. OK even I  admit this is corny. But at the very least, he is not the candidate of choice of the PAP, or Dr Chee and the SDP, or of Goh Meng Seng or the NSP.

First Ship Lease Trust looks interesting

Billionaire Wilbur Ross is betting that the slump in shipping which drove oil-tanker returns to a 14-year low is ending.

Ross & Co manages about US$10bn in assets, is part of a group (including China Investment Corp, China’s SWF) spending US$900 million on 30 ships hauling gasoline, diesel and other refined products. It is Mr Ross’s first shipping investment and deploying ‘another few hundred million’ in the industry ‘is certainly easy to do,’ he said in interviews in August.

That outlook contrasts with the pessimism of John Fredriksen, founder of Frontline Ltd, the biggest operator of the largest crude carriers. The 67-year-old billionaire said in May that it would probably be another year or two before ship values collapse and he can start adding to his fleet.

So can we imitate Ross by buying SGX counters? NOL and Samudera have container fleets. So do Pacific Trust and Rickers Maritime. BerlianLaju has the world’s 3rd largest chemical tanker fleet, more than 93 of them, but they are not the ships Ross and friends are buying.

But there is FSL. It has a fleet of 16 tankers and seven container vessels. Of the 16, 11 are product tankers (what Ross is buying), two crude tankers and three chemical tankers (presentation August 2011). But this is a tricky company to analyse, so do yr homework. It is also a shipping trust and such trusts are yield plays.

Why did PA take so long to complain?

At the same time as hoisting the white flag of surrender, the PA said its underhand tactics of fixing the WP were a result of WP tactics. WP has denied these allegations.

Problem is the incidents it cited were from yrs ago (shades of CurryGate). So how to believe? Ironically, the media carried at the same time reports of rape charges against the former head of the IMF being dropped by the American authorities. One reason given was the fact that the complaint took several hrs before complaining of being raped. She had gone on with her work.

She was no longer credible because of the time-lapse.

And why didn’t the PA see fit to allege publicly that the WP was playing dirty before the May GE. If it had, residents of Aljunied may still have Cynthia Phua as one of their MPs. It might have also prevented the WP’s near victories in East Coast and Joo Chiat.

And doesn’t it sound strange to hear from a government agency headed by the PM no less that it played dirty because it alleged the WP played dirty. Sounds like a criminal admitting it broke the law because it alleged someone else broke the law.

PM should give PA five tight slaps. One for making him look like a liar (how to believe the calls abt hearing us when his agency went rounding fixing the WP?), one for saboing Tony Tan’s campaign, one for not raising the allegations abt WP before the May GE, one for using underhand tactics, and one for making the PM look stupid (he chairman of PA)

 

China: Not immune to Western slowdown?

China, the world’s biggest exporter and second biggest economy, is still booming. Its GDP is expanding at about 9% a year and since the 2008 financial crisis, China has helped keep the global economyfrom falling in a recession. But, as the BBC’s  Damian Grammaticas reports, China may not be immune if there is a new slowdown in the US and Europe.

http://www.bbc.co.uk/news/world-asia-pacific-14578083

S’poreans have two reasons to be interest in the issue. We depend on global growth and Temasek itself, TLCs, other GLCs (like Ascendas) and GIC have big bets on China.

What MM Lee said of the ties between CCCs and PAP

On 30 December 2009, our nation building, constructive ST reported MM Lee as saying of the Chinese officials who come here to study the governance of S’pore,“They discover that the People’s Action Party has only a small office in Bedok. But everywhere they go, they see the PAP – in the RCs, CCCs, and the CCs.”

(RCs (residents’ committees), CCCs (citizens’ consultative committees), and the CCs (community clubs)
are grassroot organisations under the People’s Association. Its Chairman is none other than the PM himself who is also the secretary-general of the PAP.)

Todate no-one from the People’s Association, PAP or government, has to my knowledge, contradicted the then MM Lee.

 Back story. PA waves white flag.

SMRT CEO still does not get it

True, she says, “We cannot have another incident”. But Ms Saw said that in the rest of the world, graffiti on trains is quite a normal occurrence. “What has happened here is not the only time in Asia that you have penetration and graffiti on the train.

She still thinks we are upset because of graffti.

I hope it doesn’t take a few hundred deaths caused by bombs planted by terrorists  to make her realise that the issue is public security and safety not graffti.

Tony Tan keeps getting saboed by the governing PAP

Since the constructive, nation-building local media and NTUC, have portrayed Tony Tan as the governing PAP’s preferred candidate, every time there is public unhappiness with the government, his popularity suffers.

And boy oh boy, the unhappiness with the government has grown since the May GE.

First was the request by the two tpt cos to raise fares. SMRT is a TLC while a statutory board owns 12% of Comfort Delgro. Approval was given for a rise, abt a third of the amount requested. The funny thing is that fare rises don’t take effect until October. So couldn’t the request and approval be made in September?

Then there is CurryGate. A constructive, nation-building newspaper told us that that a government appointed  meditaor had proudly boasted of “pressuring” a local Indian family to stop preparing or eating curry when the FT PRC neighbours were in. When there was a public uproar at the insensitivity of the mediator, the government denied the accuracy of the newspaper article.

But its response created another issue: why were the mediators even raising the issue with the local family? Surelyguests have to adapt to hosts, not the other way round?

Strike three is the repeatedly failure of SMRT to secure its train depots.

Then came strike four. PAGate:  in a nutshell, the HDB had the brazen nerve to lease some prime spots for grassroots events — apparently previously by the PAP-controlled Aljunied Town Council — to the People’s Association. This was done quickly after the General Elections, on 27 May and 13 June, and apparently without any announcement or publication anywhere. On 15 August, the PA informed Sylvia Lim, Chairman of Aljunied-Hougang Town Council, that “bookings by WP will not be allowed”. http://siewkumhong.blogspot.com/2011/08/leopards-and-spots.

The presidential election is fast turning into a referendum on the government’s actions since the GE in May. And there is a gd alternative to Tony Tan.  He too was a PAP MP (at a time when PAP  MPs were respected members of the community, unlike today), he has moderate and compassionate views and best of all he is no radical or self-appointed Voice of the People.

If Tony Tan is the preferred candidate, he should tell the PM that the PM is doing him no favours and that the PM can keep the presidency. At 71, he is too old to do NS or to lose a public election thru no fault of his own.

Property: What weed are these people smoking?

I am amazed that any broker can call the Singapore real estate sector “Overweight”. But RBS did it on 16 August 2011

The valuation gap between developer stocks and physical properties widened over the past eight months. We expect it to narrow as home sales remain robust. Strong household and developer balance sheets should support prices and cooling measures may prove ineffective in quelling real demand. We upgrade our view on the sector to ‘overweight’ from ‘neutral’.

Developer stocks’ premium to NAV narrowed to just 4 per cent from 33 per cent in January, despite robust primary home sales of 11,197 units (up 13 per cent year on year) in the first seven months of 2011 and a 4.3 per cent half-on-half increase in home prices in H1 2011. The sector also underperformed the STI by 11 percentage points in the last eight months. Policy risks seem as low now in view of heightened global uncertainty. We think any policies to cool the market would prove ineffective as we believe there is virtually no speculation now. We expect mass-market homes to continue to be undersupplied in 2012 to 2013.

Growth in total stock averages 2.3 per cent a year from 2011-12, below the long-term average of 3 per cent, while occupancy rate is at 98 per cent. Hence, we expect the healthy churn of mass properties to persist. We stress-tested the household balance sheet and found that a 30 per cent drop in home prices would bring the debt-to-asset ratio to 18.6 per cent, slightly higher than the long-term average of 18 per cent but below the high of 21 per cent in the 1997 and 2001 booms.

Gearing of larger developers is low at 34 per cent vs 41 per cent during the pre-crisis level of 2008 while that of smaller players halved to 103 per cent. Given their low land bank, developers will not cut prices even if there is a recession, in our view.

RBS expects the economy to grow 6 per cent in 2010 and 5 per cent in 2012. We expect an equilibrium in the office sector, in the light of higher visibility of supply and likely slower demand. Hence, we moderate our office rental growth assumptions to 5 per cent in both 2011 and 2012.

Overall, retail rents may soften in view of an oversupply but quality malls owned by seasoned operators should continue to do well. We like hotels on a structural growth story in Singapore tourism. Capital values of commercial assets should also hold up in view of persistently low rates.

We are most positive on City Developments, which we believe could benefit from a lifting of policy risks and continued strength in the residential market. Hence, we upgrade the stock from a ‘hold’ to ‘buy’, for its large exposure to the residential sector which accounts for 39 per cent of its RNAV.

We maintain our ‘buy’ ratings on Keppel Land, OUE and UOL as these commercial stocks look undervalued, trading at 30 to 50 per cent discount to RNAV. We maintain our ‘hold’ rating on CapitaLand as we believe that the stock may lag in stock price performance in view of its complex shareholding structure.

Are you OK Doc Tan?

I’m wondering if Tony Tan realises that the president is only a security guard when it comes to guarding the reserves?

The speech he gave at the NTUC financial and business services cluster National Day observance ceremony on Friday morning, was a good one. He talked abt the worsening global economy and the uses that the reserves can play.  But it was the speech of a player, not a security guard. ://sg.news.yahoo.com/blogs/singaporescene/gov-t-prepared-economic-uncertainties-tony-tan-071802754.html

So maybe he is hinting to the PM that he would like to return to GIC where he can play a meaningful role in helping S’pore steer through the crisis. He has after all helped built up the reserves to the extent that Tan Jee Say can say spending S$bn of the reserves on Jee Say’s plans is “small change”.

I for one prefer him to return to GIC. The elected presidency is too small a role for him. It was too small for LKY, it is too small for Tony Tan. https://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/ Link was inserted at 6.25 pm on 21 August 2011.

 

CIMB on Reits

CIMB loves them based on a research note dated Aug 18 2011 where it called for an “Overweight” on the Reit sector.

CIMB recently hosted nine Singapore and Malaysia real estate investment trusts (Reits) at our inaugural Asean Reit conference. While investors were generally not pricing in a double dip, most appeared increasingly cautious.

Coupled with value emerging from the recent selldown, we sensed increased interest in Reits, with a particular preference for those in more resilient segments like industrial, retail and healthcare.

Our top picks are Ascendas Reit, Frasers Commercial Trust, Starhill Global Reit and Cache Logistics Trust. We also like CapitaMall Trust and CDL Hospitality Trust at current valuations.

During the conference, we sensed increased caution among investors after the recent market selldown, with more turning to S-Reits given increased risk aversion. Most Reits also gave the feedback that they had been receiving more investor interest and enquiries. While turning cautious, investors were not yet pricing in a double dip.

Questions centred on rental growth and expansion via acquisitions or development. Most agreed with us that S-Reits have emerged with stronger balance sheets and portfolios from the last crisis.

Recent market volatilities and developments in advanced economies have not affected Reits yet.

Notwithstanding slowing growth in advanced economies, industry participants remained positive on growth in the region. However, most would be monitoring developments closely.

Industrial Reits continued to expect positive rental reversions on the back of rising spot rentals and rental step-ups. Investors liked the stability from industrial leases but were slightly wary of a seeming slowdown in manufacturing in Singapore.

Industrial S-Reits, however, noted that manufacturing remains a core component of Singapore’s economy and continued to see bright spots as local manufacturing transitions to higher-value-added products and services.

While spot rents for most office S-Reits remained healthy, more investors were starting to question rental growth next year. We noted a moderation in tone among the office S-Reits, on the back of a slowing leasing momentum, significant physical completions in 2012 and potential growth concerns. Most expected rental growth to be more moderate in 1H12, before picking up again in 2H12 as supply tightens in 2013.

Most Reits are still keen to grow through acquisitions. Opportunities are, however, limited with the system still flush with liquidity.

Industrial Reits noted a difficult acquisition environment, given increased competition from new entrants such as private funds, smaller players and other industrial Reits. Most were thus gravitating towards development (mainly build-to-suit) and redevelopment, given their enhanced yields, the small capital outlays, short gestation periods and Reits’ ability to mitigate leasing risks by building to suit.

Similar concerns on compressed yields and a lack of quality assets for acquisition were expressed by the office S-Reits.

TKL: Gone over to the Dark Side?

TKL had consistently said that he wanted to run a clean campaign. “I do not wish to cast any candidate in a negative light or to engage in any activity that may smear or belittle their reputation or character.” Example.

But this statement appeared on his websiteon 19th August. Excerpts that belittled two other Tans:

— Another candidate has stood as a candidate for an opposition party. He now wants to act as a check and balance on the government. Do you want the office of the President to be quarreling with the Government most of the time?

— Another candidate was a non-executive chairman of a company and is not fully involved in the management. Do you want a President who does not have much financial experience to carry out the role of safeguarding the reserves?

He was reported to have said something similar in Jurong.

So has Anarkin Skywalker, the Jedi Knight, turned to the Sith Lord, Darth Vader?

As, in the early career of Anarkin Skywalker, there was evidence that he would join the Dark Side, in the case of TKL there were similar signs. Remember his extreme sensitivity to criticism? The recent examples need no reminders. But in 2008, he rowed with some netizens (self included) calling them smearers and astroturfers when they asked him why he only found the courage to speak out after he retired. He tried unsuccessfully to have the unfavourable remarks removed. He “unfriended” the website, even though it closed the thread.

LKY and Dr M ain’t that bad

LKY and Dr Mahathir may have played very rough with their opponents, but he didn’t hound them until they committed suicide.

This man made a fool of Hitler in court. He was persecuted until he commited suicide. Dr Chee is still standing tall. So is Anwar.

SMRT: Another reason for selling

It’s amazing to read that it only found out that security guards were not patroling the fence perimeter at its Bishan depot after the break-in.

What this shows is that management is not only complacent abt security, but is incompetent. It found out the failure to patrol after reviewing CCTV footage. Shouldn’t a review of the tapes be routine?

Update on 21 August at 9.20am

It gets worse. The security company claims that it didn’t patrol the area because SMRT didn’t allow it to. And if it could have patroled the area, it would not have detected any intrusion because there were no lights in the area. SMRT says it is asking its lawyers’ opinions.

Our Muslim minister should do a Haj to thank Allah that terrorits didn’t spot this flaw. Hundreds of commuters could have been killed, and with them S’pore’s reutation as a safe place to live and do biz in.

Why MU is listing here

Unlike in HK, a loss-making co can list here.

Uniquely S’porean.

SMRT: Third time unlucky?

Investors should seriously consider selling their SMRT shares.

There has been another serious of breach of security at a train depot. This after security was supposedly  tightened after last yr’s break-in that went undetected for days. This time the break-in was detected within hours. Even so the vadalised train was on the tracks before being recalled.

SMRT (and commuters) have been lucky twice. The break-ins resulted only in vandalism. But will this luck hold?

We have been told that Muslim terrorists have targeted S’pore because it is a friend of the West. So SMRT (and commuters) could be the victims of a bomb blast if SMRT continues being unconcerned with security.

If commuters are killed in a bomb blast resulting from explosives being planted in a carriage after a break-in at a depot, SMRT will be sued for tens of millions. And fined tens of millions by the government.

So selling yr SMRT shares now, may be a gd idea.

Tan Jee Say: Wannabe spender of S$60bn

I hope S’poreans who want a president to act as “jaga” (security guard) or as “auditor and gatekeeper” (Tan Jee Say’s words) of our reserves realise that Tan Jee Say wants to spend S$60bn of our reserves on various projects (see page three of this).

So if you want a “jaga” or “auditor and gatekeeper”  to ensure that our reserves are not raided by the governing PAP to ensure a victory at the next GE (Goh Meng Seng for one has alluded to this possibility), voting for TJS to become president would be like suckling pigs voting for Chinese New Year or sheep voting for the coming Eid festival. Or chickens voting to allow a fox into their coop.

As he has said he will lobby the cabinet on his spending plans, he would surely endorse their plans, if they agreed to fund his plans. The result will be like drunks spending Christmas in a brewery.

And as an experienced manager, he should know that the auditing and gatekeeping functions are separate from the advisory role. So why does he want to combine them into one person, himself?

Of course, if you think like KennethJ that too much money has been locked away in the reserves, go ahead and vote for TJS. If he wins, the PAP will rue the day that LKY came up with the idea of an elected prsident to fix any non-PAP government that wins power in a “freak” election that is not, in turn, overturned by the SAF. To get hold of the reserves, the governing PAP would have to play ball with TJS.

Here’s something I find terribly funny. TRE and S’pore Election Watch have very strongly endorsed TJS and postings on their sites show the support that their followers are giving him. But these sites, at regular intervals, carry pieces on why the reserves are insufficient to cover CPF withdrawals, and hence the government’s restrictions on withdrawals.

If there are insufficient funds in our reserves for our CPF withdrawals, how can these sites and their followers support a chap who wants to spend S$60bn of money that they say does not exist?

One wonders what TJS thinks of these supporters? He had said when he was a SDP candidate in the recent GE elections that S$60bn is only a small amount of our reserves.

But I give respect where respect is due.  These sites are courageous. If TJS loses his deposit, they will be shown not to be opinion formers and leaders, but juz ranters. If he gets a decent share of the votes, or wins, they justly deserve the bragging rights.

Based on reports that only abt 100 TJS supporters turned up at the nomination and that they booed Tony Tan, the probability of TJS losing his deposit is high. BTW, the People’s Voice only had abt 80 supporters there. Looks like people don’t want him to be their voice. TKL looks likely to lose his deposit too. No wonder he kept trying to keep his option to withdraw open until the very end.

Citi continues to prefer Reits

Citi continues to prefer Singapore Reits over developers, because of the current uncertain economic environment. “Despite attractive valuations, continued policy risk implies that it remains difficult to suggest picks within the real estate developer space”.

Citi prefers Reits that are operationally more defensive, including retail Reits such as Mapletree Commercial Trust and Fraser Centrepoint Trust, where passing rental rates are below market ones.

The curry thickens

Wah lan! “Cannot eat curry when FTs are home” happened 6- 7 yrs ago. So now we know that for at least more than 6- 7 yrs,  the Community Mediation Centre has been telling locals that complaining FTs can’t stand curry. This is even earlier than the “Foreigners 1st, 2nd and 3rd; locals last” policy that was introduced by the government. I hate to think what the CMC were doing after MM said in 2009 that S’poreans were daft and lazy while PRC FTs were “the salt of the earth”.

OK I exaggerate.

But the law minister and his ministry still don’t get it.

What upsets and annoys the respectable netizens of cowtowns is that CMC raised the issue with the local family. It should have told the FT family, “S’pore is a multi-racial, multi-cultural society. Preparing and eating curry is part of everyday S’pore life. As guests here, if you can’t stand the smell, pls find another apartment.”

Instead it conveyed the complaint to the local family. And initially gave the MediaCorp free-sheet the impression that it proudly “pressured” the local family. Of course, it now denies pressuring the family. But that’s to be  expected. It would say that, wouldn’t it?

Even so, the fact that it wanted to publicise the incident of it telling the local family of the complaint, tells us that it is not willing to tell FTs that they,as guests, must be sensitive to their host.

Or maybe, the minister and ministry get it. They are just trying to throw curry powder over the issue of the insensitivity of the CMC towards locals.

I hope Lina Chiam raises the issue when parliament opens. The WP MPs will have better things to do. WP MP Pritam Singh implies that the WP wants to be in a coalition with the PAP after the next election.

Related post: https://atans1.wordpress.com/2011/08/11/the-insensitivty-of-an-official-currying-fts-over-locals/

SIA & Qantas: Different Strategies

Qantas has unveiled its strategy to meet the competition from low-cost carriers.

What is interesting is that it has taken a different approach from SIA, another legacy airline. SIA is planning to add a low-cost carrier to complement its existing premium and other legacy services. This is a conservative approach but one that risks cannibalising customers from its non-premium legacy services

But Qantas is taking a more aggressive approach. It is turning Qantas into a low-cost carrier with a premium service subsidary that will be based in Asia.

All plague on all the Tans

Where is each Tan on the curry issue?

Now what annoys me abt each Tan.

Tony Tan

You keep talking of yr economic and financial skills. Hey do remember that president is only a security guard of our reserves. Want to use yr skills, go reapply for yr old job at GIC, or go help yr niece manage the debts she must have incurred in buying control of Straits Trading.

Tan Cheng Bock

I know yr strategy is to use the retired grassroots activists that the PAP have discarded to get you the votes. But ain’t you forgetting that they got discarded because they no longer are of any use in bringing out the votes?

Pls talk abt more bread-and-butter issues rather than footie and racial tolerance. On the latter, it’s the FTs, not us, that are the intolerant ones. They don’t want us to eat curry, or burn paper during 7th month.

Tan Kin Lian

You keep telling us that the people asked you to stand. If that is so, don’t you think they would have volunteered to help yr campaign, and contribute money, without you asking? For the record, you asked twice.

The other candidates are not asking for donations, why you so cheap skate?

Knowing how thin-skinned you are, what assurance netizens got that if you get elected, you won’t propose to the cabinet illebral rules to tame cowboy towns?

Tan Jee Say

Why you found yr voice and conviction only this yr? You have been free to speak since 1991. Kinda convenient in an election yr? Where were you when S’poreans were saying no to the casinos in 2005? You after all have voiced in 2011 yr moral outrage at the casinos. Why not in 2005?

Why so silent abt yr experience at Morgan Grenfell and Standard Chartered?

As you want to tap S$60bn from the reserves, ain’t electing you to the  presidency the equivalent of allowing the fox into the chicken coop?

S’pore is Second

S’pore is second to HK in a list of most popular business hubs. London is third. As the people of both these cities have rioted against their living conditions, will S’poreans riot? Nope, they will elect Tony Tan as president.

http://www.cnbc.com/id/44084372?slide=11

Trying to spot the bottom?

Here’s a guide. But remember catching falling knives is dangerous. Why not juz go into hibernation.

http://www.economist.com/blogs/buttonwood/2011/08/financial-markets-0

Tan Jee Say: Shane or Tom Horn?

When I think of Tan Jee Say’s presidential bid, I can’t help thinking of two Westerns.

In Shane and Tom Horn, a stranger rides into town.

Tan Jee Say metaphorically rode into  town early this year with his very detailed and interesting analysis (summary) on Singapore’s economy. We were reminded that he was once a upon a time a scholar from a very humble background,  then a high flying, high ranking civil sevant specialising in economic policy issues. In particular, he was GCT’s Principal Private Secretary (PPS) when the former was DPM, though we subsequently learnt that GCT didn’t have a good opinion of him. We also learnt that since leaving the civil service in 1991, he has worked in Morgan Grenfell, John Govett and Standard Chartered before becaming an investment adviser, whatever that is.

He has only given details of his stint at John Govett.

In April 2011, he joined the SDP and contested the GE under its colours. There were allegations that he tried very hard to get onto the WP’s slate. Apparently the WP didn’t want him. In July, he resigned from the SDP so he could contest the presidential election. 

He has talked of “moral courage and conviction” but these in his case only became evident a few months before the GE

No matter how one looks at it, his public track record on socio-political issues and activism is pretty thin. The public records only stretch from the beginning of this year. Despite his very strong stand against the casinos, I don’t recall any report mentioning his name when there was a debate about whether casinos should be allowed several years ago. Surely, I would have remembered a report that GCT’s ex-PPS had publicly spoken out against the casinos?

And spending a few months with the SDP is not a positive. This can either be spun as opportunism (to get onto their MP slate) or that he is an SDP mole out to subvert parliamentary democracy (remember SDP won no seats) by capturing the presidency. Those who believe the latter will cite the support the is getting from sites that are believed by many to be aligned with the SDP.

Coming back to the Westerns. In Shane, Shane turned out to be the people’s hero. He killed the gunfighter brought in by a rich cattle rancher to intimidate the farmers. In Tom Horn, Horn turned out to be a hired killer of the wealthy cattle ranchers, killing those suspected of rustling their cattle. He was the bad guy.

Some websites that are alleged to have links with the SDP are actively promoting him as the man that will defeat Tony Tan. A Shane.

But is he more like Tom Horn? I am not suggesting that Jee Say will go round killing the other two non-Tony Tans. But could he, albeit inadvertently or accidentally, turn out to be the guy that kills off any chance of Dr Tan Cheng Bock or Tan Kin Lian of defeating Tony Tan? These two Tans, by any criteria, have distinguished records on socio-political issues and activities, and in the case of Dr Tan for decades.

Remember that based on the last GE and a study by the Institute of Policy Studies, about 35% of the voters will blindly support any donkey if it a PAP donkey, and 20% will support any ass so long as it was an anti-PAP ass. The remaining 45% were the “thinking” swingers.

Before Jee Say got his COE, Tony Tan was widely perceived as the candidate that the PAP would like to win, Dr Tan Cheng Bock was the centralist, and Tan Kin Lian was the perceived anti-PAP candidate. It was thought that in a three-Tan race, Tony Tan might lose while in a one-to-one with Cheng Bock, Tony Tan would lose.

Now there are two perceived anti-PAP candidates fighting for the 20% core vote. And four candidates fighting for the 45% swingers. And Tony Tan still has his core 35% vote.

I am glad that Tan Jee Say got his COE because it shows that the Presidential Election Committee is taking a very liberal and enlightened view of who can qualify for the COE. But those S’poreans who want to use this election to vote in someone less identified with the PAP will be disappointed. One or two too many to choose from.

The silliness of investors

Governments are simultaneously being told by markets to cut deficits and promote growth – but is the deficit-cutting tipping the developed world back into a recession that investors (and the rest of us) would hate

http://www.bbc.co.uk/news/correspondents/robertpeston/

A broker who almost got it right

In late January 2011, I posted this giving the views of UOB Kay Hian. It argued investors will be best served by having a balanced portfolio comprising firstly of counters that promise high and sustainable dividend yields.

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

In Economy, Investments on 20/01/2011 at 5:31 am

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.

We the voters will decide what kind of president we want

From films about the Romans, many S’poreans will be familiar with terms like “emperor” , “consul” and “senator”. What most won’t be familiar with is the word “tribune”.

There was a time, when the tribune was the most powerful man in Rome. He derived his authority (which included being above the law) because he was the only leader who had to win a Rome-wide election where all the citizens voted. He was apponted by the will of the people, and derived his powers from the simple fact of winning an election where all Romans voted.

In the S’pore context, even though, those who argue that the president can be an activist president do not have the law (OK the lawyers) on their side, their views could still prevail. In a democracy (assuming S’pore is one), the will of the people matters.

In 1975, Australia had a constitutional crisis which started when the opposition-controlled senate refused to pass legislation allowing the unpopular Labor government to spend money (block supply). It ended when the Labor appointed governor- general sacked the Labor prime minister who still commanded a majority in the house of representatives. An election of both houses of parliament followed, and Labor lost.

Even though the senate retains its power to block supply, and the governor-general the power to dismiss the government, these powers have not been used since 1975.

The reason is that these actions are considered too controversial to try again. The Australian public has decided that whatever the constitution allows, the senate should not block supply, nor should the government be sacked by the governor-general. The government can only lose power in a general election or if loses the support of the majority in the house of representatives.

Putting this into the S’pore context, the role of the elected president can be changed (without changing the constitution) if

– an eligible candidate says he will be an “activist” president;

– he gets elected;

– he walks the walk, not juz talk the talk; and

– the government, instead of removing him or ignoring him or telling him to shut up, listens to him.

Then the role of the president will change by convention (customary practice). And if the government ignores him or removes him, then the voters at the next GE will have the final say. They can remove the government that doesn’t want an activist president.

Is this easier than winning two-thirds of the parliamentary seats and amending the constitution? At least this process doesn’t depend on the People in Blue, the near clones of the MIW.

The insensitivty of an official currying FTs over locals

I was appalled when I read u/m in Today recently.The mediator leans on a local Indian family to stop cooking curry when their PRC neighbours are at home. Reason, the FTs don’t like the smell of curry. Now if the Indian family cooks curry at the wrong time, they can sued by the PRC couple. Do they have to knock on the PRC couple’s door to check if they are in before they cook curry? The mind boggles.

This is carrying matters too far. The PRC couple should be told that S’pore is a multicultural, multicultural place, where curry is a staple food. If they can’t stand the smell, they should move on to another apartment, where there are no curry smells to offend them.

Worse, the mediator is proud that she pressured the S’porean Indian family to accomodate this most unreasonable request. She should be ashamed of herself.

Finally. as  the Community Mediation Centre is funded by us the tax payers, are we supposed to fund the Ms Giams of the world so that they can allow FTs to lord it over us? Seriously, the centre and Ms Giam act the way they do because of the signals that they perceive they are getting from the government.

Is the message they think they are getting is, “S’poreans are daft, FTs are tua kee”?

The government should send a clear message: S’pore is a multiracial, multicultural society, where foreigners are welcomed but must fit in. Are well, pigs are likely to fly before this happen. Witness PM’s message, “Let’s not turn negative on foreigners”. How abt him telling dad not to keep sending the message that FTS are tua kee, locals are daft and lazy?

What next? S’poreans can’t eat durians or blachan because the smell offends the FT neighbours? Or Ms Giam bullying S’poreans to accept that public spitting is OK becauses FTs do it?

http://www.todayonline.com/Singapore/EDC110808-0000102/Number-of-neighbour-disputes-hit-high

A family, who had just moved here from China, had resorted to mediation because they could not stand the smell of curry that their Singaporean Indian neighbours would often cook. The Indian family, who were mindful of their neighbour’s aversion, had already taken to closing their doors and windows whenever they cooked the dish, but this was not enough.

“They said: ‘Can you please do something? Can you don’t cook curry? Can you don’t eat curry?’,” said Madam Marcellina Giam, a Community Mediation Centre mediator. But the Indian family stood firm. In the end, Mdm Giam got the Indian family to agree to cook curry only when the Chinese family was not home. In return, they wanted their Chinese neighbours to at least give their dish a try.

 

Hedgie beats GIC in court case

Paulson & Co, the US hedge fund, has won a US court victory against GIC over control of a group of luxury hotels that brings it closer to making potential windfall profits.

GIC has been trying to win control of the hotels from a group led by Paulson & Co since early this year. These hotels were originally part of the holdings of troubled Morgan Stanley real estate funds –

The FT reports, In a little noticed judgment at the end of June, the court extended for another four months the Paulson group’s exclusive rights to file a bankruptcy plan.

GIC had argued that the Paulson group would manipulate the bankruptcy process for its own gain. According to court documents, GIC said the Paulson group was delaying resolution to enable it to “bet on a significant upswing in the commercial real estate market”.

Note SWFs are reluctant to court the publicity that goes with litigation.

Note this hedgie made billions buying BoA when Temask was selling its “30-yr” investment.

S’pore: The trouble with AAA-status

Singapore is one of the few remaining AAA sovereign borrowers, especially one without any fiscal issues.

So money will pour in, interest rates will drop, and property prices will fly.

The banking system may soon have more cash deposits than it knows what to do with. In the 1970s in  Switzerland, banks were paid to accept deposits i.e. negative interest rates.

This is a tough problem to solve. If our central allows the exchange rate appreciate  in order to slow the inflow, a more expensive Singapore dollar will hurt exports and tourism. If it doesn’t act, then Singapore will face significant inflationary pressures. House prices will fly even higher, SBS, SMRT and the electricity suppliers will fleece us even more, and CPF rates will drop to 0.1%, if not negative. We will pay the government interest on our forced savings. OK I exaggerate on the likihood of this.

Even the late Dr Goh Keng Swee might not have been able to solve this problem.

A quote when mkts are volatile

(Or for any season)

Confucius said: 知穷之有命，知通之有时，临大难而不惧者，圣人之勇也。”To understand that hardship is a matter of fate and success is a matter of the times; and to able to face enormous difficulties without fear or terror is to have the courage of a sage.”

Hope Dr Wong Wee Nam doesn’t mind me borrowing above from his tribute to Dr Lim Hock Siew.

President Nathan: An Ordinary S’porean

Today, president Nathan will be presiding over the National Day Parade.

If the comments on the internet are to be believed, many netizens think that he should be flipping pratas instead and serving them to LKY, Ho Ching, the PM and other ministers. Now that is unfair, if not downright mean

Firstly, he represents one of the quiet S’poreans who support the PAP. There are 60% of them.

He is also a good model for the very many S’poreans (quiet or not) who buy Toto, Big Sweep and 4-D tickets. At the age of 74, he won big time. From a retired civil servant living in a modest semi-detached house along in an unfashionable district, he has become at almost 86 a multi-millionaire. His near contemporaries who had bigger houses in more fashionable districts have been left far behind.

He is your typical quiet ordinary S’porean who happened to luck out. A great role model.

So let’s give him two cheers and oh make mine a pratha with an extra egg.

Related post

https://atans1.wordpress.com/2011/07/01/the-greed-of-president-nathan/

S’pore still has AAA- status

So all those S’poreans who believe that their CPF monies are not safe, should think again.

As the US loses AAA, where is a safe harbour?

Nowhere as everything is priced in US$. In the 1970s, a US Treasury Secretary said to the Europeans and Japanese, “Our dollar, your problem”.

Today, the US should say to China etc, “Our debt, your problem”.

“If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours,” John Maynard Keynes

http://www.bbc.co.uk/news/business-14430643

Property developers should petition PM

Given the downgrade of US debt with the fear of higher global interest rates and weaker equity markets, property developers must be more worried today than they were this time last week. Maybe they should petition the PM to bring back Mah Bow Tan as housing minister? It is a well known fact that he can e3nsure that residential property prices rise in a recession.

That they were already very worried last Monday is evidenced by the meeting that day that Redas (the property developers trade union) held for 17 analysts from 14 stockbrokers and five consultants. Developers don’t call for such meetings when they are bullish. They are then too busy counting their potential profits.

They discussed issues such as “possible ways to facilitate sharing of information among industry stakeholders, the need to better understand and analyse new market dynamics and the changing nature of the demand for Singapore residential properties”, Redas said in response to queries from BT.

According to BT, Redas had suggested sharing in-house data to help analysts better study the property market. The supply of private homes in the pipeline was also discussed. The meeting took place days after Redas shared results from the latest Redas-NUS Real Estate Sentiment Index survey, which polled developers, consultants and other Redas members.

The findings reflected a softening in sentiments about the property market in the second quarter.

In recent months, several equity research houses also released reports about a potential glut in private homes. One of the most recent is a July 28 report from Bank of America Merrill Lynch, predicting ‘an inflection point in 2012, driven by excess supply, demand moderation and slowing economic growth’.

Its analysts expect around 12,500 new units to enter the market every year between 2011 and 2015 – 60 per cent higher than the 15-year historic average annual supply delivered to the market. At the same time, they expect demand for private homes to weaken due to factors such as tighter immigration policies and an influx of HDB flats.

Citi’s property analysts are among some who do not see an over-supply of private homes coming, as their June report shows.

Adding to reports from property analysts are views from National Development Minister Khaw Boon Wan, who blogs often. In a June entry, he had advised investors and upgraders to consider various factors, such as volatile global conditions, before buying a property.

According to Redas, its president Wong Heang Fine said that he would like to have such sessions on a regular basis, say, every six months.

EP’s powers: The silence of two legal academics

When the minister of law made these comments

— “that all public acts by the president – including public speech – can only be made on the advice of the Cabinet, except for the powers specifically vested in the office”; and

— “The president cannot reject advice given by the Cabinet And he cannot engage in public debate with the government”,

he was speaking at a public forum organised by the Institute of Policy Studies.

The moderator of the forum was one professor Tommy Koh and the other speaker was professor Thio Li-Ann from the National University of Singapore’s Faculty of Law. Both are known to speak their own.

Part of what they said were reported in our constructive, nation-building mainstream media and there was no mention of any criticism of the above points made by the law minister. But one would expect that inconvenient facts are not reported by our MSM.

But I understand from someone who attended the seminar that they did not challenge or criticise these points.

I am not surprised as it is the conventional wisdom that what the minister said is an accurate position of the law.

I have blogged thrice on the inability of the president to speak out and no lawyer or legal academic has dared argue against me, despite my promising blog space and anonymity.

https://atans1.wordpress.com/2011/06/08/many-things-president-cannot-do/

https://atans1.wordpress.com/2011/06/09/the-silence-of-the-president/

https://atans1.wordpress.com/2011/06/16/how-to-unsilence-the-president/

The surprise is that Tan Kin Lian found a lawyer who agrees with his radical (but popular with Goh Meng Seng and many netizens) interpretation of the law, “I have looked at the constitution earlier about whether the President can be the voice of the people to bring issues to the Government. I do not find any requirement that the President should be “dumb”. I have also received advice from a lawyer who looked at the constitution and he confirmed my understanding.”

A reward has been offered to anyone who can out this lawyer. Juz joking.

CIMB still likes FCOT

On I August 2011 when FCOT was at $0.88 (note I own some shares), CIMB came out with report where it maintains ‘outperform’. Q3 2011 distribution per unit (DPU) of 1.38 cents meets our forecast and Street expectation at 24 per cent of our FY2011 figure. 9M 2011 DPU forms 74 per cent of our estimate. DPU was up 10 per cent y-o-y on stronger net property income (NPI) contributions from almost all its self-managed assets mainly on better occupancy. Occupancy at KeyPoint had improved for the ninth consecutive quarter.

An improving underlying portfolio at China Square Central meanwhile should position Frasers Commercial Trust (FCOT) for upside when it takes over direct management in March 2012. No change to our DPU estimates or dividend discount model-based target price of $0.99 (discount rate: 9.4 per cent).

With an improving portfolio, stable capital structure and a strong sponsor in F&N, we see no reason for its 35 per cent discount to book amid forward yields of 7 per cent. We see catalysts from early refinancing, the unlocking of value from AEI at China Square Central and improvements in occupancy and rentals.

NPI was up 10 per cent y-o-y on stronger contributions from Central Park, Caroline Chisholm Centre and Keypoint. Q-o-q, NPI was up 4 per cent as there were improvements at its Australian assets. Occupancy at KeyPoint also continued to improve for the ninth consecutive quarter to 86 per cent since the in-house team took over property leasing in Q2 2009.

Passing rents were stable at about $5 per square foot with limited exposure to higher rollover rents locked in at the 2008 peak.

China Square Central’s underlying occupancy improved 20 basis points, with recent leases renewed at $6.30-8.00 psf versus expiring rents of $6.30 psf and passing rents of below $6 psf. Continued improvements in occupancy and rentals on the back of more proactive management by FCOT and an upcoming Telok Ayer MRT station could position FCOT for upside when it takes over direct management following the expiry of the master lease in March 2012.

Asset leverage had been pared down to about 37 per cent after the divestments of AWPF and Cosmo Plaza. This entire amount ($745 million) will mature in 2012. With a high cost of debt of 4.3 per cent and prolonged low interest rates, FCOT could save in terms of interest following the refinancing of this debt. We estimate that a 50-basis point interest rate reduction could lift its DPU by 11 per cent.

OUTPERFORM

Why the PM should ask Tony Tan to return to active duty

The finance minister has come out to say that the world economy will undergo a rough period three or four years.

Tony Tan helmed GIC through a very rough period recently and all indications are that GIC had a good crisis compared to Temasek. An example: Temask lost billions cutting losses within 15 months on its so-called 30-yr investments, Merrill Lynch/ BoA and Barclays. True GIC has a 50%ish book loss on UBS but it made money on Citi, its 30-yr investments. https://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

If Tony Tan becomes president, he is only the security guard of the the reserves, True he can advise the PM, but the PM and S’pore will lack Tony Tan’s executive skills in a financial crisis.

So the PM should tell Tony Tan, “No more of this presidential rubbish, especially as your can’t communicate with “lesser mortals” to save their lives. Return to active duty for the sake of S’pore.”

And if TKL becomes president, so what? The PM can always get the doctors to certify him medically unfit to serve as president. They can use this very recent example

After the law minister made this statement, “The president cannot reject advice given by the Cabinet And he cannot engage in public debate with the government,”, TKL issued a statement implicitly agreeing with the minister. http://tankinlian.blogspot.com/2011/08/voice-of-people-and-constitution.html

Less than 12 hours later (albeit overnight), he came out to disagree with the minister saying, “I do not agree with his view that  the President cannot speak about anything else without the approval of the Government. I find the Law Minister’s interpretation to be too narrow. It seemed to give the President less freedom of speech than an ordinary citizen of Singapore.” http://tankinlian.blogspot.com/2011/08/statement-from-tan-kin-lian-can.html

Shouldn’t he have said this in the first place?

And as to Tan Cheng Bock, if he was good enough for one Lee Kuan Yew to ask him to serve as a PAP MP when being asked to serve as a PAP MP was seen by the public as an honour unlike today (when the likes of  Kate Spade Tin, Foo, Wee Kiak and Puthu can become PAP MPs) , and for the government of the day (which the PM was a part) to ask him to head a feedback unit, waz the problem of having him as a security guard president?

And as the law minister said, the PM can ignore his advice. Say if and when he asks the PM to think of the people when making policy decisions.

 

Why do people like being Citi clients?

Citigroup was responsible for giving poor investment advice to 88-year-old millionaire Ie Seng Hoan, which resulted in the loss of $18.1 million, Mr. Ie’s lawyer said Tuesday.

“It knew full well of Pak Ie’s health problems, his language difficulties and his lack of financial acumen and education,” Mr. Ie’s lawyer said in his opening statement at the Singapore High Court trial.

http://www.bloomberg.com/news/2011-08-02/citigroup-gave-88-year-old-client-negligent-advice-singapore-court-told.html

In Indonesia, the police have accused three external debt collectors of Citi of mudering a deliquent Citigold card customer.

And in the US, a famous TV star of the late 70s was awarded damages against a Citi investment unit.

Can’t help feeling for the Tans especially the father

Who would have thought that the campaign of a former chairman of a media group would be found wanting in the field of public communications. There was and is a decent narrative to his son’s 12-yr disruption.

Ignoring minor gaffes aside (censoring comments and not knowing how FaceBook works), there was one major balls-up: the failure to frame the debate of son’s 12-yr deferment within the “medical disruption” exception.

It didn’t work. The facts came out. See this (esp 1-7). Any queries should be addressed to Mindef, not the Tans. But because the now infamous reply to Jessica tried to frame the issue within the narrow confines of “disruption for medical studies” , and failed, people are not interested in giving the Tans the benefit of the doubt. The Tans should give each communications adviser a few tight slaps.

Because the sad and funny thing is that there was a perfectly good narrative to exploit. If an extremely bright student wants a 12-yr disruption so that he can undertake privately (at no expense to the tax payer) a course of study that could be of value to Singapore, why shouldn’t he ask for it? Why shouldn’t dad agree that his son should make the request?

It would be for Mindef to decide, not Tony Tan who was then minister for education.

Unfortunately most of the value of this narrative has been destroyed by the reaction to the attempt by the Tan team to frame the 12-yr disruption within the “medical studies” exemption. People focus on the fact that 12-yr disruption is very long for medical studies and that anyway he is still not a qualified MD. So what’s this tosh abt disuption to be an MD? They are not willing to see it in any other way.

And given the fishmonger incident, one suspects Tony Tan is not meant to be president. Maybe the stars are aligned for Doc Tan Cheng Bock. I sure hope for the sake of S’poreans, they are not aligned for the “People’s Voice”. Or is it “People’s Megaphone”?

Standard Chartered beats forecasts with 17% profit rise

London-based, Asia-focused Standard Chartered Bank (Temasek owns 19%) has reported that pre-tax profits for the first six months of the year were $3.6bn (£2.2bn), up 17% from last year.

Profits grew in all the regions where Standard Chartered operates, except for its biggest market, India, where profits fell by 5%.

Profits grew by 23% in Hong Kong, 34% in Singapore, 14%in South Korea and 19% in China.Income from the Middle East grew 4%, in Africa it grew 10% and in the Americas and Europe it grew 11%.

It blamed rising interest rates, growing competition and regulatory changes for falling profits in India.  It made a big bet in India financing takeover details. Will be interesting to see if these give the bank the same death-defying experiences as it gave some Wall Strret banks in the 1980s and 1990s. https://atans1.wordpress.com/2010/09/10/stanchart-getting-too-aggressive/

Just when you tot it was safe

Three US share indices fall more than 2.1% on weak US economic data. http://www.bbc.co.uk/news/business-14382506

Update at 3.50 pm

Asia follows.

The silence of the co-driver etc

While the internet is buzzing with comments on Tony Tan & Son, the WP is being like the mainstream, constructive, nation-building media: silent as if there are no issues about the NS of a presedential candidate. Actually a bit unfair on MSM. They did carry Tony Tan’s version of what happened.

When the WP asked us for our votes so that they could co-drive with the PAP and give the PAP a “tight slap” if the PAP did something wrong, we delivered Aljunied, and almost East Coast and Joo Chiat. Looks as if WP is not happy with us.

Pritam Singh is regularly, publicly mentally masturbating about the WP forming a coalition with the PAP. So that the WP is allowed to put a finger on the steering wheel? But we only get silence on what the WP thinks abt the NS deferment for 13 yrs for the Patrician’s son, and related issues.

The two “People’s Voicess” are also silent.

As we know, TKL has a public position on almost every topical topic. But his megaphone is muted when it comes to the issues surrounding Patrick and Tony Tan. He expects us to believe he will be our public voice on other “sensitive” matters?

And that self-proclaimed silent “Voice of the People” remains silent. If we elect Tan Cheng Bock as president, we will have silence from him for six years. He tells us to trust him that he will speak out privately. But why should we trust him? On his track record of speaking his mind publicly, he says.  But thaz the problem. He is asking us to make a leap of faith. Where once there was evidence, now there will be no evidence.

And what abt the SDP, NSP and SPP? Kinda silent on this “hot” topic?  The silence of the RP and SDA are understandable. They are the walking dead.

And what abt LKY? The man who tells us that people like him get “an extra egg”, discounts because of who they are. What does he think? Is Tony Tan one of these people entitled to discounts? And is it OK for Mindef to give “an extra egg”?

HSBC: Cutting the fat

HSBC has said it will cut 30,000 jobs by 2013 and exit operations in 20 countries as it looks to save billions of dollars.

The announcement came as the bank reported pre-tax profits for the first six months of the year of $11.5bn (£7bn), up 3% on the $11.1bn the bank made a year earlier. A very decent set of results.

As a shareholder, I can only say “about time”.

Gd analysis  http://dealbook.nytimes.com/2011/08/01/hsbc-to-cut-25000-more-jobs/?nl=business&emc=dlbka8

Nomura’s S’pore calls

Last week, Nomura issued a report on S’pore. Not surprisingly, defensive stocks found favour.

It cited an uncertain external environment, a slowing economic outlook for Singapore and an over-extended residential property sector. It expected the Straits Times Index to trade range between 2,900 and 3,200 for the rest of the year.

It  advised investors to go for sectors that provide sustainable dividend yields and stocks that have a regional presence and a re-rating potential based on fundamentals.

Nomura said that following the Singapore general election, the property, gaming and land transport sectors could see policy reviews which could undermine the performance of related stocks.

An over-extended residential property market could also start to impact banks’ earnings.

Calling for an overweight on telcos and conglomerates, Nomura said that it is bullish on these sectors for their yields.

“SingTel (5 per cent yield) and M-1 (6 per cent) provide the stability of yields and resilient earnings . . . OCBC is our top pick for banks given its broad wealth management platform and regional presence”.

Among conglomerates, it picks ST Engineering, Keppel Corp and F&N for their strong business franchises (potential for re-rating) and yields.

It also favours Reits, saying, “With the persistent low interest rate environment, Reits are attractive for their 5 per cent-plus yields”. Favourites are Suntec, K-Reit and CapitaCommercial Trust.

In commodities, it said Olam and Golden Agri are trading at attractive levels.

Finally, Biosensors is seen as being able to re-rate on strong growth for its drug eluting stent products in China and Japan.

“little disappointment”: Tony Tan to TOC

Here’s another example of Tony Tan and his team’s carelessness (or is it elitist meritocratic snobbery at work?).when talking to “lesser mortals”, in this case the plebs at TOC. I don’t think, based on TOC’s reply, that the plebs understood why patricians read TOC’s piece “with a little disappointment”.

Let me explain. Tony Tan and his team are disappointed because they must believe in an 18th century philosophical theory that is now treated as a forerunner of the concept of “subjective idealism”. One Bishop Berkeley argued that there are no material objects, only minds and ideas in those minds. He summarised his theory with the motto “esse est percipi” (“To be is to be perceived”). In modern PR-speak, this translates into,“Perception is reality”, one of the major tenets of the PR and public communication industry.

This theory of “Perception is reality” is best summarised in the following example he gave. If a tree in a forest falls, but no-one sees or hears it fall, has it fallen? Berkeley argues that it has not fallen. It is still standing.

An example in the S’pore context would be that S’poreans were not aware of how close the voting would be on polling day in 1988 in Eunos GRC and in Cheng San GRC in 1991. The mainstream media did not report the sentiment on the ground in these two GRCs, so S’poreans were not aware that many S’poreans were unhappy with the PAP. The unhappiness did not exist because it was not reported.

Coming back to Tony Tan. We know that our constructive, nation building media did not see it fit to cover the questions raised by netizens after Tony Tan issued a statement on FaceBook explaining his son’s very, very long disruption from NS. One could reasonably argue (based on the reporting of voters’ views in Eunos and Cheng San) that the media didn’t report the statement and the queries it raised because the media were adopting Berkeley’s reasoning that if no-one knew a tree fell, it hadn’t fallen.

Here because mainstream S’poreans were not aware of the questions raised by some netizens, these questions were never asked (i.e. did not exist). But because TOC informed mainstream S’poreans that the questions existed, they (the questions) came into existence. And this disappointed Tony Tan and team “a little”.

Get it? If you don’t, don’t worry. I am just trying to show that Tony Tan and his team communes not with us “lesser mortals”, but with the immortals. Well let the immortals vote for him.

As for myself,in a three-Tan race, I was planning to vote (admittedly through gritted teeth) for Tony Tan because I didn’t want a “feedback”, “constructive criticism only”, and fickle-minded president i.e. TKL by default. But after this and other public communication failures by Tony Tan, I’ll vote for the guy I want as President, Tan Cheng Bock.

If TKL becomes president, the government can come to a deal with him (remember the 2008 Income AGM?) or remove him.