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Archive for the ‘China’ Category

HSBC’s 1979 gift keeps paying for itself

In Banks, China, Emerging markets, Hong Kong, Uncategorized on 01/07/2015 at 1:33 pm

Li ka-shing accounted for 70% of HSBC’s global M&A advisory work in 2015 according to the FT.

HSBC sold him its stake in Hutchison Whampoa at a very special “For you only” price in 1979. This gave him face and showed that HSBC was aligning itself with the Chinese tycoons not the ang moh houses like Jardines. The then Oz CEO of Hutch said he could have gotten a better price for the stake. He was told by HSBC to mind his own business because he was an employee. HSBC had hired him to turn round Hutch which he.

Long term greed.

Shareholders need to find a new Sandberg and Purvis combination, with John Bond assisting. We know the damage (think sub-prime and Safra) that Bond can do when not supervised by adults. But I’m to harsh. During his tenure, HSBC had a one-for-one bonus and the ex-bonus share price almost reached the cum price. And there was a deeply discounted share issue to pay for the losses in the US.

But at the very least we need a  home-grown John Cryan*. Off with Gulliver’s head.

Gulliver sucks, like Anshu Jain and has to go. Capital markets investment bankers are not usually rational, cold and deep thinkers

As Lex rightly pointed out a few weeks ago, Hongkong Bank is trying to cut fat and grow muscle. Us sporty fatties know that this is real hard work and often fails. Taz why we are still fatties. Gulliver failed to trim fat and is lousy at PR (When Blatter said he couldn’t be expected to know everything at FIFA, I tot of Gulliver’s remarks on managing HSBC.). And now he wants to cut fat and grow muscle?

Failed in cutting costs and now wants to do something even hardEer? Pigs are likely to fly first. Or i’ll lose some serious fat and put some muscle.

He’d likely cut muscle and grow fat. Maybe expansion into the industrial heartland that is the Pearl Delta estuary isn’t the greatest idea? “Poll shows 25% of foreign businesses plan China job cuts,” is the top FT headline on my PC screen.

—-

*And if there’s no-one homegrown do what the Germans did, go find someone and put the chap in charge of the board’s audit committee. Great hands-on experience and sreep learning curve.

I always believe that in most cases there is always someone inhouse in a company with a strong corporate culture who can do the CEO’s job: the problem is finding the guy and the board having the balls to appoint the “unknown”.

S’pore not part of Apple’s ecosystem

In China, Japan, Malaysia, Vietnam on 29/06/2015 at 12:04 pm

Neither is M’sia or SE Asia. It’s Northern Asia. I blogged yonks ago that we are part of the Microsoft ecosystem.

Apple iPhone component suppliers

PRCs spend more here than in HK

In Casinos, China, Economy, Hong Kong, Tourism on 27/06/2015 at 4:30 am

Casinos

Investing, the Chinese way

In China, Financial competency on 24/06/2015 at 2:18 pm

Sun Tzu’s “The Art of War” is widely read as a manual of how to win victories without fighting*.

There is no equivalent of a Chinese “The Art of Investing”.

But here are two precepts that the FT has gleaned from throwing fortune sticks:

The motto of mainland investors has long been that he who does not believe in the greater fool theory is the greatest fool.

High valuations will make it easier and cheaper to recapitalise state-owned groups, hence a reason why the Chinese authorities seem pretty relaxed about stroking an equity bubble.

“We think it would be premature to call an end to this rally, given the importance of the stock market to helping China’s state-owned enterprises and key industries obtain much-needed financing, and the likelihood of more monetary easing,” HSBC also says.

—–

*Edward Luttwak (he would have been a strategist during the period of the Three Kingdoms or the Warring States) wrote a book on Chinese strategy, and pointed out waz wrong with Sun Tzu’s precepts.

Coming in for criticism by name is Sun Tzu, whose writings of 2,500 years ago, including “The Art of War“, are the main source of what Mr Luttwak calls “the flawed principles of ancient unwisdom”. He grants that the cunning statecraft, stratagems for deception and diplomatic finesse advocated by Sun Tzu may have worked when used by one warring Chinese state against another. But he argues that these doctrines have served China poorly in fending off other adversaries.

With a quick pass through the history of China’s engagement with Jurchens, Khitans, Mongols, Manchus and other Asiatic nomads, he notes that China has been ruled by Hans, its ethnic majority, for only about a third of the past millennium. “While Han generals in charge of large armies were busy quoting Sun Tzu to each other, relatively small numbers of mounted warriors schooled in the rudely effective strategy and tactics of the steppe outmanoeuvred and defeated their forces,” he writes.

The bit about being thrashed regularly by the nomads is a fact, not a Hard Truth.

https://atans1.wordpress.com/2013/09/30/sun-tzu-the-paps-non-use-of-new-media-the-pm/

Yellow peril horde avoided

In China, Emerging markets, ETFs, Financial competency, Financial planning, Uncategorized on 18/06/2015 at 3:37 pm

These charts from FT tell in charts what the NYT Dealbook describes in words below:

 

 

CHINA MOVES CLOSER TO INCLUSION IN MSCI INDEX Though MSCI decided on Tuesday that it would hold off on adding Chinese domestic shares to its emerging market index, China is moving closer to joining the global benchmark, Neil Gough writes in DealBook. In its decision, the index company cited concerns over China’s cumbersome investment quotas, restrictions on money flows, and questions over the legal status of foreign shareholders. But MSCI said that in the coming months it would work with China’s main securities regulator to address the company’s concerns and that it may make a special decision to include Chinese stocks, also known as A-shares, in its benchmarks before the next scheduled annual review, which takes place a year from now. “It is clear from MSCI’s announcement today that it is only a matter of time before A-shares are added to global indexes,” Louis Lu, a portfolio manager at CSOP Asset Management, which invests in mainland shares, said in an email.

“The decision – and the waiting period – reflects the changing face of China’s financial system,” Mr. Gough writes. Over the last two years, the country has embarked on a series of overhauls to the financial system, but foreigners remain wary because they continue to face challenges in gaining access to the Chinese markets. Mr. Lu said that the delay by MSCI is likely to motivate the Chinese government to “accelerate the opening of its capital markets and provide greater accessibility to international investors in the near term to increase the chance of inclusion as soon as possible.” If China can assuage MSCI’s concerns, analysts estimate that the country is likely to see several billion dollars of new investment pour in initially, with that figure rising to more than $200 billion over time.

Ho got this one right

In China, Temasek on 15/06/2015 at 1:14 pm

It was reported earlet that one of the funders of the US delisting was Temasek.

CARLYLE-BACKED COMPANY REACHES $7.4 BILLION DEAL FOR CHINA LISTING Focus Media, a Shanghai advertising company that was delisted from the Nasdaq two years ago after being targeted by the short seller Muddy Waters, on Wednesday reached a $7.4 billion deal to list on the Shenzhen stock exchange, Neil Gough writes in DealBook. Focus is returning to the market through a so-called backdoor listing, in which its main assets are sold to a company already listed in Shenzhen in exchange for shares that represent a controlling stake in the listed company. On Wednesday, Jiangsu Hongda New Material, a Shenzhen-listed manufacturer of silicone rubber products, said it would pay 45.7 billion renminbi, or $7.4 billion, mostly by issuing new stock, to acquire control of Focus.

In 2011, Focus Media was still listed on the Nasdaq when Muddy Waters accused it of overstating the number of screens in its LCD advertising network by about 50 percent, allegations that Focus Media denied. In 2013, the company was acquired and taken private by its chairman and a group of Chinese and foreign private firms that included the Carlyle Group, at a valuation of $3.7 billion.

NYT Dealbook

Smartphone way of short-listing 300 from 33,000 job applicants

In China on 13/06/2015 at 5:14 am

An ang moh company wanted to recruit people from the less elite unis in China. This is what it did

This year, the 33,000 applicants for the 70 places on the company’s Chinese graduate recruitment scheme have been asked to save themselves the paper, the printer ink and the pain.

Instead, they were asked to answer three simple questions via their smartphones.

http://www.bbc.com/news/world-asia-china-31617597

HSBC: Desperately seeking home-grown John Cryan

In Banks, China, Corporate governance, Emerging markets, Hong Kong on 11/06/2015 at 10:19 am

As a long suffering Hongkong Bank shareholder (But to be fair, I was there when John Bond called a bonus issue and the share price post bonus issue almost reached the pre bonus share price and I was there when the bank called for a massive deeply discounted during the crisis rights issue), who is the inhouse John Cryan*?

John Cryan the incoming UBS boss is rational, cold, deep thinker and no show-off(NYT Dealbook).

Hongkong Bank needs a rational, cold, deep thinker who is not accident-prone.

Gulliver sucks, like Anshu Jain and has to go. Capital markets investment bankers are not usually rational, cold and deep thinkers

As Lex rightly points out, Hongkong Bank is trying to cut fat and grow muscle. Us sporty fatties know that this is real hard work and often fails. Taz why we are still fatties. Gulliver failed to trim fat and is lousy at PR (When Blatter said he couldn’t be expected to know everything at FIFA, I tot of Gulliver’s remarks on managing HSBC.). And now he wants to cut fat and grow muscle?

Failed in cutting costs and now wants to do something EVEN hardER? Pigs are likely to fly first.

He’d likely cut muscle and grow fat. Maybe expansion into the industrial heartland that is the Pearl Delta estuary isn’t the greatest idea? “Poll shows 25% of foreign businesses plan China job cuts,” is the top FT headline on my PC screen.

—-

*And if there’s no-one homegrown do what the Germans did, go find someone and put the chap in charge of the board’s audit committee. Great hands-on experience and sreep learning curve.

I always believe that in most cases there is always someone inhouse in a company with a strong corporate culture who can do the CEO’s job: the problem is finding the guy and the board having the balls to appoint the “unknown”.

HSBC should return to its roots

In Banks, China, Emerging markets, Hong Kong on 09/06/2015 at 1:28 pm

No not as a narco-bank for the modern day equvalent of the Jardines, Mathesons and Sassons who were the drug barons of the early 19th century smuggling opium into China

https://atans1.wordpress.com/2012/07/29/hsbc-doing-gods-work/#comments

https://atans1.wordpress.com/2012/12/23/hsbc-great-customer-shareholder-service/

It should remember that the HS stands for Hongkong and Shanghai and that it was once known as Hongkong Bank (when it was kicked out of China) https://atans1.wordpress.com/2013/04/02/hsbc-london-greater-china-bank/#comments

HSBC should focus on its jewel in the East

Here’s a good idea that (almost certainly) will not be announced by HSBC at its big strategy day on Tuesday: split the bank in two, and let only the Asian business base itself in Hong Kong.

UBS analyst John-Paul Crutchley is the author of the inspired demerger idea, which starts by arguing that “taking the accumulated baggage of the last three decades home may not be the best course of action”.

Baggage may seem a harsh description of the non-Asian parts of HSBC, including its UK retail banking operation, but Crutchley reckons the Hong Kong Asia-Pacific bank accounts for 80% of HSBC’s market valuation while deploying less than half the equity. It is the jewel. Indeed, the analyst reckons HSBC’s share price could be twice the current 619p if the group had decided in the 1980s to stick with its Asian franchise and not pursue all the deals and acquisitions elsewhere.

That observation illustrates the fact that HSBC management’s head-scratching over where to base the bank is something of a sideshow. Dodging the full impact of the UK bank levy by redomiciling the whole shebang to Hong Kong might save $1bn a year. But, even if one assumes such a saving is worth $12bn in today’s money, that’s only the equivalent of 44p on the share price. The bigger question is: what’s the best way to manage this vast sprawling group?

A demerger is not a cure-all but it would deliver a few advantages. The Hong Kong end could concentrate on combating increased competition from Chinese banks. Rump HSBC could be more vigorous in allocating capital to the parts of the business generating better returns. And, since regulators are piling heavier capital and compliance costs on very big global banks, both bits might benefit from being part of smaller organisations.

It’s an idea HSBC is highly unlikely to adopt. But a dose of bold thinking is arguably exactly what it needs to awaken a slumbering share price. Flogging the Brazilian and Turkish operations – Tuesday’s likely highlights – probably won’t be enough to excite shareholders.

From Guardian

S’poreans hanna do NS for China: Ho Ho Ho

In Banks, China, Temasek on 18/05/2015 at 2:05 pm

We (or rather Temask but then even Ho Ching has said Temasek’s money is our money, something Roy and his fellow cybernuts pretend she never said) have a big bet on Chinese banks.

And recently I reported some bad news: https://atans1.wordpress.com/2015/05/03/temaseks-china-banks-strong-headwinds-2/

More bad news:

Chinese policymakers have ordered banks to keep lending to local government projects under construction, in a sign of concern that a crackdown on shadow financing has reduced municipalities’ spending and is hurting the economy.

Financial institutions which signed legally binding contracts before the end of 2014 to loan to money to construction projects backed by local government financing vehicles (LGFVs) must not stop lending or reduce the loan size, a document posted on the State Council website Friday said.

“It is necessary to support the financing needs of LGFV projects under construction and ensure an orderly continuation,” the regulators said in the document.

“This will help meet reasonable funding demand of the real economy, as well as effectively prevent and resolve fiscal and financial risk.”

http://www.reuters.com/article/2015/05/15/us-china-debt-lgfv-idUSKBN0O00JM20150515

Noble: Why I’m not tempted

In Accounting, China, Commodities, Corporate governance on 14/05/2015 at 1:31 pm

Many of Noble’s operations and investments are exposed to the slowdown in China.

And the Chinese economy is still slowing. And the engine of growth is no longer exports or infrastructure spending  or construction. It’s the service sector.

Maybe when I hear that Noble is starting to shipping Pinoy gals to China as wives for barren branches, will I buy the stock.

LKY: Hegemon’s pet?/ How China treats a really old friend?

In Banks, China on 13/05/2015 at 4:20 am

This is what his pal, Henry Kissinger (US Secretary of State, National Security Adviser) said in tribute to LKY: “His theme was the indispensable U.S. contribution to the defense and growth of a peaceful world.”

Doesn’t the Kissinger comment sound like a pat on the head for the US’s pet? Remember, even a “weak” president like Obama believes that the US is the world’s “indispensable power”.

And even LKY’s own words show that he can sound like a cheer leader for the US: that the US really won the Vietnam war. The Economist recently wrote:

After the [Vietnam] war, the region boomed. American intervention in Vietnam no longer looked such an unmitigated disaster. Lee Kuan Yew portrayed it almost as a triumph: without it, South-East Asia would probably have fallen to the communists. America bought the region time and, by 1975, its countries were “in better shape” to stand up to them. The prosperous emerging-market economies they have become “were nurtured during the Vietnam war years”.

No wonder the US delegation was led by an ex-US president while China sent an unranked portlibtro member, showing how important LKY was to China and the respect it accorded him

If you want to see how China treats ‘lau peng youu”, think about this.

The Hong Kong Monetary Authority says that it “takes a positive attitude should HSBC consider relocating its headquarters back to Hong Kong”, where it is the largest bank. HK is willing to be lender-of-last-resort to HSBC a bank with US$2,6 trillion in assets, despite HSBC being almost 9 times bigger than HK’s GDP.(More background: https://atans1.wordpress.com/2015/04/28/govt-sees-stanchart-as-risky-lkys-30-year-investments-revisited/)

To do such a thing Peking must have given its chop.

This reminded me that many years ago I read “Wayfoong” (The Chinese name for Hongkong Bank and the title of a book on HSBC’s 100 yrs of existence: this yr it’s 150). A fair chunk of the book (which interesting I borrowed from a public library in Sydney) was devoted on how it was a good friend of China in the late 19th century and early 20th century: it raised foreign loans for building the railway system and stabilising the currency. I tot, “What a lot of bull. Hongkong Bank was an exploiter of China and the Chinese. It was founded to finance the opium trade.

Well we know that the CCP has a long memory and an even longer grievance lis: witness Japan.

At least to me now the book is more believable than what the PAP and LKY said about his ties with the Chinese leaders.

 

 

Temasek: If only chose Apple, not StanChart

In Banks, China, Temasek on 04/05/2015 at 1:48 pm

The big concentration on financials is to play the rising Asian middle class theme. A lot of the exposure goes into China banks (not looking good going forward) and StanChart.

Err should have juz bot Apple leh? Look at its price since 2005 when Jobs returned https://sg.finance.yahoo.com/q/bc?s=AAPL&t=my&l=on&z=l&q=l&c= Ho Ching became CEO of Temasek in 2004, and Temasek started buying StanChart in 2006. She should have bot Apple.

Here’s why based on her thinking of riding the expansion of the Asian middle class (Not Italic bits below are my tots, snide comments).

What do two big American and European multinational corporations have in common? Not much on the surface when comparing consumer giant Apple to the FTSE-listed Standard Chartered bank.

However, both have been significantly affected by emerging markets in their first-quarter earnings. And how they’ve been affected is revealing of the way emerging economies have matured, particularly in Asia.

The emerging markets-focused bank, Standard Chartered, reported a big fall in pre-tax profits of more than one-fifth in the first quarter (22% to $1.47bn) as revenues fell by 4% and costs rose by 1%.

By contrast, Apple had a strong quarter where revenues rose by 27% to $58bn, driven by a 40% increase in sales of iPhones. More than 61 million were sold globally, and notably, the biggest market was China for the first time and no longer the US. [Demand from China’s middle classes, iPhone sales leapt 40% to 61.2m units.]

But iPad sales fell sharply by 29%, reflecting a weak spot in their figures. [Apple fixing this introducing new model for Jap aging market. If works in Jap, another big global winner.]

So, it’s a really tale of two emerging markets. [Ho, Ho, Ho]

One side of emerging economies is a concern over their slowdown in growth, which raises risks over loan repayments, not just in Asia but also commodity exporters in Africa and the Middle East.

These are Standard Chartered’s key markets. Indeed, Standard Chartered took a $476m charge on bad loans, which is 80% higher than the first quarter of last year, although loan impairments were lower than in the previous six months.

[Ho, Ho, Ho]

However, there’s also the consumer side of emerging markets to consider.

For Apple, China’s rapidly growing middle class generated an impressive 72% increase in sales of iPhones. And Greater China has even overtaken Europe to become Apple’s second largest market for the first time with revenues rising by 71% in that region to $16.8bn, which accounts for much of Apple’s strong performance. Net profit was a third higher at $13.6bn for the quarter.

So, as emerging markets, particularly in Asia, become middle income countries, companies that sell to those emerging consumers are well-positioned to benefit.

But the period of rapid economic growth, particularly via debt-heavy investment, of key emerging markets is seemingly over. And companies, particularly banks, are liable to struggle as those economies restructure toward being increasingly driven by consumption.

[Ho Ho Ho: so waz Temasek doing to get into the consumption plays? Olam? Asians eating more peanuts?]

http://www.bbc.com/news/business-32495200

My serious point that by focusing so much on financial services (30% of portfolio and not on consumer plays (outside of the Telecoms, Media & Technology sector: 24%), Temasek has for the last few years been betting on a three-legged horse. Other consumer plays are only a subset of Life Sciences, Consumer & Real Estate: 14%)

Temasek’s China banks: Strong headwinds

In Banks, China, Temasek on 03/05/2015 at 4:36 am

Temasek has stakes in three of the five major Chinese banks. See details here http://temasekreview.com.sg/en/major-investments/financial-services.html

An FT working for Reuters recently wrote

The biggest five banks reported a miserable sub-2 percent increase in earnings for the quarter, year on year. Two rate cuts have pressured their lending rates, and fees from other lines of business have slowed. A bigger drag is borrowers who can’t or won’t pay up. While bad debt levels are still low, charges for credit that hasn’t yet gone bad but might are leaping. These items increased by 73 percent year on year at China Minsheng Bank, and more than 50 percent at Agricultural Bank and Industrial Bank of China.

The valuations of big banks like ICBC, China Construction Bank and Bank of China are also burdened by the lenders’ role in big government schemes that are still not properly sketched out. Take the plan to reform local government finances by swapping some of the estimated 16 trillion yuan ($2.6 trillion) borrowed by regional authorities into new bonds. The new securities could leave banks holding the same credit risk in a different form, at deceptively low rates of interest.

China’s ambitions for global greatness also raises questions. Plans to roll out infrastructure under the clunkily named “one belt, one road” strategy are likely to involve hefty lending commitments. That may bring glory, but also pressure on banks to lend to projects that may take years to generate cash flows. In the meantime, if growth slows more at home, further rate cuts will add pressure to lenders’ margins.

http://blogs.reuters.com/breakingviews/2015/04/30/banks-are-designated-drivers-at-china-market-party/

Below is a Q&A from reported on Temasek’s website. It was asked, last yr,  at a media conference on Temasek’s 2014 Review

QUESTION: Can you confirm if the Chinese banks are the major drag on your relative underperformance last year and then what are your views and plans for them? Thanks.

WYB: The banking stock has been volatile. I would not say the Chinese banks are the major drag on our performance. They do fluctuate from time to time. Chinese economy – we remain very optimistic over the long term. The financial institutions we believe have ample capability to weather the current storm and be able to adjust to the risks they’re facing. So, we remain comfortable with our stakes and we will continue to invest in the financial institutions because they are good proxy for the long term growth for Chinese economy.

RS: If I could just add to that, as you would have seen in our presentation, we had mentioned that about half our portfolio consists of listed stocks in Singapore and stocks that are listed on the H-share in Hong Kong and you saw even the Straits Times Index over the last year had negative returns, so it was not any one set of stocks, it’s just that some of the areas that we had invested in had weak market performance. And again, you know, these are results as of a particular date, March 31st. You mentioned the Chinese banks. Since March 31st, they rebounded by 10 to 12% or even if you look at the Straits Times Index, that’s up about 4%. So, you know, we really look at long term returns and look at investments over the long term horizon and are fairly comfortable with short term market volatility.

Govt sees StanChart as risky?/ LKY’s 30-year investments revisited

In China, Hong Kong, Temasek on 28/04/2015 at 4:42 am

The Hong Kong Monetary Authority says that it “takes a positive attitude should HSBC consider relocating its headquarters back to Hong Kong”, where it is the largest bank.

HSBC WEIGHS MOVE FROM LONDON HSBC was established in Hong Kong 150 years ago and moved its headquarters to London in 1993. Now it is considering a return trip. Citing changes in regulation, HSBC says it will study whether to relocate its headquarters out of London, reports Chad Bray in DealBook.

A big part of the issue is Britain’s bank levy, which was instituted in 2010 to help pay for the government’s financial crisis bailouts. While all banks operating in Britain pay the tax, Mr. Bray writes that “The levy hits British-based banks particularly hard, however, as they are taxed on their global balance sheets.” HSBC’s announcement could become a political issue as Britain nears a general election on May 7.

(NYT’s Dealbook)

Hongkong Bank is a HK quitter. It moved to UK in 1993, juz before PRC regained HK in 1997. But all is forgiven.

Both HK have S’pore have similar sized economies (about US$300bn in GDP).

HK is willing to be lender-of-last-resort to HSBC a bank with US$2,6 trillion in assets, despite HSBC being almost 9 times bigger than HK’s GDP.

Yet the S’pore authorities, it’s clear from hints in the FT, are unwilling to have StanChart HQed here (only 1.1 trillion in assets), despite Temasek being the largest single shareholder (which will benefit from reduced tax: HSBC shares were up 6% in HK yesterday), and despite many of StanChart’s operations being run from here.

The PAP administration is afraid of another of Temasek’s investments blowing up? After all StanChart is not as safe as our local banks: https://atans1.wordpress.com/2015/03/25/stanchart-not-as-solid-as-local-banks/

It also has weaker capital ratios than HSBC and the big US banks. So weak that the new CEO is expected to call for yet another massive rights issue.

Remember LKY and his bank investments that are forever? OK 30 yrs leh) Even longer than Buffett’s investments, he once said

In 2007/2008, our SWFs’ bot into UBS (GIC), Citi (GIC) and Merrill Lynch (Temasek) in a big way that ST characterised then as showing S’pore was a tua kee investor.

We lost serious money in two of the 30-yr investments by 2009.

— Estimate of Temasek’s realised losses on ML and Barclays:

https://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

— Estimate of GIC’s loss on UBS as at 2011:

https://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

(BTW, Temasek’s 2012 purchase of Credit Suisse mandatory bonds:

https://atans1.wordpress.com/2012/07/22/third-time-lucky-temasek/)

 

 

 

Temasek bidding for China’s POSB?

In Banks, China, Temasek on 27/04/2015 at 11:33 am

Bidders Seen for Stake in Postal Savings Bank of China UBS, BNP Paribas and Temasek of Singapore are said to be among the preliminary bidders seeking to buy 10 percent of Postal Savings Bank of China ahead of an expected initial public offering next year that could raise $25 billion.

NYT Dealbook

More CGT BS? Swiss Standard? What Swiss standard?

In China, India, Malaysia on 25/04/2015 at 5:19 am

Switzerland has been ranked the happiest country in world.

http://www.bbc.com/news/business-32443396

Singapore is ranked 24th But is tops in Asean and region. Thailand is placed at 34, Taiwan (38), Japan (46), South Korea (47), Malaysia (61), Hong Kong (72), Indonesia (74) and PinoyLand (90).  China and India are found lower down the scale at 84 and 117 respectively

Wanted: PRC princeling to be SGX’s CEO

In China, Hong Kong on 17/04/2015 at 12:39 pm

The Singapore Exchange (SGX), Bank of China (BOC) and BOC International (BOCI) are extending their collaboration on renminbi (RMB) initiatives and joint marketing initiatives. (CNA today)

And yesterday SGX denied “market rumours” in news reports that it will establish a stock trading link along the lines of the Shanghai-Hong Kong Stock Connect.

What this tells us is that SGX (and S’pore: Remember who PRC sent to LKY’s funeral: an unranked politburo member; this despite LKY’s and the PAP administration’s self-serving claims that he had great personal ties with the last two presidents. None of them turned up did they?) doesn’t have any serious China connections.

So SGX should make it a priority that its next CEO has the best possible China connections. As US banks are now wary of employing princelings (could run foul of US anti-corruption laws) with the right connections, SGX should have an easier time finding one with the right connections.

SGG has a lame duck ang mog FT  CEO, an Indian FT as president and Indon FT as head techie. (By the way all these are people where the “T” stands for “Trash”.) Why didn’t it even try to get a PRC FT? Taz how screwed up SGX is.

Why such a trading link is so impt:

A stock trading link with China will make it easier for Chinese investors to buy Singapore-listed shares.

The Hong Kong-Shanghai Stock Connect got off to a slow start when it was launched late last year. In recent weeks though, a surge of investments from mainland China has propelled Hong Kong stocks, including those of many smaller-cap firms, to multi-year highs. (CNA)

 

Ho Ching has a problem; so have our local banks

In Banks, China, Temasek on 09/04/2015 at 6:54 am

As readers will know Ho Ching has big markers on StanChart and Chinese banks.

Once regarded as a proxy for the growth of Asian markets in commodity-rich nations like Indonesia, StanChart has today become a victim of the reversal of fortune suffered by many emerging markets and their heavily indebted corporate borrowers …

Much of the lending to Asia outside of China assumed the region would grow on the back of insatiable demand from China. Much of the lending to China itself was based on that same expectation. That faulty thinking was then compounded by assuming that the value of the Chinese property used to back the loans would also continue to rise. But local banks in China, such as Agricultural Bank of China, are beginning to report that their bad loans have doubled — although officially they remain under 3 per cent. (Excerpt from recent FT article)

Ho Ho HO.

But it’s our problem too now that Tharman is now using projected long term returns from Temasek to spend our money on ourselves. Cybernuts might want to note that their heloo, Ong Teng Cheong, wanted to lock-up all the returns from the reserves (more LKY and Dr Goh). It was Ah Loong that fought him. Ah loong is the real people’s hero. if Ong had his way, we’d be pressing our noses on the iron bars guarding our reserves: Money, money everywhere/ Not a cent to spend/ Give thanks to Ong Teng Cheong

But the pix’s not that great for our local banks either: what with DBS’s exposure to Greater China and Indonesia, OCBC’s exposure to Greater China, and UOB’s and OCBC’s exposure to M’sia. Btw, OCBC has FTs as its Chairman and CEO, while DBS and UOB have true blue S’porans (Yes, I’m counting Gupta as a local. He’s a real talent.)

And if property prices tank here …

China evacuates S’poreans from Aden

In China on 04/04/2015 at 5:10 pm

Not seen any report on this from CNA etc.

China’s navy has evacuated 225 foreign nationals and almost 600 Chinese citizens from Yemen’s southern port of Aden, amid fierce fighting there.

,,,

Chinese naval frigates were carrying out anti-piracy patrols off the coast of Somalia when they were diverted to Yemen to evacuate people trapped by the fighting.

The evacuees were taken by naval frigates across the Red Sea to Djibouti, to take flights home.

The non-Chinese evacuees included 176 people from Pakistan, said Chinese foreign ministry spokeswoman Hua Chunying. There were smaller numbers from other countries, including Ethiopia, Singapore, the UK, Italy and Germany.

Ms Hua said it was the first time China had helped evacuate foreign citizens – and only the second time that China has used warships to evacuate its own citizens from a conflict zone, says the BBC’s Martin Patience in Beijing.

http://www.bbc.com/news/world-middle-east-32173811

Senior Minister of State for Foreign Affairs and Home Affairs Masagos Zulkifli has sought Oman’s assistance, should it be necessary, to assist Singaporeans leaving Yemen. (CNA on Friday)

World class banks, “peanuts” salaries

In China, Corporate governance, Temasek on 03/04/2015 at 5:00 am

China banks’ CEOs are monkeys? Temasek has significant stakes in three of them.

 

 

Exhibits from FT

 

Lex chinese banks

A hint of China’s real view of LKY?

In China on 29/03/2015 at 5:09 am

One of the self-serving narratives of LKY and the PAP administration is that LKY had good, long-standing personal relations with Chinese leaders. They were “old friends”.

Well then, how come it seems that China’s leaders are not giving that much face to LKY (and S’pore) by only standing Vice-President Li Yuanchao?

True, he holds the second highest state post. But in the Chinese hierarchy of power, the CCP is more important than the state or government. It is even above the law. The standing committee of the politburo of the CCP is at the apex, with the secretary-general (and state president) Xi Jinping, right at the top.

Li Keqiang (also the PM) is the next highest ranking official on the standing committee. There are five other members.

The VP that is coming is not even in the standing committee of the politburo (as other VPs have been in the past) though he is somewhere in the 25 politburo (25 members).

If China wanted to give LKY (and S’pore face), it would surely would have sent the PM or any other less senior standing committee member. If Xi had come himself, it would be very serious face for LKY and S’pore, but even the ST in an article had conceded that his presence was unlikely.

As it is we only got the VP.

To be fair, I should point out that in a speech in China, the president praised LKY. A friend heard a broadcast of the speech yesterday.

What do you think. Was LKY that close to the Chinese leaders?

SGX’s FTs still think Singkies still stupid?

In China, Corporate governance on 09/03/2015 at 1:09 pm

Around the time of the Spring Festival celebrations began, the Foreign Trashes managing SGX (president and head rechie are FTs, CEO is leaving) boasted that SGX was planning to attract Chinese cos here. Remember that in Asean, the Thai exchange raises more money than this global financial centre.

Well looks like the FTs still running SGX are hoping that S ‘poreans have forgotten that they lost money in S-chips.

Here’s a reminder that the Cina have not cleaned up their act. During the Spring Feitval hols, London-based directors of Naibu Global revealed they had suspended shares in the Aim-quoted Chinese sportswear maker because executives in China had refused to update them on the co’s finances. Err maybe now that the Spring Festival is over, they’ll contact the London directors. Somehow I doubt it.

How AhLoong’s salary compares to that of ord S’porean

In China, Political governance on 21/01/2015 at 4:24 pm

Yesterday I blogged that despite President Xi getting a 62% pay rise his pay was peanuts when compared to our very own AhLoong  despite AhLoong taking a pay cut in 2012 (US$22,256 a year versus US$1.8m a yr).

Mr Xi’s monthly base income is roughly twice the average annual income of a registered Beijing city-dweller according to the FT relying on official Chinese data.

Using Mom data, for the monthly median salary of an  ordinary S’porean (employer CPF included), it seems PM’s monthly salary is 4 times that of an ordinary S’porean’s median annual income in 2013. In the late 60s , LKY’s monthly salary was about four times that of my dad’s monthly salary.

No need to wonder why there is a growing income gap between the rich and poor here, is there?*

Which reminds me: “If the annual salary of the Minister of Information, Communication and Arts is only $500,000, it may pose some problems when he discuss policies with media CEOs who earn millions of dollars because they need not listen to the minister’s ideas and proposals, hence a reasonable payout will help to maintain a bit of dignity.”

– Dr Lim Wee Kiat, PAP MP for Nee Soon GRC, 24 May 2011 in Lianhe Wanbao.

So when Ahloong meets Xi or the Obama, he will not respect them, their views or their countries despite the US being the hegemon and China a wannabe?

*Readers might like to know that the PAP’s bible has been going on recently about inequality: inequality and the travails of the middle-classes are America’s (and the West’s) biggest problem, has been gaining currency for some time now. So has the idea that one of the better fixes is to begin to overhaul America’s dysfunctional tax code. Indeed, one publication in particular has been saying precisely that for quite a while.

 

Xi gets 62% pay rise, but still paid “peanuts” by AhLoong’s standard

In China, Political governance on 21/01/2015 at 10:06 am

The Chinese president’s new base salary is equivalent to US$22,256 a year, despite a pay rise of 62%.

FT points out that he and Obama are outearned by Lee Hsien Loong of Singapore, the world’s highest-paid prime minister, who took a pay cut to S$2.2m ($1.8m), beginning in 2012.

As the PAP likes to say that “Pay peanuts, get monkeys”, so the PAP thinks Obama, Xi and other leaders are monkeys? What do you think?

Relevant posts:

https://atans1.wordpress.com/2014/09/13/hen-jost-gracef-money-money-money/

https://atans1.wordpress.com/2011/05/26/with-mps-like-these-pap-does-not-need-enemies/

And from FT too

What countries pay their leaders (annually/$ excluding benefits)
Singapore 1.8m
Russia 1.76m
US 400,000
European Commission 372,000
Germany 290,000
South Africa 224,000
UK 215,000
France 208,000
Indonesia 64,000
Poland 64,00

LKY did it, Xi trying to follow him?

In China on 20/12/2014 at 6:07 am

President Xi “only mentions reform, not democracy,” Ms Gao told the BBC in an interview in March 2013.

“This is his political blueprint – to build a highly efficient and clean government, but whether this goal can be reached without democracy, constitution, multiple parties or press freedom is a question.”Gao Yu faces trial for leaking state secrets.

Sounds like LKY can soon boast Xi is following: again like what Deng did.

StanChart directors to push for chief’s succession plan

In Banks, China, Corporate governance, Emerging markets, Hong Kong, Temasek on 01/11/2014 at 11:06 am

Above is FT’s headline for today.

Ho, Aberdeen, Blackrock and L&G baring their fangs? TRE ranters and other anti-PAP paper activists, pls note that Temasek has been pushing for a succession plan for some time.

Standard Chartered data

But they can rejoice ’cause  sharesclosed at £9.39 on Friday – down from £18 less than two years ago.

They will be celebrating.

Related:

https://atans1.wordpress.com/2014/10/29/lousy-set-of-results-from-stanchart/

https://atans1.wordpress.com/2014/10/31/stanchart-gives-ho-more-problems/

 

StanChart gives Ho more problems

In Banks, China, Corporate governance, Hong Kong, Temasek on 31/10/2014 at 10:12 am

Is StanChart a rogue bank?

Standard Chartered Plc (STAN) fell for a fourth consecutive day in London after U.S. prosecutors reopened investigations to determine whether the bank, which entered into a deferred prosecution agreement in 2012, withheld evidence of Iran sanctions violations.

The U.S. Justice Department, Manhattan District Attorney Cyrus Vance Jr. and Benjamin Lawsky, superintendent of New York’s Department of Financial Services, are all reopening their original inquiries into the London-based lender to determine whether it intentionally withheld information from regulators before the 2012 settlements, according to two people briefed on the matter, who asked not to be identified because the probes are confidential.

http://www.bloomberg.com/news/2014-10-30/standard-chartered-bank-of-tokyo-said-getting-new-review.html

Temasek wants clear succession plan at StanChart

https://atans1.wordpress.com/2014/10/29/lousy-set-of-results-from-stanchart/

Lousy set of results from StanChart

In Banks, China, Corporate governance, Emerging markets, Hong Kong, Temasek on 29/10/2014 at 2:23 pm

Standard Chartered has announced a 16% fall in operating profit because of a restructuring of its South Korean business and an increase in bad loans.

The Asia-focused lender said pre-tax profits fell to $1.5bn (£930m) in the July-to-September quarter compared to the same period a year ago.

Standard Chartered also warned full-year earnings would fall because of weak trading activity.

http://www.bbc.com/news/business-29797961

FT reports that some of the major shareholders have been pressing for the CEO to be sacked if things don’t improve soon. It also reports that Temasek  is “pressing for a clear plan of succession”.

Standard Chartered data

 

 

PRC GLCs’ CEOs put our ministers to shame

In China, Humour, S'pore Inc on 14/10/2014 at 5:22 am

CEO pay

As the above shows, they are paid a pittance

Yet FT reports that as their pay is being cut by up to 60%, “The biggest difference between China and western countries is that we pursue the goal of getting rich together,” Fu Chengyu, head of the country’s largest refiner, told reporters. “If you want to earn big sums, you should not be an SOE executive.” (“SOE” is State Owned Enterprice i.e a GLC or TLC).

Need I say more?

[M]oney is by far the least [important factor]” when choosing where to work. At this level it can’t be painful, right? The job we’re doing is a vocation. All of us like to be paid whatever is deemed competitive in the market, but it’s not the main driver.”” said the CEO of Switzerland’s third largest bank who has had to cut his pay by 12% because shareholders were unhappy.

https://atans1.wordpress.com/2014/09/13/hen-jost-gracef-money-money-money/

Roy’s & New Citizen H3 should go to HK

In China, Hong Kong, Political governance on 03/10/2014 at 4:35 am

And observe, research and analyse how the students and other protesters are doing things in such a way that caused a Mainland Chinese official visiting Hong Kong to say, “It’s so amazing they can organise such an orderly, peaceful and self-disciplined protest.” (FT).

As at the time of writing, these protestors have behaved in such a way no-one can reasonably fault their behaviour even though what they are doing is technically, illegal: they don’t have permission to protest.

A walk among the tens of thousands clustered around the Admiralty district in Hong Kong feels more like attending a music festival than a protest. The demographic of those calling for representative elections in 2017 is mostly twentysomething or younger – some are in school uniforms. Volunteers hand out snacks, drinks, and goggles to defend against pepper spray, though there has been no sign of any since the first day’s ruckus. Volunteers shepherd new arrivals away from overcrowded areas; others hand out home-made flyers on how to remain calm if provoked.

Anyone can be violent, but keeping protest this calm requires strategy. According to many non-violence theorists, the only way to confront a muscular government like China’s is to train, plan, stay calm and kill the enemy with kindness.

http://blogs.reuters.com/breakingviews/2014/10/01/hong-kong-harmony-hits-beijings-worst-fears/

But somehow going by TOC’s video* showing at the very least showing Roy, H3 and friends shouting their slogans in front of special needs kids, I suspect that the lessons the HK protesters can teach S’poreans will be lost on them and their very vocal defender of their actions Goh Meng Seng (who is in HK). Too bad because

What’s most impressive is that the orderliness is basically self-generated. While some training had taken place beforehand, much of the co-ordination among the protesters has been ad hoc, with more experienced protesters conducting on-the-spot education, according to one organizer. Supplies are requested via social networks and Google Docs. Meanwhile, the crowds have the element of surprise on their side. Protests were still spreading to previously untouched areas today, including the high-end shopping district Tsim Sha Tsui, a magnet for mainland tourists.

Thankfully we have Cherian George there. He can perhaps observe, research and analyse, and then teach teach S’poreans how to ensure that social movements can be emotionally charged but peaceful, disruptive but harmonious.

If that happens, the govt and the administrators will rue the decisions that forced him to move on to HK. Cometh the our, cometh the man.

———-

*Recommended viewing by H3 and Roy to support their view that they didn’t “heckle” the special needs kids. My view is that they are trying to be pedants. The usage of the word “heckle” has evolved to encompass their actions.

This is a neutral report of the scene: When Yahoo Singapore visited Hong Lim Park just before 5pm on Saturday, Ngerng and Han were leading about 100 protesters in circles around a large tented area where people attending the YMCA event were seated, waving large and small Singapore flags and chanting “Return our CPF!” and “PAP, vote them out!” through microphones connected to speakers placed on the outskirts of the YMCA event area.

At at least one point, Ngerng and Han led the group of protesters near the front of the permanent stage at Hong Lim Park, where performances by various youth groups, including one by special needs children, were taking place.

The performance of the special needs group appeared to be disrupted by the sound of the protesters’ chants, and the song the children were dancing to was stopped and restarted after the protesting group moved to a mound at the back of the lawn.

-https://sg.news.yahoo.com/police-investigate-cpf-protest-march-at-hong-lim-park-004904810.html

Ishandar investors screwed again: by PRCs this time

In China, Malaysia, Property on 01/10/2014 at 4:15 am

Bad news travels in pairs.

Last week, Reuters reported

Amid growing anxiety over a glut of high-rise residences in Malaysia’s Iskandar, a mega waterfront township project there appears to have hit a snag.

The Business Times understands that CapitaLand, South-east Asia’s largest real estate developer, recently sought a six-month extension on the launch of its 900-unit high rise condominium, which is the first phase of a S$3.2 billion ($2.52 billion) Danga Bay project, which spans some 28 hectares on a man-made island.

It seems that it had some problems with Johor state authorities. If  TLC can have such problems, what about yr ordinary, not connected S’porean property buyer?

Then BT on 30 September carried a story reported that thanks to PRC developers and buyers, S’poreans buying to rent in Iskandar are screwed.

A looming housing glut in Iskandar Malaysia may weigh down rental yields in the economic zone, with homes being left empty.

The warning this time came from Malaysia’s national organisation of developers, the Real Estate & Housing Developers Association (Rehda).

FD Iskandar, president of Rehda, noted that some 30,000 homes could be completed by 2016 or early 2017 in Iskandar.

If these are mainly sold to buyers outside Malaysia and Singapore, “then you will see that these units will be empty and once they are put up for rent and there are so many units available, that will put pressures on rental yields”, he said.

Malaysia’s federal government is “actually looking seriously” at this issue … But land administration in Malaysia lies within the authority of the state government.

In the past 12 to 18 months, the deluge of homes launched or in the pipeline by China developers, including Country Gardens and Guangzhou R&F Properties, has stoked concerns over a looming housing glut in the Iskandar region, which encompasses an area of more than 2,000 square kilometres in Johor.

“… developers from China launching a few thousand units at one go,” Mr Iskandar said, adding that Malaysian or Singaporean developers would typically have 400-600 units in one project.

Most of the buyers of these Chinese projects come from mainland China, he observed. “…concerns about these residential units being empty.”

 

 

Uniquely PRC, paving the streets with gold & voluntary compulsion

In China on 28/09/2014 at 5:33 am

NUS has set up China Business Centre to among other things deepen the understanding of China’s business environment.

I hope that lacing noodles with opium to attract repeat customers will be on the curriculum. This is after all a variation of what the Brits did in China in the 19th century, selling opium to the Chinese. Out of that trade grew Jardine Matheson, Swire, HSBC and StandChart.

Or this: The walk at the indoor precinct in Yichang, in Hubei province, consists of 606 shiny yellow bricks, worth $32m (£20m) in total, the Chinanews.com website reports. The bricks weigh 1kg (2.2lb) each, and are covered with a glass pane. The lavish attraction was created to celebrate the shopping centre’s 18th anniversary – and to attract customers during the upcoming “Golden Week” national holiday, after which it’ll be dismantled. Shoppers have been eager to use the walkway, as it’s apparently believed in China that walking on gold brings luck, according to the Shanghaiist blog.

Or thisBaoji city in China is on a blood donation drive, and has caused a stir in social media by saying people should give blood if they want to go to college, learn to drive or even marry.

Background info on NUS’ China Business Centre:

The China Business Centre launched on Wednesday (Sep 24). The centre is helmed by the National University of Singapore’s Business School and is the first China business-centric outfit set up by a local university. 

It will serve as a resource and research platform to deepen the understanding of China’s business environment. The centre will also advance research in management challenges in China, as well as develop leaders with a China-focused business education.

Some of the centre’s upcoming projects include training programmes for business leaders and studies on management challenges and issues faced by businesses in China.

The centre will also organise research symposiums and workshops to promote understanding of China’s business landscape. It is expected to bring industry leaders from Singapore and China together for deeper dialogue. (CNA earlier this week)

 

Shumething gd (finally) from SGX for retail investors/ SGX thinks Chinese leopards can change spots

In China on 24/09/2014 at 6:47 am

(Or “Why hate Foreign Trashes to pieces”)

StockFacts allows investors to screen for stocks based on 20 different criteria, including market capitalisation and revenue. The product will also incorporate information from S&P Capital IQ like analysts’ consensus estimates and recommendations.

“Before StockFacts was launched, investors who wanted to do research on SGX-listed companies had to use various different sources of varying credibility to access the information,” said SGX head of retail investors Lynn Gaspar to BT on Monday. “This was a gap that we identified through retail investor feedback.”

Why took so long Foreign Trashies? CEO and COO are FTs but people pushing for StockFacts are locals. Taz why

So, SGX is now hoping S-Chips will start coming here. and that Sinkies will forget that they were fleeced in the past? To remind

In the case of FerroChina, which had a market value of more than S$2 billion in 2007, shareholders lost their entire investment when the steelmaker was forced to delist in March 2010. Other stocks that have been suspended include Sino Techfibre, which said a fire destroyed its financial records after reporting accounting flaws, and China Sun Bio-Chem Technology Group Co., which said a truck transporting its accounting records was stolen.

http://www.bloomberg.com/news/2014-09-21/singapore-exchange-sees-end-to-two-year-hiatus-for-china-ipos.html

Here’s more fleecing (in Germany)

The chief executive of Chinese footwear firm Ultrasonic, who was reported missing last week along with most of the firm’s cash, has spoken to Chinese media and denied wrongdoing.

Last week, Ultrasonic said it had dismissed him from his post.

The firm said he and his son, who is chief operating officer, had vanished.

The firm, which is listed in Germany, said that both the men, Qingyong Wu and Minghong Wu, had “apparently left their homes and are not traceable”.

Earlier this year, another Germany-listed Chinese manufacturer, Youbisheng Green Paper, said its chief executive had gone missing without explanation. It later initiated insolvency proceedings.

http://www.bbc.com/news/business-29306957

Giants that will slay Jack (Ma)?

In Banks, China, Internet on 23/09/2014 at 4:25 am

Jack Ma, Alibaba’s founder, is a hero. He slew eBay in China. Now he is going up against new giants by shaking up China’s state-dominated finance industry. His business, the Zhejiang Ant Small and Micro Financial Services Group, processes payments, sells insurance and runs one of the world’s largest money market funds, placing it in competition with banks controlled by the Chinese government. It is a precarious position.

http://blogs.wsj.com/chinarealtime/2014/03/26/chinas-largest-bank-declares-war-on-alibaba/

PM talks cock about “private” sector

In China, Temasek on 14/09/2014 at 6:57 am

The private sector-led, Government backed Guangzhou Knowledge City (GKC)* is a good model for future Singapore-China projects, said Prime Minister Lee Hsien Loong on Friday (Sep 12).

… Mr Lee said he was happy with the progress, six years after he first discussed the project with provincial leaders … the private sector-led GKC is a different model that Singapore is “trying out” after the Suzhou Industrial Park and Tianjin Eco-city, both government-to-government projects. (CNA on Friday)

Funnily the private sector leadership is provided by Temasek-owned company Singbridge who is in a j/v and the southern Chinese city of Guangzhou.  Singbridge is 100% owned by Temasek, 100% owned by the Minister for Finance. Not even the fig-leaf of a SGX-listed TLC like Keppel or SIA.

And PM went to Catholic High and NJC? But then Yaacon was from RI (see tom)

—-

*”The hurdle for government-to-government projects like Suzhou and Tianjin will be higher in future, so I think this (GKC) is a good model that we should explore going forward,”

“But there has to be a balance between private sector leadership and government support, and there has to be market demand for what’s being offered by the project” …

Located 35 kilometres from Guangzhou city centre, work is underway to turn the Guangzhou Knowledge City, currently a 123 square-kilometre site into a future magnet for industries like pharmaceuticals and info-comm technology, part of local authorities push for so-called high end industry.

 

Tourism potential of Indon, Vietnam & Burma

In China, Hong Kong, Indonesia, Japan, Malaysia, Vietnam on 24/08/2014 at 4:58 am

Number of foreign visitors received in 2013

  • Thailand – 26.5 million
  • Malaysia – 25.7 million
  • Hong Kong – 25.6 million
  • South Korea – 12.1 million
  • Japan – 10.3 million
  • Indonesia – 8.8 million
  • Vietnam – 7.5 million
  • Myanmar – 2 million

I’m surprised that Indonesia has only 8.8m visitors given the popularity of Bali.

Still Mynamar is the place to invest in the tourism biz. Opportunities there from recent BBC article.

S’poreans: 11th in lying on hols experience

In China, Hong Kong, Humour on 16/08/2014 at 4:34 am

Chinese are number 1. lie to friends and family about the marvellous time they had,The survey didn’t give a reason for why the Chinese exaggerate the most about their holidays, but the status of being able to afford to go abroad, ensuring you keep one step ahead of the Wangses, may be a factor. Another explanation could be that the Chinese tourist is a relatively recent phenomenon who could learn a thing or two about complaining from travel-hardened European and American holiday-makers  Economist

Both reasons are likely to apply to the sheep Singaporeans too.

In Asean, Thais are ahead of us. Interestingly, Hongkies, who many locals think are BS artists don’t exaggerate that much. But then they have a reputation for being gd at complaining.

 

Qn for Swee Say: How cheap you want us to be?

In China, India, Indonesia, Vietnam on 14/08/2014 at 4:36 am

manufacturing wages

When I saw the above table, I tot of the Deaf Frog’s “Cheaper, Better, Faster”. There is always somewhere cheaper as above from FT article shows. And MNCs will move there: now moving from Jakarta and Vietnam to central Java. (Btw, $ + US$)

“Cheaper, Better, Faster’

The apologist version of what he meant by a website funded by a organisation headed by one Philip Yeo after being approached by one BG Yeo (taz the rumour). With credentials like these how not to believe meh?

In 2007, Lim coined the phrase to exhort Singaporean companies to increase their competitiveness.

Companies have to be cheaper and better than their competitors internationally, because those who used to be cheap (China) are now getting better, and those that used to be good (United States) are now getting cheaper as well. Hence, Singaporean companies have to be cheaper and better than them, and yet turnaround faster.

He obviously didn’t do an MBA: it’s accepted wisdom that one cannot have all three, only two. Attempts to have all three results in failure. This should cheer on TRE posters: Swee Say is urging a policy doomed to failure.

 

Problems at Temasek’s StanChart & DBS/ OCBC ovepaid for HK bank?

In Banks, China, Emerging markets, Hong Kong, Temasek on 30/06/2014 at 4:50 am

Standard Chartered has said first-half operating profits will be 20% lower than a year earlier, blaming a slump in income from its financial markets business.

The warning comes only three months after the Asia-focused lender reported its first fall in annual profits for a decade.

The UK bank had been expected to show a modest bounce-back this year.

But it said tougher regulations and low market volatility had hurt revenues.

Standard Chartered said its interest rate and foreign exchange trading had been particularly hit.

Chirantan Barua, an analyst at Bernsteinm said: “Cyclical headwinds are yet to arrive in full force in the bank’s two key markets – Hong Kong and Singapore. Not that Korea or India is out of the woods either.

“Pack that in with a challenging and uncertain capital regime that won’t be resolved until the end of the year and you have a great deal of uncertainty around the stock.”

http://www.bbc.com/news/business-28031504

StanChart shows the peril of investing in a stock listed overseas overseas that operates internationally. When profits were gd, sterling was weak against all major currencies. When sterling is strong, profits no gd. Note the value of sterling is irrelevant to the underlying profits or losses of  most of bank’s international operations.

——

ON AN afternoon in early summer a prospective customer walked into the gleaming new branch established in Shanghai’s free-trade zone by DBS, a Singaporean bank that, like many of its international rivals, has long touted China’s great promise for its business. The lobby was empty, save for a guard playing a video game. A log showed that the branch was attracting just two or three visitors a day. DBS remains optimistic about China and says that most of its free-trade-zone transactions are routed through other locations. But the torpid atmosphere at the branch points to foreign banks’ struggle to crack open the Chinese market.

—–

To be fair to DBS its New Citizen CEO is not like the FT CEO of OCBC who may have blundered.

OCBC is offering to buy Wing Hang Bank’s shares for 125 Hong Kong dollars (US$16.12) each, in a big bet on China’s sustained economic growth. OCBC hopes the deal will springboard its growth into mainland China through the Hong Kong bank’s cross-border operations, and give it a foothold in Macau.

OCBC and Wing Hang Bank, one of Hong Kong’s last remaining family-owned lenders, began discussions on a possible deal late last year, and in January entered exclusive talks (after ANZ and UOB balked at the family’s asking price), which were extended twice as they argued over price.

The most recent comparable transaction (and bargaining benchmark for the family), the 2013 sale of Chong Hing Bank, went for 2.35 times book value including the value of a special dividend related to Chong Hing’s real estate. Accounting for the increase Wing Hang ascribes to the value of its property, the OCBC offer is closer to 2 times book value, a discount, compared to the Chong Hing deal, considering Wing Hang’s return on equity averaged 11.3% for the past three years, versus 7.8% for Chong Hing, according to Capital IQ.

Still OCBC shareholders were not that happy and its share price suffered.

What is unknown is the value of Wing Hang’s Hong Kong real estate, on some of the busiest shopping streets in the world. These could be worth even more than the bank says. A government index of Hong Kong retail properties has risen 400% over the past decade. Yet the company’s revaluation over the acquisition cost of the property is less than 100%.

If enough of Wing Hang’s minority shareholders refuse the price on offer, however, OCBC might prefer to raise it or offer* or bear the cost of maintaining the Wing Hang listing, and the cost of failing to fully integrate the bank.

Update at 6’00am: Here’s someone who thinks OCBC got sold a dog.

Wing Hang gives it greater opportunity to finance trade between China and other parts of Asia such as Malaysia and Indonesia, where it already has a foothold. Wing Hang’s strong funding base – loans were just 73 percent of deposits at the end of last year – is another advantage, as is its ability to capitalise on the yuan’s growing international popularity. About 17 percent of Wing Hang’s deposits are currently in the Chinese currency.

Nevertheless, the purchase brings risks to OCBC investors. China’s economic slowdown is creating credit wobbles, while Hong Kong’s property boom is bound to have led to some lending excesses. Meanwhile, rising interest rates in the United States could reverse the cheap deposits that have flowed into both Hong Kong and Singapore in recent years. Shareholders, who will probably be asked to help finance the purchase, may pay a high short-term price for OCBC’s long-term China ambition.

 http://blogs.reuters.com/breakingviews/2014/04/01/ocbcs-chinese-ambition-comes-with-hefty-price-tag/

 ————

*OCBC has said the bid, a 50% premium to the then stock price, is generous.

Why Japs smarter than Singkies

In China, India, Japan, Vietnam on 21/06/2014 at 5:18 am

http://im.ft-static.com/content/images/c272b0ac-d4f9-11e3-adec-00144feabdc0.img.

By 2050, elderly (65 and over) almost 40% of population

Next to Japan only. But no robots here, only FTs.

Japs smarter than us in avoiding the problems that FTs bring, like pushy Pinoys, wanting to change PM from Prime Minister to Pinoy Minister and SPF to S’pore Pinoy Force. But then they have friends like William wan, Kirsten Han, AWARE and Maruah. Their only public opposition is Gilbert Goh and Goh Meng Seng.

The govt should remember that when the Pinoys burnt our flag in the 1990s and it protested, the Pinoy govt gave the S’pore govt the finger, telling it nothing wrong with burning our flag.

 

Invest with the Hong Leong gp in contrarian play

In China, Property on 27/05/2014 at 4:49 am

First Sponsor Group Ltd, a real estate group whose controlling shareholders are Hong Leong Group S’pore and Tai Tak Group S’pore, is looking to raise up to $102.1 million, through an IPO and a sale of shares to cornerstone investors.

First Sponsor, whose focus is on residential and commercial properties in tier-two China cities, said it plans to make a share offer of 54.05 million shares at between $1.50 and $1.60 per share. This includes 49.05 million placement shares for institutional investors and high net worth investors, and a public offer of five million shares.

The data from China on property is gloomy. Example:http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=2014_05_20_08_46_baf327d0669d4ae5bc33702b274e2271_PRIMARY.jpg

So the Hong Leong group offering investors to join it in investing in China property is intriguing. The group is a shrewd property investor and so may know something that the ang mohs don’t know. Hitch a ride with First Sponsor and find out?

Noble: Time to cheong?

In China, Commodities on 08/04/2014 at 4:25 am

Well depends on whether COFCO will run the joint venture as a commercial entity.

The structure allows Noble to reduce its exposure to an underperforming business while sharing in any recovery. The prospect of a deal had already fuelled a 25 percent rally in Noble’s shares in the past month, lifting its market value to around $6.5 billion. The proceeds could be reinvested in Noble’s better-performing energy and resources businesses. And because Noble will no longer have to include the venture’s $2.5 billion of net debt on its balance sheet, its headline borrowings will roughly halve, according to Eikon.

For Noble investors, the lingering worry is whether or not COFCO, which is already China’s main wheat importer, will run the joint venture as a commercial entity. The involvement of China-focused private-equity group HOPU in the Noble deal offers some comfort. So does China Investment Corporation’s 14 percent stake in Noble, which it has owned since 2009. If China does decide to squeeze Noble, it shouldn’t do so too hard.

http://blogs.reuters.com/breakingviews/2014/04/02/noble-china-joint-venture-still-faces-market-test/

At a recent conference, Yusuf Alireza, the chief executive of Noble, talked business models: “None of us should be arrogant to assume one model is right and one model is wrong . . . from a Noble perspective, our core competence is in the middle part of the supply chain . . . We are not miners, we are not farmers, we are not a bank.”

Why PAP should be afraid but not not too afraid

In China, Humour, Internet, Malaysia, Political governance, Vietnam on 10/03/2014 at 4:49 am

Paper warriors can cause serious problems for paper generals. Take heart Richard Wan, SgDaily, Terry Xu etc. And NSP should put more effort and time on online activities, rather than pounding the streets and climbing stairs, even though P Ravi of NSP gets great workouts: but Ravi, skip the teh tariks at the end. And the Chiams start an online presence.

Online activism can be an accurate indicator of where revolutions might take place next, according to University of Manchester research.

Argentina, Georgia, the Philippines and Brazil are claimed to be most at risk of upheaval, according to this measure.

The Revolution 2.0 Index* was developed last year and identified Ukraine as the most likely to see political upheaval.

This index sees revolution being forecast by computer experts rather than political analysts … It provides a different view of how regimes are put at risk by protest movements, looking at online factors rather than street demonstrations.

The index produces a risk factor based on the level of repression and the ability of people to organise protests online.

(http://www.bbc.com/news/education-26448710)

But Yaacob, MDA, and the ISD can still relax a little: The highest risk comes in countries where there are protests against perceived injustices – but where there is relative freedom online.

Err we knowthat S’poreans don’t like to sweat at Hong Lim: ask Gilbert Goh. (Alternative reason: https://atans1.wordpress.com/2013/10/11/gg-crashes-new-indian-chief-needed/)

So get the people out in their tens of thousands to Hong Lim Green and keep up the online volume, then sure can effect regime change. But fortunately for the PAP, only the LGBTs can get out the crowd. Aand then only once in a pink moon.

Still if PM and the ministers want to make sure they get to keep their mega-salaries then they should start sending study teams to  Ethiopia, Iran, Cuba and China: At the lowest end of this 39-country index are countries such as Iran, Cuba and China because there is a lower level of risk of revolution in repressive countries with tight controls over the internet.

Actually, it juz might be easier to ban Facebook and other forms of social media on the grounds that users waste time on them during office hours (all those cat photos that a certain social activist posts during office hours). Users are subversives, undermining the govt’s productivity drive, the aim of which is to make S’poreans richer slaves.

Talking about the Ukraine, professor Richard Heeks from Manchester University, the creator the index, says: “But social media has been the core tool used to organise protests and maintain them by letting protesters know where they can get nearby food, shelter, medical attention, and so on.

“It has spread word about violence and has garnered support and assistance from overseas.”

BTW, S’pore, Cambodia and Laos are not on the index but the rest of Asean is

The Philippines (4th)

M’sia (14th)

Indonesia (26th)

Vietnam (29th)

Thailand (33rd: err data was up to 2012)

Burma (35th)

———————————————————-

*The index combines Freedom House’s Freedom on the Net scores, the International Telecommunication Union’s information and communication technology development index, and the Economist’s Democracy Index (reversed into an “Outrage Index” so that higher scores mean more autocracy). The first measures the degree of Internet freedom in a country, the second shows how widely Internet technology is used, and the third provides the level of oppression.

 

 

Martial arts training in China

In China, Holidays and Festivals on 01/02/2014 at 6:27 pm

Something for Neigh Year hols viewing

http://www.bbc.com/travel/slideshow/20120712-chinas-kung-fu-revival

Temasek’s right on ICBC, BoC & CCB

In Banks, China, Temasek on 07/11/2013 at 4:52 am

I’ve blogged before that Temasek loves China banks while ang mohs were running away.

Well since late June, Chinese bank shares have been on a roll, example  ICBC (where Temasek had been picking up shares this yr) is up more than 22%. Recent Chinese economic data has got investors buying the banks again, ang mohs included. So much so that some smaller Chinese banks are planning IPOs in HK.

Anyway,Jack, the usual suspects, and the readers of TRE, TOC and TRS needn’t yet bang their [ ] in frustration. Firstly, Temasek can never ever exit these investments given that S’pore wants to be China’s friend. Temasek got big chunks of BoC and CCB at a “special” price.. It can only play around the margins, reducing its cost of these investments.

Then are there two more reasons why we should be worried about Temasek’s punt:-

The biggest threat to Chinese banks’ cozy oligopoly … Online groups Alibaba and Tencent are making incursions into the country’s financial services market, providing an alternative to the capped deposit rates and sluggish service offered by the country’s big lenders. The disruptors are taking on risks, and savers should be glad. http://blogs.reuters.com/breakingviews/2013/10/10/tech-disruptors-could-save-chinas-savers/

Alibaba, the e-commerce group that just bought a 51 percent stake in asset manager Tianhong for $193 million, is the banks’ main foe. By July it had made over $16 billion in short-term loans to companies who sell goods on its sites. Its real-time records of borrowers’ cashflows and counterparties aid lending decisions.

Banks’ deposits are also under threat. WeChat, the mobile chat app that clocked up over 300 million users within two years of being launched by gaming group Tencent, is working on distributing wealth products via smartphones, and offering payment for fund managers, according to Chinese media. Alibaba lets users reinvest surplus balances in their online payment accounts into money market funds. That gives savers a better return than the 3 percent capped rate they get on bank deposits.

Tech companies’ desire to disrupt the financial services sector is understandable. China’s big banks make returns on equity in excess of 20 percent.

Add to that, an attempt to shake up the country’s slow-moving financial industry and create more investment opportunities for the private sector, Chinese regulators have invited companies from across the spectrum to apply for banking licences.
And here’s the latest on bad debt write-offs (something I had talked about) http://www.bloomberg.com/news/2013-10-22/biggest-china-banks-triple-debt-write-offs-to-brace-for-defaults.html.
So Jack, etc can relax. Time enough for their curses on Ho Ching to take effect. I hope they remember that returns from the reserves are used to make life more comfortable for ourselves.

M’sia: The only winners of GE 2013

In China, Malaysia, Vietnam on 12/10/2013 at 5:10 am

In the words of the Institute of Southeast Asian Studies (ISEAS), a S’pore govt-funded think tank, in its Oct Asean Monitor

Barisan Nasional’s worst-ever general election performance in May has undermined Prime MinisterNajib Razak’s promise to reform the United Malays National Organization (UMNO) after he took overits leadership in 2009. Outside UMNO, liberal reforms are stridently opposed and resisted by extremist Malay-Muslim groups such as PERKASA and by UMNO-owned media, especially the Utusan Malaysianewspaper. Within UMNO, political momentum favours former Prime Minister Mahathir and his conservative allies, who support preserving the ketuanan Melayu (“Malay ownership”) status quo.

Recognizing that UMNO needs to be further strengthened after its failure to win a convincing majority of the Malay vote, many senior party leaders and veterans will not want the president and deputy president posts, held by Najib and Deputy Prime Minister Muhyddin Yassin, respectively, to be contested duringthe upcoming October party elections. However, the party’s three vice-presidential posts are likely tobe hotly fought over by the incumbents Ahmad Zahid Hamidi, Shafie Apdal and Hishammuddin Husseinand by three challengers, namely Mohd Ali Rustam, Isa Samad and, potentially, Mukhriz Mahathir.

Recent developments have further pressured Najib to follow through with his general-election pledge totackle corruption and crime. The 2013 Global Corruption Barometer report confirms the perception thatthe level of corruption in Malaysia has increased despite the government’s claims to the contrary. Publicconfidence in the corruption-tainted police force received another huge blow from the recent spike inviolent crimes, including more than 30 murder attempts in the past five months.

Because of the country’s deteriorating public finances, a global ratings agency has downgraded Malaysia’ssovereign credit rating outlook from stable to negative. The Malaysian ringgit slid to three-yearlows against the US dollar and to 15-year lows against the Singapore dollar; these slides may generate inflationary pressures. The government announced 10.5 percent and 11 percent hikes respectively in the prices of subsidized 95 RON gasoline and diesel on 3 September, and it is likely that further measuresto strengthen the country’s fiscal position will be introduced.

Key points: The status quo will persist, with conservatives gaining control of the UMNO supremecouncil. Budget 2014 will see the introduction of a GST and the scaling back and rescheduling of publicly funded projects.

The Chinese have to live with the consequences of their vote for Anwar’s group. The Indian community (which marginally supported BN) must be sore with the Chinese.

Related articles: http://www.economist.com/news/asia/21586864-ruling-party-returns-its-old-habits-race-based-handouts-bumi-not-booming

http://blogs.wsj.com/searealtime/2013/10/08/in-talent-battle-malaysia-loses-to-singapore/

Other Asean round-up news:

Vietnam R Sembcorp (belated)

UNDETERRED by the many challenges facing Vietnam’s economy, Sembcorp has once again upped its investment in the socialist republic – this time by building central Vietnam’s first large-scale industrial park worth US$337.8 million.

This latest of five Vietnam-Singapore Industrial Parks (VSIPs) is sited in Quang Ngai province, about 90 minutes’ flight south of Hanoi. It offers manufacturers a new and alternative investment locale that is away from Vietnam’s northern and southern regions, where labour markets are tighter and costs continue to rise.

VSIP Quang Ngai will take shape in the form of a 1,120ha industrial park and integrated township; the industrial park will take up 600ha, with the other 520ha slated for commercial and residential purposes. BT 14th August: PM was in Vietnam BTW.

Thailand is to hand over rice and rubber in part-payment for its new high-speed rail system, it’s reported.

The country’s transport minister is expected to formally agree the barter deal with Chinese premier Li Keqiang … The project to link Bangkok with Nong Khai, close to the Laos border, is part of a proposed 2m baht ($30bn, £19bn) infrastructure investment programme to part-financed with agricultural products. The railway is one day envisaged to link Thailand with the Southern Chinese province of Kunming, via the Laos capital Vientiane.

http://www.bbc.co.uk/news/blogs-news-from-elsewhere-24475574

Where S’pore and other Asean countries most vulnerable to Fed tapering

In China, Hong Kong, India, Malaysia, Vietnam on 14/09/2013 at 5:36 am

This chart from Reuters shows the vulnerability of major Asian economies to Fed policy of tapering

http://graphics.thomsonreuters.com/RNGS/2013/AUG/ASIARANKINGS/ASIARANKINGS.html

S’pore is vulnerable

Slowing GDP: Most vulnerable

Growing Public Debt : Second most vulnerable

Uncompetitive Currency: Second most vulnerable

Growing Credit Intensity: Fourth most vulnerable. Another view: Banks with large property loan portfolios will face higher risks when interest rates start to rise — this as highly-leveraged households begin to have difficulty paying their mortgages.

Economists said this could lead to credit tightening by banks, and a hard landing for the property sector.

If that happens, DBS Bank said Singapore and Hong Kong will be hardest hit within Asia.

In other Asean round-up news

surpluses of Thailand, Hong Kong and Malaysia have narrowed even more since the second half of 2007. However, this is partly because Thailand and Malaysia have boosted domestic investment, which lifts imports.

Malaysian and Indonesian companies are grappling with a margin squeeze: The two commodity-producing economies have witnessed the biggest rise in their real cost of capital. The Philippines has the opposite problem: Falling inflation-adjusted returns for savers.

Rightly or wrongly, though, the sovereign debt issued by developed countries is perceived as safe. Malaysia is not in the same league, and it is pruning petrol and diesel subsidies to control its growing public debt problem.

Unlike in 1997, most Asian countries have relatively straightforward choices. Malaysia can introduce a goods and services tax to control the 14 percentage point increase in its sovereign-debt-to-GDP ratio since 2007. Indonesia can raise interest rates to tame 9 percent inflation. The main problem is India, with its cocktail of slumping growth, high inflation, a creaking banking system, reckless fiscal policies and political uncertainty. Other Asian nations can’t take rising U.S. interest rates lightly, but they are far from a crisis.

http://blogs.reuters.com/breakingviews/2013/09/05/not-all-asian-countries-need-to-fear-the-fed/

Indonesia’s central bank raised its benchmark interest rate 25 basis points Thursday afternoon in a move that defied market expectations and continued a swift phase of tightening efforts as the nation’s economic growth showed signs of stumbling.

The interest rate increased to 7.25 percent, the fourth hike in as many months, as Bank Indonesia moved to stabilize the increasingly volatile rupiah while controlling inflation and the widening trade deficit.

The danger of capital controls in Asean (Note this is new link and chart, not the one originally posted)

http://www.economist.com/news/finance-and-economics/21586569-error-apology-and-revision-spreadsheet-different

Asean trade with China (FT charts)

Our world class Chinese banks need US$50-500bn more in capital

In Banks, China, Temasek on 12/09/2013 at 4:56 am

This blog has been pointing out why ang mohs don’t like Chinese banks, while Temasek loves them.

This short video shows the strengths of Chinese banks in size and income from interest (Big 4 in global top 10). The latter must surely be a consideration in why Temasek invests in three of them.

http://www.economist.com/blogs/graphicdetail/2013/09/daily-chart-1

Now back to the worrying analysis:

— With bad loans and competition rising, China’s largest banks face tougher times ahead. ChinaScope Financial, a research firm partly owned by Moody’s, a ratings agency, has analysed how declining net interest margins will affect China’s banks. It estimates that the sector will need an injection of $50 billion-100 billion over the next two years just to keep its capital ratios at today’s level. The managements of the Big Four realise this, and have won approval from their boards to raise over $40 billion in fresh capital over the next two years. But Andrew Sheng of the Fung Global Institute, a think-tank, reckons the sector will need to raise even more later: up to $300 billion over the next five years.

http://www.economist.com/news/finance-and-economics/21584331-four-worlds-biggest-lenders-must-face-some-nasty-truths-giant-reality-check

— China’s bad debts could blow a $500 billion hole in bank balance sheets. That’s roughly how much extra equity the eleven biggest lenders might need if 10 percent of their loans went sour, according to a Breakingviews calculator.

http://blogs.reuters.com/breakingviews/2013/09/04/chinas-bad-debt-could-leave-500-bln-equity-hole/

SingTel affected by rupiah, rupee collapse

In China, India, Indonesia, Malaysia, Telecoms, Vietnam on 31/08/2013 at 5:08 am

In its latest set of results announced a few weeks ago, the profit contribution from regional associates climbed 14% to S$552 million in the quarter on higher results from Indonesia, Thailand and India, the company said.

SingTel gets 12% of its profit before tax from India and 22% from Indonesia, with those earnings in future likely to take a hit when translated back into Singapore dollars. Remember too the weakish A$, Baht, and Filipino peso will affect its earnings.

Other Asean round-up news

At an emergency meeting on Aug. 29, the monetary authority raised its benchmark and overnight deposit rates. It’s a decision Bank Indonesia should have made at its last official gathering less than two weeks ago. An obsession with economic growth stayed its hand. http://blogs.reuters.com/breakingviews/2013/08/29/currency-markets-rude-wakeup-call-stirs-indonesia/

Politics is back on the streets in Thailand, after a relative lull of more than two years, with a protest over the weekend. It underlines the persistence of divisions in Thailand and raises the prospect of a return to the political turmoil that left more than 90 people dead in Bangkok in 2010.

Thousands of demonstrators gathered in a vacant lot in Bangkok on Saturday, as speakers threatened to “overthrow” the government.

But unlike in previous years, this time the protesters were members of Thailand’s oldest political party, the Democrat Party, which has long had a reputation as the staid, well-mannered and intellectual voice of the Bangkok establishment and has been firmly dedicated to resolving differences inside Parliament, where the Democrats lead the opposition.

The acrimony between the Democrats and the government of Prime Minister Yingluck Shinawatra centres on a number of legislative issues, chiefly an effort by the government to pass an amnesty law for those involved in the 2010 protests.

The Democrats oppose the Bill, saying it might also apply to those who insulted the monarchy or committed serious crimes.

But the broader conflict appears to stem from their feeling of powerlessness in the face of the resurgence of Thaksin Shinawatra, Ms Yingluck’s brother, who sets the broad policy lines for the government and the Pheu Thai Party despite living abroad since 2008 in self-imposed exile to escape corruption charges.

The weekend protests followed another peaceful one earlier this month involving some 2,500 supporters of the Democrat Party and royalist groups at Bangkok’s Lumpini Park, throwing fresh light on Thaksin’s divisive influence in Thailand.

(Extract from NYT)

Malaysia‘s government is exploring the possibility of hiking the real property gains tax to rein in rising housing prices and curb speculation in the market. Bernama quoted Housing Minister Abdul Rahman Dahlan as saying that current property tax levels had failed to stabilise house prices with the house price index continuing to rise.

Malaysia’s GST will take 14 months to implement if announced in the budget in October, a ministry official said

The Philippines posted better-than-forecast economic growth, fuelled by its services sector and higher consumer and government spending. Its economy grew 7.5% in the April to June quarter, from a year earlier. It is the fourth quarter in a row its economy has expanded by more than 7% – defying a regional trend which has seen growth slow down in many countries. The Philippines’ 7.5% second-quarter growth matched that of China but is higher than Indonesia, Vietnam or Malaysia,

However, the country has been hurt in recent weeks by investors pulling out of the region’s emerging economies. This despite under emerging mkts, given the follow of remittances from workers overseas, it will not have to worry about investors’ outflows unlike other mkts.

Japan’s All Nippon Airways has said it will acquire a 49% stake in Asian Wings Airways, an airline based in Burma..

The Japanese airline will pay 2.5bn yen (US$25m) for the stake.mIt is the first time a foreign carrier has invested in a Burmese-based commercial airline. It currently operates domestic flights to all major tourist destinations in Myanmar.It t plans to “extend its wings to regional destinations through scheduled flights as well as chartered ones”.

SCCCI SME Survey proves LKY’s point?

In China, India, Indonesia, Malaysia, Vietnam on 17/08/2013 at 1:41 pm

Indonesia has overtaken China as a preferred investment destination for small and medium-sized enterprises (SMEs), This was a key finding of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) SME Survey 2013, which polled 516 companies in June and July.

Of the 63% SMEs which are venturing into markets abroad, 39.9% favour investing in Malaysia and 28.1% Indonesia, a hair’s breadth more than the 27.2% looking towards China.

One reason given is that as the Chinese economy develops and wages rise, Indonesia could stand to position itself as an undertapped source of low-cost labour. As I blogged here, a few days back, LKY said that SMEs would flee S’pore if FTs were not allowed in by the cattle-truck load: they want cheap labour. The survey indicates that securing cheap labour is all that SMEs care about?

Other Asean-round up news:

Express link to KL

M’sia should talk to billionaire inventor Elon Musk. He wants to build a Hyperloop that would cut travel time between SF and LA to 35 minute. 12 minutes to KL based on the 35 minutes time

http://www.bbc.co.uk/news/technology-23681266

Shrimps

THe US Commerce Department declined to set duties on shrimp imports from Thailand and Indonesia. It has imposed duties on shrimp imports from five nations.

The ruling applies to about US$2bn of shrimp imports, from India, Ecuador, China, Malaysia and Vietnam. The Commerce Department found that those nations had been subsidising their shrimp producers.

Malaysia faces the highest duties of up to 54.5%, the lowest were set for Vietnam which faces duties of up to 7.8%.

A final approval is needed by another government body, the International Trade Commission (ITC), before the duties can take effect, The ITC will consider whether US producers have been threatened by the imports and make its decision in September.

Fighting inflation the Indon way

Bit like the way they fight the haze: wayang all the way.

Indonesia’s central bank held its benchmark interest rate on Thursday and took steps to contain loan expansion to battle inflation without taking any more steam out of slowing economic growth.

Many economists do expect another rate hike later this year but the central bank faces a tricky combination of surging prices, a falling rupiah, a stubborn current account deficit and slowing economic growth.

Time to worry about Temasek’s strategy on Chinese banks

In Banks, China, Temasek on 02/07/2013 at 5:07 am

Temasek owns big chunks in three out of four China’s major banks

— 2% of Bank of China

— 8% of China Construction Bank

8% of Industrial & Commercial Bank of China,

Temasek has accumulated more than [US]$17 billion of holdings in Beijing-based ICBC, China Construction Bank Corp. (939) and Bank of China Ltd. over the past two years, according to data compiled by Bloomberg. Global firms including Goldman Sachs and Bank of America Corp. have divested holdings as new capital rules known as Basel III make it more expensive to hold minority stakes in banks. (Bloomberg few days ago)

S’poreans have to keep a beady eye on developments in the Chinese economy particularly in the financial sector.

Well things don’t look that rosy:

There is of course a second and much more disturbing possible implication of spiking lending rates in China – which is that the slowdown in credit creation will lead to tumbling asset prices, widespread bankruptcies and the crippling of the banking and wider financial system …

According to a recent and influential report by Fitch, outstanding loans by Chinese banks and shadow financial institutions were equivalent to 200% of GDP at the end of 2012, up from around 125% of GDP in 2008.

 As quantum, domestic business and household debt at two times GDP is high – pretty similar, for example, to a debt burden on the UK private sector which has hobbled our [UK] economy.

 But it is the stunning and unsustainably rapid rate of growth in Chinese credit creation, and who has borrowed the money, that are the main sources of concern.

 Unless China is re-writing financial history, much of that money will have been lent without due care to businesses and individuals, and many of them will never be able to repay much of it.

 As and when that is too conspicuous to ignore, banks and financial institutions will go bust – unless bailed out by central bank and government. http://www.bbc.co.uk/news/business-23000323*

Well in the case of the UK, two major banks were effectively nationalised, and the existing shareholders were left with “peanuts”. And UBS and Citi received injections of cash from their central banks in exchange for securities, exchanges that diluted their other shareholders, including GIC.

In 2007/2008, our SWFs’ bot into UBS (GIC), Citi (GIC) and Merrill Lynch (Temasek) in a big way that ST characterised then as showing S’pore was a tua kee investor.

We lost serious money in two of the 30-yr investments by 2009.

— Estimate of Temasek’s losses on ML and Barclays:

https://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

— Estimate of GIC’s loss on UBS:

https://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

(BTW, Temasek’s 2012 purchase of Credit Suisse mandatory bonds:

https://atans1.wordpress.com/2012/07/22/third-time-lucky-temasek/)

Hopefully Superwoman Lina Chiam will raise the issue of Temasek’s strategy doubling up on Chinese banks in parly so that the finance minister’s rebuttal of her concern, will be a matter of public record,  come the next GE.

*And not only ang mohs are worried about China and its financial system: http://blogs.reuters.com/breakingviews/2013/06/28/review-tales-from-chinas-wild-lending-frontier/

China will eat & eat

In China on 20/06/2013 at 5:03 am

Or it’s all about pigs. Fishmeal is used to feed the pigs. Chart from Economist.

Asean round-up

In China, Malaysia on 15/06/2013 at 6:59 am

1997/ 1998 all over again?

http://www.bbc.co.uk/news/business-22871588

Asian manufacturers got no pricing power

Producer prices are sliding across the region – falling 8.5 percent even in the Philippines, where GDP grew 7.8 percent in the first quarter. Cheaper commodities are partly to blame, but the main culprit is sluggish demand from the United States. If companies can’t make up the difference, they may struggle to repay growing debts … On average, factory-gate prices in China, Taiwan, South Korea, Malaysia, Indonesia, Singapore, Thailand and the Philippines fell 3.5 percent in April, the eighth straight month of declines.

http://blogs.reuters.com/breakingviews/2013/06/12/deflation-flu-could-leave-asia-feeling-very-sick/

Failed at Olam, now trying luck at StanChart

In Banks, China, Temasek on 14/05/2013 at 6:55 pm

 

Carson Block Is Shorting Debt of Standard Chartered

 

 

Carson Block, the short-seller who runs Muddy Waters LLC, said he’s betting against the debt of Standard Chartered Plc (STAN) (STAN) because of “deteriorating” loan quality, triggering a 13.5 percent jump in the cost of insuring against losses on the debt of the British lender.

http://www.bloomberg.com/news/2013-05-12/carson-block-says-he-s-shorting-standard-chartered-debt.html

Somehow I don’t expect StanChart to go berserk like Olam, “Carson Block is outside of the bank and does not have access to the bank’s loan files,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “He has very little ammunition in his gun to shoot at Standard Chartered at this point. He’s got one example of a large loan that appears to be something that possibly would not have been prudent to book.”

China in charts: FT

In China on 16/04/2013 at 6:30 am

Chinese financial sector: there be storms and shaols

In Banks, China, Temasek on 31/03/2013 at 7:06 am

(Backgrounder: Temasek has biggish stakes in three out of the four major  Chinese banks: doesn’t have shares in Agricultural Bank and CapLand is big and bullish on China).

Credit issues in Pearl Estuary region:  http://blogs.reuters.com/breakingviews/2013/03/27/chinese-credit-alarms-sound-in-the-east/

And New rules will force mainstream lenders to cap their exposure to some of the riskier off-balance sheet products they have sold to customers – in particular, those that are effectively repackaged corporate debt. That limits a big source of risk for banks, but creates a new one for the Chinese economy.

http://blogs.reuters.com/breakingviews/2013/03/28/china-shadow-bank-curbs-attack-symptom-not-cause/

The junk bond market in China took off this year. Although the deals still account for a small share of the global total, Chinese companies have sold $8 billion of high-yield bonds to overseas investors since January. That’s up from $2.3 billion during the same period a year earlier, according to figures from Dealogic … the Chinese market has its own set of potential problems, and some analysts worry that investors aren’t being properly compensated for the added layer of risks.

he bulk of the high-yield bonds in Asia this year — roughly half — come from Chinese real estate companies. The fear is that the housing market, which has been booming, is a bubble that will eventually burst.

Mainland China’s domestic bond market remains largely off limits to foreign buyers. So most investors buy offshore Chinese bonds, which are issued through holding companies headquartered in places like the Cayman Islands.

The bonds tend not to be backed by the actual businesses and underlying assets in mainland China. That means foreign bondholders may have little legal recourse if a company defaults on its debt, especially if local banks or other Chinese creditors make claims.

Bondholders are now facing such difficulties with the bankruptcy of Suntech Power.

http://dealbook.nytimes.com/2013/03/28/as-pace-of-chinas-junk-bond-sales-grows-so-do-worries/?nl=business&emc=edit_dlbkpm_20130328

Why S-Chips no hew our laws

In China, Corporate governance on 26/03/2013 at 5:46 am

Chinese no hue US laws.

Ned L. Sherwood won a proxy contest with the ChinaCast Education Corporation, an education company based in China that is incorporated in the United States, but the ousted executives subsequently transferred all the company’s valuable Asian assets, leaving Mr. Sherwood and the US public shareholders with nothing but a lawsuit in China. The deal highlighted the risks of investing in Chinese companies.

AND

Now some distressed debt investors get to find out what exactly it is you buy when you buy American-issued debt in a company incorporated in the Cayman Islands and doing business in China. I suspect the answer will be “not much.” http://dealbook.nytimes.com/2013/03/22/chinese-solar-giants-bankruptcy-presents-a-test/?nl=business&emc=edit_dlbkpm_20130322

But investors still buying these bonds.  http://blogs.reuters.com/breakingviews/2013/03/22/exposed-bondholders-suffer-solar-burns-in-china/

Asean round-up

In China, Indonesia, Vietnam on 12/01/2013 at 5:08 pm

Gd news for SE Asia. China has reported better-than-expected trade data, adding to optimism that growth in the world’s second-largest economy may be rebounding.Exports, a key driver of expansion, rose 14.1% in December from a year earlier. Most analysts had forecast a figure closer to 4%.Imports also rose, climbing 6% and indicating stronger domestic demand.

The US has filed a complaint with the World Trade Organization (WTO) against Indonesia’s restrictions on imports of horticultural and animal products. BBC report. Other agricultural exporters like Australia and Thailand have been unhappy about Indonesia’s restrictions too.

Thailand is considering measures to help companies cope with the country’s rise in the minimum wage (35% up from level of last year), but has rejected business warnings of job losses, factory closures and a shift by some manufacturers to neighbouring countries

Thailand’s central bank left its benchmark interest rate unchanged at 2.75% on Wednesday, as expected, saying the global economy continued to recover while growth this year could be higher than thought and inflation was stable.

The International Monetary Fund has warned that a credit boom in Cambodia poses a threat to economic growth. Banks have been cutting interest rates to win customers and private sector credit has increased by almost a third in the past 12 months, the fund said.

A $US200m deal with Masan Group by KKR is the largest by a private equity firm so far in Vietnam. It comes in addition to an earlier $159 million investment by KKR. Masan is Vietnam’s leading fish, soya and chilli sauce producer. As well as sauces Masan makes instant foods such as noodles, cereals and coffees. The firm estimates that 90% of local households use its products.http://www.bbc.co.uk/news/business-20954875

Japan was in talks with the Philippines on Thursday to enhance maritime co-operation amid their separate territorial rows with China.

“We talked about the challenges that we appear to be facing in view of the assertions being made by China,” Philippine Foreign Secretary Albert del Rosario told reporters after meeting with his Japanese counterpart, Fumio Kishida, in Manila.

Part of the co-operation may include 10 new patrol vessels from Japan to boost the Philippine coast guard, as well as communication equipment, Mr Del Rosario said.

Noble Gp: “Cheong all the way” Maybank

In China, Commodities on 11/01/2013 at 5:39 am

But if China doesn’t perform, you’re in trouble.

S’pore Biz Review

It was annced yesterday that China’s commodities imports accelerated in 2012 in volume terms in spite of slowing growth in the overall economy, with crude oil, iron ore and copper reporting record high imports for 2012.

This guy is awesome!

In China, Internet on 18/09/2012 at 7:18 am

That is what Mr Moncayo did when, at the tender age of 23, he devised a grand plan to forge a whole new trading relationship between Latin America and China

Despite knowing very little about manufacturing and unable to speak a Chinese language, he decided to build a career negotiating and supervising deals between firms in his native Latin America and Chinese suppliers. It was an obvious gap in the market.

“We were the first ones to really connect these two regions,” he says.

Just eight years later, Mr Moncayo is the chief executive of Asiam Business Group, handling orders from Asia worth $35m (£22m) per year, mainly on behalf of Latin American fashion houses.

http://www.bbc.co.uk/news/business-19507524

Long term investor while trading a stock

In China, Financial competency, Temasek on 04/09/2012 at 7:00 am

Jim Cramer’s “trading round a position”. Got to try it. Locks in profits.

http://www.cnbc.com/id/48614527?__source=ft&par=ft

Maybe Temasek is trading round its position in the Chinese banks it holds, given that China will not be pleased if it sells out of them. https://atans1.wordpress.com/2012/05/03/temasek-rebalancing-its-chinese-bank-portfolio/

Even Chinese manufacturers are moving to Vietnam & Bangladesh

In China, Vietnam on 16/08/2012 at 5:24 am

Earlier this week FT reported that an online Chinese retailer was trying out manufacturing in Vietnam. At about the same time, CNN reported that  Chris Devonshire-Ellis, founding partner of Dezan Shira & Associates in Beijing, which advises firms on foreign direct investment (FDI), as saying,”Companies are starting to think twice before building in China.”

He said the cost of running a factory in Dongguan, China with 300 workers would be about US$2.3 m. The same factory in Ho Chi Minh City, Vietnam would be US$650,000, and a similar factory in Chennai, India would cost about US$346,000.

“About 50 per cent of our work in Vietnam is setting up factories for companies which have relocated from South China because they want to add more (manufacturing) capacity (in the region), but they don’t want to have Chinese costs. Vietnam and Bangladesh are becoming subsidiary manufacturing nations to make goods for sale in China.”

Earlier this month, the Economist wrote, “Another manufacturing firm [making flags]moved its operations to Vietnam in 2004. “We have to migrate, like herdsmen chasing water and pastures””. Love the way moving to a cheaper place is described.

What the MSM doesn’t tell you abt Shenzhen

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

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

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

And no FTs in mgt!

FYI, NYSE is at US$12.5 trillion.

Europe: Temasek has competition

In China, Temasek on 03/07/2012 at 7:42 am

(Updated on 5 July 2012 : forgot to mention ex-UBSer appt)

Sometime back, the new CIO said that Temasek is looking for investment opportunities in Europe.  He said turmoil in Europe may result in a market slump rivaling the 2008 global financial crisis creating opportunities for Temasek to make deals. Earlier this year, Temasek hired former UBS Chief Financial Officer John Cryan to oversee its strategy for Europe, whereit has limited exposure. The hiring of Cryan had raised speculation that Temasek is eyeing distressed assets in the euro zone, shumething that the CIO has confirmed.

It had better hurry.

The total value of mergers and acquisitions in Europe by foreign companies has reached US$101 billion, well ahead of the combined US$73 billion spent in the United States by international acquirers, according to the data provider Dealogic http://dealbook.nytimes.com/2012/06/20/amid-debt-crisis-overseas-buyers-seek-european-companies/?nl=business&emc=edit_dlbkam_20120621.

The Chinese even have a fund to co-invest with Chinese cos wanting to buy European coms for their technology or brands. Not juz but investment returns or financial egineering, unlike Temasek. Maybe our leaders should “sit down and shut up” when it comes to advising China to follow them? And observe what the Chinese are doing?

Hopefully, Temasek will remember that it bot Barclays and Merrill Lynch, and GIC bot UBS and Citi a bit too early in the 2008 cycle, to be precise in 2007. Temasek sold its dogs in 2009, juz went markets were recovering, losing billions. Given the losses, Temasek will hopefully be more cautious, even if it means losing some great bargains. Catching a falling knife will not amuse S’poreans, the “owners of Temasek” (Ho Ching once called us).

As to why it needs to do deals: investment returns are likely to have without some good deal http://www.businessweek.com/news/2012-06-21/temasek-expects-smaller-returns-amid-difficult-years-curl-says.

Related post: https://atans1.wordpress.com/2012/02/26/our-swfs-owned-four-out-the10-biggest-investment-flops-of-the-last-10-yrs/

If China slows down, ASEAN beneficiaries

In China, Commodities, Indonesia, Malaysia, Vietnam on 26/06/2012 at 6:22 am

(Or “What stocks, ETFs to buy”)

A  China slowdown need not be bad for everyone. Mr Frederic Neumann, Regional Economist at HSBC, distinguishes between hard and soft commodities. A Chinese rebalancing could actually be good for soft commodities*, such as wheat and soybeans*, if household spending were to rise.

Brazil’s loss, in other words, could be Argentina’s gain. Other commodities, such as palm oil**, used in processed foods, may also do better.

That could benefit countries such as Malaysia, which has ramped up palm oil*** production in recent years, and Indonesia**** – although the latter also produces hard commodities including coal.

On the other side of the ledger, some big oil importers***** could benefit from the weaker prices that a Chinese slowdown might produce.

http://www.todayonline.com/CommentaryandAnalysis/Commentary/EDC120622-0000021/Should-we-fret-about-Chindown?

*Think Olam, Wilmar, Golden Agri, Bumitama Agri, Kencana Agri and First Resources

**Think Wilmar and the other SGX plantation stocks.

***Think Felda, Sime Darby, United Plantations, IOI, Genting Plt, KL Kepong, TSH, Oriental.

****Think Astra Agro and London Sumatra Indonesia. Any other Indon listed plantations cos to think about? Do remember that the SGX-listed planters are mainly Indonesian planters and many of them are relatively new, giving them an advantage over the older Malaysian plantation players. Malaysian planters have also bought land in Indonesia partly because land in Malaysia is getting too expensive even in East Malaysia.

*****Think ETFs on Singapore, Thailand and Vietnam.

“China has risen”: Mao will be proud

In China on 16/06/2012 at 6:57 am

More people are saying that China is world’s leading economic power

http://www.economist.com/blogs/graphicdetail/2012/06/daily-chart-8

This guy is shorting China & emerging markets

In China, Emerging markets on 14/06/2012 at 7:11 am

And a bull on US retailers.

And he has outperformed his peers!

http://www.bloomberg.com/news/2012-06-06/a-contrarian-fund-manager-bets-against-emerging-markets.html

Why our local banks shld stop wasting resources on China proper

In Banks, China, Investment banking, Temasek on 07/06/2012 at 5:14 am

(Or “Why Temasek’s big bet on Chinese banks makes sense“)

DBS is the 6th largest foreign bank in China proper. It has a strategy of expansion into China. So have UOB and OCBC.

Well, its a tough biz to be in. Non-Chinese banks have only 2% market share. Even HSBC, StanChart and Citi have problems http://www.bloomberg.com/news/2012-06-04/china-wall-hit-by-global-banks-with-2-market-share.html

DBS, OCBC and UOB shld juz not bother abt China.

Test needed to ask questions at co. meetings

In China, Corporate governance, Financial competency, Humour, Property on 04/06/2012 at 5:01 am

(Or “Shume really stupid shareholders” or “Why SGX shld pay Mano Sabnani to conduct courses on asking sensible qns at AGMs and EGMs”)  

Sometime back, the media reported that some daft shareholders (same people as those who complained at DBS AGM that DBS paid 50% premium over Bank Danamon’s share price to get controlling stake? I mean these people never ever heard of a premium needed to secure a controlling block?) abt CapitaLand’s China exposure and share price since 2008 or 2007 at its AGM.

Don’t they read the int’l media?

Example from BBC Online:”China has, thus far, avoided the much-feared hard landing,” said IHS Global’s Ren Xianfeng.

“Expect no major property meltdown or construction bust. Expect no deflationary spiral or banking crunch.”

Analysts said that given the steadiness of the property market, policymakers were likely to continue to ease their policies to boost growth.

Ting Liu of Bank of America-Merrill Lynch forecast that China’s economy was likely to grow at an annual rate on 8.5% in the second quarter, up from 8.1% in the first three months of the year.

And on the share price: don’t they realise that equity markets have had a choppy ride since 2008. And that China-related stocks have been the target of bear raids and that CapitaLand is an obvious target to short given that the stock is liquid and shares can be easily borrowed

In case anyone doesn’t understand the reference to Mano, he asks vv intelligent questions at AGMs and EGMs. Only one I can bitch abt is at K-Reit EGM when he queried the price paid for Ocean Towers from its parent. Shumething like Ocean Towers seldom gets sold at mkt price, except perhaps in distressed sale. Kanna pay premium.

More bad news for Noble, Olam and Wilmar

In China, Commodities, Logistics on 21/05/2012 at 5:48 am

The FT reports that Chinese importers are requesting trading houses to defer shipments of commodities. Sometimes they have broken agreements by refusing to accept deliveries.

Commodities specifically mentioned are iron ore and thermal coal (Noble’s specialities), cotton (Olam speciality) and soyabeans (Wilmar is world’s boiggest crusher). No wonder the price of these stocks keep weakening.

BTW, until I read below, I didn’t realise Noble is a big player in coffee and cocoa (but revenue is “peanuts” compared to iron ore and energy).

http://seekingalpha.com/article/572831-commodity-trading-firms-bunge-and-noble-offer-investors-good-value

MIIF & FCT: Useful updates

In China, Property, Reits on 17/05/2012 at 6:51 am

Never summed up the courage to buy MIIF because although it is a China infrastructure play, yirld is super, and MIIF is net cash, its underlying investments are up to their eyebrows in debt: could affect MIIF’s payouts, NAV and price. But chk out for yrself  http://www.investmentmoats.com/money-management/dividend-investing/amfraser-have-some-seriously-optimistic-cash-flow-projections-for-miif/

For the working stiffs who got cashflow from day jobs. Not for retiree who gambled his cashflow.

 CIMB likes Frasers Commercial Trust I own shume.

Update: DBSV likes FCT too http://sreit.reitdata.com/2012/05/18/fcot-dbsv-3/

Philippines not safe for PRC nationals warns China

In Casinos, China on 12/05/2012 at 6:26 am

China told its citizens on Thurday  they were not safe in the Philippines and its state media warned of war, as a month-long row over rival claims in the South China Sea continued.

Chinese travel agencies announced they had suspended tours to the Philippines, under government orders, and the embassy in Manila advised its nationals already in the country to stay indoors ahead of protests on Friday. Five hundred protested outside the Chinese embassy, in the event.

And the Philippines wants Chinese gamblers to visit Manila, and the Chinese to invest in the country. What a joke!  Want Chinese money but intent on upsetting China. Filipinos are not realists.

Temasek: Rebalancing its Chinese bank portfolio

In Banks, China, Temasek on 03/05/2012 at 6:04 pm

Last month, Temasek bought US$2.3bn worth of shares in Industrial and Commercial Bank of China (ICBC), taking its overall stake in the bank to 1.3%. I commented that it was increasing its bet on the big Chinese banks (it owned big stakes in three of them) when the mood on them was getting bearish.

Well it is now sell US$2.4bn worth of its shares in Bank of China and China Construction Bank.

So overall, it is reducing its stakes in BoC and CCB (locking in some profits: it got into these at very attractive prices as a cornerstone pre-IPO investor) while adding a stake in ICBC to the mix at a slight discount to the market.

Update on 4 May 2012 at 3.10pm: More details http://www.bloomberg.com/news/2012-05-02/temasek-selling-2-4-billion-in-boc-china-construction.html

Temasek’s Chinese banks have an unending appetite for capital

In Banks, China, Temasek on 27/04/2012 at 6:54 pm

Regular readers will know that Temasek’s investments in Bank of China and China Construction Bank are great investments. It came in as a pre-IPO cornerstone investor and unlike the Western banks that had similar status had not sold out. Gd friend of China. It trades out and in of these stocks to make realised profits. But these trading profits are peanuts as the trading positions are peanuts in relation to its holdings in these banks

And that it recently bot Goldman Sach’s remaining stake in ICBC, at a slight discount to its mkt price. 

As this article explains these banks have an unending appetite for capital because they are “squeezed for capital”. So Temasek has to be willing to cough up more of our money if it wants to avoid being diluted when rights issues are called.

S-Chips are not the only Chinese junk exports, ask the US and HK

In China, Hong Kong on 23/04/2012 at 6:44 pm

The 180 Chinese companies that went public around the world since the beginning of 2010 are trading at an average of 21%  below their IPO prices, Bloomberg News reports.

In Singapore, the third-biggest market for such listings after Hong Kong and New York, eight Chinese companies that went public in 2010 have declined an average of 47 percent from their offer prices, the data show. That compares with a drop of 15 percent for the 23 non-Chinese firms that had IPOs in 2010.

And trading volumes are shrinking. In the last 12 months, trading volumes in S-Chips have halved. [Update on 24 April 2012 at 7.20pm]

But HK and the US are doing something. Regulators in Hong Kong are set to propose rules that would make banks liable for faulty IPO documents, Reuters reports. And earlier today, Hong Kong’s securities regulator fined a brokerage firm and revoked its corporate finance licence. Mega Capital (Asia) has been fined HK$42m (US$5.4mfor “inadequate and sub-standard” diligence work and “failure to act independently”. The firm was the sole adviser to Hontex International, which had raised HK$1bn via a share sale in 2009. BBC Online

In the US, the SEC and FBI have been investigating people allegedly involved in fraud in China-based companies listed on US exchanges. Latest [25 April 2012] SEC investigations and analysis of the complicated structure that overseas listed Chinese cos (including S-Chips) have to adopt to list overseas which makes malpractice easier..

Err waz happening here? We are told by an SGX non-executive director that SGX is “a private club” despite it regulatory role. He said this recently when representing SGX in court as SGX’s lawyer in a case involving a S–Chip. Article 14 analyses the case.

When will this happen to a S-Chip?

In China, Corporate governance on 22/04/2012 at 7:20 pm

It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.

Its ousted chief executive, Ron Chan, has been accused of aiding in the disappearance of ChinaCast’s chops — ornate corporate seals that are needed to approve everything from paychecks to contracts.

And recently more than a dozen men claiming an association with Mr. Chan burst into the company’s Shanghai office twice, violently carting off several computers from the finance department, according to a United States regulatory filing.

http://dealbook.nytimes.com/2012/04/19/battle-over-a-chinese-company-turns-physical/?src=dlbksb

No wonder S-chips are finding it difficult to get people to be non-executive or independent directors.  And the row between China Sky’s former independent director Yeap Wai Kong and SGX doesn’t help. He took SGX to court in an attempt to quash its public reprimand issued against him in December 2011. The court is hearing the case.

ANZ Bank attractive to Chinese strategic buyer?

In Banks, China on 20/04/2012 at 7:24 pm

An Australian who recently retired as head of Standard Chartered’s business in China believes there’s a strong chance of a major Chinese lender picking up a cornerstone stake in one of Oz’s big four banks within a few years. The Age carried an interview with Mike Pratt, , who says it’s “highly possible” that a major Chinese player will take a stake of up to 15%  in a major Australian bank this decade”.

ANZ Bank would make the most sense, given its super-regional bank strategy. Commonwealth Bank is increasing its presence in Asia but is nowhere as regional as ANZ Bank.

Westpac (a portmanteau of “Western-Pacific”) despite its name, and National Australia Bank both focus on Oz after misadventures abroad.

Analysing Temasek’s investment in another Chinese bank

In Banks, China, Financial competency, Temasek on 16/04/2012 at 7:06 pm

Temasek has agreed to buy Goldman Sachs’s shares in the Industrial and Commercial Bank of China (ICBC), the world’s largest bank. It will buy US$2.3bn worth of ICBC shares, taking its stake to 1.3% in the bank.

In an interview with Reuters at the end of March, Ho Ching’s presumed successor-in-training, Temasek’s head of portfolio management,acknowledged the heavy allocation to financials, but noted that it holds four very good banks: Bank of China, China Construction Bank, DBS Group and Standard Chartered. Well it has added ICBC to this list, and at a price close to the market price, unlike the stakes in the other two Chinese banks where it got a “special” price as a pre-IPO cornerstone investor.

But is it a wise move?

True, since the lows last October of the Chinese and HK stock markets, the shares of the four leading Chinese banks (including Bank of China, China Construction Bank and ICBC) have gone up by more than half, easily outperforming the broader market.

But since March, prices have been off (but masked by general market falls) because of concerns abt China’s growth, bad loans and comments by the  Chinese PM, Wen Jiabao, who hinted  of breaking the monopoly state-owned lenders have enjoyed in China’s banking sector. (The sector is dominated by four big state-owned banks and Temasek now has significant stakes in three of them.)

Mr Wen said that their monopoly was hurting businesses in the country, as they had few options to raise capital.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital,” he was quoted as saying by China National Radio. “That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

The lack of easy availability of capital has often been cited as threat to growth of small and medium-sized businesses in China. There have been fears that some of these businesses, seen as key to China’s growth, may turn to unofficial sectors for capital, increasing their borrowing costs substantially

But Temasek could be betting on, “Wen has one year left [in his term].” This was said by an unnamed Chinese state banker quoted by Reuters. “This is a task for the next generation of leaders. It cannot be accomplished within one year.”

But the banker could be wrong, Wen could be telling us what has been agreed upon between his generation and the next generation of leaders.

Remember, It took a beating on its finance industry holdings after the 2008 crisis, losing about $5 billion in stakes held in Barclays and Merrill Lynch, now part of Bank of America. It has since trimmed its financial holdings by 4 percentage points to 36 percent of the portfolio. Last month, it sold a 1.4 percent stake in India’s No.2 lender ICICI Bank. From said Reuters reported.

And of the remaining two “very good banks” where Temasek has significant stakes, DBS has juz decided to buy Temasek’s stake in Bank Danamon. Management will now be preoccupied with getting the deal approved by the Indonesian authorities, then integrating the bank into DBS. Before this deal, management had finally got to grips with DBS’s operational problems. The danger is that the focus on the Danamon deal may lead to backsliding in the area of operatons.

The genuine jewel is StanChart, but by global standards, it is “peanuts”.

Another day, another sucker

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

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

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

A Gamble Too Far? Pinoys gamble on China

In Casinos, China on 15/03/2012 at 9:45 am

The Philippines is not just ahead of other new casino markets [like South Korea, Japan and Taiwan]; it also has several key benefits over the more established ones, according to Gustino De Marco, vice-president at the Hong Kong-based brokerage BTIG and a specialist in this area.

Firstly, it has a strong domestic demand and the type of games Filipinos like to play are the high risk-high reward games such as slot machines, which give better returns to the casino operator than card tables.

Another attraction is geography, with the Philippines only a few hours flight from China, Japan and South Korea, where most high-rolling Asian gamers come from.

And while it is near China, it is not under any kind of Chinese jurisdiction. So, unlike Macau, which in recent years has had to ramp up its gambling tax and impose certain visa restrictions on Chinese gamers, the Philippines is free to offer all the incentives it can.http://www.bbc.co.uk/news/business-16753960

But is it realistic for the Filipinos to expect the Chinese authorities* and patriotic Chinese to co-operate when the Filipino government is the most hawkish of all the ASEAN nations when it comes to territotial disputes with China? The Institute of Southeast Asian Studies (a S’pore government statutory board thhin-tank) says in its inaugral ASEAN Monitor dated February 2012: Despite the weakness of its armed forces, the Philippines has assumed the role as the most outspoken of four Southeast Asian claimants against China’s assertiveness in the South China Sea. President Benigno Aquino has taken the lead in trying to rally ASEAN behind a common policy on the South China Sea, mainly to present a united front in negotiations with Beijing over acode of conduct. Defying threats from official Chinese media, Manila has encouraged the US to increase its military presence in the Philippines and supply the country with additional resources to patrol its waters … Will the Philippinegovernment maintain its hard line over the South China Sea, or prove as susceptible to China’s entreaties as some of its predecessors?

—–

*They could make travelling to the Philippines inconvenient.

Wilmar: Beneficiary of China slow-down?

In China, Economy on 13/03/2012 at 6:47 am

One reason why Wilmar had such a bad set of results was because it’s Jing Long YU (China’s biigest cooking oil brand) could not raise prices because of administrative measures imposed by the government to control inflation. Pre-tax margins in this segment more than halved.

Now that Chinese inflation has fallen to a 20-month low in February, Wilmar should be able to raise prices for this brand?

Due diligence: a cautionary tale

In China on 29/02/2012 at 6:42 am

The fraud at Puda Coal, a Chinese company traded in the United States, was spelled out in documents that were publicly available months before the company raised $100 million from investors, but it appears no one bothered to look, writes Floyd Norris of The New York Times.

http://www.nytimes.com/2012/02/24/business/sec-charges-reveal-fraud-in-chinese-company.html?_r=2&ref=business&nl=business&emc=dlbka35

More chillingly is that the the Chinese authorities are making it more difficult to inspect publicly-filed documents, often informing the filers who are asking for filings.

So play, play in China at yr own risk. Like having unprotected sex.

China Sky shows how impotent SGX is when it comes to China stocks. Can only reprimand directors. I tot it damned funny that the CEO (and a major shareholder) could juz resign like that,

Don’t underestimate the US

In China on 22/02/2012 at 6:04 am

This is another of an occassional series on why Chinese chauvinists and Cina Tua Kee lovers should be careful about crowing of the coming hegemony of China, and the fall of the US.

A US company is a major beneficiary of the Chinese love of eating fried chicken.

The US-based company that owns the KFC fast food chain has again reported solid growth figures fuelled by demand in China despite increasing food and labour costs in China. Revenue from Yum’s restaurants in China fell 2.4% to 19.7% in the last quarter from the year before, due to wage inflation of 20% and an 8% rise in commodity prices. The company says the Chinese market is crucial to its success.

“We opened a record 656 new restaurants and delivered extraordinary same-store sales growth of 19%,” said David C. Novak, chairman and CEO of Yum! Brands.

“Clearly our KFC and Pizza Hut brands in China continued to strengthen their category-leading positions.”

Yum! Brands has reported better-than-expected profits for the fourth quarter of 2011, jumping 30% from the same period last year. Net income for the three months ending in December was US$356m.

FBI in US, SIAS, SGX here

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

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

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

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

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

Metro: Share price of 0.695 includes 0.36 of net cash

In China, Property on 30/01/2012 at 5:40 am

DMG & Partners Securities on 27 December 2011, issued a “Buy” call on Metro Holdings. As the price remains unchanged at 0.695 (despite a strong market); and given that less the net cash, the stock is only trading at 0.335;  and a yield of almost 3% (historical), it’s something worth exploring despite it being a China play, and a property one at that.

(Background: Metro was founded in 1957 as a department store operator and became a household name. It diversified into property development in the 1990s and was one of the early investors in China’s real estate market, thereby missing the bullet of being a retailer here.)

It has since built up a portfolio of prime commercial properties in Tier-1 cities in Shanghai, Beijing and Guangzhou, as well as several property projects and joint ventures in Tier-2 and Tier-3 cities. Key properties that the group owns include Metro City and EC Mall in Beijing, Metro City and Metro Tower in Shanghai and GIE Tower in Guangzhou.

Leveraging on the group’s retail experience, Metro has chalked up an impressive track record as a mall operator and investor in China. To date, all its property ventures have been profitable, with past divestments making gains of 5-25 per cent premium over book value.

Over the past five years, shareholders’ equity compounded at a CAGR of 9 per cent. This was achieved without the use of excessive leverage given management’s conservative style. Its strong balance sheet (net cash of 36 cents) allows it to deploy capital opportunistically. The ability to recycle capital and profits into new projects has been a hallmark of Metro’s management.

The company is in the midst of selling its 50 per cent stake in Metro City Beijing for 1.25 billion yuan (S$247.5 million), a 50 per cent premium over its latest valuation. Should the deal go through, Metro will be able to book a pretax profit of $87.4 million. We estimate this will lift book NAV by nine cents/share.

On our estimates, the stock has an RNAV of $1.02 billion, or $1.23/share, after netting out liabilities. At current price, the stock is trading at a steep discount of 45 per cent to RNAV. Our target price for the stock is $0.86, based on a 30 per cent discount to RNAV.

Shan Gao Huang-di Yuan (“The mountains are high and the emperor is far away”)

In China, Corporate governance on 16/01/2012 at 6:01 am

It was SGX managers that were keen on China listings in the late 1990s and early noughties. They got their mult—million bonuses, but minority shareholders in many S-Chips got the worms. Now SGX has all kind of rules to try to ensure good corporate governance. But as this shows, the mgt of a Chinese co listed on NASDAQ, doesn’t care a damned abt US laws, confirming the experience of investors here on the attitude of the management of S-Chips to S’pore laws and SGX’s rules.

If ChinaCast again loses in the Delaware courts, the question is, what will it do afterward? The Chinese company could simply refuse to honor the court’s order. It has no assets in the United States, so it could easily ignore any monetary fine. However, it is listed in the United States and is subject to S.E.C. supervision; such an act is likely to crater its stock price. The likelihood of such a response is low, but it appears that ChinaCast’s current management is going to fight this coup to the bitter end. Expect more maneuvering by all parties involved.

There is a wider lesson here. It is hard to know the real facts in this case given the murky nature and distance of the events, but whatever the truth is, investing in companies based in a foreign country is risky not only because the rule of law is weaker, but also because of cultural differences.

Foreign companies are not as familiar with United States practices and laws governing domestic corporations. They are sometimes more willing to push the envelope, either out of cultural inexperience or simple ignorance. ChinaCast itself appears to have been a bit behind the ball in getting good advice.

 Sigh. Taz the scandal, not PM and ministers earning millions. But SGX listing cos that are difficult for S’pore-based investors to monitor, and police.

China’s collapse ‘will bring economic crisis to climax in 2012′

In China, Temasek on 15/01/2012 at 5:56 am

But it’s sunshine from 2013 onwards, if you still got the money.

A looming hard landing in China will bring the financial and economic crisis of the past five years to a climax in 2012, one of the City of London’s leading analysts has warned.

Albert Edwards, head of strategy at Société Générale and one of the UK’s leading “bears”, said the next 12 months would be the “final year of pain and disappointment”.

http://www.guardian.co.uk/business/2012/jan/11/china-economic-collapse-global-crisis

SDP, KennethJ and the usual grumblers will have a field day if this guy is right (he has a good track record, this last few yrs) what with Temasek’s and its TLCs’ (Think DBS, CapitaLand, KepLand), and other GLCs’ (Ascendas for example)  big bets on China.

Predicting a sharp slowdown in activity in the world’s fastest-growing emerging economy, Edwards said: “There is a likelihood of a China hard landing this year. It is hard to think 2013 and onwards will be any worse than this year if China hard-lands.”

http://www.guardian.co.uk/business/2012/jan/11/china-economic-collapse-global-crisis

DBS bullish on China infrastructure play MIIF

In China, Infrastructure on 29/11/2011 at 6:19 am

In a note dated 25 November 2011, DBS is bullish on MIIF. Interesting as there is current net cash of about S$115 m and  prospective yield of about 10.5% assuming mgt is correct. My previous post in January this year https://atans1.wordpress.com/2011/01/11/miif-unnoticed-china-play/ reflects my concerns about this stock. But it could be I’m wrong, and DBS is correct. Anyway, nearly a year has passed.

International Infrastructure Fund (MIIF) is now leaner, fitter and wholly Asia-focused … MIIF has divested its non-Asian assets, and repaid corporate level loans with the sale proceeds … a cleaner balance sheet with current net cash of about $115 million.

The sale of stakes in other funds also eliminated the black-box problem (assets with limited financial visibility) and the fund now focuses purely on key Asian infrastructure assets.

MIIF’s three key investments

Taiwan Broadband Communications (TBC), the third largest cable TV network in Taiwan;

— Hua Nan Expressway (HNE), a 31 km urban toll road in Guangzhou, China; and

— Changshu Xinghua Port (CXP), a multipurpose port in the Yangtze River Delta region of China.

We visited these …  impressed by the management and operations … fairly confident of steady organic dividend growth from CXP and TBC, though traffic growth at HNE could face some near-term roadblocks. MIIF [has] used its surplus cash (from the sale of prior investments) to increase its stake in TBC from 20 per cent to 47.5 per cent …  higher dividend receipts from TBC.

MIIF paid out a three-cent dividend for FY2010. After restructuring its portfolio, MIIF is now guiding for a dividend per share of 5.5 cents for FY2011, based on expected cash flow generation plus existing cash reserves (2.75 cents already declared for H1 2011). We expect this is achievable and given the healthy implied yield of close to 10.5 per cent at current prices, we are reinstating coverage with a ‘buy’ call and TP of S$0.64, based on a discounted cash flow valuation of underlying assets. The share buyback programme … provides further support …

Temasek: Where things can go wrong.

In China, Temasek on 19/10/2011 at 6:44 am

Credit Suisse analyst Sanjay Jain said in a report last week that he thinks that up to 12%  of all of China’s outstanding loans may go bad and non-performing loans may likely account for all of the banks’ equity. Current NPL ratios hover at around 1% or the top Chinese banks.

Ops a daisy. As Temasek has major (and so far very profitable) stakes in two of China’s top four bank, Bank of China (4%) and Construction Bank of China (7%), predictions such as this (and Credit Suisse is not alone, just the latest and most pessimistic) should worry S’poreans.

As Temasek got the initial substantial stakes at bargain prices (courtesy of the Chinese government), selling part or all these stakes requires Chinese approval. At a time when the Chinese government is supporting the shares of the major four banks, such approval is unlikely.

Not another debacle like Shin, ABC Learning, Merrill Lynch or Barclays in the making?

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

http://www.nytimes.com/reuters/2011/08/30/business/business-us-bankofamerica-ccb.html?nl=business&emc=dlbka32

China: Not immune to Western slowdown?

In China, Economy on 24/08/2011 at 8:31 am

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.

When China plays fail in US

In China, Corporate governance on 30/07/2011 at 7:02 am

The shareholders of dud China plays are increasingly filing class-action lawsuits against the companies, auditors and even the investment banks. The auditors and banks have deep pockets. http://dealbook.nytimes.com/2011/07/26/chinese-reverse-merger-companies-draw-lawsuits/

Too bad for investors in S-Chips that class-action law suits are difficult to undertake here. So the banks are auditors are safe from law suits.

A problem S’pore & China share

In China, Economy on 12/07/2011 at 7:08 am

In an image entitled Live At The High Place, the photographer and performance artist Li Wei stands at the base of an inverted human pyramid in front of the Sanlitun Village shopping centre in Beijing. On his shoulders are balanced four people; on theirs, six more. The human sculpture portrays the impact of China’s one-child policy – as a generation of only children, now adults, contemplate looking after increasing numbers of older relatives. BBC report

In S’pore it was a two-child policy and “babies are for graduate mums only” (OK I exaggerate on the latter, but you know what I mean) but the effect is still the same.

To solve this goof-up, the government then introduced the FT policy, except that FTs turned out in many cases to be Foreign Trash (they are veerry cheap) rather than the Foreign Talents. Now we are waiting to see how this FT balls-up will be solved. What with Tharman supervising the manpower ministry, I am reasonably optimistic something will be done that will satisfy the people. Especially since at least 40% of the  voters are angry with the FT policy in its present form.

China play: when due diligence is not enough

In China, Corporate governance on 27/06/2011 at 9:54 am

The hedgie who made a fortune shorting subprime mortgages, and who made money buying BoA when one Temasek was selling, recently lost US$100m over a China play despite doing serious due diligence. http://dealbook.nytimes.com/2011/06/24/paulson-speaks-out-on-sino-forest/?nl=business&emc=dlbkpma21

If such an investor with all his resources and acumen, can still get snookered, what makes the ordinary retail investor here think he can do better?

Ignore S-Chips? They can ruin yr finances.

Experts differ on prospects for China; but we got big bets on China

In China, Temasek on 20/06/2011 at 9:36 am

Some see serious trouble ahead, some see the troubles as to be expected in a rapidly expanding economy, and are notb that serious. http://www.bbc.co.uk/news/business-13802453

And do remember Temasek has big bets on China.

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

https://atans1.wordpress.com/2010/09/03/sporeans-temasek-may-have-a-problem/

So does GIC.

S-Chips: Sumething SIAS could do

In China, Corporate governance on 11/06/2011 at 4:45 pm

SIAS is, as usual, calling for more measures to safeguard investors’ interesting following yet another S-Chip fiasco.

SIAS has a research department. Why can’t it do what Muddy Waters Research is doing? This US firm has issued damning reports on five Chinese cos listed in the US. He approaches each case like an investigation, sifting through corporate registration documents and even hiring private investigators to pose as potential business partners.

Perennial Retail Trust: the case against

In China, Property, Reits on 03/06/2011 at 10:36 am

In today’s ST, Perennial China Retail Trust took out a full-page ad in colour in ST to extol the IPO’s merits.

Two pages away, ST carried a story headlined ” CapitaLand’s share dip linked to China”. In juz slightly smaller type face, the headline went on, “Poor showing due to concerns over firm’s greater exposure, vulnerability to policy changes”.

If I were Perennial, I’d ask ST for a refund. This headline sums up the thesis why this is an IPO to avoid.

DBS bullish on Hutch Port at US$0.95

In China, Infrastructure on 02/06/2011 at 6:29 am

Find it difficult to poke holes in DBS’ analysis. But note DBS was one of the IPO mgr and that HPH is trading below its IPO price of US$1.01. DBS says:

Firm prospects over the short and medium term. We like HPH Trust for its stable and growing earnings profile, which we believe will be driven by continued rising trade volumes into and out of the Pearl River Delta region, translating into an annual growth of 10 per cent in distributions to unit-holders for the next few years.

HPH Trust is due to report its interim results by mid-August, and we are expecting a distribution per unit (DPU) of about 1.8 US cents to be declared.

Maintain ‘buy’ and US$1.15 TP. Given that HPH Trust seems to be well on its way to meeting our projections in FY2011 and FY2012, current FY2011 and FY2012 yields look very attractive at 6.6 per cent and 7.2 per cent, respectively; expect DPU compound annual growth rate of 10 per cent up to 2013.

Our target price implies a total return potential in excess of 30 per cent at current prices. Among Singapore-listed Reits, business trusts and high yield plays, HPH Trust offers one of the highest combinations of yield and DPU growth.
BUY

Yet another reason to avoid S-Chips

In China on 16/05/2011 at 10:07 am

This story tells how Yahoo may have been taken for a ride in China: Yahoo is upset with its Chinese partner Alibaba over the latter’s transfer of a major internet asset to its chief executive.

If a major MNC, with its legions of lawyers, accountants and executives, can end up in this type of situation, wouldn’t it be better for retail investors to avoid S-Chips as a matter of principle?

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