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Where would CPF money go if it is nominated to a bankrupt? When Madam Lim Lye Kiang sought to claim the $102,000 from CPF which her late sister had left her, she would never have expected that the CPF Board transferred the money to the OA (Official Assignee) to...

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Why you should not buy IPOs As Sheng Siong is launching its IPO next month, I expected a few calls as whenever an IPO is launching. And if you are my client, you know my answer. I decide to write this article so everybody can benefit...

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Questions to ask your Financial Adviser Every Sunday morning when I flip open the newspapers, I always see articles or advertisements regarding "Financial Advisers". Nowadays, just like the once prestigious word "Banker", which is misused in...

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Revision to Nomination of Insurance Nominees Regulation With the onset of the Mental Capacity Act ("MCA") coming into effect on 1st March 2010, the Insurance (Nomination of Beneficiaries) Regulations 2009 ("the Regulations") will be amended to effect 2 changes: The...

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The ABCs of the Financial Advisers Act The title, Financial Adviser, is always mis-used in the industry and misunderstood by the consumers. On 10 October 2002, the Financial Advisers Act came into effect and all financial institutions are...

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Is Perennial China Retail Trust a good buy?

Posted by Ivan Guan | Posted on 31-05-2011

Category : Stocks

Tags:

It has become a phenomena that every time an IPO is launching, I will receive a few calls asking if it is a good buy. Investors always have this interesting perception that they buy IPO at discounted price of the stock. Many investors DREAM to become overnight new rich by buying IPOs.

The most recent IPO is Perennial China Retail Trust (PCRT), which deals in retail space in China. The IPO is planning to raising S$776.2 million with units priced at S$0.70 each. This is significantly lower than the $1 per unit which it had planned previously. It were shelved due to concerns of slow growth in China as well as the worsening debt situation in Europe.

Let’s just exam the fates of the hot IPOs in the past; Green lines refer to Straits Times Index, Orange Lines represent the performance of the IPOs.

Mapletree Commercial Trust vs STI (as May 30, 2011)

  • Hutchison Port Holdings Trust

Hutchison Port Holdings Trust vs STI (as May 30, 2011)

CapitaMalls Asia Ltd vs STI (as 30 May 2011)

So I will leave it for you to decide yourself on the fate of Perennial China Retail Trust.

But wait, isn’t LinkedIn IPO which just doubled its price since Thursday debut? Of course, check out who are the winners of the game.

Who benefited the most from LinkedIn IPO

Posted by Ivan Guan | Posted on 31-05-2011

Category : Stocks

Tags: , ,

LinkedIn IPO debut on Thursday and nearly doubled to $87 from its $45 IPO price, who benefited the most?

Here’s a peek at the LinkedIn millionaires club (Source: Wall Street Journal):

* Reid Hoffman: LinkedIn’s co-founder and former CEO’s 21.7% voting stake in LinkedIn is worth more than $1.6 billion. He’s holding onto nearly his entire stock pile, save for a $5 million slug for a down payment on a new yacht or whatever.

* Goldman Sachs: The investment bank sold all 871,840 of its shares in LinkedIn. They pocket $39 million from the IPO. if Goldman had waited one day and sold its shares on Thursday, its stake would have been worth $76 million.

* McGraw-Hill: The company, owner of Standard & Poor’s, made a $5 million investment in LinkedIn at a valuation of roughly $1 billion, according to people familiar with the three-year-old transaction. At the $4.3 billion IPO valuation, McGraw-Hill will reap $19 million from the sale of its LinkedIn stock.

* Jeffrey Weiner: The CEO’s 2.5% stake in LinkedIn is worth roughly $200 million on paper, though he is selling just a sprinkling of his stock as part of the IPO.

* Sequoia Capital, Greylock, Bessemer: The trio of private-equity firms were early investors in LinkedIn, and are being rewarded with a stake valued collectively at $3.1 billion, based on Thursday’s stock price. The VC firms also are holding onto their LinkedIn stock, rather than using the IPO to cash out and run off.

So who benefited the most from an IPO?

Berkshire Hathaway AGM 2011 – Insights from Warren Buffett

1

Posted by Ivan Guan | Posted on 05-05-2011

Category : Market Commentary, Stocks

Tags:

On Saturday, April 30, 2011, Berkshire Hathaway Inc. held its Annual General Meeting in Omaha, Nebraska. An estimated 40,000 people gathered here to listen to Warren Buffett, 80, Berkshire’s Chairman and CEO.

One of my colleague has attended the AGM.

There are some key insights shared by Neil Jain, a fee based financial adviser from Canada whom my colleague met during the AGM.  I find a couple of the topics very relevant for Singapore Investors.

Investing for the average person: “Consistently set aside money in index funds”

Buffett advises that if you “have a day job” and aren’t going to be actively engaged in investing, then “consistently set aside money in index funds.” He asserts that this is the best long-term strategy.

Although his personal net worth is nearly fully invested in Berkshire, he hypothesizes that if he had another job, index funds would be the choice for him too.

Commodity investments: “You’re simply betting”

Buffett has for many years considered gold to be an unwise investment. He believes that when trading commodities, because of their finite nature, “you’re simply betting on the fact that someone else will value that commodity at a higher price in a few years.”

He animatedly repeated a quip that we dig up gold from South Africa, ship it to the U.S. and put it back in to the ground in the Federal Reserve. “Aliens from Mars would think we’re crazy!”

Currency, inflation and purchasing power: “The U.S. dollar will decline”

Buffett commented that he believes “the U.S. dollar will decline” in relation to other currencies but he doesn’t know how rapidly.

He believes all currencies will lose purchasing power over time. This is common when a higher inflationary environment is anticipated.

You can read the full article archived here.

Why market has been so surpisingly strong?

Posted by Ivan Guan | Posted on 02-05-2011

Category : Market Commentary, Stocks

The MSCI World Index has increased by about 8% year to date. The equities market showed strong resilience against several unsettling global events that included

  • major civil unrest in the Middle East and North Africa (which led to higher oil prices)
  • a massive earthquake in Japan
  • renewed sovereign debt concerns in peripheral euro zone economies.

This surprised many bears who have been waiting short term correction for long.

I recently read a report from Legg Mason Asset Management and find an interesting comment about S&P 500 performance as below:

In our view, the market has been so surprisingly strong in the face of an onslaught of discouraging news. In a word, we believe the answer is “regret“. We think investors have finally realized they have been too negative on the stock market over the last two years, regret missing the near doubling of the S&P 500 over that time period, and have been hoping for a correction in the market to put more money to work.

That view is supported by data on mutual fund flows from The Leuthold Group, LLC, which show net inflows of US$40.5 billion into U.S. focus equity mutual funds this year through March 30. Moreover, Leuthold’s data … suggesting that investors are now more willing to “buy the dips” than they have been in previous corrections.

Mapletree Commercial Trust Launches Second Largest IPO This Year

Posted by Ivan Guan | Posted on 19-04-2011

Category : Stocks

Tags:

The Mapletree Investments, a property arm of the state-owned Temasek Holdings, is launching what is set to become Singapore’s second largest initial public offering (IPO) this year.

Mapletree Commercial Trust (MCT) aims to raise up to $983m from the offering, after pricing the shares at $0.88 each – slightly above the mid-point of its marketed range of $0.84 to $0.91 per unit. At the offer price, the projected yield for the year ending 31 Mar-12 and the year after is 5.7% and 6.2% respectively. MCT will sell up to 1.1b units (including the over-allotment option), of which 548.1m have been set aside for placement to institutional investors and another 302.2m to be taken up by cornerstone investors including NTUC FairPrice Co-op, AIA group, Hillsboro Capital and Itochu Corp.

MCT will initially hold three assets worth $2.8b in total, with crown jewel being Singapore’s largest mall VivoCity and the others being Bank of America Merrill Lynch HarbourFront and PSA Building office buildings. The local retail investors are likely to scramble over the 164.8m units made available to public, which opens today at 9am and will close on 25 Apr at 9am. MCT is expected to start trading on the mainboard on 27 Apr.

Source: SharesInv.com

S&P Raised AIA Group Rating TO AA-

Posted by Ivan Guan | Posted on 24-11-2010

Category : Insurer News, Stocks

Tags:

HONG KONG, 23 NOVEMBER 2010 – AIA Group Limited, (“AIA”; stock code: 1299), the largest independent listed pan-Asian life insurance group in the world, is pleased to confirm that Standard & Poor’s Rating Services (“S&P”) has raised its ratings on two of AIA operating entities — American International Assurance Company, Limited (“AIA Ltd”) and its wholly owned subsidiary American International Assurance Company (Bermuda) Limited (“AIAB”) — to ‘AA-’ from ‘A+’, outlook stable.

Understand the risks before you subscribe DBS Preference Shares

Posted by Ivan Guan | Posted on 14-11-2010

Category : Stocks

Tags:

Some of my clients are excited about DBS Preference Share recently and they are asking for my opinion. After talking to them, I realized that most of them might have a wrong impression about what is being offered.

Some backgrounds, DBS is offering as much as S$500 million preference shares to retail investors with a fixed dividend rate of 4.70% a year. The payout is made twice a year. It is non-cumulative, non-convertible and non-voting preference shares callable in 2020.  Given the current near zero interest rate in the banks, it appears to be a attractive offer to many conservative investors.

However, investor must take note preference share is bond alike but it is NOT a bond.

First of all, forget about the very remote possibility of DBS being liquidated, in normal situation, the dividends are Fixed but NOT GUARANTEED, in DBS Preference Shares Offer Information Statement (page 28), it says

If the financial condition of DBS Bank were to deteriorate, DBS Bank could suspend dividends under the
Preference Shares, and investors would not receive such dividends or other payments. Investors should
not assume that unfavourable market or other conditions or events will not harm the financial condition
of DBS Bank.

Secondly, “Non-Cumulative” means if DBS does not make a dividend payout, it does not have to make up for this later when it is able to do so.  “Non-Convertible” means you cannot convert your preference shares into ordinary shares. Investors also do not have voting rights.

Thirdly, Investors should also beware that the preference shares are expected to be listed on the Main Board of the Singapore Exchange Securities Trading Limited from 23 November 2010, and will be traded in board lots of 100 preference shares.

Let’s be reminded that in 2008, investors who have bought OCBC Bank Preference Shares and United Overseas Bank preference shares have suffered paper losses on their investments as they crashed below issue price when Lehman Brothers failed a few months later.

Do ask yourself if that happens again, would you be able to bear the pain and hold the shares till the maturity.

Above all, as I always stressed, every product has its merit. The important thing is if the investors can purchase the one which is suitable for them.

AIA IPO will start trading in Hong Kong today

Posted by Ivan Guan | Posted on 29-10-2010

Category : Insurer News, Stocks

Tags:

AIA Group Ltd. will debut on the Hong Kong stock exchange today after climbing in unofficial over-the-counter trading following the biggest initial public offering in the city’s history.

Shares of Hong Kong-based AIA, the insurer sold by American International Group Inc. in a $17.8 billion IPO, last traded at HK$21.50 each yesterday in gray market transactions brokered by BTIG LLC, said Christian Kielland, a managing director at the firm’s Hong Kong office. That’s 9.2 percent higher than the IPO price of HK$19.68 each.

Read the full story at Bloomberg

SGX agrees US$8.3b buy of ASX

Posted by Ivan Guan | Posted on 25-10-2010

Category : Stocks

Business Times: Singapore Exchange Ltd (SGX) unveiled an agreed A$8.4 billion (US$8.3 billion) takeover offer for Sydney-based ASX Ltd today to create Asia’s fourth-largest stock exchange.

SGX offered a combination of A$22.00 in cash plus 3.473 of its own shares, valuing ASX shares at A$48.00 each – a 37 per cent premium to their last trade on Friday.

It faces several hurdles, including needing Australia’s parliament to lift a 15 per cent ownership cap on ASX and Foreign Investment Review Board (FIRB) approval of the deal.

Shares in ASX spiked as much as 25 per cent to A$43.89 after it resumed trade, still well short of a record high of A$61 in early 2008, and were up 20 per cent at 0330 GMT.

SGX shares fell as much as 6.7 per cent and last traded down 5 per cent at S$9.06.

SGX said it had secured an 18-month bridging loan to finance the deal and would not be raising equity ahead of the purchase, expected to complete in the second quarter of 2011.

SGX vs ASX on Oct 25 2010 (Source: Bloomberg)

My two cents: It appeared the news is not well received, some people feel the takeover price was too high and markets are concerning about the regulatory issues.

Investors should bear in mind that in Merger and Acquisition, the taking over party (SGX) price will drop and the taken over (ASX) price will rise. as shown above.

Be very careful when you are catching a falling knife.

SGX set to launch A$6b offer for ASX

Posted by Ivan Guan | Posted on 23-10-2010

Category : Stocks

Singapore investors have been pampered with exciting news lately. After the near largest IPO for Global Logistic Technologies (GLP) and MapleTree Industrial Trust (MIT), “SINGAPORE Exchange (SGX) could be on the verge of a historic takeover, with an estimated A$6 billion (S$7.65 billion) bid for Australia’s ASX” (Source: Business Times)

The move by SGX – which has been under the leadership of merger maestro Magnus Bocker for under a year – could create Asia’s biggest exchange at a time when SGX is facing pressure to outshine Hong Kong, and establish itself as a strong commodities player in Asia.

‘Is a merger good? Definitely,’ said a CIMB research report yesterday, noting ASX’s heavy focus on commodities, with mining giants BHP Billiton and Rio Tinto listed there. On SGX’s part, it has forged ties with the London Metal Exchange and expressed interest in drawing more commodity companies to list to Singapore.

SGX has been active in beefing up its listing business, will clear over-the-counter (OTC) Indonesian sub-bituminous coal swaps from Nov 3. and just announced on Friday that they would look into dual-listing opportunities with Nasdaq OMX through a new cooperation agreement.

Investors should pay attention to the announcement and price action on Monday.

http://www.nasdaqomx.com/
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