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Expert says Sinkie banks will suffer big losses, time to get out of bank stocks

Papsmearer

Alfrescian (InfP) - Comp
Generous Asset
Forget about Europe, investor tips Singapore banking crisis

While investors fret about the carnage in European bank stocks, some analysts are warning that they're ignoring problems much closer to home: the possibility of an Asian banking crisis.

Legendary Swiss investor Felix Zulauf, who runs Zulauf Asset Management, was one of the first to sound the alarm, warning that China's economic woes would inevitably infect Singapore and would probably prompt a banking crisis.

"Singapore, which has attracted a lot of foreign capital over the years because of its image as a strong-currency state, will be extremely exposed to the situation in China," Zulauf told Barron's Roundtable in January.

"Singapore's banking-sector loans have grown dramatically in the past five or six years. Singapore is now losing capital, which means the banking industry is losing deposits."

He said this would probably cause carry trades to backfire, triggering heavy losses for those who had borrowed heavily to buy higher-yielding assets.

"I expect a banking crisis to develop in Singapore and to spread eventually to Hong Kong," he said.

But Zulauf isn't alone in worrying about the financial health of Singapore's large banks. Analysts say Singapore's three largest banks – DBS, Oversea-Chinese Banking Corp and United Overseas Bank – could suffer a sharp spark in problem loans if the Chinese economy brakes sharply.
Big corporate loan books

After all, all three are big lenders in the Asian region, with significant corporate loan books. The three banks could face a big jump in their problem loans if there is a spate of defaults by debt-laden Chinese companies, or from other companies in the region whose earnings are already tumbling as a result of flagging Chinese growth.

Investors are already showing a skittishness about the banks. Although Singapore's stock exchange has been closed this week because of Chinese New Year, fears about the hefty exposure of Singapore's three biggest banks to mainland China have been weighing on their share prices.

The share price of DBS has slumped almost 30 per cent in the past year, while Oversea-Chinese Banking Corporation is down 27 per cent and United Overseas Bank, which has lower exposure to China, has declined 23 per cent.

Meanwhile, jitters over the exposure of Asian banks to China is causing global investors to withdraw funds from Singapore, which has helped push the Singapore dollar close to a six-year low.

It's a similar problem in Hong Kong, where capital outflows appear to be accelerating as investors worry about the huge exposure the city's large banks have to Chinese borrowers.

Analysts say this could create a liquidity problem for Hong Kong's banks because while global investors are able to withdraw their funds quickly from this deregulated financial centre, local banks face a much tougher task in extracting their cash from mainland China.
Nervousness about house prices

In addition, capital outflow is putting upward pressure on short-term interest rates, and fuelling nervousness about the outlook for housing prices in Hong Kong, which have already fallen almost 10 per cent from their September peak.

The Hong Kong dollar recently touched a seven-and-a-half-year low against the US dollar, amid growing speculation the city will be forced to end its currency peg with the greenback.

These worries are already being reflected in sharp slides in the share prices of British-listed banks such as HSBC and Standard Chartered, both of which are estimated to derive about a third of their revenue from China.

HSBC's share price dropped a further 1.4 per cent in trading overnight, while Standard Chartered dropped 5.6 per cent.

In the past year, HSBC's share price has tumbled 29 per cent, while Standard Chartered's share price has had a stunning 55 per cent decline.

Read more: http://www.afr.com/business/banking...-banking-crisis-20160209-gmpzfp#ixzz3zpOJDJVk
Follow us: @FinancialReview on Twitter | financialreview on Facebook
 

kukubird59

Alfrescian
Loyal
hahaha...truly an attention seeking whore...
there re already threads on this topic and the resident empty vessel must start one....no surprise here...
what is surprising is that so far no PLPs have reported in to masturbate him yet...lol.
 

bigboss

Alfrescian
Loyal
Capital will flee to where there is political stability, and since sinkie land is as solid as a rock under the pappies, unlike the mat land up north, banking crisis may just be a bad storm but it will blow over.

As for mat land and other countries with political turmoil, the storm may swipe in as the tornado to cause severe damage. If pappies are still vigilant and do not put their heads in the cloud, sinkie land will not falter.
 

BuiKia

Alfrescian (InfP)
Generous Asset
Not surprising that the banks with the most ah neh is the worst performing bank.
 

frenchbriefs

Alfrescian (Inf)
Asset
Singapore might survive the crisis.but im afraid her reputation as a business hub and world class city might be tarnished forever.already the sti is bleeding like a stuck pig,down 30 percent from its peak,many businesses are declining,our growth has stalled,revenues are shrinking.the government is at a stalemate what to do and all the easy options have been exhausted.
 

numero uno

Alfrescian
Loyal
Singapore might survive the crisis.but im afraid her reputation as a business hub and world class city might be tarnished forever.already the sti is bleeding like a stuck pig,down 30 percent from its peak,many businesses are declining,our growth has stalled,revenues are shrinking.the government is at a stalemate what to do and all the easy options have been exhausted.

hahahhahahh. I was prescient all along. I correctly predicted the STI would bleed like a pig and warned alot of people to get out of China and sinkie stocks 6-8 months ago in this forum and the three stooges laughed at me and now I am laughing!!!! cash is king!!!! mother of all depression and crash is coming. expect yuan to be devalued another 20%. sinkie economy is doomed. Like I said, once LKY is gone, the whole country goes down.
 

Wunderfool

Alfrescian (Inf)
Asset
I was so concerned with what the experts said. I went to the local banks and withdrew all my monies today.
 
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eatshitndie

Alfrescian (Inf)
Asset
No scare. Deposits guaranteed by deposit insurance.

sinkie deposits are pennies to tiong bad loans. banks will have loss and write-off's as a result of bad loans, and they will need help. gov will have little choice but to extend assistance, tax more on locals, and raise cpf withdrawal age to 69. it's soixante-neuf as described in my signature. :p
 

mojito

Alfrescian
Loyal
sinkie deposits are pennies to tiong bad loans. banks will have loss and write-off's as a result of bad loans, and they will need help. gov will have little choice but to extend assistance, tax more on locals, and raise cpf withdrawal age to 69. it's soixante-neuf as described in my signature. :p

The PAP is never caught without jamban paper. We are well prepared for the runs. :cool:
 

eatshitndie

Alfrescian (Inf)
Asset
Bank deposit insurance is limited. In Spore it is only up to $50,0000. You can't evem buy a car for $50k.

While in the US it is up to $250,000.

which is wise in the u.s. not to keep savings and checking accounts with any bank beyond a balance of us$250k. if one has a million of cash to stash away for short term liquidity, one can deposit $250k in each of the 4 major banks.
 

johnny333

Alfrescian (Inf)
Asset
which is wise in the u.s. not to keep savings and checking accounts with any bank beyond a balance of us$250k. if one has a million of cash to stash away for short term liquidity, one can deposit $250k in each of the 4 major banks.


In Spore who knows what will happen if you are a "lesser mortal":confused:

Many examples of the PAP changing the rules of the game. Look at what happened to those 55 year olds who now can't withdraw their CPF. People who invested $ in the minibond fiasco lost it all. While in HK people received their money.

Remember CLOB? LHL assured investors that it was legal but investors was left high & dry when it was closed.

During the recent financial crisis a few years ago, I heard of indonesians who had term deposites in Spore who were told that they couldn't withdraw their $ & they were forced to keep the money in the banks.

PAP has a bad track record & as a "lesser mortal" it's , once bitten twice shy, at least in my case :wink:
 

yahoo55

Alfrescian
Loyal
DBS share price has crash 38% so far, today's price is $13.09


It’s official: DBS is no longer South East Asia’s largest bank

Published: 12 Feb 2016

Indonesia’s BCA snatched the crown.

Indonesian lender Bank Central Asia is now the region’s largest bank in terms of market capitalisation, toppling Singapore-based DBS from the top spot.

This chart from Bloomberg shows that BCA's market cap has exceeded US$24 billion, while DBS's market cap has dropped below this threshold.

DBS’s shares have lost 37.8% of their value since August last year. The group’s share price dropped to $13.140 per unit in Thursday’s trading, compared to its recent peak of $21.120 in August 21.

In contrast, BCA’s share price has risen 18.6% from a low of IDR 11,252 per unit in August 24 to close at INR 13,350 per share as of Thursday.

- See more at: http://sbr.com.sg/financial-service...nger-asia’s-largest-bank#sthash.QU8dolXG.dpuf
 
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