19 October 2008

Effects Of The Current Financial Turmoil (2)

MAS is in the news again
Not the escapee from prison
Shouldn't it be keeping our savings selamat?*
People who lost money are understandably mad

Some investors bought "minibond"
Now their money could be all gone
Its complexity's beyond the layman
Many didn't know it was linked to Lehman

The product with a fanciful name
But minibonds and bonds are not the same
Who would think a 5% dividend is reasonable
When you could lose all of your principal?

For some it was their entire life savings
Yet the distributors said it had good ratings
"Your risk is very small"
Spinning a tale that's very tall

Is it the buyers' carelessness?
Or rather the sellers' callousness?
Were the buyers simply greedy?
Or were the sellers obviously shifty?

Many elderly people were targeted
The products were indiscreetly marketed
Some were not educated highly
A prospectus they'll not understand easily

Many of them were retirees
Who have collected CPF monies
The banks knew they were cash-laden
So what if there's no diversification?

Some had only wanted fixed deposits renewed
But instead had their investment strategies reviewed
The banks not caring all this while
If the products fit the customers' risk profile

Some VIP even said something like this
If you're unwilling to take any risk
Leave your money with the CPF for 4% return
A very good rate with no risk taken

* - "Selamat" is Malay for "safe". It is also part of the name of the escaped terrorist.

Below are some funny cartoons published in last Sunday's New Paper:


11 comments:

peter said...

I do remember that Tan Kin Lian, x-CEO of NTUC Income was doing some radio advertisement or maybe also on TV where he was promoting investment-linked insurance policies.

He was asked about risk......maybe someone know exactly what he said then. I remember something like there was risk but the company invest in a basket of XXXXX to iron-out the risk.

Since I did not buy, can someone advise me whether same thing like the recent upheaval about people losing their life-savings?

Sathiya said...

I pity all those who lost their money. Losing all your hard-earned money it not an easy thing to digest.....I can feel their pain. I can donate 50S$ but can't stand cheating of even 10$.

But I believe this case is not cheating. No one had a single clue that Lehman would go bankcrupt. The banks should have done Risk Mitigation though.

Victor said...

Peter, I believe that NTUC Income was not involved in marketing structured products. Mr Tan Kin Lian was speaking about their combined funds when he was still CEO. The funds consist of the following types - Growth Fund (least conservative), Balanced Fund and Conservative Fund (most conservative).

Victor said...

Yes Sathiya, I especially empathise with the retirees who lost their life savings, some to the tune of several hundred thousand dollars. This group of people is past their economic productive age. They are unlikely to be able to rebuild their nest-egg again and would probably have to depend on social welfare (if there's such a thing in Singapore) in order to survive through their twilight years. So sad. :(

peter said...

Then what about those retirees and professionals who lost their money when they invested in Malaysian counters on our Singapore Stock Exchange called CLOB? Was this not something "illegal" as Dr. Mahathir had said when he warned Singapore not to list those Malaysian companies, yet the relevant Singapore authorities went ahead for the next 10 years?

It is like saying those Lehman cases need more sympathy than others? What about those who were encouraged to support SingTEL with their CPF to the tune of "More Good years"?

Can u explain the mechanics of those "Combined Funds" - what ever one wants to call them? Those "Combined Funds" invested in what to pay the investors?

peter said...

I thot these statistics and events look very interesting.

When the Malaysian Government froze the Malaysian shares traded on the Singapore Stock Exchange's CLOB in 1999, some US$5 billion or S$7.4 billion were hanging in the balance; although a few years later investors had to sell their Malaysian shares at a huge loss + paying commission to the agent. many got something like 3 cents to 12 cents for every $1 invested.

Some 174,000 investors were affected, out of which 49,880 banded together under a body.

What was the impact of the Lehman Brothers event? 1,0000 investors and some S$0.5 million was "lost".

We can argue and debate from different platforms and with different reasons but it still boils down to one thing. MONEY and who we believe in the first place.

peter said...

Correction:

Not $0.5million BUT $0.5 billion.

There was something unique in the way this unhappy 1999 event ended.

Throughout 1999 and 2000, investors' hopes were kept high because they were told there was an "interested party" who could break the impasse between Malaysia and the share investors. As it turned out, that "interested party" was a Malaysian company who so little for so much to be gained.

Well I guess something is better than nothing. It will be difficult for a full refund.

yg said...

i want to sell my lemon, i mean minibonds, but so far no takers, leh.

Lam Chun See said...

I have a few friends who gave up their jobs to 'play' shares full time. Dare not ask them whether they got burnt or not.

I have no guts for shares. Would have gone for safe 'lemon' products .. if I had the cash. Sometimes, having more money leads to more headaches.

fr said...

Some retirees may not be well-educated but they have a lot of life experience and generally they are prudent and cautious with thier hard-earned savings, so it is quite unexpected that put all their nest eggs in one unfamiliar basket.

Good thing if they can get back 50%.

peter said...

Was he not the same guy who sang "More Good Years"?