Friday, August 03, 2012

How NOT to open a bank account with AmBank?

Date - Aug 2, 2012 (Thursday)
Time - about 130pm
Place - Johor Bahru, Jalan Wong Ah Fook Branch
Attended by Shirley (personally) and Mr Tan Hiang Tak (Michael) (by phone) - District Manager, Southern District 4

My intention - to open a savings account to be used to service a housing loan

What did I bring to the bank? I brought myself, Malaysian identity card (I/C), Malaysian passport and money.

After Shirley reviewed my docs, she asked me why I need to open an account in Johor Bahru (JB) when the address on the I/C shows that I am from Kuala Lumpur (KL).

I told her I am working and staying in Singapore and have just entered into an option to buy a property in JB. She then asked me for work permit or Permanent Resident card or any document to prove that my place of residence is in Singapore.

I asked her why the need to show that I am residing in Singapore. She told me that it would not be appropriate for someone with a KL address to open an account in JB. So I ask why not?

I offered some possible resolutions to our impasse. I offered her my lawyer's details for her to confirm my intention. She said no. I asked Shirley whether she could talk to AmBank loan officer who is currently reviewing my loan request. She said no again.

My mind is trying to find a single possible valid reason for someone staying in Jurong being refused to open a bank account in Tampines.

Is it because the Malaysian banks' computer systems are not fully linked? Are they worried that a "naughty" customer would be able to open accounts all over Malaysia and they could not cross check each other branch's database? (By the way, I wish to reiterate that I am trying to open a savings account and not a current account. It is very difficult to cheat someone with a savings account.)

She added that I could come AGAIN on another day with perhaps, my utility bill (for example) showing my name against the address.

I asked to see the Branch Manager. I was told he is not around. I asked to speak to him over the phone. I was duly connected to a Michael Tan. I appealed to him for a waiver. He said he is unable to yield to my request and offered to ask Shirley to send an email to their Head Office for permission. I was asked to wait for the request to go through.

I waited for ONE hour.

At the end of that one hour, Shirley informed me that Head Office has turned down my request.

What am I seeking in this open letter?
a) Please explain the need for proof of residence or some other docs to support why one need to open an account in a certain location.

b) What is your standard response time for Head Office to reply to an email request from a branch?

I am really curious to learn the reason for this requirement. The requirement for proof of residence is so important to the Bank that they could reject your request to open an account. This open letter could also many other prospective customers to understand your policy.

I actually went straight to my lawyer and duly informed him to inform future Malaysians staying in Singapore to bring their respective proof of residence.

Saturday, February 18, 2012

two tales of two largest S'pore insurance entities

In one corner, we have a report by Magdalen Ng on Great Eastern on Feb 15's ST. In the other corner, I read a report by Christopher Tan on NTUC Income on Feb 17's ST.

To Magdalen, Singapore's largest insurer is Great Eastern. Whereas Christopher reported NTUC Income as the largest composite insurer (ie. offering both life and general insurance) in Singapore.

Magdalen's article carried a headline with a negative tune and focused on the double digit drop in Q4's net profit and consequent 24% decline in full year profit to $385.7m. Magdalen did not report on GE's overall sales turnover. Christopher's headline is positive and focused on the record turnover of $4.2b achieved. Christopher did not report on current profit achieved but gave an indication on its profitability by telling us about the $200m profit secured last year.

Magdalen reported on factors contributing to the decline in profit. Terminologies used - "weak investment climate", "unrealised mark-to-market losses" etc. Both GE's Chief Executive and Chief Financial Officer tried to tell us that there is light at the end of tunnel in the form of "resilient performance despite...", "operating and financial discipline", "ride volatility", "total weighted new sales.. improved 10%".

As Christopher may understand that profitability is not the utmost priority to a cooperative and that as a NTUC cooperative it must make an impact to society, his piece focused on the transformation achieved by the new Tan Suee Chieh after taking over from the old Tan Kin Lian. Premiums collected doubled to $4.2b over 5 years. Profit increased form $96m in 2006 to $200m last year. Rebates of $4.2m to be returned to policyholders.

Despite all of the above, there is definitely a lot of monies involved in the insurance industry in Singapore as represented by these two insurers.

Sunday, December 04, 2011

Can you sell properties like that?

i am referring to private properties

My brother and I walked into a property showroom in Geylang. He got interested in a unit and so I lent my ears to the fantastic arrangement of buying a property.

I thought the arrangement should be - I like what I see at the price that I like, I sign the option to purchase and pay the 5% down payment first.

But the property agency ("Agency") and its agents ("Agent") have a different way of selling properties for the Developer/their client ("Developer"). Here is the process as I understand it. If any property agent is reading this, please feel free to correct me if I am wrong.

1. The Agent stressed that we have NOT officially launched the project and the price list is as SUGGESTED (only tentative/indicative) by Agency.

2. If we are interested in a particular unit, we will write a cheque (5% of SUGGESTED price) to the Developer's account to DEMONSTRATE our interest in that unit. (The Developer/Agency is asking prospective buyers to "shown hand" first in a poker game.)

3. After we wrote the cheque, Agency will put a small orange sticker on that unit. For some units, there were 3 or 4 stickers. Agents will use that "stickered" presentation to demonstrate to the next prospective buyers on the level of "hotness" the project is accumulating.. (I asked the Agent - who verify whether the stickers represent real interest.)

3. There will be a specific launch date, launch time and balloting time as determined by the Developer/Agency. (I am not sure when they decide on this. But if I were the Developer, I guess I will only LAUNCH when my agents have secured 3 or 4 cheques for each unit on offer.)

4. Half an hour before 11.15am on launch day, the Developer releases their FINAL price list. (If I were the Developer, I will obviously launch at a higher price given the many cheques/stickers collected.)

5. Agent will then attempt to call those who have shown their interest with their cheques. Agent's intention is to seek confirmation as to whether to put my brother's cheque into the "lucky draw" to be final purchaser of the unit.. ie. assuming more than one party has shown a willingness to proceed at the HIGHER Developer's price list.

However, if my brother decides not to proceed at the new Developer's price, we have the right to withdraw and the Agent will return the cheque with no further obligation.

6. But should my brother decides to withdraw AFTER being successful in the ballot, a penalty is payable.

7. My brother decides to proceed with the process. Agent sent a SMS to confirm our intention. He affirmed with a return SMS.

What if the prospective buyer did not received the phone call/SMS, Agent said the cheque will be withdrawn from the balloting process. (True enough.. after the balloting, we witnessed a family disputing viciously/vehemently with their Agent/Agency on the lost chance of getting a unit. For some reasons, they did not received any phone call.)

8. Balloting exercise subsequently ensue in the presence of anybody who manage to squeeze into the showroom.

9. For my brother's unit, he was duly informed of being the successful purchaser without any competing interest.

10. Normal sales & purchase arrangement follows. Bankers, lawyers, agent, CPF monies, talking about tiles.. follow.

Besides the above, what are my other concerns?

  1. Does any Authority need to approve the process of sale?
  2. Can the Developer/Agency vary the details of the process during the "soft" launch?
  3. What is "soft" launch?
  4. Should the sales process be explicitly presented somewhere in the showroom?
  5. Our Agent did a good job explaining the process to us. But it is not in black and white.
  6. I find it very uncomfortable having to write a cheque to show my interest. I thought a cheque is a promise to pay. You can be sued if that instrument is dishonoured.
  7. Isn't Developer and Agency the same party?


Saturday, November 05, 2011

Paya Lebar site - Damn if you award, damn if you don't

economics of land & building
Situation - Urban Redevelopment Authority (URA) rejected the only bid from a UOL Group-Singapore Land consortium for a commercial plot in Paya Lebar. Reason given -price being 'too low' at $565.74 psf per plot ratio (psf ppr). Compared to the last awarded site in that area in April, it is actually 35% lower than the $872.16 psf ppr top bid in April.

Arguments for and against the award of the tender as follows:-

  • The rejection would delay the government's long-term plans to decentralise commercial activity outside the CBD and help ease business costs and reduce congestion.
  • URA has to uphold the interest of the nation ie. the secure the maximum disposal value for nation's assets.
  • URA has just wasted the bidders' resources in producing a bid without the reserve price being made public prior to the start of tender assuming that price is the sole criteria in deciding an award or otherwise.
  • The UOL-SingLand consortium defended their bid price after taking into consideration the prevailing volatile market, unfavourable economic outlook, site's mixed use configuration and the site being technically more challenging as the plot is split into two triangular portions by a section of Geylang River.
  • URA may think that there is less urgency NOW for the development of new office space on the island given the ample pipeline supply of over eight million sq ft net lettable area. (But doesn't URA know the stats on office supply and "economic feel" before it put the land up for tender?) 
  • Price is not the sole criteria for URA. In late 2007, URA had actually awarded a plot at Marina View at 45% below the price for the next-door plot awarded a few months earlier against a backdrop of escalating office rents then. (So may we know exactly why you have rejected the bid?)
  • Had URA awarded the second Paya Lebar plot to UOL-SingLand at a much lower price than the earlier plot, it would put a downward pressure on the rental rate in the area as it can make do with a much lower rental or pricing level. Tenants could also benefit from the lower rental rates.
  • Had URA awarded the second Paya Lebar plot to UOL-SingLand, the earlier consortium comprising of Low Keng Huat, Guthrie and Sun Venture Commercial who had paid the higher price in April, would definitely not be happy. (But on willing buyer, willing seller basis, who could they blame?)
  • Had URA awarded the second Paya Lebar plot to UOL-SingLand at a much lower price than the earlier plot, it would induce a systemic shockURA is artificially seen to have helped prop up the market. Good and bad to this, depending from whose point of view you are looking at this.
  • But what is/are the criteria of assessing a tender of a site in the "confirmed" list? There are two lists where URA lists sites available for sale. The "confirmed" list consist of sites with no reserve price. The "reserve" list consists of sites with the respective minimum price acceptable to the state being made public. A site on the "reserve" list may send a signal to the market that there is less urgency for its development as compared to those on "confirmed" list. So is it urgent or not urgent for URA to develop the Paya Lebar site or is it just money not enough?
Source - Business Times and Straits Times - Nov 5, 2011.

Sunday, July 03, 2011

Are midwifes responsible for S-chips listed here?

With more oversea-listed Chinese companies (S-chips) being rapped for accounting irregularities globally and particularly in Singapore, Mr Max Loh, Ernst and Young's (E&Y) new country managing partner for Singapore, says that the firm is strengthening its client acceptance procedures. It is a set of criteria to decide whether to accept or not to accept a prospective client, particularly on those entities en-route for public listing.

Mr Loh, in my opinion, correctly added that improving Chinese companies' corporate governance does not just fall strictly on the shoulder of accounting and auditing profession.

Thus here are the key questions I am asking for this article. Firstly, who are key expertises ie. midwifes, needed to identify, gestate (ie. packaging) and subsequently get them listed (ie. born) at a particular stock exchange? Secondly, what are their responsibilities for pre- and post-delivery?

Besides the accounting and auditing profession, the other midwifes are lawyers, corporate bankers, capital market specialists, the PR specialists and finally the gatekeeper ie. the security exchange. During the good times of S-chips, there are people going around in China talking and identifying companies for incubation and grooming to be listed. Once both parties agree to work towards listing, the rest of midwifes are brought in to do a makeover ie. make it looks good enough to at least last till the first day of being listed.

Once the entity is listed, most of the midwifes' responsibilities expire except for the exchange and auditor. So when S-chip bubbles imploded across the world's exchanges, the minority shareholders ended up with massive losses. When the minority shareholders look for people who should be held accountable, they were stone-walled with the famous punchline ie. "Buyers beware". In the meantime, the midwifes enjoy their bounty. In recent years' as the S-chips' gravy train has come to standstill, many of these midwifes have shifted their operations to more fertile grounds, geographically or to another trade all together.

Should "Buyers beware" be our first and last line of defence? These midwifes were delivering exactly what the investors were craving for ie. to invest in any company with the word "China" in its name. It is observed that no one from Wall Street has been held responsible and prosecuted till today for financial crisis caused by property meltdown in US.

Perhaps the financial market is a stage where every man and woman plays its part, the outcome is the responsibility of no single person but all participants.

Wednesday, June 29, 2011

Lunch is still on for SGX!!

a building which will house many remisiers?
Mr Bocker, you have tried to buy ASX on behalf of Singapore but failed. That was certainly a bold attempt which I, with my humble knowledge of markets and financial instruments, am fully appreciative of. Everyone knew that SGX would face many hurdles and objections but it definitely worth a go.

I have a vague idea that you have spent millions on hardwares and softwares in an attempt to increase capacity and processing speed for transactions. I have yet to see the potential of that upgrades being translated to the bottomline.

You then tried to take away the 90-min lunch break of hundreds of remisiers and supporting staff but failed again. While you may have a target to boost the sagging volume of SGX by lengthening trading hours at the expense of lunch, you have perhaps misunderstand the value of lunch time in Singapore.

Firstly, many of them did not have a proper breakfast, thus lunch break is really something for them to look forward to. (yes.. a cheeky one) Secondly, lunch is perhaps when most of the business is done in this Asian society. Thirdly, is the pre- and post-lunch so overwhelming now that we need to spread the overflowing transactions into that special 90 minutes of the day? I don't think so.

Mr Bocker, you have definitely scored on trying. But let's try to lock in some success! Cheers!

Sunday, June 26, 2011

Is SIA flying out of idea?

By the way its shareholders have structured the company, SIA has a single nature of business ie. to focus on transporting human and cargo. On a more subtle and yet important level, SIA (as also in all govt-linked entities) must represent Singapore as a symbol of excellence with a profitability level to match.

In today's Straits Times, it is reported that SIA is again the 2nd best airline in the world for the last 3 years. SIA even lagged behind in rating for its renowned inflight entertainment system.

SIA has been where it has been over the last 20 years based on a strategy that is deemed impossible as per Michael Porter's Theory of Competitive Advantage. SIA has been able to beat its competitors with innovations and service standards. Innovations and service standards have allowed SIA to achieve highest revenue per passenger delivered at a lowest passenger unit cost. Its passenger unit cost is said to be even lower than that of budget airlines. But the key limiting factor to SIA's growth, in my humble opinion, is the landing rights agreed between two countries. But Airbus A380s helped SIA overcome this limitation by allowing SIA to carry largest number of passengers on the more profitable routes.

Should SIA focus on mergers and acquisition to fuel its growth? SIA does not aim to be largest airline in the world but rather excel in profitability and service quality. But having said that, SIA did attempt some M&A but failed miserably. May I cite ANZ? I am still not sure about the 49% in Virgin but as per SIA's books, the investment has been written off long time ago. We also tried to buy a Chinese airline, an Indian airline.. etc but BLOCKED.

But SIA must continue to be ahead of the curve!! But how?? Under the new CEO, SIA has announced recently that it will enter the budget airline foray officially and wholeheartedly. Could it be a pre-response to AirAsia's massive order placed with Airbus recently? Did SIA hear in the grapevine that AirAsia has a plan to conquer the budget airline world? We will wait and see as the story continues to unfold.

Monday, May 02, 2011

Mapletree Log and Frasers Centrepoint Trust compared

In Business Times dated April 22, the two entities' performance were reported.

Mapletree Logistics Trust
- increase in amount distributable to $37.54 million for quarter ended March 31
- distribution per unit is 1.55cents (1.5 for same quarter last year)
- This represents a yield of 6.8% assuming the share price of 91.5cents and constant distribution per unit over 4 quarters

Frasers Centrepoint Trust
- net quarterly property income dropped 1.3% to $20.1 million
- distribution per unit is 2.07cents (2.06 for same quarter last year
- total distribution for half year to date is 4.02cents (3.97cents a year ago)
- This represents a yield of 5.4% assuming share price of 150cents and constant distribution per unit for remaining 6 months of financial year

Sunday, November 14, 2010

My questions on Supplementary Retirement Scheme (SRS)

time to spend money? donate

If I have not opened an SRS account, should I?

My simple is YES (and quickly). I opened the account on the basis that I wish to lock in on the current mandatory retirement age before I can make my first withdrawal. There are signals from the government that the official retirement age could be raised. While we won't see the kind of riots and unrests in France replicated here in Singapore, personally we need to take that in consideration.

The much touted immediate benefits of tax savings from deposits into SRS would depend on your tax bracket and availability of taxable income / free cash.

The usefulness of an SRS account would also depend on the age group. During the early part of our working life, we are living in a stage of intense spendings with little of  savings ie. repaying study loans, travelling, dating, getting married, babies, home renovation, parents etc etc Thus should we need to call upon some monies for emergency reasons, your savings in SRS is an option but an expensive one (penalty of 5% and immediate taxability of amount withdrawn).

Thus you would have noticed that my recommendation to open the account is different from recommending regular amount to be deposited.

I would think twice before using the SRS account to house my investments. Please check on the service charges that the bank may levy. Given my experience with the CDP account ie. $10.70 per transaction (I think) regardless of the nature of transaction (I think), it is very expensive indeed when I am just receiving dividend.

Lorna Tan cited the example of yearly contribution of $11,475 to an SRS account for 20 years, this would translate to $2960 monthly withdrawal for 10 years ASSUMING you are able to manage your nest age to generate a return of 4% per year. Governments of the world, fund managers and insurance companies are all trying very hard to do the same, if not better.

Buyers beware, always.

Reference - Lorna Tan, "Saving a little today will go a long way", Sunday Times, Nov14, 2010.

Sunday, July 25, 2010


 it was vacant many years ago

In my Saturday's Business Times, 4 REITs' results were reported. May I summarise the results for quarter ended June 30, 2010 as follows:-

1. CapitaRetail China Trust (CRCT)
Gross revenue - $29.6m (-2.8% compared to Q2 last year)
Net property income - $19.8m
Distribution per unit (DPU) - 2.07cents
Share price - $1.26 (as of Friday's closing)

2. Ascott REIT
Gross revenue - $44.4m (+3% compared to Q2 last year)
Net property income - $11.6m ($11 in Q2 last year)
Distribution per unit (DPU) - 1.87cents (1.79cents in Q2 2009)
Share price - $1.23 (as of Friday's closing)

3. Frasers Centrepoint Trust (FCT)
Gross revenue - $30.7m (+45%)
Net property income - $16.3m (+35% compared to similar quarter last year)
Distribution per unit (DPU) - 2.07cents (1.97cents in similar quarter last year)
Share price - $1.39 (as of Friday's closing)

4. Ascendas India Trust (a-iTrust)
Gross revenue - $30.9m (+4% on year on year basis)
Net property income - $18.9m (+3% on year on year basis)
Distribution per unit (DPU) - 1.66cents (-19% compared to similar quarter last year)
Share price - $0.995 (as of July 22's closing)

P/S - Usual disclaimer apply.

Monday, July 12, 2010

An interesting remark on HK property

Andy Xie, an independent economist said on CNBC today, "HK property is actually more risky than China."

Bernard Lo of CNBC was taken aback and he queried why it is so.

Andy said property owners in Hong Kong, who are hanging on to their property, are hoping for some stupid and wealthy mainlanders to come and pay them millions of dollars for their CONCRETE BOXes.

I am wondering whether the same phenomenon is also happening in Singapore.

Saturday, June 05, 2010

General Magnetics - a lesson yet to be learned?

jakarta traffic from my taxi window

General Magnetics (GM) conducted its first AGM as an unlisted firm last week. Joyce Hooi of Business Times observed that for an unlisted firm's AGM, it was really well attended but with so much outpouring of outrage by its shareholders.

GM was listed 20 years ago as a cassette tape maker, "survived the death of the Walkman age, struggled through the Discman decade as a recordable CD and DVD maker and finally succumbed to the iPod era".

It made losses by the millions since the turn of century and was put on the watchlist in 2008 before being delisted in April this year.

Why are there so much outpouring of outrage by shareholders at this stage? Some shareholders have held on to their shares years after years for the last 10 years despite the annual warning bells of losses being announced. Why lament the delisting?

In fact, they were not outraged by the delisting but rather by the fact the minority shareholders could not force the majority/management to liquidate all remaining assets and distribute the net proceeds to all shareholders. Why would a shareholder buys shares in company and hope the company goes into liquidation?

Towards the end of listed status, the shares had traded so far below net tangible asset value. For those who may have bought at those prices, they are clamouring for the company to be liquidated.

Learning point - Are you holding on to shares of companies, that in recent years, have been making significant losses year after year (eg. Creative)? If so, are you doing anything about it?

Thursday, March 04, 2010

Prudential buying AIG?

Prudential's market capitalisation - about GBP12.3billion (about USD18.5billion)

Purchase price - USD35.50billion

The biggest reason for Prudential to buy - rapid increase in access to a rapidly growing Asia market.

How to pay?
USD$25billions in cash and the rest in Prudential shares

Where to find USD$25billion cash?
- rights issue of USD$21billion ie. issue more shares to existing shareholders
- borrow USD$5billion

Impacts and consequences?
Marcus Barnard said - 3 times increase in the number of shares with only 60-70% increase in contribution from AIG (for now) (thus massive dilution expected for now)
Is Prudential buying at too high a price given the current weak European currencies against USD?

Thursday, February 18, 2010

Gold still glitters?

Global demand for gold dropped 11 per cent last year, but the the gold price gained 35 per cent - the biggest annual rise in three decades . Why?

  • Just like oil priced in USD and its weakening outlook, the sellers of these commodities have to asked for higher prices in USD to compensate for its weakness.
  • It is an alternative perennial store of value against expectations of long-term inflation as the world economy emerges from recession. (Is this still valid?)
  • Just pure madness when there are millions of tonnes of gold sitting idle with central banks of the world.
What do you think?

Saturday, January 09, 2010

Singapore, SGX and our neighbours

For year 2010 in Hong Kong / Shanghai / Shenzen
South China Morning Post reported a few days ago that Hong Kong may raise more than HK$300 billion (about SGD60bio) this year through initial public offerings albeit Shanghai and Shenzhen will do better, according to estimates by PWC. PWC forecasts there will be 60 listings this year in Hong Kong. HK$300 billion would represent a 23 per cent increase from last year.

For year 2009 in Hong Kong / Shanghai / Shenzen
- 73 IPOs in Hong Kong last year raised HK$243.7 billion (far exceeding PwC's predictions at the beginning of the year of HK$100 billion).
- Shanghai and Shenzhen bourses raised 185.6 billion yuan (HK$210.9 billion) combined.

For year 2009 in Singapore

- $2.84 billion were raised by the 23 IPOs (about 20 times LESS than Hong Kong)
- $8.29 billion from 17 listed firms delisted, called it a day and went private (due mainly to Chartered Semicon, SPC and CK Tang) (Source - BT Jan 4, 2010)
- Turnover in structured warrants hits 4-year low. Average daily volume last year plunged to $43m from $84m in 2008. (Source - BT Jan 8, 2010)

Countermeasures in motion:-
- new CEO for new ideas?
- Jan 7, 2010 - SGX proposes Special Purpose Acquisitions Company scheme and changing its listing criteria.

We will be watching as the new CEO of SGX gets to work.

Wednesday, August 19, 2009

Warren Buffet - Giving away his wealth

My last posting on Warren Buffet was on how he made his money. In this posting, I wish to share with you his well-thought way of giving away his wealth.

His Philosophy on Wealth and Distribution
Buffett has donated much of his wealth to the Gates Foundation ie. 85% of Berkshire stock, worth about $40 billion back in June 2006.

Why donates away most of his wealth?
As he states: "The idea of passing wealth from generation to generation so that hundreds of your descendants can command the resources of other people simply because they came from the right womb flies in the face of a meritocratic society."

Buffett believes that children should not inherit money just because of the lottery of their birth. He says children should be left "enough money so that they feel they could do anything, but not so much that they could do nothing."

How do he and the Gates want the Foundation to manage the money donated?
  • Together with Bill and Melinda Gates, the wealth will be used to try and fulfill shared goals of eradicating major diseases like malaria and HIV/AIDS in developing countries, and improving high school education standards in the U.S.
  • The monies must all be spent over 20 years on health and education.
It is one of the few philanthropic donations where the money will run out relatively quickly, contrary to the self-interest of foundation bureaucracies to survive as long as they can. He does not want the managers of the Foundation to become big fat cats ie. to preserve their cushy jobs and thus holding back on putting the money to good use.

Buffett has not set up a foundation nor paid for buildings at hospitals or museums to try to perpetuate his name.

"Buffett's ideal was a world in which winners were free to strive, but narrowed the gap by helping the losers," writes Alice Schroeder.

Source - Alice Schroeder, Buffett: Rock Star of American Capitalism, Knowledge at Wharton

Monday, August 17, 2009

Do you still trust your bank and banker with your money?

I have just read an article on Business Times entitled "Restoring Trust in Financial Institutions" (FIs) reflecting the views of Mr Simon Newman, Managing Director, AVIVA Singapore.

To restore something means you must have lost it first and then looking to find and put it back. So have we the investing public lost trust in FIs? And the FIs are now trying to restore or regain the public's trust and confidence?

The collapse of structured products amid allegations of massive mis-selling by FIs and their commission-powered sales representatives was the main contributor to that loss of trust.

Can FIs regain that trust of the consumers by simply requiring them to print the sales brochures in all 4 languages (which of course, will be peppered with tons of disclaimers in all 4 languages) and to follow MAS-issued Guidelines on Fair Trading? Mr Newman said FIs need to go beyond merely fulfilling their legal obligations (yes, I agree), (but also) to truly engage consumers and meet their evolving needs in this challenging and volatile economic climate (blah, blah blah). Huh? Is this the panacea to people who have lost millions of dollars of life savings? Let me share with you a parallel example.

The travel industry too was generally in doldrum in the last few months due to the financial crisis. It was later compounded by the outbreak of H1N1. Many who have pre-booked their holidays wanted to cancel and seek refund. Some travel companies are ok to refund but with heavy penalty. The question here - what would you have done if you were running a travel agency?

An industry player opined the industry as a whole should have adopted the position to refund. Otherwise the consequence would be consumers would be more fearful of future early commitment (thus impairing your long term business viability) and prefer last minute self-arranged travels.

Bottomline - When self interest is the foundation of every party's action / decision, the debate will continue. Or given time, the pain will ease and trust will return.

Sunday, August 16, 2009

Who is Warren Buffet?

He is the chief icon of Bershire Hathaway. About 30 years ago, Buffett spent $15.4 million to buy 46% of Berkshire (a textile entity) including 3% for his wife Susan, paying an average $32.45 per share. With Berkshire shares recently traded around $87,200, Buffett has grown his wealth nearly 3,000-fold in some 30 years.

How did he do it?
Technically, he learned this massive capital accumulation discipline from Benjamin Graham, investment GURU of Columbia University in 1951.

Buffett's approach to investment involves using seventh grade math and common sense to analyze a company's underlying economics ie.

1. “buying a business not a stock”,
2. “ignoring the fluctuations of the stock market”; and,
3. most importantly, Graham’s main principle “maintaining a margin of safety.”

In frothy bull markets, Buffett is fearful while others are greedy, taking profits on some holdings and piling up the cash generated by businesses. Example - Berkshire sold its stake in PetroChina for $4 billion in 2007 amid rapidly rising oil prices and the craze for investing in emerging markets, having bought it in 2002 and 2003 for $488 million.

Then, during severe stock market or industry declines, he is greedy when others are fearful, buying good businesses at attractive prices. Example - Berkshire secured favourable terms in deals with Goldman Sachs and General Electric during last year's stock market panic.

Buffett's three rules of portfolio management are:-
1. Don't lose money;
2. Don't forget rule one and;
3. Don't go into debt.

Buffet’s personal traits required do the job:-
  • His focus,
  • an intellect which is a perpetual learning machine,
  • rationality,
  • an ambition from childhood to become rich,
  • family is secondary,
  • he attracts talented people to work, partner and deal with him due to his honesty, fairness, letting them do their job without interference and crediting them for success and;
  • he freely acknowledges making several errors.
Source - Alice Schroeder, Buffett: Rock Star of American Capitalism, Knowledge at Wharton

Monday, August 10, 2009

Creative Technology - Can see any light yet?

Creative Technology reported a net loss of USD$14 million for its fourth quarter ended June 2009, including a provision of US$12.8 million for potentially unrecoverable loans due from a former subsidiary, compared with a net profit of USD$116.2 million a year ago.

Total loss in FY2009 is USD$137.9 million, compared with net profit of USD$128.2 million in FY2008. The previous year's profit was mainly due to a gain of USD$147.9 million from the sale of Creative's headquarter office and restructuring charges of USD$11.2 million.

I am sure its management knows that it is in need of new ideas that are sustainable. There was a rumour that there could be some sort of a tie up with THX. Whatever it is, the lifeline has to come really soon. Otherwise, the only card left is new Zii platform.

I don't know what it is but I hope for the sake of Singapore's entrepreneurial spirit and Mr Sim's good spirit, the company would turn black soon.

Wednesday, July 22, 2009

SGX welcomes new CEO

Magnus Bocker is replacing Hsieh Fu Hua as chief executive officer of the Singapore Exchange (SGX), the company announced last night.

His profile highlights his fantastic track record in business development ie. putting together small bourses and finally selling the consolidated entity to a big boy. This is in addition to the fact he took his wife's name. (I cannot understand the need for that.)

Anyway back to my intention of this blog piece.. I would like to raise the question as to his competence in the area of control, maintenance, supervisory roles of a stock exchange.

We certainly need a SGX that would play an even hand to its shareholders and yet market friendly to the listed companies and big and small investors (hopefully not always in this order of preference).

Mr Goodyear, gone So soon?

I just read that Singapore's Temasek Holdings Mr Charles (Chip) Goodyear, the CEO designate, has decided not to become the chief executive of the state investment firm. Reason? Due to differences on certain strategic issues that could not be resolved.

Mr Goodyear had been appointed a member of the Temasek board on February 1, 2009 and CEO-designate, a month later. He resigned on July 21, 2009.

Too short a burn-in period for the candidate to adapt to the economic and political culture and structure of Singapore? Well isn't the candidate supposed to have been selected after an extensive and intensive search for such a high profile and important position ie. managing the wealth of a nation earned with blood and sweat over two or three generations? Or perhaps the portfolio that is supposed to be taken over way too "complex" to digest ie. handover?

Whatever it is - All the bests to you, Mr Goodyear. Perhaps it is just not meant to be.