The Great Britain Sale - Every Pound has to go!!

Over the last couple of days, the sterling pound dropped like a sinking anchor due to some really negative remarks by the Bank of England in the latest inflation report. The UK's GDP main contributors are financial services and construction, both are in a deep funk right now and is looking to get even worse. With the weakening pound, imports will get even more expensive, exacerbating the rate of inflation.
When wife and I came over, the GBPSGD exchange rate was 3.10 - Now, it has dropped over 20% to 2.63. Ouch!

Room for improvement - Straits Times Interactive

Have been taking advantage of the two week free passes to the Singapore Straits Times online website to do some reading up. Unfortunately the whole experience was quite a let-down.

Having been fed high quality content websites like the NY times or the bbc online, I found it difficult to appreciate the online version of the Straits Times.

Some comments about the Straits Times online edition:

a. I cannot fathom why they wanted a print version of the SS. Hardly anyone would want to zoom in/zoom out of a 15inch computer screen to see a print version normally printed in broadsheet size. I found the whole experience tedious and was put-off by all the print-ads. My guess is that this is more likely for advertisers - SPH is using this as another avenue to entice potential advertisers.

b. Un-customisable front page. Start working on allowing users to customise what they want to see on the front page! Well, at the very least, allow a change of colours?!!!

c. Content, Content, Content. Organising the available content into a user-friendly user-platable online platform requires much thought and design. Here the online SS fails miserably - both in terms of the quality and the delivery. Quality-wise, well we can acknowledge that our writers appeal only to a relatively small market so it is acceptable. But delivery-wise, surely we can take a leaf out of the other websites? Why can't they embed streaming video together with the news article instead of directing me to another website?

d. Integration, Integration, Integration. The online SS content is distributed across various 'hip' sounding platforms like RazorTV, Stomp, Urban, DigitalLife, etc. To me at least, it is all very confusing. I want to read articles relating to lifestyle and I find content distributed across RazorTV, Stomp and Urban. They should be integrated into a single access point for the online user.

A poor effort indeed. Try harder Straits Times. Take a leaf out from BBC and NY Times.

Temasek has learnt its lesson well

Diving into the details of the latest Merrill Lynch cash call, it is definitely a 'sweet' deal for Temasek. Temasek has learnt its lesson well since their Barclays intervention.
However, couple of things to note:
a. The 'reset' clause will no longer allow going forward; ie if there are further cash calls, Temasek will no longer be able to exercise the right to purchase more stocks at the new issued price
b. There may be more cash calls for ML going forward, looking at their current risky debt holdings

Hopefully, this will buy more time for ML to unload their risky debt at a better price.

Singapore bum investment decisions

Here's a not-so-flattering take by the ft on the investment decisions undertaken by some of the Singapore companies.
Ouch...

The competition gets even more intense

With the credit crunch in full swing, many US and UK based finance professionals are heading to Singapore's shores.
This mass exodus of 'talented' foreigners into sunny Singapore to escape or as a result of the mass culling in New York and London looks set to continue at least for the next few months.
With this exponential arrival of skilled migrants, there will be new opportunites to be uncovered but yet stiffer competition to be faced.
Local Singaporeans will once again, as usual, have to prove their worth in this rising tide of skilled foreign talents. Hopefully, the quality of our people will be enhanced through even tougher competition.

Capitalism and Greed

It is immensely exciting to witness the near capitulation of Fannie and Freddie for it bears the following implication:

a. The US brand of capitalism is not insulated from disaster - the US will no longer be able to stand on a economic ethos high ground and preach the 'goodness' of their brand of capitalism

b. Much of the failings can be attributed to greed and human nature. The US financial systems have their internal checks and balances, but human greed cannot be easily checked nor balanced. How can we prevent financial institutions from leveraging to the tills, when everyone is doing the same?

The current de-leveraging process will take years to unwind, and the excesses built up over the last decade will take as much, if not more time to work off.

Expect the worst and hope for the best.

Did Temasek make a mistake?

It is interesting to note that in the latest cash call by Barclays, Temasek only contributed a measly 200 million pounds. I think This has more to do with a diluation issue than having a real interest in buying the share at a 9% discount to the stock price as of Tuesday.
So, if we apply Buffet's definition of a good stock (of buying more when the price drops), then indeed Temasek's action may have the following implications:
a. That they may have paid too much last summer
b. That there may be more write-downs for Barclays and a further cash call

Ouch!

Conversations with a Taxi Driver Part 1

On my many overseas trips, the journey from the airport to the city/hotel usually provides a fertile opportunity to strike up a conversation with the taxi driver.
These conversations provide a great insight into the people and the country - it is amazing just how people open up when 'boxed' up in a vehicle.

Description of Journey: From OR Tambo International to Jo'berg CBD (South Africa)
Journey Time: 40mins
Cost of journey: 350 Rand (approx 65 SGD)
Date: Sometime in mid May when the xenophobia violence broke out in Johannesburg townships
Taxi driver: 'Prince' - we called him the 'Fresh Prince of Joberg'
Background: Prince is a native South African and speaks English pretty well albeit with a strong Africana accent. Taxis in Johannesburg are usually unmarked and run privately, so it is important to find a driver whom one can trust, especially if it is the first trip there. Due to this reason, people like Prince are doing a roaring trade chauffeuring foreigners around.
Prince owns four Mercedes Benz, including a Mercedes 4x4 and a 300 series. Probed further, he revealed that Mercedes evokes the imagery of a dependable, reliable and classy ride. Beemers are a 'no-no', since they are usually targets for carjackers.
There is no available public transport to bring travellers from the airport to the city - the only option is via the taxis or minibuses. The airport is currently undergoing massive renovations in preparation for the World Cup 2010.
Interesting observations: En-route to the city, we came across several Nike ads which depicts athletes in various pledges of using their bodies as a 'weapon' to 'fight' the odds. This was how Nike South Africa defined their campaign: Every day is a struggle in South Africa, albeit a struggle for respect and dignity, or a fight for food or against crime, Nike feels it has a powerful message to share – that through sport, anyone can overcome anything."
Goes to show how violence is so ingrained in the South Afican psyhic/culture.
Conversations: Inquired about the xenophobic violence in the townships. Prince was particularly against foreigners from other parts of Africa who are taking away their jobs. Sounds familiar to what's happening back home in Singapore, I added. Folks back home in Singer are complaining about highly-skilled jobs taken over by foreign talents. Adding to the pain, even lower-skilled jobs are becoming scarce, due to influx of cheaper labour from parts of Asia.
Here, immigrants from Zimbabwe, Somalia having attracted by South Africa's brighter lights and better opportunites have poured into the country since the past decade. The outbreak of violence was the culmination of anger and frustration at the loss of jobs to immigrants, fuelled by the rising cost of living which have escalated at least threefold since the beginning of the year.
Funny Incident: Not just our designated driver, Prince has many other clients to attend to. So, on one occasion, he was not available and sent a 'stand-in' driver to pick us up. Our stand-in driver turned out to be a scholar and have little or no experience driving in Jo'berg. The car stalled twice as he tried to start the car in 2nd gear and we ended up 'cruising' in Jo'berg at a lesiurely 40km/h.

Loss of jobs to foreigners seems to be the common grouse these days, but this seems inevitable as the world gets progessively flatter. Especially for a open and small nation like Singapore without any natural resources, the effect will be even more pronounced for native Singaporeans when our government strive to attract the best into our city.

London Votes!

It's funny how wife and I never had the opportunity to vote in Singapore but are now presented with a chance to do so tomorrow.
The face-off is between Ken Livingstone, the Labour incumbent versus the Conservative Party (read opposition) candidate Boris Johnson. We had polling cards, a leaflet explaining the policies which each candidate is proposing and what each of them stands for, sent to our flat.
The incumbent is riding on his past credentials and the fact that he had presided through the 'golden years' of the revival of London as a global financial center, a consequence of the policies his party has implemented. However, there is always a tradeoff for achieving such goals. Public transport is expensive, population growth has seen an exponential spike due to the attractiveness of working in London and the rising cost of living.
The voting will take place on the 1st May, which is not a public holiday unlike the rest of the world.
I can't help recalling my younger days in Singapore where my parents were voting ...

Olympic's Shame

Wife and I were at Leicester Square, London on the 6th April to witness the Olympics touch relay.
The day started with a huge snowfall, pretty unexpected as this was 'supposed' to be Spring. The decision to go to Leicester Square was made due to the desire for a 'warm bowl of noodle soup' rather than for the Olympics touch. We were unaware of the huge fiasco surrounding the touch relay beforehand. It was only after lunch did we realised that protesters were trying all kinds of ways to extinguish and put out the Olympics flame.
The atmosphere at Leicester was supportive and we could hear shouts of 'Long live Beijing', 'Long live Olympics'. For a while, I felt proud to be a Chinese and felt no different from the Chinese supporters beside us from HongKong or China.


The Olympics flame, when it arrived, was heavily guarded with at least three rings of guards surrounding the touch bearer. It was hard to see the torch bearer or the flame - on hindsight, it was not difficult to see why there was so much security.



In retrospect, the protestors do have the freedom to voice their displeasure about their views on China's policy on Tibet and human rights but I question the method through which they raise their protests. It was heart-wrenching to see protestors trying to snatch or extinguish the Olympics flame - I am not sure what they are trying to achieve in carrying out those acts. Perhaps a more meaning action such as running alongside the relay team with their flags would bring across a stronger message which will gather more supporters to their cause.



This is a huge PR lesson for China indeed, it is not lost on me that translation between the Chinese language to English may not be perfect and subtle meanings may not have been conveyed by the English media. In addition, China's hardline approach towards the protestors is likely to fuel more anger and anguish. Perhaps a more reconcilatory tone from China may be the better way forward.

The cost of the appreciating SGD

The SG dollar has strengthen against every other reserve currency since the start of 2004.

There was a report by the New York Federal Reserve in 2004 which quantified that for every 10 percent appreciation of the Singapore dollar against the U.S. dollar and other reserve currencies would result in a domestic currency capital loss of more than 10 percent of GDP.

Looking at the charts above, since the start of 2004, the SGD has appreciated more than 15% against the USD, more than 10% against JPY and GBP and remained unchanged against the EUR.

Given Singapore's GDP of about 140 bn SGD in 2006, these currency fluctuations would mean a loss of about 14bn SGD ... wow ... which may explain GIC's and Temasek's interest in the US banks - better to hold their stocks than to hold the USD.

The Importance of being fiscally prudent

Looking at the crumbling asset prices in the US and around most parts of the world, it inevitably reinforces the virtue of being financially prudent, rather than financially savvy.
The past 5 years have seen unprecedented creation of credit and the world economy was awash with 'cheap' money. As a consequence, property prices have also risen to unprecedented levels and there was a time when investors were 'educated' on the benefits of investing in properties - the huge potential financial gains that could be made simply by placing a 5% downpayment on any property developments. Every 1% upside in the property valuation would result in a gain which is 20 times multiplication of the investor's initial outlay. Such is the lure of leverage.
However, the reverse of the situation is also true. A 1% decline would also imply a loss 20 times the initial outlay.

The sticklyness of property prices - marked by sellers' reluctance to sell in a weak market and aided by cheap refinancing options means that the current downturn would take more than just a couple of months to clear. In the meantime, there will be many false dawns but until the speculative element in housing prices is replaced by realistic pricing, it is still wiser to remain at the sidelines and hang on to pure cold hard cash.