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January 2009 saw a continuation of the financial turmoil which engulfed the major banks throughout 2008. Citigroup has now officially split into two divisions – CitiCorp and Citi Holdings, while selling their brokerage Smith Barney to Morgan Stanley (thanks to comment by dream for this correction). Bank of America also saw a much needed bailout and in the UK, RBS reported a massive loss of €28 Billion and together with Lloyds and Barclays, needed a lifeline from the UK Government. It would certainly seem that the end of trouble for the banks is far from done, as more and more write-offs appear and banks are still urgently in need of capitalization to strengthen their Balance Sheet.
What I personally feel angry about is how the banks managed to wind up in this massive mess. Those who had been following the progress of this major financial crisis would have known that the trouble started from the sub-prime mortgages and CDOs, and gradually spread to other classes of debt and resulted in massive write-downs on illiquid assets. The problem is more insidious than this of course, and involves not just the banks doing lax lending (to mortgage home owners who could not pay up), but also the rating agencies such as Standard and Poors and Moodys which rated these complex debt securities as Triple-A ! I shudder to think of the amount of greed and oversight that must have occurred for such massive financial bailouts to be carried out by Governments in developed countries. One thing’s for certain – the financial system would require an entire overhaul and new regulations set in place after this crisis recedes, to ensure such events do not play out again and wipe out the wealth of millions worldwide.
The wave of corporate failures is piling up, with Jurong Technologies being the latest victim of statutory demands served by a total of six banks. In addition, many companies have been announcing profit warnings as the crisis hits demand for goods and services and causes sales and profits to be drastically reduced. In the real economy, layoffs are also being announced by local companies as well as MNC with Singapore operations, with Microsoft shocking the world by announcing the layoff of 5,000 workers. More retrenchments are set to follow as our Government has warned of worse days to come and to brace for the storm.
Singapore has unleashed its boldest Budget to date as the Government dipped into our National Reserves for the first time ever, to come up with a fiscal stimulus package to save jobs and to pump prime the economy. Assistance was also given to families and wage-earners to help them preserve jobs and to put food on the table, but sadly I felt more could have been done for those who had already lose their jobs as Singapore does not have a welfare system in place (the closest is “workfare” but this means you need to have a job to enjoy the benefits !). It remains to be seen if the Government would introduce more off-budget measures to boost the economy and help citizens if the recession worsens considerably as 2009 progresses.
In terms of corporate activity, January 2009 was another slow month (unsurprisingly) due to the worsening of the global crisis. It has become much harder for companies to secure new business as most sectors and industries are grinding to a halt as financing becomes harder to secure. FSL Trust, Ezra and Suntec REIT announced their results this month and are briefly summarized under the respective company headings. Read more...[caption id="attachment_1686" align="alignright" width="270" caption="Musicwhiz Portfolio January 2009"][/caption]
January 2009 saw a continuation of the financial turmoil which engulfed the major banks throughout 2008. Citigroup has now officially split into two divisions – CitiCorp and Citi Holdings, while selling their brokerage Smith Barney to Morgan Stanley (thanks to comment by dream for this correction). Bank of America also saw a much needed bailout and in the UK, RBS reported a massive loss of €28 Billion and together with Lloyds and Barclays, needed a lifeline from the UK Government. It would certainly seem that the end of trouble for the banks is far from done, as more and more write-offs appear and banks are still urgently in need of capitalization to strengthen their Balance Sheet.
What I personally feel angry about is how the banks managed to wind up in this massive mess. Those who had been following the progress of this major financial crisis would have known that the trouble started from the sub-prime mortgages and CDOs, and gradually spread to other classes of debt and resulted in massive write-downs on illiquid assets. The problem is more insidious than this of course, and involves not just the banks doing lax lending (to mortgage home owners who could not pay up), but also the rating agencies such as Standard and Poors and Moodys which rated these complex debt securities as Triple-A ! I shudder to think of the amount of greed and oversight that must have occurred for such massive financial bailouts to be carried out by Governments in developed countries. One thing’s for certain – the financial system would require an entire overhaul and new regulations set in place after this crisis recedes, to ensure such events do not play out again and wipe out the wealth of millions worldwide.
The wave of corporate failures is piling up, with Jurong Technologies being the latest victim of statutory demands served by a total of six banks. In addition, many companies have been announcing profit warnings as the crisis hits demand for goods and services and causes sales and profits to be drastically reduced. In the real economy, layoffs are also being announced by local companies as well as MNC with Singapore operations, with Microsoft shocking the world by announcing the layoff of 5,000 workers. More retrenchments are set to follow as our Government has warned of worse days to come and to brace for the storm.
Singapore has unleashed its boldest Budget to date as the Government dipped into our National Reserves for the first time ever, to come up with a fiscal stimulus package to save jobs and to pump prime the economy. Assistance was also given to families and wage-earners to help them preserve jobs and to put food on the table, but sadly I felt more could have been done for those who had already lose their jobs as Singapore does not have a welfare system in place (the closest is “workfare” but this means you need to have a job to enjoy the benefits !). It remains to be seen if the Government would introduce more off-budget measures to boost the economy and help citizens if the recession worsens considerably as 2009 progresses.
In terms of corporate activity, January 2009 was another slow month (unsurprisingly) due to the worsening of the global crisis. It has become much harder for companies to secure new business as most sectors and industries are grinding to a halt as financing becomes harder to secure. FSL Trust, Ezra and Suntec REIT announced their results this month and are briefly summarized under the respective company headings. Read more...
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January 2009 saw a continuation of the financial turmoil which engulfed the major banks throughout 2008. Citigroup has now officially split into two divisions – CitiCorp and Citi Holdings, while selling their brokerage Smith Barney to Morgan Stanley (thanks to comment by dream for this correction). Bank of America also saw a much needed bailout and in the UK, RBS reported a massive loss of €28 Billion and together with Lloyds and Barclays, needed a lifeline from the UK Government. It would certainly seem that the end of trouble for the banks is far from done, as more and more write-offs appear and banks are still urgently in need of capitalization to strengthen their Balance Sheet.
What I personally feel angry about is how the banks managed to wind up in this massive mess. Those who had been following the progress of this major financial crisis would have known that the trouble started from the sub-prime mortgages and CDOs, and gradually spread to other classes of debt and resulted in massive write-downs on illiquid assets. The problem is more insidious than this of course, and involves not just the banks doing lax lending (to mortgage home owners who could not pay up), but also the rating agencies such as Standard and Poors and Moodys which rated these complex debt securities as Triple-A ! I shudder to think of the amount of greed and oversight that must have occurred for such massive financial bailouts to be carried out by Governments in developed countries. One thing’s for certain – the financial system would require an entire overhaul and new regulations set in place after this crisis recedes, to ensure such events do not play out again and wipe out the wealth of millions worldwide.
The wave of corporate failures is piling up, with Jurong Technologies being the latest victim of statutory demands served by a total of six banks. In addition, many companies have been announcing profit warnings as the crisis hits demand for goods and services and causes sales and profits to be drastically reduced. In the real economy, layoffs are also being announced by local companies as well as MNC with Singapore operations, with Microsoft shocking the world by announcing the layoff of 5,000 workers. More retrenchments are set to follow as our Government has warned of worse days to come and to brace for the storm.
Singapore has unleashed its boldest Budget to date as the Government dipped into our National Reserves for the first time ever, to come up with a fiscal stimulus package to save jobs and to pump prime the economy. Assistance was also given to families and wage-earners to help them preserve jobs and to put food on the table, but sadly I felt more could have been done for those who had already lose their jobs as Singapore does not have a welfare system in place (the closest is “workfare” but this means you need to have a job to enjoy the benefits !). It remains to be seen if the Government would introduce more off-budget measures to boost the economy and help citizens if the recession worsens considerably as 2009 progresses.
In terms of corporate activity, January 2009 was another slow month (unsurprisingly) due to the worsening of the global crisis. It has become much harder for companies to secure new business as most sectors and industries are grinding to a halt as financing becomes harder to secure. FSL Trust, Ezra and Suntec REIT announced their results this month and are briefly summarized under the respective company headings. Read more...
