MERITOCRACY is about more than just academic grades

MERITOCRACY in Singapore is about more than just academic grades, said Prime Minister Lee Hsien Loong as he stressed that everyone here has a shot at success.

“When we say ‘merit’, we are not just talking about grades or scores, but also character, leadership and a broad range of talents,” said Lee said in a speech to more than 1,500 students and their parents at a bursary and Edusave award ceremony in his Teck Ghee ward.

He said: “We make sure that whatever your family background, whatever your circumstances, you may be poor, you may be from a single-parent family, you may be having some learning disabilities, but if you work hard, you can succeed.

“It does not matter what your background is. We make sure we identify you, we give you the opportunities and also the resources and the support so that if you succeed, you can do well for Singapore.”

Yesterday was the second time in just over a month that PM Lee stressed that meritocracy cannot be narrowly defined as being just about grades. He also spoke on the topic at a PAP conference on Dec 2 last year.

In that speech, the Prime Minister said he was worried when Singaporeans reject meritocracy and asked what could replace merit as the basis for decisions on jobs or school places.

The principle has come under considerable scrutiny in recent months, especially in the field of education.

While the Prime Minister repeated the same call on broadening the definition of meritocracy, yesterday he focused on what roles parents and students can play in it.

He urged parents to set an example: “Guide your children, set good examples and instil good moral values in them.”

Turning to students, Lee urged them not to neglect their studies even though there would be more focus on character, leadership and service.

“Results and grades are not the only measure of success or the only things that matter in life,” Lee said, adding: “It is important that you learn and study to give you a good foundation for what you can do in life.”

He pledged that the Governm­ent will continue to help all students achieve their potential. — The Straits Times / Asia News Network

Market closes mixed, lower liners likely to hog the limelight

Regional bourses remained on a mixed trend with Japan's Nikkei 225 surging 292.93 points to 10,688.11 while Hong Kong's Hang Seng dropped 67.51 points to 23,331.09. Singapore's Straits Times eased one point to 3,223.80.

On the local front, the Industrial Index rose 19.44 points to 2,814.34, the Plantation Index improved 23.44 points to 8,255.19 and the Finance Index edged up 5.56 points to 15,341.36.

The FBM Emas Index increased 5.78 points to 11,485.90, the FBMT100 rose 2.71 points to 11,340.65, the FBM Mid 70 Index improved 17.33 points to 12,439.6 and the FBM Ace Index advanced 33.06 points to 4,259.77.

Total volume increased to 1.256 billion units valued at RM1.688bil compared with Thursday's close of 1.128 billion shares worth RM1.825bil. - Bernama

Lower liners likely to hog the limelight

REVIEW: Bursa Malaysia kicked off the last day of 2012 on the negative side, with the FBM Kuala Lumpur Composite Index (FBM KLCI) shedding 2.93 points to 1,678.40, as profit-taking activity set in following a series of uptrend.

The overall market sentiment was pretty cautious, depressed by an extended fall in Wall Street overnight, as the White House and US lawmakers closed in on the “fiscal cliff” deadline with no deal in sight.

A pullback in most major Asian markets on profit-taking activity during the holiday season lull added to the downbeat note.

Given the dearth of fresh market-stimulating leads on the horizon, the local bourse succumbed to light liquidation to flirt in the red zones, but within a narrow range.

And that was the trend from the opening bell until the last minute, where buying in select heavyweights emerged suddenly to help the market reversed early weaknesses to end 2012 at a new record of 1,688.95, up 7.62 points on Monday.

World markets including Bursa Malaysia were shut on Tuesday for the New Year. While all of us were enjoying the holiday, optimism about the immediate direction of risky assets grew stronger, because a settlement in the “fiscal cliff” crisis in the US fuelled bullish sentiment across markets.

As expected, stocks in the region resumed business on solid grounds, with major Hang Seng Index leading the way, up nearly 3%.

Usually, the local bourse would mirror the offshore pattern, but in an unprecedented move, blue-chip counters reversed trend, as local institutional players opted to book profit from recent spikes.

Unlike the quality issues, non index-linked companies were mostly steady on greater retail participation and the two-tier market was clearly shown on the score card.

In spite of the FBM KLCI dropping 14.23 points to 1,673.72, winners beat decliners by 373 to 335 in mid-week.

Come Thursday, global equities sustained the upward thrust and the bulls on the domestic front took the opportunity to strike back.

Blue chips topped the gainers list while second and lower liners dominated the active page.

On the back of the better sentiment, the key index hit a new all-time high of 1,692.25, up 17.93 points that day.

It scaled another new peak of 1,699.68 in early session yesterday before retreating to close down 0.07 point to 1,692.58 owing to an apparent profit-taking activity.

Statistics: Week-on-week, the key index rose 11.25 points, or 0.7% to 1,692.58 yesterday, against 1,681.33 on Dec 28.

Total turnover for week ballooned to 4.093 billion units valued at RM6.020bil, compared with 2.920 billion shares worth RM3.941bil done previously.

Technical indicators: After triggering a sell at the overbought area in mid-week, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index weakened further to finish at the 66% and 73% respectively.

Likewise, the 14-day relative strength index retraced slightly from the top to end at the 69 points level.

In stark contrast, the daily moving average convergence/divergence (MACD) histogram continued to surge steadily, in tandem with the daily trigger line to keep the bullish signal.

Weekly indicators remained positive, with the weekly MACD and the weekly slow-stochastic momentum index keeping the buy call.

Outlook: Bursa Malaysia extended the upward momentum for the fifth consecutive week, largely due to “window-dressing” activity and funds taking fresh positions, as well as re-balancing their portfolios, with gains in the quality issues propelling the FBM KLCI higher to set a new record almost on a daily basis. The “fiscal cliff” resolution in the United States also aided local sentiment to some extent.

Based on the daily chart, the local bourse is bullish and it will remain so, as long as the key index continues to flirt inside the newly-established upward channel and supported by the rising 14-day and 21-day simple moving averages.

However, investors should take note that the local market has chalked up a total of 109.01 points, or 6.9% over the past five weeks and the bulls are starting to look tired. The next logical move would be to pause for air before resuming their rally later.

While we expect blue chips to correct in the short-term to avoid overheating, second and lower liners, a favourite for retail investors, are showing signs that they are ripe for a rally.

Technically, the daily and weekly MACDs are promising, but given the overbought condition, the local market is likely to consolidate, probably within a tight range this week.

Resistance is expected at every 20- or 30-point intervals above the 1,700-point psychological barrier.

Important support is pegged at the 1,680 points, followed by the 1,670 points and the next, at the 1,660-point mark.

MARKET TREND By K.M. LEE

Related post:

FBM KLCI hits all-time high; Bulls set to explore uncharted territory  

Understanding the Chinese mind

BROWSING through my library during the holidays, I came across a book on comparative Western and Chinese philosophy that had an old saying: “Every Chinese person is a Confucian when everything is going well; he is a Taoist when things are falling apart; and he is a Buddhist as he approaches death.”

 Chinese culture is like ancient pyramids of different worldviews built over one another. The earliest was animism, where one believed different gods; the Book of Changes taught two sides to every story; Confucianism was about knowledge of self; Taoism about following the natural Way; Legalism about ruthless pragmatism and order; Buddhism about letting it go. In the 20th century, China imported Western influences from Marxism to science and technology.

It is commonly believed that the Chinese think very differently from Westerners. Western minds are considered logical and scientific, whereas the Chinese mind is supposed to be elliptical, contextual and therefore relational. One possible reason is the ideogramatic nature of the Chinese language, based on pictures rather than alphabets, which positions everything in relation to everything else.

The Chinese word for crisis is both risk and opportunity; for contradiction an impenetrable shield facing an unstoppable spear. Chinese thinking tends to sees things within systemic context and history, probably because the fount of Chinese philosophy is the I Ching or the Book of Changes, circa 1049 BC, which is essentially dialectic in tradition, seeing the world as emerging from the conflict, synthesis and evolution from contradictory opposites.

Western science and intellectual tradition stems primarily from Greek Aristotlean logic, which is reductionist and linear, reducing complex ideas into simple theories and principles that could deduce, explain and predict the future. Aristotlean logic prevailed in the West, until the German philosopher Hegel (1770-1831) developed dialectics based upon the concept that everything is composed of contradictions, with gradual changes becoming crises. Karl Marx (1818-1883) built on Hegelian dialectics into historical change through class struggle and dialectic materialism, whereas Mao Zedong fused Marxism into Chinese agrarian reality to form a theory of revolutionary knowledge through practice.

In the 20th century, natural science, such as physics, mathematics and biology began to evolve away from the social sciences, particularly economics. The Anglo-Saxon tradition of linear, logical thinking continued to dominate in social science, through philosophers such as Karl Popper, who rejected the vagueness of dialectics. On the other hand, quantum physics, quantum mathematics, biology and information theory began to evolve into binary worldviews whereby change in nature evolved through the synthesis or erosion of opposites. This is much closer to ancient Chinese and Indian views that saw the world in constant change.

What has been missing so far has been a synthesis of the two divergent worldviews.

In his new book Antifragility: How to live in a world we do not understand, Black Swan author Nassim Taleb introduced option theory as a general tool to bridge dialectic thinking with mainstream bell curve statistics. The normal “bell curve” distribution is a widely used statistical tool for decision making in mainstream social science. Social scientists look for statistical significance in the high probability (95%) or “robust” zone of the bell curve, tending to ignore low probability events (2.5% each) in the long tails.

By ignoring the long tail events that occur rarely but have large impact when they occur, mainstream thinking like the economic profession missed systemic events like that 2008 financial crisis. There are of course two long tails, one being the “bad” Black Swan events that create systemic damage when they occur.

The other is the upside or “good” long tail events. Nassim calls “anti-fragility” as good actions that compensate for “fragility”, the bad events.

Intuitively, Taleb has reframed Chinese philosophy in modern mathematics with a scientific explanation. What he calls the central Triad of exposures Fragile, Robustness and Antifragile has the analogy in the Chinese trinity of female (ying), Golden Mean and male (yang).

The Confucian concept of Golden Mean seeks to avoid extremes and take the safe middle path. But Taleb's insight shows why the Golden Mean gets into trouble, because playing safe and mainstream ignores the uncertainty of Black Swan events that could eventually damage the system as a whole. Prudence and conservatism through adopting the Golden Mean prevents the practitioner from adopting “antifragile or (good) high risk-high payoff” strategies that would compensate for the uncertain unknown bad Black Swan events.

A Buddhist would immediately recognise the need to build up good deeds to compensate for the bad deeds that may befall oneself.

By not taking risks, Chinese dynasties that adopted Golden Mean strategies became closed societies that eventually imploded when disaster struck. On the other hand, in the run up to the Industrial Revolution, Western societies took large risks with high payoffs, in science, technology and even colonialism. Western society compensated for fragility by taking anti-fragile measures. No risk, no gain.

The easiest way to think about options and antifragile strategies is in stock market investment. Suppose you adopt a conservative strategy that follows what the market does on average (follow the index). If however the market suddenly drops by 30%, and your portfolio declines by 30%, you will never recover your capital if you continue to adopt market following Golden Mean strategy. To recover or do better, you have to take small bets on risky shares that are “anti-fragile”, meaning that if they win, they win big.

Antifragility loves volatility. Making small mistakes will avoid large mistakes. The more you try to be stable, the more unstable you become, which Keynesian disciple Hyman Minsky rediscovered as “stability creating instability.”。

Taking non-linear options on high risk-high return ventures was exactly what Deng Xiaoping did in his opening up strategy. He knew that the risks of failure were high (and unknown) but taking options by opening up new development zones and new policies created new payoffs and growth areas that were not imagined by the critics.

In 2013, Deng's successors may be making new, anti-fragile options.

THINK ASIAN By ANDREW SHENG

Andrew Sheng is president of the Fung Global Institute.

May 2013 be a year of productivity?

We must make sure Malaysia and the rest of the world keep going forward this new year.

WISHING people a “Happy New Year” or “Kong Xi Fa Cai” or “Selamat Hari Raya” or “Happy Deepavali” and “Merry Christmas” is something I enjoy doing very much.

The invention of e-mail, SMS and other more recent phone applications have made me a serial “wisher” and if you are on my contact list, you should have got a message from me.

For the coming 2013, I wrote a little ditty and it reads:
“Every New Year brings new hope,
Every New Year brings new joy,
Let’s make sure 2013 will bring more,
Let’s make 2013 a GREAT year”

Ninety per cent of those who got my message replied politely but most of them just treated it as another “wish”.

I would like to stress that my wish for everyone is a deep-felt one and it’s one that I mean with all sincerity – 2013 is an important year not only for us in Malaysia but also the world.

As this article is being written, the TV and wires are reporting that the Republicans and the White House have just made a last-minute deal to avoid the US economy from going over the “fiscal cliff” which would drive the US and possibly the Western world into a recession immediately.

There can be many criticisms levied against President Barack Obama and the other US politicians of leaving it until so late to come to a compromise on a very important matter with global impact.

But the successful conclusion just before midnight of New Year’s Eve augurs well for everyone. At least we started 2013 on a positive footing.

The stock markets in Asia reopened on the first day of trading of the New Year in positive territory. That’s a good start.

Avoiding the fiscal cliff is just one of many global issues that the world inherited from 2012 and needs to be overcome in 2013.

Among the more urgent ones are:

> The Euro Zone financial crisis. Nothing done seems to have had any effect and even the mighty German economy is beginning to waver under the weight of the problem. Other big economies like Spain, Portugal, Italy and France all seem to be resigned to the fact of a prolonged downturn.

The world needs to start treating economic ailments the way it treats terrorism and war – by doing it with an all-out effort.

I accept that there is no single cure for a downturn because most are caused by different situations.

However, the urgency in treating and handling economic issues is downright embarrassing.

An example is the World Trade Organisation that was set up more than 20 years ago and until today has hardly made any significant headway except to be a very expensive talk shop.

> The horrifying disintegration of Syria. The way the world has allowed this nightmare to carry on is unbelievable.

All they have done is pay lip service at best or at worst, send one side or the other more weapons that will only prolong the suffering.

The problem of the wide media publicity given to this civil war is that it has made people immune to the violence and abuses that is going on there.

Each time we see a new video coming out of that country that shows death and destruction, all we tend to do is shrug our shoulders and remark “another day in paradise”.

This has to stop. We have to care and, in 2013, we should all act as one to prevent such carnage from continuing.

> Back home in Malaysia, our attention will be focused on the GE 13 which I will bravely say will take place before April 7.

Does this mean that all our energy and attention will be centred on the first quarter of the year?

I hope not. Our energy will be needed even more after that.

Yes, this general election will be the mother of all political battles – the kind where brothers take on brothers and husbands bravely challenge wives’ political ideology.

I will not be wrong to say that both sides on the political divide have already hardened their stand – all are prepared not only for the polls but also to up the ante to a feverish pitch.

Let’s hope the pitch just stays feverish and measurable by the thermometer. Yes, there is much at stake for both sides – it’s political survival for some of the key characters in our political theatre.

Because much of it is about personal survival, certain personalities may want to take the feverish pitch past the measurable level.

I do not want to dwell on who has what at stake but I would like to caution all politicians that the country needs to move on after the votes are counted.

They must not create a situation where the country cannot move forward or backwards.

Malaysia cannot afford to be stuck in another 60 months of political quagmire caused by turning everything into a political issue whether it’s a Olympic silver medal or how long before Selangor runs out of water.

I hope the whole country will wake up after polling day, take in the results and quickly get back to work because there will be more than 154 days to go before the end of 2013.

Malaysia has burst into a quick trot in its catch-up with the rest of the world in 2012, let’s not waste all that to tantrums thrown by sore losers in a political race.

A very down-to-earth colleague, in reply to my greetings, wrote: “It’s just another day. So think young, stay healthy and better be good.”

While she may have meant the New Year’s day – I think it is also apt for the day after election.

Happy New Year.

WHY NOT?
By WONG SAI WAN saiwan@thestar.com.my

Executive editor Wong Sai Wan spent his New Year’s eve at a friend’s place toasting to a bright future for everyone.

‘The year of shame 2012’ get any worse in 2013?

THE year 2012 has been labelled “the year of shame'' for the banking industry.

It doesn't matter that such nasty name-calling refers more to the problems at British banks.

Whatever happens in London is bound to attract world interest as it is a major financial centre vying for top spot with New York.

When scandals fall in thick, the tarnish on the banks there becomes even more significant.

To make matters worse, it is now apparent that the Libor interest rate rigging problem is more widespread than originally thought.



Source: Accounting Degree.net (click to link and enlarge)

It was not just a case of a few bad apples causing the rot, said The Guardian.

The problem was cultural, the report said, implying that it would require a wide spectrum of action to overhaul mindsets and unhealthy practices, possibly from ground level.

This requires much work on an international platform as there is no knowing how far and deep the rot has spread.

No doubt, banks in London and New York are the major players in the financial industry, and the other smaller players are feeling the heat as the ripple effect wears on.

As arrests related to the Libor rigging are ongoing, reports liken the revelations and subsequent documentation to a “blizzard.''

A blizzard is a severe snowstorm that often affects visibility, and points to very difficult weather conditions.

In banking and Libor rigging, in particular, this possibly refers to the layers of greed, conspiracy and corruption among the people responsible for conducting the trades.

Going into 2013, more arrests, fines and revelations are expected; the blizzard, therefore, is expected to be stronger.

In view of such a possible scenario, what are the central banks and other banks supposed to do to prevent any international backlash?

Not to underestimate the long-drawn effects of bank weakness, these external parties should quickly cooperate on an international basis to share information, iron out potential problems and try to prevent a big crisis from erupting.

With sound and consistent monitoring, a lot of negative effects can be pre-empted and, thus, avoided.

PLAIN SPEAKING By YAP LENG KUEN The Star

Associate editor Yap Leng Kuen wonders if it is too late to find a shield from blizzards.

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The Libor fuss!
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