More above 50 marrying


By Zhen Ming


WHEN my wife and I tied the knot in 1984, you could say that as newly-weds, we were truly Mr & Mrs Average.

I was 28 and she was 25.

Back then, the typical Singapore groom was 28.3 years old and his bride 25.2 years old - that is, an age spread of 3.1 years.

Roughly a quarter of a century later, most couples in Singapore are getting hitched at later ages. The median age was 30.9 years for the groom and 26.7 years for the bride in 2007 - that is, an age spread of 4.2 years.

This widening age spread for newly-weds makes Singapore unlike most developed countries. In the US and Europe, for instance, the age spread is about two years.

In the less developed, more traditional societies, on the other hand, men can be as much as 5-15 years older than their women partners.

In Singapore, the widening age spread is linked to a growing trend among many people in their 50s and 60s (or even older) choosing to re-marry or even get married for the first time.

The number of middle-aged grooms here grew by an astounding 91 per cent over a recent five-year period, to 1,196 in 2007 from 626 in 2002.

Over the same period, however, the number of silver-haired brides grew at a somewhat slower pace of 54 per cent - to 281 in 2007 from 182 in 2002.

Back in 2002, the ratio of all middle-aged grooms to all silver-haired brides was 3.4 to 1.

By 2007, this ratio had climbed to 4.3 to1.

Among men, non-Muslims (80.5 per cent) were more likely to marry (either for the first time or again) at 50 or older.

But among women, Muslims (30.6 per cent) were more likely to do so.

Among men who marry at 50 or older, an overwhelming 84 per cent of those married under the Women's Charter in 2007 chose women partners under 50.

Love is blind?

While financial stability may seem to be the primary reason why a young woman would want to marry an older man, there are some women who fall in love with older men without any pre-planning. (Love is blind, as they say.)

In this regard, 160 women under 30 chose to marry men 50 or older here in 2007.

Among women 50 or older, an overwhelming 79 per cent picked men in the same age bracket.

Put differently, 21 per cent of these middle-aged women selected men partners under 50.

Some of these men may have been much younger than themselves, but in 2007, none of them had a groom under 30.


Source: The New Paper, Fri 27 Feb 2009

UK KIDS' FUNNY TAKE ON ECONOMIC TERMS
'Credit crunch? It's a kind of cereal'


By Zhen Ming


KIDS Say the Darndest Things was an American television series my wife and I once followed faithfully when our two daughters were growing up.

This popular show was hosted by comedian Bill Cosby and co-hosted by Canadian TV personality Art Linkletter. (This show first aired in the US from 1998 to 2000.)

My family used to howl at the humour spouted by the kids being 'interviewed'.

The premise of the show is that the host would pose a question to a child (around the age of 3-8) who would then respond in a cute (and even outrageous) way.

Out of the mouths of babes oft times come gems (of truth), or something like that.

So, with even the most informed economists everywhere still struggling to understand today's recession, what do children make of it all?

The UK's Daily Mail last week posed a few questions about the current downturn to pupils at Knowle Park Primary School (in Bristol) and St Michael's C of E Primary (in East Sussex).

Here are some hilarious highlights:

What's toxic debt and how do you deal with it?

I would deal with toxic debt by getting my dad's gun and shooting it. He shot a rat that was eating the white bit on my gym shoes.
Billy, 6

I had some sweets called Toxics so I guess it is something like that. You put them in your mouth and they all fizz up. They could well have been poisonous.
Kai, 6

What is the credit crunch?

It's a cereal, a bit like Rice Krispies.
Joe, 6

The credit crunch is if you don't have much money. Last year my dad said Father Christmas didn't have much money to buy presents.
Millie, 6

It's definitely a bad thing, because you can lose your money and everything. I've heard grown-ups say they don't like it at all.
Millie-May, 7

Where's the best place to keep your money?

I wouldn't put my money in a bank. I'd put it under my bed. But my little sister looks under there when I'm at school and there are always things missing. Then I look under her bed and find them there.
Millie, 6

Banks are a good place to put your money, but you could put it in your wardrobe in your bedroom. If you left it downstairs near a window then a robber might see it and crash through the window and take it.
Kai, 6

You shouldn't keep your money in a bank because someone could break in and steal it, like in the movies.
Katie, 7

Do you know what a banker is?

Bankers are bad people, because they could steal your money. So don't trust a banker. I heard people on TV say they think that. They were grown-ups in suits. It's best to hide your money away - I keep mine in a glass bottle on my shelf. I even hide it from my parents.
Tia, 7

I think bankers are baddies because baddies are people who try to steal money. If you work in a bank there is a lot of chance to steal money. In the bank near us there are only two people who work there. Sometimes there is only one. So it would be easy.
Henry, 7

A banker is someone who owns a bank. He's a good person because he doesn't steal stuff.
Solomon, 6

What's a hedge fund?

It's where a hedgehog lives.
May, 6

I think you might find a hedge fund in a shop. It's definitely a better thing than a credit crunch.
Millie-May, 7

This article was first published in The New Paper.


Grown-up version of the downturn

A CREDIT crunch happens when banks hoard cash. If the supply of loans evaporates, the economic outlook quickly becomes bleak (which is happening everywhere right now).

Here're five key aspects about the current crisis that you should be mindful of:

Subprime Sinks

Problems with the repayment of subprime mortgages in the US sparked a California bank run and triggered a tidal wave of concern about lending around the world in August 2007. This was the beginning of the credit crunch.

Prices Surge

While this subprime meltdown was going on, consumers felt a tight price squeeze: Commodity prices rose rapidly in 2007 and the first six months of 2008, driven by demand from then-booming China and India.

This made petrol, food and other basic costs more expensive in Singapore and elsewhere globally. This surging inflation, in turn, hindered central banks from cutting interest rates to help ease the effects of the credit crunch.

Titans Totter

Fears intensified after the collapse of Bear Stearns in January last year. But the financial crisis proper began in September with the collapse of Lehman Brothers. Now many big banks and hedge funds worldwide are in trouble.

Frauds Galore

Last week, shocking allegations were leveled against Sir Allen Stanford's Houston-based financial group. The charges are centred primarily on the uncovering of multi-billion-dollar fraud at his Antigua-based bank.

The allegations - coming so soon after the arrests of Ponzi-master Bernard Madoff and Satyam's Enron-style scammer Ramalinga Raju - suggest this will be a fraud-infested downturn.

2009 Outlook

The prospects for 2009 are undoubtedly grim.

On the horizon (but still beneath the financial-contagion radar for now): Eastern Europe is on the verge of a trillion-dollar (Asian-style) currency and banking crisis.

Last year, Minister Mentor Lee Kuan Yew said this recession could last three to five years. Even UK Prime Minister Gordon Brown now admits that it could last two years.


Source: The New Paper, Mon 23 Feb 2009

Recession or no, MRT demand will rise
Lower ridership last month temporary as public readjusts to crunch time


By Zhen Ming


AT the still tender age of 22 this year, Singapore's Mass Rapid Transit (MRT) network has come of age. And, akin to the prime of human life, it is also growing more attractive.

Many of us (my own family included), in fact, now take its convenience and its comforting presence (near our home) very much for granted.

On an average weekday, one in three of us will, without fail, hop on the country's 110km MRT network to go to work, school or play.

All in all, Singapore commuters took more than 554 million rides on the MRT in 2007 - up 66.1 per cent compared to the 334m rides taken a decade earlier.

When compared to ridership in 2006, the number of MRT passengers in 2007 jumped a 8.5per cent over 12 months, marking its largest yearly increase since 2004.

Lately, however, partly because of the economic downturn, there has been a noticeable slowdown in the pace of growth in MRT (as well as bus) ridership.

A preliminary estimate by the Transport Ministry shows that ridership last month for both the MRT and public buses actually fell by 3.1 per cent compared to the same period last year, probably due to cutbacks in discretionary trips.

But MRT ridership will get a special boost when the new Circle Line Stage3 (spanning five stations from Marymount to Bartley) opens on 30 May.

So MRT ridership may hit yet another record high for this year as a whole, recession or no recession.

Expect also many more Singaporeans to temporarily (and readily) give up their cars and taxis in favour of the MRT - what with the promise of lower train fares in the pipeline.

By 2020, if a 6.5-million population is still on target, expect ground (and underground) travel demand in Singapore to rise to about 14.3 million journeys a day.

Given the land constraint of our small island state, expect MRT ridership (and other modes of public transport) to be strongly promoted.

Expect therefore this projected increase in travel demand in 2020 to be met in part by the MRT as it is the most space- and time-efficient means of moving large numbers of people.

To this end, to encourage even greater MRT ridership and, at the same time, to facilitate affordable public transport transfers, a distance-based through-fare structure has been adopted.

This through-fare structure will ensure that most commuters will only be charged a fare based on the total distance travelled in a journey - without incurring too heavy a transfer penalty when they switch between buses or between the bus and MRT.

By 2020, Singapore's MRT system would be a 33-year-old, taken-for-granted public transport service.

By then, the MRTnetwork would also be more extensive and definitely run at a much higher frequency.

But one thing will surely remain the same: Expect the MRT in the future to still remain just as crowded - with around four peak-hour passengers per square metre - as it now is today.

Source: The New Paper, Sat 14 Feb 2009

It'll be a long, bumpy ride
S'pore stocks unlikely to see pickup anytime soon


By Zhen Ming


YESTERDAY the Straits Times Index (STI) dipped for a third disappointing time this week, for a total drop of 4.47 per cent since the start of the week.

Almost 11 per cent has been slashed from the STI's value since the start of the year - with nearly 40 per cent of the losses occurring over the past four days.

So, is the STI in serious danger of slipping even further for the rest of 2009? My answer in just a while, but first, a quick look-back at what happened (and why).

Relatively speaking, the STI's volatile performance this week is not surprising as it actually mirrors those of most other major stock market indices across the globe.

Faced with dismal trade figures and other grim signs of the economic meltdown everywhere, investors worldwide sold down stocks this week (especially on Tuesday), dragging the broad market indices down near their lows reached last November.

Prolonged recession

The Dow Jones Industrial Average closed down 297.81 points at 7,552.60 on Tuesday - barely above its post-meltdown low of 7,552.29 on 20 Nov 2008.

Dragging the Dow and other stock market indices down is a near-universal consensus that this recession is indeed going to be much longer and deeper than originally expected.

Last week, investment firm Credit Suisse lowered the projected operating earnings for S&P 500 companies in 2008 to only US$58 ($89) a share. (It originally expected US$70.)

Credit Suisse now expects overall operating earnings for the S&P 500 to drop yet again - by another 34 per cent - in 2009.

In lowering its estimate, Credit Suisse analysts added this grim note of caution: 'We worry that while financial earnings have already seen considerable weakness, non-financial earnings have further to fall.'

Investor sentiment was also shaken by news that Japan's economy shrank at an annualised rate of 12.7 per cent in the last quarter.

The worse-than-expected GDP numbers were a sobering reminder of the toll the worst downturn in decades is having on Asia's export-driven economies (including Singapore's).

Increasingly, investors across the globe are unconvinced world governments are acting fast enough. They were particularly disappointed after finance chiefs from the Group of Seven developed countries ended their meeting in Rome with pledges to work together - but (again) stopped short of concrete steps.

Ironically, the market actually sank the sharpest on Tuesday, when US President Barack Obama signed the US$787 billion stimulus into law and said there could be yet another stimulus package if needed.

On Wednesday, the US Federal Reserve cut its economic outlook for 2009 and warned that the US economy would face an 'unusually gradual and prolonged' period of recovery.

Expect therefore the-still-won't-go-away worries about ailing banks, struggling carmakers, tumbling home prices and cash-strapped consumers to push US (and global) stocks down to levels not seen since the late 1990s.

With the stock market usually regarded as a forward-looking mechanism, such sharp pull-backs can only mean investors are still questioning whether the STI and other indices will breach their lows of last November, when investor fears ran high.

Rebound?

The fundamental question here is whether global growth can realistically rebound when the US and Japan (the world's two largest economies) are just entering a period of dismal growth.

So here's my answer (and prediction) on the fate of the STI in 2009:

Expect the effect of the current global slowdown to impact Singapore significantly for at least the next couple of years.

Expect the STI, in turn, to remain basically bed-ridden for the rest of this year.

Source: The New Paper, Fri 20 Feb 2009

Sobering up to new economic reality?
Despite our rising numbers, we're drinking less


By Zhen Ming


TIGER Beer may have been first popularised in the Lion City. But a nation of loud-mouthed, bare-chested, beer-bellied drinkers, we certainly are not.

And the numbers on beer-drinking here are literally sobering - never mind those bold claims of some party revellers about binge drinking (and bottoms-baring).

Yes, the amount of beer (including ale, stout and porter) consumed throughout Singapore each year may have been creeping up year after year.

But, in reality, especially of late (perhaps because of the economic downturn), this yearly increase has not caught up with the growth in our population.

So while the Singapore population as a whole may have drunk the equivalent of 281 million cans of beer in 2008 (up nearly 3 per cent from the preceding year), the average person 'sipped' only 58.1 cans last year (compared to 59.5 cans in 2007).

I dare say 'sipped' (instead of 'gulped') because the 58.1 cans of beer per capita in 2008 actually works out to no more than 1.1 can a week (or less than 0.2 can a day)!

Could we, therefore, be sobering up to the new economic reality?

Recent cutback

More likely, in reality, the fewer beers in Singapore are probably the result of our recent cutback in discretionary spending, compounded by the already steep duties serving as an effective deterrent to the drinking of beers (and other liquors) here.

Speaking of facts and myths, did you know that the beer belly is a myth?

There is no such thing as a 'beer belly', say researchers from both Britain and the Czech Republic who, in late 2003, jointly surveyed almost 2,000 Czechs, who are generally regarded as the world's biggest beer drinkers.

Writing in the European Journal of Clinical Nutrition, the scientists said claims that people are obese because they drink too much beer are wrong.

Meticulously measuring the weight as well as the waist to hip ratio and body mass index of all those randomly surveyed, they found no link between the amount of beer Czechs drink and the size of their stomachs.

In other words, the so-called 'beer belly' is more likely to be caused by eating too much food. No beer or other alcohol beverage is necessary.

Meanwhile, a separate study (also published in 2003) suggests that some people are genetically predisposed to develop beer bellies.

Italian researchers said men with a certain gene variation have a tendency to get a flabby stomach.

Five myths about beer-drinking and alcohol

Myth: Alcohol destroys brain cells.

Fact: The moderate consumption of alcohol does not destroy brain cells. In fact, it is often associated with improved cognitive (mental) functioning.

Myth: Switching between beer, wine and spirits will lead to intoxication more quickly than sticking to one type of alcohol beverage.

Fact: The level of blood alcohol content is what determines sobriety or intoxication. Remember that a standard drink — whether beer, wine, or spirits — contains an equivalent amount of alcohol. Alcohol is alcohol and a drink is a drink.

Myth: Men and women of the same height and weight can drink the same.

Fact: Women are affected more rapidly because they tend to have a slightly higher proportion of fat to lean muscle tissue, thus concentrating alcohol a little more easily in their lower percentage of body water. Women also have less of an enzyme (dehydrogenase) that metabolizes or breaks down alcohol, and hormonal changes during their menstrual cycle might also affect alcohol absorption to some degree.

Myth: People who abstain from alcohol are "alcohol-free".

Fact: Every person produces alcohol normally in the body 24 hours each and every day from birth until death. Therefore, we always have alcohol in our bodies.

Myth: People who can "hold their liquor" are to be envied.

Fact: People who can drink heavily without becoming intoxicated have probably developed a high tolerance for alcohol, which can indicate the onset of dependency.

Source: The New Paper, Sun 15 Feb 2009

Are more puffing away?
Figures show a yearly increase in smoking


By Zhen Ming


WHEN I was just a lad of 12, I secretly lit my first (and only) cigarette at a quiet corner just outside the family home.

I was then with my two younger brothers and we did what most young boys our age would try to do - find out for ourselves what it felt like 'to puff like a man'.

Fortunately, for me, I clumsily choked (and hacked painfully) on my first puff.

And because of this failed first attempt, I haven't lit another cigarette since.

In a survey conducted in the 1990s, almost a third (32 per cent) of all Singapore men smoked while only a minuscule proportion (3 per cent) of our women did.

Back then (in 1990 itself), the average person in Singapore smoked a total of 1,649 sticks of manufactured cigarettes in a year. This, however, paled when compared with 4,831 for Cyprus; 3,554 for Greece; 3,177 for Hungary; 3,081 for Japan; 2,895 for South Korea; 2,703 for Australia; and 2,605 for the US.

By 2006, however, this average per capita consumption of cigarettes here had dropped to only 699 sticks - mainly because of an aggressive anti-smoking campaign.

But, of late, there seems to a creeping resurgence in cigarette smoking, what with the average person here lighting up 706 sticks in 2007 and 731 last year. (See graphics, top.)

This, despite a per-stick tax (which took effect from 1 Jul 2003) imposing (higher) excise duty on each stick of cigarette based on its net tobacco content.

And this despite government measures to gradually ban smoking from buses, taxis, lifts, theatres, cinemas and government offices to air-conditioned restaurants, shopping centres, bus shelters, interchanges, public pools, toilets, community clubs and open-air stadiums. (This ban has now been extended to pubs, discos, hawker centres and coffee shops.)

Foreigners contributing?

With smoking no longer welcome in virtually all public places, one assumption for this recent upsurge in tobacco consumption is the higher number of foreigners here - 1.2 million in mid-2008 as compared to less than 900,000 in mid-2006.

Over the past two years, Singapore's population (foreigners included) rose by nearly 10 per cent whereas, over the same period, the total number of cigarettes smoked grew by almost 15 per cent. This is at a pace 50 per cent much faster than the population's overall increase.

In 2007 alone, Singapore's population grew by 4.25 per cent while the number of cigarettes smoked grew by 5.24 per cent over the same period. That's a 'surplus' cigarette growth of around 0.99 per cent was generated.

This 'surplus' growth - equivalent to some 30.5 million additional cigarettes - cannot be fully accounted for by population growth alone.

Assuming this 'surplus' was perhaps brought about by all the 130,000 additional new arrivals in our midst in 2007, then each additional newcomer in that year supposedly smoked an average of around 235 extra cigarettes (vis-a-vis what the average person in the population as a whole smoked).

Then in 2008, when Singapore's population grew by 5.47 per cent, the number of cigarettes smoked grew by 9.13 per cent - that is, a 'surplus' cigarette growth of around 3.66 per cent was generated.

Population growth not the reason

Here again, this 'surplus' growth - equivalent to some 119 million additional cigarettes - cannot be the result of population growth alone.

This time, assuming this 'surplus' was again contributed at the same rate by all the 191,200 additional new foreigners in 2008 (that is, assuming each newcomer last year also smoked an average of 235 extra cigarettes, just as in 2007), then the additional newcomers could, at best, account for 45 million additional cigarettes.

That leaves 74 million additional cigarettes in 2008 that, I conclude, must have come about only because we, on average, are starting to smoke more again.

The idea that last year's big increase in smoking was wholly contributed by foreigners is therefore an urban legend - that is, pure bunkum.

Source: The New Paper, Thu 12 Feb 2009

6 of top 10 blamed for economic crisis were elected officials
Road to ruin paved with politicians


By Zhen Ming


DESPITE renewed efforts by many governments across the globe, the world faces the grim prospect of a 'bank-made' recession.

Who should we blame for leading us down the road to ruin?

You might have thought we should blame it mostly on bankers on Wall Street, right?

But, no, most of the blame should rest squarely on politicians in the US and the UK.

So says the findings of a poll conducted in late January by The Guardian newspaper in the UK.

The Top 10 'most guilty' comprised the predictable as well as a few surprise finalists:

1) Alan Greenspan
Chairman of US Federal Reserve 1987-2006

FORMER US Federal Reserve chairman Alan Greenspan, 82, was criticised for keeping interest levels low for too long and for his concurrent praise of sub-prime lending vehicles.

The long-serving chairman is also blamed for urging US homebuyers to swap fixed-rate mortgages for variable rate deals, which left many American borrowers unable to pay when interest rates rose.
Blame vote garnered: 31.9%

2) George W Bush
Former US president

MR George W Bush, 62, served as the 43rd President of the US, from 2001 to 2009.

He is blamed for doing little, while in office, to put the brakes on the vast amount of mortgage cash being lent to 'Ninja' (No income, no job applicants) borrowers who could not afford them.

Blame vote garnered: 16.7%

3) Gordon Brown
UK prime minister

MR Gordon Brown, 57, has been prime minister since June 2007. Before this, he was the UK's Chancellor of the Exchequer for 10 years.

He allegedly put City (banking) interests ahead of other parts of the economy (such as manufacturers).

Mr Brown is blamed for backing a low-tax regime for the thousands of non-domiciled foreign bankers working in London.

Blame vote garnered: 14.1%

4) The US public

YES, whether you call him John Q Public, Joe Six-pack or even Joe the Plumber, he should be blamed, too.

Said guardian.co.uk: 'There's no escaping the fact - politicians might have teed up the financial system and failed to police it properly and Wall Street's greedy bankers might have got carried away with the riches they could generate, but if millions of Americans had just realised they were borrowing more than they could repay then we would not be in this mess.'

Blame vote garnered: 11.1%

5) Geir Haarde
Former prime minister of Iceland

THE coalition government of Mr Geir Haarde, 57, resigned earlier this month after widespread (and violent) protests following an economic collapse in October 2008.

Last October Iceland's three biggest commercial banks collapsed under billions of dollars of debts.
Blame vote garnered: 7.4%

6) Bill Clinton
Former US president

MR Clinton, 62, served as the 42nd President of the US from 1993 to 2001. In 1999 he repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks.

The move led to the era of the 'superbank' and primed the sub-prime pump.

Blame vote garnered: 4.7%

7) Phil Gramm
US Senator

MR Phil Gramm, 66, is a former US senator from Texas.

A free market advocate, his work allowed the explosive growth of derivatives (including the much-dreaded credit-default swaps).

Blame vote garnered: 3.0%

8) Christopher Dodd
Chairman, Senate banking committee

MR Chris Dodd, 64, is the senior US Senator from Connecticut.He consistently resisted efforts to tighten regulation on the mortgage finance firms Fannie Mae and Freddie Mac.

Blame vote garnered: 2.3%

9) Sir Fred Goodwin
Former RBS boss

THE 50-year-old former chief executive of the Royal Bank of Scotland (RBS) presided over its rapid rise to global prominence, and its equally rapid fall.

Blame vote garnered: 1.4%

10)Dick Fuld
Lehman Brothers chief executive

MR Fuld, 62, was the last Chairman and CEO of Lehman Brothers. It's collapse in September was to have a catastrophic impact on confidence.

When asked if it was fair that he earned US$500 million ($751m) over eight years, he he insisted the figure was closer to US$300 million.

Blame vote garnered: 1.2%


Source: The New Paper, Sun 08 Feb 2009

Is STI a 'lost cause' in 2009?
Past performance is no guarantee of future returns


By Zhen Ming


ACCORDING to conventional wisdom accepted by many stock market traders and investors in Singapore and elsewhere, 'as goes January, so goes the year'.

How reliable is this conventional wisdom - that January is a reliable weather vane for the performance of Singapore's Straits Times Index (STI) for the rest of the year?

Is this adage merely another piece of financial urban legend?

Although this January saying has been trotted out at the start of virtually every year since it cropped up on Wall Street in the 1970s, it has a special resonance for Singaporeans in this current Ox Year (given the STI's steep drop last year).

January rally effect

Singaporeans can still recall that last year's 49.1 per cent plunge was presaged by a 13.9 per cent drop in the STI last January.

There are two components to this January proverb:

(1) The January rally effect, which is supposedly evidenced by a general increase in stock prices during the month of January; and

(2) The January barometer effect, whereby whatever happens in January becomes a harbinger of what's in store for the stock market for the rest of the year.

According to the January rally effect, a stock market rally in January can generally be attributed to an increase in buying, which follows the drop in price that typically happens in December when investors (especially those in the US), seeking to create tax losses to offset capital gains, prompt a sell-off.

This historical trend, however, has been less pronounced in recent years because stock markets worldwide have already adjusted for it.

For the STI since 1988, the January rally effect is true for 14 out of the 22 years observed (that is, about two-thirds of the time).

The January barometer effect seems even more reliable.

Academics and market specialists say they can now confirm the existence of the effect on Wall Street. (But they are still stumped as to why it exists.)

Abnormal

In 60 of the last 80 years, the performance of the US' Standard and Poor's 500 index in January has accurately predicted whether stocks would end higher or lower for the full year, according to index analyst Howard Silverblatt.

'Any statistician would tell you it's abnormal,' said Mr Silverblatt. 'I would not attempt to justify it. Each year is separate and different.'

This statistical anomaly also shows up for the Singapore stock market.

For the STI since 1988, the January barometer effect is, on the surface, true only for 13 out of the 21 years observed.

However, for six of the eight years when the effect supposedly failed, there were extenuating reasons why it did not work when it was supposed to.

So, with January just behind us, and with the STI down 4.5 per cent thus far this year, is the rest of the 2009 destined to be a 'lost cause' for our local bourse?

Here's a clue

For a clue, let's take a cue from the US: Wall Street started 2009 with a big rally on 2 Jan, which sent the Dow Jones industrials up more than 250 points to their first close above 9,000 in two months.

But Wall Street subsequently ended the last trading day of January down 11.4 per cent - equivalent to an annualised loss of around 137 per cent!

So, there's my answer for you.

On a separate but related note, it turns out that it is often 'better to be late than early' to a new bull - this, according to a Merrill Lynch analysis of US stock performance in the six months before and after 10 market troughs over the last 50 years.

The study found that, on average, investors posted better returns if they invested in stocks six months after the bottom was in as opposed to six months before.

'Patience is a virtue,' says Mr Richard Bernstein, Merrill's chief investment strategist.

In the end, any talk of market patterns should be accompanied by this familiar warning: Past performance is no guarantee of future returns.


Source: The New Paper, Sun 01 Feb 2009

Many will cut back on luxuries this year
And we're not just talking about low-income S'poreans


By Zhen Ming


SO it's now official: 2008 wasn't too bad a year, after all - that is, when we look at things from the point of view of ouraverage monthly household income from work.

Significantly, the income gap in Singapore last year narrowed for the first time in 10 years, as families in all income groups enjoyed higher earnings. (See table, above.)

Presumably, a key reason for this rise in income in 2008 was the buoyant labour market, which saw more Singaporeans with jobs and drawing higher salaries.

Fortunately, even the higher consumer price inflation in 2008 did not eat into our pay cheque.

Real income up

Real income for the average Singapore family, in fact, went up by 5.7 per cent.

According to figures released on Tuesday by the Statistics Department, the narrowing of Singapore's income gap is shown in the decline in its so-called Gini coefficient (or Gini), which measures the degree of income inequality.

Gini is theoretically equal to zero in the case of total income equality and, at the worst, equal to one in the case of total inequality.

Singapore's Gini - somewhere in the middle of 0and 1 - fell to 0.481 last year from 0.489 in 2007.
But if last year's 'surplus sharing' help from our Government is taken into account, this figure drops even further - to 0.462, from 0.479.

But this year will probably see a reversal of last year's Gini trend, warns economics professor Tan Khee Giap of the Nanyang Technological University.

Poor suffer

This year, expect the income of the lowest-income earners to possibly deteriorate because of the worsening economy - 'unless the Government takes drastic measures like vastly improving Workfare by giving more payouts in the scheme', said Prof Tan.

Budget 2009 announced on Thursday introduced measures to help our lower-income and middle-class families.

Cutbacks

Meanwhile, as global economic conditions worsen in the days ahead, expect more Singaporeans to swing effortlessly from being spendthrift to being frugal.

Expect most of us to cut back on almost all fronts, regardless of how much we earn.

In fact, 'scrimp and save' and 'scrape up some cash' are not concepts alien to us.

Anecdotally, we're already cutting back on travel for the holidays, eating out at restaurants, and entertainment (such as going to the movies).

Even the relatively wealthy among us are already trimming back on unnecessary spending. After all, many of them led simpler lives not too long ago.

Back in 1998 (just 10 years ago), as many as 18per cent of the wealthiest families in Singapore (in terms of per capita household income) did not even think it necessary forthem to install any air-conditioner in their homes.

Fewer toys

Back then, 31per cent of themalso did not own an audio/visual CD player or a handphone while 29per cent could actually make do without any personal computer.

Expect more high-income Singaporeans to become stingier, if need be, as they've watched the value of their stock investments plummet.

Expect them to also cut back, if they must, on eating out at restaurants, picking up takeout, buying home furnishings and even drinking specialty coffees.

That may not seem like much, compared to those who can't even afford to pay for the fare to ride a bus or the MRT to work.

But, emotionally and financially (like it or not), the wealthy in Singapore are definitely feeling the hard pinch of this global recession, too.


Source: The New Paper, Sat 24 Jan 2009

SINGAPORE BUDGET 2009
Hongbao how big?


By Zhen Ming


EXPECT a soon-to-be-announced revised growth forecast to tell us the obvious — that our GDP will probably shrink by more than 2 per cent this year or, at best, stay flat.

So what relief can the middle class wish for in Mr Tharman’s Budget Speech on Thursday to help them soothe the pain of an Ox Year burdened by wage freeze and cuts?

Also, will Budget 2009 feature a bold stimulus plan that deftly combines the right amount of increased Government spending with an appropriate tax cut?

That is, will Budget 2009 emulate the audacious US$825 billion (S$1.23 trillion) "American Recovery and Reinvestment Bill of 2009" unveiled by US lawmakers last Thursday?

On a year-on-year basis, the Singapore economy expanded by 1.5 per cent last year (no great shakes, when you compare it to the 7.7 per cent growth achieved in 2007).

What’s disturbing, however, is the speed of the economy's deterioration, as it actually contracted at an annualized pace of 12.5 per cent during the last quarter.

To figure out how Singapore can remedy this situation, let’s check out what US lawmakers will vote on in late January (when we’re still celebrating the Chinese New Year).

Firstly, the new US$825 billion fiscal recovery package — equivalent to US$2,700 for every American (now that’s a big hongbao!) — will feature roughly US$550 billion in spending increases and US$275 billion in tax cuts.

But that’s not all.

This huge deficit spending — possible only because America is the only country still privileged enough to print all the paper money it requires — will be supplemented by another US$350 billion still available to help bail out US banks.

All in all, it’ll be an unparalleled US$1.175 trillion in extra government spending to allow President-elect Barack Obama to shore up the tottering US economy.

Expect Mr Obama (who will enter the White House on Tuesday) to immediately start work by pumping in billions to boost US healthcare.

Expect him to pour in additional billions to support US schools and colleges.

Expect him to invest billions in infrastructure spending (including highway construction and repair).

And expect him to also spend billions to encourage energy production from renewable sources.

For Singapore, this public spending aspect of Budget 2009 is a no-brainer.

Expect Finance Minister Tharman to announce measures to expand or improve our infrastructure (to prepare for better times) — not by printing money out of thin air though, but by dipping into our vast pool of hard-earned reserves built up over the years.

And then there’s that across-the-board income tax cut promised by Mr Obama.

Under his just-unveiled stimulus plan, each American worker will now receive up to US$500 (and each family up to US$1,000) through a cut in payroll taxes.

For Singapore, this aspect of Budget 2009 is tougher to call.

Expect Mr Tharman to offer Singaporeans some sort of a hongbao tax break — perhaps an anti-recession dividend or even another GST offset package.

The US stimulus package also includes billions for extended jobless benefits and retraining as well as billions to help the jobless keep their health coverage.

And for the poorest Americans, it includes additional billions for a temporary increase in food stamps (government vouchers to buy staples at US grocery stores).

This safety-net aspect of Budget 2009 — how best to help and retrain the down and out (without eroding their work ethic) — is probably the most touchy.

But, as in past recessions, expect tweaks in the way we dole out assistance to the jobless and the destitute.

In the end, Mr Tharman’s biggest challenge is to devise a Budget that can help keep the Good Ship Singapore afloat in the midst of a global economic tsunami.

Hopefully, a fat stimulus hongbao in Budget 2009 can help convince Singapore consumers and businesses that worst will soon be over, thus paving the way to a speedier recovery.

Expect one of three global economic scenarios (totally beyond Singapore’s control) — a prolonged depression (unlikely), a quick recovery (wishful thinking), or an extended period of anemic growth (most probably 3-5 years).

Come what may, however, expect Budget 2009 (and subsequent budgets) to definitely help ease the pain.

Source: The New Paper, Sun 18 Jan 2009

Raju & Madoff - Tale of Two Scams

While Satyam founder flounders in Indian jail, Wall Street fraudster stays in penthouse home


By Zhen Ming


IT was only last week that Mr Ramalinga Raju - the 54-year-old founder of giant Indian software company Satyam - was enjoying a lifestyle befitting his US$1.3 billion ($1.9billion) fortune.

Over the weekend, however, Mr Raju got thrown into jail in the Indian city of Hyderabad - after admitting that he had orchestrated the country's biggest corporate fraud.

It was a swindle worth at least US$1b, and Mr Raju admitted that he had wildly inflated Satyam's profitability and assets for years.

Halfway around the world, Bernard Madoff, a 70-year-old Wall Street money manager turned self-confessed Ponzi-style swindler, has been allowed bail while awaiting trial.

Mr Madoff has already admitted to stealing as much as US$50b. If so, that would make him the biggest fraudster in global financial history.

Yet, on Monday, a US district judge ruled that Mr Madoff could still remain under house arrest in his penthouse apartment on the Upper East Side of Manhattan.

Today, while Mr Raju languishes in an overcrowded Indian jail, Mr Madoff is probably lounging in his living room watching news about himself on his flat-screen TV.

This, despite Mr Madoff having sent 16 watches (including diamond-encrusted timepieces from Tiffany and Cartier), four diamond brooches and an emerald ring to family and friends.

This, despite him having some 100 signed checks worth US$173 million lying around in his desk ready to be given to others.

To be sure, any American without Mr Madoff's bank account (or influence) would surely be locked up in jail by now.

'What a crock,' said an irate ABC News user in a website posting. 'If I went downtown and shoplifted a loaf of bread, I'd be in jail quicker than you can think... And Bernie goes off smirking at the American people.'

Double standards

Welcome, critics say, to America's supposedly two-tiered justice system - one for the very rich, the other for ordinary Joe six-packs.

In the US, wealthy white-collar crooks like Martha Stewart and Bernard Ebbers have found clever ways of staying out of prison until trial (typically by posting huge bonds).

Astonishingly, despite his own self-admission, Mr Madoff hasn't been charged yet.

What's more, his own sons have remained mum about how they could have worked at their father's firm for decades without noticing that the money he supposedly managed did not exist.

In India, when the Satyam fraud was unveiled last Wednesday, the country's benchmark Sensex index fell by 7.25 per cent in one session - a steeper drop than that which followed the Mumbai terror attacks in Nov.

Aghast institutional investors are seeking compensation in India and in the US, where several class-action suits have been filed.

As of Friday, Satyam was valued at only US$330m as compared to its market worth of more than US$7b six months ago. In other words, Satyam investors will probably recover less than five cents for each dollar invested.

But for Madoff investors, the prospect of getting back their US$50 billion is much bleaker - at the last count, what's left is only two cents for each dollar invested.


Source: The New Paper, Fri 16 Jan 2009

SIGN OF TROUBLED TIMES
Typical US home now cheaper than HDB flat


By Zhen Ming


SO, how bad are things over there, really?

Hungry for first-hand news from the US “economic warfront”, I posed this delicate question about the US economy to Sok (a visiting sister-in-law back from Los Angeles for her year-end break).

It’s truly bad, she lamented, with an atypical grimace on her usually-beaming face.

When we last met in LA around Christmas in 2007, they were happier times.

Back then, our families shopped and dined at The Grove — a boutique outdoor shopping mall located across the street from the world-famous LA Farmer's Market — where, on a good day, you might just stumble upon a Hollywood celebrity (or two).

Meltdown woes

“But today The Grove is much, much quieter,” Sok reported. “You can feel it in the frigid air. And it’s all no thanks to the meltdown on Wall Street.”

To be sure, both Sok and her husband Murali hold relatively stable jobs. She works at an LA library while he teaches at the University of Southern California.

But, not unlike many other Asian expatriates living in America, they, too, worry about whether home prices in the US will ever stop dropping — what with the median home over there now costing only US$180,800 (S$268,500).

Yes, the median American home is now cheaper than most HDB flats in Singapore.

More importantly, my “Chindian” in-laws also worry whether some of their friends, especially those working in California’s Silicon Valley, could soon lose their jobs.

Latest figures

All in all, US employers shed a total of 2.6 million jobs in 2008 — the worst-ever year since 1945.

This latest job loss figure point to a US jobs market that’s still in a free fall.

Many US companies across all sectors of the economy have, in fact, resumed mass layoffs (after a brief respite over the year-end holidays).

Last week alone, insurance provider Cigna Corp, aluminum producer Alcoa Inc, data-storage company EMC Corp and computer products maker Logitech International have announced large job cuts.

"The toughest six months will be the just-completed fourth quarter and the first quarter of this year," said Mr Robert Barbera, chief economist at the Investment Technology Group, a research and trading firm.

Hope and recovery

But Mr Barbera also noted that a widely-anticipated trillion-dollar stimulus package should begin to revive the US economy in the second half of 2009.

Meanwhile, US President-elect Barack Obama has said that the alarming job figures showed that Washington should act quickly and decisively to enact his stimulus plan.

Behind the numbers were "real lives, real suffering, real fears", said Mr Obama.

Overall, US unemployment rate jumped to 7.2 per cent in December — the highest since January 1993.

But that’s just the tip of the US job-loss iceberg.

"Factoring in discouraged workers, unemployment is closer to 9.4 per cent," said Mr Peter Morici, an economist at the University of Maryland. "Add workers in part-time positions that cannot find full-time employment and the hidden unemployment rate is 14.5 per cent."

Nevertheless, the official total of more than 11 million jobless Americans — about 2.3 times the entire population of Singapore — is already quite staggering.

I read, with personal concern, the report that US aerospace giant Boeing expects its 68,000-person workforce will shed 4,500 jobs in the coming 12 months.

The big majority of Boeing’s layoffs will occur in the Puget Sound area of Washington state. That’s where a cousin and her American husband (a Boeing engineer) live.

Back home

Back in Singapore, the local labour market is also showing signs of softening.

The jobless rate among locals (seasonally adjusted) actually rose to 3.3 per cent in September — up from 3.1 per cent in June.

Expect retrenchments in Singapore to pick up pace in 2009.

In the third quarter of last year, a total of 2,346 workers were retrenched — up from 1,798 in the previous quarter.

So, it’s the same everywhere during this global recession.

Expect the “things over here” (in Singapore) — just like the “things over there” (in the US) — to get worse first (before they can get better later on).

The current global economic flu, after all, must be allowed to run its full course.


Source: The New Paper, Sun 11 Jan 2009

Here's how to drink with colleagues in Asia


By Zhen Ming


IN VINO veritas.

It's a well-known Latin phrase which means 'in wine, truth'.

It applies to people who become uninhibited when they drink too much alcohol and start to say what they really think.

The Chinese and Japanese also believe that drinking will enable a person to tell all.

But beyond drunkenness, drinking in Asia (just as in the West) also serves another important purpose - to size up the character of a foreign business partner.

Imagine this all-too-familiar scenario:

It's 2am. You're an expatriate sitting in a dark karaoke club somewhere in China.

Your colleague is making a tired but brave attempt at singing 'My Way'.

Your local partner (the host for the evening) has just fallen asleep again while a hostess pours you another glass of wine and enquires whether you're happy.

And your head is screaming out: I have a wife and two children back home. Must I be doing this?

Yes, you must. But there's a cleverer way to handle nocturnal activities in Asia.

So advise Professor Chow-Hou Wee and Mr Fred Combe in their 408-page book entitled Business Journey to the East: An East-West Perspective on Global-is-Asian.

It's perhaps the best (what they never taught me at Harvard) idiot's guide I've come across so far 'to understand better how Asians strategise and practise business'.

In this highly-readable book (published by McGraw-Hill Education), the authors blend the practical, cultural, and historical realities of doing business in Asia with many down-to-earth anecdotes and refreshing insights.

Throughout the book, our dynamic duo of cross-border consulting explore why Asians and Westerners think and operate differently, examine how the West needs to urgently reappraise its role in Asia and propose that the West adopt a new business approach that combines Asian and Western strategies.

According to Messrs Wee and Combe, the typical office executive in Asia puts on a mask in the office. So do his bosses, customers and other business associates.

However, after several rounds of drinks, the real feelings begin to spill out.

'For example, some people, under the influence of alcohol, start to crack colourful jokes, talk nonsense, or engage in harmless small talk... Worse still, they may even leak corporate secrets,' they wrote.

The whole purpose here is to shed inhibitions with business partners, colleagues, and friends.

And other activities

The authors also offer a useful tip on whether it's okay to turn down 'other extracurricular activities' (beyond drinking or karaoke).

'Unlike the pressures of drinking or singing, this situation is very different. It is very much discretionary, and they will respect your decision,' they wrote.

But the authors also offer this cautionary advice: Do NOT gloat about what happened the night before.

'In the West, it is common to find people talking and discussing about the good fun they had the night before.. Now this is something that you must never do in Asia.'

This 'as if nothing happened the night before' stance is a cardinal rule that is to be respected and strictly adhered to.

'Indeed, this is one of those very rare incidents where many Asians make a clear demarcation between what can or cannot be divulged about their social activities, especially those that occur at night... Any betrayal of this implicit trust and prohibition will not be easily forgotten or forgiven. It is a taboo not to be broken,' they wrote.


Source: The New Paper, Thu 08 Jan 2009

Prices taken from Singapore Department of Statistics in its latest press release on the Retail Sales Index and Catering Trade Index and from the recent issues of the Monthly Digest of Statistics Singapore.

9 prices to track in 2009
These 9 items have cost more in the last year


By Zhen Ming


WHAT you see above is my personal list of nine grocery items whose prices have shot through the roof as of October last year.

There are of course some items whose prices have declined.

With the Chinese New Year buying binge coming up, prices of my nine items have to be watched.

Then, there's the eating-out.

For me, eating out with the extended family is a pleasurable weekend experience.

These days, however, this social-gastronomic experience can be quite a budget-buster for the middle class.

Take the price of an average meal at a typical fast food outlet in October (barely three months ago, when there was financial mayhem in global stock markets).

For each meal then, you had to fork out an astonishing 17.8 per cent more than a year ago (based on the latest-available price comparisons).

Put differently, for the same amount of money spent on seven trips to a typical fast food outlet a year ago, you could afford to make, at best, six.

And the well-to-do are also not spared in this industry-wide price hike.

For those who prefer fine dining, their average up-market meal at a typical restaurant now costs 11.8per cent more.

Those who eat at hawker centres and food courts, however, can take comfort that prices there rose by only 9.1 per cent in the 12 months ending October.

The good news for everyone on a tight budget for 2009:

Eating in can now be just as pleasurable as eating out - more so, ever since the price of food and beverages, on the whole, dropped by a surprising 6.3 per cent over the same 12-month period.


Source: The New Paper, Sun 04 Jan 2009

Sleep well, S'pore


By Zhen Ming


THIS year has been one filled with sob stories - from everyday investors who have seen their life savings shrink to some others losing their jobs.

(I know of an over-leveraged friend who could soon lose his home.)

But in every downturn, there'll also be winners and what has happened in 2008 is no exception.

So here's my take on how Singapore, as a people, has weathered 2008's financial firestorm:

Our resilient economy

As of last year, Singapore was the world's 44th or 45th largest economy, depending on whether you wish to rely on comparative data provided by the International Monetary Fund (IMF), the World Bank or the US' Central Intelligence Agency (CIA).

Singapore then went on to tote up a nominal Gross Domestic Product of S$255.5 billion in the 12 months ended September 2008 (in the month the US credit crunch first turned into a full-blown global financial crisis).

In terms of our nominal GDP per capita, as of 2007, we're now anywhere among the world's 19th - 24th richest people.

On a purchasing power basis, our economic achievement is incredibly impressive.

Depending on which international monitoring agency you choose to rely on, we're now either the world's 3rd (World Bank), 5th (IMF) or 6th (CIA) richest people - definitely well ahead of our financially-beleaguered American friends.

Our strong dollar

And oh, what a volatile year for currencies it has been.

And yet, ironically, we're now roughly back to Square One vis-a-vis major reserve currencies like the US dollar and the euro as well as vis-a-vis the Malaysian ringgit.

Back on 1 Jan, for instance, S$100 could be exchanged for US$69.01.

By yesterday afternoon, the same S$100 could still be swapped for almost the same amount of greenback - that is, US$69.36, to be exact.

Vis-a-vis major Asian currencies like the Japanese yen and the Chinese yuan, however, we've weakened somewhat.

For instance, the money-changer at the mall will now give you only 6,263 yen for your $100 as compared to 7,756 a year ago - down by nearly 20 per cent.

But vis-a-vis currencies like the Australia dollar and the New Zealand dollar, we've seen our purchasing power grown much, much stronger.

A year ago, for example, S$100 could get you only A$79.43 in exchange. By yesterday, however, the same S$100 was worth A$100.56. That translates into a hefty currency appreciation of 26.6 per cent in less than a year!

Overall, however, much to the relief of many traders, the Singapore dollar remains fairly stable vis-a-vis a trade-weighted basket of reference currencies.

Our bulging reserves

Back at the end of 2006, barely two years ago, our official foreign reserves already totalled a humongous S$209 billion.

It is still growing, albeit at a slower pace in recent months (mainly because of the global financial crisis).By end-October, however, our reserves stood at around S$241 billion.

This money will surely come in handy to help us weather the bad economic storm that's still brewing in 2009 and beyond.

In fact, a good chunk of this money has already been set aside to guarantee all regular deposits in our local banking system, thus allowing Singaporeans like you and I to avoid the kind of panic that has engulfed savers in many other countries.

In short, sleep tight, my friend, knowing that all is still well with Singapore.


Source: The New Paper, Wed 31 Dec 2008