How about a 50% crash?

For a long time, we have been hearing that the stock market is headed for a significant crash. Is 2014 the year?
                                       
Back in 2011, some Elliott Wave aficionados were telling us that the crash was on its way. Since that time, there has been a tendency to stop listening to those who have been crowing about the next financial crisis since before we even recovered from the last financial crisis.
                                       
But during the past few weeks, we have been receiving warnings from outside the usual "gloom and doom" sphere. Most notably, bond guru Jeffrey Gundlach gave a webcast presentation on Jan. 14, which raised more than a few eyebrows. Gundlach explained that as the Federal Reserve proceeds to taper its monthly bond purchases, stock market volatility will escalate. He considered the record-high margin-debt levels on the New York Stock Exchange as a signal of a stock market "top."

Gundlach's presentation included a handy chart depicting the effects of the various quantitative-easing programs on the stock market, from March 18, 2009, through Jan. 6, 2014. The chart makes it very clear that the stock market's advance during the past five years has been fueled by the Fed's liquidity pump. As the pump gets throttled back, what can we expect to happen?
                                       
The recent growth in stock prices has surpassed earnings growth. The trailing 12-month price-to-earnings multiple has soared from 12.8 in January of 2012 to 17.3 in January of 2014.
                                       
Using Robert Shiller's Cyclically Adjusted Price/Earnings (CAPE) formula, the CAPE ratio comes to 25.4. As a result, it the stock market "corrects" to the point where Robert Shiller's CAPE ratio declines to where it was in the late 1980s, (approximately 12.5) the S&P 500 would have to drop 50% from its current level to 919. Even if a less-extreme correction were to occur, wherein the trailing 12-month price-to-earnings multiple would fall from the current P/E multiple of 17.3 back to the 12.8 observed in 2012, the S&P 500 index would sink 35% to 1,195.

In considering what could trigger such an event, it is important to keep in mind that the current level of stock prices is apparently being largely driven by investor sentiment, rather than by fundamentals.
For example, those high-momentum stocks, which draw an enormous amount of trading volume, have absurd price/earnings ratios and suffer/enjoy wild swings based solely on "mo-mo." In the event of a meaningful decline, those stocks would likely lead the way down since their investors would have the most to lose. Beyond that, there are quite a number of S&P 500 stocks with trailing 12-month price/earnings ratios in excess of 20. What will happen to the S&P 500 if/when those shareholders start running for the exits?
                                       
The triggering event for such a selloff would most likely be somehow associated with the Federal Reserve. Inability to control interest rates or a misstep in the taper could trigger extreme volatility. Just a simple loss of confidence in the Fed and/or its new Chair could be a catalyst for the first significant decline in years.

Complacency is at extreme levels, based largely on confidence in the Federal Reserve being able to stave off any and all evil forces in global financial markets. However, during previous periods of confidence and extreme bullishness, the Fed has been proven unable to stop significant stock-market declines.
                                       
While no one can forecast the future, one can get a feel for the "mood of the market" and whether the tide is ebbing or flowing. At this point, it's quite possible that the high-water mark has been reached and that the tide may be turning. In the final analysis, whether or not we see a 50% crash is irrelevant since all market environments offer potential opportunity for those who are ready to change and adapt to the challenges of today's new realities

http://www.marketwatch.com/story/how-about-a-50-crash-2014-01-23?link=MW_story_popular

Why a stock market correction should make you happy

“Excesses in one direction will lead to an opposite excess in the other direction.”
                                        
So says rule No. 2 from retired and respected market technician Bob Farrell, whose 10 “Market Rules to Remember” offer investors a reality check on stocks, bonds and their money.

Farrell’s advice is especially timely after the disappointing week stock investors have had, with the S&P 500 SPX -2.09%  suffering its worst one-week percentage decline since June 2012, and the Dow Jones Industrials  DJIA -1.96%  taking its worst beating since November 2011. So far this year the S&P 500 has lost 3.1% and the Dow is down 4.2%.
                                        
Where she stops, nobody knows. But the conviction that stocks are due for a correction – meaning at least a 10% slide – is the worst-kept secret on Wall Street. Pundits have been opining for months about how stocks are overbought and investors are too optimistic.
                                         
It’s about time stock prices turned south. Even a year without a meaningful correction is too long a stretch. Investors get comfortable; the market’s proverbial wall of worry breaks down.

 A correction gives investors who want to get out of the market an excuse to exit, and sets the stage for buyers to come off the sidelines.  A selloff early in the year is even more welcome, since it gives the market a chance to form a new base from which to move higher.
                                       
Lower stock prices remind us that Mr. Market is mortal. “There are no new eras – excesses are never permanent,” Farrell noted in another of his famous rules. Indeed, if your investment portfolio is diversified to your specifications, market stumbles can be opportunities.
                                       
The dust from this market storm will settle, as it always does. Meantime, give your portfolio a checkup and figure out how to move forward. What’s different about the longer-term prospects for the global economy and the market that we didn’t see two weeks ago, when buyers were still lined up? Likely, not much.

 http://www.marketwatch.com/story/why-a-stock-market-correction-should-make-you-happy-2014-01-24             

Why emerging markets worry Wall Street

The big bull market in U.S. stocks is confronted with an unexpected headwind: a fresh bout of financial turbulence in emerging markets.

Wall Street is a world away from Turkey and Argentina and the other developing economies dotting the globe. But recent news of financial tumult and plunging currencies in some emerging markets, coupled with bad memories of past crises over the past 20 years that began in Mexico, Asia and Russia, has imported a boatload of financial angst back to the United States.

Indeed, the great bull market on Wall Street has suddenly run into a stumbling block that few investment strategists were even talking about at the start of the year: swooning currencies and capital flight out of vulnerable emerging markets like Turkey and Argentina.

The financial turbulence, which is being greatly exacerbated by a slowdown in growth-engine China, has raised fears of a potential crisis that could inflict damage on these developing countries' economies and perhaps infect other nations as well. That lethal combination could ultimately crimp earnings of U.S. multinationals. It could also prompt investors to dump risky assets, a response that already seems to be underway.

Indeed, the emergence of risks in emerging markets, coupled with fresh 2014 headwinds, such as U.S. stocks no longer trading at below-average valuations and Corporate America reporting less-than-stellar fourth-quarter earnings so far, has put the bull market on hold.

In the past two trading sessions the Dow Jones industrial average has tumbled more than 494 points to 15879, extending its year-to-date loss to 4.2%.

It's the uncertainty surrounding the health of fragile emerging markets, however, that seems to be weighing most heavily on investors at the moment.

Here are some reasons why what happens in emerging markets matters to Wall Street.

*Hot money can turn cold. Emerging markets are the future growth engine of the global economy and an important source of profits for U.S. companies. These developing economies were both recipients and beneficiaries of massive cash inflows the past few years as investors sought out bigger returns fostered by injections of cheap cash from the Federal Reserve and other central bankers.
But now that the Fed has started to dial back its stimulus, many investors are yanking their cash out of emerging markets and bringing the cash back to more stable markets and economies, such as the U.S., hurting the developing nations in the process, explains Russ Koesterich, chief investment strategist at BlackRock.

"Emerging markets need the hot money but capital is exiting now," says Koesterich. "What you have is people saying, 'I don't want to own emerging markets.'"

But he stresses that "it's still too early" to compare today's emerging market headwinds with the Mexican peso crisis in 1994, the Asian financial crisis in 1997 and the Russian ruble crisis in 1998.
The combination of less cheap money and a sharp devaluation in currencies in places like Turkey and Argentina makes it harder for these countries to service their debt, especially their current account deficits. A weaker currency also results in higher inflation, which reduces the purchasing power of the people who live there.

As a result, U.S. companies will sell fewer goods abroad and book smaller profits when sales are translated back into more expensive U.S. dollars, says David Semple, portfolio manager at Van Eck Global.

"U.S. companies, particularly multinationals, will see less earnings coming from emerging markets," says Semple. Add to that the fact that U.S. stock rose more last year on multiple expansion than they did on actual earnings, and it's a "solid argument for taking some profits," Semple says.

*Currency crisis could create economic crisis. The bigger fear is if the current crisis in currency markets morphs into a full-blown economic crisis and leads to financial contagion, says Matthias Kuhlmey, managing director of HighTower's Global Investment Solutions.

"The currency story is fascinating and can be a slippery slope – be cautious," says Kuhlmey, adding that the Asian crisis in the summer of 1997 that started with a sharp drop in the value of Thailand's baht, turned into a broader economic crisis that engulfed Indonesian, South Korea and a handful of other countries. It also rocked financial markets.

The good news this time around is emerging markets have learned from past crises and now have bigger reserves of foreign currencies and lower account deficits, which enables them to better withstand the short-term pain caused by capital flight and a weaker currency.

"The world, overall, is more prepared now in comparison to the Asian crisis (in 1997)," Kuhlmey says.

But if growth does slow, investors will have to recalibrate their upbeat outlooks for 2014, says Alec Young , global equity strategist at S&P Capital IQ.

"You have to mark down prices to reflect more muted global growth," says Young.

*A crisis in confidence could surface. Financial stability is built on confidence, and sentiment can shift quickly if confidence erodes, says Joe Quinlan, chief market strategist at U.S. Trust.

"A declining currency is the clearest sign of investors bolting for the door; it's a vote of no confidence that usually sparks sell offs in other assets, both credit and equity," says Quinlan. "And because investors still view emerging market assets as homogeneous, a swooning currency or asset class in one emerging market usually prompts sell offs in other emerging markets, raising the odds of contagion."

Despite the angst and uncertainty, however, Quinlan envisions a drop for the Dow in the 5% to 7% range, rather than a full-blown correction of 10% or more.

"An emerging market crisis that results in a marked selloff of U.S. stocks would be a gift to those investors underweight U.S. equities or (who have been out of) the equity markets over the past few years," he says.

http://www.usatoday.com/story/money/markets/2014/01/25/why-wall-street-fears-emerging-market-crisis/4833753/

 

China Manufacturing Activity Contracts

Cooling Domestic Demand Drags Down Closely Watched Indicator

China's economy started the year on a weaker note, as an initial gauge of manufacturing activity in January slipped to its lowest level in six months.

The preliminary HSBC Purchasing Managers' Index for January showed a contraction compared with December's reading, suggesting that a loss of economic momentum in the final quarter of last year could carry through into the new year.

 

The initial manufacturing PMI slipped to 49.6 from December's 50.5, according to the measure released Thursday by lender HSBC Holdings PLC and financial data provider Markit. A reading below 50 designates contraction compared with the previous month, while a reading above that shows growth.

 

"The data show China's economic growth momentum has slowed significantly," said Société Générale economist Yao Wei. "There may be some seasonal factors but the trend is clear."

 

Economic growth slipped slightly in the fourth quarter from a year earlier, coming in at 7.7% against 7.8% in the third quarter.

 

Nomura economist Wendy Chen said she expects growth to continue to trend lower.

 

The measure "is generally in line with our expectations that we will see slower growth in the first quarter," she said. Nomura expects economic growth to slow to 7.5% in the first quarter of this year and 7.1% in the second.

 

Other data have also been pointing to less-robust manufacturing conditions. In the final month of last year, the industrial sector showed growth was trending lower, as output slipped to 9.7% from 10% in November.

 

Policy makers have taken a relaxed view of the lower growth, however, insisting that they want to focus on rebalancing the economy—shifting it away from a reliance on exports and investment for growth and strengthening the role of consumption.

 

But they also say they need to ensure an adequate number of new jobs—Beijing late last year reiterated a target of creating 10 million—and keep urban unemployment within 4%.

 

That means they still have room to keep the longer-term objectives in their sights if the economy expands at a moderate pace.

 

Premier Li Keqiang has said that China could manage with growth of 7.2% and still keep unemployment within manageable levels and not create new sources of social unrest.

 

The HSBC data showed weakness in most of the areas measured by its survey, with decreases in the subindexes for new orders, new export orders and employment. Output increased but at a slower rate than in the previous month.

 

Some economists said it was time for the government to move ahead with additional investment projects and loosen its monetary stance.

 

"We need to see the government's so-called 'proactive fiscal policy' become really proactive," said Shen Jianguang, economist at Mizuho Securities.

 

Mr. Shen said that higher interest rates on the interbank market—the result of a cash squeeze in the banking system in recent months—have begun to have an impact on corporate borrowing costs, particularly for smaller private companies. The interbank market is where banks lend to each other to meet their daily liquidity needs.

 

"Interest rates have been moving higher and smaller enterprises are feeling the effects," he said.

The HSBC survey covers many smaller companies. An official measure of manufacturing activity, due out on Feb. 1, includes more large state enterprises.

 

The HSBC preliminary PMI figure, also called the flash PMI, is based on 85% to 90% of total responses to HSBC's PMI survey each month, and is issued about one week before the final PMI reading.

 

—Liyan Qi and Yajun Zhang contributed to this article.

 

Write to Liyan Qi at liyan.qi@dowjones.com

 

http://online.wsj.com/news/articles/SB10001424052702304856504579337443288430238

 

Mapletree Industrial Trust announced a distribution of 2.51 Singapore cents per unit in MIT (“Unit”) in relation to the Third Quarter Financial Year 2013/2014 from 1 October 2013 to 31 December 2013 (“3QFY13/14 Distribution”).

21 January 2014




NOTICE OF BOOK CLOSURE AND DISTRIBUTION PAYMENT DATE


NOTICE IS HEREBY GIVEN that the Transfer Books and Register of Unitholders of Mapletree Industrial Trust ("MIT") will be closed at 5.00pm on Wednesday, 29 January 2014 (the book closure date or "BCD") for the purpose of determining Unitholders’ entitlements to MIT’s distribution. MIT has announced a distribution of 2.51 Singapore cents per unit in MIT ("Unit") in relation to the Third Quarter Financial Year 2013/2014 from 1 October 2013 to 31 December 2013 ("3QFY13/14 Distribution"). The 3QFY13/14 Distribution of 2.51 Singapore cents per Unit comprises a taxable income component of 2.37 Singapore cents per Unit and a capital component of 0.14 Singapore cents per Unit.

On 21 January 2014, Mapletree Industrial Trust Management Ltd., as manager of MIT (the "Manager") announced that the distribution reinvestment plan ("DRP") will apply to the 3QFY13/14 Distribution.

Unitholders whose securities accounts with The Central Depository (Pte) Limited ("CDP") are credited with Units as at 5.00pm on Wednesday, 29 January 2014 will be entitled to the cash distribution that will be paid by Thursday, 6 March 2014. Unitholders who have elected to participate in the DRP for the 3QFY13/14 Distribution will have their new Units in MIT credited and listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") on Friday, 7 March 2014.




Declaration for Singapore Tax Purposes


1 The capital component of the distribution is treated as a return of capital for Singapore income tax purposes. No tax will be deducted at source from this component.

2 Tax will be deducted at source from the taxable income component in certain circumstances. The following paragraphs describe the circumstances in which tax will or will not be deducted from the taxable income component of the distribution.

3 The following categories of Unitholders will receive a gross distribution (i.e. no tax will be deducted from the taxable income component):-

(a) Unitholders who are individuals and who hold the Units either in their sole names or jointly with other individuals;

(b) Unitholders which are companies incorporated and tax resident in Singapore;

(c) Unitholders which are Singapore branches of foreign companies that have obtained specific approval from the Inland Revenue Authority of Singapore to receive the distribution from MIT without deduction of tax; and

(d) Unitholders which are non-corporate entities (excluding partnerships) constituted or registered in Singapore,
4 To receive a gross distribution, Unitholders in category 3(b) to 3(d) above must complete a prescribed form – the "Declaration for Singapore Tax Purposes Form" ("Form A").


5 These categories of Unitholders, unless they are exempt from tax because of their own circumstances, will have to pay income tax subsequently at their own applicable tax rates.

6 Unitholders in category 3(a) are not required to submit any form. The gross distribution received by these Unitholders (irrespective of their tax residence status) is exempt from tax. However, this tax exemption does not apply to such Unitholders in respect of distribution derived by them through a partnership in Singapore or from the carrying on of a trade, business or profession.

7 Tax at the reduced rate of 10% will be deducted from the distribution made to foreign non-individuals Unitholders. A foreign non-individual Unitholder is one (other than an individual) who is not a resident of Singapore for income tax purposes and:-

(a) who does not have a permanent establishment in Singapore; or

(b) who carries on any operation in Singapore through a permanent establishment in Singapore, where the funds used to acquire the Units are not obtained from that operation.
8 To receive the distribution net of tax deducted at 10%, foreign non-individual Unitholders are required to complete Form A.


9 Beneficial owners of Units who hold Units through depository agents will receive:-

(a) gross distribution if they are persons described in categories 3(a) to 3(d); and

(b) distribution net of tax deducted at 10% if they are foreign non-individuals described in Paragraph 7 above.

10 To receive gross distribution and distribution net of tax deducted at 10%, depository agents are required to complete the "Declaration by Depository Agents for Singapore Tax Purposes Form" ("Form B") and its annexes.

11 Form A and Form B (and its annexes) will be sent to Unitholders and depository agents respectively, by MIT’s unit registrar (the "Unit Registrar"), Boardroom   

Corporate & Advisory Services Pte. Ltd. at 50 Raffles Place #32-01 Singapore Land Tower, Singapore 048623, on or around Friday, 7 February 2014.

12 Unitholders (Form A) and the depository agents (Form B and its annexes) will have to complete the forms legibly and send it to the Unit Registrar such that the forms are received by 5.00pm on Thursday, 20 February 2014. Failure to comply with any of these requirements will render Form A and Form B invalid and the Trustee and the Manager of MIT will be obliged to deduct tax at the rate of 17% from the distribution.


13 Unitholders who hold Units under the Central Provident Fund Investment Scheme and the Supplementary Retirement Scheme do not have to return any form. They will receive gross distribution.

DISTRIBUTION REINVESTMENT PLAN
 The DRP provides Unitholders with the option to receive their distributions, either in the form of Units or cash or a combination of both. A Unitholder will have the following options in respect of his distribution:

 elect to receive a cash distribution on his existing Units held; or
  elect to receive an allotment of DRP Units credited as fully paid in lieu of the cash amount of the distribution entitlement for the Distribution Period ended 31 December 2013 only; or



 elect to receive an allotment of DRP Units, in lieu of part of the cash amount of the distribution entitlement credited as fully paid and the remaining distribution entitlement in cash.

For practical reasons and to avoid any violation of the securities laws applicable in countries outside Singapore where Unitholders may have their registered addresses (unless otherwise determined by the Manager) ("Overseas Unitholders"), the DRP will not be offered to Overseas Unitholders who have not provided to the CDP, not later than three Market Days1 prior to the BCD, addresses in Singapore for the service of notices and documents.


The tax treatment as described above will apply for Unitholders electing to receive distributions in Units. Where deduction of income tax is applicable and the Unitholders elect to receive the distributions in Units, the number of Units to be allotted under the DRP will be computed based on the distributions net of tax deducted.
Unitholders who wish to participate in the DRP will have to complete the Notice of Election2 and send it to the Unit Registrar such that it is received by 5.00pm on Thursday, 20 February 2014. Unitholders who do not wish to participate in the DRP need not complete the Notice of Election. Such Unitholders will receive their distributions in cash.
Declaration in Income Tax Return
 This distribution is considered as income for the year 2014. Beneficial owners of the distribution, other than those who are exempted from tax on the distribution or who are entitled to the reduced tax rate of 10%, are required to declare the gross amount of the taxable income component of the distribution as taxable income in their Singapore income tax return for the year of assessment 2015.
 Important Reminder
 Unitholders and depository agents must complete and return Form A, Form B (and its annexes) and Notice of Election to the Unit Registrar’s office by 5.00pm on Thursday, 20 February 2014 in order to receive the distribution either at gross or at net (after deduction of tax at 10%) as described above.

Important Dates Date	Event
5.00pm, Friday 24 January 2014	Last day of trading on "cum" basis
9.00am, Monday 27 January 2014	Units will be traded ex-distribution
5.00pm, Wednesday 29 January 2014	Closure of MIT’s Transfer Books and Register of Unitholders
5.00pm, Thursday 20 February 2014	Unitholders and depository agents must have completed and returned Form A or Form B, as applicable, and Notice of Election to the Unit Registrar (Boardroom Corporate & Advisory Services Pte. Ltd. located at 50 Raffles Place #32-01 Singapore Land Tower, Singapore 048623)
By Thursday, 6 March 2014	Payment of cash distribution
By Friday, 7 March 2014	Crediting of DRP Units to Unitholders’ securities accounts / Listing of the DRP units on the SGX-ST

Should Unitholders have any queries in relation to these procedures, please do not hesitate to contact:-

Melissa TAN

Vice President, Investor Relations

Tel: +65 6377 6113

Email: melissa.tanhl@mapletree.com.sg

Or visit MIT’s website at www.mapletreeindustrialtrust.com

http://infopub.sgx.com/FileOpen/20140121_Notice_of_Book_Closure_and_Distribution_Payment_Date.ashx?App=Announcement&FileID=271696

Ezra awarded new subsea projects worth almost US$80 million

Ezra Holdings Limited ("Ezra", the "Group" or 以斯拉控股), a leading global offshore contractor and provider of integrated offshore solutions to the oil and gas (O&G) industry, today announced that its Subsea Services division (EMAS AMC) been awarded projects worth a total of approximately US$80million, including options.



The scope of these projects cover a large spectrum of subsea work, including the decommissioning and towage of an FPSO in Asia and the deployment of an Inspection, Maintenance and Repair (IMR) vessel in the Americas. Work for a majority of the contracts is expected to commence by the first half of 2014.

"We are extremely pleased with these contract wins, which allows us to showcase the breadth of capabilities that EMAS AMC possesses as well as our global reach," said Ezra’s Group CEO and Managing Director, Mr Lionel Lee.

"It is an auspicious start to the new year. We are seeing a good pick up of activities in the key regions where we are focused on, and we are well-positioned to take advantage of the upturn in 2014."


The Group began the year with strong top-line growth with operational profitability, registering a 22% jump to US$339.8 million in revenue compared to the corresponding period in FY13. The Group’s subsea orderbook stands at more than US$1.4 billion, and is still tendering for some US$9 billion in projects worldwide.

ABOUT THE GROUP www.emas.com

SGX Mainboard listing: December 2005
 EMAS – a leading global contracting group providing offshore/subsea construction, marine, production and well intervention services – is Ezra’s operating brand. With offices across five continents, it delivers best-value solutions to the oil and gas (O&G) industry by combining its global footprint and proven engineering skills with a diverse offering of premium assets and services designed to fully meet clients’ needs.

http://infopub.sgx.com/FileOpen/Ezra_PressRelease_New_Contracts.ashx?App=Announcement&FileID=272164 

Fragrance Group - The Hillford Singapore's first retirement village was sold out on its first day of sale

The Hillford condo is a new exciting condominium by Fragrance Group and World Class Land. The Hillford condo is located along Jalan Jurong Kechil of Singapore With expected completion in mid 2016, it comprises of 280 residential units and 20 commercial units. The Hillford residents will be able to access within a short drive to Bukit Timah Shopping Center, Beauty World Plaza and Bukit Timah Plaza which is a short distance away for some family fun and gatherings. A healthy fun-filled lifestyle awaits you.

http://www.floraville.org/2013/11/the-hillford-new-condominium-by-world.html


A condominium touted as Singapore's first retirement village was sold out on its first day of sale.
Despite concerns about The Hillford's shorter 60-year lease, buyers - both young and old - snapped up all 281 apartments.
By 9am on Friday, The Hillford showflat at Upper Bukit Timah was already crowded with some 1,000 prospective buyers.
Within the first one-and-a-half hours, more than 80 units were already sold. That is 30 per cent of what is available.
The project has been marketed as a "retirement resort" for active seniors with elderly-friendly facilities and commercial space set aside for health care and elder care.
But with the condo located near the upcoming Beauty World MRT station in Bukit Timah, seniors were not the only ones interested.
This is despite the smaller flats and shorter 60-year lease. Private properties in Singapore usually have a 99-year lease or are freehold.
Analysts said The Hillford's popularity shows people are receptive to properties with a shorter lease.
Chris Koh, director of Chris International, said: "For many, at the end of the day it's the price. If it's affordable, and the quantum is low, you can see they're willing to buy."
But there are concerns that the facilities for the elderly may not materialise if there are too many young buyers.
A lot will depend on the property's management body, which will be made up of residents, said Mr Koh.
He said: "They must remember the essence of this village. It's for the elderly, for retirement, and they should not just change it overnight to cater to the youngsters who live in the project."
Christine Li, head of research and consultancy at OrangeTee, said: "In order to make this retirement concept more meaningful, there could be some restrictions, such as the age of the buyer, as well as some resale restrictions."
Sales figures are still being worked out, but the developer World Class Land said it expects a "substantial proportion" of buyers to be over 50 years old. 
http://www.channelnewsasia.com/news/singapore/buyers-snap-up-retirement/957928.html

Dividend Payout Ratio vs Dividend Coverage Ratio vs Dividend Cash Flow Coverage Ratio

Dividend Payout Ratio







Dividend Payout ratio basically refers to the percentage of the earnings used to pay out Dividends. Ideally, Dividend Payout Ratio should not be too high, as a rule of thumb it should not exceed 85% for most Companies. The reason is that if most of the Earnings are paid out as Dividends, there would be little Retained Earnings left to support business growth. However, there are exceptions to these. Certain Stocks likes Real Estate Investment Trusts (REITS) and Business Trusts typically have Payout Ratios in excess of 90% or even 100%. REITs are required by law to Dividend out 90% of the Earnings to gain favourable tax treatment. Some Companies also have a very high Payout Ratio because they have high Depreciation and Amortization, which is non cash item. To see how sustainable the Dividends are, one would have to look at the Dividend Cash Flow Cover Ratio below.


Dividend Coverage Ratio



Dividend Coverage ratio is the inverse of the Dividend Payout ratio. It refers how many times the Earnings can cover the Dividends paid. Ideally, the higher the Coverage Ratio, the better it is. If Dividend Coverage is 2, it means that the Earnings can cover the Dividends twice and minor fluctuations to the Company’s Earnings should not affect Dividends paid out. One should avoid stocks which have Dividend Coverage below 1, it means that the Company does not have enough profits to cover the Dividends for the year and are paying out from Retained Earnings!


Dividend Cash Flow Coverage Ratio

Free Cash Flow = Operating Cash Flow – Capital Expenditures

 

As one may have heard, Cash Flow is King. It’s the same when looking at Dividend stability. If the Company is not generating enough Free Cash Flow to cover the Dividends, the Dividends are in danger of being cut, regardless how much Earnings the Company has. Instead of using Operating Cash Flow to calculate the Dividend Cash Flow Coverage Ratio, we prefer to use Free Cash Flow as it is more conservative and takes into account the need for Capital Expenditures.

http://www.investinpassiveincome.com/how-to-pick-a-top-dividend-company-for-income-part-3-determining-stability-of-dividends/

Dividend Payout Ratio

Definition of 'Dividend Payout Ratio'

The percentage of earnings paid to shareholders in dividends.

Calculated as:

   

Remember:

- A reduction in dividends paid is looked poorly upon by investors, and the stock price usually depreciates as investors seek other dividend-paying stocks.

- A stable dividend payout ratio indicates a solid dividend policy by the company's board of directors.

 

The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio.

 

http://www.investopedia.com/terms/d/dividendpayoutratio.asp

 

Dividend Coverage Ratio

Dividend Coverage Ratio states the number of times an organization is capable of paying dividends to shareholders from the profits earned during an accounting period.



Dividend cover in respect of ordinary share capital may be calculated as follows:

Dividend Cover Ratio	=	Profit after tax - Dividend paid on Irredeemable Preference Shares
		Dividend paid to Ordinary Shareholders

Dividend Coverage Ratio indicates the capacity of an organization to pay dividends out of profit attributable to the share holders. A dividend cover of 3 implies that a company has sufficient earnings to pay dividends amounting to 3 times of the present dividend payout during the period. When calculating dividend coverage for ordinary share capital, it is necessary to deduct any dividend paid on irredeemable preference shares from the net profit earned during the accounting period in order to arrive at the earnings attributable to ordinary share holders. Dividend on redeemable preference shares is already deducted from the income statement as interest expense (finance cost) and hence no further adjustment is required in its respect in the dividend cover calculation.

http://accounting-simplified.com/financial/ratio-analysis/dividend-coverage.html

Koh Wee Meng - Founder, Executive Chairman and CEO of Singapore-listed Fragrance Group

Koh Wee Meng is a Singaporean property tycoon who has a net worth of $1.4 billion.

Koh Wee Meng broke off family's jewelry retailer Aspial in the 1990′s to make his fortune in real estate.

 He is the Founder, Executive Chairman and CEO of Singapore-listed Fragrance Group, a company that mostly buys and sells affordable residential properties and operates a budget hotel. It was in April 2012, when Koh spun off Fragrance's hotel arm into Global Premium Hotels, listing the budget hotel chain, while he is now expanding it into commercial real estate.

 In addition to his property business, Koh is an avid vintage car collector. As such, he made headlines back in 2008 for suing a Rolls-Royce dealer in Singapore for allegedly selling him a defective Phantom car.

http://www.celebritynetworth.com/richest-businessmen/richest-billionaires/koh-wee-meng-net-worth/

Ronald D. Widdows - Chairman of the World Shipping Council - CEO Rickmers Holding and Rickmers-Linie

Ron D Widdows joined Rickmers Group as Chief Executive Officer of Rickmers Holding and Rickmers-Linie in April 2012.

He has over 40 years' experience in the shipping industry, the last 31 years of which were with APL and Neptune Orient Lines Ltd where he held the position of Group President and CEO.

Mr. Widdows is currently the chairman of the World Shipping Council, which is based in Washington DC, and is on the Advisory Boards of the US Merchant Marine Academy in Kings Point NY and the International Transport Forum, based in Europe. He is a past chariman of the Transpacific Stabilization Agreement.

http://www.worldshipping.org/about-the-council/board-members/ronald-d-widdows

Edmund Cheng Wai Wing - Chairman of the Board of Directors of Mapletree Investments Pte Ltd

Mr Edmund Cheng is the Chairman of the Board of Directors of Mapletree Investments Pte Ltd (MIPL). He is also the Chairman of its Executive Resource and Compensation Committee and Investment Committee.

Mr Cheng is concurrently the Deputy Chairman of Wing Tai Holdings Limited, Chairman of SATS Ltd (both listed on the Singapore Exchange) and Executive Director of Wing Tai Malaysia Berhad (a company listed on Bursa Malaysia).

Apart from his wealth of experience as a property developer, Mr Cheng is actively involved in the public and private sectors. He is the immediate past Chairman of the National Arts Council where he was involved in national efforts to promote and develop an arts landscape that will enhance vibrancy in the economy and society (2005 – 2013). Mr Cheng previously served as Chairman of the Singapore Tourism Board (1993 – 2001), The Old Parliament House Limited (2002 – 2006), The Esplanade Co. Ltd (2003 – 2005), and as Founding Chairman of Design Singapore Council (2003 – 2008) and a member on the Board of Trustees of Nanyang Technological University (2007 – 2012). He also served on the Boards of the Urban Redevelopment Authority (1991 – 1994), the Construction Industry Development Board (1992 – 1994) and Singapore Airlines Limited (1996 – 2004). A past President of the Real Estate Developers’ Association of Singapore (REDAS), Mr Cheng remains a member of its Presidential Council.

Mr Cheng was awarded The Public Service Star (BAR) in 2010 and The Public Service Star (BBM) in 1999 by the Singapore Government for his significant contributions. He also received the Outstanding Contribution to Tourism Award from the President of Singapore in 2002. In 2009, he was conferred “Officier de l’Ordre des Arts et des Lettres” by the Government of the Republic of France.

http://www.mapletree.com.sg/Our-Company/Leadership/BOD.aspx