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Showing posts from October, 2008

StanChart says banks to be hit by more losses-paper

SINGAPORE, Oct 28 - Standard Chartered expects banks will be hit by more losses as the financial crisis moves into the real economy, while the market turmoil is far from over, its chief executive was quoted as saying on Tuesday.

"We're in uncharted territory -- the critical thing we're looking for is signs that the intervention launched two weeks ago is working," Peter Sands told the Business Times.

"What I will predict is we'll see more currency and interest rate volatilities and also see many banks with rising loan impairments as the financial crisis moves into the real economy and more corporates see the effect."

Banks worldwide have announced writedowns and credit losses of more than $600 billion since the collapse of the U.S. subprime mortgage market in 2007.

Analysts said on Monday Standard Chartered could need to raise up to $5 billion in capital to match bigger cushions held by rivals and as emerging markets face a slowdown. [ID:nLR327109]

But Sands…

Singapore economy to remain weak in 2009: central bank

SINGAPORE, Oct 28, 2008 (AFP) - Singapore's economy, which is already in a technical recession, will remain weak in 2009 on projections the global economic outlook will deteriorate further, the central bank said Tuesday.

As a financial crisis evolves to impact economic activity worldwide, the city-state is likely to be hammered given its heavy exposure to external demand, the Monetary Authority (MAS) said in its Macro Economic Review.

"Looking ahead, the outlook for the global economy has deteriorated amidst heightened risk aversion and deleveraging in the financial sector," MAS said.

As a small and open trading economy, Singapore is vulnerable to any downturn in its major export markets such as the United States, Europe, China, India and Japan.

"The risks to external demand conditions continue to be on the downside, and a more severe global slowdown cannot be discounted," the MAS warned.

"Taking all these factors into account GDP growth is expected to be aroun…

S'pore economy weakens

SINGAPORE'S faltering economy has entered a 'more advanced stage of weakness' as falling trade and tourism from other Asian countries adds to a slump in demand for the city-state's exports from the US and Europe, said its central bank on Tuesday.

Singapore's economic growth could see further slippage in the quarters ahead', said the Monetary Authority of Singapore (MAS) in its macro economic review.

As the global financial turmoil evolves to impact eocnomic activity worldwide, MAS said that Singapore is likely to be hammered given its heavy exposure to external demand.

Apart from the manufacturing sector, services industries, such as transport and tourism, will also be hit by the slowdown in Asian economies, it said.

'Looking ahead, the outlook for the global economy has deteriorted amidst heightened risk aversion and deleveraging in the financial sector', said MAS.

'The risks to eternal demand conditions continue to be on the downside, and a more s…

1m Thais risk losing jobs

BANGKOK - ONE million Thai workers are at risk of losing their jobs next year because of a sharp fall in export orders, the Federation of Thai Industries said on Tuesday.

The federation's deputy chairman, Thaveekij Jaturajarernkul, blamed the slowdown in global economic growth for the bleak forecast, which he said could bring troubles worse than the 1997 Asian financial crisis.

'Exports orders from our main markets - the US, Europe and Japan - have dropped significantly in all industries.

'That will affect our labour employment and we estimate that next year around one million workers may lose their jobs,' Mr Thaveekij told AFP.

'If another economic crisis hits Thailand this time it's going to be far worse than in 1997 because it will affect every sector,' he added.

Between mid-September and earlier this month, Thai export orders from the top three markets dropped by an average of 30-40 percent across all industries.

The figure was higher still for the luxu…

Think Big: This Mega-Bear Will End

ByArne Alsin, RealMoney.com Contributor


Who will be the biggest losers over the next three to five years? Surprisingly enough, it will be investors afraid of losing. Those who squirrel away cash in T-bills or CDs in an effort to get safe are not, in fact, safe. Chances are good that they'll be losers two different ways.

The first way is through diminished buying power. If you accept a 1% to 2% after-tax rate of return in safe investments, chances are good that over the next three to five years, you'll be a net loser after adjusting for inflation.

The second way ultra-cautious investors will lose is brutal -- more likely than not, they're cautious because they've been ravaged by the recent market debacle. They may have lost 50% or more in stocks. And so rather than endure more uncertainty in equities, they've opted out. It's been the biggest "fright flight" in history: After pulling $72 billion from equities in September, $57 billion more came out in t…

United we stand

Goh Eng Yeow on the blood-letting on the local stock market.
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THE financial tsunami of the century has finally hit our shores.

As I write, the benchmark Straits Times Index has plummetted 139 points or nearly 8 per cent.

Why the rout ?

I had written on Monday about the implosion of hedge funds which is causing a run across stock markets worldwide, as they desperately sell everything in sight - emerging markets equities, oil, commodities and even gold - to pay off angry investors and nervous bankers.

The only way we can trace their activities is through the foreign exchange market where they have made massive purchases of Japanese yen to repay their loans, sellng selling every other regional currency - the Aussie dollar, the Singapore dollar, the Korean won - after making an exit from these markets.

After the relative calm early this week, they have come back with a vengeance.

Nothing escapes. Hong Kong, Tokyo,…

Latin America in jaws of crisis

SAO PAULO - GOVERNMENTS in Latin America stepped forward on Thursday to reassure markets left despondent by fears of a global recession and Argentina's decision to nationalise pension funds.
Brazil and Mexico took measures to try to stop the long slide of their currencies against the dollar, while an Argentine official promised the pensions grab would not mean state intervention in banks and companies managing the funds.

Brazil's central bank also aggressively jumped in to support its currency, the real, promising to pump the equivalent of an extra US$50 billion (S$75 billion) into the market through currency swaps, causing the money to jump 3.25 per cent against the greenback.

Mexico announced an auction of an extra US$1.4 billion to support the tumbling peso, which on Wednesday had sunk to a record low of 13.74 to the US dollar.

Those efforts, along with official affirmations that countries in the region were well-placed to come through the crisis with little more than bruis…

Layoffs to rise

WASHINGTON - UNEMPLOYMENT claims, already well into recession territory, are rising even faster than expected, leading economists to warn on Thursday that the worst is yet to come.

As the Labour Department released bleak new numbers on the job market, Goldman Sachs, Chrysler and Xerox all announced they were cutting workers by the thousands, adding to the woes of an economy beset by tighter credit and wobbly banks.

The government said new applications for unemployment insurance rose 15,000 last week to a seasonally adjusted 478,000, above analysts' estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession.

The White House, in unusually stark language, acknowledged the economy is going through what spokesman Dana Perino called a 'rough ride.'

''We expect our GDP (gross domestic product) number next week not to be a good one and the next quarter to be tough as well,' Ms Perino said.

The Commerce Department will release its first estima…

2.7m Chinese to lose jobs

DONGGUAN (China) - AT LEAST 2.7 million factory workers in southern China could lose their jobs as the global economic crisis hits demand for electronics, toys and clothes, according to industry estimates.
The region has seen massive export-driven expansion in recent years by supplying the world with cheap consumer goods, but rising production costs and falling US and European demand have marked a swift end to the boom.

Now 9,000 of the 45,000 factories in the cities of Guangzhou, Dongguan, and Shenzhen are expected to close before the Chinese New Year in late January, the Dongguan City Association of Enterprises with Foreign Investment estimates.

By then, the association expects overseas demand for products from the three manufacturing hubs to have shrunk by 30 per cent, as the knock-on effects of the US housing market collapse and credit crunch filter down to Chinese workers.

'I am afraid it is not going to look good on the Chinese government if the decline of the export-led indust…

Hundreds of hedge funds will fail; mkts shut down: Bloomberg

Bloomberg (October 23, 2008): Roubini Says `Panic' May Force Market Shutdown
PrintShare
Nouriel Roubini | Oct 23, 2008

Bloomberg October 23, 2008: Roubini Sees Crisis Worsening, Hurting Emerging Markets (click for video)

nouriel10232008_250_01.jpg

From Bloomberg:

Oct. 23 (Bloomberg) -- Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, said at a conference in London today. ``There will be massive dumping of assets,'' and ``hundreds of hedge funds are going to go bust,'' he said.

Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut int…

Unit trusts lose over 20%

THE financial markets maelstrom has turned retirees such as Mr T.P. Wong, 57, into a 'bundle of nerves'.

He is sitting on paper losses of about $20,000 so far this year - even though he has avoided investing in the stock market directly. He had invested in eight unit trusts, thinking that they are safer than stocks because they are diversified and managed professionally.

The returns of his unit trusts, which include one in Vietnam, another in United States stocks and a technology fund, have ranged from negative 7 per cent to negative 26 per cent in the nine months to Sept 30.

'I sold off part of my unit trusts at a loss, but decided to hold the rest as it was too painful to swallow more losses,' he said ruefully.

Mr Wong is among investors who have been hit by a drop of well over 20 per cent in returns of unit trusts invested in equity and commodity markets during recent weeks.

Not surprisingly, funds sold here have also seen redemptions spike while sales dry up as investo…

Investors flee emerging mkts

LONDON - A FLIGHT from emerging market debt and stocks helped push the dollar to a two-year high against major currencies on Thursday as fears built about a global recession.

Investors were also focusing on major company earnings reports, fearful that the worst financial crisis in 80 years and the deteriorating global economy could combine to batter corporate profits.

European shares put in gains on the back of some positive results, but Asian shares fell to four-year lows and emerging markets were again under the gun.

MSCI's main emerging market stock index was down 3.3 per centon the day, hitting a nearly four-year low after major losses on Wednesday.

Emerging market sovereign debt spreads blew out to more than 800 basis points over US Treasury yields, a gap not seen since late 2002.

The cost of insurance against sovereign debt default in countries such as South Korea, Indonesia, the Philippines, Russia and Kazakhstan has soared over the past two days.

'There is now little argumen…

Goldman to cut 3,260 jobs

NEW YORK - GOLDMAN Sachs Group Inc. is cutting about 10 per cent of its work force amid the ongoing downturn in the credit and lending markets, a person briefed on the plan said on Thursday.

Goldman Sachs will cut about 3,260 jobs. Goldman's work force, which was at record high levels at the end of the third quarter, will be pared back close to 2006 and 2007 levels. No additional cuts are planned, the person said.

The job cuts are a direct result of the current economic environment and significantly lower levels of business activity, the person told the Associated Press.

Last month, amid the increasing turmoil that saw Lehman Brothers Holdings Inc. file for bankruptcy protection and Merrill Lynch & Co. sell itself to Bank of America Corp., Goldman Sachs along with Morgan Stanley received approval to become bank holding companies.

September was considered one of the worst months during the credit crisis as banks essentially stopped lending money to each other for fear they would no…

Bleak 2009 for car makers

MILAN/FRANKFURT - FIAT and Hyundai Motor Co added to the gloom surrounding automakers on Thursday with bleak forecasts for next year as the global financial crisis takes its toll.

Italian industrial group Fiat said global demand for its products could drop 10 to 20 per cent in a 'worst-case' scenario, while a senior official at Hyundai, South Korea's top automaker, said he expects car demand in emerging countries to fall next year.

Germany's Daimler, maker of Mercedes-Benz luxury cars and heavy trucks, is due to publish its quarterly results at about 6.00 pm and is widely expected to issue its second straight profit warning.

Global automakers are facing shrinking demand as consumers put off major purchases on fears of a recession.

At 3.32 pm, the DJ Stoxx European auto index was down 2 per cent, while the wider market was little changed. Fiat shares were suspended after a sharp fall.

Fiat said its trading profit could plunge by 65 per cent next year. Although the maker of …

Crisis = 'Credit tsunami'

WASHINGTON - FORMER Federal Reserve Chairman Alan Greenspan told the US Congress in prepared testimony on Thursday that the current global financial crisis is a 'once in a century credit tsunami' that policymakers did not anticipate.

Mr Greenspan was to be the leadoff witness at a House hearing lawmakers called to question past key financial players about what they felt caused the most grave financial crisis since the 1930s.

The witnesses were also expected to be asked how they thought the government would deliver the U.S. from the economic turmoil.

Mr Greenspan was the chairman of the Federal Reserve for 18 1/2 years. In testimony prepared for the House Government Oversight and Reform Committee, he voiced shock over the present turn of events and called conditions deplorable.

He said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a 'state of shocked disbelief.'

And Mr Greenspan also blamed the problems on he…

For '09 Grads, Job Prospects Take a Dive

by Cari Tuna

College seniors may have more trouble landing a job next spring than recent graduates, as employers trim their hiring outlooks in response to the slowing economy and financial-sector turmoil.

Employers plan to hire just 1.3% more graduates in 2009 than they hired this year, according to a survey by the National Association of Colleges and Employers.

That's the weakest outlook in six years and reflects a sharp recent downturn. Just two months ago, a survey by the same group projected a 6.1% increase in hiring. The August survey included 219 employers, 146 of whom responded to the new survey, conducted earlier this month. The big drop in hiring projections is "extremely unusual," says Edwin Koc, the association's director of strategic research.

The results continue a pattern of diminishing job prospects for college graduates. A year ago, employers told the association they would increase hiring for the class of 2008 by 16%. By this spring, though, the projecte…
0158 GMT [Dow Jones] Singapore banks at risk of credit losses from funding
Marina Bay casino-resort as operator Las Vegas Sands under financial
distress, says UOB KayHian. Notes U.S. gaming group''s US$8.8 million loss
in 2Q08, with debt/equity ratio at 3.9X while interest cover at only 0.83X,
share price down 88.3% year-to-date. All 3 Singapore banks among total of
19 lenders involved in S$5.4 billion credit facility for casino-resort,
with all 3 acting as lead arrangers. "We understand they are still holding
the bulk of term loans allocated. The only exception could be UOB as it
participated through UOB Asia, its investment banking arm." Says UOB could
have distributed portion of its term loans to some other foreign banks.
Downgrades OCBC (O39.SG) to Hold from Buy, cuts target price to S$6.55 from
S$9.80. OCBC off 4.9% at S$5.61, DBS (D05.SG) off 6.9% at S$10.80, UOB
(U11.SG) off 4.8% at S$13.82. (FKH)

GLG's Roman, NYU's Roubini Predict Hedge Fund Failures, Panic

By Tom Cahill and Alexis Xydias

Oct. 23 (Bloomberg) -- Hedge funds closures will eliminate about 30 percent of the industry, and policy makers may need to shut markets for a week or more to stem panic, according to presentations at an investor conference today in London.

``In a fairly Darwinian manner, many hedge funds will simply disappear,'' Emmanuel Roman, co-chief executive officer at GLG Partners Inc., told the Hedge 2008 conference in London today. U.S. regulators will ``find a way to force regulation,'' said Roman, 45, who runs New York-based GLG with Noam Gottesman, 47. The firm was founded 13 years ago as a unit of Lehman Brothers Holdings Inc. and now manages about $24 billion in assets.

Nouriel Roubini, the New York University Professor who spoke at the same conference, said hundreds of hedge funds will fail as the crisis forces investors to dump assets. ``We've reached a situation of sheer panic,'' said Roubini, who predicted the financial crisis i…

Oil trading down

September trades shrink by nearly half as market players face credit squeeze
By Yang Huiwen

OIL trading in Singapore, the world's No. 3 energy trading hub, shrank by almost half last month compared to September last year.
The problem? Severe strains in the global credit market have made it much harder for traders to borrow funds to punt on the future price of black gold, which is usually a booming market.

Trading in over-the-counter (OTC) oil derivatives fell by 44 per cent last month from a year earlier, according to price assessment agency Platts.

These derivatives, which include options, futures or swap agreements, are generally used to hedge against oil price fluctuations, and can also be used by speculators to punt on the market.

But while OTC trades can hedge against market volatility, market players are saddled with the credit risk of the party with whom they are trading. This is known as counterparty risk.

And in these uncertain times, with the recent failure of many fin…

S’pore govt warns of slower growth and higher unemployment ahead

SINGAPORE: Trade and Industry Minister Lim Hng Kiang has said the country is set for several quarters of slower growth. Speaking in Parliament on Monday, Mr Lim said this could stretch on for longer, depending on the state of the global economy.

Singapore, an open economy, cannot escape the impact of the financial crisis and the global economic slowdown. It is already in a technical recession and there are signs this is affecting the job market.

Mr Lim said: "The slowing economy and more cautious hiring have contributed to an increase in the overall unemployment rate from two per cent in March 2008 to 2.3 per cent in June 2008."

Mr Lim said that the unemployment rate for this year is likely to be higher than the record low of 2.7 per cent in 2007.

For now, he said retrenchments are still unchanged from previous quarters.

The financial turmoil has hit the property, retail and tourism industries. For the construction sector, Mr Lim said it is expected to grow by 7.8 per cent in the…

Confession of a ex-bank relationship manager

POST-MINIBOND LOSSES: What makes good relationship manager



I REFER to last Thursday's article, 'Retirees recount their big losses'.

My heart went out to the elderly woman whose face was was shown on the cover. On reading her account, I could comprehend her predicament and anticipate the tremendous duress and social repercussions that could lie ahead for those folk who have invested their life savings in the Minibonds that result in their financial bondage.

While the witch-hunting process has begun, I don't see the issue of whether the bank has mandated that retirees should be targeted for this product. If the product is genuinely suited for risk-averse investors , I don't see any reason to target them.

The point of contention is whether the risk-reward ratio has been properly articulated and communicated to investors. My take is, many zealous relationship managers are trained to convey potential returns of the myriad investment products offered by banks, but not to ful…

Five warning signs that your job is on the chopping block

Knowing a pink slip may be ahead allows you to prepare

WASHINGTON (MarketWatch) -- More than 750,000 jobs have disappeared from the U.S. economy this year and workers face the prospect of plenty more layoffs to come as a continuing credit crunch and weak consumer demand hamper firms trying to maintain payrolls.

The good news is that workers can look for red flags for approaching layoffs, and knowing that a job loss is coming is a first step to getting back on your feet, experts say. Here are five omens that may signal your position is on the line.

1. Others are losing their jobs
Even if colleagues have been let go, workers are often surprised when it's their turn to get called into the boss's office. You are not immune. If others are losing their jobs you may too, even if your boss says different.

"It's dangerous to assume that management has a crystal ball about these things. Situations can change very rapidly," said Monica Parker, founder of LeavingTheLaw.com, which…

Japan government:Singapore and South Korea economy weak

TOKYO -- Two economic reports on the state of Japan painted a bleak picture for the world's second-largest economy, with expectations of sluggish growth as the financial environment continues to deteriorate.

Japan's government cut its overall assessment of both the domestic and overseas economies in a new monthly report issued Monday, saying the downward trend will be likely to continue as financial conditions in the U.S. and Europe worsen.

The government cut its view of the domestic economy in its October report for the first time in two months, saying the economy "has weakened further."

It also cut its assessment of the global economy to "slowing down," while judging the U.S. economy is "in a recession." It was the most pessimistic view of the U.S. since December 2001.

The October report also downgraded the assessment of Asia's economies, noting "a weak tone" in some areas, particularly Singapore and South Korea.

The government said the…

FIRE SALE: OWNERS DUMP CONDOS

The Electric New Paper : 20 October 2008
FIRE SALE: OWNERS DUMP CONDOS
Agents: Some clients give as much as 20 per cent discount
FOR sale: Luxurious multi-million-dollar apartments, not quite for a steal, but with a hefty discount.
By Elysa Chen

FOR sale: Luxurious multi-million-dollar apartments, not quite for a steal, but with a hefty discount.

Stock market losses have forced some property owners to resort to 'fire sales' for a quick return to liquidity. And because the property market is almost flat, they have had to let go of their property at huge discounts.

Property agent Henry Neo receives one SMS a day from different clients asking him to sell their homes.

Mr Neo, who has been a property agent for close to 20 years, said: 'The Asian financial crisis of 1997 and this crisis are real challenges.

'It's a tsunami of the stock market.'

Two or three of the 50 clients he is servicing now are what he calls 'desperados' - people who had their fingers burnt so badl…

Japan in economic stagnation

TOKYO - JAPAN'S economy is expected to remain stagnant for a while as a global economic slowdown weighs on exports, the country's central bank chief said on Monday.

Corporate earnings in Asia's largest economy are shrinking and companies are cutting their capital investment, Bank of Japan governor Masaaki Shirakawa told a meeting of the central bank's branch managers.

'The economy of our nation is currently stagnant due in part to slower exports stemming from the lingering effects of high energy and material prices and a slowdown in overseas economies,' he said.

Business confidence remains cautious while consumption has turned softer due to inflation and sluggish wages, Mr Shirakawa said.

'Looking ahead, it is highly probable that the economy will remain stagnant as it has become clear that overseas economies continue to slow down,' he said.

Japan's economy suffered its worst contraction in seven years in the second quarter of this year and many analysts…

20m more jobless by 2009?

GENEVA - THE financial crisis could lead to a 20 million increase in the number of unemployed world-wide by the end of 2009, International Labour Organisation chief Juan Somavia warned on Monday.

Estimates from the ILO indicate that the 'number of unemployed could rise from 190 million in 2007 to 210 million in late 2009,' said Mr Somavia.

The population of working poor living on less than a dollar a day could rise by 40 million, and those on two dollars a day by over 100 million, added the ILO.

But Mr Somavia said these projections 'could prove to be underestimates if the effects of the current economic contraction and looming recession are not quickly confronted.'

Thousands of jobs have already been slashed on Wall Street and other financial centres as banks collapse or are forced to merge due to the credit crunch.

But the ILO said that the axe was likely to reach ordinary working people, with sectors including construction, the automotive industry, tourism, services and …

Yahoo planning layoffs

WASHINGTON - YAHOO plans to announce significant cost cuts, including layoffs, possibly as early as Tuesday when the troubled Internet firm announces its third-quarter results, The Wall Street Journal reported on Monday.

The newspaper, citing 'people familiar with the matter,' said that the exact number of jobs to be cut was not clear but it would be more than the 1,000 jobs the Sunnyvale, California-based company announced it was cutting in Jan.

The newspaper said some managers in Yahoo, which had 14,300 employees as of the end of Jun, had been asked to identify operating budget cuts of around 15 per cent.

Yahoo has been losing ground on the Web to companies such as Google, MySpace and Facebook, and was the target earlier this year of a failed takeover bid by US software giant Microsoft.

Its share price has shed more than 40 per cent over the past three months and was trading on Monday at US$12.58 (S$18.60) .

In a bid to reverse its fortunes, Yahoo has rolled out several new produ…

Factory shuts, 1,500 jobless

BEIJING - A HONG KONG-LISTED appliance maker shut its southern China factory on Monday, state media reported, making it the latest victim of the world economic slowdown's impact on Chinese manufacturing.

The closure of Bailingda Industrial Co.'s electrical appliance factory in the export hub of Shenzhen has left 1,500 employees jobless, Xinhua news agency reported.

It follows the failure on Friday of another Hong Kong-listed firm, toymaker Smart Union, which shut its factory in the nearby city of Dongguan in Guangdong province, throwing about 7,000 out of work.

The situation has highlighted the growing risk of instability in China's coastal manufacturing hubs as factories face financial difficulties leading to large-scale layoffs.

Xinhua said more than 1,000 of the laid-off Bailingda employees had gathered outside the factory on Sunday, demanding government intervention to secure unpaid wages.

The report made no mention of any disturbances.

It said worried Guangdong labour autho…

Signs of tough times ahead

Jayaram Perumpilavil sees an economic storm gathering on India's horizon.

In New Delhi

FOR most Indians, the global economic meltdown has until now been something that concerned ‘them’, not ‘us’. Even the news of the share market crash and fortunes being wiped out overnight has not caused them their sleep, as only a minuscule percentage of the 1.1 billion population has ventured into shares and mutual funds.

“What’s the fuss?” most wondered when Sensex, or the Bombay Stock Exchange Sensitive Index, soared from 12,500 mark in April last year to over 20,500 in early January. They asked the same question when the market tumbled to 10,527.85 points, its lowest close since mid-2006.

Even news of a non-resident Indian in Los Angeles, reduced from millionaire to pauper in the economic meltdown, shot dead his wife, three children and mother-in-law before taking his own life, or a family of four in Mumbai committed mass suicide after they lost everything in the share market, did not come as a …