Households to see average rise of about 22% in electricity bills from Oct

Households to see average rise of about 22% in electricity bills from Oct

SINGAPORE: Higher oil prices have pushed up electricity prices for this quarter by about a fifth.

SP Services said on Monday households will see an average increase of 21.46 per cent in electricity bills, when average electricity tariffs go up by 5.38 cents per kilowatt-hour.

On average, all SP Services customers will face a 21.89 per cent increase.

For the period from October 1 to December 31, tariffs have been pegged to a higher “forward fuel oil price” of S$155.14 per barrel.

This price is 38.06 per cent higher than the S$112.35 per barrel in this current quarter.

The electricity tariff is reviewed quarterly and adjusted in line with fluctuations in the cost of electricity, and approved by the Energy Market Authority.

At a news conference on Monday, the Authority’s chief executive Khoo Chin Hean said that the increase is the highest so far this year.

- CNA/yb

Source : Channel NewsAsia - 29 Sept 2008

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1,500 new jobs for Barclays here Singapore

1,500 new jobs for Barclays here Singapore

UK bank to hire highly skilled staff over next few years to run its technology centre

By Grace Ng, Finance Correspondent

Mr Seegers (left) and Mr Chan Cheow Hoe, Barclays’ head of global delivery and technology services, global retail and commercial banking, joining hands as they open Barclays’ new technology centre. — ST PHOTO: CHEW SENG KIM

BRITISH banking giant Barclays is going full steam ahead with its plans to hire up to 1,500 highly skilled staff over the next few years in Singapore, undeterred by a credit crunch that has crushed thousands of jobs in the financial sector.
The new hires will be mainly local, the bank said.

HIGH-TECH HUB
‘We picked Singapore to be the technology heart for Barclays… We will put the high-value jobs in Singapore, as it offers the quality staff we need.’
Mr Seegers, on Barclays’ decision to consolidate its growth-supporting back-end operations into three centres in Singapore, Shanghai and the Indian city of Pune
The high-end technical jobs will be located at Barclays’ newly set-up technology centre in Singapore, which will support the group’s retail and commercial banking businesses across the globe.

While the financial turmoil is expected to fester for at least another 18 months, Barclays sees this as ‘a good time to expand’, said Mr Frits Seegers, the chief executive of the bank’s global retail and commercial banking.

Noting that the group is still making profits and has not suffered ‘the losses that some other banks have had’, Mr Seegers said: ‘We decided to expand and to invest because we can.

‘Now, prices are substantially lower, so it is a good time to expand. We have a top-notch team…and we can pounce very quickly,’ he said in an interview last Friday.

He was speaking after the opening ceremony of Barclays’ Business Technology Centre at Changi Business Park Central 1.

Barclays has already hired about 110, mainly local, staff, including engineers and information technology professionals. It plans to add another 300 to 400 by the end of next year, before ramping it up to 1,500 in ‘three to five years’ time’, said Mr Seegers.

This headcount is in addition to the 2,500 that Barclays already has for its investment banking and wealth management businesses in Singapore.

Barclays was in the headlines last week for capitalising on its relative financial strength to snap up the American assets of bankrupt Lehman Brothers, which Mr Seegers noted was a ‘terrific deal for Barclays’.

The London-based bank has moved quickly to grow its commercial and retail banking presence outside its home market into growth markets, such as India, Pakistan, Africa and China.

Mr Seegers said ‘it is still quite costly’ to acquire banking franchises in emerging markets, while some buying opportunities had emerged in the United States. Barclays’ commercial and retail banking businesses will continue to grow in emerging markets through organic growth, as well as acquisitions that are ‘priced right’, he said.

Last month, Barclays snapped up a small Indonesian lender Bank Akita and launched its line of retail banking products in Pakistan. It also planted some 1,500 branches across Asia in the past 15 months, said Mr Seegers. This growth is supported by back-end operations, which have been consolidated into three centres in Singapore, Shanghai and the Indian city of Pune.

‘We picked Singapore to be the technology heart for Barclays… We will put the high-value jobs in Singapore, as it offers the quality staff we need,’ said Mr Seegers.

He said the selection process for these jobs had been very rigorous, with each successful applicant undergoing some 16 interviews.

Singapore, Shanghai and Pune are providing technology services to 14 emerging markets and seven Western European counties.

Besides Barclays, financial institutions such as Merrill Lynch, Citi, Credit Suisse and UBS have also located their back-end operations in locations like Harbour Front and Changi, hiring thousands. However, hiring for support and technology functions is said to have slowed down as these banks cut costs and lay off front-end staff, said industry watchers.

Mr Seegers dismissed suggestions that Temasek Holdings’ share in Barclays had an influence on the bank’s decision to hire hundreds more new staff in Singapore.

The veteran banker, who lived in Singapore for six years, noted: ‘We have a good relationship with Singapore, with the Government and with Singaporeans.

‘We chose Singapore because of the quality and dedication of the people here.’

He warned that there would be ‘tough times ahead for the next 18 months’, as the US, United Kingdom and Asia were all experiencing a slowdown.

‘But we have to be where the people are,’ he said. ‘ Asia has a 2.6 billion population and this is where we want to be’.

Source : Straits Times - 29 Sept 2008

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F1 race: A valuable buzz for S’pore

F1 race: A valuable buzz for S’pore

Race televised worldwide showcased Singapore to the world, says PM Lee

By Terrence Voon

PM Lee listening as F1 head Bernie Ecclestone briefed him on the track of the Marina Bay race circuit, before the Grand Prix began yesterday. — ST PHOTO: TERENCE TAN

THE Singapore skyline all aglow, that was beamed across the world last night, was a picture that brought a proud smile to the face of Prime Minister Lee Hsien Loong yesterday.
It depicts a vibrant city, ‘a city we can be proud of’, he said, drawing reporters’ attention to the TV images of the history-making Formula One night race held here over the weekend.

‘I’ve been watching it on TV the last couple of nights, not watching the cars, but watching the skyline, to see whether the skyline shows up and we see Singapore showing off its best,’ he said on the sidelines of the race before he handed the trophy to winner Fernando Alonso.

One image especially struck him: a lit-up Benjamin Sheares Bridge with regular traffic on it and F1 cars racing underneath. ‘It’s a quite a unique scene and there are very few places in the world where that would happen.’

PM Lee added: ‘It is is a valuable buzz, publicity for us around the world, which will benefit us in many ways.’

F1 racing is reportedly a money-spinning sport event, ranked among the top three with the Olympics and World Cup soccer in raking in millions in tourism.

However, for Mr Lee, the impact on business leaders is as significant.

He cited a lunch on Saturday that the Economic Development Board had with ’some of their corporate clients who are investing in Singapore big time’.

Pointing out that they had gathered here because of the F1, he added: ‘It’s a chance for us to meet them, network, and renew our relationship with them.

‘You’d be surprised how many of them have a special interest in F1. And they were telling me how impressed they were with the arrangements and with the race. It was something different, a night race, and it adds something to the sport, and would put Singapore on the map.’

However, the inconveniences were not lost on him. He noted the traffic jams, workers having to leave their cars at home and take the train to work plus lousy sales suffered by some retailers.

‘We will see how we can minimise these inconveniences,’ he said.

One area of improvement he highlighted is the duration of the road closures.

‘Because this year we didn’t know how long it would take us to put the equipment up and to set up the circuit, so I think they started closing some roads even last weekend. That’s a long time to be disrupted.’

One idea the organisers are toying with, he said, is to see if it was possible to do it a day or two before the race.

Mr Lee also alluded to the view among some that the event, touted as the biggest held here in recent years, had left out the man in the street.

On the contrary, the sport has a strong following among Singaporeans, he said.

‘For example, there’re 1,000 Singaporeans who have volunteered to help to run this race…many are enthusiasts.’

Among them, he discovered, was a member of his staff, whom he asked ‘to ‘educate me on what this race is about’.

‘I got a five-minute crash course as to how the race is run and what the scores are, what the rules are,’ he said, adding with a laugh: ‘So today, I’m a bit less ignorant than otherwise I’d be.’

Source : Straits Times - 29 Sept 2008

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And the winner is…Singapore!

And the winner is…Singapore!

Republic hosted a great F1, rivalling Monaco’s - let’s do better next year

By Sandra Davie, Senior Writer

IT WAS an unexpected but nonetheless stunning victory for Formula One’s two-time champion Fernando Alonso and his Renault team on the racetrack on Sunday, but the real winners were Formula One and Singapore in pulling off a race that was action-packed and equalled the glamour of the yearly spectacles at Monaco.
Singapore had wanted to join the Formula One race circuit for over two decades now, but only set the date last year.

The Government had agreed to foot 60 per cent of the $150 million annual bill to host the race for the next five years in the hope that it will showcase the Republic as a global player in the 21st-century economic landscape and will boost tourist arrivals.

Did it work? Was it money well spent?

Briton Jamie Symmonds, an ardent F1 fan and now a Singapore convert, summed up the sentiments of many a visitor when he said: ‘Wow, Singapore… Wow. I am blown away.’

As the 38-year-old bank manager said, the three-day races and the activities wrapped around them had all the ingredients that makes F1 one of the most watched sport - that heady mix of danger, glamour and exclusivity.

For hard-core F1 fans, Singapore’s debut on a racing calendar could not have been better scripted. With one point separating McLaren’s Lewis Hamilton and Ferrari’s Felipe Massa, the championship shootout battle was highly anticipated.

There was also the element of the unknown as F1 organisers took a shot in the dark and decided to move the race start to 8pm, instead of the usual 2pm.

Add to that the fact that the drivers had to manoeuvre on a new track and the weathermen had predicted a high chance of the track being lashed by a thunderstorm. Fans were fired up by the possibility of crashes or drivers making crucial driving mistakes.

No wonder then, that Singaporeans, who were initially tepid about the race, clamoured for race tickets closer to the weekend. Some like sales supervisor Lim Teh Jin paid $1,000 for a $298 ticket. Never mind that he can’t tell the pit from the paddock. He wanted to witness Singapore make history.

The race for pole position on Saturday and the final shootout on Sunday did not disappoint.

On Saturday, with Massa grabbing the pole position, Hamilton coming in a close second and Ferrari’s Kimi Raikkonen qualifying in third position, Singapore could not have asked for a better front trio on the starting grid.

The race proper on Sunday was even better. From the word go, it was a race packed with action and drama, both on track and in the pits and it ended with Spaniard Alonso gaining from the shift in the balance of power after a crash by his team-mate Nelson Piquet Jr on lap 15.

The 100,000 spectators leapt to their feet at the start and remained standing for much of the two hours.

The cars battling for lead position as they streaked past distinctive landmarks like the Singapore Flyer, City Hall and the Esplanade at 300kmh, were a stunning spectacle.

F1 officials like Mercedes motorsport vice-president Norbert Haug gave the Singapore setting a glowing review, calling it the ‘best pictures ever seen in F1…like in a movie’.

It was enough to make any Singaporean’s heart swell with pride. F1 fans who had come from overseas vowed to return.

Singapore also shed its staid city-state image off the track and showed how to throw a great party. There were lavish soirees for the rich and famous and for the rest there were massive dance parties, where an army of top DJs, such as Johan Gielen from the Netherlands and Britain’s Rob Wilder and Carl Cox, worked the decks at clubs.

Americans Janine Tindle, 27, and Carly Verdane, 28, who had stationed themselves at the Ministry of Sound to do some celebrity-spotting, declared Singapore the ‘Cannes of the East’.

No doubt it was a big, big step forward for F1 and Singapore’s ambition to become as a ‘global city with buzz’.

What remains to be seen though is whether Singapore will be able to repeat the feat and draw in the accolades and even more tourist dollars that will be much more needed next year.

For many Singaporeans, all the praise and festivities of the race weekend did not completely chase away the economic storm clouds that had gathered in the last few weeks.

The Government had already warned that economic growth is expected to fall below 4 per cent this year against 7.7 per cent last year, and Singapore is on the verge of slipping into a technical recession, with two consecutive quarters of contraction.

Some took comfort in a report released this week by ING and Formula Money, an industry publication, which claimed that nations that held F1 events had a return of 553 per cent on their costs because of higher retail and tourist revenues.

Hotels that have rooms with a vantage view of the race circuit such as Swissotel The Stamford, are encouraged by the advance bookings which poured in. Some 350 rooms have already been snapped up at the Swissotel.

Still, some remain less buoyant about the future of F1 in Singapore. Like Mr Michael Ma, group chief executive of the IndoChine Group, who complained of excessive road closures and businesses such as hotels being too opportunistic and not giving F1 fans value for money.

He warned: ‘Next year, Singapore will no longer be the newest venue on the racing calendar. Singapore has to do much, much better next year.’

He has a point. The novelty of Singapore being a new race circuit and hosting a night race will not be there next year, as Abu Dhabi will host its first race next year and countries like China and Australia are also looking at making the switch to hold their annual races under the floodlights, instead of daylight.

Race organisers and businesses must also remember that by September next year, the economic downturn would be felt much more deeply. They have to price things just right to lure back the 50,000 F1 spectators who flew in from as far as Europe and the United States for the weekend.

F1 supremo Bernie Ecclestone heaped high praise on Singapore on Saturday when he put it on par with the Monaco and declared it ‘the other jewel on the Formula One crown’.

Singapore must pull out all stops to put on a bigger, better, bolder show next year, if it wants its F1 future to sparkle.

Source : Straits Times - 29 Sept 2008

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Historic night race Singapore F1 wows world

Historic night race Singapore F1 wows world

Thrills and spills mark Fl’s debut in Singapore

By Leonard Lim

The race yesterday, ending in a surprising win by Renault’s Alonso, was electrifying. The crowd jumped to its feet at the start and remained standing for most of the event. — ST PHOTO: TERENCE TAN

ON A night when sporting history was made, the big winners were Renault driver Fernando Alonso, Formula One and its fans, and Singapore.
Over 100,000 spectators, close to half of them tourists, turned up in the heart of the city to witness the world’s first F1 night race yesterday.

WHAT A DIFFERENCE A DAY MAKES
‘The race is lost. You can’t overtake here and I’m starting from 15th, so I will be going out just to lap the track, but it’s over already.’ - Race winner Fernando Alonso, after his car developed mechanical problems during qualifying on Saturday night

‘Fantastic. The first podium of the season and the first victory. I can’t believe it right now, I need a couple of days to realise that we could win a race this year…’ - Alonso, after claiming his first win of the season last night

Thousands more watched it on TV at home, at parties, and at nightspots. Many others who were downtown did not catch sight of the cars, but heard the howl of F1 engines and said it was something not soon forgotten.

And after an incident-packed two hours which saw several crashes and a horribly botched pit-stop involving pre-race favourite Felipe Massa of Ferrari, they were left hungry for more.

The race, won by Alonso - who had written off his own chances barely 24 hours earlier after developing an engine problem in qualifying - served up plenty of thrills for spectators and a worldwide TV audience estimated at 500 million.

There were three crashes, several lead changes and wheel to wheel action.

But while locals and foreigners alike said the race was quite the treat, they reserved the bulk of their praise for Singapore.

Many agreed the $150 million tab for staging it was worth it.

Said bank executive Joanne Lim, 27: ‘To actually prepare to host the F1 in just over a year was amazing. Our successful staging shows the world the Singapore brand of efficiency.’

Foreigners vowed to return next year - Singapore has a five-year contract to host the race - charmed by what they had seen.

Said Briton Simon Crosse, 44: ‘This is my first visit, and I’ve been overwhelmed. I’ve been to about 15 other Grands Prix, and this is the best.

‘The night atmosphere, the organisation, it was just fantastic.’

Prime Minister Lee Hsien Loong gave the event the thumbs-up from the Pit Building yesterday, after watching part of the proceedings on track.

‘The race itself is one thing. I think the audience, we’ve got the stands full, people are enjoying themselves and we’ve got a lot of publicity from this for Singapore.

‘I’ve been watching it on TV the last couple of nights, not watching the cars, but watching the skyline, to see whether the skyline shows up and we see Singapore showing off its best.

‘And I think that it’s a city we can be proud of, and this is a valuable buzz, publicity for us around the world, which will benefit us in many ways.’

The praise flowed from many other quarters.

The sport’s supremo, Bernie Ecclestone, called Singapore the ‘jewel in the crown of F1′.

Across the world, newspaper and TV reports hailed the event as a stunning success. Writing in London’s Sunday Times yesterday, for example, columnist and former race driver Martin Brundle called the Republic a ‘world-class venue’.

Of night racing, he added, ‘all of the senses are heightened, and the atmosphere…was electrifying’.

The accolades mean that two of the main aims of hosting the race - global exposure for Singapore and bolstering the Republic’s reputation as an entertainment and events capital - have been met.

It is early days yet to tell if the other aim - boosting tourist receipts - has been met as spectacularly, but several entertainment and food outlets said business was definitely up over the weekend.

Indochine chief executive Michael Ma said: ‘We’ve been extremely busy, roughly doubling our business over the weekend. It was a boon, especially for our Orchard and Clarke Quay outlets.’

Many Orchard Road retailers also said business was up by about 20 per cent over the weekend, thanks to the big influx of tourists.

To be sure, not everything went off without a hitch.

Despite an extensive business continuity plan, for instance, stores in the Marina area were hit by road closures which left many tenants twiddling their thumbs over the weekend.

Parts of the Marina Bay circuit also got the thumbs-down after Friday’s practice sessions, especially the bumps in some parts and the high kerbing after St Andrews’ Road.

But after organisers fixed the problems, drivers were effusive in their praise.

Said championship leader Lewis Hamilton: ‘The most impressive thing for me is what an amazing job they have done here in Singapore to prepare the circuit.

‘I think they did a tremendous job.’

The race itself? It was practically consigned to second place behind the praise for Singapore, but for the record: Nico Rosberg of the BMW team followed Alonso home in second place, with Hamilton finishing third.

Massa ended 13th out of 15 finishers, after he roared out of the pit lane with a fuel line still attached to his Ferrari.

The result leaves Hamilton on 84 points, seven ahead of Massa in the world championship standings with three races left.

Source : Straits Times - 29 Sept 2008

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S’pore a key growth market for cruise player Silversea

Singapore a key growth market for cruise player Silversea

By VINCENT WEE

BOUTIQUE cruise line Silversea has a ship in Monaco for the Grand Prix every year but has no immediate plans to do so in Singapore.

Mr Odell: ‘We’re putting a lot more capacity into Asia in our plans.’
The niche cruise player, however, is expanding in the Asia-Pacific and Singapore will figure prominently in those plans, Asia-Pacific senior vice-president Steve Odell told BT.

‘Everyone talks about this being the decade of Asia and I believe that’s the case,’ said Mr Odell. ‘We’re putting a lot more capacity into Asia in our plans.’

For example, he said, Japan will be in the programme every year now as opposed to every other year previously and Silversea is using Shanghai as a turnaround port.

In the southern part of the region, Dubai is becoming a big hub with an increasing demand for cruising in the Gulf and the sub-continent.

Mr Odell said that there would be a dedicated product for sale in Asia next year when more capacity comes onstream, with the new 36,000-tonne 540-guest ship Silver Spirit making its debut.

But the reality remains that the company’s core revenue still comes from the Europe and Alaska cruise markets.

This means that basing a ship year-round in the region, or even, for example, repositioning to Singapore a little earlier so as to be in time for the Singapore Grand Prix, is unlikely because the European season does not end till November.

‘We believe Asia will be the hot ticket to the future but when you’re doing your planning you’ve got to accept that your core revenues are going to be in Europe in the summer, and Alaska,’ said Mr Odell.

‘That’s a given, so what you do, where you go and how you get there outside of that in the October to March period is the challenge.’

Asia’s attraction, certainly for the kind of high-end guests that are Silversea’s clients, is the variety of small, exotic ports which are able to offer them unique experiences.

‘People want to venture, they want different places to the ordinary cruise destinations and smaller out of the way ports and the region here has to stop thinking about just the big cruise ships and give some attention to catering to smaller ships and a more boutique experience,’ he added.

‘We want to go to different places from Star Cruises and Royal Caribbean; we don’t want to be in port with those guys because when they put their 3,000 or 4,000 people ashore it puts strain on the infrastructure and that impacts on us as well.’

‘I think there’s a big opportunity in the region for the development of smaller ports (for cruise ships) as has happened in other places,’ said Mr Odell.

For example, Cambodia has developed Sihanoukville port by leveraging on the attraction of Angkor Wat and similarly, there are opportunities for the beach resorts in Thailand to do likewise.

The luxury market that Silversea caters to has proven quite resilient to the economic conditions so far.

While the US and Japan have slowed down a bit, the pace in the Asia-Pacific is still very good, Mr Odell said.

‘Our biggest market after Japan is Singapore, then Taiwan and Hong Kong and each of those markets has continued to perform.’

Source : Business Times - 29 Sept 2008

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Singapore SM Goh optimistic about economy over next two quarters

Singapore SM Goh optimistic about economy over next two quarters

But he calls for caution next year as more big US banks may face problems
By CHEW XIANG

IN BEIJING

DESPITE signs of slowing growth, Senior Minister Goh Chok Tong remains optimistic about the Singapore economy, at least over the next two quarters.

Common ground: (from left) Mr Goh, Mr Wen and Tianjin Party Secretary Zhang Gaoli at the groundbreaking ceremony for the Sino-Singapore eco-city project 
Mr Goh, also chairman of the Monetary Authority of Singapore, was speaking to reporters in Tianjin yesterday after officiating, along with Chinese Premier Wen Jiabao, at a groundbreaking ceremony for the Sino-Singapore eco-city project.

He was in China on a five-day working visit and has returned to Singapore.

‘Next year, we’ve got to see what is happening in the US. It is still grappling with financial problems and more big banks may run into trouble,’ he said.

‘The problem for all of us now is this: You can’t at this stage know how broad and deep the sub-prime mortgages have spread . . . So next two quarters we are alright, but next year I think it’s better to be a little cautious.’

Mr Goh reiterated that for some time now, the government’s strategy has been to build up ‘external wings’ in China and India to support the economy when local growth founders.

‘Without having spent time and energy in building these two wings over the past 15 to 20 years, India more recently, and China longer, had we just depended on Asean alone, can you imagine how our economy would be today?’

The Senior Minister said that these external investments should keep Singapore ticking even as financial turmoil in the US threatens global growth as well as individual Singaporeans. ‘I know that Singaporeans have been hurt, on an individual basis they have been hurt, and more have been hurt by investing in equities . . . In the nature of capitalism you have booms and busts, now is the bust period but if you do the governance well in Singapore, then we will not go bust.’

Yesterday, Mr Goh also said that he had a ‘good discussion’ with the Chinese Premier prior to the groundbreaking ceremony for the Tianjin eco-city project.

He said that he briefed Mr Wen on two outcomes secured in earlier meetings with other Chinese leaders in Beijing.

Mr Goh said that he spoke to State Councillor Liu Yandong last week about a partnership with a Chinese university for Singapore’s recently announced fourth university, adding that both Ms Liu and Mr Wen were ’supportive’ of the proposal.

Mr Wen also endorsed a suggestion that a seminar between Singapore’s Public Service Division and China’s Communist Party’s Central Organization Department be held, Mr Goh said.

The Senior Minister added that he had suggested to Mr Wen that the Tianjin eco-city project be exempted from China’s present restrictions on offshore financing.

Mr Goh said that this was important as Singapore was partnering the Qatar Investment Authority in the project.

‘We are also thinking of Islamic banking, Islamic financing for certain parts of the project. I think the project is ideal for some Islamic funding,’ Mr Goh said.

Yesterday, the Chinese and Singapore consortiums behind the Tianjin eco-city project said that bids have been selected to develop commercial and residential plots in an initial 110 hectare area of the eventual 30 square kilometre eco-city.

Tenders for business park land will be open soon and Chinese and Singaporean developers are said to be interested. Infrastructure for a four sq km start-up area is expected to be completed by the end of next year.

National Development Minister Mah Bow Tan, who gave a speech at the groundbreaking ceremony, said that the parties involved expect to see visible results within three to five years. The whole project is expected to take 15 to 20 years to complete.

Source : Business Times  - 29 Sept 2008

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Short-selling not the culprit: AIMA

Short-selling not the culprit: AIMA

By EMILYN YAP

SHORT-SELLING did not cause the financial crisis and restrictions on this practice reduce market efficiency, said the Singapore branch of the Alternative Investment Management Association (AIMA) on Friday.
Since the financial turmoil worsened in the past few weeks, regulators in countries such as the UK, the US and Australia have imposed short-selling bans in a bid to stop markets from diving.

But short-selling did not contribute to the crisis, which stemmed from the activities of various parties such as commercial banks, investment banks and rating agencies, said AIMA Singapore in a statement.

In fact, short-selling has helped sophisticated investors such as pension funds and insurance companies hedge their portfolio exposures and gain protection from the crisis, it explained.

These investors would face greater market risk as regulators introduce short- selling restrictions at this time of stress.

‘Banning or restricting short-selling reduces market liquidity, impairs price discovery, and makes it more difficult for investors of all types to mitigate risk,’ said Peter Douglas, Asian representative to the AIMA council.

AIMA Singapore was therefore heartened that short-selling regulations were maintained or only minimally modified in places such as Hong Kong, Japan and Singapore.

AIMA Singapore has 62 corporate members which include hedge fund managers and prime brokers. Worldwide, AIMA has more than 1,280 corporate members.

 
Source : Business Times  - 29 Sept 2008

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Will reality rain on the bailout parade - New York

Will reality rain on the bailout parade - New York

By ANDREW MARKS
NEW YORK CORRESPONDENT
WALL Street ended last week under a heavy cloud of uncertainty, but traders will return to business today in a celebratory mood, after an early Sunday morning announcement from the US Treasury Department and Congressional leaders that they have reached a tentative agreement to buy at least US$700 billion worth of distressed assets.
With a resolution agreed to and ready to be put into place, the sigh of relief should lift an anxious Wall Street to a big day today. Just the hint late last Friday that Congressional leaders and Bush administration officials appeared to be back at the table negotiating the rescue after a near-agreement fell apart last Thursday night boosted stocks to a strong finish at the day’s end.

On Friday, the Dow Jones Industrial Average rose 118.20 points, or 1.1 per cent, to close at 11,140.26. The blue-chip index fell 2 per cent for the week. The S&P 500 registered a weekly decline of 3.2 per cent , while the Nasdaq Composite Index ended the week with a loss of 4 per cent .

Getting an agreement, ‘will give the market a big lift’, said SG Cowen & Company chief equities trader John O’Donohue. ‘Just the relief of being able to watch trading screens instead of CNN to find out the latest on what’s happening in Washington will bring out some of the investors who’ve pulled their money out of the market while they waited to see what the outcome would be.’

But once the celebration over reaching an accord is over, and that’s likely to happen within days if not less, investors will have to start asking ‘Now what?’ and that’s when things will get interesting again.

 
As Michael Parson, an equity analyst at stock market research firm Bull/Bear Equities put it: ‘Once the market can turn away from Washington and start focusing on the state of the economy and what this upcoming earnings season is going to look like, we’re going to have a very difficult reality to deal with. The fact is we’re in a bear market and fundamentals have been steadily eroding the last few weeks and that’s going to be reflected in company earnings for the third quarter and more importantly for the company outlooks for the next quarter.’

The government can do a great deal in terms of reassuring stock market investors that the financial system is safe from failure and it can get the credit markets flowing again back to some semblance of normaility with the rescue as a backstop, Johnson Illington Advisors chairman Hugh Johnson said. ‘But that doesn’t take away the fact that we’re still in the midst of an uncertain and deteriorating condition for both the economy and corporate profits.’

Marc Pado, chief investment strategist at Cantor Fitzgerald believes that stocks have already built into prices a recession and another poor profit reporting season.

It’s unlikely that light will be glimpsed once the furore over the rescue plan fades. Investors will have a week full of key economic data on a troubled economy, including the employment report for this month on Friday, to digest.

Before that, Monday brings personal income data, followed by the Chicago purchasing managers report and the consumer confidence index on Tuesday. The widely followed S&P Case/Shiller home price index is also released that day.

On Wednesday, ADP’s private sector employment report is released, as is ISM manufacturing data. Construction spending and the auto industry’s monthly sales reports are also that day. On Thursday, weekly jobless claims and factory orders are reported.

Friday’s jobs report will show more job losses, but Wall Street is expecting that it won’t be enough to worsen the unemployment rate of 6.1 per cent.

The progress of merger or takeover negotiations for Wachovia Corp, with Citigroup reportedly close to reaching an agreement with the troubled bank, should be the only major event coming from the private sector this week.

 
Source : Business Times  - 29 Sept 2008

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Fighting financial fires on multiple fronts

Fighting financial fires on multiple fronts

By HUGO DIXON

THE authorities are battling a banking crisis on multiple fronts over the weekend. Governments in continental Europe and the UK are working on solutions for Fortis and Bradford & Bingley (B&B). Across the Atlantic, Wachovia is reportedly in rescue talks after its stock was hammered yet again on Friday.

Good bank, bad bank: The solution for Bradford & Bingley appears to be nationalisation followed by a rapid sale of its ‘good’ bank 
There need to be credible solutions to these problems by this morning. Otherwise, there’ll be another bloody Monday in the markets.

At least, US politicians appeared to have reached a tentative deal on a US$700 billion plan to clean up some of the industry’s toxic waste.

The situation is moving fast. Here’s our latest take on the European dossiers: Fortis and B&B.

Fortis: The least-bad solution for the Belgo-Dutch banking giant is probably a complete takeover by either BNP Paribas or ING. Both are seen as strong institutions and would presumably be able to go out to the market and raise capital in the same way that JPMorgan did when it acquired Washington Mutual last week.

Fortis is a huge institution with nearly one trillion euros (S$2.1 trillion) of assets. It has two main problems: insufficient capital and low management credibility. In these markets, that means time is running out fast.

Fortis’ self-help plans have so far involved piecemeal capital raising and planned smallish disposals. Meanwhile, it fired one chief executive in July and got rid of a second interim CEO on Friday. The new CEO, Filip Dieckx, doesn’t inspire confidence as he previously ran the bank’s investment bank which is one source of the bank’s problems. It has a 45 billion-euro structured credit portfolio which some observers think will need to face further impairment charges. Nor does the chairman, Maurice Lippens, inspire confidence.

The head of the Dutch central bank, Nout Wellink, flew back from the US over the weekend to work on solutions. The Dutch press, meanwhile, says two options are being examined: sell the entire bank; and sell the ABN Amro business that it acquired last year in a wild top-of-the-market acquisition.

In normal times, both solutions - which are all more radical than Fortis’ previous plan - would be viable. But it’s not clear that selling ABN will do the trick now. That’s partly because the sums of money raised might not be big enough to restore confidence in a group with so little management credibility. It’s also because, paradoxically, it may be easier to persuade suitors to buy the whole group - which they could do by issuing shares - than part with hard cash to buy parts.

A sale to either ING or BNP would be a blow to national pride for the Belgians. It would mean that their banking champion was owned by either their big brother in the Netherlands or their even bigger brother in France. A takeover by ING would also mean one institution would dominate both the Dutch and Belgium banking markets, undermining competition.

But the Belgian and Dutch authorities don’t have many options. Nationalisation wouldn’t be as easy as it is for the UK with B&B. Just look at the numbers. Fortis is about 14 times the size of B&B, while the Dutch and Belgian economies combined are only about half the size of the UK.

Bradford & Bingley: By comparison with Fortis, B&B is a tiddler. Nobody wants to buy it. The solution here is nationalisation followed by a rapid sale of its ‘good’ bank. The government will keep the bad bank.

Such a solution pretty much seems to have been agreed upon. The remaining issues are who will get the good bank and how much the taxpayer can be protected as a result of acquiring the bad one.

Look first at the good bank. B&B has three things of value: a deposit base (albeit not big enough to stop it becoming too dependent on the fickle short-term money markets); a branch network; and some high-quality mortgages it has made to normal people for their first homes (although much of what it did was racy ‘buy-to-let’ lending).

It makes sense for this good bank to end up in the private sector. The deposit base, in particular, could even strengthen whichever bank or banks end up with it - because it would cut their reliance on the wholesale markets. Lloyds TSB, Royal Bank of Scotland and Barclays are obvious buyers. Spain’s Santander, a much-mentioned suitor, doesn’t look terribly interested.

Now look at the bad bank. This would contain the bulk of the assets, such as those racy mortgages. They are not worthless. But they will suffer impairment. The size of the losses suffered by the taxpayer will ultimately depend on three factors: how many mortgages default; how much the authorities can get for selling the good bank; and how much pain the existing providers of capital suffer. The ordinary shareholders will presumably be wiped out. But what about the other classes of capital? The more they suffer, the lower the expected losses for the taxpayer.

Source : Business Times  - 29 Sept 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com ( email me )