NOL: In need of a hero
Neptune Orient Lines' new president and CEO, Dr Thomas Held, is seemingly starting to leave his mark on the company. Since the beginning of the week, NOL sold stakes worth S$30 mln in two companies. According to an NOL spokesman they did contribute positively to EBIT but the amount was small: only less than 1% of group profits. Companies trying to make a turn around or consolidate focus more on the core areas of their business. That is, do what they do and do best. They often sell off units to "regroup". It seems that, initially, Held is going by the book.
Held was appointed last November at the local container shipping and supply chain company, which has gone through many ups and downs over the past seven years. Held was brought in to turn the company around. He was CEO of German logistics firm Schenker, which has a big office near the Singapore Expo. He worked his way up from Chief Financial Officer and Chief Information Officer. He was involved in the company's finance and accounting, risk management and information technology.
He started his career at Robert Bosch GmbH in Germany in 1986, doing a trainee program and assignments in logistics, planning and controlling finance. He worked his way up to become the Head of Commercial Coordination for its communications technology unit.
His practical experience, and his PhD qualifications in Businesses Studies at the University of Bonn seemingly give Held the necessary experience. He seems eminently qualified.
When NOL reports FY2006 earnings on February 22 we'll want to know about what motivates the man. How much of his decisions rest on business theory learnt at university, and how much on his practical experience? It would also be interesting to find out the subject of his dissertation in his university studies.
Nurwidya Abdul, Curtis Bergh & Mark Laudi
Held was appointed last November at the local container shipping and supply chain company, which has gone through many ups and downs over the past seven years. Held was brought in to turn the company around. He was CEO of German logistics firm Schenker, which has a big office near the Singapore Expo. He worked his way up from Chief Financial Officer and Chief Information Officer. He was involved in the company's finance and accounting, risk management and information technology.
He started his career at Robert Bosch GmbH in Germany in 1986, doing a trainee program and assignments in logistics, planning and controlling finance. He worked his way up to become the Head of Commercial Coordination for its communications technology unit.
His practical experience, and his PhD qualifications in Businesses Studies at the University of Bonn seemingly give Held the necessary experience. He seems eminently qualified.
When NOL reports FY2006 earnings on February 22 we'll want to know about what motivates the man. How much of his decisions rest on business theory learnt at university, and how much on his practical experience? It would also be interesting to find out the subject of his dissertation in his university studies.
Nurwidya Abdul, Curtis Bergh & Mark Laudi
GST hike will slow down trade
Last December, the government brought about a possible increase in our Goods and Services Tax(gst). Now that the government has confirmed, it will announce the Budget on 15 February. The current debate is that should they jump straight to the 7% gst, or should it increase to 6% this year and 7% next year.
Our Prime Minister Lee Hsien Loong mentioned in yesterday's Straits Times that we should 'take (our) medicine sooner', suggesting a one time hike of 7%. The government says that this hike will be better for us as we do not have to face the issue of gst increment for a while.
I think that this will slow down volumes of trade in the stock market.
My reasons:
First. Commisions from trade done from the internet and phone will increase. All brokers currently earn $1.25 from S$25 of booking fee will see a $0.50 increase to a total of S$26.75. The phone however, will see an increase from $42, includes 5% gst, to $42.80.
Second. Clearing fees to clear our transactions will increase as well. Maximum clearing fees of $200 will increase from S$210 with 5% gst to S$214.
Having said that, I'm not suggesting that there will be no trading, but there will be lesser volumes and people trading in the long run. Buying or selling shares will become a bit more costly and would be a bit harder for people to own shares. We would even see lesser people being actively involved in the stock market due to the extra costs incurred.
Now the question is, are you going to trade less?
Nurwidya Abdul
Our Prime Minister Lee Hsien Loong mentioned in yesterday's Straits Times that we should 'take (our) medicine sooner', suggesting a one time hike of 7%. The government says that this hike will be better for us as we do not have to face the issue of gst increment for a while.
I think that this will slow down volumes of trade in the stock market.
My reasons:
First. Commisions from trade done from the internet and phone will increase. All brokers currently earn $1.25 from S$25 of booking fee will see a $0.50 increase to a total of S$26.75. The phone however, will see an increase from $42, includes 5% gst, to $42.80.
Second. Clearing fees to clear our transactions will increase as well. Maximum clearing fees of $200 will increase from S$210 with 5% gst to S$214.
Having said that, I'm not suggesting that there will be no trading, but there will be lesser volumes and people trading in the long run. Buying or selling shares will become a bit more costly and would be a bit harder for people to own shares. We would even see lesser people being actively involved in the stock market due to the extra costs incurred.
Now the question is, are you going to trade less?
Nurwidya Abdul
Property Stocks: Not Good To Buy Into Now
Remember the time when CapitaLand was going on some all-time high because people were speculating they'd win the Sentosa IR bid?
The rises capped at a certain level way before the real race began with CapitaLand-Kerzner, Eighth Wonder and Genting International.
Property stocks are now rising in similar fashion, after research reports show how both the residential and commerical property markets are going to do a lot better this year.
The latest two stocks riding on this is Singapore Press Holdings and SC Global.
SPH will be soft-launching Sky@eleven condominium next month, and SC Global has two developments under construction in the prime district.
I think it's a little too much to be heading into property counters right now.
Firstly, the local market's rising too much for my liking.
And secondly, these stocks may very well be at their highest in a long while to come.
People who have bought into stocks like Keppel Land, CapitaLand and the like a few months back may find their bank accounts to have ballooned somewhat, but I think they should take their money out now.
And yes, that means I wouldn't even think of buying in now.
If anything maybe you should just take your bulk of cash, and invest it in some real property instead.
If a two-room condo at the Waterplace at Tanjong Rhu could fetch rent of at least S$2,500 a month, imagine how much more you'd make with your money in a condo.
Serene Lim
The rises capped at a certain level way before the real race began with CapitaLand-Kerzner, Eighth Wonder and Genting International.
Property stocks are now rising in similar fashion, after research reports show how both the residential and commerical property markets are going to do a lot better this year.
The latest two stocks riding on this is Singapore Press Holdings and SC Global.
SPH will be soft-launching Sky@eleven condominium next month, and SC Global has two developments under construction in the prime district.
I think it's a little too much to be heading into property counters right now.
Firstly, the local market's rising too much for my liking.
And secondly, these stocks may very well be at their highest in a long while to come.
People who have bought into stocks like Keppel Land, CapitaLand and the like a few months back may find their bank accounts to have ballooned somewhat, but I think they should take their money out now.
And yes, that means I wouldn't even think of buying in now.
If anything maybe you should just take your bulk of cash, and invest it in some real property instead.
If a two-room condo at the Waterplace at Tanjong Rhu could fetch rent of at least S$2,500 a month, imagine how much more you'd make with your money in a condo.
Serene Lim
SingTel vs StarHub: Who Could Win?
Remember the time when there was a constant flow of news and opinion pieces comparing Apple and Creative?
The two had even tried to top each other everytime one party announced something new.
The SingTel-StarHub relationship is pretty similar to the Creative-Apple one then.
While SingTel was broadband- and mobile-centric and StarHub was THE cable-TV and broadband operator, both's businesses seem to be eating into each other's “space”.
SingTel has just launched its Mio, which combines mobile, internet broadband and IDD.
Before this, it launched its IPTV as possible competition to StarHub's cable-TV service.
But because of the latter's monopoly of local cable-TV, SingTel's IPTV probably have to take a backseat for now.
StarHub came crashing onto the local mobile and internet scene with free incoming calls and free internet access, which must have rocked SingTel's boat as the supposed incumbant.
Free incoming calls have since caught on with all the telcos and internet access has become commonality.
More recently, StarHub won the rights to broadcast the English Premier League for three years.
SingTel was one of three bidders for the license.
One thing the two telcos seem to agree on is throwing in major incentives to bring customers in.
These gifts include PC and Mac notebooks and LCD televisions.
As a consumer, I would want the best deals for myself and perhaps not really consider being loyal to one brand.
For example, I'm a StarHub cable-TV and broadband subscriber, but I'm a SingTel mobile user.
As an investor though, I want good returns so whoever has better fundamentals would win my vote.
I'm all for the underdog but when it involves more than a S$30 monthly phone bill, I'd rather stick with the safer bet.
Widya Abdul
The two had even tried to top each other everytime one party announced something new.
The SingTel-StarHub relationship is pretty similar to the Creative-Apple one then.
While SingTel was broadband- and mobile-centric and StarHub was THE cable-TV and broadband operator, both's businesses seem to be eating into each other's “space”.
SingTel has just launched its Mio, which combines mobile, internet broadband and IDD.
Before this, it launched its IPTV as possible competition to StarHub's cable-TV service.
But because of the latter's monopoly of local cable-TV, SingTel's IPTV probably have to take a backseat for now.
StarHub came crashing onto the local mobile and internet scene with free incoming calls and free internet access, which must have rocked SingTel's boat as the supposed incumbant.
Free incoming calls have since caught on with all the telcos and internet access has become commonality.
More recently, StarHub won the rights to broadcast the English Premier League for three years.
SingTel was one of three bidders for the license.
One thing the two telcos seem to agree on is throwing in major incentives to bring customers in.
These gifts include PC and Mac notebooks and LCD televisions.
As a consumer, I would want the best deals for myself and perhaps not really consider being loyal to one brand.
For example, I'm a StarHub cable-TV and broadband subscriber, but I'm a SingTel mobile user.
As an investor though, I want good returns so whoever has better fundamentals would win my vote.
I'm all for the underdog but when it involves more than a S$30 monthly phone bill, I'd rather stick with the safer bet.
Widya Abdul
Is This Home? Truly?
A variety of factors are making me worry about my future in Singapore.
Besides the impending GST hike and growing income gap, an article on last Friday's Business Times cited a household income survey which found that that of the majority middle class to have stagnated in the past five years.
The article also said that “an underclass will develop and lead to social and political instability”.
This was found by a panel of economists at a conference last week, hosted by the Institute of Policy Studies.
I am worried because I consider myself to be at the lower end of the middle class.
And because of the choice to experience life by not going the cookie-cutter way of an education and job, I will not be able to own any major assets even after I get married.
Most of all, I worry that circumstances will force me to leave my country in the distant future, especially when that future is seeking to meet a targetted 8 million in local population figures.
The property market is on the rise.
There are empty blocks of HDB flats sitting pretty in Seng Kang simply because the target demographics cannot afford them.
Those who can, pay a little more for a condominium.
While these flats remain empty, more are being constructed around them.
The market is banking on the impending influx of foreign talent to snap up these places in the coming years.
Though isn't it ironic how it expects expatriates to buy new flats in Seng Kang rather than new or resale condos at Tanjong Rhu?
For a country that was worried about falling birthrates, Singapore sure isn't making it easy for young couples to settle down.
Manu Bhaskaran, an adjunct senior research fellow at the Institute, told the BT he wonders “who Singapore's growth is for”.
“The widening inequalities suggest there are more losers (than winners).”
So, as we seek to bring in more foreign talent (which also means paying higher salaries), we should also consider ways to retain our young and mobile who might also find it more feasible to move elsewhere like Australia or other parts of Asia for opportunities.
Because if we focus purely on attracting “suitable” immigrants, we will keep losing our local talents and this will make hitting the population target of 8 million more difficult.
And that's the least of our problems.
What of those who find it hard to stay relevant as the country progresses, yet cannot afford to move away?
You go do the math.
Serene Lim
Besides the impending GST hike and growing income gap, an article on last Friday's Business Times cited a household income survey which found that that of the majority middle class to have stagnated in the past five years.
The article also said that “an underclass will develop and lead to social and political instability”.
This was found by a panel of economists at a conference last week, hosted by the Institute of Policy Studies.
I am worried because I consider myself to be at the lower end of the middle class.
And because of the choice to experience life by not going the cookie-cutter way of an education and job, I will not be able to own any major assets even after I get married.
Most of all, I worry that circumstances will force me to leave my country in the distant future, especially when that future is seeking to meet a targetted 8 million in local population figures.
The property market is on the rise.
There are empty blocks of HDB flats sitting pretty in Seng Kang simply because the target demographics cannot afford them.
Those who can, pay a little more for a condominium.
While these flats remain empty, more are being constructed around them.
The market is banking on the impending influx of foreign talent to snap up these places in the coming years.
Though isn't it ironic how it expects expatriates to buy new flats in Seng Kang rather than new or resale condos at Tanjong Rhu?
For a country that was worried about falling birthrates, Singapore sure isn't making it easy for young couples to settle down.
Manu Bhaskaran, an adjunct senior research fellow at the Institute, told the BT he wonders “who Singapore's growth is for”.
“The widening inequalities suggest there are more losers (than winners).”
So, as we seek to bring in more foreign talent (which also means paying higher salaries), we should also consider ways to retain our young and mobile who might also find it more feasible to move elsewhere like Australia or other parts of Asia for opportunities.
Because if we focus purely on attracting “suitable” immigrants, we will keep losing our local talents and this will make hitting the population target of 8 million more difficult.
And that's the least of our problems.
What of those who find it hard to stay relevant as the country progresses, yet cannot afford to move away?
You go do the math.
Serene Lim
Malaysia: More gains ahead if…
Malaysian stocks have risen to their highest levels in ten years over the last few weeks, with the KL Composite Index breaking out of its 850-950 trading range established in mid-2004, and rallying to more than 1,120. A variety of reasons have been given for why it's managed to do this, such as restructuring of government-linked companies (GLC) by state investment firm Kazanah. But there are a variety of other factors that make me believe Malaysian stocks can rise further, and sustainably.
Here's why:
First, Malaysia is now seen as a safer investment destination than its neighbor Thailand. People who previously mocked the Malaysian way of doing business, such as cronyism and for domestic political reasons, now have a much worse example to point at. Thailand has gone from the sublime to the ridiculous, replacing a leader who knew what he was doing, although it apparently benefitted his own family's pockets, with a leadership that is trying to work hard for the good of everyone, but doesn't seem to know what it's doing. The evidence for these two points can be found in the recent imposition, and subsequent retraction of capital controls, and the current hearings into how the Shinawatra family sold billions of dollars worth of assets without paying any tax. By contrast, Malaysia shines.
Second, as Christopher Wong, investment manager for Asian equities at Aberdeen Asset Management pointed out at a Hwang-DBS briefing in Kuala Lumpur on January 9, Kazanah has been cracking the whip at GLCs. The restructuring has been healthy, he says.
But there are also considerable headwinds, that are likely to prove to be resistance to the market's gains.
First, Kuala Lumpur feels depressing. When was the last time you were there? Did it feel like the place had a buzz, like Jakarta or Singapore? No. Malaysian friends have confirmed this feeling. Somehow, the place doesn't feel like it's going anywhere. And that's a worry for all business people, who depend on domestic demand for their sales.
Second, the sophistication of Malaysian retail investors leaves a lot to be desired, as Tan Teng Boo from iCapital.biz points out. In his editorial in The Star he says few emulate Warren Buffet's style of investing, despite its common sense and simplicity.
He says:
"Can we apply the Buffett-Graham-Munger approach to Bursa Malaysia? Yes, except that one has to be very patient, disciplined and do the necessary homework.
"For whatever reasons, many claim to be a follower or non-follower of Buffett without really knowing his philosophy and methodology.
"Many investors have blamed the Bursa Malaysia for losses or poor returns.
"Many have said that the Buffett-Graham-Munger investing style cannot be successfully applied to Bursa.
"Many investors do not realise that the real culprit of their losses or poor performance is themselves."
These are considerable headwinds, but in my view there is no reason why the current gains can't be sustained if the Malaysian economy perks up a little and Malaysians become more savvy investors.
Widya Abdul & Mark Laudi
Here's why:
First, Malaysia is now seen as a safer investment destination than its neighbor Thailand. People who previously mocked the Malaysian way of doing business, such as cronyism and for domestic political reasons, now have a much worse example to point at. Thailand has gone from the sublime to the ridiculous, replacing a leader who knew what he was doing, although it apparently benefitted his own family's pockets, with a leadership that is trying to work hard for the good of everyone, but doesn't seem to know what it's doing. The evidence for these two points can be found in the recent imposition, and subsequent retraction of capital controls, and the current hearings into how the Shinawatra family sold billions of dollars worth of assets without paying any tax. By contrast, Malaysia shines.
Second, as Christopher Wong, investment manager for Asian equities at Aberdeen Asset Management pointed out at a Hwang-DBS briefing in Kuala Lumpur on January 9, Kazanah has been cracking the whip at GLCs. The restructuring has been healthy, he says.
But there are also considerable headwinds, that are likely to prove to be resistance to the market's gains.
First, Kuala Lumpur feels depressing. When was the last time you were there? Did it feel like the place had a buzz, like Jakarta or Singapore? No. Malaysian friends have confirmed this feeling. Somehow, the place doesn't feel like it's going anywhere. And that's a worry for all business people, who depend on domestic demand for their sales.
Second, the sophistication of Malaysian retail investors leaves a lot to be desired, as Tan Teng Boo from iCapital.biz points out. In his editorial in The Star he says few emulate Warren Buffet's style of investing, despite its common sense and simplicity.
He says:
"Can we apply the Buffett-Graham-Munger approach to Bursa Malaysia? Yes, except that one has to be very patient, disciplined and do the necessary homework.
"For whatever reasons, many claim to be a follower or non-follower of Buffett without really knowing his philosophy and methodology.
"Many investors have blamed the Bursa Malaysia for losses or poor returns.
"Many have said that the Buffett-Graham-Munger investing style cannot be successfully applied to Bursa.
"Many investors do not realise that the real culprit of their losses or poor performance is themselves."
These are considerable headwinds, but in my view there is no reason why the current gains can't be sustained if the Malaysian economy perks up a little and Malaysians become more savvy investors.
Widya Abdul & Mark Laudi
Forget the critics, SGX should buy a stake in the BSE
News that the Singapore Exchange has been shortlisted as one of four exchanges in the running for a 26% stake in the Bombay Stock Exchange is great news. Contrary to some commentators, my view is this is the ultimate in its regionalisation efforts. It would give SGX exposure to stock market-related earnings from beyond Singapore's shores. And considering Indian companies are being told to list in India first before they can list abroad, thereby perhaps negating the need to list abroad, it will give SGX exposure to the booming Indian economy.
There is some truth to the argument, put forward by Kevin Scully in the Business Times on Monday, that the SGX shouldn't be buying stakes in other Asian exchanges at a time when it is trying to position itself as a major capital market.
I have a lot of respect for Kevin, and his views are always based on sound reasoning and many years of experience in the market. But if the SGX's possible investment really doesn't make sense, then either the SGX is truly barking up the wrong tree or the SGX has another agenda that may not be quite so obvious at first.
As Kevin rightly points out, big Indian companies prefer to list on their home or the US markets. My view is though: if the SGX can't get them to come here, then perhaps the SGX should go where they are.
It's not like SGX is buying a stake in ASX, Bursa Malaysia or the Stock Exchange of Thailand. Given the fact that the SGX already has companies from these three markets listed on its own exchange, there doesn't seem to be much of a reason to buy stakes in them. Whatever synergies they might want to derive could be derived through an agreement or contract, such as the SGX's informal cooperation with the Tokyo Stock Exchange, or the WorldLink to the ASX (which failed) and Bursa Malaysia.
No, my view is this is about expanding SGX's earnings into areas that would otherwise be out of reach.
But I can think of another reason why SGX is keen on a stake in the BSE: recently there's been some talk that the SGX could fall prey to another overseas exchange, such as the Korean Stock Exchange or Nasdaq. By buying a stake in BSE, it could either complicate the story or it could enhance the SGX's attractiveness to a potential suitor.
Which is it?
Mark Laudi
There is some truth to the argument, put forward by Kevin Scully in the Business Times on Monday, that the SGX shouldn't be buying stakes in other Asian exchanges at a time when it is trying to position itself as a major capital market.
I have a lot of respect for Kevin, and his views are always based on sound reasoning and many years of experience in the market. But if the SGX's possible investment really doesn't make sense, then either the SGX is truly barking up the wrong tree or the SGX has another agenda that may not be quite so obvious at first.
As Kevin rightly points out, big Indian companies prefer to list on their home or the US markets. My view is though: if the SGX can't get them to come here, then perhaps the SGX should go where they are.
It's not like SGX is buying a stake in ASX, Bursa Malaysia or the Stock Exchange of Thailand. Given the fact that the SGX already has companies from these three markets listed on its own exchange, there doesn't seem to be much of a reason to buy stakes in them. Whatever synergies they might want to derive could be derived through an agreement or contract, such as the SGX's informal cooperation with the Tokyo Stock Exchange, or the WorldLink to the ASX (which failed) and Bursa Malaysia.
No, my view is this is about expanding SGX's earnings into areas that would otherwise be out of reach.
But I can think of another reason why SGX is keen on a stake in the BSE: recently there's been some talk that the SGX could fall prey to another overseas exchange, such as the Korean Stock Exchange or Nasdaq. By buying a stake in BSE, it could either complicate the story or it could enhance the SGX's attractiveness to a potential suitor.
Which is it?
Mark Laudi
CK Tang needs lions at the door
The infamous retail superstore CK Tangs have not been seeing much crowd since it first opened last October. Investors are deciding critically whether or not to pull out of their investments. At risk of sounding outdated and old-fashioned, I believe it all has to do with the structure or 'feng shui' of the building.
My reasons:
First, its VivoCity entrance is hardly noticeable. Apart from the bright orange sign, the doorway is too narrow. You could barely walk in three abreast - unlike at Tangs Orchard Road.
Second, the exterior design at VivoCity is completely different from Tangs at Orchard. Everybody knows the Tangs building for its unique oriental designs with the two stone lions at both ends of the entrance, symbolising good fortune. Tangs VivoCity doesn't have that.
The late founder of CK Tang, Mr Tang Choon Keng, started out by selling door-to-door. He opened his first store in 1934 at River Valley Road and in the late 1950's, he opened the one in Orchard Road, which is now still running strong.
Mr Tang's traditional Chinese handicrafts made him popular. That would very much explain the architectural designs at Orchard Road: oriental, original and Chinese.
Perhaps the outlet at VivoCity isn't drawing many shoppers because the exterior is very plain, and most definitely not Chinese. If Tangs hadn't spent S$15 mln on the interior, but also put in the effort to create this familiar ambience on the exterior, I would say that would have been money well-spent.
Without the traditional touch, Tangs is just like any other retail store selling clothes, shoes, jewelry and so on. There is nothing interesting or unusual about it. And this at VivoCity, where hundreds of shops are competing and fighting for customers. They need another set of lions at the door.
Nurwidya Abdul
My reasons:
First, its VivoCity entrance is hardly noticeable. Apart from the bright orange sign, the doorway is too narrow. You could barely walk in three abreast - unlike at Tangs Orchard Road.
Second, the exterior design at VivoCity is completely different from Tangs at Orchard. Everybody knows the Tangs building for its unique oriental designs with the two stone lions at both ends of the entrance, symbolising good fortune. Tangs VivoCity doesn't have that.
The late founder of CK Tang, Mr Tang Choon Keng, started out by selling door-to-door. He opened his first store in 1934 at River Valley Road and in the late 1950's, he opened the one in Orchard Road, which is now still running strong.
Mr Tang's traditional Chinese handicrafts made him popular. That would very much explain the architectural designs at Orchard Road: oriental, original and Chinese.
Perhaps the outlet at VivoCity isn't drawing many shoppers because the exterior is very plain, and most definitely not Chinese. If Tangs hadn't spent S$15 mln on the interior, but also put in the effort to create this familiar ambience on the exterior, I would say that would have been money well-spent.
Without the traditional touch, Tangs is just like any other retail store selling clothes, shoes, jewelry and so on. There is nothing interesting or unusual about it. And this at VivoCity, where hundreds of shops are competing and fighting for customers. They need another set of lions at the door.
Nurwidya Abdul
Cancellation of trade totally uncalled for
The Singapore Exchange's cancellation of an errant trade in DIAMOND DIA 10 ETFs raises again the conflict of interest between the SGX's roles as a provider of a platform to trade securities, and being the regulator of that platform. It's reversed a trade in which DBS Vickers Securities sold 16,300 DIA units at US$1.19 each, far below the last traded price of US$108. Apparently, someone at DBS made an error when keying in the stock code. My view is the trade should stand.
My reasons:
First, a trade is a trade. By cancelling it, Phillip Securities and the unidentified customer who bought these units at such a low price, are being made to pay for DBS Vickers' mistake. Even if it was made out of carelessness, you and I both know we can't afford to that in this fast-paced market. Phillip and DBS Vickers now have to agree on how much compensation should be paid but anything less than the actual potential gain would punish Phillip.
Secondly, as a buyer constantly on the lookout for cheap stocks it seems unfair for someone to come along, in this case the SGX, and tell you, 'no, you can't buy it at that price'. Afterall, stores that advertise goods at a particular price have to stand by their offer, even if they made a printing error in their catalogue.
Granted, the amounts of money involve are huge. DBS Vickers had actually offered to sell 75,000 DIA ETFs at US$1.19 apiece, worth just US$89,250. If the units had been sold at the last done price on the SGX, at US$108, it would have been worth US$8.1 mln. If they had been sold at the last price on the American Stock Exchange, the total value would have been US$9.3 mln. The difference in the price of the 16,300 securities Phillip bought at US$1.19 and the price they would have paid at $108 is US$1.74 mln.
The formula is simple. No one should be 'punished' for another's mistake. You made an error, so accept it and learn. The SGX's cancellation of the trade was a 'humane' act for DBS Vickers, but in my view not the right one for Phillip Securities.
My reasons:
First, a trade is a trade. By cancelling it, Phillip Securities and the unidentified customer who bought these units at such a low price, are being made to pay for DBS Vickers' mistake. Even if it was made out of carelessness, you and I both know we can't afford to that in this fast-paced market. Phillip and DBS Vickers now have to agree on how much compensation should be paid but anything less than the actual potential gain would punish Phillip.
Secondly, as a buyer constantly on the lookout for cheap stocks it seems unfair for someone to come along, in this case the SGX, and tell you, 'no, you can't buy it at that price'. Afterall, stores that advertise goods at a particular price have to stand by their offer, even if they made a printing error in their catalogue.
Granted, the amounts of money involve are huge. DBS Vickers had actually offered to sell 75,000 DIA ETFs at US$1.19 apiece, worth just US$89,250. If the units had been sold at the last done price on the SGX, at US$108, it would have been worth US$8.1 mln. If they had been sold at the last price on the American Stock Exchange, the total value would have been US$9.3 mln. The difference in the price of the 16,300 securities Phillip bought at US$1.19 and the price they would have paid at $108 is US$1.74 mln.
The formula is simple. No one should be 'punished' for another's mistake. You made an error, so accept it and learn. The SGX's cancellation of the trade was a 'humane' act for DBS Vickers, but in my view not the right one for Phillip Securities.
STI at record high:
A pullback would be healthy for everyone
The new year has started with the way the old year ended: a record high on the Straits Times Index. If there is any truth to the doomsayers, who've been predicting a slower economy this year, and a "coming off the boil" for stock prices, it wasn't to be seen today. But that doesn't mean that it won't be seen this year, or that they should not be seen this year. While it's all well and good for the market to keep rising beyond 3,000, in my personal opinion a pull-back would be healthy for everyone.
Here's why.
First, the Straits Index has gained almost uninterrupted. Even the big decline in May last year, which saw the STI move from more than 2,600 to less than 2,400, now just appears like a blip. And it's the largest blip since the July to October 'flatness' of 2005 and May 2004. Volumes have also been very strong, with around two billion shares traded each day. A repeat of May last year would ensure a reorientation, where speculative money comes out of the market and prices are once again be based on fundamentals.
Second, the market should price in future earnings. It should be a barometer of expectations. Given current concerns about US consumers taking a breather, and other economies plateauing, I don't see such expectations being priced in. I don't sense fear kicking in as it, perhaps, should. Traders appear punch-drunk. I say this because it's increasingly difficult to find bargains. Value investors are likely to sit increasingly on the sidelines. I don't believe trader-driven activity can boost the market ad infinitum. The volumes over the Christmas-New Year break held up remarkably well, suggesting to me that the traders stuck around while the investors were away on holiday. Without fresh money coming in, and strong attractions to draw it here, I don't see how the market can continue like this.
My contention in saying this isn't so much that I think the market will fall. I could well be proven wrong, and the market could rise to 4,000 before a pullback - who knows?! But some consolidation would be the reality check we need, making further record highs all the more stable.
Mark Laudi
ArchivesHere's why.
First, the Straits Index has gained almost uninterrupted. Even the big decline in May last year, which saw the STI move from more than 2,600 to less than 2,400, now just appears like a blip. And it's the largest blip since the July to October 'flatness' of 2005 and May 2004. Volumes have also been very strong, with around two billion shares traded each day. A repeat of May last year would ensure a reorientation, where speculative money comes out of the market and prices are once again be based on fundamentals.
Second, the market should price in future earnings. It should be a barometer of expectations. Given current concerns about US consumers taking a breather, and other economies plateauing, I don't see such expectations being priced in. I don't sense fear kicking in as it, perhaps, should. Traders appear punch-drunk. I say this because it's increasingly difficult to find bargains. Value investors are likely to sit increasingly on the sidelines. I don't believe trader-driven activity can boost the market ad infinitum. The volumes over the Christmas-New Year break held up remarkably well, suggesting to me that the traders stuck around while the investors were away on holiday. Without fresh money coming in, and strong attractions to draw it here, I don't see how the market can continue like this.
My contention in saying this isn't so much that I think the market will fall. I could well be proven wrong, and the market could rise to 4,000 before a pullback - who knows?! But some consolidation would be the reality check we need, making further record highs all the more stable.
Mark Laudi
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