PM Lee says Commonwealth countries can take practical steps to move ahead

PM Lee says Commonwealth countries can take practical steps to move ahead

TRINIDAD AND TOBAGO: Singapore Prime Minister Lee Hsien Loong has said Commonwealth countries can take practical steps to move ahead despite circumstances that may differ among members.

Speaking at a session on sustainable development, at a meeting of Commonwealth leaders in Trinidad and Tobago, Mr Lee outlined several strategies that can help countries progress.

He made the call for free trade in the globalised world, saying it can help poorer countries develop and give members stakes in one another’s success.

Other measures include investing in education and upgrading skills and capabilities.

The Commonwealth group consists of 53 members covering some of the world’s richest and poorest nations.

Outside the Commonwealth, Mr Lee also called on the more influential group of G20, made up of mostly industrialised countries, to formalise its consultations.

He said this will help enhance the G20’s legitimacy and effectiveness. - CNA/ms

Source : Channel NewsAsia - 30 November 2009

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Singapore to reduce emissions from a “business-as-usual” level

Singapore to reduce emissions from a “business-as-usual” level

By Imelda Saad

TRINIDAD AND TOBAGO: Commonwealth leaders have thrown their full support behind the United Nations climate talks in Copenhagen next month.

At their summit in Trinidad and Tobago, all 53 member states pledged their commitment to seal a legally binding agreement, aimed at cutting greenhouse gas emissions.

World leaders need to agree on stringent cuts that have to be in place by the end of the first commitment period of the Kyoto Protocol in 2012.

It is a big boost for the climate meeting, as the Commonwealth nations represent two billion people - a third of the world’s population.

The Commonwealth summit is the last international gathering before the Copenhagen talks.

The leaders issued their statement after a special session on climate change with UN Secretary-General Ban Ki Moon and Danish Prime Minister Lars Rasmussen.

“We, as the Commonwealth representing one-third of the world’s population, believe the time for action on climate change has come,” said Australian Prime Minister Kevin Rudd. “The clock is ticking to Copenhagen, we’ve achieved one further significant step forward with this communique.”

Leaders said a crucial breakthrough in the Commonwealth statement is a resolution on the importance of a “fast start fund” to help poorer nations cope with climate change.

The proposed Copenhagen Launch Fund aims to start in 2010 and build to US$10 billion annually by 2012.

Leaders also agreed that 10 per cent of this fund should immediately go towards helping small island states which are most vulnerable to rising sea levels.

There is overall optimism about the upcoming Copenhagen summit, a stark contrast from a few weeks back when talks looked set to derail because countries could not agree on standards. Now, the target for a full legally binding climate change treaty is no later than 2010.

Leaders from about 90 countries have confirmed that they will be attending the UN climate change summit in Denmark next month.

The Danish Prime Minister and the UN Secretary-General have welcomed the Commonwealth declaration.

Mr Ban said: “We need the leadership and commitment of all the leaders and as Secretary-General of the United Nations, I will continue to devote all my energy and time under my authority to make this - seal the deal in Copenhagen, which has very serious implications for the future of our humanity and for the future of our planet.”

UN Chief Ban has spent the past two days trying to shore up support from Commonwealth leaders, including Singapore Prime Minister Lee Hsien Loong.

Mr Ban’s call on Mr Lee, which lasted for about half an hour, saw both leaders discussing the Copenhagen meeting, which the Singapore PM has said he will attend.

Singapore has pledged its full backing for a successful outcome in Copenhagen.

However, the city-state’s position is that any treaty or political declaration must take into account the different circumstances among different countries.

For example, there are no energy sources such as hydro or nuclear energy in Singapore. Mr Lee has said the country will reduce emissions from a “business-as-usual” level provided other countries also commit to do their part in a global deal.

There is also general consensus that developed nations should lead the way as they are the largest emitters of greenhouse gas.

Separately, PM Lee took the opportunity to brief Commonwealth leaders on the inaugural Youth Olympic Games (YOG) in Singapore next year.

He gave a presentation to delegates providing insights into areas such as the Olympic Village, sporting events, cultural education programme and the YOG torch journey.

Mr Lee invited Commonwealth countries to send their best youth athletes to the Games.

Later in the day, Mr Lee had a bilateral meeting with Bangladeshi Prime Minister Sheikh Hasina Wazed.

- CNA/yb

Source : Channel NewsAsia - 30 November 2009

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Dubai World rejected sale of distressed assets: report

Dubai World rejected sale of distressed assets: report

(DUBAI) Dubai World refused to offload assets at fire-sale prices to repay obligations, forcing it to seek a debt standstill, a newspaper report yesterday quoted an unnamed source at the government-controlled firm as saying.

Stocks from Tokyo to New York have been haunted by concern that banks were exposed to state companies in Dubai, though world leaders expressed confidence in the global economic recovery last Friday despite the fears.

‘The group absolutely refused in the last few months to sell a number of good investment and property assets at low prices,’ al-Ittihad newspaper said, quoting a source at Dubai World, the holding company at the centre of Dubai’s debt crisis.

Last Wednesday, the government of Dubai asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, as it restructured the Dubai World group.

The restructuring is expected to focus on property and foreign investments which have been worst hit by the economic crisis, the source said. — Reuters

Source : Business Times - 30 November 2009

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UAE central bank sets up emergency facility for banks

UAE central bank sets up emergency facility for banks
Move seen as aimed at preventing capital flight, run on deposits

(DUBAI) The United Arab Emirates’ central bank set up an emergency facility yesterday to support bank liquidity in the first policy response to Dubai’s debt woes that threatened to paralyse lending and derail economic recovery.

It said it ’stands behind’ local and foreign banks operating in the country.

Dubai rocked the financial world last Wednesday when it said it would ask creditors of Dubai World (the conglomerate behind its rapid expansion) and Nakheel (builder of its palm-shaped islands) to agree to a standstill on billions of dollars of debt as a first step to restructuring.

As a result, banks face heavy losses and the risk that fearful depositors could rush to remove cash from the system, threatening interbank lending with the second largest Arab economy still facing a downturn this year.

‘It might support the market a little bit but I don’t think it is enough,’ said Shawkut Raslan, head of brokerage at Prime Emirates brokerage. ‘I think some foreigners will take their money out of the country and others will be afraid to put their money into these markets.’

The central bank policy move came late yesterday as Dubai’s Supreme Fiscal Committee gathered to prepare a statement before markets open today in an attempt to reassure investors. The central bank said the banking system was more sound and liquid than a year ago, when the global crisis ended the oil and real estate-fuelled boom in the Arab Gulf, the world’s top oil-producing region.

The monetary authority said last Saturday it was closely watching events stemming from the Dubai debt crisis to ensure there is no negative impact on the UAE economy.

In London, the Independent on Sunday newspaper reported that banks that lent over US$30 billion to Dubai World were planning to appoint auditors KPMG to represent them in talks to recover their money.

The banks include HSBC, Britain’s biggest bank, as well as Royal Bank of Scotland, Lloyds Banking Group, and Standard Chartered, the paper said, without citing sources.

KPMG will be formally appointed once the creditor banks have created a steering committee comprising five or six of the main lenders to lead the negotiations, it added.

Before the Dubai debt crisis, the UAE economy was seen contracting 1.1 per cent this year before returning to 2.9 per cent growth in 2010, a Reuters poll of analysts showed earlier this month.

Analysts said the central bank’s move was a preventive measure to avoid a possible capital flight and a run on deposits when markets reopen today after a four-day holiday break.

‘It is important because the main concern is that there might be some panic behaviour by depositors in Dubai and by bankers who want to take deposits out of the banking system,’ said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.

Senior bankers in Abu Dhabi, Dubai’s oil-rich cousin in the UAE federation, told Reuters last Friday that Abu Dhabi banks have built up an exposure to Dubai-based companies worth at least 30 per cent of their loan books.

In reaction to Dubai’s debt problems, Fitch Ratings has said it downgraded Dubai Bank, Tamweel and Bahrain’s TAIB Bank.

‘It (the facility) would cover the immediate concerns related to deposits in the UAE banks,’ said Ghanem Nuseibeh, senior analyst at Political Capital consultancy. ‘It doesn’t mean that lending would necessarily ease. It is no guarantee for depositors. We still don’t know the extent of the UAE banks’ exposure to Dubai’s problems.’

State-run Dubai World had US$59 billion of liabilities as at August, a large proportion of Dubai’s total debt of US$80 billion, and repayment of Nakheel’s US$3.5 billion worth of Islamic bonds, which were originally due to mature on Dec 14, was widely expected by the market to be met.

Last year, the UAE Finance Ministry poured US$6.8 billion into bank deposits, the first tranche of a US$19.1 billion rescue facility it set up to help lenders weather the onslaught of the global credit crisis.

It deposited another US$6.8 billion into banks in November 2008 but has not made any statements since, regarding the remainder of those funds. This came after the central bank set up a US$13.6 billion emergency bank facility to combat the crisis. — Reuters

Source : Business Times - 30 November 2009

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Reit investors get a reality check

Reit investors get a reality check

They discover the ability of most Reits to deliver decent yields - something which many had neglected when they chased capital gains before the recession

By EMILYN YAP

(SINGAPORE) After a heart-stopping year, investors in real estate investment trusts (Reits) seem to have swallowed a dose of reality on what the sector can - and cannot - deliver.

It was a lesson learnt the hard way. Once favoured for offering high capital gains, the Reit sector lost that shine early in the year as unit prices tanked - the FTSE ST Reits Index fell as much as 50 per cent from September 2008 to March 2009. The sector was hit by market concerns over earnings, as property rents and occupancy rates dropped, and debt levels, as credit lines froze.

Saizen Reit, for one, was forced to suspend distribution payouts since its fiscal second quarter because of credit problems. More recently, the public wrangle between MacarthurCook Industrial Reit and Cambridge Industrial Reit highlighted the financing issues that the sector has to grapple with.

What stood out amid the tumult was the ability of most Reits to deliver decent yields - something which many investors had neglected when they chased capital gains before the recession. Looking at annualised distributions per unit (DPU) in the third quarter of the calendar year and closing unit prices as at last Thursday, all 13 Reits BT looked at had distribution yields of more than 5 per cent.

This has changed how investors view the sector. ‘People are becoming more receptive to Reits as yield instruments rather than as growth instruments,’ noted CIMB Reit analyst Janice Ding.

The financial crisis has tested the strength of the Reit model and revealed risk factors which investors may have previously overlooked, market watchers say. OCBC Investment Research analyst Meenal Kumar said: ‘We believe this is for the better, as investors now have a more balanced perspective on the strengths and weaknesses of this investment vehicle.’

Overall distribution yields in the sector could have been higher if not for weaker DPUs. Of the 13 Reits, as many as nine saw their DPU slide from a year earlier.

For five of these nine, lower DPUs were caused by reduced earnings. This was the case for those in the hospitality sector - Ascott Residence Trust and CDL Hospitality Trust both had less distributable income as the downturn hit tourism.

But there were four other Reits with lower DPUs even though their distributable income increased. Equity raising was the culprit - all four conducted rights issues or private placements in the one-year period under review. This means that distributable income had to be spread over larger unit bases, lowering DPUs.

Equity raisings have been rife among Reits, as they tried to pay off maturing debts amid the credit crisis. Their efforts have been successful - so far - in reducing the pressure on the balance sheet. According to the Monetary Authority of Singapore’s Financial Stability Review, the local Reit sector had 18.5 per cent of total borrowings maturing in 2009 and 2010 as at end-October this year, down from 57 per cent at end-2008.

While immediate refinancing pressures have eased, Reits still have huge chunks of debt due in 2011 and 2012. This leads some analysts to believe that equity raisings will continue next year. CIMB’s Ms Ding expects acquisitions - on top of debt repayment - as another driving factor. With so much fund raising, more discerning investors may also not respond well to cash calls used merely to reduce debt, she added.

Some Reits are already showing renewed appetite for assets. ‘We expect more acquisitions in 2010 as that is an important growth strategy underpinning the Reit model,’ said OCBC’s Ms Kumar.

The pace of acquisitions may be constrained in the medium term because Reit managers are targeting lower gearing after the crisis, she added. ‘But risk appetite is not static and it could increase as and when the property market recovers.’

For now, Reit investors are likely to remain cautious. As the MAS highlighted in its report, several other risks remain - credit conditions could worsen again with sudden and large declines in financial markets, and rental yields for commercial and industrial space could fall further.

In particular, office Reits are gaining little favour among analysts. CIMB’s Ms Ding believes that negative rental reversions will set in next year and affect DPUs. The dilutive effect of rights issues and private placements will also extend into 2010 for some Reits, she said.

OCBC’s Ms Kumar believes that hospitality Reits should see year-on-year gains in income as the travel industry recovers, helping occupancy and room rates improve.

Source : Business Times - 30 November 2009

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Calmer home sales pace likely in 2010

Calmer home sales pace likely in 2010
Lull likely before sector picks up from late Feb; more high-end homes expected next year
By Joyce Teo

The unusual frenzy in private home sales till September this year is fast winding down, as launches slow.

It should be a short lull before new launches kick in from late February, after Chinese New Year. Next year, however, is expected to see a steadier and calmer pace.

And, unlike this year, more high-end launches are expected next year, experts said.

DTZ head of South-east Asia research Chua Chor Hoon expects sales activity to remain low for next month and early next year.

This is because there are few mass market projects being launched in the next few months.

Recent government cooling measures seem to have had an effect too, making home hunters and speculators more wary about wading in, she said.

The property market will likely pick up only after Chinese New Year in mid-February next year, said Knight Frank’s executive director (residential) Peter Ow.

Apart from the high-end launches next year, home hunters can expect several large projects including those on sites that were sold en bloc during the previous boom, experts said.

These include the site of Minton Rise condo in Hougang; a site in Dakota Crescent, near Old Airport Road; and a project in Yishun.

The 99-year Minton Rise project will have at least 1,000 units of various sizes while the Dakota Crescent site, also a 99-year project, may have around 600 units.

In Yishun, MCL Land has a launch-ready 608-unit project a 10-minute walk from the Khatib MRT station.

Prices for this 99-year condo, which offers a view of Lower Seletar Reservoir, could well be above $700 per sq ft (psf), an industry source estimated.

Other likely non-prime projects in the first half of next year include the collective sale sites of Flamingo Valley in Siglap and Rainbow Gardens in Toh Tuck Road.

But one industry source said it is the high-end market that will be interesting to watch.

Next year, developers are expected to start pushing out their high-end projects for sale, after a year with no major luxury launches. ‘Buyers will have a lot of choices so they should be selective,’ the industry source said.

Possible new prime launches include the condo on the former Parisian site in Orchard; The Laurels as well as Urban Resort in Cairnhill; Ardmore III and the new condos on Pin Tjoe Court and Anderson 18 sites in Ardmore Park.

Some of these en bloc sites were kept for lease as the developers rode out the downturn.

While mass market home prices have since peaked, high-end prices have not reached the previous high of $4,000 psf to $5,000 psf.

Today, there is still little demand for homes priced beyond $3,000 psf, sources said.

Affordability has been a key issue in the past year, such that many developers reconfigured their projects to have smaller units in general in order to keep absolute prices low.

MCL Land, for instance, reconfigured its Yishun project to allow for more small units.

Most new launches next year would still have small units in general, said Mr Ow.

Third-quarter data shows that these small units of 500 sq ft and below remained popular, with sales totalling 253 units, up from 102 units in the same period a year ago, according to data from DTZ.

They form about 2.7 per cent of total transactions this year, compared to 3 per cent last year, and just under 1 per cent in 2007.

Source : Straits Times - 29 November 2009

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Singapore firms prepared for debt crisis

Singapore firms prepared for debt crisis

Second Minister for Finance and Transport Lim Hwee Hua said Singaporean companies operating in Dubai would have been prepared for the debt crisis there.

She said companies would not be surprised by the announcement last Thursday, when government investment firm Dubai World asked for a six-month delay in repaying a US$59 billion (S$81 billion) tranche of its total debt of US$80 billion.

‘For a while, they have been giving some feedback about the difficulty with some of the projects. So I believe they would have been preparing for some of these eventualities,’ Mrs Lim said on the sidelines of a community event in Tampines.

As for Singaporean banks, she said they are very diversified in terms of their risk exposure to any location or industry.

Hence, she would not expect any exposure to affect them.

Mrs Lim said such risks are part and parcel of a globalised marketplace.

As such, companies will have to assess carefully the sovereign and corporate risks involved in every market.

‘They (companies) should work that into their own risk assessment and risk management of the business so that going forward, as they go into the new markets, they would know how to handle the different risk profiles.’

Source : Straits - 29 November 2009

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Dubai crisis won’t derail recovery, say leaders

Dubai crisis won’t derail recovery, say leaders

Major banks also play down their exposure to debt, but analysts warn of repercussions

London - World leaders have expressed confidence in the global economic recovery despite fears about a debt default by Gulf emirate Dubai, while major banks have played down their exposure to the debt.

Last Friday, stocks from Tokyo to New York were haunted by concern that banks were exposed to state companies in Dubai, whose rise from a desert backwater into the business hub of the world’s top oil-exporting area lured expatriate cash and executives.

United States markets closed lower last Friday , with the Dow losing 1.5 per cent to 10,309.92 points. The market regained its poise after European markets clawed back some of last Thursday’s horrendous losses to close about 1 per cent higher.

Asian markets slumped 3 per cent to 4 per cent across the board last Friday.

Since then, the ruler of the once-booming city-state has been to neighbouring Abu Dhabi, whose balance sheets are flush with oil revenue.

Abu Dhabi has the cash and cachet to be Dubai’s white knight providing a Gulf version of a too-big-to-fail bailout or helping to calm markets with promises to intervene if Dubai’s fiscal mess deepens.

The direction Abu Dhabi takes will likely set the tone for the coming week as analysts try to sort out which banks and institutions have the most at stake in the money crunch - which has suddenly transformed Dubai’s image from a desert dream factory of indoor ski slopes and a ’seven-star’ hotel to a reckless spender sideswiped by the recession and unable to pay its bills.

The crisis began last Wednesday when Dubai, part of the United Arab Emirates (UAE) federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of three palm-shaped islands that once attracted celebrities and the super-rich.

‘While it is a setback, I think we will find it is not on the scale of previous problems we have dealt with,’ British Prime Minister Gordon Brown told reporters from the Commonwealth Heads of Government Meeting in Port of Spain. ‘The world financial system is stronger now and able to deal with the problems that arise.’

French Prime Minister Francois Fillon said the Gulf had the resources to ensure the world would not sink into a second round of turmoil, but Russian Premier Vladimir Putin said the saga showed how hard it was to shake off a crisis that has lasted two years.

The US said its Treasury Department was closely monitoring the situation in Dubai.

Although there were expectations that Abu Dhabi would come to Dubai’s rescue, Reuters quoted an unnamed senior Abu Dhabi official yesterday as saying that the capital of the UAE would ‘pick and choose’ how to assist its debt-laden neighbour.

‘We will look at Dubai’s commitments and approach them on a case-by-case basis,’ the official said. ‘It does not mean that Abu Dhabi will underwrite all of their debts.’

Despite the world leaders’ reassurances, analysts around the world warned that Dubai’s debt woes may worsen to become a ‘major sovereign default’ that roils developing nations and cuts off capital flows to emerging markets, Bank of America strategists said.

A default would lead to a ’sudden stop of capital flows into emerging markets’ and be a ‘major step back’ in the recovery from the global financial crisis, they wrote.

UBS analysts said Dubai may owe more than the US$80 billion (S$110 billion) to US$90 billion in liabilities assumed by investors.

Reuters, Bloomberg

Source : Straits - 29 November 2009

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JTC Quarterly Facilities Report Third Quarter 2009

JTC Quarterly Facilities Report - 1Q09 Full report

Source - JTC

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JTC Quarterly Facilities Report - 1Q09_Full report

JTC Quarterly Facilities Report - 1Q09 Full report

Source - JTC

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