Typography of our (and global) economic recovery

So the economy is expected to shrink between 4 and 7% this year as MTI again downgraded official growth projections for 2020. If the projections are correct (remember that astrologers and other fortune tellers have better track records) we are headed for the worst-ever recession since 1965.

The estimates for non-oil domestic exports (NODX) and total merchandise trade for the year have been cut drastically.

But factory output surged by 13 per cent in April, the second straight month of a year-on-year rise, largely down to gains made by the pharma manufacturing cluster. But excluding biomedical manufacturing, overall output in April fell 3.5% due to COVID-19 related measures both locally and overseas.

So how will the recovery pan out?

Related posts:

— Investing in the time of Covid-19: Watch this index

— What goes down quickly, must go up quickly

— Covid-19 investing: Beware of a double bottom

— Markets: Easy collapse, easy rebound

— Antidote to Covid-19 and market stress

CPF: Imitate Oz?

The Australian govt recently decided to allow people in financial distress to withdraw up to A$20,000 from their superannuation (pension) accounts. Australia has the world’s 4th largest pension fund system: A$3tn in assets.

The govt expects a withdrawal of A$30bn. Some industry experts think the final figure could be almost double that,

Difficult see the PAP govt imitating the Oz govt. Not so much on ideological grounds (Hard Truths), but because CPF funds are also used to make public housing “affordable”, and private housing more than just a dream. CPF is not juz saving for pensions.

Is US equity market deluded?

Around half the S&P 500 Index constituents have reported first-quarter earnings, including the start of the sharp downturn triggered by the coronavirus. Profit for the group in the period is set to drop nearly 15%, according to Refinitiv data. A month ago, analysts thought the decline would be under 5%, and at the start of the year they were targeting a 6% increase.

For the second quarter of 2020, the picture is starting to look more realistic. Earnings are forecast to slump nearly 40% from last year. But with revenue projected to be down only 10% in the three months to June, Wall Street may still, unfortunately, be behind the Covid-19 curve. For every company with top-line growth, like Facebook, there are others like American Airlines, which sees industry revenue down perhaps 95% in April compared to last year. It will get worse before it gets better. (By Richard Beales)

https://www.reuters.com/article/us-health-coronavirus-finance-breakingvi/breakingviews-corona-capital-tepid-earnings-red-hot-bonds-idUSKBN22C3OQ

PAP govt prudent? This prudence?

Our debt already so high. Still want to spend so much money?

How come PAP running dogs (Apologies to the real dogs) in parliament not KPKBing that PAP must be prudent and not pass on the sins of overspending onto future generations.

The PAP govt is throwing US$41.6, more than 10% of GDP to fight the economic and financial consequences of the pandemic in an election year.

Whatever happened to MPs like Liang Eng Hwa, Kate Spade (who else?), Hri Kumat and Arthur Fong: PM aiming left, to hit the centre/ Axed? PAP MPs who don’t get it.

When they so quiet?

Govt change policy, so they sit down and shut up?

Related posts:

Can the hard-hit spend their way out of a recession?

“Prudent banker” is an oxymoron

Investing in the time of Covid-19: Watch this index

BCA Research says cheong when gains in the CRB index outpace those of gold as Chinese “stimulus seeps through to the real economy”.

Toilet paper maker cleans out

Vinda International Holdings is one of the world’s biggest toilet roll makers and is listed in HK.

Shareholders must be shitting themselves in joy.

It just said operating profit for the three months ended March 31, 2020 is expected to increase by about 55% compared with the year before.

Profit for the first quarter is expected to increase by about  65% from the year before. Operating profit and net profit forthe first quarter are expected to be about HK$527 million and HK$377 million, respectively.

Revenue is expected to be about HK$3.41 billion, down by 16% and organic growth of  -12%.

Funnily, the stock tanked during the recent sell off, only to reverse.

Those who panicked must be shitting bricks.

What goes down quickly, must go up quickly

Bulls are hoping.

US stocks have just recorded their biggest weekly gain since 1974 despite the bleak economic outlook.

Wall Street’s S&P 500 shares index rose 12% this week, as the US central bank announced more stimulus measures to support the economy.

Related posts

Covid-19 investing: Beware of a double bottom

Markets: Easy collapse, easy rebound

Antidote to Covid-19 and market stress

Covid-19 investing: Beware of a double bottom

As Mobius points out, historical bear markets on a global scale have averaged a larger 30% to 50% drawdown spread out over the span of roughly two years. Some have been quick to optimistically predict, however, that if the market cratered at record speed, perhaps it could recover just as fast because this time it is different. To refute the notion that lightning could strike just as quick to fuel an equal move to the upside, Mobius quoted the late John Templeton.

“The most expensive words in the world are ‘This time is different.’ I don’t think this time it’s different,” he said. “I think we’re probably maybe going to do a double bottom, jumping down again and pushing up again.”

https://sg.finance.yahoo.com/news/investor-who-predicted-the-start-of-the-2009-bull-market-were-not-in-the-clear-yet-104234346.html

I bot on the way down. Out of three stocks, one is ahead, two under water. Still got ammo.

Antidote to Covid-19 and market stress

The BBC (among others) recommend that to lessen the stress of Covid-19

— Limit the amount of time you spend reading or watching things which aren’t making you feel better.
— Be careful what you read

Hmm.

Until very recently, markets were tanking as if there were tomorrow. Maybe in such a situation, stop following the market.

Btw, markets are on a roll. Most say it’s a bear market rally. But hope springs eternal.

Covid-19: The truth about the death projections

No they are not fake news, but the projections are very nuanced and come with caveats, something that social media, new media and the mainstream media don’t communicate properly.

But before going into that something that most reports don’t highlight, did you know that the Spanish flu that killed an estimated 50 million people worldwide should have been named the Indian flu given that some 12-17 million people died in India, about 5% of the population? Only 5-7 million people died in China. And a lot less in Spain.

Sorry for the aside, Coming back to the death projections, I’m sure that you know by know that a key piece of modelling which has informed the British government’s decision to try to suppress the virus was done by Imperial College London.

It suggested 500,000 could die if we do nothing, while the government’s previous strategy to slow the spread was likely to lead to 250,000 deaths.

Instead, it is hoped the steps which have been taken, which are essentially about suppressing the virus, will limit deaths to 20,000.

BBC report

It also came up with projections for countries like the US.

But these projections do not exclude the number of people that who would have died in the normal course of events if there had been no pandemic. The modellers did not exclude the normal death numbers because they can’t. They have no data to work from.

As the BBC explains in the context of the UK:

Every year more than 500,000 people die in England and Wales – factor in Scotland and Northern Ireland, and the figure is around 600,000.

The coronavirus deaths will not be in addition to these, as statistician David Spiegelhalter, an expert in public understanding of risk at the University of Cambridge, explains.

“There will be substantial overlap in these two groups — many people who die of Covid [the disease caused by coronavirus] would have died anyway within a short period.”

It was a point acknowledged by Sir Patrick at a press conference on Thursday when he said there would be “some overlap” between coronavirus deaths and expected deaths – he just did not know how much of an overlap.

https://www.bbc.com/news/health-51979654

What I trying to say is that the very nature and limitations of modelling means that we have to be very careful in trying to understand the numbers thrown at us. They are actually very nuanced, and come with caveats.

Some householders laughing all the way to the bank

Those (like me) who signed up for floating rates pegged to the regulator’s price are smiling.

Looking forward to really low bills so long as oil is below US$30. So long as oil price is below US$55, those who signed up for floating rates can sneer at those with fixed tariffs. Most tariffs were fixed when oil was in US$55 – US$65.

Actually, I signed up for the floating rate scheme because it’s possible to break contract without penalties, unlike the fixed tariff contracts.

Related post: Wuhan virus: Why electricity prices sure to collapse

Whatever, the smaller bills will help make up for the mark-to-market losses in the stock market: Markets: Easy collapse, easy rebound.

Vote wisely.

Tourism: Look on the bright side

In Tourism: Where Covid-19 really hurts us, I pointed out that the drop in tourism will hurt the economy. But, looking on the bright side, things no longer that expensive for us locals.:

Cities that get a large part of their income from tourism could become cheaper as their economies shrink and prices are driven down.

The impact of the coronavirus has shaken the world economy, with the travel and tourism industries among the hardest hit. Hong Kong and Singapore are two of the cities that could see a big drop in revenue as demand for leisure activities, restaurants and accommodation plummets. This weaker demand could drive down prices, making these cities cheaper for their inhabitants.

https://www.bbc.com/news/business-51922267

True, things no longer that expensive for us locals. But got money to spend or not?

Markets: Easy collapse, easy rebound

If wondering why markets tanked so fast juz look at

Could rebound pretty fast: I hope. Core portfolio stocks down 30%. New positions 20% underwater. And I was buying 25% from highs at end February.

Sad.

Xia suay! If we triple AAA why pay so much more than ang moh sick man?

With the carnage in markets, we’ll soon hear in the constructive, nation-building media that have AAA status.

The PAP govt and its running dogs in parly, in the constructive, nation-building media, and on the internet will be trumpeting our triple A status, reminding of our budget surpluses and prudent budgets

So what? The S’pore 10 year government bond has a 1.335% yield. 

But UK’s 10 year government bond has a yield of now around 0.24% despite the UK not being triple A, and the UK being a sick man:

Since the financial crisis of 2007-2009 Britain has lost its AAA credit rating, seen its debt-to-GDP ratio rise from 40% to more than 80% and voted for Brexit. And yet over the same period the yield on gilts, the benchmark ten-year government bond, has fallen from around 4.5% to under 0.5%. 

Economist

We AAA paying 556.25% more than the UK? CCB. KNN.

Maybe because, our debt-to-GDP ratio is 108%. For that 108%, think and thank CPF.

[O]ur CPF monies are invested in special government bonds. The $ from the bonds flow into the government’s Consolidated Fund together with revenues from taxes etc. All government expenses are paid out from this fund. If there is a surplus (as there usually  because the government is thrifty or mean depending on who is doing the talking) part of that surplus can go to GIC and Temasek. The government argues that because all the monies in the fund  is fungible (cannot be separated), one is wrong to argue that CPF monies are invested abroad.

How we fund our SWFs: ”If Singaporeans are not “hard-driving and hard-striving”, where did GIC and Temasek get so much money to lose?”

PAP govt’s explanation

Special Singapore Government Securities (SSGS) are non-tradable bonds issued specifically to meet the investment needs of the Central Provident Fund (CPF). Singaporeans’ CPF monies are invested in these special securities which are fully guaranteed by the Government. The securities earn for the CPF Board a coupon rate that is pegged to CPF interest rates that members receive.

https://www.gov.sg/article/is-it-fiscally-sustainable-for-singapore-to-have-such-a-high-level-of-debt

 

Investors who gave finger to Wuhan virus doom mongers now crying

The S&P 500 was down by 3.6% by lunchtime today, its worst day since February 2018, and the tech-heavy Nasdaq lost 4%.

Earlier other global stocks slide after Italy’s coronavirus lockdown. Iinvestors shift from equities and oil to bonds and gold

Just last week,  Wall Street bullish on corporate earnings despite virus. The case for stock market bull run bolstered, despite risk warnings like the one below.

(Chart from last week. LOL)

“There’s a big chance for disappointment if the impact is greater in China and the spillover effects on to the global economy last longer than expected,” said Liz Young, director of market strategy for BNY Mellon Investment Management.

Related posts:

Wuhan virus: Goldman Sachs has second tots?

Wuhan virus: Why investors are not panicking

Interesting ideas from Germany and US to protecting borrowing home owners and their lenders

Recently I wrote in TRE cybernuts and central bank singing from the same song sheet that our central bank is worried that

Singapore property market faces risks from unsold units, uncertain economy: MAS

Here’s what the Germans do to protect banks and borrowers

German mortgage-lenders embrace an unusual appraisal technique. When assessing the value of a house, they rarely refer to market price; instead they consider “mortgage-lending value”, an assessment of the probable price of a house over the economic cycle. A report from the Bank for International Settlements, a club of central banks, suggests that by discounting short-term price fluctuations, this valuation technique can stop bubbles from forming. Lenders in America once embraced the technique, points out Ed Pinto of the American Enterprise Institute, a think-tank, yet after the second world war it fell out of fashion.

https://www.economist.com/special-report/2020/01/16/what-is-the-future-of-the-rich-worlds-housing-markets

Meanwhile in America

Safe Rate, based in Chicago, offers a new type of mortgage. When local house prices decline, so do borrowers’ monthly mortgage repayments. The benefit for the borrowers is that they save money and are less likely to default. The advantage for investors is that, by preventing foreclosures, more mortgages will be kept going and it is less likely that house prices across a region will spiral downwards.

https://www.economist.com/special-report/2020/01/16/a-decade-on-from-the-housing-crash-new-risks-are-emerging

Wuhan virus: Goldman Sachs has second tots?

Just as well as Wall ST is down two days in a row on fears that that the Wuhan Virus is an economic killer. Apple’s profits warning early this week spooked the market. When Apple sneezes, investors worry.

Before Apple’s warning, in Wuhan virus: Why investors are not panicking, I had quoted Goldman Sachs

We estimate that even in a scenario where the rate of new infections did not peak until the second quarter, the negative hit to global economic growth would be about 0.3 percentage points. That means the expansion would still be 3.1 per cent — in line with last year’s pace.

Goldman Sachs Japan vice chair talking about the global economy

This week, “The impact of the coronavirus on earnings may well be underestimated in current stock prices,” Peter Oppenheimer, analyst at Goldman Sachs, warned in a client note this week.

He said that investors are misjudging the full impact of the Covid-19 outbreak on companies’ earnings, pointing to China’s economic rise and greater integration in the world economy. Note (The Chinese economy is six times larger now than it was during the Sars outbreak of 2003, and Chinese tourism alone accounts for about 0.4%) of global GDP.

He said forecasts for profit growth this year are already “relatively modest” and so far earnings revisions have been in line with the historical trends, including in “more cyclical markets like Europe, where direct exposure to China is much higher”.

Equity markets are looking increasingly exposed to near-term downward surprises to earnings growth and while a sustained bear market does not look likely, a near-term correction is looking much more probable.

Remember: A correction is defined as a drop of 10% or more from a recent peak.

 

No, markets are not in a bubble

Rather as a perceptive FT reader puts it after yet another article denouncing that markets are not behaving the way the FT thinks they should (ie collapse)

The other way of looking at things is it is not that asset prices have gone up, but the value of cash has gone down. Equity prices may have risen, but so have the prices of property, luxury items, art, etc., i.e. all the things that matter to most owners of stocks – so the purchasing power of stocks is unchanged for them. This comes at the expense of the the middle class (who pay capital gains tax on their nominal gains) and the working class (whose labour has become less valued).

Wuhan virus: Why investors are not panicking

Unlike the anti-PAP cybernuts who rushed to hoard rice and instant noodles investors are not panicking Because

We estimate that even in a scenario where the rate of new infections did not peak until the second quarter, the negative hit to global economic growth would be about 0.3 percentage points. That means the expansion would still be 3.1 per cent — in line with last year’s pace.

Goldman Sachs Japan vice chair talking about the global economy

Current investor sentiment seem to suggest an economic recovery from 2018 lows remains on track, albeit with a delay.

JPMorgan’s Asia equity strategy team notes the prevalence of three types of investors at the moment:

“The largest group of investors have chosen to ride out the whole episode with an assumption that market reactions to the developments would be transitory and difficult to time. Much of this camp has recently been adding to existing holdings as they have corrected.”

It says, one gauge of this, which also dovetails with the Nasdaq 100 up 9.4% this year to a record high, is how the China A-shares tech sector is the best performing sector, says JPM.

A more KS group of investors believes “the situation is about to significantly deteriorate, calling cycle views into question”, notes JPM.

The bank’s strategists say “there are risks from unexpected supply disruptions (through bottleneck inputs or processes) or a resurgence of new cases as factories reopen or the virus mutates”. That scenario entails a drop of 6% in the MSCI Asia Share index excluding Japan, and further pain should the cycle falter from here.

The final group includes the buyers of the dip or what JPM term “a similar minority of investors are tactically raising risk exposure” and anticipating a lot more easing from China that offsets any damage to consumer sentiment.

JPM points out:

“In a somewhat cyclical argument, it is important for the market to hold up as, contrary to popular belief, we find price action shaping narratives and sentiment as much as (if not more than) the other way around.”

In simple English it’s saying “This view requires a degree of optimism”.

Based on joint salaries, what properties available

Here’s a great table from “Here’s the salary you need to earn to afford these homes in Singapore”

https://www.asiaone.com/money/heres-salary-you-need-earn-afford-these-homes-singapore?utm_term=Autofeed&utm_medium=Social&utm_source=Facebook&fbclid=IwAR12OUteKQMsmv0WkK7l_waW3MOmm7KPj8gMguNipQlWv3880_5O4Dhoo04#Echobox=1579565572

Btw, nothing great about our property mkt in 2020

The prime sales market in Singapore had an active 2019 despite the cooling measures in place. The city benefited from rising affluence among residents and interest from international buyers. Small price rises are expected in 2020 triggered by pent-up demand.

Sophie Chick, head of Savills world research

Not like M’sia or Manila.

Related posts:

Why S’pore is so shiok for private property investors

Ang moh’s great insight on property mkt

Buying homes the billionaire way: two luxury homes are better than one

Why S$73.8m flat is a steal

But don’t get overgeared: TRE cybernuts and central bank singing from the same song sheet

Benefit of saving regularly illustrated

FT has a graphic that shows that saving £43.60 a week has

 

Vote wisely

All Blacks are not the only the Kiwis’ world class champions

 

And

 

Why investors can afford to be complacent about climate change

Even if it’s not fake news.

 

 

Another year of sticking to S-Reits

In summary, the models expect recovering GDP growth, extremely low inflation, exceptionally low bond returns, and low but positive equity returns in 2020-22.

Gavyn Davies* talking about the global macro scene for 2020

I tot I would be selling out of my S-Reits in 1Q 2020. Guess I’ll hang around for a bit longer.

*He’s an FT columnist

Gavyn Davies is now chairman of Fulcrum Asset Management and co-founder of Prisma Capital Partners. He was the head of the global economics department at Goldman Sachs from 1987-2001, and was chairman of the BBC from 2001-2004. He has also served as an economic policy adviser in No 10 Downing Street, an external adviser to the British Treasury, and as a visiting professor at the London School of Economics.

FT

Which greener? Online shopping or visiting store?

“The problem isn’t buying online — it’s how the delivery is implemented and how packages come to our door,” BBC article.

Fake news: CPF Life not enough to live on

This reminded me of u/m chart. Look at it and realise that it’s fake news that S’poreans (young and old) are worried about their retirement needs. Way down at number 24.

 

 

 

 

https://www.schroders.com/en/sg/private-investor/sg-insights/global-investor-study/revealed-the-global-league-table-of-pension-worry/?utm_campaign=insights&utm_content=GIS_Retirement_1&utm_medium=paid_social&utm_source=facebook&utm_term=singapore%20digital%20end_investor%20video%201200×628%20video&fbclid=IwAR3rtN5elQ4i4e-xn2XPDVyFuyv5I8P6KzHKawJOXzeodl-4Y0DZ8VawPkc

Time to POFMA TOC’s M’sian Indian goons (Terry and his “bunch of Indians”), the cartoonist and other TOC , and TRE cybernuts?

And Straits Times and StanChart Bank for this BS? https://www.straitstimes.com/business/banking/nearly-half-of-affluent-singaporeans-may-miss-the-mark-on-retirement-savings-goals

Making yr money work harder for u

What with GST going up another 2 points soon, us coupon clippers got to find the difference so that we can continue eating Stilton, French butter, suckling pig etc.

The dividend yields on DBS, OCBC and UOB are 4%+. And so are the forecasted yields. Now for those of us who have second tier S-Reits up to our eyeballs, this is “peanuts”.

But instead of putting money into fixed deposits, maybe KS S’poreans should think of buying the shares of one of the local banks: remembering that you may not get back the amount invested if things go wrong. Equity premium risk leh.

And do remember: Using yr CPF OA as a savings account.

Why buy bank shares? Because PAP govt is friend of banks or so it seems: Why I hold Hongkong Bank and UOB shares

Latest BS in asset mgt to steal yr money: ESG

ESG (Environmental, Social and Governance) scores are becoming ever more important in the marketing of financial products that are sold to the masses. At least US$3trn of institutional assets now track ESG scores, and the share is rising quickly.

Pure BS to charge higher fees

Why did the ESG investor cross the road?

If you’ve spent any time around the sustainable investing world, you might have heard the old joke: “What’s the easiest way to improve your company’s ESG score? Change your rating agency.”

Is it funny? That’s debatable. Is it cynical? Possibly. But is it rooted in truth? Absolutely.

FT

Don’t believe?

esg scores are poorly correlated with each other. esg-rating firms disagree about which companies are good or bad. The Economist has compared the scores of two big esg-rating systems, updating an analysis done by the imf earlier this year (see chart). It shows at best a loose link between the two measurement systems. The same lack of correlation holds even when the e, s and g scores are considered separately, according to the imf. Small wonder, then, that it found no consistent difference between the performance of esg funds and that of conventional ones.

Economist

The result

Tobacco and alcohol companies feature near the top of many esg rankings. And many funds marketed on their green credentials invest in Big Oil.

Economist

https://www.economist.com/finance-and-economics/2019/12/05/climate-change-has-made-esg-a-force-in-investing

 

 

TRE cybernuts and central bank singing from the same song sheet

A recurring tune that TRE’s cybernut-in-chief “Oxygen” and his pals (like “Jihadist Joe” aka “Bapak”) shout is that the property market sure to crash and that when that day comes, they shout that they’ll be having orgasms of joy seeing their fellow S’poreans (even anti-PAP voters) suffer. Problem is that they’ve been predicting this since when TRE started (circa 2007, I think).

So my conclusion in reading the u/m headline from the usual constructive, nation-building CNA is that MAS must have been infiltrated by said cybernuts. Time for the ISD to investigate senior central bank officials for being anti-PAP?

Singapore property market faces risks from unsold units, uncertain economy: MAS

Singapore’s property market faces “potential downside risks” from a large supply of unsold units in the medium term and an uncertain economy, said the Monetary Authority of Singapore (MAS) on Thursday (Nov 28).

In its annual Financial Stability Review, the central bank urged prospective buyers, especially households that are highly-leveraged, to be mindful of risks and remain prudent.

Property firms that have built up high levels of leverage and hold large unsold inventory should also exercise prudence …

These concerns come against the backdrop of a moderation in the private residential property market following the cooling measures introduced in July last year.

https://www.channelnewsasia.com/news/business/mas-financial-stability-review-property-risks-unsold-homes-12133586

Don’t they know there’s a GE (My prediction in 2018 Akan datang: GE in late 2019) and GST rise (How PAP can win 65% plus of the vote) round the corner?

Seriously, just remove Additional Buyer’s Stamp Duty (ABSD) and prices will cheong.

Related posts:

Forgot (ignored?) asset inflation?

Look at our private housing, it’s expensive:

Buying homes the billionaire way: two luxury homes are better than one

Why S$73.8m flat is a steal

Why S’pore is so shiok for private property investors

And even in private property there are govt controls

Ang moh’s great insight on property mkt

PAP whacks greedy pigs

 

 

 

 

Angry, little people fight back

Great to see minority shareholders do something other than go to and whine to that toothless, flea ridden watchdog that is the Securities Investors Association of S’pore asking for help, or to failed presidential candidate who lost his deposit (and PAP enabler) Tan Kin Lian for help.

A group of minority shareholders of Magnus Energy shot down all the resolutions put forward at the recent annual general meeting on Oct 30. They ousted three of the directors and blocked the reappointment of the external auditor as well as the mandate to issue shares to raise funds or pay director’s fees.

Then

On Nov 7, these shareholders, who hold a total stake of about 10%, sent Magnus Energy’s board an extraordinary general meeting requisition notice.

https://www.theedgesingapore.com/news/shareholder-activism/penny-stock-linked-magnus-energys-past-transactions-under-spotlight

And that’s not all, they are suing past and present directors for breaches of general and fiduciary duty.

Wow. These are really very angry shareholders. Can’t blame them. before the shares were suspended from trading in Aug this year, the share price was 0.1 cent. They were at a high of $3.75 in February 2013.

Bit harsh on SIAS? Go read

Why SIAS should sit down and shut up

FBI in US, SIAS, SGX here

SIAS: Close it down

Hyflux: Can believe or not?

Buying STI ETF is buying into HK

I’ve always told young people who want to invest in local shares to buy into one of the two STI ETFs if they believe that the PAP govt is doing a decent job and will continue doing a decent job, and if they believe that it will continue ruling S’pore. A coalition of the Spastics (Mad Dog, Lim Tean and Goh Meng Seng) will ruin S’pore.

But with the troubles in HK, I’ve had to modify that advice by telling them that because the STI Index has a heavy HK component, they have to think about HK’s problems and its long term future.

I tell them that around 13% of the STI Index (by mkt cap) is made up cos in the Jardines Group. Jardine and Matheson (and Sassoon) were the original narco drug barons. Jardines Group is still very HK-based: Dairy Farm, Jardine Matheson, and HK Land. All these cos are in STI, as is Jardine C&C*. See table for the HK exposures of the Jardines Group: SGX-listed stocks that have serious HK exposure. Note that Mandarin Htls is part of Jardines Group.

I’ll end with a link to the constructive, nation-building BT, defending the heavy presence of Jardines in STI Index: https://www.businesstimes.com.sg/companies-markets/are-there-risks-to-having-too-many-jardine-units-in-the-sti. Note a far cry from its snide remarks in 2010. See STI ETFs — Are there values there?.

---

*Jardine C&C is big in Indonesia: Impt of Indonesia to Jardine’s and other local listcos

 

Power of compounding

Actually in this case the power of reverse compounding.

Pocahontas (aka Ms Warren, a descendant of Marx, who has a bit of Cherokee blood and who got into trouble claiming to be an Injun) has proposed what her campaign calls an “ultra-millionaire” tax of 2% on assets above $50m, plus a 1% “billionaire surtax” on assets above $1bn.

Doesn’t sound much does it? FT has done some calculations. If US billionaires paid her weath tax since 1982, they’d be a lot poorer.

SGX-listed stocks that have serious HK exposure

DBS got almost 20% exposure (no surprise), while OCBC has only 9% exposure (surprise, tot more). UOB doesn’t even make the list (surprise, surprise). Surprise that that Wing Tai and iFast got that much HK exposure.

Economics of buying cheap and cheerful stuff

The late (and much missed) Sir Terry Pratchett , in his Discworld series, had a character by the name of Captain Samuel Vimes of the Ankh Morpork City Watch. He was penny wise, pound foolish.

He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

Of course one has to take care of the good quality boots.

M’sian stocks: eagles and dogs

Interesting tables from https://www.theedgesingapore.com/capital/tongs-portfolio/good-bad-and-ugly-our-malaysian-portfolio-reaches-its-fifth-anniversary

From the late 80s until the late 90s, I used to specialise in M’sian equities. These stocks are Mandarin to me. LOL.

 

Where PAP is most vulnerable

In PAP is like one armed swordsman,I said I’d talk more about the election goodies.

“Ownself fund ownself”

We know the PAP has been doling out the goodies. But remember it’s all from yr own money.

In 2018, I wrote

[O]ver the last 10 years, Singapore’s net investment returns (NIR) contribution (NIRC) to the Budget has more than doubled from S$7 billion in FY2009 to an estimated S$15.9 billion in FY2018.

…

Waz this NIRC and NIR BS?

NIRC consists of 50 per cent of the Net Investment Returns (NIR) on the net assets invested by GIC, the Monetary Authority of Singapore and Temasek Holdings and 50 per cent of the Net Investment Income (NII) derived from past reserves from the remaining assets.

In other words, we spend 50 per cent of the estimated gains from investment, and put the remaining 50 per cent back into the reserves to preserve its growth for future use.

Associate Professor Randolph Tan is Director of the Centre for Applied Research at the Singapore University of Social Services, and a Nominated Member of Parliament.

Under PAP rule will S’pore become like UK or Venezuela?

In 2011 I wrote the following explaining how the money for our SWFs really came from us (When most probably Roy Ngerng was still wearing shorts and still coming to terms with his sexuality):

https ://atans1.wordpress.com/2010/11/02/how-we-fund-our-swfs/

https://atans1.wordpress.com/2010/11/19/property-sales-also-fund-our-swfs/

At the most, the PAP govt should be given credit for allowing S’poreans to spend more of our own money on ourselves. And even that was because in 2011, the voters gave the Pap an underwhelming ruling mandate to govern. And if not for Goh Meng Seng, his useful idiot Tan Kin Lian and Tan Jee Say (opportunists three), the PAP’s preferred presidential candidate would have lost to Dr Tan Cheng Bock.

So spread the word to those who think that they should be grateful to the PAP for the goodies that its our money the PAP is spending, but claiming credit for. Sadly, I doubt this will happen because cybernuts rather spread anti-PAP BS than the nuanced truth, even if the latter can persuade the PAP voters who think (about 35% of the voters: those who voted for Dr Tan Cheng Bock).

GST

In How PAP can win 65% plus of the vote, I pointed out that postponing the GST rise is the best to ensure a 65%+ share of the popular vote for the 4G leaders. But the 4G leaders think that the goodies doled out are sufficient for a 62% victory, if not more. (Btw, article lists most of the goodies)

Well this gives the Oppo a good chance to KPKB about the folly of increasing GST when the global and S’pore economy are weak, if not in recession (“Only cold spell coming, but not Winter,” says Heng). But will they do it? I have my doubts.

I’ll end with:

Countering PAP’s BS that taxes must go up

Welfarism the PAP way/ The last word on GST

which show that really the PAP govt doesn’t need the GST to fund future welfare spending.

 

 

Hedgies con trick unravels

Investors pull money from hedge funds at fastest pace since 2016

Rebound in returns this year has not stopped clients punishing managers for weak 2018

FT headline

“It is the best returns the industry has broadly seen in almost 10 years, but it is still below an equal-weighted equity and bond benchmark”, said Peter Laurelli, the head of research at eVestment.

 

Btw, HK Monetary Authority beat the crap of George Soros in 1998 after he screwed Tun: Attempt to bring down HK’s financial system fails: yet again

 

Sovereign bond with penny stock characteristics

From juz below par (100) to 38 in two years.

Two years ago, investors were rushing to buy Argie’s 100-year bond with a coupon of 7.125% and initial yield of yield of 7.9%: https://www.cnbc.com/2017/06/20/argentina-sees-strong-demand-for-surprise-100-year-bond.html.

Rational long-term investors “reasoned that a bond with a 7.9 per cent yield would cover the initial investment and then some over a decade or so,” said the FT

Yesterday it fell to 38 cents on the dollar, a fall of 6% on the day after Argentina started selective defaulting of its bonds: Line between living beyond one’s means and being mean is very thin.

Reminds me of this S’pore fiasco: https://www.theedgesingapore.com/inner-workings-penny-stock-scandal-revealed-first-prosecution-witness

Line between living beyond one’s means and being mean is very thin

Argie president Mauricio Macri’s plan to delay payments on more than U$101bn of debt, is a de facto default.

Todd Martinez, director of sovereign ratings at Fitch debt agency, had earlier told the BBC’s Today programme that Argentina had three options to repay what it owes – most of which is in US dollars – and none of them “looks very viable”.

“It comes down to a simple equation,” he said. “Argentina can either (sic) dip into its savings, borrow new money or achieve a budget surplus.

True of a country, true of an individual. Over-borrowing and over-spending have consequences. Btw, a Hard Truth of the PAP is be prudent. Problem is this leads to the vice of being over-prudent and leads to meanness. Think PAP: Will PM, tonite, give peace of mind on CPF Life Standard?

But to be fair to the PAP: Reason why CPF Life so mean?

Vote wisely.

Why Oppo cock to think that HDB issues will affect the vote

In Christmas, CNY coming early thanks to PAP, I pointed out that the loss of value for resale flats and the older flats has yet to be addressed by the PAP govt. And that there are S’poreans that are unhappy.

But all the KPKBing by cybernuts like Goh Meng Seng (If he still thinks HK better place to bring up his family, how come he so quiet nowadays and btw, I hear his daughter is studying here despite him saying that HK’s education system is better), and Lim Tean (He rents a S$15,000 black and white bungalow from the PAP govt) to stir more unhappiness and discontent, S’poreans are not fooled by their BS.

Our public housing policies mean that public housing is cheap, compared to other major cities, not juz “affordable”.

This table puts into context the issues of

— Falling resale prices causing a problem for the PAP with those who bot resale flats: Double confirm, ground not sweet for PAP and Will this resale flat buyer vote for PAP in next GE?

— 99-year leases: Why 30-year old HDB flats difficult to sell/ Why PAP rule will end in 2029 and Older HDB flats: How much value is lost in under 2 yrs

Christmas, CNY coming early thanks to PAP

Things could be better, a lot better. But 60-70% of voters think (thanks   that housing would be be like in HK, if not for the PAP govt. And while taz not the real pix, they are not that wrong.

Look at our private housing, it’s expensive:

Buying homes the billionaire way: two luxury homes are better than one

Why S$73.8m flat is a steal

Why S’pore is so shiok for private property investors

And even in private property there are govt controls

Ang moh’s great insight on property mkt

PAP whacks greedy pigs

So when will the PAP start worrying about the problem of older flats? Read Why PAP rule will end in 2029.

Fed chair: Not much Fed can do right now to help world economy

In addition to the Fed’s focus on balancing inflation against employment, Federal Reserve chair Jerome Powell is dealing with two other sources of stress. Investors have been critical of how he communicates policy and The Donald has been demanding, more aggressive by the day, for more monetary accommodation via interest rate cuts and quantitative easing.

Powell has juz given Trump the finger.

Powell has now called the current era of Fed history the “emerging new normal”, and said it offered three challenges: low inflation, financial risks, and how the Fed can support economic growth when interest rates are already so low. The Fed, he added, “faces heightened risks of lengthy, difficult-to-escape periods in which our policy interest rate is pinned near zero.”

How to support economic growth when interest rates are already so low is an important question for central bankers all over the world. They had gathered in Jackson Hole, Wyoming, to among other things, discuss whether policy rates have any effect on the real economy.

With his historical timeline, Mr Powell offered an answer to both. The current era of slower growth, downward pressure on inflation, and lower interest rates is the consequence of long-term trends. And there is not much the Fed can do right now to help.

It’s a very pessimistic (and hawkish: nothing much can be done) speech.

Here’s how the Economist put it

He spoke of the difficulty the Fed faced in assessing and responding to Mr Trump’s trade war. And he mentioned that if interest rates globally remain near zero, then central banks may need new policies. But on the subject of the moment—what the Fed will do next—he gave little away. “We will act as appropriate to sustain the expansion, with a strong labour market and inflation near its symmetric 2% objective,” he said.

Mr Powell may have felt he could say little more, given the disagreement within the Fed. But both the recent minutes and the speech today devoted more words to the possibility that low rates might contribute to financial instability than has recently been the norm in the Fed’s discussions. That may be a sign of more determined opposition to additional easing than recognised hitherto.

https://www.economist.com/finance-and-economics/2019/08/23/now-donald-trump-calls-the-feds-chairman-an-enemy

And btw, Trump’s not that dumb

At least one observer felt the hawkish overtones of the speech to be crystal clear. “As usual, the Fed did NOTHING!” Mr Trump tweeted after Mr Powell’s remarks. “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” The president thus cast a longer shadow than the Tetons over the day’s events.

https://www.economist.com/finance-and-economics/2019/08/23/now-donald-trump-calls-the-feds-chairman-an-enemy

How all this impacts us:

S’pore: the canary in the coalmine/ Is the ground sweet for the PAP?

Latest “bad” economic data is really “gd” news for PAP

“Only cold spell coming, but not Winter,” says Heng

Ground is not sweet economically/ Authorities may have to do something but no gd options

-ve deposit rates

Further to Bank pays u to borrow/ Govts borrow for free, Jyske Bank who pays money to borrowers to borrow has become the first Danish lender to impose negative interest rates on customer deposits and has warned that sub-zero rates were looking “rather permanent”.

Customers with balances over DKr7.5m (US$1.1m) would be charged a default rate of 0.6% a year.

Fyi, UBS and other major Swiss banks have been charging negative interest rates on customer deposits for some time. But there we are are talking of deposits of tens of millions, not US$1m

Bank pays u to borrow/ Govts borrow for free

World turned upside down.

A Danish bank last week week launched the world’s first negative-rate mortgage, allowing housebuyers to take a home loan and pay back less than they borrowed.

Sounds good.

But do realise that should negative interest rates leads prove to be a precursor of deflation, property values fall in a deflation. But then that doesn’t matter to HDB flat owners.

Germany has a new test of investors’ voracious appetite for bonds with very low or even negative yields: a 30-year bond that offers no interest payments at all.

FT

It has already issued similar 10-yr bonds

Bonds worth U$15tn, about a quarter of the global market, are offering negative returns, the FT reported last week: U$100 of bonds, including interest payments, will return less than that amount throughout their lives. That’s useful context in understanding why central bankers keep being asked about negative rates.

The central banks of the Eurozone, Switzerland, Japan, Sweden and Denmark all have rates set below zero to try and tackle very low inflation. It isn’t working, but that’s another story.

The Bank of England’s governor was asked by website Central Banking whether the UK will try the policy.

“At this stage we do not see negative rates as an option here. I am not criticising others that have used them, but we don’t see it as an option,” he replied.

Whatever one says about the Brits, despite a no deal Brexit being the likely result, the economy doesn’t yet need to resort to -ve interest rates. Sounds like Brexiters are right to accuse the Remoaners (those who want to stay) of doom-mongering i.e. Project Fear.

Hyflux revisited: Got profits but cash flows out

Muddy Waters (Temasek helped Olam see off an attack from them yrs ago: see this*): has written a really nasty report about a UK company Burford Capital,a litigation funder. The shares collapsed. because muddy waters has a more than decent track record despite having its balls crushed by Temasek over Olam.

Carson Block, the boss of Muddy Waters, had been speaking to BBC Radio 4’s Today Programme about his concerns.

One of his concerns is that the profits did not result in positive cashflow, rather negative cashflow.

He makes a great analogy about an accounting trick (OK OK OK, a legitimate accounting practice that ‘s perfectly legal): realised gains not reflected in the income statement (and hence cashflow). Think Hyflux: the profits were there, but there was no positive cash flow, rather cashflow was negative.

“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.

 

A really curious incident

Legitimate accounting tricks practices allowed this. See box for detailed explanations.

---

Hyflux’s Worrying Cash Flow Situation

https://www.theedgesingapore.com/portfolio/total-compliance-financial-reporting-was-it-misleading

———————————————————————————————–

As Carson Block put it, “The analogy I like is if I say ‘I’m going to take you on vacation, meet me at the airport oh Hawaii is amazing, it’s got great beaches, my favourite hotel is this one’ and then you meet me at the airport and I say ‘we’re going to Ireland’. Hawaii has nothing do with Ireland and all that discussion about Hawaii has nothing to do with where we were going.

“And that’s basically what all this discussion about realised gains in the investment materials is. It has nothing to do with – or very little to do with – what flows into the income statement.”

Want to know more about what went wrong at Hyflux?

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

Did Hyflux’s auditors mislead?

Hyflux fiasco shows why “book value” is BS

---

*https://atans1.wordpress.com/2013/11/26/temasek-tales-tlc-overpaid-olam-cheong-wont-read-this-in-tre-toc/

Olam: Hang on, buy for the ride?

Hyflux is Big Flush

The latest news that Huflux is talking to the camel drivers (Hyflux: Can believe or not?) after telling them to go f**k their camels reminded me of a comment I once saw on TRE:

Hyflux will be known as Big Flush?

GIC outperformed by tell-all Norwegian SWF

By 15%.

GIC’s annualised 20-year real rate of return, its main performance metric, was 3.4 per cent up to the year-end in March. That compares with a real rate of return of 3.9 per cent since 1998 at Norges, the Norwegian sovereign wealth fund.

FT

Please remember that GIC (like Temasek) says it needs to be non-transparent to make money for us. Well tell that to the Norwegians who even tell the world the colour of the underwear of the fund managers.

Btw, GIC is investing less in stock markets, more in private equity. Who isn’t?

Why I hold Hongkong Bank and UOB shares

OK, OK, I only have an economic interest in UOB via shares in Haw Par. The underlying reasons for investing in Haw Par haven’t changed since 2011: Haw Par: Rediscovered yet again. More recent analysis: https://www.fool.sg/2019/02/28/haw-par-declares-bumper-special-dividend-for-their-full-year-2018-earnings/

As a result of the high cash balance and also to celebrate Haw Par’s 50th anniversary, the group has declared a bumper special dividend of S$0.85 per share in addition to its final dividend of S$0.15 per share. The sum of its final and special dividend amounts to S$1 per share, and if we include its interim dividend of S$0.15 per share, the full-year dividend would be S$1.15 per share. At Haw Par’s last done share price of S$12.39 on 27 February 2019, that represents a trailing dividend yield of 9.3%.

(Bear in mind that the huge dividend yield is due to “special” dividend. It’s normal dividend yield is between 3-4%. FYI, UOB has a 4%+ yield.)

Btw, OCBC and DBS recommending UOB. So do ang moh brokers.

Back to why I own HSBC and Haw Par shares: S’pore and HK are very kind to banks:

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

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 do? 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 haram 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.