Akan datang: Singapore investors won't matter in SGX trade
Hong Kong's Hang Seng China Enterprise Index rose 8.7% a week ago on news Chinese mainland investors were going to be allowed to invest US$50,000 each in Hong Kong-listed stocks. The expectation is that some of the US$2.3 trillion worth of funds ICEA Securities Asia says is tied up in boring savings accounts will find its way across the border. Jun Ma at Deutsche Bank told Dow Jones' MarketWatch "it is labeled as a pilot program, but in practice it is close to a national program", because virtually anyone will be able to open an account with the Tianjin branch of the Bank of China, the branch officially handling it. On the one hand, this is great news for Singapore, because if the Chinese next allow their citizens to buy shares in Singapore there will likely be substantially more liquidity in SGX-listed stocks, presumably specifically China stocks listed here. On the other hand, this will also dilute the say local investors have in the affairs of locally listed companies.
Assuming the Chinese authorities allow their citizens to invest the same amount of funds in Singapore Exchange-listed stocks – as the SGX should be actively lobbying them to do – it doesn't take a lot of calculations as to the impact this could have. Conservatively, if 10,000 mainland investors bought US$50,000 worth of SGX-listed stocks, this would see S$780 mln worth of funds coming in, more than a third of the trading volume yesterday. This would be a huge boon for companies looking to raise funds here. Arguably, more foreign companies wanting to attract investments would list in Singapore (and Hong Kong), knowing that investors from the mainland will be able to back them.
At the same time, the moods and trades of mainland investors will exert greater influence over local stock prices. Also, companies with a growing number of shareholders from the mainland will understand the importance of building good relations in that country. Perhaps we will see annual general meetings being held in China, rather than locally, in the same way that some New Zealand firms hold their AGMs in Australia because their shareholder base is there. Already, CEOs from many China companies fly to Singapore just for their earnings announcements. If their audience was predominantly on the mainland presumably fewer would make such trips here.
Assuming shareholder registries of local and Chinese companies would be increasingly dominated by mainland investors, the voice of Singaporean investors in these firms would be diminished. Their influence on companies would diminish with them. Over time we may see that even local companies will act increasingly in the interests of their large investor base on the mainland.
It's impossible to forecast the long term implications. However, as good as the influx of liquidity would be for local investors and the market as a whole, they deserve some thought and debate.
After all, how many Singaporean investors would travel to China to attend AGMs and earnings briefings of locally-listed companies?
Mark Laudi
Assuming the Chinese authorities allow their citizens to invest the same amount of funds in Singapore Exchange-listed stocks – as the SGX should be actively lobbying them to do – it doesn't take a lot of calculations as to the impact this could have. Conservatively, if 10,000 mainland investors bought US$50,000 worth of SGX-listed stocks, this would see S$780 mln worth of funds coming in, more than a third of the trading volume yesterday. This would be a huge boon for companies looking to raise funds here. Arguably, more foreign companies wanting to attract investments would list in Singapore (and Hong Kong), knowing that investors from the mainland will be able to back them.
At the same time, the moods and trades of mainland investors will exert greater influence over local stock prices. Also, companies with a growing number of shareholders from the mainland will understand the importance of building good relations in that country. Perhaps we will see annual general meetings being held in China, rather than locally, in the same way that some New Zealand firms hold their AGMs in Australia because their shareholder base is there. Already, CEOs from many China companies fly to Singapore just for their earnings announcements. If their audience was predominantly on the mainland presumably fewer would make such trips here.
Assuming shareholder registries of local and Chinese companies would be increasingly dominated by mainland investors, the voice of Singaporean investors in these firms would be diminished. Their influence on companies would diminish with them. Over time we may see that even local companies will act increasingly in the interests of their large investor base on the mainland.
It's impossible to forecast the long term implications. However, as good as the influx of liquidity would be for local investors and the market as a whole, they deserve some thought and debate.
After all, how many Singaporean investors would travel to China to attend AGMs and earnings briefings of locally-listed companies?
Mark Laudi
DBS and the CDO issue
DBS Group's announcement Monday updating its exposure to so-called collateralised debt obligations (CDO) are a lesson in what to do - and what not to do - when a crisis strikes. Any company dealing with accidents, emergencies or, well, problem mortgages, has only one option, for the benefit of staff, customers, suppliers and shareholders: don't just own up to problems, but go beyond the call of duty to disclose potential problems. And don't leave out any details.
The reason is very simple: the more you show you are honest about problems and you have a plan to fix them, the more credibility you will have. The more you come clean, the cleaner you are seen to be. Stakeholders are far more likely to forgive errors and even transgressions, and so will your shareprice. In DBS' case, this could have been applied when the markets first took a hit in late July (because, as we all know
by now, American consumers with patchy credit records hadn't been paying off their mortgages like they should have). A proactive statement to declare exposures – or the lack of exposures - could have been made within the first few days. Instead, DBS lodged a statement only on August 7, and only (as the first sentence tells us) "in response to queries from investors and the press..." Are we to interpret this to mean that if investors and the media hadn't started asking questions, DBS would not have come forth with the information?
It didn't seem at first as though DBS had anything to declare. It wrote four paragraphs about the exposures they have and finished by saying that it did "not expect any further losses to have a material impact on earnings or capital".
Well, that sounded reasonable enough.
But when CLSA pointed out, and Reuters highlighted, that DBS may have nearly double the S$1.3 bln worth of CDOs it first disclosed, any sense that DBS had done the right thing evaporated. Even though it confirmed that they were still comfortable with the exposure, four days had passed since the Reuters report citing CLSA, 20 days since its initial disclosure, and one month after the markets started tanking. It leads to the perception that information is only being shared when people are asking for it, or brokers are writing about it.
DBS may very well have been caught by surprise that its so-called Red Orchid Secured Assets (ROSA) had to draw on liquidity facilities provided by banks. Understandable, given that "DBS' CDOs in ROSA are not directly exposed to the US sub-prime mortgage market". Plus, who could have foreseen that even AAA/AA rated collateral was going to be caught up in the liquidity crunch that followed the initial collapse. As DBS says "we initially did not include ROSA as pat of DBS' own exposure to CDOs on the assumption that ROSA would continue to be funded by investors". In the end, it had to draw on its own funds. Some of the biggest banks on Wall Street availed themselves of hundreds of millions of dollars in cash by selling top quality assets to the Federal Reserve when no one else wanted to buy them. So if it's good enough for them it's certainly good enough for DBS.
But no matter how often CFO Jeanette Wong says "Our total CDO exposures make up only 1% of our overall assets with over 70% of this amount concentrated in the high quality AAA/AA+ space", or how often she points out that "DBS has one of the strongest capital positions of banks operating in Asia and we have minimal exposure to the US sub-prime mortgage market", we are now just waiting for the next broker report, or more questions from investors/the press, or perhaps the ongoing investigation by the Singapore Exchange to reveal whether there are more problems.
Your view: how would you rate DBS' public relations on the CDO issue?
The reason is very simple: the more you show you are honest about problems and you have a plan to fix them, the more credibility you will have. The more you come clean, the cleaner you are seen to be. Stakeholders are far more likely to forgive errors and even transgressions, and so will your shareprice. In DBS' case, this could have been applied when the markets first took a hit in late July (because, as we all know
by now, American consumers with patchy credit records hadn't been paying off their mortgages like they should have). A proactive statement to declare exposures – or the lack of exposures - could have been made within the first few days. Instead, DBS lodged a statement only on August 7, and only (as the first sentence tells us) "in response to queries from investors and the press..." Are we to interpret this to mean that if investors and the media hadn't started asking questions, DBS would not have come forth with the information?
It didn't seem at first as though DBS had anything to declare. It wrote four paragraphs about the exposures they have and finished by saying that it did "not expect any further losses to have a material impact on earnings or capital".
Well, that sounded reasonable enough.
But when CLSA pointed out, and Reuters highlighted, that DBS may have nearly double the S$1.3 bln worth of CDOs it first disclosed, any sense that DBS had done the right thing evaporated. Even though it confirmed that they were still comfortable with the exposure, four days had passed since the Reuters report citing CLSA, 20 days since its initial disclosure, and one month after the markets started tanking. It leads to the perception that information is only being shared when people are asking for it, or brokers are writing about it.
DBS may very well have been caught by surprise that its so-called Red Orchid Secured Assets (ROSA) had to draw on liquidity facilities provided by banks. Understandable, given that "DBS' CDOs in ROSA are not directly exposed to the US sub-prime mortgage market". Plus, who could have foreseen that even AAA/AA rated collateral was going to be caught up in the liquidity crunch that followed the initial collapse. As DBS says "we initially did not include ROSA as pat of DBS' own exposure to CDOs on the assumption that ROSA would continue to be funded by investors". In the end, it had to draw on its own funds. Some of the biggest banks on Wall Street availed themselves of hundreds of millions of dollars in cash by selling top quality assets to the Federal Reserve when no one else wanted to buy them. So if it's good enough for them it's certainly good enough for DBS.
But no matter how often CFO Jeanette Wong says "Our total CDO exposures make up only 1% of our overall assets with over 70% of this amount concentrated in the high quality AAA/AA+ space", or how often she points out that "DBS has one of the strongest capital positions of banks operating in Asia and we have minimal exposure to the US sub-prime mortgage market", we are now just waiting for the next broker report, or more questions from investors/the press, or perhaps the ongoing investigation by the Singapore Exchange to reveal whether there are more problems.
Your view: how would you rate DBS' public relations on the CDO issue?
Who's a better suitor for the SGX?
Tokyo Stock Exchange?
Or Hong Kong Exchanges And Clearing
Poor Americans may have trouble paying off their subprime mortgages, leading to difficulty for mere mortals to get loans from banks. But the big money is proving that the era of excess cash sloshing around global markets is far from over. Temasek's purported bid for Nasdaq's 30% stake in the London Stock Exchange shows there is still lots of money chasing ideas. The recent volatility in the market hasn't dampened the appetite for these big deals at all. It has simply provided a window of opportunity for predators to make their move. For the Singapore Exchange Ltd, this means a takeover bid may come sooner rather than later. The next question is, whether this would be good for Singapore.
Here's why: If a 30% stake in the London Stock Exchange, whose total equity per share is negative £1.61 according to Reuters data, can be sold for £800 mln, then surely the Singapore Exchange must be an attractive target. Even if last Friday's closing price of S$9.45 means it is priced at more than 12x book value (!).
The SGX has a lot going for it.
· The best reputation for corporate governance of any exchange in Southeast Asia.
· The highest total market capitalisation of any exchange in Southeast Asia of US$505 bln. The next biggest exchange is Bursa Malaysia, whose listed companies are worth a total of US$306 mln (end June figures).
There are a number of additional but familiar points to note, such as Singapore's status as a financial centre, and so on. Critically, it's a well-run business with strong cashflows and a healthy cash balance.
Already waiting to raise its stake is the Tokyo Stock Exchange. Mid June it bought a stake of just under 5% for $304 mln. If their application to raise their stake beyond 5% goes through, who knows where it will end.
"Global competition between exchanges is intensifying," TSE President Taizo Nishimuro told a news conference, quoted by Reuters, "Singapore is very important as an Asian financial centre, and if we didn't buy these shares we are sure someone else would look to buy in."
That is almost certainly true, but talk to market watchers in Singapore and they're less than enthused about the TSE being the potential suitor. Despite its huge size and global economic significance, the Tokyo Stock Exchange isn't exactly a dynamic organisation that keeps up with the times. They didn't even hire a Chief Technology Officer until the market crashed under incredible volumes in November 2005.
Insiders I've spoken to in Singapore say the conservative nature of the Japanese in general and the TSE in particular would be disasterous for an exchange like the SGX. In many ways it is at the other end of the spectrum to the TSE. Unlike the TSE, the SGX is a small market fighting for relevance. Unlike the TSE, it needs to think entrepreneurially to survive. Unlike the TSE, it needs to attract companies from around the region. And unlike the TSE, the SGX not only has a system which doesn't crash under heavy volumes (although the data feed may slow), but it has also had a Chief Technology Officer for a lot longer to look after it.
If the Singapore Exchange really has to be taken over by someone – and I think it is inevitable that it will, given the fact that Temasek is not on the shareholder registry and Singapore generally is very open to foreign investment – then I sincerely hope it is Hong Kong Exchanges and Clearing.
This might seem outrageous, given the intense competition between the two. But that's just the point. Arguably, more could be achieved between two exchanges if they actually worked together. They are already similar in their circumstances, their corporate governance standards and their goals. Such a tie-up would make much more sense that a bid from the TSE.
Here's why: If a 30% stake in the London Stock Exchange, whose total equity per share is negative £1.61 according to Reuters data, can be sold for £800 mln, then surely the Singapore Exchange must be an attractive target. Even if last Friday's closing price of S$9.45 means it is priced at more than 12x book value (!).
The SGX has a lot going for it.
· The best reputation for corporate governance of any exchange in Southeast Asia.
· The highest total market capitalisation of any exchange in Southeast Asia of US$505 bln. The next biggest exchange is Bursa Malaysia, whose listed companies are worth a total of US$306 mln (end June figures).
There are a number of additional but familiar points to note, such as Singapore's status as a financial centre, and so on. Critically, it's a well-run business with strong cashflows and a healthy cash balance.
Already waiting to raise its stake is the Tokyo Stock Exchange. Mid June it bought a stake of just under 5% for $304 mln. If their application to raise their stake beyond 5% goes through, who knows where it will end.
"Global competition between exchanges is intensifying," TSE President Taizo Nishimuro told a news conference, quoted by Reuters, "Singapore is very important as an Asian financial centre, and if we didn't buy these shares we are sure someone else would look to buy in."
That is almost certainly true, but talk to market watchers in Singapore and they're less than enthused about the TSE being the potential suitor. Despite its huge size and global economic significance, the Tokyo Stock Exchange isn't exactly a dynamic organisation that keeps up with the times. They didn't even hire a Chief Technology Officer until the market crashed under incredible volumes in November 2005.
Insiders I've spoken to in Singapore say the conservative nature of the Japanese in general and the TSE in particular would be disasterous for an exchange like the SGX. In many ways it is at the other end of the spectrum to the TSE. Unlike the TSE, the SGX is a small market fighting for relevance. Unlike the TSE, it needs to think entrepreneurially to survive. Unlike the TSE, it needs to attract companies from around the region. And unlike the TSE, the SGX not only has a system which doesn't crash under heavy volumes (although the data feed may slow), but it has also had a Chief Technology Officer for a lot longer to look after it.
If the Singapore Exchange really has to be taken over by someone – and I think it is inevitable that it will, given the fact that Temasek is not on the shareholder registry and Singapore generally is very open to foreign investment – then I sincerely hope it is Hong Kong Exchanges and Clearing.
This might seem outrageous, given the intense competition between the two. But that's just the point. Arguably, more could be achieved between two exchanges if they actually worked together. They are already similar in their circumstances, their corporate governance standards and their goals. Such a tie-up would make much more sense that a bid from the TSE.
Economy; where is it going?
Singapore has and is currently experiencing a boom in more than one of the current industries.
There's the oil and gas sector, the construction sector and of course the highly rated property sector.
Its all fun and games when there's money to be made and opportunities galore.
The current positive business sentiment has been going strong for.....hmmm slightly more than a year....
Sure! There were talks about the property bubble bursting and the oil and gas sector tapering down.
But up till now, it seems to be mostly talk and speculations.
Up till now....
According to the latest BT-UniSIM Business Climate Survey in the Business Times article today by Oh Boon Ping, the survey yielded that business profts sentiments have weakened slightly in the second quarter of 2007.
The survey is now in its twelfth year, and polls 125 local and foreign firms form a range of industries, with regards to their earnings numbers such as sales, profits, new orders and business prospects.
Here are some of the results:
The percentage of firms which reported more than 10% increase in its profits have dropped from 38% in Q1 2007 to 29% in Q2 2007.
And slightly more companies are expecting things to turn for the worse for the remaining year.
Before you become a worry pot, Chow Kit Boey the survey director says that the numbers 'are still positive and healthy' but it could also indicate that the Singapore Economy 'is close to the peak of the business cycle and an economic slowdown looks imminent'.
However in her statment, she added that she is confident the slowdown would blow over by next year.
Conclusion of the survey?
That the numbers indicate that the economy is still growing but at slower rates, and that the current expansion phase is taking longer than the average past cycles.
Well, that's not for certain that the economy would stay up, but its a worthwhile thought.
But considering that anything that goes but must come down. Even though studies show that the economy is not likely to spiral downwards anytime soon, we can't escape the fact that the day is drawing near!
Currently, manufacturing was the best performer in sales and the contruction sector has held the best business prospects for six quarters straight.
If you're asking me, that day is certainly closer than we all expect.
But considering that we are in the midst of a construction boom, we still have that time until all the construction projects in Singapore have been completed.
We would love to hear your views on whether the Singapore market is indeed heading south pretty soon, or if you agree with the survey that its just a minor slowdown that will only last till next year.
Nurwidya Abdul
There's the oil and gas sector, the construction sector and of course the highly rated property sector.
Its all fun and games when there's money to be made and opportunities galore.
The current positive business sentiment has been going strong for.....hmmm slightly more than a year....
Sure! There were talks about the property bubble bursting and the oil and gas sector tapering down.
But up till now, it seems to be mostly talk and speculations.
Up till now....
According to the latest BT-UniSIM Business Climate Survey in the Business Times article today by Oh Boon Ping, the survey yielded that business profts sentiments have weakened slightly in the second quarter of 2007.
The survey is now in its twelfth year, and polls 125 local and foreign firms form a range of industries, with regards to their earnings numbers such as sales, profits, new orders and business prospects.
Here are some of the results:
The percentage of firms which reported more than 10% increase in its profits have dropped from 38% in Q1 2007 to 29% in Q2 2007.
And slightly more companies are expecting things to turn for the worse for the remaining year.
Before you become a worry pot, Chow Kit Boey the survey director says that the numbers 'are still positive and healthy' but it could also indicate that the Singapore Economy 'is close to the peak of the business cycle and an economic slowdown looks imminent'.
However in her statment, she added that she is confident the slowdown would blow over by next year.
Conclusion of the survey?
That the numbers indicate that the economy is still growing but at slower rates, and that the current expansion phase is taking longer than the average past cycles.
Well, that's not for certain that the economy would stay up, but its a worthwhile thought.
But considering that anything that goes but must come down. Even though studies show that the economy is not likely to spiral downwards anytime soon, we can't escape the fact that the day is drawing near!
Currently, manufacturing was the best performer in sales and the contruction sector has held the best business prospects for six quarters straight.
If you're asking me, that day is certainly closer than we all expect.
But considering that we are in the midst of a construction boom, we still have that time until all the construction projects in Singapore have been completed.
We would love to hear your views on whether the Singapore market is indeed heading south pretty soon, or if you agree with the survey that its just a minor slowdown that will only last till next year.
Nurwidya Abdul
Labels: BT-UniSIM Business Climate Survey, economy slow down, profits, Singapore Economy
The Fed's Decision: Good idea? or Bad idea?
The Fed's Decision: Good idea? or Bad idea?
The surprise announcement by the Federal Reserve on Friday to lower the discount rate spurred trading on Wall Street's last day of trading for the week...and it seems the positive sentiment kept going because we have seen mixed closings on Wall Street since.
So that begs the question, was this move by the Fed a good decision?
The obvious answer from an investor would probably be a resounding yes, form an economist maybe something different, from pundits that like the markets to float on their own strength you'd get a resounding no.
I fall into the boat that the Fed had to do something, what exactly, I still don't know, I'm still not sure if this was an overreaction or not by the Fed. What does worry me though is that it will create this false sense of security that when things go wrong, the Fed will be there to save us. Like a guaranteed safety net of sorts.
So here is your chance to chime in, do you agree with the Fed's decision to intervene in the recent wave of troubles we've seen in the U.S.
Curtis Bergh
The surprise announcement by the Federal Reserve on Friday to lower the discount rate spurred trading on Wall Street's last day of trading for the week...and it seems the positive sentiment kept going because we have seen mixed closings on Wall Street since.
So that begs the question, was this move by the Fed a good decision?
The obvious answer from an investor would probably be a resounding yes, form an economist maybe something different, from pundits that like the markets to float on their own strength you'd get a resounding no.
I fall into the boat that the Fed had to do something, what exactly, I still don't know, I'm still not sure if this was an overreaction or not by the Fed. What does worry me though is that it will create this false sense of security that when things go wrong, the Fed will be there to save us. Like a guaranteed safety net of sorts.
So here is your chance to chime in, do you agree with the Fed's decision to intervene in the recent wave of troubles we've seen in the U.S.
Curtis Bergh
Labels: Bernanke, Federal Reserve, Paulson, Stock Markets
The future of Singapore
Yesterday, the National Rally Speech was out. In the midst of Singapore's progress, the elderly are not left out of the picture.
The government is extending the retirement age. CPF is also being stretched to aid the elderly through their golden years; make retirement savings last longer. In today's Straits Times, it was also mentioned that there is a new HDB buy-back scheme for older owners, essentially, the Government buys the flats from the elderly but the elderly can still live in the same apartment for another 30 years.
Now the targeted topic here is about stretching the CPF, but here's the catch; one cannot use the extra savings fund for investments in the stock market. This is done to minimise any possible risk of losing money, especially at the old age.
Is it a good idea? Well, I think it works both ways.
Good idea: Well, it preps the older generation for their older age as in recent times, medication is much more advanced and that people are living longer hence the need for cash in the golden years is quite critical.
On top of that, it'll stop them from spending it in the stock market; allowing them to realise that risks should no longer or advisable not to be there, especially when it comes to money at that age.
Young working adults would then have more money in their CPF to allow them to afford a more luxurious choice of housing when the time comes.
Bad idea: The higher monthly cut from CPF would result lesser spending for the working adults. On top of that, there is no guarantee that they may live that long to enjoy the CPF savings.
From the time they work with the monthly CPF cut to the day they get their money, is a long way to go. For some people, CPF cut may be quite a burden for them.
In terms of savings, one can always start having his or her own, without having to depend solely on CPF. Every month, just set aside some cash as savings.
Well, at the end of it, it is still 'our' money and we can do whatever we want with it, be it even investing, but I guess the Government is looking at our end as well, the possibility of not having enough cash for the old age.
Well, this issue of stretching the CPF can really go both ways. What do you think?
Nurwidya Abdul
The government is extending the retirement age. CPF is also being stretched to aid the elderly through their golden years; make retirement savings last longer. In today's Straits Times, it was also mentioned that there is a new HDB buy-back scheme for older owners, essentially, the Government buys the flats from the elderly but the elderly can still live in the same apartment for another 30 years.
Now the targeted topic here is about stretching the CPF, but here's the catch; one cannot use the extra savings fund for investments in the stock market. This is done to minimise any possible risk of losing money, especially at the old age.
Is it a good idea? Well, I think it works both ways.
Good idea: Well, it preps the older generation for their older age as in recent times, medication is much more advanced and that people are living longer hence the need for cash in the golden years is quite critical.
On top of that, it'll stop them from spending it in the stock market; allowing them to realise that risks should no longer or advisable not to be there, especially when it comes to money at that age.
Young working adults would then have more money in their CPF to allow them to afford a more luxurious choice of housing when the time comes.
Bad idea: The higher monthly cut from CPF would result lesser spending for the working adults. On top of that, there is no guarantee that they may live that long to enjoy the CPF savings.
From the time they work with the monthly CPF cut to the day they get their money, is a long way to go. For some people, CPF cut may be quite a burden for them.
In terms of savings, one can always start having his or her own, without having to depend solely on CPF. Every month, just set aside some cash as savings.
Well, at the end of it, it is still 'our' money and we can do whatever we want with it, be it even investing, but I guess the Government is looking at our end as well, the possibility of not having enough cash for the old age.
Well, this issue of stretching the CPF can really go both ways. What do you think?
Nurwidya Abdul
Labels: CPF, generation, golden years, government, investment, luxurious, National Day rally, risk, savings
China sabotaged?
China lately has been hitting the headlines over again with new problems. A quick refresh; Among many things, the discovery of problems in food export, slavery, toxic toothpaste, fatal pet food and now, toys' recall due to the lead paint used.
Just a thought. One possibility is that these problems could really have started appearing only just recently.
But maybe, just maybe, could there be a possibility that China is being sabotaged?
Well, I'm not suggesting that it's alright to have toxic toothpaste or dangerous pet food and so on.
But the irony do lie in the fact that although these issues have been ongoing, it has been made known to the world just a year before the Olympics.
Coincidence? Well, for today, I'm going to say no.
My reasons:
First, like I've mentioned, these issues have been ongoing but why now, a few months away from the Olympics, are they being seen by the media. If the media had really wanted to show how 'disorgansied' or 'inefficient' China is, they should have covered the stories years ago, and not a year before China's most anticipated and awaited event; hosting the Olympics.
Second, most of the complaints come especially from the States. Like the lead paint in toys and the suspension for pork shipments, these complaints came from the US. The issue about the pork shipments is that it contains a swine growth promoter that is used in the States, but banned in China.
Well, I mean if its edible and the people in US are eating it, and it doesn't cause any casualties, why not?!
I may be wrong; that perhaps it's really only recently that the media sees these issues, but on the other hand, it seems quite a convenient sabotage plan.
Do add in your comment here, to take this discussion onto the next level.
Nurwidya Abdul
Just a thought. One possibility is that these problems could really have started appearing only just recently.
But maybe, just maybe, could there be a possibility that China is being sabotaged?
Well, I'm not suggesting that it's alright to have toxic toothpaste or dangerous pet food and so on.
But the irony do lie in the fact that although these issues have been ongoing, it has been made known to the world just a year before the Olympics.
Coincidence? Well, for today, I'm going to say no.
My reasons:
First, like I've mentioned, these issues have been ongoing but why now, a few months away from the Olympics, are they being seen by the media. If the media had really wanted to show how 'disorgansied' or 'inefficient' China is, they should have covered the stories years ago, and not a year before China's most anticipated and awaited event; hosting the Olympics.
Second, most of the complaints come especially from the States. Like the lead paint in toys and the suspension for pork shipments, these complaints came from the US. The issue about the pork shipments is that it contains a swine growth promoter that is used in the States, but banned in China.
Well, I mean if its edible and the people in US are eating it, and it doesn't cause any casualties, why not?!
I may be wrong; that perhaps it's really only recently that the media sees these issues, but on the other hand, it seems quite a convenient sabotage plan.
Do add in your comment here, to take this discussion onto the next level.
Nurwidya Abdul
Labels: beijing olympics, China Eastern, fatal pet food, food export, Mattel, sabotage, slavery, swine growth promoter, toxic toothpaste, toy's recall
Open note to SQ: Sell the Virgin stake NOW while you can!
Virgin Atlantic, 49% owned by Singapore Airlines, reported rather lackluster earnings the other day dragged down by Virgin Nigeria's performance. Higher fuel costs (particularly now and on the horizon), Virgin Nigeria operating in a tough environment, and open skies coming into force in early 2008 across the Atlantic, and the conditions seem ripe to me for Singapore Airlines to do what it should have done a while ago: sell the 49% stake back to Sir Richard and co.
Here are some of the highlights of Virgin's performance for the quarter:
-Profit down from £60.3 mln to £6.6 mln
-Revenue was up 16% to £2.2 bln
-Passenger numbers up from 4.8 mln to 5.3 mln
Virgin Nigeria was one of the main reasons earnings got dragged lower. When you think about it, that airline already operates in an extremely tough market to begin with. Finding success for them is something that could take a while, that is, if success ever comes their way.
Taking into consideration that open skies across the Atlantic will soon come into force and suddenly the market operating environment for Virgin Atlantic becomes a lot tougher on their bread and butter routes. A number of airlines that had previously not held route authority to Heathrow airport have already stated their intention to fly into what has been one of Virgin Atlantic's traditional hubs (over London's Gatwick airport). Granted the transatlantic market between London and the United States is the largest of them all, competition however will become much fiercer and cut throat as airlines work to undercut each-others market share on routes.
Energy costs continue to rise, particularly for jet fuel. Singapore Airlines hiked its fuel surcharge again recently, and crude prices also continue to trade in the $70 range.
With all these conditions, the time is now for SQ to sell their stake in my opinion, before the earnings picture gets even uglier than this.
Curtis Bergh
Here are some of the highlights of Virgin's performance for the quarter:
-Profit down from £60.3 mln to £6.6 mln
-Revenue was up 16% to £2.2 bln
-Passenger numbers up from 4.8 mln to 5.3 mln
Virgin Nigeria was one of the main reasons earnings got dragged lower. When you think about it, that airline already operates in an extremely tough market to begin with. Finding success for them is something that could take a while, that is, if success ever comes their way.
Taking into consideration that open skies across the Atlantic will soon come into force and suddenly the market operating environment for Virgin Atlantic becomes a lot tougher on their bread and butter routes. A number of airlines that had previously not held route authority to Heathrow airport have already stated their intention to fly into what has been one of Virgin Atlantic's traditional hubs (over London's Gatwick airport). Granted the transatlantic market between London and the United States is the largest of them all, competition however will become much fiercer and cut throat as airlines work to undercut each-others market share on routes.
Energy costs continue to rise, particularly for jet fuel. Singapore Airlines hiked its fuel surcharge again recently, and crude prices also continue to trade in the $70 range.
With all these conditions, the time is now for SQ to sell their stake in my opinion, before the earnings picture gets even uglier than this.
Curtis Bergh
Labels: Earnings, Singapore Airlines, Virgin Atlantic
Singapore, get real!!!
The National day Parade that has just passed has been filled with lots of facts about Asia's growing economy; how countries like China, Malaysia and India for example are rising up to compete.
Singapore has always been seen as the 'developed' country in the region; that is our trump card.
But looking at the pace around us, we have to start bucking up to ensure that the card is still in our advantage not only to stay afloat with the world, but also to ensure that Singaporeans themselves are working hard for their own benefits.
My reasons:
First, Singaporeans, in general, are quite selective in their choices. Not suggesting that one can't be selective, but just have to be realistic; to realise the purpose at the end of the day.
For example, in the National Day Rally, it was mentioned that some Singaporeans are quite fussy in terms of travelling from home to work because the venue is too far. Reality check. Singapore is also abbreviated as an Island and is also popularly casted as the 'little red dot' on the world map. The purpose of working is to get money.
Yes, travelling do take up some and money, but at the end of the day, to get a decent job and to bring home bread and butter daily for the family is the bottom line. What is scarier now is that employers are getting more foreign workers because they can be paid at a cheaper rate and that leaves Singaporeans with lesser job opportunities. There is no room for fussy-ness!
Another example given in the speech is that it mentioned an article picked up by The New Paper about a man who got retrenched from his job as a cargo tank officer. His wife in jail for drugs and has three children whom he currently feeds with instant noodles and bread. He is surviving with S$240 from self-help group and cash borrowed from friends. When asked if he were to bring back S$600 to $800 monthly from working as a cleaner, his reply was no, and why should he lower his expectations.
If you ask me personally, I feel sorry for his kids as they are the ones suffering as they're still young to fend for themselves.
Second, countries around are catching up. Again, for the umpteenth time, Singapore as the competitor. Yes, regional countries are catching up, the most obvious ones are Malaysia and China. Even others that are considered as 'the underdog' like Vietnam too are being mentioned here and there. Although it may still take a while more, from now until then, Singaporeans have no choice but to work hard for their own benefit. The monthly CPF cut may not necessarily be enough for some and being reliant on that alone may not be wise as by the time one realises how little money they have it may be well, too late.
In The Straits Times today, there are several articles on CPF and how depending on it alone may prove to be risky.
In other words, Singaporeans not only have to ensure their manners (like what Sue En's blog previously mentioned about how our mannerisms should be in-line with the country's progress), but also the working attitude that should be in-line with the country's growth. At the end of the day, it does not only about making Singapore look good, but also for his or her own benefit.
Nurwidya Abdul
Singapore has always been seen as the 'developed' country in the region; that is our trump card.
But looking at the pace around us, we have to start bucking up to ensure that the card is still in our advantage not only to stay afloat with the world, but also to ensure that Singaporeans themselves are working hard for their own benefits.
My reasons:
First, Singaporeans, in general, are quite selective in their choices. Not suggesting that one can't be selective, but just have to be realistic; to realise the purpose at the end of the day.
For example, in the National Day Rally, it was mentioned that some Singaporeans are quite fussy in terms of travelling from home to work because the venue is too far. Reality check. Singapore is also abbreviated as an Island and is also popularly casted as the 'little red dot' on the world map. The purpose of working is to get money.
Yes, travelling do take up some and money, but at the end of the day, to get a decent job and to bring home bread and butter daily for the family is the bottom line. What is scarier now is that employers are getting more foreign workers because they can be paid at a cheaper rate and that leaves Singaporeans with lesser job opportunities. There is no room for fussy-ness!
Another example given in the speech is that it mentioned an article picked up by The New Paper about a man who got retrenched from his job as a cargo tank officer. His wife in jail for drugs and has three children whom he currently feeds with instant noodles and bread. He is surviving with S$240 from self-help group and cash borrowed from friends. When asked if he were to bring back S$600 to $800 monthly from working as a cleaner, his reply was no, and why should he lower his expectations.
If you ask me personally, I feel sorry for his kids as they are the ones suffering as they're still young to fend for themselves.
Second, countries around are catching up. Again, for the umpteenth time, Singapore as the competitor. Yes, regional countries are catching up, the most obvious ones are Malaysia and China. Even others that are considered as 'the underdog' like Vietnam too are being mentioned here and there. Although it may still take a while more, from now until then, Singaporeans have no choice but to work hard for their own benefit. The monthly CPF cut may not necessarily be enough for some and being reliant on that alone may not be wise as by the time one realises how little money they have it may be well, too late.
In The Straits Times today, there are several articles on CPF and how depending on it alone may prove to be risky.
In other words, Singaporeans not only have to ensure their manners (like what Sue En's blog previously mentioned about how our mannerisms should be in-line with the country's progress), but also the working attitude that should be in-line with the country's growth. At the end of the day, it does not only about making Singapore look good, but also for his or her own benefit.
Nurwidya Abdul
Labels: Island, little red dot, NDP Rally, realistic
U.S. woes affecting Singapore housing market
Continued woes in the subprime mortgage market in the United States and housing concerns are definitely starting to take their toll on Asia I think, particularly for those of us here in Singapore.
Focusing on the housing market, we are seeing such a property boom here in Singapore its hard to imagine that sooner or later, home prices- and the issues home builders are running into in the U.S.- won't affect this market at some stage sooner or later.
For now, our red hot housing sector in Singapore will continue I think. But the "bubble" may burst much sooner rather than later given what we are seeing in the US. only a matter of time I think.
As always please see your licensed financial advisor before making any investment decisions.
Curtis Bergh
Focusing on the housing market, we are seeing such a property boom here in Singapore its hard to imagine that sooner or later, home prices- and the issues home builders are running into in the U.S.- won't affect this market at some stage sooner or later.
For now, our red hot housing sector in Singapore will continue I think. But the "bubble" may burst much sooner rather than later given what we are seeing in the US. only a matter of time I think.
As always please see your licensed financial advisor before making any investment decisions.
Curtis Bergh
How the Inter-Korean summit will have an effect on investors
What may be happening on the Korean Peninsula thousands of kilometers away from Singapore believe it or not may actually affect you as an investor here. Geopolitical events have just as much drive in the markets as earnings announcements and financial related information that we digest daily. With so many of the regions market moving in sync with one another, just about any geopolitical event in the Asia Pacific region will have an affect on investors and the market.
The announcement that North Korea and South Korea will hold their second summit since the end of the Korean War more than half a century ago was welcomed by the international community which has made steady progress recently in dealing with the North Korean nuclear issue through the six party talks. The timing of the summit and visit to Pyongyang by South Korean President Roh Moo-hyun coincides with the positive developments made at the six party talks and should keep good vibes and progress on track.
But aside from all the diplomacy for a second, how does it affect investors here in Singapore?
Well it goes beyond just stating the obvious here that Singapore is in Asia. But even more deep than that, major Asian markets are located around the Korean Peninsula that have an affect on how the Singapore market trades (Tokyo, Seoul, etc.) and their major indices tend to move somewhat parallel to the STI from time to time (not an exact science but, making a general statement - it happens a lot). Couple that with the fact that a number of foreign companies from the region - mainly China, the host of the six party talks- are listed here and geopolitical events in northern Asia now take on a bit more significance to us here in Singapore.
While China isn't involved in the Inter-Korean summit, it is a major player in the six-party talks which eventually seek to have a denuclearized Korean Peninsula. Getting to that goal will require six party participants to offer assistance to the North in some way shape and form. So far we have seen energy aid in the form of heavy fuel oil. China is also the North Koreans largest trading partner, and any increase in business and trade between the two could have an impact on companies in China, especially those listed here.
So now, you can see how the dominoes can line up geopolitically speaking in terms of affecting you as an individual investor.
Curtis Bergh
The announcement that North Korea and South Korea will hold their second summit since the end of the Korean War more than half a century ago was welcomed by the international community which has made steady progress recently in dealing with the North Korean nuclear issue through the six party talks. The timing of the summit and visit to Pyongyang by South Korean President Roh Moo-hyun coincides with the positive developments made at the six party talks and should keep good vibes and progress on track.
But aside from all the diplomacy for a second, how does it affect investors here in Singapore?
Well it goes beyond just stating the obvious here that Singapore is in Asia. But even more deep than that, major Asian markets are located around the Korean Peninsula that have an affect on how the Singapore market trades (Tokyo, Seoul, etc.) and their major indices tend to move somewhat parallel to the STI from time to time (not an exact science but, making a general statement - it happens a lot). Couple that with the fact that a number of foreign companies from the region - mainly China, the host of the six party talks- are listed here and geopolitical events in northern Asia now take on a bit more significance to us here in Singapore.
While China isn't involved in the Inter-Korean summit, it is a major player in the six-party talks which eventually seek to have a denuclearized Korean Peninsula. Getting to that goal will require six party participants to offer assistance to the North in some way shape and form. So far we have seen energy aid in the form of heavy fuel oil. China is also the North Koreans largest trading partner, and any increase in business and trade between the two could have an impact on companies in China, especially those listed here.
So now, you can see how the dominoes can line up geopolitically speaking in terms of affecting you as an individual investor.
Curtis Bergh
Labels: Inter-Korean Summit, North Korea, Singapore Market, South Korea
Manufacturing companies hit a new wave
The words entrepreneur and innovation brings to mind a young individual striking out on his own, struggling to market his new idea or product.
Now what stands out in a world of piracy and cheap replica's?
A new product, yes...that must be unique, not something that the market already has nor a variation.
A product that has added value to its consumers.
And most of all, consumers must like it.
Niche market, that's what we can call it.
But considering that we're advancing as such a breaknecked pace, creating a niche market is one thing, sustaining it is another.
Well, it seems manufacturing companies may have to join in this fun filled world of 'who gets the most customers'.
And of course as the end users, we are in for a treat to a wide selection of products available on the market....we're simply spoiled for choice, but whose complaining? Certainly not me.
According to an article on the Business Times website entitled R&D tolerate short -term pain for long term gain.
It said, until the late 1990's, the primary strengths of manufacturing centres was its ability to provide low-cost labour and resources.
However, the industry was in for a rude awakening as China emerged as a leading offshore manufacturing platform.
In terms of pricing, they certainly beat us hands down. Upgrading one's traditional assembly line certainly won't do much good.
Jong Voon Hoo the Chief financial officer of China-based Youcan Foods said in a statement on an article entitled Gaining an edge through innovation on the Business Times website today that 'Competition is intensifying across most industries and it is getting more difficult to find unique selling points on similar products. Therefore it is important that our R&D department remain creative'.
His fears are not unfounded as Fong Saik Hay, the chief technology officer of ST Engineering and president of ST Dynamics is also chomping at the bit through partnerships with research institutes, small start-ups and other mature companies.
So the bigger companies have their work cut out for them. Where does that leave small companies who do not have the resources?
No fear for the government is here!
Allow me to just rattle of a couple of government aids:
First, the Singapore Economic Development Board instituted the Product and Process Development Assistance Scheme to give local companies a hand to improve their design and development capabilities.
Second, Spring Singapore has launched a S$150 mln Technology Innovation Programme last August. It has set up Centers that provide technology consultancy and advise to small and medium enterprises.
It has also launched a S$9 mln Intellectual Property Management programme allows SME's to protect their products from copyright issues.
In the same article, Darius Cheung, the Chief Executive Officer of mobile technology start-up tenCube gives us a glimpse as to why manufacturing companies were not big on investing in its R&D arm.
He says that 'Asian companies are commonly pressured to focus on short-term profits without the freedom to invest in creative processes that may be difficult to justify in terms of monetary returns.
However he added that this very same process may be the one to produce tremendous bottom-line results.
So, we've covered the direction on which manufacturing companies are heading towards and the funding that will be available to them.
Not forgetting that ideas are..ultimately generated from people.
So about the welfare side.
Companies such as ST Engineering and tenCube are pressing hard on creating a 'conducive and supportive environment' and culture which will allow 'creativity to thrive' and some are even offering monetary incentives.
But it seems innovative R&D still has a rather way to go.
Resolving technologies and funding issues are just the tip of the ice berg and i dare say may be the easier obstacles.
With so many variations of products on the market, obtaining a unique selling point and meeting consumer demand is certainly not a stroll in the park.
More effort has to be placed in research gathering, to understand the end consumer before being able to create a product that will stand out and appeal.
After all culture is not something that can be created or changed overnight.
Yeo Sue En
As always, please see your licensed financial advisor before making any financial decisions.
Now what stands out in a world of piracy and cheap replica's?
A new product, yes...that must be unique, not something that the market already has nor a variation.
A product that has added value to its consumers.
And most of all, consumers must like it.
Niche market, that's what we can call it.
But considering that we're advancing as such a breaknecked pace, creating a niche market is one thing, sustaining it is another.
Well, it seems manufacturing companies may have to join in this fun filled world of 'who gets the most customers'.
And of course as the end users, we are in for a treat to a wide selection of products available on the market....we're simply spoiled for choice, but whose complaining? Certainly not me.
According to an article on the Business Times website entitled R&D tolerate short -term pain for long term gain.
It said, until the late 1990's, the primary strengths of manufacturing centres was its ability to provide low-cost labour and resources.
However, the industry was in for a rude awakening as China emerged as a leading offshore manufacturing platform.
In terms of pricing, they certainly beat us hands down. Upgrading one's traditional assembly line certainly won't do much good.
Jong Voon Hoo the Chief financial officer of China-based Youcan Foods said in a statement on an article entitled Gaining an edge through innovation on the Business Times website today that 'Competition is intensifying across most industries and it is getting more difficult to find unique selling points on similar products. Therefore it is important that our R&D department remain creative'.
His fears are not unfounded as Fong Saik Hay, the chief technology officer of ST Engineering and president of ST Dynamics is also chomping at the bit through partnerships with research institutes, small start-ups and other mature companies.
So the bigger companies have their work cut out for them. Where does that leave small companies who do not have the resources?
No fear for the government is here!
Allow me to just rattle of a couple of government aids:
First, the Singapore Economic Development Board instituted the Product and Process Development Assistance Scheme to give local companies a hand to improve their design and development capabilities.
Second, Spring Singapore has launched a S$150 mln Technology Innovation Programme last August. It has set up Centers that provide technology consultancy and advise to small and medium enterprises.
It has also launched a S$9 mln Intellectual Property Management programme allows SME's to protect their products from copyright issues.
In the same article, Darius Cheung, the Chief Executive Officer of mobile technology start-up tenCube gives us a glimpse as to why manufacturing companies were not big on investing in its R&D arm.
He says that 'Asian companies are commonly pressured to focus on short-term profits without the freedom to invest in creative processes that may be difficult to justify in terms of monetary returns.
However he added that this very same process may be the one to produce tremendous bottom-line results.
So, we've covered the direction on which manufacturing companies are heading towards and the funding that will be available to them.
Not forgetting that ideas are..ultimately generated from people.
So about the welfare side.
Companies such as ST Engineering and tenCube are pressing hard on creating a 'conducive and supportive environment' and culture which will allow 'creativity to thrive' and some are even offering monetary incentives.
But it seems innovative R&D still has a rather way to go.
Resolving technologies and funding issues are just the tip of the ice berg and i dare say may be the easier obstacles.
With so many variations of products on the market, obtaining a unique selling point and meeting consumer demand is certainly not a stroll in the park.
More effort has to be placed in research gathering, to understand the end consumer before being able to create a product that will stand out and appeal.
After all culture is not something that can be created or changed overnight.
Yeo Sue En
As always, please see your licensed financial advisor before making any financial decisions.
Labels: culture, innovation, manufacturing, research and development, RnD, Singapore
With StarHub's earnings, is industry consolidation inevitable?
We saw the earnings from StarHub Thursday night and while there was overall top and bottom line growth, their earnings shed some light on the operating environment in this industry here in Singapore. Competition is fierce amongst the telcos, and with mobile phone penetration floating well above 100%, the pressure on 'the big 3' telcos to come up with alternative revenue streams is immense.
Could consolidation in the industry be inevitable? IMHO, the factors are there pointing to that.
Looking at their earnings, two specific areas jumped out at me: 1) revenue growth was flat for its cable business and 2) its post-paid mobile subscriber customer based dipped. To me, those two things don't bode well at all given that cable is such a an integral part of StarHubs business in addition to mobile. With mobile still being the bread and butter of the business, their post-paid customer base seems to be on the decline somewhat as well.
After reading Starhubs earnings, you really have to ask yourself what the future holds for StarHub and who will out muscle who amongst the telcos here in Singapore.
Quite frankly, I think three major players is far too many here in Singapore. I wouldn't be surprised if you saw consolidation. SingTel without a doubt holds the top spot here in Singapore and undoubtedly will be for some time I think. But you almost wonder if M1 and SatrHub came together what the benefits would be not only for shareholders but for consumers.
Mergia mania maybe will even make its way over to Singapore, as we have seen plenty of companies in the United States come together under situations similar. The only question is, are executives thinking the same thing. Only time will tell.
Curtis Bergh
As always please see your licensed financial advisor before making any investment decisions
Could consolidation in the industry be inevitable? IMHO, the factors are there pointing to that.
Looking at their earnings, two specific areas jumped out at me: 1) revenue growth was flat for its cable business and 2) its post-paid mobile subscriber customer based dipped. To me, those two things don't bode well at all given that cable is such a an integral part of StarHubs business in addition to mobile. With mobile still being the bread and butter of the business, their post-paid customer base seems to be on the decline somewhat as well.
After reading Starhubs earnings, you really have to ask yourself what the future holds for StarHub and who will out muscle who amongst the telcos here in Singapore.
Quite frankly, I think three major players is far too many here in Singapore. I wouldn't be surprised if you saw consolidation. SingTel without a doubt holds the top spot here in Singapore and undoubtedly will be for some time I think. But you almost wonder if M1 and SatrHub came together what the benefits would be not only for shareholders but for consumers.
Mergia mania maybe will even make its way over to Singapore, as we have seen plenty of companies in the United States come together under situations similar. The only question is, are executives thinking the same thing. Only time will tell.
Curtis Bergh
As always please see your licensed financial advisor before making any investment decisions
Labels: Singapore, StarHub, telcos in Singapore
Foreign Funds now buying into Singapore property
The property market in Singapore continues to be red hot as more developments get launched and speculators continue to buy.
But a new trend is emerging in this market, and that lies in foreign investment funds buying up blocks of property in Singapore.
We saw just the other day the sale of two blocks at Reflections at Keppel Bay - a development by Keppel Land- get gobbled up by a recently established fund backed by the Kuwait Finance House and Amanah Raya in Malaysia.
This I think is the beginning of a trend that we will see continue here in the Singapore property sector. Big listed property developers will sell off chunks of developments to foreign holders and take the profits at higher margins straight away.
Not only will the property funds that are investing in Singapore be from overseas, but more and more will increasingly come from the Middle East and places such as Kuwait, Dubai, and Qatar.
And if that keeps up, I think then the prospect of the property bubble bursting anytime soon goes down significantly only prolonging the streak of rising prices in this ridiculously overpriced property market in Singapore.
Curtis Bergh
ArchivesBut a new trend is emerging in this market, and that lies in foreign investment funds buying up blocks of property in Singapore.
We saw just the other day the sale of two blocks at Reflections at Keppel Bay - a development by Keppel Land- get gobbled up by a recently established fund backed by the Kuwait Finance House and Amanah Raya in Malaysia.
This I think is the beginning of a trend that we will see continue here in the Singapore property sector. Big listed property developers will sell off chunks of developments to foreign holders and take the profits at higher margins straight away.
Not only will the property funds that are investing in Singapore be from overseas, but more and more will increasingly come from the Middle East and places such as Kuwait, Dubai, and Qatar.
And if that keeps up, I think then the prospect of the property bubble bursting anytime soon goes down significantly only prolonging the streak of rising prices in this ridiculously overpriced property market in Singapore.
Curtis Bergh
Labels: Foreign Property Funds, Property Market, Singapore, Singapore Property
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