Quoteworthy: "Banks do not actively gather customer deposits just to park them at the central bank as a business strategy" –— Willie Tanoto of Fitch Ratings, commenting on news that DBS had lent $30 billion to MAS as it is “not finding enough opportunities to put the money to work.”
New entrants to SGX watchlist
A total of 13 companies have been added by Singapore Exchange (SGX) S68 to its Watchlist, which will subject them to greater scrutiny and possible delisting if the companies remain mired in the doldrums with no signs of turning around.
Companies are included on the watchlist if they report three consecutive years of pre-tax losses or if their average market value for last 6 months is below $40 million. Including these 13 new names — likely the largest batch at one shot — brings the total number on the list to 36. For context, that is around 5.6% of the 645 listed entities as of April.
These 13 companies, in alphabetical order, are Amos Group 49B , Beng Kuang Marine BEZ , British and Malayan Holdings, CH Offshore C13 , Datapulse Technology, GRP BLU , Intraco, IPC Corp, Jadason Enterprises J03 , Jasper Investments FQ7 , Manufacturing Integration Technology M11 , Shanghai Turbo Enterprises AWM and Trek 2000 International.
Most of these companies have been struggling for years for one reason or another. And in quite a few cases, their businesses were further hurt by the pandemic, even as they struggled to move into new businesses under controlling shareholders and management.
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Datapulse Technology BKW, for example, was the subject of a high-profile tussle. Under new controlling shareholders, it moved into hospitality, but as the familiar plot goes, the pandemic caused years of pain that is only recovering. Its main operating asset is the Travelodge Myeongdong City Hall in Seoul. “While we are seeing some improvement in operating figures, we are still being affected,” says executive director Yee Chia Hsing.
Before the pandemic, China was the largest contributor to South Korea’s tourist figures. China has a list of 60 countries where its travel agencies can organise outbound tour groups, while South Korea is not on this list. “We have not seen tourist arrivals from China recover to pre-pandemic levels,” he adds.
It will not be fair to call all these companies fly-by-night entities. A couple were high-profile, storied names in their days. Intraco I06 , for example, was a government department tasked to help expand Singapore’s trading activities, buying and selling rice, oil and other commodities from countries far and wide.
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IPC Corp AZA , meanwhile, was the former IT poster boy of Singapore’s early tech scene — around the same time, a certain Sim Wong Hoo was making computers that could make a sound. Under the Ngiam brothers, IPC Corp is famous for making its brand of personal computers, before fiercer competition overtook it and forced it into other businesses. Specifically, IPC went into running hotels in China. Again, with the pandemic, it is no surprise that it was mired in losses over the past few years.
Trek 2000 International 5AB is another. True, founder Henn Tan, who led the team to invent the thumb drive, was convicted of accounting fraud. His son Wayne has taken over and was seen trying to create new variants of electronic products.
One of the stated purposes of the watchlist, according to SGX, is to alert investors to the risk of being invested in companies that may face delisting. Gary Goh, who writes the Lone Wolf Investor blog, says he will probably avoid stocks on the watchlist. “There is no certainty they can nurse themselves back to health. They are on the list for a reason.”
From what he has observed, some companies couldn’t be bothered to get themselves out of the list. A usual way is to look for a reverse takeover deal, but unfortunately, most RTOs do not work, says Goh, a former stockbroker. — The Edge Singapore
Surbana Jurong’s unit SMEC may back the US$150 billion plan to build 123 new African cities
The African Union and SMEC, a subsidiary of Surbana Jurong, part of Temasek Holdings, is considering backing a plan to develop as many as 123 new cities across Africa.
The plan, developed by Cape Town-based Africa123, envisages the construction of the cities over the next two decades at a cost of as much as US$150 billion ($202 billion). The aim is to meet a continent-wide housing deficit, with the World Bank predicting that 216 million people in Sub-Saharan Africa will live in shanty towns by 2063.
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Africa123 plans to incorporate designs that include sustainable energy and water supplies, transport, education and health infrastructure, and employment opportunities. The African Union Development Agency is in talks to develop a pilot project with the company, and the programmes will include providing home loans through arrangements with financiers. “We like the programme,” said Kossi Toulassi, head of industrialisation at the AUDA, in an interview. It’s “bringing together education, health and employment together under one shop.” The capital cities of many African nations — like Harare in Zimbabwe or Luanda in Angola — were built by their former colonial powers for much smaller populations. Today authorities are struggling to keep up with providing services to cities that have been subject to an unplanned sprawl for decades as people move to urban areas in search of work.
“We expect that there are going to be three billion people in the continent by 2063 and 150 million families that will need decent housing,” said Gita Goven, chairwoman of Africa123. It proposes building new, better-planned cities to provide housing and other amenities, starting with three settlements in Ghana. Land for those has been secured, and the plan is to build 800,000 residential units to house three million people.
“We are assisting with funding applications” for the projects, said John Anderson, the chief operating officer for the Africa division of SMEC Holdings. “We support the concept of sustainable cities” and could back future projects under the programme, he said. — Bloomberg
China’s National Financial Regulatory Administration vows to open up further
The nation’s new top regulator said that China would continue to open up its US$60 trillion ($80 trillion) financial market to foreign banks and investment firms while sticking to the bottom line of preventing systemic risks.
China will “unswervingly” open up its financial sector and welcome quality foreign financial institutions to China, Li Yunze, head of the National Financial Regulatory Administration, said at the Lujiazui Forum on June 8 in Shanghai.
“Opening up is China’s long-standing state policy, and the door for opening up the financial sector will only be wider,” said Li, a former vice governor of Sichuan province named chief of the new financial regulator last month in a regulatory overhaul.
Growing tension between China and the US is unnerving global investors. While China has pledged to continue its financial opening, authorities have recently cracked down on access to a broad swath of data and raided consulting firms as the US is mulling further restrictions on investing in the Communist Party-ruled nation.
Yi Huiman, chairman of the China Securities Regulatory Commission, also said at the forum that China would push for more open markets while stabilising market confidence.
The comments come as global banks reassess their ambitions in China, cutting revenue forecasts and trimming staff. Still, the world’s second-biggest economy is a potent lure. JPMorgan Chase held a summit for clients in Shanghai last month, with CEO Jamie Dimon pledging to remain in the country in good and bad times.
Citigroup CEO Jane Fraser was also in Beijing, where she met with the top regulator. Fraser expressed confidence in China’s financial and economic development and vowed to keep expanding onshore operations during her June 5 meeting with the nation’s top financial regulator, according to an official statement.
“The overall risk in China’s finance industry is controllable, and we’re fully confident and able to safeguard the bottom line of preventing systemic risks,” Li said at the forum.
While recent international banking risk events have had little direct impact on China, they have served “as a strong warning,” says Li. “The National Financial Regulatory Administration will take a more proactive attitude to address various risks and hidden dangers, adhere to the principle of ‘early identification, early warning, early detection, and early disposal’ and strive to resolve risks in their early stages.”
Efforts will also be made to plug loopholes in China’s financial regulation and resolutely prevent new risks from brewing. Li has pledged to bring all types of financial activities under supervision and eliminate regulatory blindspots.
China has made containing financial risk one of the top priorities this year even as it battles to revive the economy after abandoning its zero-Covid approach late last year.
The CSRC will dissolve bond default risks in an orderly manner, crack down on violations, including insider trading and step up monitoring of quant trading as part of its efforts to improve market regulation, Yi said. — Bloomberg
