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[Latest] MAS replies to Bloomberg: Hongkan lah! No credit risk here becos PAP best!

Rogue Trader

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[h=1]Singapore Home Sales Fall as MAS Sees Market Stabilizing

By
Sharon Chen and Pooja Thakur - Jan 15, 2014

Singapore home sales fell to a four-year low and the central bank said the nation’s
property market is stabilizing.

Annual home sales dropped 33 percent to 15,301 units in 2013, according to government data released today. New
housing loans have declined and household balance sheets are strong, the Monetary Authority of Singapore wrote in an e-mailed statement to Bloomberg News today after a Forbes article this week said the city is headed for an “Iceland-style meltdown.”

Singapore unveiled new rules last year governing how financial institutions grant property loans to individuals, in addition to previous curbs including new taxes and higher downpayments. Fourth-quarter home
prices slid for the first time in almost two years, trimming annual gains to the smallest since 2008 as mortgage curbs cooled prices in Asia’s second-most expensive housing market.

“The government and MAS have taken decisive steps to cool property demand and prevent excessive leverage,” the central bank said. “Singapore’s banks are resilient, with strong financial and capital positions.”

Singapore’s home sales plunged 82 percent to 259 units in December from a year ago, the lowest since January 2009.

Record
home prices amid low interest rates had raised concerns of a housing bubble and prompted the government to widen the campaign that started in 2009 to curb speculation in the property market.

“The measures have impacted sales last year especially after the loan curbs in June,” said Lay Keng Lee, head of Singapore research at DTZ. “We don’t see a rollback of the measures yet as it is too early for that, so sales may decline to between 12,000 and 15,000 units this year.”

‘Extremely Unlikely’

Iceland’s economy was pushed into recession when its three largest banks defaulted on $85 billion within weeks of each other in October 2008. The meltdown forced the government to seek a bailout from the
International Monetary Fund and implement capital controls.

“The central bank here has been more wary of excessive lending since the 1998 financial crisis,” said Song Seng Wun, an economist at CIMB Group Holdings Bhd. in Singapore. “The risk of Singapore heading in the direction of Iceland is extremely unlikely and there are enough analysts from reputable investment banks and credit-rating agencies on the ground here to flag that if such a risk were to emerge.”

Price Drop

The city-state’s private residential property
price index fell 0.8 percent to 214.5 points in the three months ended Dec. 31, after it added 0.4 percent in the third quarter, according to preliminary figures released by the Urban Redevelopment Authority earlier this month.

The index drop was the first since the January-to-March quarter of 2012. Prices increased 1.2 percent in 2013, lower than the 2.8 percent gain in 2012, data showed. That’s the smallest annual increase since prices slid 4.7 percent in 2008, the data showed.

The stock
index tracking 50 property-related companies in the city rose 0.5 percent to 705.83 as of 1:44 p.m. in Singapore. The gauge fell about 10 percent last year, compared with a 48 percent increase in 2012.

Developers are beginning to cut prices in existing and new projects and take lower profit margins, City Developments Ltd.,
Singapore’s second-largest developer, said on Nov. 12.

A new loan framework announced by the central bank in June required lenders to take a borrower’s debt into consideration when granting mortgages. Home loans should not lead to a borrower’s total debt-servicing ratio rising above 60 percent and those that do will be considered imprudent, the monetary authority said in June.

To contact the reporters on this story: Sharon Chen in Singapore at
[email protected]; Pooja Thakur in Singapore at[email protected]

To contact the editor responsible for this story: Stephanie Phang at
[email protected][/h]
 

wMulew

Alfrescian
Loyal
Re: [Latest] MAS replies to Bloomberg: Hongkan lah! No credit risk here becos PAP bes

Dumfuck scenario highlighted by the retarded article from Forbes

Property crash
Asean Economy crash
Asian Economy slowdown

All happened in 97 crisis. Singapore recovered in 1 year. Dumbfuck author from forbes should do his homework. We didnt even have to pull out our reserves. The retard under estimated the brilliance of the SG government economic management.
 

Rogue Trader

Alfrescian (Inf)
Asset
Re: [Latest] MAS replies to Bloomberg: Hongkan lah! No credit risk here becos PAP bes

Don't worry sinkies! 152nd is here to save the economy!

Chilly reception to S'pore's 'Iceland' tag

122528%20-%2022_06_2005.jpg


Victoria Barker
MyPaper
Thursday, Jan 16, 2014

SINGAPORE- A Forbes article on the state of Singapore's economy which has gone viral has raised a storm, with economists here offering differing views on its credibility.

American economic analyst Jesse Colombo claimed that the Republic is facing a dangerous credit bubble fuelled by low interest rates and heading towards an "Iceland-style meltdown".


On Tuesday, the Monetary Authority of Singapore categorically refuted this. "Singapore is not facing a credit bubble that puts the country or its banking system at any risk of crisis," a spokesman said, adding that "serious observers and investors are not in doubt about the country's financial health".


Among Mr Colombo's claims:


Singapore has a credit bubble, which started soon after interest rates fell below 1 per cent. Outstanding private-sector loans have risen 133 per cent since 2010.


It also has a property bubble, with prices up 60 per cent since 2009. Mortgage loans have grown at 18 per cent each year for the past three years.


Seventy per cent of Singapore's mortgages have floating interest rates.


Cheap credit is also fuelling a construction bubble.


The financial-services industry grew 163 per cent between 2008 and 2012, which is not sustainable.

Singapore's bubble will pop if the bubbles in emerging markets and China, where Singapore has invested heavily, pop, and interest rates rise.

CIMB economist Song Seng Wun disagrees. "To say the authorities are blind to the risk (of overleveraging) is a bit excessive," he told MyPaper. "This region has gone through the (1997) Asian financial crisis... measures taken by regulators suggest they are much more mindful of the risk of excesses brought about by cheap lending."

Mr Yeoh Lam Keong, a senior adjunct fellow at the Institute of Policy Studies, called the article "insightful in many ways" and said it "correctly" points out the dangers of real-estate-based asset bubbles in Asia.

These, together with overinvestment in construction due to depressed global interest rates and debt-fuelled expansions, are "very likely to lead to crashes in these sectors when prices of real estate and construction activity take a deep fall", he said.

Though the risk of the real-estate bubble popping is high, he said "a recession here is very unlikely and, thus, a banking crisis is also unlikely".

The article raised doubts about the Government's ability to handle cyclical shocks to the economy, noted Barclays Capital economist Leong Wai Ho. "We are not invulnerable to such shocks," he said. "(But) the key is to stabilise the labour market quickly, which heralds the quick return of confidence...Singapore has (previously) managed to do this."

In a Facebook post, Lee Kuan Yew School of Public Policy senior fellow Donald Low called the article "far too sweeping".

Property prices may fall 10 per cent this year, said Mr Low. But even if they fall 20 per cent, the health of the banks and households will not be affected.

"There will be households that have negative equity, but as long as they have the cash flow to service their mortgages, it will not precipitate a financial crash," he said.

Still, he mostly agrees with Mr Colombo's point that booms led by real-estate development and the financial sector are "mostly illusory". "They create the impression of economic dynamism without creating any real productive capacity in the economy," said Mr Low.



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Rogue Trader

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Re: [Latest] MAS replies to Bloomberg: Hongkan lah! No credit risk here becos PAP bes

152th: this young fella is another doomsayer

Who is Jesse Colombo?


MY_20140116_VBECON16A_P_98895.jpg

Mr Colombo, 28, is known as "The bubbleologist".

Victoria Barker
MyPaper
Thursday, Jan 16, 2014

SINGAPORE- His preoccupation with credit bubbles has reportedly led to this nickname: The "bubbleologist".

Jesse Colombo, also a columnist at Forbes.com, has garnered major attention with a report titled "Why Singapore's Economy Is Heading For An Iceland-style Meltdown".

According to his website, the French-born American, 28, was recognised by The Times of London in 2008 for predicting the United States housing and credit bubble.

Contacted by MyPaper via e-mail yesterday, Mr Colombo, a graduate of Stony Brook University in New York, shared his views on the Monetary Authority of Singapore's (MAS') response on the Republic's financial health.

MAS said: "It is clear that unusually low global interest rates have stimulated credit growth and an increase in property prices in recent years...That is why the Government and MAS have taken decisive steps to cool property demand and prevent excessive leverage."

Mr Colombo argues: "These measures have slowed the increase in property prices somewhat, but they're still at already-inflated levels and are overvalued, plus mortgage debt outstanding has not declined either after its fast run-up.

"I also called them a "Band-Aid on a flesh wound."


He adds: "Property curbs have (also) not slowed the growth rate of loans to Singapore's private sector."

MAS had also pointed to an assessment by the International Monetary Fund (IMF) that found Singapore's financial system would remain sound "even under severe stress scenarios", such as a sharp increase in interest rates and steep drop in property prices.

Mr Colombo counters: "What they are not accounting for is a regional crisis from South-east Asia to China, as all of those areas have large bubble economies.

"Singapore's financial sector, which has been a primary driver of the country's growth, is heavily investing and lending in the ASEAN region...very strong chance that multiple crises may hit at once, from the popping of Singapore's housing bubble, to a regional ASEAN crisis to a crisis in China."



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