$660 Million Lifestyle Hub To Go Up At Buona Vista - 5,000-Seat Theatre, Shops Part Of Rock Productions, CapitaLand Project

Source : The Straits Times, 10 Sept 2007




















FUTURISTIC LOOKING: An artist's impression of the integrated complex, which will have eight levels of civic and cultural space, and four levels of retail and entertainment space. -- PHOTO: ROCK PRODUCTIONS

COME 2011, a futuristic-looking lifestyle hub with a 5,000-seat theatre, restaurants, shops, chill-out wine bars and even dance clubs will emerge in Buona Vista.

Property giant CapitaLand and a church-linked business company, Rock Productions, announced yesterday that they will jointly develop an integrated complex in Singapore’s one-north science hub at a cost of $660 million.

CapitaLand’s share of the proposed development, including the ownership of about 1,000 carpark lots, will be about $380 million.

Rock Productions - the business arm of the 16,000- strong New Creation Church - will invest $280 million.

The complex, which will be connected directly to the Buona Vista MRT station, will be sited within the 17ha Vista Xchange, the business service centre as well as lifestyle and cultural hub of one-north.

Designed by Mr Andrew Bromberg of Aedas Hong Kong, it will have eight levels of civic and cultural space, and four levels of retail and entertainment space.

The project came about after JTC Corporation last Friday awarded Rock Productions the tender to build, lease and operate an integrated civic, cultural, retail and entertainment hub at Vista Xchange on a 60-year lease at a land price of $189 million.

Rock Productions had spoken to a few partners and decided on CapitaLand, which entered into an agreement through its indirect wholly owned subsidiary One Trustee to acquire the hub’s retail and entertainment zone, which has a gross floor area of more than 24,000 sq m.

CapitaLand Retail will also manage the entire development of the integrated hub.
It is proposing an open concept for the retail and entertainment zone, which will be spread over two floors above the ground and two basement levels. The basement levels will house chic tenants that will include restaurants, cafes, thematic dance clubs, a concept food hall and a gourmet supermarket.

CapitaLand Retail chief executive officer Pua Seck Guan said the zone presents a unique opportunity for CapitaLand to extend its presence to the Buona Vista area.
The zone will cater to the affluent crowd from the nearby Bukit Timah, Holland and Rochester Park areas, as well as the visitor catchments from the one-north communities, surrounding estates and tertiary institutions, he said.

Rock Productions will own and manage the hub’s civic and cultural zone, which has a gross floor area of 30,000 sq m. This zone will have a 5,000-seat state-of-the-art theatre designed by world renowed performing arts facility design consultants Artec Consultants and Bromberg.

Among Artec’s best-known projects are the Lucerne Culture Centre in Switzerland and the concert hall and opera theatre at the Esplanade here.

Rock Productions has engaged IMG Artists, a global performing arts management company, to work on the marketing and programming efforts for the zone.

A major tenant has already been secured.

New Creation Church, which now holds its services at The Rock Auditorium at Suntec City, will be the anchor tenant of the theatre, using the space on a large part of Sundays and one mid-week night, said Rock Productions director Matthew Kang.

Rock Productions also owns and manages The Rock Auditorium and Marine Cove, the recreational and dining establishment at East Coast Park.

JTC Puts Up Pioneer Rd/Tuas Ave 11 Site For Sale

Source : The Business Times, September 10, 2007

JTC Corporation has put a land parcel at L7 Pioneer Road/Tuas Avenue 11 for sale by public tender on Monday after it received a bid of $5.9 million on July 18.

The closing date of the tender is Oct 18 at 11am.

The site area is 21,871 sqm. It has a maximum permissible gross plot ratio of 1.4 and an approximate maximum gross floor area of 30,619.4 sqm.

The site is zoned for Business 2 development and has a lease period of 30 years. -- BT

Read the full report in tomorrow's The Business Times.

CityDev-Led Group Wins Beach Rd Site For $1.7b

Source : The Business Times, September 10, 2007

SINGAPORE - Singapore said on Monday that a group led by property firm City Developments (CityDev) had clinched a 3.5-ha downtown land site for $1.69 billion (US$1.11 billion).

CityDev had teamed with Dubai state investor Istithmar and Israeli developer Elad for the bid, the Urban Redevelopment Authority said in a statement.

Other bidders included CapitaLand, Hong Kong's Cheung Kong (Holdings) and Keppel Land.

The site will be developed into an office, retail and hotel complex. -- REUTERS

________________________________________________
URA News Release
10 September 2007

Award of tender of site for commecial development at Beach Road

The Urban Redevelopment Authority (URA) today awarded the tender for the commercial sale site at Beach Road to a consortium comprising Scottsdale Properties Pte. Ltd. (a subsidiary company of City Developments Limited), Istithmar Beach Road Fze and Elad Group Singapore Pte. Ltd.

Land Parcel at Beach Road

The 3.5 ha Land Parcel at Beach Road is bounded by Beach Road, Bras Basah Road, Nicoll Highway and Middle Road and occupies a prime and highly strategic nodal location within Singapore’s Downtown. It is located at the crossroads of two distinctive and vibrant districts within the city centre - Marina Centre and the Civic District.

The Marina Centre area is Singapore’s key convention and hotel hub with a number of major hotel developments - Ritz-Carlton Millenia, Marina Mandarin, Pan Pacific and The Oriental together with the Suntec Singapore International Convention & Exhibition Centre. The Civic District is home to many of Singapore’s historical buildings and places - the former Supreme Court and City Hall, War Memorial Park and the Padang and the world-renowned Raffles Hotel. Raffles City, another well-established major commercial development, is also located nearby.

Being a complete streetblock in a strategic location, the site offers a unique and attractive opportunity for a high-quality mixed-use development to be built that can contribute significantly to the urban character and enhance the streetscape and vibrancy in this part of the city. With its prominent location, the future development will also form a key component of the city skyline and will be highly visible from major approaches to the city, e.g. along Nicoll Highway, as well as from key public open spaces and buildings within the Civic District including the Padang, War Memorial Park and around Marina Bay.

The site includes four conservation buildings along Beach Road – the former NCO Club building and Block 1, 9 and 14 of the former Beach Road Camp – which are to be restored for adaptive reuse. Thus, the site offers an opportunity to create a distinctive development featuring a well-considered and innovative blend of conserved and new buildings.

Located directly adjacent to the Circle Line Esplanade MRT station, the future development will enjoy convenient access to the rail network. In addition, the future development will also be seamlessly connected via a comprehensive underground pedestrian network to the nearby City Hall MRT Interchange Station.

The success and appeal of the future development depends on the developer’s ability to conceptualise an outstanding development that will commensurate with the prominent location and creatively capitalise on all the attributes of the site.


Two-envelope tender

The Government has adopted a two-envelope tender system to ensure that the development at the Beach Road site will meet the high standards expected for the site. Under this system, tenderers were required to submit their concept proposals and tender prices in two separate envelopes for evaluation. The concept proposals were first evaluated by a Concept Evaluation Committee (CEC) based on a set of evaluation criteria specified in the tender, which pertains to appropriateness to context, quality of architecture, composition and placement of uses, and track records of the tenderer and the design team.

Under the criteria for appropriateness to context, the CEC considered the overall design concept and whether the proposed building form and massing responded appropriately and related well to the surrounding context. The proposals were also assessed on whether they contributed positively to the skyline profile of the city. Under the criteria for quality of architecture, the CEC assessed whether each proposal featured a high-quality architecture that would underscore the significance and importance of the site as a strategic node within the city. The CEC also assessed the concept proposals on whether they provided attractive public spaces, effective pedestrian access that was well-integrated with the adjacent Esplanade MRT Station, appropriate responses to the tropical climate, appropriate placement of uses within the development and sensitive adaptive reuse of the conservation buildings. The experience of the tenderers and their design teams in developing and operating a large scale development of similar quality was also considered under the track record criterion.

Only concept proposals that substantially satisfied the evaluation criteria were short-listed by the CEC to proceed to the second stage of evaluation. At the second stage, only the price envelopes of the short-listed concept proposals were opened for consideration. The site was then awarded to the tender with the highest bid among the tenderers with short-listed concept proposals.


Details of tender

The Beach Road site was launched for tender on 6 March 2007 and the tender closed on 25 July 2007. A total of seven tenders were received for the site.

CEC concluded that the concept proposals submitted by the following two tenderers had satisfied the evaluation criteria substantially and were acceptable to proceed to the second stage of the tender evaluation:

1) Scottsdale Properties Pte Ltd., Istithmar Beach Road Fze and Elad Group Singapore Pte. Ltd.; and

2) Ocean & Capital Properties Private Limited and Billion Rise Limited.

Both tenderers offered concept proposals that would result in high-quality developments, in terms of overall design concepts and that fit well into the site context and contribute positively to the skyline profile. Both concept proposals also contained very attractive and well-conceived 1st storey layout with attractive public spaces and good integration with the adjacent Esplanade MRT Station.

The price envelopes of the two short-listed tenderers were opened and the details of the price bids are as shown in Annex A. In accordance with the two-envelope tender system, the Beach Road site is awarded to Scottsdale Properties Pte. Ltd., Istithmar Beach Road Fze and Elad Group Singapore Pte. Ltd., which submitted the higher price bid of $1,688,888,000.

Concept proposal by Scottsdale Properties Pte Ltd, Istithmar Beach Road Fze and Elad Group Singapore Pte Ltd

Central to the concept proposal of the winning bid is the adoption of environmental design approach and green technology to create a distinctive, high-quality development for the site that responds well to the tropical climate and the urban context. The key feature in the design is a large ‘environmental filter’ canopy that covers over the open spaces and ties together the new and conservation buildings within the site. This structure provides protection from the sun and rain, yet maintains a naturally ventilated and attractive environment below it.

The concept proposal also provides an attractive 1st storey layout which is highly permeable, open and welcoming. It contains a series of internal streets, inspired by the finer grain street network at the nearby Seah Street and Purvis Street area, sunken courtyards and tiered gardens lined with activity-generating uses, such as shops, cafes and F&B outlets. The well-conceived connection from the MRT Station features a ‘green axis’ that ascends gradually from the basement level where the MRT entrance and exit are located to the street level through a series of cascading steps and multi-tiered garden spaces. This pedestrian-friendly setting with an attractive series of sheltered public spaces and a variety of uses will help to enhance street level vibrancy and facilitate pedestrian movement through the site and to the surrounding areas.

In terms of building form, the Concept Proposal features distinctive tower forms with sun-shading louvres, glass façade treatments and extensive sky gardens that will contribute very positively to the skyline profile of the city. The building shape and slanting facades of the towers are also oriented and designed to catch prevailing winds and direct air flow down to the lower areas of the development to improve the micro climate of the ground level spaces. The undulating geometry of the environmental filter canopy is also designed to help induce cooling air currents through the spaces below. All these elements, together with the other ‘green’ features, such as incorporation of photovoltaic cells on the building facades and the environmental canopy, contributed to the scheme potentially being able to achieve a Green Mark Platinum rating. This is the highest possible rating awarded by the BCA for buildings in Singapore that feature energy-efficient, water-efficient and environmentally friendly design.

Overall, the concept proposal offers a compelling and attractive scheme which, once implemented, would create a truly distinctive development and an exemplary showcase of ‘green’ architecture in Singapore. Please click here to view the images of the winning proposal.

Rate Cut Not Always Needed: Fed Official

Source : The Business Times, September 10, 2007

Market disruptions can be addressed using tools available

(NEW YORK) Federal Reserve Bank of Philadelphia president Charles Plosser said there is an 'underlying stability' in the US economy and officials need not always cut interest rates in response to turmoil in financial markets.

'Disruptions in financial markets can be addressed using the tools available to the Federal Reserve without necessarily having to make a shift in the overall direction of monetary policy,' Mr Plosser said on Saturday at a conference in Waikoloa, Hawaii.

Underlying stability: While there is uncertainty about the economy's outlook, the Fed's Mr Plosser expects US growth to return 'toward trend later in 2008'

Mr Plosser said while the housing slump has lowered forecasts for the expansion and there is 'considerable uncertainty' about the outlook, he expects economic growth to return 'toward trend later in 2008.' The drag from housing will 'gradually' ease, concluding sometime next year.

The comments suggest that Mr Plosser has yet to conclude a reduction in the Fed's benchmark rate is critical to safeguard the economy, which lost jobs for the first time in four years in August. The Philadelphia Fed chief doesn't vote on the rate-setting Federal Open Market Committee until next year.

Lowering the benchmark rate is an 'option if financial sector problems spill over to significantly harm the outlook for the broader economy,' said Mr Plosser, 58, who took office a year ago. And, when shocks threaten market stability, a central bank 'must be prepared to act promptly,' he said.

Mr Plosser said that the US has coped with blows in the past, such as the devastation of Hurricane Katrina in 2005 and oil-price shocks, and that a decline in one industry 'does not always imply major problems in the economy as a whole.'

'It is important to understand and appreciate this underlying stability of the economy in the face of temporary disturbances as we seek to assess monetary policy,' Mr Plosser told the Pennsylvania Association of Community Bankers convention.

Investors and economists said on Friday there's little doubt Fed policy makers will lower the main rate after a government report that day showed employers unexpectedly cut 4,000 from payrolls in August.

'The committee usually does not base its decision to change monetary policy on any one number,' Mr Plosser said, without referring specifically to the August jobs report.

Answering questions following his speech, Mr Plosser said the outlook for inflation is 'still up in the air,' and it's not clear that the moderation in prices of recent months will be sustained. -- Bloomberg

Fed Has Effectively Cut Funds Rate: Analysts

Source : The Business Times, September 10, 2007

They say unusually large spread between fed funds target and effective rates signals Fed's next move

(NEW YORK) Here's a secret: The Federal Reserve has already cut the fed funds rate.

Yes, the Fed's target rate is still the same 5.25 per cent it has been since June 2006, and the US central bank has only formally cut the less-used discount rate on loans it makes directly to banks.

But going back to Aug 9, when global central banks started flooding financial systems with cash to prevent a complete shutdown of credit markets, the actual rate at which US banks are providing each other overnight funds, the fed funds effective rate, has averaged just under 5 per cent, according to Federal Reserve data.

That's equivalent to the 25-basis-point reduction in the fed funds target rate that many investors expect US monetary policy-makers to announce at their next meeting on Sept 18.

'The Fed already eased,' said Jim Bianco, president of Bianco Research in Chicago, a member of the bond market camp that says a de facto rate cut happened a month ago and a formal announcement of one on the 18th would be little more than a rubber stamp.

'This is really hard for many market participants. They are so locked into the target rate that they cannot see the game has changed. The target rate is meaningless,' Mr Bianco (President of Bianco Research) said.

Mr Bianco's view is not universal, however. Others counter that the Fed's out-sized liquidity injections are strictly temporary measures to ease credit conditions and are not the equal of a formal policy change by the Federal Open Market Committee.

This group does agree, though, that rubber stamp or not, the unusually large spread between the fed funds target rate and the effective rate is a clear signal of the Fed's next move.

Typically the effective rate rarely sways beyond a few basis points on either side of the target rate. But through last Thursday, the 21-day moving average on the effective rate has been 4.99 per cent - a 26-basis point spread.

In fact, the last time such a significant deviation between the two occurred for a persistent period was after the Sept 11 attacks. The Fed kept the banking system flush with cash and followed through with two rate cuts by the first week of October, including a rare inter-meeting cut on Sept 17, 2001.

The effective fed funds rate - a weighted average of where federal funds trade over one session - was 4.98 per cent last Thursday, well below the 5.25 per cent target rate.

'Federal funds typically would move only 5 basis points around the target,' said Kenneth Kim, economist with Stone & McCarthy Research Associates, in Princeton, New Jersey.

Normally, 'maybe not until a day or two before the meeting you could see some slippage.' 'But these are extraordinary circumstances,' he said.

Since Aug 9, the Federal Reserve has added US$199 billion of temporary reserves to the banking system. These operations have eased the pain for banks struggling with the US subprime mortgage debt crisis and have also contributed to striking volatility in the overnight money market.

And, despite the sudden gap between the target and effective rates, some analysts say the recent moves in federal funds simply reflect those upheavals and fast-changing credit conditions.

'While the Fed may very well cut the funds target on the 18th, I don't think you can make the leap of faith that the effective fed funds rate being below target was the signal,' said Kevin Flanagan, fixed income strategist for global wealth management with Morgan Stanley in Purchase, New York.

In fact, the daily trading in the fed funds rate has been the most volatile since at least 1994, careening from effectively zero to as high as 6.05 per cent in just one session on Aug 10.

Before 1994, federal funds traded rates were a main tool for tracking Federal Reserve policy, and big swings then were a signal of a policy change. In 1994, though, the Fed adopted the current system of targeting a specific rate and announcing changes to its target the same day, as part of an effort to increase transparency to markets.

Since then, the effective rate has lost some of its predictive power, and for clues to pending rate moves investors have turned instead to rate futures markets.

Still, the current gap probably cannot continue for much longer. Either the Fed has to cut the target rate, as most now expect, or it has to ease up on the liquidity injections to allow the effective rate to float back up to a more typical spread. -- Reuters

Fed Should Cut Rates By 100 Basis Pts: Forbes

Source : The Business Times, September 10, 2007

Make it clear Fed will provide liquidity so financial system doesn't 'seize up'

IF Steve Forbes had his way, the US Federal Reserve would cut interest rates by 100 basis points or more.

'(Fed chairman Ben) Bernanke should stop acting like Hamlet and start acting like a central banker and make it clear the Fed will provide liquidity to solve the short-term crisis,' he said at a lunch talk at Raffles Hotel yesterday.

Mr Forbes, chief executive officer of Forbes and editor-in-chief of Forbes magazine, is in town for the three-day Forbes Global CEO Conference, which kicks off today.

Monetary disturbance: Mr Forbes (second from left, with fellow CEOs - from left - William Adamopoulos, Robert Bird and Pierre Baer) at yesterday's pre-conference media briefing. Talking about the US economy, Mr Forbes said today's credit crunch really started three years ago, when the Fed created too much money and commodity prices went up across the board. Usually, some commodity prices will go up while others come down - but, in that instance, they all went up at once.

He said the Fed should temporarily shift away from targetting inflation and instead focus on making sure the financial system does not 'seize up'.

For example, it's too late to tell banks to tighten lending standards, Mr Forbes said. In the present context, this would only make it more difficult for solvent borrowers to obtain liquidity. Rather, the Fed should make sure the solvent borrowers do not go down with the insolvent, he said.

Only after contagion is stopped will markets be able to properly price assets, said Mr Forbes. This is critical, since markets are presently jittery, precisely because they are uncertain about how much assets are really worth.

According to him, today's credit crunch really started three years ago, when the Fed created too much money and commodity prices went up across the board. Usually, some commodity prices will go up while others come down, but in that instance, they all went up at once - which is 'a sign of monetary disturbance', he said.

For example, today's high oil prices are not due to fundamental issues of demand and supply, but to 'inflation and the speculation generated by inflation'.

But inflation was not reflected in the consumer price index, because improving productivity kept prices of daily goods down. Instead, the excess liquidity led to rising asset prices and lower standards of credit.

Mr Forbes also discussed the 2008 US elections, in which he backs New York City ex-mayor Rudy Giuliani.

Key to this choice is Mr Forbes' belief that protectionist sentiment in the US, in both the Republican and Democrat parties, has grown much stronger since the 1990s. Even Hillary Clinton - whom he believes will win the Democratic nomination - will face difficulty in backing free trade, he said.

Though her husband, former president Bill Clinton, pushed a free-trade agreement (FTA) with Mexico through Congress in the 1990s in the face of opposition from his own Democratic Party, he succeeded only with overwhelming Republican support, said Mr Forbes.

But times have changed; a year ago, a Republican-dominated House of Representatives passed FTAs with Central American countries by only a single vote. But Mr Giuliani, as mayor of New York, pushed through tax and budget cuts despite governing a state where people are 9-to-1 Democrat, said Mr Forbes. 'He won't win a cuddly bear contest on Oprah, but he's not afraid to go against the grain.'

Will A Fed Rate Cut Really Help?

Source : The Business Times, September 10, 2007

MARKETS

SOME 5-6 weeks ago when the US Federal Reserve and various other central banks injected liquidity into the finacial markets to prevent an all-out collapse, we pondered the question of whether such central bank intervention was only delaying the inevitable.

Since then - and because the intervention did not have its desired effect as stocks continued to slide - Fed chief Ben Bernanke dropped prominent hints that his organisation would do whatever is necessary to ensure the US does not slip into a recession.

Coming soon after the Fed cut its discount rate two weeks ago, these comments have been widely taken to mean that a possibly aggressive federal funds rate cut is on the cards at the Sept 18 Federal Open Markets Committee (FOMC) meeting.

In other words, Wall Street has known for several weeks now that Fed action is probable to stave off a financial disaster. Despite this, stocks have continued to come under pressure.

Or to be more precise, stocks have not performed despite every one (well, almost every one) being confident that Mr Bernanke and his colleagues will bow to political pressure and help keep the liquidity ball rolling.

Of course, markets are rarely if ever that efficient in discounting expectations and perhaps several weeks is insufficient for sentiment to be fully restored to pre-July levels.

But one can't help but get the nagging feeling that even if US rates are cut on Sept 18, the relief it affords might only be temporary.

On Friday, Wall Street collapsed after the release of a dismal jobs report, the worst since 2003. According to the New York Times, most of the job losses came not surprisingly in construction and housing, and according to economists it interviewed, this raises the probability of a US recession next year to as high as 25-50 per cent. Add to this rising oil prices and slowing consumer spending and it's not difficult to see how this conclusion has come about.

It appears Friday's action all but guarantees that the Fed will cut rates on Sept 18 and some observers are hoping for a 50 basis points reduction from 5.25 to 4.75 per cent. Indeed, it's very likely that the Straits Times Index's outperformance last week - it shot up almost 100 points, or almost 3%, over the five days even as regional majors Japan and Hong Kong faltered - was due to hedge funds positioning themselves for the post-Sept 18 rally that everyone is hoping for.`

In fact, some observers believe that a rate cut before Sept 18 is possible - DBS Group Research for example, said over the weekend that a 25 points cut on Sept 18 is a done deal and that there really is no reason to wait until then to implement it.

Our guess is the same as it's been for some weeks now, namely that the smart money would probably take the opportunity to sell into strength post-rate cut, raise cash and withdraw for the time being until the dust fully settles on the sub-prime fiasco. It may take a few more months but patience will surely pay dividends.

If the Fed does cut rates by 50 points then the relief afforded might last a little bit longer than a 25-points cut, but our guess is that it could fizzle out quickly, especially if the economic numbers continue to be weak.

Meanwhile, it looks like house traders and syndicates, having made a lot of money pushing loss-making penny stocks throughout April-July and having sold out at the top are now ready to renew their activities again. And why not?

This is a market that thrives on inside information, rumour and the ability of 'operators' (a polite alternative to 'manipulators') to move stocks with or without the aid of corporate insiders.

Moreover, as far as the retail hordes are concerned, this is what investing is all about since it usually results in large gains in a short space of time. The advice again is the same - a US rate cut could help keep the momentum going but traders should be aware there's a good chance it won't last too long.

IMF's Rato Says Recent Turmoil Provides Welcome 'Reckoning'

Source : Channel NewsAsia, 10 September 2007

LONDON : The recent credit crunch in the financial markets has provided a welcome "reckoning" that should help in terms of long-term stability, the outgoing head of the International Monetary Fund (IMF) said in an interview published Monday.

Speaking to the Financial Times from Cernobbio, Italy, at a conference of international financial policymakers, IMF Managing Director Rodrigo Rato said that this "reckoning is probably a welcome one but it does not mean that it will be a painless one."

Rato, who is set to step down from his post in October, described recent market turmoil caused by problems in the US housing sector as a "serious crisis."

He acknowledged, however, that the crisis was occurring in "a context of strong global growth and with strong macroeconomic fundamentals in many countries, and also high credibility of monetary authorities."

"This is an important crisis that is still unfolding, and probably a high degree of uncertainty right now is the worst issue that we will have to resolve."

The turmoil stems from a crisis in the US sub-prime mortgage sector, where home loans are granted to people with poor credit.

The sub-prime crisis has affected the broader financial markets, with several Wall Street banks hit with multibillion-dollar trading losses in mortgage-backed securities, spooking investors. - AFP/ir

Singapore Shares Down Sharply On Wall Street Tumble

Source : Channel NewsAsia, 10 September 2007

SINGAPORE: Singapore share prices were sharply lower early Monday, following steep falls on the Wall Street on Friday.

The Straits Times Index fell 96.11 points to 3,392.86 within 15 minutes of trade.

Wall Street shares took a dive on Friday as news of a surprise drop in US payrolls, the first in four years, heightened fears that the world's biggest economy is flagging.

The Dow Jones Industrial Average tumbled 249.97 points (1.87 percent) to close at 13,113.38.

Ahead of the opening, the Labour Department reported non-farm payrolls fell by 4,000 in August.

That was the first drop in employment in four years and far below Wall Street expectations of a gain of 110,000 jobs. - CNA/ir

Selected Groups May Be Exempted From Compulsory Annuities

Source : Channel NewsAsia, 09 September 2007

SINGAPORE: Not all Singaporeans will need to buy compulsory annuities when they turn 55 years old.

Those with chronic diseases may be excluded, since they may not live long enough to enjoy the life insurance payouts.

This was revealed by the Minister-in-Charge of aging issues, Mr Lim Boon Heng, at a seminar organised by the Community Development Councils (CDCs) on Sunday.

One in six Singaporeans will be an elderly by 2030, and to ensure that everyone has enough money for their sunset years, the government will make it compulsory for all Singaporeans currently below 50 years old to buy annuities when they turn 55.

This was announced by Prime Minister Lee Hsien Loong during the National Day Rally.

Such a scheme will then pay them a monthly allowance from the time they turn 85 till they pass on.

Related Video Link - http://tinyurl.com/2ovz9q
Selected groups may be exempted from compulsory annuities

Many agree that having an annuity scheme will help the majority of Singaporeans who are expected to live till 85.

But sadly, not everyone is blessed with longevity, especially so for people down with severe chronic diseases and disabilities.

Mr Lim said a committee would be set up by the Manpower Ministry to study how the annuity scheme could be made more effective.

He said: "Those suffering from chronic illnesses do not expect to live so long, therefore (they) could be excluded. There are also some people who are already buying annuities – do we need to have double coverage? The answer obviously is 'no'. So those who are adequately covered and the policy which they bought fulfils a certain requirement may also be exempted."

Alvin Lim, CEO of Bizlink Centre, said: "There are selective groups whose average lifespan would not be the same as the majority population. For example, people with muscular dystrophy will not live that long, so for them to contribute to a scheme like that would make them feel discriminated by the society at large. Worse still, this group of people is, on the average, from the lower income group."

More details on the scheme are expected when Parliament sits on 17 September. - CNA/so

Three Indian Banks May Get Full Licence In Singapore

Source : AsiaOne News, Mon, Sep 10, 2007

MUMBAI, Sept 9 - Three Indian state-run banks may be granted full banking licenses by the Monetary Authority of Singapore and the Indian government may reciprocate by giving the same status to three Singapore banks, the Economic Times said.

State-Bank of India , the country's largest commercial bank, Bank of Baroda and Bank of India may be given the qualifying full banking licence, which would enable the banks to open more branches, the paper said.

"We are told that SBI, BOI and BOB will be granted qualifying full banking status. That means we will grant the same status to three banks from Singapore to operate in India," a senior finance ministry official was quoted by the paper as saying.

DBS Group , Oversea Chinese Banking Corp and United Overseas Bank are among the banks which have applied for a full banking licence in India, the paper said.

Billionaire Forbes Urges US Federal Reserve To Cut Interest Rate, Remove Excess Liquidity

Source : AsiaOne News, Sep 9, 2007

SINGAPORE (AP) -- Billionaire publisher Steve Forbes urged the U.S. Federal Reserve on Sunday to cut a key interest rate by a full percentage point when it meets later this month, to solve an ongoing credit crisis.

The central bank should also focus on addressing the root of the problem - excess liquidity in the economy, Forbes said at lunch hosted by the Singapore Press Club.

Forbes said the Fed should cut the interest rate, now at 5.25 percent, by 100 basis points when it meets Sept. 18 and make it clear "that while they're going to solve the short-term crisis, they will, over the next year or so, start to mop up the excess liquidity.

"Removing excess liquidity - the Federal Reserve selling bonds from its portfolio and withdrawing funds from the market - that is tightening which the Fed has not done," he said.

Economists increasingly believe the Fed will cut the rate by at least one-quarter percentage point at the September meeting.

The Fed has not lowered the rate in four years, but pressure has been building on it to do so to help ease credit conditions. Lower rates would reduce borrowing costs for everyone from potential homeowners to companies looking to finance activities and purchases.

Forbes - the CEO of Forbes Inc. and editor-in-chief of Forbes magazine - said he expected the U.S. economy to slow down in the latter half of the year due to the credit crisis, but added that fundamentals remained strong.

"It will slow down in the second half of this year because of the repercussions of the crisis," he said. "Next year it should start to pick up again, especially in spring time."

Forbes also warned of a rising tide of protectionism in the United States - particularly in the Democratic Party - and elsewhere.

"Make no mistake, even though the global economy is doing very well, protectionist pressures are very strong in the U.S., you see it in Europe, you see it elsewhere," he said. "In the Democratic Party, protectionism is now rampant."

"It's going to take strong political leadership to keep these forces at bay," Forbes said. "Because if they're not kept in control, then this great global boom will cease to exist."

Asian Shares Tumble After Wall St Fall

Source : The Straits Times, Sep 10, 2007

TOKYO - ASIAN stock markets tumbled on Monday, with exporters hit hard as the dollar slumped to a 15-year low against a basket of major currencies on concerns the United States economy may be heading into a recession.
Data on Friday showing US payrolls shrank in August for the first time in four years suggested that a credit squeeze stemming from problems in the US subprime mortgage market is beginning to stifle growth in Asia's top export market.

Japanese government bond futures leapt to a 19-month high following a rally in US Treasuries on growing expectations that the Federal Reserve may have to slash interest rates next week to support the economy.

'A rate cut by the US Federal Reserve would certainly ease investor concerns and it is increasingly likely that it will happen. But short of that, it is hard to see what the catalyst will be for investors' nerves to be soothed,' said Mr Martin Arnold, an equities economist at CommSec in Sydney.

TOKYO
Japanese share prices fell 2.11 per cent in morning trade on Monday as a surprise fall in US payrolls and a contraction of the Japanese economy weighed heavily on investor sentiment, dealers said.

Exporter shares were particularly hard hit after the dollar slumped against the yen and other currencies as the US job losses raised concerns that the world's largest economy is losing steam.

The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares was down 340.49 points at 15,781.67 by the lunch break.

The broader Topix index of all first-section shares lost 30.53 points or 1.96 per cent to 1,526.49.

On Friday in the US, the Dow Jones index lost 1.9 per cent after markets took fright at a drop of 4,000 in payroll jobs in the US economy in August.

'The US employment data reinforced investor uncertainties about the future course of the US economy on top of ongoing worries about subprime loans,' said Mr Katsuhiko Hiroshige, a market analyst at Traders & Co.

Adding to the market gloom, Japan's economy shrank by 0.3 per cent in the three months to June from the previous quarter as firms cut spending on new factories and equipment, the government said ahead of the opening bell.

SHANGHAI
Chinese share prices fell 0.94 per cent in early Monday morning trade, extending previous loss after China's top securities regulator flagged the risks of stock investment, dealers said.

They said that cautionary comments published Monday by Mr Shang Fulin, China's chief security regulator, sparked selling ahead of the release of key monthly economic data this week.

Mr Shang, chairman of China Securities Regulatory Commission, said in commentary published in state media that risks were increasing amid recent strong gains that has pushed the key Shanghai index up 97 per cent since January.

He said that new forms of market irregularities and the weak risk awareness of many investors continued to be problems for China's fledgling but booming stock market.

'The market, which is retreating after recent highs, was psychologically impacted by Mr Shang's remarks,' said Mr Wang Xiaoming, an analyst with Xiangcai Securities.

Investors were also nervous about the release of key data this week that is expected to show inflation is well above the government's comfort zone of 3.0 per cent.

On Friday, the benchmark Shanghai Composite Index closed down 116.48 points, or 2.16 per cent, at 5,277.18, after the central bank announced a seventh hike in bank reserve ratio requirements in an effort to tighten credit.

At 10.26am, the benchmark Shanghai Composite Index, which covers both A and B shares listed on the Shanghai Stock Exchange, was down 49.75 points, or 0.94 per cent, to 5,227.42.

HONG KONG
Hong Kong stocks fell 1.7 per cent in a broad sell-off on Monday, pacing declines in global markets, after the latest US jobs data sparked fears that the world's largest economy could be headed for a recession.

But blue chip Hong Kong Exchanges and Clearing surged more than 7 per cent at the open after the government raised its shareholding in the city's bourse operator.

The benchmark Hang Seng Index opened at 23,584.07.

KUALA LUMPUR
The Kuala Lumpur Composite Index opened down 14.76 points to 1290.14. -- REUTERS, BERNAMA, AFP

Meet Me At The Ritz, By That, I Mean At Home

Source : The New Paper, September 10, 2007

It's getting Fashionable To call your hotel home

IMAGINE living in a home that is run like a hotel.

You don't have to worry about parking when you reach home - a valet will do it for you.

A round-the-clock concierge is at your beck and call to help run your errands and maids make up your room and do your laundry.

If this sounds more like a hotel than an apartment, well, it's run by the same people who manage a chain of luxury hotels.

The Residences at The Ritz-Carlton will join the ranks of top-of-the-line apartments stamped with five-star hotel credentials in Singapore, like the Four Seasons Park and St Regis Residences.

It is a trend which is seeing a boom in other parts of the world too.

On Monday, the company announced it will be building the luxurious 36-storey tower on Cairnhill Road. It will be the first Ritz-Carlton Residences in Asia.

When it is completed in 2010, it will offer 58 apartments and two penthouse units.

WOOING THE RICH

Mr Joseph Tan, CB Richard Ellis' executive director (residential), said: 'The trend of branded residences is set to grow in Singapore as the city continues to draw more foreign investors.

'These upscale properties will appeal to the well-heeled and well-travelled set.'

Mr Simon Manning, Ritz-Carlton Hotel's regional vice-president (sales and marketing) told The New Paper on Sunday: 'The Ritz will target the wealthy and high net-worth individuals.

'Some of our clients belong to the who's who of the world, including celebrities and royalty. Most already own two or three properties around the world.

'In Singapore, we are expecting 50per cent of the buyers from this city.'

The Ritz's three- and four-bedroom apartments and two-storey penthouses - spanning 2,800 sq ft, 3,100 sq ft and over 5,000 sq ft respectively - will be up for sale next month.














Such branded properties are likely to get more expensive as developers continue to cater to rich buyers, said Mr Tan.

In June, City Developments' St Regis Residences fetched a record of $4,635.50 psf.

At the Ritz-Carlton Residences, each unit is expected to fetch at least $4,000psf, said property experts.

Despite such prices, hotel-residences are in demand, particularly in the US.

Mr Joel Green, president of the US-based Condo Hotel Centre, which specialises in hotel-residence properties, observed that it's not 'unusual these days for a hotel project to have some units sold as condos'.

There are the famous W Dallas Victory Residences managed by Starwood Hotels & Resorts.

And the InterContinental residences in Boston, as well as the Solis Resort Residences and the Grand Bohemian Hotel & Residences in Florida.

By 2009, the Mandarin Oriental Hotel Group will also manage a new 120-room luxury hotel and 90 branded residences in Dallas.

In Toronto, Canada, all eyes are on the 68-storey mixed-use Trump International Hotel & Tower which is now being built.

It has both hotel rooms and residences. The apartments, from the 35th storey up, range from 2,226 sq ft two-bedroom suites to a 7,000 sq ft Grand Skyplex occupying the top three levels.

Here, residents can enjoy five-star concierge service, housekeeping, valet services and more.

The price tag: From US$1.5million ($2.29m).

In Asia, homegrown resort operator Banyan Tree Hotels and Resorts has residences in Phuket, Seychelles, Lijiang and Bintan, with prices that start from US$500,000. Most buyers are from Hong Kong, Europe and China.

Though Banyan Tree has all-suite residences in Bangkok and upcoming residences in Abu Dhabi, Chiang Mai and Bali, there are no plans for one in Singapore.

HERE'S THE CATCH

These properties, though, come with strings attached.

Residents have to pay a hefty monthly maintenance fee. This usually covers staff costs, services and amenities.

At the Ritz-Carlton Residences, home owners are expected to pay between $2,000 and $3,000 a month.

This will get them 24-hour room service and even sommelier service.

And you'll be able to rent out your apartment at the Ritz.

Said Mr Manning: 'The Ritz offers two kinds of home ownership. One is fully-owned and the other is a fractional ownership.

'The residences in Singapore will be fully-owned by the buyers. They may rent out the apartment but on no less than a year's lease.'

Banyan Tree offers owners guaranteed rental returns of 6per cent a year of the purchase price for six years.

Those who own villas may also swap stays with other resort owners in an exchange programme.

HOME RESTRICTIONS

But what you see is what you get.

Home owners can't make changes to the design or layout of their Banyan Tree residences. This is because the units can be leased out as vacation homes when not in use.

On how extensively one can renovate units at the Ritz-Carlton Residences, Mr Manning said: 'The limitations are not known at this point. But if one intends to annex rooms, it may affect the value of the property.'

--------------------------------------------------------------------------------

RITZ-CARLTON RESIDENCES

At the Ritz-Carlton in the Cayman Islands, two- to seven-room units are priced from US$3.6m and come with 24-hour butler service

S'pore's Ritz-Carlton Residences at Cairnhill will be first in Asia

60 exclusive units to go up for sale next month

Owners expected to pay $2,000 to $3,000 for monthly maintenance, which includes 24-hour room service

--------------------------------------------------------------------------------

BANYAN TREE HOTELS & RESORTS

S'pore operator has residences in Phuket, Seychelles, Lijiang, Bangkok and Bintan

Prices of units start at US$500,000 ($761,700)

Investors guaranteed rental returns of 6 per cent per annum of purchase price for six years

Located on four exclusive floors of the 61-storey Banyan Tree Bangkok hotel, Banyan Tree's residences are luxurious two-room units.

--------------------------------------------------------------------------------

ST REGIS RESIDENCES

The residences made waves here in June when it fetched record $4,635.50 psf

Penthouses measure whopping 4,941 to 7,287 sq ft

In two 23-storey towers flanking the St Regis Hotel on Tanglin Road, the residences are touted to offer the best in hospitality. Throwing a party? You'll have your own chef.

More Market Panic Ahead As Banks ‘Fess Up’ On Sub-Prime - Confidence In Banks Exceptionally Low, Says JP Morgan Asia

Source : The Business Times, 10 Sept 2007

Be prepared for more market panic as major banks continue to ‘fess up’ to their holdings of US sub-prime mortgage securities over the next several months, said Ivan Leung, JP Morgan Asia chief investment strategist.

The world’s financial markets are in turmoil as worries over exposure to the US sub-prime mortgage debt has led to a freeze in the credit market with global central banks having to step in to provide liquidity.

Around the world, banks are under intense pressure as investors and analysts cast a spotlight on their exposure to sub-prime, or high-risk, property loans in the US through their investments in collateralised debt obligations, known as CDOs.

There is little information on the amount of CDOs held by banks, which has led to ‘exceptional low’ confidence in the banks, said Mr Leung in an interview last week. In the past month, European and Asian banks including DBS Group Holdings and United Overseas Bank have revealed their CDO holdings.

‘(US banks) originate it, they package it, they sell it - but it doesn’t necessarily mean they hold on to it,’ Mr Leung said.

He said that, often, US banks do hold on to some of these CDOs in structured investment vehicles - off their balance sheets - so there is no transparency on their holdings. He described this as scary.

‘European banks, and to a lesser extent - so far as we have seen - Asian banks, were purchasers of these products,’ Mr Leung said.

‘So the crisis in confidence is not so much that there could be a 80 billion or even a 200 billion dollar loss of sub-prime; the confidence issue is that we don’t know exactly who is holding all this debt,’ he said.

And we don’t really know the prices of all this debt, and how much of it will be subject to default, he said.

‘The confessions, you see them once in a while; that’s why we think this is an issue, because over the next three to six months, some banks will begin to confess that they have some on their balance sheet, and some off-balance sheet, but clearly right now, nobody really has a true picture of what’s going on. ‘It’s the worst of all situations - nobody knows.’

Mr Leung expects the markets to veer between confidence and ‘blind panic’ each time there is another disclosure.

Bank shares skidded on Aug 24 after DBS and three of Asia’s biggest banks revealed bigger-than-expected exposure to the US sub-prime mortgage crisis.

DBS said that it had US$1.6 billion (S$2.43 billion) in holdings of CDOs - more than the S$1.3 billion disclosed on Aug 7.

An additional 1.5 million sub-prime borrowers may fall behind on their mortgage payments as introductory interest rates on those loans rise this year and next, US Federal Deposit Insurance Corp chairman Sheila Bair said last week.

Among the 2.5 million sub-prime mortgages with interest rates that are expected to be reset this year and next, ‘1.5 million will be in financial distress’, Ms Bair said.

Getting any kind of centralised data collection will be very challenging, she said.

JP Morgan estimates that US$600 billion worth of adjustable rate mortgages will be reset over the next 12 months.

But, following the adage that there are always opportunities when risks are high, Mr Leung said that one way for investors to take advantage of the current extreme volatility in the markets is to buy ‘plain vanilla’ short-term structured notes with capital protection.

The notes are designed to give a high payout even if the stock markets move only slightly higher, he said. ‘When volatility is as high as it is right now, we can go for simple structures,’ Mr Leung said.

The notes that JP Morgan is offering are meant for investors who share the view that the US mortgage crisis will not lead to a recession. Lower growth, yes, and therefore moderately bullish stock markets still.

Mr Leung said that JP Morgan was positive on undervalued markets such as Thailand and South Korea and favours Singapore and China companies which have superior corporate and economic fundamentals.

Is Punggol Slated To Host The First Heartland Racing Extravaganza?

Source : The New Paper, September 10, 2007

F1 RACING COUNTDOWN
GO-KART RACES IN HEARTLANDS?

The New Paper on Sunday has learnt that there are plans to run a series of professional go-kart racing events as curtain-raisers for next September's Formula One race, which will take place in the Marina Bay area.

This comes just weeks after Prime Minister Lee Hsien Loong rolled out plans for Punggol 21+ in his National Day Rally speech.

The go-kart racing could be on as early as November, starting Singapore's countdown to F1.

During a go-kart event last month at Sengkang East Way, MP Teo Ser Luck, Parliamentary Secretary for Community Development, Youth and Sports, hinted: 'We can't bring Formula One cars to the heartland, but we can create awareness of car racing and F1 and give residents a taste with go-karts.'

CARNIVAL ATMOSPHERE

The difference between the Sengkang event and the upcoming ones is that this series of events will take on a more family-oriented, carnival-like atmosphere, with food stalls and games.

The New Paper on Sunday understands that the initial events will feature professional go-kart racing (or prokarting) on roads which will be closed to traffic.

According to go-kart websites, special models used on purpose-built race circuits can boast up to 900BHP (brake horsepower, a unit measuring the power of a car's engine) and a top speed of up to 300kmh.

They can go from 0 to 100kmh in about 4 seconds - similar to a Ferrari F430.

A regular 1.6L saloon car has a BHP of about 110, and takes more than 10 seconds to get to 100kmh.

It is not known what kind of go-karts will be used during the race events here.

When contacted, Mr Teo, who is on the steering committee for the Singapore Grand Prix, declined to elaborate on the plans but hinted at 'several firsts'.

In a telephone interview from Dalian, China, where he was attending a World Economic Forum meeting, he said: 'Before the end of the year, there will be go-kart carnivals in the heartlands.













'Prokarting basically means going really fast on small vehicles...

'There won't just be one (event) but potentially several in different places.'

Asked if real cars may take the place of go-karts during these public road racing events, he said: 'We start small. As for real cars, it really depends.'

Will it be in Punggol? After all, Mr Teo is MP for Pasir Ris-Punggol GRC.

He laughed, but would not confirm it.

Apart from raising the excitement for residents at housing estates, Mr Teo added that these events will help raise awareness of next year's F1 races.

BYE BYE, ROADBLOCKS

'I didn't think this would be possible. There were so many roadblocks. But now it's materialising before my eyes,' he said.

During the upcoming events, the main draw will be racing by professionals, but there will be ample opportunities for the public to try their hand at the sport.

Car-lovers may also be able to show-off - if not race - their souped-up vehicles at static displays at the carnivals.

There are also plans to fly in actual F1cars for display.

Car enthusiast Daniel Lee, 29, who is looking forward to the F1 races, felt these events would act as an appetiser.

'I've watched prokarting competitions in Australia, and they're thrilling. Hopefully, there will be international racers,' he said.

'It's great if they're thinking of getting some real F1 cars in for people to take a close look.'

Madam Irene Loh, 47, hopes the event will come to her Yishun neighbourhood even though she doesn't know a lot about cars.

The shipping executive said: 'My husband and two children will definitely enjoy the races, and it gives me a chance to find out what the big deal is. Anyway, any carnival is always fun to attend.'

New Hub For One-North

Source : TODAY, Monday, September 10, 2007

$660m to develop cultural, retail and entertainment project

SOUTH-EAST Asia’s largest real estate developer CapitaLand will jointly develop a $660-million integrated civic, cultural, retail and entertainment hub at Vista Xchange, one-north, with Rock Productions.

The venture along North Buona Vista Road comes after Rock Productions won the $189-million tender from JTC Corporation on Sept 7, to build, lease and operate the hub on a 60-year lease. The project will comprise a civic and cultural zone with more than 30,000 sq m in gross floor area and a retail and entertainment zone about 24,000 sq m.

In a statement filed with the Singapore Exchange, CapitaLand Retail, the retail arm of CapitaLand, said it would be investing about $380 million to own and manage the retail and entertainment zone, plus approximately 1,000 car park lots at the proposed development.

Rock Productions, which has committed about $280 million, would own and manage the civic and cultural zone.

CapitaLand Retail will also project-manage the entire development.

“The civic and cultural zone of the integrated hub at Vista Xchange will be a worldclass venue for staging large-scale performances, shows and events,” said Mr Mathew Kang, director of Rock Productions.

“The proposed 5,000-seat high-tech theatre, backed by the expertise of Artec Consultants and IMG Artists, is expected to fulfil the needs of, and attract these target performing art and cultural groups.”

Mr Pua Seck Guan, CEO of CapitaLand Retail said: “Other than catering to the demand of the affluent crowd from the nearby Bukit Timah, Holland and Rochester Park areas, the retail and entertainment zone is expected to benefit from the natural visitor catchments from one-north communities, surrounding housing estates as well as tertiary institutions close by.”

The project is scheduled to be completed by 2011. CapitaLand shares rose 5 cents to close at $7.55 last Friday.

Rein In Unscrupulous Agents

Source : TODAY, Monday, September 10, 2007

All housing agents should be registered for better control and regulation

Letter from ONG CHENG HONG



















I WAS glad to read the article, “Agents who move in for the kill” (Aug 31).

The article came at a time when I, too, suffered the tyranny of unethical housing agents and echoes the experiences of many people who have been “bullied” by these unprofessional agents.

Bullies do not exist only in schools. In the adult world, there are road bullies, gender bullies (those who fire pregnant employees, for instance), and business bullies — just to name a few.

With the booming property market, there are many new agents entering the business. Because of this, I think there is a real and urgent need to do things right.

Legislation should be in place to regulate the conduct and practices of housing agents.

I’ve checked the websites of a few institutions and to my disappointment, discovered that there is no official body that regulates housing agents.

I also found what I read on the website of the Singapore Accredited Estate Agencies disturbing:

“While there are professional bodies such as the Singapore Institute of Surveyors and Valuers and the Institute of Estate Agents (IEA), which exercise control on the practice and conduct of their members who practise as estate agents, there is at present no proper system of accreditation for practising estate agents. The increasing number of property transactions arising from a growing economy and the effects of globalisation have inevitably raised the issues of control and regulation of those who perform as estate agents.”

On its website, the IEA says that it hopes to register 75 per cent of agents in Singapore on a voluntary basis. Is this sufficient?

As IEA has a registration system for housing agencies and agents, I decided to check up on the names of the agents that I had encountered.

To my horror, I discovered that many of them were not registered.

Without the power to make it mandatory for agents to register with the IEA, the organisation is as good as non-existent.

How can it help to upgrade professionalism or regulate the conduct of agents? How can the public be protected from unprofessional, unscrupulous and unethical agents?

The relevant authorities must step in to enforce compliance with ethical practices before more Singaporeans, especially the old and uninformed, fall prey to unethical agents.

Forbes: Get Over Your Hang-Ups, Bernanke

Source : TODAY, Monday, September 10, 2007

Forbes Inc CEO, Publisher,Mr Steve Forbes

THE United States Federal Reserve should cut its key interest rate by a full percentage point when it meets next week to restore short-term confidence in the country’s economy and solve the credit crisis, sparked by the sub-prime mortgage problems.

The central bank should then focus on the root of the problem and, over the next 12 to 18 months, mop up excess liquidity “in a deliberate and calm manner”.

This remedy, dished out by billionaire publisher Steve Forbes (picture) — speaking at a lunch hosted by the Singapore Press Club yesterday and later to journalists —is much more aggressive than the 0.25-to-0.5-percentage point rate cut that most economists expect the Federal Open Market Committee, the key monetary policy-making body of the Fed, to announce on Sept 18.

US Central Bank, Federal Chairman, Mr Ben Bernanke

Speaking to TODAY, the editor-in-chief of Forbes business magazine said: “When you have a crisis like this, you just have to put all your preconceptions and agendas aside and deal with the immediate crisis. Preventing panic is key and the Fed has been a little hesitant on that for a variety of reasons, but they just have to … get over your hang-ups Mr Ben Bernanke (the Fed chairman), deal with the crisis and then clean it up.”

The US presidential election was also very much on the mind of Mr Forbes. His big worry — the rising tide of protectionism in the US.

He warned that the global economy and world trade would suffer if Ms Hillary Clinton, or any other Democrat candidate for that matter, were to be elected to the White House next year.

“There is a lot of protectionist sentiment especially in the Democratic party, far more than during Bill Clinton’s presidency in the 1990s,” said Mr Forbes, ahead of the 7th Forbes Global CEO Conference being held in Singapore.

“When Bill Clinton got his free trade agreements through Congress, most of his party voted against it. It was with Republican support that the free trade agreement with Mexico got through.

“So, that’s what I worry about … protectionism in the trading system.

“It’s going to take strong political leadership to keep these forces at bay. Because if they’re not kept in control, then this great global boom will cease to exist.” — Forbes Inc CEO Steve Forbes on protectionism

Even though he expects the US economy to slow down in the latter half of the year due to the credit crisis, he pointed out that fundamentals remain strong and “next year it should start to pick up again, especially in spring”.

The Global CEO Conference is the seventh in the series and the third held in Singapore. It brings together top CEOs with a combined net worth of US$130 billion ($200 billion).

Annuities May Not Be Compulsory For All

Source : TODAY, Monday, September 10, 2007

Not all Singaporeans may have to join the compulsory annuity scheme.

Exemptions could be granted to those with certain health conditions who would not expect to live long, Minister in the Prime Minister’s Office Lim Boon Heng told reporters yesterday.

At a seminar earlier, Mr Alvin Lim, CEO of Bizlink Centre, a job agency for the disabled, asked for certain groups – such as muscular dystrophy patients – to be exempted.

The Minister said the concern was “valid” and urged for feedback to be sent to the Manpower Ministry. The annuity scheme will be detailed next week in Parliament.

Government Parliamentary Committee (Health) chairman Halimah Yacob told TODAY it was a reasonable request. “If there are pockets of people who know they are not going to benefit, it’s just not logical to insist they be covered under the scheme,” she said. “Excluding them does not contravene the original objective of having annuities.”

Asked if this might open a Pandora’s box, with various groups asking for exemptions, she said each request should be “examined on its own merit”.

A Quick Guide To Sub-Prime Issues

Source : The Straits Times, September 10, 2007

CHARMIAN KOK explains how individual loan defaults in a faraway land can have a domino effect all over the world - including here

PAUSE for a moment to consider these facts: HSBC, the world's third-largest bank, announced that 50 per cent of its earnings in 2006 were wiped out by sub-prime losses from its US subsidiary. Since the beginning of that year, over 50 US mortgage companies have put themselves up for sale, closed or been declared bankrupt. In July this year, Bear Stearns closed two of its ailing hedge funds, while in June, BNP Paribas announced the suspension of three of its funds due to exposure to US mortgages.

With news like this making waves in financial markets lately, it is hardly surprising to see the proliferation of doomsday headlines like 'Market falls parallel previous collapses', and 'Anxiety attack knocks markets down'. No longer confined to the US real estate or financial markets, the topic of America's sub-prime mortgage market has taken centre-stage, as fears of a spillover spread to financial markets in Europe and Asia - even Singapore.

How did it all begin?
Before the US real estate bubble burst, sub-prime lending was a rapidly growing segment of the mortgage market. It worked by banks extending credit to borrowers who, for a number of reasons, would otherwise be unable to qualify for credit. According to the US Department of Treasury guidelines issued in 2001, 'sub-prime borrowers typically have weakened credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments and bankruptcies'.

Most US sub-prime mortgages have an attractive initial fixed-rate mortgage payment for a few years, followed by a higher adjustable rate for the remaining life of the mortgage. The sub-prime mortgage industry began to proliferate earlier this century and estimates say that about 21 per cent of all mortgage originations from 2004 to 2006 were sub-prime - a sharp increase from 9 per cent in 1996-2004. At its height in 2005, sub-prime mortgages were worth US$805 billion.

Although not all sub-prime loans are necessarily high-risk, many of them were made to homebuyers with poor credit or little income. As the US housing market boomed, thousands of lenders greedily sought greater profits by aggressively touting loans to individuals with poorer credit ratings and making greater exceptions to guidelines. In certain cases, individuals were not even required to produce any proof of their income.

These sub-prime loans were bought mainly by big banks which bundled the debt and sold them to Wall Street firms. To sell these ticking time bombs, Wall Street packaged these risky loans with supposedly safer loans to create instruments known as collateralised debt obligations (CDOs) - making them more attractive to risk-averse investors. In 2006, an estimated US$100 billion of sub-prime debt went into US$375 billion worth of CDOs.

In pursuit of higher yields, investors stretching from Europe to Asia invested in these instruments for their potentially higher returns, as compared to bonds with the same ratings.

What went wrong?
Trouble started brewing when the US economy began showing signs of slowing down. Interest rates crept up, house prices tumbled and sub-prime mortgage defaults began climbing at an alarming rate, reaching 12.6 per cent at one point.

As default rates soared, creating losses on the underlying mortgages of CDOs, investors began to question the reliability of the models and ratings which valued these CDOs; indeed, credit rating agencies like Moody's have come under fire for misjudging default rates in sub-prime mortgages. With the uncertainty surrounding the current analysis and valuation of credit risk, many investors have decided to pull back on investments in CDOs and hedge funds with stakes in such securities.
Explained Jeremy Goh, an associate professor of finance at the Singapore Management University (SMU): 'When investors heard all these negative things about default rates in the news, they started withdrawing their money from hedge funds and parked them in safer money market instruments like treasury bills.'

The result was a triggered chain of reactions which affected markets worldwide. Hedge funds were forced to unload their assets in order to raise cash.

The scattered ownership of CDOs has in turn created widespread loss of confidence in financial markets. Besides affecting all holders of sub-prime-related assets, the greater and more serious implication of the sub-prime crisis is a squeeze on liquidity. Due to the uncertainty over other financial institutions' exposure to sub-prime losses, they became unwilling to lend to each other.

A tsunami or ripple effect?
However, central banks around the world have responded by injecting liquidity into the markets to ease fears of a liquidity crunch. The US Federal Reserve has also cut its discount rate (which it charges for emergency lending to banks) from 6.25 per cent to 5.75 per cent.

Asian equity funds have also been hit hard, and among those affected the most are funds from Singapore and Malaysia. Data from Morningstar Asia showed that funds from both countries sank an average of 10 per cent. Asian stock markets has also been tumultuous, spreading fears that a slowdown in the US economy will extend to the rest of the world.

Although the sub-prime crisis in the US may be a cause for concern, investors here should not be overly worried as Asian fundamentals remain strong. Many industry watchers agree that Asia's economies are no longer as reliant on the US as in the past. As intra-regional trade grows, Asian giants like China and India have become increasingly important trade partners for other Asian countries instead of the US.
Fundamentals of Singapore's economy remain firm as well, analysts agree. With the introduction of Formula One and the integrated resorts in the coming years, demand and consumption is likely to continue to propel Singapore's growth.

Prof Goh concurs: 'I think the jittery stock market in Singapore is only temporary, and I believe that highly-rated CDOs are still safe. Even if the US economy is heading for a recession, it will be a mild one, so the problem could be due to panic selling in the markets or hedge funds unloading some illiquid assets.

' As a result, it triggers fear in the lending market. Lenders are more reluctant to lend, which might have some effect on the economy - but nothing major, in my opinion.'

More Market Panic Ahead As Banks 'Fess Up' On Sub-Prime

Source : The Straits Times, September 10, 2007

Confidence in banks exceptionally low, says JP Morgan Asia

(SINGAPORE) Be prepared for more market panic as major banks continue to 'fess up' to their holdings of US sub-prime mortgage securities over the next several months, said Ivan Leung, JP Morgan Asia chief investment strategist.

The world's financial markets are in turmoil as worries over exposure to the US sub-prime mortgage debt has led to a freeze in the credit market with global central banks having to step in to provide liquidity.

Around the world, banks are under intense pressure as investors and analysts cast a spotlight on their exposure to sub-prime, or high-risk, property loans in the US through their investments in collateralised debt obligations, known as CDOs.

There is little information on the amount of CDOs held by banks, which has led to 'exceptional low' confidence in the banks, said Mr Leung in an interview last week. In the past month, European and Asian banks including DBS Group Holdings and United Overseas Bank have revealed their CDO holdings.

'(US banks) originate it, they package it, they sell it - but it doesn't necessarily mean they hold on to it,' Mr Leung said.

He said that, often, US banks do hold on to some of these CDOs in structured investment vehicles - off their balance sheets - so there is no transparency on their holdings. He described this as scary.

'European banks, and to a lesser extent - so far as we have seen - Asian banks, were purchasers of these products,' Mr Leung said.

'So the crisis in confidence is not so much that there could be a 80 billion or even a 200 billion dollar loss of sub-prime; the confidence issue is that we don't know exactly who is holding all this debt,' he said.

And we don't really know the prices of all this debt, and how much of it will be subject to default, he said.

'The confessions, you see them once in a while; that's why we think this is an issue, because over the next three to six months, some banks will begin to confess that they have some on their balance sheet, and some off-balance sheet, but clearly right now, nobody really has a true picture of what's going on. 'It's the worst of all situations - nobody knows.'

Mr Leung expects the markets to veer between confidence and 'blind panic' each time there is another disclosure.

Bank shares skidded on Aug 24 after DBS and three of Asia's biggest banks revealed bigger-than-expected exposure to the US sub-prime mortgage crisis.

DBS said that it had US$1.6 billion (S$2.43 billion) in holdings of CDOs - more than the S$1.3 billion disclosed on Aug 7.

An additional 1.5 million sub-prime borrowers may fall behind on their mortgage payments as introductory interest rates on those loans rise this year and next, US Federal Deposit Insurance Corp chairman Sheila Bair said last week.

Among the 2.5 million sub-prime mortgages with interest rates that are expected to be reset this year and next, '1.5 million will be in financial distress', Ms Bair said.

Getting any kind of centralised data collection will be very challenging, she said.

JP Morgan estimates that US$600 billion worth of adjustable rate mortgages will be reset over the next 12 months.

But, following the adage that there are always opportunities when risks are high, Mr Leung said that one way for investors to take advantage of the current extreme volatility in the markets is to buy 'plain vanilla' short-term structured notes with capital protection.

The notes are designed to give a high payout even if the stock markets move only slightly higher, he said. 'When volatility is as high as it is right now, we can go for simple structures,' Mr Leung said.

The notes that JP Morgan is offering are meant for investors who share the view that the US mortgage crisis will not lead to a recession. Lower growth, yes, and therefore moderately bullish stock markets still.

Mr Leung said that JP Morgan was positive on undervalued markets such as Thailand and South Korea and favours Singapore and China companies which have superior corporate and economic fundamentals.

Releasing Detailed Property Price Data A Good Start, But We Could Go Further

Source : The Straits Times, Forum, Sep 10, 2007

I refer to the increase in development charges and the recent measures to cool down the property market.

One of the main reasons for publishing more detailed property transactions' price data, and for publishing it more frequently, is to calm a hot property market.

I would like to suggest that we go further by publishing historical high-low data as well.

For example, we could highlight that despite the recent hype, the property market is still about 18 to 21 per cent below the last high, for private property and HDB respectively, which was about 11 years ago.

We could also publish foreclosure and default (more than 3 months in arrears) data.

For example, as was stated in Parliament on July 17, about 3 per cent of first-time HDB buyers who took bank loans have lost their flats and CPF through foreclosure.

About 7 per cent, or about 6,300 buyers, have been in arrears for more than 3 months. HDB provided financial assistance to more than 26,000 flat-owners last year.

With the recent financial meltdown in sub-prime mortgages in the United States, one of the largest mortgage lenders recorded delinquencies of 3.6 per cent in sub-prime, 2.13 per cent in non-prime and 0.81 per cent in prime, according to a report in The Straits Times Money section on Aug 10.

Why not publish this type of data on a regular basis?

It may be a more effective measure to calm the market, as 'negative' news data may have a greater impact on investors than detailed breakdowns of 'positive' data.

Leong Sze Hian

Recent Turmoil Provides Welcome 'Reckoning': Rato

Source : The Straits Times, Sep 10, 2007

LONDON - THE recent credit crunch in the financial markets has provided a welcome 'reckoning' that should help in terms of long-term stability, the outgoing head of the International Monetary Fund (IMF) said in an interview published on Monday.

Speaking to the Financial Times from Cernobbio, Italy, at a conference of international financial policymakers, IMF Managing Director Rodrigo Rato said that this 'reckoning is probably a welcome one but it does not mean that it will be a painless one.'

Mr Rato, who is set to step down from his post in October, described recent market turmoil caused by problems in the US housing sector as a 'serious crisis.'

He acknowledged, however, that the crisis was occurring in 'a context of strong global growth and with strong macroeconomic fundamentals in many countries, and also high credibility of monetary authorities.'

'This is an important crisis that is still unfolding, and probably a high degree of uncertainty right now is the worst issue that we will have to resolve.'

The turmoil stems from a crisis in the US subprime mortgage sector, where home loans are granted to people with poor credit.

The subprime crisis has affected the broader financial markets, with several Wall Street banks hit with multibillion-dollar trading losses in mortgage-backed securities, spooking investors. -- AFP

Govt May Let Some Groups Opt Out Of Annuity Scheme

Source : The Straits Times, Sep 10, 2007

THE chronically sick and those who have already bought annuities could be exempted from the government's compulsory annuity scheme, Minister in the Prime Minister's Office Lim Boon Heng said yesterday.

A committee set up by the Manpower Ministry to look into the scheme could make an exception for the first group as such individuals are not expected to live for long, he explained.

As for the second group, he said that they would not need to be covered twice.

'So, for those who are adequately covered and (if) the policy which they have bought fulfils certain requirements, then they, too, may be exempted,' he said.

His comments came after some Singaporeans called on the Government to consider making proposed compulsory annuities an opt-in scheme instead.

Mr Lim, who is overseeing ageing issues and is deputy chairman of the People's Association, was speaking to reporters on the sidelines of a four-hour Community Development Council seminar.

It was attended by some 200 grassroots leaders, businessmen and members of voluntary welfare groups.

Mr Alvin Lim, the chief executive officer of BizLink, which helps to source jobs for the disabled, asked if the Government would consider exempting this group from the annuity scheme.

Prime Minister Lee Hsien Loong had announced last month that all Central Provident Fund (CPF) members aged below 50 would have to buy an annuity at age 55 using a small portion of their CPF Minimum Sum.

The annuity will give them a monthly payout of $250 to $300 once their Minimum Sum runs out when they reach the age of 85. This is meant to cover members' needs when they outlive their CPF savings.

But Mr Alvin Lim noted at a dialogue with Mr Lim yesterday that people with disabilities tend to have shorter lifespans. Most are also shunned by insurers.

Minister Lim gave his assurance that such views would be taken into account by the committee, and said there was already flexibility in the CPF scheme.

Under rules that were relaxed last year, those who are certified by doctors as being terminally ill or have a disabling illness, can withdraw their CPF money regardless of age.

But Mr Lim also took pains to highlight the importance of the proposed scheme.

The Government did not want a situation where people were alive but had no stream of income to survive, he said.

Some people argued that they would not live past 85, he noted. But living longer was a global trend.

Already, 25,000 Singaporeans are above the age of 85, and some 500 are above the age of 100. Scientists who study the human body say that a person's lifespan can even go up to 120 years, said Mr Lim.

The proposed compulsory annuity scheme has generated much discussion since it was mooted.

Unlike the Minimum Sum, which goes to a CPF member's family if not used fully, the amount that goes into the annuity will not be recovered if the buyer dies before 85.

Mr Lim said there is no way to predict who is going to live longer. So, the scheme is a way to 'pool resources' to benefit those who live past 85.

'I hope Singaporeans will understand that this is what the proposal hopes to achieve,' he said

Some Katong Commercial Properties Going For En-Bloc Sale

Source : The Straits Times, Sep 10, 2007

Buildings include Katong Shopping Centre; sales could help rejuvenate area and boost image
















FACED with flagging businesses and dwindling human traffic, the shop owners of several commercial buildings in Katong are coming together to sell their properties en bloc.
This has led to renewed interest in the old East Coast hot spot recently, sparking hopes among residents and shopkeepers nearby that the area - famed for its good food and old-world charm - will get the rejuvenation that it needs to boost its image.

At least five commercial buildings along Mountbatten Road and East Coast Road have, or are in the process of engaging marketing agents to launch their collective sales. These include Katong Mall, Paramount Hotel and Shopping Centre, Roxy Square, Katong Plaza and the iconic Katong Shopping Centre, said Mr Lui Seng Fatt, the regional director and head of investments at Jones Lang LaSalle.

In its heyday, Katong Shopping Centre was the heart and soul of the East. But as the years wore on, the lack of entertainment facilities and an attractive retail mix made it a poor rival to malls like Parkway Parade.

Many of these buildings in Katong are more than 20 years old and, in the case of Katong Shopping Centre, which opened in 1973, more than 30.

Dr Lim Un Huat, an owner of several shops at Katong Mall, told The Straits Times most shop owners were in favour of a collective sale, and were waiting for the right price to sell.

Mr Lui said the 'tired-looking' buildings were overdue for a revamp, especially since residential projects in the area have gone upmarket.

Prices of homes in the Katong, Meyer and Amber Road residential enclave have soared recently with the property boom. The area's proximity to the upcoming Integrated Resort in Marina Bay is an added lure.

United Industrial Corporation's One Amber and Grand Duchess sold out around $700 to $800 per sq feet (psf) recently. CapitaLand's The Seafront on Meyer and GuocoLand's The View @ Meyer fetched new highs of between $1,500 psf and $1,800 psf.

While the shop owners do not expect to make a 'huge windfall', Mr Lui said selling en bloc would help them unlock the value of their shops.

He estimates that the prices transacted would be between $500 psf and $1,000 psf, depending on the building.

Colliers International's executive director for investment sales, Mr Ho Eng Joo, said Katong's rejuvenation would be a 'natural progression' following the influx of residents living in the area's new condominiums.

'Katong's residential area is getting quite vibrant, so the commercial side has to catch up now,' he said.

The only setback, he added, would be the new rules for collective sales - expected to kick in next month - which will prolong the sale process.

But in three or four years' time, Katong could be transformed, he added.

However, while some property consultants remain optimistic about Katong's future, others remain cautious.

Director of marketing and business development Ku Swee Yong at Savills Singapore said the area was a 'bit of a mixed bag' - comprising offices, residential apartments, hotels and retail space - which makes it 'neither here nor there' for redevelopment.

'The area's physical limitations mean a very creative approach is needed to redevelop it,' he added.

From a conservation perspective, the revitalisation of Katong is desirable if done properly, said Singapore Heritage Society president Kevin Tan.

Over the years, the retail business in the area has withered, and given way to maid agencies, pubs and video arcades. But this can be changed by injecting some new life and a new trade mix into the area, he added.

He hopes, however, that the architecture of Katong Shopping Centre will be conserved as it was 'very important in East Coast's history'.

Shop owner Dr Lim concurred: 'We all hope to bring back the hustle and bustle of the old Katong.'

--------------------------------------------------------------------------------

MOVING FORWARD

'Katong's residential area is getting quite vibrant, so the commercial side has to catch up now.' MR HO, Colliers International executive director for investment sales

OBSTACLES TO BEAT

'The area's limitations mean a very creative approach is needed to redevelop it.'
MR KU, Savills Singapore director of marketing and business development, on the area's mixed developments