7% of hope

Temasek owns 261 million preferred shares of Citibank that pay 7% fixed returns. What does this mean? 7% of what? 7% of the value of the 261 mil worth of shares or 7% of the par value of the shares? If it is the latter, then nothing much to talk about as the amount will come to about US$18m pa, assuming the par value is US$1. Now, if the return is based on the total sum paid for the preferred shares, eg at US$10 each, the return will be a neat US$180m pa. The amount will vary accounting to the share price agreed upon. This is quite likely as the returns must be gauge against who Temasek could get from other fixed income products other than minibonds. Oh, maybe minibond returns are factored in as these bonds were then yielding 4 or 5% returns. Which is which, this has not been explained. 7% of what? The return must be quite sizeable or else Citi will not be attempting to force the conversion of these shares to ordinary shares earning no fixed returns. Is there a 7% of hope?

Right to know or right not to know?

We have heard the huge losses of Temasek's investment, all $58b! Now, don't ever poof poof this as small change. It is a very huge sum of money. What about GIC? How much has it lost? Rumours and speculations are that it has lost more than $100b! Given the $550b portfolio that it was managing then, it is unlikely that it can escape the meltdown with less than 30% loss. Do the citizens have the right to know how much we have lost? Or shall this be kept under veil in the name of secrecy or professional expediency? Is it acceptable not to tell the people how much we have lost? Is this the people's money? If so, can we ask and be told of the real numbers? Or shall we be complacent and just trust that the money is in good hands?

Minibonds and the stock market - Which is more destructive?

We have seen the victims of the minibonds and toxic financial products. Of course no one is responsible for the mess and the loss of millions from our investors. These investors are expected to be smart enough to know what they were doing, and stupid enough to lose all their monies in things they do not know enough. They should count themselves lucky, to be able to point the fault at the products and the agencies selling them, including the ‘irresponsible’ marketeers. I am not sure if it is fair to blame this group of scapegoats. But what these people have lost in the minibonds is nothing compare to the billions lost in the stock market. Blame it on the contagion effect affecting the whole financial world. No one is to be blamed. Really? OK, OK, better not to blame anyone if we want people to listen. Once people think that they are being put on the spot, their guards will be up. In our hurry to build a big stock market after the collapse of CLOB, have we been too quick and too loose in expanding our stockmarket, with all kinds of stocks from China and a little from other emerging countries launching their IPOs here? Now we are seeing how risky they can be without the close quarter monitoring. We are seeing frauds after frauds, with managements running away or accounting irregularities. Have we thrown caution into the winds just to achieve our ambitious plan of expanding at all cost? Then there is the operating system that favours the big boys who can muscle out the small investors by brute force, force selling all the way down, or vice versa. Not only the investors were hurt, corporations also see their stock values hammered to levels beyond recognition, far below their net asset values. Now IPO listing is a stigma that few would even contemplate. No body have faith any more in IPOs and our market. Derivative markets are as good as dead. Before we ask where are we going from here, please ask how much have been lost, or how many billions have been lost. The sad thing is that unlike the minibond fiasco, it is difficult to pin point at one single fault. So there is no avenue to seek redress. Caveat emptor, caveat emptor! Everyone looks like an angel. Yes I can see the halo ring above the heads. Where is the moral responsibility, the public duty, and professional conduct and accountability to ensure that the system is sound and fair to all participants in the market? Are we happy at the way the market is running and at the way money is being lost in the market? Actually the money were not lost. They were being scooped away. It is high time that something be done to stamp the incessant loss of money in the market? Anyone bothers? Anyone responsible? Who cares, the apple still look ravishingly red and sexy outside. All we are hearing is that we have one of the best regulated market in the world. Best in what and to whose benefit? Anyone want to ask the opinion of the small investors? Who is laughing all the way to the bank? And whose bank accounts are being emptied? It is a tragedy! Nothing less. PS. Japan is worried that confidence in their stockmarket and financial system is breaking down and is seeking ways to intervene in the stock market to prime it up. They are preparing billions to buy into the stock market. I think we will do nothing. It is all caveat emptor. We have the best system in the world, and it will run to a halt on its own. Have faith. Trust that the system is in good hands.

We will

We will look after our old, our weak and our sick! We will house them, feed them and care for them! We will return their savings as promised and not suka suka keep it at our pleasure! We will build housing at really affordable price, not market price! We will build hospitals to care for our sick, not at astronomical prices! Hmmmm, I think any potential political party that adopts the above as their party slogan will be seen as too idealistic, not pragmatic. Maybe foolish.

Ouch! it's painful

In January 2008, GIC invested US$6.88b in convertible preferred securities of Citigroup, which at the time would have given it a 4% stake in the bank if converted to common stock. According to a Securities and Exchange Commission filing late last month, GIC now owns a beneficial 5.3% stake, or 303.8m shares, in Citigroup. These include preferred shares that can be converted into 261.1 million common shares. Based on Citi's $1.95 closing price Friday, the stake is worth $592.4 million. The above is an extract from a WSJ article posted in www.littlespeck.com. From US$6.8b to US$592.4, that is less than 10% left. Oooooh, it is so painful.