Archive for September, 2011|Monthly archive page

Shipping trusts looking good?

In Uncategorized on 30/09/2011 at 7:58 am

Interested in the high yields (10% or more) they are offering? Especially as they make payouts in US$? 

Well they like other shipping firms are facing refinancing problems.  As European banks reduce exposure to this sector, the shipping industry will need to seek financing from the private equity and bond sector, executives told Reuters. And it ain’t easy.


TJS: Right attitude, wrong project?

In Political governance on 30/09/2011 at 6:49 am

I’m one of those 75% of voters who didn’t vote for TJS in the presidential elections. I wasn’t convinced that he was sincere (to be frank,I thought he was an opportunist); and the lack of a verifiable track record, career-wise, since 1991 was of concern. My thoughts on whether he was a hero or bad guy.

And there was the issue of S$60bn. “[S]mall change”, but not to his fan websites, and the party he resigned from the SDP.

But 25% of voters voted for him which shows that he convinced a quarter of adult S’poreans that he was sincere and competent. I accept their judgement. I am happy that he has rewarded (or should it be repaid?) their trust by saying he will continue fighting for his articulated principles and convictions.

But is trying to unite the Opposition a good use of his passion and talents? I think not.

Chiam tried it twice. First with the setting up of SDA and then by trying to help KennethJ take over the SDA. The latter ended with Chiam taking the SPP out of the SDA, and with both Chiam and KJ looking stupid and arrogant. Chiam recovered his reputation, KJ never did. But KJ was playing for high stakes. If he had taken over the SDA, he would have established himself as a master tactican.

Next, why would the WP and SDP want to team up because of TJS? They have distinct brands, and appeal to different voters. If the parties worked together closely, WP would not be able to attract the swing voters. They would not to be associated with the “radicals” of the SDP. Although not true, that is the image that the swing voters have of SDP members, an image that the constructive, nation-building local media, PAP and government helped build and maintain. Though to be fair, until very recently, SDP members made it easy to caricature themselves.

It is no surprise they have not commented on what he has said.

Then there is the state of the other parties. The SPP punches above its weight because of brand Chiam. The NSP (forever reinventing itself between elections), RP (remember who this is?), and SDA are sick parodies of political parties.

See who are the parties that welcome his initiative, and are willing to join the “Coalition of the Hopeless”: the SPP, NSP, RP and SDA.

Finally, the present arrangement of all the parties not fighting three-way contests suits everyone except the SDP.  In particular, the WP benefits from having the SDP’s supporters having no choice except to vote for it. See this.

True in 2011, the WP refused to give way to the SDA in one area (but it was vindicated when the SDA candidate lost his deposit) and there were rows between the WP and NSP, and between the NSP and RP on seat allocations. But the bigger party bullied the smaller party into submission in both cases. Goh Meng Seng was bullied by the WP, and he in turn bullied KJ.

This co-operation may not be possible after the next GE. The parties, especially the WP and SDP, may raise their ambitions, but that is in the distant future.

So I hope TJS finds something more doable and constructive, taking into account his talents and weaknesses. What that could be I hope to explore in a future post. 

Meanwhile, “Tan Jee Say, Ho Say Leh”: so long as he repays the trust that 25% of adult S’poreans have in him.

Mortgagors may get double whammy?

In Economy, Property on 29/09/2011 at 2:00 pm

Looks like MAS is right to focus on weakening S$ Double dip here we come.

So morgagors may face rising interest rates (interbank rates rise to attract S$ deposits) and a recession (no jobs). True rate rises may be moderate but it all depends on how prudent “homeowners” have been in their budgeting.

I hear that advertising and marketing people are being axed as of this morning.

Mortgagors: No gd scenarios

In Economy, Property on 29/09/2011 at 6:44 am

Commentators like Tan Kin Lian have been saying for ages that interest rates cannot remain at so low levels here and that they must rise one day. Then those homeowners who overleveraged by not anticipating having more in interest would face problems servicing their loans.

Well it seems that higher interest rates are occurring finally because the central bank no longer wants an appreciating S$. It now seems to want the S$ to weaken.

The central bank is forcing the value of the S$ down, making it unattractive to hold S$ deposits. It has reversed its policy of allowing the S$ to strengthen against the US$ because it is afraid that a stronger S$ will lead to weaker exports, slower growth and a recession. It allowed the S$ to strengthen because it wanted to fight inflation, a fight that has yet to be won.

If the central bank continues to allow the S$ to depreciate, then S$ interbank rates will have to rise to attract S$ funds. However analysts are divided on how much further the central bank will force down the S$. Those with property mortgages may hope that MAS reverts to a stronger S$ policy. But then the problem is whether they then still have the jobs to service the loans. A stronger S$ could hasten the recession.

Snigger, snigger.

Update on 29 September 2011 at 2.05am

Mortgagors: Double whammy?

UBS: And GIC wasn’t consulted?

In Banks, Corporate governance, GIC on 28/09/2011 at 6:52 am

I don’t know what shocked me most.

I read in Monday’s Today that despite being the largest single shareholder in UBS (6.4%), GIC was not consulted on the management change when the CEO resigned. He resigned over differences in strategy and corporate governance issues.

Yesterday evening Reuters reported that “GIC supported former chief executive Oswald Gruebel’s strategic plan for the bank and believed he could have stayed on to manage it through the latest crisis, a source with direct knowledge of the matter said on Tuesday … GIC’s support of Mr Gruebel until the very end also shows that while his leaving may have satisfied some shareholders, it hardly reassured the Singapore fund, which owns 6.4 per cent of the bank.” (Sorry I don’t have the link as I got the report via BT Online.)

Given that GIC is the single largest shareholder and supported his plan, and the board was meeting in S’pore, GIC should have been consulted. Would any company where Warren Buffett is the single largest shareholder dare sack a CEO that had his backing? Unlikely.

Time for GIC to gain some respect by flexing its financial muscles. No more Ang Moh Tua Kee pls.

GIC: Smoke & mirrors

In Accounting, Corporate governance, GIC, Political governance on 27/09/2011 at 3:21 pm

No, this is not a rant abt GIC’s performance or how it misleads the public abt its performance. It’s about how its inability or unwillingness to communicate with us, the public, can be self-defeating, leading to more questions being asked, especially on why it keeps relying on spin rather than facts, as illustrated by this media statement from GIC.

In a statement to the media last week, the Ministry of Finance said, How well GIC performs is not a secret. Its mandate is to preserve and enhance the international purchasing power of the reserves over the long term. Hence, it publishes its 20-year annualised real rate of return.

GIC also reports its returns over five- and 10-year periods as intermediate measures of its performance.

 GIC’s Performance as per annual report

Period Government’s nominal rates of return in US$ for period ended 31 March 2011 (%) 
5-Year 6.3
10-Year 7.4
20-Year 7.2

Well its performance might be as well be secret.

The problem is that these performance numbers raise questions on their methodolgy, to which answers are not available. I will only raise one issue, but this one issue will take acres of space. TOC has raised other less technical issues.

My grumble is that there is no disclosure on whether the functional currency is US$ or S$. By “functional currency”, an accountant means the currency in which the accouts are prepared. We only know that the returns are presented in US$, the presentational currency. This does not imply that the functional currency is US$.

If the accounting of the funds under mgt are done in S$, the performance results would have included the exchange loss arising from the US$ depreciation against the S$. So if its functional currency is S$, but its presentation currency is US$, then all exchange losses arising from US$ depreciation against the S$ will have been taken into account.

If however if the  functional currency is US$, then its US$ denominated assets and US$ investment income will not be impacted by US$/S$ movements. And any analysis would have to take US$ depreciation into account.

The differences can be great. (Please click “Read more” to read the article in full, if you are reading from the Home page. There is a necessarily long-winded example to illustrate what I’m trying to say.)    Read the rest of this entry »

Shareholder democracy has its dark side

In Corporate governance on 27/09/2011 at 6:34 am

 The majority of investors do not always know best, as shown by dreadful, shareholder-approved deals like Time Warner’s merger with AOL, Daimler’s deal with Chrysler, and Royal Bank of Scotland’s bid for ABN Ambro.

Scared shareholders could prevent deals that may be good longer term for them e.g. the Prudential’s aborted attempt to buy AIA.

Meddling investors can also impede development.

No, this is not to be taken as an allegory why S’pore should remain one nation under the PAP. I’m still waiting for the MIW to offer me serious money to become a covert blogger for them.

F1: S’pore will not rush into contract decision: Iswaran

In Economy, Tourism on 26/09/2011 at 11:42 am

Mr Iswaran, junior trade minister said: “We have engaged independent consultants, because we want to make sure that going forward, we have a clear idea of what is the value proposition of the F1 for Singapore…from the tourism point of view, from an economic spin-off point of view and a social point of view.

‘My own sense is that we need to have some kind of closure on this, certainly before next year’s race. But I’m hoping we can find a mutually beneficial agreement sooner rather than later.”

This was only reported in ST Online. ST carried an article on its front page praising the economics and other aspects of the race. Headline read,  “Stunning S’pore race a big winner” .

Is F1 worth it? Updated with 2011 estimate of additional tourism revenue

In Economy, Tourism on 25/09/2011 at 9:48 am
Year Cost (SGD M) Additional TourismRevenue(SGD M) Profit/ Loss(SGD M) Margin over Costs (%)
2008 150 168 18 12
2009 150 93 -57 -38
2010 150 160 10 6.67
2011 150 100 (Estimate) -50 – 33.33

Totals                      600                     521                      -79                             -52.67

(Click the headline to see full table if you are reading from the Home page.)

Doesn’t look gd does it? Looks bad if you ask me. Revenue (estimated albeit) drastically down this year.

[Update on 26 September 2011 7.15am: ST headline “Stunning S’pore race a big winner” and reporting that “race has retained its lustre and won over new fans”, is at variance with the estimated drop in revenue (see table) that SunT reported yesterday.]

Note: As much as 60% of the S$150m a year is being invested by the Singapore government through the Singapore Tourism Board (STB) in a bid to attract more visitors here,

Any wonder why “intangible rewards” matter. 

But shouldn’t intagible costs be taken into consideration, which makes things worse. Danny the SDP Bear’s pals may not be wrong.

(Cost and revenue numbers taken from BBC link above, except for 2011 revenue, taken from ST. Note ST quotes a revenue figure of S$98m for 2009.)

Is F1 worth it?

In Economy, Tourism on 24/09/2011 at 10:16 am
Year Cost (SGD M) Additional TourismRevenue(SGD M) Profit/ Loss(SGD M) Margin over Costs (%)
2008 150 168 18 12
2009 150 93 -57 -38.00%
2010 150 160 10 6.67
Totals 450 421 -29 -19.33

(Click the headline to see full table if you are reading from the Home page.) (Cost and revenue numbers taken from BBC link below.) 

Note: As much as 60% of the S$150m a year is being invested by the Singapore government through the Singapore Tourism Board (STB) in a bid to attract more visitors here,

Any wonder why “intangible rewards” matter. 

But shouldn’t intagible costs be taken into consideration.

A Catholic, Protestant, Muslim and Jew have dinner

In Wit on 23/09/2011 at 8:17 am

A Catholic, a Protestant, a Muslim and a Jew were in a discussion during a dinner.

Catholic: “I have a large fortune….I am going to buy Citibank!”

Protestant: “I am very wealthy and will buy ExxonMobil”

Muslim: “I am a fabulously rich prince…. I intend to purchase Microsoft!”

They then all wait for the Jew to speak….

The Jew stirs his coffee, places the spoon neatly on the table, takes a sip of his coffee, looks at them and casually says:

“I’m not selling!!!…”

Who is the Opposition Kingmaker?

In Uncategorized on 23/09/2011 at 7:00 am

Following this year’s two elections, I could reasonably argue that the core PAP vote (any donkey even if it is Tin Pei Ling, so long as it is a PAP donkey) is 35%, the core anti-PAP vote is 30% (any ass even an SDA ass, so long as it is an anti-PAP ass) and the remaining 35% are the Animal Farm sheep aka the swinger voters. 

(I’ve not used the term  “Opposition” because all the Opposition parties define themselves as being anti-PAP or its values.)

Given that the WP has five MPs and two NCMPS (while no other Opposition party has an MP, and the SPP has the only other NCMP) , one would think that the WP best presents the angry S’porean voter. I think not.

The WP has done well because it can attract enough swing voters with its moderation (or waffliness or BS, if I wanted to be unkind) while relying on the 30% of voters who are angry with the PAP. It does not have to appeal to these voters because the Opposition parties try to avoid three-way contests in the belief that such contests only benefit the PAP.

True, the PAP benefits most in such contests, But the WP benefits most among the Opposition parties in two-way fights. Its discipline, moderation and willingness to walk the ground between general elections, plays well to the sheep of Animal Farm.

The biggest loser is the SDP, the natural home of these angry voters. SDP supporters in areas not contested by the SDP, have no choice but to vote WP, SPP, NSP, and SDA and RP; or spoil their votes.

Think I exaggerate? I’ve been told by a usually reliable source that in the Aljunied GRC, Tan Jee Say polled a decent close second to Tony Tan. Tan Cheng Bock was nowhere. And look at the TJS rally, and even the booing of TT on Nomination Day. These bear the hallmarks of SDP activism; in the latter the Dark Side of SDP activism, not the mainstream SDP.

And remember Tan Kin Lian, who lost his deposit? He and his adviser, Goh Meng Seng, thought they had the angry vote stitched up, allowing them to focus on the swing vote. Then TJS got his COE and performed well in the presidential election. TKL could only get angry publicly with TJS.

True, TJS was not endorsed by the SDP but he had the active help of many of its activists, though the MSM and bloggers focused on the endorsement he got from Nicole Seah, the super celebrity. Incidentally, I was told that in Marine Parade, TCB was second to TT. So much for her endorsement.

My conclusion? The SDP is the kingmaker of the Opposition. Remember how the Communists destroyed David Marshall and the WP in the early 60s? They told their supporters not to vote for the WP.

It could happen again. The SDP could withdraw its support of the WP, and even field candidates to fight the WP if the WP doesn’t pay Danegeld to the SDP or move leftwards. But by doing either or both, it will lose its attractiveness to the sheep of Animal Farm. Not a sweet spot to be in, Mao.


Why are the Glaziers like the PAP?

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

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

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

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

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

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

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

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

GIC has internal communication problems?

In Corporate governance, GIC on 21/09/2011 at 8:25 am

I am pleased to read in today’s FT that GIC has in a statement (can’t find it to link to) expressed its concern to UBS abt the latest loss of US$2.3bn.

At least, it is concerned it bought us 6.4% in a dog with fleas.

Why these comments by me?

Yesterday I was appalled by this media statement to Today. GIC came across as saying, “So what if GIC lost money in UBS, it made money elsewhere, and that’s the important thing.” This was hedgie gunslinger talk, not that of a responsible fund manager.

True. performance should be judged on the performance of the entire portfolio,  not its individual holdings. But

– where a bigger than normal bet is made (GIC usually buys less than 5% of an investee),

– in a special deal for GIC alone,

– where it trumpeted very loudly its prowess at the time when the deal was made,

such such public insouciance by Jennifer Lewis Head, Corporate Affairs and Communications, is unacceptable.  Especially as GIC manages our money. (BTW, yes, she helped Tony Tan in the debacle of a campaign in her personal capacity.)

So I am glad to read that GIC is concerned abt its investment in UBS.

UBS: Why GIC may have to take a loss

In Banks, GIC on 20/09/2011 at 7:31 am

The investment bank of UBS “now looks as likely to die as it is to live,” writes Felix Salmon of Reuters. Selling or spinning off the unit don’t look like great options in the current environment, he says.

So there goes GIC thesis of a unique franchise combining wealth mgt and investment banking.

Remember, GIC has a 6.4% interest in this dog with fleas and GIC is down around S$10bn as of Thursday last week. Since then the loss has reduced to S$9.75bn. Even Mrs Goh Chok Tong would not call this sum “peanuts”.

A TLC where losing $1m is “peanuts”

In Corporate governance, Temasek on 20/09/2011 at 7:19 am

This is the impression I get after reading in the nation building, constructive ST that the new CEO of Wildlife Reserves Singapore (WRS) abruptly cancelled the Night Safari’s Halloween Horrors event, despite the WRS having spent close to $1m on organising this popular annual event. This means that close to $1m will have to be written-off, as there will be no revenues from this popular event.

It’s not as though the WRS (owned 80% by Temasek and 20% by the S’pore Tourism Board) is rolling in money. I understand that this is one flea-ridden animal that cannot be sold because it is in constant need of financial injections. So she must have consulted and gotten her board of directors’ approval, before taking a million dollar hit.

So the board too must think that $1m is “peanuts”. Not their money leh. It is our money. We own Temask and the tourim board.

But let’s to fair to the CEO. Maybe she had a revelation from her god that god would provide, and that she convinced her board that her god was stronger than the devil. But what if she goofed? She has form in goofing.

The last thing newly elected president, Dr Tony Tan, needed after a bruising election campaign was for for his comments on the need to have more famiy bonding activities to be linked to the CEO’s cancellation of a popular event. “He kill-joy or something worse?”, I could hear the bloggers thinking. after her attempt at linkage. He was not amused and she had to apologise for her most unfair attempt to link his comments to her action.

Finally, does the devil have friends? 

She is getting a terrible press from the ST. Are there devil-worshippers among the reporters and editors of the ST? Remember they have form when it comes to attacking Christians, the devil’s arch-enemies. A few years ago, DPM Wong Kum Seng pointed out that the ST’s coverage of the AWARE fight was biased against the Christian members who opposed the old guard who they accused of promoting anal sex and homosexuality in schools. Note that the government withdrew AWARE’s status as a provider of sex education services to schools after the allegations were made.

Sumething must be rotten with UBS’ mgt systems

In Banks, Corporate governance on 19/09/2011 at 9:49 am

Not easy to lose US$2bn. It takes a large amount of capital to be put at risk and one has to settle trades with real money. And one has to know how to fool the risk management system.As someone who has “arbitraged”, I know that if I can’t close positions on the same day, someone in the firm will know abt the trades as the firm has to borrow money to fund a trade, or expect payment from a counterparty.

As this article explains, it’s never a one- person show, no matter what mgt claims.

Reinventing the PAP? A Hard Truth

In Corporate governance on 19/09/2011 at 8:00 am

So PM wants to reinvent the PM and wants it to listen to the people and if necessary change policy. But he spoilt this by saying in the same street interview that he had personally cleared the two media statements from PA that caused much unhappiness.

He should take to heart this statement made by the very arrogant and hyper French president (sounds familiar?)  said late last year, “from the moment that something you do is not understood, or causes a controversy, it’s a mistake.”

Taken to its logical and must stupid conclusion, this can mean never doing anything unpopular. But otherwise, the statement makes sense.

In the S’pore context, because many S’poreans do not understand why the PA “fixed” the WP at Aljunied, the role of the PA, why university education should be rationed, the expensive health and medical care systems, the public housing shortage, the security and overcrowding of the public transport, the need for FTs, and the obsession with GDP growth, he should realise these are policy mistakes. And that he had better do something abt changing the policies or finding new ways to present these policies (including making available more information to help persuade). Or to do both.

Chanting the old mantras or Hard Truths do not help persuade.

I was thinking of saying, “Pigs will fly first”. But given that it’s only four months since the general election, and less than a month since the presidential election, I’ll “pang chance” him and give him a little longer to prove his sincerity abt changing the PAP.  But so long as the PAP believes that being unpopular shows that its leaders have the “right stuff”, the PAP will not never change.

Arsenal fans will not agree

In Footie on 18/09/2011 at 2:07 pm

As someone who has consistently warned about the dangers of organisations with sky-high debts, the Arsenal manager would be a positive benefit to the IMF conference. Article

Tell that to the Arsenal fans after the recent trashings. Snigger, snigger. Hehehe.

SDP’s timely reminder and to do

In Corporate governance on 18/09/2011 at 10:58 am

No more elections until at least 2015. Time to put aside the badge of activism (attending rallies, reading blogs and posting comments, or donating) or caring abt changing society?

NO says the SDP. …  Singapore Demiocrats need to warn Singaporeans that we cannot afford to think that from here on out we just have to rely on elections once every five or six years to bring about democratic change. If that is all we do, we will fail and change will not come. Article

So what does it recommend?

we have to double up our effort and continue working to reform the election process, press for media freedom and push for freedom of speech and assembly. For WP, SDP and SPP activists, they know what this means. They will walk the ground in their chosen areas. Did you know that days after the 2006 defeat in Aljunied, Sylvia Lim and other WP activists and volunteers were walking the ground in Aljunied.

The bloggers and socio-political websites are still writing with one notable exception. Is TRE AWOL or MIA? Any ideas?

What abt the other S’poreans who want change but have lower energy levels? Juz feel guilty abt the non-action, and open yr wallets and purses to proven fighters for the causes you support  when they come a’calling for money. The fighters for a better S’pore cannot be sustained by emails of appreciation and fresh air. Periodically they need money. Be generous when proven fighters ask for donations.

And if the ordinary S’porean who cares doesn’t even donate? Absent this, 50 years from now we’ll still be wistfully talking about how close the opposition came to winning at the polls.

How to be a nicer person

In Uncategorized on 17/09/2011 at 2:43 pm
Meet people, make more friends. But you will be an intellectual wimp.
When you meet anyone in the flesh you realize immediately that he is a human being and not a sort of caricature embodying certain ideas. It is partly for this reason that I don’t mix much in literary circles, because I know from experience that once I have met and spoken to anyone I shall never again be able to feel any intellectual brutality towards him, even when I feel I ought to – like the Labour M.P.s who get patted on the back by dukes and are lost forever more.
George Orwell

What’s yr advice on UBS, TT?

In Banks, GIC on 16/09/2011 at 7:31 am

GIC’s big loss-making investment in UBS happened on Tony Tan’s watch at GIC.

Given the latest problem at UBS, a US$2bn “unauthorized” loss (anyone ever heard of an “authorized” loss?”, and Tony Tan’s boasting of his expertise, PM should ask him for advice on what to do with this long-term investment?

Too bad, the president can only give advice and be a security guard. In investment management and investment banking, there is a school of thought that believes that those who created the shit, should clean up the mess themselves.

Update at 4.15pm on 16 September 2011

Local paper reported that the book loss on GIC’s 6.4% in UBS is S$10bn based on yesterday’s closing price of UBS shares.

Do we need more political parties?

In Political governance on 16/09/2011 at 6:58 am

So now there are voices calling for Tan Jee Say and Dr Tan Cheng Bock to each form a new political party. And I’m sure, there are voices out there asking the “Voice of the People” to make a fool of himself again (this time with his daughter by his side) by forming the VP Party or VPP.

I’m sure some of these callers are thinking, genuine and sincere people, while some of the callers are PAP activists hoping to split the votes of voters unhappy with the PAP. But most of these calls are coming from very daft, but sincere and genuine people.

Think of where the parties of TJS and TCB will position themselves.

There are two slightly left-of-centre parties, the Workers’ Party and the Singapore People’s Party. Further left (but not on extreme left, despite what the local constructive, nation-building media say), we have the Singapore Democratic Party and somewhere between the WP and the SPP, and the SDP, there is for the moment the National Solidarity Party.

The NSP is forever changing shape in between general elections and, at the moment, is undergoing yet another metamorphoses. The WP and SDP have strong brands and active supporters, while the SPP is finally trying to make a serious effort to move away from brand “Chiam”. Let’s hope it succeeds. Chiam deserves to leave behind a political legacy. He showed us that an ordinary, decent man could take on the PAP and survive. There was no need to play the matyr game.

Now where will brand Tan Jee Say fit in? Based on his behaviour during the presidential election, his party will be further left of the SPP and WP, and right of the SDP. A space that the NSP, with two of his scholat mates in its management committee, is now trying to make its own. Kinda crowded, aint it?

As for Dr Tan Cheng Bock, the man, who waffled on during the election about not being the preferred PAP candidate and abt unity via footie and multiracialim (If I sound mean, I remind that I voted for him. Yup I can be that irrational), where will his party stand? Right of the WP, and SPP most likely, based on his waffling.

Even if it occupies some of the right-of-centre space dominated by the PAP, it will be fighting for some of the very moderate left votes.

The space on the left is crowded, with these six parties. There may not be enough seats to satisfy the ambitions of these six parties in a general election. There may be three-way contests. Then there are the absolute no-hopers, Singapore Democratic Alliance and the RP: making a total of eight parties on the left. The only place left field unoccupied is on the extreme left.

Establishing a new party is not easy. Remember the Reform Party? Set up by the late JBJ, it had to be resurrected by his son, KennethJ,  because of JBJ’s death soon after its founding. Despite all the goodwill that the memory of JBJ attracts, the RP had problems recruiting. And anyway, the newbies soon left, leaving King KJ to play and fantasise alone.

So please, let’s not encourage bored men with large egos, deep pockets and axes to grind to form new parties of the left. The field is crowded left of centre with eight parties.

Now, there is plenty of space on the extreme right. Anyone bored with a big ego, deep pockets and an axe to grind interested? I’m sure one LKY will be the party’s patron if the party ideology is a mixture of fascism, capitalism, socialism and his Hard Truths.

Buying property stocks: What can go wrong?

In Economy, Property on 15/09/2011 at 8:00 am

Maybe as part of a campaign to make us “feel good”, the constructive, nation-building local media are highlighting that stockbrokers are telling their clients that property stocks are trading at a discount to their net asset valuation (where once they traded at premiums)  or way below  their usual discount net asset valuation.

Hence there are gd buys around.

But there is the fine print that the MSM don’t report or don’t highlight. The brokers point out that they are assuming a slowdown in the economy, not a global recession. Neither they nor MSM highlight that investors are assuming the worst, a global recession, and hence are pricing the stocks at recession values i.e. investors do not believe the values brokers are pricing the assets at because they think the brokers are optimistic.

So if you believe that the world economy is only experiencing a slow-down, go ahead and buy the recommended property stocks. But if you are afraid of a recession, sit tight. The discounts will bet bigger

Goldman is worth breaking up?

In Financial competency, Investments, Uncategorized on 13/09/2011 at 8:10 am

Masterclass in back of envelope calculations.

MoE analogy abt PA

In Political governance on 13/09/2011 at 6:42 am

“It’s like having the Ministry of Education, the civil servants are impartial and neutral but the Minister is a Government Minister,” said the PM when trying to explain that the People’s Association was part of the government, like the MoE, and not the PAP.

The problem with this analogy is that the MoE doesn’t have embedded within its structure of administrators and teachers, PAP MPs, defeated PAP MPs and candidates and possible MP candidates; and whose ranks cannot contain non-PAP MPs. On this ground alone the analogy fails.

The analogy only works if the PA only appoints civil servants to be grassroot leaders, to explain and promote government policies. Do PAP MPs, defeated MPs and candidates, and potential MP candidates, get invited to attend school and MoE functions as a matter of routine, while Opposition MPs are not invited as per standard operating procedures? I think not.

The PM should give give several tight slaps to whoever suggested that he use this analogy. Any chance it was Tin Pei  Ling, via her hubby yr PPS? Sounds like her.

CIMB bearish on commodity supply chain stocks

In Commodities on 12/09/2011 at 7:07 am

CIMB doesn’t like commodity plays and has made negative comments abt midstream commodity supply chain players Mewah, Noble and Olam.

Not time to buy yet: Noble is trading at its eight-year historical mean, while Olam is trading at 1.5 standard deviations below its mean and Mewah is trading at 2.5 standard deviations below mean. Despite their more modest valuations, we believe it is too early to turn bullish on this sector. Consensus estimates do not appear to have fully reflected their earnings risks, in our view. Our FY12 earnings per share estimates for all three stocks are 4-46 per cent below consensus. Further downgrades by the Street may be de-rating catalysts.

TJS: a coming victim of the Sirens?

In Political governance on 11/09/2011 at 5:21 pm

In Greek mythology, the Sirens were three bird-women, who lured passing sailors with their enchanting music and voices to shipwreck and death on the rocks around their island.

In the S’pore context, the Sirens are those anonymous voices on the Internet who lure men with large egos and deep pockets to enter politics as voices of the oppressed, only to abandon them to ridicule, shame and monetary loss when elections are held.

When KennethJ (remember him and the Reform Party?) was thinking aloud of entering politics, many anonymous voices on the internet encouraged him to emulate his father, JBJ, to stand up and speak out for the oppressed. When he did in 2009, even more voices came out to tell him that he was their hero and they would support him.

I was one of the few Cassandras who posted anonymously on TOC that he should be aware of the Sirens. I cited the example of one Tan Kin Lian who in 2008 received emails asking him to stand for election in the coming 2011 presidential election. He then organised a petition asking for 100,000 people to petition him to stand for the presidency. In 2009, he got less than 1,500 names and renounced all presidential ambitions.

Well we know now how much support KennethJ received. Very few joined the RP, and most of them left soon afterwards. The share of the votes RP got in the 2011 GE was pathetic. The Sirens made a fool of him.

Then there was TKL. Not satisfied with being played out by the internet, he flip-flopped (I am thinking of standing, I will stand, I am thinking of standing) his way into the presidential election. And was humiliated when he lost his deposit. Did the Sirens fix him, hehe, snigger, snigger. Funniest of all, he and, Goh Meng Seng, are in denial over his loss. TKL’s media statement and GMS’s comments (see comments).

Coming back to Tan Jee Say. His performance was very credible. He got 25% of the votes. The Sirens failed to humiliate him after enchanting him to stand for president. True he budgeted S$200,000 for his campaign and we don’t know how much he got in donations. But waz money for an ex- investment banker active in the early to mid-1990s (I was only an equities dealer and salesman but I made more than enough to spend most of noughties unemployed) and an ex-Scholar? 

The Sirens are now telling him to set up his own party. Still trying to fix him.

If I were him, I’d give them the finger. There are a certain number of voters who will always vote for the anti-PAP candidate. In the late 1960s this was abt 10% of the voters. After the 2006 GE, this figure had become abt 20%. After the 2011 GE, there was an estimates that this could be as high as 31% of the voters, with the most conservative estimate remaining at 20%.

Taking into consideration, the votes that went to Spoiler Tan, TJS could have gotten 30% of the hard core opposition vote, almost all of 31%. In a GRC or SMC in a GE, this would mean certain defeat, if the fight was between the PAP and an opposition candidate.  If the hard core were only 20%, then taking into account 5%-Tan, he could have gotten 10% of the swing voters. Still not enough swing votes  to win in a straight fight.

OI course, the Sirens would sing that 30% is a gd base to start from but look at how long it took the WP to win a GRC, over a decade. And the WP had very complacent PMs, and MPs in Aljunied. And TJS isn’t young.

At his age, he would be better off counting his dividends, and making sure that his very pretty daughters date only the “right” boys. And joining me for walks in the neighbourhood. Lots of nice areas to walk in Frankel Estate, Siglap and Marine Parade.

The problem with being a safe haven

In Economy on 10/09/2011 at 9:34 am

Proud and happy that S’pore is a safe haven in this crisis?

Think again. The Swiss experience.

For S’pore the choice is deflation as strong currency stifles economic activity especially exports in gds and services.

Or if the currency is kept artifically low, asset inflation.

Whatever the case, MAS can continue losing serious money (S$10bn last yr).

Only SDP will be happy, saying, “We told you so”.

The new normal in mkts

In Economy on 09/09/2011 at 7:10 am

Investors want governments to spend, spend to avoid a double dip recession.

Up to August, they were worried that governments were profigate. They are still afraid of excessive debt longer term, but they are terrified of a recession in the shorter term.

And we rely on markets to help allocate capital efficiently? Sigh

Markets are fickle and neurotic.

Easy & cost-free way of uniting S’poreans

In Political governance on 09/09/2011 at 7:07 am

The president and PM have called for unity.

 The PM for the fifth time. Read my take on his call.

Well since about 7,000 votes separated the winner of the presidential election from the runner-up, one easy and popular way of making the 35% of voters that voted for the runner-up happy and contented is for the PM and president to announce that one of them is offering to appoint Dr Tan Cheng Bock as a member of the presidential council. Remember the government and the president (at his personal discretion) can each appoint two persons to the council.

This will show the 35% of the electorate that voted for Dr Tan Cheng Bock that their views matter.

If the PM is wily, he will offer to appoint Tan Jee Say to the council, thereby making about another 25% of the electorate happy that the government recognises their voices. Whether it would be wise for TJS to accept is another matter.

The only reason why no offer will be made is that the PAP and the government (and the president has been in both) has a mindset that has problems distinguishing between “popular” actions and “popularism”. They seem to think that the words are synonymous. They hate “popularism” because by definition it is opposed to rule by the elite. Fair enough but then they think that being popular is being a populist.

Worse they think that the way to go is to do “unpopular” things. Witness LKY’s boast of not doing popular things to win elections, and Philip Yeo saying,”My greatest fear now is that the government is terrified of the people. You cannot have a system where the people are pampered.”

So while I hope Dr Tan will be appointed to the presidential council, I won’t hold my breath. As to Tan Jee Say being offered an appointment, pigs will fly first, even though there are advantages to the PAP and government offering him an appointment. Offering him an appointment, will be a poisoned chalice. He is damned either way. If he refuses, the label “confrontationalist” can be attached to him by the government and PAP. If he accepts, his ex-SDP pals will unfriend him for selling out.

As to PM’s “reinvented” PAP, I’ll acknowlege it when I see it.

Who Holds The Largest Gold Reserves?

In Gold on 08/09/2011 at 8:06 am

United States – 8,133.5 metric tons

Germany – 3,401.0

International Monetary Fund (IMF) – 2,846.7

Italy – 2,451.8

France – 2,435.4

China – 1,054.1

Switzerland – 1,040.1

Russia – 775.2

Japan – 765.2

Netherlands – 615.5

The Italians and French can issue bonds backed by gold if investors are unhappy with their finances.

More details

DBS bullish on KepLand and UOL

In Economy, Property, Reits on 07/09/2011 at 7:22 am

We believe stocks are currently priced for a slowdown but not a recession. Our strategy would be to adopt a stock picking strategy in the property sector. Within the office segment, office landlords are trading in excess of -1 standard deviation to historical RNAV discount while S-Reits are trading at less than 1 SD to the long-term yield.

We believe office stocks have more than priced in the muted outlook and valuations appear attractive currently. While we have widened target price (TP) discounts and lowered TP for landlords given the higher risks going forward, upside to our TP remains significant.

Our top picks remains Keppel Land and UOL. Keppel Land is currently trading at 46 per cent discount to RNAV of $5.57 and offers 40 per cent upside to our lowered TP of $4.18.

We remain positive on UOL, thanks to its multiple growth engines that spans commercial, residential as well as hospitality. Our TP of $4.96, based on a wider 20 per cent discount, offers 9 per cent upside. We have lowered our call on Singland to Hold due to its large 75 to 80 per cent exposure to the office sector.

Who reflects reality better, netizens or MSM?

In Media, Political governance on 07/09/2011 at 7:20 am

Dr Derek da Cunha stated in ST recently that “online chatter” was irrelevant to 7 May GE and 27 Aug PE.

He should get several tight slaps, along with “Kee Chui” Chan (of “lunatic fringe” fame) and “Cowboy towns” Lee.

Reading thru the leaked Wikileak cables, one gets the impression that they reflect very accurately what we netizens are saying is the reality on the ground. Not what the local MSM is saying is the reality.

Hell’s bells, our coffee-shop chatter abt ST reflects accurately what  ST reporters told the US embassy staffers on how things work in ST. [Text of the leaked cable] Compare that with what the MSM says abt itself.

True one of them, Lynn Lee*, has recanted what she told the Americans (all misrepresentations she howls). But a reasonable person can be forgiven for not believing her version, but preferring to believe the American version. Jus look at ST’s coverage of the GE and PE.

And it seems that US staffers agree with us[Link], rather than the MSM, on the quality of new PAP candidates in 2006.

So PM, Kee Chui and Dr da Cunha, acknowledge that we netizens reflect reality with less distortions than the publications and stations of our nation-building, constructive SPH and MediaCorp. Give us that respect, since we don’t get the 30 pieces of silver that each SPH and MediaCorp journalist or editor gets, at least that’s what I’ve been told.

Even if the American staffers are wrong abt who is the better reflection of the reality on the ground, they are employees of the hegemon. Their views matter.

*I’m disappointed that my heloo Siew Kum Hong has yet to unfriend her. American informants stick together?

MU’s net profit

In Footie on 06/09/2011 at 8:13 am

I was searching high and low for this figure, given all the publicity on all other types of other numbers, EBITA, revenues, operating profit etc which ran into hundreds of millions. Example

It is only sterling 9.8m (S$19.1m).

Try telling the PA and yr minister abt unity, PM?

In Political governance on 06/09/2011 at 7:18 am

On 1 September 2011, the PM said Singapore must also build a united society which leaves no Singaporean behind. He was speaking at the swearing-in ceremony of Singapore’s seventh President Dr Tony Tan at the Istana.

This was the fifth time that he had spoken about the need for unity since the 7th May 2011 General Election. Five times in five months.

Well the trouble with this latest attempt was that the day before, the People’s Association (a statutory of agency of which he is chairman) had published a statement explaining why it excluded Opposition MPS from being appointed grassroot leaders. In a letter to the Straits Times Forum, PA director of corporate and marketing communications Ooi Hui Mei said on behalf of the CEO, “Besides connecting people to people, grassroots advisers are required to help the Government connect with people and help promote Government policies and programmes such as anti-dengue and active ageing. Hence, the Government has to appoint grassroots advisers who support its programmes and can play this role well. Opposition MPs cannot be expected to do this and thus cannot become advisers to GROs.”

She is saying that Opposition MPs are not loyal S’poreans that the government and PA can trust.

Ms Ooi’s letter drew a response from WP’s Aljunied GRC MP Pritam Singh (the guy with tots of being in coalition with the PAP on his brain). He wrote on his Facebook page that he found it “apposite to inform the PA that Opposition MPs do not love the aedes mosquito, nor do we have anything against active aging.” He cited examples of former and current PAP MPs, including former MP Tan Cheng Bock and President Tony Tan, who opposed the Nominated MP scheme and the graduate mother’s scheme respectively.

Hehehe. Snigger, snigger. Gd riposte Bei-Yee Singh. Letter writers to ST and Today and online forums joined in the fun of bashing Ms Ooi’s letter.

Unhappy with this mauling, the deputy chairman of the PA, Lim Swee Say (who is also a cabinet minister and NTUC chief), not heeding PM’s call for unity, got Ms Ooi to issue another letter on 3 September 2011, making the same point again: that Opposition MPs are not loyal S’poreans that the government and PA can trust.

Because of her letters, I’m again left wondering (I’ve commented on his four previous attempts here) whether the PM is sincere when he calls for unity. Why should I take his words at face value, when the spokeswoman from a government agency, where he is the chairman, takes a view that is contrary to his call for unity, both before and after his message. If she had not written the second letter, I would have been willing to try to suspend cynical disbelief. But Ms Ooi’s letters have left me no choice but to disbelieve the PM.

Is he or the CEO and deputy chairman, she scribed for, off-message? Or is his definition of “unity” different? Maybe he means “unity under the regime of Hard Truths”?

Time will tell.

If PM is sincere abt unity, what abt talking a leaf from Mao. When the Chinese Communist Party refused to listen to him, he launched the Culture Revolution. Maybe PM should reform the PA to better serve his and our needs.

Haw Par: Rediscovered yet again

In Investments on 05/09/2011 at 2:00 pm

So another investor and blogger discovered last yr that Haw Par is undervalued and blogged abt it recently. Welcome to the Haw Par Tan Kuku club brudder.

If you read the latest annual report, you will know that Cundill and Eagle Investments are substantial shareholders. Both are value investors. Cundill has held the shares for over 10 yrs. Yes, the valuation gap has existed for at least that long.

I bot the shares more than 10 yrs ago and the gap has has narrowed, widened, going round and round. Some brokers recommend buying it when the gap is historically wide and selling it when the gap narrows.

But I don’t mind holding onto the shares. I looked at it, and still do, as buying into a listed investment trust that invests in the Wees’ financial empire (UOB, UOL and UIC). The operating businesses I get for almost free, and the dividends are decent. True there is a big gap between the share price and valuation but so what? No such thing as a free lunch.

And who knows? If the Wees’ empire is broken up, the valuation gap closes.

Another way for the gap to narrow, is if one or more of the operating businesses hits a winner, and the market recognises the value of the business or businesses. Actually 20 over yrs ago, people bot Haw Par because of its operating businesses.

My 2009 post

Don’t cry for TKL, but what abt GMS?

In Political governance on 04/09/2011 at 9:27 am

I didn’t want to write the first part of this piece because the presidential election is over and Tony Tan has been sworn in as the new president. Let’s move on. But the behaviour of Tan Kin Lian and some of his supporters annoys me no end. Hence the first part of the piece.

Tan Kin Lian and some of his supporters are behaving as though the election is still on. They are trying to prove that although he lost his deposit and cost S’poreans the opportunity to have a president that was not the PAP’s preferred candidate, it wasn’t his fault.

The blame is put on Yahoo! (Who other than TKL takes online polls seriously, certainly not Dr Tan Cheng Bock. Otherwise he would be complaining to TOC for a survey that showed him last) and Tan Jee Say (Hey he got 25% of all the votes cast, 10 percentage points behind the winner and runner-up, and 20 percentage points more than TKL).

For those 95% of S’poreans that didn’t vote for him, there is no need to feel sorry for him for losing his deposit. Even his supporters should not feel sorry that he lost his deposit. The reason?

He loves publicity. Go ask anyone who has worked for him. And the election gave him lots of it.

Spending $48,000 is money well spent on a cost benefit analysis. Look at the coverage he got on TV: MediaCorp debates etc, RazorTV and TOC TV. And all those pixs and articles in print media and on the internet. And then there is radio.

True his campaign cost $120,000 but then the balance of $72,000 is other people’s money, not his. Even if it were his money, $120,000 is peanuts compared to the millions NTUC Income must have spent on TV ads and print ads featuring Tan Kin Lian when he was CEO of Income.

But then maybe TKL wants publicity free of charge, like when he was CEO of Income. Other people’s money, but his publicity.

BTW, the blogger Think Happiness, a TKL groupie, is not AWOL, hiding in shame for endorsing TKL. He assures me he was away. He will be writing again soon.

That leaves only Goh Meng Seng and De Leviathan unaccounted for. Hope to hear from them soon, esp from GMS.

Seventy percent of voters rejected his idea of using the Elected Presidency to provide “some real checks and balances”. They didn’t want, by the back door, a separate centre of power formed from, or advised by people, who could not win seats in parliament.

Worse, 95% of voters certainly didn’t want his preferred candidate, Tan Kin Lian.

What does he think abt his PE reverses, and the chaos in TKL’s campaigning? Does he accept any reponsibility for the latter? I still get indignant when I recall TKL and his team attending a memorial service in their campaign tee-shirts. And chuckle when I recall him squeezing out of his car. And the car was a Jaguar, certainly not a car of the people.  He should have stuck to his Toyota, a People’s Car.

Update on 5 September 2011 at 7.20am

This is a great, mean analysis of TKL’s statement after the election from a non-political blogger

DBS loves Reits too

In Property, Reits on 03/09/2011 at 6:22 pm

In the recent equity market sell off, the FSTREI (S-Reit index) while corrected by some 5 per cent versus the 12 per cent and 25 per cent fall in the STI and FSTREH (property developers index) respectively. S-Reits now offer a prospective FY11-12F distribution yield of 6.5-6.7 per cent, which represent a 500 basis points spread above the long-term government bond. It is now closer to -1 standard deviation of the sector historical yield trading range. We believe that S-Reits continue to offer a compelling investment proposition.

We reiterate our preference for retail Reits. Even in the event of an economic downturn, retail Reits’ exposure in necessity shopping (eg supermarkets, F&B outlets) have kept earnings fairly stable. Industrial S-Reits also offer strong stability and visibility given a larger proportion of their income deriving from master-lease structures. While we continue to see hospitality Reits delivering good numbers going into a seasonally busier 2H11, we believe that growth momentum should be slowing down.

We see value emerging in CapitaMall Trust (Buy, TP $2.05) which is our big cap pick with attractive FY11-12F yields of about 5.3-5.9 per cent. Mapletree Commercial Trust (Buy, TP $1.09) is attractive for its strong organic growth coming off from a first renewal cycle at its VivoCity retail mall. Among the industrial Reits, Mapletree Logistics Trust MLT (Buy, TP $1.07) stands out post an active H1 FY11 and is poised to deliver strong earnings growth into H2 FY11. We continue to see relative value amongst the smaller cap S-Reits – Cache (Buy, TP S$1.07) and Frasers Commercial Trust (Buy, TP $1.05), which offer higher than average yields with limited earnings downside.

Load up on S$ assets

In Economy, Uncategorized on 02/09/2011 at 7:00 am

If this blogger is correct. Bubble developing here.

“Retired ministers”: no megabucks from private sector

In Political governance on 02/09/2011 at 6:58 am

So ex-junior minster Zainul Abidin is joining SPH where he will run SPH’s radio stations, SPH UnionWorks, where NTUC has a 20% stake. Given the job description, I don’t see him drawng a million dollars a yr, the starting point of ministerial salaries.

We were told that S’pore had to pay the likes of ex-DPM Wong, HDB Mah, Cry baby cry Lim, Raymond Lim, “PAP must change” Yeo, Ms Lim (the MP from 7th month) and Zainul Abidin million-dollar salaries because taz what they are worth to the private sector.

If they were not paid millions, they would resign from the cabinet in search of million-dollar salaries.

Well they have all left the cabinet recently but somehow I don’t hear of the private sector (let alone the TLC or GLC sectors) offering them zillions of dollars for their expertise. True Ms Lim has become a director of a major listco, Jardine C&C, but she is not getting millions of dollars.

Admit the truth PM? They, like Nathan, struck it lucky big  time. Juz like first prize winners of Toto, Big Sweep or $4D tickets.

Or maybe, their pensions are so big (remember no details are made public) that they can sit back and relax, and take jobs that pay “peanuts”?

Salary reviewers pls note, whatever the case may be,

Temasek the hedge fund?

In Banks, China, Temasek on 01/09/2011 at 8:29 am

A consortium that includes Temasek and its wholly owned hedge fund Seatown Holdings has acquired a 5% stake in China Construction Bank it was reported on 30 August 2011

It had unloaded a portion of its own stake in the Chinese lender about a month ago, when, by my calculations, the price of CCB shares was  abt 10% higher. And given that it bought the latest batch of shares at a discount, Temask could have made 20% on the sale and repurchase.

Gd trade.

Description of trades

How F1 teams & sponsors take yr $

In Uncategorized on 01/09/2011 at 8:27 am

Other marketees, and public communication practictioners can learn some brand extension tricks.