Tan Kin Lian's Blog: Opinion of an investor

Sunday, September 28, 2008

Opinion of an investor

Dear All,
http://biz.yahoo.com/ap/080928/as_hong_kong_lehman_protest.html

Please read about Hong Kong Investors' protest. I reckon that if we are not united and serious about getting our money back, the banks will just 'try their best' to recover whatever they can for us.

Believe all of us didn't know nor understand the complexity of the credit swap derivatives and we thought we have invested in bond-like products. In the money market, risk matches return. Frankly, for a 5% /yr return, why should we be subjected to such high risk? Equity market is said to be most risky, but even if we anyhow invest in the stock market, our money will not be zeroised, right?

I have met up with DBS' product team and expressed my disappointment in their callousness in handling our trust and money. The products were structured to protect the bank's interest. We were made to sign forms we didn't read carefully because we were too trusting. However, if all investors went into the products have the same understanding and experience that we were not well informed, then the intention to deceive is there since day one.

I am not sure about the rest, but DBS' RMs did not take initiatives to call, I called mine. Until Jun or July, we received a letter of assurance that so long as we hold on to the product till maturity, our capital will be in tact. At that point, the DBS HN5 was still valued at 43%.

See, we are no expert in investment, but surely senior management in the banks would have the expertise to read the market situation and forewarn us of the possibility of a credit event. We could have done something.

Understand that in Hongkong, the lawmaker may take the lead to sue the banks. Our equivalent law maker here is MAS. They do have some responsible as to why Credit Swap Derivatives are allowed. Actually Credit Swap Derivatives are complex instruments to allow banks like Lehman Bros to hedge their risk. What does it mean? We investors become the insurers involuntarily. When banks accept premiums on our behalf, they expose us naked to the risk of any downfall of the institutions listed in the reference list.

We will need strong leaders to pull us together really.

Best regards,

KT

5 comments:

Anonymous said...: One important lesson that we learnt in this whole saga is that you are on your own when comes to investing your own money. Nobody can make a decision for you and you cannot blame others for causing you to lose money. This is the risk that you have to take. Nobody has predicted Lehman Brothers, a company with 156 years of history can fail. Similarly we are not 100% sure if Citibank or even DBS will fail or not tomorrow but you have to make a calculated risk yourself.

If I were you, I shall cut loss and move all my investment back to cash, FDs and CPF and wait for the storm to fade before investing again. This is rule of the game in investment. Meanwhile life still moves on...; September 28, 2008 11:34 PM
Zhong said...: KT,

You are right. DBS Customer Care Dept VP and Snr VP tried to push the full responsibility to us. We should get all the DBS HN victims together fast and discuss our course of actions.

Zhong; September 28, 2008 11:54 PM
Anonymous said...: I think consumers are clueless but some may argue they are not.I do agree but I am being generous with my words.
If you are among the 'some' then you knew what was coming or what to expect but the majority they don't know what hit them. Before this probably they never heard of CDOs or CDS. Now the have heard I don't think they can understand these derivatives and usages.They are financial engineering jargons and learned at post graduate course.
How can the banks sell such esoteric products to the man in the street especially the old folks. And I doubt they were sold, more like they were conned. MAS and the banks must be held responsible, MAS for approving and the banks for misrepresenting and mis -selling.
How can investors become unwitting insurers to the banks? This is a real scam.; September 29, 2008 12:54 AM
Anonymous said...: I am one of the estimated 40,000 people in Hong Kong who were misled into buying such products. Not sure if you've checked the Chinese media here, where you'd find more comprehensive coverage.

Let me share with you the HK status:

1. Legislative Councilors from 4 political parties are helping us.

2. While we continue to press the government, we actually have little expectation. Our government is hopelessly useless. They even refused to send any delegate to attend a public forum yesterday.

3. Protest and complaint will get us nowhere.

4. The only possible way is by bringing the banks to court. Which, according to some friends of mine working for some of the banks involved, is a move anticipated by banks. They are ready to lose customers, exit investment-products business, and go to courts. This is a war of attrition. I am not even sure how we can organize 40,000 people sueing 20 banks over HK$20 Billion.

5. The most important point is that we have received no help at all from government. Not counting on it either.; September 29, 2008 6:53 AM
Anonymous said...: 11.34PM, I disagree that you are on your own when it comes to investing. maybe you do but the rest of the world need someone to help.Then why use an adviser ,a consultant at the bank if you can get it their website. You should also demand a discount because you don't need help at all.
Then MAS should repeal section 27 of the FAA. Tell this to the 'Ah Pek and Ah Mnn" that it is their misfortune for 'making a decision'; September 29, 2008 9:10 AM