Thursday, 28 October 2010

Singapore and Australian exchanges: learning to play the SAX?

Price and protectionism aside, the acquisition proposal between the Australian and Singapore exchanges is a potential winning stroke for both countries.
While Australian nationalism (read protectionism) may force politicians to veto the deal, the Singapore exchange (SGX) had to try something to force its way back onto the international stage. Granted the price being paid by Singapore might be a tad too much but it might just be a price worth paying.
The Singapore exchange had all but lost the regional race to Hong Kong some years ago. Hong Kong basks in the sunshine of being a political territory of the fastest growing economy in the world – the People's Republic of China!*
Recently, the financial race has added a new dimension, a shift from the capital markets to the currency markets. Offshore Yuan trading will be the next big thing. Once a freely tradable / convertible Yuan becomes established, then Yuan based tradable securities are merely a hop, skip and jump away.
Yuan denominated transactions, fixed income, equities and derivatives, will happen first and foremost in Hong Kong. Singapore may get some crumbs but Hong Kong will win the prize ... again.  
Hong Kong's natural advantage, geographically and politically will practically ensure the city the right of first refusal for most major future transactions (which will be liberally sprinkled with Chinese government owned entities).
Australia faces other issues. The country's geographic isolation is its best friend and enemy.
Australia is the first major capital market traders can access. It's a natural stop for businesses from Oceania. The capital markets benefit from a steady supply of resource linked companies. The Australian institutional investment community familiarity with resource based companies is an added advantage.
Yet, for companies beyond a certain size Australia loses much of its relevance. Also, after a certain time trading shifts to Europe and the US. In a sense, Australia is an important market by default – its importance diminishes as the rest of the world wakes up.
Put two 'losers' together and one may just get a bigger loser. But the stakes for the SGX and the Australian exchange (ASX) are high. A merger gamble is better than sitting around waiting for the situation to improve.
There are ways in which a 'joint' exchange can synergize a winner. Imagine if stocks were dual listed on both the ASX and the SGX, meaning investors had two time zones to trade the same security. The resultant liquidity boost may just galvanize more listings on a merged SAX, exactly the medicine required to revive the SGX.
Operational constraints are real, including managing pricing in two floating currencies. Related settlement matters will also need to be addressed. However, over time such teething issues can be overcome with adequate investment.
Many observers question the wisdom of the SGX bid for the ASX. The strategy does raise legitimate questions about the SGX's future strategic direction. Nevertheless, without a radical departure from the past the SGX would only continue its slow march into the sunset.
Sometimes, shaking things up is a prudent strategy – even if the end result is unknown. It stirs corporate entities from a complacent slumber.
* I wrote a post titled 'Has Singapore lost the race to Hong Kong' in October 2009.

Friday, 22 October 2010

Of mothers, spouses and Singapore’s sharia

Last week, I attended an Association of Muslim Professionals seminar on the subject of Islamic Estate Planning. Sitting in a room filled with Muslims theoretically at the 'cutting edge' of Islamic thought has somewhat of a nineteenth century feel – it was as if I was an anti-imperialist activist at a session addressed by the likes of Indian Muslim Modernists like Sir Syed Ahmed Khan or Dr. Allama Mohammad Iqbal.
Sir Syed Ahmed Khan's study about the causes of the 1857 uprising against colonial rule

Modern Singapore is a far cry from British India. But some positive vestiges remain – the English language and Common Law.
The seminar was interesting in many ways. Without exception, each individual speaker, including a scholar associated with the Islamic Religious Council of Singapore (MUIS), extolled the virtues of individual financial planning. Each stated it is perfectly Islamic to make post-death arrangements to secure the future of loved ones, even if the plan contravenes the binding inheritance principles of Singapore's Application of Muslim Law Act (AMLA).
The audience was told about the flexibility that Islam provides believers. Listeners received an introduction to various Sharia compliant financial instruments available to Muslims to dispose of an estate.   
In other words, I learnt how best to circumvent the inheritance restrictions laid down by AMLA.
The entire event has me confused. If it is perfectly Islamic for an individual to wish to deliver his estate to his spouse, parents or others who he financially supports then what is the purpose of making the law of Faraid legally binding? Why not make things easier for ordinary Muslims by empowering them to write a Will under normal civil law?
In the current set-up, any Muslim wishing to bequeath his estate based on his freewill must enter into all sorts of extraneous paperwork associated with gifts (hibah), trusts or other sharia compliant instruments recognized by Singapore's sharia law.
I am a believer in Islamic scholarship.
Surely, there is a place in the world for Sharia compliant financial products. During my professional career I have worked to develop Islamic products. However, for sharia compliant products to be successful they must be simple, cost efficient and true to the spirit of Islam. Not merely intelligent ways to dodge usury recognized by prevalent legal codes.
Islamic finance has come a long way during the last few decades. Plain vanilla banking products like loans, credit cards and mortgages are available in Sharia compliant form in standardized form, thus making them competitive with their interest based counterparts.
Unfortunately, that is not yet the case with Islamic estate planning.* Ordinary Singaporean Muslims cannot order their personal financial affairs to their own liking due to legal restrictions enforced by AMLA.
It is all well and good to outline options available to academically inclined or wealthy Muslims. Nevertheless, for ordinary Muslims with a modest financial asset base, these choices are complicated and costly.
Pakistan's Founder, Quaid-e-Azam Muhammad Ali Jinnah's left his entire estate to three educational institutions - an action not permissible under certain interpretations of Islamic law - via a simple Will

Muslims have been granted free will to make personal decisions on worldly matters, including matters of inheritance. In contemporary Singapore, individuals have even been granted the freedom to commit certain 'innocent' sins; sins which do not harm other members of society or the public good.
It is almost impossible to argue that securing the future of one's parents, spouse and family is a sin, under Islamic or secular law.
Undoubtedly, the decolonization of Singapore was a liberating experience. Yet, for some Singaporeans the enactment of AMLA in 1968 took away a few important financial freedoms previously available under colonial rule.
*I became aware of one Sharia specific legal provision pertaining to Muslim beneficiaries of insurance policies under Singapore's Insurance Act which is unusual and somewhat alarming. I hesitate to comment on the subject until I am certain of the correctness of my understanding. 

Monday, 18 October 2010

Taunting China Norwegian style – the 2010 Nobel Peace Prize

By awarding the 2010 Nobel Peace Prize to a hitherto unknown Chinese human rights activist the Nobel Committee has achieved at least one objective: focusing global attention towards the state of human rights in China. However, inadvertently or not, the Committee has also divided the world into pro and anti-China camps.
I don't blame either side, but place myself squarely in the 'back to basics' Peace Prize camp. Back to basics means honouring the Will of Alfred Nobel, the founder of the award.
The Will reads, "[The Nobel Peace Prize is awarded annually] to the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses."
The peace prize is not meant as an overtly political statement.
Jean Henri Dunant: Swiss businessman and founder of the International Committee of the Red Cross was the first recipient of the Nobel Peace Prize in 1901

One may stretch the meaning of 'peace congresses' so as to permit granting of the prize to human rights activists such as Shireen Ebadi, Liu Xiaobo or Aung San Suu Kyi. Undoubtedly, all three activists struggle for a noble cause at great personal risk. No one can argue with their passionate idealism for achieving social justice.
However, at another level, awarding prizes to such personalities seem very much an attempt to irritate the domestic regimes of countries 'out of favour' with Western nations; not surprising given that the Nobel Committee's five members are appointed by the Norwegian parliament and broadly represent national parliament's political make up.
The Kingdom of Norway is a founding member of the US-led security alliance, the North Atlantic Treaty Organization (NATO). While the country is not a formal member of the European Union, it maintains strong European ties through various treaties. Norway is a member of the European Economic Area.
Surely, the Norwegians have played an admirable role in engendering peace in the Middle East (the Oslo Accords) as well as other war ravaged areas. Yet, is it not possible for the Nobel Committee to find less politicized recipients for the Peace Prize? There are several billion people in the world.

Governance and international representative systems are not divorced from a nation's ground realities. For example, pursuing democratic ideals in Somalia, China, Denmark or the United States requires modifications to suit local political cultures. Somalia's parliament meets in Kenya, when it can. In the United States and Denmark, burning the Koran or caricaturizing Islam's final Prophet is a legitimate democratic pursuit.
To an outsider, the fine legal niceties legitimizing water boarding, acts of rendition, assassinations using unmanned drones and Guantanamo are not so different from China's policies designed to ensure social stability within its own borders. Arguably, China pursues vigorous economic development as a way of granting greater freedoms to its people – freedom from hunger versus freedom to protest.
Awarding the Nobel Peace Prize to less divisive personalities such as Nelson Mandela, Mother Teresa, Medicins Sans Frontieres and Mohammad Yunus seems a better way to achieve Alfred Nobel's goal of 'building fraternity between nations.'

Wednesday, 13 October 2010

Half Muslim – maybe? Half child – I think not

I was speaking with a stranger a few days ago. The gentleman was in the service industry and ran a family business with his wife. The subject turned to his family and he said he had 3.5 (three and one half) kids.
Okay, that's an unusual number. Children normally come in whole numbers – unlike Muslims who are sometimes half-Muslims!
Maybe his wife was pregnant and baby number four was on its way? Hesitatingly I enquired about the 'half child,' fearing that perhaps I was getting too personal. It turns out his wife and he had adopted a boy and referred to the boy as a 'half-child.'

It's not for me to tell people how to speak of their children. Yet, it seems somewhat odd, if not wrong, that a son is referred to as a 'half.' Adopted or not, a son is a son.
A bloodline is a unique feature. It's not surprising that modern DNA testing can match identities among distant relatives, probably by isolating the one unique chromosome an individual carries. (I am no scientist, nor do I watch CSI to know enough about DNA testing to speak authoritatively on the subject.)
Nevertheless, to the Grand Moofti, an adopted child does not deserve to be singled out from her (biological) siblings. The way an adoptee is spoken about reflects how she is seen by her adopted parents, as a full member of the family or as an outsider.
Kids are kids. They soak in their environment without adults even noticing the process. A child's self-confidence and self-perceptions are largely based on acceptance by their immediate family. Adopt a child and then forget she was adopted. Adoption becomes a secret that travels to the grave.
There are no 'half-kids' in the world.
Of course, readers may legitimately question the Grand Moofti's qualifications to speak about kids. It's true, his credentials are restricted to periodic interactions with nephews, nieces and other kids who fondly refer to him as 'uncle.'  

Tuesday, 5 October 2010

Gillette’s miracle razors, ‘nais’ and the Ottoman Sultan

Every so often, Gillette releases a new razor with a 'new, improved' blade. The Sensor and the Sensor Excel are pass̩ Рit's the Mach 3 and other 'supersonic' blades which are now in vogue.
These sophisticated razors can shave against the grain, sideways, up, down and any way which takes your fancy. Shave while doing handstands or one handed push ups, it's all good, the Mach range can handle it.
Like many, I enjoy a close shave. It makes me feel brand new!

Hence, I revel in the technological breakthroughs made by Gillette's hard working research scientists. Five blades make a nice change from the disposable blades used by screw-top razors – you know the type of razors sold today by shops with fancy English names and the quaint smell of aristocracy!
For me, the old fashioned razors coupled with shaving cream squeezed from toothpaste like tube made it impossible to shave without nicking myself almost daily.
My ability to grow a beard or moustache is just one more feature which makes me a 'fake' minority Singaporean. Chinese men can typically only grow one, maybe two, beards during a lifetime of not shaving. (By unusual coincidence, the majority of Chinese tend to have an aversion to facial hair.)
Me, I could become a contemporary version of Captain Caveman if I skip my daily shave for a few weeks. What's worse is that my facial hair is almost entirely white – not even salt and pepper but white!
White hair aside, all the advancements in shaving techniques and technology make me yearn for the good old fashioned Pakistani street side barber or nai! (Surely, there must be a Gillette sponsored university campus somewhere handing out degrees on the art and science of shaving for aspiring nais?!)
In the mid-1990s, I spent a couple of weeks with a friend in the central Pakistani city of Bahawalpur. Like many second tier Pakistani cities, Bahawalpur seemed frozen in a wonderful time warp.
The Darbar Mahal, a former palace of the Nawabs of Bahawalpur

For me, the best part of Bahawalpur was not visiting the former Nawab's White Palace or travelling to various shrines in the City of Saints (nearby Multan) but my vacation from shaving.
Shaving became the barber's job, not mine. Every day, the nai set up a chair on the porch and yours truly felt like a right Nawab himself while he ruthlessly dealt with my facial hair!
Ask me how traditional barbers get such a close shave without even a tiny cut and I plead ignorance. Maybe it has something to do with that Gillette University certification the Bahawalpuri nais are obligated to receiving before establishing their practice? Or just maybe it has to do with the distinction of being one of the few humans permitted to use a razor near a stranger's neck without any repercussions?
For good reason, the barber has a special place in the erstwhile Turkish Ottoman Sultan's entourage: the barber was the only person allowed to use a blade on the Ottoman rulers face without losing his own head in the process.