Published June 26, 2009

Board defers request to appoint Najib aide

By S JAYASANKARAN
IN KUALA LUMPUR

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THE board of Petroliam Nasional, or Petronas, has deferred a request to appoint Omar Mustapha, a key aide of Prime Minister Najib Razak, to the board of the national oil corporation.

According to oil industry officials, the decision to defer Mr Omar's candidacy was made on Wednesday after the board met to approve the oil firm's financial results for the year.

The officials said that the board wanted to personally explain its position to Mr Najib who had made the request in the first place.

Previously the board had rebuffed Mr Omar's candidacy on the grounds that he had defaulted on the conditions of scholarship given to him by Petronas more than 20 years ago. Mr Omar, 38, had served in the oil firm only briefly before leaving for higher studies overseas - a move that, theoretically, left him in breach of the provisions of the scholarship.

According to an earlier news-report in The Straits Times, Mr Najib had asked the board to reconsider its position on Mr Omar's candidacy. Given the board's latest position on Wednesday, it appears that it remained unmoved.

The oil firm's seemingly uncompromising position on the matter symbolises the relative independence of its board, a characteristic that has been a hallmark of Petronas since its inception since 1974, The tradition has been carried on by its current chairman and chief executive Hassan Merican.

Mr Hassan, however, declined to comment on the matter when asked during a media briefing on the oil firm's financial results.

The initial reports that Mr Omar, one of the premier's key advisers on economics and finance, was to be appointed to Petronas's board first appeared in several prominent blogs and was harshly criticised by various commentators.

Even former prime minister Mahathir Mohamad, who is an adviser to Petronas, got into the act when he criticised the possibility of Mr Omar's joining the board saying it wasn't a good idea to have political appointees on Petronas's board because they 'might have a different agenda'.

Mr Omar, an Oxford-trained economist, worked in Petronas briefly before joining McKinsey and Company where he served in London and Kuala Lumpur. He then founded Ethos, a consultancy company in Kuala Lumpur, before joining Mr Najib as a special assistant.

When the news first surfaced on the blogs, it was speculated that Mr Omar was being groomed for Mr Hassan's job because the succession plans for Petronas remain unclear.

Mr Hassan's contract expires in February and, according to market speculation, he could be replaced as the oil firm's chief executive but would retain his chairmanship. But given his deft management of Malaysia's most profitable company, his would be a very hard act to follow.

Published June 26, 2009

Petronas profit dips 14% to RM52.5b

Dividend to be paid to federal govt rises 25%, despite fall in earnings

By S JAYASANKARAN
IN KUALA LUMPUR

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MALAYSIA'S national oil corporation Petroliam Nasional, or Petronas, registered a 13.9 per cent decline in net profit to RM52.5 billion (S$21.7 billion) for the year to March 31, 2009 on the back of RM264.2 billion in sales largely due to lower global prices for oil and high operating costs.

Challenging times: Petronas reinvested only 21% of its profits during its financial year - significantly lower than the average 57% for the oil majors

'It's been a hugely challenging year,' Petronas chief executive Hassan Merican told reporters yesterday. 'The industry has moved from a 'high price-high cost' environment to one that is 'low price-high cost' and it has tested the resilience of all its players.'

Despite the lower bottom line, however, Petronas declared a RM30 billion dividend to the federal government, 25 per cent higher than the previous year. Indeed, total payments to the government - including royalties, taxes and dividends - rose 20 per cent to RM74 billion.

The heroic figures illustrate the disproportionate importance of Petronas on government revenues and the economy at large. By its own calculations Petronas's payments contributed 45 per cent of the federal government's revenues in 2008.

Indeed, much of the oil firm's fees to the government seemed to have come during the tenure of former prime minister Abdullah Ahmad Badawi. Between 2003 and 2008, Petronas contributed RM268 billion to Kuala Lumpur, or 57 per cent of whatever the oil firm paid the government since its inception 35 years ago.

All that money given back to the government also works against the oil firm as it reinvested only 21 per cent of its profits during its financial year - significantly lower than the average 57 per cent for the oil majors and the 72 per cent that other national oil corporations ploughed back into the industry.

Pressed on whether he was under pressure from the government to continue delivering high dividends to plug Kuala Lumpur's budget deficit, Mr Hassan replied that he was under 'no pressure at all' and clarified that there had been times 'especially in the 1990s' when the government allowed the firm to reinvest locally and abroad in a big way.

But he also conceded that the firm would be in a 'better position of comfort' if it could reinvest up to 35 per cent of its profits.

There is no doubt that it has been reinvestment, especially overseas, that has enabled Petronas to become a major global player and Malaysia's only Fortune 500 company.

During the period under review, the firm's international operations contributed 42 per cent of revenue. A further 37 per cent came from exports while only 21 per cent came from domestic operations.

Reinvestment of the firm's profits has also boosted its oil reserves. During the period under review, Petronas boosted its reserves marginally to 20.18 billion barrels of oil equivalent with new finds in increasingly complex geological areas: almost 15 per cent of reserves exist in very deep waters. Meanwhile, the firm's international reserves rose almost 10 per cent to 6.84 billion barrels of oil equivalent.

Mr Hassan said he did not expect oil prices, currently close to US$70 a barrel, to improve any time soon. 'The fundamentals do not justify the prospect of high prices,' he said. 'The demand is down and spare capacity has increased. My own opinion is that the current prices are due to speculative trading and the depreciation of the US dollar.'

Published June 26, 2009

Hyflux shares soar on Libya project news

It will build and own a 49% share in two plants in Tripoli and Benghazi

By CHEW XIANG

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SHARES of Hyflux surged as much as 18 cents or almost 9 per cent yesterday after the company announced that it will build two water desalination plants in Libya.

It's a deal: Olivia Lum, Hyflux Group CEO, president and managing director (left) with Abubaker Awidat, Libya's Undersecretary of the General People's Committee for Public Utilities at the signing of a memorandum of agreement between both parties

The stock closed trading at $2.24, up 16 cents or 7.7 per cent with 6.8 million shares changing hands for the day.

Hyflux did not say how much the projects are worth, saying that negotiations on technical and financial details are still ongoing, but analysts put the value at as much as $1.5 billion.

OCBC analyst Carey Wong said that the project value of the two jobs 'should easily exceed $1 billion (to as much as $1.5 billion) and would bump up Hyflux's order book for the next three years'.

Hyflux, now building the world's largest membrane desalination plant in Magtaa, Algeria, will own a 49 per cent share in the two plants in Tripoli and Benghazi, neighbouring Libya's two largest cities. Total capacity of the two plants is at least 900,000 cubic metres a day, almost double the Magtaa plant's 500,000 cubic metres. According to preliminary agreements, 80 per cent of the projects will be funded by debt.

Analysts put the value of the two desalination projects at as much as $1.5b.

DBS Vickers analyst Tan Ai Teng said that the funding structure was clearly favourable to Hyflux as project financing should not be difficult to secure given that its partner is a state-owed entity. As well, the equity portion, estimated at about $100 million, could be funded by a deposit paid for the engineering, procurement and construction (EPC) work for the plants, which will be fully undertaken by Hyflux.

CIMB analyst Gary Ng said that assuming financial close is achieved in FY2010, 'the two Libyan plants are estimated to be fully completed in FY2014, thereby adding a progressive earnings stream for the next few years'. He estimated that the deals could add $1.3 billion to the company's existing order book, 'based on a typical EPC model of US$1,000 for every cubic metre/day'.

Analysts, however, stayed cautious in updating their earnings projections as the actual agreements have yet to be signed. JP Morgan's Chan Ying-Jian said: 'We have not included the earnings and valuation contributions from these projects so we expect upside risk to our price target.'

Key risks are likely to be hiccups in the negotiation process that will end up in the annulment of the agreement as well as possible turbulence in Libyan politics, said DBS Vickers' Ms Tan. The terms of the final deal could also turn out significantly inferior compared to initial expectations, she said. She nevertheless upgraded the stock to 'buy' from 'hold', with a new one-year target price of $2.82, up from $2.05.

Mr Chan, who maintained his call and price target, said: 'We stay cautious on potential geo-political risk factors, as the market may award a risk premium on these projects until management proves itself on the execution front.'

Published June 26, 2009

Hyflux bets against North Africa's past

By CHEW XIANG

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ALMOST 14 months ago, Hyflux announced that it had won a $630 million contract to build a mammoth desalination plant in Magtaa, Algeria.

At the time, BT urged caution in this same column. The company had been burnt by a previous unsuccessful foray into the Middle East with a Dubai partner in 2006. The rates at which it bid for and won the Magtaa contract were astonishingly competitive. Would that hurt earnings? Would Algeria be Dubai redux? These were among the questions that arose.

Hyflux has responded with another coup. Earlier this week, it signed a memorandum of agreement with General Desalination Company, the corporate arm of the Libyan Ministry of Utilities. This would see Hyflux building two mammoth desalination plants in Libya's two biggest cities, Tripoli and Benghazi, with total capacity of at least 900,000 cubic metres a day. That's almost twice that of the Magtaa plant now under construction, which can produce 500,000 cubic metres a day.

Details of cost and financing have yet to be announced but analysts have put the value of the deals at up to S$1.5 billion. They also hailed the deals as providing some earnings visibility in the years ahead, especially given the recent lack of big contract wins, especially in China.

OCBC analyst Carey Wong said: 'We believe that the latest geographical expansion into Libya is an important milestone for Hyflux and would further serve to showcase its technologies to the rest of the world, and should result in more project wins.'

And encouragingly, raw material and construction costs appear to be moderating. Last year, higher than expected costs meant that construction profit from an earlier 200,000 cubic metre per day desalination plant in Tlemcen, Algeria was coming below expectations. This year, 'raw materials and consumables used and subcontractors' costs decreased by 9 per cent from $66 million for the first quarter (ended) March 31 2008 to $59.9 million for the first quarter ended March 31, 2009, in line with the lower global commodity costs,' Hyflux said in its most recent financial report.

As well, its strategy of taking a minority stake in the projects - while reserving for itself all of the revenue and profits from construction and engineering work - means it will not have to consolidate debt taken on to finance the building of the plants onto its balance sheet, a relief, given that some have expressed concern about its relatively high gearing.

There are risks, however. Much will depend on Hyflux's ability to execute its projects well, and the company has realised this.

Chief executive officer Olivia Lum has stated just that as the main priority for the company, ahead of winning projects, and has invested heavily in manpower.

But there are risks beyond the company's control. The country has moved mountains to rid itself of pariah nation status since the late 90s - Italy recently agreed to pay Libya US$5 billion as reparations for colonial-era disputes. Other Singapore companies with a presence there include Boustead and Hotel Properties Limited and there have been significant high-level meetings between government officials on both sides. In April, Singapore and Libya signed investment guarantee and double taxation avoidance agreements.

But the country - in theory a democracy of thousands of small communes - is still very much influenced by one man - the 67-year-old Muammar Gadaffi. His possible successor and son, Saif Al-Islam, is a reformist, who in a Forbes interview said that he saw Singapore as a model for Libya's future development.

But reports say that he could be losing ground to conservatives opposed to his plans to liberalise the country's economy and political system. A television station linked to Mr Saif was reportedly shut down in May. His links with Singapore could count against Hyflux should the country be roiled by political uncertainty.

First Algeria, now Libya - Hyflux has, more than any other Singapore-listed company, connected itself to the success and stability of North Africa. Unfortunately, that is a region that in recent history has seldom enjoyed both. Investors should hope it can defy the past.

Published June 26, 2009

Outlook for Singapore banks negative: Moody's

Rating agency also has negative outlook for Asian banking industry

By LYNETTE KHOO

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MOODY'S Investors Service says the outlook for Singapore banks and the Asian banking industry is negative as it expects a substantial increase in non-performing loans (NPLs) amid rising corporate defaults.

For Singapore banks, 'NPL will peak sometime next year', said Deborah Schuler, Moody's senior vice-president and group credit officer for Asian financial institutions.

Ms Schuler was speaking at the release of Moody's latest annual Asian Banking System Outlook, which covers 16 jurisdictions.

In Singapore, loan demand has softened, while credit costs are rising as the ability of borrowers to repay has been gradually impacted, the report says. Market-sensitive income is also likely to remain volatile.

These banks have seen an increase in NPLs in the fourth quarter of 2008 and the first quarter of this year. More NPLs are likely to come from corporate defaults, Ms Schuler noted, as the increase in credit cards delinquencies has been minor and remains lower than the levels seen three to four years ago.

Moody's has negative outlook for Singapore banks on two counts: the financial strength ratings, and long-term deposit and debt ratings. But it has a stable outlook on country ceiling for foreign currency bank deposits.

The combined assets of the three local banks represented 241 per cent of gross domestic product (GDP) at end-2008.

Ms Schuler noted that the multinational corporations (MNCs) here face higher risk of defaults than big local firms, many of which are Temasek-linked companies. It remains unclear how many of these MNCs were picked up as clients by local banks last year when troubled foreign banks pulled back on some of these MNCs.

But even in a severe downturn, Moody's expects the banks 'to remain solidly positioned within the Aa rating band' thanks to their strong franchises, healthy credit profiles, well-capitalised balance sheets and strong support from the government, the report says.

For Asian banks as a whole, Moody's expects further deterioration of earnings as loans growth shrinks and asset quality weakens, driving NPLs higher.

'Such developments should not be a surprise, given bad loans typically lag GDP numbers,' the Moody's report says.

The rating agency has a negative outlook for the banking industry in the region given the uncertainty of a swift economic recovery.

There is also the uncertainty of whether the recent surge in wealth across Asia can generate sufficient levels of consumption to compensate for the lower demand from the United States and other developed economies.

'Asians save a lot of money and if they start spending, it would help,' Ms Schuler said. 'Unfortunately, what we are seeing in Asia is that governments are trying to stimulate the economies but consumers are worried and are hanging onto their cash and putting it in banks.'

The region's very high levels of single-borrower concentrations also raise asset quality risk. Moody's recent survey of single-client exposures at banks in Asia (ex-Japan) shows their credit portfolios as significantly more concentrated than those in North America.

But Moody's bank ratings in most Asian countries and territories - including Hong Kong, China, New Zealand, Australia, Cambodia, Indonesia, Philippines and Taiwan - remain largely stable as they have entered this crisis with stronger capital and liquidity, and improved risk management.

Published June 26, 2009

Current quarter sees big jump in property investment sales

By KALPANA RASHIWALA

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(SINGAPORE) Investment sales of Singapore real estate so far this quarter have hit $953.9 million, a jump of 248 per cent from $273.8 million in the first quarter, says CB Richard Ellis (CBRE).

The increase came as residential investment sales quadrupled on the back of a growing number of high-end condo purchases, a pick-up in transactions of Good Class Bungalows (GCBs) and the acquisition of a few small residential sites.

The sale of three office blocks - Parakou and VTB buildings on Robinson Road, and Anson House - for a total of $259.6 million also helped breathe some life into the moribund office investment sales market.

Investment sales are a gauge of developers' and investors' medium to long-term confidence in the property sector. The pick-up in Q2 was against the backdrop of a dramatic stock-market rally that has led to an improvement in home buying.

CBRE defines investment sales as transactions with a value of at least $5 million, comprising government and private sales of land and buildings, both strata and en bloc. It also includes change of ownership of real estate via share sales.

With a tally of $1.2 billion so far in the first half, CBRE executive director (investment properties) Jeremy Lake reckons full-year investment sales could come in at $2 billion to $2.5 billion, 'depending on how long the burst of activity in the residential sector lasts'.

The figure for the whole of last year was about $18 billion, down from the record $54 billion in 2007.

As for the latest Q2 showing, 63.5 per cent or $605.6 million was from the residential sector.

This sum included 14 GCB deals, up from just three GCB transactions in the first quarter.

'For the Singapore investment market, the first movers are the Asian private investors who are willing to buy at current prices which they deem reflect an attractive discount from the peak,' Mr Lake said.

'Their sweet spot is $20 million to $85 million and their focus is office and/or residential investments.'

On the other hand, institutional investors are mostly adopting a wait-and-see strategy for Singapore, judging that the fundamentals are weak and better opportunities will arise in six to 12 months.

'For second-half 2009 there will be more investment deals, although most of the owners who wanted or needed to sell have already done so, and accordingly the choice of investment opportunities could be limited,' Mr Lake said.

Agreeing, DTZ's senior director for investment advisory services Shaun Poh said investment sales activity may ease slightly in Q3 because of a limited supply of small investment-quantum commercial properties available for sale.

'However, we may see some deals that are currently cooking being sealed in Q3,' he said.

'For the residential sector, some developers who have enjoyed strong sales at their showflats over the past few months are looking to restock their residential land bank selectively,' he added.

Published June 26, 2009

SingTel board member held StarHub shares

By NISHA RAMCHANDANI

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(SINGAPORE) Singapore Telecommunications' lead independent director Kaikhushru Shiavax Nargolwala held 37,000 shares in rival telco StarHub as at March 31, 2009, although he has since sold the shares.

'We understand that he sold those shares in May 2009,' said a spokesman for SingTel in response to a query from BT.

This echoes another scenario, when it was reported in 2003 that then SingTel chairman Ang Kong Hua purchased 235,000 shares worth about $310,000 in rival MobileOne (M1), which raised questions - and eyebrows - among some investors, who questioned his commitment and the potential conflict of interest.

At the time, Mr Ang defended his purchase, which he said was merely 'a portfolio investment'.

In the case of Mr Ang, his holdings were disclosed in M1's annual report since he was listed as the 19th largest shareholder in M1 as at March 3, 2003, a source pointed out.

At that point, Mr Ang reportedly held more shares in M1 than in SingTel.

He later bought 500,000 SingTel shares on March 13, 2003 which raised his holdings to 501,540 shares as at June 9, 2003, and had also sold the M1 shares by June.

In comparison, Mr Nargolwala holds some 37,000 shares which is not as significant, the source added.

Mr Nargolwala was appointed lead independent director of the board in May this year. He has been an independent director on SingTel's board since September 2006.

Meanwhile, group chief executive officer Chua Sock Koong's pay was down 5.3 per cent year-on-year in FY08-09, SingTel's annual report shows, as profits took a hit.

Although Ms Chua earned a higher base salary of $1.35 million in the year ended March 31, 2009, the cash bonus came in at $1.95 million for a total of some $3.38 million (including other components such as benefits). She received $3.57 million in FY07-08, which included a bonus of $2.34 million.

For its full financial year ended March 31, 2009, SingTel's net income fell 12.9 per cent to $3.45 billion despite a 0.6 per cent increase in revenue to $14.9 billion.

SingTel is also proposing a reduction - from 10 per cent to 5 per cent - of the amount of shares it can issue under a general mandate at an upcoming AGM to be held on July 24.

Last year it reduced the number from 15 per cent to 10 per cent.

Singapore listing rules allow companies, subject to an annual vote, to issue up to 20 per cent new shares without the need to get additional shareholders' approval - which can be a contentious issue for minority shareholders.

The proposed reduction is to 'provide shareholders with enhanced protection against dilution', the company said in its annual report.

With the same objective in mind, it is also looking to introduce an annual limit of one per cent - down from 10 per cent - of the total number of issued shares on the number of new shares awarded under the SingTel performance share plan.

Published June 26, 2009

S'pore wealth chart shrinks by 22%

Globally, high net worth individuals' wealth falls 19.5% to US$32.8t in 2008

By OH BOON PING

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(SINGAPORE) The number of wealthy Singaporean individuals fell 21.6 per cent to 61,000, largely due to losses in the equity and property markets, according to Merrill Lynch and Capgemini's latest wealth report.

Attracting investors: The affluent around the globe increased their allocations towards jewellery in 2008 to 22 per cent, compared with 18 per cent two years ago

Merrill Lynch head of advisory for South Asia Kong Eng Huat reckons that the combined fortunes of the well-heeled in Singapore could have fallen by about 20 per cent last year from US$379 billion previously - in line with the 22.3 per cent contraction seen in the region.

He said that 2008 was an 'unprecedented year because of extraordinary volatility and distress in the financial markets, and this impacted the size of the wealth of high net worth individuals (HNWIs)'.

Globally, the combined wealth of the world's HNWIs - defined as those with investible assets of US$1 million - fell 19.5 per cent to US$32.8 trillion in 2008, but should recover to US$48.5 trillion in five years. The ultra-HNWIs - those with investible assets of more than US$30 million - suffered an even sharper drop of 24.6 per cent in combined fortunes as 'they were more aggressive and highly leveraged'.

The world's real GDP had expanded only 2 per cent in 2008, against 3.9 per cent in 2007.

However, Bhalaji Rhaghavan, regional vice-president of banking solutions at Capgemini, sees signs of economic recovery and that HNWI wealth should 'resume an upward trend with the Asia-Pacific region leading the growth'.

Accordingly, the report projects the Asia-Pacific wealth market to grow at a 12.8 per cent annual growth over the next five years to US$13.4 trillion in 2013 - faster than the 8.1 per cent forecast globally.

In terms of asset allocation, the wealthy have generally cut back on their exposure to equities and alternative assets. Globally, the wealthy reduced their equity weighting from 33 per cent to 25 per cent. Cash and fixed income have a combined 50 per cent - up from 44 per cent a year ago.

Also, HNWIs allocated more of their financial assets to real-estate holdings, which rose to 18 per cent of the total HNWI portfolio - an increase of four percentage points from 2007.

'Last year was about preservation, not appreciation,' said Merrill Lynch Global Wealth Management president Dan Sontag. 'With no safe havens, HNWIs ended up with significant amounts of cash in their portfolios. As markets recover, they will have the flexibility to readjust their strategies and reinvest in new developing opportunities along the way.'

The report also carried a section on 'passion investments' such as art, luxury cars, and wellness. Globally, luxury collectibles accounted for 27 per cent of passion investments and fine art 25 per cent.

Interestingly, the affluent increased their allocations towards jewellery to 22 per cent, compared with 18 per cent two years ago.

In contrast, they scaled back on their allocations in miscellaneous investments of passions - club memberships, travel, guns and musical instruments - to 7 per cent from 16 per cent in 2006.

Meanwhile, the other private banks remain cautiously optimistic on the continued growth of the Asian wealth market despite the turmoil seen in the regional capital markets.

Said Raj Sriram, Singapore head of private banking at RBS Coutts: 'In the medium to long term, we believe the region will continue to be the fastest growing wealth management market in the world. Not all markets have been impacted by the same magnitude.'

A UBS spokesman said that 'the wealth management market in Asia Pacific has expanded substantially over the years and Asia Pacific has been the fastest growing region. At UBS, we are of the view that the wealth management assets in Asia Pacific will continue to grow faster than the global average'.

Citi Private Bank's Akbar Shah said that Asia is still one of the most dynamic regions in the world. 'The recession will not last forever; real economic growth will return and so will the business opportunities; our clients from Brazil or the Middle East will want to invest in China, India, or other Asian markets.'

Published June 26, 2009

H1N1 flu comes to Raffles Place

50 CIMB remisiers sent on home quarantine after one of them catches virus from his son; ministry expects H1N1 cases to rise

By VEN SREENIVASAN

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(SINGAPORE) It was just a matter of time, but the H1N1 flu has finally landed in the heart of Singapore's financial district.

CIMB Securities yesterday ordered 50 of its remisiers at its Raffles Place office to go on home quarantine after one of them caught the H1N1 virus from his son.

The company said it has activated its business contingency plan, which requires all staff of the entire trading floor where the infected person was located to be home-quarantined for seven days. The development comes even as the Ministry of Health indicated yesterday that it expected a rise in H1N1 cases in the days to come.

'Fortunately, we had our contingency plan in place, so we were prepared when this happened,' said company spokeswoman, Chow Hooi Chin.

Besides putting in place measures to minimise physical interaction between different teams of brokers, the company is also splitting teams for back-office operations so that each department will have the necessary staff required to undertake the daily operations of the business, she added.

Daily temperature checks have also been initiated and heads of departments have been told to monitor staff for flu-like symptoms. Information on all visitors is recorded and travel histories of all employees logged.

Meanwhile, the infected broker has been hospitalised. He caught the virus from his teenage son, who had been infected at the Butter Factory, a night spot across from Fullerton Hotel. The popular club has been identified as a cluster with five H1N1 cases linked to it as of this week.

The quarantined brokers' phone lines have been re-routed to their home or mobile lines. Brokers can then initiate orders either via the company's Internet platform or by calling into its central buying desk.

'It is a bit of an inconvenience, but things are still working as they should,' Ms Chow said.

CIMB is one of Singapore's fastest growing financial houses, with about 700 staffers in its securities side - including 300 brokers - and another 200 staff at its banking unit.

This is the first time any major player within the local financial industry has faced the H1N1 threat at its operating premises. But with some 200 cases of the flu confirmed islandwide, most brokerages and banks have been quietly preparing for the eventuality.

DBS Vickers Securities' chief executive Edmund Lee said his company had prepared its business contingency plans.

'We have pandemic plans in place, and this include splitting operations between our main location at PWC Building and ComTech,' he explained. 'If someone is sick, we will send the entire team home to operate. Arrangements will be made for clients to continue speaking to them. Meanwhile, we have taken measures to minimise interaction between brokers on different floors.'

Meanwhile, at Citibank, even staff travelling overseas on business are monitored for symptoms of the flu. 'Citi is committed to taking necessary precautions to ensure the health and well-being of our clients and employees,' a spokesman said.

'Our Continuity of Business Taskforce has been monitoring the H1N1 situation closely and has implemented contingency plans. Staff who return from overseas travel have been advised to closely monitor their health and if they feel unwell, to immediately seek medical help and advice.'

Meanwhile, Singapore may see a rise in the number of H1N1 flu cases even as the traditional flu season tails off.

Already, the proportion of H1N1 cases among samples from influenza surveillance has been climbing sharply.

It rose from about 2 per cent for the first three days starting June 17 when H1N1 was first registered on the surveillance, to 4.7 per cent on June 22.

'We can expect to see exponential rises (in the percentage),' said Lyn James, director of the communicable diseases division at the Ministry of Health.

The trend in Singapore mirrors that of the US, where the buildup of H1N1 cases has resulted in another peak in influenza positive tests reported to its Centers for Disease Control.

The trend may see Singapore move from the containment stage to the mitigation stage. But this will only happen once the proportion of H1N1 cases in the flu surveillance sample hit 15 per cent, said K Satku, director of medical services at MOH,

'Only then it is worthwhile for us to start treating without testing because we want to make sure that the people receiving the medication will benefit from it,' he said.

Lim Poh Lian, senior infectious disease consultant at Tan Tock Seng Hospital, stressed the need to keep vigilant as there is a lag between the disease first hitting a community and cases of mortality. She also pointed out that once the number of cases starts to rise, even a low death rate would imply that there are still lives to be saved.

(With additional reporting by ZHANG YI TING)