By SIOW LI SEN
 | Email this article |
 | Print article |
 | Feedback |
TURBOCHARGED bank stocks this week were said to be powered by a slew of encouraging news plus a wave of liquidity. But just glancing at recent headlines in this newspaper will show that there is still plenty of bad news out there.
Yesterday, a report said that two smallish office buildings had found buyers at prices 35 per cent below what the owners paid for them in 2007. It added that bigger discounts are expected for larger office towers before buyers can be found.
The day before that, there were sweeping changes proposed to US tax rules which could deal a painful blow to Singapore, Hong Kong, Ireland and other locations favoured by US multinational companies for their overseas operations.
While the full details are still unknown, the proposals could have 'a great impact' on Singapore, a major centre for the regional headquarters and holding companies of foreign firms in Asia, said Owi Kek Hean, head of KPMG tax services here.
A pre-May Day release on unemployment showed that a record 12,600 workers here lost their jobs in just the first quarter alone. This easily beat the previous quarterly mark of 9,410 in the final three months of 2008, as a further sign of the growing economic crisis. Prior to that, the peak was 8,590 redundancies in the last quarter of 2001, after the dotcom bubble was punctured and the United States faced the Sept 11 terrorist attacks.
The overall unemployment rate rose from 2.5 per cent last December to 3.2 per cent in March. Among the resident labour force, the unemployment rate increased from 3.6 per cent in December to a five-year high of 4.8 per cent in March.
What has yet to make the headlines is the continued departure of foreign workers and the impact on the small shops and businesses which cater to them. In addition, as highly paid expats leave, they continue to add to the downward slide in rents of luxury housing, and weakening the ability of many locals to finance their investment properties.
The bank bosses of the three local banks have warned repeatedly that bad loans will rise along with unemployment. To date, non-performing loans (NPL) at the local banks remain small, although they continue to climb.
United Overseas Bank (UOB) said that while NPLs in Singapore held steady, they declined in Malaysia and the strongest rise came from Thailand, Indonesia and Greater China. OCBC said its Singapore and Malaysian NPLs rose modestly and the biggest jumps came from other Asean countries and Greater China.
But it is early days in the cycle yet. Shareholders should remember this.
No comments:
Post a Comment