30 April 2012
By Teh Hooi Ling
Senior Correspondent
Link:
http://forums.hardwarezone.com.sg/stocks-shares-indices-92/%5Bbt%5D-sti-trading-1-6-times-tangible-assets-3707884.html
MARKETS have been rather resilient this year despite expectations of a more risk-off stance by investors going into the second quarter.
For the week, the Dow Jones Industrial Average added 1.53 per cent to end at 13,228.31, and the S&P index gained 1.8 per cent to 1,403.36. Meanwhile, Nasdaq picked up 2.29 per cent.
In Singapore, the Straits Times Index (STI) slid 0.4 per cent last week. For the month of April, it was flat.
Last week, robust corporate results from technology giants Apple and Amazon helped distract investors from other possible sources of worry - a somewhat glum US growth report for the first quarter, Federal Reserve inaction despite hopes for more stimulus, new worries in Europe and concerns over Chinese growth.
Last Friday brought a lower-than-forecast estimate for first-quarter US growth of only 2.2 per cent, down from 3.0 per cent in the final quarter of 2011.
The STI is now trading at 1.6 times tangible assets. Since 2008, it has traded to a high of 2.47 times (in early 2008) and a low of 1.07 times (in March 2009). The median in the last four-plus years is 1.84 times.
The index's expected dividend yield for next year is 3.5 per cent, relative to a high of 6.9 per cent (end-October 2008) and a low of 3.1 per cent (early November 2010). The median is 3.5 per cent.
As for price-earnings ratio, the STI is trading at 9.8 times historical earnings, but 13.9 times this year's earnings. This is about the median range the STI has traded at since 2008.
Sources:
http://www.businesstimes.com.sg/premium/companies/bt-portfolio/sti-trades-16-times-tangible-assets
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_C1_1279623.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_C2_1279624.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_C3NEW_1279665.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_1A_1279626.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_1B_1279627.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_1C_1279628.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_1D_1279629.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_2A_1279654.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_2B_1279655.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_2C_1279657.pdf
http://www.businesstimes.com.sg/sites/businesstimes.com.sg/files/BT_20120430_HLPORT30_2D_1279656.pdf
Monday, April 30, 2012
Sunday, April 29, 2012
The shady side of penny stock rallies
Big market swings blamed on ‘pumping and dumping’ by trading syndicates
29 Apr 2012 11:06 by YASMINE YAHYA
Small, cheap stocks, some costing as little as one or two cents apiece, have been driving up market volumes to astonishing heights in recent weeks, yet nobody seems to know who is trading these “ultra pennies”.
Remisiers and analysts hint that it could be the work of “trading syndicates” – groups of full-time stock market traders who work together to amass large amounts of certain stocks in order to push up their values and then profit by selling them off.
Veteran stock market observers term it “pumping and dumping”.
Such groups have been around probably as long as the stock exchange has been in existence, said Phillip Securities remisier Desmond Leong.
Yet there is little concrete information on who these traders are.
They made their presence felt recently through a number of ultra penny stocks, including JEL Corp, Advance SCT and TT International. The market capitalisations of these three firms – the total value of all their tradable shares – range from $35 million to $127 million.
All were inactive stocks that suddenly became hot overnight for little or no discernible reason.
JEL Corp, for example, had been thinly traded for at least three years. On an average day, fewer than two million of its shares changed hands.
But on March 30, its trading volume shot up to 115 million for no apparent reason. The stock price jumped 57 per cent that day, from 0.7 cent to 1.1 cent.
The stock price and volume continued to rise and gradually began drawing the attention of retail investors.
Never mind that the firm was on the Singapore Exchange watchlist for posting repeated losses.
Investors saw a cheap stock on a seemingly uninterrupted trajectory skywards.
Last Wednesday, JEL shares chalked up a trading volume of one billion and ended the day at a year’s high of 12.2 cents, making it 17 times more expensive than it had been just three weeks before.
And then the syndicate traders began cashing out.
The very next day, JEL stock tumbled 4.4 cents, and on Friday it fell another 1.4 cents. In just two days, the stock had lost almost half its value.
Mr Leong said this perfectly encapsulates the reason why he discourages his clients from joining penny stock rallies, especially if the share in question does not have good business or financial fundamentals.
“These stocks can rise very fast within a short period of time, but once they start falling, they fall just as fast, if not faster.”
After all, these syndicates are waiting to profit on the stocks that they have amassed and the only way they can do that is by selling them at jacked-up prices to willing buyers.
Once they have sold off all their stock in a particular company – and nobody knows when that might be – the buyers will find that overnight, trading volume has vanished and the share price is declining rapidly.
But savvy punters who are able to monitor the stock market throughout the day can and have profited from penny stock rallies.
Mr Charles Chua, a remisier who also trades stocks with his own money, recently made a winning bet on TT International.
He noticed that the stock had been rising steadily since April 9, when its price shot up 38 per cent in one day.
On April 19, he bought TT shares at 11.5 cents apiece. Just three days later, he made a 48 per cent profit by selling them at 17 cents.
“I made a small amount of money,” he said.
This is not the first time that Mr Chua has punted on such stocks, which, in his own words are “highly speculative, highly volatile and with zero fundamentals”.
He uses a program called Meta- Stock, which helps him to filter out what he calls “break-out” stocks.
These are shares that fulfil three criteria: they have been thinly traded for at least a year, their volumes have suddenly increased sharply and their prices have shot up dramatically.
“I monitor them for a while, and if I see that they continue to rise, I will join the party for a few days, or up to two weeks,” he said.
Penny stocks continued to dominate trading on Friday, but analysts say their time is almost up.
NRA Capital executive chairman Kevin Scully noted that in the past, such rallies had been cut short when trading reached such a frenzied level that brokerage houses got spooked.
In 2009, for example, at the height of a penny-stock rally, UOB Kay Hian told its customers that they could no longer use their Internet trading accounts to buy or sell shares in five small chip firms, including Jade Technologies, Transcu Group and Ban Joo.
Trading in all penny stocks died down soon after, Mr Scully recalled.
History could be repeating itself soon. UOB Kay Hian on Thursday listed 13 penny stocks that its customers are no longer allowed to trade online, including Artivision, Digiland and JEL.
OCBC Securities has banned Yoma Strategic and JEL from online trades.
“So trade carefully, but try not to jump in if the shares have already spiked, and if there are no accompanying fundamentals to justify the spike,” Mr Scully said.
yasminey@sph.com.sg
29 Apr 2012 11:06 by YASMINE YAHYA
Small, cheap stocks, some costing as little as one or two cents apiece, have been driving up market volumes to astonishing heights in recent weeks, yet nobody seems to know who is trading these “ultra pennies”.
Remisiers and analysts hint that it could be the work of “trading syndicates” – groups of full-time stock market traders who work together to amass large amounts of certain stocks in order to push up their values and then profit by selling them off.
Veteran stock market observers term it “pumping and dumping”.
Such groups have been around probably as long as the stock exchange has been in existence, said Phillip Securities remisier Desmond Leong.
Yet there is little concrete information on who these traders are.
They made their presence felt recently through a number of ultra penny stocks, including JEL Corp, Advance SCT and TT International. The market capitalisations of these three firms – the total value of all their tradable shares – range from $35 million to $127 million.
All were inactive stocks that suddenly became hot overnight for little or no discernible reason.
JEL Corp, for example, had been thinly traded for at least three years. On an average day, fewer than two million of its shares changed hands.
But on March 30, its trading volume shot up to 115 million for no apparent reason. The stock price jumped 57 per cent that day, from 0.7 cent to 1.1 cent.
The stock price and volume continued to rise and gradually began drawing the attention of retail investors.
Never mind that the firm was on the Singapore Exchange watchlist for posting repeated losses.
Investors saw a cheap stock on a seemingly uninterrupted trajectory skywards.
Last Wednesday, JEL shares chalked up a trading volume of one billion and ended the day at a year’s high of 12.2 cents, making it 17 times more expensive than it had been just three weeks before.
And then the syndicate traders began cashing out.
The very next day, JEL stock tumbled 4.4 cents, and on Friday it fell another 1.4 cents. In just two days, the stock had lost almost half its value.
Mr Leong said this perfectly encapsulates the reason why he discourages his clients from joining penny stock rallies, especially if the share in question does not have good business or financial fundamentals.
“These stocks can rise very fast within a short period of time, but once they start falling, they fall just as fast, if not faster.”
After all, these syndicates are waiting to profit on the stocks that they have amassed and the only way they can do that is by selling them at jacked-up prices to willing buyers.
Once they have sold off all their stock in a particular company – and nobody knows when that might be – the buyers will find that overnight, trading volume has vanished and the share price is declining rapidly.
But savvy punters who are able to monitor the stock market throughout the day can and have profited from penny stock rallies.
Mr Charles Chua, a remisier who also trades stocks with his own money, recently made a winning bet on TT International.
He noticed that the stock had been rising steadily since April 9, when its price shot up 38 per cent in one day.
On April 19, he bought TT shares at 11.5 cents apiece. Just three days later, he made a 48 per cent profit by selling them at 17 cents.
“I made a small amount of money,” he said.
This is not the first time that Mr Chua has punted on such stocks, which, in his own words are “highly speculative, highly volatile and with zero fundamentals”.
He uses a program called Meta- Stock, which helps him to filter out what he calls “break-out” stocks.
These are shares that fulfil three criteria: they have been thinly traded for at least a year, their volumes have suddenly increased sharply and their prices have shot up dramatically.
“I monitor them for a while, and if I see that they continue to rise, I will join the party for a few days, or up to two weeks,” he said.
Penny stocks continued to dominate trading on Friday, but analysts say their time is almost up.
NRA Capital executive chairman Kevin Scully noted that in the past, such rallies had been cut short when trading reached such a frenzied level that brokerage houses got spooked.
In 2009, for example, at the height of a penny-stock rally, UOB Kay Hian told its customers that they could no longer use their Internet trading accounts to buy or sell shares in five small chip firms, including Jade Technologies, Transcu Group and Ban Joo.
Trading in all penny stocks died down soon after, Mr Scully recalled.
History could be repeating itself soon. UOB Kay Hian on Thursday listed 13 penny stocks that its customers are no longer allowed to trade online, including Artivision, Digiland and JEL.
OCBC Securities has banned Yoma Strategic and JEL from online trades.
“So trade carefully, but try not to jump in if the shares have already spiked, and if there are no accompanying fundamentals to justify the spike,” Mr Scully said.
yasminey@sph.com.sg
Friday, April 27, 2012
The most bullish of all bull runs?
27 April 2012
Colin Tan
Judging from the recent spate of positive market news, it appears that there is no better time to be involved in property than the present.
A report on Wednesday highlighted the sharp rebound in resale transactions of completed private homes last month, confirming that the secondary market had indeed recovered to levels before the additional buyer's stamp duty (ABSD) was imposed in December.
That segment of the market had been in "deep freeze" since the introduction of the ABSD but thawed quite suddenly. Indeed, it has been a lot harder to make an appointment with your real estate agent in the past few weeks, than say, in the early part of the year.
Excluding the caveats filed for executive condominiums and en bloc sales, there were 1,142 resale deals for private homes last month. This is more than twice the 565 caveats for February and more than three times January's volume of 314 transactions. Last month's number also exceeds December's volume of 776 and November's 981.
Only a day earlier, it was reported that rentals for homes in the private market had risen yet again for February. Overall, the message was that, with the exception of small pockets of weak rents in some locations, the leasing market has been pretty resilient - even amid news of expatriates returning home in numbers.
These expats are those who have not been successful in renewing their employment or work passes.
But if you look at the data, there had never been so many renter households in Singapore before. For the whole of last year, there were 45,062 private leasing contracts lodged with the Inland Revenue Authority of Singapore.
Meanwhile, according to the Housing and Development Board's website, the number of subletting approvals for last year totalled 26,130. Ostensibly, these numbers are keeping rents for both private and public apartments fairly high, if not higher.
The leasing market has been a puzzle: How do we square the returning expat numbers with the rising number of rental contracts? The answer must be that more locals are renting.
Who are these locals? Many are beneficiaries of en bloc sales. And the tenders for collective sales - discounted by many to fall sharply this year - are coming thick and fast.
I am amazed at the speed at which they are hitting the market, and some of these developments are not very old. Their impact on the market cannot be denied, especially their roles in the robust sales of new properties and in the high rents for both private homes and public flats.
Then, there are the robust sales for new units at developers' launches - mostly shoebox units - starting from Watertown in February and sustaining the momentum right up to Sky Habitat and Katong Regency in recent weeks.
The most common comment from property analysts this week is that they are not ruling out another round of cooling measures. I think by now, almost everybody knows this without any need for reminders. What matters more is the kind of measures that will be introduced.
We have already seen off five rounds of cooling measures but we do not seem to have got much further from square one. If the measures do not address the issue of low borrowing costs directly, I would not rule out just another round but a few more.
Finally, the widespread optimism has even begun to permeate the moribund high-end market segment.
Projects located in the prime central areas as well as those on the fringe are being re-launched with discounts, rental guarantees, luxury fittings and designer interior decor. And if the promotion packages catches on, who knows, the buying fervour may just spread to the rest of the high-end market.
The thing with market launches is that they help provide more recent sale benchmarks against which buyers and sellers in the secondary or resale market can rely on to conclude their transactions. Without such a benchmark, there is usually a stand-off between my offer and yours.
As it is, some agents are already spreading the word that the suburban market is over-bought and over-supplied and that it may be time to re-enter the prime segment.The prices on a per square foot basis has certainly narrowed between prime and fringe versus suburban.
Yes, it does seem a lot more convincing this time around. Is this finally the year of the high-end market?
Colin Tan is head of research and consultancy at Chesterton Suntec International.
Colin Tan
Judging from the recent spate of positive market news, it appears that there is no better time to be involved in property than the present.
A report on Wednesday highlighted the sharp rebound in resale transactions of completed private homes last month, confirming that the secondary market had indeed recovered to levels before the additional buyer's stamp duty (ABSD) was imposed in December.
That segment of the market had been in "deep freeze" since the introduction of the ABSD but thawed quite suddenly. Indeed, it has been a lot harder to make an appointment with your real estate agent in the past few weeks, than say, in the early part of the year.
Excluding the caveats filed for executive condominiums and en bloc sales, there were 1,142 resale deals for private homes last month. This is more than twice the 565 caveats for February and more than three times January's volume of 314 transactions. Last month's number also exceeds December's volume of 776 and November's 981.
Only a day earlier, it was reported that rentals for homes in the private market had risen yet again for February. Overall, the message was that, with the exception of small pockets of weak rents in some locations, the leasing market has been pretty resilient - even amid news of expatriates returning home in numbers.
These expats are those who have not been successful in renewing their employment or work passes.
But if you look at the data, there had never been so many renter households in Singapore before. For the whole of last year, there were 45,062 private leasing contracts lodged with the Inland Revenue Authority of Singapore.
Meanwhile, according to the Housing and Development Board's website, the number of subletting approvals for last year totalled 26,130. Ostensibly, these numbers are keeping rents for both private and public apartments fairly high, if not higher.
The leasing market has been a puzzle: How do we square the returning expat numbers with the rising number of rental contracts? The answer must be that more locals are renting.
Who are these locals? Many are beneficiaries of en bloc sales. And the tenders for collective sales - discounted by many to fall sharply this year - are coming thick and fast.
I am amazed at the speed at which they are hitting the market, and some of these developments are not very old. Their impact on the market cannot be denied, especially their roles in the robust sales of new properties and in the high rents for both private homes and public flats.
Then, there are the robust sales for new units at developers' launches - mostly shoebox units - starting from Watertown in February and sustaining the momentum right up to Sky Habitat and Katong Regency in recent weeks.
The most common comment from property analysts this week is that they are not ruling out another round of cooling measures. I think by now, almost everybody knows this without any need for reminders. What matters more is the kind of measures that will be introduced.
We have already seen off five rounds of cooling measures but we do not seem to have got much further from square one. If the measures do not address the issue of low borrowing costs directly, I would not rule out just another round but a few more.
Finally, the widespread optimism has even begun to permeate the moribund high-end market segment.
Projects located in the prime central areas as well as those on the fringe are being re-launched with discounts, rental guarantees, luxury fittings and designer interior decor. And if the promotion packages catches on, who knows, the buying fervour may just spread to the rest of the high-end market.
The thing with market launches is that they help provide more recent sale benchmarks against which buyers and sellers in the secondary or resale market can rely on to conclude their transactions. Without such a benchmark, there is usually a stand-off between my offer and yours.
As it is, some agents are already spreading the word that the suburban market is over-bought and over-supplied and that it may be time to re-enter the prime segment.The prices on a per square foot basis has certainly narrowed between prime and fringe versus suburban.
Yes, it does seem a lot more convincing this time around. Is this finally the year of the high-end market?
Colin Tan is head of research and consultancy at Chesterton Suntec International.
Monday, April 23, 2012
S-REITS 'to get boost from strengthening S$'
23 April 2012
Yvonne Chan
SINGAPORE - The popularity of Singapore Real Estate Investment Trusts, or S-REITS, looks set to rise, given the expectations of a stronger Singapore dollar in the year ahead.
This follows the recent announcement by the Monetary Authority of Singapore (MAS) to allow the Singapore dollar to appreciate at a faster pace.
Mr Liu Jinshu, deputy lead analyst at SIAS Research, said: "If they expect the dollar to appreciate, of course there will be more interest in Singapore-dollar-denominated assets.
"Hence, REITS that are listed in Singapore and traded in Singapore dollars will benefit as well."
S-REITS have often been referred to as "defensive" plays and analysts say they have held up well, appreciating by over 10 per cent in the first quarter of this year.
Research houses such as DBS Vickers and CIMB have earmarked their preference for certain S-REITS over other stocks.
DBS Vickers tips Mapletree Logistics Trust, Ascendas India Trust and Frasers Commercial Trust as S-REITS to accumulate ahead of dividend declarations.
CIMB favours CapitaMall Trust and Frasers Centrepoint Trust for their retail exposure and strong growth potential, while OCBC Investment Research prefers industrial REITS, which offer yields in excess of 8 per cent, to outperform.
However, analysts warn that selected REITS that have seen a significant increase in share price will now have lower yields.
And as more capital flows into Singapore in anticipation of currency appreciation, investing hastily into REITS has its drawbacks.
Mr Eli Lee, analyst at OCBC Investment Research, said: "One thing to be careful about is that most REITS are diversified geographically, so if they are taking their income from overseas, they would be penalised with a stronger Singapore dollar.
"I would be careful of how much of the news is already priced in, because the market is forward-looking and if an announcement has already been made public, then the market would have already moved to anticipate it."
Analysts say investors should continue to maintain a diversified portfolio and look at investing for the long term.
"The best-value proposition of REITS is income, so investors who look for a steady dividend stream and payout could look at this option," said Mr Lee.
"However, REITS do not offer capital protection. Investors with long holding power and who are less sensitive to REITS prices falling will be better off," he added.
With macroeconomic uncertainties set to remain, S-REITS that offer a higher yield and more stable earnings outlook continue to be popular with investors.
Industry watchers say investments into S-REITS with an exposure to Indonesia and China are likely to increase.
Yvonne Chan
SINGAPORE - The popularity of Singapore Real Estate Investment Trusts, or S-REITS, looks set to rise, given the expectations of a stronger Singapore dollar in the year ahead.
This follows the recent announcement by the Monetary Authority of Singapore (MAS) to allow the Singapore dollar to appreciate at a faster pace.
Mr Liu Jinshu, deputy lead analyst at SIAS Research, said: "If they expect the dollar to appreciate, of course there will be more interest in Singapore-dollar-denominated assets.
"Hence, REITS that are listed in Singapore and traded in Singapore dollars will benefit as well."
S-REITS have often been referred to as "defensive" plays and analysts say they have held up well, appreciating by over 10 per cent in the first quarter of this year.
Research houses such as DBS Vickers and CIMB have earmarked their preference for certain S-REITS over other stocks.
DBS Vickers tips Mapletree Logistics Trust, Ascendas India Trust and Frasers Commercial Trust as S-REITS to accumulate ahead of dividend declarations.
CIMB favours CapitaMall Trust and Frasers Centrepoint Trust for their retail exposure and strong growth potential, while OCBC Investment Research prefers industrial REITS, which offer yields in excess of 8 per cent, to outperform.
However, analysts warn that selected REITS that have seen a significant increase in share price will now have lower yields.
And as more capital flows into Singapore in anticipation of currency appreciation, investing hastily into REITS has its drawbacks.
Mr Eli Lee, analyst at OCBC Investment Research, said: "One thing to be careful about is that most REITS are diversified geographically, so if they are taking their income from overseas, they would be penalised with a stronger Singapore dollar.
"I would be careful of how much of the news is already priced in, because the market is forward-looking and if an announcement has already been made public, then the market would have already moved to anticipate it."
Analysts say investors should continue to maintain a diversified portfolio and look at investing for the long term.
"The best-value proposition of REITS is income, so investors who look for a steady dividend stream and payout could look at this option," said Mr Lee.
"However, REITS do not offer capital protection. Investors with long holding power and who are less sensitive to REITS prices falling will be better off," he added.
With macroeconomic uncertainties set to remain, S-REITS that offer a higher yield and more stable earnings outlook continue to be popular with investors.
Industry watchers say investments into S-REITS with an exposure to Indonesia and China are likely to increase.
Perpetual bonds carry risks, so do your checks
The Straits TimesGoh Eng Yeow
23/4/2012
RETAIL investors finally got a chance recently to jump into the latest investing fad here, perpetual securities - and they seized it with both hands.
But as local interest grows in this seldom-seen type of security, similar to preference shares, investors should consider some of their potential pitfalls, as well as the attractive returns.
Casino giant Genting Singapore directed its issue squarely at small-time investors who were attracted by the hefty 5.125 per cent interest payment, known as a coupon rate, offered by the shares.
Genting was tapping into pent-up demand as retail investors had been left out in the cold in recent perpetual securities issues, directed only at the big boys.
The outcome: Genting raised $500 million from 21,594 retail investors.
This was on top of the $1.8 billion it netted from an earlier perpetual securities issue last month.
Perpetual securities are nothing new. They are bond-like instruments which offer their holders a fixed payout, but no voting rights.
But unlike bonds, in which both the principal and interest must be paid to investors according to a fixed schedule, perpetuals allow an issuer to defer coupon payout under certain circumstances. The repayment of the principal is also left at the issuer's discretion.
For issuers, one big attraction of perpetuals is that they can be structured to count as equity, rather than debt, on their books.
The other big plus is that an issuer can raise capital without diluting its equity base. Given the uncertain market conditions, this relieves the pressure on its share price that would otherwise have been triggered by a cash call such as a rights issue or a private share placement.
Until last year, only the bluest of the blue chips such as DBS Group Holdings, United Overseas Bank and OCBC Bank have been successful in attracting investors to buy perpetual securities which they labelled as preference shares.
Things however changed last year when water specialist Hyflux netted $400 million - double the sum it was hoping to raise initially - from a perpetual securities issue.
The enthusiasm didn't end there. Investors were struck by the brisk buying interest in the Hyflux perpetuals after they were listed.
Even though the mother share has suffered a 25 per cent drop since August last year, amid market turmoil, the perpetuals are trading at a 6.2 per cent premium to its $100 issue price.
It is not surprising that with the Hyflux experience in mind, investors have been loading up on the Genting perpetuals. Since its debut last Thursday, the security has attracted a total volume of 18.6 million shares in two days of trading, closing with a 1.9 per cent premium to the $1 issue price at $1.019 on Friday.
This prompted Mr Clifford Lee, the head of fixed income at DBS Bank, which has managed the lion's share of the perpetuals launched this year, to suggest that other issuers might well follow in Genting's footsteps in tapping on the broader retail investor base.
'We will hopefully see more retail bond offerings in the near future. With the strong first-day performance of the Genting perp in the retail market, this will certainly spur more interest from potential issuers and hasten more discussions for similar offerings,' he told The Straits Times.
Still, despite the exuberance, a word of caution is needed, as such instruments appear to have lured many risk-averse investors who have not touched the stock market in years.
Some sceptics believe that there must be a catch somewhere. To them, the fact that an issuer is prepared to offer such an attractive coupon payout is simply too good to be true.
As one blogger observed: 'In exchange for you lending him the money, he is willing to pay you interest of 5.125 per cent, which is considerably more than what the bank is paying you. One must wonder why he is offering an interest rate which is much higher than what other people are offering you.'
But some have noted that the higher 'interest rate' is to compensate buyers for leaving repayment of the principal at the issuer's discretion.
Outside of Asia, interest in perpetuals is almost non-existent. Europe has seen no deals this year, while North America has seen just four deals worth US$986 million (S$1.24 billion), according to Dealogic.
Interest in such instruments in these two markets abated considerably when the perpetuals issued by well-known companies such as US mortgage giants Freddie Mac and Fannie Mae were written off completely during the 2008 global financial crisis, after they went bust and failed to make their usual coupon payout.
That should serve as a cautionary tale. Retail investors should do a few checks before placing money in perpetuals.
First and foremost, it is important to evaluate the business model of the issuer and stress-test its cash flow to make sure that it has the ability to make the coupon payout. There is no point in getting lured into a perpetual which offers a big coupon rate only to find out that the company is unable to make the payment.
Since the issuer of the perpetual is under no compulsion to redeem the principal by a certain date, the only way an investor is able to get his capital back is by selling the perpetual in the market. So it is vital to consider the liquidity of the perpetuals before buying them.
So far, retail investors have not experienced any problem selling perpetuals traded on the Singapore Exchange, but well-heeled investors who bought into institutional offerings have complained of a big difference between the buying and selling price quoted to them.
One encouraging sign, however, is that most of the perpetuals issued so far this year by companies such as Global Logistic Properties, Singapore Post and Olam International are trading well above their respective issue prices.
The fact that an issuer of perpetuals can forgo a dividend payout without triggering default also places a big emphasis on the features to protect investors if such an event occurs.
Most of the perpetuals this year comes with a 'dividend stopper'. This means that the issuer will not be able to pay any dividend to its shareholders unless it makes good on all the deferred coupon payments.
That makes it important for an investor to check a perpetual issuer's dividend payout record.
Singapore Post was able to issue a 4.25 per cent coupon because the company enjoyed a steady dividend track record since it was listed almost 10 years ago. In contrast, Genting offered a higher 5.125 per cent payout, as it only started paying out dividends since last year.
engyeow@sph.com.sg
23/4/2012
RETAIL investors finally got a chance recently to jump into the latest investing fad here, perpetual securities - and they seized it with both hands.
But as local interest grows in this seldom-seen type of security, similar to preference shares, investors should consider some of their potential pitfalls, as well as the attractive returns.
Casino giant Genting Singapore directed its issue squarely at small-time investors who were attracted by the hefty 5.125 per cent interest payment, known as a coupon rate, offered by the shares.
Genting was tapping into pent-up demand as retail investors had been left out in the cold in recent perpetual securities issues, directed only at the big boys.
The outcome: Genting raised $500 million from 21,594 retail investors.
This was on top of the $1.8 billion it netted from an earlier perpetual securities issue last month.
Perpetual securities are nothing new. They are bond-like instruments which offer their holders a fixed payout, but no voting rights.
But unlike bonds, in which both the principal and interest must be paid to investors according to a fixed schedule, perpetuals allow an issuer to defer coupon payout under certain circumstances. The repayment of the principal is also left at the issuer's discretion.
For issuers, one big attraction of perpetuals is that they can be structured to count as equity, rather than debt, on their books.
The other big plus is that an issuer can raise capital without diluting its equity base. Given the uncertain market conditions, this relieves the pressure on its share price that would otherwise have been triggered by a cash call such as a rights issue or a private share placement.
Until last year, only the bluest of the blue chips such as DBS Group Holdings, United Overseas Bank and OCBC Bank have been successful in attracting investors to buy perpetual securities which they labelled as preference shares.
Things however changed last year when water specialist Hyflux netted $400 million - double the sum it was hoping to raise initially - from a perpetual securities issue.
The enthusiasm didn't end there. Investors were struck by the brisk buying interest in the Hyflux perpetuals after they were listed.
Even though the mother share has suffered a 25 per cent drop since August last year, amid market turmoil, the perpetuals are trading at a 6.2 per cent premium to its $100 issue price.
It is not surprising that with the Hyflux experience in mind, investors have been loading up on the Genting perpetuals. Since its debut last Thursday, the security has attracted a total volume of 18.6 million shares in two days of trading, closing with a 1.9 per cent premium to the $1 issue price at $1.019 on Friday.
This prompted Mr Clifford Lee, the head of fixed income at DBS Bank, which has managed the lion's share of the perpetuals launched this year, to suggest that other issuers might well follow in Genting's footsteps in tapping on the broader retail investor base.
'We will hopefully see more retail bond offerings in the near future. With the strong first-day performance of the Genting perp in the retail market, this will certainly spur more interest from potential issuers and hasten more discussions for similar offerings,' he told The Straits Times.
Still, despite the exuberance, a word of caution is needed, as such instruments appear to have lured many risk-averse investors who have not touched the stock market in years.
Some sceptics believe that there must be a catch somewhere. To them, the fact that an issuer is prepared to offer such an attractive coupon payout is simply too good to be true.
As one blogger observed: 'In exchange for you lending him the money, he is willing to pay you interest of 5.125 per cent, which is considerably more than what the bank is paying you. One must wonder why he is offering an interest rate which is much higher than what other people are offering you.'
But some have noted that the higher 'interest rate' is to compensate buyers for leaving repayment of the principal at the issuer's discretion.
Outside of Asia, interest in perpetuals is almost non-existent. Europe has seen no deals this year, while North America has seen just four deals worth US$986 million (S$1.24 billion), according to Dealogic.
Interest in such instruments in these two markets abated considerably when the perpetuals issued by well-known companies such as US mortgage giants Freddie Mac and Fannie Mae were written off completely during the 2008 global financial crisis, after they went bust and failed to make their usual coupon payout.
That should serve as a cautionary tale. Retail investors should do a few checks before placing money in perpetuals.
First and foremost, it is important to evaluate the business model of the issuer and stress-test its cash flow to make sure that it has the ability to make the coupon payout. There is no point in getting lured into a perpetual which offers a big coupon rate only to find out that the company is unable to make the payment.
Since the issuer of the perpetual is under no compulsion to redeem the principal by a certain date, the only way an investor is able to get his capital back is by selling the perpetual in the market. So it is vital to consider the liquidity of the perpetuals before buying them.
So far, retail investors have not experienced any problem selling perpetuals traded on the Singapore Exchange, but well-heeled investors who bought into institutional offerings have complained of a big difference between the buying and selling price quoted to them.
One encouraging sign, however, is that most of the perpetuals issued so far this year by companies such as Global Logistic Properties, Singapore Post and Olam International are trading well above their respective issue prices.
The fact that an issuer of perpetuals can forgo a dividend payout without triggering default also places a big emphasis on the features to protect investors if such an event occurs.
Most of the perpetuals this year comes with a 'dividend stopper'. This means that the issuer will not be able to pay any dividend to its shareholders unless it makes good on all the deferred coupon payments.
That makes it important for an investor to check a perpetual issuer's dividend payout record.
Singapore Post was able to issue a 4.25 per cent coupon because the company enjoyed a steady dividend track record since it was listed almost 10 years ago. In contrast, Genting offered a higher 5.125 per cent payout, as it only started paying out dividends since last year.
engyeow@sph.com.sg
Saturday, April 14, 2012
Singapore, the future Swiss franc market for Asia
Published April 14, 2012
SINGAPORE - A flurry of foreign fundraising, including a rare high-yield chinese bond, has put the spotlight on Singapore's growing role in the global debt capital markets.
The city-state was buzzing with new deals again this week, underscoring Singapore's viability as an alternative to the US dollar market, with S$8.7billion (US$7billion) issued so far this year.
"It's getting to be the Swiss franc market for Asia," said one Singapore-based foreign banker. "It shows that the Singapore dollar is increasingly becoming a currency market of choice." Driving the surge in activity are extremely low local benchmark rates, which are close to record tights - even though the Singapore dollar is stronger than it has been in years.
The five-year SOR Singapore benchmark rate narrowed 14bp last week alone, ending on Wednesday at 1.14 per cent. By Friday, the rate was 1.19 per cent. The tightest ever was 0.735 per cent last August.
"The Singapore dollar is becoming more international in breadth and availability," said one Hong Kong-based syndicate banker, who said he was growing his presence in local markets.
"And that is drawing interest from as far as Europe." Central China Real Estate this week priced an increased S$175million five-year bond at 10.75 per cent, inside the initial price talk of high 10 per cent to 11 per cent.
Meanwhile Hong Kong conglomerate Hutchison Whampoa has been mulling perpetuals in Singapore, potentially bettering its US$2billion 6 per cent perpetual non-call five sold in 2010, and there has also been talk of an offer from Yanlord Land.
They like it. Investors have been keen to get exposure to the Singapore dollar, seeing good prospects of the currency continuing to appreciate as the government combats inflationary pressures.
The Monetary Authority of Singapore on Friday tightened rates to combat inflation, which stood at 4.6 per cent in February - more than double the 2.0 per cent average since 2000.
Foreign investors also see Singapore, which boasts a Triple A, as a safe haven.
There has even been talk about investments earmarked for the Dim Sum market being redirected to Singapore dollar bonds - especially since Hong Kong accounts are taking bigger shares in deals out of the city-state.
The growing bid has allowed many recent Singapore dollar bonds to remain at or above par, while new US dollar issues have been hit by wild fluctuations.
While some investors gripe about trouble getting in and out of trades quickly due to current illiquidity, this has helped to keep prices stable. - REUTERS
SINGAPORE - A flurry of foreign fundraising, including a rare high-yield chinese bond, has put the spotlight on Singapore's growing role in the global debt capital markets.
The city-state was buzzing with new deals again this week, underscoring Singapore's viability as an alternative to the US dollar market, with S$8.7billion (US$7billion) issued so far this year.
"It's getting to be the Swiss franc market for Asia," said one Singapore-based foreign banker. "It shows that the Singapore dollar is increasingly becoming a currency market of choice." Driving the surge in activity are extremely low local benchmark rates, which are close to record tights - even though the Singapore dollar is stronger than it has been in years.
The five-year SOR Singapore benchmark rate narrowed 14bp last week alone, ending on Wednesday at 1.14 per cent. By Friday, the rate was 1.19 per cent. The tightest ever was 0.735 per cent last August.
"The Singapore dollar is becoming more international in breadth and availability," said one Hong Kong-based syndicate banker, who said he was growing his presence in local markets.
"And that is drawing interest from as far as Europe." Central China Real Estate this week priced an increased S$175million five-year bond at 10.75 per cent, inside the initial price talk of high 10 per cent to 11 per cent.
Meanwhile Hong Kong conglomerate Hutchison Whampoa has been mulling perpetuals in Singapore, potentially bettering its US$2billion 6 per cent perpetual non-call five sold in 2010, and there has also been talk of an offer from Yanlord Land.
They like it. Investors have been keen to get exposure to the Singapore dollar, seeing good prospects of the currency continuing to appreciate as the government combats inflationary pressures.
The Monetary Authority of Singapore on Friday tightened rates to combat inflation, which stood at 4.6 per cent in February - more than double the 2.0 per cent average since 2000.
Foreign investors also see Singapore, which boasts a Triple A, as a safe haven.
There has even been talk about investments earmarked for the Dim Sum market being redirected to Singapore dollar bonds - especially since Hong Kong accounts are taking bigger shares in deals out of the city-state.
The growing bid has allowed many recent Singapore dollar bonds to remain at or above par, while new US dollar issues have been hit by wild fluctuations.
While some investors gripe about trouble getting in and out of trades quickly due to current illiquidity, this has helped to keep prices stable. - REUTERS
Psychological factors behind investor losses
Published April 14, 2012
INVESTING
Dalbar study of investor behaviour shows that the 'average investor' underperforms benchmarks due to his tendency to buy high and sell low
By Genevieve Cua Personal Finance Editor
How they stack VOLATILITY in 2011 has thrown into sharp relief the damage that investor fear and greed wreak, says Dalbar's latest Quantitative Analysis of Investor Behaviour (QAIB).
The study shows - as it has for the last 17 years since it began to track investor behaviour - that the "average investor" underperforms common benchmarks due to his tendency to buy high and sell low at the worst moments.
Using data from the Investment Company Institute, Standard & Poor's and Barclays Capital Index Products, the firm has found that the average equity mutual fund investor lost 5.73 per cent in 2011, compared to the S&P 500's gain of 2.12 per cent. This is a negative differential of more than seven percentage points.
To illustrate investors' poor timing, the month of September saw a large uptick in the S&P 500. But that was a month when fund flows were close to zero. However, fund flows rose to 10 per cent of total assets two months later. By that time the S&P 500 had lost nearly half its gains.
The average fixed income investor saw a positive return of 1.34 per cent, but this was significantly below the Treasury yield. The Barclays Aggregate Bond Index's return was 7.84 per cent.
Dalbar believes nine psychological factors of behavioural finance cause investors' underperformance over the long and short term. These are:
• Loss aversion or the expectation of high returns with low risk;
• Narrow framing, where decisions are made without considering all implications;
• Anchoring which links situations to familiar experience, even though this is inappropriate;
• Mental accounting which takes undue risk in one area and avoids rational risk in others;
• Diversification which seeks to reduce risk but by simply using different sources;
• Herding or copying the behaviour of others;
• Regret
• Media response or reacting to news;
• Optimism or the belief that good things happen to the investor and bad things happen to others.
Dalbar says volatility set new records in 2011 and in the United States, this was accompanied by regulatory flip-flops.
"Records were set for both up and down days. As dramatic as it has been, the market was not the only area of volatility. Starting with the 'certainty' of a Dodd-Frank universal fiduciary standard that fizzled in dissension at the SEC, we saw a series of regulatory initiatives threaten and then fall by the wayside.
"Even more significant than the uncertainties of 2011 is the fact that the causes of the upheaval remain unchanged, making it likely that this volatility in markets and regulation could become a new norm."
Dalbar adds that the dramatic swings in the market feed investors' fear and greed, causing them to abandon their investment strategy and sell out of the funds they own. "This is sometimes due to fear but other times due to the investor's temptation to time the market. These and other irrational behaviours can lead to devastating investment results."
The QAIB reflects investor behaviour using ICI data on fund sales, redemption and exchanges; it takes the net dollar volume of these activities monthly. Investor returns are calculated as the change in assets, after excluding sales, redemptions and exchanges. The calculation captures realised and unrealised capital gains, interest, dividends, trading costs and other cost items such as sales charges and fees.
Dalbar data shows that both equity and fixed income mutual fund investors underperformed the market over one, three, five, 10 and 20-year periods.
The average asset allocation or balanced investor outperformed equity investors in 2011 with a negative return of minus 1.27 per cent. This is only the sixth time that asset allocation investors have outperformed over the last 20 years.
On a 20-year basis, the average equity investor underperformed the S&P 500 by 4.32 per cent on an annualised basis. The average annualised underperformance of the fixed income investor against the Barclays Aggregate Bond Index is 5.56 per cent. Interestingly the performance gap between the equity investor and the S&P 500 has actually narrowed over the years. In 1997, for instance, the gap was over 10 percentage points.
"It is believed that the improving results from 1997 to 2011 were largely due to the fact that investors who entered the market in the '90s have now experienced multiple market declines and recoveries, and have learned from those experiences. They found that remaining invested has, over the long term, produced positive results."
Still, the study also found that remaining invested is a challenge. "One of the most startling and ongoing facts is that at no point in time have average investors remained invested for sufficiently long periods to derive the benefits of the investment markets."
The average equity mutual fund retention rate is about 3.29 years; fixed income 3.09 years and asset allocation 4.42 years.
The average fixed income and asset allocation investors generally failed to keep pace with inflation based on 20, 10, five and one-year periods. Equity investors beat inflation on a 20-year and three-year periods, but failed to do so on 10, five and one-year periods.
QAIB also looks into systematic investing where a hypothetical US$10,000 is evenly distributed across each month. It found that for 2011, the average equity investor earned US$9,853 compared to a systematic investor's earnings of US$8,665. It said this underperformance of the systematic equity investor does not mean that the method of investing should be abandoned. "It should, however, cause investors or their financial advisers to seek new strategies to counteract investor behaviour that loses alpha."
The average systematic fixed income investor overwhelmingly outperformed the average fixed income investor over a 20-year period, earning four times as much. - BT
INVESTING
Dalbar study of investor behaviour shows that the 'average investor' underperforms benchmarks due to his tendency to buy high and sell low
By Genevieve Cua Personal Finance Editor
How they stack VOLATILITY in 2011 has thrown into sharp relief the damage that investor fear and greed wreak, says Dalbar's latest Quantitative Analysis of Investor Behaviour (QAIB).
The study shows - as it has for the last 17 years since it began to track investor behaviour - that the "average investor" underperforms common benchmarks due to his tendency to buy high and sell low at the worst moments.
Using data from the Investment Company Institute, Standard & Poor's and Barclays Capital Index Products, the firm has found that the average equity mutual fund investor lost 5.73 per cent in 2011, compared to the S&P 500's gain of 2.12 per cent. This is a negative differential of more than seven percentage points.
To illustrate investors' poor timing, the month of September saw a large uptick in the S&P 500. But that was a month when fund flows were close to zero. However, fund flows rose to 10 per cent of total assets two months later. By that time the S&P 500 had lost nearly half its gains.
The average fixed income investor saw a positive return of 1.34 per cent, but this was significantly below the Treasury yield. The Barclays Aggregate Bond Index's return was 7.84 per cent.
Dalbar believes nine psychological factors of behavioural finance cause investors' underperformance over the long and short term. These are:
• Loss aversion or the expectation of high returns with low risk;
• Narrow framing, where decisions are made without considering all implications;
• Anchoring which links situations to familiar experience, even though this is inappropriate;
• Mental accounting which takes undue risk in one area and avoids rational risk in others;
• Diversification which seeks to reduce risk but by simply using different sources;
• Herding or copying the behaviour of others;
• Regret
• Media response or reacting to news;
• Optimism or the belief that good things happen to the investor and bad things happen to others.
Dalbar says volatility set new records in 2011 and in the United States, this was accompanied by regulatory flip-flops.
"Records were set for both up and down days. As dramatic as it has been, the market was not the only area of volatility. Starting with the 'certainty' of a Dodd-Frank universal fiduciary standard that fizzled in dissension at the SEC, we saw a series of regulatory initiatives threaten and then fall by the wayside.
"Even more significant than the uncertainties of 2011 is the fact that the causes of the upheaval remain unchanged, making it likely that this volatility in markets and regulation could become a new norm."
Dalbar adds that the dramatic swings in the market feed investors' fear and greed, causing them to abandon their investment strategy and sell out of the funds they own. "This is sometimes due to fear but other times due to the investor's temptation to time the market. These and other irrational behaviours can lead to devastating investment results."
The QAIB reflects investor behaviour using ICI data on fund sales, redemption and exchanges; it takes the net dollar volume of these activities monthly. Investor returns are calculated as the change in assets, after excluding sales, redemptions and exchanges. The calculation captures realised and unrealised capital gains, interest, dividends, trading costs and other cost items such as sales charges and fees.
Dalbar data shows that both equity and fixed income mutual fund investors underperformed the market over one, three, five, 10 and 20-year periods.
The average asset allocation or balanced investor outperformed equity investors in 2011 with a negative return of minus 1.27 per cent. This is only the sixth time that asset allocation investors have outperformed over the last 20 years.
On a 20-year basis, the average equity investor underperformed the S&P 500 by 4.32 per cent on an annualised basis. The average annualised underperformance of the fixed income investor against the Barclays Aggregate Bond Index is 5.56 per cent. Interestingly the performance gap between the equity investor and the S&P 500 has actually narrowed over the years. In 1997, for instance, the gap was over 10 percentage points.
"It is believed that the improving results from 1997 to 2011 were largely due to the fact that investors who entered the market in the '90s have now experienced multiple market declines and recoveries, and have learned from those experiences. They found that remaining invested has, over the long term, produced positive results."
Still, the study also found that remaining invested is a challenge. "One of the most startling and ongoing facts is that at no point in time have average investors remained invested for sufficiently long periods to derive the benefits of the investment markets."
The average equity mutual fund retention rate is about 3.29 years; fixed income 3.09 years and asset allocation 4.42 years.
The average fixed income and asset allocation investors generally failed to keep pace with inflation based on 20, 10, five and one-year periods. Equity investors beat inflation on a 20-year and three-year periods, but failed to do so on 10, five and one-year periods.
QAIB also looks into systematic investing where a hypothetical US$10,000 is evenly distributed across each month. It found that for 2011, the average equity investor earned US$9,853 compared to a systematic investor's earnings of US$8,665. It said this underperformance of the systematic equity investor does not mean that the method of investing should be abandoned. "It should, however, cause investors or their financial advisers to seek new strategies to counteract investor behaviour that loses alpha."
The average systematic fixed income investor overwhelmingly outperformed the average fixed income investor over a 20-year period, earning four times as much. - BT
Wednesday, April 11, 2012
Preparing for life without maids
by Richard Hartung
04:45 AM Apr 11, 2012
Even the concept of giving maids one day off a week has sparked lively debates about whether families can survive without help for a single day.
The real question, though, may be what families would do if they didn't have maids at all.
It's easy to think that they will always keep coming here, since they have been part of society for so long. Even many middle-income families can hire a maid, who may work over 70 hours a week doing everything from childcare to cooking and cleaning or more. Indeed, nearly 20 per cent of households have one and we employ more than 200,000 foreign domestic workers.
Yet, even though families may feel entirely dependent on them, current trends here and elsewhere are shifting towards fewer maids rather than more.
In Malaysia, for example, Human Resources Minister S Subramaniam told Malaysians to "prepare for life without maids" after Indonesia's director-general of Labor Placement Development, Mr Reyna Usman, said that domestic helpers sent to Malaysia could only be made to do a very limited set of tasks - housekeeping, cooking, babysitting and caring for the elderly.
In the Philippines, the Overseas Employment Administration has periodically placed bans on maids working in some foreign countries and could easily place a ban on Singapore if Filipinas here encountered serious problems.
Policies or practices in other countries could change, too, and restrict maids from coming here.
MINDING THE CHILDREN
Domestically, Singapore's shift towards less reliance on foreign workers may also mean fewer maids and higher costs.
Finance Minister Tharman Shanmugaratnam said in his Budget speech in February that "economy-wide, we will have to take further measures to avoid an ever-increasing dependence on foreign labour".
A critical question, then, is how families could cope without a maid.
In places like Japan and South Korea as well as the United States and Europe, few families can afford to hire one. Yet, the existence of a variety of alternatives to the services they perform means families still fare well even without domestic help. Looking at practices in those other countries, then, can show what else may work here.
Childcare is a key concern and countries like France provide an excellent example of what else can work well.
The French creche system provides affordable full-day childcare for children from 2½ months to three years - most French children attend full-day nursery school between the ages of three and six. Government-subsidised fees at creches vary depending on income and the type of creche, so they are affordable even for lower-income families and state-run nursery schools are free.
TAKING CARE OF HOUSEWORK
While parents here often suffer time constraints and require help in meal preparation, in other places they have, again, developed alternatives.
Cornell University researchers found, for example, that Americans use a dozen coping strategies, including prepared entrees, take-out meals and quicker-to-prepare foods. The ready availability of hawker centres here as well as support from grandparents would give local families even more options.
Cleaning is another task that few families may want to take over from their maids. But, as in other countries, there is a burgeoning industry of companies providing part-time cleaners who can also do the laundry.
Sure, parents need to mop up when children make a mess. But once-a-week helpers can take care of bigger tasks like cleaning the flat and the toilets, or dry-cleaning companies can help with the laundry. And technology like room-cleaning Roombas may provide more alternatives before long.
For families with elderly parents at home, an expanding range of geriatric care services like those in other countries as well as technology like motion sensors and devices that send alerts or remind the elderly to take pills could help provide the daytime care needed.
It's true that many families would need to do something different for childcare and cooking and cleaning, as well as other tasks, if maids suddenly disappeared. Yet the multitude of alternatives elsewhere shows how families can thrive even without them.
CHANGES IN ATTITUDES
While practices that enable families to do without maids are already in place in other countries, many alternatives are not as well-developed here. Hence, solutions could require everything from longer-term changes in government policy or workplace practices to changes in attitude.
Setting up a childcare system like the one in France or changing workplace practices so parents can more easily leave work in time to pick up their children, as happens in Denmark, could take years.
However, the combination of policy changes in other countries, increasing costs and downward pressure on foreign worker numbers here means living without maids is more likely than before to become a reality.
While even considering life without maids could well result in outraged howls of protest, it may now be time to start preparing for a society without domestic helpers.
Rather than being taken by surprise not far in the future, proactively starting preparations may enable families to thrive rather than struggle when there are far fewer maids in Singapore.
Richard Hartung is a consultant who has lived in Singapore since 1992.
04:45 AM Apr 11, 2012
Even the concept of giving maids one day off a week has sparked lively debates about whether families can survive without help for a single day.
The real question, though, may be what families would do if they didn't have maids at all.
It's easy to think that they will always keep coming here, since they have been part of society for so long. Even many middle-income families can hire a maid, who may work over 70 hours a week doing everything from childcare to cooking and cleaning or more. Indeed, nearly 20 per cent of households have one and we employ more than 200,000 foreign domestic workers.
Yet, even though families may feel entirely dependent on them, current trends here and elsewhere are shifting towards fewer maids rather than more.
In Malaysia, for example, Human Resources Minister S Subramaniam told Malaysians to "prepare for life without maids" after Indonesia's director-general of Labor Placement Development, Mr Reyna Usman, said that domestic helpers sent to Malaysia could only be made to do a very limited set of tasks - housekeeping, cooking, babysitting and caring for the elderly.
In the Philippines, the Overseas Employment Administration has periodically placed bans on maids working in some foreign countries and could easily place a ban on Singapore if Filipinas here encountered serious problems.
Policies or practices in other countries could change, too, and restrict maids from coming here.
MINDING THE CHILDREN
Domestically, Singapore's shift towards less reliance on foreign workers may also mean fewer maids and higher costs.
Finance Minister Tharman Shanmugaratnam said in his Budget speech in February that "economy-wide, we will have to take further measures to avoid an ever-increasing dependence on foreign labour".
A critical question, then, is how families could cope without a maid.
In places like Japan and South Korea as well as the United States and Europe, few families can afford to hire one. Yet, the existence of a variety of alternatives to the services they perform means families still fare well even without domestic help. Looking at practices in those other countries, then, can show what else may work here.
Childcare is a key concern and countries like France provide an excellent example of what else can work well.
The French creche system provides affordable full-day childcare for children from 2½ months to three years - most French children attend full-day nursery school between the ages of three and six. Government-subsidised fees at creches vary depending on income and the type of creche, so they are affordable even for lower-income families and state-run nursery schools are free.
TAKING CARE OF HOUSEWORK
While parents here often suffer time constraints and require help in meal preparation, in other places they have, again, developed alternatives.
Cornell University researchers found, for example, that Americans use a dozen coping strategies, including prepared entrees, take-out meals and quicker-to-prepare foods. The ready availability of hawker centres here as well as support from grandparents would give local families even more options.
Cleaning is another task that few families may want to take over from their maids. But, as in other countries, there is a burgeoning industry of companies providing part-time cleaners who can also do the laundry.
Sure, parents need to mop up when children make a mess. But once-a-week helpers can take care of bigger tasks like cleaning the flat and the toilets, or dry-cleaning companies can help with the laundry. And technology like room-cleaning Roombas may provide more alternatives before long.
For families with elderly parents at home, an expanding range of geriatric care services like those in other countries as well as technology like motion sensors and devices that send alerts or remind the elderly to take pills could help provide the daytime care needed.
It's true that many families would need to do something different for childcare and cooking and cleaning, as well as other tasks, if maids suddenly disappeared. Yet the multitude of alternatives elsewhere shows how families can thrive even without them.
CHANGES IN ATTITUDES
While practices that enable families to do without maids are already in place in other countries, many alternatives are not as well-developed here. Hence, solutions could require everything from longer-term changes in government policy or workplace practices to changes in attitude.
Setting up a childcare system like the one in France or changing workplace practices so parents can more easily leave work in time to pick up their children, as happens in Denmark, could take years.
However, the combination of policy changes in other countries, increasing costs and downward pressure on foreign worker numbers here means living without maids is more likely than before to become a reality.
While even considering life without maids could well result in outraged howls of protest, it may now be time to start preparing for a society without domestic helpers.
Rather than being taken by surprise not far in the future, proactively starting preparations may enable families to thrive rather than struggle when there are far fewer maids in Singapore.
Richard Hartung is a consultant who has lived in Singapore since 1992.
Tuesday, April 10, 2012
Genting S'pore makes another perpetual offer
Published April 10, 2012
$500m issue targets retail investors, size may be raised by another $200m
By GRACE LEONG
FRESH from its first successful $1.8 billion offering of perpetual securities - the largest-ever single-tranche Singapore-dollar bond deal - Genting Singapore is now targeting retail investors with a perpetual issue of $500 million.
This latest issue, which can be increased by another $200 million if the offer is oversubscribed, targets retail investors that were left out of Genting's institutional perpetual offering in late February as minimum applications started at a hefty $250,000.
For the second tranche, minimum applications start at $5,000, and investors can subscribe in lots of $1,000 above that, the company announced yesterday.
Proceeds will be used to fund acquisitions and to invest in new projects to grow Genting Singapore's gambling and hospitality business in Asia.
'This is the first time a corporate is offering such an investment to retail investors, and there's a lot of demand for such investments because interest rates are currently very low,' Lee Shi Ruh, the company's chief financial officer, said yesterday.
The notes will pay a 5.125 per cent annual coupon twice a year until October 2022, and 6.125 per cent after that, with the company having the option to redeem the securities in 2017.
'It will strengthen our balance sheet position because we will have more cash in our balance sheet (post the issue) while our long-term borrowings remain the same as the securities will be recorded as equity on the balance sheet,' Ms Lee said.
The public offer opens at 9am today and will close at noon on April 16, and the securities will be traded on the Singapore Exchange. The securities are open for public subscription by way of ATMs belonging to DBS, OCBC, UOB as well as their Internet banking websites and DBS' mobile banking platform.
Unlike the first tranche, the retail perpetual offering is marketed exclusively in Singapore. DBS is the sole global coordinator on the offer and DBS and OCBC are joint lead managers.
'Genting is a strong household name. The investment grade-rating on the issuer and securities should give comfort on the issuer's credit worthiness. The third draw is the interest yield,' said Clifford Lee, head of DBS fixed income.
The company has been accorded a credit rating of Baa1 by Moody's and A- by Fitch Ratings. Its perpetual securities have been rated Baa3 by Moody's and BBB by Fitch.
Given these draw factors, Mr Lee said he is eager to see how this latest offering will be received by retail investors.
'This offering will definitively test the retail market for this type of perpetual bond,' he said.
Carey Wong, an analyst with OCBC Investment Research, said that the second offering will further boost Genting Singapore's growing cash hoard for potential overseas investments.
While the company doesn't have immediate investment plans, Ms Lee said that the fund raising was done to position Genting for any opportunities that may arise.
'If it is Japan or Korea, it would likely be greenfield projects,' Ms Lee said. 'Genting Singapore is well positioned for opportunities such as those in Japan or in Korea. Looking at the way that the country (Japan) is looking at, it will be very similar to what Singapore has introduced - big sized integrated resort, with the main aim to increase tourism arrivals.'
She said that the proceeds will be used only by Genting Singapore and its subsidiaries, and not by Genting Malaysia.
While this is a relatively attractive investment opportunity for retail investors, Gan Kok Kim, head of Group Investment Banking, OCBC Bank, pointed out that they should be aware that such investments carry some risks.
For one thing, payment of coupons on the securities may not be made on a distribution payment date. The issuer may, at its sole discretion and subject to certain conditions, elect to defer any scheduled payout on the securities for any period of time, he said.
Another risk is that investors could lose all or part of their investment in the securities if the issuer is liquidated, dissolved or wound up, Mr Gan said.
Finally, the price of the securities may fluctuate depending on the prevailing market conditions, including interest rate as well as the credit standing of the issuer, or the market for the securities may not be sufficiently liquid or active. This being so, the securities may trade lower than the initial issue price and investors may suffer a loss, he said. - BT
$500m issue targets retail investors, size may be raised by another $200m
By GRACE LEONG
FRESH from its first successful $1.8 billion offering of perpetual securities - the largest-ever single-tranche Singapore-dollar bond deal - Genting Singapore is now targeting retail investors with a perpetual issue of $500 million.
This latest issue, which can be increased by another $200 million if the offer is oversubscribed, targets retail investors that were left out of Genting's institutional perpetual offering in late February as minimum applications started at a hefty $250,000.
For the second tranche, minimum applications start at $5,000, and investors can subscribe in lots of $1,000 above that, the company announced yesterday.
Proceeds will be used to fund acquisitions and to invest in new projects to grow Genting Singapore's gambling and hospitality business in Asia.
'This is the first time a corporate is offering such an investment to retail investors, and there's a lot of demand for such investments because interest rates are currently very low,' Lee Shi Ruh, the company's chief financial officer, said yesterday.
The notes will pay a 5.125 per cent annual coupon twice a year until October 2022, and 6.125 per cent after that, with the company having the option to redeem the securities in 2017.
'It will strengthen our balance sheet position because we will have more cash in our balance sheet (post the issue) while our long-term borrowings remain the same as the securities will be recorded as equity on the balance sheet,' Ms Lee said.
The public offer opens at 9am today and will close at noon on April 16, and the securities will be traded on the Singapore Exchange. The securities are open for public subscription by way of ATMs belonging to DBS, OCBC, UOB as well as their Internet banking websites and DBS' mobile banking platform.
Unlike the first tranche, the retail perpetual offering is marketed exclusively in Singapore. DBS is the sole global coordinator on the offer and DBS and OCBC are joint lead managers.
'Genting is a strong household name. The investment grade-rating on the issuer and securities should give comfort on the issuer's credit worthiness. The third draw is the interest yield,' said Clifford Lee, head of DBS fixed income.
The company has been accorded a credit rating of Baa1 by Moody's and A- by Fitch Ratings. Its perpetual securities have been rated Baa3 by Moody's and BBB by Fitch.
Given these draw factors, Mr Lee said he is eager to see how this latest offering will be received by retail investors.
'This offering will definitively test the retail market for this type of perpetual bond,' he said.
Carey Wong, an analyst with OCBC Investment Research, said that the second offering will further boost Genting Singapore's growing cash hoard for potential overseas investments.
While the company doesn't have immediate investment plans, Ms Lee said that the fund raising was done to position Genting for any opportunities that may arise.
'If it is Japan or Korea, it would likely be greenfield projects,' Ms Lee said. 'Genting Singapore is well positioned for opportunities such as those in Japan or in Korea. Looking at the way that the country (Japan) is looking at, it will be very similar to what Singapore has introduced - big sized integrated resort, with the main aim to increase tourism arrivals.'
She said that the proceeds will be used only by Genting Singapore and its subsidiaries, and not by Genting Malaysia.
While this is a relatively attractive investment opportunity for retail investors, Gan Kok Kim, head of Group Investment Banking, OCBC Bank, pointed out that they should be aware that such investments carry some risks.
For one thing, payment of coupons on the securities may not be made on a distribution payment date. The issuer may, at its sole discretion and subject to certain conditions, elect to defer any scheduled payout on the securities for any period of time, he said.
Another risk is that investors could lose all or part of their investment in the securities if the issuer is liquidated, dissolved or wound up, Mr Gan said.
Finally, the price of the securities may fluctuate depending on the prevailing market conditions, including interest rate as well as the credit standing of the issuer, or the market for the securities may not be sufficiently liquid or active. This being so, the securities may trade lower than the initial issue price and investors may suffer a loss, he said. - BT
Lim Chong Yah suggests second wage revolution
Published April 10, 2012
3-year plan to cut income inequality, foreign labour use
By TEH SHI NING
(SINGAPORE) To tackle rising income inequality and an excessive reliance on cheap foreign labour, one prominent local economist is proposing a three-year restructuring plan that includes a wage freeze for top income earners and sizeable pay hikes for the lowest paid.
This 'bold and iconoclastic' proposal seeks to complete the wage revolution of 1979 to 1981, says Professor Lim Chong Yah. He helmed the National Wage Council (NWC) from 1972 to 2001 and as its founding chairman had a pivotal role in that first, radical three-year wage restructuring exercise.
Then, the NWC had recommended a 20 per cent across-the-board increase in wages a year, including higher contributions to Central Provident Fund accounts and to the Skills Development Fund, which grants companies training subsidies.
Speaking to an audience of about 50 at an Economic Society of Singapore public lecture yesterday, Prof Lim outlined another three-year solution to Singapore's 'two Achilles' heels' - the sharp rise in low-wage foreign workers and rising income inequality - while raising productivity.
This features a sizeable pay hike for the lowest-paid workers, regardless of nationality or age, earning less than $1,500 per month over three years. He proposes a cumulative 15 per cent rise in the first year, another 15 per cent in the second, and 20 per cent in the third. This increase would be channelled, in equal parts, to the worker's take-home pay, his CPF Retirement Account, and the Skills Development Fund.
At the top end of the income ladder, Prof Lim proposes a three-year wage freeze for those earning $15,000 or more a month. But he stresses, the intention is not to 'frighten the geese that lay the golden eggs' as there will be no pay cut, pay ceiling or super-taxes imposed.
As for the middle income, he proposes pay hikes ranging from a quarter to a third of that received by the lowest-income group, part of which will go into the CPF Retirement Account. The government should also match contributions to the Skills Development Fund to demonstrate its commitment to the restructuring effort.
Prof Lim envisions all operating details of this proposal being discussed and decided on by the tripartite NWC, as was the case in 1979, to 'forge consensus by the three tripartite social partners'.
He acknowledged readily that national economic restructuring is 'much more difficult' now than it was three decades ago, given the changed political, economic and socio-economic climate. But he thinks that Singapore still has effective tripartism and a government and civil service with integrity and ability, so what is needed is 'national will' in the face of 'the problems of economic success'.
In response to questions from the floor, Prof Lim said that his proposed scheme is unlikely to have a significant negative impact on unemployment - now at record lows - and that high-quality foreign investment will continue to flow into Singapore in pursuit of strong fundamentals.
Asked about the pace he proposes, which seems swifter than the government's target of a more gradual 30 per cent rise in median incomes in the 10 years till 2020, Prof Lim said that some 'shock' is needed to 'check, halt and if possible reverse' the rise in income inequality. - BT
3-year plan to cut income inequality, foreign labour use
By TEH SHI NING
(SINGAPORE) To tackle rising income inequality and an excessive reliance on cheap foreign labour, one prominent local economist is proposing a three-year restructuring plan that includes a wage freeze for top income earners and sizeable pay hikes for the lowest paid.
This 'bold and iconoclastic' proposal seeks to complete the wage revolution of 1979 to 1981, says Professor Lim Chong Yah. He helmed the National Wage Council (NWC) from 1972 to 2001 and as its founding chairman had a pivotal role in that first, radical three-year wage restructuring exercise.
Then, the NWC had recommended a 20 per cent across-the-board increase in wages a year, including higher contributions to Central Provident Fund accounts and to the Skills Development Fund, which grants companies training subsidies.
Speaking to an audience of about 50 at an Economic Society of Singapore public lecture yesterday, Prof Lim outlined another three-year solution to Singapore's 'two Achilles' heels' - the sharp rise in low-wage foreign workers and rising income inequality - while raising productivity.
This features a sizeable pay hike for the lowest-paid workers, regardless of nationality or age, earning less than $1,500 per month over three years. He proposes a cumulative 15 per cent rise in the first year, another 15 per cent in the second, and 20 per cent in the third. This increase would be channelled, in equal parts, to the worker's take-home pay, his CPF Retirement Account, and the Skills Development Fund.
At the top end of the income ladder, Prof Lim proposes a three-year wage freeze for those earning $15,000 or more a month. But he stresses, the intention is not to 'frighten the geese that lay the golden eggs' as there will be no pay cut, pay ceiling or super-taxes imposed.
As for the middle income, he proposes pay hikes ranging from a quarter to a third of that received by the lowest-income group, part of which will go into the CPF Retirement Account. The government should also match contributions to the Skills Development Fund to demonstrate its commitment to the restructuring effort.
Prof Lim envisions all operating details of this proposal being discussed and decided on by the tripartite NWC, as was the case in 1979, to 'forge consensus by the three tripartite social partners'.
He acknowledged readily that national economic restructuring is 'much more difficult' now than it was three decades ago, given the changed political, economic and socio-economic climate. But he thinks that Singapore still has effective tripartism and a government and civil service with integrity and ability, so what is needed is 'national will' in the face of 'the problems of economic success'.
In response to questions from the floor, Prof Lim said that his proposed scheme is unlikely to have a significant negative impact on unemployment - now at record lows - and that high-quality foreign investment will continue to flow into Singapore in pursuit of strong fundamentals.
Asked about the pace he proposes, which seems swifter than the government's target of a more gradual 30 per cent rise in median incomes in the 10 years till 2020, Prof Lim said that some 'shock' is needed to 'check, halt and if possible reverse' the rise in income inequality. - BT
Monday, April 9, 2012
New gold player emerges with 'buyback offer'
Published April 9, 2012
New gold player emerges with 'buyback offer'
But customers may be buying overpriced gold
By KENNETH LIM
(SINGAPORE) Another gold trading company marketing an 'offer to buy back' has emerged even as others have folded or come under regulatory scrutiny.
The Gold Guarantee, an outfit headquartered in Boat Quay, claims that it will buy back gold at a premium to the original sale price, becoming the latest to offer such a product.
This newest entrant comes in the wake of Genneva Pte Ltd, whose Malaysian arm is under investigation, and The Gold Label Pte Ltd, which has since shut down. Those two older companies have been placed on the Monetary Authority of Singapore's Investor Alert List, a cautionary document of parties whose activities are not regulated by MAS.
This, or some variation, is what such companies typically offer: They will sell investment-grade gold to you today and give you the option to sell it back to them at a premium after a fixed period of time.
If gold prices have gone up significantly, you can potentially sell on the open market instead and make an even better return.
The typical marketing language can lead customers into thinking they are getting a cheap, low-risk deal. In fact, customers may be buying overpriced gold and a promise whose real strength is not known.
The Gold Guarantee's brochure cites an example where a customer can buy 'gold bullion at market price ($80/gram) with 1.7 per cent discount', suggesting that it is selling the gold at a discount to current 'market' prices.
In reality, 'market' price may turn out to be a premium.
The Gold Guarantee founder Lee Song Teck initially said that the company sets its market price off the Singapore Jewellers Association's recommended gold prices. But a check with the trade association revealed that the SJA has not been recommending prices for quite a while to comply with competition laws.
Confronted with this, Mr Lee clarified that his prices were benchmarked on 'goldsmith prices' that are gathered from sources on the ground.
But goldsmith prices come with quite a hefty premium, which means that The Gold Guarantee may be selling investment-grade gold at a more expensive price than a straight seller, like a bank, for example.
Buying overpriced gold could still make sense for the customer who can get a minimum positive return from the buyback option.
But what is the real value of that 'offer to buy back'? The promise to buy back the gold is only as good as the promisor's credit.
The quality of The Gold Guarantee's credit is anyone's guess.
Mr Lee said The Gold Guarantee maintains some capital to meet its obligations, but did not say how much capital the company holds. The company was set up with just $1 million in paid up capital, according to filings with the Accounting and Corporate Regulatory Authority in Singapore.
How the business can withstand the test of mass buyback demands is another question. Mr Lee said The Gold Guarantee does not hedge its exposures using 'fancy financial stuff', sticking to physical gold and a 'buy low, sell high' strategy. He told BT that if the price of gold drops, he will buy more gold and that will drive down the average cost of his stocks.
But such a strategy could backfire if prices go down for a sustained period, because The Gold Guarantee will face both a depreciating inventory and a wave of buyback demands.
These gold companies are similar in more than just business model. The Gold Guarantee's website lists four core corporate principles - honesty, loyalty, trust and integrity - that are described almost word-for-word as on Genneva's website.
Mr Lee said The Gold Guarantee and Genneva are unrelated, and any similarity is coincidental.
Genneva director Leow Wee Khong declined to comment, citing the regulatory spotlight that has been cast on the company.
The attraction of the two selling points - gold at a discount and an offer to buy back - has helped The Gold Guarantee, which Mr Lee said targets 'middle class' customers, to grow extremely fast.
Mr Lee said that since it started in July and August 2011, The Gold Guarantee has sold about 2 tonnes of gold to about 500 customers, and has about 35 in-house staff and about 300 'sales consultants'.
The company already has a marketing presence in Malaysia, and Mr Lee, a self-proclaimed savvy investor, even shared his hopes to expand regionally, to Japan, Hong Kong and Taiwan.
It is not clear who regulates such companies, which usually say that they only need a licence from the police to deal in second-hand gold. Mr Lee took pains to stress that he was not selling an investment product. If he was, it would put him under the purview of the MAS.
One gold industry veteran said such businesses have found a foothold because of the rising price of gold over the past decade and the lack of easy access in Singapore to investment-grade gold. All three companies began after 2008. 'I hear about this all the time from my friends,' the veteran said. 'I tell them, you go and do the calculations and see if it still makes sense.'
Financial planner Eddy Cheong, head of financial planning at Providend, said investors have to ask a few questions when faced with a product that seems incredibly lucrative. 'How are they going to pay you?' he asked. 'What are the terms and conditions? Are there any guarantees? If there's a complaint, is there a channel I can go through?'
Mr Cheong added that people should also not feel pressured to rush into such products without thinking it through. 'You don't have to rush into it,' he said. 'If it's a good product it will stand the test of time and it will still be there later.' - BT
New gold player emerges with 'buyback offer'
But customers may be buying overpriced gold
By KENNETH LIM
(SINGAPORE) Another gold trading company marketing an 'offer to buy back' has emerged even as others have folded or come under regulatory scrutiny.
The Gold Guarantee, an outfit headquartered in Boat Quay, claims that it will buy back gold at a premium to the original sale price, becoming the latest to offer such a product.
This newest entrant comes in the wake of Genneva Pte Ltd, whose Malaysian arm is under investigation, and The Gold Label Pte Ltd, which has since shut down. Those two older companies have been placed on the Monetary Authority of Singapore's Investor Alert List, a cautionary document of parties whose activities are not regulated by MAS.
This, or some variation, is what such companies typically offer: They will sell investment-grade gold to you today and give you the option to sell it back to them at a premium after a fixed period of time.
If gold prices have gone up significantly, you can potentially sell on the open market instead and make an even better return.
The typical marketing language can lead customers into thinking they are getting a cheap, low-risk deal. In fact, customers may be buying overpriced gold and a promise whose real strength is not known.
The Gold Guarantee's brochure cites an example where a customer can buy 'gold bullion at market price ($80/gram) with 1.7 per cent discount', suggesting that it is selling the gold at a discount to current 'market' prices.
In reality, 'market' price may turn out to be a premium.
The Gold Guarantee founder Lee Song Teck initially said that the company sets its market price off the Singapore Jewellers Association's recommended gold prices. But a check with the trade association revealed that the SJA has not been recommending prices for quite a while to comply with competition laws.
Confronted with this, Mr Lee clarified that his prices were benchmarked on 'goldsmith prices' that are gathered from sources on the ground.
But goldsmith prices come with quite a hefty premium, which means that The Gold Guarantee may be selling investment-grade gold at a more expensive price than a straight seller, like a bank, for example.
Buying overpriced gold could still make sense for the customer who can get a minimum positive return from the buyback option.
But what is the real value of that 'offer to buy back'? The promise to buy back the gold is only as good as the promisor's credit.
The quality of The Gold Guarantee's credit is anyone's guess.
Mr Lee said The Gold Guarantee maintains some capital to meet its obligations, but did not say how much capital the company holds. The company was set up with just $1 million in paid up capital, according to filings with the Accounting and Corporate Regulatory Authority in Singapore.
How the business can withstand the test of mass buyback demands is another question. Mr Lee said The Gold Guarantee does not hedge its exposures using 'fancy financial stuff', sticking to physical gold and a 'buy low, sell high' strategy. He told BT that if the price of gold drops, he will buy more gold and that will drive down the average cost of his stocks.
But such a strategy could backfire if prices go down for a sustained period, because The Gold Guarantee will face both a depreciating inventory and a wave of buyback demands.
These gold companies are similar in more than just business model. The Gold Guarantee's website lists four core corporate principles - honesty, loyalty, trust and integrity - that are described almost word-for-word as on Genneva's website.
Mr Lee said The Gold Guarantee and Genneva are unrelated, and any similarity is coincidental.
Genneva director Leow Wee Khong declined to comment, citing the regulatory spotlight that has been cast on the company.
The attraction of the two selling points - gold at a discount and an offer to buy back - has helped The Gold Guarantee, which Mr Lee said targets 'middle class' customers, to grow extremely fast.
Mr Lee said that since it started in July and August 2011, The Gold Guarantee has sold about 2 tonnes of gold to about 500 customers, and has about 35 in-house staff and about 300 'sales consultants'.
The company already has a marketing presence in Malaysia, and Mr Lee, a self-proclaimed savvy investor, even shared his hopes to expand regionally, to Japan, Hong Kong and Taiwan.
It is not clear who regulates such companies, which usually say that they only need a licence from the police to deal in second-hand gold. Mr Lee took pains to stress that he was not selling an investment product. If he was, it would put him under the purview of the MAS.
One gold industry veteran said such businesses have found a foothold because of the rising price of gold over the past decade and the lack of easy access in Singapore to investment-grade gold. All three companies began after 2008. 'I hear about this all the time from my friends,' the veteran said. 'I tell them, you go and do the calculations and see if it still makes sense.'
Financial planner Eddy Cheong, head of financial planning at Providend, said investors have to ask a few questions when faced with a product that seems incredibly lucrative. 'How are they going to pay you?' he asked. 'What are the terms and conditions? Are there any guarantees? If there's a complaint, is there a channel I can go through?'
Mr Cheong added that people should also not feel pressured to rush into such products without thinking it through. 'You don't have to rush into it,' he said. 'If it's a good product it will stand the test of time and it will still be there later.' - BT
Tuesday, April 3, 2012
DBS to buy Indonesian bank for $9 billion
The cash-and-shares transaction would rank as Asia's fourth-largest banking deal. -Reuters
Tue, Apr 03, 2012
Reuters
SINGAPORE/JAKARTA, April 2 (Reuters) - Singapore's DBS Group , Southeast Asia's biggest bank, is to buy Indonesia's Bank Danamon for $7.24 billion, in a deal that could stir nationalist opposition stoked by anxious local rivals.
DBS, part-owned by Singapore sovereign investment arm Temasek Holdings, said on Monday it agreed to take over Danamon in a cash-and-shares transaction that would rank as Asia's fourth-largest banking deal.
Temasek is on both sides of the transaction as it also owns 67.4 per cent of Danamon, and has had additional exposure to Indonesia through the DBS franchise there.
If the deal is approved, Temasek will be invested in a single bank in Indonesia, rather than two - something that should please government officials in Jakarta, sources familiar with the deal said.
But Indonesia's biggest foreign takeover could become a test of its openness to overseas capital, a month after Jakarta moved to curb foreign ownership of mines and less than a year since it voiced concerns over foreign bank holdings.
It could also trigger more foreign bank takeovers, with shares in Bank Panin Indonesia jumping 6 per cent on Monday on bets that it, too, could become a target.
However, some Indonesian bankers said they would try to block the deal and were considering a media campaign targetting public opinion in the hope of influencing politicians. Local rivals face stiffer competition from expanding foreign banks.
"You're going to see some movements to halt this deal in the coming days," said a senior executive of a rival local bank, who asked not to be named because of what he called the sensitivity of the issue.
"This is about nationalism. We don't have to be afraid of Singapore ... We're going to raise this case to parliament, the central bank and (banking regulator) Bapepam," he added.
Bankers and industry analysts agreed there was little scope for a rejection of the deal on strict regulatory grounds, but a politically focused campaign could prove unpredictable.
BIG PREMIUM
DBS is buying most of Danamon, at a hefty 52 per cent premium, in the form of new DBS shares from Temasek, which in turn will become an even bigger owner of DBS.
It would make Singapore-based DBS the fifth-biggest lender in Indonesia, one of southeast Asia's hottest markets, where bank penetration is low and annual loan growth runs at 20 per cent.
However, Danamon has lower returns on equity than some peers and a heavy exposure to auto financing, an area vulnerable to recently announced steps by policymakers to curb excessive lending in the region's largest economy.
"We have the capacity to unshackle these businesses," DBS's CEO Piyush Gupta said in Jakarta on Monday, briefing investors on his first major deal since becoming boss in 2009.
"This changes our growth profile," Gupta said, adding the move would triple DBS's exposure to high-growth markets from 11 per cent now. The price was fair, he said, and the Indonesian growth story was reflected in Danamon not being a "cheap deal".
MINORITIES' WINDFALL
Gupta said DBS would cut Danamon's funding costs, expand its business into regional trade and corporate finance - and break the perception of DBS as a low-margin, mature-market bank.
The price - S$6.2 billion ($4.93 billion) in shares for Temasek and the rest in cash for minority investors - initially surprised some investors, with the offering at 7,000 rupiah ($0.77) per Danamon share, which last traded at 4,600 rupiah.
"Danamon minorities are in for a windfall," said Anand Pathmakanthan, an analyst at Nomura Securities in Singapore, predicting DBS shares would suffer as a result.
But the price looked less generous using another valuation yardstick: at 2.6 times book value, it was below some other big banking takeovers in Indonesia - although previous benchmarks were set before the 2008-09 global financial crisis.
Temasek already owns about 29 per cent of DBS and its stake would rise to about 40 per cent after the deal. Temasek has obtained a regulatory waiver from having to make a general offer for the remaining DBS shares.
Trade in DBS and Danamon shares was halted on Monday, pending the announcement. Danamon stock has fallen by a quarter over the past 12 months, while the wider Indonesian market has gained ground. DBS has fallen 2 per cent over the same period.
LOOKING TO EXPAND IN MALAYSIA
DBS signalled on Monday it also aimed to expand in neighbouring Malaysia, saying it had approval to negotiate to buy a 14 per cent interest in Alliance Financial Group - again from Temasek.
The Alliance stake is worth about $270 million. Shares in the Malaysian bank jumped 3 per cent on the news.
Gupta said Danamon suffered from high funding costs due to its weaker deposit base and use of wholesale markets, where interest rates had jumped since the global crisis.
According to its website, Danamon and its subsidiaries operate some 2,900 branches and points of sale, and employ close to 62,000 staff and non-permanent workers. Net income last year rose 16 per cent to 3.3 trillion rupiah ($367 million).
Gupta, 52, aims to expand DBS beyond Singapore and Hong Kong, which make the bulk of its profits, but one DBS shareholder, Aberdeen Asset Management, questioned whether Jakarta would have any concerns over the Danamon deal.
"It will be interesting to see the reaction of Indonesian authorities," said Hugh Young, Aberdeen's Asia chief.
Indonesia's central bank last year considered a law to limit bank ownership, putting some deals on ice, but the state deposit agency recently said policymakers would not go ahead with it.
Some bankers said Australia and New Zealand Banking Group Ltd would also be watching the Danamon takeover closely. ANZ, which owns 38.5 per cent of Bank Panin, is keen to increase its stake, but valuation differences derailed talks with the founding Gunawan family, which holds 46 per cent.
Gupta said he expected the Danamon deal to close in the second half of the year, subject to regulatory approval.
The deal's implied price-to-book ratio of 2.6 times is below the 4.2 times paid by HSBC for Indonesia's Bank Ekomomi Raharaja in 2008. It is also below the multiple paid by Maybank for Bank Indonesia Internasional.
Credit Suisse and Morgan Stanley are joint financial advisers to DBS, while WongPartnership LLP and Hadiputranto, Hadinoto & Partners are legal advisers.
Temasek is advised by Bank of America-Merrill Lynch and UBS. Danamon is advised by Citigroup and Deutsche Bank.
Tue, Apr 03, 2012
Reuters
SINGAPORE/JAKARTA, April 2 (Reuters) - Singapore's DBS Group , Southeast Asia's biggest bank, is to buy Indonesia's Bank Danamon for $7.24 billion, in a deal that could stir nationalist opposition stoked by anxious local rivals.
DBS, part-owned by Singapore sovereign investment arm Temasek Holdings, said on Monday it agreed to take over Danamon in a cash-and-shares transaction that would rank as Asia's fourth-largest banking deal.
Temasek is on both sides of the transaction as it also owns 67.4 per cent of Danamon, and has had additional exposure to Indonesia through the DBS franchise there.
If the deal is approved, Temasek will be invested in a single bank in Indonesia, rather than two - something that should please government officials in Jakarta, sources familiar with the deal said.
But Indonesia's biggest foreign takeover could become a test of its openness to overseas capital, a month after Jakarta moved to curb foreign ownership of mines and less than a year since it voiced concerns over foreign bank holdings.
It could also trigger more foreign bank takeovers, with shares in Bank Panin Indonesia jumping 6 per cent on Monday on bets that it, too, could become a target.
However, some Indonesian bankers said they would try to block the deal and were considering a media campaign targetting public opinion in the hope of influencing politicians. Local rivals face stiffer competition from expanding foreign banks.
"You're going to see some movements to halt this deal in the coming days," said a senior executive of a rival local bank, who asked not to be named because of what he called the sensitivity of the issue.
"This is about nationalism. We don't have to be afraid of Singapore ... We're going to raise this case to parliament, the central bank and (banking regulator) Bapepam," he added.
Bankers and industry analysts agreed there was little scope for a rejection of the deal on strict regulatory grounds, but a politically focused campaign could prove unpredictable.
BIG PREMIUM
DBS is buying most of Danamon, at a hefty 52 per cent premium, in the form of new DBS shares from Temasek, which in turn will become an even bigger owner of DBS.
It would make Singapore-based DBS the fifth-biggest lender in Indonesia, one of southeast Asia's hottest markets, where bank penetration is low and annual loan growth runs at 20 per cent.
However, Danamon has lower returns on equity than some peers and a heavy exposure to auto financing, an area vulnerable to recently announced steps by policymakers to curb excessive lending in the region's largest economy.
"We have the capacity to unshackle these businesses," DBS's CEO Piyush Gupta said in Jakarta on Monday, briefing investors on his first major deal since becoming boss in 2009.
"This changes our growth profile," Gupta said, adding the move would triple DBS's exposure to high-growth markets from 11 per cent now. The price was fair, he said, and the Indonesian growth story was reflected in Danamon not being a "cheap deal".
MINORITIES' WINDFALL
Gupta said DBS would cut Danamon's funding costs, expand its business into regional trade and corporate finance - and break the perception of DBS as a low-margin, mature-market bank.
The price - S$6.2 billion ($4.93 billion) in shares for Temasek and the rest in cash for minority investors - initially surprised some investors, with the offering at 7,000 rupiah ($0.77) per Danamon share, which last traded at 4,600 rupiah.
"Danamon minorities are in for a windfall," said Anand Pathmakanthan, an analyst at Nomura Securities in Singapore, predicting DBS shares would suffer as a result.
But the price looked less generous using another valuation yardstick: at 2.6 times book value, it was below some other big banking takeovers in Indonesia - although previous benchmarks were set before the 2008-09 global financial crisis.
Temasek already owns about 29 per cent of DBS and its stake would rise to about 40 per cent after the deal. Temasek has obtained a regulatory waiver from having to make a general offer for the remaining DBS shares.
Trade in DBS and Danamon shares was halted on Monday, pending the announcement. Danamon stock has fallen by a quarter over the past 12 months, while the wider Indonesian market has gained ground. DBS has fallen 2 per cent over the same period.
LOOKING TO EXPAND IN MALAYSIA
DBS signalled on Monday it also aimed to expand in neighbouring Malaysia, saying it had approval to negotiate to buy a 14 per cent interest in Alliance Financial Group - again from Temasek.
The Alliance stake is worth about $270 million. Shares in the Malaysian bank jumped 3 per cent on the news.
Gupta said Danamon suffered from high funding costs due to its weaker deposit base and use of wholesale markets, where interest rates had jumped since the global crisis.
According to its website, Danamon and its subsidiaries operate some 2,900 branches and points of sale, and employ close to 62,000 staff and non-permanent workers. Net income last year rose 16 per cent to 3.3 trillion rupiah ($367 million).
Gupta, 52, aims to expand DBS beyond Singapore and Hong Kong, which make the bulk of its profits, but one DBS shareholder, Aberdeen Asset Management, questioned whether Jakarta would have any concerns over the Danamon deal.
"It will be interesting to see the reaction of Indonesian authorities," said Hugh Young, Aberdeen's Asia chief.
Indonesia's central bank last year considered a law to limit bank ownership, putting some deals on ice, but the state deposit agency recently said policymakers would not go ahead with it.
Some bankers said Australia and New Zealand Banking Group Ltd would also be watching the Danamon takeover closely. ANZ, which owns 38.5 per cent of Bank Panin, is keen to increase its stake, but valuation differences derailed talks with the founding Gunawan family, which holds 46 per cent.
Gupta said he expected the Danamon deal to close in the second half of the year, subject to regulatory approval.
The deal's implied price-to-book ratio of 2.6 times is below the 4.2 times paid by HSBC for Indonesia's Bank Ekomomi Raharaja in 2008. It is also below the multiple paid by Maybank for Bank Indonesia Internasional.
Credit Suisse and Morgan Stanley are joint financial advisers to DBS, while WongPartnership LLP and Hadiputranto, Hadinoto & Partners are legal advisers.
Temasek is advised by Bank of America-Merrill Lynch and UBS. Danamon is advised by Citigroup and Deutsche Bank.
Sam Goi set to pump $14m into JEL Corp
By Melissa Tan
Apr 3, 2012
The Straits Times
Share purchase would raise his direct holding in firm to 57.75%
LOCAL food tycoon Sam Goi Seng Hui is set to pump an additional $14 million into mainboard-listed consumer goods distributor JEL Corp (Holdings), which is on the Singapore Exchange's (SGX) watch list.
Mr Goi, 62, will buy two billion ordinary shares in the company at 0.6999 cents apiece, JEL Corp told the SGX on Friday.
If his purchase goes through, these shares will make up around 50.3 per cent of the firm's enlarged share capital.
Mr Goi, known as the 'Popiah King' for building up frozen popiah skin maker Tee Yih Jia Food Manufacturing, already owns around 15 per cent - or nearly 296.4 million shares.
The latest share subscription would bring his direct holding in JEL to around 57.75 per cent. Mr Goi's purchase of the additional stake is subject to the Securities Industry Council granting him a 'whitewash waiver', the company noted in its filing.
This waiver removes his obligation to make a mandatory takeover offer for the remaining shares of JEL.
His purchase is also subject to shareholder approval at an extraordinary general meeting to be held later.
JEL Corp said Mr Goi's 'increased involvement in the company will be beneficial and strategic', citing his 'strong business connections, influence and expertise'.
It added that Mr Goi's agreement to subscribe to the shares would 'expand the group to a larger economic size and market capitalisation'.
This, in turn, would meet the minimum market capitalisation for the firm to qualify to be taken off the watch list, it stated.
Mr Goi said in a statement yesterday: 'JEL has a viable business in marketing and distribution of IT, photography and imaging products, as well as timepieces in Central Asia, the Middle East and Indochina. I think JEL has demonstrated good ability in handling various businesses in these developing markets, and believe that it can grow even more in China, where I intend to facilitate its growth.'
Last month, it was reported that Mr Goi would sell his 22.07 per cent stake in China Healthcare, the target of a buyout offer.
He also sold his 7 per cent stake in Asia Environment Holdings last year when its chief executive, Mr Wang Hongchun, bought out the China- based wastewater treatment company.
The proceeds from his JEL share subscription would be used for working capital and for potential opportunities for mergers and acquisitions, JEL Corp said.
It went on the SGX watch list in March 2010 after posting pre-tax losses for three consecutive financial years and its market cap fell to $11.9 million, below the $40 million watch-list threshold.
The counter rose 0.7 cents to 1.8 cents yesterday.
melissat@sph.com.sg
Apr 3, 2012
The Straits Times
Share purchase would raise his direct holding in firm to 57.75%
LOCAL food tycoon Sam Goi Seng Hui is set to pump an additional $14 million into mainboard-listed consumer goods distributor JEL Corp (Holdings), which is on the Singapore Exchange's (SGX) watch list.
Mr Goi, 62, will buy two billion ordinary shares in the company at 0.6999 cents apiece, JEL Corp told the SGX on Friday.
If his purchase goes through, these shares will make up around 50.3 per cent of the firm's enlarged share capital.
Mr Goi, known as the 'Popiah King' for building up frozen popiah skin maker Tee Yih Jia Food Manufacturing, already owns around 15 per cent - or nearly 296.4 million shares.
The latest share subscription would bring his direct holding in JEL to around 57.75 per cent. Mr Goi's purchase of the additional stake is subject to the Securities Industry Council granting him a 'whitewash waiver', the company noted in its filing.
This waiver removes his obligation to make a mandatory takeover offer for the remaining shares of JEL.
His purchase is also subject to shareholder approval at an extraordinary general meeting to be held later.
JEL Corp said Mr Goi's 'increased involvement in the company will be beneficial and strategic', citing his 'strong business connections, influence and expertise'.
It added that Mr Goi's agreement to subscribe to the shares would 'expand the group to a larger economic size and market capitalisation'.
This, in turn, would meet the minimum market capitalisation for the firm to qualify to be taken off the watch list, it stated.
Mr Goi said in a statement yesterday: 'JEL has a viable business in marketing and distribution of IT, photography and imaging products, as well as timepieces in Central Asia, the Middle East and Indochina. I think JEL has demonstrated good ability in handling various businesses in these developing markets, and believe that it can grow even more in China, where I intend to facilitate its growth.'
Last month, it was reported that Mr Goi would sell his 22.07 per cent stake in China Healthcare, the target of a buyout offer.
He also sold his 7 per cent stake in Asia Environment Holdings last year when its chief executive, Mr Wang Hongchun, bought out the China- based wastewater treatment company.
The proceeds from his JEL share subscription would be used for working capital and for potential opportunities for mergers and acquisitions, JEL Corp said.
It went on the SGX watch list in March 2010 after posting pre-tax losses for three consecutive financial years and its market cap fell to $11.9 million, below the $40 million watch-list threshold.
The counter rose 0.7 cents to 1.8 cents yesterday.
melissat@sph.com.sg
Monday, April 2, 2012
One-minute self-cure exercise for a healthy and happy life
by leesa86 - Mar 11, 2012 at 8:05 am
MBLAQ‘s Mir was able to finally cure his back problems.
On the most recent episode of SBS ‘Star King‘, a guest by the name of Lim Hyun Suk revealed his one-minute self-cure exercise for a healthy and happy life.
MBLAQ’s Mir has been seeing a doctor for a long while trying to fix his back problem to no avail, but his condition improved greatly after meeting with this amazing guest.
Lim remarked, “I discovered this minute self-cure exercise after perfecting my martial arts skills. If you complete this exercise on a regular basis, it will help you maintain good health.”
Baekdoosan leader Yoo Hyun Sang who received a negative score after taking a flexibility test was able to bend his back 10cm more than before, after completing the one-minute exercise.
Lim Hyun Suk was also able to maintain his balance on one foot, even when 10 male panel members tried to push him to the ground.
Source & Image : OSEN via Nate
Star King’ participant Lim Hyun Suk once again surprises viewers with his miracle cure
by choiwj - Apr 1, 2012 at 9:15 pm
Stars that guested on the latest broadcast of SBS‘s ‘Star King‘ were once again met with miracle improvements with the help of Lim Hyun Suk‘s one-minute self-cure exercise.
The March 31st episode was a continuation of last week’s one-minute self-cure exercise by guest Lim Hyun Suk. The exercise is a procedure which shows drastic health improvements by tapping on the acupuncture points on the arm and the hand.
The first member to receive the “miracle cure” was comedian Kim Ji Sun. She complained of not being able to fully lift her left leg, which was immediately cured.
X-5‘s leader Gun also received treatment after being unable to bend sideways due to his back pains. Kim Chung‘s eyesight of 1.2 instantly improved to 2.0.
Also, MC Park Mi Sun who had been suffering from constipation, received treatment to the center palm of her hands and Jewelry‘s Semi was cured from pains to the stomach.
Check out his amazing cures below (video in korean no sub):
Click to watch video on youku
Source & Image: Newsen via Nate
MBLAQ‘s Mir was able to finally cure his back problems.
On the most recent episode of SBS ‘Star King‘, a guest by the name of Lim Hyun Suk revealed his one-minute self-cure exercise for a healthy and happy life.
MBLAQ’s Mir has been seeing a doctor for a long while trying to fix his back problem to no avail, but his condition improved greatly after meeting with this amazing guest.
Lim remarked, “I discovered this minute self-cure exercise after perfecting my martial arts skills. If you complete this exercise on a regular basis, it will help you maintain good health.”
Baekdoosan leader Yoo Hyun Sang who received a negative score after taking a flexibility test was able to bend his back 10cm more than before, after completing the one-minute exercise.
Lim Hyun Suk was also able to maintain his balance on one foot, even when 10 male panel members tried to push him to the ground.
Source & Image : OSEN via Nate
Star King’ participant Lim Hyun Suk once again surprises viewers with his miracle cure
by choiwj - Apr 1, 2012 at 9:15 pm
Stars that guested on the latest broadcast of SBS‘s ‘Star King‘ were once again met with miracle improvements with the help of Lim Hyun Suk‘s one-minute self-cure exercise.
The March 31st episode was a continuation of last week’s one-minute self-cure exercise by guest Lim Hyun Suk. The exercise is a procedure which shows drastic health improvements by tapping on the acupuncture points on the arm and the hand.
The first member to receive the “miracle cure” was comedian Kim Ji Sun. She complained of not being able to fully lift her left leg, which was immediately cured.
X-5‘s leader Gun also received treatment after being unable to bend sideways due to his back pains. Kim Chung‘s eyesight of 1.2 instantly improved to 2.0.
Also, MC Park Mi Sun who had been suffering from constipation, received treatment to the center palm of her hands and Jewelry‘s Semi was cured from pains to the stomach.
Check out his amazing cures below (video in korean no sub):
Click to watch video on youku
Source & Image: Newsen via Nate
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