H1N1 spread unstoppable

CANCUN (MEXICO) - THE H1N1 flu virus is running wild in the Southern Hemisphere, spreading rapidly through Europe, and showing signs of rebounding in Mexico. That indicates it may be unstoppable, warns World Health Organisation (Who) director-general Margaret Chan.

She was speaking to health ministers from around the globe at the opening on Thursday of a two-day summit to design strategies for battling the pandemic. 'As we see today, with well over 100 countries reporting cases, once a fully fit pandemic virus emerges, its further international spread is unstoppable,' said Dr Chan.

Nations attending the summit include the United States, Canada, China, Britain and Brazil.

Mexican officials wanted the meeting held in the Caribbean resort city of Cancun - where tourism has plunged - to highlight the country's success in controlling its epidemic with a five-day national shutdown of schools and businesses in May. The measures were applauded by the US Centres for Disease Control and international health officials. 'Our presence here is an expression of confidence,' said Dr Chan.

But Mexico is starting to see an increase in H1N1 flu cases in isolated areas, in a worrying sign that the country may see a resurgence, especially when its winter flu season begins in November.

Mexico has confirmed a total of 10,687 cases to date, including 119 deaths. Officials blamed the spike on outbreaks in schools, which have since closed a few weeks early for summer break.

'Unfortunately, we let our guard down, especially after classes started, and the outbreak is unstoppable,' Yucatan health secretary Alvaro Quijano told local news media.

With the Southern Hemisphere in the midst of its winter flu season, Dr Chan said officials are keeping a close watch on those countries.

The virus is spreading in Chile, and Argentina - with 1,587 cases and 26 deaths - ranks third behind Mexico and the United States. In Europe, the hardest-hit nation is Britain, which has officially reported 7,447 H1N1 flu cases. Many flu experts believe numbers could jump exponentially now that the virus is entrenched.

Worldwide, there were 332 deaths and more than 77,000 confirmed cases as of Wednesday, according to WHO's latest figures.

Wealth managers must up their game to survive: PwC

By CHEW XIANG

The economic crisis has brought the soaring wealth management industry down to earth and it must change to survive, according to a new study by PricewaterhouseCoopers (PwC).

The report, titled A New Era: Redefining Ways to Deliver Trusted Advice, argues that falling asset values and the number of high-profile scandals in the industry have hurt trust between clients and their relationship managers. 'There is a sense that some wealth managers might have placed short-term revenue goals - and not client interests - at the heart of their businesses,' PwC says.

The report, which surveyed 240 private banks and wealth managers in 40 countries around the world, says firms losing clients and assets will now have to focus on providing quality advice and invest in technology. 'Wealth managers must up their game. The industry is at an historic crossroads. Quality of advice is the real differentiator,' says Justin Ong, Asia Pacific private banking and wealth management leader at PwC and one of the authors of the report.

While wealth managers have fed deeply from the trough in the past few years, the 'economic crisis has presented (them) with challenges that they have neither the experience nor the skills to deal with', PwC says. As clients turn away from risk and demand more transparency, it will no longer be possible to sustain profitability by pushing products, the report notes, and that means wealth managers will have to focus on providing quality advice. 'Wealth managers can no longer afford to be all things to all people.'

While many firms profess to focus on their clients, the reality of delivery is often different, the report says. Many do not have formal client retention programmes and clients are seldom asked to comment on the quality of service they receive. While most wealth managers now report spending more time on cultivating relationships with clients, some clients have become disillusioned with the poor quality of their relationship managers and the advice given.

Over half of clients said their primary source of financial advice was their own research and knowledge. Wealth managers identified the three most common areas of weakness for front-office staff as an inability to adapt to change, lack of client relationship skills, and poor appreciation of risk.

While there is some consensus that reform of reward systems is needed to drive better service, 55 per cent of wealth managers say they have no plans to change this in the next two years, the report says. 'There is a strong sense of 'first-mover disadvantage',' the report notes. Average retention of relationship managers is still very low and only a quarter of them have discussed medium-term career development plans with their firms, the report says.

Worse for the industry, their relatively fixed-cost base means they have little scope to cut expenses and improve efficiency, the report says. Cutting front-office staff could cause clients to leave. 'The best way to escape from this cost trap is to grow through acquisition of new clients or increasing the share of wallet from existing clients,' PwC says. The wealth managers with the best performance, however, poached relationship managers at twice as much as the average rate, the report says, noting that the best firms also had the lowest ratio of clients to relationship managers.

On the other hand, size does not matter, as the industry does not have great economies of scale, PwC says. 'Our survey suggests very clearly that there is no direct link between size and profitability (in terms of cost/income ratio).'

What firms can do is make better use of technology and improve their process management, PwC says. For instance, at the peak of the crisis, many wealth managers were unable to keep up with clients' demands for regular, even real-time, updates of their financial position. Sharing services and back-office functions, as well as outsourcing what need not be done in-house, are also suggested ways of cost-cutting, the report says.

This article was first published in The Business Times.

Wealthy investors still cautious, fear further price falls: Poll

By Gabriel Chen

HIGH net worth individuals are sitting on the fence because they are afraid of major price corrections, according to a new survey by Barclays Wealth and the Economist Intelligence Unit.

The report - based on a world poll of 2,100 high net worth individuals, more than 100 of whom are from Singapore - found the majority thought there were buying opportunities, but believed the risk of price falls was too high to take advantage of them.

Compiled between March and May, the data showed that 59 per cent of investors held this view in Singapore, compared with an Asia-Pacific average of 66 per cent.

Around the world, investors have questioned whether the recent 12-week rally is a prelude to the next bull market.

Many have stayed out of the stock market, fearing that the speed and severity of the downturn may lead to further market plunges.

This, despite global stock indices surging since the lows of March 9.

The MSCI index of Asia-Pacific stocks outside Japan has jumped more than 50 per cent from the March trough to late last month.

'For the average investor, they missed out on the early boom because they were too nervous,' said Barclays Wealth head of behavioural finance Greg Davis.

Private bankers agreed that the mood among wealthy investors in Singapore was still generally cautious.

'They are hesitant to jump feet first back into the market for fear of a pullback from the recent market rally - particularly so for those who missed the rally over the last few months,' said Mr Raj Sriram, RBS Coutts' head of private banking in Singapore.

Mr Rajesh Malkani, Standard Chartered Private Bank's head of South-east Asia, said that it is stepping up its communication with clients, keeping them informed of market conditions and reviewing their portfolios regularly.

This article was first published in The Straits Times.

Wheelock chief urges separate listing regulator

David Lawrence takes a critical view of safeguards offered by Chinese walls

By KALPANA RASHIWALA

WHEELOCK Properties (Singapore) CEO David Lawrence has joined the ranks of those calling for a separate authority to regulate listed companies in Singapore as the existing authority, Singapore Exchange, faces an inherent conflict of interest as it is a listed company.

'I think what is needed is a separate regulatory authority in Singapore. Not the MAS, but a separate regulatory authority for the listing of companies in Singapore. So that Singapore can maintain its international reputation and integrity.
'It is better to expand slowly with better companies than to expand quickly with nonsense companies with directors you can't trust,' Mr Lawrence said in a recent interview with BT.
Being a listed company, SGX, its CEO and directors have a duty to make money for their shareholders and expand the business, he added. 'The SGX is competing with me for investors' capital. Why should a competitor regulate me? Maybe I should regulate them!' he quipped.
Mr Lawrence observed that the same problem exists in Hong Kong, where a discussion has been raging on the topic for years.
Mr Lawrence debunked the notion of Chinese walls. 'SGX will probably say, like all the investment bankers have been saying to me for the last 10 to 20 years, 'Well, we have Chinese walls between departments.


'I've been saying to these investment bankers for 20 years, 'Have you ever walked along (the Great Wall of China)?' No, they haven't. I have, and I can tell you there are more holes than there are actual built walls.'
Market watchers note there's been a long-standing discussion on the potential conflict facing the SGX because of its dual role as a commercial entity and markets regulator. Some have criticised the SGX for not taking a tougher regulatory stand against errant companies listed on the bourse here, arguing that SGX may see tough actions as working against its attractiveness as a listing platform. Critics also point out that SGX's earnings and losses are shared by both the regulatory and listing departments.
The race to attract China companies or S-Chips to list here in the past may have led to SGX pulling in some poor-quality issuers whose share prices have been punished by the market. Those monitoring the real estate investment trust market also wonder how some Reits that don't have any raison d'être ever got listed in Singapore.
Observers also point out that SGX's top regulator, Yeo Lian Sim, receives performance shares from the company, which could potentially create conflict.
Agreeing, Mak Yuen Teen, co-director of the Corporate Governance and Financial Reporting Centre, said: 'I hold the view that those involved with managing risk, internal audit or regulatory functions should not have variable pay tied to the bottomline or stock price of the organisation. The company has to think of other ways of measuring their performance and rewarding them.'
SGX has maintained that it has a robust framework of checks and balances to ensure that its regulatory and commercial goals are not divergent.
For instance, a Regulatory Conflicts Committee comprising SGX's independent directors oversees the handling of regulatory conflicts within SGX. The committee in turn accounts for its actions to MAS.

Courtesy of Conrad: The Camel’s Back Slides

The worst jobs data in 26 years, the worst pre-4th-of-July performance in 100 years, 5 more bank closures to bring the year’s total to 51 banks gone bust, the lowest close on the DOW since May this year, a second round of soon-to-be-useless stimulus programs after the first round did nothing but waste money, interest rates to remain low, the start of the year’s worst quarter and the worst earnings quarter is upon us next week … can we expect any worse?

Yes, we can.

And it doesn’t look any rosier in Singapore either … private housing prices fall more than 5% month on month, unemployment and job losses steadily mounting, shipping slowing down, retail sales taking a hit in spite of GSS, deferred payment defaults have started, more and more are paying minimums on their credit cards debts, government begins raising funds through bond sales made convenient through ATMs and the housing bubble continues to swell unabated as Singaporeans pour their remaining reserves late into the rally … can we get any more ignorant?

Yes, we can.

DOW completed the neckline retest of its Head & Shoulders pattern and confirmed the weekly Evening Star from three weeks ago with three consecutive down weeks. Now it looks set for a short-term downside XOP at 7,900 by mid-to-late August and XXOP at 7,280 by late September. It looks like we’ll get another October stinker this year if this goes on. And if that happens, I might just get my DOW 6,000 to 5,800.

It was always suspected that the March-June rally was not sustainable. As the big players stayed sidelined and fund managers focused on improving their portfolios’ performance, the market’s leadership by Energy and Materials together with the underlying lack of fundamentals was always going to falter that rally spectacularly in the near term. And now we have it, late, like everything else in life.

America’s Recession is now 20 months old. Although they would deny it, they are technically in Depression and have been since half a year ago;

From Wikipedia:

In economics, a depression is a sustained, long downturn in one or more economies. It is more severe than a recession, which is seen as a normal downturn in the business cycle.

Considered a rare and extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression.

America is in Depression. There can be no doubt about it except that they haven’t officially acknowledged it just like they did not acknowledge their Recession till a year after the fact in December 2008. (America had been in Recession since December 2007.)

Singapore is no better except that we’re cash rich from the outstanding 2003 to 2007 rally that saw us reap in and stack up cash reserves that are currently keeping us comfy and safe. But the truth is in the pudding, as they say and the pudding I am looking at every week is the amazing rate at which the government is discharging bankrupts. Discharge rates are outpacing new bankrupts by about 3 to 2 as seen in today’s Classifieds. And that trend is picking up in pace.

What is even more obvious (and disturbing) is the obvious fact that those getting discharged were from the previous recessions (1997 through 2005) with the bulk of discharged individuals coming from that most painful time in the last recession between 2001 and 2002. A distant Aunt of mine was even discharged without paying up much of her debt.

Although speculative, I am looking at a situation that is out of control with regard to credit in Singapore. It’s a funny thing but it would seem the banks have shot themselves in the foot on this one. To me, it’s a good thing because it tells me how much pain the banks and our economy are in.

Imagine this; just looking at the number of bankrupts being discharged today alone (79, plus one annulment), you have to wonder just how many more there are out there. And if more than half of these bankrupts are through credit defaults, then it’s because the banks put them into bankruptcy in the first place back in 2001 and 2002. I know because I was one of them. So here’s the irony …

Banks have been and are still dishing out Credit facilities to everyone and anyone who vaguely qualifies for one. In most cases, you only need to have a salary of $4,000 and you get a credit line of $20,000 (per bank). This means you get up to five times the leverage on your current outlay. This increases your chances of over-spending by five times. Now do the math by the number of banks you can apply to for the same credit leverage.

And when you can’t afford to pay the debt, you can choose to pay the minimum to cover the interest. What happened in 2001 and 2002 is that many people who used these facilities ended up losing their jobs and were unable to even pay the minimum. They were promptly bankrupted.

The numbers and dates of today’s (and the past 9 weeks) bankrupts being discharged and the circumstances of their discharge has prompted me to make an obvious assumption - this profitable line of “credit” is running thin for the banks.

You see … before the banks are able to rid themselves from the mess they made from the last recession, the mess is piling up higher with this recession’s new mess. We know that most of the bankrupts are from credit defaults simply by checking on the Notices pages in the Classifieds. And this is where the banks shot themselves in the foot …

The banks have united to form a database of discharged bankrupts and have a very efficient system to disqualify recently discharged bankrupts from getting financial assistance or certain financial facilities. The government says you are a free person upon your discharge but the banks keep you in financial jail for another seven years. (Strange that they have such an efficient system to recognize ex-bankrupts but is incapable of recognizing and warning their clients of their dangerous and obvious over-spending and over leveraging!)

Now that so many have gone bust, the banks are finding less and less people to take up their credit facilities and continue their profitable minimum payment scheme. And with so many more on the seven year blacklist, their database of qualified creditors is getting smaller every day. You know this to be true because of the increasing number of telemarketing calls you’ve been getting of late. (Strange that their efficient system also fails to disqualify ex-bankrupts from their telemarketing exercise because I’ve been getting quite a few calls lately!)

Thus, the solution is to get more discharged earlier and reduce the seven year financial jail term to three.

There you go … another pain indicator to tell us that our financial system is not all well and doing fine. This recession is going to be longer than we can imagine and if I am right about this, then the banks are going to be hurting to raise funds as their creditors slowly but surely dwindle. (Strange that they cut our savings rate from pathetic to ridiculous but kept mortgage and loan rates at intolerable!)

And now the fireworks display is all set for a great September/October show when no less than 7 condominium projects will T.O.P. and hundreds of new home owners will be expected to shell out the 50% stage of their deferred payment plan. If you’ve never seen shit hitting the fan before, you’d be advised to carry a really big umbrella in October because the Monsoon Season of 2009 is about to bring a new kind of rain that is going to put us deep in it.

So can this economy get any worse? Can we make it any more painful than it should be? Can we drag out this pain for a longer time than necessary? Can we get any greedier than Wall Street? With the “help” of our banks …

Yes, we can.

God help America while we, in Singapore repeat their mistakes.

Happy Independence Day on the 4th of July, 2009.

http://www.conradalvinlim.com/