Singapore's construction stocks higher on upbeat industry prospects
SINGAPORE (Thomson Financial) - Shares in construction companies were higher
Wednesday on expectations of more activity going forward as Singapore pushes
ahead with plans to develop a vibrant global city.
A number of developments are underway, including hotels and residential
projects, the two integrated casino resorts and the Sports Hub project, which is
a cluster of sports facilities to form Singapore's land and sea sports,
entertainment and lifestyle area.
The two integrated casino resorts located in Marina Bay and Sentosa, will offer
a range of tourism attractions, meetings facilities, F&B outlets, as well as
hotel rooms.
Last month, the Building and Construction Authority (BCA) increased its
forecast for construction contracts awarded this year to 19-22 billion Singapore
dollars from 17-19 billion earlier. About 16 billion dollars worth of contracts
were awarded in 2006.
Westcomb Securities analyst Wong Say Tian said he expects the uptrend in the
construction industry to continue for the next three to four years.
Wong has started covering KSH Holdings Ltd, with a "buy" rating after the
construction firm won a contract to build a boutique hotel bringing its order
book to 405 million Singapore dollars.
"KSH should be able to clinch more contracts with the government releasing more
retrofit programmes, and projects including the sports hub," Wong said.
DBS Vickers, who also rates KSH a "buy", today increased its 12-month target
price for the firm to 1.94 Singapore dollars from 1.52 dollars.
At 3.58 pm, KSH was up 5 cents or 4.4 percent at 1.19 Singapore dollars. Other
construction stocks were also higher and among the most actively traded, with
Hor Kew Corp up 2.5 cents or 9.6 percent at 28.5 cents, Yongnam Holdings up 1
cent or 2.5 percent at 41.5 cents, Chip Eng Seng Corp up 2 cents or 2.4 percent
at 84.5 cents, and CSC Holdings up 1 cent or 3.1 percent at 33 cents.
Source:Thomson Financial
Saturday, September 15, 2007
Singapore Stock Market Wednesday, September 12, 2007
SINGAPORE (Thomson Financial) - Singapore shares closed marginally higher
Wednesday led by gains in property and oil-and-gas related counters on their
upbeat industry outlooks.
But gains were capped, with the benchmark index closing off its highs earlier
in the day, as investors found few compelling reasons to buy amid ongoing
uncertainty in equity markets worldwide.
Analysts said the market is awaiting the next Federal Reserve policy meeting on
September 18 for a clearer direction on interest rates.
The Straits Times Index closed up 11.52 points or 0.3 percent at 3,506.09,
after trading between 3,498.48 and 3,531.14.
Gainers beat losers 518 to 271, with 854 shares unchanged.
Volume traded was 2.5 billion shares valued at 2.3 billion Singapore dollars.
UOB Kay Hian analyst K Ajith said it was "pretty risky" to take aggressive
positions in the market at this stage, with no improvement in market breadth and
no clear leadership from banks.
"They are worrying signs, and I think the index will fall before rebounding,"
Ajith said.
He expects the STI to trade within a range of 100 points in the next few days.
Analysts said investor sentiment will remain tentative until a clearer market
trend emerges.
Property heavyweights rose after unlisted developer Far East Organization
reportedly paid a record price for a suburban residential condominium site in
the northern town of Ang Mo Kio, providing further evidence that residential
property demand is spreading into the midrange and mass housing segment.
CapitaLand added 15 cents to 7.70 dollars, City Developments gained 20 cents to
15 dollars and Keppel Land rose 5 cents to 7.85 dollars.
Among blue chip gainers, Fraser and Neave Ltd (F&N) rose on expectations the
company will see good earnings growth in the next few years supported by gains
in its property business. The stock was up 15 cents at 5.30 dollars.
Oil-and-gas related stocks were higher, buoyed by rising oil prices. Singapore
Petroleum added 15 cents to 6.35 Singapore dollars, Labroy Marine was up 5 cents
at 2.29 dollars, and Keppel Corp rose 10 cents to 13.30 dollars.
Wilmar International, which owns palm plantations in Indonesia and Malaysia,
rose on expectations crude palm oil (CPO) prices will remain at their current
high levels on prevailing strong demand. The stock put on 12 cents to 3.54
dollars.
Construction issues were also higher and were among the mostly actively traded
stocks amid the ongoing property boom. Hor Kew rose 2.5 cents to 28.5 cents,
Yongnam Holdings added 1 cent to 41.5 cents, and Chip Eng Seng advanced 1.5
cents to 84 cents.
Banks closed higher after a day of seesaw trading. DBS Group Holdings was up
10 cents at 20 dollars, United Overseas Banking Corp was up 10 cents at 21.60
dollars, and Oversea Chinese Banking Corp was up 5 cents at 8.80 dollars.
Source:Thomson Financial
Wednesday led by gains in property and oil-and-gas related counters on their
upbeat industry outlooks.
But gains were capped, with the benchmark index closing off its highs earlier
in the day, as investors found few compelling reasons to buy amid ongoing
uncertainty in equity markets worldwide.
Analysts said the market is awaiting the next Federal Reserve policy meeting on
September 18 for a clearer direction on interest rates.
The Straits Times Index closed up 11.52 points or 0.3 percent at 3,506.09,
after trading between 3,498.48 and 3,531.14.
Gainers beat losers 518 to 271, with 854 shares unchanged.
Volume traded was 2.5 billion shares valued at 2.3 billion Singapore dollars.
UOB Kay Hian analyst K Ajith said it was "pretty risky" to take aggressive
positions in the market at this stage, with no improvement in market breadth and
no clear leadership from banks.
"They are worrying signs, and I think the index will fall before rebounding,"
Ajith said.
He expects the STI to trade within a range of 100 points in the next few days.
Analysts said investor sentiment will remain tentative until a clearer market
trend emerges.
Property heavyweights rose after unlisted developer Far East Organization
reportedly paid a record price for a suburban residential condominium site in
the northern town of Ang Mo Kio, providing further evidence that residential
property demand is spreading into the midrange and mass housing segment.
CapitaLand added 15 cents to 7.70 dollars, City Developments gained 20 cents to
15 dollars and Keppel Land rose 5 cents to 7.85 dollars.
Among blue chip gainers, Fraser and Neave Ltd (F&N) rose on expectations the
company will see good earnings growth in the next few years supported by gains
in its property business. The stock was up 15 cents at 5.30 dollars.
Oil-and-gas related stocks were higher, buoyed by rising oil prices. Singapore
Petroleum added 15 cents to 6.35 Singapore dollars, Labroy Marine was up 5 cents
at 2.29 dollars, and Keppel Corp rose 10 cents to 13.30 dollars.
Wilmar International, which owns palm plantations in Indonesia and Malaysia,
rose on expectations crude palm oil (CPO) prices will remain at their current
high levels on prevailing strong demand. The stock put on 12 cents to 3.54
dollars.
Construction issues were also higher and were among the mostly actively traded
stocks amid the ongoing property boom. Hor Kew rose 2.5 cents to 28.5 cents,
Yongnam Holdings added 1 cent to 41.5 cents, and Chip Eng Seng advanced 1.5
cents to 84 cents.
Banks closed higher after a day of seesaw trading. DBS Group Holdings was up
10 cents at 20 dollars, United Overseas Banking Corp was up 10 cents at 21.60
dollars, and Oversea Chinese Banking Corp was up 5 cents at 8.80 dollars.
Source:Thomson Financial
Singapore property stocks higher on hopes housing demand will be sustained
Singapore property stocks higher on hopes housing demand will be sustained
SINGAPORE (Thomson Financial) - Shares of Singapore property developers were
higher Friday on hopes that housing demand will be sustained in the months ahead
despite a slower pick-up in sales in recent weeks.
At 10.55 am (0255 GMT), Allgreen was up 6 Singapore cents at 1.82 dollars,
CapitaLand up 15 cents at 7.95 dollars, City Developments up 40 cents at 14.30
dollars, Keppel Land up 15 cents at 8.10 dollars and Wing Tai up 10 cents at
3.50 dollars.
There are several indicators showing that housing demand remains intact despite
the recent turmoil in the financial markets induced by concerns over the fallout
from the US subprime crisis.
The number of Singaporeans upgrading from public housing to private
condominiums has been rising and demand appears to be spreading into the mid- to
mass-market segment.
In the second quarter, 1,750 Singaporeans quit their public housing apartments
and bought private residential property, 75 percent more than in the first
quarter, Citigroup said in a note.
"We are positive on the outlook of the mass market as transactions made by
(public housing) upgraders surged in the second quarter and prices have started
to move," Citigroup analyst Wendy Koh said in a note.
Rising rental yields are also boosting demand for mass residential property,
Koh said.
"While we expect secondary transaction volume in the second-half to slow
compared to (the) first-half, residential prices are expected to continue their
upward trend given the demand-supply disequilibrium," she said.
Developers sold more than 9,000 apartments in uncompleted residential projects
in the first-half, with prices rising an average of 20 percent from a year
earlier.
Kim Eng Securities analyst Wilson Liew said he will wait for the third quarter
data on housing sales to see whether demand is holding up.
"Demand may not be as strong as what we've seen in the first two quarters of
the year," Liew said.
But he believes that over the longer term, demand for property will remain
intact, considering the string of projects in the next few years.
"We haven't seen the peak," Liew said.
Source:Thomson Financial
SINGAPORE (Thomson Financial) - Shares of Singapore property developers were
higher Friday on hopes that housing demand will be sustained in the months ahead
despite a slower pick-up in sales in recent weeks.
At 10.55 am (0255 GMT), Allgreen was up 6 Singapore cents at 1.82 dollars,
CapitaLand up 15 cents at 7.95 dollars, City Developments up 40 cents at 14.30
dollars, Keppel Land up 15 cents at 8.10 dollars and Wing Tai up 10 cents at
3.50 dollars.
There are several indicators showing that housing demand remains intact despite
the recent turmoil in the financial markets induced by concerns over the fallout
from the US subprime crisis.
The number of Singaporeans upgrading from public housing to private
condominiums has been rising and demand appears to be spreading into the mid- to
mass-market segment.
In the second quarter, 1,750 Singaporeans quit their public housing apartments
and bought private residential property, 75 percent more than in the first
quarter, Citigroup said in a note.
"We are positive on the outlook of the mass market as transactions made by
(public housing) upgraders surged in the second quarter and prices have started
to move," Citigroup analyst Wendy Koh said in a note.
Rising rental yields are also boosting demand for mass residential property,
Koh said.
"While we expect secondary transaction volume in the second-half to slow
compared to (the) first-half, residential prices are expected to continue their
upward trend given the demand-supply disequilibrium," she said.
Developers sold more than 9,000 apartments in uncompleted residential projects
in the first-half, with prices rising an average of 20 percent from a year
earlier.
Kim Eng Securities analyst Wilson Liew said he will wait for the third quarter
data on housing sales to see whether demand is holding up.
"Demand may not be as strong as what we've seen in the first two quarters of
the year," Liew said.
But he believes that over the longer term, demand for property will remain
intact, considering the string of projects in the next few years.
"We haven't seen the peak," Liew said.
Source:Thomson Financial
HDB upgraders are back in force
HDB upgraders are back in force
Big hike in secondary market deals shows genuine demand: analysts
By ARTHUR SIM
(SINGAPORE) The broad-based recovery in the property sector is gathering pace with data showing a spike in the number of property transactions by Housing and Development Board (HDB) upgraders.
Looking at data which captures transactions made by buyers with registered HDB addresses - traditionally considered HDB upgraders - Citigroup noted that, in Q2 2007, HDB upgraders made about 1,750 transactions in the secondary market, an increase of 75 per cent from the previous quarter when around 1,000 transactions were recorded.
On the significance of secondary market transactions, Citigroup analyst Wendy Koh said that these represented 'genuine demand as full payment is required for completed developments'.
Although there is always some level of speculation in a rising market, the mass market appears to be safe for now, with Citigroup noting that subsales in the mass market segment stood at about 9 per cent of total sales compared to 27 per cent at the peak of 1995/1996.
DTZ Debenham Tie Leung executive director Ong Choon Fah also believes buyers in this segment are genuine. 'Most speculation still takes place in the prime districts because price increases (in the mass market) are still not as significant,' she said
Mrs Ong added that the recovery of prices for the HDB resale segment has also boosted the number of upgraders and noted that about 70 per cent of resale flats transacted at above valuation in Q2.
DTZ's figures show that combined primary and secondary market transactions by upgraders increased by about 50 per cent in Q2 over the previous quarter. Popular new developments among upgraders were The Quartz near Buangkok MRT Station, Northwood in Sembawang and Ferraria Park Condo in Pasir Ris. Upgraders made up 80 per cent, 58 per cent and 54 per cent of the buyers respectively.
'There is also now more urgency to buy because there is the belief that prices seen in the prime areas will filter out into the suburban districts,' she added.
Upgraders have also bought into more upscale developments.
A spokesman for UOL said that they formed about 16 per cent of the buyers for Pavilion 11 at Minbu Road while Frasers Centrepoint said a similar 16 per cent have bought into The Soleil at Novena. Even at the more expensive The Seafront on Meyer, CapitaLand said that just under 5 per cent are buyers with HDB addresses.
HDB upgraders are still, however, price sensitive and Mrs Ong attributed the spike in secondary market transactions to this as the secondary market offers lower-cost private residential alternatives.
Speculation could, of course, raise prices. A recent report by Credit Bureau (Singapore) revealed that people living in the heartlands of Serangoon Gardens, Hougang and Punggol recorded the highest number of borrowers with multiple property loans, suggesting that they owned homes for reasons other than to live in.
Savills Singapore director (marketing and business development) Ku Swee Yong, who also believes speculation has yet to hit the mass market, reckoned that the increase in the number of borrowers with multiple loans could be due to the fact that several developments in the area, including Kovan Melody and Tangerine Grove, have obtained temporary occupation permits (TOP), requiring existing homeowners who opted for deferred payment schemes to apply for loans.
He also noted that some collective sale beneficiaries have had to apply for housing loans because more banks are refusing to give bridging loans.
CB Richard Ellis executive director Li Hiaw Ho does believe that speculation is increasing in new suburban projects like One Rochester and Sky@Eleven. Although Mr Li said that it is still 'quite minimal', he believed that it will impact overall prices, and that mass market projects will not be spared. 'You just have to look at the recent land sales price at Ang Mo Kio,' he added. The site in question sold for about $600 per square foot per plot ratio and is expected to sell for over $1,000 psf.
Big hike in secondary market deals shows genuine demand: analysts
By ARTHUR SIM
(SINGAPORE) The broad-based recovery in the property sector is gathering pace with data showing a spike in the number of property transactions by Housing and Development Board (HDB) upgraders.
Looking at data which captures transactions made by buyers with registered HDB addresses - traditionally considered HDB upgraders - Citigroup noted that, in Q2 2007, HDB upgraders made about 1,750 transactions in the secondary market, an increase of 75 per cent from the previous quarter when around 1,000 transactions were recorded.
On the significance of secondary market transactions, Citigroup analyst Wendy Koh said that these represented 'genuine demand as full payment is required for completed developments'.
Although there is always some level of speculation in a rising market, the mass market appears to be safe for now, with Citigroup noting that subsales in the mass market segment stood at about 9 per cent of total sales compared to 27 per cent at the peak of 1995/1996.
DTZ Debenham Tie Leung executive director Ong Choon Fah also believes buyers in this segment are genuine. 'Most speculation still takes place in the prime districts because price increases (in the mass market) are still not as significant,' she said
Mrs Ong added that the recovery of prices for the HDB resale segment has also boosted the number of upgraders and noted that about 70 per cent of resale flats transacted at above valuation in Q2.
DTZ's figures show that combined primary and secondary market transactions by upgraders increased by about 50 per cent in Q2 over the previous quarter. Popular new developments among upgraders were The Quartz near Buangkok MRT Station, Northwood in Sembawang and Ferraria Park Condo in Pasir Ris. Upgraders made up 80 per cent, 58 per cent and 54 per cent of the buyers respectively.
'There is also now more urgency to buy because there is the belief that prices seen in the prime areas will filter out into the suburban districts,' she added.
Upgraders have also bought into more upscale developments.
A spokesman for UOL said that they formed about 16 per cent of the buyers for Pavilion 11 at Minbu Road while Frasers Centrepoint said a similar 16 per cent have bought into The Soleil at Novena. Even at the more expensive The Seafront on Meyer, CapitaLand said that just under 5 per cent are buyers with HDB addresses.
HDB upgraders are still, however, price sensitive and Mrs Ong attributed the spike in secondary market transactions to this as the secondary market offers lower-cost private residential alternatives.
Speculation could, of course, raise prices. A recent report by Credit Bureau (Singapore) revealed that people living in the heartlands of Serangoon Gardens, Hougang and Punggol recorded the highest number of borrowers with multiple property loans, suggesting that they owned homes for reasons other than to live in.
Savills Singapore director (marketing and business development) Ku Swee Yong, who also believes speculation has yet to hit the mass market, reckoned that the increase in the number of borrowers with multiple loans could be due to the fact that several developments in the area, including Kovan Melody and Tangerine Grove, have obtained temporary occupation permits (TOP), requiring existing homeowners who opted for deferred payment schemes to apply for loans.
He also noted that some collective sale beneficiaries have had to apply for housing loans because more banks are refusing to give bridging loans.
CB Richard Ellis executive director Li Hiaw Ho does believe that speculation is increasing in new suburban projects like One Rochester and Sky@Eleven. Although Mr Li said that it is still 'quite minimal', he believed that it will impact overall prices, and that mass market projects will not be spared. 'You just have to look at the recent land sales price at Ang Mo Kio,' he added. The site in question sold for about $600 per square foot per plot ratio and is expected to sell for over $1,000 psf.
ECONOMIC growth will take a hit across the major G7 economies this year, apart from the UK, as the credit crisis puts a brake on expansion
ECONOMIC growth will take a hit across the major G7 economies this year, apart from the UK, as the credit crisis puts a brake on expansion, Reuters polls showed yesterday.
The monthly polls of around 250 economists, carried out September 7-13, showed the US, Japanese and euro zone economies bearing the brunt of a global credit market squeeze that has not yet abated.
Economists now see around a 30 per cent chance of a US recession happening in the next 12 months should the effects of a housing market slowdown continue to ripple into the wider economy.
Growth of just 2.1 per cent is predicted this year in the United States, down from the 2.2 per cent recorded last month.
Japanese growth is also expected to be sluggish, coming in at 1.8 per cent in fiscal 2007/2008, well down on the 2.3 per cent seen last month.
Forecasts for Japan were taken before the sudden resignation of Prime Minister Shinzo Abe on Wednesday, which unsettled markets further.
The UK bucked the trend, with analysts upgrading their calls for the economy, predicting growth of 2.9 per cent up from 2.8 per cent last month.
"We have lowered our third and fourth quarter GDP forecasts for the United States on the assumption that business confidence will temporarily retreat in response to the credit crunch," said Michael Englund at Action Economics.
Revised growth forecasts come in tandem with expectations for the US Federal Reserve to lower interest rates, with a rate cut seen as soon as next week, and another to come by the end of the year.
Rates are seen on hold 2008 at 4.5 per cent after another cut by March.
"We now assume that the Fed will feel compelled to lower the Fed funds rate target to end the credit crisis," said Englund.
The main scenario for the United States is for growth to hit a low of 2.0 per cent in the final three months of the year, then creep up through subsequent quarters to average 2.5 per cent in 2008.
This will mark a turnaround against other G7 economies, with growth forecast to slip to 2.3 per cent in the UK and euro zone.
Reuters
The monthly polls of around 250 economists, carried out September 7-13, showed the US, Japanese and euro zone economies bearing the brunt of a global credit market squeeze that has not yet abated.
Economists now see around a 30 per cent chance of a US recession happening in the next 12 months should the effects of a housing market slowdown continue to ripple into the wider economy.
Growth of just 2.1 per cent is predicted this year in the United States, down from the 2.2 per cent recorded last month.
Japanese growth is also expected to be sluggish, coming in at 1.8 per cent in fiscal 2007/2008, well down on the 2.3 per cent seen last month.
Forecasts for Japan were taken before the sudden resignation of Prime Minister Shinzo Abe on Wednesday, which unsettled markets further.
The UK bucked the trend, with analysts upgrading their calls for the economy, predicting growth of 2.9 per cent up from 2.8 per cent last month.
"We have lowered our third and fourth quarter GDP forecasts for the United States on the assumption that business confidence will temporarily retreat in response to the credit crunch," said Michael Englund at Action Economics.
Revised growth forecasts come in tandem with expectations for the US Federal Reserve to lower interest rates, with a rate cut seen as soon as next week, and another to come by the end of the year.
Rates are seen on hold 2008 at 4.5 per cent after another cut by March.
"We now assume that the Fed will feel compelled to lower the Fed funds rate target to end the credit crisis," said Englund.
The main scenario for the United States is for growth to hit a low of 2.0 per cent in the final three months of the year, then creep up through subsequent quarters to average 2.5 per cent in 2008.
This will mark a turnaround against other G7 economies, with growth forecast to slip to 2.3 per cent in the UK and euro zone.
Reuters
THE US dollar hit a 15-year low against a basket of major currencies for the fifth consecutive day
THE US dollar hit a 15-year low against a basket of major currencies for the fifth consecutive day yesterday as investors braced for an expected Federal Reserve interest rate cut next week.
The greenback which also set record lows versus the euro and three-decade troughs against the Canadian dollar has been under pressure since Friday, when an unexpectedly weak US jobs report fuelled speculation that the Fed may cut rates by as much as 50 basis points on September 18 from the current 5.25 per cent.
The unexpected fall in US employment levels suggested that the US economy may be hit more than previously expected by the turmoil in financial and credit markets, which spiralled out from troubles in the US sub-prime mortgage sector.
Dollar weakness "has been the strong trend for the past few days, ever since we got the payrolls number. The market is now pricing in the fact that what we are seeing in financial markets ... is probably going to be a lot more negative for the US economy than economies elsewhere," said Adarsh Sinha, currency strategist at Barclays Capital.
"We think that further (dollar) weakness is likely ahead."
By 1058 GMT, the US dollar index had fallen to 79.302 its lowest since 1992, when it had set an all-time trough of 78.19. It last traded at 79.529.
The euro set a record high of US$1.3927, according to Reuters data, before easing back to US$1.3886.
The US dollar was down a third of a per cent at C$1.0334, just off an earlier 30-year low at C$1.0316.
One exception though was the yen, which lost ground broadly, including against the US dollar.
Analysts cited short-term positions adjustments as well as political uncertainty after Prime Minister Shinzo Abe's shock announcement on Wednesday that he will step down.
The yen was down 0.4 per cent against the euro at 159.41 . It fell 0.6 per cent versus the US dollar to 114.76.
The Swiss franc was steady versus the euro ahead of a Swiss National Bank rate decision. Most economists expect the SNB to hold rates at 2.5 per cent, but a sizeable minority are expecting a 25 basis point hike.
"We believe the SNB will indeed tighten, which given the uncertainty over the outcome, could see Swiss franc gains," ING said in a research note for clients.
The high-yielding Australian and New Zealand dollars both slipped yesterday, partly after data showed retail sales in New Zealand were flat in July from a month earlier compared with forecasts for a 0.2-per cent increase.
The report followed the Reserve Bank of New Zealand's decision to keep rates on hold at 8.25 per cent, the highest among developed economies, with the central bank acknowledging signs of slowing demand but saying inflation remained a worry.
Elsewhere, sterling fell to a six-month low against the euro as weak UK housing data added weight to expectations that UK interest rates have peaked.
Reuters
The greenback which also set record lows versus the euro and three-decade troughs against the Canadian dollar has been under pressure since Friday, when an unexpectedly weak US jobs report fuelled speculation that the Fed may cut rates by as much as 50 basis points on September 18 from the current 5.25 per cent.
The unexpected fall in US employment levels suggested that the US economy may be hit more than previously expected by the turmoil in financial and credit markets, which spiralled out from troubles in the US sub-prime mortgage sector.
Dollar weakness "has been the strong trend for the past few days, ever since we got the payrolls number. The market is now pricing in the fact that what we are seeing in financial markets ... is probably going to be a lot more negative for the US economy than economies elsewhere," said Adarsh Sinha, currency strategist at Barclays Capital.
"We think that further (dollar) weakness is likely ahead."
By 1058 GMT, the US dollar index had fallen to 79.302 its lowest since 1992, when it had set an all-time trough of 78.19. It last traded at 79.529.
The euro set a record high of US$1.3927, according to Reuters data, before easing back to US$1.3886.
The US dollar was down a third of a per cent at C$1.0334, just off an earlier 30-year low at C$1.0316.
One exception though was the yen, which lost ground broadly, including against the US dollar.
Analysts cited short-term positions adjustments as well as political uncertainty after Prime Minister Shinzo Abe's shock announcement on Wednesday that he will step down.
The yen was down 0.4 per cent against the euro at 159.41 . It fell 0.6 per cent versus the US dollar to 114.76.
The Swiss franc was steady versus the euro ahead of a Swiss National Bank rate decision. Most economists expect the SNB to hold rates at 2.5 per cent, but a sizeable minority are expecting a 25 basis point hike.
"We believe the SNB will indeed tighten, which given the uncertainty over the outcome, could see Swiss franc gains," ING said in a research note for clients.
The high-yielding Australian and New Zealand dollars both slipped yesterday, partly after data showed retail sales in New Zealand were flat in July from a month earlier compared with forecasts for a 0.2-per cent increase.
The report followed the Reserve Bank of New Zealand's decision to keep rates on hold at 8.25 per cent, the highest among developed economies, with the central bank acknowledging signs of slowing demand but saying inflation remained a worry.
Elsewhere, sterling fell to a six-month low against the euro as weak UK housing data added weight to expectations that UK interest rates have peaked.
Reuters
OIL edged lower yesterday, but kept within sight of the previous day's all-time high above US$80, as investors stayed locked into the market
OIL edged lower yesterday, but kept within sight of the previous day's all-time high above US$80, as investors stayed locked into the market for the long haul.
Their enthusiasm has grown thanks to a backward-dated market structure, where oil prices nearby are higher than those further forward, which produces favourable returns for investors.
The nearly two-month "backwardation" has been encouraged by the belief by analysts and consumer nations that Opec will not pump enough oil to satisfy demand for fuel this winter.
US crude traded six US cents lower at US$79.85 a barrel by 1125 GMT, after hitting a record of US$80.18 on Wednesday. London Brent crude shed 22 cents to US$77.46.
"Modest demand growth combined with no significant supply increases has caused oil inventories to decline sharply, creating 'backwardation' in the oil forward curve, which is a very bullish signal," said Jeffrey Currie of Goldman Sachs.
The Organisation of the Petroleum Exporting Countries agreed on a modest supply increase on Tuesday in a bid to soothe consumer concern that soaring oil costs may slow economic growth.
But analysts said Opec's pact to raise output by 500,000 barrels per day (bpd) from November 1 was not enough to reverse a rally that has lifted prices by 31 per cent this year.
Though quadruple the levels of 2002, the price of oil when adjusted for inflation is below the US$90-a-barrel peaks of the Iranian Revolution in 1979 and the start of the Iran-Iraq War the following year.
"There are so many things that affect the price of oil," Hasan Qabazard, director of Opec's research division, told reporters yesterday.
"We have a storm working its way to American facilities. We have an economic crisis, so many things are affecting...prices."
Hurricane Humberto yesterday hit the Texas coast, a major oil-producing and gasoline-refining area, though industry officials expect little impact on operations.
Reuters
Their enthusiasm has grown thanks to a backward-dated market structure, where oil prices nearby are higher than those further forward, which produces favourable returns for investors.
The nearly two-month "backwardation" has been encouraged by the belief by analysts and consumer nations that Opec will not pump enough oil to satisfy demand for fuel this winter.
US crude traded six US cents lower at US$79.85 a barrel by 1125 GMT, after hitting a record of US$80.18 on Wednesday. London Brent crude shed 22 cents to US$77.46.
"Modest demand growth combined with no significant supply increases has caused oil inventories to decline sharply, creating 'backwardation' in the oil forward curve, which is a very bullish signal," said Jeffrey Currie of Goldman Sachs.
The Organisation of the Petroleum Exporting Countries agreed on a modest supply increase on Tuesday in a bid to soothe consumer concern that soaring oil costs may slow economic growth.
But analysts said Opec's pact to raise output by 500,000 barrels per day (bpd) from November 1 was not enough to reverse a rally that has lifted prices by 31 per cent this year.
Though quadruple the levels of 2002, the price of oil when adjusted for inflation is below the US$90-a-barrel peaks of the Iranian Revolution in 1979 and the start of the Iran-Iraq War the following year.
"There are so many things that affect the price of oil," Hasan Qabazard, director of Opec's research division, told reporters yesterday.
"We have a storm working its way to American facilities. We have an economic crisis, so many things are affecting...prices."
Hurricane Humberto yesterday hit the Texas coast, a major oil-producing and gasoline-refining area, though industry officials expect little impact on operations.
Reuters
TOP Japanese brokerage Nomura Holdings, looking to build up its equities business in Asia beyond Japan, has set up a unit in Singapore
TOP Japanese brokerage Nomura Holdings, looking to build up its equities business in Asia beyond Japan, has set up a unit in Singapore to invest in and finance property deals in the region and to develop a real estate investment trust (REIT) business.
"That (REIT business) is something we are keen to do more of in Asia ex-Japan," Philippe Espinasse, Nomura's new co-head of equity capital markets, said in an interview yesterday.
Espinasse, who has REIT experience from his previous stint as head of Asia equity capital markets at securitisation specialist Macquarie Bank , said Nomura's new Asia Asset Finance unit, which was set up in July, would grow to about 12 people.
Singapore is the top property trust market in Asia-Pacific after Japan and Australia, and the city-state has become a hub for the listing of trusts holding assets outside the country, as well as assets other than property, such as ships.
Singapore is home to 17 property trusts with a combined market value of more than US$15 billion.
"You now have a critical mass with Singapore real estate investment trust," Espinasse said.
Investment banks such as Morgan Stanley , Macquarie, Deutsche Bank and ING have been pouring money into Asian property, with China, India and Japan especially popular.
Reuters
"That (REIT business) is something we are keen to do more of in Asia ex-Japan," Philippe Espinasse, Nomura's new co-head of equity capital markets, said in an interview yesterday.
Espinasse, who has REIT experience from his previous stint as head of Asia equity capital markets at securitisation specialist Macquarie Bank , said Nomura's new Asia Asset Finance unit, which was set up in July, would grow to about 12 people.
Singapore is the top property trust market in Asia-Pacific after Japan and Australia, and the city-state has become a hub for the listing of trusts holding assets outside the country, as well as assets other than property, such as ships.
Singapore is home to 17 property trusts with a combined market value of more than US$15 billion.
"You now have a critical mass with Singapore real estate investment trust," Espinasse said.
Investment banks such as Morgan Stanley , Macquarie, Deutsche Bank and ING have been pouring money into Asian property, with China, India and Japan especially popular.
Reuters
Friday, September 14, 2007
Plenitude to launch 3 projects
Plenitude to launch 3 projects
Digg this story Add to your del.icio.us account
They have GDV of more than RM340mil
By YEOW POOI LING
PETALING JAYA: Plenitude Bhd expects to launch three projects with a combined gross development value (GDV) of more than RM340mil by the first half next year, said acting chief executive officer Khoo Yek San.
A piece of land in Batu Ferringhi, which is targeted for residential development, has a GDV of some RM120mil while the Lot 88 project in Sungai Petani is worth RM136mil.
“The mainland will see spillover effects from Penang island.
Khoo Yek San
“Sungai Petani, being only 45 minutes away by highway, will also benefit given the competitive and affordable prices,” she told StarBiz in a telephone interview.
The company's Batai project in Damansara Heights would comprise bungalows valued at about RM88mil in total, Khoo said.
On the back of these, earnings for the years ending June 30, 2008 and 2009 were likely to be significantly better, she said.
For the year just ended June 30, Plenitude's pre-tax profit rose 10% to RM82.7mil from RM75.2mil a year earlier while revenue improved 7.7% to RM238.2mil from RM221.1mil. Earnings per share increased to 41.82 sen against 38.81 sen previously.
Part of the improvement was contributed by Taman Puchong Prima in Puchong, which saw higher sales, thanks to it being the only available freehold land in the vicinity, Khoo said.
Plenitude is also the developer of Taman Desa Tebrau and Tebrau City in Johor. Due to their proximity to the Iskandar Development Region, property value has increased substantially.
Khoo said the company intended to leverage on that by turning some of its future developments into high-end residential properties like bungalows instead of terrace houses as initially planned.
She said the opening of an Ikea outlet in Tebrau City by year's end would further boost interest.
“Singapore, Vietnam, Dubai and Abu Dhabi are seeing a boom in their property markets. This will have a spillover effect on Malaysia, with property prices in Johor and Kuala Lumpur to increase soon,” she said.
The cash-rich company also plans to have a more sustainable income, going forward.
Khoo said the developer planned to set up a hotel in Taman Desa Tebrau to cater to the growing number of tourists.
“We already own the Tanjung Bungah Beach Hotel in Penang, which contributes about 6% of group revenue,” she said.
Plenitude was also looking to expand into Vietnam and Indonesia, Khoo said.
Digg this story Add to your del.icio.us account
They have GDV of more than RM340mil
By YEOW POOI LING
PETALING JAYA: Plenitude Bhd expects to launch three projects with a combined gross development value (GDV) of more than RM340mil by the first half next year, said acting chief executive officer Khoo Yek San.
A piece of land in Batu Ferringhi, which is targeted for residential development, has a GDV of some RM120mil while the Lot 88 project in Sungai Petani is worth RM136mil.
“The mainland will see spillover effects from Penang island.
Khoo Yek San
“Sungai Petani, being only 45 minutes away by highway, will also benefit given the competitive and affordable prices,” she told StarBiz in a telephone interview.
The company's Batai project in Damansara Heights would comprise bungalows valued at about RM88mil in total, Khoo said.
On the back of these, earnings for the years ending June 30, 2008 and 2009 were likely to be significantly better, she said.
For the year just ended June 30, Plenitude's pre-tax profit rose 10% to RM82.7mil from RM75.2mil a year earlier while revenue improved 7.7% to RM238.2mil from RM221.1mil. Earnings per share increased to 41.82 sen against 38.81 sen previously.
Part of the improvement was contributed by Taman Puchong Prima in Puchong, which saw higher sales, thanks to it being the only available freehold land in the vicinity, Khoo said.
Plenitude is also the developer of Taman Desa Tebrau and Tebrau City in Johor. Due to their proximity to the Iskandar Development Region, property value has increased substantially.
Khoo said the company intended to leverage on that by turning some of its future developments into high-end residential properties like bungalows instead of terrace houses as initially planned.
She said the opening of an Ikea outlet in Tebrau City by year's end would further boost interest.
“Singapore, Vietnam, Dubai and Abu Dhabi are seeing a boom in their property markets. This will have a spillover effect on Malaysia, with property prices in Johor and Kuala Lumpur to increase soon,” she said.
The cash-rich company also plans to have a more sustainable income, going forward.
Khoo said the developer planned to set up a hotel in Taman Desa Tebrau to cater to the growing number of tourists.
“We already own the Tanjung Bungah Beach Hotel in Penang, which contributes about 6% of group revenue,” she said.
Plenitude was also looking to expand into Vietnam and Indonesia, Khoo said.
L&G to consider nominations to board
L&G to consider nominations to board
KUALA LUMPUR: Land & General Bhd (L&G) will deliberate on nominations of directors at a board meeting slated within the week, executive director Rita Benoy Bushon said yesterday.
The six-member L&G board is now headed by Bushon, who is the Employees Provident Fund's (EPF) nominee, after chairman Datuk Oh Chong Peng withdrew from seeking re-election to the board.
“My job here (with L&G) is finished,” Oh told reporters after the company AGM yesterday.
Oh said he had anticipated resistance from certain substantial shareholders. “I saw a lot of markings on proxy forms against me. There's no point for me to seek re-election.”
As at last week, the single-largest shareholder of L&G was Unioncity Enterprises Ltd, a company linked to Datuk Ishak Ismail, the former managing director of KFC Holdings (M) Bhd, with 14.9%.
EPF is the second largest with 9.86%, while Hong Kong-based property tycoon Tan Sri David Chiu has an 8.35% stake via Mayland Parkview Sdn Bhd. Mayland had earlier withdrawn a request to have its nominees Low Gay Teck and Muhammad Khairun Aseh elected directors during yesterday's AGM.
The two nominees were believed to be up against directors Lau Tiang Hua and Datuk Imran Ho, who were believed to be aligned to Ishak.
“I think they want the board to deliberate the issue instead of going straight to the AGM,” Oh said.
On L&G's operations, Bushon said despite resistance from some shareholders, the group would still look into divesting non-core assets, except landbank and its education business. Topping the list is Vietnam Industrial Investment Ltd.
The group, which encountered financial difficulties during by the 1997 economic crisis, had hived off some RM800mil worth of assets in the last five years under its asset disposal scheme.
For the financial year ended March 31, 2007, L&G's pre-tax profit dropped sharply to RM8.59mil from RM96.37mil previously as it slowed down the asset-selling activities.
Bushon said the group had accumulated RM137mil in its composite debt restructuring scheme (CDRS) escrow account that was able to square off its debt position.
“But we are now seriously looking at resuming our property development activities,” she said, referring to a plan to develop an upmarket residential project on a 42-acre hilly site in Bandar Sri Damansara.
However, she said new property launches had a one- or two-year gestation period and she did not expect property development to impact L&G's results during the time.
On loss-making unit Bandar Sungai Buaya Sdn Bhd, Bushon said: “We have been studying whether we can liquidate or look into setting up a joint venture with a property developer who can pump money into the project. Or, we can also develop the project with the banks.”
KUALA LUMPUR: Land & General Bhd (L&G) will deliberate on nominations of directors at a board meeting slated within the week, executive director Rita Benoy Bushon said yesterday.
The six-member L&G board is now headed by Bushon, who is the Employees Provident Fund's (EPF) nominee, after chairman Datuk Oh Chong Peng withdrew from seeking re-election to the board.
“My job here (with L&G) is finished,” Oh told reporters after the company AGM yesterday.
Oh said he had anticipated resistance from certain substantial shareholders. “I saw a lot of markings on proxy forms against me. There's no point for me to seek re-election.”
As at last week, the single-largest shareholder of L&G was Unioncity Enterprises Ltd, a company linked to Datuk Ishak Ismail, the former managing director of KFC Holdings (M) Bhd, with 14.9%.
EPF is the second largest with 9.86%, while Hong Kong-based property tycoon Tan Sri David Chiu has an 8.35% stake via Mayland Parkview Sdn Bhd. Mayland had earlier withdrawn a request to have its nominees Low Gay Teck and Muhammad Khairun Aseh elected directors during yesterday's AGM.
The two nominees were believed to be up against directors Lau Tiang Hua and Datuk Imran Ho, who were believed to be aligned to Ishak.
“I think they want the board to deliberate the issue instead of going straight to the AGM,” Oh said.
On L&G's operations, Bushon said despite resistance from some shareholders, the group would still look into divesting non-core assets, except landbank and its education business. Topping the list is Vietnam Industrial Investment Ltd.
The group, which encountered financial difficulties during by the 1997 economic crisis, had hived off some RM800mil worth of assets in the last five years under its asset disposal scheme.
For the financial year ended March 31, 2007, L&G's pre-tax profit dropped sharply to RM8.59mil from RM96.37mil previously as it slowed down the asset-selling activities.
Bushon said the group had accumulated RM137mil in its composite debt restructuring scheme (CDRS) escrow account that was able to square off its debt position.
“But we are now seriously looking at resuming our property development activities,” she said, referring to a plan to develop an upmarket residential project on a 42-acre hilly site in Bandar Sri Damansara.
However, she said new property launches had a one- or two-year gestation period and she did not expect property development to impact L&G's results during the time.
On loss-making unit Bandar Sungai Buaya Sdn Bhd, Bushon said: “We have been studying whether we can liquidate or look into setting up a joint venture with a property developer who can pump money into the project. Or, we can also develop the project with the banks.”
Dubai 9 eyes real estate sector in three countries
Dubai 9 eyes real estate sector in three countries
DUBAI-BASED property developer Dubai 9 is assessing investment opportunities in the real estate sector in China, India and Malaysia, managing director Hayan Merchant said.
“We are still in the early stages of seeing what we can offer these markets, including the Iskandar Development Region (IDR).
Whatever we do has to fit into our business model of developing residential, commercial and real estate for tourism activities,” he said yesterday.
Several Middle Eastern groups have made commitments to develop real estate at IDR.
Property prices are expected to rise further in Asian cities and developers that are able to capture new lifestyle trends stand to win in markets away from their home turf.
Hong Kong’s Shui On Group chairman and chief executive Vincent H.S. Lo said developers needed ideas that catered to the needs of the younger generation.
DLF Ltd chairman Kushal Pal Singh said there was a huge gap in demand and supply in India’s office and residential units.
He cautioned that while there was huge scope for foreign companies to invest in India, there was a need to select the right partner.
Merchant said the boom in construction activities and real estate in Dubai was sustainable although a bubble was predicted a few years ago.
“The bubble will not burst but minor corrections can be expected in the property sector,” he added.
Hong Leong Group executive chairman Kwek Leng Beng said he would continue to invest in Singapore on expectation of further upside in the property market.
“Singapore is becoming a global city with many people buying high-end condominiums,” he said.
Macau continues to face challenges from emerging casinos but Melco International Development Ltd chairman and CEO Lawrence Ho said the group had a strategy in place to ensure Macau remained the region’s gaming hub.
DUBAI-BASED property developer Dubai 9 is assessing investment opportunities in the real estate sector in China, India and Malaysia, managing director Hayan Merchant said.
“We are still in the early stages of seeing what we can offer these markets, including the Iskandar Development Region (IDR).
Whatever we do has to fit into our business model of developing residential, commercial and real estate for tourism activities,” he said yesterday.
Several Middle Eastern groups have made commitments to develop real estate at IDR.
Property prices are expected to rise further in Asian cities and developers that are able to capture new lifestyle trends stand to win in markets away from their home turf.
Hong Kong’s Shui On Group chairman and chief executive Vincent H.S. Lo said developers needed ideas that catered to the needs of the younger generation.
DLF Ltd chairman Kushal Pal Singh said there was a huge gap in demand and supply in India’s office and residential units.
He cautioned that while there was huge scope for foreign companies to invest in India, there was a need to select the right partner.
Merchant said the boom in construction activities and real estate in Dubai was sustainable although a bubble was predicted a few years ago.
“The bubble will not burst but minor corrections can be expected in the property sector,” he added.
Hong Leong Group executive chairman Kwek Leng Beng said he would continue to invest in Singapore on expectation of further upside in the property market.
“Singapore is becoming a global city with many people buying high-end condominiums,” he said.
Macau continues to face challenges from emerging casinos but Melco International Development Ltd chairman and CEO Lawrence Ho said the group had a strategy in place to ensure Macau remained the region’s gaming hub.
Swinging time with West Mark
Swinging time with West Mark
THE West Mark GFM swing gate comes with the latest state-of-the-art mechanism using a servo-motor which is connected to the motor’s electronic circuit to control its speed and rpm.
Designed for durability it can withstand high vibration, high temperatures and lightning.
The initial operating speed is faster and it automatically reduces its speed at the end.
The system has a safety feature where it stops moving when it detects an obstacle. This is especially important for houses with children.
This wall mounted rotary motor is also water resistant making it the ultimate driver for swing-type and folding-type automatic gates.
The system does not require a lock at the centre of the driveway as it uses an electro magnetic lock on the motor itself.
West Mark GFM comes with a four-channel transmitter to open both sides, left side, right side and an optional wireless panic alarm.
This transmitter has an anti spy function where it cannot be duplicated by a locksmith.
The panic alarm can also be activated from your car.
West Mark also specialises in sliding gates, burglar alarms, boom gates, card access systems, CCTVs, wrought iron gates, grilles, staircases and balustrades.
THE West Mark GFM swing gate comes with the latest state-of-the-art mechanism using a servo-motor which is connected to the motor’s electronic circuit to control its speed and rpm.
Designed for durability it can withstand high vibration, high temperatures and lightning.
The initial operating speed is faster and it automatically reduces its speed at the end.
The system has a safety feature where it stops moving when it detects an obstacle. This is especially important for houses with children.
This wall mounted rotary motor is also water resistant making it the ultimate driver for swing-type and folding-type automatic gates.
The system does not require a lock at the centre of the driveway as it uses an electro magnetic lock on the motor itself.
West Mark GFM comes with a four-channel transmitter to open both sides, left side, right side and an optional wireless panic alarm.
This transmitter has an anti spy function where it cannot be duplicated by a locksmith.
The panic alarm can also be activated from your car.
West Mark also specialises in sliding gates, burglar alarms, boom gates, card access systems, CCTVs, wrought iron gates, grilles, staircases and balustrades.
Three decades after being dubbed the “silicon island”, Penang is set to move on to the world stage as a global city centre.
Three decades after being dubbed the “silicon island”, Penang is set to move on to the world stage as a global city centre.
The RM25bil Penang Global City Centre (PGCC) masterplan, covering 104ha at site of the Penang Turf Club, was unveiled yesterday by Datuk Seri Abdullah Ahmad Badawi.
The project will comprise, among others, hotels, condominiums, commercial centres and a central park.
The Prime Minister, a Penang boy, said this would be a “meaningful” project to the state and country.
Futuristic appearance: An artist’s impression of the Penang Global City Centre.
“As Prime Minister, I know that it will contribute significantly to the national economy,” Abdullah said.
“While Kuala Lumpur has its KLCC (Kuala Lumpur City Centre), Penang will have its very own PGCC. Both make me proud.
“PGCC is a high-impact project to complement the Northern Corridor Economic Region. I know Penang will do well,” he said when unveiling the masterplan at a hotel here.
Also present were Chief Minister Tan Sri Dr Koh Tsu Koon, Equine Capital executive chairman Datuk Patrick Lim and Abad Naluri chairman Datuk Seri Kamal Hashim.
Abad Naluri, an associate company of Equine Capital Bhd, will undertake the project.
Abdullah, who is the Finance Minister, said PGCC would offer excellent facilities to foreign investors and an alternative avenue for them to set up offshore offices beyond the Klang Valley.
“This project will make the northern region viable for economic development. I hope this project will be implemented as soon as possible after getting the necessary approvals from the relevant authorities,'' he added.
Abdullah thanked the Penang Turf Club for allowing the development of PGCC.
In it goes: Abdullah inserting a crystal key to mark the launching of the Penang Global City Centre project at a hotel in Penang yesterday. With him are (from left) Kamal, Dr Koh and Lim.
“If it is not for them, this will not happen,” he remarked.
Abad Naluri bought the land for RM488mil in 2002 when the Penang Turf Club committee felt that the existing facility could no longer cope with the demands of modern-day racing.
In Butterworth later, ZULKIFLY MOHAMAD reports that Abdullah presented Ramadan aid to 22 mosque representatives at the Seberang Jaya mosque.
He also dispensed some important advice to the people: “Drive home safely for the Hari Raya break.”
Reminding everyone that the festive period was a time when many road fatalities occurred, Abdullah said he wanted to remind them of this on the first day of the fasting month itself.
“I hope parents will advise their children to drive carefully when they return home to celebrate Hari Raya.
Abdullah also called on mosque committees to organise more activities during Ramadan to foster closer relations among Muslims.
The RM25bil Penang Global City Centre (PGCC) masterplan, covering 104ha at site of the Penang Turf Club, was unveiled yesterday by Datuk Seri Abdullah Ahmad Badawi.
The project will comprise, among others, hotels, condominiums, commercial centres and a central park.
The Prime Minister, a Penang boy, said this would be a “meaningful” project to the state and country.
Futuristic appearance: An artist’s impression of the Penang Global City Centre.
“As Prime Minister, I know that it will contribute significantly to the national economy,” Abdullah said.
“While Kuala Lumpur has its KLCC (Kuala Lumpur City Centre), Penang will have its very own PGCC. Both make me proud.
“PGCC is a high-impact project to complement the Northern Corridor Economic Region. I know Penang will do well,” he said when unveiling the masterplan at a hotel here.
Also present were Chief Minister Tan Sri Dr Koh Tsu Koon, Equine Capital executive chairman Datuk Patrick Lim and Abad Naluri chairman Datuk Seri Kamal Hashim.
Abad Naluri, an associate company of Equine Capital Bhd, will undertake the project.
Abdullah, who is the Finance Minister, said PGCC would offer excellent facilities to foreign investors and an alternative avenue for them to set up offshore offices beyond the Klang Valley.
“This project will make the northern region viable for economic development. I hope this project will be implemented as soon as possible after getting the necessary approvals from the relevant authorities,'' he added.
Abdullah thanked the Penang Turf Club for allowing the development of PGCC.
In it goes: Abdullah inserting a crystal key to mark the launching of the Penang Global City Centre project at a hotel in Penang yesterday. With him are (from left) Kamal, Dr Koh and Lim.
“If it is not for them, this will not happen,” he remarked.
Abad Naluri bought the land for RM488mil in 2002 when the Penang Turf Club committee felt that the existing facility could no longer cope with the demands of modern-day racing.
In Butterworth later, ZULKIFLY MOHAMAD reports that Abdullah presented Ramadan aid to 22 mosque representatives at the Seberang Jaya mosque.
He also dispensed some important advice to the people: “Drive home safely for the Hari Raya break.”
Reminding everyone that the festive period was a time when many road fatalities occurred, Abdullah said he wanted to remind them of this on the first day of the fasting month itself.
“I hope parents will advise their children to drive carefully when they return home to celebrate Hari Raya.
Abdullah also called on mosque committees to organise more activities during Ramadan to foster closer relations among Muslims.
PENANG'S first purpose-built MSC office building, SunTech@Penang Cyber-City in Bayan Baru, which is scheduled for completion by year-end
PENANG'S first purpose-built MSC office building, SunTech@Penang Cyber-City in Bayan Baru, which is scheduled for completion by year-end, has achieved 95% in sales.
Emerald Capital Group general manager Lee Ham Kong said only a few of the 162 units were still available.
SunTech offers full business facilities in a single building as well as indoor and outdoor cafes, and recreational facilities such as gymnasium and sauna, and two grand entrance lobbies on the ground floor and 10th floor for double security.
Emerald Capital Group general manager Lee Ham Kong explaining about the company's SunTech@Penang CyberCity and Perak Tourism Hub projects which will be showcased at The Star Property & Home Fair 2007.
Shared business facilities include meeting rooms, conference rooms, seminar rooms, lounge area for private discussions and a business centre.
“We have a data centre or server room, an incubation centre, and the fibre optics cabling is ready. We have four main distribution frame (MDF) rooms to cater for different telco companies, and the common area of the building is WiFi ready,” said Lee.
SunTech offers full business facilities in a single building as well as indoor and outdoor cafes, and recreational facilities such as gymnasium and sauna, and two grand entrance lobbies on the ground floor and 10th floor for double security.
He said SunTech Small Office Home Office (SOHO) suites concept was ideal for multi-nationals dealing with different time zones.
Another project that the company will also showcase at The Star Property & Home Fair 2007 is the RM250mil Perak Tourism Hub at Bandar Baru Medan, Ipoh.
Lee said the project boasts of a world-class development concept that includes a modern lifestyle mall, a grand double-volume column-free banquet hall that could hold 200 tables, and a comprehensive tourist information centre to be run by the company itself.
The community space for people to interact is a 30ft wide by 1,500ft long (9.1m by 457.2m) boulevard to cater for pedestrian traffic and alfresco dining.
A unique feature is its rooftop and recreational facilities on the five-storey podium. The area of about 0.4ha will have, amongst others, two swimming pools, a clubhouse, a gymnasium, jogging track and landscaped garden.
The groundbreaking was officiated by Mentri Besar Datuk Seri Mohamad Tajol Rosli Ghazali on Sept 6.
Another project that the company will also showcase at The Star Property & Home Fair 2007 is the RM250mil Perak Tourism Hub at Bandar Baru Medan, Ipoh.
Phase I comprising two blocks of serviced suites, the mall, the hall and the tourist information centre, is scheduled for com-pletion by end of 2009, with the remaining two blocks of serviced suites under Phase II to be completed by end of 2010.
The three-day Star Property & Home Fair 2007 will be held at the Penang International Sports Arena (PISA) in Penang from Sept 21.
About 100 exhibitors are expected to take part and they will showcase property, home financing packages and home-related products in over 200 booths.
The fair is open from 11am to 9pm. Admission is free.
Emerald Capital Group general manager Lee Ham Kong said only a few of the 162 units were still available.
SunTech offers full business facilities in a single building as well as indoor and outdoor cafes, and recreational facilities such as gymnasium and sauna, and two grand entrance lobbies on the ground floor and 10th floor for double security.
Emerald Capital Group general manager Lee Ham Kong explaining about the company's SunTech@Penang CyberCity and Perak Tourism Hub projects which will be showcased at The Star Property & Home Fair 2007.
Shared business facilities include meeting rooms, conference rooms, seminar rooms, lounge area for private discussions and a business centre.
“We have a data centre or server room, an incubation centre, and the fibre optics cabling is ready. We have four main distribution frame (MDF) rooms to cater for different telco companies, and the common area of the building is WiFi ready,” said Lee.
SunTech offers full business facilities in a single building as well as indoor and outdoor cafes, and recreational facilities such as gymnasium and sauna, and two grand entrance lobbies on the ground floor and 10th floor for double security.
He said SunTech Small Office Home Office (SOHO) suites concept was ideal for multi-nationals dealing with different time zones.
Another project that the company will also showcase at The Star Property & Home Fair 2007 is the RM250mil Perak Tourism Hub at Bandar Baru Medan, Ipoh.
Lee said the project boasts of a world-class development concept that includes a modern lifestyle mall, a grand double-volume column-free banquet hall that could hold 200 tables, and a comprehensive tourist information centre to be run by the company itself.
The community space for people to interact is a 30ft wide by 1,500ft long (9.1m by 457.2m) boulevard to cater for pedestrian traffic and alfresco dining.
A unique feature is its rooftop and recreational facilities on the five-storey podium. The area of about 0.4ha will have, amongst others, two swimming pools, a clubhouse, a gymnasium, jogging track and landscaped garden.
The groundbreaking was officiated by Mentri Besar Datuk Seri Mohamad Tajol Rosli Ghazali on Sept 6.
Another project that the company will also showcase at The Star Property & Home Fair 2007 is the RM250mil Perak Tourism Hub at Bandar Baru Medan, Ipoh.
Phase I comprising two blocks of serviced suites, the mall, the hall and the tourist information centre, is scheduled for com-pletion by end of 2009, with the remaining two blocks of serviced suites under Phase II to be completed by end of 2010.
The three-day Star Property & Home Fair 2007 will be held at the Penang International Sports Arena (PISA) in Penang from Sept 21.
About 100 exhibitors are expected to take part and they will showcase property, home financing packages and home-related products in over 200 booths.
The fair is open from 11am to 9pm. Admission is free.
Reed Exhibitions Sdn Bhd expects the 24th Malaysian International Building Exposition (Malbex) 2007 to chalk up more contracts than the RM325mil
Reed Exhibitions Sdn Bhd expects the 24th Malaysian International Building Exposition (Malbex) 2007 to chalk up more contracts than the RM325mil achieved at last year’s event, said general manager Michelle Lim.
Co-organised by Reed and the Construction Industry Development Board, Malbex is the longest annual building and construction event in the country and hopes to attract up to 200 manufacturers and suppliers from 19 countries this year.
“For a show that happens in Malaysia, you would have up to 90% of local buyers. Our survey showed that over RM325mil was contracted last year.
“We consider this a success and expect even better results this year,” she said.
Lim was also confident that the recent Budget announcement would boost trade dealings at this year’s Malbex.
“The Iskandar Development Region in Johor received a lot of attention in the recent Budget announcement. The various plans that the Government has announced and the amount of investment going into the project will boost the building construction sector,” she said.
“The 30% (tax) exemption on the transfer of ownership would help as well. Husbands and wives would now be considered a single entity. Hence if you have a family, you would want to buy a few properties.”
Lim said Malbex would help boost other sectors in Malaysia as well.
The four-day Malbex 2007, which is expected to attract 50 first-time participants from various countries, will start on Sept 19 at the Kuala Lumpur Convention Centre.
Co-organised by Reed and the Construction Industry Development Board, Malbex is the longest annual building and construction event in the country and hopes to attract up to 200 manufacturers and suppliers from 19 countries this year.
“For a show that happens in Malaysia, you would have up to 90% of local buyers. Our survey showed that over RM325mil was contracted last year.
“We consider this a success and expect even better results this year,” she said.
Lim was also confident that the recent Budget announcement would boost trade dealings at this year’s Malbex.
“The Iskandar Development Region in Johor received a lot of attention in the recent Budget announcement. The various plans that the Government has announced and the amount of investment going into the project will boost the building construction sector,” she said.
“The 30% (tax) exemption on the transfer of ownership would help as well. Husbands and wives would now be considered a single entity. Hence if you have a family, you would want to buy a few properties.”
Lim said Malbex would help boost other sectors in Malaysia as well.
The four-day Malbex 2007, which is expected to attract 50 first-time participants from various countries, will start on Sept 19 at the Kuala Lumpur Convention Centre.
The Golden Triangle of Kuala Lumpur is one of the busiest and most highly valued prime properties in the Klang Valley.
The Golden Triangle of Kuala Lumpur is one of the busiest and most highly valued prime properties in the Klang Valley. Despite the perception that anything constructed in this area will automatically flourish, we beg to differ. You can still find failed projects. Some failed to live up to their promises and have become eyesores.
It is possible that the sky-high rentals could be a factor that led to many a business closing shop and relocating. It is also possible that traffic congestion prompted businesses to move to the outskirts or nearby Petaling Jaya. Maybe it is the poor infrastructure – erratic public transport, limited (and expensive) parking, a lack of sheltered walkways – that contributed to some properties being poorly patronised.
Modern shopping malls in Hong Kong and Singapore are connected by elevated pedestrian bridges. Workers and shoppers can walk from one building to another without risking their lives in traffic or under the hot sun.
Architecture and feng shui are closely connected because they both deal with living spaces. Their goals are similar: to create a conducive and harmonious living space, be it a dwelling or place of business. The best architectural work, in my opinion, learns from nature, adapts to it and blends with it. These buildings are usually very aesthetically pleasing as well.
To the west of the Kuala Lumpur City Centre along Jalan Ampang is called the Golden Triangle (we will come to Jalan Bukit Bintang eventually). This area covers the entire length of Jalan Ampang from KLCC, into Jalan Gereja, connecting with Jalan Raja Chulan and finally, Jalan P. Ramlee.
It is possible that the sky-high rentals could be a factor that led to many a business closing shop and relocating. It is also possible that traffic congestion prompted businesses to move to the outskirts or nearby Petaling Jaya. Maybe it is the poor infrastructure – erratic public transport, limited (and expensive) parking, a lack of sheltered walkways – that contributed to some properties being poorly patronised.
Modern shopping malls in Hong Kong and Singapore are connected by elevated pedestrian bridges. Workers and shoppers can walk from one building to another without risking their lives in traffic or under the hot sun.
Architecture and feng shui are closely connected because they both deal with living spaces. Their goals are similar: to create a conducive and harmonious living space, be it a dwelling or place of business. The best architectural work, in my opinion, learns from nature, adapts to it and blends with it. These buildings are usually very aesthetically pleasing as well.
To the west of the Kuala Lumpur City Centre along Jalan Ampang is called the Golden Triangle (we will come to Jalan Bukit Bintang eventually). This area covers the entire length of Jalan Ampang from KLCC, into Jalan Gereja, connecting with Jalan Raja Chulan and finally, Jalan P. Ramlee.
The Spa Village Tanjung Jara in Terengganu has won Tatler UK magazine’s Most Innovative Spa Award.
The Spa Village Tanjung Jara in Terengganu has won Tatler UK magazine’s Most Innovative Spa Award.
The Dungun-based resort, a YTL Corp Bhd luxury spa retreat, was selected for its ancient Malay healing tradition and techniques
Its resident therapist Yahya Mamat received the award from Tatler editor Geordie Gregs at a special ceremony here on Tuesday.
Pak Yahya, as he is affectionately known, said the award was a great honour for the resort and Malaysia as a whole.
“I hope to see this traditional Malay healing art being spread across the world,” he said.
Yahya, who was winner of the Best Spa Therapist in the Asia Spa and Wellness Awards last year, comes from a long line of traditional healers and midwives.
He acquired his knowledge of indigenous remedies and treatments, herbs and plants, and ancient massage techniques from his grandmother at the age of 13.
“She taught me total devotion towards healing the sick,” he said, adding that the heart, mind and hands must combine as one in the healing arts.
Despite his 40 years of experience, the grandfather of 11 is modest about his skills, preferring to let his fingers do the talking.
Yahya, however, expressed concern that the younger generation was reluctant to learn Malay traditional massage due to lack of interest and discipline.
“My only hope now is my 16-year-old daughter Yasliyana, who shares my passion in acquiring such knowledge and skills,” he added.
Tatler Spa Guide consultant Jo Foley said the resort bagged the award since Malaysia had comparatively fewer spas than other Asian countries like Thailand, India and China.
“It won the hearts of the judges for introducing its unique treatment and therapies based on ancient Malay healing traditions to the 21st century market,” she added.
The innovative category was one of several introduced in conjunction with the launch of the Spa Guide to Asia by Cleveland Collection, Britain’s leading luxury tour operator.
The Dungun-based resort, a YTL Corp Bhd luxury spa retreat, was selected for its ancient Malay healing tradition and techniques
Its resident therapist Yahya Mamat received the award from Tatler editor Geordie Gregs at a special ceremony here on Tuesday.
Pak Yahya, as he is affectionately known, said the award was a great honour for the resort and Malaysia as a whole.
“I hope to see this traditional Malay healing art being spread across the world,” he said.
Yahya, who was winner of the Best Spa Therapist in the Asia Spa and Wellness Awards last year, comes from a long line of traditional healers and midwives.
He acquired his knowledge of indigenous remedies and treatments, herbs and plants, and ancient massage techniques from his grandmother at the age of 13.
“She taught me total devotion towards healing the sick,” he said, adding that the heart, mind and hands must combine as one in the healing arts.
Despite his 40 years of experience, the grandfather of 11 is modest about his skills, preferring to let his fingers do the talking.
Yahya, however, expressed concern that the younger generation was reluctant to learn Malay traditional massage due to lack of interest and discipline.
“My only hope now is my 16-year-old daughter Yasliyana, who shares my passion in acquiring such knowledge and skills,” he added.
Tatler Spa Guide consultant Jo Foley said the resort bagged the award since Malaysia had comparatively fewer spas than other Asian countries like Thailand, India and China.
“It won the hearts of the judges for introducing its unique treatment and therapies based on ancient Malay healing traditions to the 21st century market,” she added.
The innovative category was one of several introduced in conjunction with the launch of the Spa Guide to Asia by Cleveland Collection, Britain’s leading luxury tour operator.
US sub-prime debt
SHANE OLIVER goes back to the scene of the crime and uncovers the damning caveats
THE last month or so has seen big swings in markets on the back of the turmoil in credit markets. By and large though, most investors should have come through reasonably unscathed. However, some would not have been so lucky. Funds reported to have had the greatest losses seem to fall into three categories - funds with a heavy direct and geared exposure to US sub-prime debt, some of which have seen 80 per cent to 100 per cent of their capital wiped out; funds with a geared exposure to corporate debt which has been caught up in the fallout from the subprime problems; and quantitative equity hedge funds which have been caught out by the volatility in investment markets.
While conceding that the period of share market weakness and credit turmoil ‘ain’t necessarily over yet’, and without getting into the surrounding economic issues and the outlook going forward (which I have covered in previous reports), the blow-up in credit markets provides a number of lessons for investors. Specifically, these relate to financial engineering, diversification, gearing, the fact that there is no such thing as a free lunch and the need to invest in only what you understand.
Lesson 1: Beware of financial engineering
Financial engineering is at the centre of the storm now engulfing credit markets. Mortgages to very low quality borrowers (sub-prime mortgage borrowers) were packaged up into securities (collateralised debt obligations, or CDOs) which were sold off in various parcels, some of which came with high risk like equity but some of which came with AAA credit ratings (the highest possible credit rating).
So, due to the magic of modern finance, a portion of something which was regarded as high risk was able to be marketed as low risk. Hence it was always an artificial construct. And more fundamentally, because of a limited track record (usually just covering the last few years of relatively favourable conditions) risk was dramatically underestimated. Risk was underestimated both in terms of the performance of the underlying sub-prime mortgages and how the securities themselves would behave in times of market stress and poor liquidity (like we have seen over the last few months).
What’s more, this re-packaging and underestimation of risk arguably made the whole situation worse. By encouraging demand for the securities more money became available for lending to sub-prime borrowers which meant that lending standards became ever more lax. Such complex arrangements also led to a poor alignment of interests. Everyone was paid up front - the mortgage originators, the banks underwriting the securities, the ratings agencies, the CDO managers - except the end-investor who held all the risk. And mortgage originators had an incentive to write loans regardless of the quality of the borrowers. On top of all this, these complex securities were poorly understood and irregularly traded, adding to the difficulties involved in undertaking a decent risk analysis.
So when all is going well, there are no problems. But once the underlying investment (ie, mortgages to borrowers with poor credit histories) started to turn sour, the credit ratings proved unreliable. The securities proved impossible to sell because they were so complex and no one really understood them, let alone knew their true worth. And everyone ran for the exits at once.
The key lesson for investors from all this is to be sceptical of investments which rely heavily on financial engineering to meet their objectives, particularly if they haven’t been tested in both good and bad times. Such constructs often have a poor alignment of interests, the true risks may be poorly understood or hidden and, because so many parties are involved, the underlying fees may be excessive.
Lesson 2: Gearing is great - till it isn’t
We all know the benefits of gearing. Investing $1 of borrowed capital for every $1 of your own capital can turn a 10 per cent gross return into a 20 per cent gross return. But of course when returns are negative it can go badly wrong. In fact, very high gearing (eg 5 to 10 times) was at the centre of most of the big fund losses announced recently. For example, if debt is running at five times capital then just a 5 per cent drop in the value of the underlying investments will lead to a 30 per cent drop in the value of the fund for investors, viz: If initial capital in a fund from investors is $1 million and $5 million is borrowed, then the fund’s total investment is $6 million. If the underlying investments fall in value by 5 per cent to $5.7 million the lenders to the fund are still owed $5 million, but the investor’s capital in the fund drops to $0.7 million, or a 30 per cent decline.
Excessive gearing on top of the losses in the underlying securities explains why some funds with direct exposure to sub-prime debt have seen all or most of their value wiped out. It also explains the severity of the decline in value for some funds which were not directly invested in sub-prime related investments, but may have had an exposure to high yield corporate debt, where the decline in value has been modest.
A high level of gearing of this nature can also make the problem a lot worse. An ungeared fund might (depending on the ‘patience’ of its investors and whether it can freeze fund withdrawals if they are not patient) be able to ride out any market turmoil until pricing improves or the underlying securities simply mature by which time any actual losses (eg. owing to mortgage defaults) may be far less than current market conditions imply. But when gearing is huge, the fund’s creditors may seize the assets and sell them into weak markets pushing down their value even further (the equivalent of margin calls). Such fire sales only lock in the losses for investors.
It should also be noted that not only were the funds investing in sub-prime related securities geared, but there was additional gearing in the securities themselves. For example, CDOs that contain sub-prime debt could be up to 25 times geared. In this context it only takes a small increase in mortgage defaults to start causing big losses. As a result, there was effectively gearing on top of gearing.
So be wary of investments that rely on excessive gearing, both at the fund level and in the underlying investments.
Lesson 3: Diversification is good
Many of the funds at the centre of the recent storm appear to have been poorly diversified (particularly those with an excessive exposure to sub-prime related debt) and this has only magnified their losses. More diversified credit focused funds have held up much better.
Similarly, the events of the past month or so have also highlighted the downside of concentrated exposure to hedge funds. Some hedge funds, particularly quantitative long/short equity funds, had a particularly rough month with losses of around 30 per cent being reported at one point.
However, well-constructed funds-of-hedge-funds have generally come through in far better shape.
The point is that investors are always wise to make sure that funds they invest in are well diversified and not overly reliant on a particular type of investment or investment strategy.
Lesson 4: There is no such thing as a free lunch
Investor interest in credit investments and more recently in highly complex yield-based securities has its origin in the long-term decline in interest rates and bond yields on the back of the shift to low inflation over the last two decades.
Somehow, getting a 6 per cent return from government bonds in a world of 2.5 per cent inflation doesn’t sound quite as good as getting a 12 per cent return from bonds in a world of 8.5 per cent inflation (the 1980s). So investors with a desire for a high income flow, such as self-funded retirees, have been prepared to go in search of higher returns moving from government bonds into corporate debt. This was probably all fine because most corporate debt has a long history and so the risk involved can be reliably estimated and managed. In recent years though this has started to morph into funds investing in highly complex securities such as CDOs where risk was less well known.
However, while risk may remain dormant for many years leading investors to forget about it, the events of the past few months highlight that higher returns also come with higher risk. In other words, there is no such thing as a free lunch. The trick for investors is to make sure that they are aware of the extra risk they are taking on and to then make sure that it is managed appropriately in terms of diversification and gearing levels.
Lesson 5: Only invest in what you understand
A key lesson for investors from the events of the last few months is to only invest in what you understand. Modern credit instruments are incredibly complex and it would appear that many (including market participants) did not understand the nature of the investments being undertaken. Until recently most investors would not have known what a sub-prime mortgage was and most would have thought that a CDO was just another acronym for a senior company executive.
The writer is head of investment strategy and chief economist at AMP Capital Investors
Source: Business Times 12 Sept 07
THE last month or so has seen big swings in markets on the back of the turmoil in credit markets. By and large though, most investors should have come through reasonably unscathed. However, some would not have been so lucky. Funds reported to have had the greatest losses seem to fall into three categories - funds with a heavy direct and geared exposure to US sub-prime debt, some of which have seen 80 per cent to 100 per cent of their capital wiped out; funds with a geared exposure to corporate debt which has been caught up in the fallout from the subprime problems; and quantitative equity hedge funds which have been caught out by the volatility in investment markets.
While conceding that the period of share market weakness and credit turmoil ‘ain’t necessarily over yet’, and without getting into the surrounding economic issues and the outlook going forward (which I have covered in previous reports), the blow-up in credit markets provides a number of lessons for investors. Specifically, these relate to financial engineering, diversification, gearing, the fact that there is no such thing as a free lunch and the need to invest in only what you understand.
Lesson 1: Beware of financial engineering
Financial engineering is at the centre of the storm now engulfing credit markets. Mortgages to very low quality borrowers (sub-prime mortgage borrowers) were packaged up into securities (collateralised debt obligations, or CDOs) which were sold off in various parcels, some of which came with high risk like equity but some of which came with AAA credit ratings (the highest possible credit rating).
So, due to the magic of modern finance, a portion of something which was regarded as high risk was able to be marketed as low risk. Hence it was always an artificial construct. And more fundamentally, because of a limited track record (usually just covering the last few years of relatively favourable conditions) risk was dramatically underestimated. Risk was underestimated both in terms of the performance of the underlying sub-prime mortgages and how the securities themselves would behave in times of market stress and poor liquidity (like we have seen over the last few months).
What’s more, this re-packaging and underestimation of risk arguably made the whole situation worse. By encouraging demand for the securities more money became available for lending to sub-prime borrowers which meant that lending standards became ever more lax. Such complex arrangements also led to a poor alignment of interests. Everyone was paid up front - the mortgage originators, the banks underwriting the securities, the ratings agencies, the CDO managers - except the end-investor who held all the risk. And mortgage originators had an incentive to write loans regardless of the quality of the borrowers. On top of all this, these complex securities were poorly understood and irregularly traded, adding to the difficulties involved in undertaking a decent risk analysis.
So when all is going well, there are no problems. But once the underlying investment (ie, mortgages to borrowers with poor credit histories) started to turn sour, the credit ratings proved unreliable. The securities proved impossible to sell because they were so complex and no one really understood them, let alone knew their true worth. And everyone ran for the exits at once.
The key lesson for investors from all this is to be sceptical of investments which rely heavily on financial engineering to meet their objectives, particularly if they haven’t been tested in both good and bad times. Such constructs often have a poor alignment of interests, the true risks may be poorly understood or hidden and, because so many parties are involved, the underlying fees may be excessive.
Lesson 2: Gearing is great - till it isn’t
We all know the benefits of gearing. Investing $1 of borrowed capital for every $1 of your own capital can turn a 10 per cent gross return into a 20 per cent gross return. But of course when returns are negative it can go badly wrong. In fact, very high gearing (eg 5 to 10 times) was at the centre of most of the big fund losses announced recently. For example, if debt is running at five times capital then just a 5 per cent drop in the value of the underlying investments will lead to a 30 per cent drop in the value of the fund for investors, viz: If initial capital in a fund from investors is $1 million and $5 million is borrowed, then the fund’s total investment is $6 million. If the underlying investments fall in value by 5 per cent to $5.7 million the lenders to the fund are still owed $5 million, but the investor’s capital in the fund drops to $0.7 million, or a 30 per cent decline.
Excessive gearing on top of the losses in the underlying securities explains why some funds with direct exposure to sub-prime debt have seen all or most of their value wiped out. It also explains the severity of the decline in value for some funds which were not directly invested in sub-prime related investments, but may have had an exposure to high yield corporate debt, where the decline in value has been modest.
A high level of gearing of this nature can also make the problem a lot worse. An ungeared fund might (depending on the ‘patience’ of its investors and whether it can freeze fund withdrawals if they are not patient) be able to ride out any market turmoil until pricing improves or the underlying securities simply mature by which time any actual losses (eg. owing to mortgage defaults) may be far less than current market conditions imply. But when gearing is huge, the fund’s creditors may seize the assets and sell them into weak markets pushing down their value even further (the equivalent of margin calls). Such fire sales only lock in the losses for investors.
It should also be noted that not only were the funds investing in sub-prime related securities geared, but there was additional gearing in the securities themselves. For example, CDOs that contain sub-prime debt could be up to 25 times geared. In this context it only takes a small increase in mortgage defaults to start causing big losses. As a result, there was effectively gearing on top of gearing.
So be wary of investments that rely on excessive gearing, both at the fund level and in the underlying investments.
Lesson 3: Diversification is good
Many of the funds at the centre of the recent storm appear to have been poorly diversified (particularly those with an excessive exposure to sub-prime related debt) and this has only magnified their losses. More diversified credit focused funds have held up much better.
Similarly, the events of the past month or so have also highlighted the downside of concentrated exposure to hedge funds. Some hedge funds, particularly quantitative long/short equity funds, had a particularly rough month with losses of around 30 per cent being reported at one point.
However, well-constructed funds-of-hedge-funds have generally come through in far better shape.
The point is that investors are always wise to make sure that funds they invest in are well diversified and not overly reliant on a particular type of investment or investment strategy.
Lesson 4: There is no such thing as a free lunch
Investor interest in credit investments and more recently in highly complex yield-based securities has its origin in the long-term decline in interest rates and bond yields on the back of the shift to low inflation over the last two decades.
Somehow, getting a 6 per cent return from government bonds in a world of 2.5 per cent inflation doesn’t sound quite as good as getting a 12 per cent return from bonds in a world of 8.5 per cent inflation (the 1980s). So investors with a desire for a high income flow, such as self-funded retirees, have been prepared to go in search of higher returns moving from government bonds into corporate debt. This was probably all fine because most corporate debt has a long history and so the risk involved can be reliably estimated and managed. In recent years though this has started to morph into funds investing in highly complex securities such as CDOs where risk was less well known.
However, while risk may remain dormant for many years leading investors to forget about it, the events of the past few months highlight that higher returns also come with higher risk. In other words, there is no such thing as a free lunch. The trick for investors is to make sure that they are aware of the extra risk they are taking on and to then make sure that it is managed appropriately in terms of diversification and gearing levels.
Lesson 5: Only invest in what you understand
A key lesson for investors from the events of the last few months is to only invest in what you understand. Modern credit instruments are incredibly complex and it would appear that many (including market participants) did not understand the nature of the investments being undertaken. Until recently most investors would not have known what a sub-prime mortgage was and most would have thought that a CDO was just another acronym for a senior company executive.
The writer is head of investment strategy and chief economist at AMP Capital Investors
Source: Business Times 12 Sept 07
Investors need to look within themselves to determine their life goals, before embarking on the road to financial contentment, financial planner Arun
Investors need to look within themselves to determine their life goals, before embarking on the road to financial contentment, financial planner Arun Abey tells GENEVIEVE CUA
WHAT does happiness have to do with financial planning? Some may say happiness is the fruit of a well-laid financial plan. After all all, such a plan should foster greater confidence in the future, leading to financial security - and, hopefully, happiness.
But what of the reverse?
Ipac group co-founder and executive chairman Arun Abey believes that getting your life together - in term of your goals and choices - should come first, and financial planning follows. Ipac manages US$9 billion in client assets globally, advising some 20,000 individuals and institutions. It began in Australia and has operations in Hong Kong and Singapore.
‘People use the phrase ‘lifestyle financial planning’ as a slogan. But it’s a real thing. It’s about putting the ‘life’ into financial planning. It’s how the two integrate.
‘I’ve increasingly become convinced that the financial planning part is an outcome. You get the ‘life’ part right and the financial planning is actually easy.’
He adds that the biggest hurdle in financial advisory is that clients typically do not have a clear idea of what they want. ‘I’ve become convinced that an important part of financial planning is getting clients to want what they need.
Clients come in with a list of ‘wants’. Those ‘wants’ are completely unrealistic.
‘They say I want to make a lot of money, but I don’t want to lose any money. That doesn’t work. As Warren Buffett says, give me a bumpy 15 per cent any time. I’d rather take a bumpy ride than no returns.’
Drawing on the experiences of clients, Mr Abey has just published a second book How much is enough?, in which he tackles the amorphous question of happiness and the more mundane but no less challenging issues of financial planning and investing. The book is co-authored with Andrew Ford.
The book is meant to be a companion to his first book Fortune Strategy, published in 2000 , which delves into portfolio construction against a backdrop of the historical pattern of risk and return. Fortune Strategy, he says, explained the behaviour of markets. This time, taking centrestage is the behaviour of investors themselves.
‘If you understand markets, you can do something. I’ve come to understand that that’s not enough. You need to look within to understand your behaviour… People who can be confident, who can manage their behaviour and not worry about what others are doing, are also people who can control their behaviour in investment markets. It’s the same neural pattern, I hadn’t realised that before.’
The book draws on the growing body of research on happiness and behavioural finance, written in a readable, down-to-earth fashion. A few chapters are devoted to the behaviours that can undo the best laid investment plans.
These include loss aversion as a wealth hazard - that is, in seeking to avoid loss, investors actually incur greater losses. In a chapter ‘The Madness of Myopia’, he writes that the more frequently investors evaluate their returns, the more likely they are to make inappropriate decisions.
Several of the foibles come up repeatedly among clients, he says. One is unrealistic expectations. Two is a poor understanding of risk. Risk covers not just a probability of loss, but also the failure to beat inflation. ‘With cash you’ll never see a negative return, but with inflation you’re losing buying power every year. That’s pretty serious. A capital guarantee doesn’t protect you from that.’
Manage your time
A third mistake is the belief that the right timing could be the ticket to success. ‘It’s a very naive belief that you can get the timing right. Over 4,000 days there may be 40 key days. If you miss those days you miss the returns of the whole market. You have a 1 per cent chance to get it right and you don’t do something for a 1 per cent chance.
‘Fortune Strategy and this book use the same core investment strategy. If you apply that, the odds are in your favour. The only thing you have to manage is time.’
Ipac advocates four key principles in investments. These are to invest in quality companies; to diversify; to avoid overpaying for assets; and to give your portfolio time.
But there is yet one more mistake - as Mr Abey sees it - that may be hard for Singaporeans to swallow. That is the tendency to over-invest in property. ‘Investing in residential property other than your family home is likely to result in higher risk and lower returns than investing in quality shares,’ he writes.
He argues that the risks of a property investment tend to be understated, and the returns overstated because of flaws in measurement. Assessment of values, for one, is infrequent and informal.
‘Property investors never see red ink on a statement unless it is on the day of sale. And most property investors never formally evaluate the performance of their investments at all.’
Mr Abey lives in Australia, where cities like Melbourne and Sydney, and more recently Perth saw the strongest home prices until recently. He himself does not ‘invest one cent in residential property outside of my family home’.
Perhaps the key chapter in the book is the one that presents a framework for understanding the role of money, which he calls the ‘bridge of well being’. The process of developing and implementing this framework is the essence of lifestyle financial planning itself.
There are three steps to this. One is to understand your goals. Two is to apply your resources towards those goals.
That includes saving and investing. The third is to have a simple investment strategy.
‘You need to develop a financial plan for yourself - not for your money … The aim … is to help you experience the good life you want to live, knowing sufficient money is there to support you.’
Source: Business Times 12 Sept 07
WHAT does happiness have to do with financial planning? Some may say happiness is the fruit of a well-laid financial plan. After all all, such a plan should foster greater confidence in the future, leading to financial security - and, hopefully, happiness.
But what of the reverse?
Ipac group co-founder and executive chairman Arun Abey believes that getting your life together - in term of your goals and choices - should come first, and financial planning follows. Ipac manages US$9 billion in client assets globally, advising some 20,000 individuals and institutions. It began in Australia and has operations in Hong Kong and Singapore.
‘People use the phrase ‘lifestyle financial planning’ as a slogan. But it’s a real thing. It’s about putting the ‘life’ into financial planning. It’s how the two integrate.
‘I’ve increasingly become convinced that the financial planning part is an outcome. You get the ‘life’ part right and the financial planning is actually easy.’
He adds that the biggest hurdle in financial advisory is that clients typically do not have a clear idea of what they want. ‘I’ve become convinced that an important part of financial planning is getting clients to want what they need.
Clients come in with a list of ‘wants’. Those ‘wants’ are completely unrealistic.
‘They say I want to make a lot of money, but I don’t want to lose any money. That doesn’t work. As Warren Buffett says, give me a bumpy 15 per cent any time. I’d rather take a bumpy ride than no returns.’
Drawing on the experiences of clients, Mr Abey has just published a second book How much is enough?, in which he tackles the amorphous question of happiness and the more mundane but no less challenging issues of financial planning and investing. The book is co-authored with Andrew Ford.
The book is meant to be a companion to his first book Fortune Strategy, published in 2000 , which delves into portfolio construction against a backdrop of the historical pattern of risk and return. Fortune Strategy, he says, explained the behaviour of markets. This time, taking centrestage is the behaviour of investors themselves.
‘If you understand markets, you can do something. I’ve come to understand that that’s not enough. You need to look within to understand your behaviour… People who can be confident, who can manage their behaviour and not worry about what others are doing, are also people who can control their behaviour in investment markets. It’s the same neural pattern, I hadn’t realised that before.’
The book draws on the growing body of research on happiness and behavioural finance, written in a readable, down-to-earth fashion. A few chapters are devoted to the behaviours that can undo the best laid investment plans.
These include loss aversion as a wealth hazard - that is, in seeking to avoid loss, investors actually incur greater losses. In a chapter ‘The Madness of Myopia’, he writes that the more frequently investors evaluate their returns, the more likely they are to make inappropriate decisions.
Several of the foibles come up repeatedly among clients, he says. One is unrealistic expectations. Two is a poor understanding of risk. Risk covers not just a probability of loss, but also the failure to beat inflation. ‘With cash you’ll never see a negative return, but with inflation you’re losing buying power every year. That’s pretty serious. A capital guarantee doesn’t protect you from that.’
Manage your time
A third mistake is the belief that the right timing could be the ticket to success. ‘It’s a very naive belief that you can get the timing right. Over 4,000 days there may be 40 key days. If you miss those days you miss the returns of the whole market. You have a 1 per cent chance to get it right and you don’t do something for a 1 per cent chance.
‘Fortune Strategy and this book use the same core investment strategy. If you apply that, the odds are in your favour. The only thing you have to manage is time.’
Ipac advocates four key principles in investments. These are to invest in quality companies; to diversify; to avoid overpaying for assets; and to give your portfolio time.
But there is yet one more mistake - as Mr Abey sees it - that may be hard for Singaporeans to swallow. That is the tendency to over-invest in property. ‘Investing in residential property other than your family home is likely to result in higher risk and lower returns than investing in quality shares,’ he writes.
He argues that the risks of a property investment tend to be understated, and the returns overstated because of flaws in measurement. Assessment of values, for one, is infrequent and informal.
‘Property investors never see red ink on a statement unless it is on the day of sale. And most property investors never formally evaluate the performance of their investments at all.’
Mr Abey lives in Australia, where cities like Melbourne and Sydney, and more recently Perth saw the strongest home prices until recently. He himself does not ‘invest one cent in residential property outside of my family home’.
Perhaps the key chapter in the book is the one that presents a framework for understanding the role of money, which he calls the ‘bridge of well being’. The process of developing and implementing this framework is the essence of lifestyle financial planning itself.
There are three steps to this. One is to understand your goals. Two is to apply your resources towards those goals.
That includes saving and investing. The third is to have a simple investment strategy.
‘You need to develop a financial plan for yourself - not for your money … The aim … is to help you experience the good life you want to live, knowing sufficient money is there to support you.’
Source: Business Times 12 Sept 07
The US housing slump will probably last until 2009 and home sales will take a ’substantial hit’ in the next several months as borrowers struggle
The US housing slump will probably last until 2009 and home sales will take a ’substantial hit’ in the next several months as borrowers struggle to get mortgages, Moody’s Investors Service said.
‘The downturn is more severe and more protracted than we had expected,’ Joseph Snider, a credit officer at Moody’s, said. Home sales will be hurt by the lack of sub-prime and Alt-A mortgage lending and the difficulty borrowers with good credit are having obtaining mortgages, Moody’s said on Monday.
A glut of new and existing homes for sale is prompting potential buyers to wait for prices to fall before purchasing.
The Moody’s forecast contrasts with the National Association of Home Builders, which expects housing to begin rebounding in mid-to-late 2008. It also came as Federal Reserve Bank of San Francisco president Janet Yellen said the economy is under ‘downward pressure’ from turmoil in credit and housing markets.
The worst housing market in 16 years has sent a Standard & Poor’s measure of 16 US homebuilders down 49 per cent this year.
Moody’s said on Monday it has taken 38 negative ratings actions on the 22 US homebuilders it rates over the past year and more downgrades are possible. Builders may also begin violating credit agreements and banks may tighten restrictions placed on companies.
‘Tighter lending and credit standards, diminished consumer home-buying confidence, rising cancellation rates, and falling home prices - especially in the most reliable strong real estate markets prior to 2006 - have exacerbated the industry’s woes and further deepened our year-long negative view,’ the report said.
A recovery for housing could be hastened should the Federal Reserve take ‘frequent and concerted action’, the report said. Moody’s said it doesn’t expect that kind of action to occur unless the economy heads into a recession.
Mr Snider said that Moody’s had estimated there might be a second-half housing recovery in 2008. That forecast has now ‘been pushed back some’, he said.
Meanwhile, Fannie Mae and Freddie Mac, the biggest sources of money for US home loans, adopted rules intended to discourage the funding of high-risk sub-prime mortgages, the Office of Federal Housing Enterprise Oversight said.
The rules require Fannie Mae and Freddie Mac to buy home loans from originators that ‘help prevent abuses’ in mortgage lending, Ofheo said on Monday.
The two companies can only purchase home loans after verification of the borrowers’ income and ability to adjust to higher interest rates, according to the guidelines.
Source: Bloomberg (Business Times 12 Sept 07)
‘The downturn is more severe and more protracted than we had expected,’ Joseph Snider, a credit officer at Moody’s, said. Home sales will be hurt by the lack of sub-prime and Alt-A mortgage lending and the difficulty borrowers with good credit are having obtaining mortgages, Moody’s said on Monday.
A glut of new and existing homes for sale is prompting potential buyers to wait for prices to fall before purchasing.
The Moody’s forecast contrasts with the National Association of Home Builders, which expects housing to begin rebounding in mid-to-late 2008. It also came as Federal Reserve Bank of San Francisco president Janet Yellen said the economy is under ‘downward pressure’ from turmoil in credit and housing markets.
The worst housing market in 16 years has sent a Standard & Poor’s measure of 16 US homebuilders down 49 per cent this year.
Moody’s said on Monday it has taken 38 negative ratings actions on the 22 US homebuilders it rates over the past year and more downgrades are possible. Builders may also begin violating credit agreements and banks may tighten restrictions placed on companies.
‘Tighter lending and credit standards, diminished consumer home-buying confidence, rising cancellation rates, and falling home prices - especially in the most reliable strong real estate markets prior to 2006 - have exacerbated the industry’s woes and further deepened our year-long negative view,’ the report said.
A recovery for housing could be hastened should the Federal Reserve take ‘frequent and concerted action’, the report said. Moody’s said it doesn’t expect that kind of action to occur unless the economy heads into a recession.
Mr Snider said that Moody’s had estimated there might be a second-half housing recovery in 2008. That forecast has now ‘been pushed back some’, he said.
Meanwhile, Fannie Mae and Freddie Mac, the biggest sources of money for US home loans, adopted rules intended to discourage the funding of high-risk sub-prime mortgages, the Office of Federal Housing Enterprise Oversight said.
The rules require Fannie Mae and Freddie Mac to buy home loans from originators that ‘help prevent abuses’ in mortgage lending, Ofheo said on Monday.
The two companies can only purchase home loans after verification of the borrowers’ income and ability to adjust to higher interest rates, according to the guidelines.
Source: Bloomberg (Business Times 12 Sept 07)
Recession in the US used to be the kiss of death for emerging economies, but that may no longer be the case
Recession in the US used to be the kiss of death for emerging economies, but that may no longer be the case
By MICHAEL PREISS
THERE was something inevitable about the worst US job reports in four years. They suggest that the American economy has now ‘officially’ slipped into recession and will ensure that the Bernanke Fed cuts the overnight borrowing rate at the next three open market committee meetings, starting Sept 18. Net-net, a 4 per cent Fed Funds rate is the last antidote to the liquidity squeeze and credit shock that has delivered a deflationary blow to Wall Street and the international banking system. Global stock markets are on edge, amid fear that the correction in equities could morph into something far nastier.
The risk is that the US stock market could re-test its August lows, because even a Fed rate cut cannot magically end the distress of millions of bankrupt homeowners and the financial bomb that has hit the mortgage-backed securities and credit derivatives markets. Main Street is going down and Ben Bernanke and his merry men at the Fed must act fast or risk economic disaster.
Fear cannot be captured in any economic model but it is the one human emotion more powerful than greed during a psychological U-turn.
Not even the most soothing words from Mr Bernanke can change the fact that as long as US house prices continue to fall, the leverage-embedded mortgage-backed securities and collateralised debt obligation markets - and investors in these markets - are in deep trouble.
The meltdown in sub-prime mortgages is not the real malaise affecting the capital markets. The real time bomb is the coming end of the structured finance business, in which financial innovation has often been nothing more than collusion between investment banks and ratings agencies to disguise highly risky mortgage and corporate debt as AAA securities.
When even the Bush White House is compelled to fulminate against Wall Street, a Congressional witch-hunt and more restrictive regulatory protocols are inevitable.
The Day After
The macro-economic impact of ‘The Day After’ on Wall Street will be a deflationary shock as broker-dealers and institutional investors de-leverage their exposure to mortgage-backed securities and structured finance. This means that new issues of corporate bonds and leveraged buyout loans will plummet because investment banks can no longer underwrite or syndicate credit risk, even though it has been re-priced higher since August.
Asset-backed commercial paper liquidity lines have come back to haunt the world’s largest banks, which must now necessarily cut bank credit growth. The markets are witnessing the dark side of securitisation as international banks are caught with untold billions of off-balance-sheet exposure. This is the real reason that central banks are desperate to pump huge amounts of liquidity into money markets frozen with fear.
Emerging markets have not escaped unscathed from the trauma in the world financial markets since August. Apart from China’s Shanghai A shares, market indices as diverse as Brazil’s Bovespa, South Korea’s Kospi, India’s Sensex and Russia’s RTS plunged 10-20 per cent in just four weeks as the Japanese yen carry trade unwound with a vengeance in the foreign exchange market and triggered a global scramble to sell risk.
This meant that billions of dollars fled emerging market equities, that spreads on emerging market sovereign debt widened above 200 basis points on US Treasuries and that the Chicago Volatility Index doubled in a month.
But what will be the end-result of the US credit bust on emerging markets?
In my view it will be a strong de-coupling from the now outdated and wrong assumption that the US dollar and US rates are the global benchmark and the so-called risk-free rate.
Emerging market spreads recently have been the narrowest in history. Does this mean that all emerging markets are over-valued? Or that the underlying assumption that US-dollar rates are the ‘risk-free-rate’ needs to be rethought?
Do the lessons of 1998 have any relevance in the months ahead? I believe so.
As US economic growth decelerates, the Fed will do its best to reduce the real cost of borrowing to zero - a prerequisite to avoid recession and re-liquify the banking system. This means the Fed Funds rate can well fall below 4 per cent some time next summer.
While this will most probably help the US equity market, it will mean a much lower value for the US dollar in the foreign exchange markets.
Ordinarily and in the past, a US recession is or was the kiss of death for emerging markets.
But this may not be the case now, particularly if the Fed, at the expense of a much weaker US dollar, cuts rates aggressively to pre-empt recession and global GDP growth, led by China, India, Brazil and Russia, anchors domestic demand and export growth in emerging markets.
As the US Treasury bond yield falls to 4.25 per cent, emerging market equities will be the biggest beneficiaries, as more and more global investors realise that the real victim of the sub-prime mess is the US dollar.
However, I recommend buying domestic demand, not export, plays in emerging markets in order to insulate a portfolio from the very real risk of a US slowdown.
Russian banks and telecom shares such as Sberbank, Vimplecom, MTS and Comstar provide exposure to one of the world’s highest-growth consumer stories in a petro-dollar state with 160 million citizens and US$400 billion of reserves.
The credit crunch may actually prove beneficial to the Russian stock market because it will force the postponement of many London floats, which cannot take place amid a mood of risk aversion.
The Singapore market was also victim of the stockmarket sell-off on Wall Street and the Asian bourses. In fact, Singapore property shares fell far more than even the Straits Times Index, as much as 20-30 per cent in some cases.
The Singapore Reit sector’s cost of capital has risen, but its growth prospects are tied to South-east Asia’s most compelling asset reflation story.
After all, the forward yield on the sector is now 5.2 per cent - a compelling value metric for long-term exposure. It is imperative to seek Reits that offer long lease contracts, high-quality assets and acquisition strategies, proven business models and attractive discounts to net asset value.
It is ironic that the largest, most liquid Singapore Reits have been hit the hardest, proving once again that during moments of panic, emerging market managers do not sell what they must, they sell what they can.
So CapitaCommercial Trust, CapitaMall Trust, Ascendas and Mapletree are all down 20 per cent from their August highs. The spread between the Singapore Reit forward dividend yield and the island’s bellwether 10-year government bond rate is now the highest since at least May 2006.
Singapore Reit shares will be the natural beneficiaries of central bank easing in the US and Europe, somewhat akin to Nasdaq stocks after the Greenspan Fed bailed out Long Term Capital Management in 1998.
Asian property in local currency could be the next big thing in emerging markets, especially as the US dollar takes a tumble when the Fed cuts rates aggressively.
By MICHAEL PREISS
THERE was something inevitable about the worst US job reports in four years. They suggest that the American economy has now ‘officially’ slipped into recession and will ensure that the Bernanke Fed cuts the overnight borrowing rate at the next three open market committee meetings, starting Sept 18. Net-net, a 4 per cent Fed Funds rate is the last antidote to the liquidity squeeze and credit shock that has delivered a deflationary blow to Wall Street and the international banking system. Global stock markets are on edge, amid fear that the correction in equities could morph into something far nastier.
The risk is that the US stock market could re-test its August lows, because even a Fed rate cut cannot magically end the distress of millions of bankrupt homeowners and the financial bomb that has hit the mortgage-backed securities and credit derivatives markets. Main Street is going down and Ben Bernanke and his merry men at the Fed must act fast or risk economic disaster.
Fear cannot be captured in any economic model but it is the one human emotion more powerful than greed during a psychological U-turn.
Not even the most soothing words from Mr Bernanke can change the fact that as long as US house prices continue to fall, the leverage-embedded mortgage-backed securities and collateralised debt obligation markets - and investors in these markets - are in deep trouble.
The meltdown in sub-prime mortgages is not the real malaise affecting the capital markets. The real time bomb is the coming end of the structured finance business, in which financial innovation has often been nothing more than collusion between investment banks and ratings agencies to disguise highly risky mortgage and corporate debt as AAA securities.
When even the Bush White House is compelled to fulminate against Wall Street, a Congressional witch-hunt and more restrictive regulatory protocols are inevitable.
The Day After
The macro-economic impact of ‘The Day After’ on Wall Street will be a deflationary shock as broker-dealers and institutional investors de-leverage their exposure to mortgage-backed securities and structured finance. This means that new issues of corporate bonds and leveraged buyout loans will plummet because investment banks can no longer underwrite or syndicate credit risk, even though it has been re-priced higher since August.
Asset-backed commercial paper liquidity lines have come back to haunt the world’s largest banks, which must now necessarily cut bank credit growth. The markets are witnessing the dark side of securitisation as international banks are caught with untold billions of off-balance-sheet exposure. This is the real reason that central banks are desperate to pump huge amounts of liquidity into money markets frozen with fear.
Emerging markets have not escaped unscathed from the trauma in the world financial markets since August. Apart from China’s Shanghai A shares, market indices as diverse as Brazil’s Bovespa, South Korea’s Kospi, India’s Sensex and Russia’s RTS plunged 10-20 per cent in just four weeks as the Japanese yen carry trade unwound with a vengeance in the foreign exchange market and triggered a global scramble to sell risk.
This meant that billions of dollars fled emerging market equities, that spreads on emerging market sovereign debt widened above 200 basis points on US Treasuries and that the Chicago Volatility Index doubled in a month.
But what will be the end-result of the US credit bust on emerging markets?
In my view it will be a strong de-coupling from the now outdated and wrong assumption that the US dollar and US rates are the global benchmark and the so-called risk-free rate.
Emerging market spreads recently have been the narrowest in history. Does this mean that all emerging markets are over-valued? Or that the underlying assumption that US-dollar rates are the ‘risk-free-rate’ needs to be rethought?
Do the lessons of 1998 have any relevance in the months ahead? I believe so.
As US economic growth decelerates, the Fed will do its best to reduce the real cost of borrowing to zero - a prerequisite to avoid recession and re-liquify the banking system. This means the Fed Funds rate can well fall below 4 per cent some time next summer.
While this will most probably help the US equity market, it will mean a much lower value for the US dollar in the foreign exchange markets.
Ordinarily and in the past, a US recession is or was the kiss of death for emerging markets.
But this may not be the case now, particularly if the Fed, at the expense of a much weaker US dollar, cuts rates aggressively to pre-empt recession and global GDP growth, led by China, India, Brazil and Russia, anchors domestic demand and export growth in emerging markets.
As the US Treasury bond yield falls to 4.25 per cent, emerging market equities will be the biggest beneficiaries, as more and more global investors realise that the real victim of the sub-prime mess is the US dollar.
However, I recommend buying domestic demand, not export, plays in emerging markets in order to insulate a portfolio from the very real risk of a US slowdown.
Russian banks and telecom shares such as Sberbank, Vimplecom, MTS and Comstar provide exposure to one of the world’s highest-growth consumer stories in a petro-dollar state with 160 million citizens and US$400 billion of reserves.
The credit crunch may actually prove beneficial to the Russian stock market because it will force the postponement of many London floats, which cannot take place amid a mood of risk aversion.
The Singapore market was also victim of the stockmarket sell-off on Wall Street and the Asian bourses. In fact, Singapore property shares fell far more than even the Straits Times Index, as much as 20-30 per cent in some cases.
The Singapore Reit sector’s cost of capital has risen, but its growth prospects are tied to South-east Asia’s most compelling asset reflation story.
After all, the forward yield on the sector is now 5.2 per cent - a compelling value metric for long-term exposure. It is imperative to seek Reits that offer long lease contracts, high-quality assets and acquisition strategies, proven business models and attractive discounts to net asset value.
It is ironic that the largest, most liquid Singapore Reits have been hit the hardest, proving once again that during moments of panic, emerging market managers do not sell what they must, they sell what they can.
So CapitaCommercial Trust, CapitaMall Trust, Ascendas and Mapletree are all down 20 per cent from their August highs. The spread between the Singapore Reit forward dividend yield and the island’s bellwether 10-year government bond rate is now the highest since at least May 2006.
Singapore Reit shares will be the natural beneficiaries of central bank easing in the US and Europe, somewhat akin to Nasdaq stocks after the Greenspan Fed bailed out Long Term Capital Management in 1998.
Asian property in local currency could be the next big thing in emerging markets, especially as the US dollar takes a tumble when the Fed cuts rates aggressively.
Weak US housing and trouble in the credit markets are, for now, having limited impact on job plans
Weak US housing and trouble in the credit markets are, for now, having limited impact on job plans, according to a survey released yesterday.
Employers remain confident about hiring for the fourth quarter, Manpower Inc said. Its poll of 14,000 employers found the net employment outlook - the difference between those adding jobs and those cutting them - was unchanged for the fourth quarter from the third.
The seasonally adjusted level of 18 compares with a reading of 20 a year ago, Manpower reported.
The Manpower report comes after the government last week reported a surprise drop in US non-farm payrolls in August, which raised fears that the US economy was shifting to a much lower pace of growth or could tip into recession.
Most industries reported steady demand for workers, but employers in mining, transportation and utilities have lower confidence about hiring compared to the previous quarter.
When compared with a year ago, hiring expectations are weaker in six of the ten industry sectors surveyed by Manpower.
Expectations are unchanged in three sectors and higher in one: education and public administration.
A slowdown in the US housing market is being felt among finance companies, especially in the northeast, and in construction, but companies without direct exposure to housing remain reasonably confident about the health of their business, Manpower CEO Jeff Joerres said.
‘They say, ‘I’m going to be in the marketplace but I’m going to hire very judiciously. I will only add what I need to add’,’ Mr Joerres said. ‘That means there’s not as much to drop out if there are some more difficult times.’
Job prospects are again strongest in the west and weakest in the north-east, Manpower said, where there is particular softness in transportation, utilities, education and mining.
A separate, international poll of 52,000 employers, also conducted by Manpower, found positive hiring prospects in all 27 countries and territories it surveyed.
Employers in Australia, Germany, Japan and India, among others, reported their best optimism in the survey’s history.
By contrast, those in Italy, France, the Netherlands and Belgium are less optimistic.
Job projections in China were lower both from the previous quarter and from a year ago, in part reflecting concern ahead of new labour laws coming into effect at the start of 2008.
‘They’ve been growing so quickly for so long that they’re going to be cautious,’ Mr Joerres said.
Source: Reuters (Business Times 12 Sept 07)
Employers remain confident about hiring for the fourth quarter, Manpower Inc said. Its poll of 14,000 employers found the net employment outlook - the difference between those adding jobs and those cutting them - was unchanged for the fourth quarter from the third.
The seasonally adjusted level of 18 compares with a reading of 20 a year ago, Manpower reported.
The Manpower report comes after the government last week reported a surprise drop in US non-farm payrolls in August, which raised fears that the US economy was shifting to a much lower pace of growth or could tip into recession.
Most industries reported steady demand for workers, but employers in mining, transportation and utilities have lower confidence about hiring compared to the previous quarter.
When compared with a year ago, hiring expectations are weaker in six of the ten industry sectors surveyed by Manpower.
Expectations are unchanged in three sectors and higher in one: education and public administration.
A slowdown in the US housing market is being felt among finance companies, especially in the northeast, and in construction, but companies without direct exposure to housing remain reasonably confident about the health of their business, Manpower CEO Jeff Joerres said.
‘They say, ‘I’m going to be in the marketplace but I’m going to hire very judiciously. I will only add what I need to add’,’ Mr Joerres said. ‘That means there’s not as much to drop out if there are some more difficult times.’
Job prospects are again strongest in the west and weakest in the north-east, Manpower said, where there is particular softness in transportation, utilities, education and mining.
A separate, international poll of 52,000 employers, also conducted by Manpower, found positive hiring prospects in all 27 countries and territories it surveyed.
Employers in Australia, Germany, Japan and India, among others, reported their best optimism in the survey’s history.
By contrast, those in Italy, France, the Netherlands and Belgium are less optimistic.
Job projections in China were lower both from the previous quarter and from a year ago, in part reflecting concern ahead of new labour laws coming into effect at the start of 2008.
‘They’ve been growing so quickly for so long that they’re going to be cautious,’ Mr Joerres said.
Source: Reuters (Business Times 12 Sept 07)
Interest rate fears fuel 4.5% plunge in Shanghai market
Interest rate fears fuel 4.5% plunge in Shanghai market
(BEIJING) Soaring food prices propelled China’s annual consumer price inflation to 6.5 per cent in August, the fastest pace in nearly 11 years, cementing expectations the central bank will defy the global trend and keep raising interest rates.
The inflation rate published yesterday, up from 5.6 per cent in July, easily surpassed economists’ forecasts of 5.9 per cent. It was the highest reading since December 1996.
Shanghai stocks plunged 4.5 per cent, the biggest daily drop in two months, as investors fretted that higher borrowing costs could help bring the market’s dizzying rally to a halt.
‘Going forward we believe there are non-trivial risks that inflation may continue to edge up,’ economists at Goldman Sachs said in a note to clients. ‘We expect the central bank to respond to higher inflationary pressures with decisive tightening measures, including two interest rate hikes to the benchmark lending and deposit rates by the end of this year.’
China also reported a trade surplus for August of US$24.97 billion. It was the second-biggest on record but slightly lower than forecast as the ending of some tax rebates dented exports.
The ruling Communist Party, aware that inflation has touched off unrest in China down the ages, has voiced increasing concern about the speed of price rises.
A senior party researcher warned on Monday that inflation becomes difficult to control once it exceeds 5 per cent, while a local paper said Beijing had told schools and colleges in the capital not to raise canteen food prices as inflation climbs.
The National Bureau of Statistics said inflation was driven by an 18.2 per cent leap in the cost of food, which accounts for a third of the consumer price basket.
Meat prices rose 49 per cent in August from a year earlier, reflecting a shortage of pork, China’s staple meat.
China’s pig population has fallen 10 per cent due to blue-ear disease and reduced incentives to rear hogs, including fast-rising foodgrain costs and low prices last year.
China, the world’s biggest producer and consumer of pork, could quadruple its imports of the meat this year to 100,000 tonnes to ease the shortage, industry sources said yesterday.
To keep a lid on inflation and prevent the world’s fourth-largest economy from overheating, the central bank has raised interest rates four times this year and ordered banks on seven occasions to tie up more of their deposits in reserve.
As for the market plunge, analysts said that after more than doubling this year to last Thursday’s all-time high, the benchmark stock index might finally be starting a substantial pullback, even though they believe a full-fledged bear market remains very unlikely.
‘All the government policies will have a cumulative impact on the market - eventually, there will be a last straw on the camel’s back,’ said Liu Lifeng, fund manager at BOCI Securities.
Many traders think the market will in coming days slip to psychological support around 5,000 points.
A drop to technical support in the 4,700-4,800 area, where the index’s mid-August peak roughly coincides with the 38.2 per cent retracement of its rally since early July, also looks quite possible.
Source: Reuters (Business Times 12 Sept 07)
(BEIJING) Soaring food prices propelled China’s annual consumer price inflation to 6.5 per cent in August, the fastest pace in nearly 11 years, cementing expectations the central bank will defy the global trend and keep raising interest rates.
The inflation rate published yesterday, up from 5.6 per cent in July, easily surpassed economists’ forecasts of 5.9 per cent. It was the highest reading since December 1996.
Shanghai stocks plunged 4.5 per cent, the biggest daily drop in two months, as investors fretted that higher borrowing costs could help bring the market’s dizzying rally to a halt.
‘Going forward we believe there are non-trivial risks that inflation may continue to edge up,’ economists at Goldman Sachs said in a note to clients. ‘We expect the central bank to respond to higher inflationary pressures with decisive tightening measures, including two interest rate hikes to the benchmark lending and deposit rates by the end of this year.’
China also reported a trade surplus for August of US$24.97 billion. It was the second-biggest on record but slightly lower than forecast as the ending of some tax rebates dented exports.
The ruling Communist Party, aware that inflation has touched off unrest in China down the ages, has voiced increasing concern about the speed of price rises.
A senior party researcher warned on Monday that inflation becomes difficult to control once it exceeds 5 per cent, while a local paper said Beijing had told schools and colleges in the capital not to raise canteen food prices as inflation climbs.
The National Bureau of Statistics said inflation was driven by an 18.2 per cent leap in the cost of food, which accounts for a third of the consumer price basket.
Meat prices rose 49 per cent in August from a year earlier, reflecting a shortage of pork, China’s staple meat.
China’s pig population has fallen 10 per cent due to blue-ear disease and reduced incentives to rear hogs, including fast-rising foodgrain costs and low prices last year.
China, the world’s biggest producer and consumer of pork, could quadruple its imports of the meat this year to 100,000 tonnes to ease the shortage, industry sources said yesterday.
To keep a lid on inflation and prevent the world’s fourth-largest economy from overheating, the central bank has raised interest rates four times this year and ordered banks on seven occasions to tie up more of their deposits in reserve.
As for the market plunge, analysts said that after more than doubling this year to last Thursday’s all-time high, the benchmark stock index might finally be starting a substantial pullback, even though they believe a full-fledged bear market remains very unlikely.
‘All the government policies will have a cumulative impact on the market - eventually, there will be a last straw on the camel’s back,’ said Liu Lifeng, fund manager at BOCI Securities.
Many traders think the market will in coming days slip to psychological support around 5,000 points.
A drop to technical support in the 4,700-4,800 area, where the index’s mid-August peak roughly coincides with the 38.2 per cent retracement of its rally since early July, also looks quite possible.
Source: Reuters (Business Times 12 Sept 07)
THE People’s Bank of China (PBOC), China’s central bank, issued 151 billion yuan (S$30.6 billion) of directional bills to selected commercial banks
THE People’s Bank of China (PBOC), China’s central bank, issued 151 billion yuan (S$30.6 billion) of directional bills to selected commercial banks last week. Unlike the ordinary central bank bills distributed in the open market, PBOC made it compulsory for the commercial banks to purchase its tranche of directional bills.
This is the fifth time the central bank has wielded such a tool to restrain domestic banks from expanding credit too fast. While the term remains the same, the size of the current bill issuance is bigger than the previous four batches of 101 billion yuan.
Moreover, while the yields of the previous four batches of directional bills were only two to six basis points lower than normal central bank bills, the spread between the yield of the new batch and that of the ordinary ones widened to 10 basis points.
The issuance of directional bills came only one day after PBOC announced an increase in bank reserve ratio of 0.5 percentage points to 12.5 per cent, effective from Sept 25. It is the seventh time the central bank has increased the bank reserve ratio this year.
Contrary to general expectation, China’s economy didn’t slow in 2007. Instead, China’s economy has been accelerating despite a series of macro economic control measures.
In the first half of 2007, China’s GDP grew by 11.5 per cent, 0.6 percentage points higher than the same period in 2006. In particular, the investment growth remains at an uncomfortably high level.
In the first seven months, fixed asset investment in urban China grew by 26.6 per cent, which is partly driven by excess liquidity.
According to the central bank, M2, the broad measure of money supply, went up 18.48 per cent by the end of July 2007, over the same period last year. The growth rate is 1.42 percentage points higher than that of the end of June, indicating acceleration in money supply.
Currently, directional bills, bank reserve ratio requirements and interest rates are the three major instruments the PBOC uses to adjust liquidity in China’s financial market.
So far, PBOC has increased the interest rate four times within this year. Therefore the question we are left with is whether PBOC will increase the interest rate again this month after last week’s tightening move.
Usually, the decision of an interest rate hike is made at a weekend after major economic statistics, such as the consumer price index (CPI) and fixed asset investment in urban areas, are released by the National Statistics Bureau (NSB). According to the data release schedule, the next possible interest rate hike may be announced on Sept 14.
It does seem that the forthcoming August figure would trigger a new interest hike. It is widely expected August CPI will go beyond 6 per cent, provided food prices, the major drive for a high CPI rate, continue to pick up. The July figure hit a 33-month high to reach 5.6 per cent.
However, from a macroeconomic point of view, we reckon that even if a high CPI rate comes together with a high fixed asset investment figure, PBOC might not be in a rush for a new interest rate hike this month.
First of all, the high CPI rate might not be a bad thing in China. In fact, the CPI figure in July was less than one per cent, if food prices, which account for about one-third in the price basket, is excluded.
The food price surge will eventually benefit the farmers and help the country to narrow the widening income gap between the urban population and the rural one.
In the first half of 2007, net income of farmers grew by 13.3 per cent, which is a 20-year high.
Additionally, it is a common practice that Chinese banks extend loans much faster in the first half of one year.
Thus PBOC is under less pressure to control bank credit expansion in the second half.
Therefore, the current stronger-than-usual directional bill measure, together with a new bank reserve ratio hike, might allow PBOC more time to see the result of its actions.
Tiger Tong is an analyst with China Knowledge, a premier provider of trade and investment information on China
Source: Business Times 12 Sept 07
This is the fifth time the central bank has wielded such a tool to restrain domestic banks from expanding credit too fast. While the term remains the same, the size of the current bill issuance is bigger than the previous four batches of 101 billion yuan.
Moreover, while the yields of the previous four batches of directional bills were only two to six basis points lower than normal central bank bills, the spread between the yield of the new batch and that of the ordinary ones widened to 10 basis points.
The issuance of directional bills came only one day after PBOC announced an increase in bank reserve ratio of 0.5 percentage points to 12.5 per cent, effective from Sept 25. It is the seventh time the central bank has increased the bank reserve ratio this year.
Contrary to general expectation, China’s economy didn’t slow in 2007. Instead, China’s economy has been accelerating despite a series of macro economic control measures.
In the first half of 2007, China’s GDP grew by 11.5 per cent, 0.6 percentage points higher than the same period in 2006. In particular, the investment growth remains at an uncomfortably high level.
In the first seven months, fixed asset investment in urban China grew by 26.6 per cent, which is partly driven by excess liquidity.
According to the central bank, M2, the broad measure of money supply, went up 18.48 per cent by the end of July 2007, over the same period last year. The growth rate is 1.42 percentage points higher than that of the end of June, indicating acceleration in money supply.
Currently, directional bills, bank reserve ratio requirements and interest rates are the three major instruments the PBOC uses to adjust liquidity in China’s financial market.
So far, PBOC has increased the interest rate four times within this year. Therefore the question we are left with is whether PBOC will increase the interest rate again this month after last week’s tightening move.
Usually, the decision of an interest rate hike is made at a weekend after major economic statistics, such as the consumer price index (CPI) and fixed asset investment in urban areas, are released by the National Statistics Bureau (NSB). According to the data release schedule, the next possible interest rate hike may be announced on Sept 14.
It does seem that the forthcoming August figure would trigger a new interest hike. It is widely expected August CPI will go beyond 6 per cent, provided food prices, the major drive for a high CPI rate, continue to pick up. The July figure hit a 33-month high to reach 5.6 per cent.
However, from a macroeconomic point of view, we reckon that even if a high CPI rate comes together with a high fixed asset investment figure, PBOC might not be in a rush for a new interest rate hike this month.
First of all, the high CPI rate might not be a bad thing in China. In fact, the CPI figure in July was less than one per cent, if food prices, which account for about one-third in the price basket, is excluded.
The food price surge will eventually benefit the farmers and help the country to narrow the widening income gap between the urban population and the rural one.
In the first half of 2007, net income of farmers grew by 13.3 per cent, which is a 20-year high.
Additionally, it is a common practice that Chinese banks extend loans much faster in the first half of one year.
Thus PBOC is under less pressure to control bank credit expansion in the second half.
Therefore, the current stronger-than-usual directional bill measure, together with a new bank reserve ratio hike, might allow PBOC more time to see the result of its actions.
Tiger Tong is an analyst with China Knowledge, a premier provider of trade and investment information on China
Source: Business Times 12 Sept 07
SALES of properties on auction here plummeted last month, in one of the first signs that the global credit crunch may be taking a toll on Singapore
SALES of properties on auction here plummeted last month, in one of the first signs that the global credit crunch may be taking a toll on Singapore’s property market.
Only $10.79 million of properties were sold under the hammer in the month, less than one-fifth of what was fetched in each of June and July, said property firm Colliers International, one of the biggest auctioneers here.
Since March, the value of properties sold via auction each month has ranged from $33 million to $108 million.
But this plunged last month, said Colliers, which released a report on auction sales yesterday.
In previous years, August has traditionally been a slow month for property sales due to the Hungry Ghost Festival.
But superstitious buyers were not the reason auction sales turned in an exceptionally poor showing in this year’s hungry ghost month, which stretched from Aug 13 to Monday.
Colliers said the nosedive in sales was mainly due to the recent stock market volatility caused by United States sub-prime mortgage worries, new government policies, and higher asking prices by sellers.
‘Given the good property market performance, many sellers have raised their expectations and upped their asking prices, especially for properties with en bloc potential,’ said Ms Grace Ng, Colliers’ auctioneer and deputy managing director.
She added that these properties have also become less appealing, thanks to the newly announced rules governing collective sales, which will make it more difficult for developments to sell en bloc.
In addition, the ’stock market turmoil amid the US sub-prime woes’ has also contributed to the ’slowdown in the market, as buyers take a cautious stand’, Ms Ng said.
Only 10 properties were sold via auction in this year’s hungry ghost month, less than one-tenth of the 131 that were put up for sale in the period.
The properties that were sold fetched $9.56 million in all - a tiny fraction of the $133.86 million achieved in last year’s double hungry ghost month and ‘one of the lowest seen in the past 10 years’, Colliers added.
Although the hungry ghost month typically sees fewer property sales due to superstitious buyers and sellers, the firm said this is unlikely to be the reason for the plunge in auction sales of property.
Indeed, the number of properties put up for auction by their owners in the period surged to 88, the highest level in at least a decade.
On the other hand, the number of repossessed properties - traditionally the main source of supply for auction sales - fell to 43, down from 239 last year and the lowest level since 1998. This was largely due to the buoyant economy and climbing property prices, said Colliers.
All this shows that auction sales in the hungry ghost month were being moved more by market conditions than superstitious beliefs, the firm added.
But Ms Ng was quick to point out that the firm is still receiving plenty of inquiries about auction properties from potential buyers.
‘The inquiries are still there, but people are thinking twice before jumping in,’ she said. ‘They may be taking a step back and reassessing the prices.’
Colliers also noted that while auction sales may have plunged in the hungry ghost month, other segments of the property market appeared to still be going strong.
For instance, the total number of homes sold in the period is ’still at a very healthy level’, although it has been falling since May, the firm said.
Only $10.79 million of properties were sold under the hammer in the month, less than one-fifth of what was fetched in each of June and July, said property firm Colliers International, one of the biggest auctioneers here.
Since March, the value of properties sold via auction each month has ranged from $33 million to $108 million.
But this plunged last month, said Colliers, which released a report on auction sales yesterday.
In previous years, August has traditionally been a slow month for property sales due to the Hungry Ghost Festival.
But superstitious buyers were not the reason auction sales turned in an exceptionally poor showing in this year’s hungry ghost month, which stretched from Aug 13 to Monday.
Colliers said the nosedive in sales was mainly due to the recent stock market volatility caused by United States sub-prime mortgage worries, new government policies, and higher asking prices by sellers.
‘Given the good property market performance, many sellers have raised their expectations and upped their asking prices, especially for properties with en bloc potential,’ said Ms Grace Ng, Colliers’ auctioneer and deputy managing director.
She added that these properties have also become less appealing, thanks to the newly announced rules governing collective sales, which will make it more difficult for developments to sell en bloc.
In addition, the ’stock market turmoil amid the US sub-prime woes’ has also contributed to the ’slowdown in the market, as buyers take a cautious stand’, Ms Ng said.
Only 10 properties were sold via auction in this year’s hungry ghost month, less than one-tenth of the 131 that were put up for sale in the period.
The properties that were sold fetched $9.56 million in all - a tiny fraction of the $133.86 million achieved in last year’s double hungry ghost month and ‘one of the lowest seen in the past 10 years’, Colliers added.
Although the hungry ghost month typically sees fewer property sales due to superstitious buyers and sellers, the firm said this is unlikely to be the reason for the plunge in auction sales of property.
Indeed, the number of properties put up for auction by their owners in the period surged to 88, the highest level in at least a decade.
On the other hand, the number of repossessed properties - traditionally the main source of supply for auction sales - fell to 43, down from 239 last year and the lowest level since 1998. This was largely due to the buoyant economy and climbing property prices, said Colliers.
All this shows that auction sales in the hungry ghost month were being moved more by market conditions than superstitious beliefs, the firm added.
But Ms Ng was quick to point out that the firm is still receiving plenty of inquiries about auction properties from potential buyers.
‘The inquiries are still there, but people are thinking twice before jumping in,’ she said. ‘They may be taking a step back and reassessing the prices.’
Colliers also noted that while auction sales may have plunged in the hungry ghost month, other segments of the property market appeared to still be going strong.
For instance, the total number of homes sold in the period is ’still at a very healthy level’, although it has been falling since May, the firm said.
THE turmoil which has engulfed financial markets globally has hardly dented investor enthusiasm in Singapore’s red-hot property market.
THE turmoil which has engulfed financial markets globally has hardly dented investor enthusiasm in Singapore’s red-hot property market.
The swift recovery of property giants such as City Developments (CDL) and CapitaLand after a region-wide selloff two weeks ago suggests that the Singapore equities market has decoupled itself from the volatility on Wall Street.
Yesterday, covered warrants on property developers were among the most actively traded contracts on the Singapore Exchange.
These included a call warrant issued by Deutsche Bank on CapitaLand which closed 0.5 cent lower at 21.5 cents on a volume of 8.15 million units, and a contract issued by Macquarie Bank on CDL which ended one cent down at 14 cents, with 6.67 million units traded.
Interest in these warrants was spurred by the $1.69 billion winning bid by CDL and partners for a plum commercial site at the old Beach Road military camp.
‘This hotly-contested bid is a strong testimony of the keen interest in the property market by foreign developers and the big boys here,’ said a dealer.
Deutsche Bank vice-president Sandra Lee expects warrants on property counters to remain popular with investors. These include a Deutsche Bank call warrant on CapitaLand which requires its holder to use five warrants after paying a strike price of $7.80 for conversion into one share.
Source: The Straits Times 12 Sept 07
The swift recovery of property giants such as City Developments (CDL) and CapitaLand after a region-wide selloff two weeks ago suggests that the Singapore equities market has decoupled itself from the volatility on Wall Street.
Yesterday, covered warrants on property developers were among the most actively traded contracts on the Singapore Exchange.
These included a call warrant issued by Deutsche Bank on CapitaLand which closed 0.5 cent lower at 21.5 cents on a volume of 8.15 million units, and a contract issued by Macquarie Bank on CDL which ended one cent down at 14 cents, with 6.67 million units traded.
Interest in these warrants was spurred by the $1.69 billion winning bid by CDL and partners for a plum commercial site at the old Beach Road military camp.
‘This hotly-contested bid is a strong testimony of the keen interest in the property market by foreign developers and the big boys here,’ said a dealer.
Deutsche Bank vice-president Sandra Lee expects warrants on property counters to remain popular with investors. These include a Deutsche Bank call warrant on CapitaLand which requires its holder to use five warrants after paying a strike price of $7.80 for conversion into one share.
Source: The Straits Times 12 Sept 07
Number of people with multiple home loans up 64% in June as applications surge.
Number of people with multiple home loans up 64% in June as applications surge.
For thousands in Singapore, a single home - or a single loan - is no longer enough.
Riding the property boom, with its promise of huge gains, the number of people with multiple home loans soared to 38,520 in June this year.
This represented a 64 per cent jump from 12 months ago. In June 2006, the number of people with two home loans or more stood at just 23,541, according to the Credit Bureau (Singapore) Pte Ltd (CBS), which released data on property loans for the first time yesterday.
In tandem with rising property prices, new home loan applications surged to 17,323 in May. If the past 30 months are a benchmark, then the average month sees just 10,000 new home loan applications.
Also, over the past two-and-a-half years, an average of 4,000 applications have been approved each month. But in May, a total of 4,856 applications were approved, suggesting that while banks had stepped up the pace of approvals, the applications had flooded in even faster.
Loan approval data lags applications as it refers to disbursements which could be a few months later or even as long as two years down the road for borrowers who bought on deferred payment schemes.
June saw 4,794 approvals against 16,017 applications. The breather that the property market then took was echoed in the number of new loan applications, which fell to 13,870 in August.
Property loan approvals increased 12 per cent in June 2007 to 50,514 from a year ago.
Explaining the relatively low rate of approvals compared to the applications flowing in, Mark Rowley, CBS general manager, ventured that people making ‘multiple applications’ could have something to do with it - as could the credit policy of banks.
And while there has been some anecdotal evidence of banks tightening credit, he said it was too early to say if the low rate of approval was a result of that.
Said Helen Neo, head of consumer banking of Maybank in Singapore: ‘A home loan application may be rejected if the applicant’s repayment ability is in doubt taking into account his overall financial commitments.’
Tan Chia Seng, Citibank Singapore business director, said that in the last 12 months, there had been a noticeable increase in big ticket mortgages and multiple home loan borrowers.
‘At Citibank, we always take a prudent approach towards mortgages,’ said Mr Tan.
‘For multiple home loans, it is particularly important to consider the applicant’s aggregate servicing capability for all his loans, especially his home loans,’ he added.
He ventured that one possible reason for the low approval rate could be that the applicants’ aggregate servicing capability for all his loans has fallen below an acceptable level.
‘If the applicant has a disproportionately high debt-servicing ratio, a prudent bank may not approve his application for a second or third home loan,’ said Mr Tan. ‘In our case we have been declining loans to applicants where the debt-servicing ratio exceeds our comfort level.’
CBS said the data, which have been compiled over the 30 past months and used to develop a property loan index, show a hunger for credit to finance properties under the current property boom.
The index showing credit hunger climbed to a high in May, 71 per cent above the baseline or 17,323 new loan applications. Single-day sellouts at various property launches also repeatedly made the headlines.
Home loan approvals jumped 23 per cent in May to 4,856. In April, the number stood at just 3,967.
The good news is that along with the relentless climb in property prices, the delinquency rate, or the proportion of borrowers behind with their home loan instalments, is falling.
CBS also charted a delinquency index which shows the percentage of people being late in payments has been declining from the average delinquency rate of 2.35 per cent to just 2.04 per cent as of June 2007.
That works out to 5,448 delinquent borrowers out of the total 266,512.
From a credit risk perspective, it is very positive, said CBS’s Mr Rowley.
‘We will always focus on delinquency as the indicator - it’s low at this point,’ he said.
Source : Business Times - 13 Sept 2007
For thousands in Singapore, a single home - or a single loan - is no longer enough.
Riding the property boom, with its promise of huge gains, the number of people with multiple home loans soared to 38,520 in June this year.
This represented a 64 per cent jump from 12 months ago. In June 2006, the number of people with two home loans or more stood at just 23,541, according to the Credit Bureau (Singapore) Pte Ltd (CBS), which released data on property loans for the first time yesterday.
In tandem with rising property prices, new home loan applications surged to 17,323 in May. If the past 30 months are a benchmark, then the average month sees just 10,000 new home loan applications.
Also, over the past two-and-a-half years, an average of 4,000 applications have been approved each month. But in May, a total of 4,856 applications were approved, suggesting that while banks had stepped up the pace of approvals, the applications had flooded in even faster.
Loan approval data lags applications as it refers to disbursements which could be a few months later or even as long as two years down the road for borrowers who bought on deferred payment schemes.
June saw 4,794 approvals against 16,017 applications. The breather that the property market then took was echoed in the number of new loan applications, which fell to 13,870 in August.
Property loan approvals increased 12 per cent in June 2007 to 50,514 from a year ago.
Explaining the relatively low rate of approvals compared to the applications flowing in, Mark Rowley, CBS general manager, ventured that people making ‘multiple applications’ could have something to do with it - as could the credit policy of banks.
And while there has been some anecdotal evidence of banks tightening credit, he said it was too early to say if the low rate of approval was a result of that.
Said Helen Neo, head of consumer banking of Maybank in Singapore: ‘A home loan application may be rejected if the applicant’s repayment ability is in doubt taking into account his overall financial commitments.’
Tan Chia Seng, Citibank Singapore business director, said that in the last 12 months, there had been a noticeable increase in big ticket mortgages and multiple home loan borrowers.
‘At Citibank, we always take a prudent approach towards mortgages,’ said Mr Tan.
‘For multiple home loans, it is particularly important to consider the applicant’s aggregate servicing capability for all his loans, especially his home loans,’ he added.
He ventured that one possible reason for the low approval rate could be that the applicants’ aggregate servicing capability for all his loans has fallen below an acceptable level.
‘If the applicant has a disproportionately high debt-servicing ratio, a prudent bank may not approve his application for a second or third home loan,’ said Mr Tan. ‘In our case we have been declining loans to applicants where the debt-servicing ratio exceeds our comfort level.’
CBS said the data, which have been compiled over the 30 past months and used to develop a property loan index, show a hunger for credit to finance properties under the current property boom.
The index showing credit hunger climbed to a high in May, 71 per cent above the baseline or 17,323 new loan applications. Single-day sellouts at various property launches also repeatedly made the headlines.
Home loan approvals jumped 23 per cent in May to 4,856. In April, the number stood at just 3,967.
The good news is that along with the relentless climb in property prices, the delinquency rate, or the proportion of borrowers behind with their home loan instalments, is falling.
CBS also charted a delinquency index which shows the percentage of people being late in payments has been declining from the average delinquency rate of 2.35 per cent to just 2.04 per cent as of June 2007.
That works out to 5,448 delinquent borrowers out of the total 266,512.
From a credit risk perspective, it is very positive, said CBS’s Mr Rowley.
‘We will always focus on delinquency as the indicator - it’s low at this point,’ he said.
Source : Business Times - 13 Sept 2007
Data shows area has highest number with multiple home loans.
Data shows area has highest number with multiple home loans.
It may not top Singapore’s wealth charts, but Hougang has plenty of property investors - or speculators. District 19, which includes Serangoon Gardens, Hougang and Punggol, has the highest number of borrowers with multiple property loans, at 3,263.
According to data from Credit Bureau Singapore (CBS), which analysed loans and looked at where borrowers live, investors are defined as people with two home loans and more. They live all over Singapore and are not confined to the rich districts of 10 and 11 or 15.
In fact District 9, which includes Orchard, Cairnhill and River Valley, has only 716 borrowers with at least two home loans. This is much lower than districts 16, 18, 20, 22 and 23, each of which has between 2,000 and 2,700 borrowers with more than one loan.
People with multiple home loans totalled 38,520 in June - a 64 per cent jump from 12 months earlier.
And District 19 took the top prize in this category - at 3,263. CBS general manager Mark Rowley said this could be due to the number of property launches in the area, although the data would include residents who have bought elsewhere.
While the rich residents of districts 15, 9 and 10, which include Katong, Orchard, Ardmore, Bukit Timah and Holland Road, figure prominently in terms of people owing banks more than $1 million on property loans, the data shows people who owe more than a million dollars on homes live all over the island. The number jumped a hefty 26 per cent to 12,884 in June from a year ago.
‘The value of properties has gone up,’ said Mr Rowley who does not consider the jump in big loans a matter of concern, given the low rate of delinquency among borrowers.
District 10, which is made up of Ardmore, Bukit Timah, Holland Road and Tanglin, has the most million-dollar borrowers at 2,033, up 30 per cent from a year ago.
Again District 19 didn’t do too badly. It has 618 such borrowers, a slight gain of 2 per cent from June 2006.
District 24, which comprises Lim Chu Kang and Tengah, has a grand total of 6 people who owe more than $1 million on their home loans, a 100 per cent jump from 12 months ago.
Interestingly, Kranji and Woodgrove in District 25 are the only places where residents who owe more than $1 million showed a drop - 117 versus 119 a year ago. They also seem the most conservative area, with only 20 people having multiple home loans.
And District 25 had a 16 per cent fall in new property loans. This translated to 1,666 people getting a loan, down from 1,984 a year ago.
It was one of five districts that showed a negative in new property loan approvals. The other four were districts 22, 24, 27 and 20.
CBS gets its property loan data from 10 financial institutions, eight banks and two finance companies.
They are ABN Amro Bank, CitiBank, DBS Bank, HSBC, Maybank, OCBC, Standard Chartered Bank, United Overseas Bank, Hong Leong Finance and Sing Investments & Finance.
Source : Business Times - 13 Sept 2007
Serangoon Gardens, Hougang and Punggol, has the highest number of borrowers with multiple property loans, at 3,263.
According to data from Credit Bureau Singapore (CBS), which analysed loans and looked at where borrowers live, investors are defined as people with two home loans and more. They live all over Singapore and are not confined to the rich districts of 10 and 11 or 15.
In fact District 9, which includes Orchard, Cairnhill and River Valley, has only 716 borrowers with at least two home loans. This is much lower than districts 16, 18, 20, 22 and 23, each of which has between 2,000 and 2,700 borrowers with more than one loan.
People with multiple home loans totalled 38,520 in June - a 64 per cent jump from 12 months earlier.
And District 19 took the top prize in this category - at 3,263. CBS general manager Mark Rowley said this could be due to the number of property launches in the area, although the data would include residents who have bought elsewhere.
While the rich residents of districts 15, 9 and 10, which include Katong, Orchard, Ardmore, Bukit Timah and Holland Road, figure prominently in terms of people owing banks more than $1 million on property loans, the data shows people who owe more than a million dollars on homes live all over the island. The number jumped a hefty 26 per cent to 12,884 in June from a year ago.
‘The value of properties has gone up,’ said Mr Rowley who does not consider the jump in big loans a matter of concern, given the low rate of delinquency among borrowers.
District 10, which is made up of Ardmore, Bukit Timah, Holland Road and Tanglin, has the most million-dollar borrowers at 2,033, up 30 per cent from a year ago.
Again District 19 didn’t do too badly. It has 618 such borrowers, a slight gain of 2 per cent from June 2006.
District 24, which comprises Lim Chu Kang and Tengah, has a grand total of 6 people who owe more than $1 million on their home loans, a 100 per cent jump from 12 months ago.
Interestingly, Kranji and Woodgrove in District 25 are the only places where residents who owe more than $1 million showed a drop - 117 versus 119 a year ago. They also seem the most conservative area, with only 20 people having multiple home loans.
And District 25 had a 16 per cent fall in new property loans. This translated to 1,666 people getting a loan, down from 1,984 a year ago.
It was one of five districts that showed a negative in new property loan approvals. The other four were districts 22, 24, 27 and 20.
CBS gets its property loan data from 10 financial institutions, eight banks and two finance companies.
They are ABN Amro Bank, CitiBank, DBS Bank, HSBC, Maybank, OCBC, Standard Chartered Bank, United Overseas Bank, Hong Leong Finance and Sing Investments & Finance.
Source : Business Times - 13 Sept 2007
It may not top Singapore’s wealth charts, but Hougang has plenty of property investors - or speculators. District 19, which includes Serangoon Gardens, Hougang and Punggol, has the highest number of borrowers with multiple property loans, at 3,263.
According to data from Credit Bureau Singapore (CBS), which analysed loans and looked at where borrowers live, investors are defined as people with two home loans and more. They live all over Singapore and are not confined to the rich districts of 10 and 11 or 15.
In fact District 9, which includes Orchard, Cairnhill and River Valley, has only 716 borrowers with at least two home loans. This is much lower than districts 16, 18, 20, 22 and 23, each of which has between 2,000 and 2,700 borrowers with more than one loan.
People with multiple home loans totalled 38,520 in June - a 64 per cent jump from 12 months earlier.
And District 19 took the top prize in this category - at 3,263. CBS general manager Mark Rowley said this could be due to the number of property launches in the area, although the data would include residents who have bought elsewhere.
While the rich residents of districts 15, 9 and 10, which include Katong, Orchard, Ardmore, Bukit Timah and Holland Road, figure prominently in terms of people owing banks more than $1 million on property loans, the data shows people who owe more than a million dollars on homes live all over the island. The number jumped a hefty 26 per cent to 12,884 in June from a year ago.
‘The value of properties has gone up,’ said Mr Rowley who does not consider the jump in big loans a matter of concern, given the low rate of delinquency among borrowers.
District 10, which is made up of Ardmore, Bukit Timah, Holland Road and Tanglin, has the most million-dollar borrowers at 2,033, up 30 per cent from a year ago.
Again District 19 didn’t do too badly. It has 618 such borrowers, a slight gain of 2 per cent from June 2006.
District 24, which comprises Lim Chu Kang and Tengah, has a grand total of 6 people who owe more than $1 million on their home loans, a 100 per cent jump from 12 months ago.
Interestingly, Kranji and Woodgrove in District 25 are the only places where residents who owe more than $1 million showed a drop - 117 versus 119 a year ago. They also seem the most conservative area, with only 20 people having multiple home loans.
And District 25 had a 16 per cent fall in new property loans. This translated to 1,666 people getting a loan, down from 1,984 a year ago.
It was one of five districts that showed a negative in new property loan approvals. The other four were districts 22, 24, 27 and 20.
CBS gets its property loan data from 10 financial institutions, eight banks and two finance companies.
They are ABN Amro Bank, CitiBank, DBS Bank, HSBC, Maybank, OCBC, Standard Chartered Bank, United Overseas Bank, Hong Leong Finance and Sing Investments & Finance.
Source : Business Times - 13 Sept 2007
Serangoon Gardens, Hougang and Punggol, has the highest number of borrowers with multiple property loans, at 3,263.
According to data from Credit Bureau Singapore (CBS), which analysed loans and looked at where borrowers live, investors are defined as people with two home loans and more. They live all over Singapore and are not confined to the rich districts of 10 and 11 or 15.
In fact District 9, which includes Orchard, Cairnhill and River Valley, has only 716 borrowers with at least two home loans. This is much lower than districts 16, 18, 20, 22 and 23, each of which has between 2,000 and 2,700 borrowers with more than one loan.
People with multiple home loans totalled 38,520 in June - a 64 per cent jump from 12 months earlier.
And District 19 took the top prize in this category - at 3,263. CBS general manager Mark Rowley said this could be due to the number of property launches in the area, although the data would include residents who have bought elsewhere.
While the rich residents of districts 15, 9 and 10, which include Katong, Orchard, Ardmore, Bukit Timah and Holland Road, figure prominently in terms of people owing banks more than $1 million on property loans, the data shows people who owe more than a million dollars on homes live all over the island. The number jumped a hefty 26 per cent to 12,884 in June from a year ago.
‘The value of properties has gone up,’ said Mr Rowley who does not consider the jump in big loans a matter of concern, given the low rate of delinquency among borrowers.
District 10, which is made up of Ardmore, Bukit Timah, Holland Road and Tanglin, has the most million-dollar borrowers at 2,033, up 30 per cent from a year ago.
Again District 19 didn’t do too badly. It has 618 such borrowers, a slight gain of 2 per cent from June 2006.
District 24, which comprises Lim Chu Kang and Tengah, has a grand total of 6 people who owe more than $1 million on their home loans, a 100 per cent jump from 12 months ago.
Interestingly, Kranji and Woodgrove in District 25 are the only places where residents who owe more than $1 million showed a drop - 117 versus 119 a year ago. They also seem the most conservative area, with only 20 people having multiple home loans.
And District 25 had a 16 per cent fall in new property loans. This translated to 1,666 people getting a loan, down from 1,984 a year ago.
It was one of five districts that showed a negative in new property loan approvals. The other four were districts 22, 24, 27 and 20.
CBS gets its property loan data from 10 financial institutions, eight banks and two finance companies.
They are ABN Amro Bank, CitiBank, DBS Bank, HSBC, Maybank, OCBC, Standard Chartered Bank, United Overseas Bank, Hong Leong Finance and Sing Investments & Finance.
Source : Business Times - 13 Sept 2007
A new accounting interpretation standard being proposed will require property developers to recognise revenue from their projects only on completion
Proposed change requires developers to book revenue only on completion.
A new accounting interpretation standard being proposed will require property developers to recognise revenue from their projects only on completion and not in phases.
Developers are said to be resisting the proposed change in accounting standard which, they say, will result in greater fluctuations in earnings reported by listed property companies.
The new standard is put forward by the Council on Corporate Disclosure and Governance (CCDG) which adopted it from the UK-based International Accounting Standards Board. The CCDG sets accounting standards in Singapore.
The Institute of Certified Public Accountants of Singapore vice-president Ernest Kan said: ‘This will cause earnings of property companies to be more erratic.’
‘Currently, if I started an 18-month project in January, and I complete two-thirds of the project this year, the 2007 financial statement looks nice because I can recognise two-thirds of the revenue and profit.
‘But under the new standard, there will be nothing to show for it in the 2007 financial statements, but next year when the project is completed there will be a sudden surge of revenue and profit which is recognised.’
The proposed change aims to standardise accounting practices among real estate developers for sales of units such as apartments before construction is complete.
The Real Estate Developers’ Association of Singapore said yesterday that it has given feedback to the CCDG on behalf of developers but declined further comments.
Hiap Hoe executive director Cindy Lim said: ‘Financial accounting should reflect the business and economic value generated by companies.’
‘If we were to recognise revenue only upon the completion of a property, it would not be a fair reflection of a company’s performance. Commercially speaking, revenue would have already been generated once the property is sold - even if it is only half completed.’
And the chief financial officer of a listed property developer said: ‘Most developers would prefer the status quo because we don’t want gyrations in earnings.
‘Besides, home buyers here make progressive payments based on completion, and risks are passed on to them accordingly, so developers should be allowed to recognise revenue.’
Dr Kan said the change could be implemented as soon as the financial year beginning on or after Jan 1 next year.
The CCDG has gathered feedback on the proposed change and will pass it on to the IASB, which is inviting comments until Oct 5.
‘It will be interesting to see if Singapore will adopt this. It generally wants to adopt international standards, and has only resisted doing so in very unique circumstances,’ Dr Kan said.
Source : Business Times - 13 Sept 2007
A new accounting interpretation standard being proposed will require property developers to recognise revenue from their projects only on completion and not in phases.
Developers are said to be resisting the proposed change in accounting standard which, they say, will result in greater fluctuations in earnings reported by listed property companies.
The new standard is put forward by the Council on Corporate Disclosure and Governance (CCDG) which adopted it from the UK-based International Accounting Standards Board. The CCDG sets accounting standards in Singapore.
The Institute of Certified Public Accountants of Singapore vice-president Ernest Kan said: ‘This will cause earnings of property companies to be more erratic.’
‘Currently, if I started an 18-month project in January, and I complete two-thirds of the project this year, the 2007 financial statement looks nice because I can recognise two-thirds of the revenue and profit.
‘But under the new standard, there will be nothing to show for it in the 2007 financial statements, but next year when the project is completed there will be a sudden surge of revenue and profit which is recognised.’
The proposed change aims to standardise accounting practices among real estate developers for sales of units such as apartments before construction is complete.
The Real Estate Developers’ Association of Singapore said yesterday that it has given feedback to the CCDG on behalf of developers but declined further comments.
Hiap Hoe executive director Cindy Lim said: ‘Financial accounting should reflect the business and economic value generated by companies.’
‘If we were to recognise revenue only upon the completion of a property, it would not be a fair reflection of a company’s performance. Commercially speaking, revenue would have already been generated once the property is sold - even if it is only half completed.’
And the chief financial officer of a listed property developer said: ‘Most developers would prefer the status quo because we don’t want gyrations in earnings.
‘Besides, home buyers here make progressive payments based on completion, and risks are passed on to them accordingly, so developers should be allowed to recognise revenue.’
Dr Kan said the change could be implemented as soon as the financial year beginning on or after Jan 1 next year.
The CCDG has gathered feedback on the proposed change and will pass it on to the IASB, which is inviting comments until Oct 5.
‘It will be interesting to see if Singapore will adopt this. It generally wants to adopt international standards, and has only resisted doing so in very unique circumstances,’ Dr Kan said.
Source : Business Times - 13 Sept 2007
AMID Singapore’s property boom, the number of investors with two or more property loans shot up by 64 per cent in June from a year earlier.
AMID Singapore’s property boom, the number of investors with two or more property loans shot up by 64 per cent in June from a year earlier.
And the number of borrowers owing more than $1 million in property loans was up nearly 26 per cent that month, according to new figures from Credit Bureau (Singapore). New property loans, too, rose 12 per cent from a year earlier to hit 50,514 in June.
All these inaugural figures from the bureau’s latest property market credit analysis show a surge in demand for credit amid Singapore’s property boom.
The trend is captured by the consumer credit bureau’s property loan index unveiled yesterday.
The bureau is an independent body that collates data on borrowing trends in Singapore.
The data is derived from loan data provided by 10 members including ABN Amro Bank, CitiBank, DBS Bank, OCBC Bank, Standard Chartered and United Overseas Bank. It includes loans for private and HDB properties, and other types of properties.
A total of 38,520 consumers were holding multiple property loans in June, the data showed.
The largest number of these consumers was concentrated in District 19 (Serangoon Gardens, Hougang and Punggol) with 3,263 borrowers. Other districts with a relatively large number include District 10 (Ardmore, Bukit Timah, Holland Road), District 15 (Katong, Joo Chiat, Amber Road) and District 23 (Hillview, Dairy Farm, Bukit Panjang).
In June, there were 12,884 consumers owing more than $1 million in property loans. Most of them were from District 10 (2,033) and District 15 (1,218).
Apart from the demand for new loans, the index tracks the approval rate of new loans and the rate of delinquency for such loans.
In June, just over 2 per cent of consumers holding on to about 181,000 loans were delinquent - meaning that they have loans that were more than 30 days overdue. This is healthier than the baseline average of 2.35 per cent.
The bureau’s general manager, Mr Mark Rowley, said it devised the index to provide an early insight into the developing trends in property loans as there is ‘a lot of heat’ in the property market.
‘Delinquency is low at this time, but it is a lead indicator. From a credit risk perspective, if delinquency goes up, that is when we take note of a trend change.’
The data comes amid much talk that banks are tightening the way they lend money to finance home purchases.
‘If banks tighten their lending policy, there would be a widening gap between credit demand and approvals,’ said Mr Rowley.
The demand for new loans, which peaked at 71.77 points on the index in May, slipped in July and last month. But it is still above the average.
Mr Rowley said the loan approval figures for July appear to be tapering off, as there is a time lag in the bureau getting the credit approval figures.
‘They would be around the baseline figure, which shows that the gap is still maintained.’
The bureau will post an updated monthly property loan index on its website. It can be accessed free of charge.
The bureau will also soon issue similar indexes for credit card loans, personal loans and motor vehicle loans.
Source : Straits Times - 13 Sept 2007
And the number of borrowers owing more than $1 million in property loans was up nearly 26 per cent that month, according to new figures from Credit Bureau (Singapore). New property loans, too, rose 12 per cent from a year earlier to hit 50,514 in June.
All these inaugural figures from the bureau’s latest property market credit analysis show a surge in demand for credit amid Singapore’s property boom.
The trend is captured by the consumer credit bureau’s property loan index unveiled yesterday.
The bureau is an independent body that collates data on borrowing trends in Singapore.
The data is derived from loan data provided by 10 members including ABN Amro Bank, CitiBank, DBS Bank, OCBC Bank, Standard Chartered and United Overseas Bank. It includes loans for private and HDB properties, and other types of properties.
A total of 38,520 consumers were holding multiple property loans in June, the data showed.
The largest number of these consumers was concentrated in District 19 (Serangoon Gardens, Hougang and Punggol) with 3,263 borrowers. Other districts with a relatively large number include District 10 (Ardmore, Bukit Timah, Holland Road), District 15 (Katong, Joo Chiat, Amber Road) and District 23 (Hillview, Dairy Farm, Bukit Panjang).
In June, there were 12,884 consumers owing more than $1 million in property loans. Most of them were from District 10 (2,033) and District 15 (1,218).
Apart from the demand for new loans, the index tracks the approval rate of new loans and the rate of delinquency for such loans.
In June, just over 2 per cent of consumers holding on to about 181,000 loans were delinquent - meaning that they have loans that were more than 30 days overdue. This is healthier than the baseline average of 2.35 per cent.
The bureau’s general manager, Mr Mark Rowley, said it devised the index to provide an early insight into the developing trends in property loans as there is ‘a lot of heat’ in the property market.
‘Delinquency is low at this time, but it is a lead indicator. From a credit risk perspective, if delinquency goes up, that is when we take note of a trend change.’
The data comes amid much talk that banks are tightening the way they lend money to finance home purchases.
‘If banks tighten their lending policy, there would be a widening gap between credit demand and approvals,’ said Mr Rowley.
The demand for new loans, which peaked at 71.77 points on the index in May, slipped in July and last month. But it is still above the average.
Mr Rowley said the loan approval figures for July appear to be tapering off, as there is a time lag in the bureau getting the credit approval figures.
‘They would be around the baseline figure, which shows that the gap is still maintained.’
The bureau will post an updated monthly property loan index on its website. It can be accessed free of charge.
The bureau will also soon issue similar indexes for credit card loans, personal loans and motor vehicle loans.
Source : Straits Times - 13 Sept 2007
A new property loan index has been launched by the Credit Bureau of Singapore.
A new property loan index has been launched by the Credit Bureau of Singapore.
It is aimed at, among others, to track loan delinquencies and demand for housing credit.
But the information will also make it easier for market watchers to read trends in the property sector.
The new property loan index will come in handy, providing additional useful information for property market-watchers.
It covers details such as credit delinquency, loans approval and credit demand and it already shows a drop in demand for housing credit over the past four months.
In May, the total number of loan applications was 17,300, or 72 per cent above the baseline.
That tapered down to just 38 percent, or 13,870, by end-August.
Mark Rowley, General Manager, Credit Bureau Singapore, says: “Obviously if we see demand tapering off, that’s likely to lead to property prices tapering off sometime in the future. So, I think that is it’s significance for consumers. Certainly, for the banks themselves, they’re looking at indicators such as delinquency to ensure that the risks isn’t escalating in the markets.”
The numbers also show that Singapore lenders have been keeping a tight rein on housing mortgages.
Bank loan approvals stood at a positive 22 percent above baseline, lagging behind credit demand at positive 59 percent.
For every loan that was approved, about two others were rejected.
The credit bureau also revealed figures for mortgagees with more than one property loan.
The number jumped from 23,541 last June to 38,520 this June.
There are also more people who owe over S$1 million each in housing loans.
Mark Rowley says: “I think it’s indicative of the market over the past year, quite a significant increase - 60 odd per cent increase in the number of consumers that have more than one property loan. So, yes I think it’s evident of the heat that we’re seeing in the market at the moment.”
The property loan index will be updated monthly.
Besides the personal loan index, the bureau will also be coming with indices for credit card, motor vehicle and personal loans so we have a better picture of the credits risks and health of Singaporeans.
Source : ChannelNewsAsia - 13 Sep 2007
It is aimed at, among others, to track loan delinquencies and demand for housing credit.
But the information will also make it easier for market watchers to read trends in the property sector.
The new property loan index will come in handy, providing additional useful information for property market-watchers.
It covers details such as credit delinquency, loans approval and credit demand and it already shows a drop in demand for housing credit over the past four months.
In May, the total number of loan applications was 17,300, or 72 per cent above the baseline.
That tapered down to just 38 percent, or 13,870, by end-August.
Mark Rowley, General Manager, Credit Bureau Singapore, says: “Obviously if we see demand tapering off, that’s likely to lead to property prices tapering off sometime in the future. So, I think that is it’s significance for consumers. Certainly, for the banks themselves, they’re looking at indicators such as delinquency to ensure that the risks isn’t escalating in the markets.”
The numbers also show that Singapore lenders have been keeping a tight rein on housing mortgages.
Bank loan approvals stood at a positive 22 percent above baseline, lagging behind credit demand at positive 59 percent.
For every loan that was approved, about two others were rejected.
The credit bureau also revealed figures for mortgagees with more than one property loan.
The number jumped from 23,541 last June to 38,520 this June.
There are also more people who owe over S$1 million each in housing loans.
Mark Rowley says: “I think it’s indicative of the market over the past year, quite a significant increase - 60 odd per cent increase in the number of consumers that have more than one property loan. So, yes I think it’s evident of the heat that we’re seeing in the market at the moment.”
The property loan index will be updated monthly.
Besides the personal loan index, the bureau will also be coming with indices for credit card, motor vehicle and personal loans so we have a better picture of the credits risks and health of Singaporeans.
Source : ChannelNewsAsia - 13 Sep 2007
Subscribe to:
Posts (Atom)
