Quoteworthy: "Sometimes, it’s not because we are stupid and make bad decisions. Sometimes, we are just careless or don’t pay attention for a second and click by instinct." –— Former Temasek CEO Ho Ching, in her personal Facebook post on May 29, where she urges “Don’t fall for scams”
MAS to launch consultation on qualifying managed phase-out of coal-fired power plants
The Monetary Authority of Singapore (MAS) will launch a consultation on its proposal to include the managed phase-out of coal-fired power plants in the Singapore-Asia Taxonomy in the coming weeks.
Formerly referred to as the Singapore Taxonomy, the guidelines were expected to be published in June. Instead, MAS will seek feedback on additional criteria from financial institutions “within the next few weeks”, says Gillian Tan, chief sustainability officer (CSO) of MAS.
The taxonomy was developed by the Green Finance Industry Taskforce (GFIT), an industry-led initiative convened by MAS, whose mandate is to help accelerate the development of green finance.
GFIT launched its third public consultation on the taxonomy in February — then thought to be the last round to provide feedback. Speaking at a media briefing on May 30, Tan says the central bank and regulator received “extensive feedback”. “So, we definitely want to take some time to really cover it well,” she says.
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The move comes as regional guidelines are being updated to include the managed phaseout of coal.
In March, the Asean Taxonomy Board determined that projects phasing out coal can obtain transition financing, a first for any regional taxonomy.
These projects are graded on a “traffic light” model, with the lowest tier — “Amber Tier 3” — qualifying coal plants built between 2023 and 2027, provided they adopt best-in-class technology that is affordable, accessible, reliable, and can be implemented within a reasonable timeframe.
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A consultation paper by another regional taxonomy will be released in June. The Glasgow Financial Alliance for Net Zero Asia-Pacific (GFANZ APAC) Network has been developing guidance on how financial institutions can fund the managed phase-out of coal. This was first announced in October 2022, and MAS is part of the workgroup convened by the GFANZ APAC Network.
Back in October 2022, MAS’s managing director Ravi Menon said the GFANZ initiative would help address the challenges in responsibly decommissioning these plants. GFANZ was launched in April 2021 and brings together more than 500 global financial institutions from 45 countries committed to net-zero emissions by 2050. The regional offshoot of GFANZ began in June 2022, hosted by the Singapore Exchange, with support from MAS, Temasek and Bain & Co.
The proposed move could appear dissonant with banks’ efforts to decarbonise their portfolios. Singapore’s three local banks have pledged to reduce their exposure to coal assets from as early as 2019. In April that year, Oversea-Chinese Banking Corp became the first Southeast Asian bank to stop financing new coal-fired plants. DBS and United Overseas Bank followed within a month.
DBS announced in 2021 that it will phase out thermal coal exposure by 2039. From January 2026, DBS will also stop financing customers who derive more than half of their revenue from thermal coal, except for their non-thermal coal or renewable energy activities.
Meanwhile, UOB has committed to stop financing the thermal coal sector by 2039. This is on top of its existing prohibitions on new project financing of greenfield or expansion of coal-fired power plants and thermal coal mines.
Singapore’s financial institutions should “take their dressing” from global best practices, standard-setters and science-based experts, says Tan, who was appointed in October following the exit of MAS’s first CSO, Darian McBain, after a year.
The International Energy Agency, for example, has outlined the need to phase out unabated coal generation by 2030 in advanced economies and by 2040 in emerging economies, notes Tan. “If a bank finances the managed early phase-out of coal, they should only do it where it is helpful to the climate challenge and [if] it is credible.”
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In the Asia-Pacific region, fossil fuels account for about 70% of power and electricity generation, while coal accounts for almost 60% of total generation. Coal is a huge part of this problem, says Tan, who is also assistant managing director (development and international) at MAS. “If we are going to transition Asia well, there needs to be a comprehensive approach for energy transition that takes into account a few Asia-specific features.”
Tan acknowledges that retiring coal-fired power plants ahead of time is an expensive endeavour, especially given how many of the plants in Asia are relatively new. “The economic viability of it is an issue… A lot of early phase-out models [are] very much premised on us being able to bring the costs of borrowing down such that you can buy out the incumbents, and then bring the lifespan down.”
The industry needs to find innovative ways to solve those challenges, she adds, such as using carbon credits to “sweeten the economics slightly”. The process is also labour-intensive, says Tan. “The problem is that currently we’re looking at it in a very transaction-by-transaction approach. If we could group together a set of power plants with similar characteristics and risks — maybe they come from the same permit jurisdictions [or share the] same set of decision-makers — if you can standardise that, you can actually scale it and bring it down to a good level.”
Ultimately, banks will need to look at the range of guidance that will be available and make a decision, says Tan. “You saw the decarbonisation targets that they put up, all the slight variations here and there, because they’ve made their assessments based on what experts have told them and what the shape of the portfolios look like. I think they will do likewise on the managed phase-out [of coal].” — Jovi Ho
SGX launches depository receipts through linkage with Stock Exchange of Thailand
Singapore Exchange (SGX) S68 0.43% has announced that it has launched a new product, Singapore Depository Receipts (SDRs), under the Thailand-Singapore depository receipts (DR) linkage on May 30.
A memorandum of understanding was signed on May 30 to mark the partnership between SGX and the Stock Exchange of Thailand (SET) on the DR linkage.
This is the first exchange-level DR cooperation in Asean, demonstrating an important step forward in enhancing regional connectivity. The collaboration leverages the strengths of two well-established exchanges to promote more joint investment and business opportunities for both exchanges and their market participants, according to an SGX release.
SGX CEO Loh Boon Chye says: “Asean is increasingly emerging as an investment thematic among investors. With greater connectivity between Singapore and Thailand, investors can now widen their investment horizons and participate in the growth potential of Asean.”
“I am optimistic the SDRs will spur increased participation across borders and create more vibrancy in our capital markets, and for the DR linkage to be the catalyst to spark further collaboration between exchanges in this region,” he adds.
SGX says it is introducing SDRs to provide Singapore investors with more efficient access to regional markets. Investors will be able to trade SDRs through their local brokers, gaining greater exposure to overseas listed securities while enjoying the convenience of trading through their usual platform.
SET president Pakorn Peetathawatchai says: “As investor needs evolve, the linkage facilitates investors’ access from one market directly to another in local currency, bringing more liquidity and price efficiency. This collaboration is part of our commitment to grow connectivity between exchanges in Asean. I am confident that the linkage will be a key platform connecting the world to this region.”
The inaugural SDRs have been issued by Phillip Securities, representing the beneficial ownership interest in the underlying securities of Airports of Thailand, CP All and PTT Exploration & Production, which are constituents of the benchmark SET50 Index.
Phillip Securities managing director Luke Lim says: “At PhillipCapital, we are fuelled by our desire to serve our investors better, and we recognise that today, investors have a wide range of investment choices as well as high expectations on potential trading opportunities. These new SDRs offer Singapore investors new opportunities to invest in the Thai market.”
SDRs will be traded on the SGX securities market during local trading hours and in Sing dollars. — Bryan Wu
Temasek cuts pay of those responsible for FTX investment; says it’s ‘disappointed’ with the outcome
Temasek Holdings has cut the pay of the investment team and senior management, who were “ultimately responsible” for the investment decision made in failed cryptocurrency firm FTX.
The state investment company had to write off its entire investment of US$275 million ($372 million) in November 2022.
Lim Boon Heng, the chairman of the board at Temasek, issued a statement on May 29 saying that he was “disappointed” with the outcome of its investment and the negative impact the failed investment had on its reputation.
“Temasek, as an investor-owner, seeks to deliver sustainable returns over the long term. While there are inherent risks whenever we invest, we believe that we have to invest in new sectors and emerging technologies to understand how these areas may impact the business and financial models of our existing portfolio and whether they would be drivers of future value in an ever-changing world. This is why we invest into early-stage companies,” reads the statement.
“With FTX, as alleged by prosecutors and as admitted by key executives at FTX and its affiliates, there was fraudulent conduct intentionally hidden from investors, including Temasek,” it adds. — Felicia Tan
Cathie Wood says software stocks are next AI bet after Nvidia
Cathie Wood said software providers will be the next to ride on the artificial intelligence frenzy driven by Nvidia Corp.
“We are looking to the software providers who are actually right now where Nvidia was when we first bought it,” Wood, CEO and founder of Ark Investment Management LLC, told Bloomberg TV on May 31. While Nvidia is expected to do well over time, Ark is “onto the next thing”, she added.
Wood’s flagship Ark Innovation ETF cut its holding in Nvidia in January and has missed out on an epic rally that made the chipmaker briefly cross US$1 trillion ($1.35 trillion) in market valuation. Wood has defended her decision to dump Nvidia shares, citing concerns over the computer-chip industry’s boom-bust cycle and saying it is “priced ahead of the curve” in a tweet earlier this week.
Instead, Wood is betting on software stocks that she expects to eventually grow into the size of Nvidia, citing UiPath, Twilio and Teladoc Health as key examples. Wood’s funds hold all three stocks.
“For every dollar of hardware that Nvidia sells, software providers, SaaS providers will generate eight dollars in revenue,” Wood told Bloomberg TV.
Wood is betting on a trio of companies that have fallen far off their highs. New York-based UiPath rose to more than US$85 a share after going public in 2021 and has tumbled about 80% since. San Francisco-based Twilio has dropped 85% from its peak in 2021, while Teladoc Health is off more than 90% from its high the same year.
Ark Innovation ETF has lost more than 10% since its peak in early February, while the Nasdaq 100 Stock Index has jumped 12% over the period.
Wood reiterated Tesla is the “biggest artificial intelligence play”, and expected its stock price to reach US$2,000 in 2027 on autonomous technology from around US$200 currently.
“Autonomous taxi platforms, we believe, globally will deliver US$10 trillion in revenue from almost zero” by 2038, she said on Bloomberg TV. “Tesla, many people think, is an auto stock. We don’t, we think it’s much more than that.”
On China, Wood said the “common prosperity” policy agenda there means companies expanding into the country will have to give up on margins if they want that opportunity of scale. — Bloomberg
