A Turbulent First Quarter

Contrary to some Fengshui Masters who use Chinese horoscope and geomancy to predict the behaviour of the stock market, the "calm" Rabbit year started the year rather turbulently. For the past two months, we have seen unrelated events, cascading to result in a mini crisis. In late January, there was a huge continuous selldown of Asian markets by large fund managers for 3 weeks. Before it ended, there was Middle East crisis heating up when Libya's unrest unwinding into a civil war. Crude oil prices shot past 2-year high and that caused great concerns to the recovery pace of the world economy. About when the oil prices eased a little with OPEC members' commitment to top up supply from Libya's shortfall, there was then a sudden Mother Nature's savage of a wrenching earthquake and treacherous tsunami that destroyed many parts of Japan, the 3rd largest world economy. All three unprecedented events sent the STI index to a double bottom of a 6-month low of 2921 points. I guess that's bad enough for many investors who got caught in a false confidence at the beginning of the new year when everything was painted all so rosy.

For those who held faith in the market, or who had capitalized on bargain hunting, the market always proves to be merciful. It did a spectacular recovery of more than 260 points in a short 3-week span. You would be helping your heart if you had hibernated out of the market for the last 3 months and opening to see your screen now, saving yourself the treacherous ride of the market; now that the STI has come close to last year's end closing of 3190 points. Phew! It was a 5-digit roller-coaster ticket price for me.

Now looking at the global economy, fundamentally is still unchanged. Broad-based economics still show an uptrend in a global recovery. US is still reporting improving sales and employment figures. The Dow Jones and S&P 500 indexes were showing continued uptrend which was momentarily disrupted by the recent crises. The US presidential election is slated to be held near the end of 2012. The government is not expected to do unfavourable measures to upset the market, especially when it is on its third year of running since the last election, as illustrated by previous election cycles. China is poised to contain its inflationary rate between 3-4% this year.

However, in a short to medium term view, there lies several risks which may hamper global economic growth and negative impact to the market.

Japan, suffering from a triple whammy disaster, will spend the next few years rebuilding its nation. As a world supplier of many advanced technologies like microchip and automobile, related industries are going to feel the ripple effect from a serious shortfall of supply. The government has to sort out the urgent need of restoring power back to factories.

The Quantitative Easing 2 (QE2) fund injection of the US Fed is ending by mid of 2011. If there is no deterioration of the US economy, no fresh injection of funds would be expected further. Less hot money would be free flowing in and out of market. Furthermore, the Fed would start to increase the interest rates amid an improved economy. It would then be less attractive for fund managers to borrow from banks and invest into equities.

If crude oil price continues its relentless upward trend, it is certainly going to derail the recovery of the global economy.

Market Comments by Economist Dr CY Chan

I have extracted an article, written in chinese and translated to english, by Dr CY Chan, a program director in City University of Hong Kong. He is a well known figure as an advisor to many enterprises and a frequent public speaker about world economics:

3 March 2011

"Dear Friends
The stock market fell heavily for the first two months in 2011. Many small punters did not believe the the market would fall andwent in, hoping the market would rebound. Indeed there was no logical reason why the market should fall. Singapore economy is doing well and the government in its budget is paying out financial goodies to the people. US stocks keep rising to two years’ new high. There is no reason for Singapore stock market to fall. In my opinion, the only reason for the market to fall because too many people think there is no reason for it to fall.
Thus, many individual short term punters gamble on market’s rebound, gamble on derivative instruments in particular, hoping to have good returns with small capital outlay. But we cannot deny the big punters with their financial backing are able to
press the stocks until the small punters to surrender and give up. I believe in fundamental analysis. The fundamentals did not turn sour during the past two months. I cannot guess and do not want to guess the market’s short term fluctuations. Now is best to patiently wait for the corporate results which support the stock prices. Listed companies are going to announce their corporate results; those companies with good improved profits would make their stock prices look cheap as PE ratio would be much lower to attract investment interest. The Jasmine Revolution that started in Tunisia has spread like wild fire, engulfing North Africa and all the Arab countries in the Middle East. Tunisia is still in turmoil since the president stepped down. Egypt is under the control of military junta. Oil producing Libya is out of control. German and British oil companies have begun to evacuate their staff. In other word, oil production has stopped. Peoples of Iran, Bahrain, Yemem and Jordan demonstrate to overthrow the governments. Midde East and North Africa countries can be grouped into oil and non oil producing ones. US only concerns with who is who governing the oil producing countries. North Africa and Middle East cooutries can also be grouped into pro US and anti US. US, under the internal pressure of own people will oppose pro US governments to use force to surpress the demonstrations; therefore chances of these pro US regimes being overthrown are greater. Anti US groups will surely use force to clamp down the demonstrations; these regimes will not collapse without bloodshed. Many years ago the fanatic Gaddafi openly financed and supported Muslim extremists. Then one day US fighters flew over Lybian sky and started bombing with intent to kill him. Gaddafi, escaped and his life spared, became tamer since. Later when US invaded Iraq, Gaddafi got scared, and began to communicate with Western countries. There are US and European oil companies exploring Lybian oil fields today.
The unrests in Middle East and North Africa give US headaches. The locality is the largest global oil export region. Rising oil price will lead to price hike in other commodities. US is now in the wake of economic recovery and can ill afford continuous rising oil price that may lead to what the economists termed stagnation.
What is stagnation? It is where vicious inflation and recession happen at the same time. It happened in the 70s of the last century once due to certain rise in oll price. A price rise is either due to demands increase or supplies decrease, a simple economic concept. If the price rise is due to increase in demands, the issue is not so crittcal as it signifies economic prosperity; people have more money to spend
(though it may be due to printing of currency notes). People do not grumble that much if inflation is due to booming economy. In this case, only the less competitive and weaker group needs to be taken care of. If the price rise is the result of short supplies, then except for a few hoarders, most people whose income remains static will suffer as income lags behind rising prices. Consumption and expenditure will be cut, and economic recession follows. Should US economic recovery is hindered by rising oil price, global stock markets will be adversely affected. More frequent turbulences they are in Middle East the better it is for China. The 911 attack in 2001 was the watershed for China. President Bush’s all out efforts to counter terrorism altered his foreign policy. China became the world factory during Bush’s 8 years tenure. In order to have China against terrorism, Bush supported China’s entry to World Trade Organisation, thus opened up US market to China. As a result not a single US factory that originally rolled out cowboy jeans remaind in business. When Obama was elected, US foreign policy changed again. US is trying to woo Muslin countries, getting ready to pulll out from Iraq, liken China as an adversary. Nontheless, America had to ceremoniously welcome China’s Hu Jing Tao on his visit to US in return for financial aids. Inspite of this, the US foreign strategy to contain China has been formulated. Should the dictatorship Middle East regimes collapse one after another and these regimes ruled by Muslim fundamentalists, US foreign policy may yet change again. Obama is now trying to find a suitable pro US candidate to govern Egypt. Obama has no more energy to trade waring with China. The 20 nation finance minister forum on global inbalnce is over. It is conspicuously a meeting of tussle between Western fully developed nations and newly developing nations. Western fully developed nations have gathered some evidences to accuse the newly developing nations for causing the economic inbalance to prosperity at the expense of the fully developed nations. In other word the fullty developed nations are using all kinds of pretexts to blame the newly developing nations for their economic woes. Will the developing nations keep quiet? Not so. Yet to ignore the accusations means each goes its own way. Fully developed nations will exercise protectionism. As a compromise, Chinese finance minister suggested using trade accounts in lieu of exchange rates and foreign reserves as the benchmark. The G20 meeting was an important meeting that would have far reaching consequences to China’s government policy to avoild being accused as the chief culprit of economic inbalance. In short, China will have to increase imports by lowering import tariff to counter her strong exports. The moment when the G20 meeting ended, rumours had it that China would be lowering the import tariff for cometics and milk powder. Take a note of it."

Singapore Entrepreneur - Asian Market Savage

You might have noticed or became a victim of the recent heavy selling in the stock market since the end of Jan. This is not only happening to Singapore market, but all Asian markets, except Japan, which suffered heavy losses too. As mentioned before, Asian markets had a good run in 2010, mainly due to their exceptional recovery from the global crunch in 2008 and hot money pouring from the US and Europe. Now, fund managers are re-considering their exposures in Asia, amid escalating inflation in the region. Authorities in China and South Korea are scrambling to impose higher interest rates to curb the problem. Such measures usually spook investors and they start wondering if the authorities would be able to be in control of the situation. Meanwhile, while Asian governments are scratching their heads over the next measure to impose, fund managers decide to withdraw their funds and plough back into the US and European markets, where there are still sweet growth story. Advanced economies grew 3% in 2010, less than half the pace of Asian economies which grew at 7.1%. Most fund managers think it is catch-up time for these economies. Over the last 3 weeks, these fund managers withdrew a staggering US$7.02B out Asian markets. The movement started out with an excuse to pull the stock market down during the Egypt crisis. After a false rally, the fund managers then started their concerted actions to continuously sell down the market. This amount to date, is the largest fund withdrawal in 3 years. Looking the today's stock market, the music does not seem to have stopped yet. It is expected to last for another few weeks. So, don't get trapped again by any false rally or rebound in coming weeks. A false rally is detected by low volume of transaction pushing up the prices. It will then be followed by heaving selling after that. Fund managers are professionals and have large funds under their control. If they want to sell their shares in the market, they have to get the best value out of them. After selling down the market for a few days, they will start buying them back to create a false rally. Other investors who see it as a market recovery, may follow to buy up the shares. When the price is right again, the fund managers would start selling them again to unwitting investors.

Nonetheless, to be a savvy investor, you need to know the happenings in the market. Opportunities lie out there every day. Don't despair on the performance of the market. The market will never die and whatever goes down will come up. If you have the power to hold, look out for oversold stocks. Stay in the sidelines if you are unsure. These companies are still operating healthily and still collecting their profits. Their shares are just being manipulated in the meantime. When investors start to realize their true value of these companies, buying sentiment would then start. In the wider perspective, Asian markets will start attracting back investors once they are convinced that the governments are still on top of their steering wheels. Moreover, the next round of QE2 from FED is expected to pour into the market again. But do keep in mind, if hot money comes in easily, be prepared that it exits also easily too; a phenomenon that is happening exactly now.

Singapore Entrepreneur - Hot Money, Easy Money?

We have all seen a phenomenal growth in 2010, especially in the East Asia region. Stock market rallied, jobs created, cash registers kept ringing, and countries' GDPs in healthy numbers. It was all a stark contrast comparing with previous years of 2008 and 2009. The recovery was literally a sharp V-shape.

Most of us who have held on our jobs, operating a business, or even invested in the equity market, would have been rewarded by good bonuses, profits or capital gains in 2010. Those who had invested in properties during the downturn would be handsomely rewarded from a rise in property prices.

From a gloom and doom year in 2009 to a stellar year in 2010, who had made all these possible? Are we still going to continue enjoying such healthy growths?

In this article, I am going to describe the phenomenon and analyse the possible scenarios unfolding.


The Great Recession

I am sure you are aware of the 2 big engines of the world economy; the US and China. The US, for all mother nature's sake, was the main cause of the Great Recession of the century. It started in with a thing called Sub-Prime credit crisis. (For more understanding, you can read my previous blogs in the link.) When Mr Barrack Obama just came on board as the US 44th and first black president in Jan 2009, lucky or not, he inherited his country's and the world's largest problem. Within months, he managed to push through a legistration of a US$1.7 Trillion stimulus package to help the faltering US economy. This amount helped bail out some of the world's biggest banks from the brink of collapse. These banks went through major restructuring and cut down their exposures in toxic assets in the US and turned their heads to Asia. European banks, also largely affected by the American crisis, followed suit.

China as the darling of Asia, has been enjoying relentless growth of double-digit GDP for years. Money started pouring from the US into China, seen as the next hope to help the world out of the great mess. The rest of Asia, seen as emerging economies, enjoyed the overflow from investments in China. So in the whole year of 2010, the Asia region was enjoying an influx of 'hot money' from the US and Europe. The US stimulus package spending (called quantitative easing 1 or QE1) officially ended in March 2010.


So did the QE1 help US and the world?

QE1 spending helped the US economy from collapsing further by saving the banks. It contributed significantly Asia's unprecedented growth. However, it is still far from effective in bringing US back to its pre-crisis level. Unemployment figures, albeit decreasing, are still hovering at record high levels. Home prices are still stagnating.


Quantitaive Easing 2 (QE2)

The FED decided to inject another $600 Billion to further stimulate its economy. The amount will be spent from 2nd quarter of 2011. It will be used to purchase Treasury issued bonds from banks like Goldman Sachs and JP Morgan. These money will be used by the banks to loan out or seek further investments for returns. Such money would be expected to again spill into the Asia region as most investors are still hedging on its phenomenal growth.


Where on earth does US get so much money from?

US, being the largest economy in the world does not mean that it has a mountain of savings in its bank. It is like a large business centre which has a big capability in earning money. But all the money invested in its business are borrowed from the world. It issues Treasury bonds, like IOU, to foreign countries like China, who lends it a lot of money in return for interest. This is one way how US raises money to spend. Alternatively, it can simply print money out of mere paper. This is in the case of QE2, where $600 Billion are printed money. The effect of this, is a devaluation of the US currency. The government, however, does not see it as a problem because devaluation of the US dollars would invite higher exports of its products.


How would the QE2 unfold?

The US, for several years, has been complaining about China's stance in artificially devaluating its reminbi. China has, however, repeatedly denied this and is not succumbing to pressure from the US to appreciate its currency. For a long time, China has an unfair advantage of being the world's largest factory where most businesses from the US are outsourcing their production, tapping on its low labour cost. US has no qualms in going ahead with printing $600 Billion out of thin air to save its economy. This has a double effect of devaluing its dollar, thus making US businesses think twice about purchasing China goods with their weaker dollar. China may embark a tit-for-tat action by further supressing its yuan to maintain its currency value against the US dollar. Other major economies, fearing for their higher cost of goods with the weaker dollar may follow suit by printing more of their own currency. This is already evident in Brazil when its government started buying up all US dollars with its Real. When there was not enough, it started printing more of its own notes. If this continues, a major currency war would emerge. The world would be flooded with increasingly worthless currencies and inflation would rocket. Prices of precious metal like gold would also shoot through the roof when people scramble to find safer reserves. Governments around the world would start imposing high interest rates to curb inflation. When this day happens, a major economy apocalypse would have arrived. This time, much worse than the recent global recession.

But before we see the D day, let us see how the $600 Billion would affect us, people from Asia. Again, hot money would start pouring from the US. We may see further gains in the stock markets and other assets. But do remember that Asia has seen a sharp growth in 2010. Investors may start to see limited upside for Asia's growth in 2011. As hot money has entered into the Asia so easily, it may also exit easily to find better investments outside Asia.

Let us look at the charts below and analyse the behaviour of the equity markets in recent months. The first chart is the Dow Jones Industrial Average (DJIA), second is the Hang Seng Index (HSI) and the third is the Straits Times Index (STI). Each blue eclipse highlights the trading period between Oct 2010 and Jan 2011. The DJIA shows a clear uptrend, while the HSI and STI show sideway trend. In recent trading days, HSI and STI have also been lacklustre in performance despite DJIA seeing several days of rally. These patterns may be exhibiting some early signs of what I have mentioned; hot money exiting Asia and going back to the US. DJIA performance has lagged behind Asia's indexes by more than 20% in 2010 and it may be a catch-up time now. Moreover, this year's hot topic in Asia is about rising inflation, which may put off many investors.

So going forward, while we continue to enjoy the economic growth in 2011, let's not be complacent and always keep a watchout for any sudden market change. Happy investing!

Singapore Entrepreneur - Latest Property Cooling Measures

Ok. The Singapore government is really coming down hard this time on property speculation. Let us swallow and digest the facts here and analyse what are the possible consequences.

The overwhelming response from the latest launch at Loft@Holland, just before the news was released, evidently showed that the previous 3 rounds of cooling measures had not dampened the mood of property investors. It averagely attracted 3 keen buyers to 1 unit, which resulted in a fully sold project within 2 hours after balloting.

There was a knee jerk reaction from the market after the news release. Many buyers retracted from deals almost signed on the dotted line or even forfeited the option fees. They are expecting a fall in prices in the following months with the slew of tough changes.

For a $1M purchase of a private home, if it were to be a 2nd (or more) property, the maximum loan approved by bank would be 60%, or $600,000. This means that you have to fork out a minimum of $400,000 upfront in both CPF and cash. For middle income earners, this is a sheer amount not to be trifled with. If you intend to let go within a year after the purchase, the Seller's Stamp Duty (SSD) will be 16% of purchase price, which equates to $160,000. This means that you need sell at least 20% above your buying price just to break even, not forgetting other costs like Buyer's Stamp Duty, legal fees and bank early redemption charges.

For a small property investor like me, it is certainly coming on me from all corners. One thing for sure, I will be out of the game for now.

The new rules are certainly going to put a hard brake on price and sales volume. The mass to mid-level market private condominiums and landed properties are going to be the worst affected. For the following months to come, it will be a stage of tough standoff between buyers and sellers. Sellers have the ability to withhold their properties with their financial abilities. Buyers have cash but will hold on to see if prices start to fall further. Property developers, who are keen to letting go their new projects may start the ball rolling by offering perks to potential buyers. But since the government measures are slated, developers have already long factored in their costs and would unlikely compromise in their selling prices anytime soon. For the following months to come, prices are expected to be flat while transaction volumes coming down sharply.

Slowing sales volume in the private sector would likely have a trickle down effect on HDB sales. Cash-over-valuations (COV) would be expected to ease further while prices would continue to hold.

On the other end of the market, which comprises high end condominiums and landed properties, would be the least impacted from the measures. This sector, not restricted to foreign buyers, often attract sophisticated overseas investors with high net worth. Prices would likely continue to grow at a healthy level with a lot of money pumped into the Asian region. Comparatively, Singapore property prices are still lower compared to properties in cities like Hong Kong and Shanghai.

In summary, the Singapore government's agenda is to encourage first-time buyers or upgraders, weed out property speculators and invite foreign investments into the local market. Afterall, its primary interest is to protect the people from being blinded by low interest rates and ever increasing property prices, resulting in a property bubble burst. The consequence would be unimaginable.

Singapore Entrepreneur - Latest 2011 Property Cooling Measures

"The government has announced on Thursday (13 Jan 2011) the fourth round of property cooling measures to 'maintain a stable and sustainable property market'.

They include:

1) Increasing the holding period for imposition of Seller's Stamp Duty (SSD) from the current three years to four years;

2) Raising the SSD rates to 16 per cent, 12 per cent, 8 per cent and 4 per cent of consideration for residential properties which are bought on or after Friday, and are sold in the first, second, third and fourth year of purchase respectively;

3) Lower the Loan-To-Value (LTV) limit to 50 per cent on housing loans granted by financial institutions regulated by MAS for property purchasers who are not individuals

4) Lower the LTV limit on housing loans granted by financial institutions regulated by the Monetary Authority of Singapore from 70 per cent to 60 per cent for property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.

The measures will take effect on Friday. "

Copyright © 2010 Singapore Press Holdings. All rights reserved.

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The news is finally released after some long anticipation. It is going to be a hot topic for the next few days. I am rather surprised that they are releasing it so early and implementing it almost immediately. It looks like the government is really hot behind the heels of property speculators. It is certainly going to irritate some investors and put off many people out of the property market. But, it's better to do it now then later. Remember, it's a year of the General Election. This is expected to be held after the 2nd half of the year. It is understandable for the government to impose the rule early to allow negative sentiments to subside in 6 months. Afterall, people would start to realize and appreciate that their dear government is doing it for everyone's good.

If you have been picking up the newspapers daily for the last couple of months, you would have realized that many pleasant news and plans are being published. Big plans like rejuvenating old heartlands like Hougang and Balestier, new MRT extension to Tuas area and big Budget surplus to benefit most lower income people. In my neighbourhood, there are ongoing sprucing up of roads and pavements, and even the HDB blocks around getting a new fresh coat of paint after 5 years.

I guess everyone should know what to do when the time comes, right? Who else can we choose...?

Singapore Entrepreneur - Latest 2011 Property Cooling Measures

Market Outlook for 2011

We went through a topsy turvy year of 2010. The first half of the year appeared to continue the gloom of 2009 where there was much speculation of a double dip recession happening in US. There was sudden news about Dubai economy nearly falling apart. Europe was not spared the rod either with Portugal, Ireland, Greece and Spain dragging the Eurozone into credit crisis. In the second part of the year, things appeared to look better with better employment figures and improving home prices in the US. What's more, the Barrack Obama administration, inspired by its first stimulus package during the global depression in 2008, decided to further boost its slow moving economy by injecting another US$900 billion (dubbed QE2), to buy up treasury bonds. The immediate reaction to that was the euphoria felt by stock markets in the world. On the other side of the world, is China, still enjoying an ever red hot economy. The whole of East Asia was enjoying the spillover effects from China. Global investors, attracted by the turbocharged economy of Asia, started pouring hot money from the US into the region.

In Singapore for 2010, we have seen phenomenal economic growth of 14.7%, a figure not seen since for the last 20 years. We have also seen an unstoppable rise in property prices, passed the last peak in 2007. So what lies ahead for us in 2011?

If you have been following news and analysts' forcasts, most are still bullish about the world economy. The IMF forecasts that the world economy would grow at 4.3% for 2011 compared to 4.2% for 2010. Although most are painting a brighter picture, they are putting words of caution with the Eurozone crisis still hovering and US still struggling to pull itself out of its stagnating economy.

Inflation will be the hottest topic for the year while crude prices are expected to reach the high of US$100 per barrel, a record breached in 2007. Signs of these have already shown up before 2010 came to a closure. China, has already taken measures to increase interest rates to curb rising prices of its commodities. My Hong Kong friend cited that in recent months, mainland chinese are swarming into the territories to buy up daily necessities like fruits, vegetables and diapers with their appreciating Yuan against HK dollars. For those car owners in Singapore, you would have experienced at least 3 times of petrol price hike in the last 2 months.

How about the red hot property in Singapore? It has surpassed the previous peak in 2007. The Singapore goverment has already put in several measures to weed out speculations. With still gravity defying property prices, the government is expected to come in soon again to further dampen the speculation mood. Latest index has shown that HDB prices are still on the rise, while mass market condos are easing. Landed houses and high-end apartments have just started its rise. The government has reiterated that it wants an affordable home to all Singaporeans. It has the utmost duty to moderate home prices and while allowing them to beat inflation.

As an investor, I update myself with news, check on stock market behaviour and network with industry players to be aware of what is going on around.




Let us take a simple view of the Straits Times Index (STI) performance over 2010 in order to forecast a 2011 behaviour. Refer to the topmost chart seen above. This is the STI performance between June and Dec 2010. If we draw 2 parallel blue lines to coincide with most highs and lows, they look clearly in an ascending pattern. This is what Chartists call an uptrend. If you refer to the end of the line (highlighted by the blue eclipse) which shows a downward direction, it is still not at a dangerous low. A dangerous low will be when it is crossing the lower parallel line. A 2011 market will be expected to be choppy. If the STI line remains within the window of the parallel lines, it would then be a healthy uptrend sign.

Chartists believe that market is always the first to digest information and reacts immediately to it. Chart patterns do not behave randomly but to some specific patterns that can be plotted out. However, as retail investors like us, although it can help us to forecast the future, we should not be too engrossed in only one camp of thought. We should open our eyes and ears to look for other indicators.

In my point of view, the 2011 will await signals on how US will help itself recover from recession and how the Eurozone crisis will unfold. The market will continue its 2010 behaviour when it was very sensitive to any grim news. China economy will also be closely tracked for any changes from impact of its policy change.

As for the Singapore property outlook, it is rather certain that the government is coming in with more measures to cool down the sector, as it has mentioned in its previous move. However, it certainly does not intend to kill the market. It has to moderate the growth to beat inflation and yet cannot allow speculations to create a property bubble, like what happened in the US during the sub-prime crisis. Too much hot money has been pouring into Asia from new found wealth around the region. With new immigrants also swarming into Singapore, the government is certainly right to regulate on property as it is one of the core investment engines for investors. But do remember that the General Elections is drawing near and the government cannot do absurd measures to its voters' ire. It has to ensure the economy grows healthily and at a moderate pace, get a mandate from its election win and then go back to work as usual.

In my view, the property, although has formed a new high, is not going down anytime soon. Rather the government is putting in measures to prevent it from spiking further up. If you look at the previous troughs in 1997, 2003 and 2008, they coincided with global economic downturns. If the world economy does not meet its nemesis in the few years ahead, the Singapore property is unlikely to see another slum. In fact, we will meet more new highs before we see the next global recession. This phenomenom will be attributed to the ongoing new money and new immigrants we are witnessing today.

Singapore Entrepreneur - Entrepreneur turned Investor

Hi Guys,

I have been out of action for quite a while now. I have finally left a company which I set up 10 years ago. Now, it is in good hands of a new management team. Ever since, I had not looked back and have been looking for a new chapter of my life. Enriched with many years of business and investment experience, I am now working towards a new direction towards investment.

I have burnt tremendous amount of energy and time into my company over the last 10 years. The blood and sweat I have contributed is like 20 or 30 years equivalence of any other job. It is by no mean feat to build a company from scratch to a successful company. Understandably, I went through a period of emptiness and directionless when I left. I explored many avenues of new businesses. At one point, I was even conned of my money for dabbling into F&B business. I went through many bad patches over the period that I thought dark clouds were following me wherever I go. I even changed some Feng Shui in my house to hopefully chase away the bad spell that was daunting on me.

I recalled that some of the close people around me fell into depression when they lost their jobs during recessions. I told myself that my mind was still clear and will stay sane and keep myself occupied with activities. I started to take up investment and self-improvement courses to motivate myself.

After more than half a year of a stagnated life, I have finally found back my own self and is currently pushing myself towards a new direction.

I realized the whole problem was all about myself. I had been a technical and management person in my job. It's like a occupational hazzard where you keep doing the same thing for many years till it becomes a habit. During my job, I had to crack my brain on technical issues everyday and organise my team and assign jobs for them. When all these were gone, I became lost. My mum, my wife nor my kids didn't understand me when I told them about technical things. They also didn't respond like my guys did when I tried assigning jobs to them. The world was staring emptily back at me. What was I supposed to do?

After much pondering, I started to shift my mentality. Instead of feeling nostalgic of what I used to do daily, I should appreciate on what business knowledge I have gained over the years. The best MBA course in the world couldn't have equipped me with such a deep business knowledge I have today. Since I have this invaluable asset in my brain, why not I capitalize on it?

Today, I declare that I am an Entrepreneur turned Investor. My main interest in investing is in equities and property. Thanks to some gurus in the trade for sharing with me, I am now more ready to go into this direction.

Every person in his entire life goes through ups and downs. It is up to the individual to manage his emotions and thinking. Don't blame in on luck. Everyone is in control of his own destiny.

Singapore Entrepreneur - Blue Ocean Strategy

I particularly like the definition of this strategy which is described by W.Chan Kim and Renee Mauborgne, Professors in strategy and international management at the INSEAD business school. http://www.blueoceanstrategy.com

Continuous competition in a market will lead to price war and oversupply of commoditized products. Brand loyalty will start to decline and profits start shrinking, ending in a bloodbath which is termed as Red Ocean.

The Blue Ocean is a market space which is untested and uncontested. Players trapped in the Red Ocean should seek a path to exit towards the Blue Ocean.

There are four principles in the Blue Ocean strategy:

1. Reconstruct market boundaries
This is to look out for spaces where current competition does not see. You may still be in the same trade, but if you manage to create a new need for people, You will see demand naturally increase. Take the example of the Japanese hairdresser franchise QB House. In the haircut industry, there are different level target markets. Budget conscious men would go for an economical haircut at the barber. More image conscious individuals would go for average class saloon. Other individuals would not even blink an eye on the high price they pay at an upclass hair saloon. QB House ingeniously created a haircut service which fuses between barber and hair saloon. It created a concept with the budget conscious individuals in mind, to provide a hair saloon quality hairstyle at a barbershop price. It revolutionize the idea of haircut and create a new need, thus found itself in the midst of the Blue Ocean where there is no existing similar provider. Although over time, it may see more copycats coming into the sector, it is important to have the first mover advantage. When it sees its Blue Ocean slowly becoming red over time, it must then seek again for the next Blue Ocean. This is what we term as constant Innovation.

2. Focus on the big picture, not the numbers:
The lifeline of a business is always its bottom line revenue and profits. However, business owners must not be led by the nose in its budget. They have to look beyond the current scenario and paint a bigger picture for the business. This usually involves time and more investments into uncharted areas and most people easily shrug off such ideas.

3. Reach beyond existing demand:
Tata Group launched the world's cheapest car, Nano, on 26 Feb 2009, just one year after acquiring two luxurious automobile brands, Jaguar and Land Rover from Ford Motors at a price tag of US$2.3 Billion. The acquisition allows Tata an immediate access to the premium market of the automobile industry. However, it was not sitting still. It had been eyeing on the untapped middle class families in India, typically seen riding precariously on two wheelers, with children. With more than 100 million of such families in India alone, pricing the Nano at a mere US$2200, it is a sure hit in this sector.

Another great revolutionary product is the Wii TV console game player, launched by Nintendo. For many years, Nintendo has been in a distant far in the lucrative game console market, from Sony's PlayStation and Microsoft's XBox. Nintendo tweaked the idea on gaming by simplifying its console that could entice both young and old in the family to play.

4. Get the strategic sequence right:
In all aspects when seeking for the Blue Ocean, you must be pragmatic. You may be just building castles in the air if certain principles are not adhered to.
- Buyer utility: Is there an exceptional buyer utility in your business idea?
- Price: Is your price practical in the market? You have to ask yourself why your customer would want to pay you that amount you have defined for your product. Existing competitors and substitutes must be also be compared with.
- Cost: Is your cost of production able to meet the expected profit margin?
- Adoption: Why would people want to adopt your new idea? Humans tend to have the comfort-zone intuition. It is not easy to persuade people to change their habits to adopt a new style. This may be the biggest hurdle amongst the four. Awareness and education may be necessary to assure customers.

Singapore Entrepreneur - Money Creation and Destruction

From the video below you will start realizing that virtual money is being created to feed the world. It's rather scary. If the system falls apart, we will all face another D day.

Watch here

Singapore Entrepreneur - Aliens or Hearthrobs??

Former French TV heart-throbs look unrecognisable on the red carpet after too much plastic surgery




Look at them in their younger days in the 80's...





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Singapore Entrepreneur - Hottest February in Singapore - El Nino Effect or Global Warming?

The mercury has hit 35.2 Degree Celsius! It has been a sweltering hot hot February in Singapore! I couldn't help the environment with the extra carbon footprints I have been contributing from the full blast aircon as soon as I return to my car in the midst of the midday sun. Same when I get back home each evening in a sweat soaked shirt. I would conveniently press the air-con button control to my room.

I would then start reading news articles about the hottest and driest February and El Nino effect in this region in this couple of months. I read news about droughts in several parts of South East Asia and southern China, bush fires affecting the air quality in certain countries. I shudder the thought of global warming. I start to recall the recent climate summit held in Copenhagen. Attended by leaders of 170 countries, no agreement nor conclusions were drawn in the 13 days' meeting. The main reasons for the failure are attributed to different levels of economic development and wealth amongst nations. Even the fear of a world of apocalypse caused by global warming could not instill the urgency amongst the members to compromise and agree to a concerted reduction of carbon emission.

I just wonder if they have chosen the right location and period of the summit, in the first place. Copenhagen, being near the Arctic Circles, has got the coldest weather all year round, not to mention that the summit was held in the winter December, where temperature is at freezing point. How could you imagine what is global warming and ice caps melting when you are freezing under your thick fleece jacket.

I suggest they hold the next summit in our region, right in Singapore, 1 Degree North of Equator. Invite them to our driest, hottest February peppered with some El Nino effect. Hold it at the Siloso beach at 12pm and let them enjoy our tropical sun. Hold it every year in the same month and let them feel the heat each time the mercury hits the next record level. Without the need to say further, I reckon all parties will just sign the agreement unanimously. Let these temperate folks have a taste of what tropical people are facing on this planet.
Until any agreement signed to cool the earth, I will continue to find comfort in my aircon and please pardon me for creating more carbon footprints. I have no choice! I live in the tropics!

Singapore Entrepreneur - Guangzhou Trip

It was an eye opening trip this time. It was a well-deserved break for me. I met my good friend who was on a business trip in Guangzhou. He brought me around the city and we did some shopping. It is simply an amazing city. Although rather messy and traffic very chaotic, the city is bustling with life. Now I can comprehend what is meant by "strong domestic demand...despite the financial tsunami", often quoted to describe the 3rd largest economy in the world.

I took a public bus from Baiyun International Airport to the railway station downtown. I tried to flag a cab without much success after that. After a while, a man rode up to me in a 3-wheeled scooter. He offered to take me to my destination. Since I was totally unfamiliar with Guangzhou, I sought his help to locate the hotel. He took a while to verify where the hotel was. Then, he quoted me RMB25. I agreed without hesitation. It was about 5km from where we were. He took my large luggage and strapped it on a platform fitted to his scooter. Then here we went. The ride was both scary and exhilarating. We went through highway, back lanes, against traffic and illegal turns. At one point, the machine started choking along the highway. The uncle had to stop and check on the petrol tank. He shook the scooter a bit and checked on a few items. He then appeared to behave suspiciously, peering continuously left and right. I was still sitting. I started to get a little worried, wondering if there was any ulterior motive. Memories of people telling me that Guangzhou's crime rate is high started flashing in my mind. I thought he had accomplice and he deliberately stopped his scooter in the middle of a highway to mug me. Anyway, after less than 5 minutes, he managed to re-start his engine and we moved on again. It was a 20-min ride to my hotel and finally I arrived safe and sound. Phew! I asked him how much again and this time he said RMB30. I just gave him without question. I was just thankful I was safe. The ride was like a James Bond ride on a took took van in Thailand!

Singapore Entrepreneur - Guangzhou Trip - 'contd

Guangzhou is a vibrant city. It is a city where its tradition is struggling with modernisation. If you take a stroll along the streets, you could see uptown fashion retail shops and fast food outlets on one particular street, and on another, old folks selling anything from live chickens to old pots and pans.

Everyone in Guangzhou seems to be very busy. No one seems to be idling around. Even the unemployeds could find themselves some freelancing jobs which I heard could give them some decent income. The retails shops don't seem to have ever any loading/unloading bays for trucks to offload their goods. This creates opportunities to some enterprising individuals to invest in a trolley or bicycle that could help them transport goods in carton boxes from one place to another. And this is a booming trade. Everywhere I go, I could hear countless of trolley wheels scampering along rough surface of roads. I heard one could earn at least 3000RMB (S$600) a month from this freelancing.

Singapore Entrepreneur - Entrepreneur Reborn

18 Jan 2010 is my birthday, or rather I call the rebirth of my Entrepreneurship - I have left Wavex Technologies, a company I set up 9 years ago. Since my partners and I sold it to a Hong Kong listed company in 2007, we never looked back. The new management has taken over and I decided to leave the company on 15 Jan 2010. So 18 Jan 2010 is a day that I have set as a new milestone in my life. I have no concrete plans. I gave myself this great challenge to leave my comfort zone of 9 years and explore the world once again. People said I am crazy to leave without a job. To me, it is just my spirit. When there is challenge ahead, I will work even harder. It was a different scenario when I first stepped out of my comfortable job to start up Wavex. I was still single, no house mortgage nor any family burden to worry. If I had failed, I could still easily find another job at that age. Today, I am in my late 30's, an age when most working men start entering into mid-life crisis; I have a wife and 2 young children; I have ageing parents and house mortgage to pay; A comfortable family car which I am most reluctant to give up. Although the wealth that I have may be able to support all these burden for the time being, the time starts ticking from now on. The challenge is to find back my next livelihood. It is a new chapter of my life. I am starting to explore into areas which I have zero experience. I came from a school of hard knocks. So, looking ahead, I am well armed with experience to wade into the unchartered territory. Wish me all the best to my endeavours.

Singapore Entrepreneur - Entrepreneurship Spirit in Singapore

Great that the entrepreneurship spirit is still burning in Singapore. Read the article.

Singapore Entrepreneur - Market Correction Finally?

Speak of the devil! Just when I posted yesterday about a possible market correction, the stock markets across the world plunged today. Could it be the long awaited correction? It could jolly well be. It is so dishearting to see the indices all in the sea of red. But looking beyond that, it looks like a healthy correction. At least prices are trying to align with fundamentals. Continue to monitor the situation before taking the plunge immediately. It could a small window of opportunity to dive in or it could be another bear trap.

Singapore Entrepreneur - Aspiring Entrepreneur's Forum

I have chanced on a forum website set up by some aspiring Singaporean Entrepreneurs. I posted a couple of messages there. It's rather heart-warming to see the spirit of Entrepreneurship in Singapore is still very much alive. Feel free to visit: http://www.ssuf.biz/

Singapore Entrepreneur - Is the World Economy Recovering?

The International Monetary Fund (IMF) has forecast the global economic growth at 3.1% for the year 2010, compared to a dismal -1.1% in the year 2009.

Asia, led by its growth engines China and India, is slated to outpace its US and Europe counterparts. This year, China alone is expected to emerge at 8.5% growth amidst a global recession. This feat is mainly attributed to its government stimulus package and continual strong domestic demand. Developing economies like ASEAN stands to benefit from these powerhouses.

On the other side of the globe in US where the epicentre of the financial tsunami is, growth has been laggard for this year. No clear signs of recovery has emerged. Same is felt in most European economies. High unemployment rate is still being faced in these countries. It will certainly take at least another year of two for the US and Europe climb back its their pre-crisis levels.

Although the decoupling effect theory has been in the talks for some years, the impact of the US economy on the rest of the world will, nevertheless, still be great.

In this year alone, we have witnessed the equity markets rising to as much as 80% from their lowest points. Asian markets have seen the most spectacular gains in anticipation of their quick recovery.

But are all these rises sustainable? Could we see another bubble or start of a W-shape recovery, as depicted by some analysts?

One argument point about the unprecedented recovery of the global market is that most governments' stimulus packages have taken effect. So whatever improvements we have witnessed are all artificial and may not be sustainable. How much more can governments continue to "feed" their economies until they can be back on their feet again?

Nonetheless, Asia is still slated to emerge strongly from this deepest recession in 70 years. Economists and analysts have unanimously agreed that any next bet would be on Asia. The spectacular rise over the last few months in Asia markets is mainly attributed to new investment monies entering from US and Europe.

In Singapore, many counters have risen from undervalue to fair or overvalue. In the short term, analysts are divided over which direction the Straits Times Index (STI) will head.

My analysis on the current trend is that most counters have been fully valued. All earnings have already been factored into the current price. Today's STI Price over Earnings (P/E) ratio stands at about 21x. It is no longer cheap as compared to the above chart (courtesy of Bloomberg), showing the historical STI P/E. The direction of the index will really depend on the earnings announcement for the last quarter and also any development in the US economy. A small correction may be eminent in the near future. It should be healthy for the market to cool off speculation. For long term investors, the current price is still reasonable for future growth. As for short term investors, be on your toes when looking into the suitable price to enter. Don't get caught up by a sudden correction.