Wednesday, September 29, 2010

APPLE Going For Number ONE

Ten years ago, if you asked 1,000 investors to pick out 5 stocks that would be possibly the biggest company in the world, I doubt very much Apple would be even on any of the shortlist. Now Apple looks likely to be near enough to overtake Exxon Mobil. Its fascinating, one company has billions in real assets in the ground and millions of tons of expensive heavy machinery. The other just have Steve Jobs. Now both are jostling for the bragging rights to be the world's biggest company in market cap.

One would have thought Microsoft had a shot 20 years ago, or even Google had a shot 3 years ago. Don't worry, you will know exactly when Apple overtakes Exxon .... all the media will be blaring out that momentous occasion.

Bespoke Investment Group: A year or so ago, Apple (AAPL) eclipsing Microsoft (MSFT) in size was starting to look possible. It became reality a few months ago. Now Apple has its sights on Exxon Mobil (XOM) as the biggest company in the world. Below is a chart of the market caps for Apple and Exxon Mobil going back to 2000. As recently as 2008, the comparison between the two was laughable. Now they're nearly on par with each other and rank as the #1 and #2 biggest companies in the world. A move into the $300s for Apple and some sideways action for Exxon would make Apple #1.

Imagine the question mark that would have popped up in your head had someone said 10 years ago that Apple would be the biggest company in the world but still have less than 10% of the PC market? There isn't a "pc" in "biggest," but there surely is an "i".


Tuesday, September 28, 2010

The Real Business Of 1+3D and The Racing Totalisator

The Edge Weekly reported that the Cheng family is believed to be eyeing the gaming business of the soon-to-be privatised Tanjong plc. Other interested parties are said to be the Genting Group and Multi-Purpose Holdings. The key surprise is that the Chengs could be a new entrant into the NFO (Number Forecast) arena. Sure, many would be keen to claim the last NFO but they could face hurdles in the form of competition objectives and regulatory approvals.

The key is many seem to forget that the "dastardly-run-hands-tied" Racing Totalisator (RTO) will be part of the package. If its just 1+3D operations, thats fine, I am not sure if the bidders are aware of the "most 'beguiling' business unit in the whole of Malaysia". Many would think they know what they are buying, when even Ananda Krishnan cannot get the "political will" to make the necessary changes to the RTO, you think anyone else can???

While AK may be wanting to shed the gaming business to mould the business to be shariah compliant for future fund raising purposes, I doubt that is his main motivation. I mean, he can easily source for lenders, shariah or otherwise. Who does not want a mini-monopoly with the 3rd leg of NFO business in Malaysia? Its a brilliant cash cow. Its the RTO business that is making them crazy.

The Chengs are looking into the deal and have arrived at a valuation of about RM2bn for the entire business. Should the Chengs decide to bid, the proposed acquisition will be done in a private capacity, and that they will probably partner a private equity fund.

Of course the Genting Group would be a keen bidder as well. Four years ago, when Tanjong expressed interest in selling the business, Genting Bhd and Multi-Purpose Holdings had said they were interested, but pricing was a problem then. There has been speculation in the past that Tanjong and Genting could swap assets, with the former hiving off its gaming business in exchange for the latter’s power division. That would make a lot of sense.

For MPHB which owns 51% of Magnum Corp, acquisition of Tanjong’s gaming assets is, on the surface, an easy way to expand its market share. But most NFO outlets are so close to one another that the real value may not be as attractive to Magnum's operations. To relocate some of the outlets to improve yields may not be as easy as it is on paper.

The Cheng family: Headed by Datuk David Cheng, is in the gaming slot machine business, mostly in the Klang Valley. The family is also in the food and beverage industry. One of David’s two sons, Datuk Douglas Cheng, teamed up with Datuk Vincent Tan Ting Wong and Henry Yip to establish the popular Chinese restaurant chain Dragon-I in 2004.

Trust me, AK wants to get rid of the RTO and he wouldn't mind bundling the NFO with it. However all bidders would want the NFO business only and they should get that out of their business model, it will come with the RTO.

For the year ended Jan 2010, NFO under Tanjong recorded an operating profit of RM234.9m while the RTO registered a loss of RM65.8m. For the previous year the RTO business posted losses of RM26.9m. I tell you that the RTO business will be losing RM100m or more a year very soon.

The key here is, what ails RTO. I mean its a monopoly with the 3 turf clubs in Malaysia. For those of you not familiar with horse racing, Malaysian horse racing garners possibly more betting revenue than the Genting Highland casino + illegal football bets + all 4D operators all added together, and is in multiples of that collective sum. I would not be off a lot if I were to say that the number one place on earth for horse race betting is HK, followed by Australia and then Singapore and Malaysia. How on earth can the RTO business be in the red all the time???

Its the most "hands-tied-business" in the country for sure. Its also the biggest sector in the "shadow economy". The country loses billions in taxes foregone, at least we still get taxes from NFOs and the casino business.

There is a lot of inertia with the "boards" that run each turf club, there is so much vested interest. Race fixing is rampant in Malaysia, probably second in the world next to Macau. For each race, the total betting received by the local turf clubs may be around RM300,000. The actual real betting with bookies is conservatively 20x-30x that amount.

Say the government tax is 15% and the RTO gets 10%. Technically the government gets RM45,000, the RTO gets RM30,000. Now, you add the fact that there are at least 30 races a week x 52 = 1,560. The government gets RM45,000 x 1,560 = RM70.2m and the RTO getsRM46.8m. When you start to deduct funds needed to pay the prize money for each race and the usual operating expenses, its a wonder they only make RM80m losses.

If we take the low end of estimate of actual illegal betting, the government is losing 20 x RM70.2m = RM1.4 billion a year in uncollected taxes/duties. While the RTO could very well have gotten 20 x RM46.8m = RM936m in revenue.

Why would the RTO allow that to happen? Firstly, they are not paid as per revenue/profit achieved. It is better to allow for status quo because of "certain information flow". Now, it is so rampant that a substantial number of horse owners are also bookies themselves, how to win at this?

New owners of NFO and RTO would be likely to try to implement the following (which I am sure Tanjong and Ralph Marshall have tried their hardest):
- reduce government taxes by half, the lower the duties, the better the pool payout which will eat into bookies' margins
- improve access, convert at least half of 1+3D outlets to take racing bets and allow for live broadcast at these outlets
- have a truly independent steward board and disciplinary board, now 90% of all riders who "pull" horses get off scot-free, same for the trainers (btw do you know how many jockeys and trainers get bashed up a year ...more than you know)
- have a special task police unit to haul up all illegal bookies, at the tracks and elsewhere, if they can be so effective during the World Cup, this can be done
- remove all the turf club board members, replace with one professional management unit that is paid professionally and with credibility
- work with authorities to block the enterprising internet betting sites continuously

So, think again before you bid for Tanjong's NFO and RTO business. If you want just the former, I think AK will ask to to go fly wau.

Monday, September 27, 2010

Where Are We In The Stock Market Cycle?

The following chart was taken from The Kirk Report. So where are we at the present moment? Despite the fact that we are at the year's high, the feeling does not transpire to the broader market. Safe to say, its an institutional driven rally, mainly into large caps.

If you look at the cycle below, its actually a continuous loop, i.e. the "optimism" coming out of recovery on the extreme right should connect back to the "optimism" on the extreme left.

In terms of sentiment, we are nowhere near the "excitement" and "thrill" side. We are probably on the "hope" and "relief" points currently. Does that mean that the risk element is low then?

Short answer "yes", the risk is not high despite what many bears might want to think.

Even if there is a pullback, I doubt we will go through a massive one. As in any recovery, the lack of participation by private investors is reflective of other market recoveries. Private investors will again tend to gravitate when market sentiment moves to "optimism-excitement" points.

Saturday, September 25, 2010

EPF To Buy PLUS Expressways?

Is this a scoop? THis was reported in an exciting newish blog named Taikuns & Taikors. It now looks like sensibility has won the day with EPF entering the fray to buy PLUS Expressways. I can so no better solution to that. This toll system is too ingrained to be in private hands. At least now, all profits will accrue to EPF holders.

Deepika Padukone

Some twelve million EPF members are in for a windfall as the huge profit stream from Plus will directly boost yearly interest payout to exceed the current average of five percent, though earlier MMC Corp and Asas Serba proposals to buyout Plus are rejected.

The government has given the nod for the Employees Provided Fund to acquire Malaysia's largest tolled highway operator, Plus Expressways Bhd, putting an end to the attempts of two private companies to take over the Khazanah-owned entity.

EPF’s late-entry acquisition pips the proposals made separately by Tan Sri Syed Mokhtar Al-Bukhary’s MMC Corporation Bhd and Tan Sri Halim Saad’s Asas Serba Sdn Bhd to buyout Plus through Khazanah Nasional Bhd, which directly owns 16.74% of Plus and has an indirect stake of 38.51% via UEM Group.

Raising the roughly RM11 to RM12 billion to pay for the 55% of Plus shares now in Khazanah’s hands is considered as “loose change” as EPF has RM402 billion in total asset allocation as at March this year and would not require the pension fund to resort to the debt market.

Plus Expressways Bhd announced a traffic volume of 1,281.4 million Passenger Car Unit kilometer (PCU-km) in July, up four per cent compared with the same period last year.

Deepika Padukone

PLUS manages the North-South Expressway, New Klang Valley Expressway, Federal Highway Route Two and Seremban-Port Dickson Highway.

For the seven-month period ended July 30, traffic increased nine per cent to 9,916.7 million PCU-km from the previous corresponding period.

Meanwhile, its ELITE (North-South Expressway Central Link) subsidiary recorded 137.8 million PCU-km in July, an increase of 10.1 per cent from the corresponding period.

Year to date, traffic rose 13.6 per cent to 911.4 million PCU-KM against the the same period last year.

Read more: Plus Expressways posts 4pc traffic growth

The shifting of a large chunk of a government controlled asset from one institution to another, is seen as the end of strategic assets being placed in the hands of individuals and ushering a new era of compliance on public accountability.

At a stroke, some 12.7 million EPF members will enjoy a windfall, as analysts compute the added cash flow from Plus to EPF will see its members gaining an extra one or two percent in annual interest payout from the present average of 5 percent.

In recent weeks there has been an unprecedented surge in the share price of Plus, touching its all-time high recently of RM4.32 on September 1 from its 52 week low of RM3.20.

Commenting on the government’s move to shift a strategic asset from one institution to another as it matures, in this case transferring Plus from Khazanah to EPF, a senior local banker said, ”It really is a way of sharing corporate profits directly with the public so people can gain from well run business operations within the government stable.”

A stock analyst familiar with the deal adds that the government has taken a lot of brickbats in the past for awarding contracts to individuals and this move marks the end of an era of placing strategic assets in the hands of individuals.

Deepika Padukone

“Almost all the past corporate debacles stemmed from individuals being trusted to manage national assets or assets of strategic importance. However, a mix of over-gearing and perhaps, over-ambition, led to their eventual failure which saw the government being forced to bail them out.

“In fact, Plus was once under the Renong Group and Khazanah was asked to take it over, rehabilitate the company and put in place a strict code of corporate governance.

Plus today is a really top-notch operation that is rated one of the world’s top five tolled highway operators.

“From Putrajaya’s viewpoint, it makes sense to transfer Plus to another state institution that pays out dividends directly to millions of Malaysians. We have to see this as a signal from the present administration that they are using a fresh approach to pass on profits generated by state-controlled companies to the man-in-the-street.

At the same time, the old practice of awarding large-scale state assets to individuals has come to an end,” he said.

The Plus purchase caps an acquisition spree by EPF which saw it take control of property developer MRCB and bank holding company RHB Capital, as a means of controlling large-scale profit generators to pay out a steady dividend pipeline to its members.

Thursday, September 23, 2010

The Economic Transformation Program

My verdict: Good to Pretty Good. Liked the fact that PEMANDU is there, supposedly to ensure proper execution of the projects.

Hwang DBS: The Government held an Open Day to present ideas for the Economic Transformation Program (ETP) on various key economic sectors for the country – including oil, gas & energy, financial services, palm oil and wholesale & trade. In our view, the program, approach and selected ideas/initiatives highlighted inspire optimism. If implemented successfully, we believe the projects will be able to generate greater economic activity.

Among the key projects, we understand that the RM36bn KL MRT, which features in the Greater Kuala Lumpur plan, has received high level of commitment – increasing the likelihood of the project’s approval. Potential beneficiaries: Gamuda (High Conviction Pick; TP: RM4.35), MMC (Buy; TP: RM3.20).

The Rubber Research Institute (RRI) project was also included. Potential beneficiaries: MRCB (High Conviction Pick; TP: RM2.25), WCT (Buy; TP: RM3.60).

Other mega projects include the previously shelved RM8bn high speed train to Singapore (potential beneficiary: YTL Corp; Not Rated) and the Klang river project (potential beneficiaries: SP Setia (Buy; TP RM4.80), YTL Power (Hold; TP: RM2.50), MRCB).

The drive to improve Kuala Lumpur’s attractiveness would also benefit large landowners in the greater KL area such as SP Setia, Bolton (Buy; TP: RM1.50) and DNP (Buy; TP: RM2.25).

Implementation is key. There will definitely be major challenges to some of the initiatives. Implementation is a key test for the ETP. In our opinion, Senator Dato Sri Idris Jala and PEMANDU’s (Performance Management and Delivery Unit) role in facilitating implementation would help enhance the likelihood of success. Successful execution of the ETP would help transform the country and attract investments.

Highlights of Economic Transformation Program
Sector Initiative Potential beneficiaries
Greater KL KL MRT - received high level of commitment Gamuda, MMC
Rubber Research Institute project MRCB, WCT
High speed train to Singapore YTL Corp
Klang river project SP Setia, YTL Power, MRCB
Initiatives to make KL more attractive SP Setia, Bolton, DNP
Oil, gas & energy LNG regasification plant KNM, Dialog, Kencana
Financial services Create regional champion Maybank
Improve capital markets Bursa Msia
Promote bond market Maybank
Business Services Increase level of skilled workforce Jobstreet
Health services Promote generic drug manufacturing and export Pharmaniaga
Education Push for health services education Masterskill
Source: PEMANDU, HwangDBS Vickers Research

ETP: Macro takeaways
NKEA projects will achieve economic growth of 6%
A high income nation with GNI per capita of USD15,000 by 2020
The NKEAs will contribute over 73% of Malaysia’s GNI (USD523 billion in 2020)
92% of funding for the projects will come from private investment and only 8% from public funding
Will generate an additional 3.3 m jobs, over 60% will be in medium-income or high-income salary brackets
NKEA Labs feature 131 EPPs and 60 Business Opportunities
Source: PEMANDU, HwangDBS Vickers Research

Construction sector

From the EPPs (Entry Point Projects) for Greater KL, there were several projects that will provide opportunities for contractors.

MRT – Gamuda and MMC are potential beneficiaries of the project. Gamuda’s orderbook could double and MMC’s triple, but we believe the sector will benefit given the sheer size of the RM36bn project. Among the key projects, we understand that this project has received high level of commitment – increasing likelihood of the project’s approval.

High Speed Rail (HSR) – This RM8bn project was initially proposed in 2008 but put on hold. The lab recommended a study by Land Public Transport Commission (SPAD) and Economic Planning Unit (EPU) to determine the feasibility of the project with results to be tabled to the Cabinet by
January 2011. Potential beneficiary: YTL Corp (Not rated).

Klang river project – In March 2010, the Selangor government appointed three companies to carry out the project that was expected to attract RM50bn worth of investments. Potential beneficiary: YTL Power (Hold; TP: RM2.50), MRCB.

In addition, the Rubber Research Institute (RRI) project was among projects included in the Greater KL National Key Economic Area (NKEA). Potential beneficiaries: MRCB (High
Conviction Pick; TP: RM2.25), WCT (Buy; TP: RM3.60).

Property sector

The “Greater KL” NKEA aims to improve KL’s ranking to one of the Top 20 most liveable cities and economic cities in the world by 2020 (currently ranked 79/130 in recent quality of life survey). Initiatives proposed include:
a) Foreign magnet: Attracting 100 of the world’s top MNCs & high-skilled immigration;
b) Improved connectivity: High-speed rail to Singapore, MRT (integrated urban rail system);
c) New attractions: Rejuvenation of rivers, greener KL, iconic places; and
d) Enhanced services: Pedestrian network, solid waste management.

PEMANDU expects KL population to balloon to 10m by 2010 from 6.5m currently, creating demand for 1m new homes. Areas identified to benefit the most from transformation of KL:
a) High-impact: RMAF base @ Sungai Besi, Dataran Perdana, MATRADE @ Hartamas, RRIM @ Sungai Buloh, Kampung Baru
b) Ripe for redevelopment: Bukit Bintang, Pusat Bandar Damansara, Dataran Sunway, 1 Utama, Subang Bestari, Balakong, Serdang

Aside from GLC/Bumi developers tipped to benefit from government land redevelopment (eg MRCB, Boustead, Bolton, SP Setia, Mah Sing), owners of large landbank and investment assets in KL should also stand to benefit.

Oil and gas

PEMANDU has identified 12 EPPs and 7 BOs (Business Opportunities) for the oil, gas and energy sector under the NKEA. A 3 pronged area of focus – sustain, grow and diversify. The EPPs and BOs are expected to bring about RM76.8bn in GNI (Gross National Income) and create 52,000 jobs by 2020.

Several of the broader initiatives presented included PETRONAS strategies such as enhancing oil recovery in existing fields, developing smaller fields, and the construction of a LNG regasification terminal to meet the nation’s gas demand. However, what we understand that is making the difference is the role that PEMANDU will be playing to ensure smooth and effective implementation of the said EPPs. This, we believe, would be the critical factor leading to the success of the program.

Based on the roadmap shown by PEMANDU, we understand that the government is looking to receive its first LNG imports into the country by 2013. This would mean that the tender for the LNG regasification plant could be out as early as the beginning of 2011, assuming 2 years of construction.

We see KNM Group (Hold; TP: RM0.55), Kencana Petroleum (Not Rated), and Dialog (Not Rated), as potential beneficiaries to the project. The initiatives highlighted include the 10m cubic metres oil storage terminal in the works spearheaded by Dialog and Vopak in Pengarang, Johor. The development of small fields and enhancement of oil recovery should benefit a handful of local oil & gas players.

Tanjung Offshore (Hold; TP: RM1.60) could stand to gain under its engineering and marine divisions while both Alam Maritim (Buy; TP: RM1.40) and Petra Perdana (Fully Valued; TP: RM1.00) could benefit under their OSV operations.

Wednesday, September 22, 2010

HSBC Musical Chairs, Grow Up Old White Boys!

HSBC Holdings chairman Stephen Green (British descent) resigned from his position to become trade minister for the UK government. That's all fine and dandy. Thus the chairman's position is now vacant.

Michael Geoghegan (British descent), who replaced Green as CEO in 2006, is expecting to be promoted to the chairmanship position. However, rumours are now swirling that he might be passed over for that position and may just remain as CEO only.

The favourite to be the new chairman of HSBC is John Thornton (an American) joined HSBC as a non-executive chairman of its North American unit in December 2008, six months after division pushed the bank into the biggest writedowns in its history. The bank has since set aside more than $58 billion to cover bad loans made by its subprime lender Household International, which it purchased in 2003.

HSBC's chief executive Michael Geoghegan now has threatened to quit if he is not promoted to chairman, as the battle for the top job at the bank intensifies. What kind of crap is this? Michael, you are already CEO of HSBC .... HSBC, what other building blocks in life do you want to tick off your fucking wish list? Having sex with Japanese triplet sisters???

Michael, why are you jeopardising the entire HSBC operations by threatening to leave. Where is the company before self thing? This is all me, me, me ... Its obviously not the salary as the CEO will get paid a lot more than the chairman, so its the power. You had to kowtow to Green before as Green was the ex-CEO before being made chairman, but you are not willing to report to any other person as chairman as none were ex-CEOs before. Why the tight ass attitude after reaching the altitude?

Mr Geoghegan was angered by the suggestion that he might be passed over for the role at Europe's biggest bank during a meeting last week. He was told the board was not ready to give him the chairmanship and he was not happy. The way he reacted, the board would be absolutely right NOT to give him the chairmanship. What a petulant old boy? Probably an only child who still can throw tantrums when he is 56. What next, kick an old lady in her shins when you leave the HSBC building just because you were in a foul mood?

The role of chairman at Asia-focused HSBC opened up when the incumbent, Stephen Green, was appointed Britain's trade minister earlier this month. He will take up his new role in early 2011. The decision about the succession is due to be made at a board meeting in Shanghai next Tuesday.

HSBC has traditionally elevated its chief executive to chairman and Hong Kong-based Geoghegan, 56, would not be happy to see another chairman appointed over the top of him. He would be especially angered if the current favourite, former Goldman Sachs banker John Thornton, won the top job. What is this ... entitlement ... like some knighthood if you serve the correct ministries for the correct amount of time??? Michael probably has this sense of entitlement, which is so archaic. Be a professional, do not threaten .... if you do not like they way you are treated, just resign, be a MAN. Why fuck around pouting like a demented child missing his medication.

Michael, even if you get the chairmanship NOW, what kind of respect will you be getting from your colleagues and staff, what will they be whispering behind your back?

If Geoghegan resigns, the favorite to replace him as CEO is Stuart Gulliver, head of the company’s investment bank.

Talking about being pissed off, now this was reported in one of the UK papers:
"HSBC “will be looking to balance out the board between having a British CEO and non-British chairman or vice versa,” said Colin McLean, who manages £650 million at SVM Asset Management in Edinburgh, including HSBC shares."

What kind of crapula is this? I thought HK shooed away the colonial masters since the 90s. Yes, we still have the Jardines reaping their profits from recycling ill gotten gains from Asia 50-100 years ago, and now has "washed clean" the dirty money to own brilliant companies and buildings in Asia. "LOOKING TO BALANCE between a British CEO and a non-British chairman or vice versa".

B.S. Please turn over your share register and see who are HSBC main shareholders, they are mostly not British anymore. HSBC is an Asian bank with a small far flung operations elsewhere. Why is HSBC like Ye Smokehouse Grill or an old English pub with "members only" sign at the door.

You want to be an Asian and get into the higher echelons of HSBC management ~ first get a fucking British degree, not just any degree mind you, has to be Oxford, Cambridge or London School of Economics ... helps if you are from a top private school and plays cricket or rows well, ok then at least know cricket and rugby well enough to hold a decent conversation. Must like beer, warm beer preferably. Dresses conservatively but from Savile Row bespoke. Finally you must know at least 5 white British dudes (dudes only) who are currently holding positions as Managing Director (SVP) or higher in HSBC or other banks/ securities firms (preferably related as well).

So fuck off with the must have one British as CEO or chairman shit, or we will get Agriculture Bank of China and State Bank of India to take over HSBC. ... Other than that, how was your day?

Tuesday, September 21, 2010

Warrants 'Renewal' Should Be Abolished

hng has left a new comment on your post "Islamic Finance, Malaysia's Bright Light":

Hi Dali

Can you advice on PJD and PJD-WB? i’ve bought many PJD on hope on its warrant on basis 3 for 8 as well as its upcoming dividend of 5sen (6.6% yield). PJD have slowly show some movement from 71sen to 76sen now, but its PJD-wb move much more from 4.5sen to current 7sen, a gain of >50%!?

As these PJD-wb also entitle 3 for 8 warrant, its implies market price upcoming warrant at least 20sen (7sen x 8 unit) + (2sen x 3 unit) divided by 3 unit.

What is your opinion on both PJD and PJD-WB, should i exchange in order to gain more exposure?


You are right and the market is pricing the old warrant correctly, and yes, the new warrant should trade between 20 sen-25 sen. Yes you should exchange and get more exposure. I do not follow PJD but on surface, the company is OK. Recently announced full year's net profit rose 133% to RM52.76m, and has a cash balance of RM104m.

Now lets get to the principles of warrants and why these "clauses" to allow for warrants to be renewed, or renewed via a rights issue should be abolished. Warrants are usually issued together with a bond, which means the warrant is detached (i.e. from a convertible bond). The number of warrants multiplied by the conversion price should equal to the bond amount. Hence the basis for a normal warrant is to get it to be converted so that the premiums paid by those warrant holders who convert into new shares will be collected to pay off the bond eventually.

This works if the company performs well, or rather the share price performs and trades much higher than the exercise price. As the time value dwindles or the gearing dwindles towards 1.0x, the warrant will start moving to the no premium or even discount range. This will bring about investors buying the warrant to convert into shares.

If your exercise price was higher than your mother share price towards the end of the warrant period, nobody will convert and your warrant will find its way towards 1 sen level. If a company's warrants do not get converted, it basically means the company will have to fork out funds to pay off the bond at the end of the loan period, or renew the loan on new terms.

The important reasons why this "renewal" thing should be abolished:
- its not a "structured" or transparent decision, the decision lies with the management and/or board of directors
- some out of money warrants do not get extended, some do, its highly discretionary
- the basic rights of people who buy warrants should be protected here, by allowing "renewal" you make it impossible for warrant holders to sell or buy on full logical calculation
- it gives rise to insider trading of a massive scale if insiders were to collect at 1 sen or 2 sen for the longest time and then announce the warrants being given a new lease of life

Time value and gearing are the cornerstones of valuing a warrant, to suddenly give an out of money warrant an additional 5 or 10 years is a huge gift.

If I bought a warrant at 20 sen with 12 months to expiry and the mother share is 1.00 but the conversion price is 1.30, thats a clear investment as the gearing is stupendous at 5x even though the premium is 50% (20 sen + 1.30 / 1.00). After 6 months, the share price stays the same and the warrant moves to 10 sen. Gearing is 10x now while premium is at 40%, which is very high with just 6 months left.

Say with just 60 days to expiry, and the mother share stays at 1.00, the warrant would have dwindled down to 3 sen or 4 sen as it looks near impossible for the mother share to move more than 30% forward in 60 days. Herein lies the dilemma, when do an astute warrant holder sell??? Should he/she factor in a "maybe" the warrants will be renewed??? That is pure b.s. especially when its so "whimsical and totally at someone's discretion" which you have no privy to!!!

In PJD's case, investors might say its a good thing, especially for those who held onto the warrants. What about the really smart investors who sold at 15 sen, 14 sen, 13, sen, 12 sen, 10 sen, 9 sen, 8 sen, 7 sen, 6 sen, 5 sen, 4 sen, 3 sen, 2 sen and ta-dah 1 sen???? What about their "loss"? Were they stupid, noooo, contrary to that, they were smart and knew how to value and trade a warrant properly. Who gained? The stupid investors who bought all the way down below 5 sen (unless they knew something beforehand).

This is blatantly wrong if you weigh this in terms of basic tenets of investing. There should be no guessing and all must be transparent. I would like to haul up all buyers of PJD warrants below 3 sen, and get to the end owners of those trades, don't you?

I am not implying that there was something sinister about the renewal of PJD warrants but we should safeguard a fair level playing field for investors. Why are there guesswork and doubts about this, they should be removed in order to provide a more transparent investing environment.

To rectify that, the rules should be clear from day one of warrants issuance, that the company WILL renew the warrants if it stays out of money on expiry for another 5 years OR that they WON'T. Isn't that fairer?

c.c. SC and Bursa

Thanks to a swift comment, I will provide a swift reply in brackets.
kl said...


Some elaboration to your comments are in order;

PJD-Wb were issued together with a rights issue of shares in 2000, not a bond issue

(Doesn't matter, the principles are the same, whether they were a rights issue attached or even totally free warrants in the first place).

PJD-Wb are not being renewed, will expire in Oct '10 after its 10 year life and out of the money.

(I use the word renewed in brackets. We all know what I am trying to get at. PJB does not get out of jail card because of some twists here and there. Same principles of transparency are lacking).

The new PJD-Wc is a new issue on a basis of 3:8 to both PJD and PJD-Wb holders for another 10 years at 2 sen, the proposals being interdependent.

(Again, does not matter whether it is a 1:1 or 3:8 or even 1:50, the principles have been violated).

PJD does not need the few million Ringgit raised from a cheap new warrants issue. The exercise seems to be an attempt to rescue some value for Wb holders more than anything else. No prizes for deducing who the major holders of Wb are. They are also the major shareholders. (I am not implying PJB needed the money. I wasn't even targeting PJB. I even mentioned how well PJB did in their recent results. It is exactly the creation of value" for major shareholders of the warrant that I am disputing ~ unfair, totally unfair to those who have sold the warrants for the past few weeks or even months).

Islamic Finance, Malaysia's Bright Light

There is a bright light in Malaysia's financial landscape, its Islamic Finance. Malaysia has been competing with the Middle East countries to wrangle the top spot. Malaysia held a good lead prior to the global financial crisis, and for the last 2 years have edged away from the competition to be a clear leader. The Middle East countries have had to grapple with debt restructuring of its own which weighs heavily on their Islamic Finance focus.

Its not just a matter of prestige to be the center for Islamic Finance, its a viable and attractive area of finance. Its potential is enormous. Lagging behind Malaysia are the usual suspects, Saudi Arabia, Bahrain, Qatar and UAE.

The most active category is sukuk or Islamic Bonds. The main difference is that sukuk does not charge interest but rather claims a portion of the issuer's profits. This year alone international borrowers have sold $9.8bn of Islamic Bonds, with 72% of that being issued in Malaysia. Similar bonds issued by the Persian Gulf nations totaled just $2.5bn collectively this year.

The gulf nations had a major real estate tumble and then had to deal with default of sukuks issued by Saad Group (Saudi Arabia) and Investment Daar (Kuwait).

Considering that there is more than $950bn in assets globally that comply with shariah law (mainly deposits), we are looking at a market with strong growth prospects. Even international big banks have been trying to muscle into that territory to get a slice of the action. The most successful to date include HSBC, Citigroup and DBS.

As an indication of things to come, Saturna Capital, the world's biggest shariah compliant equity fund manager has just set up shop in Kuala Lumpur as did Nomura Securities and India's Reliance Capital Asset Management (all shariah compliant fund managers).

Thanks to the push by Bank Negara and SC, last year Malaysia introduced an online trading platform for murabahah transactions where banks and companies can buy and sell commodities based on a price that includes an agreed upon profit margin.

Safe to say that the bulk of the sukuk issuers in Malaysia have been GLCs and government linked debt. In order for this market to see greater acceptance and adoption, we need more non-GLCs to start tapping the market with greater frequency.

Do not lose the lead and edge you have achieved.

Gambler Jumps To Death After Losing HK$5m

Gambler jumps to death from floating casino after losing HK$5m

Dennis Chong / The Standard HK

Monday, September 20, 2010

A 51-year-old mainlander jumped off a 13-deck "floating casino" off Sai Kung after losing HK$5 million playing baccarat.

The gambler, identified by police only as Xu, made his fatal leap off the Star Cruises vessel SuperStar Aquarius as it sailed back to Hong Kong from international waters shortly before 9am yesterday.

Rescuers searched for Xu for almost an hour before fishing him out of the water. He was certified dead by the ship's doctor.

Xu apparently boarded the ship on Saturday for a two-day gambling trip. He was seen betting at the baccarat table right after dinner.

According to several passengers, he gambled until closing at 8am yesterday and lost almost HK$5 million.

He was seen wandering on the deck for about an hour before jumping. Crew were alerted immediately that a man was overboard. The captain sent a rescue team and notified the Hong Kong authorities.

Genting Hong Kong, a Hong Kong- listed company that operates the Star Cruises fleet, said there were 1,500 passengers on board at the time of the incident, which happened in Hong Kong waters.

Police said there are no suspicious circumstances in the case, which was classified as "man overboard."

A police spokesman said they received a report of a man jumping off a ship at 9.50am when the vessel was sailing south of the Kwo Chau islands, south of Sai Kung.

Marine police and the Fire Services Department dispatched rescuers to the area and the Government Flying Services sent a helicopter.


Star Aquarius returned to port with the body, arriving in Hong Kong at 12.30pm.

Passengers disembarked before police investigators boarded the vessel to inspect the body. It was later transferred to Kwai Chung Mortuary.

A Genting Hong Kong spokeswoman said the company is getting in touch with the man's next-of- kin.

According to the company's website, SuperStar Aquarius departs daily from Hong Kong and, besides casino facilities, has a variety of entertainment and sports facilities.

Monday, September 20, 2010

Clair de Lune

If ever there was a song or a piece of music that deserves its own special posting, it has to be Clair de Lune. You cannot even call it a song as that seems to be belittling the music. Yes, it has to be called that masterpiece composition by Claude Debussy.

If you ever needed to find solace, calmness and one with the world, just listen to Clair de Lune, possibly my favourite piece of music ever, and I am sure many of you feel the same.

Listening to Clair de Lune kind of makes me feel that all people of the earth are so alike. I don't think anyone on earth do not feel the same when they listen to this song ~ any race, any nationality, any political affiliation, any religious group, everyone ~ we all feel the same kind of wonderment and will be moved by it. Coincidence or the humanity of it all.

Translated, its called Moonlight, named after Paul Verlaine's poem of the same name. For such a wonderful piece of music, I tried to locate the movies which have used the piece of music. To my horror and to Debussy as well, many do not do justice by parading the music alongside so-so movies with even blander plots.

Topping the list of horrors has to be using Claire de Lune in Twilight, of course. There are many movies including Ocean's Eleven & Ocean's Thirteen, Seven Years in Tibet, Atonement, Man On Fire, The Darjeeling Limited, Ficció, El próximo oriente, The First Day of My Life, The Right Stuff, Antonieta, Casino Royale, Gran Turismo 4, The Game, Mùi du du xanh - L'odeur de la papaye verte (aka The Scent of Green Papaya), Tôkyô Sonata, Valley of Abraham,
Bloodsport 3 (OMG), Castaway, Dog Soldiers, ... I must have missed some somewhere.

Movies that feature the music appropriately: Tokyo Sonata, Castaway and The Right Stuff. But the best movie has to be Frankie & Johnny, starring Al Pacino and the wonderful Michelle Pfieffer. The movie was way under-rated, the story enchanting and the acting was amazing. The song was waaayyyy appropriate. In fact, I thought the entire plot and movie was made so that they could feature the song towards the last 15 minutes of the movie.

Anthony Tobin 2007, piano solo.

The tough task here is selecting which of the four versions you like best. They are all wonderful. I think for this piece, less is more, I love David's version best.

David Oistrakh plays beautifully, recorded in Paris, 1962, with Frida Bauer on piano.

John Williams & Julian Bream

Julian Lloyd Webber with his cello and full orchestral accompaniment.

IJM Land To Be Privatised?

This was from a local broker:

Market talk indicates IJM Land may be privatized by IJM Corp, its parent company. Further details are not available at this point. We spoke to management and they were unable to comment.

We are quite surprise by the rumor given injection of IJM Properties (previously 100% owned by IJM Corp) into RB Land and subsequent rebranding into IJM Land in mid 2008. IJM Land has suffered low liquidity as it is tightly held by its parent, IJM Corp, which has 62.5% stake. Inclusive of EPF (8.7%) and GSIC (7.3%) stake, free float is 21.5%. The stock has been a laggard with only +0.9% Ytd returns vs. KLPRP +11.3%.

Catch-22 situation. Although it is unorthodox to take private a subsidiary that has been listed not too long ago, we will not be surprised if it happens. IJM Corp is unlikely to dilute its interest as more than 50% of its pretax profit is derived from property division in the future. Given the difficulties in replenishing its large orderbook of more than RM5b, the group will be more reliant on IJML earnings.

However, the low liquidity of the stock meant that IJM Corp will never be able to fully realize the value of IJML. In fact, many foreign funds are interested in IJML given that it is an alternative proxy to SP Setia and the Malaysian property sector, but are unable to invest due to lack of liquidity.

(Privatisation is possible as none of the substantial shareholders are wanting to sell at current levels. No liquidity means no other institutions are likely to buy in as they may find it hard to buy big blocks or sell them when they want to. This will make it less attractive as a listed vehicle).

IJM Land valuations. At current price of RM2.38, IJML is trading at 1.4x FY11E PBV while FY11-12E PER is 14x-13x. Our RM2.80 fair value (SoP RNAV) implies 1.7x FY11E PBV, which is a discount to SP Setai’s current FY11E PBV of 2.2x or a premium to average property development companies’ average P/BV of 0.9x. Assuming privatization price at our TP, which is 18% premium to current price or 1.7x FY11E PBV, The value of the shares not owned by IJM now is worth RM1.16b.

FY11E BV/sh (RM)

PBV (x)

discount to SP PBV
discount to SP PBV
discount to SP PBV
discount to SP PBV
discount to SP PBV
discount to SP PBV
discount to SP PBV

(Yes, you can compare with SP Setia, but its a different animal. SP Setia is like a charged up counter with very important GLCs as shareholders. SP Setia is likely to be a critical beneficiary of some of the upcoming big government land spin offs).

RCULS conversion. There is RM400.0m nominal value RCULS (maturity in 2013), owned by IJM Corp, which is unconverted in IJML’s books. IJM Corp can convert these into shares at any time at a conversion rate of RM1.74, which is ‘in the money’. If IJM Corp converts all RCULS, share base will be enlarged by 21% to 1.34b whilst IJM Corp’s shareholding increases to 68.9% from current 62.5%, giving them a higher shareholding to start the privatization exercise with high chances of success. Alternatively, the other two substantial shareholders EPF and GSIC could also be persuaded to act in concert with IJM for the privatization exercise.

Privatization of listed property arm of construction and conglomerate companies is not unusual. Sime Darby privatized Sime Properties in its mega merger. WCT and IOI privatized WCT Land and IOI Properties respectively. Both WCT Land and IOI Properties were privatized at 1.5x – 1.7x P/BV and at 4%-17% premium over the market price on the date of announcement.

The incentive to privatize becomes more apparent. Listed property developers are under pressure to maintain a pipeline of launches to maintain an increasing profit track record. By privatizing the property company, it has no pressure to do so especially in light of a slowdown in the growth rate of property launches, prices and take-up rates as BNM is mulling on capping LVR and pulling the plug on interest absorption schemes.

We think the privatization is possible. At IJM Corp’s Company level, net gearing is 0.22x, which is ample room to gear up further. On IJM Land’s level and assuming all RCULS converted, its net gearing will be very low at 0.03x. Assuming if IJM undertake an LBO structure to privatize IJML and subsequently “push” the debt down to IJML operating levels, IJM Land’s net gearing will be 0.69x. Given a strong FCF of RM200m-RM240m p.a. in the next 3 years, it can easily service a 5-year RM1.16b debt in addition to the current operational debt outstanding. We continue to maintain BUY on IJM Land with fair value of RM2.80.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

How To Spot A Good Trade Part 3

I wouldn't recommend this trade to anyone who has not logged more than 10 years trading experience in the markets. Let me clarify here, its a trade, its not even a trade based on fundamentals. Its a trade based on meeting certain crucial parameters, its a fun trade.

Since this actually happened on Friday, I will be able to go through in detail the steps and thought process. On a normal week, I get tips on at least 2-3 stocks. Usually I do not get many tips as I, more often than not, will drill down on the "real value case" of the tips. Who, why, when .... and then another round of ... why now? So, I have manage to filter down my contacts to the bare minimum as the run of the mill types would not have get much air time with me.

Always keep a track record of each of your "informant" - its a two way thing. Now more often than not, my contacts are really running through their counters through me for verification and veracity. I usually do not act on the information unless they tick the right boxes. I do not cry if a tip goes well and I did not get in, you cannot win them all, you are not supposed to.

It was last Friday and I was driving back to Ipoh for my cousin's wedding. Got the call to look out for UEM Land, my initial thoughts ... hmmm ... sounds good judging from the current good run on index stocks and GLCs. Tick.

I asked for the price range traded for the day, it was up 5 sen still towards the high. Its a Friday afternoon, most traders would have closed off their positions, not many would be taking on new ones with just an hour or two left, and over the weekend to boot. Hence for a flat day, this was significant for a stock to be holding near its highs on a Friday afternoon. Tick.

The price range and volume was pretty solid. I expect this kind of volume build up as a second gear move, watch for third and fourth gears shifts.Tick.

Do I know of anything happening with UEM Land, no ... this is actually good as that meant corporate developments not out yet. It does not matter what it is for a trade (I know that sounds irresponsible but I am laying out guidelines for a pure trade not on fundamentals). Tick.

I of course asked for more info, no more info was forthcoming as it was hush hush. Granted, no need to push anymore. Its better I do not know anything. Went long for a trade.

Now, let's see if this trade works out on Monday and Tuesday ... lol....

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Friday, September 17, 2010

Dude, Where's My 50 Points Gone To???

You go for an extended holiday, thinking that nothing much will happen to the markets with the plethora of holidays in the first half of September ... and wallah .. Dude, where's my 50 points gone to? In the blink of an eye, the index climbed as if indexed stocks were limited editions of Jessica Alba's photo shoots.

We all can be cynical to think that it can be so easy to move the main board index as they are mainly tightly held by the usual suspects. To be fair, I do think there was a pick up in the inflow of foreign funds into Malaysian equities despite the many negative "big picture articles", "asset allocation articles" against Malaysian stocks. A collusion somewhere?

It is easier to be a bear than a bull this year. The worst of the bears think there will be a double dip recession and possibly deflation as well. Production, shipping and growth indices have been benign. My bullishness on equities have not been predicated on the reverse opinion of the above factors (although I do think the reverse is correct).

My bullishness is based on options available on asset classes in light of prevailing economic conditions. When risk aversion was high, no asset classes were favoured except for cash, bonds and gold. Risk aversion will result in over selling. The bulk of the recovery in 2009 had been due to filling up that gap.

In recent months, the equity markets, especially emerging ones, have been doing well because risk aversion had receded. We have side stepped the Euro-crisis. Next we have too much liquidity in the system which have propelled US Treasuries and gold into mini bubbles of their own.

Emerging markets are kind of flavour of the year thanks to the stagnating major developed markets.

Equities are good not so much because their growth is going to be spectacular. They are good because the alternatives are getting ridiculous. In particular, those from emerging markets with a strong currency outlook (Malaysia, Brazil, China). In particular, those emerging markets with their own sustainable domestic demand (Thailand, Indonesia). While the run up will push valuations into demanding levels, they are sustainable for a while.

I see the KLCI hovering below 1500 for some weeks at least. The 1500 level will need to be tested a few times. While the main board index has been zooming up, most of the retail participation has been naught. Don't worry, second liners will soon have their day in the sun again as the KLCI starts to hover around 1450-1470 in the coming days.

I can see some interesting volume build up in the following stocks, which are not entirely speculative but with some fundamentals / corporate developments in the works. They could be decent trades in the coming days and weeks:

SP Setia





NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Tuesday, September 14, 2010

Murakami @ Versailles

I am no manga fan but I consider Takashi Murakami a great artist in his own right. There is something "not quite right" to have Murakami's creations in a place like Chateau de Versailles. I mean, look at some of the pictures, the magnificent old paintings, sculptures and architecture looked so out of place, in fact they looked rather embarrassed to be in the same room as Miss Ko. LOL ...

Naturally some critics were up in arms over this exhibition, but hey art is art. Its compelling, even disruptive, but move over kiddo ... Great job by the curator to bring Murakami there! If you look at the old masters, sculptures ... they seemed to be saying "get me outta here, this is so discomforting".

Murakami's creations are fun, they make you feel "young", they are vibrant and in your face. Great stuff!!!

Takashi Murakami’s “Tongari-Kun” (2003–2004), part of the artist’s installation at Versailles.

Takashi Murakami versailles
Miss Ko

Murakami has written:

“For a Japanese like me, the Château de Versailles is one of the greatest symbols of Western history. It is the emblem of an ambition for elegance, sophistication and art that most of us can only dream of.
Of course, we are aware that the spark that set fire to the powder of the Revolution came directly from the centre of the building.

But, in many respects, everything is transmitted to us as a fantastic tale coming from a very distant kingdom. Just as French people can find it hard to recreate in their minds an accurate image of the Samurai period, the history of this palace has become diminished for us in reality.


So it is probable that the Versailles of my imagination corresponds to an exaggeration and a transformation in my mind so that it has become a kind of completely separate and unreal world. That is what I have tried to depict in this exhibition.

I am the Cheshire cat that welcomes Alice in Wonderland with its diabolic smile, and chatters away as she wanders around the Château.

With a broad smile I invite you all to discover the wonderland of Versailles.”

Imagine the juxtapositions! The exhibition will run from September 14th through December 12th, 2010.


20100908 P9082858 600x450 Takashi Murakami at Le Château de Versailles

Takashi Murakami @ Chateau de Versailles

portrait murakami

Takashi Murakami is one of the most thoughtful and thought-provoking Japanese artists of the 1990s. His works include cartoon-style paintings, almost minimalist sculptures, giant inflatable balloons, events, watches, t-shirts and other products manufactured in series, many of which bear his figure-signature, Mr. DOB.

Takashi Murakami was born in Tokyo in 1963 and holds a BFA, MFA and Ph D from the National University of Fine Arts and Music of Tokyo. He has performed one-man shows in the Marianne Boesky Gallery in New York (2003), the Fondation Cartier pour l’art contemporain in Paris (2002), the Museum of Contemporary Art in Tokyo (2001), the Museum of Fine Arts in Boston (2001) and the Emmanuel Perrotin gallery in Paris (2001).

Alongside his artistic work, Takashi Murakami is a curator, an entrepreneur and a student of contemporary Japanese sociology. In 2000, Murakami was the curator of an exhibition of Japanese art called "Superflat" and representing a movement interested in mass entertainments and their consequences on contemporary aesthetics. Murakami is also known worldwide for his collaboration with the designer Marc Jacobs in the design of handbags and other products for the Louis Vuitton fashion house.

The work of Takashi Murakami has been exhibited in prestigious museums all over the world, including the Metropolitan Museum of Art in Tokyo, the Museum of Fine Arts in Boston and a recent one-man retrospective at Bard College Museum of Art.

Through his work Murakami plays on oppositions between East and West, the past and the present, high art and low culture, while remaining always amusing and accessible. His work depicts the worlds of popular contemporary Japanese cartoons and historic Japanese painting (he received a classic training in art and possesses a PhD in the traditional nihon-ga style). His recurring figure, Mr. DOB, appears on T-shirts, posters, key rings, etc. around the world and has even appeared as a 3-D sculpture. Murakami was also the curator of "Super Flat", an exhibition grouping contemporary Japanese artists.

Monday, September 13, 2010

IHT and NYT Interview Lee Kuan Yew

I was engrossed reading the following article. We all have our opinions on the man. I think he is an outstanding pragmatic statesman. Singapore would not be where it is without his vision, strategies and execution ability ~ though we may not fully agree with all the things he did, overall, it has been top notch. You don't gain many things without sacrificing some. The interview below did more than shed some fresh light on Mr. Lee ... how he faces adversity, death and the humanity of it all were illuminating and gives him a more down to earth persona.


The following is the transcript of the interview Seth Mydans had with Minister Mentor Lee Kuan Yew, for the New York Times and the International Herald Tribune. The interview was held on 1 September 2010.

Mr Lee: “Thank you. When you are coming to 87, you are not very happy..”

Q: “Not. Well you should be glad that you’ve gotten way past where most of us will get.”

Mr Lee: “That is my trouble. So, when is the last leaf falling?”

Q: “Do you feel like that, do you feel like the leaves are coming off?”

Mr Lee: “Well, yes. I mean I can feel the gradual decline of energy and vitality and I mean generally every year when you know you are not on the same level as last year. But that is life.”

Q: “My mother used to say never get old.”

Mr Lee: “Well, there you will try never to think yourself old. I mean I keep fit, I swim, I cycle.”

Q: “And yoga, is that right? Meditation?”

Mr Lee: “Yes.”

Q: “Tell me about meditation?”

Mr Lee: “Well, I started it about two, three years ago when Ng Kok Song, the Chief Investment Officer of the Government of Singapore Investment Corporation, I knew he was doing meditation. His wife had died but he was completely serene. So, I said, how do you achieve this? He said I meditate everyday and so did my wife and when she was dying of cancer, she was totally serene because she meditated everyday and he gave me a video of her in her last few weeks completely composed completely relaxed and she and him had been meditating for years. Well, I said to him, you teach me. He is a devout Christian. He was taught by a man called Laurence Freeman, a Catholic. His guru was John Main a devout Catholic. When I was in London, Ng Kok Song introduced me to Laurence Freeman. In fact, he is coming on Saturday to visit Singapore, and we will do a meditation session. The problem is to keep the monkey mind from running off into all kinds of thoughts. It is most difficult to stay focused on the mantra. The discipline is to have a mantra which you keep repeating in your innermost heart, no need to voice it over and over again throughout the whole period of meditation. The mantra they recommended was a religious one. Ma Ra Na Ta, four syllables. Come To Me Oh Lord Jesus. So I said Okay, I am not a Catholic but I will try. He said you can take any other mantra, Buddhist Om Mi Tuo Fo, and keep repeating it. To me Ma Ran Na Ta is more soothing. So I used Ma Ra Na Ta. You must be disciplined. I find it helps me go to sleep after that. A certain tranquility settles over you. The day’s pressures and worries are pushed out. Then there’s less problem sleeping. I miss it sometimes when I am tired, or have gone out to a dinner and had wine. Then I cannot concentrate. Otherwise I stick to it.”

Q: “So…”

Mr Lee: “.. for a good meditator will do it for half-an-hour. I do it for 20 minutes.”

Q: “So, would you say like your friend who taught you, would you say you are serene?”

Mr Lee: “Well, not as serene as he is. He has done it for many years and he is a devout Catholic. That makes a difference. He believes in Jesus. He believes in the teachings of the Bible. He has lost his wife, a great calamity. But the wife was serene. He gave me this video to show how meditation helped her in her last few months. I do not think I can achieve his level of serenity. But I do achieve some composure.”

Q: “And do you find that at this time in your life you do find yourself getting closer to religion of one sort or another?”

Mr Lee: “I am an agnostic. I was brought up in a traditional Chinese family with ancestor worship. I would go to my grandfather’s grave on All Soul’s Day which is called “Qingming”. My father would bring me along, lay out food and candles and burn some paper money and kowtow three times over his tombstone. At home on specific days outside the kitchen he would put up two candles with my grandfather’s picture. But as I grew up, I questioned this because I think this is superstition. You are gone, you burn paper money, how can he collect the paper money where he is? After my father died, I dropped the practice. My youngest brother baptised my father as a Christian. He did not have the right to. He was a doctor and for the last weeks before my father’s life, he took my father to his house because he was a doctor and was able to keep my father comforted. I do not know if my father was fully aware when he was converted into Christianity.”

Q: “Converted your father?”

Mr Lee: “Yes.”

Q: “Well this happens when you get close to the end.”

Mr Lee: “Well, but I do not know whether my father agreed. At that time he may have been beyond making a rational decision. My brother assumed that he agreed and converted him.”

Q: “But…”

Mr Lee: “I am not converted.”

Q: “But when you reach that stage, you may wonder more than ever what is next?”

Mr Lee: “Well, what is next, I do not know. Nobody has ever come back. The Muslims say that there are seventy houris, beautiful women up there. But nobody has come back to confirm this.”

Q: “And you haven’t converted to Islam, knowing that?”

Mr Lee: “Most unlikely. The Buddhist believes in transmigration of the soul. If you live a good life, the reward is in your next migration, you will be a good being, not an ugly animal. It is a comforting thought, but my wife and I do not believe in it. She has been for two years bed-ridden, unable to speak after a series of strokes. I am not going to convert her. I am not going to allow anybody to convert her because I know it will be against what she believed in all her life. How do I comfort myself? Well, I say life is just like that. You can’t choose how you go unless you are going to take an overdose of sleeping pills, like sodium amytal. For just over two years, she has been inert in bed, but still cognitive. She understands when I talk to her, which I do every night. She keeps awake for me; I tell her about my day’s work, read her favourite poems.”

Q: ‘And what kind of books do you read to her?”

Mr Lee: “So much of my time is reading things online. The latest book which I want to read or re-read is Kim. It is a beautiful of description of India as it was in Kipling’s time. And he had an insight into the Indian mind and it is still basically that same society that I find when I visit India. “

Q: “When you spoke to Time Magazine a couple of years ago, you said Don Quixote was your favourite?”

Mr Lee: “Yes, I was just given the book, Don Quixote, a new translation.”

Q: “But people might find that ironic because he was fantasist who did not realistically choose his projects and you are sort of the opposite?”

Mr Lee: “No, no, you must have something fanciful and a flight of fancy. I had a colleague Rajaratnam who read Sci-Fi for his leisure.”’

Q: “And you?”:

Mr Lee: “No, I do not believe in Sci-Fi.”

Q: “But you must have something to fantasise.”

Mr Lee: “Well, at the moment, as I said, I would like to read Kim again. Why I thought of Kim was because I have just been through a list of audio books to choose for my wife. Jane Austen, Emily Bronte, books she has on her book shelf. So, I ticked off the ones I think she would find interesting. The one that caught my eye was Kim. She was into literature, from Alice in Wonderland, to Adventures with a Looking Glass, to Jane Austen’s Persuasion, Pride and Prejudice, and Sense and Sensibility. Jane Austen was her favourite writer because she wrote elegant and leisurely English prose of the 19th century. The prose flowed beautifully, described the human condition in a graceful way, and rolls off the tongue and in the mind. She enjoyed it. Also Chaucer’s Canterbury Tales. She was an English Literature major.”

Q: “You are naming books on the list, not necessarily books you have already read, yes?”

Mr Lee: “I would have read some of them.”

Q: “Like a Jane Austen book, or Canterbury Tales?”

Mr Lee: “No, Canterbury Tales, I had to do it for my second year English Literature course in Raffles College. For a person in the 15th Century, he wrote very modern stuff. I didn’t find his English all that archaic. I find those Scottish poets difficult to read. Sometimes I don’t make sense of their Scottish brogue. My wife makes sense of them. Then Shakespeare’s sonnets.”

Q: “You read those?”

Mr Lee: “I read those sonnets when I did English literature in my freshman’s year. She read them.”

Q: “When you say she reads them now, you’re the one who reads them, yes?”

Mr Lee: “Yes, I read them to her.”

Q: “But you go to her.”

Mr Lee: “Yes, I read from an Anthology of Poems which she has, and several other anthologies. So I know her favourite poems. She had flagged them. I read them to her.”

Q: “She’s in the hospital? You go to the hospital?”

Mr Lee: “No, no, she’s at home. We’ve got a hospital bed and nurses attending to her. We used to share the same room. Now I’m staying in the next room. I have to get used to her groans and grunts when she’s uncomfortable from a dry throat and they pump in a spray moisture called “Biothene” which soothes her throat, and they suck out phlegm. Because she can’t get up, she can’t breathe fully. The phlegm accumulates in the chest but you can’t suck it out from the chest, you’ve got to wait until she coughs and it goes out to her throat. They suck it out, and she’s relieved. They sit her up and tap her back. It’s very distressing, but that’s life.”

Q: “Yes, your daughter on Sunday wrote a moving column, movingly about the situation referring to you.”

Mr Lee: “How did you come to read it?”

Q: “Somebody said you’ve got to read that column, so I read it.”

Mr Lee: “You don’t get the Straits Times.”

Q: “I get it online actually. I certainly do, I follow Singapore online and she wrote that the whole family suffers of course from this and she wrote the one who’s been hurting the most and is yet carrying on stoically is my father.”

Mr Lee: “What to do? What else can I do? I can’t break down. Life has got to go on. I try to busy myself, but from time to time in idle moments, my mind goes back to the happy days we were up and about together.”

Q: “When you go to visit her, is that the time when your mind goes back?”

Mr Lee: “No, not then. My daughter’s fished out many old photographs for this piece she wrote and picked out a dozen or two dozen photographs from the digital copies which somebody had kept at the Singapore Press Holdings. When I look at them, I thought how lucky I was. I had 61 years of happiness. We’ve got to go sometime, so I’m not sure who’s going first, whether she or me. So I told her, I’ve been looking at the marriage vows of the Christians. The best I read was,” To love, to hold and to cherish, in sickness and in health, for better or for worse, till death do us part.” I told her I would try and keep you company for as long as I can. She understood.”

Q: “Yes, it’s been really.”

Mr Lee: “What to do? What can you do in this situation? I can say get rid of the nurses. Then the maids won’t know how to turn her over and then she gets pneumonia. That ends the suffering. But human beings being what we are, I do the best for her and the best is to give her a competent nurse who moves her, massages her, turns her over, so no bed sores. I’ve got a hospital bed with air cushions so no bed sores. Well, that’s life. Make her comfortable.”

Q: “And for yourself, you feel the weight of age more than you have in the past?”

Mr Lee: “I’m not sure. I marginally must have. It’s stress. However, I look at it, I mean, it’s stress. That’s life. But it’s a different kind of stress from the kind of stress I faced, political stresses. Dire situations for Singapore, dire situations for myself when we broke off from Malaysia, the Malays in Singapore could have rioted and gone for me and they suddenly found themselves back as a minority because the Tunku kicked us out. That’s different, that’s intense stress and it’s over but this is stress which goes on. One doctor told me, you may think that when she’s gone you’re relieved but you’ll be sad when she’s gone because there’s still the human being here, there’s still somebody you talk to and she knows what you’re saying and you’ll miss that. Well, I don’t know, I haven’t come to that but I think I’ll probably will because it’s now two years, May, June, July, August, September, two years and four months. It’s become a part of my life.”

Q: “She’s how old now?”

Mr Lee: “She’s two-and-a-half years older than me, so she’s coming on to 90.”

Q: “But you did make a reference in an interview with Time magazine to something that goes beyond reason as you put it. You referred to the real enemy by Pierre D’Harcourt who talked about people surviving the Nazi, it’s better that they have something to believe in.”

Mr Lee: “Yes, of course.”

Q: “And you said that the Communists and the deeply religious fought on and survived. There are some things in the human spirit that are beyond reason.”

Mr Lee: “I believe that to be true. Look, I saw my friend and cabinet colleague who’s a deeply religious Catholic. He was Finance Minister, a fine man. In 1983, he had a heart attack. He was in hospital, in ICU, he improved and was taken out of ICU. Then he had a second heart attack and I knew it was bad. I went to see him and the priest was giving him the last rites as a Catholic. Absolutely fearless, he showed no distress, no fear, the family was around him, his wife and daughters, he had four daughters. With priest delivering the last rites, he knew he was reaching the end. But his mind was clear but absolutely calm.”

Q: “Well, I am more like you. We don’t have something to cling to.”

Mr Lee: “That’s our problem.”

Q: “But also the way people see you is supremely reasonable person, reason is the ultimate.”

Mr Lee: “Well, that’s the way I’ve been working.”

Q: “Well, you did mention to Tom Plate, they think they know me but they only know the public me?”

Mr Lee: “Yeah, the private view is you have emotions for your close members of your family. We are a close family, not just my sons and my wife and my parents but my brothers and my sister. So my youngest brother, a doctor as I told you, he just sent me an email that my second brother was dying of a bleeding colon, diverticulitis. And later the third brother now has got prostate cancer and has spread into his lymph nodes. So I asked what’re the chances of survival. It’s not gotten to the bones yet, so they’re doing chemotherapy and if you can prevent it from going into the bones, he’ll be okay for a few more years. If it does get to the bones, then that’s the end. I don’t think my brother knows. But I’ll probably go and see him.”

Q: “But you yourself have been fit. You have a stent, you had heart problem late last year but besides that do you have ailments?”

Mr Lee: “Well, aches and pains of a geriatric person, joints, muscles but all non-terminal. I go in for a physiotherapy, maintenance once a week, they give me a rub over because when I cycle, my thighs get sore, knees get a little painful, and so the hips.”

Q: “These are the signs of age.”

Mr Lee: “Yeah, of course.”

Q: “I’m 64. I’m beginning to feel that and I don’t like it and I don’t want to admit to myself.”

Mr Lee: “But if you stop exercising, you make it worse. That’s what my doctors tell me, just carry on. When you have these aches and pains, we’ll give you physiotherapy. I’ve learnt to use heat pads at home. So after the physiotherapy, once a week, if I feel my thighs are sore, I just have a heat pad there. You put in the microwave oven and you tie it around your thighs or your ankles or your calves. It relieves the pain.”

Q: “So you continue to cycle.”

Mr Lee: “Oh yeah.”

Q: “Treadmill?

Mr Lee: “No, I don’t do the treadmill. I walk but not always. When I’ve cycled enough I don’t walk.”

Q: “That’s your primary exercise, swimming?”

Mr Lee: “Yeah, I swim everyday, it’s relaxing.”

Q: “What other secrets, I see you drink hot water?”

Mr Lee: “Yes.”

Q: “Tell me about it.”

Mr Lee: “Well, I used to drink tea but tea is a diuretic, but I didn’t know that. I used to drink litres of it. In the 1980s, I was having a conference with Zhou Ziyang who was then Secretary-General of the Communist Party in the Great Hall of the People. The Chinese came in and poured more tea and hot water. I was scoffing it down because it kept my throat moistened, my BP was up because more liquid was in me. Halfway through, I said please stop. I’m dashing off. I had to relief myself. Then my doctors said don’t you know that tea is a diuretic? I don’t like coffee, it gives me a sour stomach, so okay, let’s switch to water.”

Q: “You know you had the hot water when I met you a couple of years ago and after I told my wife about that, she switched to hot water. She’s not sure why except that you drink hot water, so she’s decided to.”

Mr Lee: “Well, cold water, this was from my ENT man. If you drink cold water, you reduce the temperature of your nasal passages and throat and reduce your resistance to coughs and colds. So I take warm water, body temperature. I don’t scald myself with boiling hot water. I avoid that. But my daughter puts blocks of ice into her coffee and drinks it up. She’s all right, she’s only 50-plus.

Q: “Let me ask a question about the outside world a little bit. Singapore is a great success story even though people criticize this and that. When you look back, you can be proud of what you’ve done and I assume you are. Are there things that you regret, things that you wished you could achieve that you couldn’t?”

Mr Lee: “Well, first I regret having been turfed out of Malaysia. I think if the Tunku had kept us together, what we did in Singapore, had Malaysia accepted a multiracial base for their society, much of what we’ve achieved in Singapore would be achieved in Malaysia. But not as much because it’s a much broader base. We would have improved inter-racial relations and an improved holistic situation. Now we have a very polarized Malaysia, Malays, Chinese and Indians in separate schools, living separate lives and not really getting on with one another. You read them. That’s bad for us as close neighbours.”

Q: “So at that time, you found yourself with Singapore and you have transformed it. And my question would be how do you assess your own satisfaction with what you’ve achieved? What didn’t work?”

Mr Lee: “Well, the greatest satisfaction I had was my colleagues and I, were of that generation who were turfed out of Malaysia suffered two years under a racial policy decided that we will go the other way. We will not as a majority squeeze the minority because once we’re by ourselves, the Chinese become the majority. We made quite sure whatever your race, language or religion, you are an equal citizen and we’ll drum that into the people and I think our Chinese understand and today we have an integrated society. Our Malays are English-educated, they’re no longer like the Malays in Malaysia and you can see there are some still wearing headscarves but very modern looking.”

Q: “That doesn’t sound like a regret to me.”

Mr Lee: “No, no, but the regret is there’s such a narrow base to build this enormous edifice, so I’ve got to tell the next generation, please do not take for granted what’s been built. If you forget that this is a small island which we are built upon and reach a 100 storeys high tower block and may go up to 150 if you are wise. But if you believe that it’s permanent, it will come tumbling down and you will never get a second chance.”

Q: “I wonder if that is a concern of yours about the next generation. I saw your discussion with a group of young people before the last election and they were saying what they want is a lot of these values from the West, an open political marketplace and even playing field in all of these things and you said well, if that’s the way you feel, I’m very sad.”

Mr Lee: “Because you play it that way, if you have dissension, if you chose the easy way to Muslim votes and switch to racial politics, this society is finished. The easiest way to get majority vote is vote for me, we’re Chinese, they’re Indians, they’re Malays. Our society will be ripped apart. If you do not have a cohesive society, you cannot make progress.”

Q: “But is that a concern that the younger generation doesn’t realize as much as it should?”

Mr Lee: “I believe they have come to believe that this is a natural state of affairs, and they can take liberties with it. They think you can put it on auto-pilot. I know that is never so. We have crafted a set of very intricate rules, no housing blocks shall have more than a percentage of so many Chinese, so many percent Malays, Indians. All are thoroughly mixed. Willy-nilly, your neighbours are Indians, Malays, you go to the same shopping malls, you go to the same schools, the same playing fields, you go up and down the same lifts. We cannot allow segregation.”

Q: “There are people who think that Singapore may lighten up a little bit when you go, that the rules will become a little looser and if that happens, that might be something that’s a concern to you.”

Mr Lee: “No, you can go looser where it’s not race, language and religion because those are deeply gut issues and it will surface the moment you start playing on them. It’s inevitable, but on other areas, policies, right or wrong, disparity of opportunities, rich and poor, well go ahead. But don’t play race, language, religion. We’ve got here, we’ve become cohesive, keep it that way. We’ve not used Chinese as a majority language because it will split the population. We have English as our working language, it’s equal for everybody, and it’s given us the progress because we’re connected to the world. If you want to keep your Malay, or your Chinese, or your Tamil, Urdu or whatever, do that as a second language, not equal to your first language. It’s up to you, how high a standard you want to achieve.”

Q: “The public view of you is as a very strict, cerebral, unsentimental. Catherine Lim, “an authoritarian, no-nonsense manner that has little use for sentiment”.”

Mr Lee: “She’s a novelist, therefore, she simplifies a person’s character, make graphic caricature of me. But is anybody that simple or simplistic?”

Q: “Sentiment though, you don’t show that very much in public.”

Mr Lee: “Well, that’s a Chinese ideal. A gentleman in Chinese ideal, the junzi (君子) is someone who is always composed and possessed of himself and doesn’t lose his temper and doesn’t lose his tongue. That’s what I try to do, except when I got turfed out from Malaysia. Then, I just couldn’t help it.”

Q: “One aspect of the way you’ve constructed Singapore is a certain level of fear perhaps in the population. You described yourself as a street fighter, knuckle duster and so forth.”

Mr Lee: “Yes.”

Q: “And that produces among some people a level of fear and I want to tell you what a taxi driver said when I said I was going to interview you. He said, safer not to ask him anything. If you ask him, somebody will follow you. We’re not in politics so just let him do the politics.”

Mr Lee: “How old is he?’

Q: “I’m sorry, middle aged, I don’t know.”

Mr Lee: “I go out. I’m no longer the Prime Minister. I don’t have to do the difficult things. Everybody wants to shake my hands, everybody wants me to autograph something. Everybody wants to get around me to take a photo. So it’s a problem.

Q: “Yes but…”

Mr Lee: “Because I’m no longer in charge, I don’t have to do the hard things. I’ve laid the foundation and they know that because of that foundation, they’re enjoying this life.’

Q: “So when you were the one directly in-charge, you had to be tough, you had to be a fighter.”

Mr Lee: “Yes, of course. I had to fight left-wingers, Communists, pro-Communist groups who had killer squads. If I didn’t have the guts and the gumption to take them on, there wouldn’t be the Singapore. They would have taken over and it would have collapsed. I also had to fight the Malay Ultras when we were in Malaysia for two years.”

Q: “Well, you don’t have a lot of dissidents in prison but you’re known for your libel suits which keeps a lot of people at bay.”

Mr Lee: “We are non-corrupt. We lead modest lives, so it’s difficult to malign us. What’s the easy way to get a leader down? He’s a hypocrite, he is corrupt, he pretends to be this when in fact he’s that. That’s what they’re trying to do to me. Well, prove it, if what you say is right, then I don’t deserve this reputation. Why must you say these things without foundation? I’m taking you to court, you’ve made these allegations, I’m open to your cross-examination.”

Q: “But that may produce what I was talking about, about a level of fear.”

Mr Lee: “No, you’re fearful of a libel suit? Then don’t issue these defamatory statements or make them where you have no basis. The Western correspondent, especially those who hop in and hop out got to find something to show that they are impartial, that they’re not just taken in by the Singapore growth story. They say we keep down the opposition, how? Libel suits. Absolute rubbish. We have opponents in Parliament who have attacked us on policy, no libel suits against them and even in Parliament they are privileged to make defamatory allegation and cannot be sued. But they don’t. They know it is not true.”

Q: “Let me ask a last question. Again back to Tom Plate, “I’m not serious all the time. Everyone needs to have a good laugh now and then to see the funny side of things and to laugh at himself”.”

Mr Lee: “Yes, of course.”

Q: “How about that?”

Mr Lee: “You have to be that.”

Q: “So what makes you laugh?”

Mr Lee: “Many things, the absurdity of it, many things in life. Sometimes, I meet witty people, have conversations, they make sharp remarks, I laugh.

Q: “And when you laugh at yourself as you said?”

Mr Lee: “That’s very frequent. Yeah, I’m reaching 87, trying to keep fit, presenting a vigorous figure and it’s an effort and is it worth the effort? I laugh at myself trying to keep a bold front. It’s become my habit. I just carry on.”

Q: “So it’s the whole broad picture of things that you find funny?”

Mr Lee: “Yes, life as a whole has many abnormalities, of course.”

Q: “Your public life together with your private life, what you’ve done over things people write about you and Singapore, that overall is something that you can find funny?”

Mr Lee: “Yes, of course.

Q: “You made one of the few people who laugh at Singapore.”

Mr Lee: “Let me give you a Chinese proverb “do not judge a man until you’ve closed his coffin. Do not judge a man.” Close the coffin, then decide. Then you assess him. I may still do something foolish before the lid is closed on me.”

Q: “So you’re waiting for the final verdict?”

Mr Lee: “No, the final verdict will not be in the obituaries. The final verdict will be when the PhD students dig out the archives, read my old papers, assess what my enemies have said, sift the evidence and seek the truth? I’m not saying that everything I did was right, but everything I did was for an honourable purpose. I had to do some nasty things, locking fellows up without trial.”

Q: “For the greater good?

Mr Lee: “Well, yes, because otherwise they are running around and causing havoc playing on Chinese language and culture, and accusing me of destroying Chinese education. You’ve not been here when the Communists were running around. They do not believe in the democratic process. They don’t believe in one man, one vote. They believe in one bullet, one vote. They had killer squads. But they at the same time had a united front exploiting the democratic game. It gave them cover. But my business, my job was to make sure that they did not succeed. Sometimes you just got to lock the leaders up. They are confusing the people. The reality is that if you allow these people to work up animosity against the government because it’s keeping down the Chinese language, because we’ve promoted English, keeping down Chinese culture because you have allowed English literature, and we suppress our Chinese values and the Chinese language, the Chinese press, well, you will break up the society. They harp on these things when they know they are not true. They know that if you actually do in Chinese language and culture, the Chinese will riot and the society must break up.”

Q: “So leadership is a constant battle?”

Mr Lee: “In a multiracial situation like this, it is. Malaysia took the different line; Malaysians saw it as a Malay country, all others are lodgers, “orang tumpangan”, and they the Bumiputras, sons of the soil, run the show. So the Sultans, the Chief Justice and judges, generals, police commissioner, the whole hierarchy is Malay. All the big contracts for Malays. Malay is the language of the schools although it does not get them into modern knowledge. So the Chinese build and find their own independent schools to teach Chinese, the Tamils create their own Tamil schools, which do not get them jobs. It’s a most unhappy situation.”

Mdm Yeong: “I thought that was the last question.”

Q: “This is the last part of the last question. So your career has been a struggle to keep things going in the right way and you’ve also said that the best way to keep your health is to keep on working. Are you tired of it by this point? Do you feel like you want to rest?”

Mr Lee: “No, I don’t. I know if I rest I’ll slide downhill fast. No, my whole being has been stimulated by the daily challenge. If I suddenly drop it all, play golf, stroll around, watch the sunset, read novels, that’s downhill. It is the daily challenge, social contacts, meeting people, people like you, you press me, I answer, when I don’t…. what have I got tomorrow?”

Mdm Yeong: “You have two more events coming up. One is the Radin Mas Community.”

Mr Lee: “Oh yeah. I got it.”

Mdm Yeong: “And then you have other call, courtesy call on the 3rd.”

Mr Lee: “We are social animals. Without that interaction with people, you are isolated. The worst punishment you can give a person is the isolation ward. You get hallucinations. Four walls, no books, no nothing. By way of example, Henry Kissinger wants to speak to me. So I said okay, we’ll speak on Sunday. What about? We are meeting in Sao Paolo at a J P Morgan International Advisory Board. He wants to talk to me to check certain facts on China. My mind is kept alive, I go to China once a year at least. I meet Chinese leaders. So it’s a constant stimulus as I keep up to date. Supposing I sit back, I don’t think about China, just watch videos. I am off to Moscow, Kiev and Paris on the 15th of September. Three days Moscow, three days Kiev, four days Paris. Moscow I am involved in the Skolkovo Business School which President Medvedev, when he wasn’t President started. I promised to go if he did not fix it in the winter. So they fix it for September. I look at the fires, I said wow this is no good.”

Q: “It’s not going to be freezing if there are fires.”

Mr Lee: “No but our embassy says the skies have cleared. Kiev because the President has invited me specially and will fly me from Moscow to Kiev and then fly me on to Paris. Paris I am on the TOTAL Advisory Board together with Joe Nye and a few others. They want a presentation on what are China’s strengths and weaknesses. That keeps me alive. It’s just not my impressionistic views of China but one that has to be backed by facts and figures. So my team works out the facts and figures, and I check to see if they tally with my impressions. But it’s a constant stimulus to keep alive, and up-to-date. If I stop it, it’s downhill.”

Q: “Well, I hope you continue. Thank you very much, I really enjoyed this interview.”