May 2013



The coloured gem market — sapphires, rubies and emeralds — is just as valuable as the diamond market.

At a time when many investments offer low returns, many investors will fill a bag with precious stones and hope they will be worth a fortune some day.

Check this chart about the rising prices of gemstones.

Unlike diamonds, though, the $10 billion coloured gems market is mysterious and poorly understood.

This Wall Street Journal video illustrates the issues.

Henry Sapiecha

One of Asia’s richest tycoons has avoided tax on tens of millions of dollars in profits from Australian property deals over the past two decades.

Onn Mahmud – brother of the billionaire chief minister of Sarawak in Malaysian Borneo – has used an elaborate global financial network to export his earnings from a portfolio of Sydney commercial and residential properties worth an estimated $100 million.

In one deal, Mr Onn sold an apartment development site in Potts Point for $15.5 million in 2007, realising a profit of $10.8 million.

Farok Abdul Majeed
Farok Abdul Majeed, who is suing Mr Onn for the $5 million he claims he is owed. Photo: Supplied

A former senior business associate of Mr Onn said no capital gains tax was paid on the deal and all of the proceeds were repatriated to a trust based in the Cayman Islands.

”All his operations were carefully structured to ensure that he paid no tax in Australia,” said Farok Abdul Majeed, who ran Mr Onn’s Sydney property deals for several years.

Mr Onn’s wife and children live in a mansion in Carrara Road, Vaucluse, with sweeping harbour views, but he spends most of his time in Singapore and Malaysia.

Documents obtained by Fairfax Media indicate that Mr Onn gave conflicting information to authorities to secure an Australia business visa and build the property portfolio he ran through Cayman Island trusts managed by merchant bankers Merrill Lynch in the Isle of Man.

Mr Abdul Majeed is fighting to recover millions of dollars he claims to be owed in unpaid fees, commissions and expenses. Leading architects Crone Partners also claim to be owed more than $500,000 for professional services.

Mr Onn is reported to be the second richest person in Malaysia with a fortune of more than $2 billion, most of it drawn from deals involving timber exports that have decimated the tropical rainforests of Sarawak. His 2002 business visa application was sponsored by Ryan Park Limited and three associated companies he and his family controlled, Ferncroft Limited, Golden Arrow Limited and Cherry Blossom Limited. In the application, Mr Onn said Ryan Park and the other companies had invested more than $50 million in Sydney real estate. Mr Abdul Majeed said he believes Mr Onn’s total property investments in Australia were double that amount.

Ryan Park’s ABN registration describes it as an ”Australian private company” but it has no record with the Australian Securities and Investments Commission and was registered in the Cayman Islands in 1991 as a ”non-resident” entity.

In March 2007, executives of Merrill Lynch swore in a statutory declaration in the Isle of Man that Ryan Park was ”an unregistered foreign company” that ”does not carry on business in Australia”.

Ryan Park – and the three other companies also registered in Cayman Islands – were struck off the Islands’ company register several years ago.

The property portfolio assembled by Mr Onn between the early 1990s and 2007 included a hotel and restaurant complex in central Sydney and an office building in Elizabeth Street sold in 2005 reaping a profit believed to be more than $5 million.

Mr Abdul Majeed said that when the site in Wylde Street, Potts Point, was sold in 2007, the proceeds were repatriated to a Cayman Islands trust whose beneficiaries were members of Mr Onn’s family.

The unrealised plans to build a luxury apartment tower on the Potts Point site made it, for a while, the talk of the town. In 2008 a duplex penthouse was sold off the plan for a record $20 million.

Mr Abdul Majeed, a Malaysian-born property development and project management consultant, has resumed legal action to recover more than $5 million he claims to be owed by Mr Onn.

In August 2007, a NSW Supreme Court judge ordered Mr Onn to pay $2.2 million to Mr Abdul Majeed for outstanding fees and commissions. The order was discontinued after he failed to appear at a subsequent hearing at which the order was challenged by Mr Onn’s lawyers.

Mr Onn did not respond to a series of questions from Fairfax Media sent last week to his Singapore lawyers.

Henry Sapiecha
Diamond 101.73 carats

British auctioneer Christie’s sold a “perfect” pear-shaped colourless diamond for $26.7 million at an auction in Geneva Wednesday, reports the Associated Press.

The symmetrical flawless gem weighs 101.73 carats and is graded with the best colour, D, the best clarity, flawless, and the best purity, Type IIa.

Christie’s said the rough stone weighed 236 carats when it was extracted from the Jwaneng mine in Botswana and took

The sale established a new world record price for a gem of its sort.

Henry Sapiecha



Henry Sapiecha



Henry Sapiecha



Henry Sapiecha



Henry Sapiecha



Henry Sapiecha

How Penny Stocks Are Creating

Millionaires Every Day

How Penny Stocks Are Creating Millionaires Every Day

You may have noticed a lot of buzz lately about penny stocks.

Penny stocks refer to the common stock of smaller public companies that trades for less than a dollar per share.  Like other shares of stock, they are regulated by the SEC and other authorities, but instead of trading on the major markets like the NYSE, they trade on “over-the-counter” markets.

Today, penny stocks are offering smaller investors a great opportunity to earn significant up-side on their investments. The benefits occur for two reasons:

1. It doesn’t take a lot of money to invest in penny stocks.
For the price of just one share in large companies such as Apple or Google, you could buy thousands of shares in many penny stock companies.

2. Penny stocks have the potential for huge returns.
Because the price per share is so low, they can experience huge price increases – sometimes even doubling or tripling in just one day.  Price jumps like this do not often occur with larger companies, but are much more common with penny stocks.

Another great thing about penny stocks is that they trade in exactly the same way as shares of larger companies. You can easily track price movements and buy and sell online, or through a traditional broker.

While there is always risk in owning shares of publicly traded companies, the amount people tend to invest in penny stocks is relatively small, so in those instances, if the price of the stock drops, investors do not lose significant amounts of money.

But, with thousands of different penny stocks to choose from, how should you go about finding the right ones to invest in?

One website that is exclusively devoted to tracking and recommending penny stocks is Billionaire Stocks. The site tracks the market for these high potential companies, and then alerts its subscribers with the latest picks.

Much of the ability to recognize a return depends upon when you purchase or sell the penny stocks, and these results are not typical or guaranteed. In some cases, where a promotion ends, the stock prices can go back down to their original amounts – so you have to be diligent with your investment and monitor your trading activity closely.

Henry Sapiecha

Is Branson abandoning Virgin Australia Airlines to buy Sky west-Selling shares.

Richard Branson jetted into Perth this week

To wave his publicity wand over Virgin Australia’s latest announcement. Between poking his head out of the cockpit window, standing next to glamorous flight attendants in Virgin red uniforms and waving flags he presided over the launching of Virgin Australia’s new acquisition, SkyWest.

But this time around the presence of Branson seemed a little strange. Less than two weeks ago he sold down his shareholding in Virgin Australia from 23 per cent to 13 per cent. And after speaking with him yesterday one thing clear, between the lines, was that he is not a long-term holder of his remaining stake. This poses the important question of who he will sell it to and how this can be done.

The Virgin Australia share register is tightly held between its three alliance airline partners, Singapore Airlines (which, thanks to Branson, now has 19.9 per cent), Air New Zealand with roughly the same, and Etihad with 8.5 per cent. Etihad had been in talks with Branson for more than a year to buy part of his shareholding but it appears to have been a case of tyre kicking.

So it is not surprising that Branson was open to the overtures from Singapore Airlines. Branson said: ”It’s always nice to have big airlines lining up for your shares.”

It’s an open secret in the airline industry that Etihad boss James Hogan was less than impressed that Branson sold 10 per cent of Virgin to Singapore.

Branson’s decision will be pivotal to how the share structure plays out and in this sense he becomes the kingmaker.

He is already working on how to spend the proceeds. One plan under investigation is a number of upmarket (and cool) boutique hotels in Australia. But he confesses it’s early days.

If Branson sells the remainder to any of these three players they would need to make a takeover bid and get Foreign Investment Review Board approval.

And even if the other airline shareholders did not accept the offer, the bidder could capture the 36 per cent held by retail and institutional shareholders. (And the fact remains that Etihad and Singapore operate in competition out of Australia beyond their hubs.)

Another possibility is a private equity play that takes out the minorities and negotiates the purchase of the majority of Virgin’s frequent-flyer program. This asset is becoming increasingly valuable, thanks to the involvement of Virgin Australia’s various alliance partners and its capture of a larger portion of the business-traveller market.

The valuation differs depending on which analyst one speaks to. Some analysts have called it as low as $250 million but at the upper end it has been valued at closer to $1.5 billion on a two-year prospective basis.

Unlike airlines whose cyclical earnings can be volatile, frequent-flyer programs churn out a more solid profit stream. And the value of this business tends to improve over time as membership builds.

At one point in Qantas’ recent history its frequent-flyer program was its most profitable division.

Virgin Australia boss John Borghetti will be acutely aware that the ownership tectonic plates are unstable. Until something happens he has to manage these shareholders under the Virgin alliance umbrella. To have any of the three on the board would result in howls of protest from the others, who would want equal treatment.


But Virgin’s purchase of SkyWest and more recently the ailing no-frills domestic minnow Tiger suggests that he is not waiting for things to happen.

While SkyWest is viewed as a West Australian regional carrier, Borghetti has plans to expand its routes. It already has one-third of its business in Queensland and operates some services in NSW. The fly-in-fly-out mining industry part of the market is worth about half a billion dollars a year and Virgin wants some of this action.

Australian Competition and Consumer Commission documents, part of its dossier on the aviation industry this year, suggested Qantas’ hard and fast line in the sand to retain 65 per cent of the domestic market has already slipped a little.

From an operational perspective this is probably not particularly significant. Indeed, investors are more likely to be relieved that Qantas would prefer to manage yield rather than adhere too closely to self-imposed metrics.

There are plenty of other challenges. Both Virgin and Qantas are just coming out of a savage capacity war that has taken its toll on domestic earnings.

There is an expectation that this pressure is already easing but Borghetti concedes that only in the past couple of weeks the aviation market has become a little softer.

So even if the two airlines have started a ceasefire they will still need to contend with the broader economic conditions.

They are not alone. There have been several economic indicators over the past couple of months suggesting any tentative improvements in economic data are now stalling and business investment is about to hit a wall.

It will be a great relief to many that the Reserve Bank of Australia on Tuesday reduced the cash rate by 25 basis points.

Henry Sapiecha

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