TR EMERITUS

PM Lee Speaking at the Teck Ghee National Day celebration dinner yesterday's evening (3 Aug), PM Lee hinted that he will talk about his Government’s commitment to give Singaporeans the assurance and peace of mind for the future, at the upcoming National Day Rally in two weeks' time (17 Aug). He said that the Government will ensure Singaporeans have enough for their old age and will provide more opportunities for young Singaporeans to pursue their dreams. He said, "I will be talking about how we can help Singaporeans make sure that they have enough in their old age, how we can create more opportunities for Singaporeans to pursue their dreams and how we can create a better living environment for all of us. And build a better, brighter future for ourselves and our children." "You don't have to worry about very difficult things in life, such as medical care," he added. "But you can have the assurance in order to reach for the stars, to work to improve your lives." Ever since PM Lee started suing blogger Roy Ngerng for defamation, CPF retirement adequacy has been the focus of much public talk. Protests against Govt's CPF policies were also held in Hong Lim Park a number of times. Over 2,500 residents attended the national day dinner yesterday. They were also treated to a variety of multi-cultural performances by various grassroots organisations, schools and community partners. There was also a tribute to the pioneer generation with Teck Ghee residents performing a Mambo dance. Earlier yesterday's morning, PM Lee joined around 4,000 residents and students in Ang Mo Kio GRC at a National Day Observance Ceremony at Yio Chu Kang Stadium. More than 20 groups marched along the tracks of the stadium. They included contingents comprising members of the Pioneer Generation, National Service personnel and students. Influx of foreigners into Singapore continues Meanwhile, as PM Lee talked about building a "better, brighter future for ourselves and our children", the influx of foreigners into Singapore continues unabated. According to prominent blogger Leong Sze Hian who wrote in March this year ('Alternative daily news (85) S-Pass up whopping 13% in 2013?'): Despite the consistent rhetoric about the curtailment of foreign labour and increasing evidence and complaints about employment pass and S-pass holders taking away particularly PMET jobs from (and depressing the wages of) Singaporeans - the number of Employment Pass holders grew by 1,300 or 0.8 per cent to 175,100 and S-Pass holders grew by 18,500 or a whopping 13 per cent to 160,900 in 2013. The combined Employment Pass and S-Pass has grown to 336,000. With more foreign managers working in Singapore, they may also tend to hire their own compatriots, discriminating Singaporeans. A survey conducted by recruitment firm eFinancialCareers last year confirmed that a large number of companies in the finance industry are discriminating against Singaporean hires. According to the survey, a majority or 52% of the respondents said their companies had favored foreigners for some job openings (‘Survey confirms rampant job discrimination against SGs‘). In fact, the situation was so bad that 2 Cabinet Ministers had to have a “friendly talk” with senior members of the financial industry. Manpower Minister Tan Chuan-Jin told Parliament in March last year that he and Finance Minister Tharman met senior members of the financial industry to urge them to develop a local talent pipeline. Mr Tan said, without going into specifics, that there had been complaints of foreign managers preferring to hire their own countrymen and his ministry was investigating the matter. In view of complaints made by Singaporeans, MOM has put in place the Fair Consideration Framework (FCF) for getting the companies to consider hiring Singaporean workers first. It remains to be seen how effective the FCF will be since there is no guarantee that a company will hire a Singaporean even after advertising on the WDA jobs bank for locals, under the FCF.    Read More →

No, that is not some new-fangled Asian fusion haute cuisine to persuade rich Singaporeans to part with their money. It is the title of a Bloomberg News analysis released on 2 Aug 2014 on rich Singaporeans snapping up bonds issued in the local market by smaller companies among which was one that supplied seafood. An engineering company raised $200 million with five-year 6.9% bonds. A rubber supplier sold S$125 million five years 6.25% bonds, posted a net profit of $9.1 million for 2013 but will spend about $6.5million a year servicing the debt. How about an absolute junk, a real estate company with a single building issue 4 year bonds with 10% coupon? The article went on “With bank deposits in Asia’s largest wealth-management centre earning less than 1%, the island’s more than 100,000 high-net worth individuals are looking to debt capital markets for better-yielding investments. Private banks bought at least 90% of the two companies’ S$325 million of notes, people familiar with the matters said. DBS Group Holdings Ltd. expects more issues from small to medium enterprises.” Don’t like Junk? How about Death Spiral? That high yield or junk bonds are invariably bought by fund managers with specialist skills did not stop the rich from gouging themselves on these bonds the past 2-3 years. If junk is not enough, they had also devoured Contingent Convertible Bonds or Cocons, specialist bonds issued by well-known banks such as HSBC to address their capital shortfall. Cocons convert the bonds into shares when their capital ratios fall below a pre-determined threshold e.g. when the bank incurred massive losses. If this is not risky enough, some Cocons are even called “Death Spiral”: when the capital ratios fall below the threshold, the bond holders are wiped out even though the bank is still a going enterprise. Western investors will not touch them but, the Asian rich seems to know what they are doing as 90% were placed with them thanks to private banks and wealth management firms getting the butter spread on both sides. Sins of Low Interest Rates Prolonged periods of low interest rates caused asset bubbles. The bubble right now is in high yield bonds and in the Singapore context real estate. When interest rates are too low investors reach for yields by buying high risk assets.  Negative real interest rates result in excessive leverage fuelling speculative activities such as buying 3 properties with 3 year mortgages hoping to sell at a profit before refinancing. Genuine homebuyers stretch their budgets to get that bigger condo, at that nicer address because low mortgage rates make properties appear within reach than they really are. Then there are those whose affordability is predicated on low mortgage rates, hoping the rates stay low. The Taper and the “Taper” The rich can wet their appetite with junk and death spiral bonds but the rest will have to cope with negative real interest rates unless one is savvy to invest in equities or take a chance in properties. But global liquidity is tightening rapidly due to the well published tapering and consequent ending of the U.S. Fed quantitative easing policy. Concurrently, there is another taper that escaped attention – Chinese purchase of foreign bonds has collapsed to US$26b from US$106b in a single quarter this year. Flows into high yield funds in the west have all but dried up even if rich Singaporeans are still buying. In recent weeks, UK house prices are showing signs of decline after the central bank accelerated its schedule to raise interest rates. The culprit is……. Interest rates are very likely to rise and as a consequence property values likely to decline further. No one is going to sympathise with the rich when their junks and their death spirals blow up. Neither with those who rode the property wave with their speculative forays. After all, they are the beneficiaries of the government’s growth maximisation policies. The rich can afford their losses but it will be the ordinary folks who bought their homes recently who will suffer from negative equity.  Some may be forced to sell because they may not afford the rise in mortgage rates. Those who wished interest rates to rise so a decent return can be earned or who wish property prices come down so that prices become affordable only wish their aspirations can be met. If a finger needs to be pointed, it should be in the direction of the government whose macro-economic policies and then the lateness of macro-prudential measures inflated the property and bond markets in the first place. The highly paid denizens of government must be nervously hoping the recovery in the West is strong enough to offset the negative effect of rising interest rates on likes of China and India and Singapore’s own real estate and construction sectors. Seat belts required.   Chris K * Chris K holds a senior position in a global financial centre bigger than Singapore. He writes mostly on economic and financial matters to highlight misconceptions of economic policy in Singapore.  Read More →

It has been really fun watching the Commonwealth Games (CG) in Glasgow. It has shown that it's still relevant and gives a lot of promising athletes a real chance to take part in a multi-game event under a degree of competitiveness. The Olympics or World Championships are really tough to win or even qualify for a final event. Athletes from minor countries like Scotland and others have shown that once they don their national colours, they are prepared to give it a real go. I really hope one day Singapore will host these Games. For sure it will go over Budget, even Scotland (Glasgow) has exceeded its initial cost, but the feel good factor and the improvements to infrastructure makes it beneficial (as stated by the Scottish Chamber of Commerce President). Most importantly, it gives a real shot in the arm to local sportsmen. A silver lining - Joseph Schooling is all smiles with his well deserved silver medal (Photo: AFP) If Singapore truly wants to be thereabouts in the medals at the Olympics and improve the standard of sports across the board, participating and even hosting either a CG or Asian Games is a good way to go about it. Anyway let's turn now to the men and women who have represented Singapore at Glasgow 2014 and pay them the homage they deserve. It seems strange to start with Joseph Schooling, because he didn't win a gold medal, but he is our most high profile athlete at the Games and the one most expected of. He began with qualification for the 200m butterfly and made the final only to finish last. But it was good lesson for him. He had a chance to swim with some of the world's best. He also made the 50m butterfly final, improving his national mark in the semis. Pardon the pun, but maybe 'butterflies in his stomach' saw him finish with a slower time in the final in 7th place. Just when question marks were beginning to be raised, he responded in a manner befitting of a champion, reaching the 100m butterfly final. He then became the 1st Singaporean swimmer to win a medal in swimming at the Games by finishing 2nd behind the awesome Chad le Clos. His time of 51.69 would have been enough to win gold at the last Games and if my memory serves me, even the last Olympic Gold. The podium finish is just the tonic he needs to build himself up and get ready for the Rio Games in 2016. While overjoyed and pleased, he promised to not let it get to his head as he embarks on what has been a bridge too far for past Singapore swimmers - to win an Olympic medal. His coach believes he can, the nation believes he can. However I would also like to raise a note of caution and not to think it's a must that he delivers a medal in Rio. The Olympics is the pinnacle of swimming, even greater than the World Championships (WC), and everyone gives their best. Only great champions swimming at their peak have gone on to win Olympic Gold and that too with a bit of luck. The great Michael Phelps needed a last ditch stroke to retain his gold at Beijing in the same event as Schooling, when it seemed certain that the Serbian swimmer had wrecked his 9 gold assault. He won in 100th of a second. That's the fine margin between medallists and finalists in an Olympic Final. While Le Clos, the Australians and the British were here for the CG and Schooling's effort is definitely a highlight, it will be even harder for the same final in Rio. There you'll have the Americans, the Chinese, the Japanese, the French, the Germans and whichever top swimmer from all the participating countries in the world. It's more likely than not that he will fail than succeed. But he has proven that he can improve and has a chance. If he can qualify for a final event, like he did at the WC in Barcelona, that's already a huge achievement. That should be his target and our expectation followed by as high a finish as possible. A bronze would be a huge cause for celebration but even a 5th or 6th place is something worthy of merit. Let's wish Schooling every success and for a start let's hope he can win some medals (preferably Gold) at the next Asiad (which I think is next year). Golden girl Jasmine Ser with her gold medal after winning the 50m rifles position 3 event Moving on, it has been a great Games for Singapore, with shooter Teo Shun Xie shooting her way to gold in the Women's 10m air pistol event. She won in a Games record of 198.6 points, a marked improvement from her 14th place finish in the Delhi Games in 2010 and her 2nd place in last year's SEA Games. This is not an easy event even in the CG, the Indians are very good at it and at the Olympics, the Chinese are the dominant force. Shun Xie has shown she can compete with the best and hopefully with form and some luck, she can repeat the trick at Rio. She was followed to the top of the podium by Jasmine Ser who the Women's 50m Rifle Positions 3 event. Our gals have done us proud and I'm sure 1 of them will be crowned Sportswoman of the Year. Finally on to Table Tennis, this is a sport that attracted a lot of controversy because of the 'foreign talents' imported to make us a medal winning country. Like many, I wasn't really beaming from 'ear to ear', when we finally broke our medal duck in the last few Olympics and other Games. Question marks were raised about the level of loyalty that these Chinese born players had for their new country. But to be fair, this time around, I saw a greater effort by the players to show their 'Singaporeaness.'  We struck gold in the Women's team event and there was a concerted effort by the girls to sing the National Anthem - 'Majulah Singapura.' Overall it really looked throughout table tennis and even badminton, that these players understood and were thankful for being able to represent Singapore. That's all we ask and they delivered, good on them, I say. Moreover even if the debate rages on about the status of 'importing glory', no real blame should be attached to any of the athletes. They were given a job to do, they were paid well to do it and they delivered. Winning is not as easy at it seems, we aren't the only ones 'importing Chinese players', even the Australians and British are doing it. The same goes for the world stage, you get Chinese born players representing Holland, Denmark, the USA etc. It requires a lot of hard work, training and dedication to succeed at the highest level, and there's no guarantee of success given the playing field. These men and women who represent us deserve the congratulations, praise and support of all Singaporeans. (The men's team also won gold in Glasgow). As it stands we've won 4 golds, 1 silver and 1 bronze (men's badminton) and lie in 13th place in the medals table at the time of writing today (Friday), with more to come in the final 2 days of competition. This is an enormous achievement for a country of our size. Of the other Asian countries participating in Glasgow, only India and Malaysia (same number of gold, but more silver and bronze) are ahead of us. It's a statistic we all can be proud of. That said, even to those who represented us in the various sports and didn't win, it's alright, we are still proud of you. We know you trained hard, prepared yourself and made a lot of sacrifices at a personal level. We hope that the experience you gained in Glasgow and the level of competition will benefit you and spur you on to greater heights at the next major event. Majulah Singapura! Sir Nelspruit *  The author blogs at  Anyhow Hantam.  Read More →