2005 Dec05 No194 p1 Theedgespore

2 THEEDGE SINGAPORE
| DECEMBER 5, 2005
THE WEEK IN PICTURES

BUSINESS & INVESTMENT EVERY WEEK
T H E W E E K O F D E C E M B E R 5, 20 05
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The Boeing 777-300ER flies over Washington State in this

undated photograph. Cathay Pacific, Hong Kongs largest airline,
will buy 12 Boeing 777-300ERs with options for 20 more, while
leasing four of the same model. Three Airbus A330-300s will be
leased from International Lease Finance Corp.
CHU JUCK SENG/THE EDGE SINGAPORE
Genting Internationals executive

chairman Lim Kok Thay (right) and
chief financial officer Tan Hee Teck
at the press briefing for the launch
of the companys IPO in Singapore.
It is offering one billion new
shares at 35 cents each, including
an over-allotment option of 103.4
million shares. While the company
will maintain its listing on the
Luxembourg Stock Exchange, the
primary listing will be in Singapore
after the IPO. Genting
International, together with sister
company Star Cruises Ltd, is one
of 11 bidders for the integrated
resorts at the Marina Bayfront and
Sentosa sites.
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You will be pleased with

the company we keep
is on board:
A Proton showroom in Kuala
Lumpur, Malaysia. Proton Holdings
Bhd shares fell as much as 2.6%
after a newspaper report said
Malaysias biggest carmaker may
post RM700 million ($1 approx
RM2.24) in pre-tax loss for the
quarter ended September.
Jorma Ollila, chairman and CEO of Nokia Oyj, waiting for the
start of Nokia Capital Market Days last Thursday, in New York.
Nokia Oyj, the worlds largest maker of mobile phones, forecast
industry handset sales to rise more than 10% next year, helped
by high-end phones and more subscribers.
Our readers spend a long time on the throne

The EDGE Singapore reader spends an average of one hour and 14 minutes reading the business weekly, longer than
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Sm_2_S194.pmd
3/12/05, 12:41 am
4 THEEDGE SINGAPORE
| DECEMBER 5, 2005
ECONOMICS WATCH
| BY SHAMIM ADAM |
D
BLOOMBERG
omestic manufacturing expanded

last month at the fastest pace in 15
months on higher overseas and domestic orders and production, a key
gauge showed.
The Singapore Institute of Purchasing
and Materials Management (SIPMM) last
Thursday said its purchasing managers index rose 2.1 points from October to 53.5,
the highest since August last year. A reading above 50 indicates overall factory activity expanded. The median forecast of seven
economists in a Bloomberg survey was for
a reading of 52.
The government is counting on a rebound
in electronics shipments by companies such
as Venture Corp and increased pharmaceuticals production to achieve economic growth
of around 5% this year. The economy grew
7% in the third quarter from a year earlier.
SIPMM said in its report that a sub-index
measuring the electronics industry also expanded at a faster pace. The sub-index rose
1.3 points to 55.4 as new orders in domestic
and overseas markets increased. The median
forecast in the Bloomberg survey was for a
reading of 54.4.
Export orders expanded in November after a contraction the month before. The index
for new export orders gained 2.3 points to
50.9. The sub-index for new electronics export orders also reverted to growth, gaining
6.9 points to 56.2.
The index for production, an indicator
of current factory output, gained 4.6 points
to 56.8 last month. The sub-index of electronics production rose 3.5 points to expand
at 62.4.
The overall employment index rose 1.2
points to 51.5. The sub-index of electronics
sector employment gained 0.6 point to expand at 50.3, after contracting in October
for the first time in five months.
E
Bloomberg LP
The travel business

| BY MURRAY BAILEY |
Hotels count the customers

Customers were flocking to four-star hotels, both
lower and upper, filling over 80% of their rooms in
the first eight months of the year (see Table 1).
Although five-star hotels got more dollar from each
customer, the net result still favoured the upperfour-stars. This may indicate a shift in travel
patterns caused by low-fare airline (LFA) travellers,
who have been producing good volume growth for
their destinations, but not necessarily in spending.
Still, it is risky to assume that all LFA
customers are budget travellers. Bob Burns, cofounder of Regent Hotels, once told me his topend resort in Italys lake district attracted
Germans (because they were close to Italys
southern border), Americans and since the
start of Ryanair flights quite a number of
Britons. So, travellers are taking a US$20 flight to
pay as much as US$1,000 a night at Burns resort.
Low-cost air fares actually motivate people to
travel. Cost is not a major factor because
travellers who are ready to spend US$1,000 a
night for a hotel room would presumably have
enough money to pay much more for the flight.
So, AirAsias slogan Now everyone can fly
is not quite right. The customers could be
regular travellers who are travelling more often or
visiting new destinations because the fares are low.
Hong Kong and even high-cost Japan were

moving ahead much faster. Although growth in
Australia was slower than Singapore by a point,
Down Under should be suffering more as its
longer-haul passengers who make up half of
its visitors would be harder hit by fuel
surcharges on air fares.
Data on visitor counts for Malaysia and
Thailand covered periods earlier than the first
three quarters. Malaysia was running slower than
Singapore. However, its figures usually reflect
growth in outbound travel from Singapore, who
make up 60% of total visitors in Malaysia.
Thailand was still suffering from the tsunami
in the four months for which it had counts. Later
indicators (from hotel occupancy, through
August) showed no change for Bangkok so,
at least the decline has stopped. But for Phuket,
hotel occupancy was down from 71% in 2004 to
E
just 46% this year.
Murray Bailey is a research director and travel

business analyst
Table 2
Visitor arrivals into main

Asia-Pacific destinations
(2005)
GROWTH (%)
OVER
OVER
2004
2000
DESTINATION
NO
(000)
Sept
6,574
8.3
14.6
Australia
China*
Hong Kong**
Japan
Malaysia
Thailand***
Sept 3,961
Sept 14,943
Sept 7,408
Sept 5,081
July 9,485
April 3,500
7.3
24.0
15.3
9.1
4
-9.5
13.7
100.4
16
42.2
62.5
5.9
Total***
The growth in regional visitors was slowing

although by not much. From over 11% in the first
half, it slipped to under 11% at the end of the
third quarter. With the numbers trending down,
the year-end figure is likely to be lower, albeit still
above 10%, making this a good year, if not a
great one. And that would be well above the
World Tourism Organizations expected 5% to
6% growth worldwide.
Singapore, however, continued to underperform in the region running at 8% growth
compared with almost 11% for the region. Given
the boost in visitors, which usually comes from
LFAs, this was not encouraging news. China,
YEAR
THRU
Singapore
2005 heads for 10% visitor growth
Sept 58,789
10.7
PACIFIC ASIA TRAVEL ASSOCIATION, TRAVEL BUSINESS ANALYST
Singapores factories
keep pumpin it up
43.3
Notes: *Foreigners only. **Excludes China, Macau.

***Estimated; Total is for destinations shown here
Hotel results in Singapore (Jan-Aug)

ITEM
LOWER-4-STAR GROWTH* (%) UPPER-4-STAR GROWTH* (%) 5-STAR GROWTH* (%)
Occupancy (%)
84
Average room rate ($) 113
5
20
85
202
7
23
73
234
An average room rate is the result of total room revenue divided by the number of hotel rooms occupied
*Points for occupancy **No comparison with 2004
Shipping containers at the Singapore harbour. The government is counting on a rebound in electronics
shipments and increased pharmaceuticals production to achieve growth of around 5% this year.
Sm_4_S194.pmd
3/12/05, 12:54 am
2
15
CITYWIDE**
81
164
THE EDGE, TRAVEL BUSINESS ANALYST
Table 1
8 THEEDGE SINGAPORE
| DECEMBER 5, 2005
CORPORATE
Dressing up Malaysians
Second Chance eyes at least 50 apparel retail outlets across the Causeway in five years
| BY CHAN CHAO PEH |
Selected Second Chance properties in Singapore and Malaysia
econd Chance, a Singapore-grown

household name, is well-known for its
clothing, jewellery and accessories catering to the Malay community. The
story of Mohamed Salleh Marican,
founder of the company, has been well chronicled. The company is remarkable not only for
being the only Malay company listed in Singapore, but also for the way it has made at
least two comebacks from businesses that
turned bad, hence the name, Second Chance.
In its latest reincarnation as Second Chance
Properties, the company is earning a big chunk
of its profits from real estate. Since 1999, the
company has been steadily buying up retail
outlets in shopping centres and neighbourhood
town centres all over Singapore.
For the financial year (FY) ended June 30,
its property business contributed an earnings
before interest and tax of $6.7 million, or 46.7%
higher than FY2004. Last year alone, the company added eight units to its portfolio, chalking up a total of more than 40 units (see box).
Income from the property business, coupled
with its dividend payout, has given this scarcely traded stock the financial strength to behave
almost like a mini-REIT (real estate investment
trust). For FY2005, the company earned a net
profit of $10 million, compared with $8.9 million for FY2004. This was its third consecutive
year of bottom-line growth. In the same period,
revenue was up 8.31% to $39.09 million. Its
shareholders, who number just over 2,000, were
rewarded with a dividend of 2.5 cents per share.
Based on last Wednesdays closing price of 20.5
cents, this payout translates into a yield of about
10% beating Singapore-based REITs at current valuations. To add more cheer, the company has committed to pay out the same 2.5
cents, gross, for FY2006 and FY2007.
Pay by Giro
While keeping some units for its retail business,
Second Chance rents most of them to tenants
like banks DBS and Standard Chartered, and
clothing retailers Giordano, Bossini and Hang
Ten. Salleh points out that they are reputable
companies that carry hardly any risk of defaulting on payments. We dont have to worry nor
ask for rent. Every month, they send it by Giro,
says Salleh in an interview with The Edge Sin-
Sm_8_S194.pmd
BUILDING
ADDRESS
City Plaza
810 Geylang Road (Units 01-45, 01-46, 01-60, 01-61, 01-56/57, 01-47, 01-81,
01-107, 01-105, 01-43/44, 02-51, 02-86/88, 02-105-108, 02-50, 02-81/82)
14 Scotts Road (Units 02-40, 02-42)
111 North Bridge Road (Units 01-28, 01-29, 01-38, 01-44, 01-45A/B)
304 Orchard Road (Units 01-56/57/58/59)
1 Park Road (Unit 01-32/33)
Jalan Ampang, Kuala Lumpur, Malaysia (Lots 1.80, 1.81, 1.82)
Far East Plaza

Peninsula Plaza
Lucky Plaza
Peoples Park Complex
Ampang Park Shopping Centre
gapore. Collecting rental is the best business.

Unlike many businessmen who made their
first fortune on property, real estate wasnt on
Sallehs mind when he started a tailor shop three
decades ago. We never, ever wanted to go into
property but, having been in the retail trade for
30 years, weve always been paying rent, he
says. Following the 1997 Asian financial crisis,
however, the property market collapsed soon
after Second Chance was listed in January that
year. With extra cash and a sense of the mechanics of the retail industry, Salleh decided to
make his foray into property investment in 1999
when the market was in the doldrums.
Another broader factor has also influenced
the companys strategy in property. A big
chunk of its properties is at City Plaza, a shopping centre diagonally across from Second
Chances flagship store at Tanjong Katong
Complex. Both buildings are near the Paya
Lebar MRT station. In the mid-1990s, when the
Singapore economy was accelerating at near
double-digit rates, the four-storey Tanjong
Katong Complex and some of its surrounding
areas had been slated for redevelopment as part
of an overall master plan. During the Hari Raya
festive season, this area is so popular with the
shopping crowd that traffic police have their
hands full trying to prevent the throng from
spilling onto the roads and forcing passing cars
to inch their way forward.
Salleh needs a sizeable alternative location
to house Second Chances retail operations
when tenants from the Tanjong Katong Complex move out. City Plaza is the obvious choice.
However, the subsequent economic downturns
have put the redevelopment plans on hold till
2012, says Salleh, citing discussions he and other
businessmen in the area had with the Singapore Land Authority. The plans which in-
clude underground links, hotels and offices

were made during boom times in the mid-1990s,
when everybody could not think properly. Now,
everybody just keeps quiet, he quips. But the
original bet stays. This area will be redeveloped. Its just a matter of time, he adds.
In recent months, the property market has
finally been showing signs of an upturn, with
property stocks enjoying a long-awaited run.
However, it is Sallehs turn to become cautious.
Between 1999 and now, Second Chance picked
up ideal units cheaply and, very often, below
valuation, which contributed to yields of as
high as 8%, when interest costs were just
2.5%. With the upturn, properties that used to
be valued at $2 million are now pegged at $2.4
million, and owners are asking for $3 million,
he notes. As a result, yield has fallen to between 5% and 6%, while costs have edged up
to 4%. The shiok is no longer there, he says.
First Lady in Malaysia

Second Chance will be leaning on its apparel
retail business (under the First Lady brand)
for growth, and slow down on the purchase
of new properties. We dont want to chase;
we dont want to get carried away, he says.
Second Chance has a 20% share of ladies
apparel in Singapore, estimates Salleh, and
only 1% in Malaysia, through its six First Lady
outlets, with three in Kuala Lumpur. In Singapore, theres limited room for expansion.
Thats why we are expanding into Malaysia,
where disposable income is rising, he says.
He believes that First Lady has marketed
itself enough to create awareness across the
Causeway, and the time is ripe to step up the
expansion. We are going all out to expand,
through our own companies or through franchises. For the cities, we are going into the
2.12.05, 9:05 pm
shopping malls; for the outlying areas, we are

going into the hypermarkets. Five years from
now, we will be in every town and city, of
both West and East Malaysia, says Salleh.
That will be at least 50 locations, he estimates.
For FY2005, the company earned an operating profit of $1.62 million on revenue of $8.73
million from the apparel business.
Salleh believes he can win over customers
in Malaysia with his range of affordable baju
kurung and kebaya, with even elaborately
embroidered ones going for as low as $20,
compared with tailor-made ones that can cost
four times more. The company sources its
apparel from seven different factories in Vietnam, and materials from China. With some
250,000 pieces sold a year, it can demand a
deep discount on volume.
Dividend payout assured

The company is confident that it can fund its
expansion in Malaysia easily, without additional borrowings. Start-up costs for each outlet can be recouped as early as within a year,
says Salleh. We are collecting cash every
day, he says.
The companys business is not all glittery.
The sale of gold jewellery, its largest revenue
contributor, was $22.63 million in FY2005,
down from $23.92 million in FY2004, as higher
gold prices drove away price-sensitive customers. Operating profit was also down from $3.71
million in FY2004 to $3.27 million in FY2005.
Currently, with gold prices at record levels of
more than US$500 an ounce a 20-year high
Salleh concedes there will be some impact.
The apparel and property businesses will
make up for declines in gold jewellery sales,
though. Second Chance may be slowing down
on its property-buying spree, but that does not
mean income from this segment is falling. Instead, in line with market rates, Salleh has been
asking for higher rental, ranging from 10% to
30%. So, shareholders can be assured that the
company will at least maintain the current level
of dividend payout, says Salleh, who, along
with his family, owns 70% of the company.
Having built its little property empire in
Singapore, Second Chance is not about to turn
its back entirely on the sector. The retail
property business has given us the highest
returns. If anything happens to the property
market again, we move in again, he says. E
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E
to other tried-and-tested suppliers.
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Sm_9_S194.pmd
UPS delivers the shipment to the buyer after it receives payment
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UPS Exchange
CollectSM
1 Buyer and seller agree to sale
and purchase terms and specify
UPS Exchange CollectSM for financial settlement
2 Seller ships the goods by UPS, which notifies the buyer that the goods are in
transit and that payment must be made before delivery
3 Buyer pays UPS
4 After UPS receives payment, it delivers the shipment to the buyer
5 Upon verification of delivery, UPS remits funds to seller
1/12/05, 7:56 pm
PICTURES: UPS
THEEDGE SINGAPORE | DECEMBER 5, 2005 9
10 THEEDGE SINGAPORE
| DECEMBER 5, 2005
CORPORATE
Boustead gets fired up

| BY GOOLA WARDEN |
ong Fong Fui spent much of last

week out of town. The jet-setting
chairman and CEO of Boustead
Singapore was, as usual, busy securing contracts for the company,
in which he has a 30.6% stake. After acquiring it in 1996, Wong set out to remake the
company so that its main businesses can be
summed up in two words: oil and water.
The company designs and operates heaters
used in oil refining. Wong says the orderbook
for the companys energy segment rose from
$45 million as at end-March this year to $75
million by Sept 30. About a quarter of
Bousteads revenues come from its energy segment, which includes power generation and
solid waste energy recovery. Its half-year results (the company has a March year-end) saw
revenues from the energy sector jump 35%.
Separately, Bousteads subsidiary delivered Singapores first dual-membrane-based desalination plant to Senoko Power in June.
Rising energy orderbook

China and India are the fastest-growing markets for Boustead as these countries invest significantly in oil refineries and power plants,
states Phillip Securities in a September report.
It reckons that the spending increase would
create demand for heaters and process-control systems, Bousteads forte.
The long period of refinery construction
from five to seven years and the refurbishing of old ones are all good for Boustead. Its
heaters are central to the refining process.
Bousteads total orderbook has been rising
since the middle of last year. In the six months
to Sept 30, it jumped by 50% to $330 million.
Bousteads share price reflects the improving
fundamentals. After staying stagnant for
months, prices rose by 48% in a year, from
62 cents to its last traded price of 92 cents.
The company designs and operates directfired process heaters used in the crude-oil-refining process, through its 90%-owned subsidiary Boustead Industrial Heaters (BIH). The
Sm_10_S194.pmd
10
manufacturing is outsourced. Investment in the

building of new refineries has just started after
20 years of neglect. High crude-oil prices have
encouraged investment in refineries, notes
Phillip Securities Research. The local broker
adds that total exploration and production
spending (including refineries) is likely to grow
9% this year.
Another subsidiary, Control & Electrics
(C&E), provides wellhead control panels for
well, production and floating platforms, and
production, storage and offtake vessels that
are used in oil production. C&Es clients include Larsen & Toubro, Iranian Offshore Construction Company, Qatar Petroleum and
Saudi Aramco. By the end of financial year
(FY) 2006, C&E will have put in place wellhead controls for 60% of Oil & Natural Gas
Corps (India) offshore platforms operating in
the Arabian Sea. Phillip Securities Research
analyst Deng Jiewen says C&E is especially
strong in designing wellhead control panels.
At the oil-refining end, BIH has completed
projects in 26 countries. CEO Wong says Bousteads heaters are at the heart of the refining
process and petrochemical plants. The heaters
are used to distil oil products and are fundamental to refining. BIHs customers include
multinationals Shell, British Petroleum, ExxonMobil, Unocal, Texaco and MW Kellogg.
What is Bousteads edge? Compared with
larger competitors such as ABB (Asea Brown
Boveri) Lummus and Foster Wheeler, BIH has
cost competitiveness that gives it flexibility to
compete for projects, says Phillip Securities
Research, noting that it also has better expertise than smaller competitors in direct-fired
process heaters.
Alternative energy
Wong says projects are getting bigger. In the
past, $3 million to $5 million contracts were
considered medium-sized. These are now seen
as small against several enquiries above $10
million. We see this trend continuing into next
year and beyond, he says. He sees the companys revenues growing to $500 million in the
next five years. In the first half of this year
THE EDGE SINGAPORE
Revenues from oil refining rose 35% and its energy-related orderbook
surged 66% in the six months to Sept 30. CEO Wong Fong Fui sees
this trend continuing.
Wong says projects are getting bigger, above $10 million, and sees the trend continuing in the near future
(1H2005), Bousteads turnover grew 46% to

$157.6 million. DBS Vickers, in a Nov 15 update, has forecast revenues of $284 million for
FY2006 and $349 million for FY2007.
A new area for Boustead, and a side effect
of high oil prices, is its foray into alternative
energy sources. Wong says Boustead is involved in a pilot project in Malaysia with Malaysian Mining Corp to turn municipal waste
into energy. The company has managed to
book almost $4 million in sales in the six
months to Sept 30 for this segment.
In Indonesia, Boustead converts waste like
palm kernels into energy. Wong says the removal of fuel subsidies there means finding
alternative sources becomes more urgent.
Boustead Maxitherm Industries, the unit that
produces the boilers to convert waste into energy, is raising capacity.
Phillip Securities Research estimates
growth in municipal-waste-generated energy
to rise to 29 billion kWh by 2025 from 7 billion kWh currently. Boustead also owns
79.5% of Salcon, whose unit Salcon Power
Corp manages and operates the 203.8mw
Naga Power Plant Complex, in Cebu, the Philippines. The company is planning to construct
a new 200mw coal-fired plant next to Naga.
Salcon builds and operates industrial, municipal and waste-water treatment plants
Bousteads second main area of operations.
2/12/05, 9:39 pm
Boustead Projects, another subsidiary, provides industrial real estate solutions. Profits
for 1H2006 more than doubled to $26.34 million, partly because of a surge from its industrial property segment.
Unused Section 44 tax credits

Recently, Boustead announced a dividend-inspecie of 83% of its 49.9%-owned associate,
EasyCall International, which is listed on the
Australian Stock Exchange. The exercise uses
up $2.1 million out of its $6.1 million in tax
franking credits in Section 44 Tax Credit balance. The company has indicated it would
explore ways of using the remaining tax credits before expiration in December 2007.
The recent half-year announcement also
showed strong operating cash flow of $82
million, boosted by a reduction in receivables
and inventories. The sale of two industrial
properties to Mapletree Logistics Trust contributed partly to a strong cash inflow and resulted in a sharp rise in cash and bank balances to $106.8 million. Boustead is in a net
cash position of 30 cents per share.
A series of positive developments, from the
oil-and-gas sector to a recovery in the local industrial property market, is drawing investor
attention to this company. The point of interest is whether its energy-related orderbook will
E
continue to grow at the current hot pace.
| DECEMBER 5, 2005
CORPORATE
Cerebos making losses in China

CEREBOS PACIFIC LTD
But the maker of Brands Essence of Chicken hopes to break even in two to three years
| BY AUDRINA GAN |
nalysts and reporters were treated to

jars of Brands Essence of Chicken
during Cerebos Pacific Ltds fourthquarter (4Q) results briefing at the
Swissotel Merchant Court Hotel last
Tuesday. Cerebos, best known for its chicken
tonic drink, also produces sauces, juices, instant
coffee, condiments and health supplements.
The chicken-tonic recipe, which was concocted by Englands royal cook H W Brand
to boost King George IVs ailing health, was
such a success that Brand decided to sell the
tonic commercially. Last year, Cerebos sold
more than 140 million bottles of chicken essence, which is the companys key revenue
generator. Nonetheless, in a recent market
survey, the group discovered a surprising yet
interesting find: The taste of this 19th-century
tonic drink is a barrier to attracting potential
customers. Whats more, its also impeding
regular customers from consuming more. To
rectify this, Cerebos is working with a handful of universities in Japan and the US to improve the taste.
The China quandary

Brands Essence of Chicken may be the category leader in markets like Thailand, Taiwan
and Singapore. But there remains one sore
spot an outflow of red ink is still evident in
Cerebos Brands liquid business in China since
its first foray in 1996. For its fiscal year ended
Sept 30, Cerebos posted a pretax loss of $8.44
million, up 19% year-on-year in China. Although revenue has grown 21% to $13.36 million, losses have widened due to the substantial investment in advertisement and promotion. In particular, Cerebos is moving into
China in a bigger way as it embarks on major
television ad campaigns, vice-president and
group financial controller Koo Nguang Siah tells
The Edge Singapore at the briefing. China is a
very difficult market... theres no transparency, says Koo. Bad debts are a common issue facing foreign firms in China.
To be on the cautious side, Cerebos, which
has a cash and cash equivalent of $233.52 million at the end of financial year (FY) 2005,
rarely extends any credit terms. So far, credit
terms are only extended to multinational cor-
Sm_12_S194.pmd
12
Although Brands Essence of Chicken is Cerebos key revenue generator, the taste of this 19th-century tonic drink is a barrier to attracting potential customers
porations such as Carrefour, Watsons and

Macro Wholefoods. Many of our Chinese
customers prefer credit terms. But we go for
cash transactions or through wholesalers who
will bear the credit risks, says Koo. And he
maintains the company will stick to its cashdealing policy even if this translates into a
slower growth rate for Cerebos in China.
Still, why has penetrating the China market proven to be such a difficult task?
Brands did well in Thailand and Taiwan in
terms of revenues in FY2005. DBS Vickers
Securities analyst Paul Yong points out that
the fundamentals in China are quite different from the rest of Cerebos markets.
For starters, the geography is vast, with each
Chinese city larger than Singapore. Thus,
each city has different requirements and
various efforts, says Yong. Cerebos currently has a network of distributors in
Guangzhou and Shanghai. Recently, it appointed an exclusive distributor, JDH, for
its developing market in Beijing.
From Yongs perspective, brand building
is important for markets like China, particularly for premium products such as Brands
Essence of Chicken and birds nest the
only two Cerebos products sold in the country. Chinese companies, including Kangfulai
and Xiyi, also compete with Brands Essence
of Chicken for a slice of the market. While
Cerebos has committed to a bigger advertising and promotion budget in China this
year, Koo declined to comment on the
groups marketing expenditure. One thing
is for sure, though. The enhanced marketing blitz via TV commercials would not be
frequently repeated in years to come. Its
costly to do so, not to mention the slew of
TV channels in China, says Koo.
If the challenges mount, could Cerebos
throw in the towel in China? DBS Vickers
Yong, who sees huge potential for growth in
China, doubts it. If they can be so successful
in a non-Chinese market like Thailand, it does
not make sense for it to stop penetrating [the]
China [market], he adds. At Cerebos, Koo
says the firm is resolved to make things work
in China.
During the briefing, Ramlee Buang,
Cerebos executive vice-president and chief
financial officer, reiterates that the company
would not go beyond its annual threshold
of $10 million with regard to losses in the
country. Meanwhile, Koo points to a positive sign China has recently imposed
more stringent regulation and penalties in a
bid to minimise false product claims. Now,
claims have to be backed up with scientific
research, which Cerebos purportedly has.
When will profits start rolling in? While Koo
says the group is more optimistic about
China than before, he prefers to maintain a
cautious stance. It would probably take
another two to three years before we could
possibly break even in China, adds Koo.
At DBS Vickers, Yong does not foresee the
China operations breaking even over the
next three to five years, even as he concedes
that revenue growth has been quite good.
2/12/05, 10:17 pm
Bird flu may dampen future growth

The spread of bird flu in the region may
present another stumbling block for Cerebos.
Analysts like Yong reckon the epidemic may
stifle growth for its flagship product. Koo,
however, feels the impact would be minimal,
though he concedes that there was a slight
dip in revenue for two months in Thailand
last year when the virus was first reported.
Consumers are aware that our products are
safe... we purchase our chicken from secure
farms in Thailand, China, Malaysia and Taiwan, says Koo.
Another golden egg lies in the groups coffee and sauces segment in Australasia under
brand names such as Fountain, Gravox,
Robert Harris, Riva and Greggs. About 50%
of total sales are derived from this segment
and Cerebos is looking at further expansion
through acquisitions and organic growth.
These include opportunities in retailing
roasted and ground coffee in New Zealand.
Presently, Robert Harris, the groups ground
coffee brand in New Zealand, is profitable
but Ramlee acknowledges it does not have the
ability to shift Cerebos into the premium
market yet. Franchising opportunities for
Robert Harris in Asia is also on the cards.
Cerebos reported a 4% growth in earnings
to $64.2 million on the back of 5% revenue
expansion to $694 million. The firm said it
would pay a tax-exempt special dividend of
19 cents. For now, investors must be hoping
that its key segments will continue to perform
E
and that the red ink will stop in China.
| DECEMBER 5, 2005
CORPORATE
Rotols new bridge to success

Impressive record
| BY FRANCIS TAN |
otol Singapore Ltd has been one of

Singapores best-performing stocks
this year. At 19 cents, it is up a
whopping 280% from the five-cent
level at the start of the year, when
its loss-making, construction-related aluminium coating and fabrication business was
facing a bleak outlook. The first run-up in
the stock occurred in April, when the price
nearly tripled over one month following the
emergence of J Bridge as a possible controlling shareholder. On Oct 14, J Bridge exercised a call option that took its stake to
57.3%, or 220 million shares, which were
priced at 10 cents each. The stock touched a
51/2-year high of 21 cents on Oct 7, following the successful completion of the reverse
takeover on Oct 5.
No divestment
So, who is J Bridge and why the enthusiasm over the stock?
Shiro Suzuki, Rotols newly appointed executive director and J Bridges sole Singapore-based representative, was eager to explain the nature of J Bridges participation in
Rotol. It is not a reverse takeover as we are
not doing away with the existing business to
gain only a shell company, he says.
The company plans to rehabilitate and restructure Rotol through a hands-on restructuring approach and to pursue new business opportunities with better profit margins. Shiro says, Well do what we can but,
at the least, we hope to change the moneylosing trend by next year.
Shiro, 31, first cut his teeth in the financial
industry as a credit analyst with the Los Angeles branch of Sumitomo Trust & Banking.
He then specialised in distressed assets at
KPMG as an accountant-cum-financial consultant for four years, mostly in its Japan office. He joined J Bridge in July 2004, following a brief stint at Shinsei Bank Ltd.
Sm_14_S194.pmd
Tokyo-based J Bridge is highly motivated to succeed in its first

revitalisation investment outside Japan with Rotol. It stands to
benefit from the upturn in the construction industry and return
of key ex-staff. But its free float is a low 15%.
14
J Bridge, which is listed on the Tokyo Stock

Exchange with a market capitalisation of
about US$825 million ($1 approx US$0.60),
is an investment firm that specialises in the
acquisition of listed and private companies. It
was a struggling warehousing and logistics
company before a takeover led by Toru
Masuzawa at the end of 2003. Masuzawa, 44,
is the CEO of J Bridge and the executive chairman of Rotol. The executive vice-president of
J Bridge, Kenichiro Yamamoto, 43, is the CEO
of Rotol. Both are based in Tokyo.
Since the takeover, J Bridge has invested
in 14 businesses in Japan and South Korea,
of which 10 are listed companies. The businesses include the manufacturing of tofu and
noodle, distribution and retail of apparel, the
design and installation of IT security systems,
and a chain of computer stores.
In the six months ended Sept 30, J Bridge
recorded a 12-fold jump in consolidated net
profit to 1.6 billion ($1 approx 70). It forecasts full-year net profit will climb five-fold
to 7.6 billion. J Bridge has only 60 staff as at
March. Its stock has risen 72% since the beginning of the year.
Rotol is J Bridges first revitalisation investment in the region, but not its first in the
construction sector. In May, J Bridge invested
in a civil engineering firm, Kidoh Construction,
Rotol
4000
Volume (000)
Price ($)
0.30
3000
0.19
2000
0.10
1000
Dec 3, 2004
Nov 18, 2005
It is not a reverse
takeover as we are
not doing away with
the existing business
to gain only a shell
company Shiro
which is listed on Osaka with a market capitalisation of about US$190 million. Kidohs
annual sales have halved to 11.3 billion
over the past three years. However, its stock
has jumped 2.4 times since J Bridge showed
up. Kidoh is keen to expand overseas and
Shiro believes Rotol could act as a conduit
for Japanese companies such as Kidoh to
come to Asia.
Rotol has about $22 million cash and less
than $5 million debts. It is exploring opportunities with regard to a possible sale of its
six-storey factory, which was written down
to $13.8 million in August.
2/12/05, 10:58 pm
Senior staff return

What about Tan Khee Bak, the founder and
now 27.6% shareholder of Rotol (including
shares held by TKB Foundation Ltd)? He is
overseeing Rotols Jiaxing factory near
Shanghai and exploring business opportunities in China which, together with Taiwan
and Hong Kong, accounted for only 11% of
turnover in financial year (FY) 2004, or $0.8
million. The rest of the turnover came almost entirely from Singapore. In its interim
results, Rotol said, Intense competition,
both in Singapore and China, is expected to
continue, which will have a negative impact
on pricing.
On the home front, Rotols existing business is managed by a team of experienced
staff, including three former employees. Tan
and a senior manager managed to persuade
two former sales managers to return after
an absence of three years. Frederick Lim,
59, a 12-year veteran with Rotol, says over
a phone interview, We got offers elsewhere
but Rotol is still the pioneer company [in
fluorocarbon coating]... it still needs us and
we can still contribute to the company. Why
not? Why [do we] need to work in a new
environment? Lim and another 13-year
Rotol veteran re-joined the company in September and persuaded a former sales executive to join them the following month. Lim
is upbeat over business prospects. There
are lots of projects coming up next year,
including commercial projects and condominiums. Hopefully, some of our customers
can get big projects and we can then work
with them.
As newcomers to Singapore and with corporate governance issues a major concern,
J Bridge opted for a large nine-member
board for Rotol to include four independent
directors. Perhaps more importantly, it
needs a successful rehabilitation of Rotol to
win credibility for its unusual investment
business model. Judging from the stock performance since the emergence of J Bridge
in April, and at 2.1 times the book value
per share of 9.1 cents now, the market has
evidently placed high expectations on J
Bridge to achieve some degree of success in
Singapore as it did in Japan. However, with
85% of the shares held by J Bridge and Tan,
the tight stock liquidity means only these
two insiders would benefit the most from
E
any turnaround.
| DECEMBER 5, 2005
CORPORATE
Setting its sights on India

| BY AUDRINA GAN |
itting in a small, windowless room in a

building at Terminal 1, Changi Airport,
Ken Ryan, the 50-something-year-old
CEO of Jetstar Asia and Valuair, looks a
tad tired. Its the tail end of his ninemonth stint in Singapore, but he doesnt let on
that hes tired, or that hes leaving his post.
Three days after his interview with The Edge
Singapore, JetStar Asia announced that Neil
Thompson, who is currently general manager
of customer relationship marketing at Qantas,
will take over as its acting CEO, as Ryan returns
to Australia this month. Kens family has unfortunately been unable to join him in Singapore, which is why he has reluctantly decided
to return to Australia, said Geoff Dixon, chairman of Jetstar Asia and Qantas, in a statement
last Friday.
Its been an eventful year for Ryan and
JetStar Asia, which turned one on Nov 28. To
celebrate, the airline offered cheap air fares,
from as low as $18 for a one-way ticket to
Bangkok and Phuket.
When Jetstar Asia celebrates its second
birthday, Ryan hopes Orange Star (the new
holding company) would have broken even.
Thats a lofty goal, particularly since the July
merger between Jetstar Asia and Valuair is a
union between two loss-making airlines. Jetstar
Asia reportedly chalked up losses of $51 million in the first seven months of its operation,
while Valuair lost $4.1 million last year.
Little surprise then that Orange Star is formulating ways to come out of the red. In October, the Australian media reported that
Qantas intends to codeshare on Jetstar Asias
flights from Singapore to Kolkata and the Thai
cities of Bangkok and Phuket. Ryan concedes
that the Qantas offspring is mulling over the
codesharing agreement. From Ryans perspective, it makes commercial sense to codeshare
on several routes, such as Bangkok. Presently,
Jetstar Asias only codesharing agreement is
with Myanmar International Airways for its
four-times-a-week flights to Yangon, which
commenced on Oct 31.
We foresee we will do that [codesharing] if
it has a financial contribution to the bottom line.
The whole idea of codesharing really is to
broaden the scope of passengers you can carry,
explains Ryan. His remarks were made in refer-
Sm_16_S194.pmd
16
Jetstar Asias next thrust will be in Indian cities like Chennai and Bangalore
ence to the comments by Tiger Airways CEO
Tony Davis, who said, What the codesharing
means is that Jetstar Asia will effectively cease
to operate independently as a low-cost carrier
[LCC]. Davis added: It will become the regional services arm of Qantas in Asia
Rather than being a LCC, a term often used
to describe Jetstar Asia, Ryan said the carrier
sees itself as a low-fare carrier. He asserts
that a prospective codesharing agreement with
Qantas would not affect its low-fare positioning. Travellers still want to have a certain
level of comfort and competitive fares we
are as competitive as any carrier, including
Tiger Airways, adds Ryan.
China dilemma
In a bid to ride into the black, Orange Star
has also been conducting a series of route rationalisation at Valuair. Unprofitable routes,
including those to Perth, Chengdu and
Xiamen, have been axed in recent months.
The first route people expected to be axed was
Perth indeed, this competitive and seasonal
route was axed in October. Why are popular
business-cum-leisure destinations like Chengdu and Xiamen, which are served by Singapore Airlines and a handful of Chinese carriers, not profitable? Valuair could not build
the load for Chengdu and Xiamen. If we [had],
we would have continued. Were not in the
habit of pulling out routes unless they are
commercially unviable. We didnt make such
decisions lightly, says Ryan.
But AirAsias CEO Tony Fernandes had
once lauded Xiamen as one of Thai AirAsias
most profitable routes. Im not privy to Tonys
accounts, Ryan retorts with a smile. Tonys
a very gregarious character. Im not sure why
he would say that. I simply know what our
results are. In his view, there was no way the
route could continue in a viable manner.
Some market watchers like analyst Chris
Eng from Malaysia-based OSK, which tracks
AirAsia, think otherwise. Xiamen is a profitable route, given the huge amount of business traffic. Therere a lot of IT companies
there, he says. Rather than a lack of demand,
he reckons Valuairs semi-frills model is the
crux of the problem. Theyre caught in between the full-service carriers and the lower
end of the market.
Is China still on the radar screen for Orange
Ryan: The whole idea of codesharing really is to

broaden the scope of passengers you can carry
Star? Ryans answer was implicit: Flights to

China take a long time. But he surmised that
Jetstar Asia would still be interested in flying to
Shanghai if the Chinese aviation authorities
would give it the green light. On Nov 25, 2004,
Jetstar Asia announced seven new routes
Shanghai, Hong Kong, Taipei, Pattaya, Jakarta,
Surabaya and Manila. The plan was dashed
when China and Indonesia subsequently
blocked LCCs from flying into key airports in
Shanghai, Beijing, Surabaya, Medan, Jakarta
and Bali.
Incidentally, China and Singapore signed a
memorandum of understanding (MOU) last
week to expand aviation transportation between
the two countries. This enables airlines from the
two countries to fly freely on any route without
limits on capacity, routing and aircraft type.
Looking to India
For now, Ryan prefers to cast his bets on India. He feels the Indian aviation market is facing a dearth of capacity. Jetstar Asia currently
flies to Kolkata. We hope to fly into more
Indian cities, such as Bangalore and Chennai,
in the near future, says Ryan. In September,
Jetstar Asia received flight permits for
Bangalore from the Civil Aviation Authority
of Singapore (CAAS). It is awaiting traffic
rights from Bangalores aviation authorities.
However, analysts like OSKs Eng are sceptical about India. For starters, India has re-
2/12/05, 11:15 pm
cently witnessed the emergence of many

LCCs, including Kingfisher Airways and Air
Deccan. Ping also perceives poor airport infrastructure as another stumbling block.
Despite recent new entrants such as Air Sahara, Jet Airways and Jetstar Asia, demand for
seats has continued to grow dramatically.
CAAS figures show that in 2003/04, passenger
traffic between Singapore and India grew 25%
to 1.5 million passengers. In August, Singapore
and India signed a MOU for more services between Singapore and three Indian cities,
namely Bangalore, Hyderabad and Kolkata.
The additional capacity afforded were hotly
contested by Singapore Airlines, Jetstar Asia
and Tiger Airways.
But observers point out that the Indian
government remains reluctant to increase capacity to the high-demand gateways of
Mumbai, New Delhi and Chennai. Its believed the main concern stems from the impact of competition on Indian state-owned carriers, which are facing a squeeze from domestic and foreign competitors.
For now, even if India is not growing at
breakneck speed, routes such as Taipei, which
has been described as one of the strongest
routes, have given Jetstar Asia a muchneeded boost. Other recently launched routes
like Phnom Penh, Siem Reap and Yangon also
bode well, given their positioning as emerging tourist destinations.
Ryan says Jakarta is a major route for
Valuair, which is now being used as Orange
Stars Indonesian vehicle. Even as its other
Indonesian route, Surabaya, is not as
strong as Jakarta, he maintains its a promising route. There are a lot of Indonesian
Chinese on that route, he reveals. What
about Bali, where flights were supposed to
be launched end October? Ryan says its
putting that route on hold until some internal problems are sorted out.
Even if Ryan perceives that the Indonesian
market could rake in profits for Valuair, it
faces stiff competition, from Adam Air to Indonesia AirAsia (formerly Awair) to Lion Air.
Even AirAsia perceives Adam Air, which has
been aggressively marketing itself and buying new planes, as a threat, says OSKs Eng.
To break even, the new CEO will probably
have to dish out more options when working
E
out his sums.
CORPORATE
Building a powerhouse
mainly in consumer-banking space in Latin
America, the US and Europe even as it has
passed up opportunities to buy banks in Asia,
unlike its arch-Asian rival Standard Chartered
(which has bought banks in South Korea,
Thailand, India and Indonesia).
When Bond took over as chairman of
HSBC, it was a federation of banks with no
clear identity and 200-odd entities each with
different names like Midland Bank of the UK,

Hongkong Bank and Marine Midland Bank
of US. Bond brought them all together under
a single name and umbrella. Now, everything
is HSBC. Indeed, HSBC is now the second
financial brand behind Citi and the 14th bestknown global brand behind the likes of CocaCola and Nike.
But Bond will be remembered for his fo-
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| BY ASSIF SHAMEEN |
he name is Bond. Sir John Bond. He

may not have the swagger of Roger
Moore, but Bond, chairman of HSBC,
has, in his own way, changed the way
banks operate in Asia and around the
world. Last week, HSBC, the worlds thirdlargest bank, announced that Bond would retire next May. In just over seven years, Bond
has transformed what was essentially an
emerging-markets and UK bank into a global
financial services powerhouse. Few people
have had such a profound impact on global
banking. Indeed, Bond joins such other financial luminaries as ex-Citibank CEO Walter
Wriston, who made Citi a global banking giant. Yet, while Wriston had over 17 years to
shape what was already a fairly international
bank, Bond did it in just seven years, remaking HSBC the worlds local bank in double
quick time.
Just days before his retirement was officially announced last week, I met Bond in
Kuala Lumpur. It was my third meeting with
him in nearly a decade. He proffered his hand
before I could say a word: I am John Bond.
Bond is an old Singapore hand, having had
several long stints in Southeast Asia, including Indonesia and even Brunei. When asked
what he has achieved and how, he shrugs:
You know, I am just an ordinary bloke who
got lucky. When Bond, 64, leaves HSBC
just before his 65th birthday the real story
would be how he rode that luck to create a
bank in his template.
Without a formal college degree or any
banking qualifications, Bond started at the
lowest rung of the ladder. Indeed, the two
slow journeys onboard old steamers made
him the patient, methodical person he is today.
At 17, as a final-year high-school student, he
sailed to California for a one-year stint as an
exchange student at Cate College. After high
school, he applied for a trainee job at HSBC
(then known as Hongkong and Shanghai
Banking Corp) at the age of 20 because
having seen the US as a teenager, he wanted
to see the rest of the world. The bank in those
days was a colonial institution with a strong
presence in Singapore, Malaysia and Hong
Kong. When I first met Bond, he was CEO,
which in HSBC speak, is actually more like
the chief operating officer, since the chairman has executive and strategy functions.
Even then, he was fairly focused on helping
create the worlds best-performing retailbanking franchise.
Though Citigroup is bigger than HSBC (in
both market capitalisation and assets), the
formers huge US presence and larger foothold
in investment banking make it a smaller global retail-banking player than HSBC. Yet, 12
years ago, when Bond then the head of
what was Marine Midland Bank in the US
was tapped by then HSBC chairman Sir
William Purves to be his heir apparent, HSBC
was a middling player in the global retailbanking arena. HSBC, under Bond, has spent
over $50 billion on more than 50 acquisitions
Sm_17_S194.pmd
17
2.12.05, 11:15 pm
BIG MONEY
cus on cost controls. He is so famous for personally turning off lights that HSBC offices
around the world are known to have dark corridors. Even today, on most days, Bond takes
the London Underground to his office every
morning. When he visits Paris, he takes the
much cheaper Eurostar train rather than use
a corporate jet. Banking, he says, is all about
costs. The lower you keep the costs, the better your margins. Citibanks Wriston is remembered for his famous quote: Information
about money is becoming almost as important as money itself. Bond might be remembered for his pontification on cost controls. E
| DECEMBER 5, 2005
CORPORATE
| BY GOOLA WARDEN |
hina state-owned oil and gas producer

PetroChina Co Ltd (PetroChina) may
have grabbed headlines last month for
accidentally spilling benzene into
northeast Chinas Songhua river. But
it hit all the right notes with investors in Singapore. A contract secured by Singapore Exchange-listed media company Fung Choi
Printing and Packaging Group (Fung Choi)

with PetroChina sent the formers stock price
up 10%.
Last week, Fung Choi set up a new unit
called Weilun JV, which secured a major contract with PetroChina to upgrade signage at
3,000 petrol stations. It led to a five-cent
(10%) gain in Fung Chois share price in two
sessions. The contract is likely to raise revenues and profits by 25% and more in the next
PetroChina deal will boost Fung Choi

three calendar years. Fung Choi, a small-cap,
southern China-based company, is a 27.1%owned associate of Fraser & Neave (F&N). It
is run by Chinese entrepreneur Lai Yuen Ling,
who is also its major shareholder, president
and executive director. Its main business is
printing, which makes up 70% of revenues,
and packaging.
Tying up with PetroChina

PetroChina has 40,000 petrol stations in
China. Of these, a Fung Choi-controlled joint
venture has secured sole rights to upgrade
3,000 of them in southern China. The cost of
each upgrade is 300,000 renminbi ($1 approx
4.8 renminbi). We expect to upgrade 30 stations a month next year, increasing to 40 stations in 2007 and 55 stations in 2008, said
Lai at an analyst briefing on Nov 30. That
would mean revenues of 108 million
renminbi next year, rising to 198 million
renminbi in 2008. Lai hinted at profit margins in excess of 25%. Fung Chois net profit
margin is 22%.
Lai says the whole point of the JVs is to move into

fast-growing and high-margin business
Joint-venture structure
Fung Choi Printing Ltd
Zhongshan Weilun Co Ltd
51%
43.7 million RMB
cash
49%
JV1 = Weilun JV
42 million RMB*
Guangzhoushi Liri Co Ltd
61%
49%
2.45 million RMB
cash
2.55 million RMB

cash
JV2 = Liri JV
*Comprising 35 million renminbi plant, equipment and other assets and the rest in cash
Fung Chois net profits for the three

months to Sept 30 (1Q2006) stood at HK$33
million ($1 approx HK$4.60) on a turnover of
HK$148 million. Revenues and profits rose
29.6% and 9%, respectively, year-on-year.
The companys China-based packaging, printing and publication business is what makes it
attractive to investors. David Toh, senior portfolio manager of equities at DBS Asset Management (DBSAM), says he likes Fung Choi
because it is a play on the media and advertising sector in China. Toh sees advertisingrelated spending growing strongly because of
Chinas fast-expanding middle class.
Lynette Tan of DMG & Partners, in a report
dated Nov 14, expects demand for Fung Chois
products and services to remain healthy with
an increasing level of consumer spending.
Fung Choi prints brochures and other advertising material for customers like Creative Technology, Haier Group, Qingdao Kerry Vegetable Oil and Tsingtao Brewery. It also has a strategic partnership with Fraser & Neave Investments, a subsidiary of SGX-listed F&N.
Fung Choi will set up a JV company with
Zhongshan Weilun Co Ltd (Weilun) called
the Rising Display Products (Zhongshan) Co
Ltd (Weilun JV), which in turn will set up
another JV company with Guangzhoushi Liri
Co Ltd (Liri) called the Liri JV. Fung Choi,
which will control the JV, has invested 43.7
million renminbi in it. The Weilun JV will,
in turn, have a controlling stake in the Liri
JV (see chart).
Weilun is a Chinese company with operations in Zhongsha. It designs and manufactures point-of-sale display units. Weiluns
main customers are consumer brand names
such as Procter and Gamble, Unilever and
LOreal. Liri is one of 20 suppliers of advertising designs for signage at PetroChinas
petrol stations, and the only one serving
southern China.
Sm_18_S194.pmd
18
2/12/05, 11:57 pm
The set-up of Weilun

JV led to a five-cent
(10%) gain in Fung
Chois share price in
two sessions. The
contract is likely to
raise revenues and
profits by 25% and
more in the next three
calendar years.
Most of the work for the PetroChina contract will be done in Zhongshan. The Liri JV
was set up to procure the contract because
Liri originally did design work for PetroChina
but is unable to produce the signboards, hence
the tie-up with Weilun JV. Fung Chois chief
financial officer Edmond Woo indicated that
the PetroChina deals first year of operation
(worth 108 million renminbi) is comparable
to Weiluns current business.
DBSAMs Toh points out that risks for
China companies are usually related to corporate governance issues. However, he
adds, Fung Chois management has been
delivering on their financials, and valuations
are cheap. Fung Chois Lai says the whole
point of the JVs is to move into fast-growing and high-margin business. So far, investors are reaping the rewards. But as with all
Chinese companies, growth doesnt come
E
without risks.
| DECEMBER 5, 2005
CORPORATE
Oasis Hong Kong Airlines gets licences

| BY VICKI KWONG |
asis Hong Kong Airlines Ltd, the

citys first low-fare carrier, won licences to operate London, Chicago
and four other routes, becoming the
second Asian discount carrier to announce plans to fly to the US and Europe.
Oasis will firm up plans to lease Boeing Co
747-400 aircraft after Hong Kongs Air Transport Licensing Authority approved its application for the routes, CEO Steve Miller said in
a telephone interview last Thursday. The airline plans to start flights to Londons Gatwick
Airport next June, he said.
The approval has helped us get back on
track, said Miller, a former CEO of Hong
Kong Dragon Airlines Ltd, the citys second-
biggest carrier. Oasis had originally planned

to start flights this year. Well now proceed
with confirming aircraft and employing crew.
Oasis, which is among at least 18 discount
airlines that have emerged in the region the
last three years, is seeking to win business
from budget travellers by charging 40% less
than economy-class fares offered by Cathay
Pacific Airways Ltd, Hong Kongs biggest car-
rier, on the Hong Kong-London route.

Kingfisher Airlines Ltd, a six-month-old
discount carrier founded by Indias biggest
brewer, has said it plans to fly to the US and
Europe. Kingfisher has ordered US$3 billion
($1 approx US$0.60) worth of planes from
Airbus SAS, including five A380s, which will
become the worlds biggest passenger plane
when it enters service next year.
Oasis is seeking to win

business from budget
travellers by charging
40% less than
economy-class fares
offered by Cathay
Pacific Airways Ltd on
the Hong KongLondon route
Cheaper fares
Oasis may charge as little as HK$1,000 ($1
approx HK$5) for a return ticket booked in
advance, Miller said. Average fares may be
around HK$3,000, he said. Cathay Pacific,
which last Thursday added a fourth daily service to Londons Heathrow Airport, charges
HK$5,250 for a trip leaving Hong Kong on Dec
5 and returning from London on Dec 12 on
economy class.
The Hong Kong-based carrier plans to start
operations with one used Boeing 747-400 that
it will lease from Bank of America Corp, Miller
said. Bank of America took over the plane
from United Airlines after the carrier sought
bankruptcy protection.
Oasis plans to put 90 business-class seats
and 270 economy-class seats on the 747-400,
Miller said. The four-engine 747-400 can fly a
maximum of 8,349 nautical miles (9,601 miles).
Apart from London and Chicago, the airline also won rights to operate flights to Berlin, Cologne, Milan and Oakland. Cathay Pacific doesnt have direct flights to any of Oasiss destinations except London.
Cathay Pacifics opposition

Cathay Pacific had objected to Oasis application for traffic rights before obtaining an air operators licence, according to a document from
the Air Transport Licensing Authority. Oasis
expects to get an air operators licence in the
next few months, Miller said last Thursday.
Oasis is backed by Raymond Lee, who has
property businesses in the US and is chairman of the airline.
Macau Eagle Aviation Services Ltd is another discount airline in north Asia that will
operate in the former Portuguese colony. It
aims to start flights to other Asian cities next
year, CEO Andrew Pyne said on Nov 14. He
declined to name the destinations until an
agreement with Air Macau Ltd, the citys sole
carrier, is firmed up.
The new airline, formerly known as
WOW!Macau, needs to obtain traffic rights
from Air Macau, which has an exclusive operating licence in the city. Macau Eagle may
fly to Europe and the Middle East after starting Asian flights, Pyne said.
The company dropped the WOW!Macau
name as its similar to WOW, an alliance
formed by the cargo units of Deutsche
Lufthansa AG, Singapore Airlines Ltd, Japan
Airlines Corp and Scandinavian Airlines.
E
Bloomberg LP
Sm_20_S194.pmd
20
3.12.05, 12:10 am
EDGEWISE
FROM PAGE 3
Oil-storage caverns for Singapore

| BY WILL KENNEDY AND
NESA SUBRAHMANIYAN |
ingapore plans to dig underground caverns that can hold 25 million barrels of
oil, expanding the islands storage capacity by almost a third, said Choo Chiau
Beng, chairman of Singapore Petroleum Co,
at the Ascope 2005 conference in Manila last
week.
The caves, which will cost $800 million,

are to be built on Jurong Island, near existing
storage facilities and two of the countrys three
oil refineries. A decision on the project, which
will be led by Jurong Town Corp, is expected
next year, he said. The new storage will help
end a shortage of tanks in Asias No 1 oiltrading centre, Choo adds. Singapores three
oil-storage companies outside the refineries
have been running at 90% of capacity for the
SHIRLEY YE/THE EDGE SINGAPORE
likely to be about whats going on. Surely, at

some point, their independence will be reflected by their own ignorance.
In addition, the less independent directors
are personally involved with the affairs of the
company and its shareholders or through limited knowledge, stay silent the more they
could be claimed to be there just for window
dressing or the directors fees. And, independent directors who derive the bulk of their income from directors fees may not be effective
watchdogs on behalf of minority shareholders.
Much like auditors and management consultants, they will have to manage their own financial self-interests in following the status quo set
by the substantial shareholders and top executives who appointed them versus challenging
them to be better stewards of the company.
Would such an individual really be more effective on the board than someone who owns 5%
of the companys shares, representing a significant portion of his net worth? Wouldnt the individual holding a significant number of shares
be more likely to question the rest of the board
and top executives than an individual who is in
their pay?
And, the idea that increasingly onerous
standards of corporate governance will promote
a companys ability to raise capital is simply not
true. Over the long term, financial markets value
companies according to how they actually perform in terms of delivering shareholder value,
with corporate governance rules only helping
to ensure transparency and accountability. A
cleanly run company still needs to make money
to attract the interest of investors.
In the end, an ideal independent director
doesnt easily fit into the mould that regulators
in Singapore and other developed markets,
for that matter are prescribing because it is
impossible to legislate personal ethics. The individual ought to be skilled in business, have a
great deal of boardroom experience, and possess deep insight into the workings of the company and its industry. But such an individual is
very likely to have done some kind of business
with the company or its majority shareholders
in the recent past. How else would he have acquired all the requisite knowledge and skills?
Rather than continue imposing more rules
on public listed companies, Singapores regulators should perhaps look at other ways of keeping top executives and majority shareholders
honest. A good starting point would be to find
ways to make it easier and cheaper for minority
shareholders and other stakeholders to bring
legal action against their companies when their
interests have been undermined. That way, independent directors wouldnt base their conduct
on a checklist of duties alone, but on an overarching concern about what is in the best interE
ests of all their companies stakeholders.
CORPORATE
The SGX has to comply with a stricter definition of

independent directors. Its independent directors
cannot be substantial shareholders of the company.
Sm_21_S194.pmd
21
3/12/05, 12:49 am
last five years, the US Energy Information Administration said in a June 2005 report.
Singapores three oil refineries, one of
which is 50% owned by Singapore Petroleum,
have oil tanks that can hold 63 million barrels. Independent tank operators have capacity of a further 27 million barrels, Choo said,
adding that other companies have plans to
build storage facilities totalling 17 million barE
rels of oil by 2008. Bloomberg LP
CORPORATE
OPINION
Will the gloom lift in Thailand?
One-off negatives dissipating

On the first point, one encouraging development
is that the drought has ended and reservoirs are
filling up again. The drought has also galvanised
the government into addressing needed improvements in drainage and related works so
that the water-dependent sectors such as farming and certain manufacturing industries such
as chemicals will not be hurt so badly the next
time there is a drought. In addition, tourism is
recovering as visitors put the horrors of the tsunami behind them and tourist infrastructure is
repaired. Oil prices have also started to ease,
and they are likely to continue to fall next year.
What is more, we see the rate increases by the
central bank as a positive it shows that it is
independent and will act effectively against in-
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he news from Thailand this year has

been discouraging. Almost everything
that could go wrong seemed to have
gone wrong: the after-effects of the tsunami on tourism, a severe drought, high
oil prices causing inflation to spike up, a harsh
monetary tightening by the central bank, protectionist measures by the US on key processed
food exports, an ugly insurgency in the south
of the country and mounting political difficulties for Prime Minister Thaksin Shinawatra in
recent weeks, despite his landslide victory in
the general elections. Not surprisingly, the
stock market has under performed and economic growth seems to have lost its lustre.
We think it is too soon to write Thailand
off. There are two reasons to think it could
surprise on the upside next year. First, some
of the above negatives were one-off and are
already dissipating or disappearing. Second,
the supply-side fundamentals of the economy
remain intact along with the surge in investment spending that we expect, economic
growth is likely to recover quite sharply.
booming demand for factory

space. Several conversations
with Japanese investors in
different industries also led us
to believe that there is likely
to be a continued rise in JapaSupply side of economy
nese investments in Thailand.
stronger than expected
Also, it is worth noting
Second, despite the cyclical
that external demand is provweakening in the economy this
ing to be much stronger than
year, the supply side of the
many of us expected. That is
economy in terms of its abilone reason almost all the
ity to attract investment, deliver | BY MANU
Asian economies that have rea good return on capital, adjust BHASKARAN |
ported third-quarter GDP
to intensified competition and
growth numbers have surdevelop new niches of competiprised strongly on the upside
tiveness appears to be intact.
the latest being Malaysia.
Our recent visit to Thailand
We would not be amazed if
gave us more confidence in
Thailand also produced a
these longer-term factors. Businessmen we met both Thais and foreign in- pleasant surprise when it reports third-quarvestors seemed a lot more confident than in ter GDP. After all, some of the key economic
our previous visits. We came across several indicators such as consumer confidence have
instances of how Thai manufacturing busi- been improving lately.
nesses had managed to fend off tough competition from China and elsewhere. For instance, Politics is the main risk
there was a Thai firm making flexible packag- What, then, are the risks? Our main concern is
ing materials for the food-and-beverage indus- politics. The southern insurgency seems to be
try. Faced with more competition, it upgraded worsening. The tough security measures that the
processes, took in a Japanese partner with im- government felt it had to take may have had
proved technology and quality control, and de- the unintended effect of hurting ordinary folks
veloped a reputation for high-quality products in the south and causing them to become more
that today command a premium price in the alienated from the central government. In such
Chinese market. We saw similar examples in a insurgencies, the key to victory is to secure the
steel company and in a chemical company pro- support of the ordinary people; that provides
ducing intermediate plastics for use in Thai- crucial intelligence and denies the insurgents
lands booming automotive industry.
much-needed refuge and resources. However,
In fact, a visit to several industrial estates while there is always a risk of insurgent attacks
reinforced this view. It was clear that there is spreading to Bangkok or major tourist areas, we
a surge of new foreign investment much of suspect that this will not happen. The insurgents
it in supporting industries for the automotive seem to be calculating that such a widening of
industry. All three industrial estates we vis- their campaign would alienate their supporters
ited were expanding massively because of a and bring forth a much tougher and more effecflation. We expect more monetary tightening in the coming
months but the bulk of it has
already happened.
my say
Yuan still pegged to the dollar

T
Sm_27_S194.pmd
27
rency basket at 85%.

Its possible the Peoples Bank
of China is only gradually allowing
the basket index to be revealed so
US dollar/yuan remains stable in
the initial period, he speculated.
What if a much simpler explanation
for the stability is that the basket
just doesnt exist? What if the pundits who claim to have unearthed
signs of correlated movements between the yuan and the yen have it
all wrong?
If Shah and his co-researchers are
right, expectations that Asian currencies would rise next year on the back
of a more flexible and stronger
yuan may come to naught, just as
they did this year.
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heres a good chance that this

year will be remembered in the
financial markets as the one in
which China blinked and made the
yuan more flexible. The misconception should be snuffed out before journalists start compiling their Things
that Shook the World This Year lists.
What flexibility? All that happened on July 21 was that the yuan
moved from one peg to another,
says a new study. Although China
no longer targets a fixed rate of
about 8.3 to the dollar, it continues
to hug the US currency almost as
firmly as before.
Economists Ajay Shah and Ila
Patnaik and statistician Achim Zeileis say, The evidence suggests that
the new Chinese currency regime is
a peg to the US dollar.
Chinas official position is that
the yuan began its long march to
flexibility after it was pegged to a
basket of currencies. Apart from the
dollar, the basket includes the euro,
the yen, the won, the Singapore dollar, the British pound and the ringgit. In August, Stephen Jen, Morgan
Stanleys global head of currency
research, computed the implied
weight of the dollar in Chinas cur-
Regression analysis
Ten out of 15 currencies in Asia-Pacific that Bloomberg tracks have declined this year. The yen has fallen
the most against the dollar (14%),
the won the least (0.3%). The yuan
has risen about 2.4% or another
0.3% since the July 21 revaluation.
To arrive at their conclusion that the
yuan is still pegged, the researchers
have computed the daily changes in
the Chinese currencys value against
| BY ANDY MUKHERJEE |
the Swiss franc, a clean floater. If

the Peoples Bank of China has indeed begun managing the yuan
against a basket, then fluctuations
in the yen or the euro against the
Swiss franc would have a bearing
on the yuan-franc.
If, on the other hand, the yuan is
still pegged to the dollar, they would
both move in lockstep against the
Swiss franc. The first hypothesis is
squarely rejected by a regression
analysis; the second is shown to be
overwhelmingly true.
Still pegged
If one plots the dollar against the
tive security crackdown. If a terrorist attack did

take place in Bangkok, it would be the work of
foreign terrorist groups and not the local insurgents. So, the likelihood is of continued violence
in the south, but contained in the deep south
rather than spreading.
So, that leaves Thaksins weakening position as the key remaining risk. A former supporter, media magnate Sondhi Limthongkul,
has whipped up an increasingly effective campaign against Thaksin. His rallies seem to be
gaining larger crowds and some of the charges
he has hurled against the premier seem to be
hitting home with the crowds. Consequently,
there is talk of efforts to unseat Thaksin and
even rumours of a coup. But the fact of the
matter is that Thaksin still retains control over
virtually all the instruments of power he has
75% support in Parliament, and tough laws
against defections limit the chances of supporters defecting. He also has loyalists in the security forces and in the bureaucracy, while also
controlling much of the electronic media. He
is a savvy political fighter and will not go down
so easily. We suspect that the current agitation
against Thaksin will peter out unless he
makes a misjudgement. Our remaining concern, however, is that he is now wounded politically and may not command the same authority that he had before. That exposes him
to renewed bouts of agitation in future should
he or his supporters make policy errors or pursue unpopular but necessary policies.
Still, if the economy does recover well, as
we expect, then the public mood is quite
likely to change for the better. Overall, we
expect Thailand to do better than the conE
sensus expects.
Manu Bhaskaran is a partner of and head of
economic research at Centennial Group Inc, an
economics consultancy
Swiss currency starting July 22, the

graph looks like a mirror image of
the yuan-franc. So far in their analysis, the researchers have used statistical techniques that have existed
since 1981. Using a newer approach,
known as econometrics of structural
change, Shah and his team have
ruled out the possibility that Chinas
currency regime is becoming more
flexible with time.
The authors have set up a weekly
monitoring mechanism at this web
page: www.mayin.org/ajayshah/papers/CNY_regime. Until Nov 21, the
latest date for which Shah has done
the math, theres no evidence that
the currency regime has changed
compared with that prevailing in
the 68 days to Oct 31, he says.
Shah was a consultant to Indias
finance ministry until late October.
His study, however, has nothing to
do with the Indian government. He
also has shown that the Indian rupee and the Russian ruble are severely inflexible.
Eyes on China
It isnt a predictive study. It
doesnt say the yuan will remain
pegged to the dollar forever or
even tomorrow. When and if
China embarks on the road to a
flexible currency, the researchers
expect to discern the signs on their
radar. Those signs, or a lack of
3.12.05, 12:09 am
them, may have a crucial significance next year.

If the US Federal Reserve stops
raising interest rates next year and
Japan, coming out of deflation,
starts increasing them, then there
may be a case for the dollar to
weaken against Asian currencies in
2006. The authorities in Beijing,
some analysts say, will embrace a
stronger yuan either under pressure
from the US or after the domestic
Chinese economy overheats so
much that it becomes imperative to
shift the export engine into a lower
gear. China may decide to move its
currency by about 10% or more in
the next 12 months, thus leading not
only to a weakening of the dollar
relative to the renminbi but also to
an appreciation of a wide range of
Asian currencies, including the
yen, says New York University
economist Nouriel Roubini.
Looking at how determined China
is to hold on to a de facto dollar peg
close to the original level, its not at
all clear whether it will allow a 10%
revaluation next year. A flexible yuan
may still make the list of the worlds
momentous financial events
though not this year, nor perhaps the
E
next. Bloomberg LP
Andy Mukherjee is a Bloomberg
News columnist. The opinions expressed are his own.
| DECEMBER 5, 2005
CORPORATE
OPINION
Hong Kong growth beats expectations

Growth momentum sustained into 3Q2005, real GDP 8.2% y-o-y above forecast
Stronger-than-expected growth in the third
quarter of this year (3Q2005) buoyed by
trade and consumption: Real GDP growth accelerated to 8.2% year-on-year (y-o-y) in
3Q2005, as Hong Kongs exports continued to
ride on Chinas investment boom, while private consumption, especially in services, was
supported by resilient asset prices as abundant liquidity helped offset the impact of
sharply higher interest rates.
We stand by our call for a cyclical slowdown
led by China: We remain convinced that Chinas economy is slowing as investment comes
under pressure from overcapacity rather than
tighter liquidity. The slowdown is being kept
at a gradual pace by surplus liquidity but,
given the vast excesses created over the boom
years, the slowdown is expected to last
throughout next year and into 2007. For the
Hong Kong economy, we forecast an orderly
slowdown in sync with China.
Growth forecasts lifted for this year and
next: Taking into account the strong growth
already realised in 3Q, the upward revision
in the 2Q figure, and the more gradual
slowdown in China, we are lifting our 2005
real GDP growth forecast to 7.4% from 5.5%.
Strong trade growth remains the key driver
in 4Q. For next year, we see growth slowing
to 5%, though stronger than the 4.2% rate
in our previous forecast. Consumer price index (CPI) inflation looks set to reach our
1.2% forecast this year, and is expected to
average 2% next year.
Global monetary tightening remains the
biggest drag: Asset markets and consumer
sentiment remain haunted by the global monetary tightening trend, which is not expected
to end before the second half of next year
(2H2006). Leveraged households pay 0.1%
GDP more in mortgage interest for every 25
basis-point hike in rates. Growth could be
kept below full potential until the US Federal Reserve stops tightening.
Growth momentum sustained into

3Q2005, real GDP 8.2% y-o-y above
forecast
Hong Kong delivered yet another strong
growth report. Real GDP growth accelerated
to 8.2% y-o-y in 3Q2005, from 7.3% (revised up from 6.7%) in 2Q and 6.2% in 1Q,
squaring the pace seen last year. This was
stronger than our (+7%) and market (+6%)
expectations. On a quarter-on-quarter (q-oq) seasonally adjusted basis, nevertheless,
growth slowed from 3.4% (revised from
3%) in 2Q to 2.7%. Nominal GDP growth
came to 8.1% y-o-y (+6.5% in 2Q), the
strongest since 2Q2004.
Private consumption surprised, but trade

was the biggest growth driver
Private consumption surprised on the upside
in 3Q2005, growing 4.6% y-o-y in real terms,
and 2.2% q-o-q (seasonally adjusted). This
acceleration in consumption came through
despite sharply rising interest rates, and contrasts with the lacklustre retail sales data for
the quarter (+6.1% y-o-y versus +7.3% in
2Q). Overall consumption was boosted by robust spending on services, up 4.7% y-o-y in
real terms (2.4% in 2Q), more than offsetting the slowdown in food (+3.3% versus
+4% in 2Q) and goods (+5.9% versus
+7.1% in 2Q) consumption. It appears that
Sm_30_S194.pmd
30
improving labour market conditions helped

overcome the pressure on households from
higher interest rates.
Fixed investment maintained slow growth
(+2.4% versus +4.5% in 2Q), as the decline
in construction in both private (-6.3%) and
public (-12.6%) sectors upon the completion
of some large projects was offset by further
expansion (though slowing) in expenditure on
machinery and equipment (+8.1% vs
+10.1% in 2Q).
The expansion in the net exports position
contributed 4.5 percentage points to overall
GDP growth, exceeding the contribution from
domestic demand ex-stocks (+2.9 percentage points), continuing to dominate as the
biggest driver of growth. Exports continued
to ride on Chinas investment and export
boom, up 12.8% y-o-y in real terms for
goods, and 8.2% for services, beating the
growth seen in imports.
Monetary tightening haunts consumers

and investors in the short term
We expect steeply higher local interest rates
to remain a drag on the economy in the immediate term, although the impact on consumption has so far been mitigated by the
improvement in employment conditions and
resilient asset prices. Outstanding mortgages
of HK$540 billion represent 40% of GDP;
each 25 basis-point interest-rate hike would
mean an additional 0.1% of GDP (HK$1.4
billion) annually in mortgage interest payments by Hong Kongs leveraged households.
From their lows, savings deposit, time deposit (three months), prime lending and
mortgage lending rates have already risen by
200, 275, 250 and 290 basis points, respectively. Our US economists see a further 100
basis points of interest rate hikes by the Fed
in the next 12 months, and we remain wary
of pressures on asset markets and consumer
demand as rates head up further.
upward revision comes from our forecasts on

trade growth. We see exports and imports
both maintaining double-digit y-o-y growth
rates in 4Q2005, supported by resilient global demand and persistent overinvestment in
China. Export growth should still be near
12% for the year. We now see the trade sector making a bigger contribution to GDP
growth (6.4 percentage points) than previously, more than compensating for the softer
domestic demand. The invisible trade surplus, in particular, is expected to surpass
16% of nominal GDP this year, a new record,
as Hong Kong continues to capitalise on
China-related opportunities.
CPI inflation, having averaged 1% y-o-y in
the first 10 months, seems on track to reach our
1.2% forecast for the year. Inflation is set to accelerate above 2% by year-end, driven primarily by private residential rental contract renewals at higher rates. Asset-price reflation, and
hence the increase in rentals, had been the main
BLOOMBERG
| DENISE YAM |
Inbound tourism Not as big

as expected
Contrary to high expectations on the
newly opened Disneylands contribution
to inbound tourism, visitors to the theme
park as well as total inbound travelers
in Hong Kong have been disappointing
so far. Total visitor arrivals grew a mere
7.6% YoY in the first nine months, and
only 4% in 3Q2005. Mainland Chinese
visitors, on which the Hong Kong
economy had become increasingly dependent, only rose 2.2% in the first nine
months, and even slipped by 0.5% y-oy in 3Q. Visitor consumer spending
totaled HK$19 billion ($1 approx
HK$4.58) in 3Q2005, up 7.3% y-o-y, less
than the HK$23.4 billion spent by residents travelling abroad.
Stronger-than-expected growth
in 2005
Economic growth so far this year has In anticipation of more service sector opportunities from Chinas increasing globalisation, Hong Kong businesses
beaten earlier expectations by a wide have remained optimistic and stepped up hiring this year
margin, as Hong Kongs trade sector condriver behind the current reflation. Retailers and
tinued to ride on Chinas investment and ex- Medium-term growth still dependent on
restaurants are starting to feel pressure from the
port boom, while the positive wealth effect from Chinas demand for services
asset reflation and robust employment growth Hong Kongs medium-term economic develop- steep hikes in rents, and are passing the increasgave support to consumption. The rise in inter- ment strategy is straightforward: to further en- ing costs onto consumers. However, before
est rates was steep, but it had been adequately hance its role as an international financial cen- wage growth catches up, such increases in rents
anticipated. China optimism and revaluation ex- tre and the service hub of southern China. The risk crowding out spending in other consumppectation continued to draw liquidity into the strength seen in the export of services over the tion categories. Meanwhile, we have yet to see
region, so the unwinding of the liquidity boom past several years is the best evidence of such any significant impact of the appreciation in the
had been gradual.
development. Services exports have reached renminbi on Hong Kongs import prices. We
35% of GDP in 3Q2005, and the share in GDP is believe intense competition among mainland
still expanding, we believe. Net of service im- producers will mean that a limited portion of
But we forecast slowdown ahead in
ports, the services trade surplus has expanded the burden of the revaluation will be passed on
sync with China
We remain convinced that Chinas economy continuously and never failed to contribute posi- to consumers. Meanwhile, our global teams
expectation for further strength in the US dolis slowing as investment comes under the tively to real GDP growth since 1999.
In anticipation of more service sector op- lar, and our conservative outlook on asset price
pressure of overcapacity, rather than tighter
liquidity. We expect this slowdown to be kept portunities from Chinas increasing globali- gains in Hong Kong upon higher rates also hold
at a gradual pace by surplus liquidity and low sation, Hong Kong businesses have remained us back from looking for a sharp surge in inflainterest rates. Economic data out of China, optimistic and stepped up hiring this year. Par- tion in the near term. Looking into next year,
though subject to considerable scepticism re- ticularly strong growth in headcount was seen we continue to expect a gradual slowdown in
garding its credibility, suggest a gradual in the trade sector, financial services, restau- line with the mainland economy. Limited breakslowdown is underway since the peak in rants and hotels. We expect to see further through is expected of domestic demand growth
1H2004. We see Chinese authorities maintain- steady improvement in labour market condi- (+2.7% verss +2.6% this year) amid high interest rates, while trade growth is seen dipping
ing effective management of liquidity conditions ahead.
to single-digits, the slowest in four years. Overtions through a combination of credit and exall GDP growth next year is now forecast at 5%,
change-rate policies so as to achieve a soft Forecasts update
landing. Because of the vast excesses created We are lifting our 2005 real GDP growth fore- revised up from 4.2% previously to reflect
over the boom years, nevertheless, this cast to 7.4% from 5.5%. The revision takes our expectation for a more gradual slowdown
E
gradual slowdown trend is expected to last into account the strong growth already real- in China.
throughout next year and further into 2007. ised in 3Q and the upward revision in the
For the Hong Kong economy, given its de- 2Q figure. We have made limited adjustments Denise Yam is a vice-president and member
pendence on China for growth, we also fore- to domestic demand components (+2.6% of Morgan Stanleys economics team covering
cast an orderly slowdown in sync with China. versus +2.8% previously), so the bulk of the Greater China
2/12/05, 6:37 pm
| DECEMBER 5, 2005
OPINION
CHINESE BUSINESS
BLOOMBERG
Chinas magazine industry opens up

| BY TAN JIN SAN |
ver the past few years, as the Chinese government relaxes its controls
over the economy, it is slowly removing the magazine publishing
industrys financial and editorial
constraints and opening up Chinas publishing industry to foreign involvement. Chinas
accession to the World Trade Organization
(WTO) means it must admit foreign competitors into various industries like banking, auto
production and especially publishing, in order to level the playing field.
In 2003, the government approved US$469
million ($1 approx US$0.60) worth of foreign
investment into 84 Chinese printing enterprises. Last year, in line with pledges China
made upon entry to the WTO in 2001, the
State Administration of Press and Publications
announced that overseas investors will be allowed to form book, newspaper, and periodical wholesale and retail firms. Before, investors had to cooperate with a state-owned entity that has a government-issued publishing
licence, but many magazine companies in
China are already looking for foreign partners
as the government eases restrictions.
A segmented population
million, with US-based company Big Way
Media Inc in Lanzhou to push the magazine
in the North American market.
Circulation of magazines
in China
YEAR
Industry structure
The State Press & Publication Administration
(SPPA) classifies magazines published in
China into seven categories: general interest,
social science, science and technology, culture and education, art and literature, childrens and pictorials.
Despite Chinas entry into the WTO, the Chinese magazine industry is still strictly supervised
and monopolised by the government. In 2003,
about 2,000 magazine titles operated as commercial entities, accounting for only 22% of all
magazine titles in China. The others were managed by either government or academic institutions. The Chinese magazine industry is basically still managed by the government, as far as
the industry structure is concerned.
However, the regulations on magazines
are not as strict as those of other media like
newspaper or TV. It is comparatively easy to
get a new licence to publish a magazine.
From 2000 to 2003, an average of 245 new
titles emerged in the magazine market. In
contrast, obtaining a new licence to publish
a newspaper is difficult since newspapers
play a very important role in directing propaganda. In addition, the magazine industrys
entry threshold is relatively low and investment costs are comparatively less than those
of other media.
Even though government censors have
become less demanding, the Chinese government still has the final say on editorial content, typically demanding adjustments to politically sensitive or salacious material.
Magazines in China make profit via two
channels revenue from large circulation
numbers, or from advertisement sales. The
first business model targets low-income readers, while the second model targets mainly
higher-income readers like managers and
well-educated and wealthy women.
In 2003, advertising income for Chinese
magazines was 2.3 billion renminbi ($1
approx 4.77 renminbi), a 60% surge over the
2002 figure of 1.5 billion renminbi. In 2003,
gross publication income was estimated at 10
billion renminbi. Given that publication expenses accounted for 40% of gross publication income, the net publication income could
reach six billion renminbi. As a result, China
magazines total revenue stood at 8.8 billion
renminbi. The ratio of advertising income, net
publication income to other revenue was
26:68:6. Therefore, despite a shift in Chinas
Sm_32_S194.pmd
Even though government censors have become less demanding, the Chinese government still has the final
say on editorial content, typically demanding adjustments to politically sensitive or salacious material
32
and distribution of magazines have not

changed much, and the potential for the magazine industry remains untapped, mainly because of the under-developed distribution
channels for newsstand and other retail outlets. This can be attributed to the lack of competent and experienced management of distribution in the publishing industry.
Magazine publishers do not actively engage
in market research to find out readers demographic data and to improve their circulation
databases. As a result, most publishers are still
unclear about their target audience. In addition, the over-dependence of magazine publishers on post offices, which undertake 70%
of the total distribution for publishers in China,
has resulted in their limiting themselves to a
narrow range of distribution methods. Conversely, this also proves that there are opportunities for expansion and growth in Chinas
publications distribution market.
NO
OF
TITLES
CIRCULATION
(BIL)
AVERAGE
CIRCULATION
(MIL)
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
6,078
5,751
6,056
6,484
7,011
7,325
7,583
7,916
7,918
7,999
8,187
8,725
8,889
9,029
9,704
9,490
1.84
1.79
2.06
2.36
2.35
2.21
2.34
2.31
2
2.09
2.85
2.9
2.9
3
2.9
2.84
0.3
0.31
0.34
0.36
0.34
0.3
0.31
0.29
0.25
0.26
0.35
0.33
0.33
0.33
0.3
0.3
Note: All magazines refer to those published in mainland China
magazine market to the advertising salesdriven model, most Chinese magazines still
depend mainly on publication income. With
Chinas large population of rural people whose
incomes are relatively low, however, magazines with low costs and a reliance on sales
will be more likely to have a large market
share in the long run.
Despite the rise of Chinese fashion magazines that entice a new generation of female
readers with high-end brand-name advertisements and the latest fashion tips and peeks at
the rich and famous, the most enduring magazine titles in China are still plain-covered periodicals with contributions from the Chinese
readers themselves.
Reader
One such title is Reader (Duzhe), the most
popular monthly magazine in China. As at
January 2004, the total circulation of Reader, a
bimonthly magazine, had topped 800 million,
ranking fourth among magazines worldwide,
after Readers Digest, National Geographic and
Time, which are published in the US.
First published in 1981, Reader has ranked
in the top 10 highest circulated Chinese magazines for 13 consecutive years, with its
monthly circulation exceeding eight million in
October and November 2003. Known for its
high quality and heart-warming style, Readers content is mainly contributed by its millions of readers. In 2003, Gansu Provincial
Peoples Press, Readers publisher, signed a
five-year contract, involving a total of US$4.5
The Stories
The Stories, published by the Shanghai Literature and Art Publishing House, is still, after
four decades of history, one of Chinas most
widely read monthly magazines, with a circulation of four million nationwide, second
only to Reader. Beginning last year, the
pocket-sized magazine became a bimonthly
magazine. Priced at 2.5 renminbi, The Stories
brings in net profit of more than 30 million
renminbi annually. Two-thirds come from
subscriptions, with the rest from advertisement revenue. In 1985, The Stories was the
most popular magazine in China, with an alltime high monthly circulation of 7.6 million.
No stars appear on its plain covers. Oral
literature and word-of-mouth tales fill its
pages. It publishes mysteries, adventures, old
Chinese legends and jokes. The editorial board
chooses stories for both entertainment and literary value. Ordinary individuals and their
achievements are celebrated in the stories.
Some stories are a reflection of Chinese society and behind nearly every story is a traditional moral, which seems to speak to audiences across the country.
Problems
Despite the many opportunities that the
magazine industry offers, there are some
problems inherent in the system. One is plagiarism. In China, where imitation is considered the sincerest form of profitability, there
is a lack of product differentiation in the nations 9,000 licensed magazines, stemming
from the reluctance to create original content. Titles from the US are merged into one
another, losing their unique identities when
imported to China. Producers look to each
other to decipher market demand, following
the safe and tested route. As a result, many
magazines look alike, and all the free English-language monthlies, like Thats Beijing
and Beijing This Month, are virtually interchangeable to consumers and advertisers
alike. As competition and foreign investment
grow, though, magazine publishers will soon
learn that brand loyalty and product identification are vital to magazines.
Distribution is another problem. As distribution channels are not developed as commercial business enterprises, circulation sales
via newsstands and other retail outlets are not
all there yet. Therefore, the market for consumer magazines has developed neither as
quickly nor as widely as it should have over
the past few years. In the last decade, the sale
2/12/05, 6:38 pm
Chinese magazines are starting to target more

segmented population groups to meet their
varying tastes. The number of magazine titles increased from 6,078 in 1989 to 9,490 in
2004 by 56%, but their average circulation
dropped from 303,000 copies to 299,000. As
competition becomes intense, magazines will
tend to specialise to meet the demands of
niche markets.
Some magazines have started focusing on
readers of certain age groups. Start in Life is a
magazine that targets fresh university graduates, Seventeen is aimed at the teenage market, while Elegance attracts the mature women
segment. Some magazines focus on reader
groups of certain professions such as Reader
(rural edition), which targets rural residents,
and Dagong, which targets working people.
Others concentrate on urban readers like
Shenzhen Weekly in Shenzhen, City Pictorial
in Guangzhou, Xinmin Weekly in Shanghai and
Brand World in Beijing.
The segmentation of Chinese magazines is
still in its early stages. As readers become
more segmented, the number of titles will tend
to increase, leading to greater variety and
higher standards.
Though publishing may be the hardest of
all businesses in China for foreign investors to
enter, given the laws and political concerns, it
is also among the least developed and therefore most promising. There are plenty of indicators that the more stringent controls may
ease, with more foreign players entering the
market, the easing of government control on
editorial content, and governmental reform of
the industry and the distribution market. All
this points to a more positive environment for
E
investors in the coming years.
Tan Jin San is a writer with China Knowledge
Press, a premier provider of trade and investment research information on China. For more
information, please visit www.chinaknow
ledge.com.
China Knowledge is a premier provider of

trade and investment research information
to foreign businesses keen on the China
market. Its wide range of China business
intelligence is available on multiple
platforms print, online and television
media. For more information, visit
www.chinaknowledge.com.
MALAYSIA
CORPORATE
Saving national icons

A monumental task lies ahead for the two new CEOs of Malaysian Airline System and Proton
| By P GUNASEGARAM,
LEELA BARROCK AND MARYANN TAN
of The Edge Malaysia |
dris Jala began his first day as CEO of

Malaysian Airline System Bhd (MAS, the
owner of Malaysia Airlines) on Dec 1
with a flourish. He reported at HQ, the
building on Kuala Lumpurs posh Jalan
Sultan Ismail which may be sold, just as the
sun was rising at 7am.
Before the day was out, he had presented
his turnaround plan to the board and announced the appointment, effective next
month, of Peter Read, a 32-year veteran with
British Airways, as director of operations. Read
will have wide-ranging responsibilities for operational efficiency, just the area which needs
to be fixed for MAS to make that turnaround.
At Proton Holdings Bhd, chairman Datuk
Mohammed Azlan Hashim tempered the announcement of Protons largest quarterly losses
with the appointment, effective next month,
of a new CEO, Syed Zainal Abidin Syed Mohd
Tahir, currently executive director of the other
national car project Perusahaan Otomobil
Kedua Sdn Bhd (Perodua).
Both Idris and Syed Zainal have monumental tasks ahead of them, turning around two
of the most prominent national icons, both of
which are currently facing their most serious
operational problems. For MAS, it is the second turnaround attempt in less than three
years and for Proton, it is its first major one.
For both, it could have been avoided if the
right measures had been taken and the right
people put in place to begin with. That would
have made both organisations competitive.
What has happened must serve as a lesson, a
bitter one, for the nation to ensure that there
is no repeat performance.
First, MAS. In a misguided move, the government privatised it to Tan Sri Tajudin Ramli,
then controlling shareholder of mobile operator Celcom (currently under Telekom Malaysia) in the 1990s. When the airline plunged
into problems at the turn of the millennium,
the government bought back Tajudins stake
at twice the market price then.
New MAS CEO Idris Jala
After years of mismanagement, MAS lost

much of its core competencies in many areas
of operations and was burdened by an overambitious route expansion programme and a
rapid and questionable fleet expansion programme, accompanied, in some instances, by
excessive cost-cutting which sliced service
quality and hampered marketing.
Eventually, MAS reported what was probably its worst ever loss, RM836 million for the
year ended March 2002. Enter Datuk (now Tan
Sri) Md Nor Yusuf, who was then special adviser at the Ministry of Finance, and the first
revival plan. By the end of 2002, MAS had put
in place the Widespread Unbundling Exercise
(WAU), effectively disposing to Penerbangan
Malaysia Bhd (PMB, wholly owned by
Khazanah and which is MAS holding company) its aircraft assets and pushing all domestic losses to this entity. It made profits soon
after, but not on an operational basis and not
if you include the results of PMB, which the
government and Khazanah still do not disclose.
PMB carries the losses from aircraft ownership
and domestic operations. The same MAS, as
we knew it, is yet to turn around.
Md Nor left for the Securities Commission
in April 2004 and Datuk Ahmad Fuaad
Dahlan, a person who had spent much of his
time in overseas postings in regional sales offices in MAS, took his place as managing director. Subsequent events showed that appointment was a mistake.
For the first quarter to June 2005, barely a
year after Fuaad had taken over, the airline
slid precipitously to a loss of RM275 million.
Fuaad resigned and MAS chairman Datuk Dr
Munir Majid stepped into the MDs shoes
pending the entry of new MD Idris.
Munir had the unpleasant task last week
of announcing that for the first six months of
its current financial year, it made net losses
of over RM600 million, clocking over RM300
million of losses in the second quarter.
But neither MAS nor Khazanah Nasional
Bhd, its ultimate holding company, saw it fit
to disclose the total extent of losses to the nation as PMBs results were not disclosed simultaneously.
It is clear what MASs problems are. Its fuel
costs are insufficiently hedged and it has not
been able to pass on the spiralling fuel costs
to customers by efficient pricing. Fuaad, according to MAS insiders, did not put in place
a mechanism for effective fuel hedging the
way some other airlines did.
During Fuaads tenure, sources say, sales
again became supreme and revenue management, which aims at revenue maximisation
through appropriate pricing, took a back seat.
Marketing and selling of seats became supreme without sufficiently looking at the overall impact of measures such as route expansion on yields.
There are problems in other areas as well.
Revenue per employee is low relative to other
airlines, less than half SIAs, for instance. Staff
need to be cut or to be made a lot more productive. All of which point to a sorry state of
affairs that Idris is trying to put right.
Not only did he announce the appointment
of a highly experienced director of operations,
the very next day, he got the Prime Minister
to talk to MAS staff and then he spoke to them
himself. True to his reputation as a man who
engages, he has gone to the staff, asking them
to address him as plain Idris. First impressions
of him are good, he seems to have a grasp of
what it is all about, insiders say. Hopefully,

Idris will be given the free hand that he needs
to do all that.
At Proton, financially things are not that
bad. But the implications of operational problems are horrendous. The key problem is that
none of Protons recent launches, not the
Waja, not the Gen.2, not the Savvy, has elicited the kind of public response that would
give enough volume for reasonable profit.
Does Proton have the capability to both
develop and produce cars of quality which will
be accepted by the public? There is no doubt
that it can produce them but there is considerable doubt that it can develop them.
The inescapable conclusion from this is
that Proton needs a foreign partner of repute
and it needs it fast. And the government must
be prepared to give up at least management
control and probably equity control as well.
Will it be prepared to do so?
If MAS loses a billion ringgit annually on reported results, it wont be far wrong to double
that figure to get the real loss for the nation.
But Protons task may prove to be more
difficult there is a serious structural problem here. That would be mainly because the
management has read it wrong all this while
, Proton needs a foreign partner and will need
to allow that partner to take control in terms
of equity and management. Thats a hard decision to take politically.
But the longer that tough decision is delayed, the greater the loss is going to be and
the harder it is going to be to get a partner. If
Chrysler and Nissan can be taken over by
Daimler and Renault respectively, there is no
reason why we should not let go of Proton,
for the right terms, of course, and keep a
meaningful stake.
That stake may eventually be worth a lot
more than the controlling interest we are trying so hard to preserve right now, whose
value will continue to go down if Protons forE
tunes dont change.
P Gunasegaram, Leela Barrock and Maryann
Tan are executive editor, associate editor and
senior writer respectively at The Edge Malaysia
SBB chairman quits ahead of crucial vote

| By ANNA TAING of
The Edge Malaysia |
he ante has been raised in the

tussle over the future of Southern Bank Bhd (SBB).
While SBB has launched a media
blitz to get shareholders to vote in
favour of the acquisition of Asia General Holdings Ltd (AGHL) when they
meet on Dec 12, Syed Mohd Yusof
Syed Nasir quit last Friday as chairman and director ahead of the extraordinary general meeting.
Sources say Syed Yusof who
with his business partner, the Sultan
of Selangor, are against the acquisition of AGHL has submitted his resignation to SBB and Bank Negara. An
aide confirmed his resignation when
contacted by The Edge Malaysia.
Syed Yusofs resignation, which
Sm_33t34_S194.pmd
33
caught other members of the SBB

board by surprise, was nonetheless
inevitable. Observers say it would be
extremely difficult for him to continue
as chairman and director when, as a
substantial shareholder, he is against
the acquisition and is in favour of
merging SBB with Bumiputra-Commerce Holdings Bhd (BCHB).
He cannot be part of a board that
supports the acquisition but has a
shareholder vote against it, says an
observer.
His resignation, therefore, is clear
indication that he and the Sultan
will use their blocks of shares to
vote against the proposed acquisition of AGHL, despite talk in recent
days that they may have changed
their minds, industry sources say.
The outcome of the Dec 12 EGM
is key to whether a merger between
SBB and BCHB will take off.

Prior to Syed Yusofs resignation,
the balance was tipped in favour of
SBB being able to get shareholders
approval for the purchase.
Shareholders, when they vote
on AGHL, are also in effect voting
on whether they want to merge
[with BCHB]. If they vote yes to
AGHL, the merger will not happen,
says a source.
This is because BCHB is unlikely
to want an SBB merger that includes
AGHL. An industry source says it is
highly probable that BCHB will walk
away from the merger if the AGHL
deal goes through.
News that the two banking groups
may merge came on Oct 21, when
BCHB announced that it had obtained
central bank approval to start talks to
buy stakes in SBB from Syed Yusof
and the Sultan of Selangor, Sultan

Sharafuddin Idris Shah.
ECM Libra, a boutique investment
house, also made an announcement
to that effect on behalf of the Sultan
and Syed Yusof on Oct 21.
Both the Sultan and Syed Yusof
have a combined direct stake of 9%
in SBB. They also own an indirect
stake of about 17% in SBB, via
Killinghall (M) Bhd. The major shareholder in Killinghall is Ramuda Sdn
Bhd with a 32% stake, in which Syed
Yusof and the Sultan collectively own
52%. Tan Teong Hean, CEO of SBB,
owns the remaining 48% in Ramuda.
Last Friday, the board of Killinghall
met, most likely to discuss how it
would vote at the EGM. The outcome
of the meeting is uncertain.
In October, BCHB also made
overtures to SBB to begin merger
3/12/05, 2:27 am
talks but it wasnt until Nov 11 that

the board of SBB responded.
Since then, only two meetings
between representatives from both
sides have been held, but nothing
concrete has emerged. Industry
sources say both meetings were considered preliminary, enabling
both sides to find out what each
wants from the deal.
Further merger talks on hold

Be that as it may, it is learnt that
further merger talks have been put
on hold, pending the outcome of the
Dec 12 EGM.
If shareholders vote yes to the
deal, it could make the proposed
BCHB-SBB merger more complex,
largely because BCHB is unlikely to
want to buy SBB with AGHL. It
would have implications on the pricing of SBB, says a banking source,
pointing to the fact that the acquisition of AGHL will erode the net tanCONTINUES ON PAGE 34
| DECEMBER 5, 2005
CORPORATE
MALAYSIA
M1 a key link for TMIs regional plan

| By RISEN JAYASEELAN of The
Edge Malaysia |
hree months after investing in

Singapore, TM International
Sdn Bhd (TMI) still comes under fire for that deal. Why buy
into the smallest player in a
saturated market, detractors keep
asking? But to Yusof Annuar Yaacob,
TMIs CEO, the acquisition of a 25%
stake in MobileOne (M1) has been a
coup of sorts.
Many others wanted to buy into
M1 but they did not think it was
possible to get from [a stake of]
12.1% to under 30%. We did our
homework before the exercise and
knew exactly where the shares were
and went and bought the blocks.
To recap, the M1 stake that had
been on the market for a long time
was a 12.06% block owned by
Hong Kongs PCCW and Britains
Cable & Wireless. But it drew little
response. One reason cited was that
regulatory approvals would be
needed to breach certain levels of
shareholding in a Singapore mobile
operator, which kept prospective
bidders less interested.
But TMI managed to secure all
the necessary approvals from the
Singapore regulators to grow the
stake to below 30%.
Many potential bidders thought
that Singapores IDA [Infocomm Development Authority] would not
give the approvals if they raised
their stake [in M1] to beyond 12%.
But we secured the approvals as we
made sure that all our bases were
covered, Yusof says.
Still, having only a 25% stake does
not give TMI control over M1. Indeed,
this is contrary to TMIs modus operandi of preferring to buy majority
stakes in their overseas investments.
But as Yusof points out, Singapore is peculiar in that sense. To
be a significant regional player, we

need a foothold in Singapore. But to
go past a 50% stake in a telco in
Singapore, the authorities would
deem you to be an operator in that
market. This would mean being subjected to many tests before you are
successful. We did not want to go
that way and indeed we do not need
to. The management and the board
[of M1] are friendly [to TMI]. There
has been no issues with my and a
Khazanah Nasional Bhd representatives appointments to the board of
M1. (TMI owns 80% in a joint-venture company with Khazanah,
which bought into M1.)
Aside from the presence in a key
regional market like Singapore, M1
offers the possibility of technical and
operational tie-ups with other companies in the Telekom Malaysia Bhd
(TM) group.
We cannot discuss this publicly
but there are numerous initiatives we
are working on, such as in the area
of roaming. We are looking at tie-ups
between M1 and Celcom, and M1
and PT Excelcomindo Pratama [Excel], for example, says Yusof.
The friendliness of M1s management to TMI, adds Yusof, means
there could be people from the TM
group who could be seconded to M1
to understand their work culture
and the way they do business.
TMIs future markets

TMI has set its sights on investing
in three markets close to home: Vietnam, the Philippines and Thailand.
However, each of these markets has
its own risks and challenges.
Every other telco is queuing up
for Vietnam and the Vietnamese
parties are in no hurry to do any
deals quickly. In the Philippines, it
is unlikely that the GSM [global system for mobile communications]
space will open up, so our invest-
HARIS HASSAN/THE EDGE MALAYSIA
After Indonesia and Singapore, TMI has set its sights on Vietnam, the Philippines and Thailand
Yusof: TMIs revenue and profit

contributions to parent will keep
growing
ment will be in some other technology such as CDMA [code division

multiple access]. In Thailand, we
are looking to be in the mobile sector, explains Yusof.
TMI missed an opportunity to
invest in India when its joint effort
with Singapore Technologies Telemedia Pte to buy into Indias Idea
Cellular Ltd, the fifth-largest operator in the worlds fastest-growing
major mobile market, fell through
because of regulatory issues.
And while India still remains
very much on TMIs radar screen,
valuations of telco assets there have
sky-rocketed, says Yusof.
India in the last 12 months has
become really expensive. We were
willing to pay an enterprise multiple of 6.5 times for Idea. But, later,
the same sellers were willing to
pay up to 10 times the enterprise
value to buy back the stake, recalls Yusof.
(Enterprise multiple is a ratio used
to determine the value of a company

and takes debt into account. It is calculated as enterprise value divided
by earnings before interest, tax, depreciation and amortisation.)
Citing another example, Yusof
points out that Vodafone recently
paid an enterprise multiple of 15
times to buy a 10% stake in Bharti
Tele-Ventures Ltd, a mobile player.
Similarly, valuations are reaching
such astronomical heights in other
big markets. The ongoing auction of
Turkeys mobile-phone operator
Telsim Mobil Telekomunikasyon
Hizmetleri AS has seen prices rising
from its floor price of US$2.8 billion
($1 approx US$0.60) to around US$5
billion now, points out Yusof. Thus,
TMIs strategy in markets like those
will be to partner other players to
make joint bids, joining a growing
trend.
TMI is increasingly becoming the
only growth prospect for its parent,
TM. This is obvious when seen in
the light of decreasing revenues in
TMs fixed-line business and an increasingly competitive and saturated
domestic mobile sector.
A quarter of TMs profits now
come from TMI, and Yusof says the
contributions of TMI to its parents
bottom line will only grow. With a
total of 10.3 million subscribers from
its combined overseas assets, TMI
has already surpassed Celcoms subscriber base of 6.3 million.
In the next few years, TMI will
grow to having 20 million subscribers. Thus, TMIs challenge is that it
is increasingly very important to the
group and there is virtually no room
for slip-ups, says Yusof.
A key market where Yusof and
TMI have to make sure things go according to plan will be Indonesia.
Early this year, TMI paid almost RM3
billion ($1 approx RM2.24) for a
57% stake in Excel, while Khazanah
paid about RM890 million for a

16.8% stake.
However, Excel is the third player
in a market where major names like
Singapore Telecommunications Ltd
and ST Telemedia are involved with
the two largest players. The Hutchison group and Maxis Communications Bhd also have investments in
small mobile operators in Indonesia.
Indeed, Yusof himself admits that Excel faces a huge challenge in the Indonesian market. After TM has
spent a lot of money buying into Excel, the expectations are high for it
to succeed.
TMI faces a similar challenge in
Bangladesh, where it has invested
about US$21 million since 1995 to
help set up TM International (Bangladesh). A mobile operator with a
28% market share, it faces stiff
competition from other operators,
all of which are mainly run by foreign telcos.
TMI is also in talks with TM to
take over Celcoms last remaining
overseas asset: a 49% stake in Irans
Mobile Telecommunications Company of Esfahan. Celcom has exited
all its other overseas ventures.
Although TMIs focus is the
Asian region, it may buy into assets
in other markets such as the Middle
East. There is no clear focus to get
into that market, but because Malaysia is seen by the Middle East as
a progressive Islamic country, we always get invitations and solicitations to acquire assets there. But
these markets are not cheap.
Meanwhile, TMI will continue disposing of its investments in Africa,
which were made between 1995 and
1997. TMI has US$1.3 billion capital
employed in all its foreign assets. E
Risen Jayaseelan is an assistant editor with the Capital Markets and Companies desk at The Edge Malaysia
Acquisition part of strategy to be strong niche player

FROM PAGE 33
gible asset (NTA) value of SBB.

An industry source says Syed Yusofs resignation also makes sense if he does not intend to vote yes on the proposed AGHL acquisition. It would be difficult for Syed Yusof
to chair the EGM if his intention is to vote
against the AGHL purchase, an industry
source says.
Can SBB get the simple majority at the
EGM to push the AGHL acquisition through?
Its still 50:50 at this point in time, industry
observers say.
Syed Yusof, who holds a 4% direct stake in
SBB, was appointed chairman of the board last
year. Sources say the Sultan and Syed Yusof
are especially unhappy with the commitment
by SBB to put a $50 million downpayment for
the proposed purchase of AGHL.
The $50 million is non-refundable if the
regulatory bodies such as Bank Negara do not
Sm_33t34_S194.pmd
34
approve or reject the deal by Dec 17, and if

designated shareholders dont vote yes.
However, the money is refundable if any regulator rejects the deal before Dec 17.
Basically, it means the Sultan and Syed
Yusof will have to vote yes on the deal [as
they are among the designated shareholders],
otherwise the downpayment will be forfeited,
says a source close to the two shareholders.
SBB, on the other hand, has insisted that
the proposed acquisition of AGHL has the
unanimous endorsement of the full board. The
resignation of Syed Yusof appears to show that
is no longer true.
SBB needs a simple majority of 51% to pass
the deal. SBB is proposing to buy 51.58% of
AGHL at $12.25 a share, or for a total consideration of $473.9 million. SBB will also eventually make a mandatory general offer for the
remaining shares in AGHL, which will bring
the total cost to $993 million.
The move to acquire AGHL is part of the

banks strategy to become a strong niche
player, especially in wealth management, not
just in Malaysia but in the region as well.
Although SBB has agreed to merger talks,
pricing is expected to be a major stumbling
block. SBB has already indicated that the
banks intrinsic value, as assessed by US investment house Goldman Sachs, is RM5 to
RM5.50. Thus, it is unlikely to sell below RM5,
an industry source says.
Banking sources say if AGHL is included
in the equation, SBBs NTA will see erosion
of about 30%, which means it is unlikely that
BCHB will offer anything higher than two
times that NTA, they say. But SBB believes
that AGHL will be earnings enhancing for the
bank and create value for shareholders.
That the Dec 12 EGM is important for SBB
is reflected by the advertising blitz that the
bank embarked on last week in the run-up to
3/12/05, 2:28 am
the meeting. Says an industry observer: Such

a blitz in the media is unprecedented. We
have not seen anything like this in Malaysias
corporate scene, before although it is not necessarily bad. The bank has to put its case
across. Those shareholders who oppose the
deal should do the same to put forward their
arguments that its bad for SBB.
With the major players stepping up their
moves ahead of Dec 12, some observers wonder whether Bank Negara could change the
situation by announcing before Dec 12
whether it is approving or rejecting the deal.
It will be interesting, says one observer.
The deal still needs Bank Negaras approval
no matter how SBB shareholders vote. So, will
it wait till after Dec 12 or make a decision
E
before shareholders meet?
Anna Taing is an associate editor at The Edge
Malaysia
CORPORATE
MALAYSIA
Global funds snap up Starhill REIT

| By LIM AI LEEN of The Edge Malaysia |
he market has spoken. Despite local

funds gripes that YTL Corps Starhill
real estate investment trust (REIT) of
fers staid yields and a capped upside,
institu-tional investors oversubscribed
the issue by 8.8 times at RM1.01 ($1 approx
RM2.24) per unit last week.
Out of the 479.6 million units on offer, 65%
was allocated to foreign funds, while 35%
went to local institutions. Meanwhile, the retail tranche of 29.99 million units was oversubscribed by 10.2 times at 96 sen per unit.
In total, the REIT raised RM513.2 million.
This enthusiastic global response is vindication enough for lead financial adviser ECM Libra Capital Sdn Bhd, which fielded questions
from disgruntled local investors during Starhills
prospectus launch a couple of weeks ago.
These investors were concerned about rising interest rates in Malaysia and that the YTL
group contributes about 60% of the REITs annual revenue. One analyst is still perturbed that
the lease with JW Marriott hotel (one of the three
REIT properties) only provides for a 5% rental
hike every five years, a rate of 1% per annum.
It doesnt even cover inflation, she says.
Yet, it appears that the foreign funds have
no problem with these issues.
They [local funds] are still talking about
issues that no one in the international market
is griping about, says David Chua, managing
director of ECM Capital. Even with Malaysias interest-rate hike, and the launch of the
worlds largest REIT [the Link REIT in Hong
Kong], global funds are into Starhill. These
are investors who can buy any asset they like
anywhere in the world.
Kuala Lumpurs highend malls, Lot 10 and

Starhill Gallery, and the
five-star JW Marriott Hotel
will be injected into the
trust at RM1.2 billion.
These properties are currently owned by YTL
Corps wholly owned subsidiary YTL Land Sdn Bhd.
YTL Land will retain a
51% stake in the REIT,
while the remaining 49%
will go to the public. Mayban Trustees Bhd will act High-end malls Lot 10 and Starhill Gallery (above), and the five-star JW
as trustees while Pintar Marriott Hotel will be injected into the trust at RM1.2 billion
Projek Sdn Bhd, a 70%
subsidiary of YTL Land, will provide manage- ple, the YTL brand name that people can identify with they will buy, he says. The sucment services to the trust.
Roadshows for this trust were held in Singa- cess of Hong Kongs Link is setting the pace.
pore, Hong Kong, the Netherlands and the UK. This is a long-term initiative to develop our capiYTL Corps effusive chieftain Francis Yeoh uses tal markets. We need sizeable transactions.
There is no disputing that REITs are the
the words sensational and groundbreaking
flavour-of-the-month asset among regional into describe the roadshow results.
This is a marvellous result for Starhill vestors. But other offerings have been greeted
REIT, YTL Corp and Malaysia. Investors have with more thunderous applause.
The Hong Kong governments US$2.5 bildemonstrated overwhelming support for this
groundbreaking transaction, and they have lion ($1 approx US$0.60) Link REIT, listed
done so at the top end of the pricing range. on Nov 25, soared 28.6% as at its HK$13.2
International investors have voted with their close last Friday. Institutions oversubscribed
pockets, outpacing domestic demand by two the issue by 19 times, while retailers demand
to one. Our international investor list is a top- was 18 times the number of units offered.
Both REITs are very successful, says
tier list, he says.
For ECMs Chua, the Starhill performance is Chang Tou Chen, HSBCs managing director
also proof that foreign investors are not shun- of investment banking, Singapore, when asked
ning the country.Malaysia is the worst-perform- how the response to Starhill REIT was coming market in Asia this year. So, the demand pared to that for Hong Kongs Link REIT. HSBC
from foreign investors demonstrates something. is one of the joint book runners for Starhill and
If its a big issue that has quality for exam- was also joint global coordinator on Link.
Will PNBs Islamic REIT take off?

| BY MALAR VELAIGAM |
he REIT that Malaysias Permodalan Nasional Bhd (PNB) is mulling over will be Syariah-compliant, sources say. It will not only be
the first Islamic REIT in the country,
but probably also the worlds first Syariah-complaint asset-type of this class.
PNBs move to lump all its assets
into an Islamic REIT came about after guidelines on that asset class
were released by the Securities Commission (SC) of Malaysia two weeks
ago. The guidelines had long been
anticipated by the industry.
PNB had recently signalled its intention to enter the REIT market to
convert its fixed assets to liquid ones.
Its CEO and president Tan Sri Hamad
Kamah Piah is reported to have said
that the group aims to grow its property business and that PNB could
later transfer these properties to a
REIT, which it will manage itself.
However, PNB going into a REIT
does not seem to have captured the
imagination of the investing public.
Hence, would an Islamic REIT by PNB
be well received?
Considering that the investment
management company has been in
Sm_35_S194.pmd
35
the property business for over 20

years, PNB should be able to pull
off the REIT. Moreover, it has a pool
of buildings and other assets, such
as Stadium Merdeka and Stadium
Negara, at its disposal.
PNBs entry into the property
sector came in 1984, which saw the
construction of its flagship building,
the 40-storey Menara PNB, on Jalan
Tun Razak, KL. Since then, the
group has built up its portfolio of
properties and now has eight in its
stable. These include the 39-storey
PNB Darby Park Executive Suites
serviced apartments on Jalan Binjai
and the 27-storey Menara Tun
Ismail Mohd Ali, both in the city,
Plaza IBM in Taman Tun Dr Ismail
and Wisma KPMG in Damansara.
PNB manages total lettable space
of 1.1 million sq ft in its own portfolio and a further 694,000 sq ft under two property trust funds (PTFs).
This makes it the largest investment
management group in the country.
According to its website, the
group manages RM58 billion worth
of funds, which are invested in over
360 listed companies. PNB also has
a number of other operations under
its belt, including asset management,
education and unit trusts.

It is an established equity fund
player, with a number of popular
funds in its stable, including Amanah Saham Wawasan 2020 and the
Amanah Saham Bumiputera funds.
But the entity is better known for
its listed PTFs, namely Amanah
Harta Tanah PNB (AHP) and Amanah Harta Tanah PNB 2 (AHP2).
There is only one other listed PTF,
which is AmFirst Property Trust.
Still, analysts remain sceptical
about the quality of properties in the
groups portfolio. On the surface,
it may look like it [the REIT] could
be big, but it all depends on the
quality of the assets, says the head
of research at a foreign research
house. The main concern expressed
by analysts is that not all of PNBs
assets are commercial or retail properties. The flavour now [for a REIT]
is commercial or retail property, not
really residential or even hotels,
says an analyst.
Even with the likes of Stadium
Merdeka and Stadium Negara under
its belt, PNBs prospective REIT is
not exciting analysts. The reason
offered is that although these assets
are substantial in size, they are not
ABDUL GHANI ISMAIL/THE EDGE MALAYSIA
Enthusiastic response partly due to projected yield of above 6%

Meanwhile, Malaysias only other REIT, the
Axis-REIT, was oversubscribed 18.4 times by
the institutions. It listed in July at RM1.25 per
unit and has climbed 30.4% as at last Friday.
Local fund managers shrug their shoulders at the book-building results and concede
that they still subscribed to the Starhill offering despite their worries.
Its a matter of not having a choice. This is
a big investment with over RM1 billion [worth
of] assets, whereas the Axis-REIT was only
about RM260 million. You buy it to hold for the
6% yield. But we still have concerns about the
upside, says the analyst. Starhill will be listed
on Dec 16, and investors will be watching
closely to see how the units perform then and
in the years to come. One fund manager continues to fret about yield enhancement prospects.
This REIT still needs to set out a serious
acquisition policy and the timeline for it, she
says, drawing comparisons with Singapores
Mapletree REIT.
At RM1.01, the Starhill REIT is projected to
yield 6.24% for financial year (FY) 2006 and
6.56% for FY2007. This is lower than AxisREITs projected 8%, but slightly above the 6%
promised by Link. It is also above Hong Kong
tycoon Li Ka-shings Prosperity REIT, which is
expected to yield between 5.3% and 5.7%
when it is listed later this month.
While YTL has not stated if other assets
will be injected into the trust, observers have
identified the Ritz-Carlton Residences, situated
close to the current REIT properties, as a poE
tential acquisition.
Lim Ai Leen is an assistant editor with the
Capital Markets and Companies desk at The
Edge Malaysia
well utilised. How much rental can

you get from a stadium? Its not that
big and I doubt they would include
those [the stadiums] in the REIT,
says an industry observer.
So, whats special about an Islamic REIT compared to a conventional one? The trust is merely a taxadvantage tool used to convert an
asset to cash. Hence, there are no
real Islamic issues in REITs. The Islamic issues only crop up when the
REIT includes property that is
unacceptable to Islamic investors,
such as gaming and insurance.
According to the guidelines released by the SC, an Islamic REIT
can include real estate where tenants operate non-permissible activities, according to Syariah law.
However, the Islamic REITs fund
manager has to adhere to additional compliance assessments before acquiring real estate that involves tenants who operate mixed
activities. An Islamic REIT must
also use takaful schemes (unless
these are not available) to insure
its real estate.
Industry players are also speculating that PNBs Islamic REIT could
be linked to the newly established
Yayasan Amanah Hartanah Bumiputera (YAHB), or Bumiputera Property Trust Foundation, which was
announced in the budget in September. The foundation was created to
2/12/05, 11:59 pm
increase the wealth and participation

of bumiputeras in the property sector. Towards this end, some RM2 billion was allocated in Budget 2005.
Malaysian Prime Minister Abdullah
Ahmad Badawi had said that the
RM2 billion would be utilised to purchase commercial properties, primarily in major towns, with the objective of providing greater opportunities for bumiputera entrepreneurs at
prime business locations.
YAHB has also been associated
with Prokhas Sdn Bhd, the company
that will take over the residual assets of Pengurusan Danaharta Nasional Bhd. Danaharta will shut
down at the end of this month and
its residual property assets, worth
RM530 million, will be taken over by
Prokhas, owned by the Malaysian
government. The assets comprise
152 properties, of which 65 are situated in central Peninsular Malaysia.
Nevertheless, if any group is
suited to offer a Syariah-complaint
REIT, it has to be PNB, having successfully managed properties and
trusts. In terms of financial standing, the group posted RM568 million in net profit on the back of
RM1.5 billion in revenue for the
E
year ended Dec 31, 2004.
Malar Velaigam is a writer with the
Capital Markets and Companies
desk at The Edge Malaysia
| DECEMBER 5, 2005
SPORTS BUSINESS
Wembley may miss FA Cup final

PICTURES: BLOOMBERG
Soccer church delays tarnish Londons image as it prepares for 2012 Olympics, say critics
| BY BRIAN LYSAGHT |
ondons new Wembley stadium, described by Brazils Pel as the church

of soccer, may be empty for the sports
best-known English contest next year.
Multiplex Group, which is building the
90,000-seat stadium on the site where England won the 1966 World Cup, will fail to meet
a January deadline for completion. Bookmakers have stopped taking bets on a new March
deadline because the chances of a miss are
too high, said Simon Clare, a spokesman for
Coral Racing Ltd.
Wembley, the worlds most expensive
sports stadium, will cost 757 million ($1
approx 0.33), five times forecasts and 62%
more than New Yorks proposed Yankee baseball park. Critics say delays, caused by disputes with contractors, have tarnished Londons image as it prepares to spend US$16
billion on hosting the 2012 Olympics. The FA
Cup final will be held on May 13.
It seems to be a very grandiose design,
and the costs have spiraled out of control,
Bob Blackman, a lawmaker for the Greater
London Assembly, the citys local parliament,
said in an e-mail on Nov 28. Whats going to
happen with the stadiums that are going to
be built for the Olympics?
The London-based Football Association
says it needs two months after building ends
to prepare Wembley for the FA Cup final. The
governing body has Cardiffs Millennium Stadium on standby for the showpiece.
Sydney-based Multiplex is still saying they
will make the completion deadline, Wembley
CEO Michael Cunnah said on Nov 24. There
are no changes to Multiplexs plan to complete the stadium by its March deadline, said
Mathew Chandler, a Sydney-based spokesman, in a Nov 28 e-mail.
Wembley will finish on time if the
weather holds, said Tom Kelly, an organiser
with the London-based GMB steelworkers
union, on Oct 18.
Nine cranes and 3,000 workers are on
Wembleys site. Multiplex said on Nov 2 that
steel costs may rise by 25 million and in February said it probably wont make a profit on
the project. In April 1996, the cost was forecast to be 180 million.
Wembley will be restricted by local laws
to 25 sports events a year, forcing it to
host concerts by stars like Robbie Williams to
pay off debts of 426 million. It will sell luxury
seats for as much as 588 a soccer match.
Its going to be challenging to make the
financing work, said Michael Siebold, a Frankfurt-based lawyer specialising in sports projects,
in a telephone interview on Oct 21. Its a unique
situation because football-related income will
make up a fraction of whats needed.
The troubled project follows the Millennium Dome, a saucer-shaped entertainment
Wembley, the worlds most expensive sports stadium, will cost 757 million, five times forecasts and 62% more than New Yorks proposed Yankee baseball park
site that cost 491 million to build in 1999

and embarrassed Prime Minister Tony Blairs
government when it failed to attract tourists.
Funding difficulty
London was chosen by the International
Olympics Committee in July to host the 2012
games. Wembley and the Millennium Dome
will host Olympic events, according to organizers who are also planning to build an 80,000seat Olympic stadium and a 500-acre park
with facilities for 15,000 athletes.
Bets are off on Wembleys completion date
because demand for the wager has set our
alarm bells ringing, Clare, the spokesman for
Barking, England-based Coral, said in a Nov
17 telephone interview.
The proposed US$800 million Yankee baseball park, due to open in 2009, will have
50,800 seats and host 80 games a year. Londons Arsenal soccer club will open the
60,000-seat, 357 million Emirates Stadium in
August and have about 30 events annually.
The Football Association, the stadiums
owner, had difficulty raising funds. Germany-based WestLB AG provided a 426
million loan after JPMorgan Chase & Co
backed out. WestLB syndicated the loan and
now holds 55 million of Wembley debt,
said John Godfrey, a bank spokesman.
Wembley will be restricted by local laws to

25 sports events a year, forcing it to host concerts
by stars like Robbie Williams to pay off debt of
426 million. It will sell luxury seats for as much
as 588 a soccer match. The troubled project
follows the Millennium Dome, which
embarrassed Prime Minister Tony Blairs
government when it failed to attract tourists.
Sm_36_S194.pmd
36
The Millennium Dome, a saucer-shaped entertainment site, cost 491 million
Soccer history
Other funding came from government grants
and lottery proceeds. The stadium may refinance the WestLB loan or sell bonds to pay
it off, said Wembleys Cunnah, 47. The Premiership, the top English soccer league, increased revenue by 6% to 1.3 billion last
season and was more profitable than any
other European league, according to accountancy firm Deloitte & Touche. That
popularity may help Wembley succeed,
said Siebold.
There wasnt any point in building just
another Premiership stadium because there
are a lot of good ones, Cunnah said. We
had to be a step above that.
A 133m (436 ft) steel arch was installed
above Wembley last year and is visible across
London. Its two meters shorter than the London Eye, the Ferris wheel near the Thames.
Cunnahs challenge is to maintain the
2/12/05, 11:27 pm
reputation of the stadiums predecessor,

which was known for twin white towers and
the prestige of its soccer matches. The building will host home games of Englands national team, whose players include David
Beckham and Wayne Rooney, soccer league
deciders and rugby matches.
Riddled with inefficiencies

A crowd of 200,000 swarmed the first FA Cup
Final. Held there in 1923, it was known as
the White Horse Final for the police horse that
helped clear the field. Bolton beat West Ham
2-0. Englands national team defeated West
Germany 4-2 at Wembley in 1966 to win the
countrys only World Cup.
The name Wembley is famous all over
the world, certainly the football world, said
Matthew Holt of the University of Londons
Football Governance Research Center.
E
Bloomberg LP
SPORTS BUSINESS
BLOOMBERG
Beckhams income up amid waning appeal

| BY ALEX DUFF |
avid Beckham, soccers richest

player, increased his income last
year by about 33% from off-field
activities such as endorsing Gillette
Co razors, the latest accounts of his
Footwork Productions Ltd company showed.
The Real Madrid midfielder earned 17.3
million ($1 approx 0.33) in the year to Dec
31, 2004, after receiving 8.7 million in the 12
months to April 2003, according to the accounts made public recently at Companies
House in London. He made 9.96 million in
the eight months from May 2003.
The England captain also endorses AdidasSalomon AG, the No 2 maker of sporting
goods; Coty Inc, the worlds biggest maker of
perfume and cologne; and PepsiCo Inc, the
second-largest soft-drink producer. Beckham,
30, may not have many years left as a toplevel professional athlete and hes never won
a trophy in his two years at Real Madrid.
Beckhams image is evolving, Oliver
Butler, an account manager in London for
sports consultant Sport & Markt AG, said in a
phone interview. Its not just only football
that attracts companies, theres the whole
Beckham package: his looks, fashion, his
glamorous wife and children.
Beckham, a father of three, is married to 31year-old Victoria, a former member of the Spice
Girls pop group. She is listed as the company
secretary in the accounts and her father, Anthony, a 57-year-old electrician, is one of its two
The commercial standing of Beckham,

who has been criticised by some UK
media for his recent performances as
England captain, may hinge partly on
whether he leads the national team to
success at the 2006 World Cup in
Germany Butler, Sport & Markt AG
contract. A survey in May

by Sport & Markt showed
that about 76 million people in Europes five biggest soccer markets found
him appealing, a lower
rating than for Real Madrid teammates Zinedine
Zidane and Ronaldo.
Beckham earns 6.4
million euros ($1 approx
0.5 euros) in salary from
Real Madrid, the same
Beckham is beginning to plan for his life away from top-level sport
amount as its other sodirectors. Still, there are signs that Beckhams called galacticos, including Zidane, accordattraction for advertisers may be waning.
ing to Spanish media.
Real Madrid, which says its soccers
richest team by revenue, is trying to avoid
Not No 1
Vodafone Group plc, the worlds largest cel- a third straight season without a trophy for
lular-phone company, four months ago said the first time in 53 years. It already qualiit wouldnt renew his three-year endorsement fied for the last 16 of Europes Champions
the all-new off the edge
arts & culture for the businessperson

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> the triad business
> hisham rais
sign of the yeast
> patrick teohs
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arts and culture for the businessperson
League and is sixth in the Spanish league,

six points behind leader Barcelona.
The commercial standing of Beckham, who
has been criticised by some UK media for his
recent performances as England captain, may
hinge partly on whether he leads the national
team to success at the 2006 World Cup in
Germany, according to Butler.
Beckham is beginning to plan for his life
away from top-level sport. Two days ago, he
opened his soccer school in Greenwich next
to Londons Millennium Stadium. The David
Beckham Academy is the largest sports facility of its kind in Europe, with two full-size
indoor pitches, classrooms, a dining hall and
medical facilities.
This academy is something of a dream of
mine, and has been for a number of years, but I
never dreamt it would be as big as it is,
Beckham told reporters. This is for my future,
E
after I finish playing. Bloomberg LP
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centrefold!
hannah tan, khir
rahman, doreen tang
On celebrity and
Malaysian entertainment
free map!
gallery w/o walls
Unrealised Project #1
Membina Masjid, lebuhraya
and much, much more in our
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tapai
dato in love part 2,
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More fun in the hay! Swiss
milkmaids, Russian femme
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Hishamuddin Rais and

the Sign of the Yeast
teohlogy
Patrick Teoh on Big Business,
bottom lines and our behinds
infernal affair
three curious views of an
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meet bodilicious hannah,
giganormous khir &
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Closer than we think: An inside

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Sm_37_S194.pmd
37
2/12/05, 11:41 pm
THEEDGE
WEEK OF DECEMBER 5 DECEMBER 11, 2005
City&Country
Raising
the bar
Boutique-hotel
business to get
more challenging
Bangkok
slowdown
Luxury-condo
market losing
steam in Thai
capital
THE NEW
MAJESTIC
The Majestic Hotel makes way for a swankier hotel,

with all the heritage and old charm preserved
Loh Lik Peng, entrepreneur
and owner of the upcoming
New Majestic Hotel
Scc_Cover_S194.indd 1
12/2/05 6:34:01 PM
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| DECEMBER 5, 2005
CITY&COUNTRY
PROPERTY BRIEFS
Offshore
(
Prosperity REIT plans
HK$1.92 billion IPO
Cheung Kongs Prosperity REIT plans
to raise HK$1.92 billion ($1 approx
HK$4.58) in an IPO this month, following the US$2.6 billion Link REIT.
The company is raising money to buy
seven ofce and industrial properties
from Cheung Kong and other shareholders for HK$4 billion, a Bloomberg
report says.
The REIT plans to sell 888.2 million
shares at between HK$2 and HK$2.16,
according to sale arrangers. Yields
range between 5.31% and 5.73%. Prosperity REIT plans to x the price of
units on Dec 8, the wire report adds.
Cheung Kong will gain about HK$2.43
billion from the sale, which is being arranged by JPMorgan and Merrill Lynch.
Cheung Kong plans to subscribe as
much as 18.58% of Prosperity REIT,
while Hutchinson plans to purchase
up to 10.42%.
Hong Kong property sales slacken

Property sales in Hong Kong slackened further, with no units sold for
major launches, according to a JPMorgan Hong Kong property update
issued Nov 28. By comparison, 25
units were sold the previous week.
Recent launches like Harbour Green
and Chianti were frozen due to unattractive pricing, compared with the
secondary market. Much attention
was focused on seven projects, including Grand Promenade and Chelsea Court, with 5,000 units to be
handed over to buyers. According to
Hong Kong media reports, some 3,000
units have not arranged for mortgage
nancing and buyers are under pressure to dispose of units to avoid mortgage payments.
Meanwhile, developers are holding rm on selling prices for unsold
inventories. As a result, primary sales
prices were 30% higher than secondary market prices and liquidity was
channelled into the secondary market,
the report says. But given that most
developers have achieved their sales
targets, we expect primary sales to
remain sluggish until early next year,
Home
when there would be more hints on
the interest-rate trends, the JPMorgan
report adds.
Shanghais prime-ofce rents to rise

Prime-ofce rents in Shanghai are expected to rise 25% this year, while
rents in the mid and lower end are declining and vacancy rates rising, says a
recent Jones Lang LaSalle (JLL) report.
The rise in prime rents would be the
highest in recent years. Sales prices
have already exceeded US$3,000 psm
($1 approx US$0.60).
The JLL report forecasts that growth
in next years prime-ofce rents will
slow to about 10% in the Puxi district
due to this years high base and also
because companies are trying to cut
down on ofce space. It also predicts
that by 2008, the vacancy rate in Shanghais prime sector will rise to 20% due
to two big projects in Pudong the
World Financial Centre and Sun Hung
Kais Mei Shi Cheng which will add
320,000 sq m to the market.
Japan construction scandal sparks

quake fears
Susumu Ojima, president of Japanese
property developer Huser Management Ltd, has denied that he was
complicit in fraud. Ojima is among
a number of Japanese developers
who are being questioned in parliament about a construction scandal
this month, when architect Hidetsugu
Aneha admitted that he had falsied data to cut costs, says a media
report. This has raised fears that the
buildings he has designed may not be
earthquake proof.
It has been found that Aneha falsied data for at least 21 buildings. It
is also believed that Aneha designed
nearly 200 buildings in at least 20 prefectures. He has admitted that in the
course of a moderate earthquake, his
buildings might crumble, the report
added. The architect told reporters he
was under pressure to speed up projects
and cut cost. Theres erce competition to win contracts in Japan, even
though the construction industry is
recovering. Compiled by Denise Wee
Government to release nine

new sites
The government will release eight
new reserve list sites and one conrmed list site at Collyer Quay for
the rst half of next year (1H2006).
Under the reserve list, there will
be three hotel sites located at
Clemenceau Avenue/Unity Street,
Sinaran Drive and Bencoolen
Street.The improved regional economy and new tourist products offered in Singapore will boost tourist
arrivals, says the Ministry of National Development in its release.
More hotel sites will be needed to
support the growth.
In addition, three residential
sites on Simei Street 4, Bishan
Street 22/Street 25 and Westwood
Avenue and two commercial sites
on Orchard Road/Somerset Road
and New Bridge Road/North Canal
Road will be released. According
to Soon Su Lin, executive director
for investment properties at CB Richard Ellis, this is reective of the
more optimistic market sentiment
and lends support to several of
the governments strategic plans
for the country. These include
the planned development of attractions around the waterfront
of Marina Bay, the revitalisation
of Orchard Road and more hotel
sites to support the increased tourist arrival targets, she adds. The
total sites available in 1H can yield
about 4,320 private residential
units, 125,500 sq m of commercial
space and 1,305 hotel rooms.
Keppel Land to set up

$631 million ofce REIT
Keppel Land will set up a real estate investment trust (REIT) called
K-REIT Asia, with an initial portfolio of four ofce buildings worth
$631 million. The four buildings
are Keppel Towers, GE Tower, Bugis Junction Towers and Prudential
Tower (in which Keppel Land has
a 44% stake). Keppel Land plans
to distribute 60% of the units to
shareholders, who will receive one
unit for every ve shares they own.
Meanwhile, Keppel Land will retain
a 40% stake in K-REIT Asia. The
establishment of K-REIT Asia is in
line with our focus on unlocking the
value of shareholders, our growth
thrusts in the region and growing
our fee-based property fund-management business, Kevin Wong,
managing director of Keppel Land,
said in a release. Trading of units is
expected to start in the rst quarter
next year (1Q2006).
Sim Lian buys Lincolnsvale

Sim Lian has bought Lincolnsvale, a 39-apartment development, for $50.53 million in an
en-bloc sale. The site is about
35,392 sq ft and the selling price
works out to be $511 psf per plot
ratio. In addition, the niche developer bought an adjoining 1,802
sq ft strip of land for $2.2 million. Six developers took part in
the tender and winner Sim Lian
intends to build a 90-unit luxury
development on the site. According to CBRE, which brokered the
deal, the expected breakeven cost
is $730 psf and new launches in
the vicinity have achieved pricing
above $900 psf.
PICTURES: CHU JUCK SENG/THE EDGE SINGAPORE
City&Country
o
CC2 THEEDGE SINGAPORE
DBS sells two ofce buildings

DBS Group Holdings will sell
two office buildings DBS
Buildings Tower One and Tower
Two to funds managed by
Goldman Sachs for $690 million.
The two buildings have a net lettable area of about 875,000 sq ft.
Under the agreement, DBS will
lease back the areas that it occupies for eight years. Thereafter,
it has the option to renew the
lease for two three-year periods.
The buildings will be paid for in
cash, with 10% already deposited and the remaining 90% to
be paid on completion. Net book
value was $240 million as at
Nov 30. DBS will retain naming
rights for the buildings.
CapitaLand Japan fund buys

Hokkaido mall
CapitaRetail Japan fund, a CapitaLand-sponsored private retail
property fund, bought its fourth
Japanese mall for $79 million
from Japanese developer Central
Leasing System K K. The mall,
called Ito-Yokado Chitose, is the
second-largest shopping mall in
Chitose city in Hokkaido, Japan.
With this latest acquisition, the
asset size of the fund has grown
to $583 million. We have the
capacity to grow the funds portfolio size to approximately 150
billion ($1 approx 68.10) within the next three years, says
Liew Mun Leong, president and
CEO of CapitaLand. The prime
freehold two-storey mall has a
gross oor area of over 277,000
sq ft, and is master leased to ItoYokado, the second-largest retail
group in Japan. Compiled by
Denise Wee
12/2/05 6:54:57 PM
(Pic
CJS)
THEEDGE SINGAPORE | DECEMBER 5, 2005 CC3
CITY&COUNTRY
Raising the bar

PICTURES: GRACE INTERNATIONAL
New competitors in the boutique-hotel business may face difculty entering the market
| BY CECILIA CHOW |
Few players in the market

Both Loh and Lawadinata do not feel
the boutique-hotel business has become more competitive. I think the
market hasnt necessarily become
more competitive because there are
still very few players out there, says
Loh. There is really only Hotel 1929,
the Majestic Hotel and The Scarlet
and the total number [of rooms] of
all three is still quite small less
than 200. So, there is a lot more room
for other entrants.
We feel there are too few players and not enough competition to
put Singapore on the international
map as a boutique-hotel capital,
Lawadinata tells The Edge Singapore
in an e-mail interview. Lawadinata
is the executive director of his newly
formed hospitality company Grace
International. There is only one
luxury-boutique hotel in Singapore
The Scarlet. At this point, The
Scarlet has no direct competition
because of its unique positioning
and offerings.
However, Loh feels the bar as to
what a new market entrant needs
to do to create an impact has been
raised substantially. Given the highquality incumbents, new entrants
will have to do something really special and that could present quite a
high barrier to entry, he adds. But
it [also] means that Singapore is
likely to see more high-quality boutique hotels. This can only be good
Scc_3n6_S194.indd 3
Lavish, one of the ve themed suites in the hotel, is priced at $500 a night
Grace International invested US$35 million in The Scarlet
news. I think with rates starting to

rise, we will see more high-quality
boutique hotels coming onstream
in the next few years and thats
assuming room rates increase.
Shaun Poh, director and auctioneer at DTZ Debenham Tie
Leung, who had brokered the sale
of the former Regal Inn (now Hotel
1929) and Majestic Hotel, as well as
budget hotels in areas like Joo Chiat
and Geylang, has also been elding
more enquiries from new entrants
looking to buy boutique hotels in
the Chinatown area.
Newcomers will nd it difcult,
with strong competitors like Loh
and Lawadinata who have already
established a name for themselves,
unless youre better than they are,
he observes. Its not difcult to
come into the market, nd a hotel
and do it up. But if you want to be
more successful than [the incumbents], you have to come up with
something very different. Otherwise,
you will be seen as just another
copycat. The moment you come up,
people will automatically compare
you with the incumbents.
Incumbents looking to expand

The improvement in the hospitality
market in Singapore in the last 12
months has spilled over into the
rest of the hotel sector, including
the boutique and budget-hotel markets.Room rates have also increased.
Both Lawadinata and Loh are on the
lookout for more properties in Singapore and also in the region. We are
reviewing some potential sites in the
THE EDGE SINGAPORE
he talk of the town the past

year has been The Scarlet, an
84-room, ve-star, luxury boutique hotel on Erskine Road in
Chinatown. The Scarlet, which
was acquired and restored at a total
cost of US$35 million ($1 approx
US$0.60), opened last December.
The Scarlet is located at the site
of the former Inn of Sixth Happiness
boutique hotel, which was in operation from 1988 to the mid-1990s.
The new owner who took over the
site of the Inn of Sixth Happiness,
Geeson Lawadinata, an IndonesianChinese, has since converted it into
The Scarlet a trendy, opulent
boutique hotel that is housed in a
row of 13 two-storey shophouses
and a four-storey shophouse. The
shophouses, built in 1868, were the
living quarters of immigrant Chinese
women servants. The hotel won
the Urban Redevelopment Authority
Heritage Awards this year, and has
effectively set a new standard for
luxury boutique hotels.
Lawadinata is not new to the
boutique-hotel business. He also
owns The Royal Peacock Hotel, a 79room boutique hotel on Keong Saik
Road, located across the street from
the 32-room Hotel 1929, owned by
entrepreneur Loh Lik Peng. Loh
is currently doing up the 30-room
Majestic Hotel (renamed the New
Majestic Hotel) on Bukit Pasoh Road
for launch early next year (see pages
CC4 and CC5).
The lobby of The Scarlet
Poh: Newcomers will nd it difcult,

with strong competitors like Loh and
Lawadinata who have already established a name for themselves
region, but nothing is conrmed at

this moment, Lawadinata says.
Loh is also looking for another
property in Singapore, and has
also been scouting around in Kuala
Lumpur and Bangkok. His second
property, the New Majestic Hotel, is pitched as a more upmarket
product compared with Hotel 1929
on Keong Saik Road. Hence, it
wont be a direct competitor to the
existing property. But having said
that, even if their [Hotel 1929 and
New Majestic Hotels] positioning

was the same, I dont think there
would be any cannibalism, he
says. We only have 32 rooms in
Hotel 1929 and there is a substantial demand we just cannot meet. I
would love to [have] another hotel
pitched at the same level as Hotel
1929 but the New Majestic Hotel
had a conguration that called out
for something different.
Loh and Lawadinata arent the
only ones on the lookout. Anita
Tang, owner of the 42-room Chinatown Hotel, located on Teck Lim
Road (off Keong Saik Road) and adjacent to Hotel 1929, is also toying
with the idea of adding one more
hotel to her agship. At the moment, were just sending out feelers
and exploring, she says.
The Chinatown Hotel has been
around for a decade, having opened
its doors in 1995. As the hotel business took up a lot of her time, Tang,
who has four children, had consid-
ered selling the hotel a few years

ago to spend more time with her
family. But our thinking is that if
our business continues to grow, we
may just consider taking on another
property, says Tang. Perhaps its
easier to manage if its within this
area, or Chinatown.
In fact, new entrants and incumbents in the boutique-hotel business
have been focusing on the Chinatown area, observes Poh of DTZ.
For the boutique-hotel business,
[the buildings] need to have a kind
of charm, he says. And Chinatowns shophouses have that.
Incumbents also know Chinatown well, given that they already have properties there. When
it comes to Little India and Arab
Street, there are already people
who [are] probably doing a good job
there because they know that area,
says Tang. But given a choice, I
would rather stick to an area I know
CONTINUES ON PAGE CC6
12/1/05 10:23:05 PM
| DECEMBER 5, 2005
CITY&COUNTRY
COVER STORY
The new
MAJESTIC
PICTURES: SHIRLEY YE/THE EDGE SINGAPORE
The Majestic Hotel makes way for a newer and trendier luxury boutique
hotel, but with all the history and old charm preserved
| BY CECILIA CHOW |
ork is ongoing at the Majestic Hotel

on Bukit Pasoh Road, a sleepy road
at the edge of Chinatown. When
The Edge Singapore visited the site
two weeks ago, seven huge crates
that had just arrived from Europe were sitting
in front of the hotel. The crates contained
antique bathtubs from France and England.
The bathtubs weighed 200kg each, and it took
eight men to lift just one.
The Majestic Hotel is being refurbished and
has been renamed the New Majestic Hotel,
which should open by the rst week of January, and in any event, no later than Chinese
New Year, says owner Loh Lik Peng, 33. Loh
is renowned for the success of his rst boutique hotel, Hotel 1929, two years ago.
Hotel 1929 on Keong Saik Road opened
at the end of February 2003 in the midst of
the SARS outbreak. But the 32-room hotel
managed to break even within the rst eight
months of operation. Today, Loh estimates
that his return on investment at Hotel 1929
is easily above 15%. He had purchased the
former Regal Inn at an auction for $3.4 million in 2002, and spent another $1.5 million
doing it up. His total investment was just
under $5 million then. The building was
acquired through a mortgagee sale at the bottom end of the property market, he says.
Loh is condent he will achieve equally
high returns on investment for the Majestic
Hotel, which was also a mortgagee sale he
had snapped up at an auction in late 2003
for $7.2 million. I would expect to do just
as well from the New Majestic Hotel as it
was a similar purchase, says Loh. Con-
Loh: The New Majestic Hotel caters to the traveller who wants more frills, luxury and space and is prepared
to pay a little more for them
struction cost has gone up fractionally since,

but on a per-square-foot basis, its marginal.
But because this [New Majestic Hotel] is
twice the size [of Hotel 1929], of course
[the former is] much more expensive. He
declined to disclose how much he spent on
restoration works, except to say that the
amount spent is substantially more than
that spent on Hotel 1929, given that the
New Majestic Hotel will have more facilities

and new structures.
rst before expanding it into the boutiquehotel business. In the old days, the restaurant
had been famous for its Cantonese cuisine,
namely its sharks n dishes and yee sang
(raw sh). It was also the place for high society to hold wedding dinners in the 1970s
and 1980s.
Loh bought the building with its contents
intact so he could continue running the hotel
while drawing up plans for his new concept.
The New Majestic Hotel will comprise 30
rooms. Loh will also revive the Majestic Restaurant and turn it into a trendy 100-seater
restaurant that serves a wide array of Chinese
cuisine. A hotel and restaurant by the name
of Majestic has been on the site for 70-odd
years. So, I am looking to preserve the history
of the building both in physical form and in
spirit, he says.
Two months ago, Loh also bought the
adjacent three-storey shophouse for $2 million in a private-treaty sale. He intends to
turn the rst oor into a bar, to be named
Majestic Bar. As for the upper oors, there
are plans to convert them into more rooms,
but the plans are not conrmed and will be
subject to planning approval. Loh had purchased the historic shophouse at 41 Bukit
Pasoh Road from the family of the late Ong
Tiang Wee, a partner in the distinguished
law rm Laycock & Ong, one of the oldest
law rms in Singapore. (Minister Mentor Lee
Kuan Yew practised law at Laycock & Ong
from 1950 to 1959 as a legal adviser to trade
unions after his return to Singapore from
Cambridge, England.) The rm will vacate
the premises in early January.
The quiet, sleepy Bukit Pasoh area is
known as the Street of Clans as a number
of Chinese clan associations are still located
there. But with the opening of the New Majestic, Loh is set to transform the area
into a trendy place, just as he
has successfully turned
Buying a piece of history

The historic, 56-room Majestic Hotel had
been operating as a boutique hotel since
1928. The family that owned it
had started with the Majestic Restaurant
Loh
The original 56-room Majestic Hotel was a mortgagee sale Loh

had snapped up at an auction for $7.2 million
Scc_4t5_S194.indd 4
12/1/05 11:14:58 PM
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CITY&COUNTRY
PICTURES: KMC HOLDINGS
COVER STORY
ueant
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An artists impression of one of the six loft rooms at the New Majestic Hotel
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Loh purchased the shophouse next door at 41 Bukit Pasoh Road for $2 million two months ago
An artists impression of the revived Majestic Restaurant, which was famous for its Cantonese cuisine in the
old days
oh
is
ber
ted
Ma-
the Keong Saik Road (a former red-light district) into a hip boutique-hotel location with
Hotel 1929. He was one of two recipients of
the New Tourism Entrepreneur of the Year
award given by the Singapore Tourism Board
(STB) in March to new entrants in the tourism industry who have made a signicant
impact on visitors to Singapore.
Capitalising on local talent

For the New Majestic Hotel, he intends to ride
on STBs Uniquely Singapore campaign, and
showcase local talent. DP Architects, renowned
for its design of Singapore landmarks such as
Suntec City and Esplanade Theatres on the
Bay, is responsible for the architectural and
restoration works. Singaporean Colin Seah,
director of Ministry of Design, was appointed
the interior designer for the New Majestic Hotel. Seah is renowned for his work at Huu club
lounge and restaurant in Bangkok.
and they can just do their own thing. So,

every room is different, says Loh.
After numerous discussions with the Urban Redevelopment Authority, Loh has also
received permission to turn the old air-well
of the hotel into a swimming pool.
With an average room size of 40 to 45 sq
m (430 to 484 sq ft), the rooms at the New
Majestic are also larger than those at Hotel
1929. There will be 30 rooms, six of which will
be loft units, the largest rooms in the hotel.
Eight of the rooms will also feature outdoor
baths, which Loh had made famous at Hotel
1929. Room rates at the New Majestic Hotel
will range from $200 to $350 a night.
Target audience
The overarching theme for both hotels is
old shophouse with a modern take. He
sees the New Majestic Hotel and Hotel 1929
catering to a similar market but pitched at
I guess [Hotel] 1929 is for the younger traveller

and the New Majestic Hotel is for his older brother
or sister who can pay a little more! The concept is
an urban, [stylish] Singapore hotel that has cuttingedge design and aesthetics. Loh
However, when it comes to the design
of each room, Loh has chosen to work with
people who are not interior designers but are
from different creative fields. Hence, every
room at the New Majestic will be unique
and carry the signature of 10 local designers. They include film director Glen Goei
(famous for his hit movie Forever Fever in
1998); furniture designer Patrick Chia (who
was discovered by Philippe Starck); fashion
designer Wykidd Song (of the fashion label
Song and Kelly); famed fashion-show choreographer Daniel Boey; and creative director
Theseus Chan (famous as the illustrator for
the Sarong Party Girl series). This whole
hotel is about showcasing Singapore talent.
Thats why we have 10 Singapore artistes
Scc_4t5_S194.indd 5
different ends of the spectrum. They are

both highly individual, design-oriented hotels but [Hotel] 1929 caters to the traveller
looking for something really hip and affordable and the New Majestic caters to the
traveller who wants more frills, luxury and
space and is prepared to pay a little more
for them, he explains.
At Hotel 1929, 40% of patrons are corporate guests, although this gure uctuates
according to the time of the year. This is
relatively low for a hotel but [Hotel] 1929 is
hip and more likely to attract lifestyle-conscious guests, he says. Also, Hotel 1929 is
not really congured for business travellers
but we do have broadband Internet access
and other facilities. So, we do still appeal to
All the 30 rooms in the New Majestic will have different designs by local Singapore designers
the more trendy business travellers.

The New Majestic, on the other hand, is
likely to see more high-end corporate guests.
All rooms will feature fairly large work desks
and other relevant services, such as full wireless Internet broadband access. However, it
will probably appeal to the more design- and
lifestyle-conscious guests, he adds.
I guess [Hotel] 1929 is for the younger
traveller and the New Majestic Hotel is for
his older brother or sister who can pay a
little more! continues Loh. The concept is
an urban, [stylish] Singapore hotel that has
cutting-edge design and aesthetics. And yes,
I was also involved in the concept [for the
New Majestic], [right] through to the nal
furniture [selection].
Expansion plans
Loh plans to manage the New Majestic himself, just like what he is doing for Hotel 1929.
The thing about a 30-room hotel is that you
can manage it yourself, he says. If you have
500 rooms, you have to think twice.
He expects to have at least 30 staff, including a hotel general manager, at the New
Majestic. But there could be some economies

of scale achieved in terms of sharing resources
with Hotel 1929.
Although he has received many offers to
buy Hotel 1929, due to its high prole, he has
no intention of selling. [Hotel] 1929 is not
for sale, he says rmly. It is very protable
for me. So, I am sure given the dismal returns
in most of the property market, the returns
I get would certainly justify a substantial
capital appreciation. Neither does he intend
to sell the New Majestic. I dont think so
not given the amount of work thats gone
into it, he says.
The former lawyer has indeed turned
into a full-fledged boutique-hotel entrepreneur and a savvy property investor in a
few short years. And he is on the lookout
for more hotel properties in Singapore and
in the region. Im not really into resorts. I
prefer the city because its easier for us to
cross-market, he says. Resorts are a different type of market. He had been looking at
Bangkok and Kuala Lumpur but its really
tough to nd the right property [with] the
E
right combination of things.
12/1/05 11:16:16 PM
CITY&COUNTRY
Bangkok slowdown
CBRE
Singapore developers dont expect luxury launches to be affected but capital gains may be muted
| BY DENISE WEE |
angkoks sizzling luxury-condo market

appears to be losing steam. Launches
for the luxury condo, priced above
80,000 baht psm ($1 approx 24.38
baht) have slowed sharply, say consultants. Demand has also tapered off, hurt
by rising interest rates and oil prices.
During the third quarter (3Q), only one
luxury project with 54 units was launched
in the central business district and upmarket
area of Sukhumvit (popular with expatriates
and wealthy high-society Thais), according
to property consultant Jones Lang LaSalle
(JLL) (Thailand). This contrasts sharply with
the rst half of last year (1H2004), when a
total of 15 new projects and 1,601 units were
launched (see table).
There are several reasons for the slowdown in demand for luxury condos. According to Benjawan Suewongprayoon, associate
director of research and consultancy at JLL
(Thailand), in the past years, theres been
huge pent-up demand for luxury condos, as
projects were held off during the Asian nancial crisis. But Bangkoks residential market
started to pick up in 2000 and demand has
already been met. In addition, there are
now fewer investors in Bangkoks residential
market, as condo prices have exceeded precrisis levels and theres far less opportunity
for capital gains.
On top of this, oil prices have spiked since.
As Thailand imports a lot of its oil, the rise
in prices has a direct impact on the economy.
Buyers, worried about the economic outlook,
are more cautious about buying big-ticket
items like houses. Along with this, interest
rates have risen from 5.5% at the beginning
of this year to above 6%.
Scc_7n8_S194.indd 7
Luxury projects CBD and Sukhumvit areas

New sales (units)
New supply (units)
New supply (projects)
1H2004
1,502
1,601
15
The Innity at One Sathorn Square, which

sold out within six months. Prior to the
launch of The Met, it was the most expensive
condo in town, priced at 120,000 to 130,000
baht per sq m. Other players include Land
& Homes, Thailands biggest home-builder,
and Metro Machinery, a listed property and
construction company.
2H2004
872
651
5
1H2005
1,553
1,424
5
3Q2005
NA
54
1
Total condominium supply,

demand and vacancy rate
in downtown Bangkok
45,000
40,000
35,000
Units
%
Total supply
Total take-up
Chia: The super high-end segment of the [Thai]

market is less affected
nishing. And, Singapore developers are also

known for their expertise in property development, notes JLLs Suewongprayoon.
There arent many other overseas developers in the luxury-condo arena. However, a
few Thai developers compete with the Singapore developers. These include Golden Land
plc, listed on the stock exchange of Thailand.
Golden Land launched the ultra-luxurious
Amid the slowdown, Singapore developers

are set to roll out even more luxury condos.
Soon, F&N will launch The Pano, a 397-unit
luxury freehold project at Rama III Road on
the banks of the Chao Phraya river, Pitchon
tells The Edge Singapore in a phone interview
from Bangkok. Presently, the show suite at
the riverside has been completed and the
project is at the pre-launch sales stage, he
adds. Pricing will be between 78,000 and
126,000 baht per sq m.
In 1H2006, CDL plans to launch a 600-unit,
luxury condo project in Sukhumvit through its
private real-estate fund, Real Estate Capital
Asia Partners LP. On Dec 8, TCC Capital Land
will launch its 443-unit luxury condo in prime
area Narathiwad. It will launch another condo
60
Vacancy rate
50
40
30,000
Upcoming launches
CB RICHARD ELLIS RESEARCH
Against this backdrop, a handful of Singapore

developers will soon launch luxury condos
or have already launched them in Bangkok.
They include the likes of CapitaLand, Hotel
Properties Ltd (HPL), City Developments
Ltd (CDL) and Fraser & Neave (F&N). While
these developers are new entrants in the
Bangkok residential market, some of them
are already active in other sectors of the
property market, or have joint ventures with
Thai partners.
For instance, HPL owns the Hard Rock Caf
Bangkok, Hard Rock Hotel Pattaya and The
Metropolitan hotel in Bangkok. Last year, F&N
formed a joint venture with Krungthep Land.
Giant developer CapitaLand has teamed up
with TCC Land and jointly launched luxury
projects Athenee Residence and Villa Rachkru
last December and this February respectively,
under the name of TCC Capital Land.
So far, sales have been steady. According
to a CapitaLand spokeswoman, Athenee
Residence is fully sold, while the 70-unit,
low-rise condominium Villa Rachakru, is
more than 90% sold. Meanwhile, The Met,
a 66-storey condo with 370 units, by Singapore businessman Ong Beng Sengs HPL,
is 60% sold. And, it has set a new pricing
benchmark for luxury condos. Launched in
September, The Met costs from $445 psf to
$573.5 psf (150,000 baht per sq m) for penthouse units, says James Pitchon, executive
director of marketing agent CB Richard Ellis
(CBRE) (Thailand).
Generally, luxury condos by Singapore
developers command a premium in Bangkok
due to their prime locations and high-quality
JONES LANG LASALLE
Fraser & Neave will soon launch The Pano, a 397-unit, luxury freehold condo at Rama III in Bangkok
Singapore developers move into Bangkok
25,000
30
20,000
20
15,000
10,000
10
5,000
0
98 99 00 01 02 03 04 1Q 2Q 3Q
05 05 05
in Sukhumvit in 1Q2006, says a CapitaLand

spokeswoman. Pre-sales for its site in Soi
Mayalab, which will house 79 luxury units,
will start this month.
Will this slew of launches be affected by
the slowdown? The timing is quite important, says Suewongprayoon. We dont know
[whether upcoming launches will be affected]
CONTINUES ON PAGE CC8
12/1/05 10:41:41 PM
| DECEMBER 5, 2005
CITY&COUNTRY
UK mortgage approvals up
BLOOMBERG
Bank of England sees broad stability continuing in the housing market amid increased turnover
| BY CRAIG STIRLING |
ome-loan approvals by UK mortgage

lenders reached the highest in almost a year and a half in October,
suggesting a pickup in the US$6 trillion ($1 approx US$0.60) property
market is being sustained after a year-long
slowdown. Approvals rose to 113,000 when
adjusted for seasonal swings, the most since
May last year, from a revised 108,000 in September, the Bank of England said last Tuesday. That exceeded the six-month average
of 100,000 and the 108,000 median estimate
in a Bloomberg survey of 26 economists.
Europes second-biggest economy is on course
for its slowest pace of annual growth since
1992 after the end of a decade-long housing
boom helped curb consumer spending. Policymakers say a recovering housing market may
help household spending regain momentum
and underpin a gradual economic expansion
next year.
Theyre a lot stronger than expected and
it tells you the housing market is improving,
says George Buckley, an economist at Deutsche Bank AG. Theres denitely a recovery,
but its still not particularly strong.
The implied rate on the interest-rate futures
maturing in June next year rose one basis point
after the release of the report to 4.5%. The
contract settles to the three-month London
interbank offered rate for the pound, which has
averaged about 15 basis points more than the
central banks target for the past decade. The
pound was little changed at US$1.72 as at last
Tuesday morning in London.
The British Bankers Association (BBA)
said on Nov 25 that home loans rose to the
highest level in 16 months in October, gaining
40% in the past year. The mortgage market
gest mortgage lender, reported

last Tuesday that they were unchanged last month after rising
1.3% the month before. Property
website Rightmove said on Nov
21 that they gained for a second
month in November.
Bank of England governor
Mervyn King said on Nov 16
that the bank sees broad stability continuing in the housing
market amid increased turnover.
The revival in the housing market comes amid signs of improvement in consumer spending, which has helped fuel 53
consecutive quarters of economic growth. Household expenditure rose 0.5% in the three
months through September, the
most since the second quarter of
2004 (2Q2004), the government
said on Nov 25. Retail sales rose
in October for a third month by
0.2%, gures released on Nov
17 showed.
Consumers are still willing
to take on more debt to nance
their spending, according to last
Tuesdays report. Net consumer
credit, which includes debt not
secured against property, bank
Home-loan approvals by UK mortgage lenders reached the highest
in almost 11/2 years in October
loans and credit-card borrowing,
rose to 1.27 billion pounds ($1
seems particularly resilient, BBA director of approx 0.33) from 1.21 billion in September.
That was in line with the average in the previstatistics David Dooks said.
ous six months of 1.3 billion. Credit-card lending in October rose to 617 million, the highest
Nationwide, Rightmove
Housing market reports have also pointed to since May, from 439 million.
The gains added to record household debt
a pickup in prices in recent months. Nationwide Building Society, the countrys third-big- of 1.14 trillion during the month, compared
with 1.13 trillion in September, the Bank of

England said.
There are signs that households are straining to service their debts as bankruptcies
increase. Insolvency declarations by people
in England and Wales rose 46% in 3Q from
a year earlier, the government said on Nov 4.
Barclays, the countrys third-biggest bank, last
Tuesday said prot at its credit-card business
fell 17% amid rising costs, including provisions for bad debts.
Trailing condence
Consumers willingness to borrow and spend
has yet to be reected in a resurgence in condence, which slid to its lowest level in 21/2
years in October, a survey by GfK NOP for
the European Commission showed on Oct 31.
Nationwide Building Society said on Nov 9 it
fell to an 18-month low.
Condence may be tested further in December with the advent of the Christmas
season. Consumers spend 10 billion more in
December than any other month, according
to the British Retail Consortium, which represents 80% of retailers.
Retail industry views on the seasons prospects are mixed. Stuart Rose, CEO of Marks and
Spencer, the countrys biggest clothing retailer,
says the company expects a tough Christmas
as it avoids discounts and spending wanes.
Figures released Nov 22 by Footfall, a retail industry researcher, showed store visit
increased 8.5% in the week to Nov 20 as shoppers sought discounts. Hopefully, increased
numbers of shoppers on the high street will
be retained by rolling promotions across a
wide variety of stores and consumers will
continue to shop early for Christmas, says
Natasha Burton, Footfalls marketing manager.
Bloomberg LP
FROM PAGE CC3
because next year, oil prices could

be more stable, she adds.
CBREs Pitchon is more optimistic. He believes theres a healthy
level of demand for luxury condos
from local Thais who are buying to
live in as well as for investment.
And, in his view, the mass and midend of the market (pricing between
40,000 and 50,000 baht psm) has
been more severely affected, as affordability is key and buyers are
more price sensitive.
Capital upside limited

Even so, Bangkoks luxury market
is looking less attractive now than
two years ago. The residential sector has posted a full recovery since
the Asian nancial crisis. Presently,
a luxury project at the very top-end
costs 50% more than pre-crisis prices, says Pitchon. For some of the
older projects, prices have increased
about 20%, he adds.
Prices have been pushed up by a
near-doubling of construction costs
in the past decade and better-qual-
Scc_7n8_S194.indd 8
ity offerings. Bangkok is one of the

few real estate markets in the world
where pricing still bears a close correlation to cost of construction,
says Pitchon.
Next year, gains are likely to
be muted. JLLs Suewongprayoon
expects prices of luxury condos to
rise by less than 5% per annum
on average. Thats hardly stellar.
I dont think there will be signicant capital appreciation, except
for projects that are good, she
says. Meanwhile, speculative demand seems to have evaporated.
Over the past two years, I think,
yes [there were speculators], but
now I dont think so, she says.
Pitchon estimates that roughly
half of the buyers of luxury properties are owner-occupiers, more than
other regional markets like Hong
Kong. Indeed, many of the bigger
units of The Met have already been
snapped up. Bigger units, which offer lower returns, are generally less
popular with investors.
On the bright side, there are
fewer players in the market. Since
Thai banks tightened up

on project nancing midlast year, theres been an
exodus of smaller property
players. This means there
will be fewer launches.
We dont have the bubble frenzy, where you have
lots and lots of developers
launching projects at the
same time, says Pitchon.
He expects to see just
four to ve luxury-condo
launches next year.
Developers unfazed by
slowdown
For now, Singapore developers are seemingly unfazed
by the slowdown. A CapitaLand spokeswoman says HPLs The Met is 60% sold, and recently achieved
the Bangkok residential pricing of 150,000 baht of its penthouse units, a new
market has been performing benchmark, according to CBRE, its marketing agent.
strongly over the past two
pace seen in 2003 and 2004, she
years, supported by pentup demand for housing and strong says. This is healthy for the market
economic fundamentals. Generally, as it does not build up the property
home sales in Thailand continue to bubble, she says.
But CapitaLand plans to venture
be encouraging, although not at the
CBRE
Speculative demand seems to have evaporated

outside of Bangkok. The company
intends to pick up the pace of its
new projects, the bulk of which
are condominium developments, in
the next few years in Bangkok, Chiang Mai and Pattaya, the spokeswoman adds.
Chia Ngiang Hong, group general manager of CDL, doesnt expect
the groups upcoming Sukhumvit
luxury condo, which has a project
cost of more than 700 million baht,
to be affected by the slowdown.
The super high-end segment of the
market is less affected. We believe
the development will have its own
unique iconic appeal, he says. In
addition, with the projects strategic location in a conveniently
accessible and prime district of
Sukhumvit, we are optimistic it will
be well received by the Thai community and investors, he adds.
Although Singapore developers
dont seem too worried by the slowdown. One things for sure while
Bangkoks luxury-condo market
may not hit the ground next year, it
isnt likely to y either.
12/1/05 10:42:50 PM
MANAGING
YOUR
MONEY
THEEDGE SINGAPORE | THE WEEK OF DECEMBER 5 DECEMBER 11, 2005
Dividend
discipline
ABN Amros Wouter Weijand buys low and sells high
by focusing on dividend yields
| BY KELVIN TAN |
outer Weijand doesnt like angling

for stocks in crowded waters. As
ABN Amro Asset Managements
global head of High Income Equities overseeing some US$1.5 billion ($1 approx US$0.60) of assets, Weijand
prefers markets in which other institutional
investors rarely venture, such as New Zealand
and Finland. He says the hallmark of many of
these under-researched markets is exceptionally high-dividend-yielding stocks. In 2004,
when we told people that we liked Finland,
they would tend to say, Oh, come on. Finland! Finland is so small and it is not even in
the [global] benchmark, the 47-year-old
fund manager says in a recent interview with
The Edge Singapore. But a lot of companies
in Finland were offering dividend yields of
over 8% at that time.
By contrast, sticking to the well-trodden
path of choosing stocks that are components
of market benchmarks like the Morgan
Stanley Capital International (MSCI) family
of indices is a sure way of missing out on
attractive bargains. [MSCI] picks things that
are big, says Weijand. Thats the American way, right? If you are a really big, big
stock, then you go into the MSCI. And, big
stocks arent always cheap, he adds. In fact,
the biggest stocks during a bull market are
often the most expensive.
In 1989, for example, at the height of Ja-
Spw_1n2_S194.pmd
pans real estate and stock market bubble, Japanese banks accounted for about one-sixth of
the worlds stock-market capitalisation, recalls
Weijand. The 10 biggest Japanese banks were
really big in the MSCI [World Index], and everybody wanted to buy them just before they
fell 90% in value in 1990. The same thing
happened 10 years later with technology and
telecommunications stocks. In early 2000, just
as the Nasdaq market was peaking, they
formed a large part of key market benchmarks,
Weijand says. Unfortunately, investors were
all crushed by these big stocks.
Not that Weijand has anything against size
per se. We are not married to size; we are
married to yields, he explains. And, that focus on yields often prevents him from including stocks with swollen market caps in his
portfolio, because stocks the market is most
excited about usually dont offer attractive
dividend yields. Certainly, Japanese banks in
the late 1980s and technology stocks in late
1990s wouldnt have been of interest to him
as they yielded nothing in dividends. In general, Weijand confines his portfolio to stocks
that offer dividend yields exceeding 3%.
Conceived during tech bubble

Ironically, it was in early 2000 as many analysts were coming up with all manner of valuation techniques to justify ever-higher stock prices
on Nasdaq that Weijand started ABN Amro
Asset Managements high-income equity department. The idea came about from my concerns
Weijand: We are not married to size; we are married to yields
in the late 1990s that growth might not last forever, he recalls. In October 2003, he launched
his fund houses first high-dividend-oriented global equity fund in the Netherlands. Called the
ABN Amro High Income Equity Fund, it was an
instant hit. It was the largest equity fund
launched in the history of our bank in [the Netherlands], says Weijand, who has been in the
investment business for 22 years and lives in
Amsterdam. As at the end of October, the ABN
Amro High Income Equity Fund was worth 840
million euros ($1 approx 0.50 euro).
Since its inception two years ago, the ABN
2/12/05, 6:15 pm
Amro High Income Fund has generated total

returns in excess of 45%, beating the 38%
gains of its benchmark the S&P/Citigroup
High Income Equity Index. Weijand attributes
the good performance to the disciplined process of his income-oriented equity strategy,
which begins with a benchmark methodology that helps in the initial screening of stocks.
Any stock around the world that provides
a dividend yield of more than 3% for three
consecutive months is added to the funds
benchmark and universe of investable stocks.
CONTINUES ON PAGE PW2
PW2 THEEDGE SINGAPORE
| DECEMBER 5, 2005
PERSONAL WEALTH
EDITOR/REGIONAL MANAGING
DIRECTOR
Tan Boon Kean
(bktan@bizedge.com)
SECTION EDITOR
Ben Paul
(benjamin.paul@bizedge.com)
STAFF WRITER
Kelvin Tan
(kelvin.tan@bizedge.com)
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Koay Sook Kuan, Evelyn Tung,
Wong Ee Laine
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PHOTOJOURNALIST
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(shirley.ye@bizedge.com)
DESIGN DESK
Calvin Yuen, Christine Ong,
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PRE-PRESS DESK
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Kuah Choon Eng,
To Yen Suang
ADVERTISING +
MARKETING
REGIONAL GENERAL MANAGER |
Edward Stanislaus
(edward@bizedge.com)
MANAGER | T Shanmugaratnam
(t.shan@bizedge.com)
Colin Tan
(colin.tan@bizedge.com)
Simon Wong
(simon.wong@bizedge.com)
Wendi Yang
(wendi.yang@bizedge.com)
COORDINATOR | Sumi Ateck
(sumi.ateck@bizedge.com)
CIRCULATION-SUBSCRIPTIONS
Suresh Kumar
(suresh@bizedge.com)
ASSISTANT MANAGER | Rosniati Selamat
(rosniati.selamat@bizedge.com)
EXECUTIVE | Naziela Nasir
(naziela.nasir@bizedge.com)
ASSISTANT | June Cheong
(june.cheong@bizedge.com)
PUBLISHER
Singapore 069543
Tel: (65) 6232 8622
Fax: (65) 6232 8620
PRINTER
57 Loyang Drive
Singapore 508968
Tel: (65) 6543 2222
Fax: (65) 6545 3333
Fund active during crises

BLOOMBERG
MANAGING YOUR MONEY
FROM PAGE PW1
If their dividend yields drop below 3% for three consecutive months, however, they are kicked out of
the S&P/Citigroup High Income Equity Index, and
Weijands fund avoids them. That is a discipline
that adds a lot of value to our portfolio, he says.
Weijand and his team then screen all the stocks
that are included in the benchmark, and consider
the sustainability of their dividends, their financial
health and their valuations. Short-listed counters are
then further evaluated using fundamental analysis
and qualitative assessments like company visits before Weijand decides which ones to include in the
fund. We screen for stocks every month. And if
something crashes and it has attractive dividends and
is still a decent company, we will buy into it.
Buying distressed stocks

Weijand says the troubled pharmaceutical giant
Merck is among the stocks that have been included
in his portfolio recently. The companys dividend
yield spiked up to 5% as its share price plunged to
a low of US$26 in the wake of reports that its blockbuster drug Vioxx increased the risk of heart attacks and strokes. When Merck was trading at
US$90 [in late 2000], people were saying how fantastic it was. Now, at US$30, everybody doesnt
want to be associated with it, says Weijand, somewhat amused. Growth-fund managers want Merck
out of their portfolios so that they wouldnt need
to explain to their clients why they are still holding
on to that stock. While Merck potentially faces
thousands of lawsuits from past users of Vioxx,
Weijand believes that the litigation risks have already been factored into its share price. Yes, they
are in litigation, but fighting at the share price of
US$25 to US$30, not US$90.
Indeed, Weijand says his fund, which owns about
135 stocks, tends to be very active during crises,
because that is when the dividend yields of stocks
become very attractive. Much like Merck, Weijand
picked up tobacco and food company Altria Group
in a crisis moment when its share price plunged
to an all-time low of US$19 in 2000. At US$19, it
was yielding at 7% to 8%, and people still said
that was a terrible price to pay for the stock, he
recalls. Where have those people gone? They
have all gone silent because the stock [currently
at US$72 a share] is now trading four times as high
as it once traded.
Of course, buying stocks as they collapse can be
risky. If you buy a stock at 5% dividend yield, nobody knows if it will yield 6% tomorrow, concedes
Weijand. But when we buy distressed stocks, we
We welcome your
comments and criticism.
Send your letters to
The Edge, Raffles City Post Office
PO Box 218
Singapore 911708
Tel: (65) 6232 8622
Fax: (65) 6232 8620
e-mail:
feedbackspore@bizedge.com
Weijand says he is bullish about dividend-paying stocks in Asia, especially those

in Japan, which we think is finally coming out of the doldrums
dont buy at US$90, but at US$30. He reasons that

the low stock prices and high dividend yields act as
a form of risk control. To further reduce risks,
Weijand says his teams will engage in averaging
strategies when a stock falls further. What you do
is you buy a chunk, and when it falls more, you
close your eyes and buy another chunk.
More importantly, Weijand emphasises that he
doesnt just buy into any stock that offers a high
dividend yield. We do our homework before buying. We check the dividend stream, dividend policy
of the company, and try to talk to the management
about its financial position, he explains. If these
companies are really in financial trouble, they will
not be able to pay the dividends, so you have to
make sure the dividends are assured.
Are high dividends a fad?

With growth investing making a comeback in recent
times, some observers suggest that the dividend style
of investing may soon go out of favour. Yes, one
specific climate when dividend stocks will do less
well is in a very high-growth environment, admits
Weijand. But he isnt convinced there will soon be
another period of high growth as seen in the late
1990s. Growth managers have been talking about
a growth comeback for the past five years.
At any rate, dividend-oriented investing doesnt
necessarily preclude the buying of growth stocks,
he adds. Is Nokia a growth stock? At 60 euros [during its heyday in 2000], everybody was once going
wild about Nokia. At nine euros [at

its all-time low in August last year]
when it was yielding over 3%, it
came into our universe.
Another growth stock that
Weijand says he is sniffing and buying a little is global telecom giant
Vodafone. Its share price slumped
11% in a single day on Nov 15, when
the company revealed during its firsthalf financial results briefing that it
may have an unexpected US$8.6 billion potential tax liability arising
from its purchase of Germanys
Mannesman several years back.
While other investors are panicking,
Weijand has been watching the companys cash flow and dividends.
Vodafone is raising its dividends,
and it is now yielding more than
3.5%, he says. We take a very different approach.
Bullish on Asia
Geographically, Weijand says he is bullish about dividend-paying stocks in Asia, especially those in Japan.
We are actually overweight in Asia at the moment
by 4% in our global portfolio, and we see a particularly strong cyclical environment in Japan, which we
think is finally coming out of the doldrums.
Within Asia, Weijand notes that Japanese stocks
currently pay the lowest dividends. But that is fast
changing. He reckons that many Japanese companies have almost finished cleaning up their balance
sheets, and will begin raising their dividend payouts
when they are done. That will happen over the
next few years, he says. And at the same time,
Japans zero-rate policy will have to stop, he adds.
They will have to raise interest rates from zero,
and when that happens, you will see a pick-up in
the general yield level of every asset class in Japan, including dividends.
Reflecting Weijands bullishness on Asia and Japan, his fund house has launched the ABN Amro
Asia Pacific High Dividend Equity Fund. This new
fund, launched on Nov 18, is currently available only
to high-net-worth investors in Singapore. Weijand
says his new dividend Asian equity fund currently
with a portfolio of 50 Asian stocks will adopt the
same investment process as his global fund. We
will look for high-dividend-paying Asian stocks with
earnings momentum, and we hope some of that earnings momentum will translate into dividend momenE
tum as well.
Fund briefs
IMAS hires new executive director
The Investment Management Association of
Singapore (IMAS), which represents the
interests of fund management companies in
Singapore, has appointed local fundmanagement veteran Venkatagiri Mudeliar
as its new executive director. Mudeliar was
general manager at Dresdner Asset
Management from 1996 to 2003. Before his
stint at Dresdner, he worked for DBS Bank
and DBS Asset Management for 24 years.
According to IMAS, Mudeliar will coordinate
the associations work on regulatory, investor
education and development issues. He
officially joined IMAS last Thursday.
Mudeliars predecessor at IMAS, Andrew
Kwek, resigned in October to take up the
position of head of institutional sales at
Deutsche Asset Management.
Pseudonyms are allowed but please state

your full name, address and contact
number for us to verify.
Fund managers still like drugs

Professional investors view pharmaceutical
stocks as the most attractive sector in terms
of valuations, and utility stocks as least

appealing, according to the latest Merrill
Lynch Survey of Fund Managers.
The survey, which was carried out from
Nov 3 to 10 and polled 290 global fund
managers managing some US$945 billion
($1 approx US$0.60) in assets, found that
39% of global asset allocators are
overweight the pharmaceutical sector.
Technology and insurance stocks are the
second and third most favoured sectors,
respectively. In fact, investor sentiment
towards insurance stocks saw the biggest
improvement among all 11 sectors featured
in the survey. According to Merrill Lynch,
26% of fund managers polled say they are
now overweight insurance stocks, up from
9% in October.
At the other end of the spectrum,
telecom stocks seem to be losing favour
with many global fund managers,
slumping from a 5% overweight position
in October to a 13% underweight
position last month. The least appealing

sector is utilities. Some 52% of fund
managers recently surveyed say they are
underweight the sector.
In terms of geographical plays, Japan is
likely to be the hottest market over the next
12 months. Some 44% of managers polled
say they would most like to overweight
their portfolios in Japan relative to the US,
Eurozone, UK and emerging markets over
the next year. Merrill Lynch says Japan also
remains the market that most institutional
investors believe has the best outlook in
terms of corporate profits. Besides having
cheaper stock valuations than the US, Japan
is also seen as having the most undervalued
currency, adds the investment bank.
More rate hikes for Malaysia

Malaysia raised its overnight interest rates by
30 basis points to 3% last week, in the face of
persistent outflows of capital. Some analysts
say it could be just the first in a series of
interest-rate hikes over the next few months.

Malaysias foreign reserves fell RM5.2 billion
($1 approx RM2.20) during the first half of last
month. That followed a RM12.4 billion decline
in October and a RM1.5 billion fall in
September. This persistent outflow of capital
has negatively affected the Malaysian stock
market, which is the worlds sixth worstperforming bourse on a year-to-date basis.
Malaysian equities measured by the Kuala
Lumpur Composite Index have lost about 1%
since the beginning of the year. Another 50
to 75 basis points can be expected in 2006 to
close the gap with US interest rates and
stabilise capital outflows, notes a research
report from DBS Bank.
Malaysias real economic activity seems
reasonably robust, with third-quarter GDP
growth coming in last week at 5.3%,
stronger than the second quarters 4.1%.
That could further support the view that the
countrys interest rates are on the way up.
Compiled by Kelvin Tan
E
Spw_1n2_S194.pmd
2/12/05, 6:16 pm
| DECEMBER 5, 2005
PERSONAL WEALTH
Power donors in the US

BLOOMBERG
Aging boomers deploy their formidable wealth to charities and good causes
| BY SUZANNE MCGEE |
Spw_4n5_S194.pmd
Bill and Melinda Gates US$28.8 billion foundation, the most visible and renowned for its efforts to improve
the health of poor children worldwide, took just five years to become gargantuan
Hawaii as a missionary and then accumulated

a fortune from agriculture and land-holdings
in both California and Hawaii.
While her husband battled to save souls
and make money, Mary Tenney Castle collaborated with renowned educators like John
Dewey and began to fight for the creation of a
racially and ethnically integrated kindergarten system in Hawaii. In 1943 exactly a
century after Marys arrival Hawaii became
the first US territory to introduce a statefunded universal kindergarten system.
The US$50 million Castle foundation now
has a lot more company in Hawaii. These days,
meetings of big, regional grant makers are
likely to include new residents like financial
entrepreneur Charles Schwab, who launched
the US$144 million Charles & Helen Schwab
Foundation in September 2001, and Intel cofounder Gordon Moore, who a year earlier
founded the Gordon & Betty Moore Foundation, now with some US$5 billion in assets.
The rise of such philanthropy is a natural
result of the US burgeoning wealth. Last year,
2.7 million people in North America had a net
worth of at least US$1 million, up 23% in just
two years as markets firmed, according to the
consulting firm CapGemini.
When people build their wealth, they inevitably realise there is only so much they can
consume, says Charles A Lowenhaupt, managing partner of Lowenhaupt & Chasnoff, a St
Louis, Missouri-based law firm, and a veteran
philanthropic adviser. Eventually, they end up
trying philanthropy because it gives some meaning to their wealth, and then only after time do
they realise they need to have a process and a
structure to make that work effectively.
Family foundations
Sure, there are other vehicles that a budding philanthropist can turn to, such as donor-advised funds and charitable remainder
trusts. But the lure of ones own foundation can be irresistible.
For starters, theres the cachet. You might
never be as wealthy as Bill Gates or fellow
Microsoft co-founder Paul Allen, possess the
glamour and allure of Richard Gere or the business savvy of Jack Welch, let alone the political connections of former President Bill Clinton.
But, just like them, you can have your own
philanthropic foundation. It can be named after you and grant money in your name to a
range of causes you fervently believe in now
and for decades after your death.
But the biggest reason to set up a foundation is to exert firm control over the process of
giving. A foundation allows the donors and the
Heavy hitters
Heres a sampling of the most prominent family
foundations
Silicon Valley
Bill & Melinda Gates Foundation
William & Flora Hewlett Foundation
David & Lucile Packard Foundation
Gordon & Betty Moore Foundation
US$28.8 bil
US$6.47 bil
US$5.3 bil
US$5 bil
Old guard
Ford Foundation
Lilly Endowment
Robert Wood Johnson Foundation
WK Kellogg Foundation
Andrew W Mellon Foundation
US$10.5 bil
US$8.6 bil
US$8.3 bil
US$6.8 bil
US$5.3 bil
Fast growers
Buffett Foundation
US$2.7 bil
Including US$2.6 billion of Berkshire
Hathaway stock it is due to receive from
the late Susan Buffetts estate
John Templeton Foundation
US$895 mil
It recently received US$550 million
from Sir John Templeton
Jack Kent Cooke Foundation
US$541 mil
It grew 50% after receiving a bequest
from Cookes estate
trustees they name to dispense charitable largesse to the causes of their choice. The main
requirements: that they pay out at least 5% of
their assets each year in grants and pay 2% of
their net investment income in an excise tax.
If you have chosen to set up a foundation,
its because you see having control as a big
plus, says Tim Walter, CEO of the Association
of Small Foundations in Bethesda, Maryland.
That incentive has moved to the fore as
many charitable groups that were often the
recipients of individual largesse have ended
up in the spotlight because of conflicts of interest, incompetence or outright fraud and
abuse. Most donors vividly recall the fall from
grace of William Aramony, the former CEO
of United Way of America, who in 1995 was
convicted of fraud and sentenced to seven
years in a federal prison.
Three years ago, the head of the Washington, DC branch of United Way was found to
have stolen US$497,000 from the organisation.
Even the Red Cross hit a bumpy patch when
it was disclosed that it allocated donations in
the wake of the Sept 11 terrorist attacks to a
reserve fund, a long-standing practice that it
hadnt publicised to donors. Its hardly sur-
30/11/05, 9:04 pm
CHRONICLE OF PHILANTHROPY; FOUNDATION WEBSITES; IRS FILINGS
hen it comes to giving, the rich

are increasingly like Frank
Sinatra: They want to do it their
way. They want to give their
money to their causes on their
schedules. And they want to make sure the
legacy lives on. Thats why theyre rushing to
set up their very own foundations.
Over the past six years, the number of family foundations in the US has increased by
more than 60%, to about 33,000. In other
words, roughly six new ones have sprouted
every day.
The Bill & Melinda Gates Foundation, with
a cool US$28.8 billion ($1 approx US$0.60),
is the most visible. Most of the others quietly
pursue their own customised giving programmes, with decidedly more modest funding. In fact, studies by the New York-based
Foundation Center suggest that more than
two-thirds of all family foundations have less
than US$1 million. Although foundations like
those are sometimes dismissed as too small
to be efficient, for either the donors or the
grant seekers, looks can be deceiving. Many
of todays small fry could become tomorrows
giants. Millionaires, says Virginia Esposito of
the National Center for Family Philanthropy,
are creating shells of foundations with the
aim of shifting more of their assets, and ultimately big chunks of their estates, into the
vehicles. As the baby-boom generation gears
up for the hereafter, those inflows could soon
swamp the US$195 billion in family-foundation assets in 2003, the last year for which
there is complete data.
Were entering an era of mega-philanthropy, declares Stephen McCarthy, a trustee of a US$8 million foundation set up by his
father, a former managing partner of investment firm Lord Abbett & Co.
Dont believe it? Its already happening.
The Gates foundation, renowned for its efforts
to improve the health of poor children worldwide, took just five years to become gargantuan. But within the next decade or so, it may
be dwarfed by the now relatively small foundation of financier Warren Buffett. The bulk
of the estate of Buffetts late wife Susan
shares of Berkshire Hathaway stock currently
worth some US$2.6 billion are due to flow
into that foundation soon, bringing the total
to US$2.7 billion. Meanwhile, Buffett has
made it clear he intends to leave the bulk of
his own estate to charity, with much of it going to his own foundation. His net worth is
estimated at US$40 billion.
The thousands of other family foundations
set up by everyone from captains of industry and movie stars to hedge-fund managers
and owners of family businesses are also
brimming with possibilities. At their best,
newly minted foundations may improve the
world in ways that cant even be imagined
today. Many of these foundations are well
positioned to provide patient, long-term support for risky or controversial projects at
which other donors turn up their noses.
The organisations that we fund know we
will be there through thick and thin, regardless of what the new, new thing is or of the
economic environment, says Alfred Castle,
executive director of the countrys oldest family foundation, the Honolulu-based Samuel N
and Mary Castle Foundation.
Alfred is the fifth generation to oversee the
foundation, which was launched nearly 112
years ago by the family matriarch the
widow of a New Englander who arrived in
prising that distrust has grown among donors

and that they want as much control as possible over their giving, says Eugene Tempel,
executive director of the Center on Philanthropy at Indiana University.
Many matriarchs and patriarchs zero in on
family foundations as a way to create or express a set of common values among the different generations of a family. Simply writing
a cheque to an art gallery or college doesnt
achieve that. The foundation can be vital in
getting children to understand the family philosophy when it comes to wealth, and as a
way to perpetuate family values, says Rod
Wood, executive vice-president of Wilmington
Trusts wealth-advisory services.
The boom in family foundations began in
earnest in the tech boom of the late 1990s.
The number of foundations jumped nearly
20% in 2000 alone, according to the New
York-based Foundation Center. In the four
years through 2003, the number grew at a
compound annual rate of 10.5%. While data
isnt yet available for 2004 and 2005, the total
will top 33,000 this year if the growth comes
in at a more modest 5% a year.
Opportunities and dangers

The growth has brought not only new opportunities for families and charitable causes but
also some new dangers. Every philanthropic
consultant or adviser has anecdotes about a
foundation founder who was overly ambitious,
poorly organised, badly advised or worst of
all corrupt. While corporate miscreants have
dominated the newspaper headlines, foundations have been among those tarnished by governance scandals of the last few years.
The Missouri attorney general told the
Ewing Marion Kauffman Foundation to
change the way its board operates and rewrite
its ethical rules in the wake of a compensation-linked controversy. Compensation is a
frequent source of controversy: In the wake
of the deaths of the founders, the two trustees of the US$7 million Lucille and Vic Wertz
Foundation of Chicago paid themselves US$1
million in compensation while donating only
US$175,000 to charities.
Paul C Cabot Jr of Boston boosted his compensation from a foundation established by
his father to US$1.4 million in 2001 in order
to pay for his daughters lavish wedding,
while donating a mere US$400,000 or so to
charities. Since then, Cabot has agreed to reimburse the foundation to the tune of US$4
million that he used to pay his mortgage and
finance his yacht.
Tighter control
If many more cases like those come to light,
there could well be a regulatory backlash. Two
years ago, William Josephson, then supervisor of charities under New York Attorney General Eliot Spitzer, proposed outlawing all private foundations with less than US$20 million, saying they were too hard to police. The
idea didnt take hold, and Josephson has since
retired. But a similar plan could well come
from another regulator at some point.
Already, foundation operators face a
goodly amount of legal requirements and administrative headaches. Foundations must
convene formal meetings, create a board, file
tax returns and manage assets, as well as research their giving activities.
Running a foundation also means keeping
an eye on how the funds are invested and ensuring that the investment policy will yield
enough return to keep funding the programmes
that trustees designate. Thats something that
THEEDGE SINGAPORE | DECEMBER 5, 2005 PW5
PERSONAL WEALTH
can easily be overlooked in the excitement of

finding new philanthropic ventures to back.
Only a tiny fraction of all foundations just
13% of those with assets of more than US$2.5
million have any paid staff, says the Foundation Center. So, the work falls squarely on
the backs of the philanthropists.
Donors who havent really thought about
their objectives when they set up their foundations have sometimes decided its simply
too much effort or expense, says Susan Price
of the Council on Foundations. For them, a
frequent tactic is to roll the foundation into a
donor-advised fund, an alternative vehicle
offered by community foundations and a
growing number of financial-advisory firms.
Donors have less control, but get more guidance and less paperwork.
Some experts maintain that foundations
make sense only if they have at least US$3
million to US$5 million. But the level of assets isnt the only consideration. I dont think
Id ever consider creating a foundation, says
Philip Smith, a Tulsa, Oklahoma-based energy-industry entrepreneur, even though the
US$10 million donor-advised fund he created
under the auspices of the Tulsa Community
Foundation is larger than most foundations.
I dont want to leave behind a foundation
that will get hijacked by its trustees and have
the money put into things I dont support or
believe in; that idea just drives me crazy, he
says. Instead, Smith is rapidly deploying his
capital by helping to establish microfinance
initiatives in India, Africa and Eastern Europe,
as well as contributing to the Tulsa Bible
Church, all through the donor-advised fund.
Another burden of foundations: making
sure the organisations that you back use the
money effectively. Foundation members love
to talk about the giving; they feel like when
they have done that, they have done it all,
says Eric Thurman, CEO of Geneva Global, a
philanthropic advisory firm based near Philadelphia. They forget about checking whether
their money has been spent wisely and
changed lives. Its a bit like patting themselves
on the head for being good investors without
checking to see how all the stocks have performed in their portfolio.
Despite all the obstacles, the swelling ranks
of family foundations seem sure to reshape
the philanthropic landscape. At the end of
the day, anyone who is intent on going beyond being a chequebook philanthropist is
signalling their purpose to become a more
thoughtful and strategic donor, says Lisa
Philp, head of philanthropic services at
JPMorgan Private Bank.
Charitable organisations, in turn, undoubtedly will have to become more strategic in identifying and approaching potential donors. With
thousands of foundations to choose from, the
organisations will need to find the ones that
really show interest in particular causes.
The well-managed foundations will help out
by clearly signalling the kinds of projects they
favour. Its not a hallmark of success when a
foundation gets 20 times more proposals than
it can fund, says Indiana Universitys Tempel.
Its a sign of a poorly run or understaffed foundation that either doesnt have clear objectives
or hasnt communicated them properly. Its a
sign of something going wrong that could ultimately prove harmful to the organisation or
the foundation or the sector.
grants to build playgrounds, fund music-education programmes and press for the creation
of effective pre-kindergarten education.
David Nee, executive director of the
US$100 million William Caspar Graustein
Memorial Fund, joined what was then a very
small foundation in 1991. While it had a tiny
endowment, its mission was potentially immense, and unfocused: funding pre-collegiate
education initiatives in the US Northeast. But
the son of the foundations creator was about
to redirect a large trust fund into the foundation, and wanted to ensure the money would
be well spent.
We established an advisory group, and
went to interview a wide array of individuals
to help us think creatively about how we

could have an impact, Nee says. Nearly 18
months later, the foundation had refocused
and narrowed its strategy, targeting elementary-school education in Connecticut. It also
actively reached out to other community and
philanthropic organisations, seeking to leverage its gifts by tying them to other initiatives.
The result? We have seen cities set up regional education-service centres, study parenting, and issue report cards and action programmes on the condition of children in their
communities, says Nee. Were willing to fund
the unglamorous things so they can do more
fund-raising and tell those donors that every
dollar of their donations goes to programmes.
Effective through the years

The rewards of good management can extend
for generations. Alfred Castle is grateful to his
great-great grandmother, for instance, for not
tying the hands of her descendants but leaving them with a flexible yet structured mandate under the terms of the foundation.
She knew that whatever changed, there
would always be some kind of need to improve
the lives of very young children, and thats the
language that is written into our trust document that means were able to continue being
effective, he says. Today, that translates into
Spw_4n5_S194.pmd
30/11/05, 9:04 pm
The flexibility, long-term commitment and

the willingness to fund these unglamorous
capacity-building or capital projects may end
up being the best legacy of foundations, say
philanthropy veterans.
Its all part of our national character, our
willingness to try to solve problems that look
like long shots, says Claire Gaudiani, a professor at the Heyman Center on Philanthropy
at New York University. Were really lucky
[to] have this pool of crazy rich people who
are willing to jump in and take action.
E
2005 Dow Jones & Co, Inc
Suzanne McGee is a financial journalist based

in New York City
| DECEMBER 5, 2005
LIPPER FUND TABLE SINGAPORE
PERSONAL WEALTH
By measuring the change in the NAV over time (after adjustment for reinvestment of dividends), one can
measure the investment ability of the fund management
company and the approximate returns an investor would
have received after deducting any front-end load or sales
charges.
To ensure that fair comparisons are being made, the
funds are broken down by type or sector of investment.
Within each sector, the funds are listed alphabetically with
their ranking, which shows the position of each fund
against its peers for each time period.
Average indicates the mean performance of all the funds
in the sector and the number of funds with data over that
time period. Wherever NA is displayed, it means that either
the fund has not been in existence over that time period or
the fund company has not supplied the necessary data.
/
The Edge-Lipper Fund Performance Table, compiled by
fund analysis company Lipper Asia Ltd enables existing investors to monitor the performance of their unit trusts and
assists first-time investors in their selection of unit trusts.
How to read the table
The table shows the performance of each of the funds over
the last one and six months, in addition to one, three and
five years. The performance is calculated on an NAV (net
asset value)-to-NAV basis with all dividends reinvested. The
NAV per unit is calculated daily by most funds by taking
the current market value of the unit trusts total assets, deducting all outstanding charges and then dividing the net
assets by the total number of units issued.
How to read the Lipper Ratings

The Lipper ratings are subject to change every month
and are based on an equal-weighted average of percentile ranks for Consistent Return, Preservation and Total
Return metrics over three-year periods. The highest 20%
of funds in each peer group are named Lipper Leaders,
the next 20% receive a score of 2, the middle 20% are
scored 3, the next 20% are scored 4, and the lowest 20%
are scored 5. Lipper ratings are not intended to predict
future results, and Lipper does not guarantee the accuracy of this information. More information is available
at www.lipperleaders.com.
Total Return: Lipper ratings for Total Return reflect
funds historical total return performance relative
to peers.
Consistent Return: Lipper ratings for Consistent Return reflect funds historical risk-adjusted returns, adjusted for volatility, relative to peers.
Preservation: Lipper ratings for Preservation reflect
funds historical loss avoidance relative other funds
within the same asset class.
About Lipper
Lipper, a wholly owned subsidiary of Reuters, is a leading
global provider of mutual fund information and analysis
to fund companies, financial intermediaries and media organisations. Founded in 1973 and headquartered in New
York, the firm tracks 125,000 funds worldwide through its
offices in major financial capitals in North America, Europe, and Asia.
Renowned for the high standard of accuracy in the
fund markets of US and Europe, Lipper today provides information to fund companies representing more than 95
per cent of US fund assets. Lipper entered the Asian markets more than five years ago, and now operates in nine
Asian countries.
Lipper Asia Limited

E-mail: Lipper.asia@reuters.com
Tel: (852) 2973 6600 Fax: (852) 2973 6622
Singapore-registered unit trust funds

9.9
14.29
28
17.24
27
67.9
25
37.37
26
31.31
8.19
8.86
20.26
50.02
LEGG MASON ASIAN ENTERPRISE TRUST
184.21
11.65
30
16.24
28
62.3
29
41.92
23
8.75
NAME
8.97
8.74
18.94
60.09
SCHRODER ISF ASIAN EQUITY YIELD A ACC
765.16
12.88
29
16.11
29
NAME
HENDERSON PACIFIC DRAGON
BOND: ASIA PACIFIC

ABN AMRO ASIA BOND A USD
ING (L) RENTA FUND ASIAN DEBT P CAP
ABN AMRO STAR ASIA BOND SGD
1.94
6.48
7.25
15.94
40.15
SHENTON ASIA PACIFIC
UOB OPTIMIX ASIAN BOND FUND
28.96
6.17
6.33
15.7
57.17
FIDELITY FUNDS - ASEAN FUND
SCHRODER ISF ASIAN BOND A ACC
895.25
3.04
3.87
22.82
62.8
SHENTON TWIN CITY
11.89
6.46
33
LEGG MASON ASIAN BOND TRUST
3.67
3.04
3.45
18.64
31.25
LEADER
LEGG MASON SOUTHEAST ASIA SPECIAL SITS TRUST
33.87
4.16
35
20.08
39.81
LEADER
OCBC SOUTH EAST ASIA SGD
ABERDEEN ASIAN HIGH YIELD SGD
4.2
INTERNATIONAL OPPS FDS ASIAN BOND A
2.49
1.12
1.89
11.04
DEUTSCHE PREMIER ASIAN BOND SGD
2.13
502.07
SCHRODER ASIAN BOND
-1.39
-1.65
ABF PAN ASIA BOND INDEX
7.02
34.66
AVERAGE (12)
283.72
4.58
17.42
46.99
80
64.01
27
38.7
25
LEADER
9.32
32
94.23
59.27
10
5.99
33
68.2
24
33.98
30
84.87
59.78
77.97
13
56.96
12
75.78
33
56.52
32
2
5.61
34
34
5.33
35
17.15
0.66
37
5.23
36
61
38
0.94
37
15.67
25
259.91
15.83
38
18.91
37
FIDELITY FUNDS - EMERGING MARKETS FUND
470.02
38.59
48.13
123.8
96.54
ING (L) INVEST EMERGING MARKETS P CAP
201.27
31.78
39.6
111.49
94.78
2415.97
32.04
39.53
128.93
111.54
LEADER
4
DBS ASIA KNOWLEDGE
49.78
8.44
8.2
AVERAGE (41)
28.8
PIMCO GIS GLOBAL REAL RETURN H RET ACC
88.65
31
36
SCHRODER ISF ASIAN SMALLER COMPANIES A ACC
SCHRODER ISF STRATEGIC BOND A ACC
30
9.76
4.65
CITI FCP CITIEQUITY ASIA EXJAPAN ANALYST A ORD USD
BOND: GLOBAL
14.34
32
3.36
INTERNATIONAL OPPS FDS ASIAN EQUITY A

4.19
31
7.52
9.1
SCHRODER ASIAN EQUITY YIELD
25.96
9.73
435.96
369.03
APS ALPHA SGD
1888.58
DBS ASIA BOND A SGD
141.8
HSBC GIF ASIA PACIFIC EX JAPAN EQ HIGH DIV AD
2.86
RANK
RANK
5-YEAR
11/27/2000
11/25/2005
1-YEAR
11/25/2004
11/25/2005
RANK
3-YEAR
11/25/2002
11/25/2005
12/31/2004
11/25/2005
RANK
1-YEAR
11/25/2004
11/25/2005
RANK
LIPPER RATINGS
CAPITAL CONSISTENT
PRESERVATION
RETURN
SCORE
SCORE
10/31/2005
10/31/2005
5-YEAR
11/27/2000
11/25/2005
RANK
YTD RETURN (%)

FUND
SIZE
12/31/2004
($ MIL)
11/25/2005
3-YEAR
11/25/2002
11/25/2005
RANK
LIPPER RATINGS
CAPITAL CONSISTENT
PRESERVATION
RETURN
SCORE
SCORE
10/31/2005
10/31/2005
RANK
YTD RETURN (%)

FUND
SIZE
($ MIL)
7.15
7.83
207.21
0
175.72
0.17
EQUITY: EMERGING MKTS GLOBAL
PIMCO GIS TOTAL RETURN BOND H RET ACC
3480.84
5.1
4.88
5.94
18
SHENTON INCOME SGD
1137.04
1.95
4.16
27.83
47.27
LEADER
66.93
1.87
2.46
16.33
35.79
LEADER
AVIVA EMERGING COUNTRIES EQUITY P1
6.18
17
16.75
16
ABN AMRO GLOBAL EMERGING MARKETS EQUITY A USD
1437.9
31.94
37.96
109.89
92.19
HSBC GIF GLOBAL EMERGING MARKETS EQUITY AD
280.75
28.85
36.67
97.4
10
84.83
SCHRODER ISF EMERGING MARKETS A ACC
114.56
29.18
35.89
114.69
75.05
SCUDDER GOF-EMERGING MARKETS EQUITY A2
155.49
29.75
34.8
123.01
90.38
65.12
28
34.45
111.32
67.16
10
662.99
24.86
10
31.04
110.27
102.16
UNITED INTERNATIONAL BOND FUND

CITI GLOBAL BOND
4.67
0.91
1.12
GROWTHPATH TODAY
26.09
-0.23
1.11
SCUDDER GOF-GLOBAL BOND A2
53.89
0.76
1.03
TEMPLETON GLOBAL TOTAL RETURN A ACC
101.14
-0.82
11
0.93
DEUTSCHE LION BOND SGD
139.99
0.25
0.28
LEGG MASON GLOBAL BOND TRUST
220.51
-2.33
15
0.27
UOB OPTIMIX WORLDWIDE BOND FUND
11.49
11
30.43
10
10
3.05
19
13.11
17
LEADER
SCHRODER EMERGING MARKETS
11
18.02
34.98
TEMPLETON EMERGING MARKETS A DIS

FIRST STATE GEM LEADERS SGD
13.38
23.47
12
30.09
10
FTF - EMERGING MARKETS A
53.67
23.6
11
29.6
11
105.59
94.48
38.72
30.07
12
36.16
11
113.64
10
90.91
10
1.87
10
0.11
12
9.13
16
24.75
15
LEADER
-1.81
13
-0.32
13
31.08
64.39
LEADER
34.29
FTF - GLOBAL BOND
-0.47
1766.84
TEMPLETON GLOBAL BOND A DIS USD
-2.12
14
-0.66
14
ABERDEEN GLOBAL EMERGING MARKETS SGD
76.3
58.6
-1.49
12
-0.92
15
14.92
31.93
LEADER
HSBC GIF BRIC FREESTYLE M2C
1561.56
86.24
-2.75
16
-1.69
16
12.23
10
32.63
HSBC GIF BRIC FREESTYLE M1C
265.92
FIDELITY FUNDS - INTERNATIONAL BOND FUND
630.22
-3.08
17
-2.39
17
18.12
38.23
DWS INVEST BRIC PLUS LC
992.65
HSBC GIF GLOBAL INVESTMENT GRADE BOND AD
152.48
-3.83
18
-2.75
18
11.44
12
28.87
11
AVERAGE (15)
584.5
83.2
-5.58
20
-3.97
19
14
31.59
EQUITY: EUROPE
31.65
FIDELITY FUNDS - EUROPEAN AGGRESSIVE FUND
OCBC GLOBAL BOND A SGD

SIS INTERNATIONAL FIXED INTEREST
SHENTON DYNAMIC BOND

UNITED GLOBAL BOND FUND SGD
19
-4.45
20
12.6
-6.2
21
-4.72
21
13.08
AVIVA GLOBAL AAA BOND P1
65.19
-6.57
22
-5.31
22
9.92
14
25.59
14
HSBC GLOBAL FIXED INCOME
7.83
-6.68
23
-5.45
23
10.3
13
25.63
13
431.01
-7.8
25
-5.67
24
38.04
-8.15
26
-5.79
25
2.95
-6.87
24
-6.01
26
DWS INVEST TOTAL RETURN BONDS LC

TEMPLETON GLOBAL BOND EURO A ACC
UNITED GLOBAL BOND FUND USD
SCHRODER STRATEGIC BOND
9.22
15
28.13
12
313.2
26.71
109.78
50.49
LEADER
19.31
90.64
71.55
LEADER
11.56
11.65
18.43
51.32
18
0.67
13
556.72
10.54
16.98
1454.06
10.94
15.95
77.92
LEADER
1409.58
9.89
10
15.5
68.19
-10.7
16
LEADER
LEADER
12.4
SHENTON GREATER EUROPE

HENDERSON HF PAN EUROPEAN EQUITY DIVIDEND A2
FIDELITY FUNDS - EUROPEAN LARGER COMPANIES FUND
-1.76
26
-0.68
26
13.42
19
31.87
PRU PAN EUROPEAN
AIG INTL FUNDS - SINGAPORE BOND
235.02
DBS ENHANCED INCOME SGD
5.17
16.19
1.7
1.93
6.19
11.46
37.72
HORIZON SINGAPORE FIXED INCOME ENHANCED SGD
153.22
UOB OPTIMIX SGD FUND
3.39
LEADER
LEADER
0.32
0.47
4.26
10.55
LEADER
LEADER
14.17
106.55
0.35
4.7
LEADER
HSBC SINGAPORE BOND R
0.34
0.09
0.29
2.04
LEADER
OCBC SINGAPORE FIXED INCOME INVESTMENT A
15.9
-1.23
-0.62
6.22
LEADER
LEADER
LEADER
CITIBOND SINGAPORE A
-0.78
1.27
-0.8
3.91
ING SINGAPORE DOLLAR BOND
3.09
-2.1
10
-1.54
-2.08
11.24
452.88
SCHRODER SINGAPORE FIXED INCOME
93.52
-0.21
10
0.5
5.6
11.85
904
24.66
30.31
82.42
28.22
EQUITY: ASIA PACIFIC

3
LEADER
129.05
OCBC NEW EQUITIES GROWTH
23.56
56.79
22.29
18.62
22.86
65.78
25.28
57.71
UNITED REGIONAL GROWTH FUND
19.19
71.5
SCHRODER PAN ASIA
16.8
20.33
76.07
43.41
LEADER
LEADER
3.7
15.11
17.71
87.03
48.36
7.75
12.4
15.79
53.8
-0.21
LEADER
PHILLIP ASIA PACIFIC GROWTH
11.48
10.83
15.51
109.71
68.46
LEADER
LEADER
HSBC GIF ASIA FREESTYLE AD
539.69
7.85
9.78
FIDELITY FUNDS - ASIA PACIFIC GROWTH & INCOME
963.21
13.18
298.68
15.41
19.48
75.94
33.69
1387.18
27.21
29.75
84.31
57.12
11
ABERDEEN PACIFIC EQUITY SGD
343.4
24.7
29.57
112.05
137.24
LEADER
LEADER
FIDELITY FUNDS - ASIAN SPECIAL SITUATIONS FUND
558.2
23.85
27.59
81.82
12
56.71
13
29.1
23.66
27.23
70.42
19
35.56
27
21.72
25.16
64.42
26
26.13
32
1804.92
22.67
24.56
104.16
115.49
LEADER
LEADER
UNITED APEC EQUITY FUND
AVERAGE (9)
NIKKO ORIENTAL GROWTH

TEMPLETON ASIAN GROWTH A DIS USD
OCBC ASPAC RECOVERY SGD
33.55
9.39
12
14.34
63.63
10.17
14.25
10
54.6
14
8.3
15
13.92
11
56.45
10
2635.66
7.59
19
13.68
12
15
4
-2.04
8.65
9.33
13
13.44
13
52.1
17
12.51
693.4
10.07
13.44
14
54.33
15
14.83
ABN AMRO EUROPE EQUITY GROWTH A
15.39
10.88
13.09
15
43.18
22
-22.42
19
23.7
8.14
16
12.2
16
47.88
20
2.01
12
76.18
7.54
20
12.03
17
54.74
13
0.04
14
UNITED EUROPEAN EQUITY FUND

SCHRODER ISF EUROPEAN EQUITY YIELD A ACC
ING (L) INVEST EUROPEAN EQUITY P CAP
477.06
7.76
18
11.82
18
55.05
12
7.2
SCHRODER EUROPEAN LARGE CAP EQUITY
38.44
6.21
26
11.26
19
49.58
19
2.44
10
DWS INVEST EUROPEAN DIVIDEND PLUS LC
566.01
6.41
24
10.9
20
100.14
6.76
22
10.84
21
52.77
16
3.66
492.79
7.95
17
10.79
22
41.51
23
-15.87
17
229.37
7.12
21
10.31
23
69.8
44.49
LEADER
6.27
6.5
23
10.08
24
47.19
21
2.34
11
8.83
6.36
25
10.06
25
35.83
24
-21.53
18
ABERDEEN EUROPEAN OPPORTUNITIES
13.6
4.22
28
9.02
26
55.97
11
13.62
4.6
5.07
27
8.38
27
61.83
227.26
-1.57
29
2.55
28
FTF - EUROPEAN EQUITY A

SCHRODER ISF EUROPEAN ABSOLUTE RETURN A ACC
SCHRODER EUROPEAN EQUITY ALPHA
INTERNATIONAL OPPS FDS PAN EUROPEAN A
ABN AMRO EUROPE OPPORTUNITIES A
39.02
0
34.59
12.99
1806.24
8.72
29
13.16
28
59.54
24
8.72
19
743.9
11.77
16.93
68.18
12.81
33
10.23
16.87
64.41
8.99
17.06
9.89
14.82
57.86
12.8
501.87
14.49
80.5
30.45
LEADER
0.12
9.37
14.21
68.57
259.19
AVERAGE (31)
10.05
15.46
67.9
16.26
EQUITY: EUROPE EX UK
HENDERSON EUROPEAN
HORIZON EUROPEAN EQUITY SGD
INVESCO CONTINENTAL EUROPEAN EQUITY A
OCBC ASIA INFRASTRUCTURE
HSBC GIF PAN EUROPEAN EQUITY PD
HENDERSON HF CONTINENTAL EUROPEAN EQUITY A2
EQUITY: ASIA PACIFIC EX JAPAN

FIDELITY FUNDS - SOUTH EAST ASIA FUND
60.65
ABN AMRO STAR EUROPE EQUITY
UNITED ASIA TOP 50 FUND
74.13
CITI PAN EUROPE EQUITY
13.98
AVERAGE (12)
FIDELITY FUNDS - PACIFIC FUND
14.4
TEMPLETON EUROPEAN A DIS USD
-1.24
67.1
14.81
14
ABN AMRO EUROPE EQUITY A EUR
-1.01
6.43
UNITED SINGAPORE BOND FUND
HSBC PAN-EUROPEAN GROWTH
11
9.31
SCHRODER ISF EUROPEAN LARGE CAP A ACC
29.95
COMMERZBANK SINGAPORE BOND

ABF SINGAPORE BOND INDEX
SCHRODER ISF EUROPEAN EQUITY ALPHA A ACC
9.68
25.2
25.97
INDUSTRIA
17
BOND: SGD
528.62
4332.16
M&G PAN EUROPEAN A EURO ACC
42.5
AVERAGE (28)
18.66
14.91
FIDELITY FUNDS - EUROPEAN GROWTH FUND
INFINITY EUROPEAN STOCK INDEX SGD
32.09
BNP PARIBAS EIFFEL FUNDS - EIFFEL ABS
3345.24
INVESCO PAN EUROPEAN EQUITY A
-5.46
3.6
38579.79
HENDERSON HF PAN EUROPEAN EQUITY A2
22.83
HENDERSON GLOBAL BOND A
M&G EUROPEAN (EX UK) A EURO ACC

AVERAGE (5)
EQUITY: EUROPE SM&MID CAP
FIDELITY FUNDS - EUROPEAN SMALLER COMPANIES FUND
2368.08
14.26
24.35
119.67
17.24
SCHRODER ISF EUROPEAN SMALLER COMPANIES A ACC
237.76
13.37
23.09
130.24
22.45
LEADER
LEADER
ABN AMRO SMALL COMPANIES EUROPE EQUITY A EUR
269.93
14.21
21.06
93.54
9.44
1.85
12.97
20.81
130.91
19.8
21.67
24.1
52.09
33
35.26
28
SCHRODER ASIAN GROWTH SGD
203.96
20.7
23.98
84.56
65.9
SCHRODER ISF PACIFIC EQUITY A ACC
259.98
20
10
23.25
68.46
22
49.31
16
43.76
21.53
23.16
10
98.83
106.06
LEADER
LEADER
20.4
19.78
12
23
11
76.46
14
47.3
19
33.99
29
LEADER
EQUITY: EUROZONE
FTF - ASIAN EQUITY A

OCBC ASIA PACIFIC SGD
ALLIANZ GLOBAL INVESTORS ASIA TIGER
M&G EUROPEAN SMALLER COMPANIES A EURO ACC

FIDELITY FUNDS - EUROPEAN MID CAP FUND
394.34
9.95
15.49
85.95
48.64
5.01
9.55
96.07
15.17
553.43
11.63
19.06
109.4
16.08
SCHRODER ISF EURO DYNAMIC GROWTH A ACC
1272.34
12.51
18.89
89.86
FIDELITY FUNDS - EURO BLUE CHIP FUND
1694.96
11.33
17.25
68.06
15.95
566.5
9.48
14.68
63.91
19.63
4055.05
7.04
13.1
84.08
32.47
LEADER
2
4
UNITED EUROPEAN SMALL CAP FUND

AVERAGE (6)
LEADER
3.11
19.91
11
22.96
12
60.06
31
M&G SOUTH EAST ASIA A EURO ACC
78.34
18.4
17
22.67
13
88.79
FIRST STATE ASIAN GROWTH SGD
95.12
16.94
21
21.99
14
69.58
21
54.17
14
AVIVA EUROPEAN EQUITY P1
404.38
19.27
14
21.61
15
71.53
18
44.96
20
SCHRODER ISF EURO EQUITY A ACC
18.02
18.83
15
21.43
16
69.67
20
39.42
24
FIDELITY FUNDS - EURO STOXX 50 FUND
788.21
6.96
11.34
56.38
-0.11
ABN AMRO EURO EQUITY A
170.86
6.52
9.95
42.82
-14.24
SCHRODER ISF EURO ACTIVE VALUE A ACC
878.94
4.03
9.33
98.91
LEADER
LEADER
1346.69
8.27
13.51
72
HSBC GIF ASIA EX JAPAN EQUITY AD

HSBC ASIAN GROWTH
DEUTSCHE ASIA PREMIER TRUST SGD
105.31
CAAM ASIA VISION
13
21.05
17
68.22
23
51.95
15
17.38
20
21.02
18
83.4
10
91.3
LEADER
7.46
HORIZON ASIA EX-JAPAN EQUITY SGD
15.47
26
20.95
19
72.76
16
47.33
18
AVERAGE (7)
879.49
ABN AMRO ASIAN TIGERS EQUITY A USD
16.42
22
20.84
20
63.26
28
43.56
22
EQUITY: FRANCE
15.5
ABN AMRO STAR ASIAN TIGERS EQUITY
18.12
18
20.79
21
83.19
11
72.04
FIDELITY FUNDS - FRANCE FUND
133.93
AVIVA ASIA PACIFIC EQUITY P1
18.49
16
20.72
22
61.06
30
48.49
17
AVERAGE (1)
27
19.26
23
57.47
32
32.53
31
23
19.25
24
72.01
17
64.4
FIDELITY FUNDS - GERMANY FUND
17.48
19
18.92
25
15.97
24
18.89
26
154.46
16.06
24.95
84.81
18.83
16.06
24.95
84.81
18.83
1860.09
13.74
19.8
98.93
8.24
339.63
13.64
57.88
-9.98
11.37
16.72
78.4
-0.87
EQUITY: GERMANY
16.05
74.74
14.88
251.52
HENDERSON HF PACIFIC EQUITY A2
1099.86
5.9
FIRST STATE DIVIDEND ADVANTAGE SGD
10.74
154.46
89.39
UNITED ASIA FUND
Spw_6n7_S194.pmd
19.38
1141.45
INVESCO ASIAN EQUITY A
ABN AMRO GERMANY EQUITY A EUR

73.92
15
44.51
21
AVERAGE (2)
1.12.05, 8:37 pm
THEEDGE SINGAPORE | DECEMBER 5, 2005 PW7
69.4
NAME
M&G JAPAN A EURO ACC
EQUITY: GLOBAL
UOB OPTIMIX CONTRARIAN FUND
-6.42
25
16.8
28.04
31.81
93.31
LEADER
LEADER
SCHRODER JAPANESE EQUITY
83.92
22.13
27.98
89.77
LEADER
SCHRODER ISF JAPANESE EQUITY A ACC
SCUDDER GOF-STRATEGIC GLOBAL THEMES A2
261.8
21.65
24.76
63.98
17.21
LEADER
LEADER
ABN AMRO BEHAVIOURAL FINANCE JAPAN A JPY
16.55
15
21.53
14
66.59
14
21.25
15
77.33
12.16
2
5
48.68
15.24
17
20.06
16
46.1
15
-0.92
1074.7
15.54
16
19.99
17
52.16
13
1.66
9.12
12.26
19
18
18
69.22
19
INTERGLOBAL
21.32
56.56
13
-5.25
22
HENDERSON JAPANESE EQUITY
1.9
13.59
18
17
21.04
53.85
18
-4.63
21
LEADER
ABERDEEN JAPAN EQUITY
10
7.59
22
14.08
20
41.92
17
17.94
20.96
54.58
16
13.43
INVESCO JAPANESE EQUITY CORE A
70.29
10.23
20
13.25
21
54.64
12
6.32
ACMGI-GLOBAL EQUITY BLEND PORTFOLIO A USD
13
16.92
16.96
20.57
56.89
12
-5.82
24
LEADER
FTF - JAPAN A
65.11
PRINCIPAL SELECT GLOBAL EQUITY
14.75
168.48
ACMIF - GLOBAL GROWTH TRENDS PORTFOLIO A
16.6
19.8
FIDELITY FUNDS - GLOBAL FOCUS FUND A USD
19.73
10
43.28
32
14
19.71
11
55.52
-12.02
14.92
12
19.12
12
54.85
15
7.05
-4.55
FIRST STATE SINGAPORE GROWTH SGD
12
OCBC SINGAPORE/MALAYSIA SGD
20
LEADER
11
18.55
13
14.18
15
18.22
14
46.42
26
13.93
16
17.8
15
41.84
33
11.2
3.23
HSBC GLOBAL GROWTH
13.91
17
17.64
16
65.4
-14.5
33
LEADER
3.93
13.18
20
17.31
17
44.19
30
-9.42
26
LEADER
22.15
13.81
18
17.19
18
79.77
7.6
11
LEADER
218.47
13.34
19
16.8
19
61.68
34.08
LEADER
LEADER
ABN AMRO MODEL FUND 6 EUR
50.17
12.93
21
16.66
20
37.56
36
LEADER
FIDELITY FUNDS - WORLD FUND
1630.52
11.91
25
16.52
21
58.88
11
8.23
10
LEADER
LEADER
UOB OPTIMIX AFFLUENCE FUND
6.78
12.69
23
16.25
22
29.61
46
-5.39
23
133.57
12.83
22
16.22
23
SHENTON GLOBAL OPPORTUNITIES

UNITED INTERNATIONAL GROWTH FUND
ABN AMRO GLOBAL EQUITY VALUE A EUR

OCBC MAP - GROWTH PORTFOLIO
15.1
11.65
27
16.03
24
48.03
23
LEADER
12.41
24
15.99
25
45.71
29
LEADER
23.93
11.02
33
15.79
26
6.07
11.58
28
15.73
27
38.73
34
-15.27
34
LEADER
HORIZON GLOBAL EQUITY SGD
477.48
11.67
26
15.65
28
47.79
24
3.08
16
SIS INTERNATIONAL EQUITY
141.45
11.55
29
15.57
29
44.08
31
6.64
13
77.12
11.54
30
15.16
30
45.81
28
-3.3
19
LEADER
24.8
11.24
32
14.81
31
46.92
25
18
LEADER
AVIVA GLOBAL EQUITY P1
117.36
11.47
31
14.41
32
34.91
40
-11.65
27
ABN AMRO GLOBAL EQUITY A USD
102.32
10.2
36
13.97
33
29.19
47
-22.6
36
LEADER
5.67
10.8
34
13.65
34
51.58
20
12.21
DBS EIGHT PORTFOLIO E
131.59
10.36
35
13.6
35
48.32
22
6.02
15
LEADER
ING (L) INVEST WORLD P CAP
200.82
9.64
38
13.34
36
35.6
38
-12.08
29
2.73
9.94
37
12.95
37
34.76
41
-21.36
35
690.54
8.47
45
12.77
38
59.99
10
LEADER
LEADER
SCHRODER ISF GLOBAL QUANTITATIVE ACTIVE VAL A ACC

LEGG MASON WORLDWIDE ENTERPRISE TRUST
SCHRODER ISF GLOBAL EQUITY SIGMA A ACC

INFINITY GLOBAL STOCK INDEX SGD
UNITED GLOBAL UNIFEM SINGAPORE FUND
UOB OPTIMIX WORLDWIDE EQUITY FUND

ING (L) INVEST GLOBAL HIGH DIVIDEND P CAP
UOB OPTIMIX SURE FUND
10.5
8.15
47
12.76
39
69.05
LEADER
LEADER
9.15
41
12.74
40
37.92
35
-12.86
30
SIS HIGH GROWTH FUND
38.99
8.82
42
12.25
41
36.9
37
6.43
14
LEADER
20.8
8.62
44
11.88
42
53.05
19
20.72
LEADER
21.9
40
11.66
43
66.97
LEADER
LEADER
7.56
50
11.53
44
34.34
42
78.62
FIRST STATE GLOBAL 100 GROWTH SGD
9.27
160.87
INVESCO GLOBAL SELECT EQUITY A
9.63
39
11.49
45
27.87
48
-13.57
31
ING (L) INVEST GLOBAL BRANDS P CAP
78.67
8.4
46
11.26
46
33.37
43
1.37
17
FTF - MUTUAL BEACON A
18.25
8.76
43
10.72
47
35.33
39
31.34
LEADER
27.88
ABN AMRO SOCIALLY RESPONSIBLE EQUITY A
85.19
7.93
48
10.64
48
23.92
50
972.72
7.46
51
10.6
49
54.27
17
DWS INVEST GLOBAL EQUITIES LC
12.66
7.65
49
9.84
50
45.87
27
SIS GROWTH FUND
57.03
6.9
52
9.77
51
30.05
45
LEADER
LEADER
TEMPLETON GLOBAL A DIS
ABN AMRO GLOBAL LEADER A EUR
5.82
PHILLIP GLOBAL BRANDS
52
17.99
51
9.46
53
50.87
21
5.32
57
8.79
54
25.32
49
3.43
ACCUMULATOR
9.74
53
5.99
54
8.71
55
32.35
44
-13.9
32
46.29
LEGG MASON JUNIOR TRUST
56
6.55
0.9
HENDERSON GLOBAL EQUITY
5.61
54.51
FTF - GLOBAL EQUITY A
5.81
55
7.8
-23.69
37
LEADER
56
22.98
1.95
0.38
59
3.09
57
12.33
54
48.77
0.92
58
2.56
58
15.69
52
LEADER
-1.18
60
1.2
59
55
-3.49
61
60
13.7
53
38.97
15.24
10
190.51
11.4
61
14.86
60
45.2
55
0.52
37
SCHRODER GLOBAL SMALLER COMPANIES
43.4
11.09
15.16
71.57
42.49
LEADER
SHENTON GLOBAL ADVANTAGE
39.2
7.24
13.7
109.72
119.06
LEADER
254.23
9.64
13.12
80.66
74.14
14.5
8.7
11.95
76.45
67.29
87.83
9.17
13.49
84.6
75.74
33.7
19.99
21.18
94.65
50.22
FIRST STATE REGIONAL CHINA SGD
190.82
14.36
18.47
107.1
68.27
LEADER
SCHRODER ISF GREATER CHINA A ACC
LEADER
SIS DEFENSIVE GROWTH FUND

SUT ETHICAL VALUE
SUT ETHICAL GROWTH
FTF - GLOBAL EQUITY INCOME
60.02
AXA WM - TALENTS
AVERAGE (63)
AVERAGE (4)
FIDELITY FUNDS - AMERICAN DIVERSIFIED USD
15.64
17.59
95.19
104.17
60.18
13.68
16.93
73.05
36.29
SCHRODER GREATER CHINA
14.83
14.81
16.75
88.52
457.72
13.05
15.13
59.08
11
101.88
83.39
82.05
30.03
101
13.92
13.84
364.56
12.93
12.94
13.44
10.44
13
12.27
0.93
12.86
10
11.97
10
75.19
12.51
12
11.55
11
113.75
125.47
LEADER
384.02
12.52
11
11.46
12
93.36
70.76
SHENTON GREATER CHINA
23.55
4.78
14
10.87
13
72.03
10
40.19
INTERNATIONAL OPPS FDS GREATER CHINA EQUITY A
26.36
FIDELITY FUNDS - CHINA FOCUS FUND

FTF - CHINA A
SGAM GOLDEN CHINA USD
HSBC CHINESE GROWTH
ABN AMRO CHINA EQUITY A USD
DEUTSCHE CHINA EQUITY A SGD
84.35
16.64
13.44
14
14.69
13
89.27
11
67.49
165.27
12.85
13.7
104.42
57.91
165.27
AVERAGE (1)
12.85
13.7
104.42
57.91
LEADER
35.73
53.26
206.29
100.79
35.73
53.26
206.29
100.79
ABERDEEN INDONESIA EQUITY SGD
41.7
16.14
20.38
133.91
193.24
FIDELITY FUNDS - INDONESIA FUND
174.08
1.96
4.21
132.79
129.72
107.89
9.05
12.29
133.35
161.48
7.6
42.46
27.12
6.32
32.89
9.78
LEADER
LEADER
0.65
18.32
-5.49
5.44
7.72
44.52
23.22
23.04
1
2
52.68
6.33
SPDR TRUST, SERIES 1
83922.9
10.24
13
19.79
17.72
15
-6.73
CITI US AGGRESSIVE GROWTH
11.98
15.48
19.75
42.65
DBS US GROWTH
11.03
15.69
18.62
26.17
12
-28.23
11
10.2
14.85
18.6
54.68
-21.24
LEADER
42.84
M&G AMERICAN A EURO ACC
2.56
15.55
18.42
SGAM US CONCENTRATED CORE USD
0.25
12.52
14.87
113.98
12.24
14.34
20.96
13
-53.36
12
HORIZON US EQUITY SGD
8.36
10.79
11
13.74
10
32.95
-11.37
ABN AMRO US EQUITY VALUE A USD
8.62
10.43
12
13.72
11
ABN AMRO US EQUITY GROWTH A USD
1167.76
11.11
10
13.44
12
17.19
16
-15.27
ISHARES S&P 500
2201.95
9.78
14
12.2
13
34.34
LEADER
FRANKLIN MUTUAL BEACON A ACC USD
2207.03
9.6
16
11.75
14
38.27
36.54
LEADER
ING (L) INVEST US ENHANCED CORE CONCENTRATED P CAP
401.36
9.68
15
11.67
15
30.96
-11.61
LEADER
SCHRODER ISF NORTH AMERICAN EQUITY SIGMA A ACC
14.35
9.07
17
11.43
16
28.12
11
30.2
8.94
18
11.15
17
30.9
-8.55
LEADER
1.2
5.51
19
8.94
18
30.69
10
-19.59
LEADER
-25.31
10
ABERDEEN AMERICAN OPPORTUNITIES

HSBC NORTH AMERICAN GROWTH
0.85
SMITH BARNEY SELECT EQUITY DIVIDEND PFOLIO 04 SGD

DIAMONDS TRUST, SERIES 1
3.96
21
7.03
19
20.49
14
129.63
INVESCO US EQUITY A
3.96
20
5.38
20
12.6
17
8.33
-1.21
22
1.11
21
13.81
21
31.42
17
-13.2
12
43.9
12705.13
ABN AMRO US OPPORTUNITIES A USD
26.85
15.86
4623.8
10.94
22
156.52
19.9
27.3
66.85
8.1
15.57
22.54
58.98
59.08
15.54
20.1
196.85
14.68
18.81
54.97
22.69
35.85
AVERAGE (23)
10.65
17.29
51.36
34.59
EQUITY: SECTOR BANKS&FINANCIAL

FIDELITY FUNDS - FINANCIAL SERVICES FUND
OCBC GLOBAL FINANCIAL SERVICES INVESTMENT A
ABN AMRO FINANCIALS A EUR
ING (L) INVEST BANKING & INSURANCE P CAP
UNITED GLOBAL CAPITAL FUND
COMMERZBANK GLOBAL FINANCE INDEX
0.94
12.11
16.67
49.62
23.4
CITI GLOBAL FINANCIAL SERVICES
18.42
11.21
15.53
54.55
20.2
AVERAGE (7)
67.97
14.24
19.75
56.05
28.96
5
5
EQUITY: SECTOR BIOTECHNOLOGY

ABN AMRO BIOTECH A EUR
51.1
FTF - FRANKLIN LIFE SCIENCE DISCOVERY A

UBS (SG) IF - BIOTECH
13.05
21.4
45.13
1308.52
DIT-BIOTECHNOLOGIE
11.78
19.31
28.16
-19.8
35.41
9.08
14.83
41.38
-28.8
6.26
2.96
10.93
12.73
-49.79
350.32
9.22
16.62
31.85
-32.8
286.21
29.52
31.46
96.42
75.02
LEADER
0.07
8.35
11.59
40.66
1.08
143.14
AVERAGE (4)
18.94
21.52
68.54
38.05
EQUITY: SECTOR GENERAL INDUSTRY

FIDELITY FUNDS - INDUSTRIALS FUND
COMMERZBANK GLOBAL TRAVEL & TRANSPORTATION INDEX
AVERAGE (2)
EQUITY: SECTOR GOLD&PREC METALS
27.18
27.09
20.33
110.05
225.15
27.18
27.09
20.33
110.05
225.15
-20.78
2.31
20.82
27.01
47.83
56.32
21.83
26.85
35.08
10
192.53
18.4
25.32
54.4
5.34
18.31
24.43
65.31
6.2
18.8
23.44
43.2
-20.6
95.6
16
22.33
41.67
-16.86
14.64
12.88
14.43
79.03
-37.73
LEADER
5.5
8.55
14
12.85
28.85
11
FIDELITY FUNDS - TECHNOLOGY FUND
364.21
9.84
10
12.47
26.05
13
-42.27
HENDERSON HF GLOBAL TECHNOLOGY A2
PRU GLOBAL TECHNOLOGY

M&G GLOBAL TECHNOLOGY A EURO ACC
OCBC ASIA TECHNOLOGY SGD
ACMIF - ASIAN TECHNOLOGY PORTFOLIO
OCBC GLOBAL TECHNOLOGY & TELECOM INVESTMENT A
100.32
61.63
100.32
61.63
1143.05
33.11
39.81
90.91
7.32
LEADER
OCBC JAPAN GROWTH SGD
79.7
26.38
30.18
136.24
39.39
LEADER
ING (L) INVEST JAPAN P CAP
316.5
23.1
29.48
58.76
11
-6.47
11
51.4
24.14
28.56
89.67
20.9
LEADER
75.12
23.34
27.57
75.88
-1.93
LEADER
49.8
14
-20.32
14
25.59
25.43
LEADER
327.15
9.82
11
12.41
10
43.47
-62.32
15
LEADER
131.6
8.87
13
11.57
11
42.11
-62.91
16
LEADER
UNITED GLOBAL TECHNOLOGY FUND
53.99
9.5
12
11.13
12
15.37
20
-42.86
401.52
9.96
10.77
13
20.63
16
-55.63
11
15.18
10.18
10.18
14
23.22
15
-18.57
403.69
6.44
19
9.6
15
18.79
18
-68.59
17
DIT-TECHNOLOGIEFONDS
SGAM ASIAN NEW ECONOMY
ABN AMRO INFORMATION TECHNOLOGY A USD
COMMERZBANK GLOBAL INFOTECHNOLOGY INDEX
5.6
7.67
15
8.6
16
23.86
14
-50.46
SCHRODER ISF GLOBAL TECHNOLOGY A ACC
26.95
6.92
17
8.46
17
17.38
19
-59.17
14
ABN AMRO STAR GLOBAL TECHNOLOGY
20.44
4.9
21
8.08
18
14.44
22
-69.52
18
UOB OPTIMIX E-COMMERCE FUND
17.89
6.72
18
7.87
19
19.53
17
-72.85
19
ABERDEEN GLOBAL TECHNOLOGY
133.6
7.27
16
7.87
20
28.19
12
-57.98
12
SCHRODER GLOBAL TECHNOLOGY
7.94
6.04
20
7.33
21
12.56
23
12.49
2.93
22
6.65
22
15.32
21
-54.16
10
1.45
1.21
24
4.94
23
12.1
24
-58.44
13
14.3
2.49
23
4.53
24
35.13
-14.18
10.26
24
13.3
24
31.81
24
-46.63
19
0
92.66
147.62
39.33
36.78
119.14
58.94
5.2
25.29
24.88
82.38
54.58
32.31
30.83
100.76
56.76
54.29
19.73
LEADER
54.29
19.73
152.08
101.63
151.03
7.3
11.25
184.32
7.98
10.57
167.68
7.64
10.91
21.24
20.55
24.63
DEUTSCHE SINGAPORE EQUITY
99.83
21.86
22.63
ABERDEEN SINGAPORE EQUITY
55.2
19.34
21.65
71.54
70.23
LEADER
97.77
14.75
17.84
76.36
28.43
LEADER
LEADER
36.38
EQUITY: SINGAPORE
EQUITY: JAPAN
22.37
LEADER
SGAM SINGAPORE DIVIDEND GROWTH
23.27
23.27
19.13
HENDERSON GLOBAL TECHNOLOGY
AVERAGE (2)
21.48
ABN AMRO CONSUMER STAPLES A EUR
606.67
FIDELITY FUNDS - CONSUMER INDUSTRIES FUND
15.24
FIDELITY FUNDS - JAPAN ADVANTAGE
5.69
EQUITY: SECTOR NON CYCLICAL CON
15.24
HSBC JAPANESE GROWTH
LEADER
21.03
AVERAGE (3)
395.82
DBS JAPAN GROWTH
LEADER
FIRST STATE GLOBAL RESOURCES SGD
395.82
OCBC JAPAN SGD
LEADER
COMMERZBANK GLOBAL ENERGY & RESOURCES INDEX
EQUITY: ITALY
INVESCO NIPPON SELECT EQUITY A
68.4
20.06
ABN AMRO ENERGY A USD
EQUITY: INDONESIA
AVERAGE (1)
16.29
16.68
AVERAGE (25)
FIDELITY FUNDS - ITALY FUND
70.61
EQUITY: SECTOR NATURAL RESOURCE
101.38
AVERAGE (2)
58.33
195.73
INTERNATIONAL OPPS FDS GLOBAL TECHNOLOGY A
101.38
AVERAGE (1)
9.59
UNITED GLOBAL INTERNET FUND
EQUITY: INDIAN SUB-CONTINENT

FIRST STATE REGIONAL INDIA SGD
14.47
HSBC GLOBAL TECHNOLOGY GROWTH
EQUITY: HONG KONG

SCHRODER ISF HONG KONG EQUITY A ACC
8.02
3167.05
HSBC GIF GLOBAL EQUITY TECHNOLOGY AD
147.66
AVERAGE (15)
12.35
FIDELITY FUNDS - AMERICA FUND
ALLIANZ GLOBAL INVESTORS PF - GLOBAL INTERNET
384.28
ABERDEEN CHINA OPPORTUNITIES SGD
56.79
EQUITY: NORTH AMERICA
UBS (SG) IF - ASIAN TECHNOLOGY
UNITED GREATER CHINA FUND

FIDELITY FUNDS - GREATER CHINA FUND
15
EQUITY: SECTOR INFORMATION TECH
EQUITY: GREATER CHINA

OCBC CHINA GROWTH SGD
15
0.11
42.73
FIRST STATE ASIA INNOVATION AND TECHNOLOGY SGD
FTF - GLOBAL SMALLER COMPANIES A
-32.22
18
AVERAGE (1)
EQUITY: GLOBAL SM&MID CAP
TEMPLETON GLOBAL SMALLER COMPANIES A DIS
18
65.98
UNITED GOLD & GENERAL FUND
4.77
UNITED GLOBAL IPO FUND
22.95
-1.9
AVERAGE (5)
INFINITY US 500 STOCK INDEX SGD
11.51
PHILLIP GROWTH
22
22
3.06
INVESCO US GROWTH EQUITY A
SCHRODER GLOBAL ENTERPRISE

INTERNATIONAL OPPS FDS WORLD VALUE EQUITY A
12.36
22.97
36.81
FTF - FRANKLIN US AGGRESSIVE GROWTH A
102.64
HSBC INTERNATIONAL SELECT ADVENTUROUS USD
21
22
SUT SAVINGS
15.06
10.05
DBS MENDAKI GLOBAL
9.7
18.26
SUT SINGAPORE EQUITY
UNIFUND
44.24
CITISELECT ASIA TILT ENHANCED GROWTH
5
5
EQUITY: MALAYSIA/SINGAPORE
28
185.07
HSBC GIF GLOBAL EQUITY AD
3
3
34.6
14
472.97
FIDELITY FUNDS - FPS GLOBAL GROWTH FUND
14.55
12
8.27
LEADER
16.59
8.2
-6.6
383.56
AVERAGE (22)
922.83
OCBC MAP - AGGRESSIVE PORTFOLIO
LIPPER RATINGS
CAPITAL CONSISTENT
PRESERVATION
RETURN
SCORE
SCORE
10/31/2005
10/31/2005
16.88
26.8
FIDELITY FUNDS - INTERNATIONAL FUND
5-YEAR
11/27/2000
11/25/2005
717.04
3323.36
ABERDEEN GLOBAL OPPORTUNITIES
FIDELITY FUNDS - SINGAPORE FUND

SINGAPORE INDEX FUND
101.66
14.68
16.81
77.06
14.13
STREETTRACKS STRAITS TIMES INDEX
16.33
79.53
LEADER
LEADER
UNITED GROWTH FUND
116.49
13.84
15.2
66.41
43.36
LEADER
SCHRODER SINGAPORE TRUST
175.94
10.86
13.27
56.65
10
38.55
LEADER
425.22
FIDELITY FUNDS - JAPAN FUND

HORIZON JAPANESE EQUITY SGD
20.76
25.02
45.39
16
-19.82
13
OCBC SINGAPORE TRUST SGD
16.9
10.89
12.29
70.26
40.33
LEADER
3439.57
ABN AMRO JAPAN EQUITY A USD
18.36
10
24.16
70.3
-3.28
10
HSBC GIF SINGAPORE EQUITY AD
2.19
9.99
10
11.64
10
84.88
45.47
LEADER
LEADER
SHENTON THRIFT
64.97
5.66
11
6.04
11
109.24
83.56
LEADER
HORIZON SINGAPORE EQUITY SGD
80.48
4.35
12
4.24
12
57.5
23.45
75.7
13.41
12
15.21
12
74.94
10
45.53
60.48
23.75
10
78.9
11.35
LEADER
23.15
11
60.8
10
0.41
17.28
12
22.94
12
DWS SINGAPORE SMALL/MID CAP A SGD
132.21
SCHRODER ISF JAPANESE EQUITY ALPHA A ACC
11
20.83
31.77
SCHRODER JAPANESE EQUITY ALPHA
18.33
114.81
UNITED JAPAN GROWTH FUND
Spw_6n7_S194.pmd
3-YEAR
11/25/2002
11/25/2005
0.33
HENDERSON HF JAPANESE EQUITY A2
M&G GLOBAL LEADERS A EURO ACC
OCBC GLOBAL INDUSTRIALS & RESOURCES INVESTMENT A
1-YEAR
11/25/2004
11/25/2005
RANK
37.63
YTD RETURN (%)

FUND
SIZE
12/31/2004
($ MIL)
11/25/2005
RANK
LIPPER RATINGS
CAPITAL CONSISTENT
PRESERVATION
RETURN
SCORE
SCORE
10/31/2005
10/31/2005
RANK
33.43
5-YEAR
11/27/2000
11/25/2005
LIPPER FUND TABLE SINGAPORE

RANK
RANK
3-YEAR
11/25/2002
11/25/2005
RANK
1-YEAR
11/25/2004
11/25/2005
3.6
NAME
RANK
YTD RETURN (%)

FUND
SIZE
12/31/2004
($ MIL)
11/25/2005
RANK
PERSONAL WEALTH
16.98
13
22.16
13
AVERAGE (13)
1.12.05, 8:37 pm
| DECEMBER 5, 2005
PERSONAL WEALTH
The right time to invest
FUND WATCH
10 best-performing funds (Nov 18-25)
ABN AMRO INDIA EQTY USD A
4.49
ABN AMRO FUNDS ENERGY FUND A
4.12
FIDELITY FDS LATIN AMERICA
2.53
FRANKLIN TEMPLETON F-KOREA
2.47
UOB OPTIMIX CONTRARIAN
2.45
SCHRODER ISF KOREAN EQ A ACC
2.29
OCBC KOREA FD
2.28
OCBC ASIA INFRASTRUCTURE
2.22
DBS US GROWTH
2.18
FIDELITY FDS INDUSTRIALS

% Chg
2.17
0
10 worst-performing funds (Nov 18-25)

UOB UNITED ASIA TOP 50
-1.15
DBS ALL STARS CAP PROT FD S$
-1.20
PRU JAPAN SMALLER CO
-1.21
ABERDEEN JAPAN EQUITY
-1.28
DBS STAR TRACK 2 SGD
-1.31
DBS STAR TRACK SGD
-1.33
DBS DOUBLE BONUS CAPITAL PROTECT
-1.68
FIDELITY FDS THAILAND
-2.01
SCHRODER ACT STRATEGIES PTF USD
-2.87
DBS SPRINT CAPITAL PROTECTED
-3.02
% Chg -3.5 -3.0
-2.5
-2.0
-1.5
-1.0
-0.5
10 highest-expense funds* (Nov 18-25)

HENDERSON GLOBAL EQUITY FUND
5.15
UBS (SG) IF-BIOTECH
3.95
UBS (SG) IF-ASIAN TECHNOLOGY
3.91
HENDERSON JAPANESE EQ
3.85
HSBC NORTH AMERICAN GROWTH
3.32
FRANKLIN TEMPLETON F-THAILAND
3.29
FRANKLIN TEMPLETON F-CHINA
3.28
FRANKLIN TEMPLETON F-EMERG MKTS
3.25
FRANKLIN TEMPLETON F-KOREA
3.25
FRANKLIN TEMPLETON F-ASIAN EQ

% 0
*Encompasses CPF-approved funds only
2.92
3
10 lowest-expense funds* (Nov 18-25)
Timing the market
DIT-EUROPAZINS
0.85
DEUTSCHE LION BOND
0.73
PRU PROT GLOBAL TITANS SGD
0.70
UOB OPTIMIX SGD FUND
0.56
COM SINGAPORE BOND
0.53
HSBC SINGAPORE BOND R
0.48
DBS ENHANCED INCOME SGD
0.45
UOB OPTIMIX CO CLIK S&P500 SGD
0.08
COM GLOBAL INFOTECHNOLOGY
0.08
APS ALPHA FD (SGD)

%
*Encompasses CPF-approved funds only
0
0
0.2
0.4
0.6
0.8
1.0
5 best-performing sectors (Nov 18-25)

EQUITY LATIN AMERICA
2.34
COMMODITY & NAT RES
2.16
EQUITY KOREA
2.15
INDUSTRIALS
2.15
ASSET ALLOC NORTH AMERICA DYNAMIC

% Chg
0.5
1.92
2.0
1.5
1.0
2.5
5 worst-performing sectors (Nov 18-25)

EQUITY ASEAN
-0.67
TRANSPORTATION
EQUITY THAILAND
-0.96
-0.96
PROP SHR & REAL EST EUROPE
-1.03
% Chg -1.2
-1.0
-0.8
-0.6
-0.4
-0.2
ABOUT STANDARD & POORS FUND SERVICES

Standard & Poors Fund Services came into existence from
the merger between two of the worlds most respected
sources of mutual fund information acquired by S&P in
1997, Micropal and Fund Research, and Standard & Poors
own fund ratings operation.
Since the merger, Standard & Poors Fund Services
has grown to become the worlds most comprehensive
source of mutual fund information and analysis, with
coverage of over 80,000 funds in more than 52 countries. Our comprehensive product offering now encompasses value-added analytics, institutional-calibre investment research as well as cutting-edge web solutions.
In addition to our products, Standard & Poors highly
successful Investment Funds Awards have now been replicated around the world in 19 countries throughout Europe and Asia, including Hong Kong, Singapore, Taiwan
and India, and have become the industry standard against
which fund managers and groups are measured.
Standard & Poors Fund Ltd
Telephone: (852) 2841 1060
Fax: (852) 2882 1727
E-mail: sales_fshk@standardandpoors.com
Website: www.funds-sp.com
Spw_8_S194.pmd
The instinct to try to take advantage of attractive entry and

exit points in the market is easy to understand. Everyones
fundamental goal is to buy low and sell high. But being invested only when the markets are rising and pulling out when
they are about to decline is easier said than done. In my view,
most people simply cannot consistently time the market
correctly.
In fact, the best market strategists only attempt to identify the extreme scenarios when either the markets are
extremely undervalued or when they have got ahead of
themselves. Those are the only two instances when these
experts tend to recommend changes to investment portfolios. The strategy at all other times is to simply stay invested. The challenge for most investors, however, is having the discipline to stay the course, riding out the frequent
small waves in the market. Investors have to recognise that
these swings are noise that eventually work their way out
of the system.
Equity fund, more than half of the 10 best and

worst days were closely bunched up together.
Even if investors had known beforehand which
way the market was headed, it is very unlikely
they would have been able to sell and reinvest
in the fund in time, as it usually takes a week
or so for the fund proceeds to be disbursed.
So, if they had tried to avoid the downdrafts in
the market, they would almost certainly have
missed the rebounds too.
A far better and more feasible strategy would
be to simply remain invested in the fund, riding
out the ups and downs, as long as the longerLIEW |
term picture for the underlying asset class in
this case, Asia ex-Japan equity markets looks
reasonably positive.
Should you be investing now?

So, should investors be putting their money into the markets now? My take on the bird-flu situation is that it could
prove to be a non-event. Experts believe that a pandemic
would only break out if the virus suddenly became transmissible between humans. So far, people who have been
afflicted by the bird flu have all had direct contact with infected birds. Moreover, I believe governments all over the
world and the WHO are conscious of the risks and will be
quickly taking the necessary steps to prevent the situation
from getting out of hand.
People investing to meet

long-term goals should
stay invested, while those
who currently arent invested
should start making their
money work harder for them.
Having said this, investors
should be extremely careful
about what they are putting
their money in.
Aberdeen Pacific Equity
historical returns (%)
2001
To buy or to sell?
-0.84
HEDGE FUND OF FUNDS
nvestors are a jittery lot. I was talking to a

couple of prospects over the last few
weeks about investing their money to meet
their long-term goals, and the issue that
each of them raised was whether it is the
right time to enter the market now. At the
top of their list of concerns was the prospect
of an avian-influenza pandemic. With new reports of more and more people getting struck
down by bird flu each week, these investors
are worried that global financial markets and
their investments risk being adversely affected.
| BY DARYL
The threat of the H5N1 bird-flu virus is very
real indeed. It has already killed more than 60
people and led to the slaughter of 150 million poultry. According to some estimates, the virus has resulted in lost trade
of US$10 billion ($1 approx US$0.60) so far. And, the World
Health Organization (WHO) recently released a report putting
the potential cost of a bird-flu pandemic at US$800 billion.
They also estimated that the best-case pandemic scenario could
result in the death of between two million and 7.4 million
people around the world.
So, should investors sit on the sidelines and wait for the
pandemic to strike before entering the market? The risk of
adopting this strategy is that this threat may turn out to be a
non-event and blow over, once the winter season in the northern hemisphere passes. What is the cost of this sit-and-wait
approach? Traditionally, equity markets do very well in the
run-up to the Christmas and New Year holidays; so, these
investors may have to forego some potentially nice returns
while waiting for the bird flu to spread.
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
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87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
87654321098765432121098765432109876543210987654321
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87654321098765432121098765432109876543210987654321
The most commonly cited reason for investors to stay invested for the long term rather than pull out at the first sign of
trouble is that missing the potential recovery when the market turns up will significantly reduce their overall returns.
Estimates of the potential impact of missing the markets upside vary depending on whom you ask. But some commentators say that missing the 10 best days in a year could cut
your return by more than half. It is worth noting, however,
that advocates of market timing would counter that point
with this one: Missing the worst 10 days would boost your
returns significantly.
I sought to test these theories by looking at the daily returns over the past five years of the Aberdeen Pacific Equity
fund, a unit trust that invests in Asia ex-Japan equities. I then
sorted out the funds returns to isolate the 10 worst and 10
best days in each year. The cumulative figures are illustrated
in the table.
What do these numbers demonstrate? Missing out on
the 10 best-performing days definitely has a significant adverse impact on overall returns. In three of the five years,
the cumulative returns from the 10 best days far exceed
the returns for the whole year. On the flipside, the figures
also showed that investors would have greatly benefited
from staying out of the fund during its 10 worst-performing days, potentially improving returns by between 12%
and 25%.
The big question is whether investors could have successfully predicted the 10 worst days and sold out of the
fund in time. According to the data, it is a long shot. The
investor would not only need to be savvy but clairvoyant as
well. According to daily price data of the Aberdeen Pacific
1.12.05, 8:23 pm
2002
2003
Cumulative 10 worst days -25.05

Cumulative 10 best days
21.57
Total returns
6.97
-18.73
16.62
-0.33
-15.63
19.16
51.90
2004
2005*
-21.11 -12.16
18.19 11.64
13.64 23.12
*Data till Nov 17
Thus, people investing to meet long-term goals should

stay invested, while those who currently arent invested
should start making their money work harder for them. Having said this, investors should be extremely careful about
what they are putting their money in. A diversified portfolio approach that spreads their investments across different asset classes and sectors is strongly recommended,
as this would greatly insulate their portfolios from external
shocks.
To illustrate, pharmaceuticals could be one sector that
would benefit from a bird-flu pandemic. As such, maintaining an allocation to the healthcare sector in ones portfolio would lessen any adverse impact on other equity holdings. Another recommended best practice when investing
in uncertain times is to spread out your investments over
a period of two or three months, allowing for dollar-cost
averaging.
In conclusion, investors should always keep abreast of unfolding risks. But they shouldnt allow themselves to be scared
into just holding cash. Choosing to stay the course is usually
the best option as long as you have a properly constructed,
E
well-thought-out investment plan.
Daryl Liew is senior investment strategist at independent financial advisory firm Providend

2005 Dec05 No194 p1 Theedgespore

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You will be pleased with

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The travel business

Hotels count the customers

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Murray Bailey is a research director and travel

Visitor arrivals into main

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2005 heads for 10% visitor growth

PACIFIC ASIA TRAVEL ASSOCIATION, TRAVEL BUSINESS ANALYST

Notes: *Foreigners only. **Excludes China, Macau.

Hotel results in Singapore (Jan-Aug)

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THE EDGE, TRAVEL BUSINESS ANALYST

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econd Chance, a Singapore-grown

Far East Plaza

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UPS delivers the shipment to the buyer after it receives payment

THEEDGE SINGAPORE | DECEMBER 5, 2005 9

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Rotols new bridge to success

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CHU JUCK SENG/THE EDGE SINGAPORE

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J Bridge, which is listed on the Tokyo Stock

Nov 18, 2005

Senior staff return

Setting its sights on India