Why a property bubble in singapore is brewing

Let’s look at the ratio of new housing loans to new bank loans from period of Jan 2009 to May 2010.

Housing loans increased by about 18 billion while new bank loans increased by about 21 billlion. Thus the ratio is 0.85 (ie. 85% of new bank loans are made up of new housing loans)

Also,Housing loans has increased to about 34% of bank loans

This high dependence on housing loans to drive bank loans in singapore is unhealthy and speaks of a property bubble.

Those who have memories of 1997-98 crisis will know that a property bust is possible, thus be mentally prepared for one in coming years.

SGX competitors are coming

FT reported that “The Monetary Authority of Singapore is discussing ways of expanding the city-state’s clearing capacity, possibly by allowing international derivatives clearing houses to compete with the two existing Singapore exchange clearers, ”

http://www.ft.com/cms/s/0/ac659864-821a-11df-938f-00144feabdc0.html

As the securities trading value stay stagnant,SGX is looking at derivatives for growth, which also leads on its “stable revenue” growth like data services provision.

However,if MAS allows more derivative clearers to enter the oligopoly market,expect keen competiton which will bring down prices and thus damage SGX’s hopes of building a derivatives franchise.

Predictions of a bond market bubble are wrong

David rosenberg wrote this article in FT

How can a security whose price is constantly projected to decline by the economics community be in a bubble? How can any asset class be in a bubble where the capital is guaranteed and which pays out a coupon twice a year? It makes no sense.

History shows that deleveraging cycles typically last as long as seven years, and we have just completed year number two

Outside of wars, deflation is the norm, not the exception. The exception has been the experience of the post-second world war era. It is remarkable how so few people in the financial industry get it.
http://www.ft.com/cms/s/0/a01c4fb6-7d7a-11df-a0f5-00144feabdc0.html

GIC: watch out for Swiss referendum

UBS must be nervous as Swiss parliament just pass the latest bill saying that Swiss voters will have the last say on whether Swiss accounts details should be handed over to US.

US deadline is August 2010 but the referendum will only take place after 100 days. Can parliament reconciliation sort this out?

Cross your fingers, GIC!

Swiss vote threatens US bank secrecy deal
http://www.ft.com/cms/s/0/a4a60edc-7866-11df-942a-00144feabdc0.html

latest update:No referendum required,GIC can heave a sign of relief

谢国忠：中国代工企业核心竞争力是压榨劳动力

A brilliant article by Andy Xie explaining why the china’s workers today is different from yesterday and why manufacturers exploitative model has to change.

http://xieguozhong.blog.sohu.com/153650030.html

Why commodities are not for you

A well-written article on why we shouldn’t fall into the commodity bubble trap.

Long-term performance of commodities not improving
http://www.ft.com/cms/s/0/304cff2a-73cd-11df-bc73-00144feabdc0.html

The simple answer is that commodities generate no income – as opposed to, for example, equities, which generate the bulk of their long-term return from the reinvestment of dividends

The complicated answer is that commodities don’t deserve to generate any return. As the name suggests, they are undifferentiated lumps of naturally occurring materials. Value needs to be added to them by the application of knowledge; it is investment in that process of application that earns the return. Over the long haul the price of the commodities themselves reverts to the cost of production.

That is why the price of copper peaked out in ancient Egyptian times, when a few kilograms could buy you a slave girl. Its purchasing power has been in decline ever since. In essence copper has been in a bear market for 3,000 years. Consider that before you di-worsify

Beware the cult of the heroic chief executive

John Kay wrote an article about “visionary” CEOs who bought into their own story and the need for someone to check their ego.

http://www.ft.com/cms/s/0/321bc03a-735e-11df-ae73-00144feabdc0.html

Domineering chief executives often fill their boards with cheerleaders, and rarely seek sceptical counsel. An army of professional advisers can hardly wait to get its hands on fees. The independence of equity analysts is compromised by their association with deal-making banks. Both analysts and journalists find their access depends on good relations with the businesses they cover. Many of the worst deals were widely applauded when announced.

The modern cult of the heroic chief executive is at the root of the problem. Greater shareholder activism may help, but the most valuable restraint would be more effective checks and balances within the company itself. “A man’s reach should exceed his grasp, or what’s a heaven for?” wrote Robert Browning, describing a recurrent theme of human behaviour.

Prediction for World Cup

Round of 16 should include these teams, let’s see how many i got right on June 26

Grp A-South Africa, Mexico
Grp B-Aregentina,Nigeria
Grp C-England,USA
Grp D-Germany,Ghana
Grp E-Holland,Camerron
Grp F-Italy,Slovakia
Grp G-Brazil,Portugal
Grp H-Spain,Switzerland

Notice there are quite a few African teams, but remember home advantage counts

Europe woes reflected in their football leagues

According to the latest report, English premier league is not the most profitable as players’ salaries take up 67% of revenues. The most profitable is German Bundesliga. France,Italy,Spain league did not fare well either.

Looks like Germans are strongest in budget discipline. Curious to know how Greek, Portugal football leagues are doing.

Emerging markets:beware of developed markets

El-erian and Michael spence wrote an article on whether emerging markets can continue their path of growth and came to the conclusion that they can provided that developed markets which are now facing trouble do not hold them back whether through protectionism (access to finance or thro’ trade in goods and services), or a restricted transfer of technology or knowledge

What they mean is whether globalisation wheel will be disrupted by sand,rocks thrown in its path by developed markets who think only of their own interests. That’s something similar to Great depression of 1930s.

However,there is a fact that is different from 1930s, emerging markets power is getting bigger and thus they have more tools at their disposal to make developed markets think thrice before resorting to beggar-thy-neighbour policies.