Author Topic: The other side of the coin  (Read 178007 times)

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
The other side of the coin
« on: June 30, 2016, 05:32:11 AM »
Cautionary tale of research reports ~ 27 Feb 2016

Sun Tzu's Art of War  孫子兵法之聲東擊西

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #1 on: June 30, 2016, 05:45:46 AM »
"Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend and step off before it is discredited." - George Soros

How billionaire George Soros profited from Brexit's 'Black Friday' ~ 28 Jun 2016

Billionaire Soros ‘long’ on pound before vote on Brexit ~ 28 Jun 2016

英国脱欧李嘉诚资产缩水11亿美元 巴菲特更惨 ~ 27 Jun 2016

George Soros, the billionaire who 'broke' the Bank of England, wins big from Brexit ~ 25 Jun 2016

George Soros: Brexit and the future of Europe ~ 25 Jun 2016

Why Soros’ bearish bet is hardly far-fetched ~ 13 Jun 2016

6 events that could make Soros a winner ~ 13 Jun 2016

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #2 on: June 30, 2016, 05:51:43 AM »

'The end is coming,' says Ron Paul
Amanda Diaz   | @CNBCDiaz
9 Hours Ago
COMMENTSJoin the Discussion

The historic U.K. vote to leave the European Union is a sign of a major global meltdown, not just a watershed that marks the end of a unified continent, former Rep. Ron Paul says.

"I think [the EU] will become nonfunctional," Paul told CNBC's "Futures Now" on Tuesday.

"It really is coming to an end. It doesn't mean tomorrow or the next day, but people are going to be really unhappy. The end is coming, but it isn't coming because of the breakup," he added.

Paul attributed the fallout to "bad fiscal policies" around the globe. He said that as long as interest rates remain low, the markets will remain in bubble territory.

"I think what everyone is looking at is there was a vote, an important vote and it went differently than expected and it sent shock waves through the markets, but I think the concentration is on the wrong issue," the former Libertarian and Republican Party presidential candidate said.

Instead, he said, what has caused so much turmoil is what happened before the recent declines.

"What has been preceding this situation that we have throughout the world and this country as well is artificially low interest rates. It causes people to make mistakes in buying bonds," he said.

All major U.S. indexes fell back into negative territory for 2016 on Friday and Monday after the Brexit vote, getting a twinge of relief on Tuesday. Still, Paul expects a heap of market weakness to come.

"Catastrophe doesn't come unless there's something that precedes it, and what sets the stage is monetary policy, artificially low interest rates, zero interest rates," he said. "There's a lot of instability still out there, and this hasn't been corrected yet. I don't think it's going to correct easily," he said.

"We are running out of steam.

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #3 on: June 30, 2016, 05:53:38 AM »

Don't Worry, You Are Not Alone: "No One Knows How To Price Brexit" Citi Admits

Tyler Durden's picture
by Tyler Durden
Jun 29, 2016 7:12 AM
No idea how to trade Brexit, and simply following the momentum-driven crowd which in turn is trading on hopes of central bank intervention? Don't worry, you are not alone. As Citi admits "No one knows how to price the Brexit scenario going forward."

Here is Citi's William Lee "clarifying" the prevailing market cluelessness:

The UK vote to leave the EU surprised almost everyone, especially market participants. It left unprecedented uncertainty about future economic and political relations between the UK and the EU.

From the US perspective, the market selloff has been large but orderly. Indeed, global markets began to stabilize today, after two days of probing for equilibrium prices and their implied trajectories going forward.

Whereas spot prices have stabilized, there appears to be little conviction among traders and other financial market participants about the course of exchange rates and asset prices going forward.

Market sentiment remains tentative; small catalysts can be very disruptive.
A common trading floor comment is: "No one knows how to price the Brexit scenario going forward."
Our past research has shown that uncertainty is pernicious: it can induce a significant drag on economic growth. The Brexit vote amplifies uncertainty with unprecedented economic and political considerations whose impact on global economic activity is difficult to discern. Fed policy remains sensitive to market sentiment, and the FOMC likely would not do anything that could be disruptive

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #4 on: July 05, 2016, 12:24:30 PM »
Malaysia’s answer to Singapore consolidating its ports ~ 4 Jul 2016

Singapore Port: One of the top 10 busiest ports in the world ~ 12 Jan 2014

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #5 on: July 08, 2016, 01:42:44 PM »
包不坏 坏不包

Defective SMRT trains were still fit and safe for service: LTA ~ 7 Jul 2016

SMRT train defects found in late 2013: Transport Ministry ~ 6 Jul 2016

Defects on SMRT trains 'not safety-critical', to be repaired by manufacturer: LTA ~ 5 Jul 2016

26 SMRT trains recalled by China manufacturer due to defects ~ 5 Jul 2016

China train manufacturer secretly recalls 35 trains from S'pore due to cracks - Part 1 of 2 ~ 5 Jul 2016

China train manufacturer secretly recalls 35 trains from S'pore due to cracks - Part 2 of 2 ~ 5 Jul 2016

Upcoming Malaysia-Singapore high-speed rail sparks interest from train makers ~ 5 May 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #6 on: July 09, 2016, 06:17:42 AM »
AmFraser goes to trial over $1.88m suit against former client ~ 8 Jul 2016

Singapore authorities raid local brokerages ~ 22 Apr 2016

China Development Unit to acquire Singapore's AmFraser Securities ~ 25 Aug 2014

Don’t be fooled by the high trading volume ~ 23 Aug 2014

投资小股失利.传兴业资本损失2千万 ~ 3 May 2014

Significant signs of syndicate presence in Vis, Itronic, MNC and Solution ~ 30 Apr 2014

Offshore broker’s role іn penny stock crash

Court papers filed bу US firm shed disturbing light οn stock trio debacle

Bу Goh Eng Yeow
Jan 13, 2014

AS THE nеw year gets under way, hope springs eternal thаt thе penny stock market wіll mаkе a strong comeback despite thе bashing іt received three months ago.

Nеw players аrе іn vogue, replacing those thаt hаνе fallen bу thе wayside аftеr thеу collapsed tο a fraction οf thеіr year-high price іn thе dramatic October crash.

Traders аrе hopeful thаt thе Year οf thе Horse wіll cause thе stock market tο gallop іn price, уеt аt thе back οf thеіr minds іѕ one bіg concern: Wіll аnу penny stock revival bе thе real McCoy?

Concerns centre οn thе outcome οf thе investigation being conducted bу thе Monetary Authority οf Singapore (MAS) аnd Singapore Exchange (SGX) over thе odd trading activity surrounding thе stock trio – Asiasons Capital, Blumont  Group аnd LionGold Corp – before thеу crashed, wiping out over $8 billion іn value іn days.

Thеrе hаνе bееn аll sorts οf rumours аnd allegations circulating іn thе market οn hοw thе three counters achieved spectacular price surges last year аnd thеіr subsequent crash.

None οf thеѕе rumours hаѕ bееn substantiated, bυt a court document filed here bу United States online brokerage Interactive Brokers sheds ѕοmе light.

Interactive hаѕ аѕkеd a court tο freeze thе assets οf eight οf іtѕ clients – six individuals аnd two companies – thаt lost аlmοѕt $80 million іn total frοm thе stock debacle.

Thаt court document mаkеѕ fοr depressing reading. Thе allegation іt contains seems tο suggest hοw easy іt іѕ tο subvert thе local stock market using аn offshore brokerage account.

It begs thе qυеѕtіοn аѕ tο whether offshore brokers hаνе рυt sufficient checks іn рlасе tο ѕtοр a stock manipulator frοm using thеіr trading platforms tο manipulate prices іn Singapore’s market.

Hοw dοеѕ аn offshore broker check іf thе accounts thаt аrе opened wіth іt аrе genuine οr nοt? And οn whаt criteria dοеѕ іt extend loans οn thе shares pledged tο іt аѕ collateral fοr share trading?

Wουld thе malfeasance whісh Interactive purportedly uncovered еνеr come tο light, іf іtѕ erstwhile clients hаd nοt failed tο mаkе gοοd οn thе massive losses whісh thеу hаd sustained іn punting thе stock trio?

Interactive dеѕсrіbеѕ itself аѕ аn online broker catering tο well-heeled  individuals аnd institutions. It ѕауѕ іt dοеѕ nοt еmрlοу аnу human “brokers” οr “advisers”. All trading іѕ done online bу customers οr bу independent financial advisers appointed bу thеm.

In hindsight, thіѕ wουld appear tο mаkе іt far easier fοr a person tο open a trading account wіth Interactive Brokers thаn wіth аnу οf thе nine traditional brokerages here serving retail investors. Thіѕ іѕ bесаυѕе thе SGX requires thе client tο turn up іn person аt thе brokerage.

Interactive ѕаіd іt wаѕ οnlу аftеr thе parties failed tο mаkе gοοd thеіr losses whеn thе stock trio collapsed thаt іt investigated further аnd found  thаt thеrе wаѕ something amiss.

Tο adhere tο Singapore’s regulations, іtѕ policy hаѕ bееn tο prevent customers, whose legal residence іѕ іn Singapore, frοm trading Singapore-listed stocks.

Bυt іt claimed thаt thеѕе parties “deliberately misled Interactive аnd/οr engaged іn multiple non-disclosures whеn applying tο open thеіr respective… accounts”.

Thе six individuals hаd listed themselves аѕ Malaysians аnd given Malaysian residential аnd mailing addresses, whіlе thе two companies wеrе listed аѕ British V-irgin Island-registered entities.

Bυt further checks аftеr thе stock trio’s crash suggested thаt “thеу аrе lіkеlу tο bе resident іn Singapore аnd/οr hаνе a sufficient connection wіth Singapore”.

Interactive noted thе eight parties hаd appointed thе same financial adviser, Algo Capital Group, whісh operates out οf a Bishan address tο trade οn thеіr behalf. Thеу hаd аlѕο borrowed large sums tο bυу substantial stakes іn Blumont, Asiasons аnd LionGold.

Bυt whаt mυѕt surely take thе cake іѕ Interactive’s belated acknowledgement thаt “many οf thе trades appear tο serve nο economic purpose аnd appear now tο hаνе bееn undertaken іn a manner possibly tο manipulate thе share prices οf thе companies concerned”.

Interactive noted thаt Algo οftеn accounted fοr “substantial рοrtіοnѕ οf thе volume οf total daily trades іn LionGold shares, аnd even exceeded 80 per cent οf thе total trading volume οn сеrtаіn days”.

Thе same trading pattern exists іn Asiasons, whеrе Algo’s trading volume “wаѕ аѕ much аѕ 67 per cent οn ѕοmе days”.

“(Algo) οftеn sold a large block οf shares аt a given price іn one οr more οf thе (parties’) accounts, thеn quickly re-рυrсhаѕеd approximately thе same number οf shares аt thе same price, putting thе accounts back whеrе thеу ѕtаrtеd, bυt giving thе market thе appearance thаt thе stocks wеrе more heavily traded thаn thеу really wеrе,” іt alleged.

Now, іf аnу remisier іѕ ѕο brazen аѕ tο indulge іn similar trading behaviour, hе wіll surely bе hauled up bу thе SGX’s market surveillance team fοr questioning.

Thе qυеѕtіοn іѕ thаt ѕіnсе Interactive іѕ based offshore serving foreign customers, whose responsibility іѕ іt tο ensure thаt іt іѕ up tο scratch іn keeping similar market misbehaviour аt bay?

Of course, іt іѕ difficult tο tеll hοw much truth thеrе іѕ іn Interactive’s claims ѕіnсе іtѕ objective іѕ tο recover аѕ much οf іtѕ losses аѕ possible.

Bυt unless thе MAS аnd SGX conclude thеіr probe speedily, thе uncertainties wіll continue tο cast a pall over thе market аnd mаkе retail investors even more cynical аbουt penny stocks. It іѕ іn thе best interests οf аll tο mаkе haste οn thе investigation.

AmBank makes RM40m provision for stock price fallout at Singapore unit ~ 13 Nov 2013

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #7 on: July 10, 2016, 11:59:40 AM »
Central banks have decided to have a negative rate on commercial banks' excess funds held on deposit at the central bank. In effect, private sector banks have to pay to park their money.

Netherlands joins negative bond yield club

9 July 2016

The Netherlands has joined a select group of countries able to boast of negative borrowing rates on 10-year debt. For the first time, yields on benchmark Dutch government bonds dipped below zero – hitting minus 0.0001 per cent on Friday afternoon, reports Elaine Moore in London.

As the coupon on bonds is fixed at issue, yields falls as prices rise.

Around the world, the volume of government bonds trading with yields below zero has jumped by more than $1tn in the last month to around $12tn as investors lower their expectations for global growth and inflation and bet on central banks to step in and cut interest rates.

But only five countries have seen 10-year rates drop below zero: Germany, Switzerland, Japan, Denmark and now the Netherlands.

Benchmark 10-year German Bunds trade at a negative yield of 0.17 per cent, while Danish bonds yield minus 0.01 per cent and Japanese bonds minus 0.28 per cent. No Swiss government bonds have a positive yield and 10-year securities yield minus 0.61 per cent.

Welcome to the weird world of negative interest rates ~  24 Jun 2016

Why use negative interest rates? ~ 15 Feb 2016

Usury, 0% interest rates, and worthless currencies ~ 11 Feb, 2015

The simple rule at the heart of finance is being broken

By Matt Phillips
February 10, 2016

If you lend somebody money, they have to pay you back with interest.

This is the basic premise of all finance, from street corner loan sharks to Wall Street loan sharks.

Bonds are sort of like loans—except you can trade them. Normally, if you buy a bond, the issuing government or corporation agrees to pay you interest. They don’t always make those payments—they default, go bankrupt, etc.—but that’s the way things are supposed to work.

No longer. With central banks pushing the limits of their ability to stoke growth, interest rates on many bonds are in negative territory, effectively turning the core rule of finance on its head. When investors buy bonds with negative interest rates, they’re agreeing to pay a borrower to take their money.

While odd, this is now the situation for large swaths of the market for government bonds. Central banks in the euro zone, Sweden, Switzerland, and Denmark have all pushed their benchmark short-term interest rates into negative territory. That’s rippled out to longer-term bonds. For instance, yields on German government bonds that mature over the next seven years are negative. Swiss 10-year bonds offer negative yields. And after the Bank of Japan moved to negative short-term yields earlier this year, the yield on the Japanese 10-year note fell into negative territory Tuesday (Feb. 9).

On the face of it, paying someone to borrow your money seems like a bad idea. But it isn’t, necessarily. Why? Deflation.

Generally speaking, interest rates on bonds are fixed. (That’s why bonds are called “fixed income” instruments.) For the most part, they don’t account for changes in prices. So an investor who is expecting prices to decline can buy a bond with a negative interest rate, and still expect to make a return in “real,” that is price-adjusted, terms.

Moreover, currency fluctuations can also turn bonds with negative interest rates into profitable investments. For example, say the yen appreciates strongly against the dollar. That appreciation could be enough to turn a bet on a negative-yielding Japanese government bond into a positive yielding investment, at least for a US-based investor.

Oh, one other thing to know: bonds that pay very low yields tend to have higher interest rate sensitivity—what bond geeks call duration. That means very small movements in interest rates generate big swings in the price of a bond. Since bond returns are a combination of price swings—capital appreciation—and interest payments, you can still make money on a bond with a negative interest rate if the price gets a nice pop. (This is basically what’s been happening lately due to the global markets meltdown.)

In fact, paying people to borrow your money has been a pretty good trade so far this year.

In US dollar terms, buying an index of Japanese government bonds or Swiss government bonds has returned more than 6% so far in 2016. That’s far better than a rather ugly 9% decline—including dividends—that investors got from investing in the US stock market.

So paying a borrower to take your money isn’t a *’s bet after all. At least not lately.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #8 on: July 15, 2016, 03:51:52 PM »
Hong Kong defends contract with China maker of defective SMRT trains ~ 13 Jul 2016

Minister Khaw explains MOT’s decision on defective SMRT trains: "Going public could have caused undue panic." ~ 13 Jul 2016

Set up govt committee to set record straight on defective SMRT trains ~ 11 Jul 2016

Hong Kong's MTR Corporation accused of cover up ~ 8 Jul 2016

Hong Kong’s MTR comes under fire after admitting it knew about faulty trains before awarding contract to manufacturer ~ 7 Jul 2016

Details of the defects and the recalls have been kept secret in both Singapore and China ~ 6 Jul 2016

Defective China MRT trains deployed in Singapore since 2011 ~ 5 Jul 2016

New trains for the Circle Line! ~ 24 Jul 2014

Downtown Line train is coming! ~ 8 Nov 2012

Offline CurryLee

  • Viscount
  • ******
  • Posts: 6,550
  • flying high! im on fire......
Re: The other side of the coin
« Reply #9 on: July 15, 2016, 04:34:44 PM »
Wah! Prolexus earned 10sen ady.....  :D
malimalimaliongongongnotongchefbutishua thuatong

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #10 on: July 16, 2016, 06:00:48 AM »
Artificially lowered interest rates cause stagnating wages and unemployment

By Hugo Salinas Price
11 December 2014

Professor Antal E. Fekete has made a remarkable discovery in the field of Economics: artificially lowered interest rates - the fundamental instrument of economic intervention in all the developed countries, practiced in the US by the Federal Reserve - are detrimental to Labor, whether Manual Labor or Management Labor, i.e., detrimental to both the working class and the middle class.

So far as I know, Professor Fekete is the first thinker to point out this particular consequence of an artificially and rapidly lowered interest rate.

The "Developed World" goes along with the Keynesian proposition of lowering interest rates drastically, to juice economies that are re-adjusting to previous juicing through credit expansion not based on previous accumulated savings. Accordingly, the slowest rates of increasing employment (if indeed there is any increase at all, since the statistics are universally doctored to look good and justify Central Bank intervention) are presented by the countries of the Developed World, which are suffering incredibly low rates of interest.

On the other hand, the "Emerging Markets" which have not applied QE and suppression of the interest rate so vigorously, are showing higher rates of employment than the "Developed World".

In a video on the Internet recently, viewers got a look at social conditions in Dhaka, the capital of Bangladesh. The number of humans is appalling. At the end of the period of fasting of Ramadan, incredible swarms of humans cram into the trains and climb up in hordes upon the roofs of the railroad cars.

The activity of boats on the massive river that goes through Dhaka is amazing; hundreds of boats are seen scampering over the river in constant activity.

There is no question of unemployment in Bangladesh, in spite of the fact that Dhaka is one of the most populated cities on the planet. Why? Because in Bangladesh, if you don't work, you don't eat. The economy of Bangladesh, left to itself, provides the maximum output possible for the massive population. Any intervention - and I do suppose they have some government intervention in their economy - must be minimal, because anything more than that would mean death for hundreds of thousands living at the very margin of sustainable life.

There is only one sort of economics in this world, because there is only one sort of human nature. Economics is simply one branch of the study of human nature: the study of the human being as an entity that acts, which is the same as saying that the human being chooses. Other species of living beings may exhibit a limited capacity for choosing, but the human being is entirely dependent on choosing - and making the right choices - for the sustenance of his life. The animal kingdom relies on instinct; the human being relies on his choices, which are not instinctive.

I mention this, because it appears that this fact escapes the high and mighty planners of national economies, known to us as "Keynesians".

When the planners proceed to lower interest rates in the economy, their decision affects not just some sectors, but all the people in one way or another.

Up to now, it has not been perceived that those who are most adversely affected are those who sell their work. Some of them will be manual workers, others will be better paid employees; some of them will lose their jobs as a result of rapidly lowered interest rates effected by the diktat of the Keynesian manipulators, and others will find that their wages do not increase, but either stagnate or even fall.

We must credit Professor Fekete for discovering the reason for this phenomenon.

Enterprises engage in production by combining Capital goods with Labor.

When the interest rate is forcibly lowered, the managements of enterprises receive a signal that tells them that Capital is abundant and suddenly much easier to acquire, by means of cheaper additional debt, than previously.

The manager examines his cash flow and makes a comparison between a) the amount of his cash flow that might go to acquiring additional Capital goods through debt, to apply in production, and b) the amount of his cash flow that goes to overall Labor costs. The cash flow that goes to Labor costs has not diminished, whereas the cash flow that could be applied to obtaining Capital goods through debt is now relatively smaller. Labor has become more expensive, relative to Capital goods obtainable through debt.

The entirely natural consequence of this comparison is that management will seek to reduce relatively more expensive Labor by taking on debt to acquire Capital goods to replace overall Labor costs. In other words, the "terms of trade" for manual laborers and employees are now set up against them.

The violent reduction of the interest rate has thus caused a set of responses by management that are adverse to Labor:

1. If laborers and employees can be substituted with Capital goods financed with ultra-low interest debt in order to automate the enterprise, the marginal laborers and employees will be laid off.

2. New enterprises that cannot command debt will be at a competitive disadvantage with larger enterprises which can take on debt and reduce costs by laying off some workers and employees. Small enterprises, the backbone of the economies of the Developed Countries, are adversely affected.

3. The relatively low cost of acquiring Capital goods, by means of taking on ultra-low interest-bearing debt, leads to the installation of enterprises massively capitalized with machinery; such enterprises employ few workers and employees. Modern auto manufacturing plants are an example.

4. Further, the relatively low cash flow required to finance the use of Capital goods, leads to the installation of enterprises massively capitalized with machinery to produce the technologically advanced Capital goods now in great demand, which will be used in other enterprises to lay off or reduce the need for manual labor: the technological boom is set off and robots and computer systematizations proliferate to the detriment of marginal manual labor and employees.

5. If we consider the work of the manual laborer and the ability of the employee as the "Capital" which they offer on the market, the return on their personal "Capital" has not been reduced; therefore, the wages which they obtained before the violent reduction of the interest rate can be sustained only precariously. They face either stagnant wages, or lower wages, or unemployment. The marginal worker and the marginal employee are laid off.

6. The middle class, which has worked to accumulate sufficient Capital on which to retire, now finds that the interest on their invested Capital is now insufficient to provide sustenance; the middle class goes into debt in an attempt to maintain their standard of living. The middle class delay their retirement and younger people do not find vacancies available.

7. With income for the mass of workers and the huge middle class stagnating, consumption must fall. The vision of Henry Ford was apt, when he said that he wanted his workers to have an income that would make them able to purchase the cars they manufactured. Stagnant wages and unemployment produce stagnant consumption. Empty shopping malls.

During the Industrial Revolution in England, the "Luddites" objected to the destruction of their jobs by newly-invented machinery. However, the reorganization of production along industrial lines eventually elevated the standard of living of the English by producing masses of much cheaper goods for the population. No greater advance in general prosperity has equaled that which took place in the 19th century and which was due to the use of machinery - Capital goods - in production. This was a natural development of the economies of the nations of the West.

The arbitrary and violent reduction of interest rates by the Keynesians in charge of the Central Banks of the West is no natural development. the arbitrary interventions of the Keynesians in reducing interest rates violently has acted to the great disadvantage of the class of people who must work for wages, whether manual laborers or employees.

Neither the Keynesian at the Central Banks, which carry out the policy of reducing the interest rate in order to stimulate their economies, nor the numerous critics of Zero Interest Rate Policy have been aware of the chain of causation between ZIRP and the plight of manual labor and employees.

Professor Fekete  (see: has contributed importantly to Economics by pointing out the adverse effects of interest rate manipulation upon workers and employees.

Bank Negara governor: OPR cut is pre-emptive ~ 15 Jul 2016

Pound on track for its best week since 2009 after Bank of England leaves interest rates unchanged ~ 14 Jul 2016

Bank of England leaves UK interest rates on hold at 0.5% ~ 14 Jul 2016

Maybank lowers interest rates to 3% ~ 14 Jul 2016

BNM cuts interest rate to 3% ~ 13 Jul 2016

"If people are not borrowing with interest rate at 0.5%, it is unlikely that a cut to 0.25% or zero will make much difference. However, such a cut would further negatively impact savers and pensioners. QE and low interest rates are deflationary. Why is this so hard for economists and central bankers to grasp?"

How do changes in national interest rates affect a currency's value and exchange rate?

How currency changes affect imports and exports

First BOE interest-rate cut since 2009 may come next week ~ 9 Jul 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #11 on: July 17, 2016, 10:17:53 AM »
Singapore and Malaysia to sign MOU on High-Speed Rail on July 19 ~ 15 Jul 2016

Singapore developer sales down 50% in June ~ 15 Jul 2016

No easing of property curbs in Singapore until 2017, say experts

By Romesh Navaratnarajah
July 13, 2016

Although home prices may start bottoming out in the next few quarters, which could prompt a moderate recovery from 2018, easing of property cooling measures are not expected until next year at the earliest, according to property experts at the Real Estate Developers’ Association (Redas) property market seminar on Tuesday (12 July), and reported TODAYonline.

Dr Chua Yang Liang, Research Head at JLL Southeast Asia, said the potential recovery range will likely be driven primarily by a pickup in the prime residential market, and in line with GDP growth.

“(Singapore’s housing prices) are close to a trough with economic conditions steady and physical market conditions balancing … The gap between the prime and non-prime market has narrowed and when economic conditions improve, we should expect the high-end market to pick up,” he said.

Meanwhile, growth in demand within the mass market segment will continue to be slow, with gradual price adjustments considering the policy measures and supply overhang. Chua also expects the residential rental market to remain soft.

Since 2009, the government has introduced a slew of property cooling measures and loan curbs to rein in the runaway property market, with the Total Debt Servicing Ratio (TDSR) framework and Additional Buyer’s Stamp Duty (ABSD) being the most significant.

The government has been reluctant to lift the property cooling measures, despite repeated calls from real estate agents and property developers for the measures to be eased.

Singapore saw private home prices soar by more than 60 percent following the 2009 Global Financial Crisis to peak in Q3 2013.

Since then, home prices have fallen by 9.4 percent over 11 consecutive quarters, or its longest losing streak on record, based on the Urban Redevelopment Authority’s (URA) latest flash estimates.

Nonetheless, property experts does not expect the property cooling measures to be eased anytime soon.

“I think the earliest we may see some unwinding of measures will be 2017 because we haven’t quite reached the double-digit price correction that they want,” said Selena Ling, Head, Treasury Research and Strategy, OCBC.

URA flash estimates released this month show that the private residential property price index dropped by 0.4 percent in Q2, a slight improvement from the 0.7 percent decline registered in the first quarter.

Quek’s son takes bigger role ~ 13 Jul 2016

GuocoLand wins tender for plum River Valley site after record $595.1m bid ~ 1 Jul 2016

The Chinese factor - 5 ways investments from China will impact the property landscape in Iskandar Malaysia ~ 30 Jun 2016

UEM Sunrise sells land to S. Korea’s Amorepacific ~ 30 Jun 2016

Singapore second quarter property sales by auction more than doubles ~ 28 Jun 2016

Some Singapore developers slash prime home prices by up to 30% to dodge extension charges

10 Jun 2016

Discount schemes are working well, analysts say.

In a desperate bid to dodge hefty extension charges, developers are resorting to huge discounts and creative marketing schemes in order to sell units at a number of high-end residential projects, according to a report by UOB Kay Hian.

At Ardmore Three, for instance, Wheelock has rolled out an ABSD Assistance package which offers a further discount of 13% to 15%. The package comes on top of an existing 15% discount, which effectively translates to a 30% price cut.

The ABSD Assistance package effectively jump-started sales at Ardmore Three, which had only sold seven units in March 2016. At a recent site visit, UOB Kay Hian learned that the development has sold up to 40 units, with the cheapest units priced at $2,560 psf including the discounts.

Pricier units at higher floors of Ardmore Three are priced at above $3,000 psf. The average selling price of $2,800 psf is a far cry from the project's original price range of $3,000-$4,000 psf.

“We have been seeing nascent signs of life in the high-end market as developers relent on pricing at selected projects, dangling discounts to entice,” UOB Kay Hian said.

Over at the 174-unit project Gramercy Park, City Developments has been offering discounts of up to 18%, which comes on top of a 2% price reduction. The discounts resulted in the sale of about 6-7 units, but CDL has rebuffed attempts at further price cuts.

"The slower uptake compared with that for Ardmore Three implies that prices cuts could well be too shallow to appeal to prospective homebuyers, and an effective discount of about 30%, representing prices as low as $2,000 psf for selected units could possibly trigger the same surge of interest witnessed at Ardmore 3,” the report noted.

Singapore boutique developer distress ~ 20 May 2016

Malaysia - a long-term property play ~ 20 Apr 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #12 on: July 18, 2016, 11:25:35 AM »
EXCLUSIVE - 'Why shouldn't we enjoy ourselves just because the country is burning?' Super-rich Socialists quaff champagne in Venezuela country club while middle class mothers scavenge for scraps in the gutter... and even the DOGS are starving ~ 16 Jun 2016

Thousands of Venezuelans cross into Colombia in search of food and medicine ~ 17 Jul 2016

My picture of the week: A roll of toilet paper and right back home ~ 16 Jul 2016

Analysis: Venezuelan military had big role in economic woes ~ 15 Jul 2016

Venezuela bonds at risk as military takes control ~ 15 July 2016

Venezuela trucks food directly to the poorest as chaos spreads ~ 13 Jul 2016

In China, Venezuela default talk is front-page news ~ 16 Jun 2016

Bakery looted amid Venezuela food widespread shortages ~ 29 Jun 2016

How the wheels fell off of Venezuela's socialist revolution ~ 23 Jun 2016

Footage of Looting & Food Riots in Venezuela ~ 21 Jun 2016

Venezuela’s food shortages trigger long lines, hunger and looting ~ 17 Jun 2016

How Venezuela’s socialist dream collapsed into a nightmare ~ 26 May 2016

Offline penang_lim

  • Knight
  • **
  • Posts: 421
  • Timing is important in all types of Investment
Re: The other side of the coin
« Reply #13 on: July 18, 2016, 01:21:07 PM »
Is the falling oil prices contributing to the degeneration of Venezuela economy.  Looks like it is spirally down out of control.

I remember reading about the popular President Hugo Chavez but he passed away due to cancer few years ago.  His deputy Maduru took over befor the oil price plunged last year.

Looks like Venezuela is ending up like Zimbawe.   :'(
When the time comes, all investment knowledges should be passed to the younger generations for further enhancement.

Thx & Rgds;

Offline Salahdin

  • Companion of Honour
  • ***
  • Posts: 977
  • Sharing is Divine. Keeping is Bovine.
Re: The other side of the coin
« Reply #14 on: July 19, 2016, 11:03:28 PM »
The cash reserve of Venezuela were only at USD2billion early 2016.

In Malaysia, our Federal Reserve were at RM120billion (~USD30billion) due to prudence saving by our past Bank Negara Zeti.  :clap:

The dark side is on the run-off effect of 1MDB to our economy.

Hope that our new Bank Negara gabenor could continue the good work of Zeti.
The worst way of learning is to keep all the knowledge to yourself.  So, share it to others as they would to you.

Salahdin (The Great Caliph of Baghdad)

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #15 on: July 21, 2016, 06:09:47 AM »
The cash reserve of Venezuela were only at USD2billion early 2016.

In Malaysia, our Federal Reserve were at RM120billion (~USD30billion) due to prudence saving by our past Bank Negara Zeti.  :clap:

The dark side is on the run-off effect of 1MDB to our economy.

Hope that our new Bank Negara gabenor could continue the good work of Zeti.

BNM International Reserves at RM390.4 billion (US$97.2 billion) as at 30 Jun 2016

BNM International Reserves at US$95.63 billion as at Feb 2016

BNM International Reserves at RM357.7 billion (US$94.7 billion) as at 28 Aug 2015

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #16 on: July 21, 2016, 06:16:56 AM »
「升級版」的官商勾結。= A comprehensive response - it involves the Reserve Bank, it involves councils and it involves the Government.

Politician flips out: Exposes central bank scam ~ 18 July 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #17 on: July 27, 2016, 04:53:54 PM »
Clinton emails reveal direct US sabotage of Venezuela ~ 26 July 2016

Special Report: In Venezuela's murky oil industry, the deal that went too far ~ 26 Jul 2016

Venezuela’s economic woes send a chill over closest ally Cuba ~ 26 Jul 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #18 on: July 30, 2016, 04:14:07 PM »
「升級版」的官商勾結。= A comprehensive response - it involves the Reserve Bank, it involves councils and it involves the Government.

Politician flips out: Exposes central bank scam ~ 18 July 2016

US: Bankers no longer too big to jail? ~ 29 Jul 2016

Companies have a $10 trillion bill that is coming due ~ 28 Jul 2016

Corrupt or just stupid? Markets hand corporations an unlimited credit card ~ 27 Jul 2016

China’s debt problem may be worse than expected, Moody’s warns ~ 27 Jul 2016

An upside-down world ~ 22 Jul 2016

China's ballooning corporate debt a key tail risk for global credit: S&P ~ 21 Jul 2016

Corporate debt seen ballooning to $75 trillion: S&P ~ 20 Jul 2016

David Rosenberg: The muddle-through economy can continue, but stock market extended ~ 12 Jul 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #19 on: August 01, 2016, 05:10:49 PM »
After Brexit, EU bosses unveil plot for "Giant Superstate" ~ 28 Jun 2016

European SUPERSTATE to be unveiled: EU nations 'to be morphed into one' post-Brexit ~ 28 Jun 2016

Brexit the movie full film ~ 12 May 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #20 on: August 02, 2016, 09:06:34 AM »
If it seems too good to be true, it probably is...

How market crooks operate ~  4 Jun 2005

Singapore regulator charges Malaysian investor with spoofing ~ 22 July 2016

Singapore charges 2 men with insider trading on 2 stocks; Qualitas Medical Group Ltd. and Leeden Ltd. ~ 12 May 2016

Soh Chee Wen 'mastermind' of penny stock crash: Prosecutor ~ 28 Jan 2016

Repco case a reality check for those watching Singapore penny stock probe ~ 27 Jan 2016

Story behind penny stock crash ~ 3 May 2014

Four stocks hit limit down, Bursa queries ~ 29 Apr 2014

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #21 on: August 11, 2016, 11:24:56 AM »
"Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend it for you." — Carl Sandburg

Swiber saga DBS says bond sales driven by demand

Bank adds that Swiber and oil prices were both going strong when bonds rolled out

By Wong Wei Han
6 Aug 2016

SINGAPORE - The Swiber Holdings bonds sold by DBS Bank to clients were rolled out to voracious demand, at a time when the company and oil prices were going strong. So DBS should not be singled out for scrutiny over bondholders' exposure to Swiber's demise, a bank spokesman noted, in response to claims that DBS and its staff may have pushed the Swiber bonds to clients who were little aware of the products' risk profile.

Swiber this week defaulted on its semi-annual payment for its $150 million 001 Trust Certificates.

A self-employed man, who wanted to be known only as Mr Jin, said he had invested $500,000 in two Swiber bond issues through DBS. "I was simply following the advice of my relationship manager, who never told me much about the company. I just thought, a bank in Singapore, with this much regulation, would not recommend risky investments," the 44-year-old said.

DBS said the sale was driven by demand: "Many clients were reaching out to us and... private banks for yield instruments, given the very low interest rate environment."

There are two outstanding vanilla Singdollar Swiber bonds: a $160 million issue in 2013, with an annual yield of 7.125 per cent, got orders of $240 million; and a $100 million issue in 2014, with a 5.55 per cent yield, had over $500 million worth of orders. The bonds were distributed by various banks here, including United Overseas Bank and OCBC.

Market conditions were positive, and concerned investors had plenty of chances to exit, DBS added.

"The two bonds were issued in 2013 and 2014, when oil prices were still above US$100 a barrel and Swiber stock was trading above $1."

The Swiber bonds were available only to accredited investors - with net personal assets of more than $2 million - or those investing a minimum of $250,000.

Mr Jin said: "I'm a new immigrant and could barely understand English. I just signed whatever papers the relationship manager gave me."

Another investor, who asked to be known only as Laura, 34, and a banker, said: "My banker said DBS could lend me money to invest, so I'm 50 per cent leveraged on Swiber bonds. Now they've defaulted, I'm asked to pay the bank $250,000 by next Tuesday to cover the margin."

The DBS spokesman said: "DBS does lend against all eligible and acceptable market securities, and investment leverage is offered to wealth customers based on prudent underwriting standards. This includes imposing criteria on the credit quality and duration of fixed income securities as well as requiring the underlying investments of each customer to be diversified."

DBS relationship managers are rewarded based on a balanced scorecard, and there is no direct link between sales targets and remunerations, the spokesman added.

Outstanding plain Sing$ Swiber Bonds

$160m issue

Issued: 2013

Annual yield: 7.125 per cent

Orders: $240 million

$100m issue

Issued: 2014

Annual yield: 5.55 per cent

Orders: Over $500 million

Exuberance boiling over in the market for perpetuals

By Goh Eng Yeow
2 June 2016

SINGAPORE - One of my favourite quotes on investments comes from Sir John Templeton who once noted that bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

This is what leads me to believe that given the moribund state of the stock market with overall daily turnover falling well below the $1 billion mark for many of the trading days in the past few weeks, there is little danger of share prices plunging for now since there are few signs of euphoria among traders.

But then I may be hunting for irrational investment exuberance in the wrong market.

There are, after all, various financial assets which an investor can pour his money into - and interest in one of them has turned red-hot.

This is the local corporate bond market where yield-hungry investors have been happily snapping up one fresh issue after another.

What is of interest, as I had noted in my recent Cai Jin column, is the strong revival in interest in a certain bond-like instrument known as perpetuals, or perps, for short.

The attractive feature about a perp is that it comes with an attractive coupon payout - easily the highest payout which an investor can get in the market. Currently, coupons for perps are in the range of 4 per cent or more.

But the catch is that the issuer has the discretion to withdraw the coupon payment without triggering a default on his other outstanding loans. (In other words, it won't go bankrupt if it decides not to make interest payment on the perps and there is no recourse for investors to get it to pay up.)

The issuer also reserves the right to repay the principal to the perp investor, and in this context, the perp may literally mean a loan in perpetuity.

The other feature about perps is that companies will only issue them to lock up the funds needed to run their business, despite the high interest costs, when liquidity is tightening - like now when the US central bank is beating the drum on the likelihood of further interest rates hikes ahead.

Now, considering all the reservations raised about perps, I would have thought that investors should tread it with care. But if there is one market where exuberance has reached fever-pitch, it is the perp issuance market here.

Earlier this week, there was a report that UK insurer Prudential plc had received orders of over US$12 billion when it launched its perp issue of US$1 billion here.

The huge interest which Prudential drew to its perp issue simply highlights the large sums of money sitting idle in the local banking system looking for a better venue for investment.

This is considering the big sums already spent by investors who snapped up other recent perp issues launched by the likes of United Overseas Bank, Mapletree Logistics Trust and Societe Generale.

But the fact that perps are drawing investors in big numbers has made some market * worried.

It is also perplexing to find foreign issuers jostling with local companies for funds in the local perp market.

After I made a case for the need to have bonds rated in a separate column recently, I got an email from former investment banker Ng Lak Chuan expressing surprise that I did not examine the Hyflux perp issue in more detail in my write-up.

While other perp issuers had confined their offerings to the wholesale market, whose target audience were fund managers, pension funds and wealthy individuals, Hyflux had gone one step further and opened up its perp offering to retail investors.

While it had initially wanted to raise only $300 million from its perp issue, it managed to upsize its offering to $500 million, after getting an overwhelming response from the investing public.

But Mr Ng was concerned that issues such as Hyflux's declining profitability and the high leverage on its balance sheet had not been given a proper airing.

I also have concerns of a more general nature where the bond market is concerned.

When interest rates go up, bond prices go down because investors demand a higher yield in order to continue holding the bonds.

For bond investors, the biggest worry is the threat of rates hikes that may come from the United States and the collateral damage it may inflict on the debt market here.

That is because any US interest rate hike may cause international investors to pull their money out of regional markets.

To stop the funds from draining out of the region, and to address this problem, interest rates will have to jack up in order to lure them to continue to keep their money here.

Therein lies the problem.

The US Fed can afford to raise interest rates in what it describes as a "normalisation" exercise - after depressing it for many years after the 2008 global financial crisis - because the US economy is humming along just fine with unemployment falling back to its pre-crisis low of 5 per cent.

But Asean countries can ill-afford to do likewise and jack up interest rates because their economies have turned sluggish. If anything, they have to loosen their monetary policies in a big way and cut interest rates aggressively to stir up demand.

But the threat of capital outflow by international investors destabilising their economies may leave them no choice at all.

Asian bond markets had a foretaste of this massive outflow of foreign capital in late 2013 during the "taper tantrum" drama, when then Fed chairman Ben Bernanke first hinted at scaling back the then massive sums which the US central bank had been pouring into the financial market each month as part of its efforts to revive the US economy.

Maybe, it is with this episode in mind that many companies are issuing perps to ensure that they are not caught short of capital just when it is needed most just in case there is a credit crunch.

Of course, they may just be playing it safe. But there is no harm in making hay while the sun shines.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #22 on: August 12, 2016, 11:34:15 AM »

Independent or irrelevant directors?

Independence of these three Swiber directors is debatable

By Mak Yuen Teen
3 Aug 2016

Swiber's tardy disclosures, sudden announcement of a winding-up application, mass resignations of executive directors, reversal of its winding-up application and retraction of a resignation announcement have befuddled and angered investors. Singapore Exchange's chief regulatory officer has - quite rightly - said that there will be investigations and regulatory actions may be taken.

When Swiber won in the small-cap category of the Singapore Corporate Governance Award in 2012, its group chief executive Francis Wong had this to say: "… We also continue to review our processes to improve each aspect of corporate governance to be in line with best practices. Swiber's board is mindful of the interests of its stakeholders … Swiber will continue to be a steward of excellent corporate governance practices across its operations."

Swiber's approach to corporate governance disclosures and practices has not changed much over the years, and, given the recent events, those words ring hollow now.

Mr Wong was one of the three executive directors who suddenly jumped from the burning platform on July 28, said a company announcement, although it was later said that the group chief financial officer did not in fact do so. Meanwhile, Swiber's executive chairman Raymond Kim Goh resigned as non-executive chairman of Vallianz Holdings, a related company of Swiber, on July 27 "due to health reasons", but has apparently stayed healthy enough to remain on the Swiber board.

The company's corporate governance report says all executive directors signed separate service agreements which can be "terminated by either party, giving not less than six months' notice to the other". The service agreements have turned out to be as watertight as the company's disclosures, given that the executive directors were able to resign with immediate effect, leaving the company adrift.

Swiber is another case of a company that has highly questionable corporate governance practices and disclosures that investors, creditors and other stakeholders appear to have overlooked, perhaps because it was considered, as one media report put it, a "darling in the Singapore oil and gas sector". In 2008, it made it into Forbes Asia's list of 200 Best Under a Billion.


Let's start with its board of directors. Before the recent resignations, Swiber had a board of nine directors - six executive directors and three independent directors. Therefore, while it met the guideline of one-third of independent directors in the Singapore Code of Corporate Governance, the executive directors far outnumbered the independent directors in decision making by the board, which was a management board rather than an oversight board.

Although the company technically separated the chairman and CEO roles, the chairman is an executive chairman, so must one question the effective separation between the chairing of the board and the day-to-day running of the company. Further, both the chairman and the deputy group CEO, Yeo Chee Neng (also known as Darren Yeo), are controlling shareholders. Therefore, the board is effectively controlled by management and controlling shareholders.

The company appointed a lead independent director, Yeo Jeu Nam, who has been on the board for just under 10 years and who also serves as an independent director of Vallianz. While serving as a non-executive director on the boards of both Swiber and its related company Vallianz does not necessarily preclude him from being considered independent on either board under the Code, it may suggest a close affiliation with the management and major shareholders of the two companies, as the chairman and CEO of Swiber were respectively non-executive chairman and non-executive deputy chairman of Vallianz (until the recent resignation of the former). Further, there are almost certainly situations where he will face conflicts in discharging his fiduciary duties to both companies.

Although Yeo Jeu Nam has experience in two major accounting firms, he was on the consulting side of those firms; his biography suggests that he does not have an accounting or finance background. Neither do the other two independent directors. One of them is Chia Fook Eng, who has a marine engineering background. Before his appointment in 2009, he was an advisor to Swiber's board on "matters relating to the Group's business". There would be questions about whether he should be considered independent.

The third independent director is lawyer Oon Thian Seng, a founding partner of Oon & Bazul LLP here. The law firm's website says Mr Oon "is noted for his ability to handle disputes involving highly technical issues and is regularly instructed by clients in the oil & gas, banking, international trade, insurance, shipping and construction industries" and is an expert on shipping matters. In the 2015 corporate governance report, Swiber disclosed that it had dealings with his law firm, although he had declared that he is not involved directly or indirectly in work that his law firm does for Swiber. Nevertheless, as a major partner, he clearly has a financial interest in the work. Again, there would be questions about his independence.

Therefore, collectively, the independent directors bring relevant industry experience but appear lacking in financial and accounting expertise; there are also doubts about their independence.

Further, one must wonder about their role and authority, given the overwhelming dominance of management and controlling shareholders on the board. Like the executive directors, they owe fiduciary duties to the company and therefore their action (or inaction) leading up to, and during, the recent events should be scrutinised in any regulatory inquiry.

Much of the affairs of Swiber are undertaken through its executive committee, which includes only the six executive directors, again raising questions about the role of the independent directors. It is also interesting that the group CEO is a member of the Audit Committee, which is not in accordance with the Code.

The remuneration disclosures and practices of Swiber are even more questionable, with almost a total disregard for the recommendations of the Code. It discloses the remuneration of its six executive directors in a single band of "S$500,000 and above" and the remuneration of the independent directors in a single band of "below S$250,000". It cites the "competitive nature of the company's business" and "sensitivity of information" as reasons for non-disclosure. One must ask if the independent directors should have pushed for greater transparency, at least for the fees paid to themselves. Surely, the risk of the controlling shareholders and the independent directors being poached is non-existent.

In disclosing the percentage breakdown for different remuneration components, Swiber lumps the annual cash bonus with performance incentives, the latter referring to "long-term cash incentive plan and long-term performance-driven plan". The percentages for this component in the latest annual report ranged from 56 per cent to 91 per cent for the six executive directors. Since the controlling shareholders up to that point did not participate in the share option or share plans, we can surmise that the performance incentives for them are generally in cold, hard cash (although as mentioned shortly, this was to change after the recent AGM and, in 2013, when the controlling shareholders received Vallianz shares under their Swiber remuneration). In the case of the executive chairman-cum-controlling shareholder, his bonus / performance incentive was 91 per cent of his total remuneration; for the deputy CEO-cum-controlling shareholder, it was 73 per cent.

Instead of naming and disclosing the remuneration of the five key management personnel who are not directors and CEO at least in bands of S$250,000, Swiber chose to disclose the top 10 without naming them. Again, it cites "confidentiality" and "competition". Further, for eight of them, the top band is disclosed as "S$450,000 or more". Swiber also does not disclose the aggregate total remuneration for the top five as a group as recommended by the Code - nor does it do so for the top 10.

Since the company chose to be non-transparent about the exact remuneration of its executive directors, I attempted to gauge how much they were actually getting. Note 33 for "Related Party Transactions" in the 2015 annual report said the total key management personnel remuneration was US$9.086 million. The relevant accounting standard provides a definition of "key management personnel", but companies have discretion as to who are included, and are not required to disclose who they are.

I assume that key management personnel for Swiber include the six executive directors and three non-executive independent directors on the board. I then subtracted the US$297,000 for directors' fees to remove the amount of fees that were paid to the non-executive directors (although Swiber's executive directors do receive directors' fees, so not all of these fees are paid to the non-executive directors). That comes to about US$8.8 million. Using an exchange rate of US$1: S$1.35, this amounts to about S$12 million. Therefore, I estimate that the average remuneration of each of the six executive directors is closer to S$2 million than S$500,000. Of course, mine is only a ballpark estimate, but the company can hardly blame me for being wrong, given the opaqueness of its disclosures. This is a good example of how misleading unlimited band disclosures such as "S$500,000 and more" can be.

In 2013, key management personnel remuneration as disclosed under the "Related Party Transactions" note jumped from under US$8.2 million in 2012 to US$18.5 million. Although profits showed a healthy increase that year, operating cash flows went from negative S$69 million to negative S$87 million. The directors' remuneration section in the corporate governance report remarkably shows that none of the executive directors, except for the CFO, received any bonus or performance incentives. Either the company misreported, or the additional share remuneration the key management personnel received were considered salary or benefits. Neither explanation puts the company in a good light.


Note 35 in the 2014 annual report disclosed that the major source of the big remuneration increase was a transfer of 89.78 million Vallianz shares "to certain key management personnel as part of employee compensation expenses" for 2013. The fair value of these shares was US$14.1 million. It was also disclosed that the transfer of shares actually took place on March 7, 2014.

Since Mr Goh and Mr Darren Yeo are directors of Vallianz, their change in interest in the shares of Vallianz was disclosed in two Vallianz announcements on March 10, 2014. From those announcements, we can see that Mr Goh got 23 million shares, and Mr Yeo, 10 million. At the then-heady Vallianz share price of 15 cents each, the actual value of those shares alone was S$3.45 million and S$1.5 million respectively - again, a far cry from S$500,000.

Although the chairman and deputy CEO are controlling shareholders, they collectively own - directly or indirectly - only about 18 per cent of the company. However, their key management roles in the company will act like leverage in enhancing their control of the company.

Where there is effective control with relatively low economic interest (effective ownership), minority shareholders probably face the greatest peril. This is because the relatively low economic interest will lead to lack of strong alignment with the company's interests, while at the same time opening the way for control over key decisions.

Where there is low effective ownership, major shareholders would be much better off receiving their "returns" through remuneration rather than through dividends. Swiber does not have a formal dividend policy and has paid dividends only sporadically to ordinary shareholders in the last six years. In contrast, since 2010, it has paid its key management personnel, including its controlling shareholders, remuneration totalling US$69.2 million.

At its April 2016 AGM, Swiber had sought shareholders' approval for the proposed adoption of a new share option scheme and performance share scheme, and to allow the grant of options at a discount of up to 20 per cent. In a departure from past practice, it sought shareholders' approval to allow the two controlling shareholders to participate in these schemes. They abstained from voting and the resolutions were passed, although nearly a quarter or more of votes cast were against these resolutions, with 46 per cent voting against discounted options.

The company did not explain the rationale for the change in remuneration policy for the controlling shareholders in its notice of AGM. Perhaps it was a sign that the company was running out of cash to pay the executive directors their "S$500,000 and more" remuneration packages.

The writer is an associate professor at the NUS Business School, where he teaches corporate governance and ethics.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #23 on: August 12, 2016, 03:51:23 PM »
Malaysia introduced new tax perks for shipbuilding and ship repair yards ~ 11 Aug 2016

Singapore shipyards in dire straits

By Gwyneth Yeo
August 11, 2016

UOB Kay Hian is downgrading Singapore shipyards to “underweight” as orders are put on hold, aborted or delayed amid the low oil price environment.

In a note on Thursday, analyst Foo Zhiwei notes that orders for floating production system (FPS) have fallen below the eight-year average of 1.5 units per month. Only two FPS orders were recorded for the year to July, which translates to 0.6 unit per month for 3Q2016.

On top of that, fewer of the planned FPS orders are reaching the final bidding stages, as low oil prices have made it “difficult for companies to sanction projects”, says Foo. Only 21% of the 241 planned FPS projects globally made it to the bidding and final stages, while 142 are in the planning stage and 49 in the appraisal stage. At its peak, 31% of planned projects made it to the final stage.

Meanwhile, only 34% of the 56 FPS projects which were in their final stages in 3Q2015 were awarded a contract or remain on track for a contract. Thirty-two per cent of them were sent back to the planning stage or cancelled, while 34% had their award dates delayed by a year or more. “Net realisation of orders in the continued low oil price environment is low as projects remain uneconomical,” explains Foo.

Foo estimates that Singapore shipyards will win about US$1.9 billion ($2.6 billion) in FPS orders per year from 2016 to 2019, given that 41% of the total US$37 billion of global FPS orders involves conversion, a specialty of the Singapore yards, and assuming half of the global orders go local yards.

However, those numbers could be lower in reality, says Foo, given the recent competition from Chinese yards for conversion orders and the lower net realisation of projects.

The brokerage is forecasting an outlook of near-zero newbuild rig orders until 2020, and together with the dismal FPS market, Foo expects the yards to report poor earnings for the next five years with lower dividend payouts.

Of the yards, Foo prefers Keppel over Sembcorp Marine given the former’s property, infrastructure and investment businesses. “Sembcorp Marine’s earnings are under more pressure as it has no other businesses to diversify to and risks its rig-building and conversion orderbook running low,” he says.

UOB Kay Hian has a “hold” recommendation for both Keppel and Sembcorp Marine, with a target price of $5.70 and $1.27 respectively.

Ezion Holdings: 3Q likely to be soft

OCBC Research - 12 Aug 2016
  • Still generating operating CF
  • Raises funds prior to Swiber
  • Lower valuations in sector
US$19.8m net profit in 2Q16

Ezion Holdings reported a 7.0% YoY drop in revenue to US$83.7m and a 31.5% fall in net profit to US$19.8m in 2Q16, such that 1H16 net profit accounted for 52% and 45% of ours and the street’s full year estimates, respectively. Revenue was lower as a few service rigs underwent modification and routine class surveys, while bottom-line was boosted by a US$14.6m gain on disposal of an asset.

Gross profit margin was lower at 21.4% in 2Q16 vs. 25.2% in 1Q16, mainly because a service rig that worked in 1Q16 was taken out of the fleet for major enhancements in 2Q16 and did not contribute to revenue in the quarter. Costs such as depreciation, interest and crew costs continued to be incurred. In addition, an associated company recognised impairment losses and there were lower contributions from JVs.

From a cashflow perspective, Ezion generated operating cash flow of US$27.4m in the quarter, bringing 1H16 net operating cashflow to US$58.3m.

3Q16 likely to be lacklustre

Looking ahead, Ezion expects to generate more cashflows in 4Q16 as about four of its units should be deployed by then. For 3Q16, however, we are more circumspect and expect core operating results should be similar to 2Q16. It would also not be surprising if the group takes the chance to refinance some of its short-term debt (e.g. lengthening tenor etc) in 3Q16, considering that it has not done so since the onset of the oil crisis.

Lower valuations across the board

The Swiber incident has greatly affected sentiment in the O&M sector, and corporates are likely to find it difficult to raise new funds under the current environment. Fortunately for Ezion, the group was able to raise about US$100m from its recent rights issue before news about Swiber broke out. However, given lower valuations that the sector is trading at, we lower our valuation from 0.4x to 0.35x NTA, such that our fair value estimate drops from S$0.42 (post-rights) to S$0.30. Maintain HOLD. 

Ezion ~ Bearish rising wedge breakout

Ezion (weekly) ~ Fall off the cliff on 26 Sep 2014

“The crowd always loses because the crowd is always wrong. It is wrong because it behaves normally.” ~ Fred C. Kelly

Ezion Holdings: Hollow man or how inattention to industry fundamentals can kill

By Andre Wheeler
July 13th, 2015

Having recently read an analysis of the failure of Chinese shipping by Charles de Trenck, published by Splash as well as Joseph Triepke’s article published in OilPro, a common theme seems to be emerging in the oil and gas sector, particularly service providers. This theme can best be summarised as the lack of focus in the underlying fundamentals in the sector can be catastrophic for decision making. When the oil price was buoyant, marine service providers could be robust in their assumptions that could focus on one or two elements to support their notion of ongoing profitability and sustainable growth. In the case of Charles’s article, investment in Chinese shipyards was based on the cost advantage in manufacture presented by Chinese yards but failed to take account of risk associated with the availability of large amounts of ‘free money’ with a focus on cheap ships and not the real cost of associated activities, such as containers. Joseph’s article highlights a worrying trend in those servicing the oil patch – namely the financial treatment of orderbacklog. He highlights that Technip has good value in its backlog, however all profitable work for 2016 was booked in 2013/14. This will not be good for their P&L and key banking ratios next year, leading Technip to now predict that the worst is still to come for the sector.

Current debate in the sector, includes the ongoing impact of oil price volatility and how it will shape the structure of service and support industries to the sector. Unfortunately, much of the debate focusses on simple supply / demand economics, without taking a deeper look at the issues that make up price. If you are within the demand driven camp, and use the growing energy demand projections as a base for saying the price of oil is going up to the $90 – $100 mark , you generally ignore the fact that other energy sources become viable at the $70 mark, hence more competition in sources of energy. Further confusing the issue is the IEA recently revising its forecast down when talking of global oil demand, stating that the market will contract in 2016. Other factors, at a more generic level are the number of drilling and uncompleted wells (DUCs) available and less measurable impacts such as Iran supply and other geopolitical issues.

I have taken a bit of time looking at some of the macro picture in the sector, highlighting that one needs to look below the headline to get a better understanding of how the market is shaping up or how to guide your investment behaviour. I will now drill down into a single service provider to the oil and gas sector and extrapolate some of the more detailed DD that needs to be done. As a case study, I will use Singapore-based Ezion Holdings not only because I know the company fairly well but I have been a regular commentator to the industry, on this particular sector. I will also look at underlying assumptions made by the recent RHB report (2/7/2015) that was used in the recent Malaysian fund raising road show undertaken by Ezion Holdings. This will also challenge some of the assumptions, particularly what they see as strengths/opportunities, as this is where I believe investors should be focusing as these are used to smooth over the companies serious leverage issues.

These claims include, and discussed as follows:
  • Southeast Asia leader in liftboat and 65% growth in their fleet: Yes, they have had a significant growth in their fleet, but it is the composition of their fleet that is the concern. Twenty vessels are service rigs and this sector is under significant pressure as operators cut back offshore activity. When one notes that the useful life of a service rig is around thirty five years, risks for Ezion is that the average age of the Ezion rigs is 33 years. Furthermore, increase in fleet size is contrary to what is happening in the sector. There have been four liftboats, new but incomplete, offered on the open market in Singapore as well as witnessing newbuild contracts being delayed or cancelled. Companies are also in the process of downsizing their fleets to consolidate their financial position and in particular are scrapping or cold stacking their old fleet as there is an anticipated 30% oversupply of newer and more efficient rigs for 2016/17. An example of this activity is Transocean that has retired / scrapped 20 rigs in 2015 and will shrink its fleet to 63 rigs, and this is a company that does have a cash and balance sheet strength. In fact there are 110 new rigs due to be delivered in the 2105/16 cycle.
  • Forecast earnings to grow on the back of long term contracts and renewal of contracts on same terms: There used to be a time when a company could bank on contracts, but it is clearly evident from the activity in the market that this is no longer the case. In fact what we are finding is operators / contractors meeting to explore cost reductions as well as innovation to boost competitive advantage, this has led to lower project awards. Furthermore, there has been a 40% reduction in charter rates, and we are now seeing charter contracts being cancelled as a means to drive down costs. Rig owners such as Hercules and Transocean have felt this, with operators such as Statoil and Saudi Aramco culling contracts that still have in excess of 12 months to run – it is unlikely that Ezion will escape this. It is also possible that the recent legal case between AMS / Ezion with regard a long term Maersk charter was in fact a push to leverage charter rates down.
Furthermore, other issues that have not been included in the roadshow include the following:
  • Environmental approval issues tied to the sale of the Tiwi Island / Teras Australia logistics business to Ausgroup is under pressure, with the approval application only being submitted recently, potentially having catastrophic consequences for the proposed port / supply base. It has already been subject to an Australian government senate enquiry that has made potential users of the facility back away.
  • Business strategy suggests that there are a lot of moving parts and coordinated. For example, 30% acquisition of ROS Pte Ltd (Rotating Offshore Services) whilst introducing a new competitor into what they regard as their core strength via the TriYards deal.
Whilst there are many other issues one could debate, this opinion piece is not written to suggest whether Ezion presents as a good buy or not. It comes from the perspective of highlighting to potential investors / fund managers to look at the underlying fundamentals of a business / sector or industry before making an investment decision. One needs to be more robust in their due diligence when looking at opportunities that may arise, particularly in the shipping and service providers to the offshore oil / gas sector. The fundamentals in this market have changed and we see the closing down of profit loopholes that contractors could enjoy over the past few years. As the movie Hollow Man suggests, it is not what you can see that is the problem, it is the invisible that does the killing.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #24 on: August 17, 2016, 11:34:09 AM »
The hidden costs of China’s lifeline in the 1MDB scandal

By Sheridan Mahareva
16 August 2016

With Malaysia facing long-term repercussions for embracing Chinese money, experts warn prime minister is turning a personal scandal into a national problem

By spending about RM16 billion ringgit (US$4 billion) on troubled Malaysian state investor 1Malaysia Development Berhad (1MDB), China has bought a lot of clout in the corridors of power in this Southeast Asian nation.

Last month’s civil suit by U.S. authorities against personalities tied to 1MDB and their assets comes as local leaders worry the global financial scandal will have a deeper impact.

It is not just a question of whether Malaysia’s Prime Minister Najib Razak will serve out his term, or whether 1MDB’s mammoth debts will be fully repaid.

It is also now the country’s shrinking ability to chart independent domestic and foreign policy, because of the expensive deals — overt and covert — that will have to be made to resolve the scandal.

Some 1MDB critics also claim it is no coincidence the suit by the U.S.’ Department of Justice comes at a time of growing Chinese influence in Najib’s administration.

They point to the backdrop of the South China Sea disputes, where Malaysia and other Association of Southeast Asian (Asean) countries are locked in overlapping territorial claims with Beijing, and where the United States wants to maintain its dominance.

The sale of 1MDB’s power assets and property in November and December to two separate Chinese firms last year was part of the company’s push to raise money to pay the company’s debts.

1MDB, which is Najib’s brain child and whose advisory board he heads, racked up RM42 billion in debts within five years of operation. A former prime minister, Dr Mahathir Mohamad, described 1MDB as the country’s single largest financial scandal and has been campaigning for Najib to resign.

Although Najib has repeatedly denied wrongdoing, the U.S. civil suit pointedly states that US$3.5 billion was “stolen from 1MDB” by its officials and their associates. Of that amount, about US$1 billion was laundered through the US and used to buy lavish properties, expensive paintings and pay gambling expenses in the U.S.

China’s purchases of 1MDB assets had helped reduce its debts to RM40.4 billion, Najib said in his 2016 New Year’s Day address. But at least one deal was controversial.

The sale of 1MDB’s power assets to China General Nuclear Power Corp would have breached the limit of foreign ownership rules for local electricity companies.

1MDB critic and opposition law maker Rafizi Ramli had campaigned unsuccessfully to block the sale, claiming that it would threaten local jobs in the energy sector.

“Allowing a foreign company to fully control electricity production operations for a major national power producer has great risk.

“Electricity supply could be disrupted if there are future problems and the increase in tariffs would be based on the interests of these foreign companies,” Rafizi said last November.

Another parliamentarian, Wong Chen, said in the end the cabinet allowed an exemption to the foreign equity rules so that the deal could go through.

The government had made an exception, because it was desperate to bring in money to pay 1MDB’s debts, Wong said.

“There will be long-term geopolitical repercussions for Malaysia, because of this intense interest in embracing Chinese money,” Wong told This Week in Asia.

The trend of favouring mainland companies over others in large infrastructure projects in the future was likely to continue, said another parliamentarian, Charles Santiago.

The RM50 billion Singapore-Kuala Lumpur High Speed Rail project is another venture that could involve either expertise or money from China, he said.

“The Najib administration had also floated the idea of a nuclear power plant and this too could involve money from China.”

In Sarawak, a region that straddles the island of Borneo in East Malaysia, China’s pull in Malaysia is already affecting the incomes of local fishermen.

Reports from late last year claimed that Sarawakian fishermen — like their counterparts in Indonesia and the Philippines — had been chased away from their traditional fishing grounds in the Luconia Shoals by armed Chinese vessels.

In March, the Malaysian Maritime Enforcement Authority (MMEA) had reportedly spotted a fleet of Chinese trawlers fishing in the area.

Malaysia claims the shoals as being in its waters. But unlike Indonesia and the Philippines, it has yet to confront or capture Chinese fishing boats that poach in the area, despite vowing to do so.

Malaysia’s low key approach could be due to both China’s help with 1MDB and the country’s history with the superpower, said Dr Tang Siew Mun, a senior fellow at ISEAS-Yusof Ishak Institute in Singapore.

“Malaysia was the first Asean state to normalise relations with Beijing [in the 1960s] and it was the current prime minister’s father who paved the way for the renewed bilateral relations,” Tang said.

“Malaysia’s growing dependence on China for not only trade but investment, too, has had a direct impact on its response to the South China Sea disputes.”

In June, Malaysia unilaterally released what was supposed to be a joint-Asean statement on disputes in the South China sea, after an Asean meeting with China in Kunming (??). However, the statement was retracted hours later, raising eyebrows all-round as to why Malaysia did it — to force Asean’s hand or to show China up.

Tang of ISEAS believes China is likely to continue to deploy large-scale fishing fleets to affirm its claims over the sea. This could trigger more friction between the maritime forces and fishing fleets of Malaysia and China.

“This puts pressure on Malaysia to respond to these Chinese intrusions, pitting its political-economic [interests] against strategic interests,” said Tang.

In the end, said lawmaker Santiago, “Najib has succeeded in turning his personal scandal into a national problem”.

Sheridan Mahareva is a Kuala Lumpur-based journalist.

1MDB scandal: Malaysian PM Najib Razak says no one can force him out of office ~ 15 Aug 2016

Ex-Abu Dhabi official in Swiss crosshairs over stolen 1MDB funds ~ 14 Aug 2016

'Bank Negara, governor's credibility at stake over kid gloves on 1MDB' ~ 13 Aug 2016

‘1MDB case is closed’ ~ 13 Aug 2016

In a threat to China, Malaysia vows to sink illegal fishing boats in the South China Sea ~ 2 Aug 2016

How exactly Malaysia plans to sink illegal boats was not specified. China wants to become a major maritime power and claims nearly the entire South China Sea as its own, based on a “nine-dash line” drawn on a 1940s map. A ruling last month invalidated the claim under the UN Convention on the Law of the Sea (UNCLOS), but Beijing has vowed to ignore it and has belittled the tribunal behind it.

In the case of Malaysia, that means it can expect a Chinese presence in its exclusive economic zone (EEZ) extending from its portion of northern Borneo, also known as East Malaysia. Under UNCLOS, Malaysia should have sole extraction rights to all the natural resources extending 200 nautical miles from the coastal baseline.

Saudi royal oil group at heart of 1MDB case ~ 27 Jul 2016

1MDB: The case that has riveted Malaysia ~ 22 July 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #25 on: August 30, 2016, 08:32:51 AM »
A massive banking crisis is brewing in Singapore, says Swiss billionaire Zulauf ~ 11 Feb 2016

Singapore banks’ risk exposure to China is contained: Analysts

By Linette Lim
12 Feb 2016

A warning of a looming crisis in Singapore’s banking industry by a high-profile Swiss billionaire investor is being downplayed by analysts, who say the system is well-placed to handle any economic shocks.

Felix Zulauf said last month that a China-related economic shock could bring about a banking crisis in Singapore, with a risk of massive capital outflows, should the world’s second-biggest economy experience a hard landing.

But while the big three banks in Singapore – DBS, OCBC, and UOB – have significant lending exposure to the greater China region, analysts say the credit risk from this is mitigated in at least two ways.

First, the majority of the exposure is to Hong Kong, while the mainland China exposure is predominately trade finance related.

These are “short-term, self-liquidating trade loans, which are traditionally safer and are mostly backed by letters of credit from systemically important Chinese banks,” according to Mr Ng Wee Siang, a credit analyst at Fitch Ratings.

Second, the Singapore banking industry is tightly regulated, with major banks like the big three subject to more stringent capital requirements. In addition, these banks are making healthy profits, which "provide another layer of cushion,” said Mr Ng.


Among the three Singapore banks, DBS has the largest lending exposure to greater China excluding Hong Kong. From 2008 to end-June last year, this rose 9 percentage points to 17 per cent of gross loans. But DBS has said that it lends to better-quality Chinese and international corporates.

Mr Jack Wang, a partner at boutique investment firm Raffles Investment, said Mr Zulauf’s prediction of an impending banking crisis in Singapore is “unlikely and baseless”, given “the relatively small direct exposure of Singapore banks to China” and the fiscal and monetary discipline at both the banking industry and central bank level.

In its latest Financial Stability Review released in November 2015, the Monetary Authority of Singapore flagged rising risks to financial stability, but said that the financial system remains sound. In the report, the financial regulator also said that banks in Singapore have strong capital and liquidity buffers to withstand severe shocks.


Analysts also said Mr Zulauf’s prediction is premised on something that appears unlikely to happen.

Fitch, for example, thinks China has the financial and administrative resources to avoid a so-called hard landing to near-zero growth. Meanwhile, Standard and Poor’s said its base case scenario is one of a manageable slowdown.

“External headwinds from a China slowdown and commodities rout will weigh on the performance of Singapore banks, but their credit fundamentals will continue to be supported by their sound capitalization and liquidity levels,” said Mr Ivan Tan, a credit analyst at Standard and Poor’s.

Cash up or ship out: it's the big O&M squeeze post-Swiber

Deleveraging and improving cash flow are key for offshore and marine players - but time may be running out for some, say analysts

29 August 2016

Singapore - CASH flow statements and debt refinancing plans of O&M (offshore and marine) counters have come under intense scrutiny, as analysts and stakeholders attempt to distinguish players more at risk than others.

It's a wake-up call triggered by the demise of the industry's once rising star, Swiber Holdings, which is now in the midst of a judicial management exercise.

A Business Times scan of small and mid-cap O&M companies - drawn from the watch lists of equity analysts - indicates a challenging patch ahead for many.

These O&M players face four key challenges: high debt-to-equity gearing of over 100 per cent; low or negative cash flows; short-term debt of above S$100 million; and/or medium-term-note redemption deadlines running through 2019.

BT drew on data released as at Aug 19 on Bloomberg, latest company results, and analyst reports.

Of the 14 companies on the list, 12 have short-term debt of over S$100 million, 10 have negative/low cash flow, and nearly all are highly geared.

With recovery still eluding the sector, the key to survival depends on how far industry players have deleveraged or cashed up to last through an industry shake-up in the wake of Swiber, analysts said. However, time may just not be on the side of many small and mid-cap industry players even as enquiries for oilfield services have increased.

IHS principal researcher Ang Dingli noted that oil companies have grown more accustomed to lower (but more stable) oil prices and may issue more tenders for new field developments at the end of 2016 or early 2017 as they are also being pressed to replace depleting oil and gas reserves. But Mr Ang qualified that these tenders will be released at a more deliberate pace and for limited projects.

He also warned that only "a few fortunate O&M players" - primarily large- cap yard operators with established track records in executing engineering, procurement and construction (EPC) projects - may benefit from any uptick. The rest would have to tread water at least until the end of 2017.

Mr Ang noted that EPC contractors - primarily those with a yard presence - have "already done what they could to lower costs either through restructuring or retrenchments of non-core staff".

He sees a lack of demand for their services as the bigger setback. Adding to the woes of small and mid-cap EPC contractors is excess capacity, partly from overinvestment in the module fabrication sub-segment in the days of high oil prices.

These contractors also face challenges from higher local content requirements imposed by some national oil companies that could restrict participation in subcontract work for new EPC awards.

EPC awards would also take months to multiply into contracting opportunities for supporting services including those for offshore support vessels (OSV).

The OSV segment is still haunted by a supply glut from excessive newbuilding and demand destruction from a slump in offshore drilling and EPC activities. Pareto Securities chief executive David Palmer said: "There is a tsunami of newbuilding (OSVs) completed and ready for delivery that are sitting in the yards."

The key uncertainty, according to Mr Palmer, is that "the exact number of newbuilding OSVs is indeterminate" and that "most industry numbers are understated". He suggested the supply glut - though more prevalent among shipshape OSV assets - has also compromised demand for liftboats, which were once touted as an asset class still above water.

One estimate is that hundreds of OSVs have yet to be delivered from China. M3 Marine's managing director Mike Meade noted that Chinese shipbuilders have tried to link up with active OSV operators to offload the excess vessels (resulting from defaults on shipbuilding contracts). The result could be more vessels competing for work in an already oversupplied OSV market.

One of the world's largest OSV owner-operators, Tidewater, recently breached an interest covenant, sparking speculation that the New York-listed player may file for Chapter 11 bankruptcy protection if it cannot secure waivers from its lenders and noteholders. Tidewater is headquartered in New Orleans and operates as a private-owned entity in Singapore.

On the situation here, Gibson Dunn & Crutcher LLP partner Robson Lee warned: "Holders of unsecured bonds issued by a company that has become mired in dire financial straits (such as Swiber) will have very little recourse to recover their investments in the event of an insolvent winding up." He noted that in such a situation, there is certainly no chance of any redemption. Others noted that bonds or debts in the O&M sector would have to be restructured (which typically involves either a substantial haircut or conversion to equity) or their repayments deferred. Support from lenders will be crucial.

Regional maintenance, repair and overhaul (MRO) solutions provider Mencast has, for instance, secured loan and credit facilities of up to S$74.9 million from UOB that will go towards redeeming S$50 million of outstanding bonds due on Sept 12, refinance certain liabilities, and provide for its working capital needs.

In Swiber's case, the affidavit for its judicial management application indicated that it had taken up lending facilities from DBS to repay medium-term notes due in June and July. BT earlier reported major local banks have worked with Swiber as well as Pacific Radiance to extend repayment deadlines for their loans. However, Swiber's subsequent troubles prompted some to ask if those efforts had been adequate in the face of a major O&M meltdown.

Unlike Swiber, some Singapore-listed players may be able to tap their cash-rich anchor shareholders. Malaysian tycoon Yaw Chee Siew, who has bankrolled Otto Marine through the years, set out earlier this year to take the OSV-focused player private. His decision to delist Otto Marine came as depressed O&M stock prices limited the effectiveness of further equity injections.

For O&M players with no cash-rich anchor shareholders to lean on, Mr Palmer extended a glimmer of hope: that the needed cash could eventually enter the system from "some unconventional sources not previously in this sector". But this may "severely dilute existing equity".

He warned that under the current excess capacity conditions (particularly severe in the OSV segment), "we will need to see more 'blood' before more sustainable capital will come in to fund companies".

But for the brave, there could be bargain-hunting opportunities. "Investors . . . have to tolerate extreme volatility and uncertainty in the short term but those who can identify companies that will make it through stand to (reap) fantastic returns," Mr Palmer said.

DBS is one of the principal bankers for almost all the O&M companies in the list.

Latest Splash Chat live Q&A casts a long, dark shadow over offshore ~ 26 Aug 2016

KrisEnergy faces debt covernant stress, bond value plunges ~ 16 Aug 2016

Double boost for Vallianz post-Swiber ~ 15 Aug 2016

Tidewater misses on earnings, may file Chapter 11 ~ 11 Aug 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #26 on: August 30, 2016, 09:17:12 AM »
Hollow man or how inattention to industry fundamentals can kill ~ 13 July 2015
Whilst there are many other issues one could debate, this opinion piece is not written to suggest whether Ezion presents as a good buy or not. It comes from the perspective of highlighting to potential investors / fund managers to look at the underlying fundamentals of a business / sector or industry before making an investment decision. One needs to be more robust in their due diligence when looking at opportunities that may arise, particularly in the shipping and service providers to the offshore oil / gas sector. The fundamentals in this market have changed and we see the closing down of profit loopholes that contractors could enjoy over the past few years. As the movie Hollow Man suggests, it is not what you can see that is the problem, it is the invisible that does the killing.

Cautionary tale of research reports ~ 27 Feb 2016

“The crowd always loses because the crowd is always wrong. It is wrong because it behaves normally.” ~ Fred C. Kelly

EZION closed @ S$1.975 on 10 July 2014.

EZION ~ Bearish symmetrical triangle breakout, interim TP S$0.195, next TP S$0.172

EZION closed with an inverted hammer @ S$0.24 (-0.01, -4%) with 11.9m shares done on 25 Aug 2016.

Immediate support @ S$0.22, immediate resistance @ S$0.26.

EZION ~ Racing to the bottom

EZION had a bullish counterattack and traded @ S$0.285 (+0.015, +5.6%) with 18.9m shares done on 3 Aug 2016 at 1255 hrs.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #27 on: September 22, 2016, 06:56:16 AM »
Behind every default was once a darling — Swiber ~ 1 Aug 2016

Swiber defaults on interest payments on second series of bonds

By Zeng Xiaolin
East Asia correspondent
19 September 2016

Singapore-based offshore oil and gas player Swiber Holdings, which has applied for judicial management, said on 16 September that it would default on interest payments due to holders of its Series 017 Trust bonds on 18 September.

The CNY450 million (USD 73.14 million) issue, which was issued on 18 September 2014, had an annual yield of 7.75% and would mature on 18 September 2017. The bond is part of a SGD1 billion (USD791.65 million) debt issuance programme. Swiber’s stocks have been suspended from trading since 26 July.

Swiber has also defaulted on interest payments on its Series 001 Trust bonds that were due on 2 August. That issue had an annual yield of 6.5% and would mature in 2018.

Swiber filed for winding up on 27 July. However, on 29 July, after a meeting between the company’s directors and its main financial creditor, Swiber cancelled its winding-up application and filed for receivership. The creditor had indicated it supported Swiber continuing to operate under administration.

The company’s woes were exposed after creditors sent letters of demand for outstanding payments. As of 15 September, such arrears totalled USD231.4 million, while Swiber has total debt of USD1.43 billion as of 31 March.

Many companies in the offshore oil and gas space have been hit hard by the collapse of oil prices, which has caused oil majors to slash capital investment. This has, in turn, hurt demand for rigs and drillships, and subsequently, offshore support vessels and engineering, procurement, construction, and installation services.

DBS Bank, Southeast Asia’s largest bank, has also been hurt by the fallout, with SGD700 million (USD524 million) of exposure to Swiber in the form of loans, bonds, and off-balance sheet items.

DBS said it expects to recover half of this as the exposure is partially secured. DBS said it will also fully provide for the anticipated shortfall, using its surplus general allowances, and that the net allowance charge will be lower at around SGD150 million.

Amid the downturn in the oil and gas and shipping sectors, struggling companies have been asking to reschedule bond payments or swapping debt for equity.

On 15 September, Singapore-listed trust Rickmers Maritime, which is sponsored by Rickmers Group, held an informal meeting with bondholders.

The trust, led by Soren Andersen, has a SGD100 million (USD74.85 million) bond issue maturing in May 2017. The bonds were issued in May 2014 and yielded an interest of 8.45% per annum. During an informal meeting with bondholders on 15 September, the trust’s management said that adverse market conditions have affected its financial performance and it has suffered a wider loss of USD55.58 million for the second quarter of 2016, from a USD15.67 million loss in the second quarter of 2015, as charter rates and vessel utilisation fell amid chronic oversupply.

As of 30 June, Rickmers Maritime had a massive working capital deficit of USD320.7 million, but leverage was manageable, as total unit holders’ funds of USD306.6 million far exceeded long-term debt of USD13.19 million.

Under these conditions, the trust said it is unable to repay USD179.7 million in senior debt due in 2017, and is unable to meet interest and principal repayments of the bond issue concerned.

Rickmers Maritime is therefore offering to exchange the existing principal amount of the bonds for SGD28 million of new shares in order to avoid a total loss on the bonds and to allow continued interest payments under the new share. Any recovery in the stock price would also benefit the bondholders.

Consent from at least 75% of the bondholders is required for the debt-for-equity swap to be approved. Failure to secure the bondholders' agreement could mean liquidation for the trust, as such agreement is a prerequisite for a USD260.2 million refinancing facility to be granted.

It is understood that the proposal did not go down well with the bondholders, and they urged the trust’s management to produce a more reasonable offer. Over 30 bondholders have formed a steering committee and plan to appoint lawyers to negotiate better terms with Rickmers Maritime.

How Singapore’s not-really-rich have been burned by Swiber bonds ~ 20 Sep 2016
When Elaine Tham signed an “accredited investor” form with her bank in Singapore 2 years ago, she took a fateful step toward losing all the money she had set aside for her children’s education. She agreed to invest S$250,000 in the bonds of a small Singapore energy-services company, Swiber Holdings Ltd., which said in August that it won’t be able to repay its bondholders. Elaine Tham is one of many Singaporeans who lost money by investing in Swiber, which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore.

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #28 on: September 22, 2016, 07:12:52 AM »


Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #29 on: October 06, 2016, 03:28:03 PM »
NYC's dirty money files ~ 3 Oct 2016

Authorities say Low headed Good Star Ltd, a company that received a massive $1.03 billion from the fund. So it’s not surprising he was able to drop so much cash on real estate, art and partying in New York. He allegedly moved money between accounts in Singapore, Switzerland and New York “in a manner intended to conceal” the origin of the money.

Switzerland pressures Malaysia over 1MDB 'Ponzi scheme' ~ 5 Oct 2016
In January 2016, 1MDB’s debts ballooned from Rm5 billion to Rm50 billion.

Singapore urged to step up policing of financial crime ~ 27 Sep 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #30 on: October 08, 2016, 06:17:25 AM »
Why Hillary Clinton could be in even stronger shape than the polls show ~ 7 Oct 2016

Selected not elected – Rothschilds hold $100,000 a plate dinner fundraiser for guess who ~ 4 Oct 2016
The evidence of politicians for sale to the highest bidder lends credibility to a 2014 study from Princeton University that revealed the U.S. is not a republic or a democracy, but rather an oligarchy. An oligarchy is a form of government in which power resides in the hands of a small number of elites within a society.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #31 on: October 23, 2016, 11:06:00 AM »
Trump gains on Clinton, poll shows 'rigged' message resonates ~ 21 Oct 2016

Why Hillary Clinton could be in even stronger shape than the polls show ~ 7 Oct 2016

Selected not elected – Rothschilds hold $100,000 a plate dinner fundraiser for guess who ~ 4 Oct 2016
The evidence of politicians for sale to the highest bidder lends credibility to a 2014 study from Princeton University that revealed the U.S. is not a republic or a democracy, but rather an oligarchy. An oligarchy is a form of government in which power resides in the hands of a small number of elites within a society.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #32 on: November 17, 2016, 11:23:40 AM »
Manus Island, Nauru refugees could wait months before being resettled in the US under new deal ~ 15 Nov 2016

Australia's refugee deal may be scuppered by Trump, US expert warns ~ 14 Nov 2016

Trump says he would not admit refugees without community support ~ 7 Nov 2016
Trump said in Minneapolis that people there had already seen the results of "faulty" vetting with Minnesota's community of Somali Muslims.

A decades-long voyage by ex-Vietnamese refugee to reunite with rescuer ~ 24 Oct 2016

Rohingya children in Malaysia, an undocumented life ~ 20 Jun 2016

First-class refugees: Malaysia's two-tier system ~ 27 Dec 2015
Malaysian government extends helping hand to Syrian refugees, as thousands of other refugees struggle in illegal limbo.

The Ministry of Home Affairs (MHA): Singapore will not be accepting refugees as it is a small country with limited land ~ 16 May 2015

Why no one wants the Rohingyas ~ 15 May 2015

Malaysia and Thailand turn away hundreds on migrant boats ~ 14 May 2015

40 stranded refugees will die if help doesn't come soon ~ 20 Dec 2012

Malaysia takes in 40 Myanmar shipwreck survivors ~ 18 Dec 2012

Singapore denies entry to ship carrying 40 boat people ~ 15 Dec 2012

Rohingya refugees streaming to Malaysia ~ 9 Nov 2012
People smugglers receive large sums from Myanmar's minority Muslims to make the dangerous trip to Malaysia.

Burma's Rohingya: The human story ~ 23 Jul 2012

Why is the world ignoring Myanmar's Rohingya? ~ 23 Jul 2012

A forgotten past – Vietnamese boat people in Singapore ~ 1 Jul 2011

Singapore: 25 Hawkins Road Refugee Camp ~ Between 1978 and 1996

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #33 on: January 14, 2017, 12:35:13 PM »
"I've always preferred mythology to history. History is truth that becomes an illusion. Mythology is an illusion that becomes reality." ~ Jean Cocteau

Another million-dollar loss at Seascape condo

By Feily Sofian
January 14, 2017

As the world celebrated the year-end festive season, a three-bedroom unit at Seascape in Sentosa Cove changed hands at a loss of $1.47 million on Dec 27. It joined the recent spate of unprofitable transactions on the paradise island.

The seller of the Seascape unit purchased the property from the developer at $2,631 psf in 2010 and resold it at $1,955 psf. The loss worked out to 26%, or 4% per annum over almost seven years.

The latest loss, however, paled in comparison to a preceding transaction in the development. Last October, a four-bedroom penthouse in Seascape was sold at an eye-watering loss of $4.65 million. The unit was bought in the secondary market at $2,594 psf in 2011 and resold at just $1,497 psf, 42% below the purchase price. Seascape is an eight-storey seafront project comprising only 151 units. The 99-year leasehold development was completed in 2011.

Around 70%, or 15 out of 21, of resale transactions at Sentosa Cove in 2016 were in the red. The average loss was $1.35 million.

Of the six profitable transactions last year, three were for The Azure. All three units were purchased in 2005 and 2006, at prices averaging $1,157 psf. They were resold in 2016 at an average price of $1,421 psf, or between $2.3 and $4.6 million each.

The second-highest loss in the week of Dec 27 to Jan 3 amounted to $817,000. It accrued to a 1,604 sq ft unit at One Shenton. The seller purchased the unit at $2,069 psf in 2007 and resold it at $1,560 psf on Dec 28. The loss worked out to 25% or 3% per annum over more than nine years.

A total of six of seven resale transactions at One Shenton were unprofitable in 2016, with losses ranging from $53,722 to $1.68 million. The sale price for the loss-making transactions averaged $1,680 psf. The sole profitable transaction was traced to a shoebox unit that was bought at $2,030 psf in 2010 and resold at $2,058 psf, resulting in a modest gain of $16,000 for the seller. One Shenton is a 99-year leasehold project in District 1 that was completed in 2011.

The highest profit in the week of Dec 27 to Jan 3 accrued to a 1,550 sq ft unit at Rivergate, a 545-unit freehold apartment at Robertson Quay, fronting the Singapore River. The property was bought in 2008 at $1,100 psf and resold at $1,935 psf on Dec 28. This resulted in a profit of $1.3 million, or 76%.

How to convert a S$3.2 million property loss into a S$1.5 million gain

18 Jun 2015

When an overseas buyer invests in a Singapore property, he (or she) is converting his home currency into Singapore dollar.   As such, he is taking a currency bet.

As you can see from Quadrant A in the Currency Bet Outcome graph, what the buyer wants to happen is for both the value of his property and the Singapore dollar to increase.  If this happens, jackpot!

First, he makes money on his Singapore property.  Then, he converts his Singapore dollars into his home currency and makes more money from the currency differential.

The worst outcome is Quadrant D.  A drop in property value and a weakening of the Singapore dollar deliver a double whammy.  Not only does he have less Singapore dollars than when he started, but he converts his Singapore dollars into less home currency.

The unknown outcome occurs when property value and the Singapore dollar move in opposite directs to one another.  (See Quadrant C and D.)

Whether the investor comes out ahead or loses depends on which of the two variables had the stronger positive movement.

In order to illustrate, let’s look at a hypothetical transaction that was based loosely on an actual transaction in Sentosa.  (The currency has been changed but the principles of the transaction are reflective of the actual situation.  Also, the illustration doesn’t account for transaction costs, taxes, etc.).

In June 2012, a Japanese buyer exchanges 1.25 billion Japanese Yen (JPY) for $ 20.2 million and buys a house in Sentosa. (Exchange rate: 1 SGD  = 61.96 JPY.)

Almost two years later, during the property market’s downturn, he sells the house at $ 17.0 million.

This results in a loss of $ 3.2 million (i.e., 20.2 minus 17).

He then changes the $17 million into JPY, which gives him the SGD equivalent of 1.37 billion JPY. (Exchange rate:  1SGD = 80.76  JPY.)

His net profit in Japanese Yen is 1.37 billion minus 1.25 billion or 120 million JPY, which is about $1.5 million.

In this case, despite the fact that he sold the house at a loss, he made a profit.

Carry Trade
  • A carry trade is when investors borrow in a low-yielding currency, such as the yen or the euro, to fund investments in higher-yielding assets elsewhere.
  • A currency carry trade is a strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate.

JPYSGD @ 0.0124 on 14 Jan 2017

SGDJPY @ 79.9970 on 14 Jan 2017

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #34 on: January 14, 2017, 02:00:44 PM »
"It’s troubling to see Malaysia again favoring limits on capital over getting under the economy’s hood. If Malaysia goes too far, it risks scaring away foreign investors."

‘Malaysia vulnerable to capital outflow risk’

By Anette Appaduray
January 11, 2017

An analysis by Moody’s Investors Service of the creditworthiness of sovereigns across Asia-Pacific puts Malaysia on the list of countries that are most vulnerable to capital outflows.

“Direct exposure to capital flows is highest when financing needs are large to cover [the] current account or external debt payments. In Asia-Pacific, Mongolia (Caa1 stable), and to a lesser extent, Sri Lanka (B1 negative), Malaysia (A3 stable) and Indonesia (Baa3 stable) are among the most vulnerable,” said Moody’s in a report entitled "Sovereigns — Asia-Pacific: 2017 Outlook — Stable Outlook Balances External, Political Risks Against Economic, Institutional Reforms".

Moody’s noted that for China, its large official reserves provide ample external liquidity, but tighter external financing and potentially increasing capital outflows could hamper the effectiveness of domestic financial policies.

“In addition to external trade and financing pressures, a key driver of sovereign credit trends will be the policy efforts of governments,” it said in a statement yesterday.

Capital inflows to emerging markets could be abruptly tapered due to the downward trend in global growth and increases in US interest rates. But Moody’s stated that the outlook for creditworthiness of sovereigns in Asia-Pacific is stable overall for 2017.

“Rising income levels and strengthening institutions will offer support to several sovereign credit profiles in the region,” it added.

Moody’s said despite robust gross domestic product (GDP) growth, slowing global trade rates and capital outflows may dampen credit profiles of nations that are dependent on external demand and financing.

“Moody's GDP growth forecasts already take into account expectations of slow global trade, which is particularly relevant for export-reliant economies like Hong Kong (Aa1 negative), [South] Korea (Aa2 stable), Singapore (Aaa stable) and Taiwan (Aa3 stable),” it said.

“Credit outcomes in 2017 will be determined by the effectiveness of ongoing reform efforts and evolution of political risks,” Moody’s added.

Moody’s report explains that most of its rated sovereigns in Asia-Pacific carry ratings with stable outlooks, but negative outlooks outnumber positive ones. Of the 24 sovereigns that Moody's rates in Asia-Pacific, there were 18 stable outlooks as of yesterday, four negative and two positive.

“Moody’s further points out that rating actions in 2016 were overwhelmingly negative, with 10 negative and only one positive over the course of the year,” it added.

It also found that in 2016, 38% of rated sovereigns in Asia-Pacific experienced a decline in fiscal strength, while 42% may suffer a higher susceptibility to event risk.

Moody’s said the authorities are formulating policies that range from those that address acute near-term challenges to longer-term improvements in credit profiles, but individual countries’ capacity to implement such policies varies across the region.

“The capacity of governments to implement measures and the effectiveness of policies in achieving respective governments’ objectives will shape the sovereigns’ credit profiles over the coming year,” it said.

Political developments and risks will also worsen negative credit drivers, and hamper credit-supportive factors in the region, as they could interfere with governments’ ability to implement reforms.

But it noted that implementation processes in countries like India (Baa3 positive), Indonesia (Baa3 stable) and the Philippines (Baa2 stable), where reforms are ongoing, would boost medium-term growth.

Growing optimism for the ringgit to strengthen in the second half ~ 7 Jan 2017

Will Malaysia's property market pick up? Where are the catalysts? ~ 31 Dec 2016

Trump tantrum puts Malaysia in spotlight ~ 24 Nov 2016

It’s time the nation’s embattled leader looked in the mirror and examined his role in the ringgit’s recent plunge.

Stronger ringgit by September? An over-optimistic prediction, experts say ~ 7 Jan 2017

BNM’s international reserves at US$94.6b as at Dec 30, 2016 ~ 6 Jan 2017

Hello 2017, it's me, says Weak Ringgit ~  5 Jan 2017

Ringgit stumbles into 2017 ~  3 Jan 2017

Thailand, Indonesia and Malaysia sign currency deal amid decline against greenback ~ 24 Dec 2016

Bank Negara spends US$1.9bil defending the ringgit ~ 8 Dec 2016

Bank Negara intervention to support ringgit unnecessary, says AIBC ~ 7 Dec 2016

Battered Malaysian ringgit keeps tumbling: 5 key questions ~ 2 Dec 2016

Bank Negara unable to stem ringgit's plunge against other currencies

By Pauline Ng
1 Dec 2016

Kuala Lumpur - BANK Negara Malaysia's (BNM) intervention in the currency market may have partially checked the ringgit's fall against the US dollar, but it has not halted the beleaguered unit's headlong plunge against other major and regional currencies including the Singapore dollar.

Market economist Suresh Ramanathan suggested "drastic policy moves" are required at this point including the liberalisation of the capital account.

"Allow the currency to be convertible on the capital account. Let the ringgit be traded offshore," he said. "As much as you tell everyone the ringgit is stabilising against the USD, it is weakening against other currencies - and to record levels as well for some."

The local unit crumbled to about 3.1340 to the SGD on Wednesday - a level previously unseen - and was also rapidly declining against other currencies although it continued to hover at around 4.460 to the greenback.

Mr Ramanathan observed that, as the central bank was targeting only USD/MYR and not the other trade- weighted currencies, they had gained tremendously against the ringgit. He did not think the central bank could stem the USD advance in the longer term despite its intervention in the currency market, including prohibiting onshore banks from trading the ringgit in the offshore NDF (non-deliverable forward) market, and asking foreign banks to commit to doing so.

Sunway University Business School economics professor Yeah Kim Leng said that, on a sovereign or country risk basis, Malaysia is seen to be relatively more vulnerable owing to its lower foreign reserves of about US$98.3 billion (S$140 billion) in mid-November. Its external debt-to-GDP ratio is also high - at about 66 per cent compared to Thailand's 32 per cent in 2015.

Consequently, funds have been withdrawing their investments, Prof Yeah said, adding that BNM's recent tightening of the ringgit NDF market "had also contributed to the response" because investors perceive Malaysia to be reverting to capital controls, albeit in a limited way. "Financial markets are always prone to overreaction. The challenge at present is to stabilise sentiment," he said.

Mr Ramanathan said the central bank's focus on the USD/MYR had led the exchange rate to trade in a straight line for the greater part of the week "while other currencies have hit the roof".

"They are hoping the USD will falter over the next few days, and the ringgit can rally or capitalise on it. It's their typical modus operandi," he said, pointing to past interventions "when the ringgit enters a weaker zone".

Although the ringgit has held steadier against the USD in the past few days, it is 6.6 per cent lower against the greenback for the month of November; it is also significantly smaller against the SGD (4 per cent) and CNY (5 per cent), and other major currencies as well.

Negative sentiment has also rubbed off on the equities market, which closed the month 3.2 per cent lower; volume traded was reduced by a fifth.

Mr Ramanathan said BNM appears to be running out of ideas given it has been three weeks since Donald Trump's unexpected US presidential election win - which triggered an initial outflow of funds back to the US on expectations of higher inflation owing to a planned increase in spending on local infrastructure.

Rather than implementing defensive moves and blaming speculators for the current volatility, he said, the central bank should allow the ringgit to trade offshore as it was doing before the Asian financial crisis, since the authorities maintain Malaysia is an open market economy and the currency is fundamentally undervalued.

"What is stopping them from letting the ringgit be traded offshore?" Mr Ramanathan wondered. At the very least, BNM ought to allow convertibility of the ringgit offshore on a limited basis in Singapore, he said.

SGD-MYR ~ May 2015

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #35 on: January 16, 2017, 06:10:28 PM »
Is Singapore at risk of becoming a rentier society?

By Lee Su Shyan
11 Jan 2017

In this time of economic transition, there is a need to guard against a tilt towards moneymaking from investments at the expense of productive work.

A widely held view is that Singaporeans have a fixation with property, be it on an individual level or at a corporate level. Despite various property cooling measures, a condo launch in a good location - not priced cheaply, but affordably - can yield a respectable response. Several tycoons have made it big through the rise of property assets, whether through Far East Organization, CDL and Hong Leong or even OCBC Bank. Several Temasek-linked companies have also performed well from property, including CapitaLand, Keppel Corp and Mapletree.

Yet another prevailing view is that high rents are killing the fledgling entrepreneur or the regular small and medium-sized enterprise. This goes hand in hand with the view that the local retail industry is in the doldrums because only large cookie-cutter chains can afford the rents that the top malls charge while shops full of character are squeezed out.

Fact or fiction, myth or reality, these views may be one reason why a recent commentary by Professor Tommy Koh in this newspaper on the Singapore economy's structural issues resonated with many readers. He touched on the high costs in Singapore and said some friends had decided to close their businesses because of escalating rentals. One friend even warned that Singapore was in danger of becoming a rentier society, he said.

Just what is a rentier society, and what are the risks to Singapore if it becomes one?

Of rent and rentiers

In economics, a ''rent'' is money you make because you control something scarce and desirable, whether it's an oilfield or a monopolistic position in a market. There is a bit of ''rent'' in nearly every transaction, the US economics journalist Adam Davidson once explained in a New York Times article.

"When you pay rent on an apartment, some of the money is for the value the landlord has added to the property, say, by upgrading the kitchen. But much of the money your landlord makes comes from the fact that he or she controls property in a desirable location," he wrote.

The term rentier is used to refer to someone who lives off savings or inherited wealth, rather than through productive work. Every society has its share of rentier activity, with people and companies making money off investments.

Indeed, speaking at a Singapore Institute of International Affairs event in late 2014, Mr David Pilling, then Asia editor for The Financial Times, said that going forward, he expected Singapore to put more focus on investment through companies like Temasek Holdings.

"To some extent, I think part of the Singapore economy will become what you might call a 'rentier economy'. Singapore is very wealthy, it has a lot of savings, it also has a lot of know-how. So one of the ways Singapore can make money is by placing bets on other companies, other countries, other technologies. Just like how a big pharmaceutical company, for example, has all its R&D in-house and it takes stakes in and might even buy technology companies," he said.

"This is a process of hedging, it is a processing of turning savings into a stream of income. This is already a part of what Singapore does and it would be my guess that they will continue to do it and it will become more important," he added.

So what then was Prof Koh warning against when he used the phrase "rentier society" and why did it resonate with many? A plausible explanation is that Prof Koh and many other Singaporeans are worried that a disproportionate share of the fruits of economic growth accrue to rentier individuals or companies, at the expense of people and small businesses doing productive work.

High rents

A couple of years ago, the Ministry of Trade and Industry presented a paper on the link between Reits and high rents. What it found was that rents were generally higher at Reit malls than single-owner malls and that rents had indeed risen faster at these malls. But the academics found that this was due to the characteristics of the mall - better location, for example - and the rise in rents was not per se caused by the Reit's acquisition.

It would be foolhardy for a Reit to kill the goose that lays the golden eggs. As the economy slows, rents will have to reflect the reality on the ground. A check showed that CapitaLand Mall Trust's (CMT's) rental reversion for the first nine months of last year was 1.3 per cent. CMT counts Junction 8, Bugis Junction and Tampines Mall among its portfolio properties. Rental reversion refers to the change in current rental rates compared with the rates inked previously. At 1.3 per cent, this means that rents increased by about 0.4 per cent per year for a typical three-year lease, a figure that hardly resembles a galloping increase.

Reit managers would also resent the accusation that they just sit back and collect rents. With so many malls having sprung up, they have to invest to enhance the mall, to keep themselves in the game.

CMT's IMM Building in Jurong, for example, offers a centralised dishwashing service so that tenants do not have to bother about hiring their own dishwashing staff. CMT has also introduced better security technology at some of its malls that maintains the level of security but reduces the number of security guards needed.

Industrial rents are on a downward trend. A report by property consultancy Savills on the third quarter of last year saw average prime monthly rent for the factory and warehouse sector slipping 6.3 per cent from the second to third quarter to $1.50 psf.

Sale values also declined. Savills said prices for upper-storey factory and warehouse units on 60-year leases fell about 4.7 per cent from the second to the third quarter while values for similar units with 30-year leases fell 2.1 per cent over the same period.

Still, since Singapore is a global city, rents and property values are high. Singapore comes in at No. 4 in prime logistic rents in a report by property consultancy CBRE last year, although growth has slowed somewhat. In terms of prime occupancy costs, Singapore was ranked No. 20 in another CBRE report.

It may be true to say that business rents are not skyrocketing. But they remain a bugbear among SMEs.

The latest annual survey by the Singapore Business Federation (SBF) found that 68 per cent of respondents cited operation costs (excluding labour costs) as the biggest challenge of operating in Singapore, while 66 per cent cited manpower issues and 55 per cent said it was business competition.

SBF CEO Ho Meng Kit said: "In the midst of the tepid economic climate, rent continues to be an issue for local companies as it forms a large part of operation costs (excluding labour costs) of most traditional offline businesses."

Times are changing

Property looms large over the economy and Singapore psyche.

Many investors have preferred to put their money in something tangible because they believe property can be a store of value. Investors have long memories of racking up losses when the stock markets tanked.

So far, the property market has delivered on many occasions, for both individual investors and Singapore businesses. A person who bought a property in 1990 is undoubtedly sitting on a large gain, even though it may be smaller than at the market's peak.

As the Singapore and Asean economies mature, a certain level of wealth has been attained. The growth of private banks and wealth management outfits testify to an increasing number of second- and third-generation wealthy individuals who will be hoping to preserve and grow their wealth.

The story of Singapore and rent-seeking behaviour has certainly become more nuanced.

An early precursor was the Asian financial crisis, when companies and individuals lost money, which gave the first inkling that property might not be a safe bet.

Fire sales may still be few and far between, but it is more common now to see prime luxury properties selling at up to 20 per cent off their previous asking price (or even their previous transacted price).

However, it is not that many people still aspire to be landlords today. And even if they do, most realise that they need to go into it with their eyes open, to choose properties in a desirable location and maintain them well. Tenants have to be courted to sign the lease and incentives have to be thrown in to get them to renew.

While previously many professionals became property agents, their numbers have now shrunk.

Rent-seeking behaviour does not refer only to property owners. It can also refer to assets such as stocks and shares. As the financial service sector grew in London, for example, it came in for criticism for adding little productive growth to the economy compared to manufacturing, which shrank.

And certainly the involvement of the public sector has curbed any excesses of rent-seeking behaviour, according to Professor Sarah Cheah from the National University of Singapore (NUS) Business School. She points to how the Government can achieve a more purposeful way of organising economic activities to promote more productive use of resources.

A good example is the development of a 200ha zone to create One North to host clusters of world-class research facilities, innovation agencies, start-ups, SMEs and multinational companies. Through these clusters, public and private organisations can operate in a more synergistic and cost-effective manner to promote innovative activities.

However, Prof Cheah notes that innovation can also happen in unfavourable circumstances. High rents, for example, could lead to a development of new business models such as e-commerce.

Singapore has prospered from the growth of the economy and the corresponding growth of its property market. Many have seen the value of their HDB homes rise, and a few have reaped the windfall from en-bloc exercises. Others have seen the value of their office buildings soar.

As the Singapore economy seeks out new paths to grow, it is timely to have a debate on whether the focus on various resources is appropriate and whether they are being put to the best use.

The Terminal 2004 [F.U.L.L] Movie - Tom Hanks, Catherine Zeta-Jones, Chi McBride
The Terminal is a 2004 American comedy-drama film directed by Steven Spielberg and starring Tom Hanks and Catherine Zeta-Jones. It is about a man who becomes trapped in New York's John F. Kennedy Airport terminal when he is denied entry into the United States and at the same time cannot return to his native country due to a military coup. The film is partially inspired by the 18-year stay of Mehran Karimi Nasseri in Terminal 1 of Charles de Gaulle International Airport, Paris, France, from 1988 to 2006.

Woman lives in Changi airport for 8 years ~ 10 Jan 2017

有家却不住 妇女睡新加坡机场长达8年


































Singapore REITs record highest yields amongst developed markets; Consumer confidence hits seven-year low ~ 20 Oct 2016

Rental kill retail business

By John Seah
1 Jul 2016

I read with regret that 77th Street is closing by end July 2016, as reported by CNA.

There is something very wrong with the business environment that is killing the shopping paradise Singapore.

It also kills any thought of becoming a retail entrepreneur in Singapore.

However, I must say that this is also happening everywhere else in the world like Hong Kong, Taiwan, Europe etc...

The introduction of REIT's concept makes it even worse. The initial idea was to have REITs gather funds to upgrade and maintain these  estates and in return, the investors get monetary returns yearly.  However, the yearly increase in profit expectations has caused the retail sector rental to increase beyond any reasoning.

According to 77th Street Founder Elim Chew, the rental has gone from $9psf to $25psf in the last 20 years.  That is an increase of 300 percent.

Did any business in Singapore increase their profit by 300 percent during the last 20 years with the exception of the property company and Banks?

The only thing we see is increased prices for food, clothing, education, transport and everything else.

This increase is due to property and rental prices, take up a large percentage of businesses.   With higher rental cost,  the retail food and goods will have to be price higher, resulting in consumers(workers) asking for a higher salary as they now pay more for everything.

It is just a vicious cycle. 

There have  been arguments that salary rise is the cause of  business costs, but I beg to differ.

For example, The cost of a 3 room flat 30 years ago was SGD$30K.  now it is SGD$300K to SGD$400K depending on area and level.  HDB says it is due to better quality material, design and as income rises, we expect better.

I do agree, but does the housing quality increase by 300 times? We now get a smaller unit and higher price!

Do we now earn 300 percent more compared with 30 years ago?

It's the same for commercial property .

This is primary due to land cost and in turn, causing the property bubble.

The rise of online retail is going (actually already started)  to hurt retail business badly and it is only going to get worse.

Why is JTC still maintaining high rental prices when manufacturing sectors have shrunk  and a lot of JTC flatted factory remains empty?

If it is truly supply and demand, then these units should be lowering their prices since there are no takers!

We really need to look at controlling commercial property prices and rental if we still want to attract any foreigners to come and shop in Singapore.  How? I really don't know!

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #36 on: February 04, 2017, 11:28:00 AM »
I had no hand in BMF scandal, says Mahathir ~ 26 Jan 2017
Former prime minister says CIA document does not blame him.

BMF scandal ‘extended’ into Malaysian ex-PM Mahathir’s govt – CIA filesr ~ 26 Jan 2017
Recently declassified documents by America’s Central Intelligence Agency (CIA) said the Malaysian government under longest-ruling Prime Minister Dr Mahathir Mohamad had a hand in the largest financial scandal the country had seen during the 1980s.

Mahathir’s disastrous financial speculation ~ 5 Mar 2012
A convoluted story that began as long ago as the 1980s when Malaysia’s central bank, Bank Negara Malaysia, at the urging of then-Prime Minister Mahathir Mohamad, began speculating aggressively in global foreign exchange markets, at one time running up exposure rumored to be in the region of RM270 billion — 3 times the country’s gross domestic product and more than 5 times its foreign reserves at the time.

Eventually, the Finance Ministry had to recapitalize the central bank, almost unheard of for any government anywhere. It is reliably estimated that Bank Negara lost as much as US$30 billion in this and other disastrous currency trades, costing the head of the central bank and his currency trader deputy their jobs.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #37 on: March 18, 2017, 06:55:04 PM »
Out of work and out of luck in search for full-time jobs

By Joanna Seow
March 18, 2017

Richard is aged 48, single and holds a master's degree in financial management.

Four years ago, the former senior banker lost his $14,000-a -month job. Life has been a long struggle since.

He found work in two small information technology companies. But when the businesses hit a rough patch, he was retrenched.

In between his search for full- time work, he did odd jobs such as washing dishes in a restaurant and distributing flyers.

Flitting from one temporary job to another is typical of many in the growing pool of out-of-work professionals, managers, executives and technicians (PMETs), who are taking longer to find permanent jobs.

Manpower Ministry figures released this week show that, on average, only 47.9 per cent of residents last year got a job within six months of being laid off - the first time in at least seven years that the proportion fell below 50 per cent.

The situation is worse for PMETs and degree holders, whose re-entry rates are 43.9 per cent and 42.5 per cent, respectively.

In addition, 1 per cent of degree holders in the resident labour force were jobless for at least 25 weeks, compared with the overall average of 0.8 per cent.

One of Richard's biggest obstacles is convincing employers that he is willing to work for as little as $3,000 a month, or to take a chance with him despite his lack of experience.

At one job fair, he applied for a caregiver role but was told it required related experience.

"I am willing to adapt, but I feel employers are not willing to adapt. They keep wanting people with the right experience," he said.

Experts say one of the biggest dilemmas facing jobless PMETs is whether to take the first job that comes along even if it is less than ideal, or to wait for a better one.

"Once they fall off a career track, it may be hard to get back on because, if the industry picks up again, employers may see jobs like driving Uber or selling property as irrelevant experience," said Singapore University of Social Sciences labour economist Walter Theseira.

NeXT Career Consulting Group managing director Paul Heng said PMETs need to be alert to technological changes and upgrade their skills in time.

Citing the insurance industry, he noted that technology has made it easier to buy products online instead of through agents.

National Trades Union Congress U PME Centre consultant Loh Peizhen advised people who are unemployed for long periods to keep their skills relevant and to spend time networking.

"Consider doing short-term project work and reconnect with old networks and form new networks," she said.

Jobless graduates highest since 2004 ~ 16 Mar 2017
The job market last year was the bleakest in years, especially for degree holders, according to employment statistics released by the Ministry of Manpower (MOM) yesterday.

Just how many of the additional 11,200 local workers are Singaporeans?

By Leong Sze Hian
March 16, 2017

I refer to the article “Two-track labour market emerging”.

It states that “Track one: Local unemployment rose last year. There were more local workers – Singaporeans and permanent residents – who want to work but could not find work.

Employment change last year – 11,200 ‘local’ jobs

But even as unemployment rose, so did employment. Employers added 11,200 more local workers to their payrolls last year.”

How many ‘local’ jobs to S’poreans – 30,000 new PRs and 20,000 new citizens granted?

With an average of about 30,000 new permanent residents (PRs) and 20,000 new citizens granted per year, in the last decade or so – how many of the 11,200 locals’ employment change went to Singaporeans?

How many of the new PRs and new citizens granted last year were working – and thus re-classified as “local” workers in the workforce?

No more non-seasonally adjusted unemployment data?

As to “Last year’s 3 per cent resident unemployment rate is the highest since 2010, when Singapore was hit by the global financial crisis” – why is it that the labour market report no longer contains the non-seasonally adjusted unemployment rate for citizens and residents, and the number of unemployed citizens and residents?

4.1% unemployment rate, 92,300 unemployed S’poreans in June 2016?

Since the non-seasonally adjusted unemployment rate for citizens was 4.1 per cent in June last year and the number of unemployed citizens was 92,300, compared to the average annual unemployment rate for citizens of 3.1 per cent and 67,300 unemployed citizens in December last year – you can see that there may be a very big difference between the non-seasonally adjusted (4,1%, 92,300 in June) and the average annual data (3.1%, 67,300 in December).

Now only recently newly invented “average annual unemployment” data?

Why is it that the narrative in the labour market report and media reports now only focus on the average annual unemployment rate which I understand was until recently – never used to report labour data in the past?

Data so bad that become “unpublishable”?

Is it remotely possible that perhaps the non-seasonally adjusted unemployment rate for citizens and the number of unemployed citizens, may have gotten worse with the worsening economic downturn – such that these statistics may have become “unpublishable”?

No breakdown for Long-Term Unemployed?

Since the unemployed data can be broken down into citizens and residents - why can’t the Long-term Unemployed (17,000 residents) be similarly broken down too?

Two-track labour market emerging

By Toh Yong Chuan
March 16, 2017

The latest official figures released yesterday paint a gloomy picture and reflect a worrying situation: The emergence of a two-track labour market.

On one track are the jobless who face an uphill task in finding work. On the other track are people with jobs that give them a steady rise in income.

The growing divide between these two groups is becoming noticeable, and gives cause for concern.

Track one: Local unemployment rose last year. There were more local workers - Singaporeans and permanent residents - who want to work but could not find work. Last year's 3 per cent resident unemployment rate is the highest since 2010, when Singapore was hit by the global financial crisis.

Also, there were fewer jobs for the bigger pool of unemployed. For every 100 unemployed last December, there were only 77 vacancies, down from 91 three months earlier. This job vacancy ratio of 0.77 is the lowest since September 2009, when the global financial crisis resulted in a ratio of 0.54, meaning every 100 jobless were chasing 54 jobs.

Put both together - higher unemployment and fewer jobs - and it shows out-of-work locals are taking longer to return to the job market.

For every 100 jobless locals last year, 26 had no job for 25 weeks or more, up from 21 in 2015.

Worse, the proportion of these long-term unemployed rose last year to the highest since 2004. The hardest hit were degree holders and those aged 50 and older.

The Ministry of Manpower (MOM) has this assessment: "The labour market weakened in 2016, reflecting subdued conditions in several segments of the economy." On the outlook for this year, MOM "expects labour demand to remain modest".

The assessment does not mask the starkness of the bad news for those out of work. This is a bad time to be without a job.

Track two: Those on the payroll of employers fared well last year.

The median monthly income of Singaporeans holding full-time jobs rose 0.7 per cent from $3,798 in 2015 to $3,823. After adjusting for the lower costs of living last year, the rise is steeper, at 1.3 per cent.

Workers were also more productive last year. Labour productivity inched up by about 1 per cent, reversing declines in 2014 and 2015.

But even as unemployment rose, so did employment. Employers added 11,200 more local workers to their payrolls last year.

This may seem contradictory at first glance, but what happened was that the growth in the number of jobs could not keep up with the growth in the workforce. So even as more local workers found jobs, even more could not find work.

This gives a hint on what is needed to fix the problem of the tepid labour market - job creation.

It is the key solution - and the only solution.

Those with jobs are faring well. They earn more and are more productive. The same cannot be said for the unemployed.

But there will always be people with and without work, regardless of the state of the economy. This is also the reason economists regard full employment as the state where all eligible people who want to work can find work at prevailing wage rates. Full employment does not mean zero unemployment.

But what would be most worrying is when the lives of employed workers improve while the jobless sink into debt and depression. This is the "jobs divide", and there are signs of it happening here.

Government measures, however, are in place to prevent it from taking root. This month, MOM announced measures to help the long-term unemployed and mature workers. These include more subsidies for training, job trials and more salary support for employers who hire them.

There are also moves to help jobless workers switch careers. The Ministry of Health last week said it would spend $24 million to help mid-career workers switch and fill the 9,000 jobs being created in the public healthcare and community care sectors in the next three years.

These moves will not solve the problems of unemployed workers overnight, or even in the near term. But they give them a better shot at going back to work and riding out the economic uncertainties.

They also ensure the "jobs divide" does not add to pressures that can divide society.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #38 on: March 20, 2017, 07:20:40 AM »
Ezra files for U.S. bankruptcy as marine debt crunch spreads ~ 19 Mar 2017
DBS Group Holdings Ltd.’s loan exposure to Ezra and related companies is estimated at S$637 million, according to a CIMB report dated Feb. 2. Oversea-Chinese Banking Corp. has S$300 million and United Overseas Bank Ltd. has S$166 million, assuming the debt of each company in the Ezra group is equally split among its principal bankers.
  • Company joins Swiber, Swissco in fending off hostile creditors
  • Decline in oil prices led to project delays, amassed debt

Ezra flags ‘immediate going concern issue’ on $900m exposure as guarantor to EMAS Chiyoda Subsea ~ 3 Mar 2017

EMAS Chiyoda Subsea files for bankruptcy ~ 1 Mar 2017

Ezra shares touch record low as debt concerns mount  ~ 7 Feb 2017

Ezra Holdings told by Forland to pay up or be wound up ~ 7 Feb 2017

Wrestling with life support in Singapore ~ 5 Feb 2017
While the legal system is well-versed in the challenges of debt defaults, creditors are new to the game. In their enthusiasm to get a result, bondholders and banks are pushing companies into liquidation, the worst outcome for all stakeholders.

Ezra liquidation to hit DBS the hardest

3 Feb 2017

The bank's exposure to the beleaguered group is around $637m.

As Ezra is foreseen to face liquidation, CIMB expects DBS to be hit the hardest, as the bank's exposure to the group is estimated to be $637m.

Ezra has called for a trading halt at the start of the month pending the release of an announcement. CIMB said this could be related to the results of its discussions with lenders and other stakeholders regarding its financial position, which could result in the group, its JV or subsidiaries’ liquidation in the worst case scenario.

"As of 31 Aug 2016, the group had US$989m of term loans and bills payable to banks, including US$568m from 75.46%-owned EMAS Offshore Limited and US$150m from 60.9%-owned Triyards Holdings Limited," CIMB explained.

The firm pointed out that DBS has the largest exposure to the Ezra group of companies at $637m, followed by OCBC at $300m and UOB at $166m. DBS's exposure is due to its lending to EMAS Chiyoda Subsea, given that it was the co-lead arranger for the loan facility for EMAS Chiyoda’s main vessel, the Lewek Constellation.

"Should the entire Ezra group go into liquidation, the banks will have to recognise their exposures as NPLs and make adequate provisions for the unrecoverable amounts," CIMB stated.

It furthered, "Based on 40-80% write-down in book value of fixed assets across the group, we estimate DBS will have to make specific provisions (SPs) of 8-16bp, OCBC: 9-12bp and UOB: 6-7bp. This assumes no SPs have been taken yet and will impact DBS’s FY17F net profit by 6-12%, OCBC: 5-8%, and UOB: 4-5%."

EMAS Offshore terminates with Perisai Petroleum Teknologi over SJR marine put option ~ 9 Dec 2016

SGX-listed Ezra Holdings may relook investments in Malaysia’s Perisai Petroleum ~ 21 Oct 2016

Ezra's Lee family puts Sentosa bungalow up for sale

The price tag is said to be S$26m, and follows sale of a GCB by family last October

By Kalpana Rashiwalakalpana and Anita Gabriel
March 3, 2016

Singapore - EZRA Holdings' Lee family has put their waterway-fronting Sentosa Cove bungalow on the block, months after they sold a Good Class Bungalow (GCB) along Windsor Park Road last October for a cool S$22 million.

The Business Times understands that the exclusive two-storey five-bedroom property in the South Cove precinct was put on the market after the Chinese New Year festivities. It comes with a price tag of S$26 million, or S$2,258 per square foot on land area, which industry watchers deem "reasonable".

The property is held by Lee Kian Soo, Ezra's founder and chairman and father of Lionel Lee, the offshore marine firm's chief executive and managing director.

Based on a corporate profile search, the Sentosa Cove property is listed as Mr Lionel Lee's address.

The property, which boasts a private berth, has a total floor area of 12,400 sq ft and a land area of 11,515 sq ft. The bungalow is on a site with a balance lease term of about 91 years.

The most recent transaction of a villa on Sentosa Cove was in the fourth quarter of last year, when a bungalow along Lakeshore View fronting Serapong Golf Course sold for S$23.8 million or S$2,775 psf. This was the highest price (on psf of land) fetched by a bungalow in the waterfront housing district in more than two years.

In October last year, Mr Lionel Lee and his mother Goh Gaik Choo are said to have sold their Balinese-style GCB located off Upper Thomson Road for S$21.8 million; the price translated to $1,070 psf on the freehold land area of 20,383 sq ft. Completed in 2006, the house has two storeys, a basement carpark and a roof terrace for functions.

These properties are not the only assets that have been shuffled or sold by the family, particularly by Mr Lionel Lee, in recent months.

Last month, the 42-year-old unloaded 20 million shares in Catalist-listed Select Group for S$7.1 million to his mother Ms Goh, cutting his stake from 23 per cent to some 9 per cent in the food caterer.

In late January, he forked out S$60,200 to scoop up one million Ezra shares, barely two weeks after a forced sale of 11.5 million Ezra shares which were held by his private vehicle.

The forced sale of S$913,341 worth of Ezra shares on Jan 12 was triggered by the sharp fall in the counter which had caused covenants of a banking facility to be breached. It was reported that the shares were pledged for a loan facility for a company unrelated to Ezra.

Despite its recent pick-up, Ezra's stock price has suffered a hammering, having lost over 20 per cent of its value this year - it's down over 75 per cent from a year ago - amid a slumping oil and gas market with * expecting more pain ahead before things look up.

The oil rout - there have been hopeful intervals of higher prices - has led to spending cuts, layoffs and less contracts to dish out, all of which have hit industry players hard. The Lees' flagship firm Ezra and its other listed subsidiaries have not been spared.

The gloomy backdrop has led to a complete turnabout in the company's fortunes with Ezra reporting its first ever quarterly loss of US$55 million over the quarter ended Nov 2015.

Ezra's other divisions, subsea services provider EMAS offshore suffered a similar fate over the period while its fabrication arm Triyards held up relatively better although profits dived 25 per cent largely owing to the absence of a one-off gain reported a year back.

The company has also seen a string of board and management changes over the past year.

The elder Mr Lee, a corporate veteran, assumed the post of Ezra chairman - again - in February after Koh Poh Tiong stepped down from the position he held for three years; Mr Lee, the founding chairman had earlier held this position till late 2012.

In late January, its chief financial officer Eugene Cheng stepped down citing "personal and family reasons" and in place, Triyards chief executive Chan Eng Yew was appointed interim CFO - he holds both positions concurrently.

Did Ezra Holdings Ltd just bail out EMAS Offshore Ltd from trouble?

By Stanley Lim Peir Shenq
December 17, 2015

EMAS Offshore Ltd (SGX: UQ4) announced on 16 December 2015 that it will be selling off its 12.13% stake in Bursa-listed Perisai Petroleum Teknologi Berhad (KLSE:0047.KL), an upstream oil & gas service provider.

Due to the falling price of oil, Perisai Petroleum has been hammered badly in the stock market over the past year – its share price has fallen from a peak of RM0.725 per share in February to a level of RM0.28 just prior to the aforementioned sale announcement.

EMAS Offshore  is not in a very healthy state itself as it is looking to sell its investment to help repair its balance sheet. So, who is buying EMAS Offshore’s Perisai Petroleum shares?

Unsurprisingly, it is Ezra Holdings Limited  (SGX: 5DN), the parent company of EMAS Offshore through its 75.25% stake, that has come to the rescue. Ezra Holdings has agreed to pay US$56 million for EMAS Offshore’s 12.13% stake in Perisai Petroleum, which is a 500% premium from the market value of the shares. Is this a bailout of EMAS Offshore by Ezra Holdings?

Looks like it

EMAS Offshore is currently sitting in a dangerous position. Its gross margin has fallen to negative territory in its latest quarter and it has a net debt to equity ratio of 127% as at 31 August 2015. The company also has more than US$200 million in short-term debt due soon to worry about.

At Perisai Petroleum’s current market value, EMAS Offshore’s stake is only worth about US$11 million. And yet, Ezra Holdings’ is offering such a high premium for the deal, as mentioned earlier.  According to EMAS Offshore’s announcement, “The price has been determined based on the cost of EMAS’ investment at inception. The purpose of this transaction is to consolidate the interest in Perisai in a single entity at Ezra level.”

That reasoning does not make any sense to me. Even if EMAS Offshore had made an investment at a much higher cost, the company should suffer the losses if it has made a bad bet. Why should Ezra Holdings’ shareholders pay for the mistakes that EMAS Offshore have committed?

It’s worth bearing in mind that Ezra Holdings’ balance sheet is not looking too good as well. The company had a net debt to equity ratio of 99% as at 31 August 2015. In my view, by buying an asset at an inflated price in the hopes of saving its listed subsidiary, Ezra Holdings’ management is essentially transferring risk from EMAS Offshore directly onto itself.

For me, this deal shows much about how the management of Ezra Holdings treats the firm’s minority investors. The management of Ezra Holdings is disregarding the interest of its minority shareholders and publically bailing out its listed subsidiary and their shareholders. In turn, it would be Ezra Holdings’ shareholders who would be the ones left holding the bag.

The deal is not completed yet as EMAS Offshore has until 31 December 2016 to sell its stake in Perisai Petroleum to Ezra Holdings.

But in any case, the deal raises a question: After this, would Ezra Holdings’ minority shareholders be willing to step up and save the firm if it has difficulties repaying over US$700 million in debt that are due, or can be recalled at any time, within the 12 month period from 31 August 2015 to 31 August 2016?

I’m not a shareholder. But if I am, my response to the question above would be: Fool me once, shame on you. Fool me twice, shame on me.

Ezra founders resolve S$208 million ($164 million) divorce asset fight ~ 23 Sep 2014
Lionel owned about 19% of Ezra, according to the company’s annual report. Lee, who stepped down as chairman at the end of 2012 and was paid about S$40,000 a month in 2009, had a 1.5% stake, according to data compiled by Bloomberg. Goh earned about S$10,000 a month before she resigned in December 2008.

In technical analysis, a stock that has made a new low is one that must be treated with caution and to be avoided buying for longterm investment.

Perisai ~  断头铡刀

Perisai gapped down with a hammer and traded @ RM0.155 (-0.02, -11.43%) with 11.9m shares done on 29 Aug 2016 at 1050 hrs.

Perisai closed with an inverted hammer @ RM0.175 (-0.01, -5.4%) with 8.09m shares done on 26 Aug 2016.

Perisai sounds out bondholders on potential recovery rate ~ 26 Aug 2016
Holders of Perisai's S$125m ($92.3m) 6.875 % bonds due Oct 3 have been warned they may recover only half of their investments.

Malaysia's Perisai gets 6 months charter extension for FPSO Perisai Kamelia ~ 22 Aug 2016

Analysts positive on O&G downstream segment ~ 13 Feb 2016

Kenanga Research retains Underperform for Perisai~ 3 Mar 2015
Perisai is 23.4%-owned by Ezra Holdings Limited (Ezra) through its subsidiaries

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #39 on: April 05, 2017, 09:04:42 AM »

 2270点阅   2017年4月04日
(紐約4日訊) 儘管特朗普政府的政策不確定性很高,但今年首季美股卻創下近十年來最低波動;高盛對此警告,市場低估了其中的風險。




報導指出,其實上個月,VIX曾經反映了美股的罕見震盪。3月中,市場擔憂醫保法案能否順利通過,美股三大指數當天經歷了今年以來最大單日跌幅,並在五個月以來首次下跌超過1 %。


當周道指累計下跌1.5%,標普500指數累跌1.2%,納指累跌1.2%,均創2017年最大單週跌幅。 VIX衝高至去年6月英國公投退歐以來最高點。







Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #40 on: April 05, 2017, 10:22:31 AM »

157点看 2017年4月5日








 点赞 0赞
相关课题: 叶伦美国美联储

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #41 on: April 06, 2017, 08:36:19 AM »

Fed officials say the stock market may be overvalued and history shows they are often right
John Melloy   | @johnmelloy
4 Hours Ago
 Santoli: Is the Fed trying to send a signal?   Santoli: Is the Fed trying to send a signal? 
4 Hours Ago | 04:11
Traders tend to scoff when a policymaker plays investor, often referencing when then-Federal Reserve Chairman Alan Greenspan made a very early "irrational exuberance" call in December 1996, more than three years before the top of the dot-com bull market.

That skepticism was voiced again Wednesday when the Fed released its meeting minutes from March which read: "Broad U.S. equity price indexes increased over the intermeeting period, and some measures of valuations, such as price-to-earnings ratios, rose further above historical norms. ... Some participants viewed equity prices as quite high relative to standard valuation measures."

But traders shouldn't be so quick to dismiss these comments from Fed officials. History shows when worries about valuation appear in these official minutes, stocks often struggle in the following year.

We found six mentions of an overvalued stock market in the minutes by searching the Fed's website for the word "valuation" going back to 1996. According to Kensho, here's the performance of the major market averages one year after the meeting when such a mention took place.

What's interesting is that these mentions didn't always occur at the end of bull markets. The officials' discussion of an overvalued stock market often came before long pauses during bull markets when equity valuations were able to come back in line because of a period of consolidation.

So this doesn't mean the end of the bull is near, but it could be another reason to believe we're in for a long period of sideways trading until earnings can catch up.

Here are the specific mentions of high "valuation" in the minutes, according to the Fed's website, along with the S&P 500's subsequent return from the meeting when that mention was made.

Meeting: April 28-29 — 2015 S&P 500 return 1-year later: -1.97%

"However, some indicators suggested that valuations remained stretched for some asset classes. An estimate of the expected real return on equities moved down, reflecting an increase in stock prices and downward revisions to forecasts of corporate earnings, and corporate bond spreads declined somewhat."

Sept. 16-17, 2014 — S&P 500 return 1-year later: -0.57%

"Some financial developments that could undermine financial stability over time were noted, including a deterioration in leveraged lending standards, stretched stock market valuations, and compressed risk spreads."

Jan. 27-28, 2004 — S&P 500 return 1-year later: +3.8%

"A number of members commented that expectations of sustained policy accommodation appeared to have contributed to valuations in financial markets that left little room for downside risks, and the change in wording might prompt those markets to adjust more appropriately to changing economic circumstances in the future."

Dec. 11, 2001 — S&P 500 return 1-year later: -20.39%

"Among those risks, members cited the apparently reduced prospects for additional fiscal stimulus legislation, the vulnerability of current stock market valuations should forecasts of a robust rebound in earnings fail to materialize, the possibility of further terrorist incidents, and especially the potentially adverse effect on consumer confidence and spending of additional deterioration in labor market conditions."

March 21, 2000 — S&P 500 return 1-year later: -24.88%

"The divergence, at least until recently, in the stock market between the valuations of high-tech firms and those of more traditional, established firms was inducing a redirection of investment funds to business activities that were perceived to be more productive. While the associated capital investments undoubtedly had contributed to the acceleration in productivity, some members expressed concern that the historically elevated valuations of many high-tech stocks were subject to a sizable market adjustment at some point. That risk was underscored by the increased volatility of the stock market."

Dec. 17, 1996 — S&P 500 return 1-year later: 32.99%

"The rise over recent years had been extraordinary and had brought market valuations to fairly high levels relative to earnings and dividends. In these circumstances, the members recognized the need to monitor with special care price movements in the stock market and asset markets more generally for their implications for consumer and other spending."

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #42 on: April 07, 2017, 05:00:40 PM »
Is the Hang Seng Index’s blue dye a blessing or a curse?

Research by the Post shows that 12 of the 15 stocks that were added to the Hang Seng Index fell in the three months after their inclusion, and 60 per cent of them have not recovered.

By Laura He
4 April, 2017

Being chosen as a Hang Seng Index (HSI) component stock, or being “dyed blue” as the local saying goes, might reasonably be considered a blessing for the share price of the chosen one, because passively managed funds that track the blue chip index have to add the stock to their holdings.

The data shows quite the opposite. An analysis of stock performance over the past seven years shows that 12 of the 15 “dyed blue” stocks declined three months after joining the Hang Seng index, while 60 per cent still haven’t recovered to this day.

“Many blue chips soared to excessively high levels before joining the index as speculators bought the stocks with the hope of quickly selling them to index-tracking funds,” said Ben Kwong Man-bun, head of research and executive director at KGI Securities.

Realignment of the weightings, or “rebalancing” by index funds, usually takes place one day prior to the implementation of an index reshuffle.

When the speculative bubble eventually bursts, it usually takes a long time for the stock to recover.

“The excessively high share prices have discounted all the existing good news about the company. So after the bubble bursts, stocks may pull back sharply or ‘go asleep’ for a long time, until investors find new reasons to speculate,” Kwong said.

Ken Wong, Asia equity portfolio specialist at Eastspring Investments, said inclusion in the blue chip index might seem like a great accomplishment. “[But] the biggest problem is that index inclusion just creates a temporary positive sentiment for stocks.

“Some investors tend to speculate on these index inclusion stocks for short term gains,” he said. “People usually buy on rumours and sell on fact.”

Looking at the 15 blue chips that joined the HSI from 2010 to 2016, nearly all were on a strong upward momentum and had risen for several months or even years before the announcement of the index reshuffle.

Between the index reshuffle and the implementation day – usually three to four weeks – 13 out of the 15 stocks gained. However, one year after inclusion, only five stocks were above the levels traded on inclusion day.

As of the market close last Friday, there are still nine stocks whose prices are lower than their levels when joining the index.

Among them, food and beverage maker Tingyi Cayman Islands Holding, coal miner China Coal Energy, and shoe retailer Belle International are the worst performers.

Tingyi, producer of the Master Kong (康師傅) brand, is the largest maker of instant noodles in China.

Before joining the HSI on December 5, 2011, Tingyi had gained 37 per cent in seven months. However, one month after it joined the index the stock had lost 4 per cent and by the end of 2012 it had fallen 15 per cent. By the time it was removed from the HSI last September, Tingyi had lost 67 per cent of its value.

China Coal Energy jumped 11 per cent in the two months before its addition and continued to rise in the first month, up 16 per cent from its inclusion day level. However, within three months it was back to its original level and within one year it was 14 per cent lower than its inclusion day price. By the time the stock was removed from the HSI in March 2014 it had lost 66 per cent.

The same goes for Belle International (百麗國際), the largest retailer of women’s shoes in China. It jumped nearly 30 per cent in the two months prior to the index addition and rose further in the first month after. But three months later it slipped 5 per cent, and one year on, it barely recovered. By Friday’s close, Belle International had already shed 65 per cent.

“Many stocks may appear more volatile after they join the HSI as the liquidity has increased,” said Kwong.

“It doesn’t mean these stocks are not good companies,” he said. “They usually have solid financial performance and are in the prime time of the industry life cycle. But share prices are driven more by liquidity, not necessarily by fundamentals.”

Blue chip candidates are already “hot stocks” in the market before being noticed by the index, trading on relatively high turnover.

But whenthe Hang Seng Indexes Company reviews the index on a quarterly basis and selects new constituents based on their turnover, market value, industry type and financial performance, the stocks become even “hotter” in the eyes of many investors.

“I don’t think it’s a curse,” said Alex Wong, director of asset management at Ample Financial Group.

“The shares are just overbought before the index addition. But the surge is difficult to sustain. It’s reasonable to have a correction afterwards. After all, being included in the HSI is just a one-time thing,” he said. “It’s a one-time story.”

There are always exceptions as six of the 15 blue chips have recovered to their previous levels, including acoustics supplier AAC Technologies, casino operators Sands China and Galaxy Entertainment, real estate investment trust Link Reit, life insurer AIA Group, and property developer China Resources Land (CRL).

AAC Technologies, Galaxy Entertainment and Link Reit have risen slightly from their reshuffle day levels, while the others have posted more significant gains.

“These stocks have continued to provide reasons for investors to buy in,” Wong said. “They have a story to tell, such as their booming industry.”

AAC Technologies, which makes speakers for smartphones and tablet computers including for Apple’s iPhones and MacBook laptops, have been given a boost by Apple’s share performance, said Kwong. AAC’s share price started to recover in December 2016, almost the same time Apple shares picked up strong momentum.

Apple closed at a fresh record high last Wednesday, pushing its market cap to above US$771 billion.

AAC Technologies also touched an all-time high of HK$98 late last month.

However, Kwong is concerned that index stocks may become more speculative as market liquidity increases on the back of strong money inflows from mainland China.

“This is the trend,” he said. “We are seeing an increasing number of momentum investors.”

A simple way to beat the market, year after year

By Brett Eversole
2 Sep 2014

There's nothing better than a simple, stupid investment idea.

Most folks think you have to reinvent the wheel to beat the market. They think the only way to produce outsized returns is with complex strategies. The kind the average person can't follow.

They're wrong.

Today, I'll show a simple way to beat the stock market. Importantly, this idea makes intuitive sense. And there's an easy way to make the trade today.

This simple idea beats the market by 1.8% a year. That might not sound like much, but over time, it leads to hundreds of percent in excess returns.

Let me explain...

Today's simple market-beating strategy requires us to rethink what "the market" actually is.

In the U.S., our benchmark for stocks is the S&P 500. This index holds the largest 500 companies that trade in the U.S.

That makes sense. If you want to own the U.S., own the biggest and the best. But there's a problem with this approach. As my colleague Porter Stansberry points out...

"S&P organizes its index by giving the biggest, most expensive stocks more "weight" in the index. Thus, the companies least likely to perform well for investors end up collecting the largest amount of investment capital from index funds.

That index isn't designed to help investors. It's designed to help sell S&P's bond ratings to issuers – i.e. large public companies."

Porter's describing "market cap weighting." It puts more of the index value into the largest companies, and less into the smaller companies.

In the case of the S&P 500, the top 50 companies make up nearly half of the index. That's a problem... as the largest companies tend to be the most mature, and tend to provide lower returns over the long term.

But history shows there's an easy way to beat this formula.

The simple change is moving from market cap weighting to equal weighting. In the equal weight S&P 500, each stock is 0.2% (one 500th) of the index, regardless of size.

That might seem like a minor change. But the increase to returns is enormous.

Since its inception in 1989, the equal-weight S&P 500 is up 1,297% (including dividends). The normal S&P returned just 823% over the same period (also including dividends).

Over that 25-year period, the equal weight S&P 500 returned 11.3% a year versus 9.5% in the market cap-weighted S&P 500... a 1.8% annual outperformance.

Again, an extra 1.8% a year might not sound like much. But it adds up. And during the "lost decade" of the 2000s, the equal weight S&P 500 doubled while the normal index went nowhere.

The great news for investors is that there's an easy way to make this trade today. It's called the Guggenheim S&P 500 Equal Weight Fund (NYSE: RSP, Stock Forum).

While you've likely never heard of RSP, it's a seasoned fund that has been available for over a decade. It does a fantastic job tracking the equal weight S&P 500. And it makes following this idea easy.

Like I said, this is a simple idea. But that's a good thing. We don't need to reinvent the wheel to beat the market.

It takes an index everyone knows about, makes a small change, and increases long-term returns. Perfect.

If you're a long-term investor looking to maximize gains, forget about the S&P 500. Put money to work the smart way. Shares of RSP are the easy way to do it.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #43 on: April 08, 2017, 08:14:14 AM »

GD Express continues climb on e-commerce optimism, bonus issue ~ 7 Apr 2017

Want to know if your local Payless ShoeSource store is closing? ~ 7 Apr 2017
Payless ShoeSource is closing nearly 400 stores in the U.S. and Puerto Rico as part of a bankruptcy restructuring

America’s retailers are closing stores faster than ever ~ 7 Apr 2017
  • Rue21 may be latest casualty as it prepares bankruptcy filing
  • Amazon is gobbling up most of the industry’s online growth

Postmedia CEO warns of even more cost-cutting to come ~ 6 Apr 2017
​After recent rounds of mass layoffs, Postmedia is warning that it still needs to cut costs after revenue plummeted by 13.5% in its latest quarter. Recently, Postmedia laid off 54 employees at its B.C. papers, the Vancouver Sun and the Province.

US job cuts jump 17% in March, but the total is lower than last year: Challenger report ~ 6 Apr 2017
U.S. employers announced plans in March to cut 43,310 jobs, a 17% increase from February.

Fairfax journalists condemn ​​proposed $30m job cuts and political positioning ~ 6 Apr 2017

Tacoma’s News Tribune to cut jobs as top editor quits ~ 6 Apr 2017
The paper is also preparing for a more digital-focused strategy as part of a plan with its corporate owners.

E-Commerce is worth RM4.9 billion in Malaysia ~ 6 Apr 2017

Retail layoffs are far from over as more store closures loom ~ 6 Apr 2017

Louis Vuitton to open new store at Changi Airport in Singapore in 2018 ~ 5 Apr 2017

Louis Vuitton will be the latest addition to Changi Airport’s more than 360 retail stores and 140 food & beverage outlets sprawled over 76,000 sqm of retail floor space.

Alibaba plans regional distribution hub in Malaysia ~ 30 Mar 2017

Coming soon: New mall, GPO at SingPost Centre  ~ 29 Mar 2017

An artist’s impression of the new retail mall at the SingPost Centre next to Paya Lebar MRT Station.

Share price of logistic firms continue to rise ~ 28 Mar 2017

Party time for logistic firms ~ 28 Mar 2017

The story of SF Express’ Wang Wei and how he became richer than Alibaba’s Jack Ma ~ 22 Mar 2017

Logistics counters rally ~ 21 Mar 2017

One of China’s richest men presides over an army of 80,000 couriers and 30 planes ~ 2 Mar 2017

10 brick-and-mortar stores you will never see in Singapore again because you shop online ~ 4 May 2016

Amid troubles in global courier services, a Malaysian giant arises ~ 15 Mar 2016

Down to earth Teong stuns market with GD Express investment ~ 20 Feb 2016

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #44 on: April 21, 2017, 12:56:54 PM »
Analysts positive on SP Setia's Singapore land purchase ~ 20 Apr 2017*

Analysts hold SP Setia's earnings forecast pending Singapore project launch ~ 19 Apr 2017

Malaysian developer S P Setia to build $457 million luxury condo in Singapore ~ 19 Apr 2017

SP Setia lands Singapore site for S$265m ~ 19 Apr 2017
SP Setia tendered for a parcel of Singapore land (99-year leasehold) for S$265m or S$939 per square foot.

Artist impression of S P Setia's Eco Sanctuary condominium.

Singapore home prices fall, extending decline to 14th quarter ~ 3 Apr 2017

Boomtime property buyers now big losers

By Linette Heng
Dec 13, 2016 06:00 am

More than 800 condo units were resold at a loss this year as economy slows

An ultra-luxury apartment with a sea view at Sentosa Cove has made the largest loss in the property market so far this year.

Originally bought for $11 million in 2011, the condominium unit at Seascape was sold for $6.35 million in October at a loss of $4.65 million.

A high-end property at The Ritz Carlton Residences in Cairnhill Road made the second-largest loss-making deal of $3.7 million in March.

Another Sentosa Cove unit at Turquoise came in third, in a transaction that made a loss of more than $3.3 million in June.

Statistics from property portal SRX show that sales of condo units with losses of more than $1 million each rose substantially this year, with 48 such transactions, compared with 31 in 2015.

Most of these luxury homes were bought during the property boom years of 2007, 2011 and 2013. Up to November this year, more than 800 transactions involving non-landed private properties were loss-making, double the figure in 2015.

There were nearly 6,000 resale non-landed private property transactions in the first three-quarters of this year, Urban Redevelopment Authority (URA) statistics show.


Analysts told The New Paper that "unprofitable" deals are common in a cyclical downturn where market sentiment and employment prospects are poor.

Expectations of a US Fed rate hike by the end of the year, which would increase interest rates here, are also driving these loss-making sales.

R'ST Research director Ong Kah Seng said: "It is easy to advise people to avoid buying when there is a property bubble but in reality, people tend to avoid buying property only when there is a slump because they lack confidence."

The high-end property market, buoyed by luxury home collectors in the mid to late 2000s, is losing its appeal because of the sluggish market, he added.

Interested parties now are cash-rich buyers from developing Asian countries who would usually avoid splurging on the luxury market but are now looking for a good deal.

Mr Ong said: "In the past, these properties were a status symbol. The more expensive it was, the higher its value. (Their losses) can be justified by the enjoyment and prestige of occupying these properties for the past couple of years.

"Besides, they would have paid a certain price if they had rented them."

Mr Desmond Sim, CBRE head of research for Singapore and South-east Asia, thinks some of these "bold" multi-million losses are paper losses, which are mitigated by foreign exchange in light of the strong Sing dollar.

"A $2-million loss could also be considered 'manageable' if it means they can unlock $10 million in a more profitable investment elsewhere," he added.

Huge losses for properties in high-end areas

The top-10 loss-making properties are in two affluent neighbourhoods, Sentosa Cove and the Central area.

All of them were bought during the property boom years in 2007, 2011 and 2013. Seven were bought in 2007.

R'ST Research director Ong Kah Seng said: "Interest in the high-end segment was at the peak then because of the exciting plans that were announced at that time - such as the integrated resorts, plans to transform the Central Business District - which attracted many foreigners to have a stake in the hype."

Massive loss-making property deals have made the headlines in recent years.

Last year, a Japanese tycoon made an eye-popping S$15.8 million loss on a penthouse unit at St Regis Residences.The Monetary Authority of Singapore, in its Financial Stability Review released last month, warned property investors to be aware of rising vacancy rates, declining rentals and impending interest rate increases.


These factors mean they may not always be able to rely on rental income to service their investment property loans.

CBRE's head of research Desmond Sim said: "The slew of government policies (such as the Total Debt Servicing Ratio and Additional Buyer's Stamp Duty) are put in place to ensure investors don't bite off more than they can chew, or they will choke.

"Those who made such huge losses are not in need of a Heimlich manoeuvre, but they are spitting it out now."

Singapore private home prices feared to plummet by up to 15%

20 Sep 2016

Blame it on supply glut.

Singapore's property sector will remain on the rocks as looming oversupply will continue to put downward pressure on private home prices.

According to a report by OCBC Investment Research, physical oversupply remains a key headwind until 2017.

"Given that the market remains in a state of physical oversupply over 2016-17, we continue to forecast for private home prices to grind 5- 15% lower over this period and also expect pressures on rental rates to persist," the report stated.

OCBC added that property sales in August were at a disappointing 7.8% decline from the record last year.

Meanwhile, OCBC also noted that authorities have already clarified that the recent tweaks of refinancing rules under the Total Debt Servicing Ratio rules should not be construed as an easing of property curbs.

"...the recent TSDR tweaks give existing borrowers more flexibility in managing their debt obligations at lower rates and and would add a measure of stability in the balance sheets of existing borrowers – which is overall positive for the housing market and the banks’ balance sheets," OCBC explained.

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #45 on: April 21, 2017, 03:53:44 PM »

 Share on Facebook
 Share on Twitter
 Share on Linkedin
 Share on Reddit
 Share on Google+

Paul Tudor Jones Says U.S. Stocks Should ‘Terrify’ Janet Yellen
by Katherine Burton  and Katia Porzecanski
April 21, 2017, 7:00 AM GMT+8
Says U.S. market cap to GDP ratio highest since 2000
Stocks could rise higher after next month’s French election

Paul Tudor Jones. Photographer: Michael Nagle/Bloomberg
Billionaire investor Paul Tudor Jones has a message for Janet Yellen and investors: Be very afraid.

The legendary macro trader says that years of low interest rates have bloated stock valuations to a level not seen since 2000, right before the Nasdaq tumbled 75 percent over two-plus years. That measure -- the value of the stock market relative to the size of the economy -- should be “terrifying” to a central banker, Jones said earlier this month at a closed-door Goldman Sachs Asset Management conference, according to people who heard him.

Jones is voicing what many hedge fund and other money managers are privately warning investors: Stocks are trading at unsustainable levels. A few traders are more explicit, predicting a sizable market tumble by the end of the year.

Last week, Guggenheim Partner’s Scott Minerd said he expected a "significant correction" this summer or early fall. Philip Yang, a macro manager who has run Willowbridge Associates since 1988, sees a stock plunge of between 20 and 40 percent, according to people familiar with his thinking.

Even Larry Fink, whose BlackRock Inc. oversees $5.4 trillion mostly betting on rising markets, acknowledged this week that stocks could fall between 5 and 10 percent if corporate earnings disappoint.

Caution Flags

Their views aren’t widespread. They’ve seen the carnage suffered by a few money managers who have been waving caution flags for awhile now, as the eight-year equity rally marched on.

But the nervousness feels a bit more urgent now. U.S. stocks sit about 2 percent below the all-time high set on March 1. The S&P 500 index is trading at about 22 times earnings, the highest multiple in almost a decade, goosed by a post-election surge.

Managers expecting the worst each have a pet harbinger of doom. Seth Klarman, who runs the $30 billion Baupost Group, told investors in a letter last week that corporate insiders have been heavy sellers of their company shares. To him, that’s “a sign that those who know their companies the best believe valuations have become full or excessive."

He also noted that margin debt -- the money clients borrow from their brokers to purchase shares -- hit a record $528 billion in February, a signal to some that enthusiasm for stocks may be overheating. Baupost was a small net seller in the first quarter, according to the letter.

Another multi-billion-dollar hedge fund manager, who asked not to be named, said that rising interest rates in the U.S. mean fewer companies will be able to borrow money to pay dividends and buy back shares. About 30 percent of the jump in the S&P 500 between the third quarter of 2009 and the end of last year was fueled by buybacks, according to data compiled by Bloomberg. The manager says he has been shorting the market, expecting as much as a 10 percent correction in U.S. equities this year.

China Slowdown

Other worried investors, like Guggenheim’s Minerd, cite as potential triggers President Donald Trump’s struggle to enact policies, including a tax overhaul, as well as geopolitical risks.

Yang’s prediction of a dive rests on things like a severe slowdown in China or a greater-than-expected rise in inflation that could lead to bigger rate hikes, people said. Yang didn’t return calls and emails seeking a comment.

Even billionaire Leon Cooperman -- long a stock bull -- wrote to investors in his Omega Advisors that he thinks U.S. shares might stand still until August or September, in part because of flagging confidence in the so-called Trump reflation trade. But he said that they will eventually resume their climb and end the year moderately higher.

Likely Culprit

The most important market news of the day.
Get our markets daily newsletter.

Enter your email
 Sign Up
While Jones, who runs the $10 billion Tudor Investment hedge fund, is spooked, he says it’s not quite time to short. He predicts that the Nasdaq, which has already rallied almost 10 percent this year, could edge higher if nationalist candidate Marine Le Pen loses France’s presidential election next month as expected. Jones tripled his money in 1987 in large part by correctly calling that October’s market crash.

While the billionaire didn’t say when a market turn might come, or what the magnitude of the fall might be, he did pinpoint a likely culprit.

Just as portfolio insurance caused the 1987 rout, he says, the new danger zone is the half-trillion dollars in risk parity funds. These funds aim to systematically spread risk equally across different asset classes by putting more money in lower volatility securities and less in those whose prices move more dramatically.

Because risk-parity funds have been scooping up equities of late as volatility hit historic lows, some market participants, Jones included, believe they’ll be forced to dump them quickly in a stock tumble, exacerbating any decline.

“Risk parity,” Jones told the Goldman audience, “will be the hammer on the downside.”

Online king

  • King
  • ***********
  • Posts: 85,409
Re: The other side of the coin
« Reply #46 on: April 23, 2017, 07:10:46 AM »

The Last Time This Happened, The Market Crashed

Tyler Durden's picture
by Tyler Durden
Apr 22, 2017 11:13 AM
Authored by Simon Black via,

A few days ago Charles Schwab, the investment brokerage firm, announced that the number of new brokerage accounts soared 44% during the first quarter of 2017.

More specifically, Schwab stated that individual investors are opening up stock trading accounts at the fastest pace the company has seen in 17 years.

17 years.

Anyone remember what happened 17 years ago?

Oh right. The Dot-com bubble burst.

After years of unbelievable gains in the 1990s, the NASDAQ Composite index peaked at 5,132.52 on March 10, 2000.

Simultaneously, during the first quarter of 2000, investors were rushing to open new brokerage accounts invest their savings in the stock market.

The NASDAQ Composite subsequently fell nearly 80% over the next 2 ½ years, wiping out trillions of dollars of wealth from retail investors.

The last phase of any bubble is almost invariably the euphoric shopping spree of an irrational public that buys stocks, real estate, etc. at record highs, foolishly believing that prices will keep rising indefinitely.

That’s what happened in 2000.

And that’s what seems to be happening today.

Investors are once again clamoring to buy expensive, popular stocks at price levels never before seen in the history of the stock market.

Company valuations are sky-high.

At 26.44, the S&P 500’s Price/Earnings ratio is the highest EVER, except for two occasions: the 2008 crash, and the 2000 crash.

At 28.93, the “Shiller P/E ratio”, which looks at company valuations over a longer-term, 10-year period and adjusts for inflation, is at the highest level EVER, except for two occasions: the 2000 crash, and the 1929 crash.

Price to sales ratios are near the highest levels in at least 50 years.

Price to book ratios haven’t been at this level since the 2008 crash.

And the stock market cap to GDP ratio is the highest since the 2000 crash.

(If you don’t understand those terms, I would highly encourage you to read this book. This small investment in your education might be the best you’ll ever make.)

Billionaire investor Paul Tudor Jones described these expensive stock market valuations as “terrifying” earlier this month at a closed-door asset management conference hosted by Goldman Sachs.

Yet for some reason individual retail investors still believe that stock prices will continue to rise.

According to Yale University’s Stock Market Confidence Index, for example, over 90% of individual investors believe that the stock market will rise in the next 12 months.

This sentiment isn’t actually based on any data; it’s simply how people -feel-.

These are classic bubble conditions: record-high prices, unsustainable valuations, baseless euphoria, and a surge in activity from retail investors.

In fairness, it’s possible that corporate profits surge by unimaginable rates; this would bring stock valuations back to reality.

But that’s unlikely.

Corporate profits are more or less tethered to the overall economy. If GDP growth is flat, corporate profits will be flat.

Real GDP growth in the US basically went flat in 2016 at just 1.6%.

And the Federal Reserve Bank of Atlanta estimates that the US economy grew at a pitiful 0.5% annualized rate in the first quarter of 2017.

Consumer spending, the mainstay of the US economy, slumped in the first three months of this year.

Plus, interest rates are starting to rise, which increases borrowing costs for both businesses and individuals.

Given such anemic conditions it seems a risky to bet everything on a sudden shock-and-awe surge in corporate profits.

So we’re right back where we started– an overvalued market exhibiting classic signs of a bubble.

I’m not suggesting that some major crash is imminent.

It’s entirely possible that this bubble can get even bigger; the stock market might rise another 10%, 20%, or more.

But it’s also possible we’ll see a drop of 40%+ from these levels. Remember, the NASDAQ Composite fell 78% from its peak in 2000.

Rational individuals always consider their downside first. Fear of loss should be far greater than the fear of missing out.

Quite simply if the reward isn’t worth the risk, don’t do it. Find something else. Or do nothing and simply wait on the sidelines.

The universe of options is a lot bigger than simply “US stocks”, and there’s an abundance of great opportunity outside of the mainstream.

Lately I’ve been involved in a number of secured lending deals where I’m able to earn between 10% to 12% per year with almost zero risk.

This strikes me as a great alternative to the stock market; I’d rather make a fixed 10% with minimal risk than potentially make 15% or 20%, but risk a 50% loss.

I’ve also been buying cash-producing royalties, which in my view is one of the most undervalued asset classes in the world. (More on that another time…)

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #47 on: April 23, 2017, 08:50:51 AM »
Oil prices fall amid fears of a new downtrend ~ 21 Apr 2017
Light, sweet crude for June delivery settled down $1.09, or 2.1%, at $49.62 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, lost $1.03, or 1.9%, to $51.96 a barrel on ICE Futures Europe. Both had their lowest settlement since the last week of March.

USD/RUB clinches highs around 56.40, US data eyed ~ 21 Apr 2017

Rouble steady near multi-month highs ~ 18 Apr 2017
At 0744 GMT, the rouble was little changed at 55.96 against the dollar.

USD/RUB to push modestly higher in the coming months – Lloyds Bank ~ 17 Apr 2017
“Sharp swings in crude oil prices made the Russian ruble the second most volatile EM currency over the past month, just behind the South African rand. More recently, increased geopolitical risk related to Russian military involvement in Syria have added to the possibility of further unexpected gyrations against the US dollar.”

Russian rouble stable after Tillerson visit brings no bad surprises ~ 13 Apr 2017
At 0738 GMT, the rouble was little changed against the dollar at 56.61 and had gained 0.08% to trade at 60.31 versus the euro.

Fixing Russia's growth for economists takes one ruble at a time ~ 10 Apr 2017
  • Weaker currency better for Russian economy, most analysts say
  • Economy Ministry sees ruble depreciating this year and to 2020

Ruble’s next trick will be to make Russian consumer prices melt ~ 2 Feb 2017
  • Stronger ruble starting to contribute to slowdown in inflation
  • M.Video, Lenta, Ikea cutting prices after consumption collapse

Oil rally sends Russian ruble soaring ~ 12 Dec 2016

Impact of oil prices on Russian ruble decreasing ~ 28 Oct 2016
In 2014, the ruble significantly decreased in value against the dollar. The most dramatic decrease was registered in December, when the exchange rate reached 67.79 rubles on December 18 up from 32.65 rubles on January 1, 2014. The Russian currency has slightly recovered since then.

Why investors are loading up on rubles ~ 11 Apr 2016

Ruble ends three-day advance as oil correlation climbs to record ~ 3 Mar 2016
  • Bond rally deepens as five-year yield falls 3rd time this wk
  • Correlation between currency and crude oil reaches 0.87

Russia's economy hit hard by falling oil prices and Western sanctions ~ 4 Aug 2015

Here's why the Russian ruble is collapsing ~ 17 Dec 2014
The Russian economy has been in trouble for months, but last night, things got absurdly bad. The value of the ruble dropped as much as 19% in the last 24 hours, the worst single-day drop for the ruble in 16 years.

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #48 on: April 29, 2017, 08:07:21 AM »
“We’ve been decreasing our telecom exposure across the region. Singtel is one of the last holdings we addressed, and we just don’t feel it’s a good place to be right now.” ~ 有人辞官归故里,有人漏夜赶科场。

China Coal Miner said to vie for Singapore mobile carrier M1 ~ 27 Apr 2017
Axiata has a 29% stake in M1, while Keppel has a 19% holding and Singapore Press owns 13%.
  • Shanxi Meijin Energy, China Broadband submit separate bids
  • Bahrain Telecom, private equity funds also make offers

Here's why firms may be interested in M1's potential sale

28 Apr 2017

Singapore has a close to 150% telco penetration rate.

With the news of the potential sale of Singapore telco giant M1 amidst the strategic review being conducted by its key shareholders – Keppel T&T, Axiata Group Bhd (Axiata) and SPH – investors will be taking the chance of grabbing a slice of Singapore's competitive telco market.

According to DBS, there are four reasons why potential bidders would be interested in M1:

For starters, foreign telcos with strong cash and balance sheets may be looking to expand their reach beyond their home bases. DBS explained that telco takeover deals may be hard to come by as regulators might attempt to block such deals, citing antitrust concerns, or national interests at stake. However, Singapore's mature telco market with close to 150% penetration rate and good telco infrastructure in place may attract foreign investors to place their bids on the table for M1.

DBS added that PE firms that may have existing stakes in other foreign telco or telco assets may be interested in taking M1 private, with the possibility of relisting the entire portfolio of telco assets thereafter.

Firms within the telco sphere such as telco equipment manufacturers may also express their interest in investing in telcos to expand their reach along the value chain.

Other companies not belonging to the already given firm categories may be interested in M1 as this could be an opportunity for them to make a foray into the telco scene and diversify.

A $130 billion manager sells Singtel as competition intensifies ~ 28 Apr 2017
“We’ve been decreasing our telecom exposure across the region. Singtel is one of the last holdings we addressed, and we just don’t feel it’s a good place to be right now.”
  • Henderson Global’s Asia funds have cut Singtel equity stake
  • Shares dropped this month on spectrum costs, TPG entry

Offline zuolun

  • Baron
  • *****
  • Posts: 3,721
Re: The other side of the coin
« Reply #49 on: May 01, 2017, 07:50:33 AM »
GM profit soars while Mazda takes a severe beating
It was the eighth consecutive quarter in which GM’s results topped expectations on Wall Street. The earnings were equal to $1.70 a share, while analysts had projected $1.48.

General Motors shuts Halol plant; first closure of auto facility in India since 2005 ~ 28 Apr 2017
The Halol shutdown is part of the plan for a complete pullout from India by GM.

This is the last year a car will be made in Australia ~ 25 Apr 2017