Source : AsiaOne News, Sep 17, 2007
SINGAPORE (AP) -- Singapore's exposure to U.S. subprime mortgage markets is small and contained, officials said Monday, but warned that a resulting slowdown in major economies will affect the city-state's growth.
Singapore's central bank is "closely monitoring our financial institutions' exposure to sub-prime and other structured credit markets, at both the domestic and global levels," S. Iswaran, minister of state for trade and industry, said in Parliament.
"Our exposure remains small and contained at this stage," Iswaran said, adding the central bank remained vigilant and was ready to inject liquidity into the banking system if needed.
Iswaran also said, however, that a loss of confidence and a general credit squeeze resulting from uncertainty in financial markets could impact the trade-dependent country.
"Strong growth in the region and the diversity of our export markets will provide us some buffer, but we are not immune to a slowdown in the major industrial economies," Iswaran said.
Iswaran said Singapore's economic growth forecast of 7-8 percent this year remained unchanged.
Singapore's local financial institutions do not offer mortgages to subprime customers, but have investments in collateralized debt obligations - complex bundles of debt repackaged as securities - 25 percent of which contain U.S. subprime mortgages, Second Minister for Finance Tharman Shanmugaratnam also told lawmakers.
The total investment in CDOs by local banks amount to 2.6 billion Singapore dollars (US$1.71 billion; €1.24 billion), making up just 1 percent of the banks' capital base, Tharman said.
The global credit crisis was sparked by a sharp rise in defaults on subprime loans, or loans given to people will poor credit. Many of those debts were repackaged as asset-backed securities like CDOS and sold to banks that did not know or understand the potential losses they were taking on.
Tuesday, September 18, 2007
Housing Still Available At Affordable Rentals
Source : The Straits Times, Forum, Sep 18, 2007
I REFER to the e-mail by Ms Stephanie Morgan-Russell (ST Insight, Sept 15) and the article, 'It's just insane' (The Sunday Times, Sept 16), regarding the paying of high rentals by expatriates in recent months.
There is a wide range of housing for rent in Singapore and the rentals are based on the type, location and size of accommodation.
One can rent a comfortable, spacious four-room HDB apartment in an easily accessible housing estate for about $1,000 a month. But if one prefers to live in a bungalow with sprawling grounds, then he has to be rich enough to do so.
Expatriates had been enjoying extremely low rentals since 2003. For example, a house in a less-popular area bought in 1996 for $1.8 million was rented out, fully furnished, to an expatriate family for only $1,400 a month in the past.
Even at a low fixed-deposit interest rate of 2.5 per cent per annum, putting that amount in a bank, instead of purchasing the property, would have fetched $3,750 per month.
In other words, owners were subsidising tenants before the increase in rentals.
The increase in rentals seems huge because houses were rented out much too cheaply earlier. It is not because there is a serious shortage of supply, especially as HDB flats can be rented out much more easily now.
I hope that the authorities will not misread the situation just because locals are less vocal than expatriates.
The renting of accommodation at affordable prices is not such a major issue that it warrants the Government looking into the matter.
Yeo Boon Eng (Mdm)
I REFER to the e-mail by Ms Stephanie Morgan-Russell (ST Insight, Sept 15) and the article, 'It's just insane' (The Sunday Times, Sept 16), regarding the paying of high rentals by expatriates in recent months.
There is a wide range of housing for rent in Singapore and the rentals are based on the type, location and size of accommodation.
One can rent a comfortable, spacious four-room HDB apartment in an easily accessible housing estate for about $1,000 a month. But if one prefers to live in a bungalow with sprawling grounds, then he has to be rich enough to do so.
Expatriates had been enjoying extremely low rentals since 2003. For example, a house in a less-popular area bought in 1996 for $1.8 million was rented out, fully furnished, to an expatriate family for only $1,400 a month in the past.
Even at a low fixed-deposit interest rate of 2.5 per cent per annum, putting that amount in a bank, instead of purchasing the property, would have fetched $3,750 per month.
In other words, owners were subsidising tenants before the increase in rentals.
The increase in rentals seems huge because houses were rented out much too cheaply earlier. It is not because there is a serious shortage of supply, especially as HDB flats can be rented out much more easily now.
I hope that the authorities will not misread the situation just because locals are less vocal than expatriates.
The renting of accommodation at affordable prices is not such a major issue that it warrants the Government looking into the matter.
Yeo Boon Eng (Mdm)
Wall St Ends Down As Credit Worries Spread
Source : The Straits Times, Sep 18, 2007
NEW YORK - US stocks dropped on Monday, led by financial shares, as a rush by savers to withdraw deposits at a large British mortgage lender fueled concerns that turmoil in the credit markets would spread.
Lines of angry customers outside branches of Britain's Northern Rock stirred fears that a crisis of confidence could befall other major banks around the world.
Shares of Citigroup, Bank of America and other leading banks and brokerages fell after shares of Northern Rock's shares plunged more than 35 per cent in London.
The Nasdaq suffered the biggest drop among the major US indexes after a decisive antitrust ruling against Microsoft in Europe. Microsoft dropped 1.1 per cent to US$28.72 (S$43.55).
For the Standard & Poor (S&P) 500, Monday was the first down day after last week's four-day streak of gains.
Oil prices rose to a record for a fourth session, fanning inflation concerns a day before the Federal Reserve is expected to cut interest rates. Higher prices could constrain the Fed as it works to cushion the US economy from the effects of the global credit squeeze.
The cautious mood was reinforced by comments by former Fed Chairman Alan Greenspan, who warned the risk of a recession had increased while inflationary forces loomed larger.
'The overall economy is doing OK, except if you think the credit market is going to get worse and worse. So that's the Sword of Damocles hanging over the market and the economy,' said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
The Dow Jones industrial average declined 39.10 points, or 0.29 per cent, to close at 13,403.42. The S&P's 500 Index slipped 7.60 points, or 0.51 per cent, to finish at 1,476.65. The Nasdaq Composite Index fell 20.52 points, or 0.79 per cent, to end at 2,581.66.
The US central bank is widely expected to lower rates on Tuesday to cushion the US economy from the financial turmoil. The Federal Reserve has not lowered rates by more than 25 basis points at a single meeting in almost five years, but this time, some analysts believe a deeper cut is needed.
Several big Wall Street companies will report earnings this week that investors fear could reveal a deeper impact from the credit rout.
Oil rose US$1.47 to settle at US$80.57 a barrel, and hit a fresh record intraday of US$80.70.
Trading was below average on the New York Stock Exchange (NYSE), with about 1.11 billion shares changing hands versus last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.44 billion shares traded, below last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 2 to 1 on the NYSE and by 7 to 3 on Nasdaq. -- REUTERS
NEW YORK - US stocks dropped on Monday, led by financial shares, as a rush by savers to withdraw deposits at a large British mortgage lender fueled concerns that turmoil in the credit markets would spread.
Lines of angry customers outside branches of Britain's Northern Rock stirred fears that a crisis of confidence could befall other major banks around the world.
Shares of Citigroup, Bank of America and other leading banks and brokerages fell after shares of Northern Rock's shares plunged more than 35 per cent in London.
The Nasdaq suffered the biggest drop among the major US indexes after a decisive antitrust ruling against Microsoft in Europe. Microsoft dropped 1.1 per cent to US$28.72 (S$43.55).
For the Standard & Poor (S&P) 500, Monday was the first down day after last week's four-day streak of gains.
Oil prices rose to a record for a fourth session, fanning inflation concerns a day before the Federal Reserve is expected to cut interest rates. Higher prices could constrain the Fed as it works to cushion the US economy from the effects of the global credit squeeze.
The cautious mood was reinforced by comments by former Fed Chairman Alan Greenspan, who warned the risk of a recession had increased while inflationary forces loomed larger.
'The overall economy is doing OK, except if you think the credit market is going to get worse and worse. So that's the Sword of Damocles hanging over the market and the economy,' said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
The Dow Jones industrial average declined 39.10 points, or 0.29 per cent, to close at 13,403.42. The S&P's 500 Index slipped 7.60 points, or 0.51 per cent, to finish at 1,476.65. The Nasdaq Composite Index fell 20.52 points, or 0.79 per cent, to end at 2,581.66.
The US central bank is widely expected to lower rates on Tuesday to cushion the US economy from the financial turmoil. The Federal Reserve has not lowered rates by more than 25 basis points at a single meeting in almost five years, but this time, some analysts believe a deeper cut is needed.
Several big Wall Street companies will report earnings this week that investors fear could reveal a deeper impact from the credit rout.
Oil rose US$1.47 to settle at US$80.57 a barrel, and hit a fresh record intraday of US$80.70.
Trading was below average on the New York Stock Exchange (NYSE), with about 1.11 billion shares changing hands versus last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.44 billion shares traded, below last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 2 to 1 on the NYSE and by 7 to 3 on Nasdaq. -- REUTERS
Credit Fears Keep Heat On Asian Stocks
Source : The Straits Times, Sep 18, 2007
HONG KONG - ASIAN stocks fell on Tuesday, with financial shares under pressure as investors fretted that the turmoil in credit markets would spread, while US crude hit an all-time high above US$81 (S$122) on supply worries.
Credit worries flared up after thousands of savers lined up on Monday to pull deposits from Britain's fifth-largest housing lender, Northern Rock, which fell victim to the sharp rise in borrowing costs between banks and had to be rescued by emergency Bank of England funding last week.
TOKYO
Japanese share prices slumped 1.77 per cent in morning trade on Tuesday as investors waited nervously for a key US interest rate decision, dealers said.
They said investors remained jittery about the fallout from problems in US mortgages, particularly in light of the financial woes of British bank Northern Rock whose customers have rushed to withdraw their cash.
The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares fell 286.11 points to 15,841.31 by lunch, giving up most of Friday's gains.
The broader Topix index of all first-section shares dropped 27.80 points or 1.80 per cent to 1,516.91.
CHINA
Chinese stocks were mixed on Tuesday as strength in many non-ferrous metals shares offset weakness in the banking sector.
The Shanghai Composite Index ended the morning up 0.12 per cent at 5,427.834 points, after earlier hitting a fresh all-time, intra-day high of 5,458.578. But losing Shanghai stocks outnumbered gainers by 443 to 402.
Turnover in Shanghai A shares rose to an active 92.6 billion yuan (S$18.6 billion) from Monday morning's 88.01 billion.
HONG KONG
Hong Kong stocks fell 0.4 per cent on Tuesday, as weak global equity markets amid concern over a credit crunch led investors to lock in profits in recent gainers such as property plays.
At midday, the benchmark Hang Seng Index was down by 71 points or 0.29 per cent to 24,528.34.
KUALA LUMPUR
Share prices on Bursa Malaysia were mixed in early trading as investors turned cautious ahead of the Federal Open Market Committee (FOMC) monetary policy meeting later today, a dealer said.
At 12.30pm, the Composite Index was down 6.63 points to 1,271.71 after opening at 1,277.85 compared with Monday's closing of 1,278.34. -- REUTERS, AFP, BERNAMA
HONG KONG - ASIAN stocks fell on Tuesday, with financial shares under pressure as investors fretted that the turmoil in credit markets would spread, while US crude hit an all-time high above US$81 (S$122) on supply worries.
Credit worries flared up after thousands of savers lined up on Monday to pull deposits from Britain's fifth-largest housing lender, Northern Rock, which fell victim to the sharp rise in borrowing costs between banks and had to be rescued by emergency Bank of England funding last week.
TOKYO
Japanese share prices slumped 1.77 per cent in morning trade on Tuesday as investors waited nervously for a key US interest rate decision, dealers said.
They said investors remained jittery about the fallout from problems in US mortgages, particularly in light of the financial woes of British bank Northern Rock whose customers have rushed to withdraw their cash.
The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares fell 286.11 points to 15,841.31 by lunch, giving up most of Friday's gains.
The broader Topix index of all first-section shares dropped 27.80 points or 1.80 per cent to 1,516.91.
CHINA
Chinese stocks were mixed on Tuesday as strength in many non-ferrous metals shares offset weakness in the banking sector.
The Shanghai Composite Index ended the morning up 0.12 per cent at 5,427.834 points, after earlier hitting a fresh all-time, intra-day high of 5,458.578. But losing Shanghai stocks outnumbered gainers by 443 to 402.
Turnover in Shanghai A shares rose to an active 92.6 billion yuan (S$18.6 billion) from Monday morning's 88.01 billion.
HONG KONG
Hong Kong stocks fell 0.4 per cent on Tuesday, as weak global equity markets amid concern over a credit crunch led investors to lock in profits in recent gainers such as property plays.
At midday, the benchmark Hang Seng Index was down by 71 points or 0.29 per cent to 24,528.34.
KUALA LUMPUR
Share prices on Bursa Malaysia were mixed in early trading as investors turned cautious ahead of the Federal Open Market Committee (FOMC) monetary policy meeting later today, a dealer said.
At 12.30pm, the Composite Index was down 6.63 points to 1,271.71 after opening at 1,277.85 compared with Monday's closing of 1,278.34. -- REUTERS, AFP, BERNAMA
Higher CPF Returns From Next Year
Source : The Straits Times, Sep 18, 2007
Extra interest, bigger Workfare top-ups and bonuses tied to draw-down
age among moves to help S'poreans save for old age
ALL CPF members will enjoy higher returns from next year.
And seven in 10 will enjoy an extra one percentage point in interest on all their balances. These are members with $60,000 or less in their Central Provident Fund (CPF) accounts.
The new interest rate is part of a suite of changes to help Singaporeans save more for old age.
These include bigger Workfare income top-ups for older low-wage workers, and new bonuses tied to postponing the draw down on members' CPF Minimum Sum.
Manpower Minister Ng Eng Hen yesterday fleshed out the details of several measures first announced by the Prime Minister in his National Day Rally speech last month.
Of these, a proposed compulsory annuities or longevity insurance scheme has proved the most unpopular
Yesterday, Dr Ng promised a flexible scheme that will take into account people's different needs.
A new committee, helmed by National Wages Council chairman Lim Pin, will study how best to ensure those who live beyond age 85 - the age when people's CPF Minimum Sum runs out - have an income until their deaths.
Related Link - http://tinyurl.com/2q47wn
Minister's Statement
Related Video Link - http://tinyurl.com/2nnx2c
CPF reforms great but ...
More than 10 MPs rose in Parliament in support of changes to the CPF system today, with many describing it as a rational and generous move.
But concerns over the effectiveness of some of the amendments were also raised. Top of the list- questions over the compulsory annuities scheme, the re-employment law and deferment of the draw-down age for CPF minimum sums.
Related Video Lnk - http://tinyurl.com/2tompo
MOM: Higher interest and better returns with CPF changes
The CPF savings in you Special Medisave and Retirement Accounts (SMRA)- which the government had already said will be pegged to a longterm bond rate - will now grow according to the yeild of the 10-year Singapore Government Securities (10Y SGS).
And judging from the 10Y SGS benchmark in the past 12 months, CPF members will earn an average return of 5 per cent for SMRA balances below $60,000.
Manpower Minister Ng Eng Hen revealed this in Parliament today when he announced further details to the CPF changes.
Dr Ng even held out the possibility that CPF members could stretch out their Minimum Sum payouts to 30 years, up from the current 20, thereby reducing the need to buy the insurance.
The 14 MPs who joined the debate yesterday supported the changes, several describing them as bold. But they also took pains to reflect workers' worries, sprinkling their speeches with Hokkien phrases to convey ground sentiments that ranged from confusion to suspicion over the Government's motives.
They said unhappiness centred on the compulsory longevity insurance and the raising of the CPF Minimum Sum draw-down age.
Now set at age 62, it will be raised to 63 in 2012, 64 in 2015, and 65 in 2018.
Dr Amy Khor, chairman of government feedback unit Reach, said some were saying in Hokkien that they would end up with 'boh chi, boh kang' - that is, 'no money, no job'.
Setting the context for the changes, which he said were necessary even if unpopular, Dr Ng noted that Singaporeans were living much longer than before.
Of those who turned 62 last year, one in two will live beyond age 85. And more than half of those who stop work at the current retirement age of 62 will have to prepare for over 20 years of retirement.
Singapore's ageing population also means that there will be fewer younger folk to support the elderly.
The ratio is now eight people aged 15 to 64 for every senior aged 65 and over. But the ratio will fall to four to one in 2030.
According to a United Nations study, by 2050, Singapore's population will be the fourth oldest in the world.
Dr Ng said: 'We must therefore tackle this challenge now, as we have done with other national issues which can affect our nation's well-being and future.'
Many had asked about the Government's role in improving retirement security, he noted.
It will foot the bill for the changes, he said, to the tune of $1.1 billion a year for higher CPF returns and Workfare payouts, and a one-off outlay of $1.2 billion for the bonuses tied to draw-down age.
While the problem of retirement adequacy was a looming challenge for many countries, he said Singapore was one of the few 'tackling this problem head-on, with eyes wide open and the public engaged'.
The Government's three-pronged retirement support plan consists of ways to help people work longer, improve CPF returns, and make savings last for their whole lifespans.
There will be a new re-employment law by 2012 and higher Workfare income top-ups for low-wage earners aged over 55.
CPF returns will also go up from next year.
Savings in the CPF Special, Medisave and Retirement accounts will also be pegged to a new rate: that of 10-year Singapore Government Securities plus one percentage point.
Dr Ng said the Government will justify the new system to the President and explain that there will be no draw down on past reserves. Second Finance Minister Tharman Shanmugaratnam will speak in Parliament on the issue.
In tandem with the raising of the Minimum Sum draw-down age, the Government will pay special bonuses to those affected by the change, or who volunteer to delay the use of their CPF savings.
Dr Ng said that taken together, the changes would strengthen and make for a better and sustainable CPF system.
They would ensure all CPF members, especially the lower- and middle-income, will be better off and that 'as many as possible will have savings for as long as they live'.
The Parliament debate on the CPF changes continues today.
Extra interest, bigger Workfare top-ups and bonuses tied to draw-down
age among moves to help S'poreans save for old age
ALL CPF members will enjoy higher returns from next year.
And seven in 10 will enjoy an extra one percentage point in interest on all their balances. These are members with $60,000 or less in their Central Provident Fund (CPF) accounts.
The new interest rate is part of a suite of changes to help Singaporeans save more for old age.
These include bigger Workfare income top-ups for older low-wage workers, and new bonuses tied to postponing the draw down on members' CPF Minimum Sum.
Manpower Minister Ng Eng Hen yesterday fleshed out the details of several measures first announced by the Prime Minister in his National Day Rally speech last month.
Of these, a proposed compulsory annuities or longevity insurance scheme has proved the most unpopular
Yesterday, Dr Ng promised a flexible scheme that will take into account people's different needs.
A new committee, helmed by National Wages Council chairman Lim Pin, will study how best to ensure those who live beyond age 85 - the age when people's CPF Minimum Sum runs out - have an income until their deaths.
Related Link - http://tinyurl.com/2q47wn
Minister's Statement
Related Video Link - http://tinyurl.com/2nnx2c
CPF reforms great but ...
More than 10 MPs rose in Parliament in support of changes to the CPF system today, with many describing it as a rational and generous move.
But concerns over the effectiveness of some of the amendments were also raised. Top of the list- questions over the compulsory annuities scheme, the re-employment law and deferment of the draw-down age for CPF minimum sums.
Related Video Lnk - http://tinyurl.com/2tompo
MOM: Higher interest and better returns with CPF changes
The CPF savings in you Special Medisave and Retirement Accounts (SMRA)- which the government had already said will be pegged to a longterm bond rate - will now grow according to the yeild of the 10-year Singapore Government Securities (10Y SGS).
And judging from the 10Y SGS benchmark in the past 12 months, CPF members will earn an average return of 5 per cent for SMRA balances below $60,000.
Manpower Minister Ng Eng Hen revealed this in Parliament today when he announced further details to the CPF changes.
Dr Ng even held out the possibility that CPF members could stretch out their Minimum Sum payouts to 30 years, up from the current 20, thereby reducing the need to buy the insurance.
The 14 MPs who joined the debate yesterday supported the changes, several describing them as bold. But they also took pains to reflect workers' worries, sprinkling their speeches with Hokkien phrases to convey ground sentiments that ranged from confusion to suspicion over the Government's motives.
They said unhappiness centred on the compulsory longevity insurance and the raising of the CPF Minimum Sum draw-down age.
Now set at age 62, it will be raised to 63 in 2012, 64 in 2015, and 65 in 2018.
Dr Amy Khor, chairman of government feedback unit Reach, said some were saying in Hokkien that they would end up with 'boh chi, boh kang' - that is, 'no money, no job'.
Setting the context for the changes, which he said were necessary even if unpopular, Dr Ng noted that Singaporeans were living much longer than before.
Of those who turned 62 last year, one in two will live beyond age 85. And more than half of those who stop work at the current retirement age of 62 will have to prepare for over 20 years of retirement.
Singapore's ageing population also means that there will be fewer younger folk to support the elderly.
The ratio is now eight people aged 15 to 64 for every senior aged 65 and over. But the ratio will fall to four to one in 2030.
According to a United Nations study, by 2050, Singapore's population will be the fourth oldest in the world.
Dr Ng said: 'We must therefore tackle this challenge now, as we have done with other national issues which can affect our nation's well-being and future.'
Many had asked about the Government's role in improving retirement security, he noted.
It will foot the bill for the changes, he said, to the tune of $1.1 billion a year for higher CPF returns and Workfare payouts, and a one-off outlay of $1.2 billion for the bonuses tied to draw-down age.
While the problem of retirement adequacy was a looming challenge for many countries, he said Singapore was one of the few 'tackling this problem head-on, with eyes wide open and the public engaged'.
The Government's three-pronged retirement support plan consists of ways to help people work longer, improve CPF returns, and make savings last for their whole lifespans.
There will be a new re-employment law by 2012 and higher Workfare income top-ups for low-wage earners aged over 55.
CPF returns will also go up from next year.
Savings in the CPF Special, Medisave and Retirement accounts will also be pegged to a new rate: that of 10-year Singapore Government Securities plus one percentage point.
Dr Ng said the Government will justify the new system to the President and explain that there will be no draw down on past reserves. Second Finance Minister Tharman Shanmugaratnam will speak in Parliament on the issue.
In tandem with the raising of the Minimum Sum draw-down age, the Government will pay special bonuses to those affected by the change, or who volunteer to delay the use of their CPF savings.
Dr Ng said that taken together, the changes would strengthen and make for a better and sustainable CPF system.
They would ensure all CPF members, especially the lower- and middle-income, will be better off and that 'as many as possible will have savings for as long as they live'.
The Parliament debate on the CPF changes continues today.
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