Markets 'Correcting.' Two Words: Don't Panic!
Ok, you may see everyone else running around in panic mode calling their broker and selling off their shares in light of the big global sell-off-spree in the last 24 hours or so, but that doesn't mean you should join in the hoopla and start freaking out. Take a deep breath, calm down, here's why we suggest holding onto your hair:
This had to happen sooner or later, and understanding what lit the fuse to the sell-off is key to preventing you from hyperventilating with fear. Everyone seemed to know deep down that the market would 'correct,' it was only a question of when (and I think we know the answer to that now!). There were really two key factors in my opinion that triggered this sell-off: rumors in China that they would actually start reforming their market and 'tightening it up.' The other being Alan Greenspan's rather alarming comments yesterday about the U.S. economy to a group in Hong Kong. He may not have the title that he once did, but whatever he says still pulls an incredible amount of weight in markets around the world.
This should definitely give a boost to the argument that markets in the U.S. (and maybe the world) take a cue from what Asia does in the overnight session. Asia is the first region in the world to start the trading week, just like the first serve in a tennis match. The rest of the world is on the receiving end, and what they do with what Asia serves up honestly sets the pace for trading week around the world I think. We saw proof positive of that last night; none of the major indices in Europe had less than a 2% decline, and we saw the biggest drop on wall street since 9/11.
BUT, despite all of this glum news, we at Investor Central really are not freaking out all that much. If you look at the actual price some of these stocks were trading at, particularly here in Singapore, you will see that many of them were trading way beyond actual value. Naturally, it had to come down.
China, while the main culprit behind the meltdown, is actually doing something incredibly positive for the long-term health of that market. Seriously, who can complain when officials are trying to tighten up the regulating environment and cut out the sketchiness? This is a positive, not a negative.
So rather than get on the phone with your broker having a panic attack, take a step back, a deep breath, relax, and take a look to see what potentials are out there, because there is an upside to everything in life, even if it is global indices melting down.
As always, please see your licensed financial advisor before making any investment decisions.
-Curtis Bergh
This had to happen sooner or later, and understanding what lit the fuse to the sell-off is key to preventing you from hyperventilating with fear. Everyone seemed to know deep down that the market would 'correct,' it was only a question of when (and I think we know the answer to that now!). There were really two key factors in my opinion that triggered this sell-off: rumors in China that they would actually start reforming their market and 'tightening it up.' The other being Alan Greenspan's rather alarming comments yesterday about the U.S. economy to a group in Hong Kong. He may not have the title that he once did, but whatever he says still pulls an incredible amount of weight in markets around the world.
This should definitely give a boost to the argument that markets in the U.S. (and maybe the world) take a cue from what Asia does in the overnight session. Asia is the first region in the world to start the trading week, just like the first serve in a tennis match. The rest of the world is on the receiving end, and what they do with what Asia serves up honestly sets the pace for trading week around the world I think. We saw proof positive of that last night; none of the major indices in Europe had less than a 2% decline, and we saw the biggest drop on wall street since 9/11.
BUT, despite all of this glum news, we at Investor Central really are not freaking out all that much. If you look at the actual price some of these stocks were trading at, particularly here in Singapore, you will see that many of them were trading way beyond actual value. Naturally, it had to come down.
China, while the main culprit behind the meltdown, is actually doing something incredibly positive for the long-term health of that market. Seriously, who can complain when officials are trying to tighten up the regulating environment and cut out the sketchiness? This is a positive, not a negative.
So rather than get on the phone with your broker having a panic attack, take a step back, a deep breath, relax, and take a look to see what potentials are out there, because there is an upside to everything in life, even if it is global indices melting down.
As always, please see your licensed financial advisor before making any investment decisions.
-Curtis Bergh
Brookstone's holding Osim back
Osim anounced its FY 2006 earnings results last night and truthfully, it was quite impressive. It reported rise in sales although its net profit dipped. Its business still made money from operations but not as much as last year, and they are paying higher dividends.
Not too bad for a company that had recently recalled its uZap MINI because it was a potential fire hazard.
It also issued a profit guidance on 31 January partially because of losses resulting from OSIM Brookstone's interest expenses.
About a year ago, we asked CEO Ron Sim if he regretted buying Brookstone. The answer was no. He mentioned that Brookstone is usually only profitable in Q4 because of the Christmas shopping season and that would be enough to turn the rest of the year around.
However, the word around is that Brookstone is not selling as much as Osim expected.
When Sim was appointed to Brookstone's board of directors, he replaced then CEO Michael Anthony with Lou Mancini because he felt Anthony wasn't performing up to par. Sim said he intended to improve how Brookstone did in Q1-Q3 and have it less dependent on Christmas sales. That said, no significant improvements have arisen out of this change in management.
Our American colleague says that during Christmas, the shopping crowd that frequents Brookstone is less likely to buy Osim's massage chairs or big ticket items than use them to soothe their muscles on the spot to prep them for more shopping.
So is Brookstone capable of turning profitable in this coming quarter? We think not.
And we wonder what Sim would say now if we asked him the same question we did a year back.
Nurwidya Abdul and Serene Lim
Not too bad for a company that had recently recalled its uZap MINI because it was a potential fire hazard.
It also issued a profit guidance on 31 January partially because of losses resulting from OSIM Brookstone's interest expenses.
About a year ago, we asked CEO Ron Sim if he regretted buying Brookstone. The answer was no. He mentioned that Brookstone is usually only profitable in Q4 because of the Christmas shopping season and that would be enough to turn the rest of the year around.
However, the word around is that Brookstone is not selling as much as Osim expected.
When Sim was appointed to Brookstone's board of directors, he replaced then CEO Michael Anthony with Lou Mancini because he felt Anthony wasn't performing up to par. Sim said he intended to improve how Brookstone did in Q1-Q3 and have it less dependent on Christmas sales. That said, no significant improvements have arisen out of this change in management.
Our American colleague says that during Christmas, the shopping crowd that frequents Brookstone is less likely to buy Osim's massage chairs or big ticket items than use them to soothe their muscles on the spot to prep them for more shopping.
So is Brookstone capable of turning profitable in this coming quarter? We think not.
And we wonder what Sim would say now if we asked him the same question we did a year back.
Nurwidya Abdul and Serene Lim
Please Scrap Special Dividends
One of the most notable features of this earnings season has been the large number of companies that have proposed to pay special dividends. These are welcomed by investors. But unfortunately they don't say very much about the financial health of the companies that pay them. Nor do they give us an indication of management's confidence in future earnings. It is my contention that companies should avoid paying special dividends. They should either raise their ordinary dividend, or buy back shares.
A healthy, mature stock market is built on investors' confidence in the companies that are listed on them. You can see what happens when this confidence is undermined, such as during the Enron and WorldCom disasters in the US, or the China Aviation Oil collapse on the Singapore Exchange. But how do we measure the confidence of listed companies in future earnings? Given how pathetic many companies' outlook statements are (such as 'barring unforeseen circumstances we expect to have a satisfactory year') dividends are the only, but also the ultimate barometer. Management only lowers the dividend when it really has to conserve cash. Management is acutely aware that companies which lower their dividends often experience a commensurate decline in their stock prices. In order to avoid having to lower dividends, companies raise dividends only when the outlook is bright enough that the chance they will have to cut their dividends in future years is reduced. And some companies even go into debt in order to maintain dividend payments.
The flip side to this is that management is often very reluctant to raise ordinary dividends, even when it can. This is where the special dividend has been used as a tool to say, 'times are good now, but that's not going to last forever'. It may seem prudent, but in my view it is also too conservative. Companies which have sustainable earnings should pay consistently higher ordinary dividends, or buy back shares.
Fortunately, this earnings season has not yielded too many of these companies. In the month of February we covered many earnings announcements where not only special dividends were announced, but ordinary dividends were raised. It is the ordinary dividends that investors should really be looking at for an indication of the future. Going by this yardstick alone, the future looks bright.
Here's a sample:
StarHub
Star example: StarHub. Not only is it paying a final dividend of 3.5 cents per share, up from 2.5 cents last year, it will pay a special dividend or share buy-back. Details to be confirmed.
SembCorp Industries
It is paying a special dividend of 16 cents per share, on top of a final dividend of 8 cents, up from 6.5 cents last year.
Unisteel
It's paying another special dividend of 1.5 cents, on top of an ordinary dividend of 3.5 cents, up from 3 cents last year.
Vicom
It's announced a final dividend of 5.65 cents per share, plus a special dividend of 5 cents per share. This compares to 4.75 cents plus 2 cents last year.
Cosco Corp (Singapore)
Cosco Corp (Singapore) is paying a special dividend of 1.5 cents per share, in addition to a final full year dividend of 2.5 cents, compared to 2 cents last year.
These are examples where companies are not just paying a special dividend but also a higher ordinary dividend, signalling confidence.
There are two special cases that deserve a mention: ComfortDelGro and Longcheer Holdings.
Which do you think has a rosier outlook?
ComfortDelGro
ComfortDelGro is paying a special dividend of 1.5 cents per share, in addition to an ordinary dividend of 3 cents per share, unchanged from last year.
Longcheer Holdings
It is paying a higher ordinary dividend of 1.6 cents, compared to 1.04 cents last year.
But it is not paying a special dividend, like the 3.12 cents it paid last year.
Going purely by their dividend announcements I would say Longcheer is more confident. ComfortDelGro is not raising its ordinary dividend. Although Longcheer is not paying a special dividend, the fact that they have raised their ordinary dividend by 50% is a far stronger indicator of management confidence in future earnings.
Mark Laudi
A healthy, mature stock market is built on investors' confidence in the companies that are listed on them. You can see what happens when this confidence is undermined, such as during the Enron and WorldCom disasters in the US, or the China Aviation Oil collapse on the Singapore Exchange. But how do we measure the confidence of listed companies in future earnings? Given how pathetic many companies' outlook statements are (such as 'barring unforeseen circumstances we expect to have a satisfactory year') dividends are the only, but also the ultimate barometer. Management only lowers the dividend when it really has to conserve cash. Management is acutely aware that companies which lower their dividends often experience a commensurate decline in their stock prices. In order to avoid having to lower dividends, companies raise dividends only when the outlook is bright enough that the chance they will have to cut their dividends in future years is reduced. And some companies even go into debt in order to maintain dividend payments.
The flip side to this is that management is often very reluctant to raise ordinary dividends, even when it can. This is where the special dividend has been used as a tool to say, 'times are good now, but that's not going to last forever'. It may seem prudent, but in my view it is also too conservative. Companies which have sustainable earnings should pay consistently higher ordinary dividends, or buy back shares.
Fortunately, this earnings season has not yielded too many of these companies. In the month of February we covered many earnings announcements where not only special dividends were announced, but ordinary dividends were raised. It is the ordinary dividends that investors should really be looking at for an indication of the future. Going by this yardstick alone, the future looks bright.
Here's a sample:
StarHub
Star example: StarHub. Not only is it paying a final dividend of 3.5 cents per share, up from 2.5 cents last year, it will pay a special dividend or share buy-back. Details to be confirmed.
SembCorp Industries
It is paying a special dividend of 16 cents per share, on top of a final dividend of 8 cents, up from 6.5 cents last year.
Unisteel
It's paying another special dividend of 1.5 cents, on top of an ordinary dividend of 3.5 cents, up from 3 cents last year.
Vicom
It's announced a final dividend of 5.65 cents per share, plus a special dividend of 5 cents per share. This compares to 4.75 cents plus 2 cents last year.
Cosco Corp (Singapore)
Cosco Corp (Singapore) is paying a special dividend of 1.5 cents per share, in addition to a final full year dividend of 2.5 cents, compared to 2 cents last year.
These are examples where companies are not just paying a special dividend but also a higher ordinary dividend, signalling confidence.
There are two special cases that deserve a mention: ComfortDelGro and Longcheer Holdings.
Which do you think has a rosier outlook?
ComfortDelGro
ComfortDelGro is paying a special dividend of 1.5 cents per share, in addition to an ordinary dividend of 3 cents per share, unchanged from last year.
Longcheer Holdings
It is paying a higher ordinary dividend of 1.6 cents, compared to 1.04 cents last year.
But it is not paying a special dividend, like the 3.12 cents it paid last year.
Going purely by their dividend announcements I would say Longcheer is more confident. ComfortDelGro is not raising its ordinary dividend. Although Longcheer is not paying a special dividend, the fact that they have raised their ordinary dividend by 50% is a far stronger indicator of management confidence in future earnings.
Mark Laudi
Which companies are the 'sly' ones?
Chinese New Year is finally here and tomorrow marks the start of a four-day holiday. But don't get too happy just yet. We are currently in the middle of earning season. Companies still have to meet their continuous disclosure obligations. And unfortunately some companies still think the best time to do this, especially if they have bad news to report, is the day before a long weekend. Most people tend to arrange a holiday or plan to catch up with friends. And afterwards, people tend to forget what happened before the weekend. Some companies take advantage of this time to release profit warnings, earnings reports that show poor results, and worse. I feel that companies who report on the last day before a holiday are not doing the right thing by investors.
Now, companies who do this will reason that they have met listing requirements. And they have. There is no way anyone can accuse them of breaking SGX rules, or the law.
But I feel it is still unethical. Investors buy into companies because they trust them. They do not have to, but they want to. The least a company can do in return is to stand up and face the music. Besides, it's all part and parcel of business. Sadly, companies still practise this.
As a word of precaution, at least briefly read through stock news before and after the holidays. First, there's no harm reading. Second, it could be your stock in distress.
We'll find out tonight which companies are on our 'bad' list.
Nurwidya Abdul
Now, companies who do this will reason that they have met listing requirements. And they have. There is no way anyone can accuse them of breaking SGX rules, or the law.
But I feel it is still unethical. Investors buy into companies because they trust them. They do not have to, but they want to. The least a company can do in return is to stand up and face the music. Besides, it's all part and parcel of business. Sadly, companies still practise this.
As a word of precaution, at least briefly read through stock news before and after the holidays. First, there's no harm reading. Second, it could be your stock in distress.
We'll find out tonight which companies are on our 'bad' list.
Nurwidya Abdul
Organic growth; why you should pay attention to it
No, I'm not here to talk about the benefits of organic foods and the worlds obsession with eating organic leafy greens. Besides the applicable nature of the word 'organic' to foods, it is also something that companies are talking more about these days not in their CEO's vegetable gardens but in their earnings announcements.
Unfortunately in Asia, not much attention has been paid to this relatively good barometer of performance and organizational health, but investors are finally starting to take notice and companies are finally starting to see the value in talking about organic growth.
Wikipedia defines organic growth as 'the rate of business expansion through increasing output and sales as opposed to mergers, acquisitions and take-overs.' In more simplistic terms, growth from what you already had in your portfolio, not from what you recently acquired. Why is this such a good barometer to check the financial health of the company you may be asking?
Simple: paying attention to organic growth will tell you as an investor whether or not the company is generating its revenue from its existing lines, or through mergers and acquistions. Organic growth will also tell you whether or not past acquisitions are growing and contributing to the companies top line.
As an investor, In my humble opinion, I'd much rather see a company generate a substantially larger percentage of revenue from 'organic growth' rather than go for an astronomical increase in revenues YoY because they went on a buying spree. Long-term, organic growth says to me that a company can take what it has and financially and strategically be ok.
During this season, we have seen a lot of good growth in companies top line performance. However, don't be star-struck by headlines of '58% revenue growth thanks to acquisitions'. Sure, its good growth, but how did they do organically? Poor organic results signal poor long term health of a company.
In the United States, a number of CEO's love to tout their companies 'organic growth' figures in interviews that they give, and their earnings presentations. This particularly holds true for companies whose business is involved in tangible goods that they sell (for instance consumer products makers) because it is a much easier concept to get your mind around compared to a services provider.
Bottom line: always look for organic growth and include it in your benchmarks in assessing if a company may or may not be a good investment for you.
Curtis Bergh
Unfortunately in Asia, not much attention has been paid to this relatively good barometer of performance and organizational health, but investors are finally starting to take notice and companies are finally starting to see the value in talking about organic growth.
Wikipedia defines organic growth as 'the rate of business expansion through increasing output and sales as opposed to mergers, acquisitions and take-overs.' In more simplistic terms, growth from what you already had in your portfolio, not from what you recently acquired. Why is this such a good barometer to check the financial health of the company you may be asking?
Simple: paying attention to organic growth will tell you as an investor whether or not the company is generating its revenue from its existing lines, or through mergers and acquistions. Organic growth will also tell you whether or not past acquisitions are growing and contributing to the companies top line.
As an investor, In my humble opinion, I'd much rather see a company generate a substantially larger percentage of revenue from 'organic growth' rather than go for an astronomical increase in revenues YoY because they went on a buying spree. Long-term, organic growth says to me that a company can take what it has and financially and strategically be ok.
During this season, we have seen a lot of good growth in companies top line performance. However, don't be star-struck by headlines of '58% revenue growth thanks to acquisitions'. Sure, its good growth, but how did they do organically? Poor organic results signal poor long term health of a company.
In the United States, a number of CEO's love to tout their companies 'organic growth' figures in interviews that they give, and their earnings presentations. This particularly holds true for companies whose business is involved in tangible goods that they sell (for instance consumer products makers) because it is a much easier concept to get your mind around compared to a services provider.
Bottom line: always look for organic growth and include it in your benchmarks in assessing if a company may or may not be a good investment for you.
Curtis Bergh
IPO fever – but who really wins?
Recent debutantes on the Singapore market have all done extremely well. Check out SunVic Chemicals has nearly tripled in price since listing one week ago, and Unionmet has more than doubled since listing two weeks ago. But it's not difficult for IPOs to do well at the moment, given the favourable sentiment, strong underlying gains in the market and the incredibly small public floats. And the current gains may be short-lived, depending on the moves by the institutional shareholders who buy in during the roadshow. In fact, my view is that the teeny weeny number of shares made available to retail investors creates distortions in the market which, inevitably, will hurt small shareholders.
Here's why:
The stock market is a large, continuous auction where sellers try to divest their stocks for as much money as possible, while buyers try to acquire shares for as little money as possible. The benefit of a public, liquid market is the efficiency of pricing. The so-called "price discovery" process assures that the price paid for a stock is the one deemed most fair by buyers and sellers at that time. Notwithstanding daily volatility, only once the view of what is its fair price changes does the stock move up or down in large steps. This is what is called a rerating.
In my view, however, this natural price discovery for newly listed companies is skewed when the public float is too small. The supply-demand equation is distorted. In an IPO of 100 million shares, if only three million shares are held by retail investors the market behaves like there is only supply of three million shares. But all shareholders, including the large institutions that bought in during the roadshow, benefit because each and every shareholder can value their shares according to the market price. You end up with three million shares in a pressure cooker, while 97 million shares held by the big money are effectively out of circulation.
Corporate financiers and companies going public like it this way. They want the stockprice to be bid up on the first day, so that everyone's shares are worth more and they can claim a 'successful listing'. The company is happy that their shareprice rose on the first day, institutional investors are happy that their investments are worth more than they paid for, and the corporate financiers are happy because their smiling faces will be on display in the photographs that get taken at the bar that night to celebrate their listing.
That is, of course, until the big money wants to sell out and take advantage of the high prices. All of a sudden, the extra supply of shares inevitably leads to a sharp fall in share prices and retail investors, who've been bidding up a small number of stocks, are left carrying the can.
This does not speak to me of a mature, sophisticated market. In my view the number of shares offered to the public should not be any less than 10% of the total float. That's still a small proportion, but better than the handful of shares that are released to the public at the moment. Chemoil's IPO went 97% to institutional investors. GEMS TV sold only 14 million out of 271 million shares to the public.
Again in my personal view, retail investors should be particularly weary of IPOs where the institutional portion was only 2-3 times subscribed, and the public tranche many more times over.
The ultimate effect of this will be that IPOs will not have the runaway rise in their stockprices on their first day of listing. This will be as disappointing to the institutional shareholders as well as to the punters who stag or flip their IPO shares on the first day. But in my view this is still better than the alternative 'wild-west' style of coming to market.
Mark Laudi
Here's why:
The stock market is a large, continuous auction where sellers try to divest their stocks for as much money as possible, while buyers try to acquire shares for as little money as possible. The benefit of a public, liquid market is the efficiency of pricing. The so-called "price discovery" process assures that the price paid for a stock is the one deemed most fair by buyers and sellers at that time. Notwithstanding daily volatility, only once the view of what is its fair price changes does the stock move up or down in large steps. This is what is called a rerating.
In my view, however, this natural price discovery for newly listed companies is skewed when the public float is too small. The supply-demand equation is distorted. In an IPO of 100 million shares, if only three million shares are held by retail investors the market behaves like there is only supply of three million shares. But all shareholders, including the large institutions that bought in during the roadshow, benefit because each and every shareholder can value their shares according to the market price. You end up with three million shares in a pressure cooker, while 97 million shares held by the big money are effectively out of circulation.
Corporate financiers and companies going public like it this way. They want the stockprice to be bid up on the first day, so that everyone's shares are worth more and they can claim a 'successful listing'. The company is happy that their shareprice rose on the first day, institutional investors are happy that their investments are worth more than they paid for, and the corporate financiers are happy because their smiling faces will be on display in the photographs that get taken at the bar that night to celebrate their listing.
That is, of course, until the big money wants to sell out and take advantage of the high prices. All of a sudden, the extra supply of shares inevitably leads to a sharp fall in share prices and retail investors, who've been bidding up a small number of stocks, are left carrying the can.
This does not speak to me of a mature, sophisticated market. In my view the number of shares offered to the public should not be any less than 10% of the total float. That's still a small proportion, but better than the handful of shares that are released to the public at the moment. Chemoil's IPO went 97% to institutional investors. GEMS TV sold only 14 million out of 271 million shares to the public.
Again in my personal view, retail investors should be particularly weary of IPOs where the institutional portion was only 2-3 times subscribed, and the public tranche many more times over.
The ultimate effect of this will be that IPOs will not have the runaway rise in their stockprices on their first day of listing. This will be as disappointing to the institutional shareholders as well as to the punters who stag or flip their IPO shares on the first day. But in my view this is still better than the alternative 'wild-west' style of coming to market.
Mark Laudi
Taking on the Kangaroo
It was a bit of surprise to read in the news today that Tiger Airways is venturing into the Australian market as it moves to set up a domestic carrier there.
There are a few things that are particularly amusing about this story being the big aviation enthusiast that I am, and some things are rather interesting.
Take a look at the ownership structure of Tiger Airways: Singapore Airlines (49%), Indigo Partners LLC (24%), Irelandia Investments Ltd. (16%), and Temasek Holdings Pte. Ltd. (11%).
With a lineup like that, announcing this new foray into the already competitive domestic Australian market which is now dominated by Low Cost Carriers (Virgin Blue, JetStar which is part of Qantas), one can only begin to wonder what competitive advantage Tiger Airways would have, AND if it is trying to achieve something else just beyond establishing itself in Australia.
Don't get me wrong, we know how the "legacy" carriers (those of a more traditional structure, the antithesis of an LCC) have fared in Australia: Ansett is no more, Compass failed twice, and on domestic routes Qantas is certainly feeling the heat from LCC's. So if there is room for another carrier, the LCC route is the one that makes the most sense.
Within just the last few months, we have seen "Low-Cost, Long-Haul" take wing from Asia. Oasis Hong Kong finally took to the skies to London and now plans to launch flights to the San Francisco Bay area (Oakland to be exact). The pioneer of LCC's in Asia, AirAsia's Tony Fernandes is now onboard the LCLH bandwagon as well with his Air Asia X plans. Also don't forget JetStar is going into the LCLH business with flights to Kuala Lumpur and Honolulu.
So with the ever changing landscape of the aviation market in Australia, 49% ownership from Singapore Airlines which has tried relentlessly to get rights out of Australia to the US, and failed almost in dramatic fashion, you have to ask yourself is this FINALLY going to be the way that Singapore Airlines gets a hold (via Tiger Airways) on the route it has always sought? Granted it wouldn't be Singapore Airlines aircraft, but it might be the only way it can get access to this route.
Curtis Bergh
There are a few things that are particularly amusing about this story being the big aviation enthusiast that I am, and some things are rather interesting.
Take a look at the ownership structure of Tiger Airways: Singapore Airlines (49%), Indigo Partners LLC (24%), Irelandia Investments Ltd. (16%), and Temasek Holdings Pte. Ltd. (11%).
With a lineup like that, announcing this new foray into the already competitive domestic Australian market which is now dominated by Low Cost Carriers (Virgin Blue, JetStar which is part of Qantas), one can only begin to wonder what competitive advantage Tiger Airways would have, AND if it is trying to achieve something else just beyond establishing itself in Australia.
Don't get me wrong, we know how the "legacy" carriers (those of a more traditional structure, the antithesis of an LCC) have fared in Australia: Ansett is no more, Compass failed twice, and on domestic routes Qantas is certainly feeling the heat from LCC's. So if there is room for another carrier, the LCC route is the one that makes the most sense.
Within just the last few months, we have seen "Low-Cost, Long-Haul" take wing from Asia. Oasis Hong Kong finally took to the skies to London and now plans to launch flights to the San Francisco Bay area (Oakland to be exact). The pioneer of LCC's in Asia, AirAsia's Tony Fernandes is now onboard the LCLH bandwagon as well with his Air Asia X plans. Also don't forget JetStar is going into the LCLH business with flights to Kuala Lumpur and Honolulu.
So with the ever changing landscape of the aviation market in Australia, 49% ownership from Singapore Airlines which has tried relentlessly to get rights out of Australia to the US, and failed almost in dramatic fashion, you have to ask yourself is this FINALLY going to be the way that Singapore Airlines gets a hold (via Tiger Airways) on the route it has always sought? Granted it wouldn't be Singapore Airlines aircraft, but it might be the only way it can get access to this route.
Curtis Bergh
I like Monopoly
The government mentioned that it will liberalise basic mail services in Singapore this April. SingPost's share price subsequently fell.
I think that this move is no threat to SingPost.
My reasons:
First, SingPost is and has been the one and only postal service in Singapore for 15 years.
To quote what UBS Investment Research said in the Business Times article on the 6 February, 'it would be impossible for new players to compete heads-on with SingPost or engage in severe price competition' because it has access to all local letterboxes.
Second, Singapore is just so small and we do not need any other mail services. Singapore is merely a little red dot on the map compared to other countries where two or more postal services would make sense.
Take the number of telcos in Singapore for example. If the three telcos did not have other investments besides dealing in mobile lines, then they would not have survived this far. If they had only concentrated in mobile lines and competed against each other, then it would be good for us as consumers, but bad for business.
In this case, liberalisation in the basic mail services will not affect SingPost's performance---at least not yet. If competition is going to occur, then it would probably work if their focus is on overseas mail or better services to challenge vPOST, Vbox and JAMES but not based on the basic mail services alone. It's just ridiculous.
To add on, the Infocomm Development Authority says that SingPost is still a public postal licensee and will still be printing our local stamps and manage the postal code system. To ensure security, SingPost will still hold the letterbox's masterdoor keys.
Now, who wants to play Monopoly?
Nurwidya Abdul
I think that this move is no threat to SingPost.
My reasons:
First, SingPost is and has been the one and only postal service in Singapore for 15 years.
To quote what UBS Investment Research said in the Business Times article on the 6 February, 'it would be impossible for new players to compete heads-on with SingPost or engage in severe price competition' because it has access to all local letterboxes.
Second, Singapore is just so small and we do not need any other mail services. Singapore is merely a little red dot on the map compared to other countries where two or more postal services would make sense.
Take the number of telcos in Singapore for example. If the three telcos did not have other investments besides dealing in mobile lines, then they would not have survived this far. If they had only concentrated in mobile lines and competed against each other, then it would be good for us as consumers, but bad for business.
In this case, liberalisation in the basic mail services will not affect SingPost's performance---at least not yet. If competition is going to occur, then it would probably work if their focus is on overseas mail or better services to challenge vPOST, Vbox and JAMES but not based on the basic mail services alone. It's just ridiculous.
To add on, the Infocomm Development Authority says that SingPost is still a public postal licensee and will still be printing our local stamps and manage the postal code system. To ensure security, SingPost will still hold the letterbox's masterdoor keys.
Now, who wants to play Monopoly?
Nurwidya Abdul
The results of the investigation, please
The Singapore Exchange reported a three hour halt in its derivatives trading system today due to a technical glitch. Securities trade and negotiated large trade however, were not affected.
SGX's first announcement at 10.39 am mentioned that 'members are unable to access the derivatives trading system'. It also mentioned that the 'SGX is currently investigating the cause and the market will be informed when normal derivatives trading resumes.' Its second announcement at 11.43 am mentioned that its derivatives trade system was up again, but still no mention of what happened. It didn't promise us that it would tell us what happened, but I think they should. It's SGX's responsibility to constantly update the market about what happened in the same way it expects listed companies to do so.
My reasons:
First, SGX is the only place for Singapore to trade derivatives. We don't have any other derivatives trading platforms in Singapore.
Second, being the only platform, SGX cannot afford to make mistakes as hundreds and thousands of dollars could be lost. It needs to be reliable and open. If the SGX isn't stable or becomes error prone, people would be very afraid to trade, hence trading volume and values could go downhill.
SGX's credibility would be tarnished. Especially with the increasing competition from other markets, we cannot afford such set backs.
Third, SGX should at least inform the public as soon as they can about the source of the problem. This will reduce the chances of concern amongst traders and companies.
Yes, SGX did keep us informed about when trade resumed, but I feel that the results of the investigation should be published as soon as possible.
We cannot afford to have mistakes or technical glitches in this fast paced economy. They're just too costly.
Nurwidya Abdul
This statement was filed after we published our blog:
SGX STATEMENT ON DERIVATIVES TRADING (Update at 7.00 pm)
Singapore Exchange Ltd ("SGX") has identified non-routine log-in activities of some member firms this morning that inadvertently prevented access to the derivatives trading system.
SGX and OMX, our service provider, have addressed the issue and normal derivatives trading resumed at 11.30am today.
“We regret this morning’s incident. Member firms and customers have been kept abreast of the situation during the recovery. We thank them for their understanding and working closely with us. SGX remains committed to maintaining the highest level of confidence in our marketplace,” said Mr Gan Seow Ann, Senior Executive Vice President and Head of Markets at SGX.
ArchivesSGX's first announcement at 10.39 am mentioned that 'members are unable to access the derivatives trading system'. It also mentioned that the 'SGX is currently investigating the cause and the market will be informed when normal derivatives trading resumes.' Its second announcement at 11.43 am mentioned that its derivatives trade system was up again, but still no mention of what happened. It didn't promise us that it would tell us what happened, but I think they should. It's SGX's responsibility to constantly update the market about what happened in the same way it expects listed companies to do so.
My reasons:
First, SGX is the only place for Singapore to trade derivatives. We don't have any other derivatives trading platforms in Singapore.
Second, being the only platform, SGX cannot afford to make mistakes as hundreds and thousands of dollars could be lost. It needs to be reliable and open. If the SGX isn't stable or becomes error prone, people would be very afraid to trade, hence trading volume and values could go downhill.
SGX's credibility would be tarnished. Especially with the increasing competition from other markets, we cannot afford such set backs.
Third, SGX should at least inform the public as soon as they can about the source of the problem. This will reduce the chances of concern amongst traders and companies.
Yes, SGX did keep us informed about when trade resumed, but I feel that the results of the investigation should be published as soon as possible.
We cannot afford to have mistakes or technical glitches in this fast paced economy. They're just too costly.
Nurwidya Abdul
This statement was filed after we published our blog:
SGX STATEMENT ON DERIVATIVES TRADING (Update at 7.00 pm)
Singapore Exchange Ltd ("SGX") has identified non-routine log-in activities of some member firms this morning that inadvertently prevented access to the derivatives trading system.
SGX and OMX, our service provider, have addressed the issue and normal derivatives trading resumed at 11.30am today.
“We regret this morning’s incident. Member firms and customers have been kept abreast of the situation during the recovery. We thank them for their understanding and working closely with us. SGX remains committed to maintaining the highest level of confidence in our marketplace,” said Mr Gan Seow Ann, Senior Executive Vice President and Head of Markets at SGX.
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