Investors are rightfully worried about the formation of asset bubble after the revelation that Chinese banks lent out US$670.9 billion, a full 91.6% of the country’s lending target for the year in the first quarter. Most are wondering if it was being directed into areas conducive to a long-term recovery. With such a huge sum of money flowing around, coupled with lax regulation and tracking by the banks, it is not difficult to guess which are the likely places the money will end up in. For answers, look no further than the China stock market and prices of real estate.
Not long ago, Beijing, worried that hot money flowing into unwanted sectors could cause bubbles rather than sustain economic growth, has warned mainland banks against using wealth management funds to directly invest in secondary markets of A shares, managed funds and pre-IPO companies. The warning come ahead of the revival of mainland initial public offerings and after an estimated 50 percent of bank lending has been poured into surging stock and real estate markets.
As such, the recent run-up in China stock market cannot be attributed to any improvement in economy or the companies’ fundamentals. Guilin Sanjin Pharmaceutical, the mainland's first IPO since September 2008, was oversubscribed 165 times and raised about 910.8 million yuan.
The sharp reduction in lending in April – to US$87 billion from US$278 billion in March – could be seen as a return to a degree of normalcy. Not as far as the People’s Bank of China is concerned. The central bank advocates a continued loose monetary policy on the grounds that a real economic recovery has yet to take hold. Increased liquidity may help in the short term, but it presents serious long-term risks. Many have highlighted a possible non-performing loan crisis down the road.
Tuesday, June 30, 2009
Sunday, June 21, 2009
No better way to lose - Jackpot machines
Last November, a 49-year-old man won the largest UK jackpot ever - playing an online slot machine. His take was £2,086,585. This, despite what we know to be a universal truth: slot machines (jackpot machines) are the worst bet of them all. They take much more than they give. The maths, the science and the psychology are all against you.
It's why the machines are the darlings of the casinos: they generate between 60 and 80% of all casino profit. According to figures collected by Las Vegas-based gaming expert Michael Bluejay, the return percentage makes the cost of playing fruit machines outrageously high in comparison to other forms of gaming. Games such as blackjack or baccarat give the casino a 1% edge over the player. A slot machine set at a relatively high 90% offers the casino a whopping 10% edge. According to Bluejay, a player on a one-dollar slot machine will on average lose $800 in a ten-hour session. This is money ground away by the machine as winnings are fed back into the machine. The same player over the same time period will lose only an average of a tenth of that ($79) playing a low-intensity game such as roulette. You still lose money at roulette, blackjack and baccarat, but you lose it more slowly; so you enjoy a longer night out.
People talk about strategies, like watching as punters pump in money then hovering like a vulture to move in if it doesn't pay out for him. But random number generators have no memory for the past or plan for the future. They do not make decisions. The machine's outcomes are determined by random numbers and every time you play a machine the odds are exactly the same. It's a myth that the slot machine will tighten up after it has hit the jackpot, or that it will be loose if it hasn't been paying. This is not true. It's like spinning a roulette wheel. Every time you play the odds are the same.
By controlling how often certain symbols that pay out money appear, manufacturers can mathematically control how much money the machine will pay out over its lifetime. Most manufacturers and players agree that machines set to pay out below 75% are far too stingy to maintain player interest, though they certainly exist.
Most people misunderstand the percentages, according to US expert and author Frank Legato. 'People think that because it's a 98% machine that it should pay back 98 cents in every dollar they gamble. No, several hundred people over a couple of months will have got back 98% of everything that was put in that machine.' He claims that even a 98% return machine will make $200 to $300 a day for a casino.
'It's about impression management. The high-frequency gambling, plus near misses, plus the lights and colours and sounds and noises... all contribute to a person staying on the machine. 'Why is there a metal payout tray? So that when coins fall into the tray, you hear the "kerchunk, kerchunk, kerchunk" and it emphasises the win. You go into a casino and there might be 1,000 machines but you'll hear the 20 that are paying out and the coins hitting a pan. What you don't hear are the 980 machines that are losing at the same time.'
It's why the machines are the darlings of the casinos: they generate between 60 and 80% of all casino profit. According to figures collected by Las Vegas-based gaming expert Michael Bluejay, the return percentage makes the cost of playing fruit machines outrageously high in comparison to other forms of gaming. Games such as blackjack or baccarat give the casino a 1% edge over the player. A slot machine set at a relatively high 90% offers the casino a whopping 10% edge. According to Bluejay, a player on a one-dollar slot machine will on average lose $800 in a ten-hour session. This is money ground away by the machine as winnings are fed back into the machine. The same player over the same time period will lose only an average of a tenth of that ($79) playing a low-intensity game such as roulette. You still lose money at roulette, blackjack and baccarat, but you lose it more slowly; so you enjoy a longer night out.
People talk about strategies, like watching as punters pump in money then hovering like a vulture to move in if it doesn't pay out for him. But random number generators have no memory for the past or plan for the future. They do not make decisions. The machine's outcomes are determined by random numbers and every time you play a machine the odds are exactly the same. It's a myth that the slot machine will tighten up after it has hit the jackpot, or that it will be loose if it hasn't been paying. This is not true. It's like spinning a roulette wheel. Every time you play the odds are the same.
By controlling how often certain symbols that pay out money appear, manufacturers can mathematically control how much money the machine will pay out over its lifetime. Most manufacturers and players agree that machines set to pay out below 75% are far too stingy to maintain player interest, though they certainly exist.
Most people misunderstand the percentages, according to US expert and author Frank Legato. 'People think that because it's a 98% machine that it should pay back 98 cents in every dollar they gamble. No, several hundred people over a couple of months will have got back 98% of everything that was put in that machine.' He claims that even a 98% return machine will make $200 to $300 a day for a casino.
'It's about impression management. The high-frequency gambling, plus near misses, plus the lights and colours and sounds and noises... all contribute to a person staying on the machine. 'Why is there a metal payout tray? So that when coins fall into the tray, you hear the "kerchunk, kerchunk, kerchunk" and it emphasises the win. You go into a casino and there might be 1,000 machines but you'll hear the 20 that are paying out and the coins hitting a pan. What you don't hear are the 980 machines that are losing at the same time.'
Saturday, June 6, 2009
Pay 83% premium for hope?
The Singapore stock market has gone spectacularly over the past few months. It would be foolhardy to say otherwise. Apparently, the sense of optimism is now so strong that some speculators are willing to pay a premium of 83% for hope.
Enporis Greenz Limited was formally known as Seksun Corporation Limited, which was principally involved in the manufacture of high-precision metal components and contract manufacturing for the electronics industry, with operations in Singapore, Malaysia, Indonesia, China and the USA. In October 2007, the Company announced the sale of substantially the whole of its assets and business undertakings to Supernova Holdings (Singapore) Pte. Ltd. Following the completion of the sale in February 2008, the Company remained listed on the SGX Mainboard and was renamed as Enporis Greenz Limited. Currently, it is a shell company with no operating business to speak of. The Company continues to explore and assess various investment options to seek viable opportunities in other areas of business.
According to the Listing Manual, the Singapore Exchange Securities Trading Limited (SGX-ST) may remove the Company from the Official List if it is unable to acquire a new business satisfying the requirements for a new listing within 12 months from the time it becomes a cash company. On 30th Jan 2009, the Company managed to obtain an extension of time of 6 months from 31 January 2009 to continue their search of a new business. In the event the Company does not obtain ETL or proceed with the RTO, the SGX-ST will not grant further extension and will proceed to delist the Company.
The time to the deadline of 31st July 2009 is less than 2 months away. It is highly unlikely that Enporis Greenz will be able to consummate a new business, considering the amount of paperwork and logistics to be done. The writing is clearly on the wall as one of the management staff, who is also a substantial shareholder, has steadily pared down his stake from 24.42% to 20.46% in the past few weeks.
In the event that the company is delisted, any cash remaining will be distributed to the shareholders. As of the last financial report, the maximum amount of cash backing per share is approximately $0.03. Enporis Greenz last traded at $0.055 on Friday 5th June, which represents a premium of 83%. In short, speculators are paying 2.5 cents more to punt that the company will successfully find a new business before end July.
Unfortunately, the margin facilities of financial institutions do not allow the shorting of Enporis Greenz's shares. A potential return of 45% in less than 2 months is eye-popping no matter which view one takes.
Enporis Greenz Limited was formally known as Seksun Corporation Limited, which was principally involved in the manufacture of high-precision metal components and contract manufacturing for the electronics industry, with operations in Singapore, Malaysia, Indonesia, China and the USA. In October 2007, the Company announced the sale of substantially the whole of its assets and business undertakings to Supernova Holdings (Singapore) Pte. Ltd. Following the completion of the sale in February 2008, the Company remained listed on the SGX Mainboard and was renamed as Enporis Greenz Limited. Currently, it is a shell company with no operating business to speak of. The Company continues to explore and assess various investment options to seek viable opportunities in other areas of business.
According to the Listing Manual, the Singapore Exchange Securities Trading Limited (SGX-ST) may remove the Company from the Official List if it is unable to acquire a new business satisfying the requirements for a new listing within 12 months from the time it becomes a cash company. On 30th Jan 2009, the Company managed to obtain an extension of time of 6 months from 31 January 2009 to continue their search of a new business. In the event the Company does not obtain ETL or proceed with the RTO, the SGX-ST will not grant further extension and will proceed to delist the Company.
The time to the deadline of 31st July 2009 is less than 2 months away. It is highly unlikely that Enporis Greenz will be able to consummate a new business, considering the amount of paperwork and logistics to be done. The writing is clearly on the wall as one of the management staff, who is also a substantial shareholder, has steadily pared down his stake from 24.42% to 20.46% in the past few weeks.
In the event that the company is delisted, any cash remaining will be distributed to the shareholders. As of the last financial report, the maximum amount of cash backing per share is approximately $0.03. Enporis Greenz last traded at $0.055 on Friday 5th June, which represents a premium of 83%. In short, speculators are paying 2.5 cents more to punt that the company will successfully find a new business before end July.
Unfortunately, the margin facilities of financial institutions do not allow the shorting of Enporis Greenz's shares. A potential return of 45% in less than 2 months is eye-popping no matter which view one takes.
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