EU's Juncker says UK's Brexit bill will be around £50b
[LONDON] The UK will have to pay a bill of about £50 billion (S$87.3 billion) when it leaves the European Union, Commission President Jean-Claude Juncker warned as British Prime Minister Theresa May prepares to trigger the formal start of the exit process.
Hong Kong: Shares tick up; Huishan Dairy plummets
[HONG KONG] Hong Kong stocks eked out marginal gains on Friday, with investors awaiting corporate earnings and a vote on a new US healthcare bill seen as President Donald Trump's first policy test.
Turkish minister visits Switzerland as Europe row simmers
[GENEVA] Turkish Foreign Minister Mevlut Cavusoglu met with his Swiss counterpart Thursday after having to call off a campaign appearance amongst diaspora voters, in a bitter row between Ankara and Europe.
ZICO proposes $4 mil share placement to strengthen financial position
Michelle Zhu - SINGAPORE (March 24): ZICO Holdings, the integrated network of professional service firms, intends to issue 15 million new shares -- representing 5.01% of the company’s enlarged share capital -- at 27 cents each to raise $4.05 million.
The placement price represents a discount of 4.69% to the volume weighted average price of 28.33 cents for all trades done on Thursday.
After calling for a trading halt on Friday, ZICO announced it had on Thursday entered various subscription agreements with five separate parties, including fund management company Island Asset Management (IAM) as well as Pacific & Orient Distribution (POD), an investment holding company based in Malaysia.
The two organisations have agreed to subscribe to 4 million and 2 million shares, representing 1.34% and 0.67% of the company’s enlarged capital respectively.
Lee Chee Seng, the director and shareholder of the group’s 70%-owned subsidiary ZICO Capital, is subscribing to 7 million shares or 2.34% of ZICO’s enlarged capital.
Two other parties, Lee Choong Onn and Koh Eng Kheng Victor, have also agreed to subscribe for 1 million shares each, translating to a 0.33% stake per subscriber following completion of the placement. Lee is a director of Straits Capital Management, while Koh is lead independent director of Catalist-listed China Star Food Group as well as a member of the advisory panel of ZICO Capital.
ZICO said it undertook the new share placement to strengthen its financial position in order to expand its business. The group intends to use 25% of the net proceeds on investments for business expansion; 40% for investments in capital expenditure and maintenance of its IT infrastructure; as well as 35% for its working capital requirements, mainly to support the requirements of its new services and offices.
As at 4.08pm, shares of ZICO are trading 1 cent higher at 30 cents after the announcement.
People Digest: DBS names new digital bank head; StanChart’s Mueller leaves
Tanu Pandey - Singapore’s DBS has named Sandeep Lal as the new Group Head Digital Bank with Olivier Crespin leaving the bank. Meanwhile, Standard Chartered Private Bank’s Global Head of Investment Advisory in Singapore Christian Mueller has stepped down. DBS names new Digital Bank head Singapore’s DBS has named Sandeep Lal as the... Read more »
The post People Digest: DBS names new digital bank head; StanChart’s Mueller leaves appeared first on DealStreetAsia.
Deutsche Bank commits to London with new UK headquarters
[LONDON] Deutsche Bank AG is in exclusive talks to move its UK headquarters to a building being constructed at 21 Moorfields in the City of London financial district.
BOJ chief Kuroda says "no reason" to withdraw stimulus now
[TOKYO] Bank of Japan Governor Haruhiko Kuroda said there is "no reason" to raise the bank's bond yield targets now with inflation so far from its two per cent target, offering his strongest denial to date of the chance of withdrawing its massive stimulus any time soon.
Uber rival Grab said raising US$1.5 billion in new funding round
Today - SINGAPORE - Grab, Uber Technologies Inc's largest rival in South-east Asia, plans to raise more than US$1.5 billion (S$2.1 billion) in a new funding round backed by SoftBank Group Corp, people familiar with the matter said.
SoftBank is pledging about US$1...
Tai Sin Electric business may not be sexy but it's steady
Trinity Chua - SINGAPORE (March 24): The lobby of Tai Sin Electric sports a purple-and-red robot on one side and an assortment of cables and wires on the other.
“This is our business,” says CEO Bernard Lim, gesturing at the cables and wires, “Not the robot.”
While there is nothing sexy about Tai Sin’s main business segment, it remains a steady revenue generator.
Since 2012, the business has grown 50.8% and margins have improved from 5.5% to 9.9% despite the general slowdown in the construction sector in the last few years.
Tai Sin thinks being a Singapore-based company has given it an advantage.
“We can supply to contractors on a daily basis, sometimes even twice a day,” says Lim.
Tai Sin also has a 30% share of Singapore’s cable manufacturing industry.
Over the years, the company has won contracts to be the primary supplier for several landmark projects, including Marina Bay Sands and Gardens by the Bay.
Industry watchers are hopeful that the $700 million of construction contracts brought forward by the government will give the sector a much-needed boost.
And Tai Sin has the capacity to increase production, given that its facility utilisation rate is at 60%.
For more information on why Tai Seng could be an attractive option for investors, get this week’s issue of The Edge Singapore (Issue 772, week of March 27), available at newsstands today.
Don't assume all old HDB flats will become eligible for Sers, cautions Lawrence Wong
[SINGAPORE] National Development Minister Lawrence Wong has cautioned home buyers not to assume that all old Housing Board flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (Sers).
Don't assume all old HDB flats will become eligible for Sers, warns Lawrence Wong
[SINGAPORE] National Development Minister Lawrence Wong has warned home buyers not to assume that all old Housing Board flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (Sers).
Quick take: Singapore manufacturing sector seen growing at a more gradual pace
Angela Tan -
SINGAPORE'S manufacturing output rose 12.6 per cent in February compared to a year ago, driven by continued growth in the semiconductor and precision engineering space.
Chinese dairy stocks crash 90% in Hong Kong
[HONG KONG] Shares in a Hong Kong-listed Chinese dairy crashed more than 90 percent on Thursday, in one of the city's biggest sell-offs that wiped billions from its market capitalisation.
Hong Kong property agents won't accept China UnionPay cards
[HONG KONG] Banks are asking Hong Kong property agents to stop accepting China-issued UnionPay cards, as mainland authorities escalate their crackdown on capital flows out of the country.
Singapore February factory output rises faster than expected
The Editor - SINGAPORE (March 24): Singapore's industrial production rose more than expected in February from a year earlier thanks to a surge in electronics manufacturing output, but analysts expect global conditions will weigh on manufacturing in months ahead.
Manufacturing output in February rose 12.6% from a year earlier, data from the Singapore Economic Development Board showed on Friday, exceeding the median forecast in a Reuters survey which predicted a 10.8% expansion on-year.
Industrial production on a month-on-month and seasonally adjusted basis, however, fell 3.7% in February. The median forecast was for a rise of 0.4% but analysts said January and February single-month data was likely skewed by "seasonal distortions" such as the timing of the long Lunar New Year holiday, which fell in February last year but late January this year. Many factories close or scale back operations during this period.
In January, industrial output rose 2.2% on-year and fell 6.0% on-month.
Singapore's February industrial production increased on the back of a surge electronics output which grew 39.8% compared to the same month last year.
This comes after Singapore's exports in February grew at the strongest pace in five years, jumping 21.5% from a year earlier, thanks to a surge in demand of tech products and shipments to China. Despite strong electronics exports, some analysts believe industrial production will begin to moderate in coming months because of lower regional demand.
"There should be some cuts in the China smart phone market and demand," said Credit Suisse analyst Michael Wan, noting additional tightening in China's property sector will slow domestic demand.
Singapore has had lacklustre economic growth over the past two years as sluggish global demand weighed on exports. Growth picked up late last year with the economy expanding at a faster pace in the final three months than initially thought.
Most analysts now expect Singapore's central bank to keep monetary policy unchanged at its next policy review in April.
However, the government has warned that the outlook remains hostage to policy and protectionist risks in the United States.
"There's a bit too much optimism about tax cuts and fiscal policy boosts from the US, so that should crimp the growth momentum a bit as we move into the next few months", Wan said.
YouTube's bid to grab TV dollars imperiled by advertiser revolt
The decision by a handful of high-profile consumer brands to pull advertising from Google’s YouTube over offensive content could threaten the site’s long-term strategy of stealing ad dollars from television, analysts and ad industry professionals said Thursday.
Two-and-20 cedes way to no fees upfront as hedge funds adapt
Bloomberg - SINGAPORE (March 24): Three Asian hedge fund startups are eschewing the industry’s traditional fee model, as they vie for capital from investors that have gotten increasingly reluctant to put money with unproven managers.
Kit Trading Fund, Noviscient and Gordian Capital Singapore, all based in Singapore, are among firms that are starting to do away with the 2% management fee and 20% of all profits -- also known as the 2-and-20 model.
Noviscient plans to start a fund that will charge investors no management fees and will absorb the first 5% of annual investment losses, moves almost unheard of in an industry known for levying the highest fees in the money management business. Gordian will take a performance fee only if returns exceed a certain benchmark. Kit Trading also has lower-than-average fees, while insulating clients from some declines.
“Increasingly these days hedge fund startups have to come up with innovative fee structures in order to attract capital and achieve critical mass,” said Melvyn Teo, professor of finance at Singapore Management University. “The key is to protect investors from some of the downside while still ensuring that the manager shares enough of the upside so that the business remains viable and attractive to the manager.”
Hedge funds have been facing an investor revolt over high fees after years of lacklustre returns, drawing criticism from some of the top names in finance. Billionaire investor Warren Buffett last month estimated in his annual letter to Berkshire Hathaway Inc. shareholders that investors wasted more than US$100 billion ($140.1 billion) on high-fee money managers over the past decade.
While fledgling firms are typically the most flexible when it comes to fees, even well-established managers are making more concessions under pressure from investors. Winton, Caxton Associates and Tudor Investment Corp. are among hedge funds that have cut some fees as investors pulled the most money from the industry last year since the global financial crisis. Billionaire Alan Howard is seeking 30% of the returns from his new hedge fund, called Brevan Howard AH Master Fund, although is charging a lower-than-average 0.75% management fee.
Returns from hedge funds globally have failed to keep pace with the broader market since the global financial crisis. While many hedge funds don’t necessarily aim to beat stocks, muted returns have made it hard for managers to justify their high fees.
Investors added US$7.9 billion to the global hedge fund industry in February, breaking a five-month streak of withdrawals, according to data tracker eVestment.Noviscient was founded by Scott Treloar, a former chief risk officer of Singapore-based Vulpes Investment Management. Noviscient’s fund, which uses computer models to trade stocks, futures and currencies, and will charge 20% of gains for the first 10% of profits, splitting the spoils equally with investors after that, Treloar said in an interview.
Instead of hiring managers from established shops, Noviscient will partner with traders with a non-traditional asset-management background, Treloar said. The partners contribute trading ideas to the fund for a 25% cut of profits before performance fees, he said.
Hedge fund platform Gordian, which has other funds with the traditional fee model, this month launched its Quadratus Fund. The fund focusing on asset allocation across equities, fixed income and currencies by mainly investing in exchange-traded funds, certificates and derivatives, according to an emailed statement.
The fund, managed by former Banco Santander SA executive director Adrien Blavier, charges a management fee of 1.25% and a performance fee of 15% for returns exceeding a global benchmark of stocks and bonds. The fund opened with US$25 million of assets.
“With my significant investment in the fund and a deliberately competitive fee structure, I’m demonstrably aligning my interests with those of investors in the fund,” Blavier said in the email.
Another vehicle straying from the traditional hedge fund fee structure is Singapore-based Kit Trading Fund, a firm led by Michael Downer, that’s part of Vulpes Investment Management. The fund charges a management fee of 1% of assets and a 15% profit split, while also insulating clients from some declines. Traders joining Kit Trading need to inject their own money and typically bear the first 2% of the fund’s losses, Downer said.
In addition, investors have the choice between two share classes. One offers lower risk and lower returns, with a some protection against losses and a smaller slice of profits, and the other offers less downside protection and a higher participation in gains, Downer said.
Kit Trading returned 17% in 2016 and was up 5% through the end of February, according to Downer.
Other funds in Asia are also crafting alternatives to the traditional model. Myriad Asset Management, which manages more than US$4.1 billion, added a new share class in its hedge fund that charges the greater of a 30% cut of profits or 1% of assets under management. Ortus Capital Management in July started a fund that takes a 33% share of profits without charging any management fee.
“There is a widespread feeling that the traditional hedge fund model, where investors bear the losses and share the gains, no longer works,” Kit Trading’s Downer said. “Our job is to better align investor interest with that of managers.”
3 tech trends to change SME growth in 2017 and beyond
Pieter Bosman - SINGAPORE (March 24): Using technology creatively to manage the business back-end can enable even the smallest start-ups to compete on the regional and even the global stage.
While government assistance can help in easing the costs around technology adoption, business builders need to be proactive in keeping abreast of the latest trends and be more digitally-aware of how they can impact their businesses.
Here are three major trends that will make a big difference in the way entrepreneurs and business builders manage and grow their companies in 2017 and beyond:
Artificial, collective intelligence and data analytics
Artificial intelligence (AI) and collective intelligence technologies are increasingly being developed to help businesses better optimise back office as well as customer facing systems and processes. Smaller businesses need to take advantage of this trend to access and make good use of their data. Enter AI, which can lend a helping hand in the form of a bot, for example, automating the entire process and providing actionable insights to the business.
Collective intelligence takes this a step further by seamlessly integrating machine and human intelligence at a large scale, potentially giving rise to new possibilities in business and for the workforce. This effectively provides the workforce an opportunity to complement AI and its business benefit, rather than compete with it.
Locally, the government is serious about strengthening Singapore's ability to innovate in a changing world by embracing digitisation and using technology. It recently committed to injecting an additional $500 million to the National Research Fund, as well as an additional $1 billion to the National Productivity Fund. With this, there is an opportunity for SMEs to leverage on this push, and gain the necessary expertise and tools needed to strengthen their businesses.
The benefit of adopting cloud-based platforms is that they give SMEs access to innovative business software solutions and services, without the need for dedicated IT support. These solutions can span areas from accounting, customer relationship management, enterprise resource planning, finance, and cloud-based mobile applications, all of which are core functions of any business.
Essentially, platform-based infrastructure has democratised access to up-to-date applications and scalable technologies that business builders use in order to be a lot more responsive to business needs. This can extend to a reduction and spread in costs to scaling up/down their operations to accommodate fluctuations in customer demand and enabling improved data accuracy and easy and instantaneous access to everything from account balances to outstanding invoices, 24/7.
Chatbots and other autonomous interfacesChatbots or programmes designed to convincingly simulate how a human would behave as a conversational partner, would add convenience and simplicity to the user experience by making tasks like processing an invoice or payment as fast as sending a text message. These admin-heavy tasks traditionally require constant monitoring and being expensive to outsource, tend to bog down start-up founders and SMEs.
When businesses are equipped with convenient and time-saving automated solutions to help take care of the back-end activities, they can then focus their energy and time on sales and strategy.
During his National Day Rally speech last year, Prime Minister Lee Hsien Loong spoke of the relentless pace of technological change sweeping across many industries. What is key, said Prime Minister Lee, is how Singapore chooses to respond – either close itself off, or embrace the change.
While this might seem daunting to some, there is good news: Businesses can reap the benefits of technology adoption almost instantly with business administration becoming almost invisible, as easy as messaging a friend. With the strides being made in machine learning, administration could even become completely automated.
Government assistance or not, this will empower entrepreneurs to stay focused on building their businesses, driving growth in the economy and contributing to their communities. In the long-term, this will promote productivity and enhance innovation as small businesses take on their larger counterparts on a regional, if not, global scale.
Pieter Bosman is Executive Vice-President, Sage Asia Pacific.
Gold slips as markets await US healthcare vote
[BENGALURU] Gold prices edged lower on Friday against a backdrop of a rising US dollar as markets waited to see whether US President Donald Trump succeeds in pushing through healthcare reforms, viewed as a potential bellwether for his ability to impose his economic and political agenda.
Seoul: Stocks, won subdued; Samsung group shares slip
[SEOUL] South Korean shares and the won were barely changed on Friday, as investors waited to see if US President Donald Trump can rally his party to push through a healthcare bill.
Will office property rents bottom in 2017?
Goola Warden - SINGAPORE (March 24): The prospect of interest rate hikes by the Fed used to spark panic among investors. This was due to the widely-held view that a receding tide of liquidity would spark a selloff in Asian assets that had been pumped up by years of ultra-loose monetary policy in developed economies.
Now, it seems that growth is not only recovering in the US but across much of the world. And, higher US interest rates are not likely to be a catalyst for a disorderly rout in Asian markets but a natural complement to accelerating growth and inflation.
“A ‘synchronised’ global recovery appears to be underway,” says Chua Hak Bin, an economist at Maybank Kim Eng.
One way that investors can ride the pickup in corporate capital spending in Singapore is through the city state’s well-managed stock of commercial property, much of which is held under locally listed real estate investment trusts and on the balance sheets of major property developers.
Indeed, it looks likely that ofﬁce property rents could bottom this year as demand picks up and new supply tapers off.
For most of the last two years, office rents have been weighed down by surging supply and downsizing by some tenants, notably financial services companies.
Now, some analysts and property market watchers figure the down cycle has reached a trough. And, even though interest rates will probably rise over time, surging rents could make office property REITs and the shares of some developers good investments over the next few years.
“We recommend that investors position themselves in more cyclical sectors, namely the office and industrial REITs, specifically the business parks and hi-tech segments. In addition, with the supply for both sectors easing from next year, we believe the prospects of a recovery in spot rents next year are increasing, which is supportive of our positive stance,” says DBS Research in a March 17 report.
Alan Cheong, senior director of the research and consultancy unit at Savills, sees office rents bottoming out this year.
“After last year’s y-o-y decline of 5.8%, we are forecasting gross rents for CBD Grade offices in 2017 to fall by 10%. Thereafter, from 2018, the rental market should start to recover, with a 0.6% rise followed by another 6.2% y-o-y increase in 2019,” he says.
After several years of very low interest rates and ample liquidity, the valuations of commercial properties have inflated to the point of testing traditional benchmarks.
Against this backdrop, REITs offer a relatively safe means of gaining exposure to rebounding office rents.
Among the office property REITs, CapitaLand Commercial Trust (CCT) is likely to be among the least affected by higher debt costs as interest rates rise, according to Morgan Stanley. It also looks certain of delivering decent DPU growth over the next two years.
Which other REITs and property stocks are poised to beneﬁt from the cyclical upturn? Are rising interest rates a risk?
Find out more in our cover story, “Trough Times”, on pages 14-16 of The Edge Singapore (week of March 27), available at newsstands now.
Huishan Dairy sinks 85% in Hong Kong
[HONG KONG] Shares of China Huishan Dairy Holdings Co sank by a record 85 per cent in Hong Kong before the company halted trading.
Credit Suisse says CEO Thiam paid 11.9m swiss francs in 2016
[ZURICH] Credit Suisse Chief Executive Tidjane Thiam received 11.9 million Swiss francs (S$16.728 million) in 2016, Switzerland's second-biggest bank disclosed in its annual report on Friday.
Samsung Elec rejects calls for holding company structure, for now
Samsung Electronics Co Ltd on Friday said it will not adopt a holding company structure for now, rejecting demands from U.S. activist hedge fund Elliott Management and putting off a long-anticipated restructuring.
Effissimo says expects long-term price gains with Toshiba stake purchase
[TOKYO] Singapore-based fund Effissimo, which has given embattled Toshiba Corp a rare vote of confidence with its purchase of 8 per cent stake this month, said on Friday the holding was for pure investment purposes and it expected long-term price gains.
Tokyo: Stocks close higher on cheaper yen, Toshiba soars
[TOKYO] Tokyo stocks rose Friday as a cheaper yen lifted exporters, while troubled Toshiba soared on renewed optimism it will be able to work through huge losses at its US nuclear unit.
How a border tax could divide Boeing and its suppliers
Today - SEATTLE - A U.S. tax overhaul proposed by Republican leaders in Congress would deepen divisions between big manufacturers like Boeing Co and the thousands of smaller companies that supply them, according to suppliers and tax and trade experts.
All drill, no frack: U.S. shale leaves thousands of wells unfinished
Today - NEW YORK - U.S. shale producers are drilling at the highest rate in 18 months but have left a record number of wells unfinished in the largest oilfield in the country – a sign that output may not rise as swiftly as drilling activity would indicate.
Banks lift Australian shares; NZ posts biggest weekly loss of 2017
[BENGALURU] Australian shares rose on Friday, with financials accounting for about half of the gains after banks hiked mortgage rates for speculative buyers as part of a campaign by regulators to cool a hot housing market.
Australia, NZ dollars at 1-week lows as US reflation trade falters
[SYDNEY] The Australian and New Zealand dollars skidded to one-week lows on Friday as investors fretted about the outlook for US fiscal stimulus as President Donald Trump struggled to get his healthcare bill passed.
Dollar, stocks inch up as US healthcare vote back on
The dollar recouped a little lost ground on Friday amid signs a delayed vote on President Donald Trump's healthcare bill would go ahead later in the day, though it remained unclear whether it would pass.
Poll finds unprecedented uncertainty among French voters before presidential election
[PARIS] A month before the first round of France's presidential election, 43 per cent of voters are hesitant about who to vote for, a poll said on Friday, underlining the uncertainty surrounding the volatile election campaign.
Hong Kong charges ship captain over Singapore's Terrex vehicles
[HONG KONG] Hong Kong on Friday charged a ship's captain over the transport of nine Singapore armoured troop carriers without a proper licence, which embroiled the two cities and China in a diplomatic dispute.
Singapore industrial output up 12.6% in Feb
Cai Haoxiang -
SINGAPORE'S manufacturing output rose 12.6 per cent in February compared to a year ago, driven by continued growth in the semiconductor and precision engineering space.
Singapore’s manufacturing output up by 12.6% y-o-y in February, led by electronics
Today - SINGAPORE - The Republic's manufacturing output grew by 12.6 per cent year-on-year last month, backed by strong growth in the electronics and precision engineering clusters, showed data by the Economic Development Board (EDB) on Friday (March 24).
China-Singapore project making progress
Cai Haoxiang -
BILATERAL project Sino-Singapore Guangzhou Knowledge City said it has broken ground for a neighbourhood centre development and launched a platform for businesses and start-ups.