Communication, crisis plans key to protecting corporate reputations

Communication, crisis plans key to protecting corporate reputations

SINGAPORE: Corporate reputations built up over years can be tarnished in a blink of an eye. Scandals like Enron and the recent crisis of confidence which affected Hong Kong’s Bank of East Asia can shake consumers’ trust in companies.

Experts said firms need to manage Internet communications and have crisis plans in place in order to safeguard their reputations.

Last week, long queues formed outside Bank of East Asia branches in Hong Kong after rumours about the bank’s stability were spread via mobile phone text messages.

In the wake of the collapse of big-name banks in the United States and Europe, these rumours also spread to Singapore where concerned customers converged at the Bank of East Asia’s branch for answers.

Authorities have since declared that the bank’s operations are safe and stable. But observers said it is a reminder of how quickly corporate reputations can be shaken.

The proliferation of the Internet and online social networks, blogs and forums has made it even more challenging for firms to manage their reputations.

Leslie Gaines-Ross, chief reputation strategist, Weber Shandwick, said: “Some of the best practices for managing reputations online – the first one is to not get into trouble in the first place. So, a company should be doing the right thing all the time so that they are not really worried about what is being said online.

“The second thing that they can do is if something is being said critical of the company online, is to actually follow the conversation, see how big it is, how prevalent it is and if it is starting to turn into a much bigger issue, (they have) to actually pick up the telephone and maybe call that blogger.

“One of the dangers is to send an email or response online. When you do that, that email or response could be sent all over the Internet and it could just get bigger and bigger. So, it’s important to actually try and establish a relationship with the blogger, call them, have a conversation and tell them your side of the story.”

By contacting people directly, companies will be better able to explain the situation, compared to just sending an email or response online. Experts also recommend that firms put in place comprehensive crisis strategies.

“Companies need to be flexible. They need to be always prepared and many of the best companies have crisis preparedness plans already. They have actually done simulations; they have actually seen what they would do and acted it out as if it had happened. So, there are many different ways that companies can be prepared,” said Mr Gaines-Ross.

Some common triggers of reputation failure include mishandled responses, product tampering, financial irregularities, and executive misconduct.

Industry watchers said that data loss and security breaches can increasingly place a company’s reputation in danger.

- CNA/so

Source : Channel NewsAsia - 02 Oct 2008

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The MRT guide to Singapore home prices

The MRT guide to Singapore home prices

Buyers increasingly keen on units near stations, which can command up to a 20% premium

By Fiona Chan, Property Reporter

HOME seeker Wan Kum Wai is hunting for a flat that is well-located - specifically, within walking distance of an MRT station.

For this convenience, the multimedia designer and his wife Jessie are willing to pay 10 to 20 per cent more than they would for a home a few bus stops away from a station.

‘We don’t drive, and the cost of living is running high,’ he said. ‘We don’t mind paying more because we think this will help us save on transportation costs and other expenses in the long run.’

In an era of sky-high petrol prices, multiplying Electronic Road Pricing gantries and increasing worries over environmental degradation, the all-important ‘location, location, location’ element of a home purchase has taken on a new slant.

While the classic prime districts of 9, 10, 11 are still sought after, home buyers are also increasingly keen on properties near MRT stations.

Apart from non-drivers, MRT-accessible homes also attract buyers with school-going children as well as investors who want to rent the units to expatriates, many of whom rely heavily on public transport, say property agents.

Ms Mylene Kwan, a PropNex agent who is helping Mr Wan find a home, said some of her clients have only one priority: to be near an MRT station.

‘Many of them don’t drive, so it’s very important to these buyers,’ she said.

But such proximity comes at a price.

Ms Kwan estimated that HDB flats with this privilege have their valuations alone jacked up by at least $20,000 or $30,000, and buyers often pay even more in cash on top of that.

The most popular HDB flats near MRT stations are those close to town, such as in the Tiong Bahru, Redhill and Queenstown areas, she said.

But even in the suburbs, a nearby station can give a big boost to prices.

In Woodlands, owners of flats near the MRT station are asking $40,000 to $50,000 above valuation just because of the location, said Ms Rohaizah Ramjan, another PropNex agent.

Whenever these flats come on the market, they get snapped up within two or three weeks, she added. For ‘normal ones’ further from the station, it can take a few months for a sale to be closed.

‘Flats near MRT stations are harder to come by, because owners are comfortable there and don’t want to sell,’ she said. ‘So if a buyer has the budget and they see a well-located flat for sale, they just grab.’

The same principle applies to private property. Condominiums near MRT stations can command a premium of up to 20 per cent over similar units a bit further away, said Mr Eric Cheng, executive director of HSR Property Group.

The price difference stems partly from the convenience of these homes, but is also due to their limited supply, he added.

‘If you look at the whole map of Singapore, I dare say only about half the MRT stations have condos right next door. Of course, they command a premium, a good 10 to 20 per cent above neighbouring properties 10 minutes’ walk away.’

At Tiong Bahru MRT station, for instance, new condos that are at the doorstep of the station - such as Twin Regency and Regency Heights in Kim Tian Road - fetch $1,240 per sq ft (psf) on average.

About five to 10 minutes away, prices average $1,072 psf, or about 15 per cent less, at the equally new The Regency at Tiong Bahru on Chay Yan Street.

‘Most of these units are rarely on the market,’ said Mr Cheng. ‘Even if the owners are not staying in them, they might not want to sell because they can get very high rental returns.’

Still, not all MRT stations are equal. Property values can differ widely between two consecutive stops, such as in the case of Novena and Toa Payoh, where condos around the former are almost double the price of those around the latter, according to an extensive analysis done by property firm Savills Singapore.

Even stations within a few kilometres of each other can see significantly different prices.

Savills’ data showed that condos around the Dhoby Ghaut station, for instance, fetched an average of around $1,600 psf in the first six months of the year. Less than 2km away, condos near the Little India station cost only two-thirds that on average, or $1,071 psf.

‘Apart from the proximity to an MRT station, buyers do look at other factors,’ said Mr Ku Swee Yong, Savills’ director of marketing and business development.

‘Equally important is the quality, age and tenure of the project and its facilities, how much the unit can fetch in rentals and what amenities are nearby.’

Mr Ku cited Lavender and Farrer Park MRT stations, separated by just 1.5km in distance but about $200 psf in price.

At Lavender, well-equipped condos such as Citylights boosted prices in the vicinity to an average of $1,104 psf in the first six months of the year. But Farrer Park is surrounded by several smaller condos with minimal facilities, so rents and prices tend to be lower, said Mr Ku.

Source : Straits Times - 02 Oct 2008

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New business park space looms over CBD - Singapore

New business park space looms over CBD - Singapore

New supply over next 5 years projected at about 7.8m sq ft: CBRE
By ARTHUR SIM

(SINGAPORE) With the Singapore market still digesting the fact that there is about 10.2 million sq ft of office space in the pipeline, news that there is also substantial business park space coming is not likely to go down well.
According to CB Richard Ellis, projected new supply of business park space over the next five years is about 7.8 million sq ft. This includes developments like The Icon@International Business Park, Solaris, Mapletree Business City, and Centric Singapore.

CBRE also believes 67 per cent of this has already been pre-let.

By comparison, only about 25 per cent of future office supply is thought to be pre-let.

While certain conditions apply before anyone can move into a business park space, it has become increasingly clear that businesses themselves have no qualms about moving to the outskirts of the city. Already, Changi Business Park has attracted MNCs like Citigroup, Standard Chartered Bank and Credit Suisse.

CBRE executive director (office services) Moray Armstrong added that many new leases in business parks ‘are in motion’, boosted by the availability of quality business parks.

‘The business parks have evidently been the sweet spot for many occupiers over the past 12 months,’ he added.

 
And business parks, which Mr Moray describes as a ‘hybrid’ of traditional office space and high-tech industrial space, is set to evolve even more.

While Changi Business Park is characterised by individual developable land plots available for end users or developers to construct build-to-suit corporate buildings, Mr Armstrong reveals that the upcoming 1.7 million sq ft Mapletree Business City in the Alexandra vicinity will be a more office-like integrated precinct including retail space under single ownership. It is also just minutes from the CBD.

And the concept is proving to be popular as over 400,000 sq ft of pre-lease deals have already been done ahead of completion in H2 2010.

Demand for business park space is likely to grow at the expense of standard office space. Business park rents, at an average $3.15 psf per month in Q2 2008, are considerably lower than average prime rents of $16.10 psf per month.

But while Mr Armstrong believes that business parks will certainly compete to an extent and will slightly dilute overall office demand, he said: ‘Nonetheless, we do not expect this to impact the office sector significantly.’

He added: ‘There is far less speculative business park development as a rule. Most projects that are being built are pre-let or built-to-suit.’

According to CBRE’s analysis, Grade A office space vacancy remained tight in Q2 ‘08 at 0.6 per cent. However, vacancy rates for the CBD fringe rose significantly from 4.6 to 7 per cent.

For the same period, vacancy rates for decentralised areas dipped to 1.6 per cent from 3 per cent. CBRE noted there was ‘heightened interest’ in the Alexandra/Harbourfront micromarket.

Interestingly, new supply could also have a diluting effect on the business park space segment as well. JTC’s Q2 ‘08 quarterly facilities report reveals that its occupancy level for its business park space declined marginally by 0.4 percentage points quarter-on-quarter to 94.3 per cent. This was partly attributed to new supply from Fusionopolis which saw gross allocation of about 450,000 sq ft of space.

UBS Investment Research estimates that financial firms occupy 20 per cent of CBD offices and 30-50 per cent of the prime buildings within it.

UBS does not expect major job losses here from the fallout of the US financial crisis. Losses, if any, will only occur in 2009. Still, it said that if even between 1.5-6 per cent of the estimated 156,900 financial sector jobs are lost, it could equate to a drop in demand in office space of between 243,000 and 971,000 sq ft.

 
Source : Straits Times - 02 Oct 2008

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US Senate to vote on sweetened bailout plan - WASHINGTON

US Senate to vote on sweetened bailout plan - WASHINGTON

Amended deal adds riders for tax breaks, higher bank deposit insurance

(WASHINGTON) After the shock defeat of a bailout plan for the American financial system rocked global markets on Monday, the US Senate is now poised to push through a sweetened version.
 
Plan B: Senate Banking Committee chairman Christopher Dodd said that some House members who voted down the plan are now having second thoughts
It was set to vote yesterday evening Washington time on a modified US$700 billion financial rescue plan that will be tied to an increase in bank deposit insurance limits and tax breaks to win Republican support.

The Senate unanimously agreed to vote on the rescue plan along with the measure temporarily raising the limit on federal deposit insurance to US$250,000 from US$100,000.

That increase was proposed by Republicans critical of the plan authorising Treasury Secretary Henry Paulson to buy troubled debt from financial institutions, which was rejected by the House on Monday.

Also linked to the bailout plan is a two-year extension of tax breaks that will save individuals and corporations about US$149 billion over the next decade. The bill, approved by a 93-2 vote in the Senate on Sept 23, would spare 24 million households from a US$61.8 billion alternative minimum tax that is due to take effect this year.

US regulators were also readying a revision of the ‘fair value’ accounting rule that has led to massive charges on mortgage-related assets, and has been blamed for deepening the credit crisis. That would mean that US banks would not need to mark hard-to-price assets down to fire sale prices.

Two-thirds of House Republicans and 40 per cent of Democrats defeated the bailout plan on a 228-205 vote on Monday. President George Bush and Senate leaders had vowed to revive the legislation.

The measure will require 60 votes to pass, instead of a simple majority in the 100-member Senate. This was the arrangement under which Senate leaders agreed to bring it to the floor for a vote quickly.

US stocks, after suffering their worst fall in 21 years on Monday after the House rejected the original package, roared back on Tuesday as investors bet that Washington would save the package to stabilise banks and markets.

The S&P 500 index shot up by more than 5 per cent. Asian stocks followed suit yesterday. The Dow Jones Average was trading at 10,722.83 points yesterday about three hours into the session, a loss of 127.83 points or 1.18 per cent. The Nasdaq was 1.27 per cent lower at 2,055.92 for a loss of 26.41 points.

The Senate is expected to pass the bill, with most Democrats and Republicans behind it. There’s also increased optimism that the House will go along, as pressure mounts on lawmakers to help restore confidence in the system.

After a week-long torrent of calls and e-mail messages from angry voters opposing the rescue package, the tide turned after markets plunged on Monday.

‘Over US$1 trillion worth of market value was wiped off the books by the stock market drop,’ said Senator Robert Bennett, a Republican. ‘It is ordinary people looking at ordinary pensions, with their ordinary Main Street kind of 401(k) plans, who lost that US$1 trillion. And they lost it in a matter of minutes.’

Senate Banking Committee chairman Christopher Dodd, a Democrat, said that some House members who voted down the plan are now having ’second thoughts’ and want ‘another shot at this’. — Bloomberg, Reuters, NYT

 
Source : Straits Times - 02 Oct 2008

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Don’t count on a Santa bailout - Singapore

Don’t count on a Santa bailout - Singapore

Rising risks from US will fan headwinds in stock markets, say analysts
By LYNETTE KHOO

(SINGAPORE) It looks like Santa Claus may not deliver a stock market rally this Christmas, with investors bracing themselves for lean times in the fourth quarter.
 
 
While technical charts suggest oversold positions and that a bottom is near, analysts say the escalation of risks from US and Europe would only fan headwinds in markets.

‘I think the effects of the sub-prime crisis that affected Singapore from the fourth quarter last year is now more serious and deep-rooted. This being the case, it will take a longer time to unwind all these that are affecting the equities market,’ says Macquarie Securities research head Soong Tuck Yin.

The benchmark Straits Times Index has slumped 31.9 per cent year-to-date. It is now set to end 2008 lower than the 3,465.63 level at end-2007. The MSCI’s Asia Pacific Index of regional shares has dropped 32 per cent since the beginning of the year.

DBS Vickers says in a report that although current valuations look cheap compared to the average PE of 15.6 times, and are close to the Sars low of 9.3 times, the derating of the market amid heightened risks presents a potential downside for the STI of a low of 2,100 points.

Many analysts believe there is still hope for the US bailout package but think its resuscitation may not bring an extended rally beyond a brief technical rebound.

‘A lot of the developments are still unravelling in the US and Europe right now; the big picture does not look good and I doubt that markets have troughed,’ says Kim Eng director of research Ong Seng Yeow.

‘In the short term, our technical strategy team believes that the Straits Times Index may be heading toward the support level of 2,307 where a technical rebound or rally may occur,’ he adds.

UOB Asset Management senior director Wong Ann Derk notes that the plan to buy troubled assets is helpful in boosting liquidity, buying time for banks to recapitalise and instilling market confidence, but the root of the issue remains, namely the US housing problems, slowing growth and poor consumer confidence.

For Singapore, there are clouds, too. The odds of another quarter-on-quarter decline in GDP in the third quarter has risen after non-oil domestic exports hit the skids in August, sinking 14 per cent from a year ago.

‘I think there are ominous signs that the domestic economy is weakening. While our market is somewhat more resilient because of our safe-haven status as an oil refinery hub, don’t forget that sentiment is determined by the aggregate money flows of the world economy,’ says Mr Ong of Kim Eng. ‘Our equity markets are equally at risk if the financial turmoil in US and Europe spills over to Asia.’

Market sentiment over the economy and corporate fundamentals remain weak, analysts say. They note that the fiscal third-quarter results due out in the fourth quarter have already been factored in and focus has shifted to the dismal earnings outlook for fiscal 2009.

DBS Vickers says it expects the cycle of earnings downgrades to continue into 2009, with the biggest risks to earnings coming from the property and banking sectors.

Describing the current market situation as a ’stalemate’, OCBC research head Carmen Lee says investors are staying on the sidelines. But for those with a two to three-year horizon, current valuations offer good yields. With no clear bottom in sight, analysts hail cash as king.

But any window- dressing by fund managers at the end of the quarter cannot be ruled out.

To stay invested, analysts recommend defensive stocks that give predictable dividend yields, and companies that are well-capitalised and need little financing.

Mr Soong suggests avoiding companies that are highly leveraged. He is ‘overweight’ the offshore sector and Reits.

Mr Ong of Kim Eng favours oversold plantation and agricultural stocks, and defensives like SMRT and SPH.

‘The value investors will definitely be the first to come back into the market,’ Ms Lee of OCBC says. Those hoping for a market recovery would probably go for the blue chips, which are usually the first to rebound, she adds.

 
Source : Straits Times - 02 Oct 2008

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