CPF interest rates: PAP govt cares for u, they really do

The US 10-year real yield — a barometer of future growth expectations for the economy — has dropped below 0.4 per cent, eyeing its September 2017 nadir of 0.25 per cent.

FT a few days ago

CPFers get a better deal from the PAP govt.

Our inflation rate is about 1.37%.

But

Savings in the Special Account earn a guaranteed 4% while savings in the Ordinary Account only earn a guaranteed 2.5%. The lower interest rate offered by OA is due to its wider usage. For instance, funds in OA are allowed to be utilised to fund child’s tertiary education as well as CPF member’s property purchase. Such uses of the CPF funds are not applicable to the Special Account and a higher interest rate is therefore provided to compensate for its restricted use.

How to Optimise Singapore CPF: Ordinary Account into Special Account

2.5 – 1.37 = 1.13. 1.13 is the real return assuming that the CPF interest rate is only 2.5%. and we know it’s higher, don’t we?

And taz not all. Read, the bits I bolded

The interest rate on Ordinary Account (OA) monies is reviewed quarterly. OA monies earn either the legislated minimum interest of 2.5% per annum, or the 3-month average of major local banks’ interest rates, whichever is higher.

The OA interest rate will be maintained at 2.5% per annum from 1 July 2019 to 30 September 2019, as the computed rate of 0.60% is lower than the legislated minimum interest rate.

And​

The interest rate on Special and MediSave Account (SMA) monies is reviewed quarterly. SMA monies earn either the current floor interest rate of 4% per annum or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is higher. In view of the continuing low interest rate environment, the Government has decided to further extend the 4% floor rate for interest earned on all SMA monies for another year until 31 December 2019.

Consequently, the SMA interest rate will be maintained at 4% per annum from 1 July 2019 to 30 September 2019, as the computed rate of 3.37% is lower than the current floor interest rate of 4% per annum.

And

The interest rate on Retirement Account (RA) monies is reviewed annually. RA monies credited each year will be invested in newly-issued Special Singapore Government Securities (SSGS) which will earn a fixed coupon rate equal to either the 12-month average yield of the 10YSGS plus 1% computed for the year, or the current floor rate of 4% per annum, whichever is higher. The interest rate earned by RA monies is the weighted average interest rate of the entire portfolio of these SSGS, which is adjusted in January each year to take into account the coupon rates payable by the new SSGS issuance. In view of the continuing low interest rate environment, the Government has decided to further extend the 4% floor rate for interest earned on the RA for another year until 31 December 2019.

The average yield of the 10YSGS plus 1% from November 2017 to October 2018 is 3.38% per annum. As this is below the current floor rate of 4% per annum, new SSGS issued in the year of 2019 will pay a fixed coupon of 4%.

Consequently, the RA interest rate from 1 January 2019 to 31 December 2019 will be maintained at 4% per annum.

Above from CPF website

Vote wisely.

Related posts (Even an anti-PAP TOC writer appreciates that the PAP govt cares):

CPFLife: PAP govt cares for u, really they do

TOC’s “Correspondent” shows that PAP govt really cares for S’poreans

Vaping: PAP govt cares for u, really they do

Merdeka Generation: PAP cares for u, really they do

Groceries: PAP cares for u, really they do

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Techs are humongous

 

Winners, losers this week

Winter is round the corner

Morgan Stanley warns on growing risk of US market “downturn”. It says its market cycle gauge moved from “expansion” to “downturn” for the first time since 2007.

Hyflux: Can believe or not?

Earlier this month, Utico, a UAE water utility offered to invest S$400 million in Hyflux, offering a binding agreement. But Oliver Lum and her board kaki are playing hard to get, telling the Arabs to go f*** a camel.

So Utico has gone on a massive PR exercise to put pressure on the Hyflux board via the retail holders of perpetual securities and preference shares.

In a media statement, after a meeting with SIAS, chief executive of Utico, Richard Menezes, made an offer to the retail investors in Hyflux perpetual securities and preference shares, if Hyflux accepted his offer, of a

“part cash redemption and also a hope for full redemption with a plan and exit option” …

“Full details can only be revealed later but as part of the overall deal, small investors of up to S$2,000 to S$3,000 could get 50 per cent cash redemption along with full redemption opportunity, while the rest of the investors could get a similar but staggered and cascade deal.”

“All investors will have an opportunity to get their money back … if they support the deal,” he added.

Read more at https://www.channelnewsasia.com/news/business/utico-offers-hyflux-s-small-investors-part-cash-redemption-as-11567048

He’s also scoring a lot of PR points for explaining why the company is making this offer to Hyflux’s junior creditors with perpetual securities and preference shares, instead of senior creditors.

“(Senior creditors) took an active business risk with ringside view, whereas (perpetual securities and preference shares) investors took a passive blind faith risk,” he said in the statement.

He said neither coupon nor principal was guaranteed in the offer prospectus and while trading at SGX, and morally there remains some responsibility from Hyflux for the predicament of the perpetual securities and preference shareholders.

To score even more points, he says:

Meanwhile, Utico said it could consider a listing in Singapore and “put some skin into the game” if it gets investors’ support for the deal.

As to the reality of the offer to retail perpetual securities and preference shares , it sounds like an extend and pretend game: both sides agree that the debt will be repayable sometime in the distant future, if at all. Tan ko ko.

Related posts

Hyflux: Sue those with money

Hyflux: “going concern” BS/ KPMG again and again

Hyflux on investor losses: “Not our fault, banksters at work”

Why most S’poreans keep voting for PAP

It’s like shopping leh:

self-reinforcing cycle, where they became more and more attached to a product.

We are attached to the PAP because we keep voting for it.

Analysing the decisions we make in the supermarket can help us understand the choices we make in other areas of our lives.

Analysing the buying decisions of 280,000 customers revealed that they fell into a self-reinforcing cycle, where they became more and more attached to a product.

These cycles tend to last for several consecutive store visits before the pattern is broken and the process starts again with a different brand.

Interestingly, when consumers break out of these self-reinforcing loops, they tend to do so across multiple products at a time.

For example, when switching their brand of coffee, they are more likely to change their brands of yoghurt and washing detergent as well.

Blind loyalty

Why does this loyalty build up?

Further analysis of the data ruled out simpler explanations, such as price or force of habit being responsible for these patterns.

One explanation is that people come to like what they purchase, out of a need to “make sense” and explain their choices to themselves and others.

For example, after buying the ingredients for a salad, a consumer might start to value healthy foods more to justify the purchase.

This pattern of behaviour could be exploited to try to create a relationship with a selected product.

In the loyalty card study, we sent the supermarket’s instant coffee drinking customers coupons to try a different brand.

Those in the switching phase were twice as likely to use the coupon as those still locked in to their existing coffee product.

Beyond shopping

This self-justified decision making is not limited to the weekly shop, but probably spills over to many areas of our lives.

For example, studies suggest people defend their selection of everything from the jam they buy to the politicians they decide to vote for in an election.

After we vote for a leader we may mimic their positions on many issues, including those we were undecided about or even to which we were opposed.

https://www.bbc.com/news/business-47357292

Fake news: Use electric cars to reduce carbon usage

The German Institute for Economic Research (Ifo) claims that an electric vehicle produces more carbon emissions than a diesel car. They are right because major carbon emitters like China, USA and Germany use lots of coal to produce electricity.

Lesson for S’pore and SGX from HK, NY

Talking about tech IPOs

when the time comes to go public, London usually loses out to New York and Hong Kong — places where locally tethered funds are fatter, exogenous effects are less esoteric and armies of private punters can be relied on to buy on hype.

FT

S’pore has the same problems as London. Most of the institutional money here is from overseas groups, while our retail investors only want safe securities like Hyflux perps and preference shares.

Hyflux: Don’t know if to laugh or cry

For the perpetual securities and preference shareholders, they get nothing if there’s no plan. They wanted something reasonable so the company will now keep (them) whole on the book and they will not be asked to take a haircut.

David Gerald of SIAS (Emphasis mine)

Read more at https://www.channelnewsasia.com/news/business/hyflux-has-credible-revival-plan-to-file-for-moratorium-11468284

Given that there’s no white knight on the horizon (David Gerald said so), MayBank deciding to appoint receivers and managers over the assets of Tuaspring (Hyflux: Good Friday cruxification), and the desalination plant set to be taken over by PUB for free in May, what is David Gerald going on about? A credible restructuring plan without a white knight after the last one rode away? Pull the other leg, it’s got bells on it.

Super massive rights issue with pref and perpetual securities allowed to take part? Ownself pay ownself?

Another wannabe stand-up comedian, like Tharman (Tharman talks cock yet again)? Indians like to be comedians it seems?

Hyflux: Good Friday cruxification

Christ and the two thieves were not the ones crucified yesterday.

Yesterday (yes on a public holiday), Hyflux said that MayBank had decided to appoint receivers and managers over the assets of Tuaspring, except for the desalination plant and shared infrastructure, and not to extend an agreement whereby it would not enforce its rights over Tuaspring to allow Hyflux to time to conclude a binding agreement with a successful bidder or investor for the plant. The agreement had been extended several times and expired on 16 April.

The integrated asset’s desalination plant is set to be taken over by PUB at zero dollars in May, after PUB issued a notice to Hyflux on 17 April to terminate the parties’ water purchase agreement.

But Hyflux is not dead. It’s juz hanging onto life on a cross

Hyflux said the termination of the collaboration agreement “is expected to have a material impact on the financial performance of the group”.

In the interim, the power plant at the Tuaspring integrated facility is expected to continue operations as usual, it added.

Read more at https://www.channelnewsasia.com/news/business/sm-investments-moves-to-terminate-hyflux-rescue-deal-in-11460852

Btw, can’t stop laughing:

Hyflux said the termination of the collaboration agreement “is expected to have a material impact on the financial performance of the group”

The “financial performance of the group” is one fat zero before this event.

Further reading:

Hyflux: Sue those with money

Hyflux: “going concern” BS/ KPMG again and again

Hyflux on investor losses: “Not our fault, banksters at work”

 

 

 

 

DBS should take leaf from Temask’s book

Too bad Hyflux and DBS (the bank issuing it’s securities) didn’t have in 2016, Temasek as a precedent to follow. Temasek in a letter to ST’s Forum (Ownself praise ownself) talked about its disclosure format for its bonds’ issues in 2018

The question is: Do people read those disclosures? Are they accessible and understandable to a lay reader?

Our research led us to a different approach in respect of our first Temasek Retail Bond.

We took a leaf from the issue of Astrea IV Private Equity Bonds, and made a special effort to provide a more accessible format of risk disclosures via a gatefold.

The gatefold supplemented the offering documents, and was intended to be retail-friendly and easy to understand.

In particular, the gatefold highlighted the associated risks in an accessible manner.

Feedback was very positive on the presentation of pictorials, flowcharts of fund flows, credit ratios and FAQs for both the Astrea IV and Temasek gatefolds.

…

We believe it would be a welcome step if issuers and their advisers consider an accessible style of gatefold, to highlight the key credit risks of their businesses, especially when they issue bond and bond-like offers to retail investors.

Temasek letter to ST’s Forum (Full text below)

Now go tell DBS how to try harder make sure greedy people read: though pigs will surely fly first. Perp investors were warned: Hyflux: Don’t cry for the investors

The letter in full:

Bond issues should be easy to understand for retail investors

Dr Jeremy Teo Chin Ghee raised interesting points in his letter (Timely to encourage retail bond market, April 5).

Our research showed that Singapore retail investors have very different risk capacities and appetites.

Younger investors look for growth, while older retirees may prefer a steady income stream. Others seek higher risk-reward opportunities.

We believe retail investors should have access to a wider range of risk-reward products, rather than be cut from riskier products through tighter regulations – the current regulations already require comprehensive disclosures of risks.

The question is: Do people read those disclosures? Are they accessible and understandable to a lay reader?

Our research led us to a different approach in respect of our first Temasek Retail Bond.

We took a leaf from the issue of Astrea IV Private Equity Bonds, and made a special effort to provide a more accessible format of risk disclosures via a gatefold.

The gatefold supplemented the offering documents, and was intended to be retail-friendly and easy to understand.

In particular, the gatefold highlighted the associated risks in an accessible manner.

Feedback was very positive on the presentation of pictorials, flowcharts of fund flows, credit ratios and FAQs for both the Astrea IV and Temasek gatefolds.

No two businesses will be the same, and all will have different risk and credit parameters.

We believe it would be a welcome step if issuers and their advisers consider an accessible style of gatefold, to highlight the key credit risks of their businesses, especially when they issue bond and bond-like offers to retail investors.

Stephen Forshaw

Head, Public Affairs

Temasek International

Temasek cares. Vote wisely.

Hyflux: “going concern” BS/ KPMG again and again

The constructive, nation-building media report that the Accounting and Corporate Regulatory Authority (Acra) is watching the Hyflux fiasco closely. And this is newsworthy? It’s ACRA job to investigate, not watch, cock-ups like these.

But then being a regulatory bureaucrat is one good way of getting a very expensive free lunch. The other is being a minister.

ACRA is watching because Hyflux investors (who never bothered to read the issue documents or Hyflux’s financials) are asking why Hyflux’s auditor KPMG failed to flag the risks of Hyflux earlier. Like real given they didn’t bother to read: Hyflux: Don’t cry for the investors. So even if accounts were qualified, what could the investors? Only KPKB earlier because the shares etc would have been suspended on a haram certification.

Seriously, this “news” reminded me that UK’s accounting watchdog Financial Reporting Council (FRC) made public, several weeks ago, plans to make auditors apply more robust checks when reviewing whether a company was likely to continue operating in response to several high-profile corporate failures that have undermined confidence in business.

Two recent UK corporate failures were similar in nature to what happened at Hyflux.

To recap: KPMG on 22 Match 2018, said the 2017 accounts were halal, but on 22 May 2018, the company sought court protection from its creditors: Did Hyflux’s auditors mislead? and Hyflux directors, mgt & auditors kooning from 2016 onwards?.

——————————————

Hyflux’s BS explanation:

“When KPMG issued an unqualified opinion on the full year results for the Hyflux Group in March 2018, there were no events or conditions that individually or collectively, cast significant doubt on the going concern assumption as at the balance sheet date of 31 December 2017, or at the audit report date of 22 March 2018.”

Then according to Hyflux, everything went wrong when in May, there was a run on Hyflux by its banksters. Because of its bad (and unexpected?) Q12018 results announced on 9 May: “certain financiers expressed concerns over their ability to continue with existing credit exposures to the group.”* They tot halal Hyflux had transmuted into haram Hyflux.

Hyflux on investor losses: “Not our fault, banksters at work”

Hyflux should have remembered

A Banker Lends You His Umbrella When It’s Sunny and Wants It Back When It Rains

(Often attributed to Mark Twain)

———————————–

Coming back to the FRC: it wants auditors to do more when reviewing whether a company was a “going concern” and likely to remain in business for another year, highlighting the collapses of construction group Carillion (auditor KPMG) and retailer BHS as key factors behind the decision.

It said auditors should challenge corporate management teams “more robustly” and “thoroughly test” the adequacy of the evidence put forward by company directors. It also wants auditors to say whether they believed management assessments with respect to going concern judgments were appropriate, and to explain how they came to that conclusion.

It said the collapse of BHS, Carillion, and failed UK bank HBOS during the financial crisis, had “brought into question why such companies had clean auditor’s opinions, which included no warnings that the companies were at risk of collapse”. Sounds like Hyflux?

Mike Suffield, the FRC’s acting executive director of audit regulation

Recent corporate failures and the FRC’s own enforcement work has shown the existing [going concern requirements] needs to be strengthened.

Our proposals will significantly expand the work required of auditors — however, we believe this to be an important investment in the quality of the work that underpins what is a cornerstone of audit.”

Karthik Ramanna, professor of business and public policy at the University of Oxford’s Blavatnik School of Government

The implication of these proposals is that auditors missed key red flags due to weak auditing standards. The real issue isn’t that the auditors need more technical guidance but rather that they are conflicted in their dual roles as watchdog and consultant.

(Emphasis mine)

Hyflux shareholders should be angry to learn that KPMG (their auditor which audited Carillion and HBOS), said it had (in the UK) already increased how much information it provided in audit reports this year by highlighting the key risks the firm considered when “carrying out work on the going concern basis of accounting”.

KPMG added: “It is vital that as a profession, we examine all possible avenues to improve public trust both in audit, and the wider corporate landscape. We welcome the FRC’s consultation into the standards governing our work around going concern, and how we report on that work to shareholders.”

Will KPMG also provide this info for us natives for SGX listcos?

Btw, KPMG is the forensic auditor whose report the Aljunied Town Council is relying on in take the Wankers Three to the cleaners: “Peanuts”: WP MPs’ liability. KPMG is also Temasek’s auditor: TOC misrepresents facts yet again.

Hyflux: Don’t cry for the investors

Perpetuals buyers were warned, while pref share investors made money in the 2011 pref shares issue.

Tan Kin Lian in Hong Leong Park on Saturday

shared that he was aware how some of them became Hyflux perpetual securities and preference shareholders despite not being financially “savvy”.

“They were just ordinary investors wanting to have a reasonable rate of interest without taking too much risk. If they wanted to take risk, they would have bought shares,” said Mr Tan, who donated funds to organise the protest event.

Read more at https://www.channelnewsasia.com/news/singapore/we-have-not-lost-faith-hundreds-of-hyflux-investors-gather-to-11395566

He couldn’t be more wrong (as is usual) about “They were just ordinary investors wanting to have a reasonable rate of interest without taking too much risk.” But then he’s the talk cock, sing song king who (together with his partner in that crime, Goh Meng Seng) deprived us of President Tan Cheng Bock, allowing the PAP’s preferred candidate to win.

Well it seems he never bothered to read document offering the perpetual securities to the public. Pg 37 of the perpetual securities issue document had this warning (Emphasis mine) which the investors ignored

RISKS ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES
The Securities may not be a suitable investment for all investors.
The purchase of the Securities involves certain risks including market risk, interest rate risk,
foreign exchange risk, credit risk and liquidity risk. Investors should ensure that they fully
understand the nature of all these risks before making a decision to invest in the Securities. Each potential investor in the Securities must also determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
• have sufficient knowledge and experience to make a meaningful evaluation of the Securities,
the merits and risks of investing in the Securities and the information contained or
incorporated by reference in this Offer Information Statement and the Product Highlights
Sheet;
• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of
its particular financial situation, an investment in the Securities and the impact such
investment will have on its overall investment portfolio;
• have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Securities;
• understand thoroughly the terms of the Securities; and
• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios
for economic and other factors that may affect its investment and its ability to bear the
applicable risks.
The Securities are complex financial instruments. Sophisticated institutional investors generally
do not purchase complex financial instruments as stand-alone investments. They purchase
complex financial instruments as a way to reduce risk or enhance yield with an understood,
measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Securities which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Securities will perform underchanging conditions, the resulting effects on the value of such Securities and the impact this investment will have on the potential investor’s overall investment portfolio.
This Offer Information Statement and the Product Highlights Sheet are not and do not purport to
be investment advice. Investors should conduct such independent investigation and analysis
regarding the Securities as they deem appropriate. Investors should also consult their own legal,
tax, accounting, financial and other professional advisers to assist them in determining the
suitability of the Securities for them as an investment. Investors should make an investment only
after they have determined that such investment is suitable for their financial investment
objectives. Investors should consider carefully whether the Securities are suitable for them in light
of their experience, objectives, financial position and other relevant circumstances.

Pretty comprehensive and in reasonably simple English. So either the perpetuals investors ignored the warning or never bothered to read: just buy.

Kee chiu if you still sympathise with them? After all they must be PAP voters, Will Oliver Lum and other Hyflux investors still vote for the PAP?, because we know the cybernuts don’t have money to even fund their favourite alt media sites.

Interestingly (I stand corrected because I may have missed it because I was getting tired), I can’t find such a provision in the offer document of the Cumulative Non-voting Non-convertible Perpetual Class A Preference Shares .

Wonder why? An honest mistake? No, most likely because Hyflux pref shares had been issued before (Hyflux: Qns to ask?) to the public, and nothing went wrong: in fact investors made money. And preference shares are shares (“You die, yr problem”) while the Perpetual Securities could according to Chris K be mistaken for bonds, hence the warnings. Don’t anyhow say PAP govt don’t care?

Still, if I were a pref share holder, I’d ask SIAS to KPKB about the lack of warning: nothing to lose further, since lost everything except underwear. Anyway, Morocco Mole (Secret Squirrel’s side kick) tells me that his second cousin removed working in DBS’s investment bank tells him that most of the 2016 buyers had made money in the 2011 issue: issue traded above par. They were hoping for a repeat killing. Kee Chiu if you think they deserve sympathy.

Btw, an interesting read: http://thefinance.sg/2019/03/11/when-exactly-did-tuasprings-operational-problems-start-hyflux/

The is the kind of stuff TOC and other anti-PAP alt media publications should be publishing instead of the rants of anti-PAP types like Goh Meng Seng and his wind bag kaki. I did forward the piece to TOC: no pix, no sound. Sad.

Related posts:

Hyflux directors, mgt & auditors kooning from 2016 onwards?

Hyflux on investor losses: “Not our fault, banksters at work”

Hyflux fiasco shows why “book value” is BS

A really curious incident

========================

*Did TKL read the other offer document? And did Meng Seng, other anti-PAP cybernuts, and other alt media experts read the 2016 securities issue documents? Or even Hyflux’s recent reply to SIAS. Somehow I don’t think so going by their comments. Sad.

 

Major tech IPOs since 1997

In 1997, Amazon did its IPO. “Peanuts”. Next big one was Google in 2004.

Where we ahead of UK in financial services

There’s a new bank in the UK: Bomad [the bank of Mum and Dad] to help finance house purchases.

S’pore has had this for ages (my dad had to take a loan from my grandmother, to help buy a house all those yrs ago). Bomad is still thriving. Friend telling me that daughter is hinting loudly that she and her husband-to-be need a loan. Problem is that she has siblings. So loan one, others will expect similar facilities. He didn’t stop at one because he hated (still hates) the PAP.

In the UK, an FT reader said Bomad should provide advisory services, not juz folk out the S’pore. S’porean parents have always provided such services as a mandatory addition to forking out the money for a HDB flat etc etc

Make MU Great Again

Or why MU, AC Milan and other ex-greats are no longer winning trophies.

A “bar chart race” video showing spending in world club football over the past 28 years.

Make MU Great Again: change Jewish owner and financial adviser (Rothschilds).  LOL

Flowless recovery = Date cat bounce or joyless recovery?

Another gd day for mkts. So was last Thursday’s ECB whimp out really a catalyst. Well

A key aspect of the 2019 rebound for markets has been the absence of money chasing the action. True, emerging markets have pulled in cash, but for other key areas, investors are not chasing the recovery, they remain intent on getting out. So the present recovery still smells more like a short covering rally, where bearish bets have closed, leaving the market poised to jump a lot higher or follow the path currently indicated by slumbering government bond yields.

Société Générale has been focusing on the flows story for a while and here’s their latest update:

“Our research shows that, year-to-date, we have experienced a flowless recovery, equities have risen the most in decades, but outflows from the equities asset class have been significant, caused by last year’s damage to portfolios. Risk aversion is now very apparent and portfolios are already hedging for many risks. Cash positions have also become very sizeable indeed, as the prospect of a US recession in 2020 does not bode well for risky assets.”

FT columnist

Related post: Black Friday for equities

Black Friday for equities

Juz that no-one noticed it. LOL

The Dow Jones Transportation Average — one of Wall Street’s favourite barometers of economic activity — has fallen for a record 11 consecutive sessions. Many investors, self included, regard its performance as a predictor of growth because it’s made up of of railroad operators, shipping companies and airlines that ship physical goods around the world. On Thursday, it fell for a record-equalling 10th straight session.

And indices including the S&P 500, Nasdaq Composite and FTSE All World all closed below their 200-day moving averages, seen by traders as long-term support levels.

That’s not all: the strength of dollar despite Fed turning chicken on interest rates shows that the other major economies look sick. And strong US dollar is bad for emerging markets.

The gd news is that S&P 5000 fell every day last week for a cumulative drop of about 2.4%  That would rank as its worst weekly performance since December 21, just before the market bottomed.

 

Hyflux on investor losses: “Not our fault, banksters at work”

OK, OK, Hyflux never said this. But going by what it has said publicly (See below), one can reasonable infer that this is the message it’s trying to imply: the motor-cycle riding Ms Lum, other investors, employees etc are suffering because Hyflux’s banksters were scared of losing their money, making a run at Hyflux, trying to squeeze money from Hyflux’s hard assets.

Let me explain.

According to Hyflux everything was fine financially in March when it’s auditors chanted everything was halal, not haram.

When KPMG issued an unqualified opinion on the full year results for the Hyflux Group in March 2018, there were no events or conditions that individually or collectively, cast significant doubt on the going concern assumption as at the balance sheet date of 31 December 2017, or at the audit report date of 22 March 2018.

---

Must be joking, right?

Auditors are supposed to assess continual use of going concern assumptions over the next 12 months as per the Singapore Auditing Standards SSA 570. With the (bankruptcy) protection filing date being two months after KPMG’s sign-off date, what are the material variances which have not been contemplated resulting in this failed assessment?

BT quoting an investor who lost $ in Hyflux

—————————————————————————————————-

Then according to Hyflux, everything went wrong when in May, there was a run on Hyflux by its banksters. Because of its bad (and unexpected?) Q12018 results announced on 9 May: “certain financiers expressed concerns over their ability to continue with existing credit exposures to the group.”* They tot halal Hyflux had transmuted into haram Hyflux.

Reminds me of the joke which Hyflux should have quoted:

A Banker Lends You His Umbrella When It’s Sunny and Wants It Back When It Rains

(Often attributed to Mark Twain)

But to be fair to its banks, did Hyflux tell its banks post December 2017 results, that everything was oh so fine financially, so that the 1Q 2018 results came as a big surprise to its lenders?

To be continued.

But I’ll leave you with what a top banking lawyer** once told other lawyers about bankers

Just remember this: if bankers were as smart as you, you would starve to death

(Henry Harfield addressing a meeting of lawyers in 1974)

Remember MayBank (the non-recourse lender) according to Hyflux really believed that Tuaspring was worth more than $1bn.

When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.

Related post: Hyflux fiasco shows why “book value” is BS

———————————————-

*This is what Hyflux said:

The operating losses of Tuaspring drove Hyflux to record its first full year of loss in 2017. When losses were also reported in its first quarter 2018 results released on 9 May 2018, certain financiers expressed concerns over their ability to continue with existing credit exposures to the group. This, coupled with the uncertainty of Tuaspring divestment or entry of a strategic investor, raised a significant spectre of an upcoming liquidity crunch. Accordingly, subsequent to discussions with its legal and financial advisors, the Hyflux Board was advised to proactively take steps to make an application for a moratorium order, which is where events stand today. At that point in time, the company was in full compliance with its financial covenants and was not in default of any financing facility.

https://www.hyflux.com/wp-content/uploads/2019/02/Hyflux-responses-to-SIAS-letter.pdf

**From NYT’s obituary

Mr. Harfield spent his entire career at the New York law firm of Shearman & Sterling, where he helped develop the legal and regulatory framework for the international banking business after World War II. He represented the firm’s lead bank client, Citibank.

Many of the issues he worked on were esoteric, but important. He developed the legal basis for negotiable certificates of deposits, creating a legal way for commercial banks to pay interest on deposits. Citibank introduced certificates of deposit as a product in 1961.

 

 

 

Hyflux: Details of $1.165bn debt securities

 

Ignore the last column because these were indicative prices from DBS Securities, sometime last year. Borrowed graphic from BT.

My comment

Hyflux reflects the old broker’s truism that high yields and good news do not go together.

Hyflux is warning of investing in high dividend yield stocks

also applies to buyers of junk debt of cos that have high dividend yields.

Meng Seng: fake news propogator

Either that or he one super blur spastic cat. Whatever, he’s one of the PAP’s most effective weapons in it’s attempts to slime the Oppo as a bunch of nutty opportunists.

Further to Merdeka Package shows how smart scholars are, I had tot Goh Meng Seng was trying to be like Alex Tan (Mrs Chiam said he was like a son) of States Times, S’pore Herald etc etc: a purveyor of fake news. This appeared in TRE under his name (emphasis mine):

The Fall of Net Investment Return Contributions?

Back in 2018, the PAP boasted that the Net Investment Return Contribution (NIRC) has more than doubled from $7b in 2009 to $15.9b in 2018.

However, the NIRC for 2019 has dramatically dropped to $3.6b in – which is about half of 2009′s NIRC when the world was facing an unprecedented global financial crisis!

Under the rules, the government can contribute up to 50% of total investment returns to the budget. Hence, there are two possibilities here.

The first is that it may have decided to use much less than the maximum 50% just to show that there is “deficit” and this is thus an “expansionary budget”. It might even be the case of political posturing to show that the government needs to raise GST to 9% because of “deficits”!

The second possibility is that our Sovereign Wealth Funds – GIC and Temasek Holdings – and MAS had suffered unprecedented losses which resulted in this dramatic drop in the NIRC!

Either way, it does not look too good.

These are the questions my team and I will pose to the PAP government if we are elected into parliament.

Goh Meng Seng

The NIRC is $17.2bn (up 4%). So what was Meng Seng smoking in his opium pipe? Ganja? Or Grandpa Xi’s dried turds? Too poor to buy opium?

Seriously either he was faking the NIRC number or he can’t read while at the same time smoking ganja or dried turd. Whatever, do we want him and his fellow clowns in parly? Remember he said:

These are the questions my team and I will pose to the PAP government if we are elected into parliament.

To be fair to him, this later appeared:

Correction:

The Straits Time reported that there will be a “basic deficit of $7.1B” and after taking into account of NIRC, the deficit is reduced to $3.5B.

After double checking the figures, this statement is misleading.

The deficit of $3.5B is the result of taking in BOTH the NIRC and the Special Transfers (all those goodies) into account.

The actual NIRC is $17.2B(up 4%) while the Special Transfer is $15.3B (up 70%).

My apology. I should not have trusted the Straits Time fully and should counter check on the figures.

Goh Meng Seng

So either Goh Meng Seng chickened out of lying or double confirm twice over twice over that he’s a double cock. Can’t get his facts right first time and giving a gibberish excuse for not getting it right first time. Other people have read the ST report (self included) and got the correct numbers from the ST report.

Whatever, do we want him and his fellow clowns in parly? Remember he said:

These are the questions my team and I will pose to the PAP government if we are elected into parliament.

And waz he doing relying on the constructive, nation-building ST for facts? Shouldn’t he be relying on TOC, State Times, S’pore Herald and other cybernut alt news outlets? And these are free to boot, unlike ST.

With enemies like him, the PAP doesn’t need friends.

Vote wisely.

 

Hyflux is warning of investing in high dividend yield stocks

Its share dividend yield over the yrs

2017	1.19%
2016	5.71%
2015	10.95%
2014	10.95%
2013	15.24%
2012	13.33%
2011	19.86%
2010	28.57%
2009	16.33%
2008	9.00%
2007	6.43%
2006	6.43%
2005	6.05%
2004	3.33%
2003	2.38%
2002	4.76%
		–
2001	2.38%	S

Trouble is that a high yield and low dividend cover (the ratio of a company’s net profits to the total sum allotted in dividends to ordinary shareholders) doesn’t leave a company much room to invest or as a buffer against market shocks.

Hyflux reflects the old broker’s truism that high yields and good news do not go together.

For investors in Reits pls remember that Reits have no cover for distributions, unlike normal cos.

“Peanuts”: WP MPs’ liability

All this talk about Hyflux’s accounts and KPMG reminded me of another set of accounts that involved KPMG.

Aljunied-Hougang Town Council (AHTC)

is seeking to claim S$33.7 million of “improper” payments made to AHTC’s former managing agent FM Solutions and Services (FMSS) and contractor FM Solutions and Integrated Services (FMSI).

A retired WP cadre (no friend of Auntie, Low or Bayee) told that this amount is excessive. It’s all the gross payments made by WP run Aljunied town council to FMSS and FMSI without deduction for services provided. No-one, not even PAPpy running dogs (apologies to the real dogs), denies that services were provided: What the US army and WP have in common. The issue is accounting for those payments: Wankers’ Party still blur on audits and accounting and AHTC accounts: WP outsources decision to recover monies.

The lawyer for the Wankers Three said

The sum of money that AHTC seeks to claim is unreasonable, as it amounted to all payments made to FMSS and FMSI. This contradicts the previous assessment made by accounting firm KPMG, which stated that there was an alleged improper payment of slightly over S$1.5 million, with only about S$624,000 to be recovered.

The retired cadre who has read all the various audit reports (AGO/ PwC and KPMG) says that while KPMG has lots of issues about the payments made to FMSS and FMSI , it has only flagged as an improper payment an amount around $1.5m. The other payments are open to question, some more questionable than others, only considering as haraman an amount around $1.5m  : What the US army and WP have in common

Whatever, funny that the defence lawyer slammed KPMG while relying on its view of liability of the amount in question:

Defence lawyers in AHTC trial slam the way KPMG compared managing agent costs

Read more at https://www.channelnewsasia.com/news/singapore/defence-lawyers-ahtc-trial-day-4-slam-kpmg-managing-agent-costs-10812630

Low can easily pay off $1.5m: juz sell one of his condos.

 

 

 

 

Will Oliver Lum and other Hyflux investors still vote for the PAP?

Amid all the KPKBing by SIAS, Hyflux investors aided and abetted by the anti-PAP cybernuts, why doesn’t anyone from this mob of born losers point out the “honest mistake” made by an agency of the PAP govt that led Hyflux to build Tuaspring? The Electricity Market Authority (EMA) got a key economic projection wrong, badly wrong, by 50 percentage points: see bits I bolded below.

[I]t is important to highlight that when the Tuaspring project was first awarded in 2011, the outlook for the Singapore power market was very favorable. The Tuaspring power plant was projected to turn in profits from day one. At that time, new power generation plants were planned to support the country’s projected electricity demand with a reserve margin of 30%. Today, however, due to oversupply of gas in the market, the projection by Electricity Market Authority (EMA) in their Singapore Electricity Market Outlook 2017 showed an increase in reserve margin to 80% in 2018. By way of illustration,the average wholesale electricity price has dropped from about SGD220 per MWh in 2011 when the Tuaspring project was awarded to an average of SGD81 per MWh in 2017, resulting in significant losses from electricity generation.

https://www.hyflux.com/wp-content/uploads/2019/02/Hyflux-responses-to-SIAS-letter.pdf

Blame the all seeing, all wise PAP govt that a minister was praising in SunTimes.

Vote wisely. As though it’ll make a difference. With Tan Kin Lian, Mad Dog, Lim Tean and Meng Seng opposing them, the PAP don’t need friends. Sad.

Related posts:

A really curious incident

Did Hyflux’s auditors mislead?

Hyflux fiasco shows why “book value” is BS

Hyflux fiasco shows why “book value” is BS

And why audited accounts are juz another genre of fiction: science fiction is closer to reality.

I tot these tots when I read Hyflux’s response to a question from the Securities Investors Association of S’pore (SIAS) which read:

On what basis was Tuaspring being valued at SGD1.4 billion? This has proven to be overstated by at least SGD900 million as Hyflux has confirmed any bids received in the 2018 sale process for Tuaspring were for less than Maybank’ s outstanding project finance debt of approximately SGD500 million?

This is what Hyflux said:

When Hyflux was first awarded the Tuaspring project in 2011, based on the financial model which modeled the cashflow projections from the project, the power plant was expected to generate profits from day one. This financial model was audited by an external financial model auditor and furnished to the offtaker. In 2013 when Tuaspring was able to secure a non-recourse project financing loan, the lender commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.

When the Tuaspring power plant entered into commercial operations in 2016, the lender commissioned another independent market study before the drawdown of the second tranche of the project finance loan, which valuation also then supported the book value ascribed to the Tuaspring project. However, while the 2017 divestment process attracted three preliminary non-binding bids that also supported the book value of the project, the 2018 sale process for Tuaspring during the moratorium did not yield a similar bid due to the limited number of parties pre-qualified to perform due diligence at such time. Please refer to https://www.hyflux.com/qa-from-second-noteholders-townhall-meetings/ for further details on the Tuaspring divestment process.

https://www.hyflux.com/wp-content/uploads/2019/02/Hyflux-responses-to-SIAS-letter.pdf

So book value is what Hyflux or any company says it is. To be fair, this can only happen with the approval of the accounting prostitutes profession and other prostitutes experts.

Think I’m unfair?

This is Hyflux’s response as to how the major assets of Hyflux were valued, and in particular why no impairment write-downs were made:

All major assets of Hyflux are measured at fair value, in accordance with the Financial Reporting Standard (“FRS”) 39 –Financial Instruments: Recognition and Measurement and FRS 105 –Non-current Assets Held for Sale and Discontinued Operations. These assets are assessed at the end of each reporting period to determine whether there is objective evidence that they are impaired, in accordance with FRS 36 –Impairment of Assets.

In accordance with the Group’s accounting policies (set out in the Annual Reports), an impairment loss, once determined, is recognised in the Income Statement in the relevant period.

Impairment losses recognised in respect of all non-derivative financial assets and non-financial assets, including investments, (if any) have been disclosed in the Annual Reports in the respective years.

The financial statements of Hyflux, as in all general purpose financial statements, have been prepared using the going concern basis of accounting.Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is a going concern and will continue its operations for the foreseeable future.

https://www.hyflux.com/wp-content/uploads/2019/02/Hyflux-responses-to-SIAS-letter.pdf

But Hyflux and the prostitutes accountants and other experts, can point out that the non-recourse lender (Maybank) “commissioned an independent market study of the project which arrived at similar conclusions supporting the book value of approximately SGD1.4 billion.”

If a leading Asean bank could screw up so badly, anti-PAP types shouldn’t be too upset that retail investors lost money.

Related posts:

A really curious incident

Did Hyflux’s auditors mislead?

igNoble Hse omnishambles puts spotlight two int’l accounting firms

 

Did Hyflux’s auditors mislead?

Further to A really curious incident, where I criticised SIAS for not KPKBing early, here’s one criticism it got right, though why didn’t it raise this earlier, much earlier?

“On Mar 22 2018, KPMG provided a clean a clean audit report for Hyflux Group for the financial year 2017. On May 22 2018, Hyflux Limited and a number of subsidiaries filed for court protection from creditors,” SIAS said, asking what transpired between Mar 22 and May 22 in 2018.

Read more at https://www.channelnewsasia.com/news/singapore/hyflux-questioned-over-ceo-olivia-lum-remuneration-financial-11229034

Really shumething must be done about the audit prostitutes profession. Very related post: igNoble Hse omnishambles puts spotlight two int’l accounting firms

A really curious incident

The silence of a self-proclaimed watchdog: only KPKBing when Hyflux was bust.

SIAS raises questions about Hyflux CEO’s remuneration amid financial troubles

Despite reporting losses of S$115.6 million in 2017, troubled water treatment firm Hyflux spent about S$2.7 million on remuneration for its key executives, with CEO Olivia Lum receiving between S$750,000 and S$1 million in salary, benefits and bonuses.

In addition to this “large remuneration”, Ms Lum also received more than S$60 million in dividends “in the time that shareholders and bond holders have seen their entire investment destroyed”, according to the Securities Investors’ Association (Singapore) (SIAS).

Highlighting these points, SIAS asked why the Hyflux founder – which has 34 per cent ordinary shareholding in the company – did not contribute her gains to the restructuring process. The investor watchdog also asked if Ms Lum would have any role in the Hyflux group after the firm’s restructuring.

These were just two of more than 40 questions put to Ms Lum and the Hyflux board by the investor watchdog in a letter issued on Monday (Feb 11) and signed off by its President and CEO David Gerald.

“SIAS, representing the interests of the numerous stakeholders of various securities, is seriously concerned that many questions regarding the operations, valuation and accountability of the board of directors of Hyflux have not been addressed, so as to help securities holders make an informed decision, with respect to the restructuring,” Mr Gerald said.

Read more at https://www.channelnewsasia.com/news/singapore/hyflux-questioned-over-ceo-olivia-lum-remuneration-financial-11229034

Like real, barking after things went wrong. Not when things were going wrong and things could possibly be done to rectify the situation. Talk of bolting the stable door after the horse bolted.

 

If SIAS was my watchdog, I’d have shot it. The audited accounts raised many red flags. It’s not as though, the debts, and cashflow issues were hidden. All public knowledge. So was thisBS?

“Hyflux Group has generated negative operating cashflow in every year since 2009. Was this highlighted to bondholders and shareholders? If so, in what form? Why did the Board continue to pay dividends, when the operating cashflow was negative and accumulate more debt during this time?”

The investor watchdog also highlighted that Hyflux, despite the negative operating cashflow, reported profits in each year before 2017 and asked how this was possible.

Read more at https://www.channelnewsasia.com/news/singapore/hyflux-questioned-over-ceo-olivia-lum-remuneration-financial-11229034

Whatever, I’ll return to the fact that it kept quiet earlier: why?

Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”

Holmes: “To the curious incident of the dog in the night-time.”

Gregory: “The dog did nothing in the night-time.”

Holmes: “That was the curious incident.”

Silver Blaze by  Sir Arthur Conan Doyle

Recession or not? Reconciling conflicting signals

Further to this Recession or not? Conflicting signals reporting that the  models from JP Morgan premised on these different signals give wildly differing results

This disconnect between market jitters and robust economic indicators could disappear:

The direct effect of stock-owners feeling poorer could cut spending. The plunging stockmarket could hit consumer and business confidence, crimping spending and investment. Predictions of recession based on markets and financial indicators could influence economic behaviour and thus become self-fulfilling.

Judging by the past couple of decades, if stockmarket turmoil persists the Fed will respond by lowering its forecasts for growth. That would feed into a looser policy stance.

[…]

inflation remains subdued, having come in at or below expectations in recent months. That gives the Fed’s policymakers room to be lenient, meaning they can avoid the premature tightening they have often been criticised for. Investors may sense something the Fed does not. Playing it safe will give it time to correct course if needed.

Economist before “The case for raising rates has weakened somewhat,” the Fed chairman said at a news conference that followed the Fed’s policy meeting in late January.

More from the Economist before the Fed chickened out:

{So]ome leading economists pointed out that the new gloomy investor “narrative” could become self-reinforcing. “Suddenly, the markets are reacting as if there’s a crisis of interest rate increases,” argued Robert Shiller, the Yale professor and Nobel laureate. He pointed out that, although the Fed had been raising rates for several years, investors were only reacting to this now. “This doesn’t look rational,” he says, drawing parallels with the 1920s in terms of the sudden shift in psychology. “[Then] the earnings were high, the economy was moving well, but suddenly it crashed — and again it was talk, I think. There was a new narrative that developed in 1929, just as there is a new narrative developing today.”

There is a chance that the stockmarket will rouse itself from its slump in coming weeks.

Pricey in Asia, unwanted in Wales

They are closely related to snails, taste like “nan’s toenails” and, in Wales, you cannot give them away.

But for the eligible South Korean bachelor, no date is complete without a bowl of Welsh whelks.

Each year 10,000 tonnes of them are caught in the Bristol Channel but virtually all end up in Asia, where they are considered an aphrodisiac.

https://atans1.wordpress.com/wp-admin/post.php?post=44904&action=edit

 

BS from fund mgrs exposed yet again

I’ll let the FT tell the tale

How did US stockpickers fare in 2018?

In a word: badly.

The performance of US stockpickers deteriorated in 2018 as just 38 per cent of actively managed equity funds outperformed their average passively managed peer over the 12 months to the end of December, according to the Morningstar, the data provider. That number was down from 46 per cent in 2017.

Supporters of active management have long argued that quantitative easing since the financial crisis and a decade of ultra-low interest rates have artificially suppressed stock market volatility.

Active fund managers kept saying their skills would shine once volatility returned to more normal levels. That theory was put to the test last year when more volatility buffeted Wall Street, leaving the S&P 500 delivering a minus 4.4 per cent return (including dividends), its weakest performance since 2008.

But the long-promised improvement for active managers failed to materialise.

Active fund managers who focus on “value” stocks — which trade at a low price relative to fundamentals, such as dividends, earnings or sales — had a particularly tough year, revealed the Morningstar data. Just 30.1 per cent of actively managed value funds that focus on large companies beat their passive peers in 2018. Success was even more elusive at the small end of the market where a lowly 15.9 per cent of value managers outperformed their average passively managed peers.

Chris Flood

Invest via low cost index funds. Buffett is a fan of these.

LBS: Perspective of 75-yr old retired technician

In alt media and social media, the HDB buy-back scheme is dissed by people like Terry’s Indian goons and their fellow cybernuts.

Here’s the perspective of a 75-yr old singleton who was a PUB technician and who has a resale HDB three-room flat. He recently opted to lease back his flat to the HDB.

— He doesn’t have to move.

— He gets $20,000 in cash when the formalities of the lease-back are completed.

— Until he dies, he’ll get about $1,000 a month. Looks like the HDB buys him an annuity for life.

(Will try to explore this aspect further after Chinese New Year (Mum’s still “under observation” in atas hospital ward*) to see, if on the available info, the premium paid is reasonable. Actuarially it will be prudent, but is it reasonable? And not kia su like the CPF Life assumptions: Will PM, tonite, give peace of mind on CPF Life Standard?))

— In 20 yrs time, when the lease expires, he has the assurance that he’ll be found somewhere to live until he dies.

— He says if he dies in the next 20 yrs, his nominee will get something. More if he dies earlier, very little if he dies later.

He’s happy.

And he’ll vote PAP. One reason is to make sure that in 20-yrs time he’ll be found a place to live. He knows he can’t trust the likes of Mad Dog, Goh Meng Seng and Lim Tean, even though he knows that there are good oppo people out there like Dr Tan Cheng Bock, Dr Paul and other SDP activists, and the Wankers.

---

*Private hospital treatment, public hospital fees

 

 

 

CPF Life starts at 70: Alt media way behind the curve

So alt media has only realised that CPF Life payments begin at 70, unless one opts in to start at 65.

In June last yr (Trumpets for me please), I highlighted what they are now only KPKBing about now. My piece then

CPF Life: How withdrawal age “moved” to 70/ Silence of the activists

I was going to explain how the dastardly deed was done but when TRE republished

Red alert! Achtung! S’poreans approaching 65, a TRE reader gave the answer, saving me the need to explain.

Lye Khuen Way:

June 11, 2018 at 7:50 am  (Quote)

The CPF Board do send out letters to those approaching their cohort drawdown age.
For those borned in 1953, it’s their 64th Birthdays.

There after, I believe it is 65.

The sly way they put it, is to suggest that you could delay your drawdown and receive more per month.

That applies to both Minimum Sum Scheme or those who opted for CPF Life.

Those who instinctively do not want any delay might just chuck the letter and the forms aside.

That’s where the devils come in.
Tuck away in the middle of the FORM, is a line that tell you that if you didn’t indicate that you want to start your drawdown from age 64,or 65,the DEFAULT AGE is 70.

Yes, Age 70.

I happen to opt for the CPF Life and somehow my enhanced topup application had already stated I wanted my draw down to start from age 64.

If unsure, call, write or better still go down personally to any of the CPF offices. Note that the Main CPF Board office is closed on Saturdays.

(Emphasis)

In places like the UK, or US of A or Europe, this kind of action

Tuck away in the middle of the FORM, is a line that tell you that if you didn’t indicate that you want to start your drawdown from age 64,or 65,the DEFAULT AGE is 70.

is not acceptable. It’s not Christian, kosher or halal. It’s politically toxic, playing games this way.

Civil rights activists would be KPKBing and rightly so.

Here it’s par for the course.

Worse our ang moh tua kees don’t care. They don’t have to rely on CPF Life payouts. People like Kirsten Han got pa’s and ma’s money just like Harry’s children.

And juz as bad is the silence of the Oppo politicians. Nothing from the Wankers’ Party or from Goh Meng Seng (Silence of Goh Meng Seng) or Lim Tean (Where’s yr defamation video and jobs rally Lim Tean?) the two talk, sing song artistes.

All so rich. It’s a fact that Lim Tean rents a black and white bungalow costing $15,000 a month.

---

Last yr, I also predicted: Akan Datang: Why CPF Life payments will begin at 85

Related: More on 85 being the new CPF Life payout date

Mkt can go either way this yr

The market appears to have reached a stage that entails staying defensive until a more difficult investment call is required. Should the current equity market correction deepen (talking before the recent rally), then the question is as follows:  “At that point, investors will need to decide whether the bear market has begun, or whether they have just been presented with one last great risk-on buying opportunity.”

So says Jim Paulsen of the Leuthold Group whicjh provides original analysis for the institutional marketplace the market talking of the US equity mkt.

Well I think notwithstanding the bounce, he’s right about defensive for now.

Recession or not? Conflicting signals

Believe financial indicators or believe real-life data? The models from JP Morgan premised on these different signals give wildly differing results

Economists at J.P. Morgan have developed a model based only on the historical predictive power of the stockmarket, credit spreads and the yield curve; that implies the probability of a recession in America in 2019 is as high as 91%.

[…]

A different model built by J.P. Morgan analysts, this time based on short-term economic indicators such as car sales, building permits and the unemployment rate, put the probability of recession in 2019 much lower, at 26%.

https://www.economist.com/finance-and-economics/2019/01/05/what-the-market-turmoil-means-for-2019

Bitcoin in 2019

FT reports that San Francisco-based Pantera Capital in early 2018 predicted the price of bitcoin could reach US $50,000 by 2019. Now at US$3,800.

Now telling its clients to believe in fairies i.e. keep the faith.

Returns of 2018: What returns?

Why Oxygen and other cybernuts are having orgasms this Christmas

They are always wishing ill to striving S’poreans, some of whom are having problems this Christmas, and so making Oz tax dodger Oxygen and his other cybernuts pals really very happy.

The number of properties put up for auction surged by almost 50 per cent this year compared with 2017, even as the number that successfully went under the hammer fell sharply.

There was a rush of listings in the final three months of this year, with more than a third put up in the fourth quarter, according to data released by property consultancy Knight Frank on Friday (Dec 21).

There were 1,120 properties put up for auction — the highest since 2011 — a 47.4 per cent increase from the 760 listings last year.

Out of the 1,120 listings, 41.9 per cent were residential properties, 22.9 per cent were retail units and 24.8 per cent industrial properties.

https://www.todayonline.com/singapore/properties-put-up-for-auction-surge-2018-knight-frank

But let’s be fair to these cybernuts. Only greedy PAP voters who are the cousins of cybernuts mortgage themselves to their eyebrows eyebrows and beyond.

Whatever, Merry Christmas to all.

And ensure a Prosperous New Year by voting wisely. And I don’t mean voting for Mad Dog, Lim Tean or Meng Seng.

S’pore value screens by KGI Securities

Value in MSCI Singapore Index: KGI Securities

Deluded Pine Court pigs still dreaming? They related to TRE cybernuts?

Further to PAP whacks greedy pigs even greedier pigs

two en bloc projects are raising their asking prices.

[…]

Pine Grove near Ulu Pandan Road also raised its price in October by S$140 million to S$1.86 billion, in a bid to secure a majority consensus needed to launch a public tender.

---

Back to 2011

They were gunning for S$2.17bn in 2011 but failed to get anyone to even smell. Analysts said at the time said S$1.3 bn to S$1.4 billion was doable. Details in Even greedier en-blockers

Now only dropping from S$2.17bn to S$1.86 bn.  They think developers more stupid then them is it? They had better realise that Old private flats’ value can also fall off a cliff.

But then they most probably have the same mental defect as TRE cybernuts such as tax dodging Oxygen, pork eating and alcohol drinking Bapak, cheap-skate BS artist Zhenzidan and always and lying rukidding. All cousins leh suffering from the belief that only they are right and everyone else is wrong. One group thinks that S’poreans will get rid of the PAP at the next GE, the other that their properties are worth a lot more than the mkt price. Both have been proven wrong, but persist in their beliefs.

---

The other deluded, greedy pigs?

Those living in

Mandarin Gardens along Siglap Road, for instance, upped its asking price by close to 12.5 per cent to S$2.79 billion in November, after finding out that the land parcel it sits on was undervalued.

Whatever

Analysts said raising the asking price would likely deter developers, especially for mega sites.

“Very often sellers are only interested in what they’ll be getting – that means the premium they’ll be getting – and omit the other costs developers will acquire for the plot of land,” Huttons’ Mr Lian explained.

“It’s not just the reserve price – it’s also the lease upgrading premiums, the differential premiums, the 5 per cent non-remittable ABSD (Additional Buyer’s Stamp Duty) plus the 25 per cent remissible ABSD if they cannot sell all their units within the five-year period.”

Knight Frank’s Dr Lee said that some en bloc sellers may have a “loss aversion” mindset when it comes to selling their properties.

“Some of them may have probably bought them at quite high prices and are generally only willing to sell if prices are above a certain mark,” he added.

“In the case of Pine Grove and Mandarin Gardens, they may find their product is very unique and so they want to push up prices … But it might be a bit difficult because there are other options – many options – available in the market.”

Read more at https://www.channelnewsasia.com/news/business/more-than-30-en-bloc-bids-fail-to-find-buyers-cooling-measures-11035028

They also don’t realise that there’s a trade war looming between China and US looming and we’ll suffer

Singapore’s non-oil domestic exports (NODX) growth fell more than expected in November with shipments to most of its major trading partners declining, official data showed on Monday (Dec 17).

Exports fell 2.6 per cent in November year-on-year, data from the trade agency International Enterprise Singapore showed, falling sharply from the revised 8.2 per cent rise the month before.

This was weaker than the 1.2 per cent increase predicted by economists in a Reuters poll.

On a seasonally adjusted month-on-month basis, exports contracted 4.2 per cent in November after growing 4.2 per cent in October. The poll predicted a 0.6 per cent expansion from the month before.

Trade to top markets like China, Indonesia and Europe declined. Exports to China fell 16 per cent in November from a year earlier, compared with the previous month’s 25.8 per cent decline.

Electronics exports rose 4.5 per cent in November from the year earlier, recovering from the 3.6 per cent contraction seen in October.

https://www.todayonline.com/singapore/singapore-november-exports-fall-faster-expected

(Related post: PAP needs strong Chinese economic growth)

But then they most probably have the same mental defect as TRE cybernuts such as tax dodging Oxygen, pork eating and alcohol drinking Bapak, cheap-skate BS artist Zhenzidan and always lying rukidding. All cousins leh suffering from the belief that only they are right and everyone else is wrong. One group thinks that S’poreans will get rid of the PAP at the next GE, the other that their properties are worth a lot more than the mkt price. Both have been proven wrong, but persist in their beliefs.

---

 

Investment returns over next 10-15 yrs

Forecast by JPMorgan. Interesting the big changes (relatively speaking) in the view about commodities’ returns, US long treasuries and US investment grade corporate bonds.

“Houses are for living in, not for speculation”

Of course not PAP: but Grandpa Xi.

And it’s a statement that the PAP and voters should remember. While a lot of the KPKBing about the price falls in older HDB flats is coming from the usual suspects like P(olitician) Ravi, the SDP (Note the silence of the Wankers: Low, Auntie and Bayee got condos waiting to be seized when they lose court case), and the cybernuts, bet u there were greedy PAP voters didn’t know that a 99-yr lease is juz that and are suffering in silence.

They heard “asset appreciation” and bought resale flats.

Will this resale flat buyer vote for PAP in next GE?

“I bought in the resale market when the prices were quite high some years back,” said Jun Liang, 42, whose apartment is in a 55-year-old block called Selegie House. “When I look at the value now, it would not have appreciated — in fact, after renovation costs it could even be a small loss.”

[…]

Home-owner Jun and his wife bought their apartment in one of the oldest HDB blocks in 2013 after getting married, spending about S$700,000 on the property and another S$100,000 to renovate. Now, they have thoughts of upgrading to a private condo. But, looking at their budget, the couple wonder if they’ve any chance of getting the home they want.

https://www.bloomberg.com/news/articles/2018-10-25/singapore-s-public-housing-envy-of-the-world-hits-rough-patch

I think he’s deluded about a small loss taking into account renovation costs. Remember prices for flats like his took a dive after Lawrence Wong’s warning about the govt taking back the land when the leasehold expires: Why 30-year old HDB flats difficult to sell.

And it’s going to get worse. 🤑🤣😛😢😪😂😝😜

Fat cat medical doctor/ investor quantified the loss

The flats in Selegie House are the small types. The one in question probably a 806sqft 4-rm flat.

If really need to sell today, unlikely to get serious offers much above $500K. Buyers will need big chunks of cash onhand to pay.

Even if SERS, the compensation by HDB based on market valuations will be a big % loss of what he paid, and certainly not enough to buy any replacement new 4-rm flat in city centre area, even if its a subsidized BTO as part of SERS package.

If there’s SERS, HDB might offer them BTO replacement flats in a slightly cheaper district such as Kallang River / Mountbatten area. This was what they did for the Rocher Centre residents when it got torn down for the N-S Highway.

.

Financial literacy test for wannabe hawkers?

I ended Double confirm GE in 2019: Free lunches for two yrs for KPKBing hawkers saying “Dollars and Sense” of a Hawker Stall should be required reading for wannabe hawkers.

I’m still unable to find out from their agitator friends if the newbie hawkers had read and understood what they were signing up for. If they had (have to assume they are not cybernuts, but educated S’poreans: yes, yes a big assumption), then the real issue is whether their projected revenues were overoptimistic. And if so, did the operators over-promise but the newbie hawkers didn’t realise that they were being taken to the cleaners, or did the hawkers cock up their estimates of footfall etc?

So maybe budding hawkers got to pass a financial literacy course?

After all

A financial education curriculum will be rolled out to all polytechnic and Institute of Technical Education (ITE) Year 1 students from next year, as part of government efforts to boost financial literacy among Singaporeans and help them manage their money well.

The mandatory module, which will not be graded, will focus on budgeting, goal-setting and financial basics such as the effect of compound interest on debt and savings.

Additional modules will also be piloted with some Year 2 and 3 students over the next few years to help them become more savvy consumers and learn how to use insurance, investments, and national schemes such as the Central Provident Fund.

This was among several new initiatives announced on Saturday (Nov 17) by MoneySense, Singapore’s national financial education programme.

An online financial health check tool for all Singaporeans and permanent residents was also launched at the roadshow at Our Tampines Hub, which will run until Sunday before moving to the HDB Hub in Toa Payoh on Dec 8 and 9.

The questionnaire, which is available on the MoneySense website, helps to assess progress in areas such as money management, insurance, investment, retirement and estate planning, and provides recommendations to address the gaps identified.

Services at key government touchpoints will also be enhanced to help Singaporeans better understand their financial options at milestones such as buying a flat and preparing for retirement.

ST recently

Another constructive suggestion: include a module on how to make realistic projections and another on “take nothing the operator of hawkers’ centres says on trust”.

Yet another constructive, nation-building suggestion: screen out the cybernuts especially those from TRELand.

Because if the newbie or wannabe hawkers are anti-PAP cybernuts, no point even trying to educate them, let alone subsidise them in the hope that their revenues will grow because of improving footfalls by 2020. It’ll be a waste of tax-payers money that can better go to fund our ministers millionaire life styles.

Worse, there’ll be a spate of food poisoning as cybernut hawkers would prefer to read TOC and TRE and KPKBing on these sites rather than cook good, hygienic food. Morocco Mole tells me that his cousin in NEA tells him that many of the recent fatal food poisoning cases are suspected to be the consequence of employees reading and posting on TRE rather than on focusing on food preparation.

 

 

 

This time is different? Or is financial history going repeat itself?

Goldman Sachs’ “Bear Market Risk Indicator” is higher than on the eve of the financial crisis. This indicator is made made up of a mixture of economic, bond and equity market measures.

Also Bank of America’s latest investor survey revealed the number of investors that expect global economic growth to slow down has climbed to the highest since November 2008.

S’poreans fall for CNA’s flawed look at hawkers’ margins

CNA Insider, part of the constructive, nation-building media screamed

Profit margins for hawker fare? As low as 20 to 30 cents

Giving the example of

Mr Ng, who started The Fishball Story in 2013, disclosed that his net profit from selling a bowl of noodles at S$3 was 20 to 30 cents.

“That’s the margin … and it’s pathetic,” he lamented. “It’s very difficult for (hawkers) to continue selling cheap food any more.”

Read more at https://www.channelnewsasia.com/news/cnainsider/profit-margins-for-hawker-centre-fare-as-low-as-20-to-30-cents-10948414

This example and other similar examples in the CNA article had the usual cybernut suspects and even ordinary S’poreans KPKBing on new media about the plight of hawkers, and blaming the Pay And Pay people.

The ordinary S’poreans joining the cybernuts in baying for PAP blood are either not thinking straight or are financially incompetent.

Is that “margin” or “net profit” before or after the “salary” that hawker pays himself? When I see the word “net margin” or “net profit”, I assume that the amount is net of everything including “salary” payments made by ownself to ownself.

Same query for the other examples quoted in the CNA article because nowhere in the article does it state whether the “margin” or “net profit” takes into account the amount that the hawker pays himself for his efforts.

If it doesn’t then it’s really a tough life. If it does, then whether it’s that tough a life depends on the amount that ownself pay ownself before KPKBing about the “peanuts” net profit.

---

“Dollars and Sense” of a Hawker Stall

But does the “Estimated Monthly Cost” include the “wages” that the two entrepreneurs pay themselves? If they had employees, the employees’ wages would be included under this heading. But as they are both bosses and workers, it isn’t clear if “Cost” includes their “wages”.

Makes a big difference on the real bottom line.

Initial Cost Of Starting Hawker Stall (Inclusive Of Opportunity Cost)

(Excluding Apprenticeship Fee)

$40,000

Monthly Operating Cost$11,000 – $15,000

Estimated Daily Revenue	$1,000	Based on assumption of 200 Customers, average spending of $5
Estimated Monthly Revenue	$22,000	22 working days per month
Estimated Monthly Cost	$13,000
Estimated Monthly Gross Profit	$9,000

——————————————————————-

Many moons ago when surgeon Susan Lim was trying to portray herself as more sinned against than sinning, I wrote

“Do the breakeven cost of $46,000 include any payments to you in the form of salary, director’s fees or advance payments?”. If they do, these numbers should have been disclosed by her when she bandied these numbers. These would have given an analyst a better understanding of what went into calculating the breakeven.

I’m not accusing Susan Lim or her accountants of anything shady or stupid. I’m juz trying to understand how the numbers she quoted prove that, This was a huge loss-making assignment.

 

 

 

The Hard and Harder Truths about Uber, Grab or Go-Gek

They got the funding to burn dollar notes, others don’t.

“Tens of others had technology just as good as Uber that never went anywhere. The difference is Uber has been heavily financed by Wall Street and they’ve raised more than $13bn. We didn’t have the same access to capital.”

He says building Uber’s app might have cost something like $30m but the rest of its huge pile of cash has gone on subsidising rides, offering discounts, effectively buying up the market.

CEO of Autocab talking to BBC: https://www.bbc.com/news/technology-46151994

As Autocab had been providing various services to cab firms for 20 years and was developing apps back before Uber got off the ground, the BBC reporter asked the CEO (Safa Alkateb) the obvious question: why wasn’t this Manchester firm heading for a $120bn (£92bn) IPO and global domination and not the start-up born in San Francisco?

Safa Alkateb, who spent a career in Silicon Valley before coming home to run Autocab, had a simple answer – money.

The Harder Truth: Uber raised the white flag in S’pore and the region, the winner Grab stopped subsidising fares. Fares rose while incentives for drivers were scaled back.

The throwing of money is aimed at securing a monopoly or near monopoly position.

South-east Asian authorities gained valuable experience as they scurried to respond, suggested Toh Han Li, chief executive of the CCCS* and this year’s chair for Asean’s competition agencies group. The Grab-Uber case “can be considered as the first significant case involving co-operation among Asean competition authorities”, he said.

Nikkei Asian Review

*Competition and Consumer Commission of Singapore

 

Crazy Rich Asians not falling for Ang Moh BS

EPFR Global the data-tracking firm notes:

“Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates, with the notable exception of Asia Pacific equity funds, continue to attract fresh money even when the broader geographic groups they are part of struggle.”

 

Akan Datang: New WP Sec-Gen and Chairman

I predicted that Bayee would not be WP’s Sec-Gen: WP Low’s anointed one

I was wrong but the I guy tipped to be Sec-Gen will soon be: OK, OK before next GE. Read above link to see who is that person.

Reason? The trial going on involving Bayee, Auntie and Sifu Low.

The trial involving three elected members of the opposition Workers’ Party held Aljunied-Hougang Town Council began last Friday. The stakes are high, and a potential judgment against the MPs could see them bankrupted and disqualified from holding public office.

https://www.facebook.com/notes/remy-choo-zheng-xi/ahtc-trial-what-to-look-out-for/10156061952333737/

While one suit is brought in name of AHTC (Ownself sue ownself), the suits came about because an independent panel (My take on the panel when it was set up) approved by the Wankers’ Party (AHTC accounts: WP outsources decision to recover monies) recommended that legal action be taken against the town council members and others to recover the alleged improper payments.

I do not see any reasonable defence to these claims. Think of all the bad accounting (KPMG report on AHTC: Notice the deafening silence?) and expect the defendants to lose. Related post: Wankers’ Party still blur on audits and accounting.

Low and Auntie, I’ve predicted will not stand in next GE, so at worse their political careers are cut short near the end. Not a happy ending if they are bankrupted but they fought the good fight, keeping alive the flame of Opposition in a dark time.

But Bayee is young and is a newly elected Sec-Gen of WP and losing the case and being bankrupted and disqualified from holding public office will be a great end of his so far unimpressive political career.

Whenever Auntie steps down, the betting in the WP, Secret Squirrel and Morocco Mole tell me, is that one Nicole Seah will be the next chairman: remember her?  She’s been working hard and quietly in the Marine Parade GRC.

The Law Suits, in Summary

There are two lawsuits.

Suit 668 is brought by AHTC, acting on the instructions of an Independent Panel appointed by order of the Court of Appeal.

Suit 716 is a lawsuit brought by Pasir Ris-Punggol Town Council (PRPTC).

In both Suits, it is alleged that the Defendants are liable for alleged improper payments made by the Managing Agents to third party contractors between May 2011 – November 2015.

https://www.facebook.com/notes/remy-choo-zheng-xi/ahtc-trial-what-to-look-out-for/10156061952333737/

Why private property owners appreciate the PAP

Especially if they are still mortgaged to their eyeballs.

S’pore’s NOT among the global cities that have the highest risk of seeing their property values collapse. We are not even on the “overvalued” list. We are on the “juz right” list.

The cities seeing the highest risk of seeing their property values collapse are HK, Munich, Toronto, Vancouver, Amsterdam and London, says UBS’s latest Global Real Estate Bubble Index.

Milan, S’pore and Boston are “fairly valued”. Ten cities including NY, Sydney and Stockholm are overvalued. Chicago is the only undervalued housing market in the 20-city index.

Still want to vote against the PAP?

Related post: Akan datang: GE in late 2019

First signal: the PAP govt ended the property cycle upswing early. If things had been allowed to run their usual course, we’d have rising property prices in 2019, if not 2020.

What value Buffett shares with a “A Man for all Seasons”?

“Sir Thomas More: Why not be a teacher? You’d be a fine teacher; perhaps a great one.
Richard Rich: If I was, who would know it?
Sir Thomas More: You; your pupils; your friends; God. Not a bad public, that.”

― Robert Bolt, A Man for All Seasons

”If you want to be remembered for one thing in your life, what do you want to be remembered for?” Howard Buffett asked Warren Buffett. He told his grandson: “Being a teacher, educating other people.”

His grandson is an associate professor at at Columbia University’s School of International and Public Affairs. He has has co-authored a book on impact investing.

Impact investing refers to investments “made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.”

Impact investing – Wikipedia

More on Richard Rich

Rich is the supporting villain in the play A Man for All Seasons by Robert Bolt, which shows his slide toward corruption. In the subsequent, Oscar-winning film adaptation, he is played by John Hurt. Bolt depicts Rich as perjuring himself against More in order to become Attorney-General for Wales. More responds, “Why Richard, it profits a man nothing to give his soul for the whole world… but for Wales?”. The final line of the film notes that Rich “died in his bed” as a critical juxtaposition with More’s martyrdom.

https://en.wikipedia.org/wiki/Richard_Rich,_1st_Baron_Rich#In_popular_culture

Myth & reality in mkts

Many believe useful myths about the markets they follow. If you want to manage money well, you need to understand what the prevailing myth is, grasp where it is wrong and when that will become apparent. Indeed, making good investments often rests on disagreeing with the conventional wisdom. However, you need to time your disagreement so you are not blown away by the weight of money going the other way before the truth outs.

John Redwoodchief global strategist for Charles Stanley, a UK broker, writing in the FT.

Robo advisers underperform

Recently, on the same day that I read OCBC had introduced robo investment advice here, I read

Low-cost robo advice companies billed as investment services for the masses have failed to deliver market-beating returns over the last year according to new research,

Companies such as Nutmeg offer ready-made investment portfolios of low-cost passive funds and have boomed in popularity in recent years amid a growing need for financial advice in the UK. Investors are automatically placed into portfolios based on an online risk assessment.

But according to research by consultancy Boring Money, customers would have earned more from a fund tracking the FTSE 100 than even the best-performing high-risk portfolio, and low-risk investors could have earned more in a cash [special tax account]

FT.

Rothschild’s a bear

Among his past good calls was his call years ago, at the beginnings of the US shale gas revolution, that this would transform the US, making it a great place to invest in US based industries that used natural gas.  

Lord Rothschild’s remarks on markets are always worth reading. First, he knows how to make money. RIT Capital Partners, the £3.2bn investment trust he chairs, has returned an average of 12.6% a year since flotation in 1988, which is excellent going for a defensively managed fund. Second, a substantial chunk of his personal wealth is held in RIT. His 18% stake is worth a cool £575m. Third, he gets to the point.

Rothschild has sounded progressively bearish since late 2015 but he took caution to new extremes in Tuesday’s report to shareholders. “This is not an appropriate time to add to risk,” he wrote, citing high stock market valuations, the length of the bull run (10 years, a record), and the end of the era of quantitative easing.

Then he offered a list of familiar worries: the eurozone; trade wars; the effect of higher US interest rates on emerging markets, with the currencies of Turkey and Argentina being early casualties; and Brexit, North Korea, the Middle East and populism. His key point is that the 9/11 terrorist attacks in 2001 and the 2008 financial crisis provoked a common approach from world powers, but it’s hard to imagine the same response today. His conclusion was almost alarmist: “This puts at risk the post-war economic and security order.”

For its part, RIT is keeping a very low exposure to stock markets of just 47%. Warren Buffett, the most successful investor alive today, is similarly in risk-off mode as he sits on large sums of cash and grumbles about how everything is too expensive to buy. Take note of these octogenarians. They have seen a few market cycles.

https://www.theguardian.com/business/nils-pratley-on-finance/2018/aug/07/rothschilds-caution-reaches-new-extremes-warnings-nils-pratley

Shares to buy?

Supermarket chain Sheng Siong, ground-services provider SATS, ComfortDelgro, SIA Engineering and ST Engineering say DBS. Can’t argue with these at this time, especially the TLCs and the GLC.

With a host of risk factors, including fresh trade-related jitters, threatening to cause more pain for local equities, analysts say it’s time for investors to seek shelter in defensive plays.

“We advocate investors to reposition into defensive stocks, using the rebound in July to pare exposure to cyclical names,” said DBS Group Research analysts Yeo Kee Yan and Janice Chua.

These will be stocks that are not closely linked to the economic cycle, while having a healthy level of cash, decent growth of about 5 per cent ahead and a consistent and satisfactory level ofdividend payouts.

But buying Reits? Taz another analyst suggesting.

Now I’m still up to my eyeballs in Reits. But even I consider them higher risk stuff because they pay out most of their income. Btw, I’ve never been into retail Reits.

 

So why so cock?

“I’m retired so this was going to be a key part of my income but now, not just the income, I have to be worried about my capital. My kids are going to university soon so I have to figure another way out.”Read more at https://www.channelnewsasia.com/news/business/hyflux-shareholders-townhall-meet-management-first-time-10545662

So why did he buy Hyflux debt in the first place?

A fool and his money are soon parted.

Btw, remember to use yr CPF normal account as yr savings account

Using yr CPF OA as a savings account

Oldies use yr CPF acct as savings, fixed deposit account

Average S’poreans smarter than scholar ministers

They cottoned on a long time ago that having babies didn’t help them in the pursuit of the 5Cs.

It’s time for governments to accept a basic truth of the 21st century political economy: Children are an economic drag for parents …

Putin introduced major subsidies for parents. Russian fertility subsequently increased, but hardly enough to matter. The 1.7 rate of 2015 remained well below the replacement level. And an 11 percent decline in births in 2017 suggests the effects of governmental birth subsidies are fading.

That pattern is common. After the Hungarian government brought in some of the world’s most generous child subsidies, the average birth rate increased only from 1.2 to 1.5. The plain fact is that governments cannot pay people to have more babies. Lower taxes, more subsidised childcare, easier access to housing and so forth do little, and not for long.

The economic logic is impeccable. No government can afford to give parents enough money to keep children from being more cost than benefit. Kids are expensive to feed, and middle-class offspring these days absolutely need expensive holidays, extra schooling and a panoply of consumer goods.

For whatever immeasurable happiness parenting may provide, it does not bring much long-term economic gain. When kids grow up and start working for pay, they rarely put much into the extended family’s coffers. If anything, they take up residence in parental attics for longer and welcome a bit of assistance stepping onto the housing ladder. Older people also now expect support from personal savings and government benefits, not their children.

Child-rearing also hurts incomes. Moms and dads often find that the commitments of time and worry slow professional advancement. Fewer children inevitably equate to lesser impediments.

All in all, it is clear that in this modern world most people will only have children because they want to. Since monetary considerations are secondary, what economists would call the subsidy-elasticity of demand is very low.

https://www.reuters.com/article/us-global-economics-breakingviews/breakingviews-hadas-global-case-of-baby-fever-is-easily-cured-idUSKBN1K813Z

 

 

Gd place to borrow money from

At reasonable rates

CO-OPERATIVES, A LESS KNOWN OPTION

An … alternative that many people don’t think about is borrowing from a co-operative society.

Co-operatives started here nearly a century ago to provide a safe place for savings and access to affordable credit.

Admittedly, they are not all open to everyone. Only teachers can get loans for 3 per cent at the Singapore Teachers’ Co-operative Society, and Polwel is for police officers.

Other co-operatives are more accessible. TCC, formerly the Telecoms Cooperative Society, says it is open to all Singaporeans and permanent residents. The interest rate for loans is just 6.99 per cent.

While you would likely need to establish a track record before borrowing, you could join a credit union if you need to take up loans periodically in the future.

https://www.todayonline.com/singapore/reducing-cost-borrowing-money

And given a reported case of criminal breach of trust by employees of one co-op, with a bit of luck there might be no record of yr borrowings.

Why I’m still not filthy rich

Ken Fisher, head of Fisher Investments and a regular FT columnist, published a provocative book on the “The Only Three Questions That Count” for investors. In a nutshell, they were, what do I believe that’s wrong, what can I fathom that others cannot, and what is my brain doing to mislead me?

FT

i still can’t answer the third question well enough.

 

 

More on 85 being the new CPF Life payout date

In Akan Datang: Why CPF Life payments will begin at 85, I “explained” why the PAP was planning to move the CPF Life start date to 85: Many S’poreans would be dead by then because 85 is 2.4 years above the average S’porean life expectancy rate of 82.6 yrs.

Seriously, two points to note on why there’ll be a move to up the age when CPF Life starts paying out (Remember the default age is now 70:CPF Life: How withdrawal age “moved” to 70)

When ang moh countries introduced state old age pensions: example when UK introduced state pensions in 1908, the retirement age, 70 for both men and women, was well above average life expectancy.

And then there’s the issue of accelerated ageing where S’pore is among those top of the class.

Senior VP financial planning was a problem gambler

WTF!

For 12 years, Emeline Tang Wei Leng carried out an elaborate ruse, deceiving five people – including her own family members – into investing their savings in non-existent fixed deposit plans with HSBC bank.

Given her former position as a senior vice-president at the bank, they trusted her with a total of S$5.2 million. But Tang, 39, used their savings to fund her gambling habit.

On Friday (June 29), the District Court sentenced Tang to 10 years and six months’ imprisonment for 34 charges including cheating and forgery. Another 223 charges were taken into consideration during sentencing.

…

Starting out as a relationship manager, Tang rose up the corporate ladder and was in the financial planning division when she left HSBC in 2012.

https://www.todayonline.com/singapore/former-hsbc-senior-vp-jailed-cheating-family-members-and-elderly-s52m

As an investor in HSBC, I’m left wondering about the HR practices of the bank.

But then all this modern day emphasis on employees’ dignity and privacy rights, and employers fear of getting into trouble on social media for intrusive survelliance of staff, means incidents like this is more likely than not to happen. Sad.

Investments: What rocks, what sucks

Xiaomi: “Easy come, easy go” or why cybernuts happy again

Xiaomi, the [US]$100bn Chinese smartphone and TV unicorn? It’s now a $50bn unicorn after it decided to cancel plans for a Chinese depositary receipts issuance.

FT on Wed/ Thurs

This is the latest twist in a tale that will have cybernuts happy again that Temask and GIC always losing money.

Juz six months ago Xiaomi was valued at US$100bn after getting into trouble a few yrs ago: Xiaomi’s IPO will make anti-PAPpyists frus

Then a few months back, it became worth US$70bn: Xiaomi IPO: Why cybernuts will be happy again

Oh and Xiaomi has juz launched an IPO to raise US$6.1bn (amended from US$6bn). It had planned to raise US$10bn but the cancellation of its Chinese depositary receipts issuance made that impossible.

Whatever, the cybernuts will never accept that Temasek and GIC made money on this investment. The changes in the valuation reflect the difficult of valuing an unlisted investment, especially a tech company.

Akan Datang: Why CPF Life payments will begin at 85

This will happen because 85 is 2.4 years above the average S’porean life expectancy rate of 82.6 yrs.

Let me run readers thru the argument.

In CPF Life: How withdrawal age “moved” to 70, I explained how the CPF Life default age for receiving payments was raised to 70, while earlier in Why CPF annuity will begin at 75 I joked that Queen Jos was planning how to justify raising the age to 75.

Well Russia has an even better plan to screw the elderly. Russia today, S’pore tomorrow?

Russia recently proposed raising retirement age above the average life expectancy of Russian males (63 yrs)

Prime Minister Dmitry Medvedev proposed increasing the pension age for men from 60 to 65 years old, and increasing the pension age for women from 55 to 63 years old.

… with many pointing out on social media it would make retirement age higher than the average male life expectancy in Russia.

https://www.bbc.com/news/blogs-trending-44495136

In S’pore, according to govt data the average male life expectancy age is 80, the female life expectancy age is 86.1 and the average 82.6. Don’t ask me how the average is calculated.

Rounding the average up to 83, and learning from Russia, CPF Life payments will begin at 85, enabling the reserves to grow and grow because many male S’poreans will be dead before CPF Life payments begin.

Btw, remember if CPF Life plan dies, you die: not yr money.

There is a provision in the law governing the CPF Life Plans which states that payouts are contingent on the Plans being solvent. This is because premiums that are paid in to get the annuities are pooled and collectively invested. If the plan you chose doesn’t have enough money to pay out, you die. This is unlike the [Minimum Sum] scheme, where account holders are legally entitled to the monies in their CPF accounts …

(https://atans1.wordpress.com/2011/12/03/best-cpf-life-plan/)

 

 

 

 

CPF Life: How withdrawal age “moved” to 70/ Silence of the activists

I was going to explain how the dastardly deed was done but when TRE republished

Red alert! Achtung! S’poreans approaching 65, a TRE reader gave the answer, saving me the need to explain.

Lye Khuen Way:

June 11, 2018 at 7:50 am  (Quote)

The CPF Board do send out letters to those approaching their cohort drawdown age.
For those borned in 1953, it’s their 64th Birthdays.

There after, I believe it is 65.

The sly way they put it, is to suggest that you could delay your drawdown and receive more per month.

That applies to both Minimum Sum Scheme or those who opted for CPF Life.

Those who instinctively do not want any delay might just chuck the letter and the forms aside.

That’s where the devils come in.
Tuck away in the middle of the FORM, is a line that tell you that if you didn’t indicate that you want to start your drawdown from age 64,or 65,the DEFAULT AGE is 70.

Yes, Age 70.

I happen to opt for the CPF Life and somehow my enhanced topup application had already stated I wanted my draw down to start from age 64.

If unsure, call, write or better still go down personally to any of the CPF offices. Note that the Main CPF Board office is closed on Saturdays.

(Emphasis)

In places like the UK, or US of A or Europe, this kind of action

Tuck away in the middle of the FORM, is a line that tell you that if you didn’t indicate that you want to start your drawdown from age 64,or 65,the DEFAULT AGE is 70.

is not acceptable. It’s not Christian, kosher or halal. It’s politically toxic, playing games this way.

Civil rights activists would be KPKBing and rightly so.

Here it’s par for the course.

Worse our ang moh tua kees don’t care. They don’t have to rely on CPF Life payouts. People like Kirsten Han got pa’s and ma’s money just like Harry’s children.

And juz as bad is the silence of the Oppo politicians. Nothing from the Wankers’ Party or from Goh Meng Seng (Silence of Goh Meng Seng) or Lim Tean (Where’s yr defamation video and jobs rally Lim Tean?) the two talk, sing song artistes.

All so rich. It’s a fact that Lim Tean rents a black and white bungalow costing $15,000 a month.

TOC saying vote PAP?

I kid u not, Terry’s Online Channel has a gd word for the PAP govt and one of its flagship programmes.

This is what TOC wrote

S$1 million will easily cover the cost of most new and resale HDB flats in Singapore. The median price of HDB resale flats in every neighborhood is below S$1,000,000, so prospective homebuyers could afford a comfortable residence in even the most expensive areas of Singapore.

For example, the median resale price of a 4-room HDB even in Central was S$850,000 in the early months of 2018.

And

S$1 Million is Not Enough to Afford Most Homes in Many Major International Cities

Both quotes from https://www.theonlinecitizen.com/2018/06/09/what-kind-of-home-would-s1-million-buy-in-major-cities-around-the-world/

Is TOC getting paid to say nice things about the PAP govt? One of TOC’s grouses is that mothership gets sponsorship from GLCs. So has TOC saold its soul too?

Btw, the writer is the only numerate person in TOC’s stable of writers and editors.

 

Red alert! Achtung! S’poreans approaching 65

Responding to this Why CPF annuity will begin at 75 fat cat investor and ex-medical doctor “abc” said that

In case you didn’t know, the DEFAULT CPF Life payout age is now 70.

This is in the event you don’t get back to CPF before your 65th birthday.

I think this policy started (silently) in 2017.

I asked a financial planner if this assertion was right, and he said after checking with a colleague, “Yes”.

So if u want yr CPF Life payments to start at 65, tell CPF. Otherwise have to wait until 70: which will soon morph into 75 as I predicted.

As, I’m on the minimum sum and I’ll be checking to see if I have to give notice that I want my money from 65 onwards. Until I give CPF details of bank account where the money is to be paid into, I know the money will be rolled over but now I want to know if I don’t give them bank account details before I’m 65, will the payments start only when I’m 70.

Not at it really matters, I’ve not withdrawn any of my CPF monies.

Btw, anyone knows what happens if someone “opts” for payment to begin at 70, but dies between 65-70: will the estate lose “everything” i.e. the amountrs not paid out? If so better start receiving money at 65.

Fate of S’porean dating Initial Coin Offering

A report in the FT over the weekend that an ICO has raised US$4bn reminded me of this recent BBC report about a S’pore-based ICO

Violet Lim wants to get rich by marrying together internet dating and the latest investment craze.

“Our ICO is about love on the blockchain,” the founder of Viola.ai exclaims.

“You can use it to get curated matches, to buy flowers, to book restaurants or even get dating and relationship advice.”

ICOs – or initial coin offerings to give them their full name – are a way to raise funds by creating a new form of money from thin air.

Singapore-based Violet has been involved in the internet dating industry for years.

But she believes an ICO presents a way to raise $17m (£12.6m) from investors, who will get tokens to use in their dating activities.

Why, I want to know, do you need a token to buy flowers for your loved one and why does the service have to be on this magical blockchain which apparently solves every problem?

“We are trying to solve a very important problem in our industry, which is the lack of trust,” she replies.

And she explains that by entering people’s details on an immutable blockchain, Viola will be able to deal with “love scammers” who hide their true identity.

But her enthusiasm gives way to a degree of despondency soon after, when Google bans crypto-currency and ICO ads on the very day Viola’s public sale gets started.

“[It’s been] a very bad first day followed by a very bad first week,” a more muted Violet tells me.

http://www.bbc.com/news/technology-44038181

It got a lot worse. The BBC asked finance blogger and former banker Frances Coppola to look at the S’porean’s ICO, and she was not impressed.

Of Viola she asked: “What’s the point?”

And she was not convinced by Violet Lim’s assertion that the blockchain would make dating more secure

“Why on earth would I want my entire dating history up on a public blockchain where everyone could see it?”

Well she wasn’t the only sceptic

As for dating-on-the-blockchain Viola, its founder and her team have decided to “pause” the sale and are monitoring market conditions to see when will be a good time to restart.

Another BS scheme bites the dust. There goes Violet’s and her team’s 5Cs ambitions, assuming she’s not a rich, clueless kid, playing with pa’s money.

 

Staircase to financial paradise

From FT columnist

Step 1: Do you need a financial adviser?

Step 2: Decide which type of service you want

Step 3: Independent or restricted advice?

Step 4: Choose which level of advice you need

Step 5: What are the charges?

Step 6: Finding an adviser

Step 7: Choosing the right person for you

Step 8: Keep your finger on the pulse

Gd advice for struggling S’poreans

In fact for anyone who isn’t fithy rich.

“You need to use a different lens to look at this question of finances,” says Ken McKellar, partner at AGM Transitions, a consultancy, and former partner at Deloitte and EY. “Rather than thinking of how big an income you need, think of how small a cost you could get away with without major changes to your lifestyle. Be aggressive about the cost. We learnt that a lot of ‘fat’ had crept into our spending over the years, and I have heard the same from many others.”

He was talking in the context of retirement planning and living in retirement in the UK.

Meritocracy? What meritocracy?

Double confirm: Paper general made Temasek and other NOL shareholders poorer too.

Not that Ho Ho Ho or other S’porean decision makers seem to care. Good luck SPH shareholders.

More evidence that NOL was sold when the cycle was about to turn &Sale completed in mid 2016).

Deutsche Bank is turning positive on Asia Pacific’s shipping sector with the strongest preference for the container sub-segment, followed by tanker and dry bulk.

This comes on the belief that industry conditions have now fundamentally turned, with the peak in deliveries of mega vessels and the recent acceleration of industry consolidation in recent years, which in turn means operators have the potential to achieve stronger price discipline.

https://www.theedgesingapore.com/tide-turning-favour-regions-shipping-sector-says-deutsche

Meritocracy? What meritocracy?

— Why PAP doesn’t do accountability, meritocracy

— Meritocratic hubris/ Who defines “meritocracy”

 

TRE poster asks “Why save when struggling?”/ Corporate raiders and change

When TRE used PAP is losing the war to keep S’poreans in ignorance there was this comment

SUNNY:

why must we save for future generation when we are struggling to survive in the most expensive city today.

in fact every generation can barely only support it self.
actually we are now the future generation ,what benefits are we enjoying??
may be the leaders should have their 90% salary/bonus cut for future 20 years generation,so we can witness before we die.
why save when it is raining heavily today.we won’t be around tomorrow.
who knows if the world will end tomorrow.

Here’s another thing to think about

What is the point of having a very good balance-sheet if the S’pore economy is underperforming its full potential?

In the 50s, 60s and 70s, US CEOs boasted of their companies strong balance sheets while spentdingcorporate funds on private jets, hunting lodges for themselves, co directors and senior executives, and their cronies. Shareholders got “peanuts” but wewre grateful. Then came the corporate raiders with the doctrine of “shareholder value”. CEOs  etc are still well renumerated but they have to keep the shareholders happy.

Recognise what should happen here next?

Too bad we got the likes of the Wankers’ Party, Mad Dog, Uncle Leong, Phillip Ang, Goh Meng Seng, s/o JBJ, TKL, Martyn See, Seelan Palay,Kirsten Han, M Ravi and TJS. They are the faces that the swing voters (those who voted for Dr Tan Cheng Bock) usually associate with change.

We need more people like Dr Paul, Terry Xu, Sonny Liew, Chris K, Tay Kheng Soon, Yeoh Lam Keong, Cherian George, Donald Low, Alex Au, Mohamed Imran Mohamed Taib, Tan Tarn How and Remy Choo.

 

Estate agents so stupid and selfish meh?

Mr and Mrs Ow should lose their licences because they are so stupid that they didn’t know that the shorter time left on any lease, the value of flat goes down. (HDB flats: 35 is a dangerous age and Why 30-year old HDB flats difficult to sell/ Why PAP rule will end in 2029)

I am very concerned if property agents who are suppose to be advising their clients personally had such an unrealistic idea that prices of HDB flats would rise forever that they thought it prudent to pay $580k for a 5-rm HDB flat that was already 35 years old at the time of their purchase.

ST also highlighted another case of HDB owner trapped in buying old HDB flats.

It featured a property agent, Janet Ow, who bought her 5-room flat with her husband, also a property agent, in the old estate of Telok Blangah. They bought the flat at $580,000 some 8 years ago in 2010. Currently, their old flat has just got 56 years left on its lease.

In 2016, they started marketing their flat at $680,000 to $690,000 hoping to make at least a $100K. Bids came in at $620,000 and $630,000 but now offers have also dried up. For more than a year now, they couldn’t sell their flat.

“Those who called asked about the balance of my lease first,” Ms Ow said. “The flat’s age has now become a main concern after National Development Minister Lawrence Wong’s reminder in March last year.”

“Upon knowing the age, sometimes they won’t even proceed with viewings. In 2016, when we put up an ad, we would get around 10 calls. Now, we don’t even get a single call for one to two weeks,” she added.

“If I don’t sell now and prices keep dropping, I will be making losses on my flat eventually.”

Ms Ow and her husband are hoping to sell their flat quickly so that they could get a condo with a fresh lease.

“At least we know we have a long lease ahead of us and can cash out,” she said. “We don’t want another HDB resale flat because the ageing lease problem will crop up again.”

…

In any case, at the moment, Ms Ow said she feels “insecure about the future”.

https://www.theonlinecitizen.com/2018/04/15/owner-sells-3-room-hdb-for-15-less-after-wongs-comment-about-zero-value-of-expired-flats/

Another reason they should lose their licences is that to help her and her hubbie out of their stupidity, they want the govt to screw other S’poreans

Ms Ow said, “Perhaps HDB could look into allowing buyers of flats with less than 60 years left on the lease to utilise their CPF fully (ie, 100%) instead of partially.”

“That will help to alleviate the worry of having to pay cash for part of the purchase. This will help buyers who need to buy flats in an oder estate to be near their parents who may be there,” she added.

Err that means those who use 100% of his or her CPF savings to buy such older flats will not have enough to retire on later because of the near-zero value of the flat.

Robbing blur Peter to pay stupid, s3elfish Pauline isit?

 

Welfare for insurers (cont’d)

Here in Welfarism the PAP way I gave an example (share of taxes paid) that the PAP did welfare: corporates get welfare, not the people

Here’s another: the new requirement that Integrated Shield Plans (IPs) with riders have a co-payment portion of at least 5%.

When the PAP introduced this welfare scheme for insurers, a minister talked about “buffet syndrome” of policyholders.

Well the insurers should have allowed to wallow in their own urine and shit.

The problem was self-created. The “free” riders were created to increase their profits, or so they tot. Now that it was not working for them, the PAPpies should not be riding to their rescue. They should simply stop marketing the products. And start increasing the premiums for existing holders to reflect previous pricing mistakes.

But to be fair to the corporate loving PAP govt: the change has not mandated any change for the 1.1m people who already have full riders for their Integrated Shield Plans (IPs) – which means they still will pay nothing for hospital bills.

But the freeloaders and scroungers that are the insurance industry will not stop lobbying for this to change. They had wanted the co-sharing to apply to the existing contract, or so Secret Squirrel and Morroco Mole tell me.

But the PAP govt didn’t want another public row what with its plans to raise GST after the next GE.

 

Remember the Death Cross?

Since 2009, equity markets have been in cheong mood.

Death crosses became an endangered technical sign.

One was sighted in Germany very recently.

Reminder: A death cross not only involves the 50 Daily Moving Average below the 200 DMA, but it also happens when both moving averages are declining

Welfarism the PAP way/ The last word on GST

Here corporates get welfare, not the people: and its foreign corporates that get the best goodies. PAP is not against welfarism so long as the beneficiaries are corporates, especially if they are foreign-owned. Ang moh tua kee kind of fascist movement?

Don’t believe me?

Well a friend, a respected economist, wrote

In Singapore’s case, there are other reasons to avoid the GST: In the context of an economy where there is an extraordinarily high profit share of GDP, is it appropriate that households bear a higher proportion of taxation than corporates? Our very rough estimate is that the direct taxes plus indirect taxes plus various levies paid by the household sector amount to about 11% of GDP, whereas the equivalent for the corporate sector is around 6%.

And

Given that foreign shareholders earn roughly half of the profits accruing to the corporate sector, the burden on Singapore households seems already to be unevenly high. This being the case, it does not seem appropriate to increase the burden on the household sector even more by increasing the GST rate.

Writer is Manu Bhaskaran. He was Tharman’s cell mate when they were convicted of breaching the Official Secrets Act. OK, OK, they were only fined. Btw, that incident showed that S’pore is a place of laws. Manu talked to his old boss in Mindef (Manu’s a scholar), BG Yeo, but BG Yeo couldn’t help. But maybe BG Yeo was ball-less or powerless, or both?

Sorry back to the article. Do read https://www.theedgesingapore.com/singapore-funding-its-rising-social-spending-right-way. Lots of other good stuff that show the fallacies of Hard Truths on Reserves, GST and govt spending.

Examples

And this brings us to the nub of the issue: What is the optimal savings rate for a country like Singapore? Savings is not an end in itself; it is the welfare of the citizens that is the end. Simply accumulating savings continuously is not the right thing to do — the right approach is to look holistically at all the determinants of welfare and then decide an optimal savings rate.

And

The thrust of the discussion above essentially leans to a view that Singapore is probably already saving enough and may even have exceeded the optimal savings rate. In that context, the better approach to funding rising social spending is to use more of the income from investments and to not raise taxes, be it the GST or some other tax.”

 

PAP is losing the war to keep S’poreans in ignorance

Be of good cheer, those of us who want the PAP lose its hegemony (Cybernuts excluded because like TRE’s Oxygen, they think a crushing defeat of the PAP is just another GE away: they’ve been thinking that since before Cyberspace came into existence), the PAP is losing the war on keeping S’poreans financially illiterate with comments like:

GST hike ‘the responsible way’ to fund areas of collective need: Heng Swee Keat

(Today)

Preserving reserves signals to markets strength of Singapore dollar: Chan Chun Sing

(ST)

Let me explain.

When two natural PAP supporters make the comments I report below, it’s clear that the retired chief economist of GIC (Known as LKY on FB), Donald Low, Chris K and others (including little old me) have not wasted our time raving and ranting that

— S’pore has too much reserves and that they can and must be used to make life better for S’poreans.

— And that tax rises show that the PAP administration are reckless prudent, or at least are mindlessly prudent.

FB post by a retired SAF officer, now active in mental welfare causes. He was one of the first Black Knights.

Maybe what the Government needs to do is to show to the citizens various scenarios (given some assumptions) about how to cater for the future financially. Period 2021-2025…, Scenario1…use of GST hike and 50% of Investment returns to manage the budget; Scenario 2…use of all reserves to do the same. Then show Sporeans what is left at end 2025, and how the projected financial state will affect Spore’s future financial health.

And this FB post by a lawyer who has said he voted for the PAP

The G says that Singapore’s reserves must be kept secret as a defence against speculative attack.

Whether true or false, there is an obvious price to pay in that if there is no public information about Singapore’s reserves, intelligent debate about Singapore’s fiscal policy becomes well nigh impossible.

The debate in Parliament currently appears to be rather sterile in the absence of meaningful facts and figures.

I am not in favour of the G’s current approach to the (non)transparency of Singapore’s reserves, which to me is not justified and makes no sense, on balance. We are better off having the knowledge to chart our national destiny.

People like Dr Tay Kheng Soon should take heart that the 70%ers can change their mind. He has often mused that educating S’poreans to realise that the PAP articulated alternative is not the only “right” way is a thankless, long and tedious task.

Whatever, remember that half of the 70% voted for Dr Tan Cheng Bock as president. He only lost because of Tan Kin Lian and Goh Meng Seng decision to fix S’poreans. As a TRE reader put it

Sabo King help Tony Tan by persuading Tan Kin Lian to steal 4.91% votes which is enough to prevent Tony Tan from winning.
Sabo King sabo TKL and made him lost his deposit.

 

 

“Why are stocks and inflation going up?”

Historically, rising inflation hasn’t always meant sinking equity markets. But some people worry all the same. The market historian James Stack told Jim Stewart of the NYT that high valuations and years of low interest rates mean “we’re dealing with what might be the most interest rate-sensitive stock market in our lifetime.” NYT’s Dealbook

Bitcoin exchanges are not safe

Did you know this?

A third of the world’s bitcoin exchanges were hacked between 2009 and 2015, say US authorities.

FT

The FT reported this in its article about the U$500m theft of XEM coins by an anonymous hacker from Coincheck, a Japanese virtual currency exchange. It claimed the day before the theft that “Cryptocurrency exchanges are already down to 1.5 players. We’re top …”

“Will crypto-crime end the Bitcoin bubble?”

But first, did you know virtual currencies lost US$100 billion in 24 hours on thursday?

Coming back to:”Will crypto-crime end the Bitcoin bubble?”

Likely because the marshalls are taking more action because criminals are trying to take advantage of the interest in crypto-currencies.

[T]he cyber-security firm Digital Shadows produced a report on the latest fashion in cyber-crime: profiting from the crypto-currency boom.

The report – titled The New Gold Rush – details the various types of scam, from fake ICOs to raids on exchanges to simple phishing attacks. Its author, Becky Pinkard, tells Tech Tent that cyber-criminals have decided to jump on the bandwagon as the frenzy of popular excitement about the rise in value of Bitcoin has grown.

“We have people all the way down to my grandmother asking about Bitcoin and what it means and whether I can make money from it,” she says.

“What that does is then create the type of exposure that criminals need in order to come in and take advantage of folks who don’t really know what they’re doing.”

Digital Shadows has been scouring criminal forums on the dark web and has found plenty of conversations about ICOs – and how to profit from them.

“Just set it up, people will come and they will drop the money on you,” said one comment.

The mood about ICOs and other manifestations of the crypto-currency boom certainly seems to have shifted this week. Facebook has announced that it is to ban all adverts promoting any kind of crypto-currency product.

Meanwhile there has been a sudden slew of prominent thinkers casting doubt on everything from the value of Bitcoin to the significance of the blockchain technology underpinning it.

The boss of MIT’s Media Lab, Joi Ito, wrote a piece headlined The Big ICO Swindle. The respected economist Nouriel Roubini weighed in with Blockchain’s Broken Promises, casting doubt on a technology that proponents claim has great potential, whatever happens to Bitcoin.

Such downbeat assessments, combined with growing regulatory pressure, seem to be having an effect. Bitcoin and other so-called altcoins have taken another sharp lurch downwards in recent days,. The crypto-bandwagon may not have halted but at least one of the wheels looks like it is coming off.

http://www.bbc.com/news/technology-42917172

“Is Someone Manipulating the Price of Bitcoin?”

(Added at 11-05am: Btw it’s down 40% since 1 January. Sorry for the omission.) Given that the price of Bitcoin price has just fallen below USA$8,000 for first time since November 24, “Is Someone Manipulating the Price of Bitcoin?” (the title of the u/m piece from NYT’s Dealbook) is laughable because price manipulation must have been the other way or failed: New questions about Bitcoin’s price

Regulators are increasingly worried that Bitfinex, a widely used (and famously opaque) exchange, has been propping it up. The Commodity Futures Trading Commission has subpoenaed the company, whose Tether digital token is often used to buy other virtual currencies.

More from Nathaniel Popper of the NYT:

Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down. The Tether were used on the Bitfinex exchange to make big purchases of Bitcoin and other tokens, helping push their prices back up, according to multiple analyses of data from Bitfinex. “This became more and more concerning, because every time the markets went down, you have seen the same thing happen,” said Joey Krug, the co-chief investment officer at Pantera Capital, which runs several virtual currency hedge funds. “It could mean that a lot of the rally over December and January might not have been real.”

Where we stand: According to CoinMarketCap, Bitcoin is trading at $9,545, down almost 7 percent over the last 24 hours, Ethereum’s Ether at $1,099, and Ripple’s XRP at $1.05, down 7 percent.

The digital money flyaround

• How Goldman Sachs was rushed into supporting Bitcoin. (Bloomberg)

• Meet Bibor, a proposed interest rate for lending Bitcoin. (Bloomberg)

• Samsung is making specialist chips for mining virtual currency. (CNBC)

____________________________

Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.

Why 30-year old HDB flats difficult to sell/ Why PAP rule will end in 2029

A doctor turned fat cat investor responded to Jialat for PAP where I reported a property saleman (OK, OK, he’s title is “research director”) as saying “From the ground, homes with leases of less than 60 years took longer to sell, and at a much lower price …”. (Background reading for those who have not followed the problem with HDB leases of less than 60 years: HDB flats: 35 is a dangerous age)

He wrote

Since 2016/2017 HDB flats older than 39 years have seen a “cliff drop” in prices due to:
(1) Reduction of CPF quantum that can be used for properties with less than 60 yrs lease;
(2) Age of buyer plus remaining lease must be >= 80.

In many mature estates undergoing SERS activities, the price of 40+ year old flats are having 35% discounts against nearby brand new “subsidized” BTO flats. Even with marketing efforts extolling the “higher chance” of SERS for those older flats, buyers are not buying it.

This mini cliff drop has been exacerbated since LW [Lawrence Wong] did an about turn against Old Fart’s & Woody’s asset enhancement propaganda.

Currently majority of HDB flats are still within 25-38 yrs old. The above problem will get worse over the next 10-15 years.

This gives PAPies another 2 terms at least to continue milking Sinkies.

Assuming the next general election is in 2019, this means the PAP will lose power or its two-thirds parly majority in 2029 or thereabouts. Mad Dog will then be 67 and Dr Paul will be about 65. If Mad Dog becomes PM jialat. If Dr Paul becomes PM, let the good times roll.

So if SDP is still headed by Mad Dog as is most likely because he’ll knife Dr Paul in the back to ensure that he’ll rule the SDP, I’ll be forced to vote PAP for the good of S’pore. So I hope he steps down soon.

 

Bitcoin keeps on falling, amid more bad news

January has been the worst month for the virtual currency in three years, with its price down 30 percent. And it’s because of the very thing that Bitcoin and other digital currencies were supposed to be free from: central authorities and regulators. (NYT Dealbook) What the central authorities and regulators are doing to make mining or trading virtual currencies a lot harder:

• The S.E.C. froze a $600 million initial coin offering by AriseBank.

• China has continued to clamp down on Bitcoin mining.

• South Korea is still weighing legal checks on virtual currency trading. Then also Facebook’s ban ads for digital money

But amid all this, NYT Dealbook reports The Japanese messaging service Line has plans to open its own virtual currency exchange, while the embattled publisher of Penthouse magazine wants to promote its own adult-entertainment-focused token.

Jialat for PAP

Unhappy HDB “owners”will complicate change of PM (Connecting SMRT failures, 4th gen ministers & change of PM) and other plans.

In yet another sign of a recovery in the private residential market (SIBOR up 25%, but property mkt is hot?), prices went up 1.1 % in 2017, reversing the 3.1%  decline in 2016, figures from the URA showed last  Friday.

But the HDB Resale Price Index (RPI) for 2017 declined by 1.5% , HDB said on Friday.

Worse for those wanting to sell older HDB flats

From the ground, homes with leases of less than 60 years took longer to sell, and at a much lower price … we anticipate the market to improve, especially in areas where former HUDC developments were sold en bloc. Some of these buyers downsized to a HDB flat and kept the proceeds for retirement, or to support their children in purchasing a private home.

Dr Lee Nai Jia, Head of Research at Edmund Tie & Company

http://www.todayonline.com/singapore/private-home-prices-11-2017-reversing-2016s-31-decline

(Trumpets pls: I posted this in April 2017 HDB flats: 35 is a dangerous age. And btw, this Old private flats’ value can also fall off a cliff).)

Anyway, the PAP has a problem if private property prices keep going up while HDB flats prices continue to decline, or stagnate at these levels.

Those with HDB mortgages will not be happy that their their “heavily subsidised” flats have not appreciated in value in line with FTs’ and elites’ private property values, while those with older flats will be doubly unhappy.

Since more than 80% of Singapore’s population live in HDB flats, a growing gap between HDB prices and private housing prices is not good for the PAP.

But at least Mad Dog and the cybernuts will be happy: more of the 70% will be unhappy with the PAP. They can “Keep on wanking and dreaming that the PAP will lose the next GE”.

Public tenders = PAPpy greed?

At regular intervals, cybernuts (Think TKL and TRE nuts) and usually rational S’poreans complain that public sector public tenders must not always go to the lowest bid or to the highest offer. Discretion must always be exercised for the good of the public. In their opinion, the PAP administration’s failure to exercise discretion for the good of the public is evidence of the greed of the PAP.

But are they willing in turn to give the govt and other public organisations the benefit of the doubt when bids are won by those bidding more or offering more (say for leases) but then things go wrong?

The reality of winning public tenders is that the lowest bids or highest offers are the way to win them. The UK has seen the collapse of Carillion, a construction and outsourcing contractor, who won public sector bids by consistently being the lowest bidder.

—————————————————-

The trap of awarding tenders to lowest bidder for society

Rob Whiteman oversaw the procurement process at the government’s UK Border Agency, where he used to be chief executive. He now heads up the Chartered Institute of Public Finance and Accountancy.

He worries public contracts are too often awarded to low bidders.

“Low bidding can appear attractive to procurement officers because they know they will be judged on value for money. But I think there is a bear trap,” he explains.

“If we overscore cost in the evaluation then we risk squeezing contractors’ profits and if they’ve got their sums wrong they may take their best staff off the contract and the taxpayer gets a sub-standard delivery.”

Another concern raised by Mr Whiteman is a lack of focus on the companies’ financial robustness during the tendering process.

He thinks that while civil servants look at a firm’s track record for delivery, more questions need to be asked about how financially sound the company is before awarding a contract.

http://www.bbc.com/news/business-42720245

——————————————————————–

To avoid accusations of wasting public money, there’s pressure to accept the lowest bid. Conversely when tendering revenue generating contracts (say leases), there’s pressure to accept the highest bid to avoid accusations of failing to maximise public revenue.

Remember that in the background is the elephant: there’s the taint or accusation of corruption, favouritism or cronyism when the lowest bid (or highest offer) is not accepted.

Coming back to the idea that discretion must be exercised for the good of the public, what is the “good of the public”? Ideas on a post card, as those wanting public tenders to be awarded using this criteria don’t seem to be able to define it. In the case of renting leases, for the “good of the public” usually amounts to renting out to a small mom-and-pop comfort food operation rather than Tony Tan Colonel Saunders or Big Mac who can afford to pay and pay unlike the small family eatery. So everyone KPKBs of “moneytheism” of the PAP administration.

 

This issue is more complicated than the cybernuts think.

 

 

Xiaomi’s IPO will make anti-PAPpyists frus

Xiaomi is laying the groundwork for its planned float in the second half of this yr as it appoints banks for a planned US$100bn IPO.

This make make our anti-PAPyists who are PRC lovers bang their balls really hard

It wasn’t that long ago when anti-PAPpyists (nutty and sane) were KPKBing that both our SWFs lost billions after investing in Xiaomei: http://www.theindependent.sg/gics-and-temaseks-investee-company-xiaomi-lost-40-billion-in-value/

Bear in mind that the above piece was not written by a cybernut but by someone who while sane didn’t have a clue about investing.

Xiaomi, which was valued at more than US$45bn in its last funding round three years ago, went through a difficult period last year that burnt through its cash. But it appears to have turned a corner in the middle of last year.

(FT a few days ago)

FT went on that the co made a:

significant recovery from January last year, when a humbled Mr Lei wrote in a memo posted on his WeChat account and on Facebook: “A few years ago, we rushed too fast, achieving a miracle in the history of modern business growth, but we also overspent a portion of our growth. We must slow down and earnestly learn from our mistakes. Prevention is better than having to fix things later.”

Why we speculate/ How to speculate responsibly

The u/m came from an FT piece on speculating in bitcoin. But it applies equally when speculating  in penny stocks, contracts of difference, binary options, currecies, and in fact in anything.

We speculate because we have little money (relatively speaking) to invest so we’re more likely to put our money in something that has the potential to see massive returns.

one young man who graduated from a US college last year and now writes a newsletter about cryptocurrencies offers a more mundane explanation. “Young people like myself have little money to invest so they’re more likely to invest in something that has the potential to see massive returns,” says Matteo Leibowitz. “Not having a family to feed or a mortgage to pay, we can take these riskier bets.”

“Not having a family to feed or a mortgage to pay, we can take these riskier bets.” Now taz being a responsible adult. If u got a family to feed or a mortgage to pay, don’t speculate.

 

Cybernuts, stock and property mkts are a cheong

Aussie Tax dodger and welfare cheat, and chief TRELand cybernut Oxygen and his pals are in for a frustrating time as S’pore’s markets dance to US’s tune for the next 6 to 24 months.

[O]ne intrepid fund manager thinks it is likely that American share prices could rise by 50% in the next six months to two years. Perhaps the biggest surprise is the identity of that pundit: Jeremy Grantham.

Mr Grantham, one of the founders of the fund management group GMO, is best known for a cautious approach to valuations. He was one of the investors who got out of the dotcom boom well before the top.

https://www.economist.com/blogs/buttonwood/2018/01/wild-ride-2018

Of course, the party will end in tears. But so long as

Jack be nimble,Jack be quick,

Jack can get away with some loot.

 

 

Trying to take profit from bitcoin

BBC reporter’s experience of converting it into cash

I have been selling some of the Bitcoin I bought 18 months ago, paying about £60.

In theory that is simple enough and indeed I have sold £500 worth for a small fee. But actually getting that cash into my sterling bank account is far from seamless – so far I am a week in to what promises to be a two-week process.

Hardly the frictionless finance that was promised by Bitcoin’s advocates and if the rush to sell gathers pace there is a good chance that the system seizes up completely.

Eat blemished fruit

Half of them acknowledged that they could have taken steps to avoid food waste generated from leftovers after a meal, food expiring or becoming spoilt, and throwing away blemished fruits and vegetables.
Read more at http://www.channelnewsasia.com/news/singapore/half-of-food-thrown-away-by-singapore-households-can-be-avoided-9464560

This reminded me that for several months now I’ve been regularly buying and eating pears whose skins don’t look that nice. I wouldn’t give them away as presents or use them as altar offerings but they are good to eat and are sold at knocked down prices. A pear that should be going for $2-2.50 is sold at $1 because the skin is less than perfect.

And slightly damaged or overripe pears are sold for 50 cents each. Just cut off the damaged bit.

From BBC article

‘Use by’ Vs ‘best before’

Best before

• “Best before” dates are about quality, not safety.
• When the date has passed, it doesn’t mean that the food will be harmful, but it might begin to lose its flavour and texture.
• The “best before” date will only be accurate if the food is stored according to the instructions on the label.

Use By

• “Use by” dates are the most important date to consider, as these relate to food safety.
• “Use by” dates are found on food that goes off quickly, such as smoked fish, meat products and ready-prepared salads.
• Don’t use any food or drink after the end of the “use by” date on the label, even if it looks and smells fine.
• For the “use by” date to be a valid guide, you must follow storage instructions.
• Once a food with a “use by” date on it has been opened, you also need to follow any instructions such as “eat within three days of opening”.
• If the “use by” date is tomorrow, then you must use the food by the end of tomorrow, even if the label says “eat within a week of opening”.

source: NHS

http://www.bbc.com/news/uk-42223507

Countering PAP’s BS that taxes must go up

The now retired chief economist of GIC published u/m on his Facebook wall but tOC has circulated it to a wider audience*.

Summary: There’s plenty of money.

And if anyone should know, it should be Yeoh Lam Keong.

The Bigger Fork in Our Long-Term Fiscal Policy Road

To be fair to PM Lee, both the MOF and he have clarified that consistent with DPM Tharmans 2015 remarks, we do not have to raise taxes before the end of the decade.

So there’s really no need to get our fiscal knickers into a twist about GST or income tax increases till after the next GE folks..

IMHO what’s really at stake are larger, more important policy issues and related fiscal choices over the longer term.

What PM was talking about and trying to tell the public was that in the longer term after 2020, tax increases might be needed given inevitable rises in social spending and infrastructure needs in the more distant future.

Actually I really hope that in the end he’s right but from an entirely different angle.

My reason : our current fiscal headroom is so large that were we to truly need higher tax revenues, this would mean that much needed increases in social spending would finally finally have been funded first. Given our current paltry current social policy spending levels, ( much lower than OECD averages as a share of GDP for healthcare, education and social protection) this would be an excellent policy development!

Consider first that we have a 5-7% GDP structural budget surplus ( calculated by global fiscal policemen the IMF no less) – that’s $20-30 bn extra a year. (I don’t want to get into technicalities of how that is a valid number here – please read my previous posts ).

Second, the formula for using net investment returns contribution or NIRC only uses only half of expected long term real returns leaving official reserves to grow by about 2% in real or about 4% in nominal terms for future generations. This could potentially contribute at least another $14bn to the budget or 3.5% of GDP currently.

This 50% spending rule for NIRC itself is a questionable division of investment income from official reserves and a shows a strangely skewed social time preference. Shouldn’t a more reasonable time preference be to use more of the investment income ( not even the real principal mind you ) for the pressing problems of the present generation in this current decade?

Surely the needs of current citizens who have built modern Singapore through very tough times and have serious remaining problems with absolute poverty, inadequate retirement finances, no universal long term or primary chronic health care, underspending in primary and secondary education relative to OECD norms, inadequately planned and funded industrial policy and a badly underperforming public transport system needs this spending now and over this coming decade. Much more so than the uncertain problems of significantly richer coming generations in the much longer term future.

I suspect though, that in the end, we might just be left Singapore daydreaming.

Rather than first spend this hard earned, exceptional fiscal largesse on pressing social and infrastructure needs of the day, then raise taxes only if necessary afterwards, I suspect that our policy makers would instead tend rather towards raising taxes first, partly to keep this implicit huge fiscal savings largely intact ( by the way the IMF thinks that this is an excessively unhealthy level of national savings ) for the rainy day in the even more distant future!

So here is what I think is the really important fork in our long term fiscal and social policy road:

Either we will finally spend enough on social and infrastructural spending – another 8-10% of GDP over the next decade – or we will continue in the kia su practice of spending considerably less, yet still raise taxes in the name of fiscal prudence to maintain one of the most extravagant public savings rates in the world.

All this while continuing to expand social policy at decidedly suboptimal levels that does not really meet our social policy needs sufficiently in all the above key areas.

To do the former means stepping out of current incrementalist, anti – welfare and state intervention mindsets and boldly reshaping, refitting and reinvesting in social policy in healthcare, education, social security, public housing and transport and industrial policy to make these key areas truly future ready for our citizens. This is what we did so successfully and innovatively in our first 30 years of independence.

Please keep in mind that at this much higher level of spending we will merely be at the lower bound of OECD public spending as a share of GDP and roughly on par with developed East Asian economies. We would also be close to true budget balance ie not structurally in fiscal deficit or running up debt. Yes, that’s how extremely conservative our current long term fiscal position is.

The latter, however ( largely status quo), means kicking the can down the road through incremental rather than transformative changes that are likely to end up being constantly behind the relentless curve of economic instability arising from globalization, technological change and worsening demographics. And perversely maintaining the highest and fastest growing fiscal resources in the world.

No prizes for which I think is the more likely scenario on current trends. Which fork we finally take and when, however, depends on both the boldness of political leadership and citizen political awareness to push for a new social and fiscal policy regime that will truly cater to our well being in a more reasonable and balanced but still sustainable way.

*I’m surprised Terry’s Online Channel didn’t republish it for a wider audience, so I’m doing it and hoping that TRE will pick it up for a wider audience: not everyone going to TRE is a cybernut. The rule of thumb on the internet and social media is

1 % of users initiate discussions or content, 9% transmit content or participate occasionally and 90% are consumers or “lurkers”.

I’m hoping to reach the lurkers who visit TRE.

(Btw, didn’t ask permission.)

Opportunity cost of owning car

Great graphic from http://www.channelnewsasia.com/news/brandstudio/how-much-it-really-costs-to-own-a-car-in-singapore-9346730

But the table doesn’t show how not having a car affects sexual attraction and relations. Taz an important factor for young males.

Reason why CPF Life so mean?

Many moons ago after one Chris K wrote this about the meanness of CPF life because of the triple redundancy, I emailed his piece to an actuary and asked him if the piece made sense (there were some things that I couldn’t quite follow). He said it did, but added “Nothing wrong in being prudent”.

This PAPpy answer got me and, when I told him, Chris K annoyed.

But reading this one can understand the logic even if one disagrees with it.

IN 1965 ANDRÉ-FRANÇOIS RAFFRAY, a 47-year-old lawyer in southern France, made the deal of a lifetime. Charmed by an apartment in Arles, he persuaded the widow living there that if he paid her 2,500 francs (then about $500) a month until she died, she would leave it to him in her will. Since she was already 90, it seemed like a safe bet. Thirty years later Mr Raffray was dead and the widow, Jeanne Louise Calment, was still going strong. When she eventually passed away at 122, having become the world’s oldest person, the Raffray family had paid her more than twice the value of the house.

Underestimating how long someone will live can be costly, as overgenerous governments and indebted private pension schemes have been discovering. They are struggling to meet promises made in easier times. Public pensions are still the main source of income for the over-65s across the OECD, but there are big differences between countries (see chart). In both America and Britain public provision replaces around 40% of previous earnings, but in some European countries it can be 80% or more. Where it makes up a big share of total pension income, as in Italy, Portugal and Greece, a shrinking workforce will increasingly struggle to finance a bulging group of pensioners.

http://www.economist.com/news/special-report/21724751-lives-get-longer-financial-models-will-have-change-financing-longevity

When it comes to the future, it’s all about probabilities i.e. throwing dice. Even with all with the help of AI, data and acturial science, the future is still guess-work, not certainity.

The more “certainity” is asked for, the higher the cost. Here’s something I wrote in 2009: What price income protection? Or the cost of an annuity

So if one wants “certainty”, there’s a price to be paid. CPF Standard Plan offers that “certainity”. As I told someone sometime back, if you know you are going to live to 150, then opt for the Standard Plan , even if by conventional wisdom yardsticks it “sucks”. But remember even then if the plan dies, you also die: Diabetes: The real reason PM is worried?

Worth of analyst report? Worthless?

Can’t stop laughing.

The EU is introducing some very complex fund mgt regulations in Jan 2018 that among other things affects reseach reports because they are considered to be “an inducement” and fund mgrs must account and quantify them as such to clients.

In the UK (still in EU) the authorities “will treat research paid for by the company raising capital as a “minor non-monetary benefit”, presumably in the same category as sandwiches at the AGM” reports the FT.

China got point that Temask model “undesirable”?

FT reports that China has tot about and now rejects the S’pore model for state-owned enterprise reform. FT says, China “turns away from Temasek-style effort to insulate state companies from politics.”

Seems the State Assets Supervision and Administration Commission thinks that

promoting the Temasek model would reinforce an undesirable trend in China’s economy towards “fake” investment that generates profits by shifting money between existing assets without generating new economic activity, Caixin reported.

What can I say?

— Given that according to the Bocconi University, Sovereign Investment Lab, our  GIC and Temasek together carried out last year 62 deals globally worth US$17.9bn, accounting for 39% of total deals and 45% of investment value.

— But as Chris K points out GIC’s and Temasek’s risk adjusted returns are in line with other SWFs.

So does the hyperactivity benefit anyone except the counterparties anf our SWFs’ advisers?

What do u think?

 

 

 

Truth about cars from car maker

FT reports GM as saying when city dwellers buy a car, it depreciates “fairly rapidly, you use it 3 per cent of the time, and you pay a vast amount of money to park it for the other 97 per cent of the time”.

Related post

Words of wisdom from top hedgie

On “risk” and the “perception of risk”/

“When share prices are low, as they were in the fall of 2008 into early 2009, actual risk is usually quite muted while perception of risk is very high,” Klarman wrote. “By contrast, when securities prices are high, as they are today, the perception of risk is muted, but the risks to investors are quite elevated.”
Read more at http://www.businessinsider.sg/baupost-groups-seth-klarman-on-market-risk-post-trump-trade-2017-5/#WuKyJzlYuqwcGixg.99

Head of research paid peanuts?

He took a $3000 bribe. What a cheapskate.

MAS also served notice of its intention to issue POs against the Chief Executive Officer of NRA Capital (NRA), Mr Kevin Scully, and its former Head of Research, Mr Lee Chee Waiy.

Through Mr Ang*’s introduction, NRA was appointed to perform the valuation of PetroSaudi Oil Services Limited (PSOSL). On 24 May 2017, Mr Ang was convicted of an offence under the Prevention of Corruption Act for bribing Mr Lee with S$3,000 to expedite the preparation of the valuation report on PSOSL.

MAS said Mr Lee had been the primary person in NRA working on the valuation. Apart from accepting the bribe, he was also found to have applied inappropriate methodology and assumptions in the valuation of PSOSL. As CEO of NRA, Mr Scully had failed to ensure that his analyst, Mr Lee, had exercised sufficient care, judgment and objectivity in the valuation of PSOSL, MAS added.
Read more at http://www.channelnewsasia.com/news/singapore/financial-penalties-imposed-on-credit-suisse-and-uob-for-1mdb-8894194

*Mr Ang Wee Keng Kelvin, a former remiser at Maybank Kim Eng Securities.

Related post on financial people doing risky but unluctative things that have negative consequences for their careers. 

Why own an asset that is not utilised 96% of the time?

Especially in S’pore unless u are paid like a PAP minister.

According to the financial-ratings agency Fitch, the average car spends 96% of its usable life parked in a garage or on the street. When maintenance, depreciation, insurance and running costs are totted up, cars are the most underutilised asset most consumers own.

Economist blog

Why People Persist in Risky Trading

I remember the “peanuts” made by the S’pore MD of Rothschilds here who got into trouble in the late 80s or 90s with the law over a risky trade.

Lost a cushy job and his reputation for “peanuts”.

From NYT Dealbook

WHITE COLLAR WATCH

Why People Persist in Risky Trading

By PETER J. HENNING

When they have good careers, and their questionable deals don’t even make that much, why do they do it? Perhaps it’s hubris, mixed with the lure of easy money.

Old private flats’ value can also fall off a cliff

It’s all about using CPF to pay off the bank mortgage. And don’t count on an en bloc sale to keep the value of flat up. The older the group of flats, the more the developer has to pay to govt to top up to 99 years. He’ll bid accordingly. He’s not like Bill Ng, the ATM (or one-armed bandit that keeps on paying and paying.

Sometime back I featured this great graphic from ST on how the value of a HDB flat will fall over a cliff after the first 35 years. Extracted from http://www.straitstimes.com/opinion/will-you-still-love-your-hdb-flat-when-its-over-64.

But private 99 year old properties are different right?

The reasoning of the salesmen is that banks usually finance leaseholds if the property to have a remaining lease of 30 years on the maturity of the loan

According to OCBC, when it comes to financing of leasehold properties, the requirement is for the property to have a remaining lease of 30 years on the maturity of the loan. “The quantum of loan to be granted is dependent on the bank’s credit assessment, which includes assessment of debt servicing capacity,” says a spokesman in an email response.

https://www.theedgeproperty.com.sg/content/perils-owning-ageing-leasehold-properties

But what these people don’t say is that banks only do this if borrowers can use CPF monies.Banks generally provide financing for the purchase of a leasehold property if home buyers are able to use their CPF.

This is the tricky bit because according to the article I linked to above

CPF has several ways to calculate this [eligibility]…

The first formula is based on the sum of the age of the applicant and the remaining lease on the property. The total must be equal to or exceed 80 years, says Huang. For instance, if the buyer is 40 and the remaining lease on the property is also 40 years, the total is 80 years. This means that the buyer is eligible to use his CPF contribution for the purchase of the leasehold property.

If the buyer is only 30, however, and the remaining lease on the property is 40 years, the total equals 70 years. In this case, the buyer will not be eligible to use his CPF contribution towards the purchase of the leasehold property. “This implies that young people cannot use their CPF to buy old leasehold properties,” says Huang.

And

CPF also requires that a property have a remaining lease of at least 60 years. If the lease on a property is below 60 years, but more than 30 years, a valuation limit is set on the amount of CPF contribution that can go towards the payment of the property.

… the numerator in the ratio will be the remaining lease on the property when the purchaser turns 55. Assuming the buyer is 40 today and the remaining lease on the property he wants to buy is also 40 years, when he turns 55, the remaining lease will be 25 years. The denominator will be the remaining lease today, which is 40 years. The ratio of 25 years/40 years is equivalent to 62.5%.

This means if the property purchase price is $1 million, the buyer can withdraw from his CPF up to a limit of 62.5% of the value, that is, $625,000, explains Huang. “And that percentage is the valuation limit.”

What all this means is that there’s a restricted pool of buyers for older flats if there are problems using CPF monies.

So what? Can always have collective sale right? The article helpfully disabuses

JLL’s Tan advises owners of private residential projects on leasehold sites to be aware that, as the lease gets shorter, the differential premium that developers have to pay gets higher. “This will eat into their sale price,” he says.

Using a recent HUDC enbloc sale

For Rio Casa, if the differential premiums were included, the total land cost would amount to $649.8 million, according to SLP Research (see chart). SLP’s Mak points out that the differential premiums account for about 30% of the total land cost for some of these HUDC estates.

So don’t play, play. Think.

 

CPF Life: False alarm that Std is now better than Basic

Here I reported that a far cat rentier (once a doctor) says that the Standard could now be better given “tweaks” over the yrs that were not made public

I said I’d asked an expert to check.

He hasn’t responded but Chris Kuan while no financial planner but a now an ex-capital markets guy who I quoted here a few yrs ago as saying that punters should opt for the Basic not the Standard plan did some calculations.

Juz spreadsheet up the present MS of 166k compounding at 4% with 1st 60k extra 1% and 1st 30k additional 1%. Then use the 1.28k per month payout from 65 onwards on a ror of 4.25%. The Standard Plan break even age remains at 89 where it was when I did the same calc a couple of years back. So I was wrong – nothing has changed. The difficulty in assessing the Basic and Standard Plan is while we know that at age 85 there is no more bequest under the Standard Plan and there is under the Basic Plan but what we don’t know is at what age does the bequest actually cease under both plans.

So “Basic good, Standard bad” still stands.