Posts Tagged ‘MAS’

Laughing mortgagees/ Betting against the Fed

In Economy, Property on 26/10/2015 at 5:43 am

(Updated at 19.30am: A few “honest mistakes”)

We’ve heard a lot in the constructive, nation-building media* and from cybernuts about coming big rises in mortgage rates. The cybernuts in TRE are happy because the rising rates show (in their demented, deranged minds) the folly of mortgagees mortsagors voting for the PAP. As though voting for their heroes, Dr Chee, s/o JBJ, Roy, Han Hui Hui, M Ravi and Goh Meng Seng would make a difference.

Well the brainless “PAP is always right” hacks and hackettes  and the “PAP is always wrong” nuts are likely to be wrong and mortgagees mortgagors will have a festive Deepavali , a Merry Christmas, a Happy New Year and a Prosperous Lunar New Year: if market expectations are to be believed.

Market expectations have played down the chance of US tighter monetary policy before next year. Futures markets predict a 32.3% chance of a rise by December, with March currently given an even chance of a Fed move.

What this means is that there come December the market thinks the Fed will stay its hand. And maybe stay its hand in March. Btw,“We see another round of QE ,,,” said Merrill Lynch this week, implying that the Fed will soon loosen policy.

But economists in London and NY still forecast rise in Fed rate before year’s end. Despite a tempering in the US labour market, 65% of the 46 economists from leading banks polled by the FT said the central bank would increase the federal funds rate at its December meeting.

If they are wrong and the markets are right, mortgagees mortgagors can keep on partying thru to end of March if not longer. The only dark cloud is that residential property prices are flat if not edging down

The Fed’s decision not to raise rates in September and October has allowed MAS to ease things a little here

On Oct 14, our central bank, the Monetary Authority of Singapore (MAS), announced that it would continue to ease monetary policy** to accommodate for the slower growth that Singapore is experiencing, largely due to weaker global growth expectations. It could do this because the Fed stayed its hand on raising interest rates.

A slower appreciation of the S$ raises the rate of inflation: not good for retirees like me. We want deep deflation.

But a slower appreciation of the S$, is good for exchange rate sensitive industries such as manufacturing, tourism, and professional services that have regional clients.

To make things simple, monetary policy is like steroids for the economy. If our economy is underperforming, MAS can stimulate it by injecting some steroids. That is what happened, by easing our monetary policy.

Coming back to the possibility of a rate rise by the end of the year: a large majority of policymakers, 13 out of the 17, or 76% 0n the Fed’s rate-setting Open Market Committee, expect a rate rise this year.

A bet against a rate rise is a bet that they will change their minds.

The big divergence in opinion between the Fed and the markets over when rates will rise means that if the Fed moves in December there will be serious volatility and mortgagees mortgagors will be having a miserable Christmas, a sorrowful New Year and an abalone-and angpow-free Lunar New Year. They’ll be crying all the way to the bank what with higher interest rates, tanking residential prices and the probability of losing their jobs.

But will the mortgagees have a Merry Christmas, a Happy New Year and a Prosperous Lunar New Year? Paying out huge bonuses? I doubt it. They’ll be worried about loan defaults.


This appeared in CNA shumetime back

Mortgage rates have risen since the start of the year, and analysts have said home owners should brace themselves for further increases.

At the beginning of 2015, home buyers in Singapore could get loans that start at 1.6 per cent in the first year. That rate has been creeping up, and the figure is now around 2 per cent, for rates pegged to three-month Singapore Interbank Offered Rate (SIBOR), said CEO of financial advisory firm SingCapital, Alfred Chia.

Mortgage brokers also said rates are likely to go up further, as recent increases in the three-month SIBOR – a key benchmark used by banks when setting  mortgages – have not been fully reflected in the interest rates homeowners are currently paying.

Said Mr Chia: “With an impending rise of the US Federal Reserve rates, SIBOR is definitely set to rise.  Banks have used SIBOR or Swap Offer Rate (SOR) as a reference when they do the mortgage interest rates. Meaning to say, they peg it to a public rate, and if the rates go up or down, it will affect the mortgage interest rates the borrowers will serve.”

DBS said it expects SIBOR to rise from the current 1.13 per cent to 1.22 per cent by the end of this year, and 1.75 per cent in about a year’s time.

Should mortgages increase by the same amount, a family with an outstanding S$500,000 mortgage spread over 20 years will have to pay an additional S$137.71 a month to service the loan.

Assuming variable interest rate rises from the current 2 per cent now to 2.6 per cent next year, the monthly instalment will rise from S$2,529.42 to S$2,667.13, using DBS’s online mortgage calculator.

Analysts have said most home owners can shoulder the burden as banks must ensure borrowers can still service their home loans if interest rates rise to 3.5 per cent, according to Monetary Authority of Singapore (MAS) requirements.

**Singapore manages its monetary policy by using the exchange rate  (not interest rates like the Fed, BoJ, BoE, ECB etc. Dt Goh Keng Swee said using interest rate to control monetary policy is not effective as the exchange rate in an open, tiny economy like S’pore’s.). The exchange rate is pegged to a “sectre” basket of currencies from countries that are important trading partners. The US$ is a big, big component.

Insider trading: The long reach of MAS

In Uncategorized on 15/10/2015 at 4:35 pm

This case surprised me because all that happened was that a bank account here was usedto buy the shares. Otherwise everything was done overseas.

The Monetary Authority of Singapore (MAS) said in a statement on Wednesday it fined Rajiv, a former Indonesia investment banking head of UBS, S$434,912 (US$313,857) in the 2012 insider trading case. It sweems the guy juz lost his job at Caryle as head of its Indon division.

The MAS said Rajiv bought 1 million PT Bank Danamon shares in March 2012 through his wife’s bank account in Singapore after he possessed price-sensitive and non-public information on a proposed acquisition of Danamon by Singapore’s DBS Bank.

DBS announced the proposed acquisition in April 2012 and MAS said Rajiv made a profit of S$173,965 from his insider trades when he was with UBS. Due to regulatory issues, DBS subsequently pulled the plug on the Danamon deal.

The MAS said Rajiv admitted breaking the securities law and paid MAS the civil penalty without court action.

Another view of why MAS didn’t further ease S$

In Economy on 15/04/2015 at 12:04 pm

The entral bank left its policy of “modest and gradual” appreciation of the local currency unchanged in its policy review on April 14. Analysts had expected further easing. The MAS had raised their hopes in January with its unexpected decision to reduce the pace of the local dollar’s appreciation against a basket of other currencies.

Our constructive, nation-building media has spun this latest decision by implying MAS was confident that the economy was improving and that there was no need for further easing. A weaker Singapore dollar should boost the cost of imported goods and help arrest a slide in domestic inflation. It could also help the city-state’s exporters regain some of their lost competitiveness. The latest data show Singapore’s manufacturing industry shrank by 3.4 percent between January and March compared with a year earlier.

But an FT from Reuters pointed out:

But the flip side of a weaker currency is the prospect of a sudden spike in domestic interest rates. The benchmark 3-month interbank rate has more than doubled in the past eight months to slightly above 1 percent. If the U.S. Federal Reserve raises its target for short-term U.S. rates, investors might demand even greater compensation to hold a falling Singapore currency. Mortgage rates in the city, still ridiculously cheap at below 2 percent, might shoot up.

That could be problematic. The era of global easy money since the onset of the 2008 financial crisis has led to a doubling of outstanding bank loans. The multiyear credit boom has pumped up Singapore’s real estate. After rising 62 percent in four years, home prices have eased 6 percent over the past 18 months – helped by the government’s strenuous attempts to contain the mania. While gently easing prices would allow the property market to rediscover its balance, a collapse could hurt both borrowers and lenders.

Singapore’s war against stalling consumer prices and anaemic global demand would benefit from a cheaper currency. But those gains may not be enough to justify pricking a credit-fuelled property bubble. If air escapes too quickly, the damage could be far greater.

SIA boleh, MAS tak boleh

In Airlines, Malaysia on 31/08/2014 at 4:50 am

Malaysia Airlines’ 19,500 staff operate a fleet of 108 aircraft, while SIA operates 103 aircraft with 5,000 fewer employees. The result is that over the past nine years the Malaysian carrier has lost a net Rm3.56bn ($1.1bn), while Singapore Airlines has made S$8.86bn ($7.1bn) without a single year of losses.

Says a lot about how S’pore Inc and M’sia Inc do things.


MAS tragedy: SIA attacked by anti-PAP cyber warriors?

In Airlines, Malaysia on 20/07/2014 at 4:27 am

Really I can’t see why SIA was attacked for saying on Facebook and Twitter that its flights were not using Ukraine airspace.

Reuters reported: That triggered a flood of angry responses, with many lambasting SIA for not offering condolences to the victims’ families and for mounting what some perceived as a publicity stunt during a crisis involving its neighboring country’s flagship airline.

Anyway SIA did the pragmatic thing by apologising and rewording its messages. No pointing rowing with loonies, something PM Lee should learn.


SIA plane juz 17km away

In Airlines, Malaysia on 19/07/2014 at 6:46 pm

The Daily Mail reports that, despite the conflict, the flight path was fairly crowded with a Heathrow-bound Virgin Atlantic jet and a Singapore Airlines plane both over Ukraine at the moment flight MH17 crashed.

The paper says the Singapore jet was just 17 miles away from the doomed flight.

One of the as-yet unknown questions, is why flight MH17 came to be flying over a conflict zone in which a number of aircraft had been shot down recently, the Daily Telegraph says.

MAS polot didn’t want to divert

The paper reports that a number of airlines, including British Airways, easyJet and Qantas had already changed flight routes to avoid the area, although Malaysia Airlines said there had been “no obvious reasons” to avoid the area.

Nonetheless, the paper says, flight path analysis suggested that other Malaysia planes had skirted the conflict zone, by flying south of the area.

The Telegraph says an expert from the Royal United Services Institute has learned the pilot of the downed flight decided not to change course after apparently telling air traffic controllers he “felt uncomfortable” over the diversion.

Extract from BBC


Why MAS really suay cont’d

In Airlines, Malaysia on 19/07/2014 at 2:32 pm

According to Flight radar24, which monitors live flight paths, the airlines that most frequently flew over Donetsk in eastern Ukraine in the last week were: Aeroflot 86 (flights), Singapore Airlines 75, Ukraine International Airlines 62, Lufthansa 56, and Malaysian 48. It was not necessarily a risky approach. The chance of a rocket reaching above 32,000 feet was considered remote, says Sylvia Spruck Wrigley, author of Why Planes Crash.(Part of BBC report: see pix of flight routrs taken )

SIA flew 56% more flights thru Eastern Ukraine than MAS, yet it was a MAS jet that waz shot down .

SIA employs better bomohs?


MAS pilot slightly off planned course

In Airlines, Malaysia on 19/07/2014 at 6:33 am

“But although the aircraft was reportedly a few hundred miles north of its planned course to avoid a thunderstorm, its altitude should have marked it as a passenger plane,” reported an Economist blog.

Not seen this in any other report.[Update on 20th July at 10.15 am ]

MAS is suay. Time for Najib to call in the bomohs to “buang suay”.
The two events that hit it and its passengers these yrs were really freak events.
Whatever it is fly SIA. Only TRE born losers will refuse to fly SIA. Die-die fly other airlines, even if die as a result.


Will MAS ever say this?

In China on 31/03/2011 at 6:39 am

Martin Wheatley, the outgoing head of Hong Kong’s securities market regulator, said today that sponsors’ due diligence of initial public offerings has been “inadequate” at times.

“In many cases, sponsors are spread too thinly in terms of the number of deals they’re bringing to the market at any one time”.

Hong Kong’s regulator may make sponsors of IPOs in the city liable for statements in their clients’ prospectuses to prevent fraud of locally listed Chinese companies.

Bloomberg story

Never ever heard any MAS official say there was anything wrong with sponsors’ due diligence despite some new listcos coming out with profit warnings shortly after being listed.

I’ve been told that MAS does not inspect sponsors to ensure that they are following “best practices”.  It is left to SGX. A few years ago, a then prominent IPO sponsor was “suspended” from bringing new listings to market.

The HK proposal to make sponsors of IPOs in the city liable for statements in their clients’ prospectuses is a gd one, and should be adopted to prevent fraud in listing S-Chips.

What S’pore and Ireland have in common?

In Economy on 25/11/2010 at 5:17 am

No not because S’pore is heading for insolvency etc if Tan Kin Lian is to believed

We and the Irish are dependent on MNCs.

Mr Honohan [the Irish Central Bank governor] … points out that Ireland’s official GDP and unit labour cost statistics have consisently overstated the size of the Irish economy and its productivity respectively – largely because that economy is so dependent on multinationals with headquarters in the Republic, whose high profits acrrue to the overseas owners of those multinationals rather than to Irish residents.

That overstatement of the magnitude of the output of Irish residents, which in some real sense is attributable to those residents, could be as much as quarter, he says. Excerpt from Robert Preston’s blog on BBC Online.

Here, where the economy too is dependent on MNCs, this means that the economy is not as big as the stats imply. And that productivity is even worse than the already lousy numbers show*. The latter isn’t juz Reform Party spin. Remember there is yet another government campaign to raise productivity going on.

Perhaps the fact that the economy is smaller than the stats imply  is why the government seems obsessed by the need to build up the reserves. We will (not might) need the rainy-day money, one day. Question of “when” not “if”.

Read the rest of this entry »

What abt High Notes SM Goh?

In Banks, Temasek on 06/08/2010 at 5:22 am

The central bank has given DBS Bank an unprecedented public censure and instructed the 27%-owned Temasek bank to put aside S$230m  to cover its operational risks. Gd for MAS, and SM Goh (chairman of MAS), Tharman and Hng Kiang. The last two ministers also sit on MAS’ board.

There is another thing to be put right, SM, Tharman and Hng Kiang.

DBS’ Hong Kong unit recently agreed to pay out HK$651 million or about S$115 million to some clients who bought products linked to Lehman Brothers. As HK$1.3 billion of notes were sold, the compensation received works out to 49% of amount invested.

In S’pore, it sold a similar product, HN5 Notes. DBS issued, arranged and distributed HN5. A total of S$103.7 million worth of HN5 were sold to 1,083 retail clients between 30 March and 30 April 2007, according to a July 2009 MAS report.

The same report said DBS compensated investors S$7.8 million.

What this works out to is 7.5% of amount investments versus 49% in HK. Is this fair? Product is the same.

Force DBS to treat the S’porean investors fairly,  ministers. You have the moral authority.

If you do, I’m sure the compensated HN5 investors, family and friends will remember the good deed when the GE comes. It’s “win, win” except for DBS. And even then its a peanutty S$51m, 44% of amount paid to the HongKies.

BTW I did not buy any of the credit-linked notes that failed. Not that “greedy”.

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