SGX – Conflict of interests

Many in the industry have cried foul that SGX is compromising itself by holding the dual roles of regulator and of running the exchange as a profit making organization. The conflict of interests is so glaring that only when one is behaving like gods and infallibles that one would think otherwise. In this exceptional island, SGX is not the only place where conflict of interests were ignored as irrelevant and inapplicable. And this sad state of affair is going to continue unquestioned and unchallenged for as long as your life time if things did not change, if the political status quo remains as it is.
 
The underlying assumption is that this exceptional island is so blessed with very exceptional human beans that have impeccable integrity, honesty and are so honourable that you can believe they would not compromise themselves even if they assumed the roles of judge, jury and executioner. They cannot be compromised or are incorruptible! So to be the regulator to police any wrong doings in the exchange and also to run the exchange for profit with evident conflict of interests is a non issue. The duality of roles, conflicting roles, would not be compromised under the charge of infallible human gods, some admitted with a little humility that they were only mere immortals, not yet gods.
This morning I glanced at the SGX screen and found out that about 30 stocks have been suspended and about 20 of them were red chips. I have lost count on the number of red chips that had been delisted, with the owners run road.
 
Just a food for thought, what if the SGX did not take on the dual roles of regulator and operator of a profit making organization that it is supposed to regulate and police? This is hypothetical of course. Would SGX be allowed to bring in the numerous red chips and foreign companies and list them in the exchange given the hindsight that many had run road or about to run road and nothing can be done about it? And given this bad experience, would SGX be wiser and be more prudent and take lesser risk in allowing foreign companies, especially the kuching kurap companies, to list here when they have barely any control over them, no legal jurisdiction over them, barely knowing how they operate and the rule of law in their country of origin?
 
On hindsight, how many hundreds of millions or billions have been lost by the innocent investors as a result of the listing of these foreign shares that had run road or about to run road? How much money could have been saved or not lost if there was a stronger and more diligent hand policing the SGX and someone, hypothetically, took a position that such high risk adventures were not worth taking and forbid SGX from doing it and from continuing to flirt and solicit potential foreign companies to list in the exchange as every listing is money, income, revenue and profit to the SGX?
 
Are the risks acceptable risks, reasonable risks, bearable risks that losing millions or billions by the investors are justifiable for the pittance the exchange was and is going to get from such listings.
 
There is also the issue of integrity and soundness of the exchange in the long run as a solid institution where investors can park their money and invest safely. Would there be a difference if SGX was not allowed to take on the dual roles of regulator and operator of a profit making organization at the same time? Is it reasonable to question and to challenge the dual roles with conflict of interests by the SGX? Or should this be the normal, the right thing to do in this paradise ruled by gods or demi gods with impeccable and unquestionable integrity, that conflict of interests would never be an issue? Gods and demi gods are infallible, unlike ordinary human beans.
 
Would SGX be just a stats board, providing a service with unquestionable integrity and an uncompromising system that would not be subject to doubts, a sound financial system? Or would it be better to delink the dual roles to have another body policing the exchange while it continues to be a profit making organization that would make decisions for revenue and profits like before?

Taiwan – The big American bully

The big bully USA just passed a law to authorise their warships to enter Taiwan. And they expect China to abide by this American law and not to violate it. They might as well pass another law to permit free entry of Americans into Taiwan and China. This is how arrogant and lawless the Americans have become. They still think they are the rulers of the world. Pax Americana is over the hill, history. I hope no silly Asian leaders would tell China to abide by this American law and ask China to follow the rule of law and this silly law is international law.
 
China is not going to let the ugly Americans do what they like in their territory. This is interference in China's domestic affairs. China's ambassador in Washington has made it crystal clear, without a speck of doubt, that if an American warship enters a Taiwanese port, it would take Taiwan by force. This is a message not only to the Americans but also to Taiwan and the rest of the American cronies that China would go to war with the Americans if necessary on this issue.
 
What would China do should the belligerent Americans think they could slap China on the face and walk away? China has spoken and would not back out from this stand. One possibility is a lock down of Taiwan by air and by sea. The airspace over Taiwan would be declared a no fly zone. The surrounding seas, say 200 nautical miles from the island, would be declared no sail zone or a war zone. Any ships inside these areas would be shot at. The American warship that entered Taiwan would be there and not allow to get out unless China allows it. Making a dash out would be shot on the spot.
Then China can wait, without firing a shot, to see if the Taiwanese would dare to fly their military aircraft or sail their warships. The Americans may try to be fearless and move their aircraft carriers within the range of the DF21s and DF26s. The Chinese military aircraft and submarines would be patrolling the war zone from above and from below. All the missiles would be ready to fire and pointing at Taiwan and the American aircraft carriers.
 
China would take Taiwan without firing a shot. Any attempt by Taiwan to pull the trigger would bring disaster to the island and the Taiwanese. It is a battle that the Taiwanese cannot win. Would the Americans risk a war with China and the sinking of all their aircraft carries in the western Pacific Ocean? The whole Chinese war machine would be at China's disposal against the handful of American carriers, from air, from space, from cyber space, from the sea, from all over China. This time China is ready and can hit anything the Americans have and dare to send to the western Pacific war zone.
 
When the blockade is set up, it would be within a matter of days when the Taiwanese would remove their pro American leaders and replace them with a patriotic leader. Taiwan returns to China after that.
 
This is a likely scenario of what would happen should the mad Americans sail their warship into Taiwan. The Americans think they can still pass their silly laws and demand other countries especially China to respect their unequal laws? There are many other possibilities that the Chinese govt could take to take Taiwan when war is declared. Make no mistake about this. Any attempt to violate Chinese territory and sovereignty is war. And war will go all the way to mainland USA. It is not a case of I can hit you and you can’t hit me. Mainland America would be in the war zone. This time the American President would have to run for real, unlike the fake fleeing for safety by George Bush during the downing of 911.

Bhutan, the happy caged canary

Bhutan is a role model country for Singapore with the highest happiness index. Singapore or Singaporeans would love to be as happy as the Bhutanese. It has preserved its isolation policy willingly and happily, guided by India and protected by India. For Bhutan to be admired by the millionaires and not by the ordinary Singaporeans could mean that the millions owned by the millionaires still could not make the millionaires happy. Or the millionaires are telling the poor and ordinary Singaporeans that they can be happy like the Bhutanese without the millions in their bank accounts. Whether this is an escapism or an alternative philosophy to life, I dunno.
 
Bhutan has recently been hitting the headlines with India coming to its defence at the Sino Bhutan border. India and Bhutan has a treaty in which India shall ‘guide’ its foreign policies and its relations with other countries. There is no treaty on home affairs but India has several thousand soldiers in Bhutan, more than Bhutan’s army of 8,000 men.
 
Bhutan does not need to care about its defence. India will take care of that, like the recent incident when India unilaterally announced to the world that it is stopping Chinese construction of roads in Chinese territory bordering Bhutan at the request of Bhutan. Bhutan has been silent on this, not sure if they know what was happening. This is the bliss of ignorance with its foreign affairs ‘guided’ by India.
 
As long as the Bhutanese are happy, nothing matters. They did not have to shout to the world about freedom and rights of small states like Singapore. They just make sure the people have food on the table and a roof over their head, inside their cage, everything is peaceful and they can live happily ever after. They don’t have to punch above their weight to make a difference.
 
Singapore or some Singaporeans are envious and great admirers of the happiness of the Bhutanese. Maybe they would also want Singapore and Singaporeans to be as happy as the Bhutanese. Not sure if they would want Singapore and Singaporeans to live in a cage. No need to think about anything with an outside power thinking for them and worrying for them.
 
Would the Bhutanese be having second thoughts, that their ancient agricultural society should change and keep up with the developments of modernity? Should the Bhutanese also think of their sovereignty, that they are a proud people and need not be protected by a big power, in a way forever a semi colonised country ruled by the protector. Should the Bhutanese think it would be better to grow their population to 20 million, have a modern economy, a sizeable military to protect itself and determine its own future, and have a say in their foreign policies?

SMRT taken private - It is so funny

This was the reason for taking SMRT private last year, delisting from the SGX. “Taking SMRT private is part of our journey to support it in its focus to be among the very best in the world, through operational and engineering excellence.” It is so funny that I find it so hard to laugh. So now we have it, SMRT is going to be better, the best in the world by being a private company owned by the govt and run by the govt. If it stayed as a public listed company, it is not going to get anywhere near being the best in the world.
 
SMRT Chairman’s statement in 2001, … ‘However, whilst we aim at enhancing shareholder value, we maintain an unwavering focus on the core mission of providing safe, reliable, convenient, efficient and affordable transportation on the MRTsystem and the Bukit Panjang LRToperation. Reflecting this philosophy, we shall not skimp on training, maintenance, repair and overhaul expenditures, even as we address the containment of other expenses.’
 
The above statement was made in 2001 when SMRT was privatised into a public company listed in the Stock Exchange. This was different from the recent privatisation from a public listed company backed to a govt owned company. I know, the word privatisation is confusing. Privatising a govt owned company into a public listed company or a public company and then privatised a public company into a govt owned company.
 
What is more queer were the reasons given for the first privatisation. The mantra of the day was that a govt owned company could become more efficient and better run if it was privatised and run by private professionals, not civil servants, and run on the basis of profit making and be accountable to shareholders. This had an underlying assumption that civil servants were inept and thus the company needed to be privatised and run like public company.
 
The latest privatised privatised SMRT, the double speak is as what it was, confirmed that the previous mantra that a govt company privatised into a public company, I know it sounds funny, is not working. So a privatised public company now must be privatised into a govt owned company run by public/civil servants again.
 
Anyone see the contradiction? Another case of LPPL? Privatised into public company to be more efficient, now privatised a public company back to a govt owned and run company? Now you remember why the SMRT was privatised in the first place?
 
For this second privatisation to be working, it means that the old mantra was false, that civil servants could not run a govt owned/stats board company well. And the new mantra is that civil servants are good at running govt owned/stats board companies. No need to privatise to be efficient.
 
What do you think?

More reserves, more taxes

The issue of our grotesquely huge reserves came into the spotlight again when Hsien Loong hinted of raising taxes to meet increasing expenditure of the govt. Heng Swee Kiat also chipped in to defend the govt’s decision not to touch the reserves, not a cent, despite appeals for the govt to use some of the reserves, just a bit more from the gains from investing the reserves. No one is asking to kill the goose that laid the golden eggs or a drumstick, just a few more eggs.
 
The discussion has gone to the social media, not a whimper is heard in the main media. Phillip Ang was so disgusted that he posted this on his blog and a copy in the TRE.
 
‘Perhaps Heng might also be hinting to Singaporeans there have been significant investment losses when he said “I will be very cautious about making statements about how big our reserves are…”.
 
So, could Heng enlighten us on what’s left in our reserves?
 
After 3 decades of planning, Heng wants us to believe that the PAP did not save for the anticipated rainy day? And reserves cannot be used because they have to increase perpetually to benefit our children?
 
I don’t think Heng expected his hogwash to be taken seriously.’

I do not know how much reserves we have, and I think not many people know, maybe a handful. This is may be public money but it is top secret! The public need not know. But from the main media and from the comments and nuances of the top politicians and the fun managers, oops, I mean fund managers, our reserves are growing and growing, though may not be in the scale of the past. The point I am making is that our reserves held in the deepest and darkest vaults are growing every year. There is nothing to worry. They are there for the future, for the rainy day. And the govt will keep growing the reserves, and there is no limit to how big this should be. It can be 10 trillion, 100 trillion, never mind, it is good to keep growing the reserves and knowing that it is there when it is needed.
 
I can only think of those govts that put their gold in Fort Knox for safe keeping by the Americans. They are not allowed to inspect their gold and cannot withdraw, but happily kept it there, knowing that the gold is there and safe in the vaults in Fort Knox. There is no need to look at them like looking at our CPF statements to bring smiles on the face. The thought of the huge reserves, like the bountiful of gold ingots in Fort Knox is comforting enough.
 
Phillip Ang should have faith that the reserves are there and growing. They would not be stolen. We have the most honest and honourable men and women taking care of them. The last thing that they would do is to lower their integrity to lie about the reserves. Just trust them. And there are two keys to keep the reserves safe. Never mind if the President did not know much is there. I am just presuming. She may know, unlike Teng Cheong. Have pleasant dreams that we are sleeping on a bed of money, plentiful of money.
 
Just pay your taxes when raised. The govt needs more money for bigger expenditure. The reserves are like the holy grail, untouchable by the untouchables. You need to be gods to touch them.