The Simplified Resource for Everything Money

Interest in Bitcoin and crypto using Google Trends

2024-03-10T07:33:00.008+08:00

Bitcoin and cypto is really soaring. Interestingly, not many bloggers are writing much about them like the past. The rise in price is not without reasons, being the US SEC has approved spot bitcoins etfs, bitcoin halvening in april and the impending decision to approve options on spot bitcoin etfs. The "fundamentals" for bitcoin is indeed stronger now than in the past.

Retail interest in Bitcoin

Looking at google trends, the spike in people searching for bitcoin and crypto in the past happens roughly 3-5 months before market price tops. During the period when Blackrock was applying for the spot bitcoin approval, interest was very low. It only started increasing once the etf was appoved.

But with Bitcoin prices having surpassed its ATH of about USD67000, interest in Bitcoin, using google trends as a reference is surprisingly still very low.

This leads me to believe that the retail buying has not yet started as the drive in prices is due to instituitional buying of Bitcoins. Barriers to entry for retail to buy Bitcoin is now lowered as there is no need to keep a cold or hard wallet and be afraid of an exchange to fail and lose one's Bitcoin. A normal broker like Interactive Brokers, Moomoo or Tiger will do, without the need to grapple with crypto terms.

A scenario:

Bitcoin price rise leads to increased mining and greater energy use, driving up the cost of energy, causing inflation to rise and the dollar to decline, driving demand for Bitcoin and increased mining, driving demand for energy and the cycle continues.

Bitcoin… https://t.co/a5LzX69R7q
— Bill Ackman (@BillAckman) March 9, 2024

Spot Ethereum ETF

The US SEC has mentioned that Bitcoin is a commodity while the other cryptos are securities and using the HOWEY test to defend their decision in US courts. Other than Bitcoin, other cryptos undergo an ICO( initial coin offering) which is akin to an IPO, hence the added burden of regulation.

I am not sure if spot Ethereum will be approved at all but apparently many people believe that if Bitcoin is approved, the other cryptos will also be approved without realising that the US SEC has already classified them into different classes.

Possible Next Steps for Hyflux Investors

2022-11-21T07:35:00.003+08:00

I am not a lawyer and neither do i have any experience in litigation. After reading the news about the charges filed against the CEO, CFOs and directors for various disclosure-related issues like omissions in the 2011 offer information statement and non compliance with accounting standards, it brought me back to the time when i read the following portions of the Securities and Futures Act (SFA).

https://www.channelnewsasia.com/singapore/hyflux-former-ceo-olivia-lum-cfo-direct ors-charged-court-tuaspring-3079541

https://www.businesstimes.com.sg/companies-markets/former-hyflux-ceo-cfo-independent-directors-charged

https://www.straitstimes.com/business/ex-hyflux-ceo-olivia-lum-ex-cfo-and-four-others-charged-for-violations-of-securities-and-futures-act

Civil liability for false or misleading statements

254.—(1) Where an offer of securities or securities‑based derivatives contracts is made in or accompanied by a prospectus or profile statement, or, in the case of an offer referred to in section 280, where a prospectus or profile statement is prepared and issued in relation to the offer, and —

(a)

a false or misleading statement is contained in —

(i)	the prospectus or the profile statement; or
(ii)	any application form for the securities or securities‑based derivatives contracts;

(b)

there is an omission to state any information required to be included in the prospectus under section 243 or there is an omission to state any information required to be included in the profile statement under section 246, as the case may be; or

(c)

there is an omission to state a new circumstance that —

(i)	has arisen since the prospectus or the profile statement was lodged with the Authority; and
(ii)	would have been required by section 243 to be included in the prospectus, or required to be included in the profile statement under section 246 (as the case may be) if it had arisen before the prospectus or the profile statement was lodged with the Authority,

the persons referred to in subsection (3) are liable to compensate any person who suffers loss or damage as a result of the false or misleading statement in or omission from the prospectus or the profile statement, even if such persons, unless otherwise specified, were not involved in the making of the false or misleading statement or the omission.

[4/2017]

(2) For the purposes of subsection (1), a false or misleading statement about a future matter (including the doing of, or the refusal to do, an act) is taken to have been made if a person makes the statement without having reasonable grounds for making the statement.

(3) The persons liable are —

(a)

the person making the offer;

(b)

where the person making the offer is an entity —

(i)	each director or equivalent person of the entity; and
(ii)	if the entity is also the issuer, each person who is, and who has consented to be, named in the prospectus or profile statement as a proposed director or an equivalent person of the entity;

(c)

where the issuer is controlled by the person making the offer, one or more of the related parties of the person making the offer, or the person making the offer and one or more of that person’s related parties —

(i)	the issuer;
(ii)	each director or equivalent person of the issuer; and
(iii)	each person who is, and who has consented to be, named in the prospectus or the profile statement as a proposed director or an equivalent person of the issuer;

(d)

an issue manager to the offer of the securities or securities‑based derivatives contracts who is, and who has consented to be, named in the prospectus or the profile statement;

(da)

an underwriter (but not a sub‑underwriter) to the issue or sale of the securities or securities‑based derivatives contracts who is, and who has consented to be, named in the prospectus or the profile statement;

(e)

a person named in the prospectus or the profile statement with the person’s consent as having made a statement —

(i)	that is included in the prospectus or the profile statement; or
(ii)	on which a statement made in the prospectus or the profile statement is based,

but only in respect of the inclusion of that statement; and

(f)

any other person who made the false or misleading statement or omitted to state the information or circumstance (as the case may be) but only in respect of the inclusion of the statement or the omission to state the information or circumstance.

From a laymans point of view just based on reading superficially the passage above, it does look like some investors do have a recourse in their investments. Certainly best to consult a lawyer to know the details better.

However, a lawyer is very very expensive for the ordinary investor in Singapore due to lack of support from the TOP, like litigation funding, contingency fees or just plain educating and informing the general public on their legal rights and recourse for matters related to investments.

To be clear, i am not refering to pro bono, small claims tribunal e.t.c which is for the segment of the population who can't afford to invest normally , relating more to criminal law. and for small sums like below $10k.

I am refering to the lack of support and recourse to civil law matters and the middle class Singaporeans who are neither too poor or too rich to afford legal services without the affordances of litigation funding and contingency fees.

Anyway, there seems there is a group of very ordinary middle class Singaporeans trying to solve this problem on their own.

https://governanceforstakeholders.com/2022/11/17/re-posting-a-message-on-behalf-of-a-group-of-hyflux-preference-shareholders-and-perpetual-securities-holders/

Can we use how Reit Manager Fees are structured to determine the Reit Perfomance?

2022-01-31T06:25:00.002+08:00

Some investors look at how the Reit managers are compensated to determine whether there is an alignment of interest.

The logic is, if the interest is aligned, then the long run performance of the Reit should be better than if it wasn't.

This makes sense.

If investors feel the pain when their Reit's lose money, at the very least, the Reit managers should, rightly, also share in the misery.

The opposite is also true, if investors make money, Reit manager should be rewarded.

The management fees of Reit managers come in two components:

Base fee
Performance fee

Acquisition and disposal fees are largely similar across the Reits, 1% of acquired property value and 0.5% of disposed property value.

Base Fee

Performance Fee

In my previous article, i found that the growth of DPU over time is the single most important metric to judge a Reit's performance as a growing DPU would naturally result in a growing Reit price too.

This makes sense as people buy Reits for their distributions.

All the financial chicanery will over time be laid bare in the DPU.

I have compiled the DPU trend of Reits here on this page.

Do you think the structure of the Reit Manager fees affect the DPU over time?

3 Reits stood out for me.

Lippo Mall Trust
Keppel Reit
Ara Logistic Trust

If you look at their DPU trend over time, they have been trending down.

Yet, they have been paid for performance by way of performance fees.

Lippo Mall Trust

Lippo Mall Trust

And to put things in perspective, its performance fee is nearly as much as it's base fee for Lippo in cash.

Keppel Reit

Ara Logistic Trust

Agent Likens Premium Financing to Property Investing

2022-01-24T10:31:00.002+08:00

" Property very high now man, just when i saved up $300 k to buy my $1 million property, it shoot up again!"

" Why you want to buy property?"

"For retirement loh...Cash flow incoming in retirement years"

That's when it started.

The sales pitch.

If one were to google premium financing, one would notice that the examples shown are normally portraying people in their 40s. The ripe age of wanting to buy an investment property and yet may not be able to due to property prices rising too much.

In a nutshell, premium financing insurance product is borrowing money from a bank to buy an insurance product. The series of monthly cashflow from the insurance returns is used to net off the monthly loan paid to the bank.

This is akin to buying an investment property and borrowing money from a bank to buy it. The series of monthly cashflow from rental is used to net off the monthly mortgage payment to the bank.

Both require a downpayment and both are custodised with the bank.

Actually, on the surface both looks the same but actually its more similar to property investing more than 15 years ago when they allow payment of interest only and not the principal.

Now a days, property investing requires payment of both interest and principal in the monthly mortgage payments. In premium financing, one only pays the interest and not the principal. The loan amount stays the same.

Hence, using the simple formula of (annual net inflow/down payment) multiplied by 100%, rates touted by financial advisors for the premium financing insurance product can be mouth wateringly 8% - 18%pa! And comparison with property investing now can be very misleading because in property financing, the net inflow is surely smaller as the mortgage payments include paying off the principal loan!

It is also when interest rates are low that such aggressive selling of such products are pervasive.

Truly financial engineering at work!

I have summarised some information from a case study from MoneyOwl.

Assumption

loan rate : 1.267%pa
Insurance return: 3.648% pa (1.248% pa guaranteed + 2.4%pa non guaranteed)

https://www.moneyowl.com.sg/articles/premium-financing-leveraging-insurance-policies/

If loan rate rises to become 2.91%pa and insurance returns stays the same.

https://www.moneyowl.com.sg/articles/premium-financing-leveraging-insurance-policies/

How did 8%pa - 18%pa advertised returns become such low returns as shown on the tables?

And the funny part is, the low returns shown on the table are based on insurance returns where 2/3 of it are non-guaranteed insurance returns!

Click here for my referral code to MoneyOwl to get $20 Grabfood credits.

An ETF giving 40% pa CAGR. You dare?

2022-01-17T05:31:00.002+08:00

It was the class gathering that only the most successful was most keen to go.

First the sound of a Maserati.

Next, she walked in with a swagger, armed with a Himalaya Birkin.

The girl who consistently did the worst in class. That girl who got the lowest paying first job and now no job. That invisible girl.

She sat quietly at the corner (as usual), unbeknownst to everyone except me. The Alphas were having a field day, with their identities tied to their jobs, they unleashed a torrent of stories about their work life and which enrichment classes they have been sending their kids to.

The last class gathering was in 2010. The now class gathering is in 2021.

I sat beside her and humbly asked her.

"Can share?"

"I had nothing to lose. I whacked the UPRO ETF. I was lucky."

The UPRO ETF incepted in 2009.

It had a price of around USD$2.50 then. Now, it's price is USD$147.

A staggering compounded annual growth rate ( CAGR) of 40% pa.

The UPRO ETF is a leveraged fund and it seeks to 3x the return of its underlying benchmark (target) for a single day. The underlying benchmark is the S&P500.

Comparing SPY ( another etf which mirrors the S&P500 without any leverage) to UPRO ETF, SPY sucks!

After reading up on UPRO ETF, i realized this girl has balls of steel, having experienced through one of the most volatile investing instrument.

You see, what happened between 2009 and 2011, masked by the beautiful CAGR was terrifying.

Volatility Decay

Assuming the underlying benchmark starts with 100. It falls to 80. That is a 20% drop.

For it to rise back to 100, it has to increase by 25% now.

Let's compare the effect of volatility decay between the benchmark fund and the corresponding 3X leveraged fund.

Both start at 100.

At Day 7, the benchmark is back at 100. Since the 3X leveraged fund seeks to "return" 3X the benchmark return for a single day, on Day 7, it has become 34.3.

That is volatility decay in action.

This girl is pretty lucky and she knew it.

She would have lost money if in the long run :

1) The market is flat and is volatile

2) The market goes down and is volatile

3) The market goes up slowly and is volatile

It seems the S&P 500 has been going up very steadily and not very volatile for her.

I am indeed happy for her and shared my observations.

" Oh i didn't think about that, thanks, i have made enough, will be transferring to SPY. "

And handed me a hulk. "You want? No box and cert. Free"

How does your asset allocation compare with others in Singapore

2022-01-10T07:00:00.000+08:00

The household networth in Singapore has grown at a rate of about 6.5% pa from 1995 to 2021. Compared with the general inflation of about 2-3% pa, we are not too shabby. No wonder property prices keep rising!

How has the asset allocation change over the years as the country becomes even more developed and the population get more aged?

What are some trends we can observe?

Over the years, the allocation to property has been reducing.

Allocation to life insurance has been increasing.

Allocation to CPF has been increasing.

Allocation to currency and deposits has been increasing.

How does your asset allocation compare?

2021

2010

1995

Source: Data.gov.sg

There looks like much money on the sidelines ( CPF and currency & deposits).

Figure 4

On a whole, is there much distress in the property market?

The amount of mortgage loans to household networth seems to be pretty healthy and having a downward trend.

I use the following for my SRS investments.

Use my Endowus referral code to get $20 in access fee credit.

I use the following for my cash investments:

Use my IBKR referral code to get free IBKR shares.

Use my Tiger referral code to get free apple shares.

Use my Moomoo referral code to get SGD200 Stock Cash Coupon

[I am not a financial advisor]

Loss of 99.3% investment in Landbanking

2022-01-03T06:30:00.007+08:00

Overseas landbanking as an investing trend was popular in the late 2000s in Singapore and may now be forgotten by many.

One can read more about it here.

My parents are one of the unfortunate investors. Being like most Singaporeans, a free lunch buffet at a nice hotel is attractive, thinking that one has the will power to resist the hard sell tactics.

I wouldn't go as far as to say this is a scam even though this company is on the MAS investor list but as a general rule of thumb, if something is too good to be true and have to be sold very hard with nice accompaniments, run far far away from it.

Long story short, the land they bought was a Greenbelt land ( basically land designated by policy to be undeveloped and generally used as agricultural land to control urban growth.)

Investors will make a windfall if this land is rezoned into productive land use like for residential or commercial purposes.

There has been cases when such conversion has occured but the problem was, the probability of this happening is extremely, extremely low and it was basically a high risk investment premised on hope.

Long story short, after 11 years of holding onto this plot of land which they bought at a price of $27,000 from Jardine Smith Singapore, the UK government decided one fine day to compulsorily acquire this land to build a high speed railway line . This project is called HS2. This is a planned high-speed rail network initially set to link London and the West Midlands, with a further phase extending to Manchester and the East Midlands.

Guess what?

The compensation was a measly $171. From $27,000 to $171. A 99.3% loss of capital. And mind you, this was after 11 years of holding and one would think land would have appreciated.

Lessons to be learnt.

If an investment needs to be hard-sold, the commission or profit margin should be sky high. If this plot of land is $171 ( actually $342, more of this later) now, it was purchased at $27000 11 years earlier, one can see that the "free" buffet is actually an expensive one.

Sub-divided small plots do not add up in value to large plots. The UK government stated that the valuation of the land is actually further halved compared to if it was valued as a larger piece due to the administrative cost of having to deal with many small land owners. Hence, the original valuation by the UK government was $342 but reduced to $171 due to it being a small parcel of land.

Negotiation is basically futile as the UK government would want the plot owners to engage property agents to negotiate and cost is to be borne by the plot owners. Who in the right mind would do that for $171.

I guess the only upside to this is that the UK government has said they would pay for any necessary , reasonable cost to engage a lawyer to effect the transaction of the compensation but this is still up in the air as they have not replied what reasonable cost means. Imagine trying to get a reimbursement on such fees and they then deem it as unreasonable and one would be effectively out of pocket and wasted time.

One other possibility is to gather all the plot owners together to probably explain to the UK government that the administrative fees are now reduced for them as they are now dealing with a larger land area instead of smaller land parcels but it is nearly impossible due to PDPA issues and the gain is at best another $171.

The Perils of Investing through a very hard selling agent!

The single most important factor for Reit investing

2021-12-20T08:11:00.014+08:00

I have probably only broke even or made a little over 6 years of investing in reits on a total basis, meaning including the dividends. This is a bad outcome. We don't have many 6 years of experimenting.

Upon reflection, i realize that investing in reits is really about trusting the people managing the property portfolio are good at their jobs and most importantly, having as little of the principal-agent problem as possible.

In my opinion, reits suffer a lot issues related to the principal- agent problem as the underlying properties are rather illiquid and the range of valuation of a property can be very wide and rather subjective. Unit trust ( and for the matter all investments) do have such agent issues too but since the underlying are securities traded on exchanges, there is more transparency in a sense. The more opaque or illiquid the underlying in, the more such agent issues arise.

Principal agent issues related to reits are aplenty with some examples as follow:

Property is acquired at a high price from sponsor, with rental support given by sponsor to increase the property yield, hence book value is increased.
Properties are being bought and sold frequently with transactions being the primary focus as reit managers get acquisition and disposal fees.
Reits being the dumping ground of sponsors.
Reits managers focus on increasing the asset base as their management fees are a percentage of the assets managed.

I think it is a given that most, if not all reit investors, invest in reits for their distributions. More specifically , distribution per unit (DPU).

The effect of sub-par reit managers will certainly tell over time with DPU decreasing.

Hence, the single most important factor is to select reits whose DPU has shown an increase over time.

Even though i have lost money in reits, i still believe in it as a good asset to have for retirement but being selective is important.

I have heard many feedback that reits are bad for retirement because of the many rights issues. If one do not have the spare cash, one will be diluted. The Supplementary Retirement Account,especially, gets a lot of flake for this due to the yearly contribution limit.

But what is the problem with being diluted if the rights-funded acquisition results in an increase in DPU?

In the end, it all boils down to the DPU.

To be clear, reits are leveraged investments and not all rights are for acquisition purposes. In the Great Financial Crisis of 2009, most rights were used to shore up the balance sheet and not for acquisition. Having a large chunk of reits as a percentage in retirement is quite risky.

I have complied the DPU of reits over the years. The DPU is based on date payable. The page can be found here.

Which jobs give the highest annual leaves in 2020?

2021-12-14T09:00:00.000+08:00

As i grow older, time begins to be more important than money. When young, we are usually attracted to jobs which pay the best. When we reach our 30s to 40s, time becomes more important especially when we have children.

Is it possible to have our cake and eat it too? A job that pays well and also have more annual leave.

It seems it's possible.

The data below are taken from the Ministry of Manpower.

https://data.gov.sg/dataset/distribution-of-full-time-employees-by-annual-leave-entitlement?resource_id=1b56422d-73e4-4853-9aab-88a8ddb753af

Those working in the financial services sector have the highest amount of annual leave with 62.7% of them having annual leave of over 21 days. Compare this with those working in the cleaning and landscaping sector where 97% of them have annual leave of 14 days and below.

While the above are just purely based on numbers, it pays to also consider whether one can truly "rest " during annual leave without mental stress or or thinking about work deadlines.

My friend commented that Pilots have the best jobs because not only are they paid quite well, when they are on leave or breaks, they are totally switched off and truly resting.

The Returns of the Supplementary Retirement Scheme

2021-12-06T09:30:00.017+08:00

The Businesstimes published an article in November 2021 titled " More Young Investors Turning to SRS Retirement Needs".

It wrote.

" The share of younger people with Supplementary Retirement Scheme (SRS) accounts has risen steadily over the years, according to data from the Ministry of Finance. As at end-2015, 11 per cent of SRS account holders were between the age of 18 and 35. This share had risen to 19 per cent at the end of 2020. "

18 year olds putting money into SRS already?

Assuming an 18 year old invested $1000 every year into his SRS account. Let's assume the 18 year old has a marginal tax rate of 7% every year and so pays less tax of $70 every year till age 62. A marginal tax rate of 7% means the chargeable income of the 18yo is between $40,000 to $80,000 already which is pretty high in my opinion at that age!

The SRS account has a base interest rate of 0.05% pa and he leaves money in the SRS account uninvested.

The interest rate pa (IRR) he would be getting over the 45 years with the yearly 7% tax savings and 0.05% pa SRS base interest rate is only 0.34%pa if he just left the money in the SRS uninvested.

The table below shows the different interest rate pa ( IRR) based on his marginal tax rates if he did not invest his SRS.

IRR(age 18 to age 62)

What the table means is that, if the 18 year old were to diligently place $1000 into a normal bank savings account every year and this savings account gives 0.34% pa every year till age 62, he will be getting the same returns as simply contributing into his SRS account without investing it.

Of course the funds in the SRS account would most likely be invested in some approved investments, say in the stock market which more likely than not yield him about 6%pa for the next 45 years. Add this 6%pa to the 0.34%pa and he gets 6.34% pa if he is at the 7% marginal tax rate compared to if he had invested using cash, getting only 6%pa.

Is the "extra" returns due to the tax savings resulting in the additional returns of 0.34% pa justified for a lock-up in liquidity and policy risk over such a long period?

At a marginal tax rate of 22%, he would be getting 6.89%pa using SRS compared to 6% pa if he had used cash.

Let us look at a 40 year old and a 50 year old and the interest rate he will get from the tax savings and SRS interest till age 62 if he had just simply left the money in SRS uninvested.

IRR ( age 40 to age 62)

IRR ( age 50 to age 62)

Probably one has to see whether the price of locking up one's cash is worth the additional interest rate ( as shown in the table above) one would get from simply the tax savings and SRS base interest over the years.

Leaving one's SRS uninvested at all will yield one the above interest rates in the tables. Please do something about it if you haven't!

I use the following for my SRS investments.

Use my Endowus referral code to get $20 in access fee credit.

I use the following for my cash investments:

Use my IBKR referral code to get free IBKR shares.

Use my Tiger referral code to get free apple shares.

Use my Moomoo referral code to get SGD200 Stock Cash Coupon

[I am not a financial advisor]

How much did the top property agent in Singapore earn 2020 - 2021?

2021-12-01T14:17:00.000+08:00

Following the announcement by the Council for Estate Agents (CEA) that they have published a complete record of all residential property transactions facilitated in the past 24 months by property agents in Singapore, i just had to fulfil my curiosity to know how much they are making.

This is not just an issue of being a 'kaypoh' which i won't deny but yours truly did consider being a property agent many many years back. You see, from my adolescent eyes back then, i have observed that property agents drive nice cars. Usually their cars are continental ones and i can't be faulted for thinking that a property agent career is a one worth considering right?

Until i went for my first NS reservist and had a conversation with a property agent who drove a Audi TT back then who told me that their managers " persuaded " their downlines to drive flashy cars because a salesperson in debt is a hungry one.

From the CEA data from the years 2020 and 2021, the transactions by the top property agent are as follows.

2021 has not ended, so transactions in 2021 are up to October, inclusive.

https://data.gov.sg/dataset/cea-salesperson-residential-transaction-record

I don't know how this salesperson did it but its amazing.

There are a total of 607 transactions in 22 months. This means on average, there are 27.6 transactions in a month.

Basically, this salesperson is closing a deal every day. Respect.

The data from CEA is only for residential properties and it does not contain data for commercial properties, so the number of property transacted may actually be higher.

In Singapore, there is no fixed rules for commission rates. But for HDB and private properties, the industry practice for commissions are generally different. For HDB resale, the buyer has to pay 1% while the seller has to pay 2% in commissions. For private property, only the seller has to pay 2% commissions. The commission may also have to be shared if there is co-broking involved.

For simplicity and to be conservative, the commission rates will be assumed 1%. For rental, the industry practice is 0.5 months for 1 year of rental which will be used for the calculation.

Due to the very varied prices of property, let's further assume that the average HDB transacted cost $600,000. The average condominium and apartment transacted cost $1.2 million and the average landed property cost $3 million.

Accordingly, let's assume the rental for HDB is $2000 per month. Based on the CEA data, this property agent does whole room HDB rentals only.

The rental for condominium and apartment cost $3500 per month and the rental for landed cost $8000 per month.

These figures above, in my opinion, are very very conservative.

This makes the one month revenue to be $1.73 million. If one is to take into consideration the number of lock downs and covid restrictions for 2020 and 2021, this figure is even more supreme.

Of course, their actual earnings are much lower after considering marketing fees, petrol and so on.

Before you jump on the property agent band wagon after salivating at the earnings above, it would be better to delve deeper and check if it is indeed a rosy career...as rosy as for the agent above who made 607 transactions.

There are a total of 19,742 agents that transacted in these 22 months in the CEA data. Transactions in the data also include one room rentals which the alpha agent above did not do.

The alpha agent did 607 transactions in 22 months but the median number of transactions sold by property agents are 6, which may include one room rentals as some of the transactions.

All is not what it seems.

I use the following for my SRS investments.

Use my Endowus referral code to get $20 in access fee credit.

I use the following for my cash investments:

Use my IBKR referral code to get free IBKR shares.

Use my Tiger referral code to get free apple shares.

Use my Moomoo referral code to get SGD200 Stock Cash Coupon

[I am not a financial advisor]

Mapletree Logistics Acquisition of China and Vietnam Properties - Effect of Income Support

2021-11-27T08:29:00.003+08:00

I think it is important for people to take note of income support for reits and things may not look as rosy as it seems based on the headline figures.

For example in 2018, it was reported that Keppel reduced its rental support for Keppel Reit and its DPU fell.

Source.

The recent headlines about Mapletree Logistics Trust acquiring 13 China properties and 3 Vietnam properties through issuing rights must have gotten little attention due to many new Reits having IPOs lately, Daiwa House Logistics and Digital Realty.

Headline figures for the China and Vietnam properties paint a very rosy picture of a forecasted rise in DPU, post acquisition of 1.2% .

Sounds good right?

But take note that this includes rental support for 1 year post acquisition by the sponsor.

Stripping out the rental support, the DPU remains unchanged.

Not all rental supports are bad and in theory, the reason for such a practice is to stabilize the rental income of new properties before they reach their "potential" .

But one can see the potential for exploitation.

This "potential" may never materialize but only serve to inflate the acquisition price, causing shareholder value destruction.

Only time will tell.

Investing is having faith too.

A Shocking October Electricity Bill for SP Wholesale Customers

2021-11-25T07:00:00.000+08:00

" My October electricity bill was 3 times the August one! I'm getting out of it!"

There were many feedback among friends and people in forums who were under the SP Wholesale plan that they were facing astronomical bills and a rush to get out of the wholesale plan.

This feedback was timely as my Geneco plan is expiring on Feb/March 2022 next year and i have been penning down my thoughts as a way to reflect on the decision on whether to join the 1% of consumers on the wholesale plan.

SP Wholesale Plan - Going for it! - 10 November

Which electricity plan to choose - 31 October

I would have to probably reconsider switching to the SP Wholesale Plan given how the prices played out in October.

I have been tracking the average SP wholesale electricity plan against both the SP regulated tariff and electricity retailer since Jan 2020 on this page.

October 2021 is indeed the ONLY month where the SP electricity plan exceeded the SP regulated tariffs and not only by a small margin but more than twice!

October 2021

Looking at the charts in October 2021, on an average basis, only if one used electricity from 1 am to 6 am in October will one have an electricity rate lower than the Wholesale electricity rate.

Hopefully, the situation will be clearer near contract expiry!

A Quick Comment on Alibaba

2021-11-22T07:04:00.000+08:00

Alibaba recently released their results which apparently disappointed the market and caused an immediate plunge of 10%.

I am sure by now that everyone knows the market is irrational and no one can forecast what the price can be in 1 months , 3 months or even 1 year's time.

Even the guru's or big boys' actions are conflicting.

Temasek trimmed their position but Charlie Munger, co -partner of Warren Buffet in Berkshire Hathaway actually loaded more quite recently.

So who's right , who's wrong?

If one were to read all the opinions in forums, one would be seriously confused.

Data from www.wsj.com/market-data/quotes/BABA/financials

In 2017, Alibaba had a share price of US$140.

Now, Alibaba has a share price of around US$140 again.

But Alibaba is a much more valuable company now than it was in 2017, at least 3 times. Theoretically, its share price should be at least 3 times of US$140 in 2017 making it US$420 today if we were to go along this line of logic. Of course, one can look at it in another way and say that since the current price is US$140, the price in 2017 should have been US$47 and US$140 was too overvalued in 2017. This is perfectly reasonable too.

I think what is happening now is just investor sentiment based on the regulatory clampdowns and also the market focus on the slower growth which based on maths, the larger a company is, the base is larger hence the growth has to slow also.

I am of the opinion that once the regulatory situation dies down, Alibaba share price should do better.

In 2017, there was Xi Jinping. In 2021 Xi Jinping is still the president, just that now, people know what he can and will do and it is more clear.

An optimist can say with so much regulations compressed into these past 6 months, the only way is lesser regulations going forward.

Besides, Alibaba isn't a dinosaur company with no growth catalyst. Last i checked, it has two growth engines which is international ecommerce and cloud computing.

So many arguments for and against.

One's head can really spin if we can't think for ourselves.

What is the actual inflation rate one should use for FIRE?

2021-11-19T06:38:00.002+08:00

My son. perspiring profusely, came back empty handed after walking 400m in the sweltering heat.

"Dad, your $1.50 is not enough! My milo peng cost $1.80 now. "

A teachable moment.

I hoped he learnt two things from this ordeal.

Inflation and the need to plan for things going wrong a.k.a margin of safety and ask for some additional coins in future.

"Here is 30 cents! Go, my young padawan and bring back the elusive milo peng to quench your thirst. Get me the delectable bak chor mee, less chilli. Take another $3.50 for the mee. It was $3.50 last month."

He rushed out immediately. Guess he didn't learnt his lesson on the need for a margin of safety and inflation. He will learnt some day..for he must learn.

Weightage of basket (Figure 1)

Source : Department of Statistics Singapore

Breakdown on Basket (Figure 2)

Source: Department of Statistics Singapore

Annual inflation rates from 1960 to 2020 (Figure 3)

Source: Data.gov.sg

The latest annual inflation rate (released in Sep 2021) is 2.5%. This is the short term data based on the previous year and is according to the CPI weighting pattern in figure 1. If one looks at the weightage of the basket of goods used to measure this inflation rate, i can't say it reflects well the inflation experienced by the residents of Singapore. Look at the lower weightage of Healthcare (6.6%) and Education ( 6.6%) compared to Recreation and Culture (7.9%).....I don't think i spend much on Recreation and Culture as compared to Healthcare and Education.

For a more accurate inflation figure to use, I think one should look at one's personal spending habits to determine one's estimated inflation rate.

A 50 year old single would not need to care about the inflation for Education but a 25 year old dad with a new born would be really concerned about education inflation.

Based on data from 1960 - 2020, the various long term inflation for the different baskets are shown in Figure 3. Highlighted in yellow are the ones which are important to me and i think to the majority of others. The rest are really non-essential, good to have items( apart from Housing and Utilities which is essential but my housing is settled).

As a matter of prudence, my personal estimated inflation would be 3.22%pa which corresponds to the inflation rate of education.

So what have i been doing to beat this inflation.

Endowus

Endowus opened last year(2020)

My Endowus funds have been doing well at 17.62% returns since i started late last year. I have chosen the customised 60% equity/40% bonds and 100% equity funds and used my SRS funds only, saving on my marginal tax rate yearly on this funds. Do not make the mistake of attributing the performance of funds to Endowus as they are simply a platform to sell funds. You make the choice of funds to buy. ( ok for the customised only funds, they chose the allocation so they had a hand in this).

The use of SRS funds is highly restrictive and i believe placing them with Endowus is the best choice.

Use my Endowus referral code to get $20 in access fee credit.

IBKR

My cash has been placed with InteractiveBrokers due to it's very very low commission charges for both shares, etfs, options and forex transactions and its ability to invest in many differerent countries. What really hits me in the right spot is the ultra low financing fees of between 1.58%pa to 0.75%pa (for USD) depending on amount borrowed which allows me to leverage .

Forex , stock and etfs transaction fees are only around $2-3 per transaction regardless of amount. That's insane. Downside is that some exchange prices like from the US are delayed and one has to pay for live subscriptions which cheapskate me obviously don't. This problem is easily solved by the two brokers below which give free live US prices. I toggle between the apps to look at prices and transact.

Use my IBKR referral code to get free IBKR shares.

Tiger Brokers

Use my Tiger referral code to get free apple shares.

Moomoo

Use my Moomoo referral code to get SGD200 Stock Cash Coupon

My son came back without the Bak Chor mee as it has inflated in price. Hope my son has learnt some lessons.

I have been putting money in the markets. Here is why.

2021-11-15T12:01:00.032+08:00

Still building one's war chest waiting to shoot with an elephant gun when a major crash happens?

Covid seemed like an Armageddon-like event that could have rivaled or surpassed the Great Financial Crisis of 2009.

I remembered viewing a property in February 2020 and viewing the same property in October 2020. I was quite surprised that the price rose.

Probably its the debt moratorium, wage support, Fed money printing or whatever but it is important to know what is really happening now.

The equity markets have been roaring and there are still some who are predicting that the market will crash when the rates start to rise.

Maybe they are right, maybe not....i have been in the markets for too long to know that no one knows for certain. No one expected how pervasive Covid would affect our lives in 2019.

https://www.bea.gov/data/income-saving/personal-saving-rate

Personal Savings as a percentage of disposable personal income

The main media coverage of Covid started in around February/March 2020 and from then on, the savings rate of Americans has increased to around twice or more than their prior savings rate of around 7% in January 2020.

Covid has helped Americans save.

The savings rate reached their pre-covid state from around September 2021 onwards which mean they are starting to spend more like last time.

https://www.federalreserve.gov/releases/housedebt/default.htm

Household Debt Service Ratio

The Household Debt Service Ratio is the ratio of total required household debt payments to total disposable income.

From a debt serving ratio (%) perspective, their debt has reduced drastically post-Covid.

Americans have historically high debt servicing ratios but it has been improving.

Before 2009 GFC, the ratio was between 11% to 13% .

After 2009 GFC to 2019, the ratio was around 10%.

In 2021, the ratio is now below 9%.

https://www.bea.gov/data/income-saving/corporate-profits

US Corporate Profits

US corporate profits have been on a uptrend, higher than it was pre-covid.

More savings, less debt and better corporate profits in the world's largest economy.

What's the probability that a US stock market ( S&P 500) crash is imminent after such a seemingly stretched run-up of prices?

To be clear, a crash is not a correction which is 10% from ATH.

I use the following for my SRS investments.

Use my Endowus referral code to get $20 in access fee credit.

I use the following for my cash investments:

Use my IBKR referral code to get free IBKR shares.

Use my Tiger referral code to get free apple shares.

Use my Moomoo referral code to get SGD200 Stock Cash Coupon

[I am not a financial advisor]

SP Wholesale Electricity Plan - Going for it!

2021-11-10T13:40:00.375+08:00

We know that if Shop A buys a product from Shop B, Shop A will then mark up the price of the product and then sell it to the consumer. To get a cheaper price, the consumer can go directly to Shop B.

Similarly, if electricity retailers buy at the wholesale electricity price and then sell it to residential consumers, wouldn't it make sense that residential consumers would get it cheaper if they buy directly at the wholesale electricity price?

The markup in price by the electricity retailers is basically to compensate them for the risk they take. They buy at volatile prices and sell at fixed prices. Residential consumers are therefore paying for price certainty a.k.a peace of mind. But is this peace of mind really worth it?

Below is the comparison of the 3 different electricity plans without GST.

This SP Wholesale Electricity Plan is the most complicated of the 3 as it comprises of additional charges on top of the wholesale electricity price (WEP). These additional charges are as follows:

Updated 3 november 2021

Only the Vesting Contract Debit/Credit is variable but it is usually a few cents per month and sometimes $0. The rest of the charges are available online and known beforehand. Peak period is between 7am to 11pm. For simplicity, i took the average of the peak and off peak rates. These additional charges are under the column "charges" which is added to WEP.

Comparison

This table can also be found here which is updated monthly.

No wonder so many electricity retailers have chosen to throw in the towel recently!

From Jan 2020 to June 2021, there is a significant price difference between the WEP prices ( blue column) and electricity retailer prices( green column), with the WEP prices always being lower. It is only in July 2021 onwards where the price differences is very low with July 2021 being the only month where the WEP price exceeded the electricity retailer price.

It seems that a switch to the SP wholesale electricity plan is a no-brainer...or is it really?

It depends.

The table above shows average prices and so neglects the volatility of prices of the WEP prices. It depends on one's usage of electricity at home. To be more specific, it depends on when we usually turn on the big guzzlers of electricity like the air conditioners, the water heaters and the washing machines. With WFH, our routines can be quite messed up unlike the Pre-covid times when most of us are in the office between 9am to 6pm.

So when are electricity prices usually more expensive?

I have charted the average WEP and Maximum WEP against the period of the day for the months of July, August and September 2021. The SP regulated tariff and electricity retailer prices are shown in red and green

September 2021

August 2021

July 2021

I would focus more on the Max WEP charts on the right as avoiding these periods of the day where the maximum electricity prices occur would most certainly result in lowering the average wholesale electricity prices even further as seen in the comparison table above. These are generally periods 19 to 45. ( 9.30 am to 10.30 pm) which corresponds well to most workers during pre-covid times as they will not be at home for a majority of this period. So, it really depends on one's routines.

So in general, if one is out of home or do not have to use energy guzzlers during 9.30 am to 10.30pm, one should prefer the SP wholesale plan?

To illustrate how volatile prices can be, the chart below shows the WEP for a single day on a Saturday, 16 October 2021. One would rationalize that periods when prices are high are when factories, schools and offices are running which falls on during weekdays. However, on this fateful Saturday, the prices were amazingly high even at night when people are sleeping from 11 pm to 1am( periods 46- 48 and periods 0 to 2). Prices average $1.3/kWh during the day, with Max price at $2/kWh at 11.30 am and Min price at $0.27/kWh at 5 am. Even at 1am when most people are asleep, the price hit $1.97/kWh! Remember that additional charges of $0.061/kWh will still have to be added to these prices to get the final price we pay.

Now, which plan would you now choose?

Previous post

Which electricity plan to choose?

How much should our networth be?

2021-11-05T05:33:00.003+08:00

In the book The Millionaire Next Door: The Surprising Secrets of America's Wealthy, there is a formula which determines whether we are Prodigious Accumulators of Wealth (PAW) or Under Accumulators of Wealth (UAW). This formula first multiplies your age with your current gross annual income, followed by dividing by 10 to get the expected networth. If my current networth is more than two times the expected networth, i am a PAW. However, if my current networth is less than half the expected networth, i am a UAW.

Example

Thommy is 50 years old now, currently earning $84,000 gross income per annum. His expected networth now should be $420,000. If his current networth is higher than $840,000, he is a PAW. On the other hand, if his expected networth is less than $210,000, he is a UAW.

I am sure many questions are forming in your heads now. Using this formula to see how we are doing financially now, ignores our future spending needs which is different for everyone. I can survive on cai peng everyday but not another person. I can be very able riding a bicycle as a means of transport but not another less able person. Many more questions! But as with all models, take it with a pinch of salt. Imagine a fresh grad at 25 years old who has worked 1 year in investment banking and earning $150,000 a year, he would be a UAW!

The PAW/UAW formula didn't fit what i was looking for. I needed to know whether i was on the right track in terms of whether i was having enough now. To know that, i needed to project

my estimated expenditure after retirement
my annual contributions to my retirement fund till i retire
the inflation rate
my rate of return of my retirement fund if i had invested them

This retirement fund is to be used fully by the time i passed away.

The retirement age will be 63 ( as per Ministry of Manpower in 2022) and the date of passing away will be projected to be 86 (as per the female life expectancy in 2021 by Singstat). Females generally live longer than males who are expected to pass away at 81 (2021 by Singstat) and using 86 is a matter of prudence as life throws curveballs at us.

Example

Esther is 41 years old. She wonders if she currently have enough money to fund her retirement. She has been spending $4000 a month on her lifestyle and would like to continue her quality of living in retirement. Inflation has been hovering around 2% pa historically and she has been getting 5% pa on her retirement fund investments.

She has been contributing $24,000 a year into her retirement fund with ease and believes she can do this till retirement at age 63.

Her networth now should be $201,222.

A lot of things have to go right for Esther to be comfortable with $201,222. She has to be able to contribute $24,000 annually for 22 years to retirement by being gainfully employed, being healthy, not being scammed ,not facing a global financial crisis somewhere along the route to retirement e.t.c. As life do throw curveballs at us sometimes, it would be better to have much more that this networth to be comfortable.

Which electricity plan to choose?

2021-10-31T07:03:00.007+08:00

Our Geneco fixed plan contract ends in February 2022. The rate we are enjoying now is $0.1662 kWh ( without GST). The current Geneco fixed plans in the market is $0.2334 kWh ( without GST) . This is a 40% increase in rates. This is a lot! My electricity bills average about $150 per month, a 40% increase is a $60 increase per month.

This is a comparison table on the best fixed plan , best discount off and SP regulated Tariff.

Updated 31 Oct

A quick summary on the options available to the readers. In Singapore, household residents can choose to buy electricity from three sources.

Singapore Power under the regulated tariff plan ( regulated by Energy Market Authority)
Singapore electricity retailers ( Geneco, Keppel electric, Senoko, Pacific light, Tuas power, Sembcorp e.t.c)
Singapore Power under the wholesale electricity plan

The trades offs between the above are price stability, prices, contracts lock-in and promotions such a credit card discounts or promo codes.

In my opinion, one should never choose the SP regulated tariffs so i was quite surprised to read on papers that about 50% of households are still on the SP regulated tariffs. Get out of it! Its a low lying sure save money choice.

It was reported in the papers that a very small percentage are on the SP wholesale electricity plan.

Let us see how wholesale electricity prices compare with the SP regulated tariff and electricity retailer prices in September.

On the horizontal axis, period refers to the time of the day.

Period 0 - 0000 to 0030

Period 1 - 0030 to 0100

Period 47 - 2300 to 2330

Period 48 - 2330 to 0000

Chart showing the average whole sale electricity for the Sep 2021

Interesting. More due diligence needed. Expect more future posts on the findings. Perhaps, i could switch to the SP whole electricity plan when my contract ends. What better period to stress test the SP wholesale electricity plan than now when the natural gas prices are so volatile and expensive, with winter coming!

Click here for updated electricity statistics.

Property Viewings During Covid

2021-10-30T12:54:00.021+08:00

My wife has been pestering me to go property viewing with her during these times. A happy wife is a happy life. So i obliged.

The above table are the latest 1 year transactions based on URA from September 2021 to October 2020 for a particular freehold property.

As gross yield can be really misleading, I decided to do a simple calculator, taking into account all the fees which we will need to pay.

Additional buyer stamp duty
Buyer stamp duty
Seller stamp duty
Estimate renovation and furniture
Commission paid to agent when we sell this property in future
Commission paid to agent when we rent out this property
MCST fees
Interest rates
Property taxes
Rental income

We made a few best case assumptions.

Property never going to be vacant
No replacement of aircon, lights, fridge , sofa etc for the holding period
Earned income tax is zero. Meaning only the rental income is included in the income tax.

The calculator used is below and the property used is the one with the smallest size 1000 to1100. sqft.

I used a 10 year holding period for the new property and assumed the property did not appreciate after 10 years. Assuming i took a 30 year loan at 75% loan from the bank with an interest of 1.5%p.a, this is how the series of cashflow is.

Series of Cashflow

As an investment property, one will have to have the holding power to tahan the first 10 years where the cashflow is negative.

More detailed information on how the above is calculated is found here.

The IRR( returns a year ) is only 0.75%pa.

This is ridiculous to me. I guess the hope would be for the property to appreciate to make the returns. But would interest rates appreciate too to negate the returns?

You can play with the calculator to see the outcomes of different scenarios by adding ABSD based on the number of existing property one has. As of above, the ABSD is $0 based on no existing property holding.

I made my wife an unhappy woman. Unhappy life.

My review of Moneyowl and Endowus

2021-07-04T17:08:00.008+08:00

[This post is not sponsored and i have accounts with them. The values stated are as per date of post]

The arrival of roboadvisors is a god-send and thanks to them, Singaporeans will be able to build their wealth quicker due to the lower fees. They have laid bare the ridiculous fee structure that have plaqued the wealth management industry.

Imagine if your traditional finanical advisor sold you the fund above and you invested $100,000. You would have already paid fees of $5,000 at point of purchase due to the initial sales charge of 5%. Additionally, you will be paying $1700 every year due to the management fee, part of this fee going back to the traditional financial advisor as trailer fees and part of it being fund-level fees being paid to the asset managers. This is ridiculous and indeed passive income for the advisor.

Instead, if you had invested this $100,000 with a roboadvisor, you will be paying zero initial sales charge and very likely less than $1700 every year depending on the platform or access fee or the trailer fee rebates given by the roboadvisor.

The reduction in fees is not a free lunch as the roboadvisors basically does not have much of an advisory, human touch, unlike a traditional financial advisor and they do not give advice on insurances for a complete financial review. ( MoneyOwl has a insurance and will writing on its platform but still no human element).If your traditional financial advisor has been doing a comprehensive financial review, including your insurances and mentoring you well along the away, helping you with medical claims and watching out for you, then please let him earn. Otherwise, fire him and go with the robos.

I am currently using Endowus and Moneyowl as i haven't found a traditional financial advisor who is worth the fees. I have started with Endowus first as the founders values resonated with me regarding transparency of fees and to help the public gain access with lower fees. It is quite challenging to compare roboadvisors as they seek to differentiate themselves with different products and each have their plus (negative)points. After reading up more on Moneyowl, i do see how one can further reduce fees at this point in time and i have redeemed all my investment using Cash out of Endowus and investing them into Moneyowl, leaving only my SRS in Endowus.

Both Moneyowl and Endowus are the only roboadvisors to have dimensional funds and these funds have no trailer fee rebates since their fund level fees are already so low. If one were to compare the universe of unit trust funds held by them, dimensional funds have the lowest fund-level-fees and if i were to get bang for the buck, i might as well invest in these which can't be found outside easily. These dimensional funds are unit trust and i could see similarities with popular ETFs such as IWDA and EIMI in terms of underlying composition of companies. Specifically, IWDA( fund level fees 0.2%pa) versus dimensional global core equity fund (fund level fees 0.26%pa) and EIMI (fund level fees 0.18%pa) versus dimensional emerging large cap core equity fund (0.36%pa).

Top Sector Weighting

Top Country weighting

Top Company weighting

Top Country weighting

Top Sector weighting

Top company weighting

From above, they are broadly similar in their country and sector weighting with many similar companies in their top 10. In terms of number of underlying holdings:

Dimensional Core equity fund ( fees 0.26%pa) : 7724

IWDA(0.2%pa):1569

Dimensional Emerging Markets large cap core equity fund ( 0.36%pa): 1147 ( this may seem as though it has less companies than EIMI but take note that one of its holding is iShares MSCI India, so the number of holdings understate the true number of companies it has exposure to).

EIMI (0.18%pa): 2998

All the above are irish-domiciled and similar taxes prevail.

Now, a likely question would be: Why would i not want to DIY completely by buying the ETFs instead of the UT since the fees for the ETFs are cheaper? I see some value in paying more in fund level fees if the number of underlying companies is more ( whether it mutes performance in boom times or crisis is another story). In addition, the UTs are priced in SGD while the ETFs are priced in USD. Rebalancing, investing and redeeming the UTs are less psychologically taxing as we do not have to deal with changing currencies and depending on the broker one uses, currency transaction cost can be expensive. Also, one would not be able to use their SRS to buy the ETFs in the first place. SRS is allowed for the UTs but not for ETFs, so for SRS investing its a no brainer as ETF is not an alternative.

Now the next question would be, how about the additional access fees( also known as platform fees) which are on top of the fund level fees paid to the robos, wouldnt these added layer of fees now make it much more expensive than to DIY with ETFs? ( We cant DIY with UTs without the roboadvisors or approved financial advisor) This is a question i have been struggling with for many nights for my cash investment and my short answer is, it is better to DIY with etfs for the cash portion if one has the time and is disciplined. Imagine an investment of $100,000, one will be paying a yearly access fee of $600 to the robos (0.6%pa). Don't get me wrong, the robos have to be paid as they provide a service such as automatic rebalancing and access to such cheap UTs but it is too high for essentially something passively held by them without any further work. For me, due to my intense work and family schedule, i am still with the robo advisors for my cash and as usual still having thoughts of changing to DIY with ETFs frequently due to it being so much cheaper.

Why did i transfer my cash to Moneyowl funds?

Moneyowl has a lower barrier to enjoy lower fees(now till mid 2022, with NTUC60 promo code, there is a 10% off the access fees). Less than 100K is 0.6%pa fees but above that is 0.5%pa. This is for SRS and CASH. The SRS and CASH can be pooled together for the AUM so its easier to reach $100k to enjoy the 0.5%pa access fee for cash. This is tiered, meaning if one were to invest 110k, the whole amount is charged 0.5%pa and not 0.6%pa for first $100k and 0.5%pa for next 10k.

For Endowus, it is also similarly tiered like Moneyowl. Less than 200K is 0.6%pa fees but above 200k is 0.5%pa. Above $1 million, the access fees is 0.35% pa. This is for CASH. For SRS, it is 0.4%pa for any amount. The SRS and CASH cannot be pooled together for the AUM. They are treated separately for the fees unlike Moneyowl.

As i need to reduce the high fees, the strategy is to leave my SRS in Endowus for the 0.4%pa fees and transfer my CASH into Moneyowl for 0.5% pa fees ( being 0.45%pa fees till mid 2022 due to NTUC60 promo code). If Endowus could give a mid tier between $200,000 to $1 million of 0.4%pa fees, then my CASH would be with them. The thing is, there is no transaction fees for both of robos, so there is no switching cost between them.

In summary, i would suggest Endowus using SRS but for cash i would suggest MoneyOwl , until one hits $1 million in cash assets before switching these to Endowus since one would then enjoy a lower 0.35% pa access fees with Endowus. And i wouldn't bother with anything other than Dimensional Core equity and Dimensional emerging markets funds as their fees are the lowest while future performance is always an uncertainty between any other funds, so why risk it.

DIY ETFs through brokerages is still the best in my opinion if one has that time and psychological bandwidth at this point in time to rebalance and DCA until at least the robos lower their access fees to perhaps 0.2-0.3%pa which will make their 1)auto rebalancing, 2)not needing to convert currency and 3) no transaction cost (brokerages charge about 0.2% per buy and sell transaction) worth it. As these funds are usually held long term say 10 years or longer, 0.72% pa ( 0.6%pa access fees + 0.12%pa higher average fund level fees based on dimensional over said IWDA and EIMI ETFs) based on $100,000 investment will cost $720 extra per year and $7200 extra every 10 years.

With the access fees of 0.6%pa, i would not even consider investing my CPF OA. The dimensional funds performance have to cross the hurdle rate of 3.41%pa guaranteed (2.5%pa CPF return+ 0.6%pa + 0.31%pa average fund level fees of the two said dimensional funds ) to make it breakeven. Especially so when CPF OA has many important uses such as housing and education and could serve as emergency funds.

I really do hope that as the robos get bigger with larger AUM under them, they will lower the access fees to around 0.25% flat like how the popular US robos like Betterment and Wealthfront charges.

[I am not a financial or tax advisor. There is indeed a use case for the two robo advisors as stated and my referral code is here for endowus and here for moneyowl. For the former, we both get $20 off access fees and for the latter, we both get $20 grabfood credits]

What happened to Hyfluxshop?

2019-11-22T09:57:00.003+08:00

Disclaimer: I am not an investment advisor. Heck, i am not even working in the financial industry. Below are my interpretation and i am grateful if you will let me know if anything i say is wrong and i will correct it in a reasonable time. I am not an expert and don't wish to be assumed to be one. I make losses frequently.

Unbeknownst to many except the unlucky ordinary shareholders of Hyflux and probably those who are interested enough, the now private company of Hyfluxshop has changed their name to Multi Water Holdings Ltd. Lately in November 2019, Multi Water Holdings undertook a rights issue.

A Brief History of Hyfluxshop to jolt one's memory in case one forgets easily.

Hyfluxshop used to be under Hyflux but through a dividends in species given to shareholders in February 2018, before the court protection to protect Hyflux from creditors in May 2018, Hyfluxshop became a private company. This resulted in Olivia Lum, who is the largest shareholder in Hyflux, having direct interest of 23.8% and deemed interest of 30.4% of Hyfluxshop, representing a total control of 54.2%.

Almost immediately in February 2018, Olivia Lum next offered to acquire the Hyfluxshop shares from other shareholders at $0.1783 a share, valuing Hyfluxshop at $20 million, given that there were a total of 112,183,566 Hyfluxshop shares. As of April 2018, Olivia Lum's direct interest became 45.7% and deemed interest of Hyfluxshop remaining at 30.4%, representing a total control of 76.1%

On November 2019, under the new name of Multi Water Holdings Ltd, one rights share for every one existing ordinary share was announced at $0.087 per rights share. This rights issuance was up to 115,867,780 new ordinary shares, making the total Hyfluxshop shares to 231,735,560 if all new ordinary shares are issued. Olivia Lum provided an irrevocable undertaking to take up in full her share of allotment of 51,332,944 new ordinary shares which would cost her $4.5 million.

The astute reader will find something amiss with the figures above. Between February 2018 to November 2019, the total number of Hyfluxshop shares increased from 112,183,566 to 115,867,780. I couldn't find any information announcing this increase in total shares since the only announcment between February 2018 and November 2019 is the financial statements 2018 which states that that no shares or options were granted.

So What Could Be The Most Likely Outcome?

The holders of Hyfluxshop shares are mainly Hyflux and Hyflux ordinary shareholders. It is very unlikely or rather impossible for Hyflux to subscribe to the rights given it is under court protection and already having no money to pay its creditors. It is also very unlikely ordinary shareholders would have the mood to pump in money, given they are already nursing a loss and besides Multi Water is under a loss position of $30 million based on its latest 2018 financial statements.

So what will be the most likely outcome?

Olivia Lum's control of Hyfluxshop has increased steadily from 54.2% to 76.1% ( or 73.73% due to mysterious ballooning of total shares) to 81.8% or possibly 86.9% of Multi Water Holdings, a private company, beyond the reach of the creditors of Hyflux.

Further reading

1) Considerations about Hyflux
2) The fate of Hyflux
3)Will Hyflux recover? The billion dollar question
4) Hyflux-Treatmeat of perpetual share holders- Ezion
5) Hyflux - loans and borrowings - Pacific Radiance
6)A happy ending for retail perpertual securities holders - Tiger Air and Hyflux
7) The Very Curious Case of Sharebuybacks- Hyflux
8)What did the founder/Chairwoman/CEO do to help hyflux throughout the years
9) Moving forwards at the Townhall meetings with Hyflux - Part 1
10) Moving forward at the Townhall meeting with Hyflux - Part 2
11)The Lucky Accredited Investors of Hyflux's Perpetual Securities - Part 3
12) The Peculiar Case of HyfluxShop - Question 12
13)Uncovering the Real Motivations Behind the HyfluxShop
14) High Level Staff Movement Indication of Red Flags -Hyflux
15)An industry comparison of Hyflux compared with its peers - Question 15
16)What other Water Companies did that Hyflux didn't - Question 16
17)Why a debt to equity option for retail investors is not right
18) Consolidated Questions For Hyflux Townhall Meeting on 19 and 20 July 2018 - Hyflux
19)Consolidated Questions For Hyflux Townhall Meeting on 19 and 20 July 2018 - Hyflux- continued
20)Informal Steering Committee for the Reorganisation Process - Hyflux
21) What happened to other Debt Restructuring Exercises - Ausgroup
22)What happened to other Debt Restructuring Exercises - Nam Cheong
23) My layman views of the so-called " White Knights of Hyflux"
24) The Unsecured Working Group (UWG) are against the retail investors - Hyflux
25)Where to find money to pay back retail investors?
26)What happened at Hyflux's Second Townhall Meeting
27) Another bomb to the retail investors of Hyflux
28)The Underrated Importance of Regulatory Risk - Hyflux
29)The Overlooked Importance of Another Regulatory Risk - Hyflux
30)Why did so many Singaporeans invest in Hyflux - The positive image illusion
31)On Why The Rich Get Richer And Poor Gets Poorer - The Hyflux Proposal is Out!
32)The " not spoken much" dirty little thing about the Restructuring Proposal - the $33 million - Hyflux
33) The Failure of the much touted Public-Private-Partnership Model in Singapore - Hyflux

34)The Curious and Disturbing Default Notice of PUB- Hyflux
35) Why i Am Still Voting No to the Revised Offer - Hyflux

36) The Wrong Impression of the Revised Offer- Hyflux
37)When Exactly Did Tuaspring's Operational Problems Start? - Hyflux
38) The Illusion of High,Recurring Profits and Low Debt - Hyflux
39) Just what is Considered True and Fair? - Hyflux

40)How Effective are SGX Listing Rules Really ? - Hyflux
41)The Liquidation of California Fitness and the case of Hyflux
42) Protection of Retail Investors in Singapore - Hyflux and Noble
43) Spotlight on Singapore Regulators
44) Lehman Bonds are No Hyflux Bonds- An Opinion

Lehman Bonds are no Hyflux Bonds - An Opinion

2019-05-15T06:03:00.003+08:00

“I get emails from a raccoon, so nothing sounds crazy.”

—Natasha Romanof (Avengers:Endgame 2019)

I guess reading a column by Straits Times Deputy Night Editor, Dennis Chan, sounds crazier to me. At the risk of unintentionally quoting him out of context, here is the article he wrote. Please read through it carefully before proceeding further.

" Flooding the investor with all kinds of disclosures is not the answer either. Take risk appreciation, for example. Will an investor reading the Hyflux prospectus for its 2016 perps offering from cover to cover be any clearer about a default risk than someone, who did not, bearing in mind that a prospectus typically contains a long list of things that could possibly for wrong?"
" Statistic students know that merely listing possibilities without knowing the corresponding probability level will frustrate any meaningful risk evaluation."
- by Dennis Chan, Straits Times Deputy Night Editor. ( source: Hyflux bonds are no Lehman Minibonds)

Is Dennis Chan, Straits Times Deputy Night Editor trying to say that full disclosure is not necessary in a prospectus since retail investors who diligently do their due diligence by reading cover to cover, would not be better off than one who hadn't done his due diligence? Or retail investors don't have the ability to digest a prospectus? ( If so, then maybe he didn't realize he just implied that these hyflux securities really ain't suitable to be sold to retail investors). I don't understand what his reasonings are which in my view contradict each other but simply just wanting to drive home the point that Hyflux investors deserved their current predicament. Of course, my opinion.

What is the point of issuing a prospectus in the first place since retail investors are already judged ( at least by Dennis Chan, Straits Times Deputy Night Editor ) to not be any better off after reading it. Therefore,as Dennis Chan, Straits Times Deputy Night Editor mentioned ,flooding with many disclosures are not the answer. This sounds ridiculous in my opinion. How does one, then make informed decisions?

What about what Minister Ong Ye Kung said in Parliament:

"A key aim of regulation is to require that investors have access to "up-to-date, material information such as a listed company's financial conditions and prospects, in order to make informed investment decisions".
But investors also "need to pay close attention to what is disclosed, look beyond potential returns and assess if they can also accept the risks that come with specific investments"
( source: Parliament: Investors must do their part by only taking risks they can live with)

Who is to judge whether a disclosure is material or non-material if Dennis Chan, Straits Times Deputy Night Editor deem it unnecessary to list "all kinds of disclosures"since it will flood? Who is going to be the arbiter of disclosures? The company, who is selling the securities? Or the Monetary Authority of Singapore? Or perhaps, the Singapore Exchange? Or perhaps Mr Dennis Chan, Straits Times Deputy Night Editor? If any of these aforementioned entities are the arbiters, then who will take the responsibility when the disclosure deemed immaterial to be included in the beginning, turns out to be very material in the end?

In order for an informed investing decision to be made, adequate and accurate disclosures should be made and it is the responsibility of investors to consider which disclosures are material and which are not material and then make an informed choice. Let there be no grounds for investors to absolve themselves of any responsibility in making losses and caveat emptor. This is my stand.

Naturally, the next reasonable and fair question would be, why did some investors buy Hyflux 2016 perpetual securities ( or perhaps the 2011), assuming they knew about Hyflux's cashflow. This is what many people shout about when calling Hyflux investors greedy only for the yield and therefore, they deserve every drop of loss. The reasons for this would also precisely answer why they didn't buy the Hyflux ordinary shares, but instead chose to buy the perpetual securities or preference shares, inaccurately coined as "retail bonds" by Dennis Chan, Straits Times Deputy Night Editor. (When a national newspaper use the word bonds loosely, don't blame the public for thinking it has bond-like characteristics.) When Dennis Chan, Straits Times Deputy Night Editor, dismissed this Hyflux episode by comparing with the other failures in SGX where minority stakeholders were only silently griefed and why should this episode be any different, did he realize that this is the very first time that a "retail bond" bought through ATM, ensnaring over 34,000, nearly, all Singaporean investors failed in the history of Singapore? Or did he just mixed up "retail bonds" with ordinary shares where ordinary shareholders lost money, in other failures in SGX?

Olivia Lum has always stated in the annual reports about the asset-light strategy of Hyflux.

"We also adopt an asset-light strategy that allows us to make value-creating investments without taking on excessive borrowings. Our approach is to build up the value of an asset and divest it at an opportune time to recycle capital for growth." - page 8, annual report 2016

"As part of our asset light strategy and to recycle capital for new investments, we unlocked value and divested our entire stake in five water and wastewater treatment plants in China to Tus Water Group Limited, a new joint venture with Tuspark TSI, of which we own 25% stake" - page 4, annual report 2015

"As part of our asset light strategy, we sold and leased back Hyflux Innovation Centre as well as divested our interests in Hyflux Marmon Development Pte Ltd and Marmon Hyflux Investments Pte Ltd." - page 5, annual report 2014

Similar to comparable water companies in Hyflux's industry, once the asset is built, it's sold and the cash is then used to pay back creditors. That's the very nature of the business. Just take a look at the other water companies such as Citic Environtech and China Everbright, who also have negative operating cashflows in 2018,2017. The most important thing for investors of "retail bonds" ( borrowing from Dennis Chan, Straits Times Deputy Night Editor) to take note of then, are the asset and liability valuation figures .Whether they can be **trusted**, in my opinion, so that investors can do their calculations on whether this "loan" can be paid back. They are not looking at prospects of the company because "retail bonds" do not enjoy much capital appreciation. Prudent investors who take note of the cashflow issues of companies in such an industry are likely the very ones who bought the "retail bonds" instead of the ordinary shares.

It is well known that Hyflux is involved in many notable private -partnership projects (PPP) in Singapore. More than 60 % of revenue actually. Unbeknownst to many however, except for diligent investors, is that according to the Ministry of Finance guidelines, PPP projects are structured in such a way that it could be seen by investors to be less risky, hence more reliable asset valuations. This perception is not groundless, this is based on black and white.

"2.3.3 Similarly, for the private sector, there should be sufficient revenue, either from Government or directly from the users, to recover the initial investment and the costs incurred by the private sector. " - (source: page 27 Public Private Partnership Handbook ,emphasis mine)
An email to clarify this statement has been sent to MOF for their clartification on 2 May 2019. No clarifications has been received as of posting. Please read the handbook carefully before proceeding.

Let's put aside the mistaken trust capital build up over the years for the moment perpetuated by the environment. Would it be reasonable then to think that investors had grounds to trust the asset values of Hyflux, or more notably Tuaspring's value , an entirely local PPP project, which is the raison d'être for Hyflux's downfall? Especially when it is considered in relation to 2.3.3 of the MOF guidelines?

Even up to 27 February 2018, less than 3 months before court protection, Olivia Lum was still assuring investors with these words

".....We believe that we have a good asset, we have a good track record, still have a brand name....We have no shortage of interested parties talking to us..."
(source: Hyflux perps won't be redeemed till divestment of Tuaspring)

Based on the then asset value of Hyflux's assets and based on the asset-light strategy, investors could have calculated that selling off the assets would have been sufficient to redeem all of the 2011 preference shares.

However, Dennis Chan, Straits Times Deputy Night Editor ,instead of focusing on what really went wrong, which are non-disclosures, chose to parrot about cashflow issues which has been repeated many many times by many after Hyflux court protection. Worst, he came out to say full disclosures is flooding retail investors and hence not the answer. Let me explain what went wrong that has not been parroted much by the mainstream media instead.

It is the inadequate and inaccurate material disclosures, or rather the material non-disclosures.

Point 1

What was not disclosed in any corporate announcements, let alone the prospectus, was that the Tuaspring Integrated Water and Power plant derived the bulk of its revenue, 90%, from electricity, instead of water. This was only disclosed in the first townhall after court protection.

That the Tuaspring Integrated water and power plant was actually a spare tyre and didn't actually produce 318,500 cubic metres a day but more of only doing about 30% utilization on average was also not disclosed before court protection in any of Hyflux's corporate announcements. Compare this to the statement in the annual report 2013, page 6.

"The official opening of our Tuaspring Desalination plant ( Tuaspring) by Prime Minister Mr Lee Hsien Loong on 18 September 2013 established Hyflux's dominance in membrane-based desalination, particularly in a market considered to be among the most competitive in the world.

Tuaspring adds an additional 318,500 cubic metre of water per day to singapore's water supply." -( source : annual report 2013,page 6, emphasis mine.)

Point 2

What was also not disclosed, was that Hyflux chose to built a power plant " significantly more than what the desalination plant needed, with the intention of selling excess power to the national power grid" according to Minister Masagos in Parliament.

(source: https://www.mewr.gov.sg/news/oral-reply-by-masagos-zulkifli--minister-for-the-environment-and-water-resources--to-parliamentary-question-on-hyflux-on-1-april-2019) .

Compare this with what Hyflux informed SGX
" This Desalination Plant is in the ordinary course of business of the Company. As energy cost is a major cost component of a Desalination Plant, the objective of power plant that was built concurrently was meant to supply electricity to the desalination plant. This was explained on slide 8 of the presentation deck dated 7 March 2011 where the Company explained that this power plant was the best size for optimal efficiencies as energy cost is a major cost component of the Desalination Plant. Excess power will then be sold to the power grid."
- (source :SGX email dated 1 February 2019)

If the objective of the power plant was to supply electricity to the desalination plant, how could 90% of the revenue of Tuaspring be from sales of electricity?

In my opinion, the intention of the power plant stated by Minister Masagos in Parliament is clearly different from the objective stated by Hyflux. The former implied that electricity was intended as a core business while the latter, implied that electricity was intended as an ancillary business.

Point 3
What was also not disclosed was that electricity sales ( comprising 90% of Tuaspring's revenue) was not mentioned as one of the core business of Hyflux in the Newspaper Advertisements when the 2016 perpetual securities were sold.
Instead, the core businesses stated on Straits Times were, environmental solutions, membrane sales, operations and maintenance of water plants.

It is clear to all now that electricity sales is important to Hyflux. It is the very fact that the glut of electricity brought down Hyflux. How then is electricity sales not considered a core business and shown clearly on the advertisements?

Point 4
What was not disclosed ( or not highlighted by Dennis Chan of Straits Times Deputy Night Editor in my opinion) was that under the risk factors stated in the 2016 prospectus, the risk was in the operations of the power plant, not in sales of electricity from the power plant.

"......If any of the Group’s counterparties fails to perform its obligations or if the creditworthiness of any of these counterparties deteriorates, the operations of the power plant may be materially and adversely affected, which may in turn cause the Group’s operations, business and financial condition to be materially and adversely affected...." - page 35 of 197 pages

As far as all the public information released so far, there are no problems with the operations of the power plant. The power plant is operating just fine. Instead, it was the sales of electricity that brought down Hyflux.

Point 5
What was not disclosed was whether Hyflux needed to attain a shareholder approval for major transactions to enter a new core business of electricity which materially changed its risk profile, in accordance with SGX listing rules, practice note 10.1. An email has been sent to SGX for clarification on 20/01/2019. As of latest reply by SGX on 11/04/2019, they are still investigating. I don't know what is taking them so long. This is despite Hyflux having to attain an EMA genco licence according to the Electricity Act to operate the power plant, despite Hyflux having spent more than $800m in power assets in Tuaspring which have breached the 20% market capitalization threshold of the listing rules, despite Minister Masagos stating that the power plant was built significantly larger than what the water plant needed, despite the very fact that it is publicly known that electricity sales was the culprit that brought down Hyflux.

Before 2011 when Tuaspring was awarded, Hyflux was only in the water business. Post 2011, electricity should have been highlighted as a new CORE business but who would have known, until after the court protection.

In conclusion

I do agree with Dennis Chan, Straits Times Deputy Night Editor, on one thing though. He wrote
" so if you were able to identify " The group is a new entrant to the power business" on page 35 of the prospectus as the factor that would bring Hyflux to its knees, your foresight as an investor is exceptional." ( source: Hyflux bonds are no Lehman Minibonds)

Indeed. Except that the retail investors are just your ordinary man in the streets, the retirees and those who work hard for a living in ordinary jobs. Certainly not the exceptional investor or even the " bank credit officers, fund managers and auditors- financial professionals" which Dennis Chan, Straits Times Night Deputy Editor mentioned. Perhaps the latter was mistaken too due to disclosure issues too?

“SMI has been waiting for Hyflux to disclose further material information following multiple requests for such disclosure. The delay in disclosing this material information has prevented SMI from determining a workable allocation between working capital and the settlement amount to creditors under the restructuring agreement.”
(source: https://www.straitstimes.com/business/companies-markets/hyflux-says-rescue-deal-with-indonesian-investor-terminated-cancels)

Now, Dennis Chan, Deputy Night Editor, are disclosures important now, even at the risk of flooding?
With the benefit of hindsight analysis, i would have expected better articles.

The Uniform Selling Electricity Price (USEP) was at the all time low during the issuance of the 2016 Perpetual Securities to the retail public. It was never this low in the history of Singapore, not even now. Who would have known, except for the insiders that the fate of Hyflux depended on the USEP prices when the materiality of electricity sales were not disclosed ?

Who would have known that the asset value of Tuaspring before the court protection would be impaired by about $900 million after court protection since the retail investors are none the wiser about the bleeding of Tuaspring due to its significant exposure to the electricity market? Interestingly, the USEP price and spark-spread is higher than before, yet the asset valuation of Tuaspring is significantly lower. Shouldn't Tuaspring be valued higher instead of being impaired by about $900 million?

Who would have expected just 2 months after the unqualified audited statements were signed off as a going - concern basis, that a court protection will be seeked?

Who would have understood convincingly why Olivia had to give the ordinary shareholders their ordinary dividends , instead of the coupons to the perpetual securities holder? Isn't coupons to perpetual securities holder ranked higher than ordinary shares, according to the terms of the prospectus?

Who would have known, except, unless all these adequate and accurate disclosures were made known.

Dennis Chan, Straits Times Deputy Night Editor, was right when he said investors would not be any clearer after reading cover to cover the Hyflux prospectus, but the reason is not because it was flooded with disclosures but rather it was lacking in accurate and adequate disclosures, in my opinion.

My point is, i would rather be flooded with disclosures. And disclosures are the answer.

To Noble Investors
I have just created a Noble Telegram group for Noble Investors to join. In my opinion, Noble investors are a less unlucky bunch compared to Hyflux because it has Big players on their side. Iceberg has set up a webpage to join them in the lawsuit. I have also reached out to Iceberg and they have responded positively to me.

I am not a Noble Investor and i do not know the specifics of the suit, but i thought the old saying of
"Strength in numbers. Divided we fall, United we stand" is wise. I do not know if it will succeed but let's see how it goes.

To Hyflux Investors
For Hyflux investors, even those ordinary shareholders, we need you. Hyflux posted an announcement on 3 May 2019, finally revealing the name of the mystery new investor. At the date of this posting, from a non-binding offer, it has become a draft binding offer. Is draft binding or non-binding actually? In the 3 May 2019 announcement, it stated the current management will be retained. In the recent extension of court moratorium, Hyflux proposed a New Hyflux and Old Hyflux arrangement. This reminds me of what Iceberg said in May 2015 on their website about Noble.

“The new Noble looks a lot like the old Noble: same management, same director (Elman), about the same financing costs,”

The Hyflux ordinary shareholders hold about 60% voting rights. An extremely uphill battle to vote out the current management definitely, but its worth a shot. And to put things in perspective, at least Noble Chairman Richard Elman stepped down eventually. Noble's Board of Directors, CEO and CFO were also changed, finally, at the very end. How about Olivia Lum (Chairman and CEO) and Lim Suat Wah (CFO)?

Further reading

34)The Curious and Disturbing Default Notice of PUB- Hyflux
35) Why i Am Still Voting No to the Revised Offer - Hyflux

Spotlight on the Singapore Regulators ( Hyflux Case) - SGX, MAS - An Opinion

2019-05-06T12:50:00.002+08:00

Image 1

In the green box above under Point (A), it was clearly stated that the highest price paid for the share buyback was $1.01 per share and the lowest price paid was $0.84 per share in 2014.

Image 2

Image 3

Image 2 and 3 shows the reply to my email enquiry. This was Cced to the Monetary Authority of Singapore (MAS). It stated that Hyflux bought shares below the net asset value per share. This is factually wrong. Any annual report post-2014 would have shown the NAV per share of Hyflux in 2014 was $0.56 and opening up the annual report of 2014 which i referred to would have shown that the lowest buyback price paid was $0.84 per share in 2014 as per Point(A) in image 1.

I replied again to substantiate with evidences and asked a simple question to show me just one example where Hyflux bought below the net asset value as asserted by SGX. This was the email i replied SGX with. I sent the specific page in Annual Report 2017 showing the NAV per share of Hyflux across the years as an attachment. MAS and SIAs is Cced in this too.

Image 4

Image 5

The above shows the Net Asset Value per share (cents) in 2014. Clearly, it was $0.56 per share in 2014.

My comments

The regulators in Singapore are clearly hopeless. Their response gives me the impression that their first instinct would be to jump to the defence of corporations without even doing a basic fact check . What use is a guard dog if it doesn't do its job of guarding the house? It's so blatant considering i have made it very easy for them by giving them the facts already.

To me, it is even worse that Hyflux was in the news already that they were in dire straits and this should naturally necessitate that the regulators should be on high alert on possible breaches or pending investigations.

It is clearly stated in Image 1 Point (A) that the highest and lowest share buyback price was $1.01 and $0.84 per share respectively. It only needed the regulator two minutes of their time to check out the NAV in 2014 by pulling out any of Hyflux's annual report to check like in Image 5. But i guess they couldn't afford the time or maybe just couldn't care.

Clearly, this shows the uselessness of SGX. By the way, the shares were bought back above their NAV per share from 2011 and 2015, every single year.

The Monetary Authority of Singapore (MAS) was also included in all the emails. They delegated the enquiry to SGX as they stated SGX was the frontline regulator. They said they will monitor SGX's response. I wonder what happened with monitoring SGX's pathetically wrong factual information given to me.

I also wonder what was the accountability mete out upon SGX? Did MAS really monitor in the first place?

I think the following statements is very apt.

".............When shareholders and other stakeholders “blow the whistle” on potential misconduct to regulators and provide substantial evidence to support their allegations, regulators must take these complaints seriously. Regulators should not only investigate when incontrovertible evidence has been provided by whistleblowers, who lack resources and investigatory powers themselves.

We often hear regulators talking about different stakeholders playing their role in improving market integrity. If stakeholders’ efforts in highlighting possible misconduct do not get the necessary support from regulators, they will stop doing it and the market will be the worse for it.

I am concerned about the loss of trust in our market and urge that more be done to improve regulatory enforcement to rebuild that trust. " - NUS Professor Mak Yuan Teen ( Emphasis mine)
source: http://governanceforstakeholders.com/author/mak-yuen-teen/page/5/

Guess what was SGX final response to my email (Image 4)?

They could not give a single example when Hyflux bought their shares back below the NAV per share. Choosing instead to ignore that question and carry on life as usual.

And very ridiculously, the Company that i am lodging a complain against answered my query. I wondered if SGX checked on the validity of the reply. Oh but wait... this time, SGX replied to me without Ccing MAS. I wonder how MAS is able to monitor SGX in this case.....

The complacency and arrogance of the current system is appalling. There is totally no accountability , no check and balances with CEOs also being Chairman as in the case of Hyflux and with unwilling regulators. SIAs remained silent throughout the email, in case you are wondering.

Retail investors, just remember, you are on your own in Singapore.

More to come...surely...stay tuned.....

To Noble Investors
I have just created a Noble Telegram group for Noble Investors to join. In my opinion, Noble investors are a less unlucky bunch compared to Hyflux because it has Big players on their side. Iceberg has set up a webpage to join them in the lawsuit. I have also reached out to Iceberg and they have responded positively to me.

I am not a Noble Investor and i do not know the specifics of the suit, but i thought the old saying of
"Strength in numbers. Divided we fall, United we stand" is wise. I do not know if it will succeed but let's see how it goes.

To Hyflux Investors
For Hyflux investors, even those ordinary shareholders, we need you. Hyflux posted an announcement on 3 May 2019, finally revealing the name of the mystery new investor, albeit, still a non-binding offer. In it, it stated the current management will be retained. In the recent extension of court moratorium, Hyflux proposed a New Hyflux and Old Hyflux arrangement. This reminds me of what Iceberg said in May 2015 on their website about Noble.

“The new Noble looks a lot like the old Noble: same management, same director (Elman), about the same financing costs,”

The Hyflux ordinary shareholders hold about 60% voting rights. An extremely uphill battle to vote out the current management definitely, but its worth a shot. And to put things in perspective, at least Noble Chairman Richard Elman stepped down eventually. Noble's Board of Directors, CEO and CFO were also changed, finally, at the very end. How about Olivia Lum (Chairman and CEO) and Lim Suat Wah (CFO)?

Further reading

34)The Curious and Disturbing Default Notice of PUB- Hyflux
35) Why i Am Still Voting No to the Revised Offer - Hyflux

40)How Effective are SGX Listing Rules Really ? - Hyflux
41)The Liquidation of California Fitness and the case of Hyflux
42) Protection of Retail Investors in Singapore - Hyflux and Noble

Protection of Retail Investors in Singapore - Noble and Hyflux - An Opinion

2019-05-04T07:39:00.004+08:00

Disclaimer: I am not an investment advisor or lawyer. Heck, i am not even working in the financial industry. Below are my interpretation and i am grateful if you will let me know if anything i say is wrong and i will correct it in a reasonable time. I am not an expert and don't wish to be assumed to be one. I make losses frequently.

"......The SGX and MAS have proven themselves incapable and impotent while greed has blinded the vast array of financial intermediaries who have enabled this tragedy. While I remain open to being proven wrong, Richard Elman, his management, EY and every single board member have utterly disgraced themselves through the most appalling lack of transparency, financial controls and governance. This indeed is Asia’s Enron.
What is needed now is for the courts and the legal system to do the regulators job and step in and force the disclosure and transparency the regulators have been unwilling to demand......."
- Micheal Dee ( Ex-CEO of Morgan Stanley South East Asia and a former managing director of Temasek). Emphasis mine.
source: https://iceberg-research.com/2018/05/08/dead-men-walking/

Above is about Noble. I did not invest in Noble, instead i invested in the 2016 Hyflux Perpetual Securities. I see similarities between Noble and Hyflux, most notably, the lack of any accountability enforced by regulators. With reason, i am of the opinion that there are grounds for enforcement action in Hyflux and in Noble's case. I am not a lawyer, neither am i educated in law. From my experience with this Hyflux episode, i am utterly disappointed with the current state of protection for retail investors.

In my opinion, there is neither an effective regulatory system nor legal avenue in Singapore that protects retail investors against corporations and their significant stakeholders.

Legal Avenues For Retail Investors

1) Unlike in the United States, Singapore does not allow class action. A class action is one in which a group of people with the same or similar injuries caused by the same product or action sue the defendant as a group. Anyone who doesn't want to join the class can choose to opt out, otherwise, they are automatically in it.

Class action enables the vindication of claims that otherwise could never be litigated, no matter how meritorious. Class actions can also be a way of leveling the playing field for poor or economically less powerful individuals.
Read here for class action case ( Yahoo) in US.

2) Unlike the US, Singapore also does not allow contingency fees where a lawyer is allowed to take a cut from the winnings. This is seen in ( Law Society of Singapore v Kurubalan s/o Manickam Rengaraju ) where a lawyer was punished for doing so in 2013.

3) Representative action ( different from class action) has happened in Singapore.
Representative action is a kind of group action, similar to class action, however, it is based on an opt in system where only those who wish to be represented join the suit and any recovery or cost is theirs alone. However, there are stumbling blocks to how it can benefit retail investor.

An example is ( Koh Chong Chiah v Treasure Resort ) The representative action was thrown out by the judge initially as it did not fulfil certain tests. On appeal to the Court of Appeal, the higher judge allowed the representative action, based on tests again. In my opinion, this just takes additional time and cost, to determine whether the claimants can form a representative action before the real case is fought.

4) In recent years ,there is an initiative to allow litigation funding. However, it seems that the litigation funding cases here are primarily to fund liquidators in the name of companies during insolvency. Recovery from such cases are on behalf of companies which would then distribute the proceeds according to ranking of the creditors.

Legal fees in Singapore are notoriously expensive. By allowing lawyers to take a cut from the winnings without retail investors having to fork out much money would allow access to justice and a fairer society. I do not agree with naysayers who say that allowing such a structure will lead to a litigious society because lawyers would not agree to frivolous suits as they are vested. Instead, lawyers will be more motivated and this solves the principal-agent problem where some lawyers just act to drag cases to earn fees even when they know the case has a low chance of winning.

The only recourse to retail investors are through representative actions. The obstacles are great due to the need for gathering claimants and determining the fees each claimant should pay. This is on top of the need to satisfy the various tests/criteria. This will certainly drag the case, lining the pockets of lawyers, to the detriment of retail investors.

On the surface, liquidation funding seems like an improvement. However, on deeper look, it actually serves to advance the needs of corporations or people with resources, to the detriment of retail investors. Retail investors are generally ranked behind the other creditors( corporations and the rich) and they would get nothing or very little since such cases are fought on behalf of the company and recovery goes to the company. Besides, it only applies to insolvency. If the rogue company drags its restructuring, liquidation funding is not applicable.

In the Singapore Constitution - Article 12(1) - Equal Protection
'All persons are equal before the law and entitled to the equal protection of the law.

However, if the lack of resources hinders retail investors' access to avenues of justice identical to what rich corporations and rich people are able to, is this a fair society?

Hence, in my view, allowing of class actions as punitive deterrence and also allowing contingency fees by lawyers, would make Singapore a much fairer society. It is in the public interest to do so.

The Regulatory System

Noble
Iceberg research, issued their first report in Feb 2015. Muddy Waters, another similar research outfit, issued another report in April 2015. In their reports, they stated very clearly what was wrong with Noble.

It was only in Dec 2018 that there was an official joint statement by MAS, CAD and SGX Regco. Three and a half years later........Yet, this joint statement was only about investigations ongoing and it was "imprudent" to allow the re-listing of New Noble. The ship has sailed...for goodness sake!

The funny thing was that even after the comprehensive reports by the two research houses have been released in early 2015, Noble was still allowed to raise $500m from equity holders in June 2016, and a $750m bond in March 2017. I am not a Noble investor. The corporate announcements of the old Noble has been taken down, so it is better to read here for the specifics of the case.

Up till date, i don't remember hearing anyone being held accountable. Noble has been likened to Asia's Enron but contrast this with the real Enron, where the US Securities and Exchange Commission (SEC) charged the CEO who was sentenced to 24 years imprisonment. In Singapore, no one is accountable as of now, to my knowledge!

“....In the Noble case, however, they were well informed and yet have failed miserably over 3½ years to protect investors and maintain the integrity of their financial markets. Their excuses are lame and misleading, their investors have lost billions and, worst of all, they have shown others who would deceive that there is little risk of being held to account"
- Micheal Dee ( Ex-CEO of Morgan Stanley South East Asia and a former managing director of Temasek). Emphasis mine.
source: https://www.theedgesingapore.com/former-temasek-director-michael-dee-calls-forensic-accountant-look-noble

Hyflux
The snail pace of investigations in Noble's case is utterly in contrast to the speed at which MAS has taken to defend DBS bank, the issue manager for both the 2011 and 2016 Hyflux Preference shares and Perpetual Securities ( PnPs). As far as i know, there was no research report or general big hooha in the news that DBS is to be blamed, yet, the speedy action of MAS to jump to the defence of DBS is uncalled for. To me, MAS chose to rely on a single statement, neither bold, underlined or emphasized and inconspicuously stated on page 119 of the 197 pages of the Hyflux 2016 prospectus to seemingly release DBS of any impropriety.

"If the current challenging market landscape of low Singapore electricity prices continues, the Tuaspring power plant is expected to incur losses in 2016. "

197 pages for goodness sake! And one statement on page 119 is deemed sufficient for adequate and accurate disclosure for retail investors to make an informed choice. With the target audience of retail investors made up of retirees and the working class, many unsophisticated investors!

Why was MAS so quick to jump to DBS's defence when no one accused it publicly of any impropriety? I understand the systemic importance of banks to the whole financial ecosystem. Very recently, in an unrelated case to Hyflux's one, the regulators in Australia fined the National Australian Bank (NAB) A$1.05 billion. They also fined ANZ bank A$928 million. Westpac and Commonwealth banks were also not spared. Total fines for the sector amounted to A$6 billion. Surely, punitive fines will not cause systemic failures. Why the need for the quick defence leaves one to wonder.....

Also, within 2 months of an unqualified audited Annual Report 2017 based on a going-concern basis, Hyflux filed for court protection. Isn't it weird?

Many people that i know have emailed facts and evidences to the various regulatory agencies. Hyflux and the various stakeholders are all based in Singapore. I wonder if the ship will again sail off .......

I will leave some phrases from experts for your consideration. This phrases may not be specific to Hyflux's case.

"....A debt capital markets lawyer here told The Business Times: "When I first came in, I was actually very shocked by the whole process of how easy it is to raise a bond. Issuers want to issue bonds quickly but don't want to spend on fees, so that comes at the expense of credit ratings, and the due diligence process....." - Published in July 2018
Source:
https://www.businesstimes.com.sg/brunch/insolvency-limbo-the-sgd-bond-market

"....Lim Sin Teck, partner at Morgan Lewis, flags that due diligence and disclosure standards in the international high-yield market are more robust than here: "Right now we're seeing a whole range of standards in disclosure in the Singapore market...." - Published in July 2018
Source:
https://www.businesstimes.com.sg/brunch/insolvency-limbo-the-sgd-bond-market

It seems to me that the welfare of companies take precedence over the welfare of retail investors when companies are allowed to easily and quickly raise money from retail investors and have ample leeway in terms of disclosure.

Where are the safeguards for retail investors?

My comments

Retail investors in Singapore, in my opinion, are left utterly defenseless. A David with a slingshot agaisnt a Goliath with a shield, a spear and a sword. The regulators have to step up, or the legal system have to change to make investing in the Singapore Exchange a much fairer and safer investing place. We now have Noble, Hyflux ...what next?

“Singapore’s regulators, if they really care about investors, and their own reputation, should halt the restructuring agreement, demand full disclosure of the last 10 years of management and board compensation, and appoint a world-class, fully independent forensic accounting firm to [investigate whether] Noble has been running a criminally fraudulent accounting programme that has precipitated the collapse of the company,” Micheal Dee ( Ex-CEO of Morgan Stanley South East Asia and a former managing director of Temasek). Emphasis mine.
source: https://www.theedgesingapore.com/former-temasek-director-michael-dee-calls-forensic-accountant-look-noble

If a less litigious society is preferred , then The Authority in charge of MAS has to make sure that MAS does it's job of enforcement effectively and corporations are effectively deterred.

As representative action seems like the only way now for retail investors to fend for themselves and do the regulator's job of seeking accountability and to serve as a deterrent.

To Noble Investors
I have created a Noble Telegram group for Noble Investors to join. In my opinion, Noble investors are a less unlucky bunch compared to Hyflux because it has Big players on their side. Iceberg has set up a webpage to join them in the lawsuit. I have also reached out to Iceberg and they have responded positively to me.

I am not a Noble Investor and i do not know the specifics of the suit, but i thought the old saying of
"Strength in numbers. Divided we fall, United we stand" is wise. I do not know if it will succeed but let's see how it goes.

To Hyflux Investors
For Hyflux investors, even those ordinary shareholders, we need you. Hyflux posted an announcement on 3 May 2019, finally revealing the name of the mystery new investor, albeit, still a non-binding offer. In it, it stated the current management will be retained. In the recent extension of court moratorium, Hyflux proposed a New Hyflux and Old Hyflux arrangement. This reminds me of what Iceberg said in May 2015 on their website about Noble.

“The new Noble looks a lot like the old Noble: same management, same director (Elman), about the same financing costs,”

The Hyflux ordinary shareholders hold about 60% voting rights. An extremely uphill battle to vote out the current management definitely, but its worth a shot. And to put things in perspective, at least Noble Chairman Richard Elman stepped down eventually. Noble's Board of Directors, CEO and CFO were also changed, finally, at the very end. How about Olivia Lum (Chairman and CEO) and Lim Suat Wah (CFO)?

For Other Investors of other companies
A level playing field between corporations and retail investors can only be good for everyone. In a large scattered group, differing messages will be sent out. I can only speak for myself. It is the corporate entities and significant stakeholders whom accountability and recovery from is seeked. Understanding what happened along the way was also necessary in the process of reaching my conclusion. I hope you read it the right way.

It would serve as a good read to understand more about the state of regulatory governance in Singapore by this subject matter expert, a NUS Professor.
David Vs Goliath
No Sign of Governance - March 2019
Administrative oversight, inadvertent omissions, administrative inadvertences: what next? - January 2019

" Inadvertent Omissions" Another Blot On Our Disclosure-Based Regime - Nov 2018

More can be done despite surge in sgx regulatory action - May 2018

Further reading

34)The Curious and Disturbing Default Notice of PUB- Hyflux
35) Why i Am Still Voting No to the Revised Offer - Hyflux

40)How Effective are SGX Listing Rules Really ? - Hyflux
41)The Liquidation of California Fitness and the case of Hyflux