Arthur Boon

Après Ho Ching, Le Deluge? - AsiaSentinel

2009-02-11T08:38:00.003+08:00

Read this interesting article from Asia Sentinel.

The following paragraph caught my attention:

Temasek's overall performance is hard to assess. Although more transparent than most sovereign wealth funds, it still falls far short of what a public company would have to report. The performance of its major listed subsidiaries is easy enough to track but there is a lot that does not appear, including methods of valuation of some huge, leveraged investments made in private equity funds.

Injections of capital from the Ministry of Finance are also a key to its expansion. For example, last financial year its portfolio value rose by 13 percent to S$185 billion but much of this was apparently accounted for by an official injection. Nor are there any details on dividends, if any, paid to the MoF.

Indeed, not only are the accounts skimpy and largely lacking in the notes normally found but anyone wishing to track the latest Annual Review against past ones will be unable to do so via the Temasek Holdings website, which now has only the latest Review (2007-08) not the previous ones.

Hmm. I wonder how I can find out what MoF does. I noted a new flash yesterday which says that MoF is asking each government ministry to publish annual account in 2010. Until then, I wonder what can I do to find out more?

Income inequality

2009-01-28T21:03:00.004+08:00

Income inequality is measured by Gini coefficient.

1 means totally unequal. 0 means perfect equality.

Rich countries generally have low Gini coefficient, ie more equality. It is interesting to note from Wikipedia that US, Hong Kong and Singapore are the exceptions: these are the rich guys with higher inequality.

The Singapore department of statistics recently published a report. Using monthly income, it basically concludes that the Gini coefficient is falling, and therefore income disparities have declined.

A friend reminded me that for high income earner, it is their annual package (ie monthly salary and bonus) that count. If we look at their monthly salary, that is not really the monthly average of their annual salary.

So the question is, why aren't the statisticians there not using a more relevant way of measuring high earners' income? Is it because they have to find a way to get a declining Gini coeffcient?

Someone's measuring the red ink

2009-01-22T14:29:00.003+08:00

Someone emailed the following to me:

Temasek lost almost US$2 billion of a badly-timed US$3 billion in Shin Corp at a peak of 49.25 baht(Shin shares are now trading at around 15 baht) in 2006.

This state-linked investment company committed S$401 million in ASX -listed ABC Learning Centres at near the peak price of A$7.30 and then averaged down at between A$1.20 and A$4.00, bringing it's commitment to over S$500 million. That investment is now essentially
worthless although Temasek has yet to write it down.

The company also bought 19% of LSE- listed Standard Chartered in 2006 only to see the market value of that stake melt 55% by November 21st.

More fiascos include a 975 million pound stake in Barclays Bank bought at the peak of 740 pence(with a further 100 million to subscribe for a rights issue at 282 pence), which have now sunk over 70% at 138 pence.

Most heinous of all is its US$6.88 billion stake in Citigroup bought with a minimum conversion price of $31.34. Citigroup has since plunged 88% to $3.71, singlehandedly delivering S$9.11 billion of red ink to Temasek's books.

Overall, the paper loss on these bank investments has exceeded S$35 billion as of October 21st.

Is CPF my social security or social bondage?

2009-01-06T15:43:00.019+08:00

I have been thinking about CPF recently, since my government, on top of getting me to do compulsory saving, is now telling me I have no choice but must buy an annuity.

I came across an article in CFA magazine on social security.

Here's the abstract of the article:

The disappearance of the defined-benefit (DB) pension plan is one of the greatest financial tragedies to befall the U.S. citizen. As demographics have changed and as defined-contribution (DC) plans have become the primary vehicles for retirement savings, retirement planning has become fraught with uncertainty. This article argues that DB plans, such as the U.S. Social Security system, are fundamentally superior to DC plans and that the Social Security crisis is largely a crisis of demographics and funding. Social Security’s assets should be invested in a single portfolio that holds both stocks and bonds, and its risky return should be swapped for a fixed return to enable the provision of a DB. This proposal inexpensively affords insurance against a market decline and allows pensions of any kind to be made portable.

The authors argue that fixed benefit is better than fixed contribution for the owners of the social security system. That way, people know how much is their guaranteed return, and can plan for retirement peacefully.

To get the guarantee return, the social fund swaps its market return for a fix rate return with another party. The social fund will then be able to deliver a fixed return, ie a defined benefit. This will be in the interest of the citizens, who are the owners of the fund.

Citizens will be able to see the defined benefit which is expressed explicitly in the form of an expected return (guaranteed by government). The expected return will be transparent and subject to comments by the public. More importantly, if the expected return declined as a result of political interference in investment decisions, by virtue of the guaranteed return, the government would be seen making more frequent and larger net payment to the social security fund. This will make the cost of political interference explicit.

This is the type of CPF that I would like. The government guarantees us (ie Singaporeans and PRs who contribute to CPF) a fixed return. It is then the job of the administrators of the fund, ie the government, to find market speculators who are willing to accept return volatility.

The other thing in my mind, as I ponder over CPF is this: Ultimately, can we shift the risk of managing the retirement fund to the owner himself, and therefore allowing the owner to control his own money? Some people like me would want to have that choice, as early in my life as possible. I can understand why government has to balance this, because they don't want to deal with people who are not responsible with their own money. Well, they can always examine how people deal with money in the past, and give more control to those who are more responsible.

I have developed the following Q&A after looking at CPF's 2007 Annual Report.

Questions that I would want to ask government regarding CPF

I. What is the size of CPF?

$136.6bn. Assuming 3.6m Singapore residents, that's $38k per head.

II. What are the main investment instruments of CPF?

$117.8bn (86% of fund) in "investments". 95% of that in long term Singapore government bond. These are floating rate bonds (Note 12, page 73).

III. How much is the return performance over the years?

2007: $4.2bn "interest credited to member's account plus $68.7m surplus, against members' account of $136.6bn. (page 43, 44). This works out to be 3.12%

2006: The respective numbers are $3.9bn, $66.5m and $125.8bn. This works out to be 3.15%

IV. What is happening to CPF now?

Government is saying, sorry, we are going to let floating rate takes over from now, instead of fixing it at 4% for members. The floor rate of 2.5% will stay though, because of provision 6(4)(b)(i) in the CPF Act (Government can always change the law though).

Notice from III that the entire fund return is more than 3%, even though members were paid 4% interest previously. Adjusting the interest payable to CPF members by pegging it to the yield of a long government bond, will mean the overall fund performance may perform better or worst. If I am the administrator (note: not the owner) of the fund and my salary depends on positive performance of the fund, what would I do?

V. What is the real reason behind the delay in redemption for CFP fund owners?

The government is softening the ground in order to get people to accept the idea that they should work longer, get their CPF later and save more in the meantime (see the huge words on page 4 of CPF 2007 Annual Report). This is like my fund manager telling me, look, you can't withdraw your money; you got to invest more and wait a bit longer before you see your money. I am very unhappy and I think many neither. The question is, why would the government wants to spend time and resources to shape people's behavior so that they won't mind getting money out later? See Google's answer.

VI. What is the objective of the CPF Fund?

The front cover the CPF 2007 Annual Report says "Retirement Planning Made Simple". I interpret the CPF scheme as a compulsory saving scheme to allow workers to benefit in their retirement.

VII. Why is the government lowering the fix 4% guaranteed return to 2.5%? Is that in line with the objective of the CPF fund? Is CPF not instituted to looking after the interest of the owners, who are trying to plan for retirement?

First part of this question is answered in IV.

If the objective of CPF is to implement "force saving," then getting rid of fix return does not contravene the objective. However, if the objective of CPF is to make "retirement planning simple", as loudly printed on the cover page of CPF 2007 Annual Report, then lowering the fix 4% return to 2.5% is certainly undermining the interest of CPF members, since long term inflation rate is typically 3%~4%.

Based on IV and V above, government is saying, sorry, you cannot afford to retire early, and even after you retire, you won't be allowed to control the money which is yours.

VIII. What can be done on how CPF is run?

See Google's answer.

IX. If CPF goes for fixed benefit (fixed guaranteed return), does that mean that there will have to be a change to members' contribution?

If my fund manager tells me that in order to get a fixed return for my money, I need to invest more, I will tell my fund manager that he might want to consider looking for a job elsewhere.

X. Who can take over the variable swap to provide fix return for CPF?

There are many speculators in this world who are willing to take higher risks for higher return. It is the job of the administrator of the fund to find them.

Looks like Paulson forgot Jefferson's reminder

2008-12-25T09:45:00.002+08:00

Read the following here:

"I place economy among the first and most important virtues, and public debt as the greatest of dangers.To preserve our independence, we must not let our rulers load us with perpetual debt."

"Dissent is the highest form of patriotism."

"The principle of spending money to be paid by future generations, under the name of funding, is but swindling futurity on a large scale."

"The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive."

"A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor any bread it has earned - this is the sum of good government."

"All tyranny needs to gain a foothold is for people of good conscience to remain silent."

"I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

"Do not bite at the bait of pleasure, till you know [that] there is no hook beneath it."

"Experience hath shewn, that even under the best forms of government, those entrusted with power have, in time, and by slow operations, perverted it into tyranny."

"I find that the harder I work, the more luck I seem to have."
"I'm a great believer in luck and I find [that] the harder I work, the more I have of it."

"It is neither wealth nor splendor, but tranquility and occupation which give you happiness."

"One man with courage is a majority."

"The care of human life and happiness, and not their destruction, is the first and only object of good government."

"Where the press is free and every man able to read, all is safe."

"I predict future happiness for (Americans) if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

Quotations from
Thomas Jefferson [1743-1826]

Victims of Biggest Ponzi Scheme ever

2008-12-22T08:07:00.006+08:00

Found the following through another blog:-

http://projects.nytimes.com/creditcrisis/madoff_clients/table

Will monitor to see if there is any familiar name.

So far, only GE. Exposure does not seem bad.

On the other hand, I heard a local SWF got a USD 300m exposure....

The other generic question is, so what happens if a fund operated by an insurance company blows? My insurance agent reminded me that the guaranteed value already delcared to policy holder will be protected up to 80%. Probably this already considered by people after the AIG event.

There are some MAS insurance guarantee regulations. I am getting a headache here trying to understand. I suppose no lawyers would help?

Property contra play unwinding next

2008-12-19T19:10:00.019+08:00

[Thanks AndrewPKYap, for helpful comment]

I pay attention to reports on property. Just read this:

SINGAPORE, Dec 19 (Reuters) - Singapore said on Friday there were 10,450 uncompleted private homes purchased under the country's deferred payment scheme, revealing for the first time the potential number of homes that may be returned to developers. About 4,560 of these homes are scheduled for completion next year while another 2,540 will be ready in 2010, the Urban Redevelopment Authority (URA) said in a statement. Singapore introduced the deferred payment scheme in 1997 in a bid to boost the then-moribond property market. The scheme, which was withdrawn in 2007, allowed buyers to buy property under construction without lining up bank financing in advance so long as they made a downpayment of 10-20 percent. The recent fall in Singapore home prices, coupled with the financial crisis that has made banks reluctant to lend, has led to concerns about a jump in the supply of unsold homes due to the failure of buyers to get loans. "The data is provided to enable the public to make a better informed assessment of the private housing market," URA said.

The source is from URA: http://www.ura.gov.sg/pr/text/2008/pr08-119.html

Ok. So now I know that there are 10,450 private properties that were bought with 10% - 20% money upfront. Some of these guys I'll call them contra players (ie speculators) because they have no intention of paying for the balance. What is the percentage of contra players? I have no idea. Maybe 10-15% (because that is the subsale vs overall sales number from URA).

I also know that, since deferred payment scheme was scrapped, some properties were sold whereby the developer, instead of buyers, pays banks the interest till TOP, after the 10%-20% downpayment by buyers. I am not sure whether buyers need to arrange financing beforehand in these cases. Maybe whatever arrangement will depend on the risk appetite of the developers or its banker. Will just assume that the number is small, for now.

Let's take a look at transaction volume of the private property market.

3Q numbers are here: http://www.ura.gov.sg/pr/graphics/2008/pr08-107d.pdf
URA's analysis is here: http://www.ura.gov.sg/pr/text/2008/pr08-107.html

I am seeing about 4,000 to 4,500 units sold (either through primary or secondary market) per quarter in Q2 and Q3 this year. The volume has come down from the peak of more than 10,000/quarter in 07.

This post cited ST's report of a steep drop in caveat numbers, and someone (to me a very optimistic fellow, because I have been watching what he said) reportedly said, ‘The average number of monthly transactions for the last 10 years is about 1,300 per month, so we should be seeing lower than average transaction volumes.’ So maybe the 4Q quarterly volume might see another shrink of up to 50%, to 2,000-2,500?

Let's go back to the deferred payment scheme numbers. It is stated that about 4,500 units are "expected to be completed" in 2009. Another 2,500 are coming up in 2010. I am going to assume that there is no reason for developers not to complete the units, unless they run out of money to build.

So come 2009, against the dwindling say 10,000 units (Colin Tan reportedly expects 5,000, but then he is always the bear. Todayonline's report here) that the market is trying to digest, a certain number of the 4,500 will have to be off loaded by contra players (10%-15%?) or those that suddenly find themselves with no bankers (8%? HDB 3 month bad loan number is 8%), or foreigners who have decided to pack up and go (15-20%? Read IHT Sep 2007 report on foreign buyers of Singapore property). My estimate is that about quarter of the DPS unit will have to be dumped. The current big picture of recession and job loss is not helping those 1,000-1,200 (?) sellers. And who knows? 2010 might get worse.

Contracting volume, force selling and bad sentiment. I am wondering how this will affect the price of that condo that I am looking at. Besides, next to it there are potentially another 11,200 that agents will be trying to sell next year.

Euthanasia is fine, just don't murder me

2008-12-13T14:41:00.018+08:00

[Thanks for comments from TTT203]

When Straits Time devotes 9 pages of its real estate to talk about euthanasia, that gets me excited.

The concept of euthanasia is, simply put, assisted killing. Whether it is merciful or otherwise, seen from the perspective of the dying man in pain, or from his wife who labours to take care of him, or from his son who is anxious about the medical bill, is subjective and debatable.

In life, we are at different time given options to choose. Sometime, we come across situations when there is no choice. However, when it comes to life and death, these are things that I cannot exercise choice. I did not choose my own birth, so I will also not deliberately choose my death.

I have seen a person, when confronted with a very difficult situation, took suicide as his way out. I have also seen the same widow, while battling with cancer pain, chose to die slowly, continued to encourage people around her, and only stopped when the pain overwhelmed her.

We already have the advanced medical directive in Singapore (reference). I can now decide that, when I am faced with a terminal disease at some point in time in the future, I will stop taking medicine or accepting medical procedures in order not to prolong my suffering.

Euthanasia takes that decision one step further. I can now get somebody to have me killed when I decide I cannot take it anymore. It is a "pro active" way of not prolonging pain and suffering.

I believe in not killing anyone including myself. I hope that when it comes to my turn, I will have the courage not to take my way out of pain and suffering through a murder. But I certainly cannot impose my philosophy on others who have different conviction.

So my stand on euthanasia is this. If you want to kill yourself or have someone to kill you to ease your pain, that is your choice. I can respect that choice. However, I have no intention of killing myself or getting people to kill me. I am especially weary that my son, if he becomes more concerned about his pocket than anything else in this world, would want to capitalise on anything to help end my misery (and his).

Therefore, if attempts are made to change our laws to allow people to make the choice of killing themselves or have themselves killed by others, I want the rules to be made very clear, in the following manner:

(i) I did not say I need any "assistance" to complete my journey on this earth. Please do not put words into my mouth that I have ever said I wanted myself killed, that at various time and venue I have alluded or expressed opinion about my "altruistic" desire. Please just assume that I will be an old fart who refuses to die.

(ii) I do not want any expert to declare that my mind can no longer make any "logical" decision, that under any "reasonable" circumstances, in the interest of my poor suffering wife and children, it is best that I be put out of the way as a favour to society and the rest of mankind. I do not want to die, sir.

(iii) Please, and don't ever tell me that assisted killing is henceforth an "opt out" option, that I will be automatically awarded a $10,000 medisave voucher for the procedure unless I choose to forgo the good money. I need to make a living to save up for my coffin money, but I do not really need a new joke to tell my PRC business associates.

Note: I believe in an almighty God, so you can say I am either delusional or religious.

Singapore 2.0 fantasy

2008-12-12T15:26:00.021+08:00

A recent Reuters poll predicts Singapore's GDP to contract by 1.1% in 2009 (see report). This comes after Singapore is "technically" in recession after two consecutive quarters of slower growth.

It is obviously a bit late for me to start planning for the "downturn" now. The STI index, which dropped from 3800 in October last year to 1700 currently, reminds all of us of the reluctant "wealth destruction" we experienced during the past 12 months. There is really nothing much I can do now except to just wait and hope for the best next year (or next few years).

Therefore, with the year-end holiday season coming up, and the market resembling a grave yard at midnight, I have decided to, what the heck, indulge myself in some fantasy. At the very least, it helps to take my eyes and mind off the depressing real world.

I am currently dreaming about house ownership. Some people like to own their house. I certainly belong to that group. Why? Because I am originally a cave man. I like my individual hole in the ground so that I can paint my own wall mural. There are others that forage from place to place. They are mobile and do not want to be tied down to a place. Not me! I need, want my own place, to create my own world.

So wouldn't it be nice that when I buy a house, having earned a decent level of income, I am able to pay for it all in full? No more worry about that mortgage payment. If I lose my job, I will tighten my belt but at least I still have a roof over my head. If I am smart and I can earn tons of dough, I'll go buy that big house. If I am not so bright and can only do a small job, I'll get for myself a smaller place that I could afford. I should not be slaving my entire life working for the bank to pay for my house. And the last thing I want is to start my working career carrying a massive mortgage. Otherwise, I will be playing safe at work, won't attempt anything that is unconventional, don't rock the boat even when things are not right, ignore my boss' unethical behaviour, and have no gut to walk away from all. In short, I will be doing everything I can to preserve my rice bowl.

And wouldn't it be nice if the road is less crowded? I am dreaming of more space in the MRT, and place to sit in the bus. There are too many people around me. And a lot of them speak languages that I no longer understand. I know we are an immigrant society, but I don't really want that many foreign construction workers, waiters, and cleaners around. I don't mind doing their jobs, if the pay is decent, so long that I could afford a place to live. Do we need that many people to come and build more new buildings, or new roads with more ERP? I have seen old izakaya restaurant, a small set up, manned by a single Japanese chef in Tokyo. I have seen Copenhagen, the capital of the happiest people on earth, which is a quiet, small city. I would like more space, less people.

If I own a business, wouldn't it be nice that I do not have to compete just on cost alone? If my customers buy my products, that is because they know I can deliver quality, not because I am selling my blood at the lowest price. Wouldn't it be really nice, if I could do business with some of the big shot GLCs? I would like them to pay me on time, and don't squeeze me on my intellectual property. If my fellow Singaporean working in the GLC or Stat Board do not want to consider doing business with me, why should I expect anyone else in the world to support me? If my business do not even have a chance to flourish, can I afford to think of new products, or pay higher salary for better workers?

Wouldn't it be nice, as we head into a recession that is supposedly one of the worst in history, that we admit we had been wrong in some areas? Since we are as bad as everyone else in terms of market performance, so no face will be lost, why not take this opportunity to rewrite the codes?

It is always nice to dream, even though it is just a dream, coming from a naive idiot like myself.

Heard on the street

2008-12-11T23:28:00.008+08:00

"They are not even printing christmas card or new year card this year."

"I am currently in 'transition', just doing trading on PA."

"Yeah, I just renewed the lease. 40% lower."

"The guy offered me a price and I counter offered 2 weeks later at lower price. He immediately accepted it. Now I hesitate."

"I am not looking at anything until 2nd half of next year."

"I am just showing my bosses I still got the deal flow."

"Play more golf. It is much cheaper than losing money at the market."

"Lot's of huge CB going at 30%-50% yield."

"I can get that fund to sell the entire portfolio. Any buyer?"

"Just passed my CAIA exam. I've got a lot of time to study this round."

"The VLCC are just sitting there in the open ocean with their oil and no way to go."

Singapore Power needs the profit

2008-12-09T21:30:00.034+08:00

In Singapore Power's annual report (31 March 08), the group's balance sheet listed intangible assets of $4.57bn. The main item there is a $3.27bn goodwill.

When a company buys something and pays a price above the net tangible asset value (sometime known as fair value) of that particular asset, the excess amount is defined as goodwill.

In this case, the asset is Alinta, a package of Australian gas and electricity network. Singapore Power announced the acquisition in March 07. The joint buyer is Babcock & Brown. The price was A$7.4bn. (www.iht.com/articles/2007/03/30/business/alinta.php) A month later, Singapore Power and fellow buyers chased up the price by another 7%. The acquisition was completed on 31 Aug 07.

In Singapore Power's book, the $3.27bn is the amount Singapore Power paid above the book value of Alinta. This excess amount is normally depreciated over 20 years. That would have meant a $164m negative impact on the annual bottomline for the next 20 years. It would have lowered Singapore Power's 2008 earning by 14%, which is still tolerable considering its profit would have been still close to $1bn.

However, Singapore Power with foresight had changed its accounting rule on 1 April 05 and discontinued amortisation of goodwill. Goodwill is henceforth subject to "testing for impairment". My layman understanding is this means every year the management will haggle with its auditors on whether or not to reduce the value of any goodwill on the group's balance sheet.

Obviously, Singapore Power did not intend to engage in such unproductive debate with its KPMG auditors.

Singapore Power owns 51% of SP Australian Network (SP Ausnet), which is listed on Singapore Stock Exchange. SP Ausnet has stated from onstart that it is the investment vehicle for electricity/gas assets for Singapore Power.

Exploiting an arbitrage opportunity like a good investment banker, Singapore Power has probably intended to buy Alinta assets and onsell to SP Ausnet, and charging a mark-up during the process. In Sep 07, SP Ausnet announced that it would buy Alinta assets being purchased by Singapore Power. SP Ausnet would pay Singapore Power A$8.1bn, the price being paid by Singapore Power, plus additional "transaction costs and holding costs" incurred by Singapore Power. Also, the price being paid by Singapore Power is subject to "adjustment and assumptions of liabilities" by Singapore Power, ie the final bill to SP Ausnet could be less or more than A$8.1bn.

Which means, if the transaction has gone through, Singapore Power would have earned something. How much is that something? I would not know. Since Singapore Power is the majority shareholder of SP Ausnet, why did it not ask SP Ausnet to buy Alinta assets directly from Alinta's shareholders? I do not know. I am tempted to think that Singapore Power did the deal this way to make more profit for itself. Singapore Power's advisor for the Alinta deal, Morgan Stanley, is after all an expert in structuring such arrangements.

Unfortunately for Singapore Power, the credit crisis started to hit the whole world in Sep 2007. SP Ausnet subsequently called off the purchase of Alinta assets from Singapore Power in Dec 07. The reason? Its management probably thought it was too expensive/difficult to borrow money to buy the Alinta assets.

Fast forward. On 29 Sep 08 Singapore Power announced a 22% increase in electricity price in Singapore for 4Q 08. It stated that the reason for the hike was that its price was pegged to forward fuel price which had increased to S$155/ barrel. I was shocked, like a lot of its customers.

But wait. Let us come back to the Alinta goodwill on Singapore Power's balance sheet. The $3.27bn comprises (i) $1.6bn classified as "management services", (ii) $1.16bn as "gas transmission" and (iii) $491m as "others". The largest item, "management services," sounds like the type of business not backed by much assets, and could arguably have a very low market value during a downturn. I also note that Babcock & Brown, the parent company of Singapore Power's partner in the Alinta deal, has meanwhile seen its share price torpedoed from A$28 in Dec 07 to 16 cent currently. The market has almost completely discounted the value of its underlying assets. I am aware that amongst the many things that Babcock & Brown does is infrastructure and project financing involving power.

KPMG has stated that there was a 12 month period for Singapore Power's management to assess if there is need for making "impairment" on any goodwill. The deadline to adjust the Alinta goodwill in Singapore Power's balance sheet fell on 31 Aug 2008. A month later came the announcement on the 22% increase in price.

Is Singapore Power trying to capitalise on the "peg" on high oil price to squeeze more money from its customers, to make up for the reduction of the value of goodwill in its book? If I am a shareholder, I will be happy that the management is doing this. Sadly, I never feel like a shareholder of Singapore Power.

Singapore Power claims that because it is only a "messenger" in the power distribution business, it is subject to the mercy of oil price fluctuation. Fair enough, although I would have expected the management to use hedging tools to minimise volatility. And if management does not hedge volatility, then rightfully if you want to pass higher cost to customers, you should also pass proportionate amount of cost saving back to your customers when oil price comes down. You want to live by the sword, then you die by the sword.

And let me gently remind Singapore Power: your job in the first place is to provide public goods efficiently, not to make money.

And I also want Singapore Power to know this. Never ever squeeze me, the captive buyer of your public goods, if you have failed your stint as an investment banker. If I ever find out that is indeed the case, boy, that would really make me pissed.

Note: I have friends who own SP Ausnet stock.

Where to get property market data?

2008-12-05T10:43:00.008+08:00

I am watching the property market.

One great source of information is the URA site, where it lists private property transactions.
I thought it is quite good, as I could see the project name and psf.

Then I recently realise that the data is submitted "voluntarily by purchasers through their lawyers to protect their interest in the property."
Also, there is no timing requirement. So the price reflected there could be a price from aeons ago.
http://www.ura.gov.sg/realEstateWeb/resources/misc/PMIFaq.jsp

I see. That means the data is not representative of the latest price then.
So if anyone with vested interest, ie the developer, or property agent points out to me that, hey look the price reflected there seems to be holding steady, I would be saying, ok, but maybe the actual transacted price could be a lot lower.

When will the data at URA starts reflecting market pricing? It may never happen, unless more caveats are lodged to "protect interest" of the parties in the transaction. And when would that happen? Maybe when there is more dispute of pricing on past transactions.

So it looks like we will only get a more realistic picture of property pricing when turmoil starts creeping into the property market....

Drilling down employment data

2008-12-04T14:43:00.013+08:00

Happen to read the latest release on employment status in Singapore at:-
http://www.mom.gov.sg/publish/momportal/en/press_room/press_releases/2008/20081128-singapore.html

There are more people being employed officially. The increase was 2.7% in 08.
More people in the group 25 to 64 years old are employed (from 76.5% in 07 to 77% in 08).
However, overall unempoyment rate has increased from 2.4% in Dec 07 to 3.1% by June 08.

Conclusion: More unemployment for the younger guys (below 25) and older folks (above 64).

But wait, the data here refers to employment status of resident labour.
According to the definition by MOM, that includes citizen and PR. (http://www.mom.gov.sg/publish/etc/medialib/mom_library/mrsd/glm.Par.80794.File.tmp/mrsd_Q32008empsit.pdf)
Looks like I will not have any idea of the employment status of Singapore citizen vs PR...

Added on 6 December 08

In ST's interview with Ong Ee Kang, the article mentioned that economic "inactive" people, if placed under training scheme, is no longer counted as unemployed.

A guy that is out of job is out of job. Whether he is under training or otherwise is irrelevant. Otherwise, primary school students could also be defined as "employed."

Funny way of keeping unemployment figure low to look good....

It seems that the whole world uses this definition.

And because nobody knows the source of payment of the training (training could be paid by employer or by oneself), government would use the figure to make themselves look good.

Seasons of Life

2008-12-03T16:26:00.001+08:00

There is a time to laugh and there is a time to cry.
There is a time to hope and there is a time to despair.
There is a time to love and there is a time to hate.
There is a time to rush and there is a time to wait.
There is a time to buy and there is a time to sell.
There is a time to fight and there is a time to defend.
Ask yourself, is it the time to do what you think you should be doing today?

Why rate video games?

2008-04-23T16:56:00.001+08:00

There is really no need to rate video games.
Think of all the hassle, the check, plus the expensive stickers.
This translates to cost for the game players. Plus cost of hiring more censors (read: tax).
And beside, what are we trying to achieve? Protect gamers?
There are worse things that people can watch, and I think most are already free on the internet.
Yeah, I mean I know there is this "sending of signal" thing, but surely that could be done in a more sensible and practical way?
First, we must all agree that only losers are playing games. I mean, a productive, responsible member of the society should be working and caring hard for his or her family. There are important things to do such as buying expensive rice and paying mortgage for flat, where price is going through the roof.
You want recreation? Well then get out of the house and get some real exercise. Pumping the imaginary uzi is not going to be helpful. You need to keep fit to stay productive, dude.
So there is really no need to look after gamers/losers.
Let them waste time, be decadent, achieve nothing, and become failures in life.
We then simply highlight their plight to all the anxious parents, and the problem will be solved by itself.
This is the best and most practical signal: Want to be a loser? Play more Doom!
In the meantime, gamers won't create any problem. They are busy shooting one another to virtual death in their bed room so they won't get into the way of the normal people like you and I. Perhaps with no rating (ie lower cost), these guys can get more games, play more, and hopefully go down faster.
Nobody will be blamed either if there is a slip up in rating standard or slip through of unchecked games.
Everybody will win. Except the gamers, of course, but who gives a sh*t about their affair.

No Rice

2008-04-04T16:55:00.000+08:00

My wife told me that the NTUC rice shelf is empty this morning.
Newspaper and TV have been showing large number of shelves of rice in reserve.
I also recall some guy telling people there is no need to hoard rice.
Well, if there is no rice to eat, then go for tapioca or potato.
I did not calculate the calorie or nutrient content of these substitute food. But we know people survived on these things before.
Man, this will be a good chance to toughen ourselves. After all, many of us have not seen war before and we have been turning soft already.
If tapioca or potato are still too expensive, I am sure there are other things.
Let's see. Bakeries normally reduce their price just before they chuck out items before closing for the day. That could be another source.
Basically, as far as I see, there is no need to chase for rice like everybody else.
It is inevitable rice price will go up. The whole thing starts with equity, property, gold, platinum, wheat etc etc.
The price cycle is just cascading down the various asset classes.
This is life. No point panicking about the situation.
I mean, how much rice could you hoard? 5 sacks? 10 sacks?
How much price could seller increase? 100%? That translates to like what, $10 ~ $15 per month for a household?
How much is that compared to other types of crazy increases, eg for properties or petrol?
If your income cannot even absorb the incremental increase in rice price, you can always take another job to increase your income.
Seems like there are plenty of jobs around, as we are shown, and not enough Singaporean wants them.

Roof over my head

2008-03-31T17:14:00.000+08:00

Property prices have shot up through the roof.
HDB flat is selling at $500k. In some cases, developer is trying to sell 5 room flat at around $700k.
Obviously some people are unhappy. Some try to ballot for new flat but do not have the luck. Some complain that their income of $8k do not even qualify them to buy HDB flats.
Well look, why don't we look at the situation this way?
Don't buy. Just rent.
I mean, ok so what if renting is money down the drain. After all, if you take a mortgage to buy a property that you cannot afford, you have to pay interest and that is also money down the drain.
Yes, bank rate is low and may or may not come down.
Yes, property price is going up and may or may not go up further.
But why stress yourself over something that you cannot change.
You can't change your luck. You cannot change policy.
So change your own thinking.
And, if enough people rent and forget about buying, hey then property price will have to adjust, isnt it?
URA and HDB just released 1Q08 flash numbers. Price are still increasing, but at a lower rate.
So should buyers be happy, and wait longer?
Should sellers that over leveraged be worried?