Counter Price as at March 25 ($)Book NAV as at March 31 ($)RNAV ($) Discount to RNAV (%)
Allgreen Properties 1.09 1.62 2.21 -50.7
CapitaLand 3.33 3.32 5.37 -38.0
City Developments 11.72 7.03 14.12 -17.0
Guocoland 2.42 2.14 3.74 -35.3
Keppel Land 4.45 2.97 6.17 -27.9
Wheelock Properties 1.88 2.31 2.87 -34.5
Wing Tai Holdings 1.56 2.14 2.71 -42.4
Friday, March 25, 2011
Wednesday, March 23, 2011
Jismyl Teo, Chief Executive Officer of DMX Technologies
http://www.bizdaily.com.sg
Established in 1999 and listed on the Mainboard of the Singapore
Exchange, DMX Technologies Group Limited is a leading internet
network infrastructure and digital media solutions provider in Asia
Pacific.
The group specialises in providing integrated information and
communication technologies solutions for telecom operators, cable
TV operators, mobile operators, media corporations and enterprises.
In September 2009, Japan’s second-largest telecom operator KDDI
took a 51.68-per cent stake in DMX, allowing the group to leverage on
their experience and technological offerings for greater long-term
market competitiveness.
Jismyl Teo, Chief Executive Officer of DMX, shares with Biz Daily the
group’s strategy for seizing market opportunities in the world’s
second-largest economy and across the region.
1) DMX’s gross profit margin decreased in FY2010 as a result of
its strategy to capture more market share for managed services
through the marketing of digital media and infrastructure
solutions. Kindly elaborate?
The lower gross profit margin was partly because we decided to take
on more hardware projects for both infrastructure and digital media
solutions last year. Such hardware projects typically bring in lower
margins than our services because they involve the integration of
different equipment from different vendors. This means we have to
pay the suppliers upfront first for the equipment and receive payment
from the customer only later when installation is complete.
As the hardware projects we took on in FY2010 did not involve many
services, they were relatively easy to handle. For example, a
customer might just want to buy the equipment in the current year,
and we can then cross-sell or upsell our services later. Such services
tend to bring in better margins and recurring income for us.
By taking on hardware projects first, we can better understannd the
customer’s equipment needs. This raises our chances of increasing
our value-add to customers on a vertical basis where we can establish a more direct relationship with them and try to cross-sell other
services to them.
If we expect the gross margin for a project to be less than our acceptable level, we would usually walk away from the project. But last year,
we relaxed this requirement a little to first establish a relationship with
customers through hardware projects ahead of our competitors. By
sacrificing a little margin for hardware projects, we can better crosssell or upsell our higher-margin services later for the equipment that
we installed
We also had excess working capital last year from KDDI’s acquisition
of shares in our company in 2009, which allowed us to take on more
hardware projects. Normally, when we have lower levels of available
capital, we would try not to get involved in such projects.
Overall, we continue to focus more on providing services because
they bring in more recurring income for us and require less upfront
hardware investment.
2) With China expected to digitise all cable TV content by 2015,
what do you think of the country’s market potential in this area?
We have been providing digital media solutions in China since 2004.
From 2004 to 2007, the pace of migrating from analogue to digital
cable TV was slower than that currently. That was because cable
operators had to overcome funding and customer charging issues,
and people were still not used to such digital technology. As many
Chinese digital operators were government owned, they were under
many controls on things such as basic charges. But because the
government sought to overcome some of these issues with cable
operators, the shift to digital cable TV was faster from 2006 to 2008.
In fact, the number of digital cable TV subscribers in China is
expected to jump from some 82 million in 2010 to 165 million by 2015.
Once cable TV operators digitise, they start to look at value-added
services as they will then be competing with telecom and mobile
operators. Of course, value-added services can be immediately
launched in regions that are already fully digitised. Jiangsu and Shandong are among the faster regions in China to digitise.
3) You mentioned that you will focus on developing next generation IT software and solutions for growth areas such as cloud
computing in India. As your Bangalore subsidiary is still very
new, how do you plan to achieve recurring sources of revenues
and higher margins in the Indian market?
Before we opened the Bangalore office, we had already outsourced
software development for IT infrastructure projects to a group of
highly experienced people based in India. We invited them to join us
and operate from our Bangalore office instead. Being part of a bigger
organisation like DMX solved their funding issue and gave them
greater flexibility to increase headcount and go after customers that
they are already cultivating. Now, they not only support our software
development for India, but also for our international operations. So it
was mutually beneficial for both parties.
Unlike large organisations, SMEs may find it difficult to maintain a
large IT department to ensure information security. That’s why they
might want to outsource the information security function.
We have set up a security operations centre in Bangalore to help
SME customers manage their information security services. For example, the enterprise might engage DMX to help monitor its
network for security threats.
While we also have another software development arm in China, that
team does software development separately for our China operations
as its focus is on digital media.
4) You said KDDI provides the technological advantage that
allows DMX to differentiate itself from competitors by launching
value-added services (VAS) with high barriers to entry. How is
this so?
KDDI already developed mobile VAS for the market in Japan. In fact,
the mobile VAS market in Japan is very developed compared with
other Asian countries.
For example, their mobile point-of-sales service is not found in many
countries, not even in China. So this is a technology we can adopt
from KDDI. Then, we can localise the interface and language for use
in China, and talk to local operators to launch the service there.
Another example is location-based services for children and the
elderly. While such services are promoted in China, they lack
accuracy there. As KDDI’s system is much more accurate, it’s easier
for us to localise their technology for the Chinese market.
Such an adoptive approach saves us technological development time
although we still need to localise the technology.
5) What impact will the recent earthquake in Japan have on your
businesses in the region?
While it may affect KDDI and other businesses in Japan, we feel it
won’t impact us much directly as we don’t have any operations in the
country. However, we are more concerned with the nuclear crisis that
arose from the earthquake. It’s still too early to tell how this crisis will
affect us in the short term and we are still currently proceeding with
our operations as normal.
People across Asia are scared of the nuclear crisis. Consequently,
regional enterprise customers may scale back their IT investments,
but I cannot say this will happen with certainty. All I can say is the
nuclear issue’s impact on market sentiment may affect the capital
expenditure of enterprises.
6) Is DMX involved with KDDI in providing data centre services to
enterprise customers?
Our relationship with KDDI started sometime in 2009. KDDI operates
data centres, while DMX helps establish the network infrastructure for
customers’ data centres. We do not build the physical facility, but we
help to link up the different equipment in the data centre for customers.
Of course, there are also customers that use KDDI’s data centres for
business continuity. It depends on what the customer wants.
While we do not sell data centre services directly to our customers,
we offer them the option of leveraging on KDDI’s data centre services
if they wish to do so.
We are also working closely with KDDI to offer value-added services
with their data centres such as virtualisation, information security
services, or business continuity solutions. DMX will launch and
market such services jointly with KDDI.
7) As cyber threats are constantly evolving, how do your information security solutions keep up with them?
Our information security engineers need to constantly keep up with
the latest developments in the US through contact with suppliers
based there. We also need to explain to customers to help them
understand cyber threats.
While the suppliers provide the software or equipment for information
security, we need to know how the technologies work and understand
the cyber vulnerabilities on the customer’s side. This allows us to
propose appropriate security solutions for the customer.
Established in 1999 and listed on the Mainboard of the Singapore
Exchange, DMX Technologies Group Limited is a leading internet
network infrastructure and digital media solutions provider in Asia
Pacific.
The group specialises in providing integrated information and
communication technologies solutions for telecom operators, cable
TV operators, mobile operators, media corporations and enterprises.
In September 2009, Japan’s second-largest telecom operator KDDI
took a 51.68-per cent stake in DMX, allowing the group to leverage on
their experience and technological offerings for greater long-term
market competitiveness.
Jismyl Teo, Chief Executive Officer of DMX, shares with Biz Daily the
group’s strategy for seizing market opportunities in the world’s
second-largest economy and across the region.
1) DMX’s gross profit margin decreased in FY2010 as a result of
its strategy to capture more market share for managed services
through the marketing of digital media and infrastructure
solutions. Kindly elaborate?
The lower gross profit margin was partly because we decided to take
on more hardware projects for both infrastructure and digital media
solutions last year. Such hardware projects typically bring in lower
margins than our services because they involve the integration of
different equipment from different vendors. This means we have to
pay the suppliers upfront first for the equipment and receive payment
from the customer only later when installation is complete.
As the hardware projects we took on in FY2010 did not involve many
services, they were relatively easy to handle. For example, a
customer might just want to buy the equipment in the current year,
and we can then cross-sell or upsell our services later. Such services
tend to bring in better margins and recurring income for us.
By taking on hardware projects first, we can better understannd the
customer’s equipment needs. This raises our chances of increasing
our value-add to customers on a vertical basis where we can establish a more direct relationship with them and try to cross-sell other
services to them.
If we expect the gross margin for a project to be less than our acceptable level, we would usually walk away from the project. But last year,
we relaxed this requirement a little to first establish a relationship with
customers through hardware projects ahead of our competitors. By
sacrificing a little margin for hardware projects, we can better crosssell or upsell our higher-margin services later for the equipment that
we installed
We also had excess working capital last year from KDDI’s acquisition
of shares in our company in 2009, which allowed us to take on more
hardware projects. Normally, when we have lower levels of available
capital, we would try not to get involved in such projects.
Overall, we continue to focus more on providing services because
they bring in more recurring income for us and require less upfront
hardware investment.
2) With China expected to digitise all cable TV content by 2015,
what do you think of the country’s market potential in this area?
We have been providing digital media solutions in China since 2004.
From 2004 to 2007, the pace of migrating from analogue to digital
cable TV was slower than that currently. That was because cable
operators had to overcome funding and customer charging issues,
and people were still not used to such digital technology. As many
Chinese digital operators were government owned, they were under
many controls on things such as basic charges. But because the
government sought to overcome some of these issues with cable
operators, the shift to digital cable TV was faster from 2006 to 2008.
In fact, the number of digital cable TV subscribers in China is
expected to jump from some 82 million in 2010 to 165 million by 2015.
Once cable TV operators digitise, they start to look at value-added
services as they will then be competing with telecom and mobile
operators. Of course, value-added services can be immediately
launched in regions that are already fully digitised. Jiangsu and Shandong are among the faster regions in China to digitise.
3) You mentioned that you will focus on developing next generation IT software and solutions for growth areas such as cloud
computing in India. As your Bangalore subsidiary is still very
new, how do you plan to achieve recurring sources of revenues
and higher margins in the Indian market?
Before we opened the Bangalore office, we had already outsourced
software development for IT infrastructure projects to a group of
highly experienced people based in India. We invited them to join us
and operate from our Bangalore office instead. Being part of a bigger
organisation like DMX solved their funding issue and gave them
greater flexibility to increase headcount and go after customers that
they are already cultivating. Now, they not only support our software
development for India, but also for our international operations. So it
was mutually beneficial for both parties.
Unlike large organisations, SMEs may find it difficult to maintain a
large IT department to ensure information security. That’s why they
might want to outsource the information security function.
We have set up a security operations centre in Bangalore to help
SME customers manage their information security services. For example, the enterprise might engage DMX to help monitor its
network for security threats.
While we also have another software development arm in China, that
team does software development separately for our China operations
as its focus is on digital media.
4) You said KDDI provides the technological advantage that
allows DMX to differentiate itself from competitors by launching
value-added services (VAS) with high barriers to entry. How is
this so?
KDDI already developed mobile VAS for the market in Japan. In fact,
the mobile VAS market in Japan is very developed compared with
other Asian countries.
For example, their mobile point-of-sales service is not found in many
countries, not even in China. So this is a technology we can adopt
from KDDI. Then, we can localise the interface and language for use
in China, and talk to local operators to launch the service there.
Another example is location-based services for children and the
elderly. While such services are promoted in China, they lack
accuracy there. As KDDI’s system is much more accurate, it’s easier
for us to localise their technology for the Chinese market.
Such an adoptive approach saves us technological development time
although we still need to localise the technology.
5) What impact will the recent earthquake in Japan have on your
businesses in the region?
While it may affect KDDI and other businesses in Japan, we feel it
won’t impact us much directly as we don’t have any operations in the
country. However, we are more concerned with the nuclear crisis that
arose from the earthquake. It’s still too early to tell how this crisis will
affect us in the short term and we are still currently proceeding with
our operations as normal.
People across Asia are scared of the nuclear crisis. Consequently,
regional enterprise customers may scale back their IT investments,
but I cannot say this will happen with certainty. All I can say is the
nuclear issue’s impact on market sentiment may affect the capital
expenditure of enterprises.
6) Is DMX involved with KDDI in providing data centre services to
enterprise customers?
Our relationship with KDDI started sometime in 2009. KDDI operates
data centres, while DMX helps establish the network infrastructure for
customers’ data centres. We do not build the physical facility, but we
help to link up the different equipment in the data centre for customers.
Of course, there are also customers that use KDDI’s data centres for
business continuity. It depends on what the customer wants.
While we do not sell data centre services directly to our customers,
we offer them the option of leveraging on KDDI’s data centre services
if they wish to do so.
We are also working closely with KDDI to offer value-added services
with their data centres such as virtualisation, information security
services, or business continuity solutions. DMX will launch and
market such services jointly with KDDI.
7) As cyber threats are constantly evolving, how do your information security solutions keep up with them?
Our information security engineers need to constantly keep up with
the latest developments in the US through contact with suppliers
based there. We also need to explain to customers to help them
understand cyber threats.
While the suppliers provide the software or equipment for information
security, we need to know how the technologies work and understand
the cyber vulnerabilities on the customer’s side. This allows us to
propose appropriate security solutions for the customer.
Buffett Sees Global Growth Over Next Yea
Source: Reuter
Billionaire Warren Buffett, who is looking to invest in large countries
such as China, India and Brazil, said on Wednesday he expected
global output to rise "significantly" over the next year.
On his first visit to India, the 80-year-old US investor said he was
unlikely to enter the country's automobile market, which is one of the
world's fastest growing.
"It's unlikely I would go into that (autos) myself. For one thing, the
ownerships are pretty well established in that field," he said in an
interaction with executives on India's CNBC-TV18.
His Berkshire Hathaway Inc holds a 10 per cent stake in BYD Co Ltd,
a Chinese car maker that also makes rechargeable batteries and cell
phone components.
Buffett, who is yet to name a successor to take over his US$200-
billion empire, skirted questions on his succession plan but praised
Berkshire veteran Ajit Jain for smoothly running much of the
company's insurance business.
"We have a clear succession plan at Berkshire Hathaway, we just
haven't announced it yet," he said.
Buffett was in Bangalore to visit the local arm of TaeguTec, a unit of
Israeli metal-cutting tool maker ISCAR Metalworking, in which
Berkshire has a majority stake.
Ranked the world's third-richest man by Forbes magazine, he is also
in India to launch Berkshire's insurance selling portal and is scheduled to meet policyholders in New Delhi later this week in an event
advertised as "Wit, Wisdom, Warren."
Earlier this month, Berkshire marked its entry into the insurance
sector in Asia's third-largest economy as a corporate agent for India's
Bajaj Allianz General Insurance.
On Tuesday, Buffett had said he was looking to invest in large countries, but added that restrictions on foreign ownership in India's insurance industry could act as a deterrent in the sector.
Billionaire Warren Buffett, who is looking to invest in large countries
such as China, India and Brazil, said on Wednesday he expected
global output to rise "significantly" over the next year.
On his first visit to India, the 80-year-old US investor said he was
unlikely to enter the country's automobile market, which is one of the
world's fastest growing.
"It's unlikely I would go into that (autos) myself. For one thing, the
ownerships are pretty well established in that field," he said in an
interaction with executives on India's CNBC-TV18.
His Berkshire Hathaway Inc holds a 10 per cent stake in BYD Co Ltd,
a Chinese car maker that also makes rechargeable batteries and cell
phone components.
Buffett, who is yet to name a successor to take over his US$200-
billion empire, skirted questions on his succession plan but praised
Berkshire veteran Ajit Jain for smoothly running much of the
company's insurance business.
"We have a clear succession plan at Berkshire Hathaway, we just
haven't announced it yet," he said.
Buffett was in Bangalore to visit the local arm of TaeguTec, a unit of
Israeli metal-cutting tool maker ISCAR Metalworking, in which
Berkshire has a majority stake.
Ranked the world's third-richest man by Forbes magazine, he is also
in India to launch Berkshire's insurance selling portal and is scheduled to meet policyholders in New Delhi later this week in an event
advertised as "Wit, Wisdom, Warren."
Earlier this month, Berkshire marked its entry into the insurance
sector in Asia's third-largest economy as a corporate agent for India's
Bajaj Allianz General Insurance.
On Tuesday, Buffett had said he was looking to invest in large countries, but added that restrictions on foreign ownership in India's insurance industry could act as a deterrent in the sector.
Saturday, March 19, 2011
Friday, March 18, 2011
The five days that shook the market
REMISIER Chew sat numb at his desk, staring at his trading screen in disbelief.
Out to lunch for an hour, he had returned to his office in Raffles Place last Monday to find the local stock market nose-diving in an almost unimaginable tailspin.
His screen was awash in a sea of red, with blue chip stocks such as SingTel and DBS Group Holdings buckling badly under a tremendous selling onslaught.
What started as a trickle of sell orders in the morning had burgeoned several- fold as waves of selling drove the Straits Times Index (STI) down by a sickening 80 points in a matter of minutes.
By the end of the day, the STI had lost 187.1 points to end at 2,917.15, its worst one-day drop since Black Monday in October 1987 - even worse than the aftermath of the Sept 11 attacks. About $36 billion of Singapore share value was wiped out, while globally, the loss was about US$2.4 trillion (S$3.4 trillion).
'It was like the world was coming to an end. I wasn't sure if I should cut my losses or hold my position,' recalls Mr Chew, who declined to give his full name. He saw his paper losses balloon to many thousands of dollars.
RELATED LINKS
A global roller coaster ride
For the rest of Monday, and then again on Tuesday, he stood by horrified as a hapless witness to a savaging of local stocks. The same carnage was seen on bourses around the region, such as in Hong Kong, China, Australia, India and Tokyo, and in many other key global markets. Big money was lost with breathtaking speed.
'Some of my remisier friends lost at least half a million dollars during those two days,' Mr Chew added.
OCBC Securities in Church Street was uncharacteristically quiet on Monday and Tuesday, devoid of the regular retirees who typically spend hours hogging the computer terminals at the branch, trading stocks each day.
They had either sold their holdings and ducked for cover, or were just holding on and praying for better days. Tellingly, most of the activity was centred around the cashier, where investors who had borrowed money to buy their shares faced 'margin calls'. This is where they are forced to sell their shares or top up their loans with extra cash - as the value of shares plummeted.
'Some of their faces were green,' said a 60-year-old retiree who wanted to be known only as Mr Lo. 'If anyone tells you they're not affected, they're probably lying. You can't jump into a pool and still be dry.'
Another bruised investor, Mr Vincent Tay, 30, regrets not cashing out when the market peaked last November.
'I would've made a tidy profit of $10,000 but I was greedy,' said the businessman who has invested mostly in Singapore-listed China firms such as Synear Food Holdings, China Hongxing and Yangzijiang Shipbuilding.
His stocks are now worth half their original $50,000 value.
In the frantic downward spiral, the margin calls escalated as investors dumped shares. And with no buyers on the horizon, the steep sell-offs got worse and worse. One trader said the frenetic selling was a lethal cocktail of fear and panic.
'There were rumours circulating, such as that about Chinese banks hiding their losses. People didn't care if they were true or not, as they kept throwing shares away,' Mr Chew said.
Another witness to the nerve-jangling plunges was DBS Asset Management's senior portfolio manager and equities strategist Peter Chiang, who was besieged by phone calls from clients seeking reassurance.
'I never found myself so popular,' said Mr Chiang, adding that a key concern was whether the firm had enough cash on hand to pay investors wanting to redeem battered unit trust holdings.
Still, amid the maelstrom, some seasoned investors stayed calm. Renowned commodities trader Jim Rogers, 65, who moved to Singapore recently, was unflustered as the markets were tanking.
'It didn't take a genius to figure out it was going to happen. Things are going to get worse in a year or two in most financial markets, not just in Singapore. But Singapore is going to be less affected than most financial markets,' said Mr Rogers, who spent the morning at his gym, then ferried his four-year old daughter Happy to school.
But for most in the investment world, explaining the brutal sell-down was no easy matter. Yes, there were worries over a United States recession in the wake of a crisis in the US mortgage market brought about by imprudent lending.
The US, the biggest economy, is a vital export market for Asian markets. If US consumers slow their spending, that means trouble.
But this scenario had been unfolding for months, and there had been no recent dramatic news to explain the sudden slump.
Another remisier, who wanted to be known only as Mr Tan, said that back in 2001, it had been simple enough to explain to clients why markets were hammered after the terrorist attacks. But this time, it was much harder to pinpoint a specific cause.
Searching for an explanation, some traders attributed the sell-down to hedge funds - powerful private investment vehicles with billions of cash at their disposal. These funds were trimming their positions to raise cash to cope with redemption calls over in the US, which was closed for a public holiday on Monday.
Others said US President George W. Bush's stimulus package announced the previous Friday to shore up the ailing US economy was such a disappointment that it triggered Monday's plunge.
Whatever the case, with so much uncertainty in the market, even experienced traders panicked. Said a trader: 'Mid-afternoon (on Monday), when the index fell below the 3,000 support level, many people were hit badly. Institutional traders lost a lot of money.'
Mr Chew, like many of his peers, went home drained and shaken from the day's activity, dreading what Tuesday might bring. Wrung out from the day's drama, many money managers still ploughed on through the night when foreign markets are open.
Mr Julian Sandt, chief executive of fund management firm Orchid Capital, kept watching the news at home, as European markets were well down when they opened in the afternoon. 'I slept but it was less than normal, because you try to follow and watch the situation intently.'
As widely anticipated, Tuesday was no better, as Asian shares dived for a second straight day. 'The mood was so bearish. I was just lying low and staying out of the market, waiting for it to be all over,' Mr Chew said.
Just after lunch, the STI was down 171 points. Some traders were getting anxious, but there were also bargain-hunters who were drawn out by what appeared to be cheap-as-chips prices.
'As value investors, we're driven by the companies' worth and fundamentals. When prices fall, it gives us a chance to buy them,' said Deutsche Asset Management portfolio manager Sam Hanbury, who remained unfazed by the market slump.
Still, there were others who were more hesitant about sinking remaining funds into stocks, preferring a cautious stance.
Fund manager Lion Capital's chief executive Daniel Chan said: 'In terms of valuation levels, the Asian markets were starting to look rather attractive but one needed to be convinced that the Asian growth story won't be seriously derailed if the worst were to happen.'
The STI later trimmed its losses to close only 50 points lower at 2,866.55. The recovery came after late-afternoon rumours - which later turned out to be true - of a US interest rate cut.
The Federal Reserve's dramatic and unusually large 0.75 of a percentage point cut in interest rates after the Asian market closed on Tuesday had a big impact on global markets as stocks started to bounce back - albeit unevenly, and with continuing volatility. The cut means loans to businesses and consumers are cheaper - and this boosts confidence.
While fear certainly overcame markets on Monday and Tuesday, the rate cut after that 'stimulated' Asian markets, noted Mr Elan Cohen, JP Morgan Private Bank's senior portfolio manager.
The roller-coaster rebound during the rest of the week allowed the STI to claw back all of the losses suffered during those two days.
'The speculators have dried up for the moment as people are not so gungho as to go into the market,' Mr Tan said.
He said that he would lie low during this volatile period and stay out of trading shares until there is more clarity about the direction the market will take.
The two-day sell-down was alarming for many inexperienced investors - but those with more experience tended to look at the big picture.
'If you're a trader, you'll buy at these levels, and sell at 10 per cent or 15 per cent higher,' said the chief investment officer of Fortis Private Banking Singapore, Mr Lim Kok Boon.
'If you're overexposed, you'll look at the next two weeks for the bounce of the market to re-adjust your positions. If you're long-term, you'll buy part of the exposure now, and see what happens in the next few months, weighing in economic data and policy response.'
Mr Rogers expects the market to go down further. 'The market likes rate cuts, the market likes the fact that the Federal Reserve is flooding the world with money, but I'm saying it's false hope.'
He said he is 'waiting for a rally, and then sell short more investment banks and more financial institutions'.
Short-selling is when an investor stakes his money on a particular share falling in price. The investor borrows a share (on payment of a borrowing fee), sells it and hopes to be able to buy it back in the future at a cheaper price.
Mr Rogers said the worst is not over. 'Once you have lots of fear, then we're going to start hitting the bottom, but I've not seen much fear yet.'
By Gabriel Chen Jan 27, 2008
Out to lunch for an hour, he had returned to his office in Raffles Place last Monday to find the local stock market nose-diving in an almost unimaginable tailspin.
His screen was awash in a sea of red, with blue chip stocks such as SingTel and DBS Group Holdings buckling badly under a tremendous selling onslaught.
What started as a trickle of sell orders in the morning had burgeoned several- fold as waves of selling drove the Straits Times Index (STI) down by a sickening 80 points in a matter of minutes.
By the end of the day, the STI had lost 187.1 points to end at 2,917.15, its worst one-day drop since Black Monday in October 1987 - even worse than the aftermath of the Sept 11 attacks. About $36 billion of Singapore share value was wiped out, while globally, the loss was about US$2.4 trillion (S$3.4 trillion).
'It was like the world was coming to an end. I wasn't sure if I should cut my losses or hold my position,' recalls Mr Chew, who declined to give his full name. He saw his paper losses balloon to many thousands of dollars.
RELATED LINKS
A global roller coaster ride
For the rest of Monday, and then again on Tuesday, he stood by horrified as a hapless witness to a savaging of local stocks. The same carnage was seen on bourses around the region, such as in Hong Kong, China, Australia, India and Tokyo, and in many other key global markets. Big money was lost with breathtaking speed.
'Some of my remisier friends lost at least half a million dollars during those two days,' Mr Chew added.
OCBC Securities in Church Street was uncharacteristically quiet on Monday and Tuesday, devoid of the regular retirees who typically spend hours hogging the computer terminals at the branch, trading stocks each day.
They had either sold their holdings and ducked for cover, or were just holding on and praying for better days. Tellingly, most of the activity was centred around the cashier, where investors who had borrowed money to buy their shares faced 'margin calls'. This is where they are forced to sell their shares or top up their loans with extra cash - as the value of shares plummeted.
'Some of their faces were green,' said a 60-year-old retiree who wanted to be known only as Mr Lo. 'If anyone tells you they're not affected, they're probably lying. You can't jump into a pool and still be dry.'
Another bruised investor, Mr Vincent Tay, 30, regrets not cashing out when the market peaked last November.
'I would've made a tidy profit of $10,000 but I was greedy,' said the businessman who has invested mostly in Singapore-listed China firms such as Synear Food Holdings, China Hongxing and Yangzijiang Shipbuilding.
His stocks are now worth half their original $50,000 value.
In the frantic downward spiral, the margin calls escalated as investors dumped shares. And with no buyers on the horizon, the steep sell-offs got worse and worse. One trader said the frenetic selling was a lethal cocktail of fear and panic.
'There were rumours circulating, such as that about Chinese banks hiding their losses. People didn't care if they were true or not, as they kept throwing shares away,' Mr Chew said.
Another witness to the nerve-jangling plunges was DBS Asset Management's senior portfolio manager and equities strategist Peter Chiang, who was besieged by phone calls from clients seeking reassurance.
'I never found myself so popular,' said Mr Chiang, adding that a key concern was whether the firm had enough cash on hand to pay investors wanting to redeem battered unit trust holdings.
Still, amid the maelstrom, some seasoned investors stayed calm. Renowned commodities trader Jim Rogers, 65, who moved to Singapore recently, was unflustered as the markets were tanking.
'It didn't take a genius to figure out it was going to happen. Things are going to get worse in a year or two in most financial markets, not just in Singapore. But Singapore is going to be less affected than most financial markets,' said Mr Rogers, who spent the morning at his gym, then ferried his four-year old daughter Happy to school.
But for most in the investment world, explaining the brutal sell-down was no easy matter. Yes, there were worries over a United States recession in the wake of a crisis in the US mortgage market brought about by imprudent lending.
The US, the biggest economy, is a vital export market for Asian markets. If US consumers slow their spending, that means trouble.
But this scenario had been unfolding for months, and there had been no recent dramatic news to explain the sudden slump.
Another remisier, who wanted to be known only as Mr Tan, said that back in 2001, it had been simple enough to explain to clients why markets were hammered after the terrorist attacks. But this time, it was much harder to pinpoint a specific cause.
Searching for an explanation, some traders attributed the sell-down to hedge funds - powerful private investment vehicles with billions of cash at their disposal. These funds were trimming their positions to raise cash to cope with redemption calls over in the US, which was closed for a public holiday on Monday.
Others said US President George W. Bush's stimulus package announced the previous Friday to shore up the ailing US economy was such a disappointment that it triggered Monday's plunge.
Whatever the case, with so much uncertainty in the market, even experienced traders panicked. Said a trader: 'Mid-afternoon (on Monday), when the index fell below the 3,000 support level, many people were hit badly. Institutional traders lost a lot of money.'
Mr Chew, like many of his peers, went home drained and shaken from the day's activity, dreading what Tuesday might bring. Wrung out from the day's drama, many money managers still ploughed on through the night when foreign markets are open.
Mr Julian Sandt, chief executive of fund management firm Orchid Capital, kept watching the news at home, as European markets were well down when they opened in the afternoon. 'I slept but it was less than normal, because you try to follow and watch the situation intently.'
As widely anticipated, Tuesday was no better, as Asian shares dived for a second straight day. 'The mood was so bearish. I was just lying low and staying out of the market, waiting for it to be all over,' Mr Chew said.
Just after lunch, the STI was down 171 points. Some traders were getting anxious, but there were also bargain-hunters who were drawn out by what appeared to be cheap-as-chips prices.
'As value investors, we're driven by the companies' worth and fundamentals. When prices fall, it gives us a chance to buy them,' said Deutsche Asset Management portfolio manager Sam Hanbury, who remained unfazed by the market slump.
Still, there were others who were more hesitant about sinking remaining funds into stocks, preferring a cautious stance.
Fund manager Lion Capital's chief executive Daniel Chan said: 'In terms of valuation levels, the Asian markets were starting to look rather attractive but one needed to be convinced that the Asian growth story won't be seriously derailed if the worst were to happen.'
The STI later trimmed its losses to close only 50 points lower at 2,866.55. The recovery came after late-afternoon rumours - which later turned out to be true - of a US interest rate cut.
The Federal Reserve's dramatic and unusually large 0.75 of a percentage point cut in interest rates after the Asian market closed on Tuesday had a big impact on global markets as stocks started to bounce back - albeit unevenly, and with continuing volatility. The cut means loans to businesses and consumers are cheaper - and this boosts confidence.
While fear certainly overcame markets on Monday and Tuesday, the rate cut after that 'stimulated' Asian markets, noted Mr Elan Cohen, JP Morgan Private Bank's senior portfolio manager.
The roller-coaster rebound during the rest of the week allowed the STI to claw back all of the losses suffered during those two days.
'The speculators have dried up for the moment as people are not so gungho as to go into the market,' Mr Tan said.
He said that he would lie low during this volatile period and stay out of trading shares until there is more clarity about the direction the market will take.
The two-day sell-down was alarming for many inexperienced investors - but those with more experience tended to look at the big picture.
'If you're a trader, you'll buy at these levels, and sell at 10 per cent or 15 per cent higher,' said the chief investment officer of Fortis Private Banking Singapore, Mr Lim Kok Boon.
'If you're overexposed, you'll look at the next two weeks for the bounce of the market to re-adjust your positions. If you're long-term, you'll buy part of the exposure now, and see what happens in the next few months, weighing in economic data and policy response.'
Mr Rogers expects the market to go down further. 'The market likes rate cuts, the market likes the fact that the Federal Reserve is flooding the world with money, but I'm saying it's false hope.'
He said he is 'waiting for a rally, and then sell short more investment banks and more financial institutions'.
Short-selling is when an investor stakes his money on a particular share falling in price. The investor borrows a share (on payment of a borrowing fee), sells it and hopes to be able to buy it back in the future at a cheaper price.
Mr Rogers said the worst is not over. 'Once you have lots of fear, then we're going to start hitting the bottom, but I've not seen much fear yet.'
By Gabriel Chen Jan 27, 2008
Friday, March 4, 2011
Raising Money-Wise Kids
To become financially savvy adults, children should be taught how to be wise with money from a young age. Here are some tips for parents with kids aged between 4 and 12 years.
Play Board Games
Parents can start their pre-schoolers on the road to understanding money by playing with them board games such as Snakes & Ladders and Monopoly. This allows them to do mental calculations, hone their arithmetic and decision-making skills.
Stack Up Coins
The simple act of getting a pre-schooler to group and stack up coins helps him to understand that different coins have different values. Going further, parents can get their child to pair up coins in different combinations to get a specific amount. This will help them to familiarise themselves with various denominations and manage spare change.
Good Saving Habits
Teach a child to save and be thrifty. This is important. One way to inculcate responsibility is to give the child a cash allowance.
Make this a learning tool for him. Guide the child. He will also learn how to set priorities, make spending decisions and live within a budget. As a general guide:
60% can be spent on basic needs, like school canteen food;
10% can be saved for wants, like a toy;
20% can be saved for emergencies;
10% can be donated to charity, to foster the spirit of giving.
To make the whole experience more realistic, take the child to a bank to open a savings account and deposit the 20% savings for emergencies into it. The savings accounts under the OCBC Mighty Savers? programme give rewards like stickers to make saving more fun. Explain to your child that in the bank, the money will grow as it accrues interest. You can also encourage him to save by matching his savings dollar-for-dollar.
For older kids, the daily allowance can be given on a weekly basis if they have successfully managed the money.
Stretch the Dollar
Teach your child how to get more out of his money. For instance:
Encourage him to walk short distances instead of taking the bus
Make notebooks out of recycled paper instead of buying one
Visit the library instead of buying new books
Pack lunch instead of eating at the school canteen
Bring a water bottle to school instead of buying bottle drinks
Play Board Games
Parents can start their pre-schoolers on the road to understanding money by playing with them board games such as Snakes & Ladders and Monopoly. This allows them to do mental calculations, hone their arithmetic and decision-making skills.
Stack Up Coins
The simple act of getting a pre-schooler to group and stack up coins helps him to understand that different coins have different values. Going further, parents can get their child to pair up coins in different combinations to get a specific amount. This will help them to familiarise themselves with various denominations and manage spare change.
Good Saving Habits
Teach a child to save and be thrifty. This is important. One way to inculcate responsibility is to give the child a cash allowance.
Make this a learning tool for him. Guide the child. He will also learn how to set priorities, make spending decisions and live within a budget. As a general guide:
60% can be spent on basic needs, like school canteen food;
10% can be saved for wants, like a toy;
20% can be saved for emergencies;
10% can be donated to charity, to foster the spirit of giving.
To make the whole experience more realistic, take the child to a bank to open a savings account and deposit the 20% savings for emergencies into it. The savings accounts under the OCBC Mighty Savers? programme give rewards like stickers to make saving more fun. Explain to your child that in the bank, the money will grow as it accrues interest. You can also encourage him to save by matching his savings dollar-for-dollar.
For older kids, the daily allowance can be given on a weekly basis if they have successfully managed the money.
Stretch the Dollar
Teach your child how to get more out of his money. For instance:
Encourage him to walk short distances instead of taking the bus
Make notebooks out of recycled paper instead of buying one
Visit the library instead of buying new books
Pack lunch instead of eating at the school canteen
Bring a water bottle to school instead of buying bottle drinks
Subscribe to:
Posts (Atom)