TR EMERITUS

(17 July) - China faces what would be the second default in the nation’s onshore bond market after a builder said it may fail to make a payment next week, the latest sign of stress in the world’s biggest corporate debt load. Huatong Road & Bridge Group Co., based in the northern province of Shanxi, said it may miss a 400 million yuan ($64.5 million) note payment due July 23, according to a statement to the Shanghai Clearing House yesterday. Chairman Wang Guorui is assisting authorities with an official investigation, it said, without elaborating. Wang was removed from the Chinese People’s Political Consultative Conference Shanxi Committee on July 9 for suspected violations of the law, according to an official statement and media report last week. Shanghai Chaori Solar Energy Science & Technology Co. (002506) marked China’s first onshore corporate bond default in March when it missed a coupon payment. Huatong Road would be the first to fail to pay both interest and principal, and would also be the first default in the interbank note market, the nation’s biggest bond bourse. Chinese firms have the most debt globally after increasing borrowings to $14.2 trillion as of Dec. 31, surpassing the U.S.’s $13.1 trillion, Standard & Poor’s said in a June 15 report. “It’s very likely the company will default,” said Xu Hanfei, a bond analyst at Guotai Junan Securities Co., the nation’s third-biggest brokerage. “If it does, the event will have a big impact on investors’ risk sentiment.”   Read more:    http://www.bloomberg.com/news/2014-07-16/huatong-road-bridge-may-miss-400-million-yuan-debt.html    Read More →

According to recent figures from the Credit Bureau of Singapore, more private home owners are not making their mortgage payments on time: Number of borrowers with delinquent mortgages (accounts that have not been paid for more than 30 days) hits 4,186 in May, up 20% from the 3,340 a year earlier Percentage of delinquent borrowers in private home loans is edging up close to 1% at 0.82% in May. This is up from 0.7% a year ago. However, some economists are not concerned. Mr Alvin Liew, senior economist at UOB, said, "It's good to pay attention to the numbers, but it's too early to conclude that this is the start of a major problem." Another economist pointed out that it could be a reflection of the correction in the property market. Meanwhile, the number of properties put up for auction by mortgagees has hit a new high in Q2 of this year ('Properties auctioned off hit new high in current Q2'). At current rate, the number of mortgagee sales for this year will likely be 4 times that of last year. A mortgagee sale occurs when the borrower has stopped making loan payments to the mortgagee or lender and the mortgagee has no choice but to auction off the pledged property so as to recover back its loan. The trend is seen gaining momentum due to rising supply of homes, weaker rental market and the new total debt servicing ratio (TDSR) framework set by MAS. The TDSR framework was mandated by MAS in June last year to ensure that borrowers do not become over-leveraged. It’s a standard that applies to property loans granted by all financial institutions in Singapore. TDSR calculates the percentage of the borrower’s income that can go into servicing loan. At present, MAS mandates that a person’s housing loan repayments, after adding all other repayment obligations (e.g., student loans, credit card debts, car loans, personal loans, etc.) cannot exceed 60% of the borrower’s income. Since a borrower who exceeded the TDSR can’t find buyers for his property, the financial institution has to step in to repossess the property and auction it off. The trend is expected to gain momentum as the rising supply of private homes will make it even harder for borrowers to find buyers themselves, resulting in more properties ending up as mortgagee sales. This year, the number of private condominium homes completed is expected to hit 17,000, up from 13,150 last year. A property consultant said that due to the exuberance at private housing launches in the past few years, many buyers bought uncompleted properties “off plan” with the non-savvy ending up with units that have undesirable orientation or layout. Such owners now face difficulty finding buyers and tenants. Another consultant advised that those having problems servicing loans to be realistic as it is a buyer’s market today. She said that potential buyers would now be anticipating price corrections. They will not be sticking to the last transacted price in the project some time ago. A blogger observed that interest rates have been creeping up [Link]: On a related note, the wife and I have noticed that the interest rate have been creeping up over the past 9 months. We have a mortgage that is currently pegged to the 3-month SIBOR. It was at 1.1513% in December last year, then went up to 1.1520% in March 2014 and the last revision in June 2014 saw the rate inched up further to 1.1537%. It will be interesting to see what the September rate is gonna be. We also realised that the bank notification for interest rate revisions these days only provide you with the new rate. So unless you bother to keep track, you may only realised it when your mortgage repayment starts showing significant increase.  Read More →

I refer to Ng Kok Lim's article on TR Emeritus titled "Re-evaluating a turbulent era of Singapore". In his article, Ng Kok Lim tried to cast a different perspective on a letter to The Straits Times Forum by Lionel De Souza on the 1950s and 1960s period in Singapore. However, I have some issues with the positions which Ng Kok Lim took up, especially with regards to the Malayan Communist Party (MCP) and communism in Southeast Asia, which I find to be disturbing and immoral. The fawning and adulating praise which Ng Kok Lim accorded to the MCP is disturbing. Ng Kok Lim called the MCP "patriots" and praised them for accelerating independence from the British through its resistance activities during the Emergency years. However, a research into the history of the Malayan Communist Party shows that, on the contrary, the Malayan Communist Party was taking orders from the Communist International, which in turn was controlled by the former Soviet Union, which in turn gave orders to be followed by the Communist Parties throughout the world. A journal article by NUS professor Cheah Boon Kheng for The New Zealand Journal of Asian Studies mentions that "The CPM was formed in 1930 clandestinely under the authority of the Moscow-directed Communist International (Comintern) agent for Southeast Asia, Ho Chi Minh (of Vietnam)"(Source: [ LINK ]. Far from being patriots fighting for the cause of Malaya, the MCP was loyal to and taking orders from Moscow .If they succeeded in taking power, Malaya and Singapore would have been no different from one of the former Soviet Satellite States in Eastern Europe,where these states' independence exist in name only, whereas in actual fact, they were under the thumb of the former Soviet Union, and political repression, which includes torture, show trials, the gulag or summary execution for political dissidents, real or imagined. It is substituting one form of imperialism for another, and substituting one monster for another. That the Soviets liberated Auschwitz and fought the Nazis does not make them saints or liberators. In the countries where the Soviets "liberated" during World War II, they replaced the Nazis with Communists, which in turn continued or worsened the political repression left behind by the Nazis. In East Berlin, the Berlin Wall was set up to prevent residents in East Berlin from fleeing Communist repression. Up till the end of the Cold War, anyone caught fleeing East Berlin would be shot. Attempts by the Czechs and the Hungarians to break away from the Soviet Union, or in the case of the Czechs, to lighten the repressive system, led to the Soviets sending their military to put down these uprisings or movements. Similarly, that Ho Chi Minh fought the French does not make him a saint or a liberator. If Ho was a liberator, why did he lend military support to the Khmer Rouge, who murdered 2 million of their people during their rule? What about the reeducation camps which the Communists set up to imprison and torture their opponents once the Communists took over South Vietnam in 1975? If Ho and the Communists in Vietnam were liberators, why did millions flee Vietnam after the communist takeover in 1975 instead of staying to enjoy their liberation? Portraying Ho Chi Minh as an admirable anti-colonial whitewashes the fact that he was a despot and a mass murderer, and the whitewash of this historical fact is no different from Holocaust denial. By saying that "The communists’ use of violence cannot be condoned.Nevertheless, a number of considerations suggest they deserve better than their eternal condemnation", it is no different from saying that "the Nazis murdered many, but they gave jobs for all and provided free healthcare, hence they are not that bad after all" which is essentially an attempt to cover up the wrongs of Communism. For a site where writers come to express their desire for more democracy in Singapore, it is disappointing to see a writer writing an article serving as an apologia for communism and communists such as Ho Chi Minh, political systems and personalities who are opposed to democracy, and a political system which is more repressive than the one currently set up by the PAP.   Ronald Tan    Read More →