Source : The Business Times, November 8, 2007
Analysts applaud OCBC's move, say future write-backs a possibility
Local banks are sticking to their positions for now, but concede that more charges could stem from losses arising from collateralised debt obligations (CDOs). This comes on the heels of OCBC's move to write down $221 million of its CDO holdings on Tuesday.
DBS Bank told BT yesterday that currently, there will be no changes to its positions. But a spokesperson added: 'As with any financial institution, it is certainly possible that further market changes may result in charges or write-backs to our positions.' She said that the bank had been conservative in how it derives market valuations and ascertains provisions for its CDOs.
United Overseas Bank also said that the necessary provisions for its CDO portfolio had already been taken in its third quarter results. 'In any case, we constantly review our investment portfolio on our own and will make any necessary adjustment when required,' a bank spokesperson told BT.
On Tuesday, OCBC announced that it had to write down $221 million of its CDO holdings, slashing the value of its portfolio of CDOs, which comprise pools of asset-backed securities (ABS), from $270 million to just $48 million.
OCBC's aggressive write-downs are the largest of the three local banks. Late last month, DBS Group made $70 million in allowances for its $275 million in CDOs that were exposed to US sub-prime assets, while UOB's total provision stands at $55 million so far.
Investors, probably spooked by the prospect of more writedowns, sent all bank stocks lower yesterday. Shares of DBS were the worst-hit of all three banks, shedding 50 cents or 2.3 per cent to $21, while UOB ended 10 cents or 0.5 per cent lower at $20.50. OCBC closed 10 cents or 1.1 per cent down to $8.80.
Analysts, on the other hand, see an upside to OCBC's move. 'We view these CDO provisioning rates to be extremely conservative ... as such, we believe that there is a significant possibility of write-backs or recoveries from this source in future years,' Deutsche Bank said in a research report.
The much larger allowance also means that future earnings might not be hit by further write-downs. 'This reflected management's conservative stance and should limit future downside risks,' said a BNP research report. A Merril Lynch report also noted that 'even if the US mortgage market were to deteriorate significantly further, OCBC would not likely face any further losses'.
Despite worries about the local banks' CDO exposure, ratings services Standard & Poor's Ratings maintained their ratings on Singapore banks, stating that they have negligible exposure to the sub-prime woes in the US.
Thursday, November 8, 2007
US$ Slumps As China Looks To Park Reserves Elsewhere
Source : The Business Times, November 8, 2007
Greenback is losing status as world currency, says China central bank official
THE US dollar slumped to a record low against the euro after Chinese officials signalled plans to diversify the nation's US$1.43 trillion of foreign exchange reserves in response to a falling US currency.
'We will favour stronger currencies over weaker ones, and will readjust accordingly,' Cheng Siwei, vice-chairman of China's National People's Congress, told a conference in Beijing.
The US dollar is 'losing its status as the world currency', Xu Jian, a central bank vice-director, said at the same meeting.
The US dollar fell against all 16 of the most active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar.
'We're likely to see further pressure on the dollar,' said Thomas Harr, senior foreign exchange strategist in Singapore at Standard Chartered. 'The potential for diversification is quite big.'
The US currency slumped to US$1.4666 per euro, the lowest since the 13-nation currency made its debut in January 1999. The US dollar traded as low as 113.69 yen, the lowest since Oct 22. The euro was little changed at 166.87 yen.
In Singapore, the US dollar ended half a per cent lower at S$1.4412 yesterday.
Chinese investors have reduced their holdings of US Treasuries by 5 per cent to US$400 billion in the five months to August. China Investment Corp, which manages the nation's US$200 billion sovereign wealth fund, said last month that it may get more of the nation's reserves to invest to improve returns.
'The world's currency structure has changed; the dollar is losing its status as the world currency,' Mr Xu from the People's Bank of China said at the conference.
Mr Cheng, speaking to reporters after his speech, said that his comments do not mean that China will buy more euros.
Gains in the euro may be limited by speculation that European economic growth may slow, reducing the need for higher interest rates. Europe's single currency will trade at US$1.43 versus the US dollar by year-end, according to the median forecast of 42 analysts and brokerages surveyed by Bloomberg News.
The US dollar's decline helped to drive the price of crude oil to a record and gold to a 27-year high, encouraging investors to buy assets in commodity- producing nations. The US dollar's 9.8 per cent drop against the euro this year boosted the competitiveness of US exports, helping to shrink the nation's trade deficit to US$57.6 billion in August, the smallest since January.
Against the pound, the US dollar declined to US$2.0955, the lowest since May 1981. It fell to US$1.1010 per Canadian dollar. The currency slid against the Australian dollar to 93.89 US cents, the lowest since April 1984, from 92.87 US cents.
'This is an asset story and shows sentiment for the dollar continues to be quite negative,' said David Forrester, currency economist at Barclays Capital in Singapore.
The US dollar also fell as losses from sub-prime mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 per cent next month.
'The interest-rate outlook is dragging down the dollar against major currencies such as the euro and the Australian dollar,' said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world's second largest currency trader. 'I cannot see the bottom of the dollar depreciation yet.' - Bloomberg
Greenback is losing status as world currency, says China central bank official
THE US dollar slumped to a record low against the euro after Chinese officials signalled plans to diversify the nation's US$1.43 trillion of foreign exchange reserves in response to a falling US currency.
'We will favour stronger currencies over weaker ones, and will readjust accordingly,' Cheng Siwei, vice-chairman of China's National People's Congress, told a conference in Beijing.
The US dollar is 'losing its status as the world currency', Xu Jian, a central bank vice-director, said at the same meeting.
The US dollar fell against all 16 of the most active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar.
'We're likely to see further pressure on the dollar,' said Thomas Harr, senior foreign exchange strategist in Singapore at Standard Chartered. 'The potential for diversification is quite big.'
The US currency slumped to US$1.4666 per euro, the lowest since the 13-nation currency made its debut in January 1999. The US dollar traded as low as 113.69 yen, the lowest since Oct 22. The euro was little changed at 166.87 yen.
In Singapore, the US dollar ended half a per cent lower at S$1.4412 yesterday.
Chinese investors have reduced their holdings of US Treasuries by 5 per cent to US$400 billion in the five months to August. China Investment Corp, which manages the nation's US$200 billion sovereign wealth fund, said last month that it may get more of the nation's reserves to invest to improve returns.
'The world's currency structure has changed; the dollar is losing its status as the world currency,' Mr Xu from the People's Bank of China said at the conference.
Mr Cheng, speaking to reporters after his speech, said that his comments do not mean that China will buy more euros.
Gains in the euro may be limited by speculation that European economic growth may slow, reducing the need for higher interest rates. Europe's single currency will trade at US$1.43 versus the US dollar by year-end, according to the median forecast of 42 analysts and brokerages surveyed by Bloomberg News.
The US dollar's decline helped to drive the price of crude oil to a record and gold to a 27-year high, encouraging investors to buy assets in commodity- producing nations. The US dollar's 9.8 per cent drop against the euro this year boosted the competitiveness of US exports, helping to shrink the nation's trade deficit to US$57.6 billion in August, the smallest since January.
Against the pound, the US dollar declined to US$2.0955, the lowest since May 1981. It fell to US$1.1010 per Canadian dollar. The currency slid against the Australian dollar to 93.89 US cents, the lowest since April 1984, from 92.87 US cents.
'This is an asset story and shows sentiment for the dollar continues to be quite negative,' said David Forrester, currency economist at Barclays Capital in Singapore.
The US dollar also fell as losses from sub-prime mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 per cent next month.
'The interest-rate outlook is dragging down the dollar against major currencies such as the euro and the Australian dollar,' said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world's second largest currency trader. 'I cannot see the bottom of the dollar depreciation yet.' - Bloomberg
Strata Board Not Obliged To Rule On Horizon Towers Sale By Dec 11
Source : The Straits Times, Nov 8, 2007
THE Strata Titles Board (STB) hearing the Horizon Towers sale application said yesterday that it was under no obligation to deliver its ruling before Dec 11.
That is the deadline for the estate's $500 million collective sale to Hotel Properties (HPL) and its partners.
The majority owners want approval for the sale, after it was thrown out on a technicality in August. The minority owners want it stopped.
The STB came to its decision after it took submissions from lawyers for both the majority and minority owners. The owners were asked if they considered that the STB had a legal duty to rule before Dec 11.
Both camps, after morning deliberations, said no.
But that did not sit well with the buyers. HPL group executive director Christopher Lim said it was 'surprising' the tribunal took that view as it may 'potentially scuttle' the transaction.
'We are also very disappointed that the majority sellers did not take the position that the matter be dealt with expeditiously and before Dec 11.'
Mr Lim said the buyers had made it clear during earlier hearings that the majority sellers would be in breach of contract if they did not deal with the sale expeditiously.
'As a result of these developments, we are currently reviewing our position.'
The STB did try to move the proceedings along yesterday, by rejecting a request by lawyers representing the minorities that they be allowed to cross-examine expert witnesses such as valuers. It also rejected an application from the lawyers that Mr Arjun Samtani, chairman of the first sale committee, take the stand as a witness.
The hearing continued with the cross-examination of Mr Wee Hian Siew, the former sale committee secretary, that began on Tuesday.
He was again asked why he did not notify owners of the $500 million offer and if he recalled the talks with Mr Bharat Mandloi.
The latter resigned from the first sale committee because he regarded the $500 million sale price as too low.
Mr Mandloi had told the committee that the owners might as well sell their units in the Leonie Hill estate on the open market at the same price.
THE Strata Titles Board (STB) hearing the Horizon Towers sale application said yesterday that it was under no obligation to deliver its ruling before Dec 11.
That is the deadline for the estate's $500 million collective sale to Hotel Properties (HPL) and its partners.
The majority owners want approval for the sale, after it was thrown out on a technicality in August. The minority owners want it stopped.
The STB came to its decision after it took submissions from lawyers for both the majority and minority owners. The owners were asked if they considered that the STB had a legal duty to rule before Dec 11.
Both camps, after morning deliberations, said no.
But that did not sit well with the buyers. HPL group executive director Christopher Lim said it was 'surprising' the tribunal took that view as it may 'potentially scuttle' the transaction.
'We are also very disappointed that the majority sellers did not take the position that the matter be dealt with expeditiously and before Dec 11.'
Mr Lim said the buyers had made it clear during earlier hearings that the majority sellers would be in breach of contract if they did not deal with the sale expeditiously.
'As a result of these developments, we are currently reviewing our position.'
The STB did try to move the proceedings along yesterday, by rejecting a request by lawyers representing the minorities that they be allowed to cross-examine expert witnesses such as valuers. It also rejected an application from the lawyers that Mr Arjun Samtani, chairman of the first sale committee, take the stand as a witness.
The hearing continued with the cross-examination of Mr Wee Hian Siew, the former sale committee secretary, that began on Tuesday.
He was again asked why he did not notify owners of the $500 million offer and if he recalled the talks with Mr Bharat Mandloi.
The latter resigned from the first sale committee because he regarded the $500 million sale price as too low.
Mr Mandloi had told the committee that the owners might as well sell their units in the Leonie Hill estate on the open market at the same price.
Horizon Towers Sale Could Be Timed Out By Tribunal Decision
Source : The Business Times, November 8, 2007
STB says it is not bound to rule by sale completion date; lawsuit looms
The Strata Titles Board (STB) tribunal has delivered a startling decision that could spell the end of the en bloc sale of Horizon Towers. The ruling could in turn resurrect the $1 billion lawsuit filed by the buyers against the sellers.
Tribunal chairman Philip Chan announced yesterday that the board was under no legal obligation to rule on whether to approve the collective sale on or before Dec 11, the sale completion date.
This means, if the tribunal chooses to make a decision only after Dec 11, the sale agreement between the buyers and the sellers will lapse - and the en bloc sale will collapse.
The decision took many observers by surprise since a ruling after the sale completion deadline would effectively render the role of the tribunal pointless.
Mr Chan said yesterday the board made its decision after considering the submissions made by all the parties involved: the majority owners who have applied for a collective sale order, and the minority owners who are opposing the sale.
The would-be buyers - Hotel Properties (HPL) and its partners - were not permitted to be parties to this hearing, and could not make any submissions on the matter.
The tribunal on Tuesday asked the relevant parties to submit their arguments on whether the board had a legal obligation to make a decision on the collective sale order on or before Dec 11.
Mr Chan announced yesterday that, as all parties were in agreement that the board was under no such obligation, the tribunal would not be bound to make a decision by Dec 11.
The position seemingly runs counter to the one taken by the tribunal at an earlier Horizon Towers hearing in June, when Mr Chan agreed to bring forward the hearing dates - so as to allow the tribunal to make its decision before the earlier sale completion deadline of Aug 11.
Mr Chan said then, as grounds for doing so, that 'courts do not sit for futility', adding: 'Courts are here to make sure that if we do give an order, that order must stick. The order must be put into operation; otherwise it would be unproductive. It may even be silly for a court to sit.'
The tribunal's decision yesterday has not gone down well with HPL and its partners.
HPL group executive director Christopher Lim told BT: 'We are very concerned about this development. It is surprising that the tribunal took the view that it had no duty to make a ruling before Dec 11, as that may potentially scuttle the transaction.'
He added: 'We are also very disappointed that the majority sellers did not take the position that the matter be dealt with expeditiously and before Dec 11. During the earlier hearings, we had made it clear that such conduct by the majority sellers is in breach of contract.
'As a result of these developments, we are currently reviewing our position.'
HPL and its partners have already sued the majority owners for breach of contract - claiming damages of up to $1 billion - but that suit has been stayed, pending the outcome of this STB hearing.
But HPL and its partners earlier also made it clear that they will consider resurrecting the legal claim against the majority owners if the en bloc sale ultimately falls through.
The dramatic reaction sparked by this one announcement was in marked contrast to the humdrum proceedings of the rest of the day. Former sales committee member Wee Hian Siew spent a second day on the stand, being grilled on whether he did his utmost to act in the owners' best interests in the en bloc sale.
The session also saw a few laughs, as Mr Chan quipped that he would refrain from making any more jokes during the hearing - 'in case I get reported', he said. BT reported Mr Chan's wisecrack about Mr Wee being a secretary 'without a skirt' yesterday.
The mood among the owners was generally upbeat, with some even distributing Deepavali sweets to those present.
STB says it is not bound to rule by sale completion date; lawsuit looms
The Strata Titles Board (STB) tribunal has delivered a startling decision that could spell the end of the en bloc sale of Horizon Towers. The ruling could in turn resurrect the $1 billion lawsuit filed by the buyers against the sellers.
Tribunal chairman Philip Chan announced yesterday that the board was under no legal obligation to rule on whether to approve the collective sale on or before Dec 11, the sale completion date.
This means, if the tribunal chooses to make a decision only after Dec 11, the sale agreement between the buyers and the sellers will lapse - and the en bloc sale will collapse.
The decision took many observers by surprise since a ruling after the sale completion deadline would effectively render the role of the tribunal pointless.
Mr Chan said yesterday the board made its decision after considering the submissions made by all the parties involved: the majority owners who have applied for a collective sale order, and the minority owners who are opposing the sale.
The would-be buyers - Hotel Properties (HPL) and its partners - were not permitted to be parties to this hearing, and could not make any submissions on the matter.
The tribunal on Tuesday asked the relevant parties to submit their arguments on whether the board had a legal obligation to make a decision on the collective sale order on or before Dec 11.
Mr Chan announced yesterday that, as all parties were in agreement that the board was under no such obligation, the tribunal would not be bound to make a decision by Dec 11.
The position seemingly runs counter to the one taken by the tribunal at an earlier Horizon Towers hearing in June, when Mr Chan agreed to bring forward the hearing dates - so as to allow the tribunal to make its decision before the earlier sale completion deadline of Aug 11.
Mr Chan said then, as grounds for doing so, that 'courts do not sit for futility', adding: 'Courts are here to make sure that if we do give an order, that order must stick. The order must be put into operation; otherwise it would be unproductive. It may even be silly for a court to sit.'
The tribunal's decision yesterday has not gone down well with HPL and its partners.
HPL group executive director Christopher Lim told BT: 'We are very concerned about this development. It is surprising that the tribunal took the view that it had no duty to make a ruling before Dec 11, as that may potentially scuttle the transaction.'
He added: 'We are also very disappointed that the majority sellers did not take the position that the matter be dealt with expeditiously and before Dec 11. During the earlier hearings, we had made it clear that such conduct by the majority sellers is in breach of contract.
'As a result of these developments, we are currently reviewing our position.'
HPL and its partners have already sued the majority owners for breach of contract - claiming damages of up to $1 billion - but that suit has been stayed, pending the outcome of this STB hearing.
But HPL and its partners earlier also made it clear that they will consider resurrecting the legal claim against the majority owners if the en bloc sale ultimately falls through.
The dramatic reaction sparked by this one announcement was in marked contrast to the humdrum proceedings of the rest of the day. Former sales committee member Wee Hian Siew spent a second day on the stand, being grilled on whether he did his utmost to act in the owners' best interests in the en bloc sale.
The session also saw a few laughs, as Mr Chan quipped that he would refrain from making any more jokes during the hearing - 'in case I get reported', he said. BT reported Mr Chan's wisecrack about Mr Wee being a secretary 'without a skirt' yesterday.
The mood among the owners was generally upbeat, with some even distributing Deepavali sweets to those present.
Tiong Bahru Sers Flats To Be Rented For Up To $4,500
Source : The Straits Times, Nov 8, 2007
Winning bidder in HDB pilot scheme aims to target foreign students, expatriates
A COMPANY that has just won an HDB tender in a pilot scheme plans to rent out 120 flats at Tiong Bahru for up to $4,500 a month to foreign students and expatriates.
UNIQUE FLATS: Katong Hostel will preserve the buildings' heritage, as they are among the early batches of flats. -- ST PHOTO: DESMOND LIM
It is the first step to boost the supply of flats in the rental market amid growing demand. It aims to put flats vacated under the Selective En Bloc Redevelopment Scheme to better use.
Former residents of the 120 flats have moved to new and better flats nearby.
The HDB said the flats that had been vacated were identified for its rental scheme, pending long-term development plans.
The Tiong Bahru flats will get a $3 million facelift and be ready for tenants by the year's end.
The winning tenderer, Katong Hostel, which provides international student housing, will be the managing agent for the 60 three-room and 60 four-room walk-up flats.
The firm, part of the privately-held Vita Group of hostels, plans to rent out at least two blocks to students and possibly the rest as service apartments to expatriates.
Katong Hostel won the tender with the highest bid of $230,280 a month, 22 per cent above the next bid of $188,000 a month.
That price is the sum the firm will pay HDB to lease the flats for three years, with an option for three more years.
Katong Hostel aims to rent out these flats - Blocks 1, 3, 5, 7 and 9 in Tiong Bahru Road - at a relatively high price of between $3,500 and $4,500 a month.
While rents in the Tiong Bahru area have risen significantly, the HDB flats there have so far achieved only up to $2,500 a month in rent, said HSR property group's executive director Eric Cheng.
But the Tiong Bahru flats are different in that they will be managed and aimed at a specific clientele, said Ms Joyce Sim, 25, a Vita group director.
She said the student housing - to be charged on a per person basis with two to a flat - is aimed at those looking for quality housing.
These could be doctorate students, for instance, who could be paying their own fees or sponsored by firms.
'These Tiong Bahru flats are among the early batches of flats,' Ms Sim said. 'We will preserve the heritage of the buildings, which have a unique design.'
$3m facelift for old flats
# The 120 Tiong Bahru flats comprise 60 three-room and 60 four-room walk-up flats.
# They are located in Blocks 1, 3, 5, 7 and 9 in Tiong Bahru Road.
# Katong Hostel plans to rent out at least two blocks to students and possibly the rest as service apartments to expatriates.
# Monthly rentals will probably be between $3,500 and $4,500.
Winning bidder in HDB pilot scheme aims to target foreign students, expatriates
A COMPANY that has just won an HDB tender in a pilot scheme plans to rent out 120 flats at Tiong Bahru for up to $4,500 a month to foreign students and expatriates.
UNIQUE FLATS: Katong Hostel will preserve the buildings' heritage, as they are among the early batches of flats. -- ST PHOTO: DESMOND LIM
It is the first step to boost the supply of flats in the rental market amid growing demand. It aims to put flats vacated under the Selective En Bloc Redevelopment Scheme to better use.
Former residents of the 120 flats have moved to new and better flats nearby.
The HDB said the flats that had been vacated were identified for its rental scheme, pending long-term development plans.
The Tiong Bahru flats will get a $3 million facelift and be ready for tenants by the year's end.
The winning tenderer, Katong Hostel, which provides international student housing, will be the managing agent for the 60 three-room and 60 four-room walk-up flats.
The firm, part of the privately-held Vita Group of hostels, plans to rent out at least two blocks to students and possibly the rest as service apartments to expatriates.
Katong Hostel won the tender with the highest bid of $230,280 a month, 22 per cent above the next bid of $188,000 a month.
That price is the sum the firm will pay HDB to lease the flats for three years, with an option for three more years.
Katong Hostel aims to rent out these flats - Blocks 1, 3, 5, 7 and 9 in Tiong Bahru Road - at a relatively high price of between $3,500 and $4,500 a month.
While rents in the Tiong Bahru area have risen significantly, the HDB flats there have so far achieved only up to $2,500 a month in rent, said HSR property group's executive director Eric Cheng.
But the Tiong Bahru flats are different in that they will be managed and aimed at a specific clientele, said Ms Joyce Sim, 25, a Vita group director.
She said the student housing - to be charged on a per person basis with two to a flat - is aimed at those looking for quality housing.
These could be doctorate students, for instance, who could be paying their own fees or sponsored by firms.
'These Tiong Bahru flats are among the early batches of flats,' Ms Sim said. 'We will preserve the heritage of the buildings, which have a unique design.'
$3m facelift for old flats
# The 120 Tiong Bahru flats comprise 60 three-room and 60 four-room walk-up flats.
# They are located in Blocks 1, 3, 5, 7 and 9 in Tiong Bahru Road.
# Katong Hostel plans to rent out at least two blocks to students and possibly the rest as service apartments to expatriates.
# Monthly rentals will probably be between $3,500 and $4,500.
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