57,800 jobs created in Singapore in third quarter

57,800 jobs created in Singapore in third quarter

SINGAPORE: Employment in Singapore grew by 57,800 in the third quarter this year, according to preliminary estimates by the Manpower Ministry.

The growth was lower than the gains of 71,400 in the preceding quarter and 58,600 in the third quarter of 2007.

After rising for two straight quarters, the overall jobless rate remained at a seasonally-adjusted 2.2 per cent in September, unchanged from June this year but higher than 1.7 per cent in September 2007.

Job growth was strongest in the construction sector. With a strong pipeline of building projects, construction employment grew by 16,400 in the third quarter of 2008, but lower than the record 22,400 gains in the previous quarter.

Meanwhile, the services sector added 36,200 jobs, lower than the gains of 38,300 in the second quarter but higher than 34,100 in the third quarter of 2007.

Amid weaker external demand, employment in manufacturing grew by 4,900 in the third quarter, half the increase in the previous three months.

- CNA/ir

Source : Channel NewsAsia - 31 Oct 2008

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Insurance firms try to sustain brand value in challenging times

Insurance firms try to sustain brand value in challenging times

By Ng Baoying,

SINGAPORE: Insurance companies are coming up with novel ways to attract new customers.

Women who spend S$20 at the Guardian Pharmacy can get a 90-day accident protection coverage worth S$100,000 from American International Assurance (AIA), a subsidiary of American International Group (AIG).

The promotion was launched in late August and is scheduled to run for about three months. Once the offer period expires, customers are encouraged to sign on for normal plans. AIA said it has gained about 1,000 new customers to date.

Customers whom Channel NewsAsia spoke to were mostly surprised to be offered insurance in a pharmacy.

AIA said the campaign hopes to tap the strong link between its insurance products and Guardian Pharmacy, which is in the health protection business. The company said it has no specific targets in terms of customer numbers as this is a pilot project.

The insurance company added that the campaign is not a direct response to the global financial turmoil. However, experts said it comes at a time when protecting brand value is especially important.

Graham Hitchmough, client service director, The Brand Union, said: “It’s a challenging time for a number of organisations and sectors. Financial organisations, in particular, are going to find this a difficult period.

“I think obviously budgets are going to be under scrutiny. There’s an issue with consumer confidence that needs to be rebuilt.”

One way is for companies to show sensitivity to these issues when offering their products.

“I think organisations also have to demonstrate that long-term view, so as not to be seen as too tactical or opportunistic. It’s a challenging time at the moment, but it will pass and companies need to look to the future and make sure that any actions that they take now will not undermine the value of their brand in the long term,” Hitchmough said.

Unlike AIA, fellow insurer Prudential is sticking to more traditional methods.

Hitesh Shah, chief marketing officer, Prudential Assurance Company Singapore, said: “In the current environment, people are a little more cautious about investments, which is fine.

“But to do investment work, we have a distribution (network) which meets with customers on a face-to-face level, and they talk about needs. So that’s where we start – know your customer.”

Rather than aggressive customer acquisition, the company is offering special deals on its products.

Source : Channel NewsAsia - 31 Oct 2008

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High Court wants STB to hear Regent Court sale appeal

High Court wants STB to hear Regent Court sale appeal

The Strata Titles Board ruled against the collective sale of Regent Court last year.

THE Regent Court collective sale may yet happen: the High Court has thrown the case back to the Strata Titles Board (STB) to continue its hearing for the sale application.

The STB threw out the sale late last year but yesterday, Justice Judith Prakash upheld the sale committee’s appeal against that decision.

It has been more than a year since the collective sale deal for the Serangoon Road estate was struck. The collective sale frenzy last year has since died, with a significant deterioration in sentiment in the real estate market.

Regent Development agreed to buy Regent Court in April last year for $34 million. There were several objectors, with one claiming a financial loss of $93,935.75.

Last December, the STB threw out the estate’s sale application. It agreed that the objector had suffered financial loss, meaning that the sale proceeds would not cover his initial purchase price.

The sale committee, which wanted the sale to go through, appealed against the decision. It contended that the estate purchaser Regent Development had given an undertaking that it would top up the difference of $93,935.75 once the sale went through, ensuring that the objector would not suffer a loss.

But the STB did not consider this payment and took into account only the objector’s purchase price and the sale price.

The case was heard only recently as disgruntled owners had wanted to disband the sale committee.

That move failed and the appeal went ahead. Justice Prakash did not give reasons for her decision yesterday. Drew and Napier represented the sale committee.

Source : Straits Times - 31 Oct 2008

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Singapore New Orchard mall 60% leased ahead of opening

Singapore New Orchard mall 60% leased ahead of opening

Orchard Central and other upcoming malls to offer retail space even as economy slows down

By Joyce Teo, Property Correspondent

ORCHARD Central, the first of three new malls springing up in Orchard Road, is already 60 per cent leased five months ahead of its opening - despite the murky outlook for the economy, including retail spending.

Retail sales have started to slow, albeit slightly, just as Singapore’s premier shopping belt is set to boast three new, quality malls.

Lend Lease is building 313@Somerset next door while CapitaLand and Hong Kong’s Sun Hung Kai are building Ion Orchard on top of Orchard MRT station.

It has been a decade since a mall was built from scratch in Orchard Road, said Ms Susan Leng, Far East’s deputy director, retail management.

Orchard Central, which has 12 floors and two basements, is expected to open in April, ahead of the other two malls.

Far East is working hard to set the mall apart. It aims to open till 11pm daily and its rooftop garden and a covered walkway will be open to the public 24 hours.

The mall even has a four-storey-high rock-climbing wall aimed at attracting its target group of shoppers aged 21 to 35.

Mr T.K. Goh, founder of The Happy People, which is behind the Ben & Jerry’s stores in Singapore, will be setting up the mall’s biggest food and beverage (F&B) outlet.

His ice-cream parlour-cum-restaurant and bar will take up a whopping 6,000sqft on the eighth floor.

On weekends, he plans to keep his shop open till 3am or 4am.

The mall’s new F&B tenants also include a restaurant brand from Shanxi, China, and a Japanese brand.

Rents at the mall, said Ms Leng, remain in the range of $20 to $70 per sq ft, though they may soften a little going forward, depending on the type of tenants and space taken.

Data from the Urban Redevelopment Authority shows that shop rents dipped 0.6 per cent islandwide in the third quarter, reversing growth of 5.2 per cent in the second quarter.

Retail sales volume fell 1.5 per cent year-on-year from June to August, due to cautious local spending and lower demand from tourists, the Monetary Authority of Singapore said in its latest macroeconomic review. It added that retailers could see slower business towards Christmas and into next year.

‘Retail sales have slowed but not significantly yet. But there are forward concerns among tenants. It’s a confidence issue,’ said an industry source.

Knight Frank’s deputy managing director, Mr Danny Yeo, said Orchard Central and Ion Orchard started marketing their space from mid- to late last year so they are doing relatively well given current market conditions.

‘Those that started marketing recently and are about to ramp up marketing efforts will face more challenging times.’

Specialists’ Centre, Meritus Mandarin Hotel and 313@Somerset are among those with new space available on Orchard.

‘Landlords are still holding out. The real test will come after seasonal sales, after the Chinese New Year period. Tenants will try as much as possible to drum up sales now,’ said another industry source.

Source : Straits Times - 31 Oct 2008

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Singapore sets up currency swap line with US Fed

Singapore sets up currency swap line with US Fed

Precautionary move will boost US$ liquidity if needed, says MAS

By Fiona Chan

SINGAPORE has set up a deal with the United States Federal Reserve that will ensure banks here have sufficient access to US dollars if they need them.

The Monetary Authority of Singapore said yesterday it has joined the central banks of Brazil, Mexico and Korea in establishing temporary swap lines with the Fed, which will provide US$30 billion (S$44 billion) of greenback liquidity in each country.

What is the swap facility for?

The swap facility is only a ‘precautionary measure’ at this point in time, MAS said yesterday. If global conditions deteriorate and banks in Singapore experience difficulties in obtaining US-dollar funding, they can turn to MAS for assistance. In turn, MAS can use the swap facility to exchange Singapore dollars for US dollars directly with the Fed.

This will increase the availability of US dollars to banks and help to prevent borrowing costs from spiking.
… more
The move, a first for Singapore, is aimed at improving liquidity in global financial markets and easing potential difficulties in obtaining US dollars, MAS said in a statement.

The cost of borrowing US dollars has spiked recently as banks become more cautious about lending to one another.

But the Singapore central bank stressed that the swap line, available until April 30 next year, is simply a ‘precautionary measure’ for now, much like the recent decision to guarantee all bank deposits here.

‘MAS judges that it is not necessary to draw on the swap facility at this time, but will continually assess the need as global conditions develop,’ it said.

More importantly, the move is meant to ‘reassure financial institutions in Singapore, most of which have global operations, that they have access to US dollar liquidity’, MAS added.

While Singapore is not in dire need of US dollars at the moment, the availability of the greenback is essential for its smooth operation as the largest US dollar and foreign exchange centre in Asia outside of Japan, economists said.

If global conditions deteriorate and banks in Singapore experience difficulties in obtaining US-dollar funding, they can turn to MAS for assistance.

In turn, MAS can use the swap facility to exchange Singapore dollars for US dollars directly with the Fed. This will increase the availability of US dollars to banks and help to prevent borrowing costs from spiking.

‘Given the international character of financial markets in Singapore, MAS deems it prudent to join the group of central banks that have established swap facilities with the Federal Reserve,’ it said.

In recent weeks, the Fed has set up or enhanced swap facilities with 10 of the world’s major central banks, including the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank.

But apart from Japan, Asia has not had any access to the Fed’s swap lines until now. This raised the risk that when institutions in the region need US dollars, they will be forced to weaken their home currencies, said a report by Goldman Sachs economists.

It noted yesterday that Singapore’s swap line will help ease difficulties in obtaining US-dollar funding in Asia.

This could be the motive behind the move, which is ‘not aimed primarily at stresses in the local system’ as Singapore ‘has not come under the same degree of duress’ as some other Asian countries, the report added.

Agreeing with this, Standard Chartered economist Alvin Liew said: ‘Singapore’s domestic financial sector remains sound and stable, and financial institutions are well-regulated, resulting in a low likelihood that the swap facility will be drawn upon in the near term.’

But he said that the financial crisis could be an ‘ongoing concern’ next year and greenback liquidity could get tight again if the financial sector is strained, which may happen at the end of this year.

‘Having such a facility in place would come in handy to deal with such US-dollar liquidity issues,’ Mr Liew said.

Bank of America managing director and country treasurer Lee Chee Pin also does not expect the swap line to actually be drawn upon.

‘This facility helps to reinforce the confidence in the system, and will help things work more smoothly. I don’t think we will actually need to use it,’ he said.

After the announcements of the swap lines yesterday, the Singapore dollar rose 1.8 per cent to $1.469 against the US dollar, its biggest jump in a decade. The Korean won also surged more than 14 per cent against the US dollar.

Source : Straits Times - 31 Oct 2008

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High Notes 5 investors win two concessions from DBS

High Notes 5 investors win two concessions from DBS

By SIOW LI SEN

(SINGAPORE) Emotional investors in Lehman-linked DBS High Notes 5 wrangled two concessions from the local bank yesterday. For one, the bank is willing to let the disputes resolution body decide on complaints of up to $100,000 - double the existing cap. More compensation also seems to be on the cards.

Review promise: Mr Raju speaking to reporters after a 2 1/2-hour meeting with investors yesterday. He said DBS promises to review all 1,400 customers who bought High Notes5 and to complete the process by year end
Some investors wore red - DBS’s corporate colour - to ‘demonstrate solidarity with the bank’. But not many of them were placated as they left the Suntec City meeting with the bank’s executives grim faced.

‘I think it helped set the tone of what we’re going to do. A lot of people were emotionally disturbed, upset especially when we told them it would be case by case, they were not happy to hear,’ said Rajan Raju, DBS head of consumer bank.

‘But it’s a process we have to do, we have to go through it systematically,’ said Mr Raju, speaking to reporters after a 21/2-hour meeting with investors.

He said DBS has told the Financial Industry Disputes Resolution Centre (Fidrec) to take up complaints of up to $100,000. Some 80 per cent of DBS High Notes 5 investors bought less than $100,000, he said.

‘We okayed to take it up to $100,000,’ he said. DBS will look case by case for customers who invested more than that.

Decisions by Fidrec, which adjudicates consumer complaints against financial institutions (FIs), are binding on the FIs but not on the consumer.

He also said the bank promises to review all 1,400 customers who bought High Notes 5, even those who have not complained, and to complete the process by year end. Each case would be handled on a first-come, first-served basis and would take four weeks, he said.

Karen Ngui, DBS spokeswoman, confirmed that the bank would continue to pay compensation if more cases are confirmed to have been mis-sold.

On Oct 22, DBS said that based on the number of cases reviewed, the bank estimated compensation to be paid out would be $70-$80 million in Singapore and Hong Kong. DBS sold to 4,700 customers in both cities a total of $360 million High Notes 5, which became worthless following the collapse of Lehman Brothers.

Yesterday, its spokeswoman said: ‘The $70-$80 million is an estimate based on the number of cases thus far. If we find more cases where DBS standards were not met, we will take full responsibility.’

One Mr Lim told reporters most investors were loyal DBS customers and they were disappointed that the bank continues to insist that it would review each case on its own merits, rather than admit it has mis-sold a high-risk product as low-risk.

One Mr Susanto from Jakarta told reporters that his wife had gone to the bank on the maturity of her fixed deposit and was persuaded by a Bahasa-speaking relationship manager to buy $300,000 worth of High Notes 5 last year.

‘Till today, we have not received the prospectus,’ he said.

Source : Business Times - 31 Oct 2008

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Relief worldwide as galloping yen stumbles

Relief worldwide as galloping yen stumbles

Hope stirs that messy unwinding of carry trades can still be avoided

By LARRY WEE

(SINGAPORE) Asian currencies rallied yesterday on news of more rate cuts overnight, but the biggest relief came from the cut that Tokyo is expected to unveil today. The possibility that Japan will trim its already rock-bottom 0.5 per cent interest rate halted the relentless march of the yen in its tracks. It also revived hopes that a disorderly unwinding of the carry trade can be avoided.

Currencies that had suffered the worst effects of carry trade reversals over the past week recovered sharply versus the Japanese unit in Asian trading yesterday.

In recent days, the razor-sharp yen has touched multi-year peaks against several currencies. This trend screeched to a halt yesterday as the yen slipped between 13 and 19 per cent versus currencies like the euro, pound and Australian dollar - compared to its recent highs.

Versus the Singapore dollar, the Japanese unit also fell as much as 11 per cent from last week’s S$1.6645 highs per 100 yen, trading back to an intra-day low of below S$1.48 before finishing the day above S$1.49 again.

This reversal has huge implications. A popular currency strategy of the past two years has seen investors in Japan and elsewhere sell the low-yielding yen in favour of high-yielders such as the Antipodean pair, the British pound and the euro. Of late, the carry trade seemed to be unwinding with devastating effects as Japanese investors pulled their currency back home - strengthening the yen and sending other currencies plunging.

‘The odds for stability to return to global financial markets should increase if market believes that the unwinding of yen carry trades may have run its course for now,’ DBS researchers said yesterday.

‘If so, look for the US dollar and yen to return their ill-gotten gains, allowing other currencies to recoup their recent losses.’

This is crucial because the surging yen has made an already bad global situation worse all round, by creating a vicious circle that threatens to send Japanese stocks ever lower: As the yen strengthens, Japanese exports suffer, the Nikkei tumbles, and Japanese investors rush more money home from overseas. This creates even more demand for the yen, making it stronger still while weakening other currencies - and pushing the Nikkei even lower.

Meanwhile, another vicious circle is created elsewhere: The more stocks and currencies in other countries tumble, the more nervous hedge fund investors rush to redeem what’s left of their hedge fund holdings, and the more assets their hedge fund managers have to sell off to raise cash for such redemptions - which only makes matters worse for them again.

The hope that Japan will prevent a messy unwinding of the carry trade added to the general sense of relief yesterday.

On top of rate cuts by China, the US and Norway on Wednesday, both Taiwan and Hong Kong followed suit in Asia yesterday, and some believe that other European central banks may act by next week as well.

The US central bank also announced swap agreements of US$30 billion each with the central banks of Korea, Singapore, Brazil and Mexico.

South Korea’s key Kospi stock index and the Korean won both soared more than 10 per cent yesterday, relieved that the Fed announcement offers a fresh supply of much-needed US dollars to Korean banks - which are believed to be heavily dependent on short-term US dollar borrowings to fund their assets.

Locally, yesterday’s sharp rebound of almost 9 per cent for the local STI pressed the US dollar more than four Singapore cents lower from Wednesday’s Asian close of S$1.5012 at one point, before it ended the day 2.2 per cent weaker at S$1.4689. Traders also suggested that a weaker Wall Street close - after early Wednesday gains of more than 3 per cent, may have also been a factor.

Source : Business Times - 31 Oct 2008

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Union Investment buys $63m building

Union Investment buys $63m building

By UMA SHANKARI

(SINGAPORE) German fund manager Union Investment Real Estate has acquired the Applied Materials Building in Changi Business Park Vista for $63 million for one of its funds, it said yesterday.

Diversification: Acquiring the Applied Materials Building in Changi Business Park Vista, Union Investment Real Estate says business parks are well sought after by a different tenant profile than the typical CBD tenant
The 198,000 square foot industrial facility was owned by Applied Materials SEA - a supplier of products and services to the semiconductor industry - and is being sold with a sale-and-leaseback agreement. The development was acquired for Union Investment’s UniImmo: Global fund. It has a 30+30-year lease.

Union Investment entered the Singapore market in 2007 with its purchase of Vision Crest’s office block and the House of Tan Yeok Nee next door in the Penang Road/Clemenceau Avenue area for a total of $260 million. It bought the properties from a unit of mainboard-listed property group Wing Tai.

The latest purchase adds to the fund’s diversification as it is in a business park, Union Investment said.

‘Business parks are well sought after by a different tenant profile than the typical CBD tenant,’ said Steffen Wolf, managing director of Union Investment’s Asia-Pacific real estate unit. ‘ It offers us the possibility to diversify our portfolio in Singapore, both in usage and location.’

Apart from Applied Materials Building, which will lease back its existing space for one-and-a-half years, other prominent tenants in the building include EMC International and Discovery Channel.

The six-storey Applied Materials Building was designed as an environmentally conscious and intelligent building. It was given a Gold Green Mark award by the Building and Construction Authority in 2008. The building’s green features include energy-efficient air- conditioning and lighting systems with functions such as motion sensors for after-hours lighting control and the toilet lighting system.

Source : Business Times - 31 Oct 2008

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More private equity may flow into hospitality sector

More private equity may flow into hospitality sector

But investors must be choosy and have a long-term view, say analysts at a panel discussion

By NISHA RAMCHANDANI

PRIVATE equity is expected to play a bigger role in the hospitality sector, given the likely medium-term difficulty in securing debt finance.

‘If you take a longer term view, then you have to some extent ignore what’s happening now. That’s how you make serious money.’

- David Faulkner,
Colliers International

But investors should be careful to pick the right type of project and must realise that investments have to be made with a long-term view.

‘Prices have been correcting. And we expect them to correct a lot more,’ said Quek Kwang Meng, Citigroup’s real estate investment head international, yesterday. As such, investors should take their time in choosing which projects to put their money in, he said. Ideally, hospitality projects should fulfil a basic need - such as three-star service apartments to cater to business travellers.

Greenfield projects in parts of China such as Shanghai and Beijing also remain of interest to most private equity investors, Mr Quek said.

This is because of rural-urban migration and a steady stream of some four million university graduates every year. ‘They need to find jobs and are going to the cities to look for them,’ he said.

Still, investments have to be made with a long-term view.

‘If you take such a view, then you have - to some extent - ignore what’s happening now,’ said David Faulkner, regional director, valuation and advisory for Colliers International, referring to the slowing economy and credit crunch.

‘That’s how you make serious money.’

While distressed properties are likely to be found on the market in time, for now, Asia remains in good shape financially, he said.

‘The bigger corporations are in a better position. Smaller developers and corporations are suffering a bit. But there’s no sign of panic in the region.’

Mr Quek and Mr Faulkner were speaking during a panel discussion at the inaugural Invest, Develop, Build - Resorts, Spas, Hotels, Marinas Asia-Pacific 2008, a networking platform for the hospitality sector which kicked off yesterday.

The event is supported by the Singapore Tourism Board and the Economic Development Board and endorsed by governments of countries such as Thailand, Indonesia, Japan and Russia.

In a presentation yesterday morning, EDB positioned Singapore as the ‘living lab to develop and test new concepts’ such as green buildings or health-and-wellness concepts.

Singapore’s pro-business environment, access to regional partners, supply chain management capabilities and stylish city scene are among factors that make it a window to the future of urban Asia, according to EDB.

Source : Business Times - 31 Oct 2008

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Japan ready to calm markets, ease yen rise

Japan ready to calm markets, ease yen rise

Several measures expected to be unveiled today to fight financial fires

By ANTHONY ROWLEY
IN TOKYO

PRIME Minister Taro Aso is expected to advance to today the unveiling of a package of emergency measures that form part of an arsenal of weapons Japanese authorities are deploying to fight the global financial and economic crisis.

Mr Aso: Said to be rushing through plans now to clear the decks for an election
This will almost certainly be followed tomorrow by a cut in the Bank of Japan’s (BOJ) policy lending rate - the first in seven years - coupled, possibly, with foreign exchange market intervention.

Mr Aso’s announcement had also been expected to come tomorrow but, given the dramatic collapse of Tokyo stock prices earlier this week and the brutal surge in the value of the yen, the package of emergency measures will almost certainly come today in order to help calm markets, sources close to the government suggested.

The BOJ is, meanwhile, under pressure to lower interest rates, chiefly as a gesture of solidarity with other leading central banks and as a means to calm shattered market nerves. The central bank is expected to cut its 0.5 per cent overnight lending rate to 0.25 per cent, especially if the US Federal Reserve drops rates by further 0.5 per cent at a meeting which was being held yesterday. The European Central Bank (ECB) and the Bank of England will probably follow suit next week.

Tokyo’s Nikkei 225 stock average rebounded 7.7 per cent or 589.98 points yesterday to 8,211.90 in expectation of an interest rate cut and in anticipation of the government’s package of emergency measures. The yen, which hit a 13-year high of around 90 to the US dollar, earlier this week declined after the Group of Seven (G-7) finance ministers warned of excessive movements in the currency on Monday. But yesterday it climbed back to 96 to the dollar.

The G-7 statement stirred speculation of foreign exchange market intervention to stem the yen’s disorderly rise. A former senior Japanese Finance Ministry official told The Business Times that such intervention would be most likely to succeed if it were accompanied by a cut in interest rates.

Chief economist Richard Jerram at Macquaries Securities in Tokyo agreed. A rate cut ‘would have limited effect unless accompanied by other actions from the BOJ’, he said.

Currency markets are watching very closely for signs of any such intervention because of the critical role played by the formerly weak yen in boosting global asset prices via yen ‘carry trades’, an analyst said.

According to media reports, the Bank of Japan will tomorrow slash its estimate of the country’s 2008 economic growth from the 1.2 per cent previously forecast by the central bank to virtually zero.

This is in line with recent forecasts by many private economists as Japan’s exports tumble, removing the one remaining prop to the growth of a Japanese economy hit by tumbling consumer spending and weakening corporate capital spending.

The package of measures anticipated today are expected to centre on restoring stability to Japan’s financial markets and institutions, however, with macro-economic supports in the form of tax cuts and public spending on infrastructure and other big-ticket government projects coming later.

Today’s package will likely include several measures to stabilise Japan’s equity markets. These will include a clampdown on ‘naked’ or uncovered short- selling of stocks; a more flexible interpretation of restrictions on equity holdings by banks; allowing Japanese firms to expand equity sales on behalf of their employees; extending a reduction in tax on capital gains from stocks; and promoting equity holdings by small investors .

Measures to ’strengthen the intermediation function’ of Japanese financial markets will include flexibility in determining the capital ratios of Japanese banks and injections of public capital into banks. Japan’s three giant bank holding companies have admitted a need to raise substantial new capital but the government is hoping they can do this through the market, so that public funds - up to 10 trillion yen (S$159 billion) - can go into smaller regional banks

The onset of the financial crisis has heightened speculation that Mr Aso will now delay an earlier-expected announcement to dissolve the Lower House of Japan’s Parliament on Nov 30 so that a snap general election can be held.

However, sources close to the prime minister insisted yesterday that no such decision has yet been made. Some political analysts say that Mr Aso is rushing through measures now in order to clear the decks for an election.

Source : Business Times - 31 Oct 2008

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