Singapore Stock Market News

For those who are young, do take note that the faster you shed the world of your idealism, the better you'll be. I took 30 yrs or so to realise that the world is built on relationships. It's that simple. I give you a very recent example of how not to follow the rules.

My gf wanted to get a new phone from a telco. Having convinced myself that life is truly negotiable, I told her to call them up and asked them to entice her to recontract under them again. After a truly annoying automated voice behind their helpline, she finally got to talk to a real person. Alas, the person is not in charge of retention, hence she's forwarded to an officer in their retention department after another several minutes of listening to their annoying advertisments.




After telling the officer that another competitor telco is offering this price for this particular handset, the officer immediately offered a handphone voucher of $60. Not satisfied with this, she pressed on further to ask for more discounts (specifically, gf wanted at least $100 voucher to match the competitor's offer), after which the officer mentioned that she will have to check with her higher ups. Another waiting time for 2-3 mins. In between this break, I told my gf that she should negotiate until the other party reached breaking point.

So after consulting with the superiors, the officer said ok to the $100 handphone voucher. I whispered to her for an extension of the caller ID (it's free for 3 months, gf is asking for free 1 yr). Another consultation with the officer's superiors, another 2-3 mins of listening to advertisments. This time, she met with a no. Well, that's not bad right? Getting a $100 handphone voucher by just calling up them and asking for it. If someone just sign up with them as advertised in the brochures or adverts, they would have to pay an extra $100!

So don't this incident teach us an important lesson? Advertised rates are for those who didn't know better. Look for under table, behind table, closed door, behind doors deal by negotating. Oh, don't settle for what is offered. Life is negotiable, remember it!

Happy Christmas and a Merry new year!

For those whose names are listed in the here, do take note of the following:

1. Venue of the dim sum lunch is at Suntec city, Pearl River Palace. Pearl river palace is located at Suntec convention and exhibition centre, on level 3. If you take the escalator, you need to turn to the right and walk straight into this chinese restaurant.

For those who have problems, do contact me at nine-four-three-five-eight-nine-three-zero.

2. The time of the event is at 1130am, 26th Dec 2008, a Friday. The last order is at 1400, with the restaurant closing for the lunch period at around 1500. You can leave anytime if you have other programs coming up, not a problem for me. A soft copy of the menu is here, if you wish to have a look.

3. Frankly, I'm quite surprised at the turnout of the event. Last time we held it at Vivocity, there are only 10 odd people. This time, there are almost 20 people. At this rate of growth, we'll hit 5,120 people on our 10th outing, 163, 840 people on our 15th outing and a mega turnout of 5,242,880 people on our 20th outing. Basically, we will have people from other countries joining in because Singapore's population is only 4.6 million at last count!

Due to this mega turnout, we'll have no choice but to separate the crowd into 2 tables. The restaurant staff will put us near the windows so as not to disturb the other lunch crowd, as I would expect dream to make a lot of noises with people queuing up to rub his million dollar belly and vying for createwealth8888's autograph.

The table 1 will have 9 seats and table 2 will have 10 seats. After taking into account each others' age and my understanding of your interest, I've decided to split the crowd into the 2 tables:

Table 1:

1. Createwealth8888
2. Elaine
3. Elaine's boy 1
4. Elaine's boy 2
5. Dream
6. Sharon
7. Lumiere (hohoho!)
8. KK
9. V
10. Jas (not sure if coming)

Table 2:

1. LP
2. Jade
3. Neophyte
4. Patrick Ho
5. Cheng
6. Derek
7. Gohsip
8. Akatsuki
9. San
10. R

Please feel free to change your seats as you want it, you do not necessary have to sit the way I proposed. I, for one, will be moving from one table to another just to chat with more people :)

4. Dream will bring a few bottles to share with us. Everyone should trust his taste buds on it and should try if you can :)

5. There are 18 adults and 2 kids (lastest edition is R), try not to pass me the payment there as it can be quite unsightly, hoho! Money is a bit vulgar especially when we're meeting on such joyous occasion. I'll foot the bill first, if you think it's worthwhile paying me, just foot the amount you think is good to my posb savings account 543-60484-4.

Have a great Christmas and we'll meet up soon :)

I happened to come across a copy of the famous book by Simon Sim - The Joseph Cycle (2004 edition) while browsing through the Singapore section of the national library. Much to my surprise, there are a lot of gems and treasures hidden among the singapore section, which I had always avoided till yesterday. There are old copies of company annual reports, industry and market analysis, accounting standards in singapore, local tax guide, local real estate reports and even those very old stock investment and company info for singapore context. You should go and take a look one day.

Anyway, Joseph cycle is actually a cycle that Simon Sim discovered. It bares resemblance to the biblical character Joseph, who being a slave, was made to oversee the entire Egpyt planning because he interpreted a dream by the ruling Pharoah satisfactorily. The interpretation is that for 7 years, there will be abundance, followed by another 7 years of scarcity. Simon Sim discovered that the market works pretty much on the same basis too.

Starting on 1959 where Singapore achieved independence, he counted in cycles of 14 years, with 7 years of bull and 7 years of bear runs. 1959 is regarded as the bottom by him. Here's a quick run through the years:

1959 - Cycle's bottom
1966 - Cycle's top
1973 - bottom
1980 - top
1987 - bottom
1994 - top
2001 - bottom
2008 - top
2015 - bottom
2022 - top

Here's the graphical representation overlaid on the STI chart that I did on excel. I would say that he is more and less correct on the mega trend of STI based on his 7 years of lean and 7 years of fat years.




I found a website where it was mentioned that he invested $400,000 into the market when last mentioned at 2004, which he will sell in 2007/2008. He would have made a handsome profit if he really invested in STI around 1300 in 2001 and ride the bull trend around 2007/2008 at the peak STI level of 3900 thereabouts. That's roughly 300% increment or about 16-17% compounded annually. This means that his $400,000 could become $1,200,000 - no mean feat.

Now if he is right about the Joseph cycle, then 2015 will be the bottom of the cycle. There should be some unexpected news that will change the bear phase back into the bull phase. He mentioned that the first 1 to 2 years of the bull phase (i.e. from 2015 to 2022), it will be a very quiet though the best time to buy.

A few thoughts comes immediately to mind:

1. If Simon Sim is right, then there will be more shakes in the market for another 7 years or so. This will really shake any bulls left, leaving the strongest behind. Will I be shaken out of it? People say that they are long term investors, but until the true test comes, it's all just empty talk and brave promises. Am I willing to hold for 14 years or so to ride the full potential of my investments?

2. I wonder what happened to the $400,000 investments that Simon Sim put into the market back in 2001-2004. Did he really managed to make a 300% returns by believing in his mega trend timing?

It's good to bare it all and answer the first question honestly.

DBS halt trading early this morning and rumors are flying about as to what is the actual reasons for the trading halt. I thought that DBS will be settling the troubled bonds issue today, as the relevant authorities mentioned that an answer would be made at the end of this month. But that was not the reason for the trading halt. The real reason caught me a little by surprise.

DBS announced that it is going to raise capital to the tune of SGD 4 bil by issuing rights shares to existing shareholders. Rights exercise is basically an attempt to raise capital from exisiting shareholders by granting them an entitlement to buy additional shares at a discounted price. There are a few things that are important in a rights issue, and I take this chance to share with you what I know about it.


These are the few things you need to know:

1. Rights ratio

DBS are offering rights shares at a one-for-two ratio, which means that for every two pre-rights shares that you have before ex-rights (XR), you will be entitlted to apply for one more rights issue at the rights issue price of $5.42, a discount to the last close of $9.37 today. This means that for every 2 lots of DBS shares you own before XR, you'll need to pay $5,420 to get your entitlement of 1 lot of DBS rights shares.


2. Nil paid rights

The rights shares will commence trading as 'nil-paid' rights on 6th Jan 2009. As the name 'nil-paid' suggests, it means that you haven't paid for the rights yet. The rights will trade in the open market with its own quotation and symbol. Basically this system caters for 3 types of people:


a. Those who are already shareholders at XR and do not want to pay for the rights. The thing goes like this, whether you want it or not, you'll be given the nil paid rights. If you want to subscribe to it, you can do so by accepting it and paying for it before 20th Jan 2009 (last date for acceptance). You can even subscribe to excess rights beyond what is entitled to you too, but it might not be successful. For those who do not want the nil-paid rights (i.e. do not want to accept the rights shares and pay for it), you can sell it in the open market. The last date of trading for the nil paid rights is 14th Jan, 2009. Which brings us to the next category...


b. For those shareholders who want to make sure they can get excess rights shares without bidding for it (and thus subjecting to chance), they can also buy the nil paid rights direct from the open market. Of course, if you subscribe to excess rights and bid for a chance to get it, you'll only pay $5.42 for each right. But if you buy from the open market, you have to pay the market price of the right PLUS a fixed $5.42. Might not be so cheap.

c. Those who are not DBS shareholders at XR but want to buy the nil paid rights at open market. Basically these arbitrageurs will look for opportunities to buy the rights cheaply, waiting for the nil-paid rights to become ordinary shares on 2nd Feb 2009, then profit (or lose) the difference.

However, do not be mistaken that the nil paid rights will be trading at the rights issue price of $5.42. If we take the post-rights price of DBS to be $8.37 (as mentioned in the announcement), then the nil paid rights should be trading at around $2.95 range (8.37 - 5.42 = 2.95). DO NOT assume that it's cheap - it might not be!

For example, if we buy the nil paid rights off the market at $2.90 per share (this varies according to market forces), then pay another $5.42 per share (this is fixed) to convert it to ordinary shares, our cost of each new share of DBS will be $8.32. There's no brokerage involved so that is truly our cost. If after the new shares commence trading on 2nd Feb 2009 at a price of $8.37, we basically earn $0.05 per share (8.37 - 8.32 = 0.05) excluding brokerage involved in selling. To succeed in this arbritrage opportunity, we have to guesstimate the price of DBS on 2nd Feb, then minus off 5.42. Any price lower than that is a good bargain, pre brokerage charge.


3. The theoretical post-rights price of DBS on 2nd Feb 2009

If you've been in the market for long, you'll realise that 'by right', the price can be this and that, but 'by left', all is not right. Oh well, in theory, because DBS is offering 1 new shares for every 2 existing shares, they are going to dilute their earnings and dividends by a factor of 2/3, which is quite substantial for those who are shareholders but chose not to subscribe for the rights. This means that if the earnings is say $3 per share pre-rights, the new earnings will be $2 per share post-rights. Dividends yield too, if their dividend yield per annum is say 6%, the new dividend yield will be 4%. Ouch.

Anyway, here's how to calculate the new share price of DBS when the rights shares commence trading on 2nd Feb. Today, DBS closed at $9.37, so let's use this price. The formula is:

New share price of DBS = (2 x 9.37 + 5.42) / 3

If we take DBS's closing price to be 9.85, then using the calculation, we end up with the post rights share price of DBS at 8.37 per share. However, do take note that the actual price will be swayed by more than just mathematical calculations, hence it might not be what is calculated. Be aware of the risk of arbitraging!


There's a whole lot more details that I missed out, so for those who wished to find out more, do visit my newbie's FAQ. Alternatively, you can visit the same version in this blog over here.

Now I worry about HSBC's possible capital injection through rights too. Will I be able to subscribe to it because I'm a foreign investor?