Wednesday, November 23, 2011

Inflation eases in October but still above 5%

Inflation eased slightly in October, but continues to remain a high level, well above the 5 per cent mark.

The Consumer Price Index rose 5.4 per cent in October from last year, due mainly to higher accommodation costs, private road transport and food.

The Department of Statistics said that transport rose 10.5 per cent in October, compared with last year, while housing rose 9.9 per cent. Food was 3.5 per cent more expensive, said the Department of Statistics.

But, in an indication that inflation has already peaked, the pace of price increases has clearly slowed, with the CPI rising just 0.4 per cent in October, comapared with September.

Govt looking at allowing Medisave for home care services

SINGAPORE : The government is looking at allowing the use Medisave for home care services and reviewing current subsidies to make home care options more affordable.

This was announced by Minister of State for Health, Dr Amy Khor, at the opening of the TOUCH Home Care Centre in Jurong on Wednesday.

78-year-old Sapri Amat suffers from hypertension and cataract, and some months ago, a gout attack left him almost bed-bound.

His wife Madam Piah has cancer.

Their only caregiver - son Mohamad Sapri - left his job about two years ago to care for his elderly parents.

The new TOUCH Home Care Centre in Jurong now provides transport for Madam Piah for her hospital appointment visits.

A nurse and therapist also visit Mr Sapri to monitor his condition and provide home-rehabilitation.

After subsidies, the family pays about S$60 a month for the services - 10 per cent of the total cost.

Madam Piah said: "I feel better. There are now people to look after me. If not, there is only me taking care of my husband, along with my son."

TOUCH Home Care is only the second voluntary welfare organisation (VWO) to provide home care services in the West, an area it said has been under-served, till now. But in just two months, its staff of 10 are now catering to the needs of 30 clients, a number it hopes to expand to some 300 within the next two years.

Besides VWOs providing these services, needy Singaporeans can soon also tap on Medifund for home care services. Some 1,000 Singaporeans are expected to benefit.

But the government acknowledges that cost is still a big factor, and it may also allow the use of Medisave for such services.

Dr Khor said: "Home care will play a substantive role in future as one of the care options for the elderly. The issue of accessibility and affordability of elder care services is critical and we need to address that, so we are looking at ways to grow the home care sector.

"Some of the areas we are looking at include reviewing our subsidies as well as the use of Medisave."

The government is also looking at leave options to alleviate the stress faced by caregivers.

The Agency for Integrated Care and the Centre for Enabled Living will provide TOUCH with a funding of S$700,000 over two years.

Monday, November 21, 2011

'Expect more layoffs this year': Lim Swee Say

More workers are expected to be retrenched this year compared with the figure last year, as signs of an economic slowdown become more evident, labour chief Lim Swee Say said on Sunday.

As demand slows, some companies are already putting their workers on a shorter work week, such as having them work only four days a week, he noted.

But he stressed that the situation is nowhere close to the economic downturn of 2008.

The National Trades Union Congress (NTUC), together with the Workforce Development Agency, is working with affected employers to send workers for training on the extra day off before they consider layoffs.

'Expect lower pay and smaller bonuses next year'

Workers should brace themselves for a tough ride next year, with lower salaries and smaller bonuses though job losses may be relatively limited, say economists and recruitment professionals.

They were commenting after the Ministry of Trade and Industry's (MTI) issued a forecast for full-year economic growth next year of just 1 per cent to 3 per cent.

In 2008, when Singapore last grew at such a slow pace, job creation nevertheless surged close to an all-time high, with some 234,000 jobs created.

And in 2009, even though Singapore had suffered sharp falls in growth in the first half of the year, following the global financial crisis, the number of jobs created for the year was still healthy at 37,500.

Singapore's economy to grow 1% - 3% next year

Buffeted by global weakness and uncertainty, Singapore's economy is expected to grow at a sluggish 1 to 3 per cent next year, the Ministry of Trade and Industry (MTI) said on Monday.

And the figure could be even weaker should Europe's debt woes worsen or a full-blown financial crisis erupt in the world's advanced economies, said MTI.

The last time Singapore suffered such weak growth was in 2008, the year the global financial crisis hit, when the economy expanded by just 1.5 per cent. It contracted 0.8 per cent in 2009.

'Global economic conditions are expected to remain subdued in 2012, with the outlook clouded by increased uncertainty and financial volatility,' said MTI.

Asian thirst for wine feeds new investment market

HONG KONG: Asia's thirst for rare and fine wine is moving beyond the dining table as the industry seeks to tickle the region's capital markets as well as its taste buds.

China is already the fastest-growing wine consumption market globally, and industry experts say wealthy Chinese business people are now also developing an appetite for the investment opportunity that wine offers.

"Wine is a very passionate subject, much more so than stocks and shares. It's a passion as well as an investment for our clients," said Stephen Wickens, the managing director of Wickens & Co, a Hong Kong-based wine investment firm.

"It's a very safe investment and it's very attractive at this time when people are uncertain about the stock and property markets."

Two thirds of the 18-month-old company's clients, totalling about 500, come from China and Hong Kong. Wickens reckons his client base will double next year.

"Right now Asia is really driving the demand. The traditional markets of Europe and America are very slow," he said on the sidelines of a wine trade fair in Hong Kong this month, which drew a record 934 exhibitors.

Hong Kong has capitalised on the rapid expansion of personal wealth in China to become the dynamic centre of Asia's wine trade since it abolished duties on wine imports in 2008.

Wine imports are poised to set a new record after surging nearly 60 per cent year-on-year in the first nine months of 2011 to US$940 million. The figure stood at $895 million in 2010, up 73 per cent from $517 million in 2009.

The wine industry council in the French region of Bordeaux says local producers saw a 92 per cent surge in export volumes to China in the 12 months to July, and a 69 per cent increase to Hong Kong.

To capitalise on this, businesswoman Ling Zhijun has just launched Dinghong, mainland China's first investment fund specialising only in wine -- available only to those with one million yuan (US$160,000) or more at their disposal.

She is waiting for the green light from authorities to start raising money, but says she already has investment pledges from a dozen people and will be able to collect 200 million yuan by the end of the year.

"We're banking on a return on investment of 15 per cent a year," she said, adding she chose to focus only on French wines because those from the New World are "more standardised, a bit like Starbucks coffee".

Hong Kong's Wing Lung Bank, meanwhile, launched a wine financing service, the first in the southern Chinese city, in April this year to allow investors to borrow to buy wine at designated merchants.

Buyers can borrow up to HK$5 million (US$650,000) with a repayment period between one and five years, and the response has been "overwhelming", said assistant general manager William Tang.

"Like many other businesses, the wine industry takes advantage of Hong Kong as the gateway to mainland China, where increased prosperity and changes in lifestyle have led to a significant rise in the demand for wine," he said.

"People in Hong Kong and China have become more knowledgeable over their favourite wines. All of these help raise people's interest in investing or purchasing wine, resulting in the growing demand on wine financing services."

But if they are looking for a place to shelter from the headwinds buffeting the global economy, Asia's new wine speculators might be disappointed. Wine prices have fallen about 15-20 per cent this year, according to Wickens.

"This is a market correction. It's not a bubble bursting or another disaster in the market, and we still see some wine going up in value, such as the Domaine de la Romanee-Conti and Petrus," he said.

"Wine is not just a piece of paper, it's a physical item. It has some tangible value, it's unlikely to go zero," he added.

Investors are advised to put their money away for the medium to long term, and target batches of young wines at their initial release price.

Wickens said certain "blue-chips" like the Mouton Rothschild 2006, which currently fetches about HK$6,300 (US$800) per bottle, and Chateau D'Yquem 2007, at HK$4,000 a bottle, could return 25-30 per cent after three years in a cellar.

"For a 2004 bottle of Lafite, which is not a great vintage -- two years ago it was selling at 5,000 pounds (US$8,000) a case and now it's about 8,000 pounds.

Even though it's not a great vintage, it has good return," he said.

The wine can also be bought "en primeur", where a specific vintage of wine is bought before it is bottled and sold in the market two or three years later.

"It's becoming increasingly interesting to consumers, it's an alternative investment," said Geordie Willis from the Hong Kong unit of Britain's oldest wine and spirit merchant, Berry Bros & Rudd, which has supplied wine to the British royal family.

He said the tight supply of fine wine, due to the limits of how much can be produced each year, make it a scarce commodity.

"It is a product which is improving in terms of quality, diminishing in terms of quantity and the market is enlarging in terms of the size of the customers," he said.

"There are more companies coming to us and there are more private investors who are trying to diversify their portfolio. It's growing all the time."

Markets disappointed over failed US debt deal

TOKYO: Japan's finance minister said Tuesday financial markets were "very disappointed" over the failure of a US Congress "supercommittee" to reach a deal on reining in ballooning budget deficits.

"I can see that the markets are very disappointed," Finance Minister Jun Azumi told a regular news conference, referring to an overnight plunge on Wall Street.

The blue-chip Dow Jones Industrial Average fell 2.10 per cent to 11,548.14 while the broad-based S&P 500 index was down 1.85 per cent to 1,193.11.

"I think this could have an impact on the Tokyo markets," Azumi said early Tuesday.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange, which closed at its lowest level since March 2009 on Monday, opened down 1.01 per cent.

The index then recovered some lost ground as the dollar rose above 77.00 yen from 76.92 yen in New York late Monday. A strong yen hurts exporters by reducing their repatriated revenue.

The index was hovering around the break-even point in mid-morning trade.

Azumi added markets had doubts over the ability of politicians in the United States and Europe to deal with deep-seated economic problems.

"Japan's political situation is more stable when it is compared with the rest of the world," he said, noting the success of Japanese lawmakers Monday in passing a 12.1-trillion-yen (US$157 billion) extra budget through parliament.

The third supplementary budget this year is aimed at boosting post-quake reconstruction and giving a fillip to an economy hit by slow global growth and a strong yen.

A US Congress "supercommittee" announced Monday it had failed to reach a debt deal, after angry partisan battles over the best way to revive the sluggish economy.

It confirmed widespread expectations that the 12-member committee would fail in its mission to cut US deficits by US$1.2 trillion over 10 years amid political feuds over tax hikes on the rich and cuts to social spending.

Global financial markets are already rattled by Europe's debt crisis and weighed down by the stuttering US economy.

Stimulus package as S'pore braces for slower growth?

SINGAPORE - Singapore on Monday predicted sharply lower economic growth of 1.0-3.0 percent in 2012 amid an export slowdown and warned the situation could worsen if Europe's debt woes trigger a global crisis.

The figure is off the previous estimate of 2.5-3.5 percent and well down from the five percent predicted for 2011 as demand in the city-state's key export markets in Europe and the United States dries up.

"This does not factor in downside risks to growth, such as a worsening debt situation or a full-blown financial crisis in the advanced economies," the Ministry of Trade and Industry (MTI) said in a statement.

"Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected," it added.

The 2011 gross domestic product (GDP) forecast is a huge slowdown from the all-time high of 14.5 percent seen in 2010 when the economy was coming off a 0.8 contraction the previous year.

Singapore's trade-driven economy is regarded as a bellwether for Asia's exporters, which depend heavily on electronics and other manufactured shipments to North America and Europe for growth.

"It looks like the risk is towards the downside," Chua Hak Bin, a Singapore-based economist with Bank of America-Merrill Lynch, said of the implications of Singapore's forecast for the rest of Asia.

"The fact that the tech exports were weak will mean other Asian economies will also see tech exports being pulled down," he told AFP.

Asia's fate will depend to a large degree on whether Europe can contain its debt crisis which has engulfed large economies including Italy and Spain, according to Chua.

Singapore's GDP was valued at S$284.6 billion in 2010, and total trade was more than three times as large.

"The longer the European debt crisis drags out with no clear solutions, it will have a negative impact globally," said Selena Ling, an economist with Singapore's Oversea-Chinese Banking Corp.

"We are starting to see the impact come through."

The MTI said it expects Singapore's electronics industry and other sectors that rely heavily on overseas orders to remain under pressure despite support from Asia's better-performing economies.

Even the financial services sector will be affected by heightened uncertainties in the external environment, it added.

The forecast came as data released separately on Monday by the trade promotion body International Enterprise Singapore showed electronics exports tumbling 17 percent in the third quarter from a year ago.

The ministry's downbeat projections for 2012 came as it released third-quarter figures showing GDP grew 6.1 percent, an improvement from 1.0 percent in the second quarter.

Singapore is a significant producer of high-end telecommunications and computer-related parts shipped to the rest of the world as well as petrochemical and pharmaceutical products.

"Within the manufacturing sector, the electronics cluster is expected to register a lower level of output given the downturn in the global electronics cycle," the MTI said.

Analysts from Nomura financial services group said the government may step in with a stimulus package when the next budget is unveiled in February 2012.

"The size of the stimulus will likely depend on how the external situation unfolds from here... the likely path is such that the first half will be weak before showing some recovery in the second half when we expect the effects of the fiscal response to kick in," they said in a report.

New CPF savings scheme for parents with special needs children

SINGAPORE - A new Special Needs Savings Scheme (SNSS) to be implemented in early 2012 will allow parents to nominate their children to receive monthly payouts from their CPF accounts after they have passed on.

Under SNSS, parents can arrange for a monthly stream of income - of whose quantum they can decide starting from a minimum amount of $250 - to their special needs children after their death.

SNSS, which requires no administrative charge and no minimum balance during sign up, is useful for parents who do not have substantial savings outside of their CPFs.

CPF interest rates will continue to be paid on the funds nominated to SNSS nominees, and the extra 1 per cent interest will be paid on the first $60,000 of the combined balance of the nominated monies and the child's own savings.

To start the scheme, a participating parent's CPF savings upon his death must be sufficient to support a year's worth of payouts - in other words, a balance of $3,000 for a monthly payout of $250. Otherwise, the deceased parent's CPF savings will be disbursed as a lump sum.

To be eligible for the scheme, the parent, and child with disabilities have to be Singaporeans or Permanent Residents. The child has to be attending or has attended a Special Education (SPED) school, or who requires assistance in at least one Activity of Daily Living (ADL) - which includes dressing, feeding, going to the toilet, and moving about.

SNSS will complement the existing Special Needs Trust Company (SNTC), which is a trust arrangement and care plan set up by parents. SNTC requires a minimum of $5,000 cash upon start-up.

Parents can top up the trust account any time with cash or nominate the trust they set up under SNTC as a beneficiary of their insurance policies or CPF savings.

Sunday, November 20, 2011

Gold’s Safe Haven Status in Question After 3.5% Sell-Off This Week

Despite its reputation as a safe place to hide from the chaos roiling global markets, gold has hardly been a bastion of strength. The yellow metal suffered a tough week falling 3.5% to close out at $1,725.10 an ounce. The price tumbled 3% on Thursday alone, actually outpacing the decline in U.S. stocks. For a traditional safe haven, the recent action has been concerning for those invested in the precious metal.

The question on the minds of gold bugs everywhere is whether this a flashing yellow light or another chance to buy the dip?

"Gold is being a save haven," insists Alix Steel, crack reporter for The metal is "going down less than the rest of the market; this is exactly what we saw in 2008," she says. During the financial crisis gold fell 20% in a few weeks then rallied up 40% for the year. Steel, who always comes prepared, also cites the following:

*ETF Demand was up 58% in Q3, despite the well-publicized selling by struggling hedge fund manager John Paulson

*Total gold investment was up 6%

*Demand for gold bars and coins rose 29%

*Central banks bought over 140 tons during Q3

The last point is critical as central bank buying around the world has been a pillar of the bullish gold case throughout the entire rally.

Steel says she hasn't heard any indications from her impressive list of sources that Emerging market central banks are doing any selling. Not only that but total buying could be as high as 450 tons for the year compared to net selling just three years ago.

Steel's conclusion is that adding gold to your holdings prudently is still a good idea provided buyers don't get too rattled by likely volatility. "Keep in mind when stocks get pummeled, commodities get pummeled, and gold will get hurt along the way," she says. But the bet is that gold just won't stay down as long.

Steel says the miners are also picking up steam lately. She points specifically to Randgold (GOLD), a stock showing strength despite the fact that the company missed Q3 earnings estimates in almost every way a company can possibly disappoint. She also likes Newmont Mining (NEM) despite dropping production because of the company's "juicy sexy dividend."

Regardless of my respect for Steel, not all the dividends nor earnings misses in a row could get me to make a bullish case for mining stocks. Gold will never change. Indeed, not changing is much of the investment thesis for gold. The miners are run by people who tend to screw up at inconvenient times.
Are you buying the metals, the miners, or staying away from both?

Let us know in the comment section below.

Saturday, November 19, 2011

Rising property prices boost Singapore households' wealth

Singapore's households are at their wealthiest, boosted by rising property prices, a report released by the Monetary Authority of Singapore (MAS) stated on Friday.

Household wealth stood at a record high of $1.471 trillion in the three months to September, up 8.6 per cent from $1.354 trillion in the same period in 2010, said the central bank.

Property made up about 50.2 per cent of the household assets, while cash, Central Provident Fund balances, stocks and shares, as well as insurance, formed the other half of households' assets.

Companies and banks were also in the pink of health, with good profits, a strong base of funding and healthy balance sheets.

Home buyers borrowing less as mood of prudence takes hold

Buyers are putting proportionally more cash down when purchasing a home and cutting back on borrowings as a new mood of prudence takes hold.

The safety-first approach is reflected in data from the Monetary Authority of Singapore (MAS) which shows that loan-to-value (LTV) ratios have fallen sharply.

An LTV ratio of 80 means the buyer has borrowed 80per cent of the home value.

The MAS found that loans with an LTV ratio of more than 80 per cent have fallen to 4.9 per cent of all outstanding mortgages in the three months to Sept 30 - the lowest since 2004.

Thursday, November 17, 2011

S'pore pledges S$50m to narrow ASEAN gap

BALI, Indonesia: Singapore announced an extension of its contributions to the Initiative for ASEAN Integration (IAI) for another four years from 2012 to 2015, totalling S$50 million.

Revealing this during the plenary session of the ASEAN Summit in Bali, Prime Minister Lee Hsien Loong said this will be the country's fourth pledge to the IAI.

The IAI aims to help member states such as Cambodia, Laos, Myanmar and Vietnam narrow the development gap to achieve the vision of an ASEAN Community by 2015.

Giving an overview, Mr Lee noted the global economy remained vulnerable with problems in the European Union and the US economy still weak with low growth and low unemployment.

He said ASEAN must cooperate to weather the storm.

He said this can be done in three ways - achieving the vision of an ASEAN Community by 2015, enhancing ASEAN connectivity and strengthening links with the rest of the world.

Mr Lee stressed that ASEAN is at a critical juncture in its community-building efforts, with slightly over three years left to achieve the 2015 vision.

He said ASEAN's credibility and success are at stake and he called on the group to focus on achieving existing targets.

ASEAN Chair and Indonesian President Susilo Bambang Yudhoyono, who opened the summit, spoke of the need for solidarity among ASEAN countries to settle problems using peaceful negotiations.

Mr Lee also said connectivity is key to the group's integration and community-building efforts as it is important for ASEAN to draw the region closer, narrow development gaps and explore opportunities to involve the private sector in its programmes.

As ASEAN expands external links, Mr Lee said there is a need for ASEAN to "entrench its centrality in the regional architecture".

One way is to move towards the concept of an ASEAN++ Free Trade Agreement (FTA) framework.

Mr Lee said he believes this will synergise the benefits from the web of ASEAN+1 FTAs it has with partners.

He urged economic officials to quickly finalise the template for an ASEAN++ FTA.

Mr Lee also said he is confident that Cambodia as the next Chair of ASEAN will sustain the momentum of strengthening and integrating the grouping.

Meanwhile, Mr Lee said Singapore is ready to play its part and work with Myanmar to ensure successful outcomes if Myanmar becomes ASEAN Chair in 2014.

Mr Lee confirmed Singapore's support for Myanmar's bid to the ASEAN Chair in 2014.

He said he believes with the support of member countries, Myanmar will be able to make further progress in its domestic politics, and assume leadership of the bloc.

Mr Lee added that having guidelines to implement a code of conduct over South China Sea disputes is an important step forward. It also showed that ASEAN can work constructively with external partners on sensitive issues.

Mr Lee said Singapore's fundamental interest in the South China Sea disputes is to ensure freedom of navigation and a peaceful resolution in accordance with international laws.

Mr Lee stressed Singapore takes no sides in the territorial disputes.

Wednesday, November 16, 2011

His real estate ambitions

LOCAL actor Benjamin Heng (right) may come across as the archetypal Ah Beng, given his memorable roles in the 1999 indie film Eating Air and the Channel 5 dramedy Anything Goes.

And it would appear he adopts a devil-may-care attitude towards his finances as well.

Heng, who has also been a part-time real estate agent since 2007, admitted to The New Paper: "When I was younger, I didn't save very much at all. I had a very carefree life."

But after unsuccessfully venturing into the food business, he is now taking a more mature and cautious approach to his finances.

Heng, 35, still vividly remembers his biggest failed investment, a "six-figure loss", resulting from the closure of his Flowerbed Kitchen & Bar noodle eatery at Far East Square in 2007.

He said: "I used my retrenchment package from SPH MediaWorks (when it merged with MediaCorp in 2005) and borrowed some money from immediate family members to help fund this investment. Significant loss

"It was a very significant loss. In fact, to this day, even though I've recouped (the losses), I'm still recovering (mentally) from it."

Heng feels that it was a very good lesson for him and a "real eye-opener".

He said: "I learnt that doing your homework before investing is vital - the game (of investing) is very, very real and you must know your limitations.

"I'm open to investing in future business ventures but for now, my main investments are my properties and my family."

Heng said he earns a five-figure sum each month, mostly from his acting jobs.

He is now filming local movie Dance Dance Dragon which is scheduled for a Chinese New Year release next year. He plays a lion dance performer who is a fierce rival of lead actor Adrian Pang's character.

But Heng has more than just acting on his mind.

He said: "I think that people who have enough money should seriously consider investing in real estate."

Heng - who lives with his in-laws in a condominium in the western part of Singapore - owns a four-room HDB flat in Sengkang and a 420 sq ft studio apartment in Kuala Lumpur that is still under construction.

He said: "My mother is occupying the HDB flat in Sengkang. For the apartment (in Malaysia), I will cash out if I can get good capital gains, over and above the RM$600,000 (S$245,000) I paid for it. "Otherwise I will just hold on to it and rent it out for income."

Heng explained that he prefers investing in property because of the volatility of stocks in the present day.

"I'm a long-term investor, at my age it's a little late to be speculative," he said with a laugh.

"I would really like to invest more in Singapore properties, but the rules are quite rigid.

"In fact, I see a pattern in property prices in Singapore. A lot of the fluctuation in prices is either directly or indirectly affected by the Government's policies.

"I feel that Malaysian property prices can only go up over time, so if you can afford to hold on to (Malaysian) properties, it's a very worthwhile investment.

"Having said that, HDB flats are still quite a solid investment here, for investors who are starting out - provided they have enough in their CPF (Central Provident Fund)."

And since he's in this line of work, Heng has some tips for would-be property investors.

He said: "Invest in an area you are familiar with...Do not overcommit yourself, only invest what you can afford to lose.

"I also really don't recommend investing in private property if you can't afford to do so out of your own pocket."

Heng's circumspect spending is largely due to his idea that it is his responsibility to provide for his family.

He said half-jokingly: "I don't go out and spend as much as I used to - sad but true!

"I give my wife half of my earnings because she has sacrificed so much by being a stay-home mum (to our two-year-old daughter).

"We also have a joint account into which we put 20 per cent of our, or should I say my, earnings."

He added: "My immediate aim is to build my (real-estate) portfolio, and have more savings on hand.
"Having savings is very important as a buffer against things you can't predict in life.

"A trust fund for my daughter in future would be nice - if I can afford it!"

Tuesday, November 15, 2011

Bankrupts' CPF inheritance goes first to...

Any inheritance money from the Central Provident Fund (CPF) willed to a bankrupt, whether discharged or not, will go towards settling the bankrupt's debt, reported the Straits Times.

The Court of Appeal ruled that any money left after paying off creditors will be held in trust. This means it will be managed on behalf of the bankrupt.

The court also ruled that even if the information on the bequeathed sum surfaces after the bankrupt has been discharged from his or her debts, the money will still go to the Official Assignee (OA), who will hold it in trust.

The court set these rulings in a judgment released last week in a case where a discharged bankrupt tried to keep $102,000 left to her by her late sister in CPF money and SingTel shares.

The woman involved in the test case, 52-year-old kitchen helper Madam Lim Lye Kiang, had been a bankrupt for 11 years with debts amounting to $1.18 million to 13 creditors when her sister Lye Keow died of cancer in March 2008.

When Madam Lim Lye Keow died, her bequest should have been transferred to the OA, as under the law, all assets belonging to a bankrupt are held by the OA for distribution to his creditors.

However, the OA was not aware of the inheritance. The paper reported that in October 2009, the OA asked the court to discharge Madam Lim as a bankrupt, as she had been one for more than ten years with no further realisable estate. She had also paid up to $150 for her monthly contributions to her bankruptcy estate.

She was then discharged in November of that year after each of her creditors received $11,664 in a final dividend declared by the OA.

However, two months later, she tried to claim her inheritance from the CPF. The CPF Board instead transferred the money to the OA, who applied to the court for an order to distribute the money among Madam Lim's creditors.

In October 2010, the High Court sided with the OA. Madam Lim had argued that since the CPF authorised the release of the money after she was discharged as a bankrupt, the money belonged to her. According to the paper, the court said that 'the protection extended to the money of CPF account holders did not extend to nominees like Madam Lim, and that the money could thus go to the OA to settle debts'.

When she appealed, the appeal court ruled that as she was a bankrupt at the time of her sister's death, the money had to go to the OA. It rejected the argument of her lawyer, Foo Soon Yien, who said that her discharge 'had the effect of revesting the entitlement to the money in her'.

The court, made up of Judges of Appeal Chao Hick Tin, Andrew Phang and V. K. Rajah, instead agreed with the OA's lawyer Lim Yew Jin, who argued that the discharge did not reinstate Madam Lim's right to the money.

Bankruptcy laws that rule the administration of a bankrupt's estate may continue after his discharge were upheld by the court. The court said that while a bankruptcy discharge releases him from debts, it does not affect the debts themselves.

Thus, any assets that surface after a final dividend is paid to creditors will be held in trust by the OA for the discharged bankrupt.


Monday, November 14, 2011

Some Singaporeans turn to vans as car prices soar

When businessman Solomon Tang, 37, was shopping for a compact runabout for his mother-in-law recently, he bought a Renault Kangoo van.

It may not be the last word in sleekness, but at around $70,000 brand new, the 1.5-litre diesel van was far cheaper than some of the cheapest passenger cars. An entry-level Toyota sedan, the Vios 1.5, for instance, costs $100,000.

Mr Tang said of the van: 'It's more practical than a car. And it runs on diesel, so you save quite a lot.'

With cars at near record prices - thanks to a limited supply of certificates of entitlement - buyers have begun looking at cheaper options.

  • A brand new Renault Kangoo costs around $70,000. An entry-level sedan like the Toyota Vios 1.5, in comparison, costs $100,000
  • A 2.5-litre turbo-diesel Navara double-cab pick-up, which seats five adults comfortably, costs slightly over $100,000
  • A 2006 Avery, a 660cc petrol van, sells for $25,000 to $28,000
  • Commercial vehicles have low scrap value
  • They have a 70kmh speed limit
  • They have higher insurance premiums - $1,500 for a mature driver with a 50 per cent no-claims bonus, compared to $1,000 for a mid-size car
  • Installing a sofa seat in the rear is illegal

Thursday, November 10, 2011

EU warns of recession in 2012

BRUSSELS: Europe warned on Thursday that its debt crisis was dragging the region towards a new recession, deepening the sense of foreboding as Italy and Greece struggled to put together new governments.

Amid a call by the head of the International Monetary Fund for an end to the political wrangling, it was still unclear who would emerge as the new leaders of Greece and Italy after both countries' premiers threw in the towel.

After doubts grew over Italy's ability to keep servicing its debts, the European Union's new economy tsar said the bloc faced tipping back into recession in 2012 due to a "vicious circle" of government debt, vulnerable banks and collapsed spending.

"Growth has stalled in Europe, and there is a risk of a new recession," Olli Rehn said as the EU released detailed forecasts for the eurozone and broader econonomy for the next two years, with GDP "now projected to stagnate until well into 2012."

Growth across the eurozone in 2012 would collapse to 0.5 percent, said the forecast, a steep drop from its previous prediction of 1.8 percent. The forecast for this year was also revised downwards from 1.6 to 1.5 percent.

The economy in Italy, the eurozone's third largest economy, would virtually stagnate in 2012 with growth of just 0.1 percent, according to the forecast.

Italy's growing crisis has already prompted Prime Minister Silvio Berlusconi to announce his resignation. He will stand down after parliamentary approval this weekend of a package of economic reforms aimed at calming investor fears, which have pushed Italy's borrowing rates to alarming levels of seven percent.

The handover of power has led to fevered backroom negotiations, with former EU commissioner Mario Monti seen as the frontrunner to succeed Berlusconi.

Monti received the backing on Thursday of Berlusconi, with the outgoing premier saying that he would work "in the interests of the country".

The 68-year-old Monti earned a fearless reputation as the European Union's competition commissioner taking on US corporate giants Microsoft and General Electric and is seen as a possible head of a national unity government.

Monti's appointment was not a done deal however after several leading members of Berlusconi's centre-right coalition insisted on early elections.

"Italy is facing a difficult time and particularly arduous choices to overcome the crisis," said President Giorgio Napolitano, who will be forced to call early elections if there is no consensus on a new government.

"Europe is urgently awaiting important signals of a taking on of responsibility by one of its founders. We will be up to the task."

On Wednesday, Italy's 10-year bond yields flew over 7.0-percent to heights that could make it impossible for Rome to keep financing its 1.9-trillion euro ($2.6 trillion) debt.

In a key test after Berlusconi's resignation announcement, Italy paid record rates of over six percent at an auction of treasury bills on Thursday.

Greece is also been in political turmoil since Prime Minister George Papandreou announced on Sunday he was standing down, triggering days of bickering between political leaders over the succession.

There was hope however that a new transitional government could be announced on Thursday whose first task will be to ratify a crucial EU bailout deal.

A meeting between President Carolos Papoulias and top political leaders opened at 0800 GMT with reports indicating that former European Central Bank vice-president Lucas Papademos would be given the reins of government in Greece's worst post-war crisis.

The Athens stock exchange was up 2.19 percent in morning trade in expectation of a deal on the fourth day of secrecy-veiled negotiations between Papandreou and the head of the opposition, conservative leader Antonis Samaras.

Europe's main markets plunged in early trading but staged a slight rally later in the morning. Frankfurt rebounded 1.04 percent and Paris added 0.98 percent, despite rising pressures in the French bond market.

Christine Lagarde, the head of the IMF, said both Greece and Italy urgently needed to sort out their leadership difficulties.

"Political clarity is conducive to more stability ... it is much needed in Greece, it is much needed in Italy," the IMF chief told journalists in Beijing.

Confusion over the future leadership of both countries was "conducive to volatility," added Lagarde, who is on a two-day visit to China.

The turmoil in parts of the eurozone has prompted questions about the single currency's whole future, including in the continent's economic powerhouse Germany.

According to a report in the German business daily Handelsblatt, MPs in Chancellor Angela Merkel's governing conservative party are mulling a move to permit countries to exit the eurozone without leaving the EU.

A motion from a group of lawmakers, which calls for any country's departure to be on a voluntary basis, is set to be discussed at the Christian Democrats' (CDU) party congress next week, Handelsblatt said.

Noble founder's family buys 10 million shares as price plunged

SINGAPORE - An investment firm linked to the family of Noble Group founder and interim CEO Richard Elman bought 10 million of the commodity company's shares on Thursday as the price plunged by more than a quarter, Noble Group said in a regulatory filing.

Noble Holdings Ltd, whose beneficiaries include the children of Elman but not Elman himself, bought the shares at an average of $1.1919 each, raising its interest in Noble Group to 21.53 per cent from 21.37 per cent previously.

Noble Group shares closed 26 per cent lower to end at $1.18 a share on Thursday after the firm reported its first quarterly loss in over 10 years and CEO Ricardo Leiman resigned on Wednesday.

COE premiums up to $78k for cars

Certificate of entitlement (COE) prices for cars above 1,600 cc and the open category, usually used for cars, hit a 17-year high after the close of November's first bidding exercise.

Except in two categories, most premiums were on the up.

Prices for cars above 1,600c went up to $77,000, a 1.5 per cent movement. The open category, usually used for cars, saw the biggest hike for passenger cars. It rose 6 per cent to $78,001.

The last time these two categories saw higher price levels than these was back in September 1994.

COE prices for Category A (cars 1,600cc and below, including taxis) had scant relief as it dipped from $56,112 in October's second bidding to $55,997, a 0.2 per cent change.

Among all, commercial vehicle COE premiums had the biggest increase. It went up 10.2 per cent to $40,803.

Motorcycle premiums ended lower at $2,012.

According to The Straits Times, the rush to meet annual sales targets and the anticipation of fewer COEs next year had sent COE prices higher.

The Government has announced it will curb vehicle population with a revised vehicle growth rate that is lower than the current 1.5 per cent.

The growth rate will fall to 0.5 per cent from August 2012 to January 2013 and is expected to result in a smaller supply of COEs.

Monday, November 7, 2011

Parents without insurance top 50%

MORE than half (53 per cent) of Singapore parents do not have individual term life insurance.

And of those who do have financial plans for their families, 24 per cent do not have any type of life insurance included in their plans. Worse still, eight in 10 parents do not have a will.

These were the sombre results of a HSBC global study on attitudes towards retirement and financial planning, with 1,000 participants from Singapore. 17,000 people in 17 countries were surveyed for 'The Future of Retirement' report.

'We are seeing a major protection gap where many Singapore families, especially those with dependent children, are failing to recognise the benefits of life insurance protection,' noted Walter de Oude, chief executive of HSBC Insurance Singapore.

'It is really advisable to review your financial situation at major moments in life, in particular when having children and planning for their future education expenditure.'

According to the study, nearly half (48 per cent) of respondents in Singapore aged between 30 and 39 say they have no short term savings.

Of those aged between 40 and 49, 30 per cent of those married or living together are protecting their assets. 34 per cent of those aged between 50 and 59 do not have retirement plans while only 12 per cent are undertaking tax planning.

The study also found that men in Singapore exercise more control than women when making financial decisions for both retirement planning and household budgets.

32 per cent of men in Singapore are more likely to make decisions on managing the household budget compared to women (28 per cent), bucking the global trend of 34 per cent and 37 per cent respectively.

In terms of household financial decisions, 70 per cent of men in Singapore (versus a global average of 65 per cent) make all or most household financial decisions compared to 52 per cent of women in Singapore (versus a global average of 53 per cent).

'A significant finding is that across Asia, women in Singapore are least likely to be responsible for making decisions on saving for retirement, deferring to their male partners,' the study noted.

In addition, the discrepancy between the sexes in planning for retirement is consistent across all age groups, suggesting that attitudes to this aspect of the family finances are not changing over time.

In contrast, East Asian countries such as China, Taiwan, and South Korea displayed the greatest gender equality in retirement planning.

72 per cent of Singapore respondents fund their retirement via cash savings accounts while 67 per cent hold insurance in the form of endowments and investment-linked insurance.

Globally, 44 per cent of respondents said they use cash savings accounts to help fund their retirement, with 22 per cent using mutual funds and investments, and a further 11 per cent using employee stock/share schemes.

Help available to locals, foreigners who can't pay medical bills

Hospitals here offer many options for patients who cannot afford to pay their medical bills. Most also have assistance schemes or funds to help the needy.

This should come as good news for people like Malaysian Kee Yau Chong, who faces a medical bill of more than $100,000 after he was set on fire by a colleague during a quarrel in June this year.

The hefty bill is due in part to the fact that Mr Kee, 24, is not entitled to the various health-care subsidies available to Singaporeans.

Mr Kee, who had burns to about 28 per cent of his body, was warded at the burns unit in Singapore General Hospital (SGH) for 46 days, where he underwent multiple skin grafts.

Sunday, November 6, 2011

Key lesson from Iceland crisis is 'let banks fail': analysts

REYKJAVIK - Three years after Iceland's banks collapsed and the country teetered on the brink, its economy is recovering, proof that governments should let failing lenders go bust and protect taxpayers, analysts say.

The North Atlantic island saw its three biggest banks go belly-up in the October 2008 as its overstretched financial sector collapsed under the weight of the global crisis sparked by the crash of US investment giant Lehman Brothers.

The banks became insolvent within a matter of weeks and Reykjavik was forced to let them fail and seek a $2.25 billion bailout from the International Monetary Fund.

After three years of harsh austerity measures, the country's economy is now showing signs of health despite the current global financial and economic crisis that has Greece verging on default and other eurozone states under pressure.

"The lesson that could be learned from Iceland's way of handling its crisis is that it is important to shield taxpayers and government finances from bearing the cost of a financial crisis to the extent possible," Islandsbanki analyst Jon Bjarki Bentsson told AFP.

"Even if our way of dealing with the crisis was not by choice but due to the inability of the government to support the banks back in 2008 due to their size relative to the economy, this has turned out relatively well for us," Bentsson said.

Iceland's banking sector had assets worth 11 times the country's total gross domestic product (GDP) at their peak.

Nobel Prize-winning US economist Paul Krugman echoed Bentsson.

"Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net," he wrote in a recent commentary in the New York Times.

"Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver," he said.

During a visit to Reykjavik last week, Krugman also said Iceland has the krona to thank for its recovery, warning against the notion that adopting the euro can protect against economic imbalances.

"Iceland's economic rebound shows the advantages of being outside the euro. This notion that by joining the euro you would be safe would come as news to the Spaniards," he said, referring to one of the key eurozone states struggling to put its public finances in order.

Iceland's example cannot be directly compared to the dramatic problems currently seen in Greece or Italy, however.

"The big difference between Greece, Italy, etc at the moment and Iceland back in 2008 is that the latter was a banking crisis caused by the collapse of an oversized banking sector while the former is the result of a sovereign debt crisis that has spilled over into the European banking sector," Bentsson said.

"In Iceland, the government was actually in a sound position debt-wise before the crisis."

Iceland's former prime minister Geir Haarde, in power during the 2008 meltdown and currently facing trial over his handling of the crisis, has insisted his government did the right thing early on by letting the banks fail and making creditors carry the losses.

"We saved the country from going bankrupt," Haarde, 68, told AFP in an interview in July.

"That is evident if you look at our situation now and you compare it to Ireland or not to mention Greece," he said, adding that the two debt-wracked EU countries "made mistakes that we did not make ... We did not guarantee the external debts of the banking system."

Like Ireland and Latvia, also rescued by international bailout packages and now in recovery, Iceland implemented strict austerity measures and is now reaping the fruits of its efforts.

So much so that its central bank on Wednesday raised its key interest rate by a quarter point to 4.75 percent, in sharp contrast to most other developed countries which have slashed their borrowing costs amid the current crises.

It said economic growth in the first half of 2011 was 2.5 percent and was forecast to be just over 3.0 percent for the year as a whole.

David Stefansson, a research analyst at Arion Bank, told AFP Iceland hiked its rates because it "is in a different place in the economic (cycle) than other countries.

"The central bank thinks that other central banks in similar circumstances can afford to keep interest rates low, and even lower them, because expected inflation abroad is in general quite (a bit) lower," he said.

Insurance a crucial building block

With markets swinging about as they do these days, it is natural for some investors to focus on spotting winners and try to pick the perfect entry and exit points. But growing your wealth is more than just a function of maximising stock returns in the shortest time possible. Managing outflows, especially unexpected ones, and steady wealth accumulation over the long term, are equally important to the planning and pursuit of any significant financial goal.

The increased market volatility that we are experiencing is reason for many investors to fret over their portfolios. Yet, while prudent management of these monies is essential, it would be a mistake to overlook a more basic building block for growing wealth. As much as you would hate to see the value of your portfolio fall by 20 per cent, the hospital bill resulting from an unexpected major illness or the loss of income due to an accident-caused disability can severely disrupt your financial goals.

For instance, you may have to liquidate your investments to pay for treatment and other basic needs. This is why it is critical to ensure that you have some basic insurance in place, which will allow you to continue working towards your investment goals even if something catastrophic happens to you.

Strengthen the backline

A simple term policy is an affordable way to begin. Those in their 20s, who have just started work, may find this option most palatable as desired cover can be obtained inexpensively. For some, a term plan may act as a liability cancellation policy so that the family is not saddled with the burden of repaying the outstanding mortgage on the family home in the case of the policyholder's demise.

While term plans can be bought with additional cover for critical and terminal illnesses, conventional whole life policies provide greater flexibility, offering optional protection for eventualities like disability and loss of income. These additional covers, called riders, can be added and removed at will.

Whole life plans may be constructed so that payments are accelerated during your working life to allow you to enjoy premium-free cover after retirement. Perhaps, the biggest advantage that whole life plans have over term plans is that they can serve also as a tool for wealth accumulation. Part of the higher premiums collected in whole life plans are invested in the insurer's participation fund, resulting in steady returns that can be cashed out as needed.

Consumers should note that whole life policies are designed to accumulate value over the long-term, so the cost of surrendering the policy early, particularly in the first few years, is very high as premiums mostly go towards paying for the cost of insurance.

Sure and steady progress

There are insurance products that go further towards the goal of wealth accumulation. Endowment policies may not be new, but unlike the 30-year tenures of old, durations these days can be much shorter if you haven't the patience or if you have started your retirement planning late.

Endowment plans are gaining wider acceptance here as more Singaporeans realise the place of steady, low-risk investments when it comes to their retirement savings. In deciding on an endowment plan, it is usually helpful to link it to an objective, which will help determine what the most appropriate tenure is. For example, a 25-year-old executive may find a 10-year plan appropriate if he is planning to use the payout to help pay for a condominium at age 35.

For investors who prefer the convenience of an all-in-one solution, investment-linked policies cover both wealth protection and accumulation needs. You get to decide the balance between protection and investment, and you get more say about how your money is invested. Potential returns are higher, as you may choose to invest in unit trusts that adopt a more aggressive stance than the insurer's typically conservative participation fund. But along with that is a higher chance of incurring losses should your investment strategy prove unsound or unbalanced.

Pass it on

Finally, insurance can help in legacy planning. A universal life plan is a single premium policy that can help you pass on wealth to your children, with a guaranteed rate of return on the money invested. If you plan to leave S$3 million to your children, you can take out a universal life plan with a sum assured of S$3 million for a fraction of the amount. The sum assured of the universal life plan is guaranteed, so you can be assured that your children will receive the bequest you intended for them even if you pass on early.

If you choose to manage and invest your funds on your own instead of buying a universal life plan, there is a risk that your bequest to your loved ones will fall short of the S$3 million you intended for them, as the amount will be dependent on the market value of your investments when the bequest is made.

There is no denying the allure of taking a punt on the market, but neglect not the basic foundations of financial planning. Insurance is a crucial building block in achieving your financial goals and with recent innovations, it can even offer solutions for more advanced needs.

Shrikant Bhat is head of wealth management at Citibank Singapore.

Saturday, November 5, 2011

Proceed with care in Asian investments

Q: Asian markets are at extremely cheap levels now. Do you think it is a good time for investors to enter this market? 

A: Using the MSCI Asia ex-Japan Index as a gauge, Asian markets are indeed at very attractive valuations. From a price-to-earnings perspective, the market is currently at its lows compared to the last 35 years. Further, from the angle of price-to-book ratio, Asia is also well below its long-term average of 1.8x at current levels.

Despite the cheap valuation, it may be too soon to jump back into a high beta market like Asia: the global headwinds stemming from the crisis in Europe, as well as the slowdown in the US and China, have shown few signs of easing.

However, it is also advisable for investors to maintain a balanced and diversified portfolio during these volatile times. Although risk aversion remains intact, investors interested in gaining exposure to the Asian equity market can consider the defensive sectors. These sectors may help manage downside risk of a portfolio.

Additionally, defensive companies are less sensitive to economic cycles as they produce items that are needed by consumers irrespective of economic circumstances. Another enticing aspect will be that of sustainable dividends which may help ease downward pressure from the market by adding a premium over steady income.

Investors can also consider dollar cost averaging (DCA) to gain exposure to Asian markets. This is a disciplined and convenient approach where investors reduce the need to time the market. In addition, it may help reduce investment costs and boost potential returns when the market turns for the better.

The foundation of successful investing remains educating and familiarising oneself with the various aspects of the market. Investors should also conduct due diligence to back each investment decision. It is also advisable to speak to a qualified financial adviser to truly understand the risk before investing in the market.

Tuesday, November 1, 2011

Light drinkers have higher breast cancer risk, says study

WASHINGTON: Light to moderate alcohol drinkers have an increased risk of breast cancer compared to women who do not drink beer, wine or liquor, said a US study published on Tuesday.

Women who drink three to six glasses of alcohol per week have a 15 percent higher risk of getting breast cancer than women who do not drink, said the research led by Brigham and Women's Hospital and Harvard Medical School.

Women who drink on average two glasses daily of alcohol show a 51 percent higher risk of breast cancer, said the study published in the Journal of the American Medical Association.

Researchers followed 105,986 women who answered survey questions about their health and alcohol consumption from 1980 until 2008.

The higher breast cancer risk was seen whether the women drank early in life or whether they were drinking after age 40, suggesting that even stopping may not have an effect on lowering risk.

The findings also present a dilemma for women who may choose to drink small amounts of alcohol, such as red wine, for heart health.

"There are no data to provide assurance that giving up alcohol will reduce breast cancer risk," said an accompanying editorial by Steven Narod, a doctor at the Women's College Research Institute, Toronto.

"Women who abstain from all alcohol may find that a potential benefit of lower breast cancer risk is more than offset by the relinquished benefit of reduced cardiovascular mortality associated with an occasional glass of red wine," he wrote.

The study authors said that the reason for the boost in breast cancer risk remains unknown, but hypothesised that it could be due to the elevation of sex hormones circulating in a woman's system after she drinks alcohol.

Euro dives below US$1.37 on Greek referendum call

NEW YORK: The European single currency fell below $1.37 on Tuesday after debt-plagued Greece shocked investors by calling a referendum over the nation's latest EU bailout.

Adding to the toxic mix, indebted Italy's bonds came under acute pressure on heightened concern over spreading debt contagion from the eurozone crisis.

The euro tumbled as low as $1.3609, its lowest level since October 12, before recovering to $1.3697 at 2200 GMT, down from $1.3851 late Monday.

It was a big drop from the $1.42 level struck last Thursday, following the EU summit's reaching a comprehensive deal to resolve the months-long crisis in the euro zone, beginning with a new Greek debt reduction and austerity deal.

"This throws all the summit's deliberations up in the air, even though they were considered lame in the first place," said David Morrison of currency specialist FX360.

"In consequence, investors are rushing to reduce their risk exposure across the board and fleeing into the relative safety of the dollar and US Treasuries."

The euro fell to 107.29 Japanese yen, down from 108.28 yen, while the dollar rose to 78.34 yen from 78.16.

The dollar was almost unchanged at 0.8869 Swiss francs. The British pound fell to $1.5950 from $1.6073.

While the euro zone crisis will continue to drive markets - France and Germany have already called another emergency summit to deal with the Greek issue - traders will also be watching whatever comes out Wednesday from the meeting of the US Federal Reserve's policy board.

While few expect any overt policy decisions - interest rates should be kept at the ultra-low levels - some anticipate signals in the language the Fed uses to indicate the medium-term direction of monetary policy.

"The rally in the greenback and the sell-off in equities indicate that investors are focused on one thing and one thing only, which is the uncertainty in the global economy," said FX360's Kathy Lien.

"What this means is that if the Federal Reserve eases monetary policy because they have grown more pessimistic about the outlook for the US economy, it may not be as overwhelmingly negative for the dollar as most people would normally expect.

"It is perfectly feasible and probably likely that the dollar will rise against risk currencies if the Fed takes additional steps to ease monetary policy."

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