The Problems With Asian Style Management: Cronyism

http://www.walesonline.co.uk/sport/football/football-news/carl-curtis-vincent-tan-must-6312934

If you've worked in an MNC or a local firm, you will know that the boss is almost always the KING or QUEEN. Often, the boss is a law unto himself. Read the hyperlink above regarding the Vincent Tan saga. Once a boss takes over, he almost immediately surrounds himself with like minded friends. I believe this is a self preservation mode which is evident as much in western management techniques. it is to prevent remnants of the incumbent management from sabotaging the new boss.

However, an Asian boss goes further to place people who are unsuitable into various positions. The key to a strong organisation is not just to appoint people who are loyal and have integrity, but to place them in positions that best suit their strengths. But Vincent Tan appoints his son's school friend as chief recruiter. Venky Chicken knew nothing about football and placed wrong people in charge of Blackburn Rovers. They fired Sam Allardyce because of personal conflicts and replaced him with a succession of incompetent managers. The club very quickly went down.

An Asian boss is also very much less consensual. Look at how badly managed Blackburn Rovers and Cardiff are. They managed to offend the fans, who are the customers, and tried repeatedly to intervene in football matters.

A boss is not an emperor. He is a facilitator to inspire his team to greater heights. He should not surround himself with a team of people who only say things that he wants to hear, but to have a team of technically competent people, who are also loyal. Otherwise, an organisation is doomed to fail, because the decision-making will be poor.

Are Asians Paying Too Much For London Off Plan Properties??

http://youtu.be/_hznBhDILNk

My answer is a resounding "YES". I focus in buying resale properties wherever I go, be it in the US, UK, Australia or Malaysia.

Pros of buying resale properties:
1. You get to choose your preferred unit.
2. No risk of developers failing to complete! This is a very big risk because almost 50% of projects get delayed overseas and 10 - 20% almost never complete! A 30% of them have defects.
3. You can get a good 20 - 40% discount to new builds. In countries like Malaysia where there is no land registry to provide latest transaction figures, the discount can be up to 50%!
4. No new supply! You often hear from agents that it is good to buy next to a new project because it sets a new benchmark. Absolute poppycock! Buy in mature areas with no supply I say.
5. Less competitors when you want to rent your unit, less competitors when you exit.
6. Older projects tend to be less dense and crowded. Roads are less crowded by cars.
7. Sometimes allow you to adopt a buy and fix strategy which gives you instant profit!

Cons of buying resale:
1. Older properties may have defects. Always bargain with seller to account for repair costs.
2. Risk of being gazumped in countries where option to purchase is not available. It is a very stressful event because seller and buyer can change minds between agreeing and completion.
3. Cash is often king. Wherever you go, whether in the US, UK or the rest of Europe, cash buyers are king!

Be wise, Asian investors. A fool and her money are soon parted!

Why You Cannot Easily Trust a Sell Side Analyst Report

The banking and securities industry is full of conflicts of interests. Reports from sell side analysts are the most unreliable because you will never get a SELL recommendation. The listed companies pay so much investment banking fees that the securities firm that issue reports are under tremendous "pressure" to write a favorable report.

I guess in Singapore, gullible end consumers hardly protest nor engage in activism to force greater clarity. Unlike in the west.

Social justice is indeed lacking here.

http://youtu.be/WMOjC4b0LGM

Climate Change & Tipping Point of ASEAN: Why You Should Not Sink All Your Eggs in S'pore / Iskandar Property Basket

http://mothership.sg/2013/11/8-ways-climate-change-damper-spore/


In many of the seminars I gave, very few people asked about climate change's impact on investments and Singapore. It is only in my last seminar with a group of very high net worth clients that this was discussed.

I often hear my colleagues and friends talk about their desire to own a landed property in Singapore or Malaysia. But very little is discussed about how vulnerable these two countries are to climate change.

In Johor, some towns like Segamat are submerged in 2m high water for several weeks a year. Many low lying parts of Malaysia will increasingly be at risk unless the government invests heavily in storm drains.

Singapore will also suffer the same fate. Rising sea levels will require dykes and levees like Amsterdam to keep out the water. By 2028, Singapore, Iskandar, KL, and Jakarta may become very different from today. Floods, famine, increasingly violent typhoons and extremely heavy rain will wreak havoc on these mega cities.

Putting all your eggs in one destination is extremely foolhardy. I have friends who just buy rows of shophouses and bungalows in Singapore. Nothing but Singapore. I also have learned friends who sink all their money into Iskandar and KL. Perhaps its their homeland and they are emotionally attached to Malaysia. Maybe it's just irrational optimism. But I've got my doubts.

The best places to escape to are well north or south of the equator, and that means countries like New Zealand, some parts of Australia, UK, most of northern Europe, Canada and the northern parts of the US. China's atmosphere is too polluted. Japan has earthquake risk. Korea, Chile, Argentina, France and most of Europe is not bad but language is a problem.

http://yahoosg.tumblr.com/post/63719064286/the-cities-highlighted-in-red-will-reach-climate

2014 Beckons... Bubbles Forming In Many Asset Classes

I am bullish developed market equities, moderately bullish on Asia and Emerging Market equities. Sometime in mid 2014 the US could finally start to taper. Then, Asia / EM equities and local currency bonds may be sold down again as hot money returns to the US. USD will strengthen against most currencies then. The 10 year UST may rise above 3%.

Another 30% increase in the S&P500 will see it reaching the dangerously overvalued territory. It will then be prime for another big correction.

The Euro Stoxx 50's CAPE is around 13x. Another 30% increase will also see it reach median level. I believe a simultaneous correction with the US could occur but at a lesser extent.

Asia / EM's property markets will start to deflate. I expect the overbuilding in Singapore, China and many developing countries will cause rental rates to drift downwards and yields to fall dangerously below mortgage rates.

In Europe and the US, the property market recovery will be in full swing. Ironically, Asia / EM stocks will be well below their median valuations in 2014 and be ripe for value investors.

2014 could well be the final year of the equity rally. In 2015 we could see an equity bear market globally, real estate bubble burst in Asia and Emerging countries, primarily in China, Singapore, most ASEAN countries including Malaysia. Property prices may fall 10 - 30% from now until 2015. But in the west, real estate prices will merely pause or just correct between 5 - 15% because they are far more affordable.

If Capital Gains Tax Were Implemented in UK, US Will Be the Last Bastion For Property!

UK may be implementing capital gains tax in 2014 on foreign buyers of properties. It is not a good development because if implemented, London will fall well behind the US in terms of IRR for the next 5 years. I expect London to give me an IRR of 24% for next 5 years, with capital values rising until 2016 before correcting slightly as more supply comes on stream.

For US cities like New York, Houston and Austin, I expect an IRR of 23% for the next 5 years and uninterrupted upward movement in prices. US loses out to London because very few banks are able or willing to provide mortgages. The highest LTV I can get is around 65% and the taxes are much higher. The CGT of around 15% also puts it second best to London in the last 5 years. However, all these will change once London implements CGT.

Much of Malaysia is a write off. I would definitely not touch condos in Iskandar, no matter how cheap. I may consider a bungalow or semi-detached, if only the rental yield stacks up. I just cannot afford to keep a property that cannot generate cashflow.

With an IRR of 23%, if you are able to invest in a portfolio of stocks well, you could beat returns from properties (with leverage).