Markets brace for news of big losses by banks-London

Markets brace for news of big losses by banks-London

Citigroup could write off US$24b, lay off 20,000 staff
(LONDON) Major American banks are expected to unveil substantial losses and secure more cash from abroad in what is shaping up to be a pivotal week for the global credit crisis.

Help wanted: Citigroup is reported to be putting the final touches to its second big fund-raising, seeking up to US$14 billion from Chinese, Kuwaiti and other investors
Citigroup could write off as much as US$24 billion and lay off 20,000 workers in a drive to cut costs and boost capital, CNBC said on its website in a report dated Sunday.

CNBC said the plans will be unveiled today when Citi, the largest US bank by assets, reports its fourth-quarter results.

Investment bank Merrill Lynch is just as troubled.

The Financial Times said yesterday that Merrill was seeking about US$4 billion in a second capital raising, and the Kuwait Investment Authority was expected to be a significant investor. A deal could be announced as soon as midweek, the newspaper said, citing people familiar with the matter.

The New York Times on Friday said that Merrill was expected to suffer US$15 billion in losses stemming from bad mortgage investments, almost twice the company’s original estimate, when it releases its results later this week.

FT also reported on Saturday that Citigroup was putting the final touches to its second big fund-raising, seeking up to US$14 billion from Chinese, Kuwaiti and other investors.

The US$200 billion Kuwait Investment Authority had no immediate comment yesterday on the reports that it may buy into the two damaged American banks.

Banks, wrestling with huge losses stemming from mortgages lent to people ill-equipped to repay them, have been seeking cash from sovereign wealth funds.

In December, Merrill secured as much as US$7.5 billion by selling a stake to Temasek Holdings and New York-based money manager Davis Selected Advisors.

The month before, Citi agreed to sell up to a 4.9 per cent stake to Abu Dhabi for the same amount.

As well as Merrill and Citi, other big names such as State Street and JP Morgan report results this week.

Wall Street analysts have turned increasingly wary over US financial results for the fourth quarter as well as the first two quarters of 2008, according to a weekly survey by Reuters Estimates yesterday.

The survey showed that analysts expect S&P 500 companies’ fourth-quarter earnings to fall 9.1 per cent from a year earlier.

That was gloomier than the 8.4 per cent decline forecast a week earlier, and the 11.5 per cent growth forecast in an Oct 1 survey.

The Federal Reserve was to auction US$30 billion later yesterday and the European Central Bank and Swiss National Bank will continue their unprecedented US dollar lending to banks as part of coordinated central bank efforts to help calm credit market tensions. The Bank of England will also weigh in.

Results of the latest ‘term auctions’, a plan agreed in December and one which has helped money market rates ease, will come today.

One to three-month Euribor interbank interest rates fell yesterday amid central banks’ moves to inject liquidity into markets.

Most analysts say the threat of further losses at major banks from investments tied to US sub-prime mortgages means the crisis is far from over as crucial lending between commercial banks remains patchy at best.

The Fed is forecast to use its other policy lever - interest rates - before the month is out. It is seen slashing rates by a half-point at its two-day meeting ending on Jan 30 after Fed chairman Ben Bernanke gave a downbeat assessment of the US economy last week and said the central bank was ready to take ’substantive additional action’.

Swiss banking giant UBS appealed to shareholders last week to back a capital injection by Singapore’s Temasek and a Middle East investor and warned it still could not predict how the sub-prime crisis would play out.

And shares in Northern Rock fell as much as 7 per cent early yesterday on fresh concerns that the bank is facing imminent nationalisation. Northern Rock is Britain’s biggest casualty of the credit crunch and has borrowed around £pounds;26 billion (S$72.8 billion) from the Bank of England since it requested emergency funds in September. — Reuters

Source : Business Times - 15 Jan 2008

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Singapore Space surge may slow Orchard Rd rent rises

Singapore Space surge may slow Orchard Rd rent rises

Almost 2m sq ft to be added between now and 2011

By Fiona Chan, Property Reporter
AN IMPENDING surge of new shop space in Orchard Road may put the brakes on the growth of retail rents along the shopping stretch.
Almost two million sq ft of new retail gross floor area is set to open in the area between now and 2011, said property firm Knight Frank.

That is about one-third the current retail space on Orchard Road and double the size of Ngee Ann City.

Most of it will come from new malls, with two - Ion Orchard and Orchard Central - due to be completed this year. They are the first new malls to open in Orchard Road in a decade.

Some consultants say the huge increase in retail space in the next few years may make it hard for mall landlords along the prime shopping belt to keep raising rents at the current pace.

But they add that more outlets may not lead to oversupply as long as shopper demand and tourist numbers keep growing.

Knight Frank’s deputy managing director Danny Yeo said the new malls could achieve benchmark rentals, but some older properties may feel the heat.

Monthly rents along Orchard Road grew at a slower 2.6 per cent to hit $45.50 per sq ft at the end of last year, said Knight Frank.

It expects islandwide prime retail rentals to rise a smaller 10 per cent to 15 per cent for this year, down from last year’s 22.1 per cent.

This is mainly due to the influx of new space. This year alone, 930,000 sq ft of new shops could come up in Orchard and Scotts Roads, said consultancy DTZ Debenham Tie Leung. Besides the new malls, the additional space includes extensions to existing buildings.

The latest to jump on the bandwagon are Paragon Shopping Centre, as well as Specialists’ Shopping Centre and the adjacent Hotel Phoenix. They revealed upgrading plans last week.

Experts lauded these plans. ‘This is a chance for older malls to revamp, or introduce new retailers, or change their concepts,’ said Jones Lang LaSalle retail director Daisy Loo.

Wisma Atria, for one, added several new stores last year. Some are from first-time retailers in Singapore, such as Australia’s Cotton On, French footwear label Schu and Brazilian fashion store Beijaflor.

Mall owners say that they welcome the new shopping centres, and do not view them as competition.

‘Our belief is that the number of shoppers to Orchard Road will increase significantly with the new supply,’ said Ms Amy Lim, general manager of pro- perty management at Macquarie Pacific Star.

CapitaLand Retail, which is building Ion Orchard, also sees minimal conflict between the new and old malls.

Chief executive Pua Seck Guan said most of the retailers that Ion Orchard is drawing in are not moving from existing Orchard Road locations. Sixty per cent will be new to Singapore, trying new concepts or opening a flagship store.
Source : Straits Times - 15 Jan 2008

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New access for Singapore Orchard MRT station

New access for Singapore Orchard MRT station

COMMUTERS who took the last train from Orchard MRT station last night were the last to enter or exit from its familiar glass dome and doors.
From today, commuters at the Orchard MRT station will have to use a different access. The current access has been moved a few metres down Orchard Road, bringing it closer to the Paterson Road junction.

Apart from linking to Wisma Atria, Tang’s and Shaw, this new access will connect to the new Ion Orchard when it opens early next year.

About 100,000 commuters had been using the old access daily since it opened in 1987.

On the link to Ion Orchard, Ms Soon Su Lin, the mall’s chief executive officer, said: ‘Shoppers can expect a seamless and convenient access to the mall by train, car and public road transport and direct connectivity to adjacent and nearby buildings.’

Meanwhile, there will be MRT and Ion Orchard staff on hand to direct commuter traffic from the new access throughout the day for one week.

Early birds will be handed coffee and fresh juice too.

Wisma Atria has also engaged a ‘traffic cop’ to direct people towards the mall. A 117m sheltered passageway will also keep commuters dry between the MRT access and Wisma Atria.

Ms Soon said there are other changes coming up too.

Besides the new Orchard MRT station access which features LED advertisements on the walls, there will also be a new underground passage connecting Orchard MRT station directly to Wheelock Place.

By next year, there should be four MRT station access points, up from the existing three.

The access that leads to Orchard Boulevard will also be redesigned and opened by the middle of this year.

And when Ion Orchard opens, the tunnel leading to Wisma Atria will reopen as well.
LIM WEI CHEAN

Source : Straits Times - 15 Jan 2008

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Few make the switch to Singapore public transport

Few make the switch to Singapore public transport

FOR financial consultant Daryl Ng, 31, the decision to leave his car at home and take the bus to work was easy.
When he started a new job in Raffles Place three months ago, he was facing a $200-a-week bill for petrol, ERP charges and parking.

So, he decided to take a direct bus from his home in East Coast Road. The fare: $15 to $20 a week.

His electronic road pricing (ERP) costs alone would have come up to about $27 a week, including the new evening charge on the eastbound East Coast Parkway.

While the commute takes twice as long on public transport, he says sacrificing a little early-morning shut-eye is a small price to pay for huge savings.

‘I used to work near Lornie Road where I didn’t pay any ERP charges,’ he said.

‘But when I started my new job in Raffles Place three months ago, it was just a logical decision.’

Mr Ng is the type of commuter the Government has been yearning for. In recent years, it has pushed for more people to opt for public transport.

Yet, a recent Singapore Press Holdings survey of 295 motorists showed others may not be as quick to switch as Mr Ng.

Only six among those surveyed - about two per cent - said they had switched to the MRT or bus.

Of those who switched, three took less than 30 minutes to get to work, another two took 30 to 45 minutes and one person took 45 minutes to an hour.

The survey did not capture whether their commutes were longer or shorter after they switched to public transport.
Source : Straits Times - 15 Jan 2008

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$2.3m boost for cellphone software creators

$2.3m boost for cellphone software creators

SingTel scheme is backed by seven vendors and aims to produce more local applications

By Alfred Siew, Technology Correspondent

CREATORS of cellphone software - strong on ideas but limited in funds - can now tap into a $2.3 million scheme announced by SingTel yesterday.
If the products of these typically small outfits are good enough, their oyster may well be the regional and even world market.

The project, called SingTel Partner Programme, is also backed by seven industry vendors such as Nokia and Microsoft, which will provide the software tools and phones.

Developers will get access to the latest software tools, mobile phones and even preferential cellphone charges as part of the plan to grow more homegrown applications.

If deemed good enough by SingTel, their software may also be marketed to the region with the help of the telco.

Altogether, SingTel and its partner telcos in the region have 158 million mobile subscriptions, dwarfing the 5.4 million subscriptions here.

Mr Allen Lew, SingTel’s chief executive officer for Singapore, said it expects to sign up more than 40 developers and roll out at least 10 applications in the next two years.

Part of the funding will also come from the Infocomm Development Authority (IDA).

Speaking at the launch yesterday, IDA chief executive officer Ronnie Tay said the authorities were open to helping other operators set up similar schemes.

Such projects are common with cellphone operators the world over as they seek the next big game or application that companies and consumers will use on their small screens.

For the SingTel scheme, developers are free to market their software with other operators. Applications are open online from April 1.

Some developers saw the scheme as a nice boost for small firms.

Mr Benson Loo, who heads mobile developer EyePower Games, said: ‘The biggest headache has been getting different handsets for testing the software on, so if they can provide that, then developers will find the scheme attractive.’

Source : Straits Times - 15 Jan 2008

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Slew of pacts signals warmer China, India ties

Slew of pacts signals warmer China, India ties

Raising bilateral trade, holding joint military exercise among new initiatives

By Sim Chi Yin, China Correspondent
‘PARTNERS, NOT RIVALS’: Dr Singh and Mr Wen after inspecting the honour guard at Beijing’s Great Hall of the People. They agreed that Asia had enough room for both China and India to grow. — PHOTO: REUTERS

BEIJING - CHINA and India, already the world’s fastest growing economies, could become an even bigger global force after putting aside their differences and ushering in a new era of cooperation yesterday.
The Asian giants acknowledged it was time to move on from past disputes as they inked a slew of pacts, and Indian Prime Minister Manmohan Singh declared that expanding ties with China is a priority for New Delhi.

A meeting between Chinese Premier Wen Jiabao and the visiting Indian leader saw the two men reach agreement on issues such as military cooperation and a bid to raise bilateral trade.

The two premiers inked a six-page document, saying both sides were ‘convinced that it is time to look to the future in building a relationship of friendship and trust’.

They also committed the two emerging powers to another joint military exercise this year, following their first round last month, and agreed to look into a possible regional trade agreement, said Dr Singh, the first Indian premier to visit China in five years.

Playing down their countries’ lingering mutual mistrust, Mr Wen told a joint press conference that, as Dr Singh had rightly noted, Asia had enough room for both China and India to grow at the same time.

‘We are partners, not rivals…we should not ask who will outdo whom,’ he said.

Agreeing, Dr Singh said his government placed priority on building a ‘cooperative and beneficial partnership’ with China.

Terming their talks at the Great Hall of the People ‘constructive and forward-looking’, Dr Singh told reporters: ‘This gives me cause for optimism for the future of our ties.’

Frozen for decades after a border war in 1962, ties between the neighbours have thawed since the 1990s, but remained testy over their unresolved border dispute and more recent mutual strategic suspicion.

India is wary of China’s long-time friendship with Pakistan, and Beijing is worried by New Delhi’s recent cosying up to the United States.

These deep-seated doubts will continue to plague bilateral ties, but the two sides’ new warmth may make it harder for other regional powers to play one against the other.

Their booming trade is what is pushing Beijing and New Delhi together.

Bilateral trade volume has jumped 33 times since 1995, hitting US$38.7 billion (S$55.5 billion) last year, Vice-Premier Hui Liangyu told Dr Singh and an audience of 600 Chinese and Indian business people at a China-India trade and investment summit yesterday morning.

China has become India’s second largest trade partner, while India is China’s 10th largest.

With bilateral trade having surpassed expectations, the two sides raised the bar yesterday, vowing to hit US$60 billion by 2010.

But Dr Singh also urged Beijing to make concessions to close a growing trade deficit in China’s favour, which has shot up from US$4 billion to almost US$9 billion in the past two years.

Both sides also agreed to cooperate on science and technology, a medical mission and an exchange of top leaders’ visits.

However, the two premiers reported no real progress on their border dispute, only renewing pledges to find a solution.

Dr Singh will meet President Hu Jintao and parliament chief Wu Bangguo today. He will also give a speech at a government think-tank before leaving.
Source : Straits Times - 15 Jan 2008

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Slowing Europe may be bigger concern for Singapore, region

Slowing Europe may be bigger concern for Singapore, region

By Bryan Lee
FOR Singapore and other Asian economies that are heavily dependent on exports, a decelerating Europe may be a cause for greater concern than a slowdown in the United States.
While the US economy will slow down in the first half of the year, it is unlikely to sink into a recession, said Deutsche Bank chief Asia economist Michael Spencer.

‘We are more concerned about growth slowing down in Europe than in the US, partly because the ECB has been persisting with a tight monetary policy,’ he said, referring to the European Central Bank (ECB).

‘Europe, we think, is under more distress now than the US.’

Asia’s red-hot economies are expected to slow this year as growing concerns of a US recession dominate the horizon.

Financial turmoil and a flagging housing market are expected to plague the world’s largest economy, which has also been the key growth driver of Asian exports.

Dr Spencer said that while US growth will moderate in the first half of the year, the economy should find its feet in the later part of the year.

In fact, the bank is predicting US growth to hit 2.5 per cent this year, up from last year’s 2.3 per cent.

He said that while the housing recession will deepen and consumers will finally trim their spending, the slowdown will not be that serious since wage growth has been sustained and interest rates are still relatively low.

‘We’ve never had a recession induced by housing alone,’ he said, noting that previous US recessions had been accompanied by oil price spikes, runaway inflation and tight monetary policy.

As for the still-brewing sub- prime mortgage debacle, US banks are sufficiently well-capitalised to stomach the huge write-downs, unlike Asian banks during the 1997 crisis.

It is a less reassuring story in Europe, where the economy is weaker than in the US, said Dr Spencer.

‘Industrial production and retail sales both probably contracted in the fourth quarter of last year when the US grew 2 per cent.’

And with inflation running higher in Europe than in the US, the ECB will be less keen to cut rates until actual economic contractions are recorded, he said.
——————————————————————————–
LARGER ISSUE

‘We are more concerned about growth slowing down in Europe than in the US, partly because the European Central Bank has been persisting with a tight monetary policy.’
DR SPENCER, Deutsche Bank’s chief Asia economist
Source : Straits Times - 15 Jan 2008

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Goldman cuts Asian growth forecasts on fears of US recession

Goldman cuts Asian growth forecasts on fears of US recession

Bank is predicting a slowdown in America that may hit US-bound shipments from Asia
RISING CONCERNS: South Korea and Taiwan warn of easing demand for electronic goods such as computers, and Goldman expects shipments to the US - Asia’s biggest export nation - to fall. — PHOTO: AFP

GOLDMAN Sachs reduced its growth forecasts for Asia on concerns that an expected recession in the United States will erode demand for the region’s exports.
Asia, excluding Japan, will expand by 8.3 per cent this year, down from an earlier estimate of 8.6 per cent, Hong Kong-based economist Michael Buchanan said in a report yesterday. The investment bank last week cut its forecasts for the US and Japan.

Goldman, which last year had said Asian growth was decoupling from the US, is now forecasting a recession in the world’s largest economy that may hit shipments to the region’s biggest export destination.

Singapore’s electronic exports have dropped each month since last February, mired in the worst slump in five years.

South Korea and Taiwan have also warned of easing demand for semiconductors, mobile phones and computers, which signals weaker growth for this year.

‘There could be a ‘tipping point’ at which the US slowdown has a more significant impact on Asia than before,’ Mr Buchanan wrote.

‘The further deterioration in the US economy comes as Japan is also teetering on the edge of recession.’

Morgan Stanley and Merrill Lynch are also forecasting that the US will slip into a recession this year for the first time since 2001, amid a fallout from the US sub-prime mortgage crisis.

Goldman is predicting a 50 per cent chance of a recession in Japan, the world’s second-largest economy. It lowered its growth forecasts for all 10 Asian economies that it covered in the report yesterday, including for China and India.

Asia’s growth next year will be 8.5 per cent, compared with a prior prediction of 8.6 per cent, Goldman said.

‘We’ll probably see suppressed US import demand because of an anticipated slowdown in consumer spending,’ said Mr Thomas Lam, an economist at United Overseas Bank.

‘The contribution from export-led growth for Asia from the US will be impacted. Larger Asian economies will not be spared.’

East Asia’s exports are forecast to climb by 15.2 per cent this year, after jumping by 17.8 per cent last year, the World Bank said in its Global Economic Prospects 2008 report released last week.

The region is almost twice as reliant on exports as the rest of the world, with 60 per cent of shipments abroad ultimately destined for the US, Europe and Japan.

Still, the US may need to go through a larger-than-expected slowdown before Asia’s growth will reach a ‘tipping point’, Mr Buchanan said.

‘There may still be a growth rate at which Asia caves in and consumption and capital expenditure slow more appreciably, but it may now take more than just a very mild technical US recession,’ he said.

China will now expand 10 per cent this year, down from an earlier forecast of 10.3 per cent, Goldman predicted. The US buys about 19 per cent of China’s exports.

In Singapore, where consumer price gains are at the highest in a quarter of a century, Goldman expects inflation to outweigh growth concerns.

BLOOMBERG NEWS

Source : Straits Times - 15 Jan 2008

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Inflation in Singapore may hit 6.5% this month

Inflation in Singapore may hit 6.5% this month

By Bryan Lee
STEEP RISES: Higher food and housing costs are likely to cause a spike in price levels this month, while low interest rates may stimulate property prices later in the year, says Citigroup. — ST FILE PHOTO

CONSUMER prices in Singapore may surge a staggering 6.5 per cent this month, bringing full- year average inflation to an equally eye-popping 5 per cent, according to Citigroup.
Higher housing and food costs are likely to cause a spike in price levels this month, while low interest rates may stimulate property prices later in the year, said the Citigroup economist Kit Wei Zheng yesterday.

Mr Kit said his higher estimate stems from ‘pent-up price pressure from the strong growth of the past two years’.

Citigroup’s new forecast comes days after United Overseas Bank predicted that inflation in Singapore would exceed 6 per cent this quarter.

Economists have been scrambling to keep their forecasts up with the relentlessly rising pace of inflation in recent months.

Inflation hit a 16-year high of 3.6 per cent last October before accelerating to 4.2 per cent in November, the fastest rate of price increase since 1982.

The Government has since raised its forecast, saying prices may jump as much as 5 per cent in the early part of this year, with full-year inflation coming in between 3.5 per cent and 4.5 per cent.

But those estimates may still be too conservative.

‘We are upgrading our inflation forecast for this year to 5 per cent from 3.8 per cent previously,’ said Mr Kit.

He expects inflation to stay around 5 per cent to 6 per cent in the first six months of the year before moderating to about

4 per cent in the rest of the year.

Accommodation costs will jump up this month, as HDB annual values have recently been revised for the first time since 2004.

Food prices may also spike, as wholesalers renegotiate prices held down by contracts that expire this month, said Mr Kit.

Other economists are sitting tight for now, preferring to wait for more actual figures before changing their predictions for Singapore’s inflation rate.

A slowing world economy may put the brakes on oil prices and ease inflationary pressures, they said.
Source : Straits Times - 15 Jan 2008

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Singapore Atrium @ Orchard up for sale for at least $1b

Singapore Atrium @ Orchard up for sale for at least $1b

A BUILDING which could become Orchard Road’s most expensive office property has been put up for sale for at least $1 billion.
The Atrium @ Orchard, above the Dhoby Ghaut MRT station, is being sold by the Singapore Land Authority.

If it attracts an expected price of at least $2,700 per sq ft (psf) of net lettable area, it will be the most expensive office property in Orchard Road, said CB Richard Ellis (CBRE), which is handling the sale.

Boasting two office towers of seven and 10 storeys, and ground floor retail space, the property has a net floor area of 34,620 sq m. It will be sold with a fresh 99-year lease. Anchor tenants at the Grade A office building include Temasek Holdings, Barclays Capital and MTV Asia.

The expected yield on the property, which has a mix of new and old leases, is about 2.5 per cent. Foreign funds and even Singapore real estate investment trusts are expected to show interest, said CBRE’s executive director for investment properties, Mr Jeremy Lake. Upon rent renewal, the property’s yield could go up to 4.5 per cent, he said.

‘The absence of new office supply coming up in Orchard Road will fuel rental growth,’ said Mr Lake. Just one new building VisionCrest is slated to be built in the nearby Oxley area.

Current office rents at The Atrium @ Orchard are around $14 to $16 psf while the retail space is going for about $17 to $20 psf, said Mr Lake.

The sale of The Atrium @ Orchard is by an expression of interest exercise that will close on Feb 22. Its expected price is similar to One George Street, an office building on the fringe of Raffles Place.

The current record for the sale of office space is$2,780 psf of net lettable area - set in August by a Goldman Sachs-linked fund when it bought Chevron House in Raffles Place.
JOYCE TEO

——————————————————————————–

If Atrium @ Orchard attracts an expected price of at least $2,700 psf of net lettable area, it will be the most expensive office property in Orchard Road, says CBRE.
Source : Straits Times - 15 Jan 2008

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