Capitacommercial Trust Stays Execution Of Market Street Carpark
The manager of CapitaCommercial Trust has deferred a decision on redeveloping Market Street carpark.
CapitaCommercial Trust Management said the decision will be made not earlier than mid-2009.
CapitaCommercial Trust said in January that it was granted an Outline Planning Permission (OPP) was granted by the Urban Redevelopment Authority (URA) for the redevelopment of the property into a Grade A office building.
The CEO of CapitaCommercial Trust Management said it deferred the decision due to the significant size of the project, rising construction costs and the currently volatile financial markets.
If CapitaCommercial Trust had gone ahead with redeveloping the Market Street carpark, it would have been its second time in just two years. Tearing down the place to build a spanking new office building would have meant a waste of S$14 mln.
Mark Laudi has touched on this subject of redeveloping the Market Street Car Park in January:
http://investorcentral.blogspot.com/2008/01/market-street-carpark-wasted-s14-mln.html#links
Analysts surveyed by Reuters have on average an OUTPERFORM call on the stock with a price target of S$2.655, compared to its last traded price of S$2.20.
As always, please see your licensed financial advisor before making any investment decisions.
CapitaCommercial Trust Management said the decision will be made not earlier than mid-2009.
CapitaCommercial Trust said in January that it was granted an Outline Planning Permission (OPP) was granted by the Urban Redevelopment Authority (URA) for the redevelopment of the property into a Grade A office building.
The CEO of CapitaCommercial Trust Management said it deferred the decision due to the significant size of the project, rising construction costs and the currently volatile financial markets.
If CapitaCommercial Trust had gone ahead with redeveloping the Market Street carpark, it would have been its second time in just two years. Tearing down the place to build a spanking new office building would have meant a waste of S$14 mln.
Mark Laudi has touched on this subject of redeveloping the Market Street Car Park in January:
http://investorcentral.blogspot.com/2008/01/market-street-carpark-wasted-s14-mln.html#links
Analysts surveyed by Reuters have on average an OUTPERFORM call on the stock with a price target of S$2.655, compared to its last traded price of S$2.20.
As always, please see your licensed financial advisor before making any investment decisions.
Darco Water - Will Its Business Be Threatened By The Slingshot?
Darco Water said yesterday it is confident of posting revenue of at least S$100 mln for FY2008 after securing seven environmental engineering projects valued at about S$25 mln.
The total project orders to be delivered in FY2008 now stand at S$126.00 mln.
Darco’s FY2007 revenue was S$87.6 mln.
The bulk of new orders come from the electronic and semi-conductor sectors, which make up almost 80% of the total orders.
But the two major orders of the bunch include Darco’s two wastewater treatment projects in Taiwan valued at S$12.3 mln and the repeated orders for Phase II of Seagate Malaysia’s facilities in Johor for air management and wastewater treatment systems valued at S$11.5 mln.
In another announcement, Darco said its lawsuit against insurer ECICS over an export credit insurance claim has resulted in the latter paying up. ECICS paid up “a substantial part of the claim” on 17 March for the purpose of compromise only and without any admission of liability, Darco said.
The unpaid claim had dragged down Darco’s FY2007 profit by 95% to S$120,000. It had made a one-time provision of S$4.6 mln relating to sub-contracting works arising from a Taiwan-based company, Hsin II, and was expecting the insurance claim from ECICS to come through.
~Jin San’s take~
Hear ye, hear ye – something has happened and the wastewater treatment industry will not be the same again. This momentous event happened last month, when Dean Kamen appeared on US talk show The Colbert Report and showed for the first time a water purifying machine. The machine, which Kamen (the inventor of the Segway - http://www.segway.com/) calls a Slingshot, can purify anything – ocean water, urine, sewage, you name it.
It looks about the size of a concert speaker, requires no filters, and can operate using an easily-obtained fuel: cow dung. Besides generating 1,000 litres of drinkable water a day, the Slingshot can generate electricity, too. Check out the marvelous invention here:
http://www.youtube.com/watch?v=EmTgVNFaDig
Kamen is trying to reduce the price of making the Slingshot to about US$1,000 to US$2,000. The prototype he showed on The Colbert Report was made for US$100,000, though. Price will be a major stumbling block - The One Laptop Per Child Project (http://laptop.org/), which had a similar humanitarian aim, took a long time to reach an acceptable US$175, which is much higher than its original target price of US$100.
But with more media coverage, the proper connections, critical mass, and further improvements, it will become a possibility for the Slingshot to help the 1.1 bln people in the world who don't have access to clean drinking water, and the 1.6 bln who don't have electricity.
On the other hand, this invention could potentially give wastewater treatment companies like Darco a run for their money. If this quantum leap in technology takes off, it could mean third world villages and small towns cutting out the middlemen to operate wastewater treatment plants and buying a bunch of Slingshots to produce clean water. The 1,000 litres of water a day the Slingshot can generate will hydrate a lot of human beings indeed. If each person drinks 1.5 litres of water in a village, I’m thinking a couple of Slingshots would be enough to serve the average village with a population of say, 1,000.
But we are only talking about the first generation of Slingshots. For sure, there will be variations and technological improvements in the future. Plus, the beauty of this invention is that it does not need anyone to operate it, unlike wastewater treatment plants. Which means cutting out the Operating part of BOT (Build, Operate, Transfer) or DBOT (Design, Build, Operate, Transfer) contracts.
To be fair, the wastewater treatment companies need not feel threatened for now because the plants they build and operate are much bigger and size. Plus, they are getting contracts at municipal and town levels. But I would not be as complacent as to discount the Slingshot as an idea that might not take off. Dean Kamen’s other invention, the Segway, hasn’t really revolutionized the way we travel, either. But he gave the Slingshot its name as a reference to the simple weapon that David used when he faced Goliath. In reality, the Goliath would be the billions of people without drinking water in the world. But this little Slingshot might take down more than just the water problem – it might take out a few water companies along the way.
But as with all technological innovations, we have to wait and see whether it will rise above the shadow of ‘just a prototype’.
As always, please see your licensed financial advisor before making any investment decisions.
The total project orders to be delivered in FY2008 now stand at S$126.00 mln.
Darco’s FY2007 revenue was S$87.6 mln.
The bulk of new orders come from the electronic and semi-conductor sectors, which make up almost 80% of the total orders.
But the two major orders of the bunch include Darco’s two wastewater treatment projects in Taiwan valued at S$12.3 mln and the repeated orders for Phase II of Seagate Malaysia’s facilities in Johor for air management and wastewater treatment systems valued at S$11.5 mln.
In another announcement, Darco said its lawsuit against insurer ECICS over an export credit insurance claim has resulted in the latter paying up. ECICS paid up “a substantial part of the claim” on 17 March for the purpose of compromise only and without any admission of liability, Darco said.
The unpaid claim had dragged down Darco’s FY2007 profit by 95% to S$120,000. It had made a one-time provision of S$4.6 mln relating to sub-contracting works arising from a Taiwan-based company, Hsin II, and was expecting the insurance claim from ECICS to come through.
~Jin San’s take~
Hear ye, hear ye – something has happened and the wastewater treatment industry will not be the same again. This momentous event happened last month, when Dean Kamen appeared on US talk show The Colbert Report and showed for the first time a water purifying machine. The machine, which Kamen (the inventor of the Segway - http://www.segway.com/) calls a Slingshot, can purify anything – ocean water, urine, sewage, you name it.
It looks about the size of a concert speaker, requires no filters, and can operate using an easily-obtained fuel: cow dung. Besides generating 1,000 litres of drinkable water a day, the Slingshot can generate electricity, too. Check out the marvelous invention here:
http://www.youtube.com/watch?v=EmTgVNFaDig
Kamen is trying to reduce the price of making the Slingshot to about US$1,000 to US$2,000. The prototype he showed on The Colbert Report was made for US$100,000, though. Price will be a major stumbling block - The One Laptop Per Child Project (http://laptop.org/), which had a similar humanitarian aim, took a long time to reach an acceptable US$175, which is much higher than its original target price of US$100.
But with more media coverage, the proper connections, critical mass, and further improvements, it will become a possibility for the Slingshot to help the 1.1 bln people in the world who don't have access to clean drinking water, and the 1.6 bln who don't have electricity.
On the other hand, this invention could potentially give wastewater treatment companies like Darco a run for their money. If this quantum leap in technology takes off, it could mean third world villages and small towns cutting out the middlemen to operate wastewater treatment plants and buying a bunch of Slingshots to produce clean water. The 1,000 litres of water a day the Slingshot can generate will hydrate a lot of human beings indeed. If each person drinks 1.5 litres of water in a village, I’m thinking a couple of Slingshots would be enough to serve the average village with a population of say, 1,000.
But we are only talking about the first generation of Slingshots. For sure, there will be variations and technological improvements in the future. Plus, the beauty of this invention is that it does not need anyone to operate it, unlike wastewater treatment plants. Which means cutting out the Operating part of BOT (Build, Operate, Transfer) or DBOT (Design, Build, Operate, Transfer) contracts.
To be fair, the wastewater treatment companies need not feel threatened for now because the plants they build and operate are much bigger and size. Plus, they are getting contracts at municipal and town levels. But I would not be as complacent as to discount the Slingshot as an idea that might not take off. Dean Kamen’s other invention, the Segway, hasn’t really revolutionized the way we travel, either. But he gave the Slingshot its name as a reference to the simple weapon that David used when he faced Goliath. In reality, the Goliath would be the billions of people without drinking water in the world. But this little Slingshot might take down more than just the water problem – it might take out a few water companies along the way.
But as with all technological innovations, we have to wait and see whether it will rise above the shadow of ‘just a prototype’.
As always, please see your licensed financial advisor before making any investment decisions.
SGX Research Incentive Scheme should not be for everybody
There is no doubt the SGX Research Incentive Scheme has been a success. It's clear from the sheer statistics – which show that 64,000 registered users download broker-generated, company-sponsored research 50,000 times a month – that there is a demand for this type of research. There is also plenty of research which substantiates the long-held belief that research is critical to increase interest and turnover in stocks. My concern is centred purely around the fact that there are some companies who should not be receiving a subsidy for having such research conducted on them.
The SGX Research Incentive Scheme is an admirable and worthwhile attempt to give a helping hand to smaller and mid-sized companies, which usually escape the attention of analysts at broking houses and therefore see low liquidity in their stocks. The problem, it was argued at the time of the launch, is that financial analysts usually write about companies which are already "in play", because that's where the turnover already is, and where the cost of financial analysts can be defrayed by commissions from share trades. By launching the scheme, this cycle of encouraging more trades in stocks which are already heavily traded, while smaller companies are ignored, could be broken.
The Monetary Authority of Singapore also understands the value of the scheme because it provides more information (=a more level playing field) in the market. The MAS subsidised the scheme through the Financial Services Development Fund from the beginning.
Sofar, so good.
The problem, in my view, is that companies which are already receiving a great deal of analysts' coverage are also permitted to take part.
Our research in late 2006 showed the following:
(Unashamed opinion continues below advertisement)
There were six companies which were already covered by more than 10 analysts.
They were:
• SingTel
• UOB
• DBS Group
• ST Engineering
• SembCorp Industries, and
• Jurong Technologies
In addition, there were 22 companies which were covered by at least 4 analysts, including COSCO, SMRT, Hyflux and Noble Group.
My argument is: these companies are already receiving a significant amount of coverage – why are they receiving a state (=taxpayer) subsidy to have even more research conducted on them?
Or, more to the point, let them take part but make them pay a higher price and receive no subsidy at all?
Granted, the sums we're talking about here aren't huge. Twentyeight companies which, in my book, should be ineligible, each receiving S$4,000 in subsidies, totals only S$112,000. But what if these funds were used to pay analysts to cover companies which currently have one or two analysts covering them, or even none?
Mark Laudi, who wishes all analysts contribute all their reports to the SGX Research portal - not just the ones generated through the SGX-MAS Research Incentive Scheme.
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
The SGX Research Incentive Scheme is an admirable and worthwhile attempt to give a helping hand to smaller and mid-sized companies, which usually escape the attention of analysts at broking houses and therefore see low liquidity in their stocks. The problem, it was argued at the time of the launch, is that financial analysts usually write about companies which are already "in play", because that's where the turnover already is, and where the cost of financial analysts can be defrayed by commissions from share trades. By launching the scheme, this cycle of encouraging more trades in stocks which are already heavily traded, while smaller companies are ignored, could be broken.
The Monetary Authority of Singapore also understands the value of the scheme because it provides more information (=a more level playing field) in the market. The MAS subsidised the scheme through the Financial Services Development Fund from the beginning.
Sofar, so good.
The problem, in my view, is that companies which are already receiving a great deal of analysts' coverage are also permitted to take part.
Our research in late 2006 showed the following:
(Unashamed opinion continues below advertisement)
There were six companies which were already covered by more than 10 analysts.
They were:
• SingTel
• UOB
• DBS Group
• ST Engineering
• SembCorp Industries, and
• Jurong Technologies
In addition, there were 22 companies which were covered by at least 4 analysts, including COSCO, SMRT, Hyflux and Noble Group.
My argument is: these companies are already receiving a significant amount of coverage – why are they receiving a state (=taxpayer) subsidy to have even more research conducted on them?
Or, more to the point, let them take part but make them pay a higher price and receive no subsidy at all?
Granted, the sums we're talking about here aren't huge. Twentyeight companies which, in my book, should be ineligible, each receiving S$4,000 in subsidies, totals only S$112,000. But what if these funds were used to pay analysts to cover companies which currently have one or two analysts covering them, or even none?
Mark Laudi, who wishes all analysts contribute all their reports to the SGX Research portal - not just the ones generated through the SGX-MAS Research Incentive Scheme.
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
Labels: Financial Services Development Fund, research, SGX-MAS Research Incentive Scheme
Agflation: new words for a new world
Even as we're grappling with the spectre of a recession in the United States, prices are rising paradoxically. But not just plain-old inflation, no! The current economic circumstances have given rise to a whole new language, as if to make us feel better, by rationalising the whole barrage of price increases we're seeing.
For example, you may have come across agflation. Google has about 47,200 listings of the word, including Investopedia's matter-of-factly definition:
In any event, we at Investor Central have come up with our own set of words to describe the current state of affairs:
Transflation - the economic rationalist explanation each time the Public Transport Council raises bus and MRT fares.
Meeflation - the "sticker shock" you get by going to People's Park and being offered Hokkien Mee, not in $2/$3/$4 portions, but $4/$5/$6 sizes.
Proflation - the phenomenon by which landlords are inexplicably bestowed the right to triple rents for long-standing tenants, or other people in the property business predict an endless rise in sale prices.
Cabflation - the mathematical relationship between the increase in taxi fares and the lengthening of queues of taxis waiting for passengers.
These inevitably lead us to the most important of all, and unlike "agflation" this one is a real word. Click on the link to read for yourself:
Afflation – the blowing of hot air by Treasury Secretary Henry Paulson and his Wall Street buddies about giving the Fed more power. Does anyone else sense another Patriot Act coming on, this time stomping on civil liberties and rights to privacy in the banking sector?
What -flations are currently weighing on your finances?
Mark Laudi, who did a double-take when he first saw the word agflation and thought the author had meant "stagflation" (rising prices in a weakening economy). Hmm… stagflation: the increasingly panicked rantings of a groom when presented with the dinner bill for his wedding?
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
For example, you may have come across agflation. Google has about 47,200 listings of the word, including Investopedia's matter-of-factly definition:
An increase in the price of food that occurs as a result of increased demand from human consumption and use as an alternative energy resource. While the competitive nature of retail supermarkets allows some of the effects of agflation to be absorbed, the price increases that agflation causes are largely passed on to the end consumer. The term is derived from a combination of the words "agriculture" and "inflation".It's as though agflation is a real word! (Dictionary.com has no record of it). David Shvartsman acknowledged the word in an almost year-old article for Safe Haven, while expertly correcting the media and economists who have bastardised the word "inflation" to make it fit into their own view of the world.
In any event, we at Investor Central have come up with our own set of words to describe the current state of affairs:
Transflation - the economic rationalist explanation each time the Public Transport Council raises bus and MRT fares.
Meeflation - the "sticker shock" you get by going to People's Park and being offered Hokkien Mee, not in $2/$3/$4 portions, but $4/$5/$6 sizes.
Proflation - the phenomenon by which landlords are inexplicably bestowed the right to triple rents for long-standing tenants, or other people in the property business predict an endless rise in sale prices.
Cabflation - the mathematical relationship between the increase in taxi fares and the lengthening of queues of taxis waiting for passengers.
These inevitably lead us to the most important of all, and unlike "agflation" this one is a real word. Click on the link to read for yourself:
Afflation – the blowing of hot air by Treasury Secretary Henry Paulson and his Wall Street buddies about giving the Fed more power. Does anyone else sense another Patriot Act coming on, this time stomping on civil liberties and rights to privacy in the banking sector?
What -flations are currently weighing on your finances?
Mark Laudi, who did a double-take when he first saw the word agflation and thought the author had meant "stagflation" (rising prices in a weakening economy). Hmm… stagflation: the increasingly panicked rantings of a groom when presented with the dinner bill for his wedding?
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
Labels: afflation, Agflation, inflation, People's Park, price increases, Public Transport Council
Jade Tech 'designated'. And here's another...
Congratulations to the Singapore Exchange for designating Jade Technology - meaning, the stock can no longer be sold short. Frankly, it was starting to bore us that each morning at our editorial meeting the top traded stock was… drum-roll please… Jade Tech. But we think there are a couple of other stocks which rank highly in the "eye-rolling" stakes, and qualify for special attention from the SGX, most notably E3 Holdings.
The stock formerly known as ei-Nets has been seeing a lot of volume, with 15 mln shares changing hands last Friday. Trading at 3 cents apiece that does not translate into a lot of money. But their announcement late March that a subscription agreement with Pacific Capital Investment Management Limited has been terminated.
Is it a coincidence that the venerable Dr Anthony Soh, who's also behind Jade Tech, is E3's President, and bought 280 mln shares in E3 Holdings worth almost S$10 mln just a month ago?
I haven't spoken to Dr Soh, and so I am not sure whether there is a relationship between the Jade Tech and the E3 Holdings announcements.
But it seems even if he cashed out this investment he still would fall short of the S$67 mln he needs to pay for the now-cancelled takeover of Jade Tech.
On the face of it it looks like whoever's been shorting Jade Tech is actually shorting Dr Anthony Soh, and is drawing E3 into it in the process.
Clearly, reading the articles and announcements about all the stuff that's gone down over this counter, there is more to it than a bunch of speculators getting hold of the stock. For example, the collapse of Australian stockbroker Opes Prime, and the investigation by the Securities Industry Council into the role played by OCBC Bank.
At the least Dr Soh could take comfort that he still has some money in the kitty, after his dream of taking over Jade Tech went down with Opes Prime.
Mark Laudi, who would like to extend an invitation to Dr Soh to appear on camera on Investor Central for a chat about what's been going on.
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
The stock formerly known as ei-Nets has been seeing a lot of volume, with 15 mln shares changing hands last Friday. Trading at 3 cents apiece that does not translate into a lot of money. But their announcement late March that a subscription agreement with Pacific Capital Investment Management Limited has been terminated.
Is it a coincidence that the venerable Dr Anthony Soh, who's also behind Jade Tech, is E3's President, and bought 280 mln shares in E3 Holdings worth almost S$10 mln just a month ago?
I haven't spoken to Dr Soh, and so I am not sure whether there is a relationship between the Jade Tech and the E3 Holdings announcements.
But it seems even if he cashed out this investment he still would fall short of the S$67 mln he needs to pay for the now-cancelled takeover of Jade Tech.
On the face of it it looks like whoever's been shorting Jade Tech is actually shorting Dr Anthony Soh, and is drawing E3 into it in the process.
Clearly, reading the articles and announcements about all the stuff that's gone down over this counter, there is more to it than a bunch of speculators getting hold of the stock. For example, the collapse of Australian stockbroker Opes Prime, and the investigation by the Securities Industry Council into the role played by OCBC Bank.
At the least Dr Soh could take comfort that he still has some money in the kitty, after his dream of taking over Jade Tech went down with Opes Prime.
Mark Laudi, who would like to extend an invitation to Dr Soh to appear on camera on Investor Central for a chat about what's been going on.
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
Labels: Anthony Soh, designated, E3, Jade Tech, SGX
Henry Paulson's plan to reduce the SGX's attractiveness
The US Treasury Secretary's plan to develop new laws for the financial services industry there may be long overdue. The Securities Act dates back to 1933, and while there have been many additional laws put into place sometimes it's just better to start anew. I don't want to debate the merits of Henry Paulson's plan here. But a perhaps unintended consequence may well be that smaller markets outside of the US, which have been positioning themselves as attractive bourses to list, will be under pressure.
Let's face it. We all love the Sarbanes-Oxley Act. Not because it straightens out shrewd American executives. It might do that, I'm not entirely sure. We love it because it makes the US such a damn difficult place to maintain a listing that even reputable companies are looking elsewhere to go public. According to figures produced by Harvard Law Professor and head of the Committee on Capital Markets Regulation, Hal Scott (quoted in USA Today), the US has been losing its attractiveness big time. In 1996, he says, eight of the 20 largest global initial public offerings were listed on a US exchange. In 2006, it was only one. Up till December 2007, not one of the top 20 global IPOs listed in the US. Similarly, 56 foreign companies abandoned their US listing in the first ten months of 2007, compared to 30 for all of 2006. Among them: Creative Technology and Australia's ANZ Bank.
Bad for them, good for us. Because it inevitably means markets such as the London Alternative Investment Market (AIM), as well as Hong Kong and Singapore, are more attractive listing destinations.
I'm not terribly concerned with the angst US exchanges may have over the prospect of equities and futures markets merging. This is already de rigueur in Asia. Just look at the merger between Singapore Exchange and Singapore International Monetary Exchange (SiMEX) in 2000 (!), and the merger between the Australian Stock Exchange and Sydney Futures Exchange to form the Australian Securities Exchange in December 2006. It's time those mile-driving, gallon-drinking and ounces-weighing Americans get over it and join the 21st century (maybe they'll consider switching to metric in the process).
My greater concern is that the United States already attracts a huge amount of capital, not because they're experts at handling money (for those that think they are, I have two words for you: sub-prime), but because of their sheer size. The statistics from the World Federation of Exchanges (page 33) bear this out. The US financial market has the inertia of a supertanker, even if it's a rusty one.
By contrast, the Singapore Exchange is a tugboat. If the supertanker modernises and becomes more agile, it is my hope that the SGX won't capsize in the wash.
Your thoughts?
Mark Laudi, who thinks it's quaint that the NYSE ditched fractions in favour of decimal calculations less than a decade ago.
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
Let's face it. We all love the Sarbanes-Oxley Act. Not because it straightens out shrewd American executives. It might do that, I'm not entirely sure. We love it because it makes the US such a damn difficult place to maintain a listing that even reputable companies are looking elsewhere to go public. According to figures produced by Harvard Law Professor and head of the Committee on Capital Markets Regulation, Hal Scott (quoted in USA Today), the US has been losing its attractiveness big time. In 1996, he says, eight of the 20 largest global initial public offerings were listed on a US exchange. In 2006, it was only one. Up till December 2007, not one of the top 20 global IPOs listed in the US. Similarly, 56 foreign companies abandoned their US listing in the first ten months of 2007, compared to 30 for all of 2006. Among them: Creative Technology and Australia's ANZ Bank.
Bad for them, good for us. Because it inevitably means markets such as the London Alternative Investment Market (AIM), as well as Hong Kong and Singapore, are more attractive listing destinations.
I'm not terribly concerned with the angst US exchanges may have over the prospect of equities and futures markets merging. This is already de rigueur in Asia. Just look at the merger between Singapore Exchange and Singapore International Monetary Exchange (SiMEX) in 2000 (!), and the merger between the Australian Stock Exchange and Sydney Futures Exchange to form the Australian Securities Exchange in December 2006. It's time those mile-driving, gallon-drinking and ounces-weighing Americans get over it and join the 21st century (maybe they'll consider switching to metric in the process).
My greater concern is that the United States already attracts a huge amount of capital, not because they're experts at handling money (for those that think they are, I have two words for you: sub-prime), but because of their sheer size. The statistics from the World Federation of Exchanges (page 33) bear this out. The US financial market has the inertia of a supertanker, even if it's a rusty one.
By contrast, the Singapore Exchange is a tugboat. If the supertanker modernises and becomes more agile, it is my hope that the SGX won't capsize in the wash.
Your thoughts?
Mark Laudi, who thinks it's quaint that the NYSE ditched fractions in favour of decimal calculations less than a decade ago.
To comment on this blog, go to the Investor Central blog.
Visit the brand new Investor Central website! for free SMS alerts to news about stocks in your watchlist
Labels: AIM, Henry Paulson, NYSE, Singapore Exchange
Commodities: the next market to collapse
If you thought tumbling equities market were merely correcting from a bubble, just wait for a big collapse in the commodities market. Not all commodities will fall, but there are clearly some which are defying fundamentals in the same way stocks did prior to the big bust. Longer term, I certainly buy the argument that commodities will be supported by growing consumer demand. But in the short term, my personal view is that the big gains have more to do with 30-something day traders with laptops and a trading account than strong demand.
The three commodities I want to focus on are oil, copper and crude palm oil.
Oil. The price of Nymex light sweet crude continues to hold above US$100 a barrel - inconceivable just a few years ago. Yet the US economy is slowing. Refineries aren't at full capacity. At 300 mln barrels, stockpiles are not just very high historically, but actually very normal by recent standards for this time of the year. The US has more gasoline (=petrol in standard English) in reserve than at any time in the last 15 years. 15 years!! Whether you believe those who are looking toward the inevitable drying up of oil wells in 50 years from now, or writers like John Cassidy who predicts a 50% decline in prices, the fact is that:
'Nuff said.
Copper. The three-month contract in London recently hit a record US$8,820 per tonne. On the one hand, you hear comments that stockpiles are at their lowest since October. But then you read "inventories in Asia are rising and Chinese demand is likely to fall further, after the world's top copper consumer imported so much of the metal it is now oversupplied". Further, "experts expect that the copper price will eventually be lowered to some extent as copper output will rise by some 850,000 tonnes when new mines are put into operation in major copper-producing countries such as Chile in the second half of this year". If that's not enough, back in June last year, when London stockpiles were around 120,000 tonnes, the price was around US$7,415. Now with stockpiles up to around 200,000 tonnes, we're supposed to believe that the price at US$8,820 is justified? Come on!
Crude Palm Oil. Prices have recently come down from records around 4,000 Malaysian Ringgit per tonne. And about time. Stockpiles are near records (1.88 mln tonnes in January). There is a limit to how much all these can be explained away by long-term demand, geopolitical issues, declines in the US Dollar, and all the other reasons financial journalists usually clasp for when writing their stories. Sooner or later, the house of cards crumbles to its foundations (=fundamentals).
As I mentioned, not every commodity is in the "fundamentally overpriced" category. A report in the New York Times says global wheat stockpiles are at 30 year lows and US stockpiles at 60 year lows. Demand is growing while drought is hitting supply. There are plenty of reports from around the region that support this view. These are flowing through to the consumer in the form of higher prices.
People like my good friend Jim Rogers keep talking up commodities. And he'll probably be right in most cases, and in the long run. But you can say that about equities too. Just like equities, I won't be surprised if the rout spreads to the commodities market in the meantime.
Mark Laudi, who was recently told by an executive in the oil industry that it still costs only US$25 a barrel to produce that stuff.
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ArchivesThe three commodities I want to focus on are oil, copper and crude palm oil.
Oil. The price of Nymex light sweet crude continues to hold above US$100 a barrel - inconceivable just a few years ago. Yet the US economy is slowing. Refineries aren't at full capacity. At 300 mln barrels, stockpiles are not just very high historically, but actually very normal by recent standards for this time of the year. The US has more gasoline (=petrol in standard English) in reserve than at any time in the last 15 years. 15 years!! Whether you believe those who are looking toward the inevitable drying up of oil wells in 50 years from now, or writers like John Cassidy who predicts a 50% decline in prices, the fact is that:
"...crude's rise despite swelling inventories highlights the disconnect between supply and demand fundamentals and the current, speculator-driven price.
"It [early March inventory report] is a ridiculously bearish report," said Stephen Schork, editor of The Schork Report.
"We have major concerns regarding the economy in the United States, rising supply, falling demand. Why is crude oil trading at over $100 per barrel? It makes no fundamental sense."
'Nuff said.
Copper. The three-month contract in London recently hit a record US$8,820 per tonne. On the one hand, you hear comments that stockpiles are at their lowest since October. But then you read "inventories in Asia are rising and Chinese demand is likely to fall further, after the world's top copper consumer imported so much of the metal it is now oversupplied". Further, "experts expect that the copper price will eventually be lowered to some extent as copper output will rise by some 850,000 tonnes when new mines are put into operation in major copper-producing countries such as Chile in the second half of this year". If that's not enough, back in June last year, when London stockpiles were around 120,000 tonnes, the price was around US$7,415. Now with stockpiles up to around 200,000 tonnes, we're supposed to believe that the price at US$8,820 is justified? Come on!
Crude Palm Oil. Prices have recently come down from records around 4,000 Malaysian Ringgit per tonne. And about time. Stockpiles are near records (1.88 mln tonnes in January). There is a limit to how much all these can be explained away by long-term demand, geopolitical issues, declines in the US Dollar, and all the other reasons financial journalists usually clasp for when writing their stories. Sooner or later, the house of cards crumbles to its foundations (=fundamentals).
As I mentioned, not every commodity is in the "fundamentally overpriced" category. A report in the New York Times says global wheat stockpiles are at 30 year lows and US stockpiles at 60 year lows. Demand is growing while drought is hitting supply. There are plenty of reports from around the region that support this view. These are flowing through to the consumer in the form of higher prices.
People like my good friend Jim Rogers keep talking up commodities. And he'll probably be right in most cases, and in the long run. But you can say that about equities too. Just like equities, I won't be surprised if the rout spreads to the commodities market in the meantime.
Mark Laudi, who was recently told by an executive in the oil industry that it still costs only US$25 a barrel to produce that stuff.
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Labels: copper, CPO, crude oil prices, crude palm oil, gasoline, stockpiles, wheat
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