Friday, September 30, 2011


Published September 30, 2011
CMA takes 50% stake in Suzhou project
It will join a Chinese developer to build a shopping mall and two office towers


CAPITAMALLS Asia (CMA) will join a government- owned Chinese developer to build a shopping mall and two office towers within Suzhou Industrial Park, it said yesterday.

Based on its 50 per cent share, CMA is expected to invest about 3.37 billion yuan (S$637 million) in the project.
Including land cost, the total development cost of the project is expected to be about 6.74 billion yuan.

CMA will partner Suzhou Industrial Park Jinji Lake Urban Development Co. The company, which is owned by the Suzhou Industrial Park government, is the master developer of the central business district within the park.
The seven-storey shopping mall, which will be Suzhou's largest, will have a total gross floor area (GFA) of about 2.7 million square feet, while the two 20-storey office towers will have total GFA of about 646,000 sq ft. The retail portion will therefore account for about 81 per cent of the development's total GFA.

This project is CMA's first development in Suzhou, said chief executive Lim Beng Chee.
'This development will leverage on our existing strong presence and management team in Shanghai as well as the larger East region of China, increasing our portfolio there from 11 malls to 12 - including six in Shanghai,' Mr Lim said.

The development, which will be surrounded by offices, hotels and high-end residential apartments, will serve an immediate catchment population of about 700,000 in the Suzhou Industrial Park, CMA said.

Analysts were generally positive on the deal and noted that with this acquisition, CMA has surpassed its $2 billion acquisition target for the year.
'We are generally positive, however, earnings will be only visible in four years time,' said Credit Suisse analyst Tricia Song. She added that CMA's current price-to-book ratio is 0.8 and the company's recently increased stakes in two malls in Shanghai will boost its earnings from China by early 2012, which would provide a catalyst.

Credit Suisse has an 'outperform' call with a target price of $1.78 on CMA.
OCBC Investment Research analyst Eli Lee likewise views the acquisition favourably because of the site's 'strong location and reasonable pricing'.
'We reiterate our thesis that possible capital recycling lies ahead and that the market has overly discounted CMA's price for a crisis scenario,' he said.
OCBC Investment Research has a 'buy' call and a fair value estimate of $1.67 on the stock.

CMA lost 0.5 cent to close at $1.20 yesterday.


My Thots....

SIP is now at the phase where it needs a mixed development to capture the 700K catchment.
Directly connected to Metro Line 1

Cost of development including acquisition of land, approx.  RMB 22K/sqm.

News of the Dual Listing will give an uplift.$file/04NewsRelease_CMAHKListing_20110930.pdf?openelement

Recent cash hoard  about fully deployed,  more capital recycling in the line?


DBS Vickers Report

Management targets to achieve a project IRR of 11-13%  

The entire development is expected to cost RMB6,740m (S$1,275m), of which CMA's share will be RMB3,370m (S$637m).
This translates to cRMB21,742 psm of GFA.
We believe this is an attractive investment given the large population base and high GDP per capita of Suzhou, which is 2.5x that of Shanghai. Retail sales have been growing by c.17% y-o-y. and the development cost will be spread progressively over the next 4 years.
Meanwhile, gearing is expected to head up slightly to over 20% by end of the year.

PMI news.... China & Japan

China's PMI 

This is the Official Index

We will be awaiting this mths index tommorow
Last Mth's Index

2010       PMI

Mar           53.4
Apr           52.9
May          52.0
Jun           50.9
Jul            50.7
Aug          50.9

PMI increased after 4 successive mths of decline.
New orders index was 51.1% indicating expansion (mainly from F&B, IT & Comms, Tabacco)New export orders index declined to 48.3% in August, compared to 50.4% in July (i.e. in contraction)
So clearly, domestic consumption is driving that growth.

The Input prices index was 57.2% in August, showing that input prices continued to rise.
Cost pressure on manufacturers was still intense.
Employment index was 50.4% in August (vs 50.5% in July)


1) Held steady at 49.9%

- signalling a negligible rate of deterioration in manufacturing sector operating conditions .

Updates 01/10/2011
2010       PMI

Mar           53.4
Apr           52.9
May          52.0
Jun           50.9
Jul            50.7
Aug          50.9
Sept         51.2

Surprisingly the Sept figure increased further to 51.2% indicating that China's PMI
was expanding in a steady manner

New Orders index was 51.3% in September ( vs 51.1% in Aug)
New Export Orders index rebounded to 50.9% in September (vs 48.3% in Aug)
Input Prices index declined to 56.6% in September (vs 57.2% in Aug)
Employment index was 51.0% in September (vs 50.4% in Aug)

CFLP Index is much positive than I have expected.
The coming year end festivities is expected to cause an increase in exports but the Euroland crisis was expected to have an opposing effect. The New Export Orders index suggests that Exports did benefit despite the gloom in the debt markets and is IMHO, a very positive outcome!!

"September final PMI still stays below 50, but shows some signs of stabilising. This implies that although the lagged effects of credit tightening will continue to cool industrial activity in the months ahead, there is little need to worry about a sharp slowdown. Despite the global slowdown, we expect China's economic growth to hold up at around 8.5-9% in the coming years."
2) HSBC believes a PMI reading of as low as 48 in China still points to annual growth of 12-13 %  in industrial output and a 9% expansion in GDP.

Japan's PMI

Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:
Manufacturing production declines for the first time in five months􀂃 Falling new business behind drop in output

􀂃 New export orders decline at fastest rate since April
􀂃 Input price inflation remains strong

Alex Hamilton, economist at Markit and author of the report said:

"Japan’s manufacturing sector recovery stalled in September, with production falling for the first time in five months, in response to fewer new order intakes. With the yen remaining strong and global demand conditions sluggish, exporters felt the brunt of the slowdown, with overseas sales falling at the sharpest rate since April.
"Combined with a marked decline in existing workloads, falling levels of production and new business bodes ill for the employment situation going forward."

Euroland/ US news....

Eurozone QE ?

Analysis: For markets, euro zone QE no longer unthinkable

But the euro zone debt crisis has reached a critical point in which markets -- rationally or not -- begin to speculate about the unthinkable.

The ECB's rules do allow it to buy any asset except for sovereign debt directly from governments.
"I think it's inevitable," said Robert Talbut, chief investment officer at Royal London Asset Management, which runs assets worth about 40 billion pounds.

"They may well be facing the prospect that if they don't do something radical they will be staring down at a European recession."

Talbut argues that coupled with bank recapitalization and a writedown of Greek debt, quantitative easing would have a good chance of bringing the crisis to an end.

Other analysts point to political leaders inability to move fast enough to get ahead of markets and ease pressure on euro zone members deemed too big to save like Spain or Italy.

The solutions available to governments, such as common euro zone bonds, could face potentially lengthy constitutional challenges and may simply be politically undoable.

"They (the ECB) are the only game in town at the moment because politicians can't move that fast," said Charles Diebel, head of markets strategy at Lloyds Bank.

The ECB, of course, has always put the onus on governments themselves and said that the solution to the crisis is about responsible fiscal policy and frameworks. It has said it will never embark on outright QE and given no sign of changing that view.

President Jean-Claude Trichet, who hosts his last meeting next week, says the bank's role in the crisis has only ever been about keeping markets well-oiled and providing an anchor for inflation.

To create large quantities of new cash at a time when inflation is already well above the bank's 2 percent target would be the antithesis of a decade of careful control over prices.

But some analysts are discussing how it could be done.

The ECB did spend 60 billion euros in mortgage-related covered bonds in a one-year program started in June 2009. Media reports have recently suggested they could do that again, but to be able to release a larger chunk of money they would have to consider buying more liquid assets.

While buying corporate bonds or equities can trigger a dramatic shift in market sentiment and spur growth, it may not go to the heart of the problem, which is governments facing increasing funding pressure as the crisis spreads.

It is now buying Italian and Spanish debt in secondary markets and indirectly helps the two battered governments fund themselves by keeping a lid on yields. The 17-country bloc's central bank has spent 156.5 billion euros in buying government debt since May last year, first buying Greek, Irish and Portuguese paper.

But it is sterilizing the purchases by removing a similar amount of money from markets. If it decided to step up the bond purchases and stop sterilizing, it would effectively mean quantitative easing.

"When the crisis escalates the ECB has to step up to the plate," said Ken Dickson, investment director for FX and money markets at Standard Life, which runs assets worth 157 billion pounds.

"We see this current phase of the crisis as one where the ECB has to take greater and greater bond buying measures, effectively easing monetary policy through a European-style quantitative easing."
His view translates into a bet that euro zone short term interest rates have "very limited upside potential over the next 18 months." That does not go completely against the market trend, though -- the ECB is now expected to cut its key rate and expand liquidity facilities in the short-term.

But betting on Italian and Spanish government bonds against German Bunds, for example, on the view that the ECB will at some point pursue quantitative easing, is not yet something investors are doing.

The ECB is already divided on whether to purchase government bonds at all, leading to the departure of two senior German members saying it eases pressure on politicians to reform.

"The SMP (bond buying program) is all about providing some stability to the market," said Russell Silberston, head of global interest rates at Investec Asset Management, who manages about $31 billion globally.

"But do they then become the buyer of last resort funded by printed money? I think that's of a magnitude far greater than what they've done so far. As things stand today, it's too far."

Morgan Stanley's global head of economics Joachim Fels Says the debate over quantitative easing reflects a more fundamental tension in the crisis which could eventually lead to a change in the ECB's formal mandate.

He points out that historically central banks have always been used to solve important problems and that the banks' exclusive devotion to inflation is a reflection of a historic need in Germany that may be overwhelmed by current events.

"What lacks in Europe is access to the central bank. We all know why. It was Germany's precondition for joining the euro-zone after the hyperinflation in the 1920s. But in the end it is a construction flaw."
(Additional reporting by Harro ten Wolde)


My Thots...

Sounds like heresy for the moment....
But, thru out the sovereign debt crisis, the ECB under Trichet has time and again done things that it said it would not do - such as buying sovereign bonds to help beleaguered sovereigns  after buying covered bonds to help  the banks.

US news...

GOP Rick Perry
Meanwhile, Rick Perry, the GOP front runner is now slipping after a series of poor performances at GOP debates..

Thursday, September 29, 2011

PARD/ CFG (Pacific Andes Resources Dev & China Fishery Group)

Yr 2009 Posts

Old CNA Forum(Salvaged)

Posted by fishfish

tap fishing grounds in the North and South Atlantic and plans to expand its distribution network in eastern Europe and the United States through acquisitions.
"Now is a better time for acquisitions because of the financial tsunami and we are in talks with potential sellers from time to time," managing director and vice chairman Ng Joo-siang said in Qingdao. He did not reveal the budget the company has put aside for acquisitions.

"As long as our gearing ratio can stay below 100 percent, we will still go ahead when there is a good acquisition opportunity," Ng said.

Amid criticism of the company's debts, Ng said the gearing ratio could be reduced to 60 percent next year from its current 80 percent if there are no new investment expenditures. He said the company is "comfortable" with the current gearing ratio.

The profit margin of its fishery business could reach 50 percent in five years from 35 percent, helped by its flagship fishing vessel, which will be operational by next month, Ng said.

Pacific Andes, which holds 42 percent of Singapore-listed China Fishery, invested US$100 million (HK$780 million) in transforming a tanker into the fishing vessel Lafayette, that is expected to haul in 300,000 tonnes of fish a year.

The holding company, mainly engaged in processing and distributing frozen fish, also aims to expand its distribution network.

"We hope to penetrate all supermarket chains in the US and enter eastern Europe through acquisitions," Ng said.

The company currently supplies frozen fish to 22 US supermarket chains. Profit margin of distributing products directly to retailers is 24-30 percent.

The new processing factory in Qingdao could save production cost of at least US$100 per tonne of frozen fish on lower water consumption, while labor productivity can be raised by 20 percent with the new equipment, Ng said.

"The cost of sales can be reduced to US$500 to US$600, from the current US$600 to US$700 per tonne," he said.

The processing factory, which has a capacity of 60,000 tonnes of frozen fish fillets a year, cost Pacific Andes US$100 million.

Fish fish...

PARD (some CFGs) forms a part (NOT insignificant) of my portfolio allocated to holdings considered "W-i-p" (work-in-progress).... those with potential to be "Biggies" due to certain monopolistic type advantages in their franchise... I am bullish about PARD & CFG, in fact the PA Group...

From this article it appears PAIH (NOT PARD) is on the prowl...

OR am I wrong? fishfish?

PAIH has the Hongdao frozen fish processing unit coming on stream with significant advantages ...
- MSC (Marine Stewardship Council) certification
- With MSC certification.... margins can go substantially higher for the low margin fish processing & trading biz... from the current net profit margins (NPMs) of 6 to 8% ( correct me if I am wrong fishfish) to higher
- the margins figure 24-30% for going direct to retailers bypassing the distributors & wholesalers, given by Ng JS in the above article is for GPM (Gross Profit margin)....I am guessing...
Given also that..
- savings of USD100/tonne for production costs arising from savings in water consumption & another
- COS (cost of sales) is down 12%
- labor productivity raised 20%..
This is a potential game changer since PAIH & PARD (takes care of distribution) can now target the European mkts with this MSC competitive marketing edge/tool to sell direct to the 22 US supermarket chains...

Driving NPMs to 12-15%?

The profit margin for CFG due to Lafayette of 50% given by Ng JS is GPM (if I am not wrong) .... so that will drive NPMs to 30-35% from current 25%?

Other potential catalysts...
see previous posts...
most will come onstream this Q or later Qs...
if there are no surprises...


PARD/ CFG (Pacific Andes Resources Dev & China Fishery Group)

Yr 2009 Posts

Posted: Fri Jul 10, 2009 11:32 am Post subject:
Posted by fishfish
try to estimate the catching volume of Pollock announced in Aug. to see if CFG has a higer quota portion in Okhotsk sea. the average is about 20% of the total quota.

Okhotsk sea

Baring sea west

USA pollock quota seems cannot increase at Baring sea east as Baring sea west is the same fo 2009 & 2010

posted: Sat Aug 15, 2009 2:44 am Post subject: Pac Andes/CFG....

Posted by qiaofeng

Grand Strategy (GS) In Execution...

PA Group management has shown remarkable biz acumen, timeliness & incisive actions at appropriate junctures in this execution...

Let me try to decipher...

Long term Strategy...
Target sustainable untapped Ocean based resources...
Buy over the existing VOAs which carries the fishing permits & rights plus ITQ when awarded...
Take AP (Alaskan Pollock)....
VOAs 1, 2 & 3 ... totals 17 super trawlers vessels... under prepaid Deferred Charter Hire arrangements
VOAs 4..... another 6 super trawlers vessels... under Variable + Fixed Charter Hires payable yearly & as proportion of Profit..
With this CFG gets 20% of the ITQ....
Take Peruvian Fishmeal...
Buy 39 Purse seine fishing vessels & 8 fishmeal processing plants...
Part of the Buy 1 get 1 Offer... they get 5% of the TAC for Peruvian anchovy as their ITQ when the switch from Olympic system occured...
Now target South Paciifc CJM... Hmmn... am I saying too much....
U figure...

Bring in the typical PA Group efficiency & "towards zero" wastage mantra...
For AP...
U get double frozen hand lay deboned fillet, with 98-99% recovery of the Pollock, I read...
Super trawlers out at sea... that semi process the fish and then double freeze it...
Reefer vessels to refuel them at sea, supply & logistic refrigerated vessels that can transport the deheaded, degutted fish back to port so that the super trawlers can be more efficient & longer at sea, minus the many trips(save fuels) ...
For Peruvian fishmeal...
Cut down the Purse Seine vessels deployed..
reduce the number of fishmeal processing plants, upgrade & restructure the fishmeal processes ... improve the steam drying process, use fresher spaced out anchovies catches to get better quality fishmeal/fishoil...
Maybe even sort anchovies for canning & human consumption for some of these plants...
Make sure that even the heads & tails (25% of the fish mass) be harnessed to reduce wastage..
And U get EBIDTA up at 56.2% 2QFY09, UP 20.2% yoy (vs 36% 2QFY08)...

Next ...
Home in on the efficiency of the super trawlers & fishing vessels, now that the ITQs are in the bag...
Reason ?
Bunkerage costs has been high as % of Cost of Sales, as much as 21.1% in FY2008 for CFG..
U have 26 trawlers in Russian waters in North Pacific, essentially very busy in 1-2 Qs.... but otherwise relaxed in others...
Modify & convert them into catcher vessels for South Pacific operations...
Put one factory vessel amongst the five catcher vessels.... to increase efficiency & reduce wastage out at sea ...
Maybe get another Reefer vessel... & have supply & logistics vessels to reduce time wasted travelling....
So the fishing vessels becomes more efficient as the numbers used at North Pacific is deployed elsewhere.... Of the original 26 trawlers.... if 9 get modified & shifted South... U have just 17 left... i.e 17 doing the work of previous 26...
Of the 17, say the ITQs are spread out over more Qs.. as with current rollovers to 4th Q, then the numbers can go down further to say 14? with longer stays out at sea..?
Hence "Cost of sales" decrease as bunker usage reduces... (12.1% of Sales cf 17% last yr partially due to lower price of bunker)... Repairs, Maintenance, Crew wages, all drops... even the Charter Hire is cut to bare bone ( close to fixed charter 20%) at 20.1%...
And when the ITQ system comes for South Pacific, CFG will be poised for the conversion... 12 converted trawlers from the North, one factory vessel & one Reefer vessel?

Increase the supply, logistics, processing & distribution chain Knowhow..
Acquire new competencies, new competitive edges for mkt penetration..
Built the largest high tech FDA standard fillet processing plant in Hongdao..
Pursue MSC ( Marine Stewardship council) certification... for fishery & end to end traceability...
Grab a significant share of the China mkts ( fastest growing)...
Pursue niche Japanese/Korean mkts like AP roe (making use of every part to reduce wastage)..
Pursue African & European diversify risks..

But wait... the GFC tsunami hits...!!
So Short term tinkering needs to be done to the strategy...

Sell lower margins mix.. sell more AP, less fish roe etc... (to keep price at USD 8000/ tonne range for fish roe ?)...
Raise funds via rights to fund working capital...
to underpin the supply & logistic & trading chain...
the lifeblood but always "overlooked" & neglected factor in a trading & SCM biz...
Use it to pay down short term revolving loans..& reduce gearing...

Inventories of fishmeal hit by GFC price collapse sold to PAH as IPT...
Spread out utilisation of vessels & ITQ over the year...
- instead of flooding Japanese/Korean mkts with expensive roe in a GFC , rollover to the 4th Q...
- similarly with AP, part of the ITQ is rolled over to the 4th Q...
So in the 4th Q... CFG can use less vessels & spread over a longer fishing excursion...
Most of the Capex for South Paciifc looks done... unless there are new acquisitions to the 1 factory ( converted supertanker) & 5 converted trawlers...
Revenues flows start from July...
Strong Operating margins & Operating Cashflows of the Biz model is sufficient to pay down the essentially long term debt funding structure here

My appreciation & grasp of this Grand Strategy is perhaps shallow & sporadic ...
as I do not know the management enuf...& have NOT good, only an asymmetric access to the insider info set...
However, I am beginning to savour their business savvy, more & more...

What can we expect from this GS?
Better improving efficiency, lower wastage, higher quality products leading to higher ASPs, higher margins & lower costs..
This Q results from PAH & CFG testify to the brillant execution to-date... even under extreme stress...
There is much more to come... CJM catch just started in July & continues as we speak.....
Season for CJM ends late Nov, early Dec...

Did U guys notice the same date for announcement of PAH/CFG results?
Alignment of the PA Grp to cut waste & reduce inefficiencies is ongoing...

Posted: Mon Nov 16, 2009 7:37 pm Post subject:

Posted by fishfish

Have your increase your holding of PARD?
PARD is under-value and will be become normal-value later, sane as PAIH

vessel Lafayette invested US$100 million ,expected to haul in 300,000 tonnes of fish a year.
This is a new fishing method can save fuel 35 tons daily and 300 workers also can be saved. The profit margin of its fishery business could reach 50 percent in five years from 35 percent

早前集團投資約一億美元巨型的加工與捕撈船—拉法葉號,將在近期完成改裝後投入服務,該船全長228米,寬32米,擁有巨大的燃油與潤滑油容量,可以長年在海上作業。 新購加工捕撈船添財源  拉法葉號配備32個魚艙,利用冷卻至0℃的海水儲存漁獲。同時,該船可容納14,000噸漁獲的冷藏貨艙及232台直立式平板冷凍機,每天可加工處理1,500噸魚。與傳統的拖網加工漁船的模式相比,不但每天節省35噸燃料,亦可大幅減少300名船員,故相信拉法葉號將為集團帶來可觀回報。

PARD/ CFG (Pacific Andes Resources Dev & China Fishery Group)

Old Posts from CNA Forum

Some of the old posts I managed to salvage from the old CNA Forum before they did the switch.

Yr 2010

Alaskan Pollock (AP) Operation & Updates...
Russian scientists have indicated that the (Russia) quota for Alaska Pollock could increase by 200k mt to 1.7mil mt in 2010
Russian stocks in Sea of Okhotsk rising whilst US stocks in Bering Sea & Aleutian Islands dropping..
Note Russia/Far East supplies likely accounts for 63% of world total AP... in 2009..
Price chart trending up

Peruvian Fishmeal Opns Effect of El Nino..
Catch volumes may drop as anchovies stay deeper in warmer waters..
and Purse seine fishing only skims the surface..
price may rise however due to lower supply..
Price chart trending up..

Chilean Jack Mackerel (CJM) Updates
6 vessels to be deployed
5 fishing supertrawlers & 1 factory vessel

Potential ...
Max based on factory vessel
1500 mt/day based on max freezing capacity
Current FOB price for Jack Mackerel is US$750/mt.
Assume 8 active months of fishing... Mar to Oct/Nov every year
we have 1500 mt/day x USD 750/mt x 8 mths x 30 days
= USD 270 mil per yr..... OR 360,000 mt/yr

Max based on supertrawler capacities
5 x 150mt/day x USD 750/ mt x 8 mths x 30 days
= USD 135 mil per yr....or 180,000 mt/yr
Super trawlers will be limiting w/o the factory ship...
With factory ship, supertrawlers can make 2 trips per day to the factory, hence factory becomes the limiting factor...
The figures estimated compares well with those in report below, based on 4 trawlers & 1 factory vessel..

Conservative estimate ...
say only 50% potential realised ...
Take USD 270 mil/yr x 50%... = USD 135 mil
Net Profit
assume net margins of 20% (much less than AP) & we have a potential net profit contribution of0.2 x USD 135 mil
= USD 27 mil.... due to CJM alone..
So FY 2010 onwards, profits at PAH/CFG may takeoff, if all goes well...
Nice map showing migration patterns of CJM..

Debt maturity
Debt maturity Profiles summarized..
60% due to Senior Notes due in Dec 2013
17% short term loans due on 2010 easily covered by reccuring Op Profits
CFG Gearing is 0.89 times..
PAH Gearing to improve Post rights
PAH gearing drops to 0.6 from 0.9, post the rights issue..
Institutional resistance due to gearing overhang should no longer factor after the rights issue...
Will the stocks PAH/CFG climb as a result...?

2010 PEs
CFG 4.5
PAH 3.6
Both does not include CJM, AP & fishmeal updated projections...

US news....

Please go to Reuters for original...

Bernanke says Fed would act if inflation falls
CLEVELAND | Wed Sep 28, 2011 8:19pm EDT
CLEVELAND (Reuters) - Federal Reserve Chairman Ben Bernanke said on Wednesday the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly.

Bernanke says Fed would act if inflation falls In his first public remarks since the Fed launched a fresh measure aimed at keeping down long-term borrowing costs, Bernanke indicated a willingness to push deeper into the realm of unconventional policy if economic growth remains anemic.

"It is something that we're going to be watching very carefully," Bernanke said in response to questions from the audience at a forum sponsored by the Cleveland Fed.

"If inflation falls too low or inflation expectations fall too low, that would be something we have to respond to because we do not want deflation," Bernanke said.

The comment was made in response to a question about a recent decline in market-based inflation expectations, which policymakers see as a good gauge of future inflation trends.

The gap between yields on 10-year Treasury notes and their inflation-protected counterparts fell to 1.70 percent last week, the lowest since September 2010. It has edged up slightly since then and last stood at 1.86 percent.

In an effort to stanch the deepest recession in generations and help the recovery, the Fed not only slashed benchmark interest rates to effectively zero, but also more than tripled its balance sheet to around $2.9 trillion.

Despite these measures, growth has remained quite soft, averaging less than 1 percent on an annual basis in the first half of the year. Bernanke signaled he remains concerned about risks to the economy, which the Fed described as "significant" in its September policy statement.

"We have a lot of problems both in terms of recovery and in terms of longer-term growth," he said.

Last week, the Fed said it will sell $400 billion in short-term Treasury securities and invest them into longer-dated ones to try to put downward pressure on borrowing costs over a longer period.
Investors have dubbed the program Operation Twist after a similar measure undertaken by the Fed in the 1960s. The central bank will also renew its help to the housing finance sector by reinvesting maturing mortgage bonds in its portfolio back into that market.

Bernanke called for the U.S. government to beef up its assistance to the ailing housing sector, the epicenter of the 2008 financial meltdown.

"Some strong housing policies to help the housing market recovery would clearly be very useful and would allow the monetary policy actions of the Fed ... to have more effect and to help the economy recovery more strongly,"Bernanke said.

Asked about the fate of fallen mortgage giants Fannie Mae and Freddie Mac, Bernanke reiterated his view that the mortgage market remains too weak to allow the government to try to privatize the government-sponsored entities.

The Fed's latest monetary easing did not have unanimous support within the Federal Open Market Committee, which sets monetary policy.

Three regional central bank presidents dissented against the move. Kansas City Fed President Thomas Hoenig, who does not have a vote on the committee this year but has been a vocal opponent of the Fed's unconventional policies, took a parting shot at the central bank's actions on Wednesday.

"When you encourage consumption by inhibiting your interest rates from rising to their equilibrium level, you will in fact buy problems, and we have, in fact, bought problems," said Hoenig, who is due to retire on October 1, in his last speech in office.

(Reporting by Kim Palmer, Pedro da Costa and David Lawder in Washington; Editing by Padraic Cassidy)


My Thots......

Bernanke is hinting that he is looking for the Obama Admin to act.
If that fails and he needs to do more, QE3.0 might come.

Euroland news.....

German Fatigue?

Excerpted  from...
Please go to WSJ for the original

SEPTEMBER 29, 2011

Germans Reconsider Ties to Europe

Merkel Scrambles on Bailout Vote as Key Allies Desert Her


BERGISCH GLADBACH, Germany—As Angela Merkel races to convince Germans that their continued prosperity rests on preserving the euro, she is encountering strong resistance even from those in her own party who have been traditionally among the country's most pro-European politicians.
When German lawmakers vote Thursday on whether to put more money into Europe's bailout fund—a step many investors see as essential to prevent a market panic—several conservative deputies, including Wolfgang Bosbach, a prominent champion of European integration, are expected to vote "no." Mr. Bosbach, a high-ranking conservative in Ms. Merkel's Christian Democratic Union, has recently become an outspoken critic of the bailout strategy.
"The first medicine didn't work, and now we are simply doubling the dose," said the lanky Mr. Bosbach of the Greek debt crisis. "My fear is that when the big bang happens, it won't just be us who will have to pay but generations hereafter."
The lawmaker rebellion underscores a broader shift among Germans about their nation's role in Europe since the crisis erupted nearly two years ago. While the Thursday vote is expected to pass, and a vast majority of Germans continue to feel a strong, historical commitment to Europe, with a common currency as its anchor, many have grown doubtful of whether it's worth the ever-growing cost of saving the euro.
Like many Europeans, few in Germany today fear the return of armed conflict in Western Europe, the decades-long impetus behind what Germans still often call the "European peace project."
Instead, economic prosperity and stability have become the main rationale for monetary union, an argument many Germans say they have trouble reconciling with one ineffective bailout after another.
Unable to persuade an increasingly skeptical German nation to go along with more rescue measures, Ms. Merkel risks presiding over Germany's growing isolation and the dissolution of the euro—the crowning achievement of Europe's post-World War II drive toward integration.
Ms. Merkel, a 57-year-old trained physicist and a famously cautious politician, is making a belated attempt to rekindle Germans' love affair with the idea of European unity.
On Sunday, the normally interview-shy chancellor defended her euro rescue efforts in an hour-long prime-time conversation on public television.

"We need the euro. The euro is good for us," Ms. Merkel said.
Germany's main opposition party has agreed to support the bailout, ensuring its passage.

Yet the growing backlash within Ms. Merkel's conservative base suggests that her coalition will face strong internal headwinds in the coming months if, as expected, Germany is asked to commit even more resources to contain Europe's spiraling debt crisis.
Mr. Bosbach, a party veteran whose district runs along the eastern wooded hills of the Rhineland—the cradle of Germany's decades-long engagement with Europe—is at the vanguard of a movement against further bailouts.
A longtime ally of the chancellor, Mr. Bosbach brought Ms. Merkel flowers in June to congratulate her on receiving the U.S. Presidential Medal of Freedom in Washington. Last year, Mr. Bosbach, affectionately called "Wobo" by many colleagues and constituents, also threw his support behind the initial European debt bailouts.
But after six decades of embracing and funding an integrated Europe, the pro-European heart of Germany's ruling class is divided over how much further to go to defend it.
"I don't want to be co-opted into an anti-euro movement—the EU is an important political project," argues the 59-year-old Rhineland Catholic, whose straight-talking manner and public battle with advanced prostate cancer has won him friends across political lines. "But what we promised the people was a union of stability, not a union of debt."
A poll for national German broadcaster ZDF earlier this month shows three-quarters of Germans are against the expanded European rescue fund that's subject to Thursday's vote.
"It's no longer some remote debate; it's about our daily lives and what will happen to our savings, our economic standing," said Ria Borgmann, a retired local government administrator while shopping on a recent afternoon in Bergisch Gladbach, the heart of Mr. Bosbach's voter district.
While Ms. Borgmann, 64, said she typically votes left of the more conservative Mr. Bosbach, she's found herself agreeing with his reasoning. "I am very much for Europe, but at some point there's got to be a limit to rescue packages."

The measures before German parliament today would nearly double the main euro-zone's bailout fund's lending capacity to €440 billion ($595 billion) and allow the fund to buy sovereign bonds in the open market.
Ever since the debt crisis began in Greece nearly two years ago, Ms. Merkel and her party have agreed to bailouts of struggling euro members only reluctantly. As the crisis has deepened, posing an existential threat to the currency union, Ms. Merkel has come under fire for jeopardizing the legacy of Helmut Kohl, the chancellor who built today's unified Germany as well as the European Union.
Though Germany has played the euro-zone's fiscal task master, insisting on painful austerity before opening its purse strings, there remains little support for withdrawing from the common currency that underpins European integration. Surveys show most Germans still see a united Europe as key to ensuring prosperity and peace on a continent with a legacy of conflict.
Still, many fear they'll soon be forced to choose between watching the common currency collapse and sacrificing their prized fiscal rigor to a European super state that enables debt-ridden countries such as Italy and Greece.
Germany's contribution to the new, expanded rescue loan package is €211 billion, still less than half the €500 billion it pledged to bail out its banks in 2008. But many see the European Central Bank's moves to buy billions of euros in low-grade government bonds of southern European countries as another sign that European institutions are slipping away from them.
Even more unpalatable is the prospect of making the euro zone collectively liable for its members' debts, as a growing chorus of European officials have recently urged. Many argue so-called euro bonds, which Ms. Merkel has steadfastly opposed, are the bulwark to relieve financial pressure on debt-ridden members and underpin the euro zone's full fiscal union.
But to Germans, it would mean relinquishing their hard-won low borrowing rates to pay for the largess of more free-wheeling members.

"Ultimately the euro-bond issue will come to a head, and Ms. Merkel will have an impossible dilemma," says one senior German coalition lawmaker. "If she goes back to the German people with [euro bonds], she is out. If she doesn't, she will be a very lonely person in Europe."
In Berlin and beyond, Mr. Bosbach's antibailout stance has resonated loudly. Hundreds of letters in support have poured into his parliamentary office, as have dozens of media requests. Back home on the streets of Bergisch Gladbach, and other district towns, voters have rushed up to encourage him.
Mr. Bosbach's position, though, has put him at odds with the majority of his coalition colleagues. One senior Christian Democrat said voters in other districts now routinely ask him and other lawmakers why they don't oppose the broader bailout fund like Mr. Bosbach. Another, the party's deputy parliamentary chairman, Michael Fuchs, criticizes Mr. Bosbach for taking his position too early in the rescue fund debate.
"Wolfgang Bosbach gets a lot of things right, but in this case he is plain wrong," Mr. Fuchs says of his friend and colleague. "Early on, I had a stomachache just thinking about a [bigger] rescue fund, but now I'm satisfied," he says. "It's necessary to protect Germany."
Like many of his constituents, Mr. Bosbach's fiscal and political world view was shaped by Germany's postwar years, as a newly minted deutsche mark helped fuel the country's economic miracle. Born into a deeply Catholic family, he grew up in woodsy hills east of Cologne and the Rhine Valley, the same region as ex-chancellors Konrad Adenauer and Kohl and one particularly scarred by 20th century conflict.
At home, religion and conservative politics dominated dinner conversations. So did lessons in responsibility. As a child, Mr. Bosbach would collect scrap paper around the neighborhood to deliver to the local paper mill.
"It wasn't for money, it was about showing responsibility," said Mr. Bosbach, whose website lists two of his three favorite books as the Bible and Germany's Constitution (the third is Paulo Coelho's "The Alchemist"). Introduced to the Christian Democrats' local youth group at local soccer-league matches, Mr. Bosbach began a career in municipal politics in his 20s and, later, practiced law.
He eventually won election to Germany's national parliament in 1994, climbing the party ranks as one of its top homeland security and interior affairs experts. There, he was a backer of then-Chancellor Kohl's pursuit of monetary union as a measure of Germany's commitment to a united Europe.
He has also been a staunch ally of Ms. Merkel. In 2004, he threw his weight behind her chancellor candidacy, going against the tide of some fellow CDU conservatives. She texted him between euro-crisis meetings last year to wish him a speedy recovery while he was in the hospital after prostate surgery.
But after voting to ratify a Greek rescue package and initial euro-zone bailout fund last year, Mr. Bosbach's doubts about the effort began to stack up. First Portugal, then Ireland, Spain and Italy became ensnared in the contagion. By spring, as Greece's economy seized up further and its debts appeared even more unwieldy, he became convinced of the futility of bailouts.
Like many ordinary Germans, Mr. Bosbach objects to the reasoning that the euro zone can only survive if a country as indebted as Greece is kept on board. Instead, he argues, the currency bloc needs clear rules that let an insolvent country exit, and can only achieve stability if they're reinforced. "The issue isn't whether Greece wants to turn around, it's whether it can," he said.
Germany's political and business elite overwhelmingly oppose such a hard line, arguing that cutting off aid now could cause the euro zone to unravel. "No really good and fast solution exists," the chiefs of Germany's top industry federations wrote in an open letter to parliament on Friday. "But without an expanded European rescue fund, incalculable consequences threaten the European Union and its common currency."
But in Mr. Bosbach's district and beyond, his views are gaining ground.





Published September 21, 2011
It's the market that decides on an offer's merits: SGX

IT is the market that decides on the commercial merits and attractiveness of an offer, and not the regulators.

The Singapore Exchange (SGX) drove home this point yesterday in a regulatory column aimed at explaining the differences between two capital structures: (a) a capital structure of ordinary and preference shares and (b) a capital structure involving dual-class ordinary shares.

The regulatory note was issued after SGX came in for recent criticisms over its reported approval of Manchester United's US$1 billion listing that will involve mainly preference shares.

'Singapore operates a market-driven and predominately disclosure-based regulatory regime with companies having the flexibility to structure the terms of an offer,' SGX said in the note. 'Market discipline will dictate the success of an offer and the market, not the regulators, decides on the commercial merits and attractiveness of an offer.'

Without referring to the Man U IPO, SGX noted that there has been a recent interest in dual classes of shares. 'Investors should not mistake a capital structure of ordinary and preference shares with a capital structure of dual-class ordinary shares,' it said. 'They are completely different.'

Ordinary shares and preference shares are different categories of securities entitled to different economic benefits, dividends and liquidation preference and bearing different risks.
Preference shares are ranked above ordinary shares in dividends and liquidation claims but normally do not have voting rights except on matters that affect their fundamental rights.
For assuming higher risks, ordinary shareholders have voting powers to influence and collectively decide the company's actions.

This is not the case for dual-class ordinary shares. The two classes of shares have the same economic benefits and bear the same risks but they differ in voting rights. Such unequal voting rights could become a sticky point in the event of a takeover bid.

Singapore, like most jurisdictions, allows companies to list both ordinary and preference shares. It does not allow the listing of dual-class ordinary shares.

Though Man U's reported listing of mostly preference shares does not breach SGX rules, SGX has come under fire for allowing the listing, which is said to compromise the influence of new shareholders.

Some market critics even question if SGX is being too willing to accommodate Man U's demands, given there were rumours that one reason Man U's billionaire owner Malcolm Glazer chose Singapore over Hong Kong was that listing requirements and regulations here were perceived to be more lax.

SGX said yesterday that it 'administers its rules in an even-handed manner so that the same high admission standards and continuing listing requirements apply to all listed companies, regardless of their country of incorporation'.


My thots....
Therein lies the inherent flaw in the SGX setup....
The message being communicated here is NOT wrong - SGX aim/goal/raison d'etre is to maximise profit and SGX operates on the "Buyers beware" disclosure based regime.
If investors do not know what is a "dual class" share or for that matter, the difference between Preference shares and common shares, SGX cannot be blamed. Investors buy at their own risk.
SGX merely provides the platform for listing and the buy N sell of shares.
          Where is the flaw?
          The flaw is that SGX also has the regulatory functions under its ambit !!
          The regulatory function in this case is in obvious conflict with its profit maximising function.
          The "flaw" as it is , does NOT lie with SGX
           - it lies with the structure which the MOF/MAS policymakers must look into.
Such conflict of interest issues will keep recurring and the replies from SGX will be seen as "lame" and laced with self-interest until and unless the regulatory functions are restructured and re-housed.
Whether it's with regards to HFT (high frequency & algo trading) or with regards to the issue of Preference shares, the same organisation that is profiting from and promoting that biz cannot at the same time claim that it can regulate those activities with "absolute" impartiality.
Any tiny tinge of doubt, creates uncertainty and breeds cynicsm and rumour mongering, something SGX can do w/o.
If Sg aspires to be an equity and financial powerhouse, these obvious areas of weakness must be remedied.
As an investor in SGX, I will also like to see that the regulatory functions be seperated.

The Hour Glass

The World of Luxury

Published September 19, 2011

LVMH to continue investing in Asia-Pac
There will be fewer store openings, but more investment in improving store size

(SINGAPORE) LVMH Moet Hennessy Louis Vuitton SA, the maker of Celine handbags and TAG Heuer watches, will continue to invest in the Asia-Pacific region as it taps demand from growing numbers of the wealthy from the region.

Speaking at the opening of Louis Vuitton's first floating boutique in the world at Marina Bay Sands in Singapore on Saturday, Yves Carcelle, who runs the fashion and leather goods unit, said that there will be less net opening of stores and more investment into improving the size of stores, because 'luxury retail has to be a luxurious experience'.

The company is expanding its store in Manila and adding one level to its Lee Gardens store in Hong Kong to double its floor space, Jean-Baptiste Debains, president of Louis Vuitton Asia-Pacific, said at the opening. It's also making its Sydney outlet 'two or three times bigger' and expanding its store in Ho Chi Minh City in Vietnam, he said.

The biggest market in the world is still Japan, while the No 1 clientele is mainland Chinese, who shop 'a lot' when they travel to places such as Singapore, Hong Kong, Macau and Paris, Mr Carcelle, 63, said.

Luxury goods sales in China are set to rise 18 per cent a year to 180 billion yuan (S$34.88 billion) between 2010 and 2015, consultant McKinsey & Co has estimated. Cie Financiere Richemont SA said this month that it sees no signs that demand is weakening in the country, after posting a 46 per cent increase in Asia-Pacific sales in the five months through August.

In India, 'one of the things that slows down the penetration of luxury and of course investment is the fact that today the global infrastructure, and especially the commercial infrastructure, are missing,' Mr Carcelle said. Allowing companies to own a maximum of only 51 per cent of shares in retail companies is holding back foreign investment in the country, he said.

Mr Carcelle also sees no signs of slowing demand for luxury products in Europe or America.

'Even in period of crisis, people want to treat themselves,' Mr Carcelle said. 'We don't see any signs of slowing down whether it's in Europe or in America. The world of luxury doesn't obey the same rules.'

LVMH has lost 6.4 per cent to 115.25 euros in Paris trading this year, giving the maker of Moet & Chandon champagne and US$6,000 TAG Heuer chronographs a market value of 58.6 billion euros (S$100.33 billion).

Two weeks ago, LVMH named former Danone SA executive Jordi Constans to replace Mr Carcelle as head of Louis Vuitton at the end of 2012. Mr Constans, 47, will work next year with Mr Carcelle to familiarise himself with LVMH and the Vuitton brand, which Mr Carcelle has led since 1990.

Mr Carcelle will become president of Fondation Louis Vuitton, an art museum that's slated to open in 2013, LVMH said. He will remain on LVMH's executive board and undertake strategic roles alongside chairman Bernard Arnault, the company said.

'The succession of Mr Carcelle had to happen one day,' Pierre Lamelin, an analyst at CA Cheuvreux, wrote in a Sept 15 note to clients. 'We are reassured by the smooth transition process over 18 months and believe that Mr Constans has the management and brand-building skills required by the top job at Louis Vuitton.'

Net income climbed 25 per cent to 1.31 billion euros in the first half, the Paris-based company said in July. The average estimate of five analysts surveyed by Bloomberg was for profit of 1.25 billion euros. Second-quarter sales advanced 9 per cent to 5.05 billion euros. -- Bloomberg

__________________________________________________ ______
Quik Quips...

Mr Carcelle: 'We don't see any signs of slowing down whether it's in Europe or in America. The world of luxury doesn't obey the same rules.'
The biggest market in the world is still Japan, while the No 1 clientele is mainland Chinese, who shop 'a lot' when they travel to places such as Singapore, Hong Kong, Macau and Paris, Mr Carcelle, 63, said__________________________________

My observations & thots......

1) Biggest mkt is still Japan after decades of deflation!!
2) No 1 clientele is mainland Chinese, and they are NOT shopping in mainland China !!
3) Luxury bizs don't obey the same rules? 
- up to a certain point, perhaps ?
- and evidently, the likes of LVMH are not feeling the pinch from current market forces yet.

"Wisdom is purified by virtue and virtue is purified by wisdom. Where one is, so is the other."