Temasek has pumped in US$900million into Merrill again as committment of US$3.4bn worth of stock. The people there are sure optimistic about the seemingly gloomy future economy.
"Merrill said Monday Singapore's powerful state-owned investment fund Temasek was taking up 3.4 billion dollars of the offer -- but only after the investment bank compensates Temasek for losses on some five billion dollars it had already invested in Merrill this year.
The announcement came in the wake of Merrill's July 17 report that it had racked up a net loss of 4.89 billion dollars for the second quarter, another sign of the devastation of the US real estate crash on financial markets."
"The company said Monday it expects to record a pre-tax write-down in the third quarter of about 5.7 billion dollars, which includes a 4.4 billion loss on the CDOs being sold.
Merrill had already raised 15.3 billion from capital markets earlier this year, including share sales to the giant sovereign wealth fund Temasek.
Temasek's earlier investment though came with a requirement that if Merrill raised more capital within 12 months at a price lower that the 48 dollars share that the Singapore fund paid, it would be compensated for the difference.
Today's announcement meant that Merrill has to pay Temasek 2.5 billion -- which Temasek is turning around to put back into Merrill, along with another 900 million dollars."
Giving back Temasek Losses so as to gain more capital infusion.....although it sounds nice that Temasek is hedging some risk off by getting some cash back, they are investing in a company that has some serious cash problems. Then isn't getting some cash back gonna exacerbate the problem further (even though it will be pumped back)???
Merrill's a nice company, no doubt. But I aren't so sure in today's market. By pumping in more money, Temasek got itself even more entanged with Merrill. And as common sense, any capital raising efforts will almost guarantee more writedowns. Just wait and see.
On another note, Temasek's 30 year average returns is only 3%....far below industry average. Either the fund managers are useless (despite being paid so much; just by buying bonds will yield the same or more) or some of the money is flowing to somewhere you and I do not know....
Tuesday, July 29, 2008
Friday, July 25, 2008
MAS revise up Inflation Forecast
"SINGAPORE: Singapore’s central bank has revised up its inflation forecast for 2008 for the third time. It now expects inflation to come in at between 6 and 7 per cent from its initial estimate of 5 to 6 per cent.
The Monetary Authority of Singapore (MAS) said this is due to the impact of external developments like higher oil and food prices on Singapore’s open and trade—dependent economy.
The central bank, however, is maintaining its current monetary policy stance for a slow and gradual appreciation of the Singdollar.
MAS believes that inflation in Singapore has peaked this year. Inflation has stayed unchanged for the previous three months, at 7.5 per cent — a 26—year high. For the first half of the year, consumer inflation averaged 7.1 per cent.
In the coming months, inflation is expected to moderate because the one—off impact of the GST hike last year will stop affecting headline inflation in July.
MAS also expects global commodity price increases to be milder. Domestic cost pressures are likely to ease as the economy slows and asset markets consolidate.
Recent employment surveys have also shown that labour market pressures could be easing.
While most economists agree that inflation will come off in July, they say what is key will be the rate at which it moderates.
Irvin Seah, economist at DBS Group Research, said: "It will decrease at a slower rate compared to what we thought so earlier, because of policy—induced inflationary pressure. Having said that, oil prices recently have shown signs of moderation. If that’s sustainable in longer term, it means inflation could come off quite a fair bit."
Between April 2004 and June 2008, the Singapore dollar appreciated 23.4 per cent against the greenback — a policy move that the MAS said has had a restraining effect on consumer inflation.
It said its monetary policy tightening will continue to restrain cost and price pressures going forward.
For example, while oil prices have increased by more than 70 per cent from a year ago, domestic electricity tariffs and petrol prices rose only by around 30 per cent.
Despite the full—year inflation being revised upwards, the central bank is keeping its forecast that the Singapore economy will grow between 4 and 6 per cent this year, which some economists say is optimistic.
Alvin Liew, economist at Standard Chartered, said: "We are looking at slower second half this year due to worsening external markets affecting export demand. Already, we see that the manufacturing sector did not do very well in the second quarter and might see the weakness being continued into the third quarter itself."
A hint of that could be found in manufacturing data out on Friday.
Mr Liew said: "One of the important things we can look out for is tomorrow’s manufacturing number for June. If it comes worse than expected, then we can probably see a downward revision for the manufacturing sector again for second quarter, and then maybe we’ll see the government’s forecast range being revised down. I’m looking at probably a half to one percentage point downward revision."
Between inflation and growth risks, analysts say, inflation will remain the larger risk for 2008, although this may switch in 2009 should global growth continue to slow.
Singapore’s economy grew 7.7 per cent last year."
Now I am puzzled. For MAS to revise 3 times (and more to come I believe), how on earth can they accurately (or inaccurately) say that the one-off GST hike last year's effect on inflation will stop affecting headline inflation by this month? What kind of funny 'forecast' is this if the revision is just playing a catching game with the macro trend as a whole? Price increase seldom, if it ever did, reverse it's path. Probably it is a nicer way of saying "You guys should have been used to the price increase by now".
Inflation is now a great concern and although there are some who are optimistic that inflation is wearing off with recent oil prices declining, I am still somewhat pessimistic about the second half of this year. The 4 days rally of the asian markets are somewhat weak with the STI being unable to cross the 3000 line. At the point of typing this post, asian markets fall (again) on re-newed concerns of widening credit-market losses and worsening global economic slump. Throw in the Iranian stand-off with the USA (or basically the rest of the Western Powers) on Iran's nuclear programme, a new US president, plus the wider effect of the Fannie Mae & Freddie Mac episodes unravelling, the future remains gloomy. Then you have the cold seasons coming in another 2-3 months, which may translate to higher oil price again. A word of comfort may be the OPEC cartel seems to have weakened with Iran, the 2nd largest oil producing country, to disagree over OPEC's agreement on increasing output.
Look out for more 'Economic growth justification' from the Singapore media & government in the months to come.
The Monetary Authority of Singapore (MAS) said this is due to the impact of external developments like higher oil and food prices on Singapore’s open and trade—dependent economy.
The central bank, however, is maintaining its current monetary policy stance for a slow and gradual appreciation of the Singdollar.
MAS believes that inflation in Singapore has peaked this year. Inflation has stayed unchanged for the previous three months, at 7.5 per cent — a 26—year high. For the first half of the year, consumer inflation averaged 7.1 per cent.
In the coming months, inflation is expected to moderate because the one—off impact of the GST hike last year will stop affecting headline inflation in July.
MAS also expects global commodity price increases to be milder. Domestic cost pressures are likely to ease as the economy slows and asset markets consolidate.
Recent employment surveys have also shown that labour market pressures could be easing.
While most economists agree that inflation will come off in July, they say what is key will be the rate at which it moderates.
Irvin Seah, economist at DBS Group Research, said: "It will decrease at a slower rate compared to what we thought so earlier, because of policy—induced inflationary pressure. Having said that, oil prices recently have shown signs of moderation. If that’s sustainable in longer term, it means inflation could come off quite a fair bit."
Between April 2004 and June 2008, the Singapore dollar appreciated 23.4 per cent against the greenback — a policy move that the MAS said has had a restraining effect on consumer inflation.
It said its monetary policy tightening will continue to restrain cost and price pressures going forward.
For example, while oil prices have increased by more than 70 per cent from a year ago, domestic electricity tariffs and petrol prices rose only by around 30 per cent.
Despite the full—year inflation being revised upwards, the central bank is keeping its forecast that the Singapore economy will grow between 4 and 6 per cent this year, which some economists say is optimistic.
Alvin Liew, economist at Standard Chartered, said: "We are looking at slower second half this year due to worsening external markets affecting export demand. Already, we see that the manufacturing sector did not do very well in the second quarter and might see the weakness being continued into the third quarter itself."
A hint of that could be found in manufacturing data out on Friday.
Mr Liew said: "One of the important things we can look out for is tomorrow’s manufacturing number for June. If it comes worse than expected, then we can probably see a downward revision for the manufacturing sector again for second quarter, and then maybe we’ll see the government’s forecast range being revised down. I’m looking at probably a half to one percentage point downward revision."
Between inflation and growth risks, analysts say, inflation will remain the larger risk for 2008, although this may switch in 2009 should global growth continue to slow.
Singapore’s economy grew 7.7 per cent last year."
Now I am puzzled. For MAS to revise 3 times (and more to come I believe), how on earth can they accurately (or inaccurately) say that the one-off GST hike last year's effect on inflation will stop affecting headline inflation by this month? What kind of funny 'forecast' is this if the revision is just playing a catching game with the macro trend as a whole? Price increase seldom, if it ever did, reverse it's path. Probably it is a nicer way of saying "You guys should have been used to the price increase by now".
Inflation is now a great concern and although there are some who are optimistic that inflation is wearing off with recent oil prices declining, I am still somewhat pessimistic about the second half of this year. The 4 days rally of the asian markets are somewhat weak with the STI being unable to cross the 3000 line. At the point of typing this post, asian markets fall (again) on re-newed concerns of widening credit-market losses and worsening global economic slump. Throw in the Iranian stand-off with the USA (or basically the rest of the Western Powers) on Iran's nuclear programme, a new US president, plus the wider effect of the Fannie Mae & Freddie Mac episodes unravelling, the future remains gloomy. Then you have the cold seasons coming in another 2-3 months, which may translate to higher oil price again. A word of comfort may be the OPEC cartel seems to have weakened with Iran, the 2nd largest oil producing country, to disagree over OPEC's agreement on increasing output.
Look out for more 'Economic growth justification' from the Singapore media & government in the months to come.
Monday, June 16, 2008
It's been long
It's been a long time since i updated my blog as I was away to China for 1 month and apparently blogspot is censored in the country. I'll be writing again very soon.:)
Saturday, May 10, 2008
A Poem: An Ode to Bernanke
This poem is so funny that I just have to reproduce in my blog:
An Ode to Bernanke
Ben Bernanke is our crazy Fed chairman, you see
He’s convinced that the U.S. has a full forest of money trees.
So he creates fancy dollar bills out of thin air,
Trying to save the economy from its destructive flair
The first thing he wants is to keep homeowners from defaulting
So he gives a multi-billion dollar bail out to the criminals who were assaulting.
But that wouldn’t be enough to save the economy from a bearish turn
So is it any wonder he had JP Morgan bail out Bear Stearns?
But the one thing he doesn’t realize is that his tricks won’t solve a thing.
He’s just trying to keep the economy together on just one string.
So as he prints money with no regard for inflation,
He’s convinced by doing this he’s going to save the nation.
One dollar, two dollars, ten dollars to buy a bottle of coke.
And as soon as you walk into a supermarket, the prices will make you want to choke.
So what will Ben do when he finds his plan didn’t work?
Will he be forever regarded as an economic jerk?
Will the annals of history reflect on him well?
Not in my mind – and that’s the history I’ll tell.
Friday, May 2, 2008
"Mr Buffet has to answer to his shareholders every year, GIC doesn't have to"
MM Lee said that in an interview by the local newspapers when consulted on whether GIC (and Temasek anyway) can afford to be more transparent. Citing 'strategic considerations' and for fear of 'dependency on pay outs' from the Government, MM Lee said it's best not to be too transparent. To be fair, Buffett is my idol, as to many millions or even billions of other people as well. And there may be a certain bias. But I do have many more questions to ask regarding GIC.
While I can understand the part on 'strategic considerations', I wonder whether it justifies the issue on transparency. While certain hedge funds and venture capitalists or private equity firms are indeed not transparent to the external world, they are fully answerable to their stakeholders. So who are the stakeholders of GIC funds amounting to more than US$300bn? You. Me. Every Singaporean. Then why aren't they answerable to us?
On the part of 'dependency' as people expects more payout: Who cultivate this dependency? While I am not complaining the government giving out cash transfers almost close to every General Elections, isn't it not the same action that is breeding more expectations from the citizens on more handouts? Admitting that it is not an easy issue to solve given the contradictory position on Singapore being a non-welfare state (to pull it from our government's lines: S'pore Inc cannot afford to offer welfare--which economically speaking is quite correct), it is a difficult yet the Government's job to ensure a balance in widening the social safety net and people's expectations. Why then are we paying them so much?
MM Lee went on to say that in comparison with the famed Berkshire Hathaway, GIC is looking at a longer term for investments. This is said so to justify the investments in the US/European banks that has registered paper losses amounting to millions of dollars for Singapore and therefore GIC will evaluate their investments in 5-10 year periods while Warren Buffett takes a shorter term view as he has to answer to his shareholders every year. This seems to insinuate GIC is far more far-sighted than Berkshire.
That statement, is fundamentally flawed. Everyone knows that Warren Buffet takes a very long term view. He likes to buy companies but rarely likes to sell. He looks for companies that can provide cashflow and more earnings indefinitely. In fact, he has held on to Coca-cola stocks longer than most people. And he does incur losses in certain areas sometimes, very much like any investor on Earth, which is clearly stated in the annual financial statements. Just that the gains are usually more than the losses. With a company racking in more than US$100bn in revenue and 1 year return of 23.297% (in USD), it would be interesting to see if GIC can even match up to that standard. To give you a perspective on how big (or how rich) Berkshire is, Berkshire's market capitalization is slightly more than US$200bn, which is almost equivalent to Singapore's GDP (PPP at 2007) .
While GIC pays millions to their board of directors (take it as the management fee--a cost my dear bloggers! for managing Singapore's funds), Warren Buffet opt to get only US$100,000 a year. Are the management in GIC liable for losses? Are their salary pegged to performance? What is the benchmark that GIC is using to evaluate performances of their management (Why would I want to pay a trader more than a million a year if he can only rack in 5% yoy return which barely covers our inflation rate)? Such information is not given to us.
In short, it is totally irresponsible to use that statement to cover up the mysterious GIC and an insult to the Oracle of Omaha.
While I can understand the part on 'strategic considerations', I wonder whether it justifies the issue on transparency. While certain hedge funds and venture capitalists or private equity firms are indeed not transparent to the external world, they are fully answerable to their stakeholders. So who are the stakeholders of GIC funds amounting to more than US$300bn? You. Me. Every Singaporean. Then why aren't they answerable to us?
On the part of 'dependency' as people expects more payout: Who cultivate this dependency? While I am not complaining the government giving out cash transfers almost close to every General Elections, isn't it not the same action that is breeding more expectations from the citizens on more handouts? Admitting that it is not an easy issue to solve given the contradictory position on Singapore being a non-welfare state (to pull it from our government's lines: S'pore Inc cannot afford to offer welfare--which economically speaking is quite correct), it is a difficult yet the Government's job to ensure a balance in widening the social safety net and people's expectations. Why then are we paying them so much?
MM Lee went on to say that in comparison with the famed Berkshire Hathaway, GIC is looking at a longer term for investments. This is said so to justify the investments in the US/European banks that has registered paper losses amounting to millions of dollars for Singapore and therefore GIC will evaluate their investments in 5-10 year periods while Warren Buffett takes a shorter term view as he has to answer to his shareholders every year. This seems to insinuate GIC is far more far-sighted than Berkshire.
That statement, is fundamentally flawed. Everyone knows that Warren Buffet takes a very long term view. He likes to buy companies but rarely likes to sell. He looks for companies that can provide cashflow and more earnings indefinitely. In fact, he has held on to Coca-cola stocks longer than most people. And he does incur losses in certain areas sometimes, very much like any investor on Earth, which is clearly stated in the annual financial statements. Just that the gains are usually more than the losses. With a company racking in more than US$100bn in revenue and 1 year return of 23.297% (in USD), it would be interesting to see if GIC can even match up to that standard. To give you a perspective on how big (or how rich) Berkshire is, Berkshire's market capitalization is slightly more than US$200bn, which is almost equivalent to Singapore's GDP (PPP at 2007) .
While GIC pays millions to their board of directors (take it as the management fee--a cost my dear bloggers! for managing Singapore's funds), Warren Buffet opt to get only US$100,000 a year. Are the management in GIC liable for losses? Are their salary pegged to performance? What is the benchmark that GIC is using to evaluate performances of their management (Why would I want to pay a trader more than a million a year if he can only rack in 5% yoy return which barely covers our inflation rate)? Such information is not given to us.
In short, it is totally irresponsible to use that statement to cover up the mysterious GIC and an insult to the Oracle of Omaha.
Thursday, April 24, 2008
PAP-The Singapore Graduate School of Taiji-ing
As many of you should have heard about the Mas Selamat Escape Incident and the explanations given by Minister Wong Kan Seng and PM Lee.
So the top guy should not be held responsible for things that go wrong at the bottom. Given that every minister does their jobs through another person (come on, you don't really think that policies are crafted by ministers do you? They have an army of scholars/economists/policy planners doing the work for them. And their job is to peruse, ask questions, and approve), they are virtually immune from any wrong doings.
"Oh this policy A is wrong?...hmm, the ministry will review it. The economy is dynamic you see..."
"Ah, some terrorist bombed Ang Mo Kio MRT station! Why aren't the public more observing? Singaporeans, a complacent lot."
Then, the ministers claimed credit for anything good.
"Thanks to our very capable government, we manage to minimize the impact from the financial crisis." (Hey with more than US$500 bn in reserves, there are more than one way to mitigate economic downturn.)
"Our government is far sighted in planning for the future of our citizens. Therefore the extension of the CPF is absolutely necessary." -- What good planning. It makes good economical sense which I agree absolutely. Then you realize their far-sightedness is only based on theory but complacent on current establishments such as silly things on not checking that there's no grills in the toilet of the Detention Camp that Mas Selamat escaped from.
It's always easy to blame the government for anything. But at least be accountable. And responsible. When is the last time ISU did an audit of their operations and all important dentention camps?
To the government:
Since we are paying you millions of dollars a year, I think it's rather fair for us to expect what was being paid out. When you pay $5000 for a watch, you at least expect a Rolex, not a Swatch. You said you guys are an extraordinary lot of people. So at least match up the price. We aren't demanding a lot ya know. To use a financial analogy, I think you are over-valued. And maybe we should start selling ya in the next GE.
Thorough explanations? I can't sense the sincerity in apology. Well trained they are in the Singapore Graduate School of Tai-ji-ing.
So the top guy should not be held responsible for things that go wrong at the bottom. Given that every minister does their jobs through another person (come on, you don't really think that policies are crafted by ministers do you? They have an army of scholars/economists/policy planners doing the work for them. And their job is to peruse, ask questions, and approve), they are virtually immune from any wrong doings.
"Oh this policy A is wrong?...hmm, the ministry will review it. The economy is dynamic you see..."
"Ah, some terrorist bombed Ang Mo Kio MRT station! Why aren't the public more observing? Singaporeans, a complacent lot."
Then, the ministers claimed credit for anything good.
"Thanks to our very capable government, we manage to minimize the impact from the financial crisis." (Hey with more than US$500 bn in reserves, there are more than one way to mitigate economic downturn.)
"Our government is far sighted in planning for the future of our citizens. Therefore the extension of the CPF is absolutely necessary." -- What good planning. It makes good economical sense which I agree absolutely. Then you realize their far-sightedness is only based on theory but complacent on current establishments such as silly things on not checking that there's no grills in the toilet of the Detention Camp that Mas Selamat escaped from.
It's always easy to blame the government for anything. But at least be accountable. And responsible. When is the last time ISU did an audit of their operations and all important dentention camps?
To the government:
Since we are paying you millions of dollars a year, I think it's rather fair for us to expect what was being paid out. When you pay $5000 for a watch, you at least expect a Rolex, not a Swatch. You said you guys are an extraordinary lot of people. So at least match up the price. We aren't demanding a lot ya know. To use a financial analogy, I think you are over-valued. And maybe we should start selling ya in the next GE.
Thorough explanations? I can't sense the sincerity in apology. Well trained they are in the Singapore Graduate School of Tai-ji-ing.
Sunday, April 6, 2008
Higher fees to watch EPL/Champions League in Singapore
I haven't been posting, coz time is rather tight. But still, this fine Sunday afternoon prompt an inner side of me to post some stuff, just as an escape from the stress of life (laugh).
The Sunday Times Headlines screams "Football fans bear brunt of pay-TV battle' (actually, the headline SHOW ME THE MONEY on Ronald Susilo who might take legal action against his ex-fiancee Li Jiawei attracts my attention more. Haha).
While it is generally true that a more competitive market generally contributes to more consumer welfare, we have to analyze deeper than the simple competitive market model. While having another competitor offering similar products generally shift out the supply curve, the thing is, having another bidder actually increases the demand for the same supplier of the product -- the EPL and Champions League content. In the end, they end up paying more to win the bids of the content and in the end pass on the higher costs on consumers due to inelastic demand curve (and supposedly elastic supply). Plus the bundling pricing strategy captures a higher producer surplus (since most people who pay the bundle only wants to watch football more than the rest but has to pay 'extra' for the other contents).
The ultimate winners are the football clubs and football players (and the distributor of football contents) since they command high monopolistic power. It' s no wonder football stars are earning so much money.
The Sunday Times Headlines screams "Football fans bear brunt of pay-TV battle' (actually, the headline SHOW ME THE MONEY on Ronald Susilo who might take legal action against his ex-fiancee Li Jiawei attracts my attention more. Haha).
While it is generally true that a more competitive market generally contributes to more consumer welfare, we have to analyze deeper than the simple competitive market model. While having another competitor offering similar products generally shift out the supply curve, the thing is, having another bidder actually increases the demand for the same supplier of the product -- the EPL and Champions League content. In the end, they end up paying more to win the bids of the content and in the end pass on the higher costs on consumers due to inelastic demand curve (and supposedly elastic supply). Plus the bundling pricing strategy captures a higher producer surplus (since most people who pay the bundle only wants to watch football more than the rest but has to pay 'extra' for the other contents).
The ultimate winners are the football clubs and football players (and the distributor of football contents) since they command high monopolistic power. It' s no wonder football stars are earning so much money.
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