Importer of Dutch Lady brand milk destroying all milk made in China

Importer of Dutch Lady brand milk destroying all milk made in China

By Liang Kaixin,

SINGAPORE : The importer of Dutch Lady brand milk products - Friesland Foods Singapore - has recalled all its flavours of sterilised milk made in China.

This comes after Singapore’s Agri-Food and Veterinary Authority announced on Friday that its tests found traces of melamine in samples of Dutch Lady strawberry flavoured milk, and a Yili-brand yogurt bar.

Friesland Foods said it will be destroying all milk made in China, despite the fact that only the strawberry flavoured bottles have shown traces of melamine.

It added that only the sterilised bottled milk is made in China, whereas its other products come from Malaysia.

It said Dutch Lady products not produced in China are completely safe for consumption.

It is sending all China-made products for lab tests, and the results will be known on Monday, and added all China-made products should be off the shelves by Saturday.

Additionally, consumers of Dutch Lady products can call 6419-8466 to get further information. Consumers can call the hotline starting from September 22 to 26, from 9am till 5pm daily.

After it was announced on Friday that Singapore has suspended the sale and import of all Chinese dairy products, a supermarket chain here received over 100 requests for refunds on Saturday.

The chain carried more than 10 milk products made in China, and staff were busy removing them from the shelves.

Melamine is a toxic industrial chemical that caused kidney stones in many of the Chinese babies who drank formula laced with it. It has been blamed for four infant deaths and illnesses in over 6,000 babies. - CNA/ms

Source : Channel NewsAsia - 21 Sept 2008

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Before you surrender your AIA policy

Before you surrender your AIA policy…

Thinking of cashing out your plan despite official reassurances? Here’s a checklist to consider first

By Lorna Tan, Finance Correspondent

Financial drawbacks: Early policy termination usually means a huge surrender penalty. As insurance plans, particularly whole life and endowments, are structured as long-term contracts, early surrender means you are unlikely to break even and this may mean losing a significant portion of your premiums. — PHOTO: ISTOCKPHOTO

In the past week, thousands of anxious AIA policyholders had rushed to the offices of insurer AIA Singapore to surrender their plans.
Many were stricken with fear when they heard about the possible collapse of AIA’s parent firm American International Group (AIG) and were concerned that their hard-earned savings, which are embedded in their policies in the form of cash values, would go up in smoke.

Despite an announcement last Tuesday morning that AIG was being rescued by the United States government, many still wanted to cash out their policies. The situation improved only towards the end of the week.

The rush led to calls from financial experts, the Monetary Authority of Singapore (MAS) and the Life Insurance Association urging AIA customers not to act rashly.

The main reasons they cited were that customers who surrender their policies prematurely may suffer losses and lose insurance coverage when they may still need it.

If you are still thinking of surrendering your AIA policies, here is a checklist of factors for you to consider. If you have just surrendered your policy in the past one week, AIA is willing to reinstate your whole life and endowment policies with no penalties.

Do you need the insurance coverage?

If you still need the coverage, it is not prudent to terminate the policy hastily. If you so decide, you should at least obtain a new policy first before surrendering.

Are you in good health?

If you still want coverage, you may not be able to buy a replacement policy elsewhere, particularly if your health has deteriorated since the time you bought your original plan. In some cases, you may be loaded with additional premiums or even be excluded for health conditions, such as diabetes or hypertension, that could have developed since you last bought your AIA plan, said financial adviser Providend’s head of risk management and special projects, Mr Eddy Cheong.

Mr Patrick Lim, associate director of financial advisory firm PromiseLand, highlighted that if a new 30 critical illness benefit plan is taken up, there is a waiting period of 90 days for up to four critical illnesses - namely major cancers, heart attack, coronary artery bypass surgery and angioplasty. No claim for any of these will be paid during this period.

Have you checked the cash value of your policy?

By finding out the cash value, you will be able to know if you have broken even - that is, whether the cash AIA returns to you upon termination will be more than the premiums you have paid up so far.

Early policy termination usually means a huge surrender penalty. As insurance plans, particularly whole life and endowment, are structured as long-term contracts, early surrender means you are unlikely to break even and this may mean losing a significant portion of your premiums.

Paying higher premiums for your next policy

Because you have grown older since the time you bought the AIA policy that you are planning to terminate, you will have to pay a higher premium now for your next plan. This is because premiums go up with the entry age. This higher premium will apply for the life of the policy, said former president of the Singapore Insurance Institute Stanley Jeremiah.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, worked out that a 35-year-old who bought a whole life plan in 1995 with a sum assured of $100,000 would be paying annual premiums of about $2,200. If he terminates the policy and buys a new plan today with the same sum assured, his annual premium would be a higher $3,800.

Losing your entitlement to terminal bonuses

A terminal bonus is paid out upon death or when the policy matures. Many policies were sold on the basis of lower regular bonuses and higher terminal bonuses, so by surrendering prematurely you would be essentially forfeiting your terminal bonus, said Mr Jeremiah.

Should you terminate your term policies or medical policies now?

Mr Cheong and Mr Leong said that since such policies do not have any cash value, terminating them during the current crisis does not make sense. On the contrary, you lose the protection that you would probably need.

Should you terminate your investment-linked policies (ILPs)?

If you have an ILP, besides checking if you are subject to early surrender penalties, your decision to surrender must be based on your investment amount against the current worth of the policy.

With the current market conditions, cashing out at a loss means you have no chance of recovering your investment, whereas if you stay invested there is a chance that you may do so, said Mr Jeremiah.

In addition, Mr Leong pointed out that ILPs are managed by various fund managers and held in trust by custodians.

‘They are not the assets of the insurance company. So, there is no connection with any financial risks of the financial institution,’ he said.

Alpha Financial Advisers’ chief executive Arthur Lim suggested that ILP customers check with the insurer if the funds they have invested in have any exposure to Lehman Brothers or AIG or any of the financial institutions recently in the spotlight, and if so, whether the exposure is significant.

Is AIA really going bust?

It seems the risk is much lower now with the bailout of AIG and the positive statements from MAS and AIA on the sufficiency of assets to meet policyholders’ obligations, said Mr Cheong.

Taking a loan on your policy

This was an option for several AIA policyholders last week.

They wanted to take out most of the cash value of their policies, but continue to enjoy the coverage by keeping their policies in force.

A loan can be taken on your policy, up to 90 per cent of its cash value. Mr Jeremiah gave this example: I may have a $100,000 critical illness policy with a cash value of $5,000. If I take a loan of $4,000, I have extracted most of the cash value but the policy remains in force for the sum assured of $100,000. If I get a critical illness, AIA is still liable for the $100,000 less the $4,000 loan I took, that is $96,000.

Depending on when the policies were effected, the loan rate of interest is 6 or 8 per cent. The interest may be higher for foreign currency policies, said Mr Leong.

Upon maturity, the loan interest accrued will be offset against the maturity proceeds. However, be very clear that future premiums must continue to be paid, otherwise the policy lapses.

Source : Straits Times - 21 Sept 2008

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Fed Treasury to buy more debts - New York

Fed Treasury to buy more debts - New York

New York - The United States Federal Reserve and Treasury have initiated a series of emergency measures to prop up the mortgage and money markets ahead of congressional action on a broader lifeline for the US financial system.
The Treasury plans to double its purchases of mortgage-backed debts to US$10 billion (S$14.3 billion) and use a US$50 billion fund to insure against losses on money-market funds.

For its part, the Fed plans to extend emergency loans to banks to buy asset-backed commercial papers from money-market funds, and to buy short-term debts from Fannie Mae, Freddie Mac and other agencies.

Friday’s announcements were aimed at combating a record exodus of investors from money-market funds.

The actions came before an expected congressional passage of a new entity that would remove illiquid mortgage securities from the balance sheets of companies.

‘This is a situation where they could not be reactive because a run on money markets would have material consequences for investor sentiment,’ said Mr Tony Crescenzi, the chief bond market strategist at Miller, Tabak & Co.

The Treasury said it would use funds from the government’s Exchange Stabilisation Fund to insure for a year holdings of publicly offered money-market funds that paid a fee to participate in the programme.

Retail and institutional funds are eligible.

Treasury Secretary Henry Paulson said Fannie Mae and Freddie Mac, the mortgage-finance firms that the government took over recently, would increase their purchases of mortgage-backed securities, and the Treasury would ‘expand’ its own mortgage-buying programme.

Spokesman Brookly McLaughlin said the Treasury would buy US$10 billion of mortgage securities for the first month of the programme. Any purchases after that remained to be determined, she said.

The Fed, meanwhile, would extend loans to banks to purchase ‘high quality’ asset-backed commercial papers from money-market funds.

It would also buy short-term discount notes issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks from Wall Street dealers. Neither programme has a set limit.

The Fed purchased US$8 billion of short-term federal agency debts under the new programme on Friday.

The loans, with terms of up to 270 days, would be at the discount rate, the Fed said. The rate was 2.25 per cent.

The New York Fed also announced that it would conduct the purchases of debt through ‘competitive auctions’ over the ‘next several weeks’.

Bloomberg

Source : Straits Times - 21 Sept 2008

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5 money gurus give their views on the carnage & what’s next

5 money gurus give their views on the carnage & what’s next

OEI HONG LEONG
Bailout offers just a short-term reprieve

Mr Oei Hong Leong, investor, businessman and tycoon. He made the news last week when he bought one million American International Group (AIG) shares when their values plunged. Their prices later shot up. He donated the shares to the Lee Kuan Yew School of Public Policy.

‘I think that this is the ‘end of the beginning’. I don’t believe that it is the ‘beginning of the end’. Autumn is turning into winter.

Although the government bailout is having a positive impact on the market now, I fear that this may be just a short-term reprieve.

The ban on short-selling, while preventing prices from falling now, may take away liquidity from the market. This may cause problems for hedge funds needing to de-leverage. Ultimately, we could still see downward pressure on prices.

We have seen the problems of the United States sub-prime mortgage market. The problem has now spread to the entire US mortgage market.

As more and more people default on their mortgages, this will push more and more banks into bankruptcy.

There are many banks already queueing up to file for Chapter 11 bankruptcy protection. These are small outfits which have given loans, mainly secured on properties such as factories or commercial businesses. Now the prices of these properties have fallen.

The next problem will be the credit card market. Many Americans have 10 credit cards or more. They won’t be able to pay off their credit card debts.

If the jobless rate hits 8 per cent or 10 per cent, then that will really be a disaster. As I have said before, it will be a tsunami.

The Federal Reserve in its latest policy statement on Tuesday indicated that inflation will moderate later this year.

In fact, what we should be more worried about is deflation. We could see something similar to Japan, which at the end of the 1980s faced a slump lasting a decade or more.’

Lee Su Shyan

CHAN CHONG BENG
One silver lining: Job-hopping may ease

Mr Chan Chong Beng, chairman of Goodrich Global, an interior furnishings company

‘Who would have expected the big banks to fall? AIG is so big, it was supposed to be invincible. On the other hand, if there are weaknesses in the system, there is some good in having consolidation.

I think Singapore banks are strong. But what is happening in the United States will certainly hit us. The crisis has definitely shaken the confidence of the average Singaporean here.

For small and medium-sized enterprises, expansion plans or new projects will have to be put on hold.

For construction and related industries, with projects already lined up and with the Formula One and integrated resort activities going on, we should still continue to have growth - perhaps not as weak as it is expected to be for other sectors, but this may come back to hit us two years down the road.

I expect consumer confidence to weaken so sales will definitely drop. My friend, who is a coffee shop owner, has already seen a drop in sales. Firms must look for other ways to cushion the impact of this.

I don’t think we will see many firms closing. Those that are not in the right trade will close, crisis or no crisis.

In fact, this situation may actually be good for us by providing some stability to the job market and helping to cut down on expenses.

In the last six months, with the job market booming, we were having so many problems hiring workers. People were moving from job to job for higher salaries. Now they will be more cautious and think longer about job security.’

Robin Chan

——————————————————————————–

CHUA HAK BIN
Recession on the cards for Singapore

Dr Chua Hak Bin, director of Singapore research, Citigroup

‘We’ve seen the fallout from the credit crunch in quite dramatic fashion and it is by no means over.

The crisis really started to hit home after it took down the larger brokers. With markets questioning whether the broker-dealer model is essentially broken, it could be self-fulfilling. A confidence crisis could lead to another shock and that itself could make the model slowly unworkable.

The effects of the crisis are beginning to filter down to the man in the street here. With the sell-down of the market, there is a bit of a contagion effect as everyone is asking, ‘Who’s next?’

Clearly a fear factor is going into high gear because if giants like Freddie Mac, Fannie Mae and Lehman Brothers can go broke, and add to that AIG, the biggest insurance company in the world, then it looks like no name can be ruled out altogether.

The outlook for Singapore is already deteriorating, and we think a recession is on the cards. The question is whether the average person will have the confidence to invest in long-term commitments given the uncertainty in the system.

There is a very real danger of a breakdown in trust in the financial system. I hope it doesn’t come to that and it will be important for the Monetary Authority of Singapore (MAS) to do something about it.

A culmination of the global credit crunch and the hike in commodity prices in recent months had made policy decisions a lot harder. But with the oil shock dissipating somewhat, policymakers now have more response options.

I think the Government and the MAS will have to respond as in previous recessions. Part of the adjustment may come next month when the MAS will probably loosen exchange rate policy and shift to a neutral bias, or even re-centre the exchange rate band. The Government may also have to come up with a Budget that will ease the pressure on the lower-income segment.

My guess is that this contraction will be over by the early part of next year. Looking at previous downturns and bear market cycles, the average bear market lasted about 21 weeks. We are currently in week 49 of the sub-prime crisis. So it is possible to imagine this bear in the equity markets will end by the second quarter of next year.’

Robin Chan

——————————————————————————–

TAN KIN LIAN
Consumers need protection

Mr Tan Kin Lian, former chief executive of NTUC Income. He is now a consultant and pens a blog (at tankinlian.blogspot.com) to educate the public about financial matters

‘I was shocked to learn about the high risks taken by the investment banks. It appears that they have short-term loans that are many times more than the shareholders’ funds.

These short-term loans have to be rolled over every few months. What happened to the risk management practices of these financial institutions?

It is also highly risky for AIG to take on so much of credit default swaps, especially as the risk of failure is likely to hit many insured credit lines at the same time.

There was an unsound accumulation of risks that could cause catastrophic losses, which is what has now happened.

Regulators have asked firms to strengthen their risk-management practices in recent years. There has been a lot of lip service, but the real issues have still not been addressed.

It is time for the regulators to rethink their failed approach of leaving issues to be sorted out by the market.

In the meantime, the markets will continue to be highly volatile over the next few months.

Many investors will lose confidence in the financial markets and the financial institutions and it will take several years for the confidence to be regained.

Singapore will have to suffer retail investors’ loss of confidence in the financial markets and the integrity of the financial institutions.

Many investors have been disappointed at the low interest rate on bank deposits for many years. Now, they have to suffer large capital losses from their investments, including structured products that were marketed to them as being safe alternatives to bank deposits.

This loss of confidence will have a negative impact on the economy for a few years.

In terms of lessons learnt, I think the financial markets need to be better regulated.

There has to be stronger protection of consumers. Regulators should disallow unsuitable products from being marketed to the retail investors.

Regulators also need to take stronger action against financial institutions that fail in their duty to provide good advice to their customers.’

Fiona Chan

——————————————————————————–

SELENA LING
Crisis of confidence poses huge challenge

Ms Selena Ling, head of treasury research & strategy, OCBC Bank

‘The initial turmoil has had investors switching to panic mode. People are thinking if AIG can go under, then frankly, nobody’s safe. So everyone’s looking over his shoulder and wondering who will be next.

We can expect consolidation to take place in the financial sector. I don’t think it’s the end of the bad news yet. Going forward, it is really more a confidence crisis. I don’t know how long this will last.

It will take a very big and positive piece of news to turn sentiment around because people are just nervous now.

Some coordinated and concerted action by central banks needs to take place. So far, we have seen domestic market injections. But if we had something similar to a G-7 format where central banks say this is what we are going to do, then it will help to eliminate the uncertainty.

We are already one year into the sub-prime crisis. I am slightly and cautiously optimistic that we are not going to end up with a situation similar to the Asian financial crisis that occurred over a two- to three-year timeframe.

Asia is being pulled down because of its dependence on exports to developed countries as end consumers, but Asia is no longer as leveraged up as it was prior to the Asian financial crisis.

If you look at medium-term fundamentals, in terms of the health of the economy, we are generally in a much better place than we were 10 years ago. So I’m not that bearish on Asia in the medium term.

The International Monetary Fund’s revised forecast has growth in Asia slowing from the 5 per cent range to the 4 per cent range, which is nothing like the Asian financial crisis when growth plunged from 7 to 8 per cent to negative numbers.

The main threat to Singapore’s economy is still going to be from manufacturing.

The risk of a technical recession this quarter has definitely grown. I would put it at a 50 per cent chance, up from 30 per cent.

Export numbers are down, growth in financial services is going to slow down and construction will begin to come off a little bit in the future.

We are loath to change our forecast for 2009. We have predicted 4.4 per cent growth for next year on the assumption that there will be some stabilisation in the second half of next year.

We have learnt a few commonsensical things from the week’s events. One, don’t be greedy. Two, if it sounds too good to be true, then it probably is.

On the part of the regulators, addressing sentiment requires very timely reactions and conventional policies may no longer be able to do the trick. The US Federal Reserve is entering uncharted waters by bailing out AIG.’

Robin Chan

Source : Straits Times - 21 Sept 2008

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10 things you should know

10 things you should know

Couldn’t keep up with the twists and turns that took place in the financial world last week? Here’s a primer

By Ann Williams

1 THE FALL OF LEHMAN BROTHERS

The week that broke Wall Street began with Lehman Brothers. On Sept12, news broke that the fourth- largest investment bank in the United States was on the brink of collapsing due to bad mortgage assets. Lehman was scrambling for a buyer as customers and trading partners fled.

No deal, however, was reached during that desperate weekend. Lehman’s chief executive had waited too long to sell the firm, and everyone was now afraid to buy.

The US government, its last hope, kept to its word and refused to bail Lehman out.

Just after midnight last Sunday in New York, Lehman announced it would file for bankruptcy, the biggest in history.

It was around midday last Monday in Asia, and immediately the carnage on stock markets began as investors dumped bank shares.

Lehman’s fall showed that the US government would not automatically prevent big banks from failing. It also showed how much worse the financial crisis had become even after the government had rescued mortgage finance giants Fannie Mae and Freddie Mac earlier this month and investment bank Bear Stearns six months ago.

2 SAVE AIG, SAVE THE WORLD… NOT

Two days after allowing Lehman to fail came bigger news that the US government would bail out American International Group (AIG), one of the world’s biggest insurers. It would give the company an US$85 billion (S$122 billion) loan for an 80 per cent stake.

AIG was hit by a big shortage of cash triggered by US$18 billion of losses over three quarters, a sinking stock price and cuts in its credit ratings.

The insurer, with US$1.1 trillion of assets, however, was deemed too big to fail. The US government said unlike with Lehman, it had to rescue AIG because of the insurer’s extensive ties to businesses and ordinary people throughout the world through a host of insurance products.

The bailout, though, failed to calm the markets. Instead, it led investors to wonder what other companies might suddenly plunge towards insolvency.

3 CRISIS HITS HOME

For ordinary people around the world, the credit crisis, which has been playing out for the last 15 months, may have really hit home only with the fall of AIG.

Newspapers in Singapore, Hong Kong and Taiwan splashed pictures and carried stories of hundreds of worried people queuing up to cash out on their insurance policies held with AIA, a unit of AIG.

For many ordinary investors in Asia, it was the first time their faith in American assets and the financial system was well and truly shaken.

Even after the US government stepped in to take over AIG and AIA put advertisements assuring policyholders that it could meet all claims, the queues continued.

4 THE BANK SALE WORTH WAITING FOR

Banks, meanwhile, were spooked by what was happening to Lehman. Merrill Lynch, the biggest brokerage in the US, wasted no time in finding a buyer.

It announced last Monday in New York that Bank of America would take it over for US$50 billion in a deal stitched together in just 48 hours.

And by last Wednesday, Britain’s Barclays Bank, which had walked away earlier from buying up Lehman for the price its chief executive wanted, ended up with Lehman’s core investment banking operations for just US$250 million.

With their shares plunging by the minute, other banks hung out ‘For Sale’ signs.

Lloyds of Britain rescued the country’s biggest mortgage lender, HBOS, last Thursday in a US$22 billion takeover. At least five companies, including HSBC and Citigroup, were said to be looking at buying Washington Mutual.

Morgan Stanley bought time by exploring a possible merger with a smaller American bank, Wachovia, and more investment from a Chinese state-owned investment group.

With share prices bouncing back last Friday, banks like Morgan Stanley may no longer need a buyout or merger, so the Great Bank Sale may be over - for now.

5 CREDIT SQUEEZE TURNS INTO FREEZE

For 15 months, banks and other companies have suffered from a credit crunch as lending slowed. In the last week, however, as Lehman, then AIG and then Merrill went down, investors lost all confidence in the financial system.

The result was that all sorts of lending or credit froze, as the costs of short-term borrowing soared by as much as 30 per cent, hurting banks and other companies.

No corporate bonds were sold in the US in the last week - the first time that has happened since at least 1999 - while sales in Europe dropped 98 per cent.

Things reached crisis proportions when banks and investment firms simply stopped making loans to each other, as they hoarded cash to protect against any sudden need for it themselves.

6 CENTRAL BANKS RACE TO CALM THE STORM

With a global crisis on their hands, the top central banks from the US, Europe, Japan, Britain and Canada moved together last Thursday to pump an extra US$180 billion into money markets to keep credit flowing and interest rates down.

Many more billions were spent individually during the week.

The US Treasury also used US$50 billion to support money-market mutual funds and even lent more money directly to banks and other financial institutions, so they could buy certain assets from money-market funds.

With US$3.3 trillion in assets, money- market funds in the US are key in providing loans to companies so they can buy supplies and pay their employees.

With fund managers rushing to the safety of US Treasury bonds, corporations could not find buyers for their short-term loans. Making things worse, ordinary people who invest in these funds started pulling money out after one fund turned out to be not as super-safe as thought.

7 STOP THE LOOTING

They have been compared to looters after a hurricane, who are out to plunder. Short-sellers borrow stock to sell, then buy it back when the price drops, making a gain on the price difference.

Short-sellers, many of them huge hedge funds, have sought to profit from the financial crisis by betting against bank shares. In normal times, short-sellers add volume to share trading and help stocks find their true worth. When there is a crisis, on the other hand, unrestrained short-selling can make shares plunge even faster.

In response, the US and Britain slapped a temporary ban on the short-selling of financial stocks last Friday. Russia, whose stock markets plunged by more than 20 per cent last week, banned the shorting of all shares.

The ban on short-selling caused bank shares around the world, which had suffered big falls earlier in the week, to jump as much as 40 per cent last Friday.

8 THE MOTHER OF ALL BAILOUTS

After months of fighting each new emergency as it flared up, the US government announced last Friday a plan to once and for all deal with the bad mortgages and mortgage-linked assets at the root of the credit crisis by buying them all up from US banks.

The hope is that by helping banks get rid of bad mortgage debt, the government can avert a total meltdown of stock and credit markets around the world and free banks to make new loans to keep US businesses running and workers employed.

By taking on the actual mortgages and changing their terms, the government can also make it easier for home owners to pay back their home loans, thus helping the housing market to recover.

The cost: No official word has been given but estimates put it at US$500 billion to US$1 trillion.

There are no details yet on how the plan will work but the US government will likely buy the assets at a big discount and hold on to them until the US housing market recovers. Ideally, these loans could then be sold at a profit so US taxpayers, who are ultimately paying for the bailout, will get some money back.

The US Congress, which has to pass laws for the plan to be implemented, is looking at it now and will hold hearings this week. A deal must be hammered by the end of this week, when Congress adjourns because of the US presidential elections.

9 FLIGHT TO SAFETY AND BACK

Until last Thursday, panicked investors rushed to dump any asset seen as risky, especially stocks, as they piled into gold or US government bonds, seen as safe bets. Some just wanted plain cash.

But then the flight to safety reversed itself last Friday with news of the US government’s sweeping plan to stem the crisis.

As investors poured their money back into stocks and investment funds, the price of gold fell by US$32 last Friday after soaring by US$116 in the previous two days.

The price of US Treasury bonds also tumbled. As a measure of how bad the fear was earlier in the week, investors piled into these bonds even though they were offering practically nothing in interest income.

Oil prices shot up by more than US$6 to over US$106 a barrel last Friday on hopes that the plan to resolve the bank crisis will spur economic growth, which is good for oil demand.

10 WHAT A RIDE

And so, investors all over the world went on the wildest ride of their lives last week.

To illustrate how volatile global markets had been, Russia suspended all stock market trading when shares plunged by 20 per cent to 25 per cent last Wednesday - and did so again when they rocketed up by 30 per cent last Friday.

The Irish stock exchange, with its biggest burst in history, jumped more than 25 per cent in the first hour of trading last Friday on news of the giant bailout.

Likewise in Asia and Europe, stock markets swung wildly up last Friday after plunging to dramatic lows earlier in the week.

In the US, the heart of the crisis, big plans to purge banks of bad assets and curb short-selling sent the Dow Jones Industrial Average, a key market index, soaring by 780 points in two days.

Because the Dow had plunged by about the same amount earlier in the week, however, the index actually ended the week where it started - pretty much like a real roller coaster.

Source : Straits Times - 21 Sept 2008

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Singapore AIA policy holders: Many cut their losses, some decide to hold on

Singapore AIA policy holders: Many cut their losses, some decide to hold on

Mr S.H. Wong imagined the worst when news broke last Monday of insurance giant American International Group’s woes.
Worried that the company would fold and he would lose his life savings, he rushed to the office of AIA Singapore in Finlayson Green on Wednesday.

He has a $30,000 life policy and a $10,000 21-year endowment plan with the company, an AIG subsidiary. He joined hundreds of jittery policyholders in the queue to terminate his policies.

But just two days later, Mr Wong, 35, who is unemployed, was back at AIA Tower, this time to reinstate his policies.

The US Federal Reserve’s announcement of an emergency loan to AIG on Wednesday had changed his mind. ‘From what I’ve read so far, it appears that the financial situation has calmed down, so I decided to reinstate my policies. I would have lost about $7,000 by terminating them,’ he said.

Like him, thousands of AIA policyholders had a harrowing week. Thinking of cutting their losses, many made the agonising decision to terminate their policies. More than 2,000 policies have been terminated. There are 2.6 million AIA policies here.

Businesswoman Sharon Lee, 49, surrendered her investment-linked policy on Friday. The decision cost her $4,000. ‘They advised me to transfer my money to other investment funds but I didn’t want to do that. I don’t trust the company anymore,’ she said.

Money losses aside, policy holders said that the queues and repeated trips to AIA Tower, plus the hours spent mulling over news stories and figures, had drained them physically and mentally.

Delivery man P.C. Tan, 54, took three days of leave to settle the paperwork. He gave up his 15-year endowment plan worth $20,000. It would have matured in two years.

‘I bought this when my children were still young and needed protection. But they have grown up now and are working; there’s no point keeping it.’

But he is keeping his $30,000 life insurance plan with the company. His wife, who has five AIA policies worth about $60,000, is still trying to decide what to do.

While some have made a U-turn - more than 20 customers had reinstated their policies by last Friday - seven customers who surrendered their policies said they had no plans to do so.

Storekeeper Lee Siow Teck, 51, who terminated his AIA life insurance plan after 17 years, said: ‘I have insurance policies with other companies. I won’t buy from AIA anymore.’

What now?
The US Federal Reserve announced last week that it is providing a US$85 billion (S$121.3 billion) lifeline to AIG in exchange for a 79.9 per cent equity stake.
In Singapore, more than 2,000 AIA policy holders terminated their policies last week. AIA, which is an AIG subsidiary, has said that policyholders who surrendered their policies in the past week could reinstate their plans without penalties. It also released numbers to back its assertion that its financial capital was more than adequate to meet all its commitments to policyholders.

Earlier, the Monetary Authority of Singapore said AIA has sufficient assets in its insurance funds to meet its liabilities. It urged customers not to terminate their policies rashly as they could lose cover and suffer losses.

Jamie Ee Wen Wei

Source : Straits Times - 21 Sept 2008

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DBS ‘High Notes 5′ Investors:They pumped in life savings and now feel cheated

DBS ‘High Notes 5′ Investors:They pumped in life savings and now feel cheated

Madam Evon Chin literally choked when she heard last Tuesday that her $75,000 investment in a DBS Bank product was in jeopardy.
The payroll executive and her husband had invested the sum in High Notes 5, which was exposed to Lehman Brothers, the United States investment bank that went bust.

‘I was eating my lunch when my husband called. I started choking on my food. My face was so red, my colleague had to thump my back,’ said Madam Chin, 40.

Her husband had told her their investment - from savings over the last 10 years - might now be wiped out. Worried, she took two days of urgent leave, determined to seek an explanation from the bank.

Like many other investors, she failed to understand how Lehman’s collapse could wipe out their entire investment.

She had thought their risk exposure was diversified since the product had a basket of eight reference entities. ‘We felt swindled. We were told this was a low-risk investment,’ she said.

DBS said last Wednesday that Lehman’s collapse triggered a ‘credit event’ that had a significant impact on High Notes 5.

The product is structured on a first-to-default basis which means that if any of the eight reference entities goes bankrupt, a credit event will be triggered and clients might not get their entire principal amount.

Said Madam Chin: ‘I’ve never lost so much, not even when I was investing in shares. This will be a serious blow to our nest egg. Will I really have enough to see my children through their education?’

They had intended the money to be used for the education of their two sons, aged six and one. ‘Now I can forget about my wish to have a third kid. This is really the saddest thing.’

The couple expect to have to tighten their belts. ‘I’m going to switch my children’s milk powder to a cheaper one. There will be no more eating out.’

She might also have to give up seeing a traditional Chinese doctor for her eczema. She used to pay for the sessions with the monthly interest from the investment.

Other investors like retiree Tham Wai Wah, 60, also felt ‘cheated’. She had trusted the relationship manager who had explained to her last year that the High Notes 5 product was ‘very safe’.

She said that with only an O-level education, she could not fully understand the prospectus. ‘I told them I’m a conservative investor and that this was my CPF money.’

She put in $125,000, part of her Central Provident Fund (CPF) savings she withdrew upon retirement after working for 30 years as a clerk. Her husband is also retired.

She said: ‘This is our fall-back, our cushion for old age. How can I accept that now I might have zero returns? What if I have any major illness in the next 20 years?’

She is thankful that she still has $130,000 in savings. She is prepared to sell her five-room flat in Punggol and downgrade to a smaller one if money runs out. ‘I thought we could go on holidays with this money,’ she said.

Senior merchandiser Carene Tan, 44, is worried that she might not have enough money for her children’s university education.

She had invested $25,000, which she intended to use to send her 15-year-old son abroad for further studies. Her other son is 12.

‘I was so upset. It’s not going to affect my livelihood now because I still have a job, but it’s like having to work half a year for free.’

Madam Chin is now more cautious: ‘I’ll never touch any investment instrument anymore.’

What now?
DBS Bank said capital invested in High Notes 5 was never protected or guaranteed. This had been stated in marketing collaterals and prospectuses.
It added that it will investigate complaints of misrepresentation by sales staff.

Last Friday, it raised the possibility that investors may get at least something back. It said it was too soon to declare a total wipe-out of investor funds.

A process to unwind the structure of the notes was initiated on Sept 17.

The bank said this valuation process will take about 30 business days. Clients will be informed as soon as the bank has done the final valuation.

Gracia Chiang

Source : Straits Times - 21 Sept 2008

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US drafts sweeping plan to mop up failed assets - New York

US drafts sweeping plan to mop up failed assets - New York

Bid to ease pressure on balance sheets of banks and other financial institutions

The plan is designed as a comprehensive approach after a series of individual rescues failed to stem the crisis. — REUTERS

New York - In an effort to bring stability to world financial markets, the United States government and Congress worked through the weekend on a sweeping plan that would mop up hundreds of billions of dollars’ worth of troubled mortgage assets.
The Treasury is likely to run the programme, which would involve auctions where the government buys devalued assets, said House Financial Services Committee chairman Barney Frank.

The plan, which will apply to US-based financial institutions seeking to sell mortgage assets, is designed as a comprehensive approach after a series of individual rescues failed to stem the crisis.

Details are still being hammered out but Treasury Secretary Henry Paulson gave an indication of its scale at a press conference last Friday.

‘We’re talking hundreds of billions. This needs to be big enough to make a real difference and get to the heart of the problem,’ he said.

Options being considered include an US$800 billion (S$1.15 trillion) fund to buy so-called failed assets and a separate US$400 billion pool at Federal Deposit Insurance to insure investors in money-market funds, said sources briefed by congressional staff.

President George W. Bush said the plan will ease pressure on the balance sheets of banks and other financial institutions.

‘There will be ample opportunity to debate the origins of this problem; now is the time to solve it,’ he said in a statement at the White House last Friday.

Calling the current crisis a ‘pivotal moment’ for the nation’s economy, he later lobbied House Speaker Nancy Pelosi and Senate Democratic Leader Harry Reid, as well as top Republicans, for quick legislative action to stabilise financial markets.

Mr Frank said Congress will act quickly.

Meanwhile, the Treasury tapped all US$50 billion in the country’s Exchange Stabilisation Fund to insure money-market mutual fund holdings, and the Federal Reserve expanded lending to commercial banks.

The measures were aimed at credit markets teetering on the edge of collapse as investors pulled a record US$89.2 billion from money-market funds last Wednesday.

The moves capped a week in which financial markets faced their most serious confluence of crises since the Great Depression in the 1930s, with national economies and the global banking system in jeopardy.

The latest rescue efforts sent stocks surging in the biggest two- day global rally in 38 years after a three-day slide last week wiped about US$1.9 trillion in market value from the MSCI World Index.

The Dow Jones Industrial Average soared another 3.4 per cent last Friday, capping its biggest two-day jump in six years. Conversely, US Treasuries - seen as ’safe haven’ investments - plunged, sending two-year note yields up the most in 23 years.

But troubling issues remain.

While many on Wall Street cheered a ban on short-selling, options traders, who sell stock short to balance their trading positions, were caught off guard and warned that the measure could paralyse derivatives markets.

Some analysts have also voiced concerns about the US government’s own balance sheet as it takes on yet more devalued assets after the seizures of Fannie Mae, Freddie Mac and American Insurance Group.

Reuters, Bloomberg, Los Angeles Times, AFP

Source : Straits Times - 21 Sept 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

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Serangoon HDB Flat for Sales 21.09.2008

Serangoon HDB Flat for Sales 21.09.2008

TYPE : [2]Rm [3]Rm [4]Rm [5]Rm [EA]Ex Apt [EM]Ex Mais [6]Rm

TNR=Tenure, DT=District, BDRM=Bedroom, AREA=Built-In, STR=Storey, Price $K=In Thousand

Price are subject to changes , please call (+65) 91002985 for lastest update

Type — 3S
District — 19
Estate — SERANGOON, BLK 243 #09
Area — 689
Age — 6
Bedroom — 2
Psf — 392
PRICE$ — 270000
Type — 4
District — 19
Estate — SERANGOON CTRL, BLK 415 #02
Area — 0
Age –
Bedroom — 3
Psf — null
PRICE$ — 410000
Type — 4A
District — 19
Estate — SERANGOON, BLK 402 #05 ABOVE
Area — 0
Age –
Bedroom — 3
Psf — null
PRICE$ — 445000
Type — 4A
District — 19
Estate — SERANGOON, BLK 419 #09
Area — 1108
Age — 05+
Bedroom — 3
Psf — 0
PRICE$ — 0
Type — 4A
District — 19
Estate — SERANGOON, BLK 508 #09
Area — 1076
Age — 11
Bedroom — 3
Psf — 335
PRICE$ — 360000
Type — 4N
District — 19
Estate — SERANGOON, BLK 101 #05
Area — 0
Age –
Bedroom — 3
Psf — null
PRICE$ — 280000
Type — 4S
District — 19
Estate — SERANGOON, BLK 233 #05
Area — 904
Age –
Bedroom — 3
Psf — 0
PRICE$ — 0
Type — 5
District — 19
Estate — SERANGOON, BLK 502 #06
Area — 0
Age –
Bedroom — 3
Psf — null
PRICE$ — 880000
Type — 5I
District — 19
Estate — SERANGOON, BLK 212 #03
Area — 1301
Age — 20+
Bedroom — 3
Psf — 325
PRICE$ — 423000
Type — 5I
District — 19
Estate — SERANGOON, BLK 212 #12
Area — 1301
Age –
Bedroom — 3
Psf — 357
PRICE$ — 465000
Type — 5I
District — 19
Estate — SERANGOON, BLK 216 #02
Area — 0
Age –
Bedroom — 3
Psf — null
PRICE$ — 0
Type — 5I
District — 19
Estate — SERANGOON, BLK 545 #07
Area — 1312
Age — 10
Bedroom — 3
Psf — 343
PRICE$ — 450000
Type — 5I
District — 19
Estate — SERANGOON, BLK 547 #15
Area — 1291
Age — 10
Bedroom — 3
Psf — 333
PRICE$ — 430000
Type — 5I
District — 19
Estate — SERANGOON, BLK 548 #11
Area — 1301
Age — 12
Bedroom — 3
Psf — 338
PRICE$ — 440000
Type — EA
District — 19
Estate — SERANGOON, BLK 234A #15
Area — 0
Age –
Bedroom — 3
Psf — null
PRICE$ — 550000
Type — EM
District — 19
Estate — SERANGOON, BLK 318 #02
Area — 1582
Age — 22
Bedroom — 3
Psf — 322
PRICE$ — 510000
Type — EM
District — 19
Estate — SERANGOON, BLK 519 #02
Area — 1582
Age — 16
Bedroom — 4
Psf — 297
PRICE$ — 470000

Buy, Sell, Rent,Invest,In Singapore

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com ( email me )

Punggol HDB Flat for Sales 21.09.2008

Punggol HDB Flat for Sales 21.09.2008

TYPE : [2]Rm [3]Rm [4]Rm [5]Rm [EA]Ex Apt [EM]Ex Mais [6]Rm

TNR=Tenure, DT=District, BDRM=Bedroom, AREA=Built-In, STR=Storey, Price $K=In Thousand

Price are subject to changes , please call (+65) 91002985 for lastest update

Type — 4
District — 19
Estate — PUNGGOL CTRL, BLK 166B #09
Area — 0
Age — 5
Bedroom — 3
Psf — null
PRICE$ — 0
Type — 4
District — 19
Estate — PUNGGOL DR, BLK 642C #09
Area — 0
Age —
Bedroom — 3
Psf — null
PRICE$ — 350000
Type — 4A
District — 19
Estate — PUNGGOL FIELD, BLK 201C #14
Area — 0
Age —
Bedroom — 3
Psf — null
PRICE$ — 360000
Type — 5
District — 19
Estate — PUNGGOL DR, BLK 637C #13
Area — 1193
Age —
Bedroom — 3
Psf — 0
PRICE$ — 0
Type — 5
District — 19
Estate — PUNGGOL FIELD WLK, BLK 128D #10 ABV
Area — 1184
Age — 5
Bedroom — 3
Psf — 346
PRICE$ — 410000
Type — 5
District — 19
Estate — PUNGGOL FIELD, BLK 199C #12
Area — 0
Age — 05+
Bedroom — 3
Psf — null
PRICE$ — 410000
Type — 5I
District — 19
Estate — PUNGGOL FIELD, BLK 101C #11
Area — 0
Age — 6
Bedroom — 3
Psf — null
PRICE$ — 400000
Type — 5I
District — 19
Estate — PUNGGOL FIELD, BLK 110A #16
Area — 1184
Age — 6
Bedroom — 3
Psf — 346
PRICE$ — 410000

Buy, Sell, Rent,Invest,In Singapore

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com ( email me )