Fergus Watch – Outlook 2012

Some of you may know, I work in the financial industry, and I usually write emails to some people for their reading entertainment. Here’s one that I wrote a while back, on my outlook of 2012. Originally sent out 26 December 2011.

One of the things I wanted to do for this email was to amalgamate some of the views I have as well as others that I have discussed with. In a way, a snippet of things that happened this year, and what it means for the year ahead. That is, the outlook for 2012.

2011, the watershed year

2011 has definitely been a watershed year in more ways than one. We have the General Elections, we have Orchard Road floodings, we have MRTs breaking down dramatically, we have numerous dead bodies found in reservoirs, we have a new record price for properties, we have our 2 Integrated Resorts, numerous new shopping malls and numerous new office buildings in the CBD. We also have Lee Kuan Yew leaving active politics. In a way, 2011 is really extraordinary. How can so many things happen in the same year? Suay? Heng? Or is the world really ending in 2012?

Complacency is a downfall of the Singapore model?

Some of the viewpoints I have been hearing about is if the Singapore model is good to go for the next decade? In the last 10 years, the biggest issue in Singapore was.. no issue. We have taken a lot of things for granted. Things were meant to work. Jobs will be available as long as you studied to the best of your ability. We will always have housing, we will always have cheap transport, we will have accessibility to anything you want to buy. This has also affected the policy makers. Why fix things if there is nothing broken? Thus, I would say the last 5 years has been one of complacency. There has been some lack of foresight and planning. After all, you pay senior management primarily for their foresight..

An example is the building of public housing and public transport. The North South Expressway was mooted to expand the transportation infrastructure from the Northern regions of Singapore into the central regions. This was announced in 2008, but it will only be completed by 2020. I’m sure there was already 1-2 years of planning before 2008, so it takes about 14 years for something like that to bear fruit. Same for public housing and many policy based problems. Senior management are paid to foresee a problem 5- 10 years, even 15 years, down the road. Complacency has set in such that a lot of stop gap measures were taken rather than true foresight planning. I am quite optimistic at the current batch of PAP MPs though. However, it will take 10 years before we can see the effect.

Policy makers and senior management are not the only group that was affected. The younger generation today have a lower threshold for tenacity. If something was too hard to do, then just quit and try something else. After all, we’re not going to starve to death. A lot of people were also seeking the get rich quick dream. Wanting to retire by 40 years old is probably quite a common phrase. Then the trick question, if everybody retires at 40, who’s still working if nobody wants kids and nobody wants foreign workers? Consumerism has become a problem for the masses. People seem to have a higher tendency to spend rather than save. A person can be earning $3k a month, but he owns a car, and eats good meals every other day. After 3 years of working, he might not have much savings. iPhone is another amazing phenomena. Most teenagers I see are very willing to spend $1k on a hp, and $300 on a Korean girl band concert ticket. Hmm.

Another group that has been conditioned by complacency is the MNCs. A lot of Government Linked Corporations (GLCs) like DBS, Singtel, Comfortdelgro, KepCorp, Capitaland, SGX has been seeking regional/international growth at the expense of not investing in Singapore. Most GLCs had the policy that they intend to reduce their dependency on Singapore by acquiring foreign companies. The good thing was that if Singapore declines, these GLCs are able to bring revenues from abroad to support the local businesses. Case in point is Comfortdelgro. Their Singapore bus and train services operates at less than 10% profit margin, but because they are the world’s second largest public transport provider, they are able to keep providing the service in Singapore (for political reasons too of course). The bad thing is that some companies have focussed so much on being overseas, that they do not spend enough money to upgrade the existing infrastructure in Singapore. An example would probably be Singtel, since they are so focussed on expanding in Australia and India now.

Growth at all cost? Or at the cost of intangibles?

The main charactistic of Singapore is that we are an open nation. A place that welcomes foreign MNCs to come and set up HQ. A place that is attractive that foreign investors want to invest. A place that is safe, friendly, and progressive. Unfortunately, that makes Singapore a externally dependent economy and thus vulnerable to shocks. At this point, Singapore is still a very attractive place. People still want to come to Singapore to work, set up businesses and invest. However, the potential to slow down is increasing, since people can go set up shop in one of the emerging nations. Singapore had the ‘grow at all cost’ model. This is a good model for a developing nation, since it is very easy to grow. However, I feel that it is likely to slow down in the next decade.

There was a big disruption with the MRTs the last few weeks. and that made me think of something: Productivity in Singapore hasn’t really gone up over the last decade, and it was more of a function of efficiency, rather than innovation. In the earlier years, MRTs typically take 3-4 minutes to get from 1 station to another. However, they have been increasing speeds gradually, such that at 1 point, it takes around 2.5 minutes per station. Everybody was very happy at the faster travelling time. When they had to slow down the train recently, I realised the problem with pushing the limits like this was the need for higher maintenance cost and the additional vibration noise that we had to endure. That too, we have gone complacent and have taken for granted that it takes 30 minutes to get from raffles place to boon lay. When it becomes 40 minutes as with last time, we complain. One of the theories of economics is that for a stable economy to increase it’s GDP, there has to be technological advancement. We haven’t really seen technological advancement on a global level for quite a while, and probably not so in Singapore, since we are on par with the world and are already at the technological barrier.

The truth is, we have a high GDP per capita, but a low GDP per capita work hour.

My view is that in the next decade, more likely than not, we would see Singapore slowing down. More maintainence work, more capital expenditure, less efficiency, more work-life balance. All these will affect our GDP, and the attractiveness of Singapore. Optimistically, we need to see our productivity in terms of GDP per capita work hour go up, before our GDP can resume it’s upward trajectory.

Developing nations hot at our tails

At this point, Singapore is still pretty high on the value chain. Keppel Corp and Semb Marine are the world’s 2 largest rig builders. Globally, Korea and Singapore makes up a large portion of the drillships and jack up rig building markets. However, China is gaining expertise fast, and probably in the next decade, we might see Korea and Singapore losing market share if they are unable to move up technologically. The problem with being at the forefront of the technological barrier, is that it is easier for someone to catch up to you. Wage differential will also be a point of issue in the next few years. A China/Indian nationality masters level student is very willing to work in Singapore for the same pay as a Singapore nationality bachelor degree holder. Like what I mentioned about tenacity earlier, I have been visiting some HNW clients recently, and a lot of them are saying that the younger generation including their own kids nowadays just don’t have the ability to stay long in a job. Most of the time, they take the low unemployment rate for granted. If they don’t like a job after 3-6 months, they can quit and find a new job. If this mindset doesn’t change in the next few years, then we would probably see the foreigners succeeding in moving to middle management.

One of the most common advice I hear, and also give, is that Singaporeans should consider working overseas. Singaporean talent is still much sought after, and MNCs overseas do pay a premium for middle managers. I have friends working in India, Shanghai, Jarkarta, Hong Kong, USA, Australia, Netherlands, etc. Most of them are decently happy, but you do lose out on family ties and the ability to settle down in Singapore.

Value of work is less than the value of asset appreciation?

Since 5 years ago, I have been saying that investments is something that all of us must do. One of the main reason is that when we grow old, we don’t want to be working because we need to. We need our money to work for us, to provide us a cashflow so that we can work for leisure, rather than being forced to work. Investments, house rentals, business incomes are just some of the ways. As we move forward, I am seeing that investment income is becoming more and more dominant. For example, I have a 30 year old friend who bought and sold a house and made $500k profit. How many years must you work in order to save $500k? Also, I know a person who owns a investment property at marina bay sail. The rental income is $4k a month. And as mentioned quite a few months back, starhub at it’s low was $1.80 therabouts. At that time, the dividend yield was around 14%. Without including the capital gains you can get, that means if you invested $200k you would have gotten $30k of annual income every year tax free.

The value of work has truely dropped such that asset appreciation is really creating a more viable source of income. But don’t get me wrong, it’s not a Singapore only problem. It is a global issue, and there will probably be no solution. The rich people will tend to get richer. And there’s no reason why they will change the system otherwise. Thus, people with extra savings must look for ways to put their money to work. Personally, I am on a lookout for property opportunities, business ideas, and stocks investment ideas. Our jobs are just a source of income, and not a source of wealth.

Consider foreign unit trusts

In Singapore, most people either invests directly into Singapore stocks, or indirectly through Singapore unit trusts. The Prudential Singapore Managed Fund, Schroders Singapore Trust are the some of the 2 biggests fund by Assets in Singapore. This strategy has worked well in the last 30 years as Singapore was in a strong growth phase. Thus, there wasn’t really much reason for us to look overseas. However, I believe some of the emerging markets are coming up strong, and we would probably see an outperformance from them soon. Some of the countries I would consider is Thailand, Vietnam, Indonesia, China, and Emerging markets like Turkey and Brazil.

For those that still prefer local equities, consider companies expanding out of Singapore into the regional markets. We should avoid companies that are forced to look back into Singapore, such as the GLCs that are politically pressured to increase their capital expenditure here.

Uncertainty in the year ahead

I believe that globally, the year ahead would be quite an uncertain one. In a sense, it is probably a test of the systems in place for the last decades. UK used to be a superpower and they lost it. The global landscape had changed a lot since the 1900s when they were the superpower. The current superpower is the USA, and more likely than not, we would see that change in our lifetimes.

2012 would be an interesting year. My view is we would see an immediate bottoming around March-June 2012, and as per my previous emails, I am accumulating my warchest to unleash onto the markets.

A quick glance, I would generally see property prices falling, COEs with a high potential of rising if the taxi companies choose to do fleet renewal next year, and stock markets generally suffering on low volume. I do hope taxi companies don’t do fleet renewal and that COE would drop, but looking at the timeline, fleet renewal is more likely to happen in 2012. I do think 2012-2013 are good times to look to starting a business though.

Have a good 2012 ahead!

Tags: Finance, LifeTips, SGPolitics, SocialEconomic

Important Information about CFA Exam Results Date

Looks like the results are coming out soon!

CFA emailed me this morning to say “We will e-mail your June 2011 Level II CFA exam results to you on Tuesday, 26 July 2011, no earlier than 9:00 am ET. Please take a moment to ensure we have the correct e-mail address on file for you”

So that means it won’t be long! I hope I pass. Of course, if you do fail, they allow registrations for the next exam starting 27 July 2011. Good luck to all candidates!

PS: I had a weird thought when I received the email though.. If they sent this notification email via email, and if the wrong email address is on file, how would you have known they notified you?

Tags: Finance

When will I get my CFA results!?

It’s finally over! After months of studying, I finally did my CFA (or also known as Chartered Financial Analyst) level 2 exams yesterday. As with always, it is bad ass!

The exams is a whole day program, consisting of 2 papers of 3 hours each. So basically it’s 9am to noon, then 2pm to 5pm. But because of the sheer number of candidates, there is a lot of admin work. One thing I actually learnt from it is how they organised it such that there is very little room for ambiguity.

It sounds like there should be 2 hours for lunch time, but in reality , we are suppose to report 1 hour before each paper, and must be seated 30 mins before it starts. So I was there before 8am, and I was already seated around 1.15pm. In any case, paper 1 seemed fairly easy, but paper 2 was definitely a killer paper!

So when is the results going to be out!?

According to CFA, the results will be out no later than 60 days after the exams according to the timeline provided. So that means it should be out by mid August the latest! Pray for me man..

I was just wonder why does it take so long just to mark MCQ, since essentially the CFA level 2 is just 120 MCQ questions with 3 choices each. Can’t take more than 2 minutes to get the marks right? So apparently I found a PDF file by CFA that shows that timeline. Sounds like a long and tedious process. Ugh.

Now I just have to wait.

Tags: Finance

PoleArt 2010 Winner – Laurence Hilsum

Just found another amazing pole dance video, or rather, as they call it ‘Pole Art’.

httpvh://www.youtube.com/watch?v=i4vKsiSEgzI

It really is an artform, compared to the traditional mindset of pole dancing.

Pretty excited to watch the upcoming event in Singapore, SG Pole Challenge, where one of the top pole dancers, Suzie Q will be in town to perform!

Tags: Finance, Performances, Youtube

Greece’s doomed generation and the good fortunes of Singaporeans

Read an article on The Guardian recently about ‘Greece’s doomed generation‘. It basically talks about how Greece is hit with all the Austerity measures imposed by IMF after they  hit the economic crisis in 2009/2010.

Somehow, the more ‘developed’ you become as a nation, the less you are willing to give up. This seems to resonate with me in the recent Singapore GE, and this article. In the 1996-1998 asian economic crisis, the Thai, Indonesian, Vietnam, even Malaysia and Singapore got hit by a sudden crash in the currencies. Thailand and Indonesian were the worst hit. IMF imposed measures and controls on the Government then in order to rein in spending. Essentially, that means they gave the reins of the economy to an external party, who’s job is just to cut your spending. The citizens of these country then went through pain, because budgets were cut, non-essential services were restrained. Now we see the same in Greece because they have fallen hard from grace. The difference is that because of a higher education level, and that they are used to the material comforts in life, there is massive protests.

I went to my favourite site, wikipedia, to look up on Greece and Singapore. It’s amazing how similar they are in terms of economy!

Their demise came out simply because of falling state revenue and increasing government expenditures. How fast the ball changes.
The  Singapore GE that just ended made me wonder. We are like Greece, with no natural resources (typically), relying on a few economic engines and largely the services industry, but otherwise, essentially nothing to fall back on. I hope I would never have to see the day that Singapore falls from grace. Before 2008, who would have thought that Greece, such a beautiful country, would fall so hard? 40% unemployment for the working class at the peak of their lives (18-24 years old) is no joke!

It has been less than 12 months since this crisis began, but little stories that illustrate the change keep bubbling up: homeless people looking for food in dustbins; friends fired without compensation, or accepting wage cuts; police officers beating up citizens who protest; schools and hospitals shutting; teachers and doctors losing their jobs; journalists censored; trade unionists persecuted; racist attacks downtown. Legality, majority, democracy and equality start to seem like odd little words.

All of a sudden, things that only a year ago happened in remote, underdeveloped places – as if to prove how lucky we were to belong in civilised Europe – are now happening here in Greece. But Greeks cannot complain, cannot react, because they are told that the crisis is their fault – even if everyone knows it cannot be just their fault.

Do spend some time to read the article here!

Tags: Finance, SocialEconomic

A simple lesson on economics, capitalism, taxes, the government, and you!

Not sure who’s the real author of this, but it’s quite a layman way of explaining tax and it’s effects.

Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh $7.
The eighth $12.
The ninth $18.
The tenth man (the richest) would pay $59.

 

So, that’s what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.”

So, now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes.

So, the first four men were unaffected. They would still eat for free. But what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his ‘fair share’?

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being ‘PAID’ to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

 

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important.

They didn’t have enough money between all of them for even half of the bill!

 

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good restaurants in Europe and the Caribbean.

Singapore’s tax structure is also pretty similar. If you earn about $2.4k and below, you probably don’t pay any tax at all. But of course, consumption taxes (like GST and ERP) are a different ball game altogether. Then again, its pretty fair to pay for something when you consume. The only thing is, how much? (And everybody’s gonna say, “as little as possible”)

Tags: Finance

Filing your income tax in Singapore

April is the month where we pay our dues. That’s right! It’s time to file our income tax!

For Singapore this year, the deadline is 15th April 2011 for paper filing, and 18th April 2011 for e-filing. Besides people who are not very savvy with computers, everybody should be doing electronic filing via the IRAS website!

As always, there is the tax calculator provided by IRAS. Main thing to note is the 20% one off personal tax rebate this year. Yay!

There’s going to be a change of tax bracket for next year’s income tax. From the table of changes, it benefits all tax payers, but the biggest benefit goes to the middle income earner. (ie, the $40k to 160k per annum chargeable income range). Another new feature this year is the estimated tax payable after you finished your e-filing. Previously, when you filed your taxes, you won’t know how much you gotta pay, until  you get the tax bill. Now, they have it displayed so that you won’t get a shock later.

My company is in the auto-inclusion scheme. So basically all the details are already electronically submitted to IRAS. On top of that, I was actually in the no-filing service. This means, I don’t even have to e-file. However, I had to include some new reliefs.

I believe we should not evade taxes. But on the other hand, we should always try to minimise our tax bill legitimately using legal methods provided for in the system. The most common ways is through incorporation of a business, and claiming of reliefs. Incorporation is probably only for the self-employed with high cash flow, else it wouldn’t make sense anyway. For individuals, we should always know what we can claim in reliefs.

Aside from parents/child/sibling/NS relief, the most common 3 for the working employee is course fee relief, donations, and SRS contribution.

I can’t remember for sure, but I think the government just increased course fee relief to $5500 per annum! That means if you attended a course that is relevant to your current work, you can claim course fee relief, and reduce your income by up to $5500. Essentially, that means they are giving you a discount on the courses you attend! If you went for a course that cost $5000, and  your top tax bracket at that point of time is 14%, thats a good 14% discount off your course.

Donations to approved charities are given a 250% tax relief. That means if you donate $1000, you get a relief of $2500. Most reputed charities are on this list. Again, no reason not to claim if you do donate regularly.

SRS or Supplementary Retirement Scheme is a form of voluntary retirement savings. This one is quite a bit of an oddball. The maximum contribution into this account is $11475 ($12750 from this year forward). The tax relief would then be the full amount contributed to SRS. If you withdraw the money from SRS after retirement age, only 50% would be subjected to tax at the prevailing rates. If you do an early withdrawal, you would need to pay tax on 100% of the amount, as well as a 5% penalty. Personally, I think this scheme would probably only benefit people earning more than $120k per annum. But then again, the benefits accrued by this scheme just doesn’t seem that enticing. Anybody has any thoughts? Probably will write more about this another day.

So if you have all your documents, receipts and donation slips, you probably can complete your e-filing in less than 15 minutes. I probably did mine in 5 minutes or less!

Just thinking about the amount of tax I pay (Barely $300 last year, and less than $1500 this year), I’m definitely deriving a lot more benefits than I paid! Thank you all you rich people for paying for my NDP fireworks and the various public venues around Singapore! As IRAS likes to say, “Thank you for your contribution to nation building”

How much taxes are you guys paying this year?

Tags: Finance

Open letter to Singapore Exchange regarding Continuous all-day trading

With regards to Singapore Exchange’s public consultation on continuous all-day trading, I have a few personal reservations about it. Below is my open letter.

Open letter to SGX by Fergus

I believe continuous all-day trading is not necessary in the Singapore market, or most other Asian stock markets in general as the benefits are not necessarily more than the disadvantages that come with it.

Unlike in US, brokerage firms play a key role in the eco-system here. In US, unless you pay top money for a full service broker, you would probably end up using a discount broker, which do not have a trading representative tied to the account. The reason why this can happen is because risk management can be calculated and computerised.

This is largely due to the difference in evolution of equities trading and trading account management. In Singapore, contra trading is common. Deposits by clients, if any, tend to be around 20% to 50% of the trading limit, as opposed to 100% in most US brokers. Thus, trading representatives play a very important role as risk managers as they are usually the ones who underwrite the credit risk of the clients.

Business in general tends to be conducted very differently in Asia as compared to the Western countries. In Asia, people tend to cultivate a more informal relationship while pursuing a business relationship. It is because of that you hear the common phrase ‘guan xi’. This is no different in Singapore. While trading and execution is a significant part of the job, trading representatives spend a large amount of time meeting up with clients over meals and having casual chats.

Besides meeting clients, trading representatives also have to juggle with attending analyst briefings, luncheon presentations, or simply just catching up with the latest news. For a trading representative who is committed to providing quality service, one would be reluctant to leave his trading desk during market hours. As such, most of such activities happen when the market is closed, such as before market, during lunch hour, or after market. For established brokers, some of them would hire trading assistants, so that they can devote more time to increasing their value to their clients.

Comparing this to a shop analogy, the longer the shop stays open, the more potential business it can generate. The main concern then would be the overheads expenses. In terms of the stock market, the overheads are placed on 3 parties, SGX, the brokerage houses and the individual trading representative. SGX and the brokerage houses would need to increase personnel cost in order to hire additional staff to handle the extra hours that the ‘shop’ is open. The trading representative would probably have to form groups or even hire trading assistants. This is not ideal, as the trading representative would still need to find additional time outside of ‘opening hours’ to meet up with their clients.

An interesting statistic to look at is the Turnover Velocity, which is taken as the shares turnover in a time period, dividend by the total market capitalisation of the market. This is an annualised figure, which basically means how heavily traded the stock market is.

Comparing with the various exchanges, SGX seem to be doing poorly, even given the longer trading hours than some of its counterparts in the region.

One of the main points brought up in the public consultation is that ‘international issuers contribute more than 40% of SGX’s market capitalisation on its securities market.’ As of 31st Jan 2010, we have 461 domestic listings, 160 foreign listings (excluding China listings), and 153 China listings. I applaud SGX in its ability to attract numerous foreign companies to list in Singapore, especially since most large exchanges such as Tokyo Stock Exchange, Australian Stock Exchange, and Shanghai Stock Exchange still consists of largely domestic stocks. I would however caution that perhaps quality is more important than quantity.

One measure that intrigues me is market broadness. In a typical trading day, Genting SP can contibute up to 25-30% of the entire’s market trading volume. In the recent days, the new IPOs have been dominating the market volume. For example, 28th October 2010′s total market volume is 678.9M (as per SGX’s website), and the new IPO, Xinren, contributes to 353M of that. In a more established market, market broadness is necessary to attract funds.

In my discussions with some proprietary traders, they mentioned they prefer to trade the Australian market, or even the Japan markets. Some of the reasons they gave is the market broadness as mentioned above, cost of trading (with respect to force key costs and wholesale clearing costs), as well as lack of tools (2nd level market depth). The existence of lunch breaks is not one of the reasons given for not trading the Singapore market.

One of the biggest beneficiaries of continuous all-day trading would be hedge funds running arbitrage systems or high-frequency trading systems. This may increase overall equity trade volume in the market and increased amounts of derivative trading. However, I don’t think this will benefit the industry as a whole. Recently there was a large drop in the NYSE, and this was attributed to algorithmatic trading. Shortly after, it was shown that 70% of the volume on NYSE is attributed to computer-automated trading?(Reference). Is it really useful to the marketplace as a whole for computers to trade against each other?

What this would do is to widen the information gap, where fast computers will be able to react faster than humans, and thus individual investors without access to such systems will be left at a disadvantage.

I would suggest SGX look to improve their systems first. Perhaps having more transparent market information such as 2nd level market depth, lower cost of trading with regards to clearing fee and force key fee, or even a removal of 10bids limitation. Eventually, you need to provide more value to the marketplace in order to generate more profits.

If SGX is still keen in having continuous all-day trading, might I suggest having it on the GlobalQuote board first. If market volume does increase and it does attract more players, SGX can consider further implementing it on the other boards. In the US, not all exchanges/boards have pre-market and post market trading. This would be similar.

SGX is losing it’s key objective to ‘ensure that the exchange creates value for its participants and shareholders.’ In the end, SGX must know what they want to be. They cannot fight against all fronts using the same tool. Competing against other domestic markets, international markets, derivative driven markets, and dark pools all require different toolsets.

An exchange that is open for one of the longest hours to match the other exchanges does not make it the market leader. In fact, it becomes a market follower, a place for secondary listings rather than the choice venue for primary listings.

I believe the incremental benefits of eliminating lunch breaks is lesser than the incremental disadvantages incurred by the industry as a whole. Additional labour costs, change of business model, with only an unproven potential benefit. The Seoul Stock Exchange abolished its lunchtime interruption in May 2000, and “there has been no significant rise” in the value of shares changing hands there. (Reference)

As reported on 25 Oct 2010, Tokyo Stock Exchange has decided not to eliminate its 11.00 to 12.30 trading break. I suppose they realise people do need to eat after all.

Thank you.
Yours faithfully,
Fergus Tan
PS: This letter reflects the opinion of the author only and do not represent the views of anybody else or any other association or corporation.

The above letter is also published in Today Weekend on 20Nov2010 http://www.todayonline.com/Voices/EDC101120-0000038/Leave-the-lunch-break-alone

Tags: Finance

The attack of the DBS atm queues

Being Singaporeans, most people started out having a POSB bank account as their first ever bank account. From then, they move on to DBS, and then having DBS credit cards etc..

Not me.

My first ever bank account was a UOB Funsavers account. This was one of those fun savings accounts for young kids that come with a bank book and all those stuff. Then, I graduated to the TX account, which is basically a low minimum balance account for teens, with a cool looking ATM card to flash around your friends. When we all got older, I moved up to the Campus account, which comes with a nice debit card that allows you to act cool in front of your peers by doing the ‘grown up swiping card for payment’. It also comes with nice cheque books that make you SO business-man like!

One of the sights that always amazes me is the queue in front of a DBS/POSB atm. In a typical shopping center, whenever you see a hub of atms, there will usually be 2-3 DBS/POSB atms, 1 UOB atm, 1 OCBC atm, 1 Citibank atm (because citibank is almost like the 4th local bank of Singapore. *heh heh*), and occasionally a ANZ/Maybank/StanChart/etc atm. What I would typically do, is walk to the UOB atm, which has no queue at all, withdraw my money in 1 minute flat (with the quick customised menu thing), and do a quiet snigger at the bunch of DBS/POSB customers queuing 10-20 minutes to withdraw their money. Hur Hur!

For some reason, there will usually be around 10-15 people queuing 2-3 dbs atms, but there will be at most 1 person, or usually nobody waiting for the uob/ocbc atms. Why, I would never understand. There hasn’t been any inherent benefit in having a dbs/posb savings account ever since they instated the $500 minimum deposit for a normal savings account, which brings in on par with the other local banks. So why not just open a UOB or OCBC account?

Not many people might know this, but a UOB customer can actually withdraw money from a OCBC atm, though you would need to pay a convenience fee if you exceed 3 times a month. But seriously, there are enough UOB atm machines to go around! Most people have the impression that there are more dbs/posb atms. That’s probably true.. But sometimes it’s not about the sheer quantity. DBS/POSB usually have 3 to even 5 or 7 machines congregated in a single location. UOB would then have 1 atm at that location, usually with little or no queues of course. But recently while walking around town area, I realised that within a 10 minute walk, I could actually walk pass 5 to even 12 UOB atms! Definitely good placement is more important than the sheer quantity.

So seriously, someone please help me understand why are there long queues in front of DBS/POSB atms?

Tags: DBS, Finance, UOB