Meeting at Speaker's Corner 18 Oct, 6-7 pm

[Ah Hai]

SCMP:Risk-assessment tests are investment traps

Wednesday, February 25, 2009

SCMP:Risk-assessment tests are investment traps
24 Feb 2009
Enoch Yiu

'How much do you earn every month?" "How many overseas trips do you take with your family every year?" "Are you living in your own apartment?"

These are the typical questions asked by your banker or broker before you open an investment account. While the stated purpose is to ascertain risk levels, White Collar believes they can be a tool to sell high-risk products to those who can least afford them.

The experience shared by our readers is that these tests are not in any way standardised, with different questions and rankings set by the banks or brokers themselves.

With the Lehman Brothers minibonds scandal still fresh in our minds, these tests need to be more tightly regulated by the Securities and Futures Commission and the Hong Kong Monetary Authority to avoid mis-selling of risky products. Three readers with different backgrounds relate their experience with these tests.

A fund manager with more than 20 years of experience was asked to do a test as the banker wanted him to invest in risky equity-linked notes - an investment product linked to the performance of some stocks.

A judge who only put his money in time deposits was also asked by his banker to do the test and buy into these notes.

And a retiree, aged almost 80, was asked by his banker to do the test and buy these products.

The fund manager left without finishing the test, as he thought the questions were only intended to find out how much money he had.

"This was an infringement of my privacy. No matter what answers I gave, I believed the results would be the same - I would be sold the products the banker needed to meet the quota for that month," he said.

The judge was ruled capable of buying the high-risk product. But he insisted on putting his money in time deposits as he did not believe in complicated investment products.

"The time deposit does not offer a high interest rate but it is better than losing your money," he said.

The retiree did the test and was judged as someone who could afford low-risk investments. Even so, he was able to buy those notes and believed the products would be "safe". The result: his investment lost 85 per cent of its value.

"Why should an investor adjudged as being only able to afford low-risk investments be sold something that loses 85 per cent of its value?" the retiree said.

This is obviously a case of mis-selling. It is not rocket science and it really does not need any test to confirm an 80-year-old is not suitable for any risky products.

It appears that no matter how these tests are formulated, the result is the same. The bankers are selling products to meet their quotas. Our regulator friends at the SFC and HKMA should immediately curb this type of test to stop people from falling into investment traps.

At the very least, regulators should have a single, standard test for banks and brokers to gauge investors' risk appetite, or we are going to see mis-selling similar to the Lehman minibonds again.
Posted by Tan Kin Lian at 9:13 AM

 

[Ah Hai]

Make people believe they are rich - how to solve the global economic crisis

Wednesday, February 25, 2009

Make people believe they are rich - how to solve the global economic crisis

We are facing a global economic and financial crisis. People are scared to spend. They want to save money, in case they lose their job and need the money to spend at that time.

The reduction in consumption is causing the economy to slow down badly. Businesses are hurt. They are not able to get encough sales to pay their expenses. They have to close down and retrench their employees. This will lead to a downward spiral.

The collapse of the value of property and other assets cause people to feel poor. They also cut down their spendings.

Actually, the people still own the same houses and assets. They now believe that these assets are worth little, when one year ago, they thought that the assets are worth two or three times more.

All this is just a matter of the mind. It is also called confidence. If we can get people to believe that they are rich, that their assets are worth more than they can fetch today, we can revive the global economy.
Posted by Tan Kin Lian at 10:13 AM

 

[Ah Hai]

A truly inspiring speech from a great leader

Wednesday, February 25, 2009

A truly inspiring speech from a great leader
Video

In his speech, President Obama said that Americans do not like to see the tax payers give money to the banks. The President said that it is necessary to allow the banks to continue to give credit for businesses and consumers.

There is another way to achive it, without giving money to the banks. This is to give the credit directly to the borrowers through another agency (other than the banks). It ensures that the money is properly used and does not give the profit to the banks.

I shall be talking more about this idea in another article.
Posted by Tan Kin Lian at 11:00 AM

 

[Ah Hai]

Reuters: In Asia, suicides rise due to financial crisis

Wednesday, February 25, 2009
Reuters: In Asia, suicides rise due to financial crisis

Read this article.
By Tan Ee Lyn and Kim Junghyun

HONG KONG/SEOUL (Reuters) - Chan Kiu-hung thought about committing suicide when she discovered that her retirement nest egg had been lost with the collapse of Lehman Brothers.

"I was in despair. I lost my appetite and couldn't sleep at all. We lost all our money. It was very painful," said Chan, who came out of retirement to work as a maid, and her husband as a lift attendant, to make ends meet.

Suicides generally increase during times of economic troubles, experts say, and Asians may be particularly susceptible as the region has among the world's highest suicide rates.

With this in mind, Asian governments are setting up hotlines and counseling centers to help those hit hardest by the financial crisis and the subsequent economic downturn.

In South Korea, a commuter train operator is even installing doors blocking access to railway tracks due to a sharp increase in people committing suicide by jumping in front of trains.

Millions of people in Asia have lost their jobs and retirees and other small investors have lost their life savings due to plunging stock markets and the collapse of investment funds.

Since the full force of the financial crisis hit Asian shores late last year, Paul Yip, a mental health and suicide prevention specialist in Hong Kong, has seen a jump in the number of patients coming to his clinic for help to cope with the downturn.

"Work is very important to the Asian because we don't have very good social security and losing one's job is associated with the loss of 'face'. So the trauma can be great," said Yip.

At the same time, he added, many Asians are ashamed to seek expert help.

"In the West, therapy is very common. Here, you are thought to be crazy if you see a psychiatrist. Asians tend not to be as expressive and depression is very under-diagnosed," Yip said.

Among developed nations, South Korea and Japan have the world's highest suicide rates, or 24.8 and 24 per every 100,000 people respectively, followed by Belgium at 21.3 and Finland at 20.35. The United States stands at 11.1.

TRAIN TRACK SUICIDES

South Korea's suicide rate nearly doubled during the Asian financial crisis 10 years ago with experts blaming it on stress caused by job and income losses.

With South Korea about to enter its first recession in a decade and exports suffering their biggest ever drop, the country's health ministry has launched a suicide prevention program.

Officials were worried as health ministry figures showed that the number of people contemplating suicide due to financial problems almost doubled in 2008, compared to 2007. Continued...
http://www.reuters.com/article/email/idUSTRE51O02P20090225

Posted by Tan Kin Lian at 11:31 AM

 

[Ah Hai]

Recipe for Disaster: The Formula That Killed Wall Street

Wednesday, February 25, 2009

Recipe for Disaster: The Formula That Killed Wall Street
Read this article.
http://www.wired.com/techbiz/it/magazine/17-03/wp_quant

Actually, the top people in Wall Street don't care. This formula allows them to show billions of profit, on which their bonuses are calculated. When the global financial system collapsed, they disappear with their big bonuses. They don't have to pay back or suffer the loss, which is borne by the rest of the world.

What greed!
Posted by Tan Kin Lian at 11:40 AM

 

[Ah Hai]

Available for rental: Thomson View #17-xx

Wednesday, February 25, 2009
Available for rental: Thomson View #17-xx

This 2 bedroom apartment (1,300 sf) is available for rental in May 2009. Monthly rental $2,300. View details. Interested? send email to [email protected]


Posted by Tan Kin Lian at 1:00 PM

 

[Ah Hai]

Respect Other People's Views

Wednesday, February 25, 2009
Respect Other People's Views

Minister for Health Khaw Boon Wan suggested that some people can consider sending their elderly parents to a nursing home in Johor Bahru, where the cost is less than half of the cost in Singapore.

This created a big uproar. It attracted more than 300 comments in postings in The Online Citizen. Over 80% of the comments were strongly against the suggestion. Many of the comments were rude and abusive. They called the minister inappropriate names. I was shocked at this behaviour.

First, it was not necessary for people to give their views in a rude manner. They should show respect to the views of other people. I am not suggesting that a minister deserves more respect than any ordinary people. But he should not be given any less respect either.

Second, there is a strong perception that any suggestion by a minister will be implemented as government policy. If the reaction is likely to be irrational and negative, the government may decide that it is better not to engage the public. Surely, as citizens, we like to have the chance of giving our views before any decision is taken by the government leaders? Can we give our views in an objective manner, rather than behave badly?

Third, there seems to be a strong dislike and distrust of the government. This is unhealthy.

The Online Citizen


Posted by Tan Kin Lian at 2:55 PM 0 comments Links to this post

 

[Ah Hai]

Lawyer to lead class action

A LAWYER, who is also a Chartered Financial Analyst (CFA), has been picked by a group investors to represent them in thier fight against distributors of Lehman Minibonds.

A new investor blog was posted online at midnight on Wednesday by the Minibond Investors Action Group (MIAG), informing members that Mr Conrad Campos of M/S Conrad Campos & Company 'will be the lead lawyer in the proposed class action.'

A committee member of MIAG, who did not want to be named, told The Straits Times on Wednesday that the group has a mailing list of more than 1,200 investors of the Lehman Brothers-linked structured product.

He said the MIAG hopes to get about 1,000 investors to commit between $2,500 and $3,000 each to raise a warchest of about $2.5 million to take distributors of the defaulted series of Minibonds to court.

According to MIAG, Mr Campos was selected based on his firm's reputation of the law firm, fee structure, commitment level, and his experience.

'We interviewed about half a dozen of lawyers and Mr Campos was the only one that could understand the product well,' said the MIAG committee member.

http://www.straitstimes.com/Breaking+News/Singapore/Story/STIStory_342790.html

 

[Ah Hai]

Bailed-out bank spends big

LOS ANGELES - REPORTS in the United States have surfaced that a bank that received $1.6 billion dollars of government bail-out money.

Based in Chicago, the Northern Trust bank apparently held a lavish series of event in Los Angeles last weekend.

Events included a Professional Golg Association tournament and client events like concerts, dinners and parties reported CNN on Wednesday.

According to celebrity website TMZ.com, the bank spent millions of dollars on the event, which included - on top of the sponsorship costs of the Northern Trust Open tournament - concerts by Sheryl Crow and Earth Wind & Fire, a private party at music venue House of Blues and gift bags from Tiffany & Co.

CNN reported that Doug Holt, senior vice president of communication for Northern Trust confirmed that the bank sponsored the tournament, however he said that it was not at taxpayers expense.

As a 'healthy' bank, Holt said that Northern Trust did not need the $1.6 billion it received from the US Treasury's Capital Purchase Program, but that it "agreed to the government's goal of gaining the participation of all major banks in the United States."

"This is the second year Northern Trust is sponsoring the Open as part of a five-year contract," Holt said.

The sponsorship is part of Northern Trust's global marketing activies, he added and repeated that no taxpayer funds had been used.

However some critics have not been reassured, with Rep. Barney Frank, D-Massachusetts, the House Financial Services Committee chairman, writing a letter to Northern Trust asking the bank to repay the money.

"We are asking Northern Trust to repay the government the equivalent of the funds they spent on the tournament and related events," Steve Adamske of Frank's staff said.

 

[Ah Hai]

Palm Jumeriah, Dubai

Thursday, February 26, 2009
Palm Jumeriah, Dubai

The Palm Jumeriah is built on reclaimed land. It is a very large development shaped like a palm tree. It comprises of the trunk, crescent and many fronds.

There are several large apartment blocks built on the trunk. Atlantis Hotel and its supporting developments is built on the crescent. The expensive villas are built on the fronds. Almost all developments have a waterfront.

The development is served by a monorail system that is connected to the Dubai Metro. It is opening in April 2009.

Atlantis is a popular attraction for the locals and tourists. You can watch this video to get an idea of the Palm. There is a tunnel that goes under the water connecting the mainland to the Palm and from the trunk to the crescent of the Palm.

Posted by Tan Kin Lian at 8:47 AM

 

[Ah Hai]

Miami banker gives $60 million of his own to employees

Thursday, February 26, 2009
Miami banker gives $60 million of his own to employees
A generous banker.
http://www.miamiherald.com/news/front-page/story/904842.html

 

[Ah Hai]

TKL Blog passes 1 million visitors

Thursday, February 26, 2009
TKL Blog passes 1 million visitors

My blog passes 1 million visitors on 26 February 2009, just slightly more than 2 years since the count started in February 2007.

Posted by Tan Kin Lian at 11:20 AM

 

[Ah Hai]

City watchdog promises 'banking revolution'

Thursday, February 26, 2009
City watchdog promises 'banking revolution'
Financial regulators may in the future ban financial products if they are too risky or too complex, Lord Turner, chairman of the Financial Services Authority, said today.

Read this article.
http://www.guardian.co.uk/business/2009/feb/25/fsa-banking-revolution

Posted by Tan Kin Lian at 12:59 PM

 

[Ah Hai]

High birth rate in France

Thursday, February 26, 2009
High birth rate in France

France has a high birth rate, compared to other European countries. I asked a French friend for the reason. He identified two key factors:

1. The income tax system favours large families. The larger the family, the lower the effective tax rate. Some high income earners does not have to pay any income tax, if they have a few children.

2. There are adequate child care facilities in the community and the workplace. This is supplemented by a system of nannies who take care of children in their homes. The cost of the nany is largely borne by the state.


Posted by Tan Kin Lian at 5:18 PM

3 comments:

Parka said...

That's a good idea. I won't bet on it happening soon until this baby problem becomes a crisis in Singapore.
February 27, 2009 1:03 PM
Concerned said...

The French people (both male and female) are more amorous and have a high libido.
February 28, 2009 1:39 AM
chienwei said...

singapore has tax cuts for families with children too, but i am not sure whether the french have more tax cuts...

i am more interested in the second point about adequate child care facilities mostly paid for by the state.

perhaps the government can bear more of the cost of tertiary education, since they already provided so many scholarships to foreigners, why not help singaporeans?
February 28, 2009 4:49 AM

 

[Ah Hai]

Civic Advocator

Friday, February 27, 2009
Civic Advocator

I invite readers of my blog to visit the Civic Advocator. It is managed by my friend and is aimed at educating the public about social affairs.
Posted by Tan Kin Lian at 10:11 AM
1 comments:

Civic Advocator said...

Thank you for your support.
February 27, 2009 10:24 PM

 

[Ah Hai]

Investing your CPF savings

Friday, February 27, 2009
Investing your CPF savings
Dear Mr. Tan,
Like many young Singapore couple, my wife and I plan to retrieve an amount of 20K from my CPF account for other investment before all our money in the CPF is wiped out by HDB for our HDB flat. Basically, the reason for doing this is to save our money for rainy day in case anything happen (i.e. retrenchment).

As we are not a high risk taker, we decided to just invest our money into unit trust. We met up with our insurance agent from AIA and he introduced us to these few AIA funds.

1) AIA Greater China Equity Fund 30%
2) AIA Regional Equity Fund 20%
3) AIA Regional Fixed Income Fund 50%

As such, we will appreciate your expert advice on the following:

1) Is this the right time for us to invest our money into unit trust?
2) Is unit trust the best option for us?
3) Is it advisable for us to invest onto AIA Company in view that they may be took over by other company soon.
4) Please advise if the three funds that our agent introduced to us is suitable for us?

REPLY
I normally advise people to invest in the STI ETF due to low charges. You can get most of the returns. Read the FAQ in my website.

If you buy an investment linked product from an insurance company, you should ask about the charges that are taken away from your investments. This is also explained in the FAQ.
Posted by Tan Kin Lian at 2:48 PM
4 comments:

zhummmeng said...

If you compare to an allocation like 30% global equity +20% asia and 30% global bond and 20% singapore bond the risk is lower . You can say it is more balanced but with higher weitgthing in asia.
Why more in asia. Reason is obvious, it is the growth region.
Your AIA allocation may give higher return but comes with hgiher risk.
February 27, 2009 4:03 PM
David said...

It seems the STI and hence the STI ETF can fluctuate lower. Now it is almost the 52 week low. Hence it may pay to wait a while to see if they go even lower.

Remember the worst for the economy is yet to come, so is the STI.
February 27, 2009 8:37 PM
Zhong said...

One Chief Investment Officer of a big bank predicted STI will hit bottom at around August/Sept 2009.
So plse be patient.
February 28, 2009 12:08 AM
Concerned said...

These funds are managed by AIA. Did the agent tell you

1) How much is the sales commission he and AIA earns
2) How much is the management fees
per annum charged by AIA

It is better to go for ETF as the management fees are much lower and there is more transparency and liquidity
February 28, 2009 1:08 AM

 

[Ah Hai]

Is it safe to stay with AIA?

Friday, February 27, 2009
Is it safe to stay with AIA?

Dear Mr. Tan,
I have purchased some investments from AIA including a single premium 10-year plan with guaranteed 3.5% p.a. return.

As you are aware, AIG is seeking to sell some of its assets including AIA. If AIA is finally taken over by another financial instititution, what would you think will be the impact on the investors here like myself and many other policy holders?

Shall we terminate our policies/investments and cash out before the take over materializes?

Does the government's guarantee to cover financial institutions' obligations in Singapore also cover the obligations of insurance companies like AIA?

Many AIA customers are anxiously watching the development in the market concerning the deteriorating financial conditions of AIG and wish to have some advice from people like you as to how to react to such major changes which could affect our investments in AIA. Please share your view with us in your blog (no commitment).

REPLY
I believe that the interest of the policyholders of AIA will be protected in the event that AIA is sold to new owners. You should avoid terminating a life policy, as you are likely to suffer a big penalty.
Posted by Tan Kin Lian at 4:45 PM
1 comments:

zhummmeng said...

It depends what you mean by safe.!!
It won't collapse, you won't lose all your money because there is a PPF.
But if you are thinking whether your whole life policy or endowment is safe or not ,then it is different issue. These products have NEVER been safe in that you will NEVER get what is projected and this applies to all the companies' whole life and endowment.
February 27, 2009 8:11 PM

 

[Ah Hai]

Some views on General Election, 2009

Friday, February 27, 2009
Some views on General Election, 2009

1. With the overall openness of Singapore's economy, it is not surprising then, that its society will soon follow suit. It is not a matter of "whether" but "when", will we enjoy a constitutional democracy where a government is not only brought to power by the people, but also kept in check by the restricting powers of just laws. It may take time, but one thing for certain is that it will come.

2. It is not that I don't want more than 10 alternative parties in parliament, but would prefer the real voice or quality people.

3. I prefer continuity

4. Economy should get worse; PAP will lose greater ground than rally stronger ground support to see the people through this crisis; Credible alternatives to PAP may not emerge just yet.

5. I doubt most if not all of the current elite PAP MPs, had ever gone through any life's difficulties. They have lost touch with the ground.

6. Be strong and don't be naive. We need the change for a better life.

7. Nobody and no party is indispensable. For too long, Singaporeans are fed with the fear that Singapore will go down the drain if the PAP is not the governing party. This is a fallacy.

8. Many other countries like Hong Kong have done well, in fact better than Singapore, in many areas like transport, welfare, tourism, taking care of their elderly, etc. What we are experiencing in Singapore is not exactly booming, what with so many elderly in such dire straits and with a heartless government. Enough is enough.

9. The civil servants are the ones doing the work, NOT the ministers or MPs. If we can manage the civil servants well, any party can be the government.
Posted by Tan Kin Lian at 5:15 PM
3 comments:

Aloysius said...

"9. The civil servants are the ones doing the work, NOT the ministers or MPs. If we can manage the civil servants well, any party can be the government"

Hi Mr Tan, I think this may be slightly inaccurate. Managing civil servants may be easy, but political leaders need to be visionary and capable to direct the civil service. If a weak party gets into power, the civil service can indeed carry out their policies effectively, but policies conceptualised by the political leaders may be inadequate.
February 27, 2009 8:18 PM
David said...

I fully agreed on point 4, particularly on "Credible alternatives to PAP may not emerge just yet".

In fact I would like to add that it may not even emerge at all.

I based it on the experience of other countries, as well as exacerbating factors like Singapore's small size and political history.
February 27, 2009 8:55 PM
Concerned said...

"It may take time, but one thing for certain is that it will come". This has been going on for a long time and may take a further longer time and "in the long run we have all be dead"
John Maynard Keynes
February 28, 2009 1:03 AM

 

[Ah Hai]

Some views on General Election 2009 (2)

Friday, February 27, 2009
Some views on General Election 2009 (2)

1. I hope can have more than 10 candidates from alternative parties are voted into Parliament

2. The government has long since neglected its role of building a nation. It now only knows to cling on to power and put economic growth above all considerations. Not that it is managing the country or economy well. The longer it stays in complete power, the greater the damage to our country and nation. Like global warming, we may already be reaching a point of no return.

3. Mr Tan should step forward, form a new party and lead a team in the GRC. I am sure many Singaporeans will lend you their support.

4. The change will come when the old man gamble away all our reserves, or the old man die!

5. Singaporeans have a spirit of greatness that have built our country into world class. Tap on this to continue to build. Success is possible. Talent is in us, tap it. The only loss is to think and act we can't.

6. I wish for a truly free & dynamic press instead of the compliant ST/Today and MediaCorp that we have now. Singapore's downhill has been greatly contributed by these people.

7. Many of your questions are crafted in such a way as to discredit the Government.

8. If there are credible opposition candidates ie quality of those PAP introduces I would consider them. However the sad thing is that the candidates from opposition did not meet such expectation. So until that day whereby the opposition becomes more credible and able to offer more constructive ideas I would still go with PAP.
Posted by Tan Kin Lian at 9:14 PM
5 comments:

Tan Kin Lian said...
This post has been removed by the author.
February 27, 2009 9:30 PM
Tan Kin Lian said...

Reply to #7. I try my best to be objective and fair. You are the only person who complained that the questions are biased. Anyway, I have created a new survey, which I hope will appear to be more neutral.
February 27, 2009 9:39 PM
AB said...

Comment #8. If you vote pap just because there is no credible alternative then you are falling into the trap set by pap.

I think people who now talk about credible alternative government is just living in dreamland. It is simply just not possible for this to happen in SG overnight.

If you truly wish to see a credible alternative develop, then you should start supporting and voting them NOW.

Pls realise that without ground support now the current disadvantaged alternative will not be able to strengthen and likely to become weaker and possibly even become extinct.
February 27, 2009 10:24 PM
JamesP said...

Chicken and egg issue....

No strong opposition - No strong candidate

If you want strong candidate, opposition must be strongER to attract stronger candidate.

We saw a good number of opposition candidate surfacing in WP the last election. The may not be the best, but at least they are willing to stand up for the people... and THAT I think is credible. Not just paper qualifications and head knowledge.
February 28, 2009 5:21 AM
zhummmeng said...

To get opposition in don't demand that the opposition must satisfy some academic criteria. What we need is men with a heart, integrity and commitment and courageous and NOT men with titles.
The question is , do you want to have opposition members in parliament to represent you. Do you want honest and committed members or you want people with PhDs.THIS IS THE ISSUE NOW.
Do you remember how PAP started? They had members with little education but committed. They even had a 'chee Cheohg Fun seller", a strong activist woman MP.
Remember you must have candidates who are from the ground and who can relate to man in the street issues and not high and mighty ones.You don't need smart alecs and if you can form a government you can have the neutral civil service to provide all the talents you need.
First get the man in or a pig in and later reform and replace with smart alec members.
February 28, 2009 11:08 PM

 

[Ah Hai]

How will you vote in the General Election (1)?

Friday, February 27, 2009
How will you vote in the General Election (1)?

The hot topic now is the next general election, which may be held in 2009. How will you vote? Give your views in this survey.

Please pass the word around to your friends and invite them to give their views in this survey. I like to have many people to participate, so that the results can be more representative of the population.

UPDATE

Here are the survey results based on 149 replies. The results are quite close to my initial summary based on 56 replies. This shows that the results are not affected by the size of the sample, provided that the initial sample is quite large (say 50 replies)

Posted by Tan Kin Lian at 11:00 PM
1 comments:

Concerned said...

Mr Tan

Can you do a survey on the low attendance of MPs during Parliament sittings

1) MPs think they can't contribute much as the Ministers have already done all the work
2) MPs do not respect the respective ministers, so they do not attend
3) MPs are busy with their own jobs and think they little of attending parlimentary sittings
4) MPs knows that they will be elected as their constituents do not know whether they attend or not
5) MPs expect the other MPs to attend
6) MPs "bo chap"
7) Others
February 28, 2009 1:15 AM