Property price is coming down fast

[blackapple]

“We have implemented a number of measures but they will take some time to work their way through the market. For example, the huge supply of new housing units will be available only over the next two to three years.” - Obiwan Kenobi

wow ... huge BTO supply available in 2-3y ...

But with 5 years MOP, the supply will ONLY reach market by 2017.

How will it reduce price in 2 to 3 years? Dun understand. But what he mean is that price will continue to move up in next 2-3 years rite ??

[phantom_opera]

But with 5 years MOP, the supply will ONLY reach market by 2017.

How will it reduce price in 2 to 3 years? Dun understand. But what he mean is that price will continue to move up in next 2-3 years rite ??

He expects subletting to be rampant after getting keys

[blackapple]

He expects subletting to be rampant after getting keys

But local tenant are mostly those sold and waiting to buy back ..

[DKSG]

http://www.channelnewsasia.com/stori...237357/1/.html

New private home sales decline in October: URA


Channel News Asia
By Wong Siew Ying | Posted: 15 November 2012 1314 hrs


SINGAPORE: Sales of new private homes in Singapore declined by about 25.7 per cent to 1,948 units in October, from 2,621 units in September, according to data released by the Urban Redevelopment Authority (URA).

URA said October's sales were led by the mass market segment which sold a total of 1,482 units.

Meanwhile, 144 new homes in the core central region and 322 new units in the city fringe were sold.

The top three best-selling private condominium projects in October were Skies Miltonia which sold 309 units, followed by Riversails with 271 units sold and eCO with 149 units sold.

Including Executive Condominiums (EC), 2,624 units were sold in October - down from 2,771 units in the previous month.

The star performers in the EC segment included Heron Bay at Upper Serangoon with 354 units sold and Waterbay at Edgefield Plains which moved 221 units.

Developers launched a total of 2,410 units of private homes and ECs in October.

- CNA/xq

This is the most lame post this week!
After hitting record high sales in last few months, we do expect new sales to inch downwards a bit and breath.

Otherwise, we will really be in a bubble!

This shows that market is healthy and people are steadily buying.

DKSG

[Rysk]

This is the most lame post this week!
After hitting record high sales in last few months, we do expect new sales to inch downwards a bit and breath.

Otherwise, we will really be in a bubble!

This shows that market is healthy and people are steadily buying.

DKSG

Helo Officeboy,
I tot this thread is talking about PRICE PRICE PRICE..
Don't be a TWIST & TURN cum DIVERT ATTENTION EXPERT act blur & talk about sales volume k!!

http://www.businesstimes.com.sg/arch...eriod-20121110

Published November 10, 2012

Non-landed private homes' resale prices up 7.3% in Jan-Oct period

[seletar]

http://www.cnbc.com/id/49833262

Euro Zone Slips Into Second Recession Since 2009

Published: Thursday, 15 Nov 2012 | 5:17 AM ET
By: Reuters


The euro zone fell into a recession in July-September, the second since the global financial crisis in 2009, as French resilience could not make up for a slump across Europe and the three-year debt crisis slowed Germany to a crawl.





Economic output in the 17-country euro zone fell 0.1 percent in the third quarter, the EU's statistics office Eurostat said on Thursday, following a 0.2-percent drop in the second quarter.

Those two quarters of contraction put the euro zone's 9.4 trillion euro ($12 trillion) economy officially in recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.

Germany and France, the euro zone's biggest economies, could not save the bloc from a double-dip recession even though both countries managed 0.2 percent growth in the quarter. Large, countries like Italy, Spain and the Netherlands all contracted and Belgium, a big exporter, stagnated.

Millions of people across Europe protested against government spending cuts that EU policymakers say are crucial to ending the debt crisis but which others blame for the economic contraction.

"We are now getting into a double dip recession which is entirely self-made," said Paul De Grauwe, an economist with the London School of Economics. "It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else," he said.

(Read More: European Parliament Boycotts EU 2013 Budget Talks)

Not everyone shares that view and the European Commission says labor costs are falling and exports are rising for Greece, Portugal, Spain and Ireland, arguing that austerity is a necessary evil to bring down unsustainable budget deficits.

The European Commission sees a 0.4 percent contraction for the euro zone in all of 2012.

Hopes for a recovery next year are also fading, with the European Commission saying the economy will grow just 0.1 percent in 2013.

A rebound in the euro zone could be vital for the rest of the world as the United States and China struggle with the impact of the crisis on their companies' ability to grow and prosper.

In one positive sign, Eurostat said separately that the euro zone's annual inflation fell to 2.5 percent in October from 2.6 percent in September, suggesting an end to a run of stubborn inflation that has contributed to the difficult environment.

But after months of resilience, Germany, Europe's largest economy, is seeing its companies unnerved by the crisis and demands for its goods in the euro zone and abroad is drying up.

While German gross domestic product expanded by 0.5 percent in the first quarter, it slowed to 0.3 percent in the second and weakened again in the third quarter.

Economists expect a worse performance in the fourth quarter.

[seletar]

http://www.cnbc.com/id/49847372

Singapore Cuts 2012 Growth Outlook, Sees Subdued 2013


Published: Thursday, 15 Nov 2012 | 8:17 PM ET
By: Reuters


Singapore cut its growth forecast for this year to around 1.5 percent and warned of a subdued 2013 on Friday as updated third-quarter data and October export numbers showed weakness in electronics manufacturing and financial services.





The trade-dependent economy is expected to grow 1-3 percent next year, with risks on the horizon from the U.S. fiscal cutback and the eurozone crisis, the Ministry of Trade and Industry (MTI) said in a statement.

"Growth could come in slightly below 1.5 percent, should weakness in externally oriented sectors continue into the final quarter of 2012," Ow Foong Pheng, permanent secretary at MTI, said at a press conference.

The new growth outlook for 2012, at the lower end of an earlier 1.5 to 2.5 percent forecast, came as the government revised third quarter gross domestic product to show a far steeper contraction of 5.9 percent from the previous quarter on a seasonally adjusted and annualized basis.

The government's advance estimate was for a 1.5 percent contraction, while economists polled by Reuters expected the economy to have shrunk 2.9 percent quarter-on-quarter.

The economy grew 0.3 percent in the third quarter from a year earlier, the government said, slower than the advance estimate of 1.3 percent and forecasts of 0.9 percent.

"It's a pretty bad number. The downward revision is almost more than three times the advance estimate, so it tells you how difficult it is to make accurate forecasts in such an environment," said Citigroup economist Kit Wei Zheng.

"All-in-all it suggests par growth conditions (for 2013) but not necessarily so bad to the point of it being recessionary, just pretty slow and sluggish."

Growth in the first and second quarters were revised upwards to 1.6 and 2.5 percent, respectively.

The government said non-oil domestic exports rose 7.9 percent in October from a year earlier, far better than the forecast of 3.1 percent in a Reuters poll.

International Enterprises Singapore said separately it now sees non-oil domestic exports growing just 2-3 percent this year, down from its previous forecast of 4-5 percent.

Singapore's manufacturing slumped a seasonally adjusted and annualized 9.6 percent in the third quarter from April-June, while financial services shrank 4.6 percent. Manufacturing was flat in the second quarter while financial services grew an annualized and seasonally adjusted 2.9 percent quarter-on-quarter.

Wealthy Singapore, a major Asian business center whose trade is three times the size of its economy, has been rocked by problems in the West that have crimped demand for its exports and hurt financial services.

With around 1.5 percent growth this year, Singapore will lag neighbors such as Indonesia and Malaysia that can count on larger domestic markets.

Indonesia's central bank last week said it expected economic growth of 6.3 to 6.7 percent next year as strong domestic demand and investment largely offset the impact of weak exports.

"I will characterize the outlook still in the soft patch, some signs of stabilization and we won't get a full recovery until the risks are resolved," said Sim Moh Siong, currency strategist at Bank Of Singapore.

[seletar]

http://www.businesstimes.com.sg/brea...ecast-20121116

Business Times
Published November 16, 2012

Update: S'pore cuts 2012 GDP outlook, Q3 worse than forecast


SINGAPORE - Singapore's Ministry of Trade and Industry on Friday released detailed economic estimates for the third quarter of 2012.

Singapore's third quarter economic performance was worse than the advance estimates of a 1.5 per cent annualised quarter-on-quarter contraction and 1.3 per cent year-on-year growth.

The detailed Q3 GDP numbers lagged the median estimates of economists polled by Reuters, which was for a 2.9 per cent quarter-on-quarter, seasonally adjusted and annualised contraction, and 0.9 per cent year-on-year growth.

Manufacturing, which accounts for about 25 per cent of GDP, contracted an annualised and seasonally adjusted 9.6 per cent quarter-on-quarter. Manufacturing also contracted 0.8 per cent in the third quarter from a year ago.

[seletar]

http://www.channelnewsasia.com/stori...237551/1/.html

Trade forecast revised down with Q3 total trade decline


Channel News Asia
Posted: 16 November 2012 0822 hrs


SINGAPORE: Singapore's total trade declined by 2.8 per cent on-year for the third quarter of 2012 to S$240 billion after growing 2.9 per cent in the previous quarter.

On a quarter-on-quarter basis, Singapore's total external trade declined by 6.1 per cent for the third quarter, following a 3.1 per cent contraction in the previous quarter.

IE Singapore said total trade in the first nine months of 2012 grew y-o-y by 2.4 per cent, and in view of the weaker than expected performance of total trade in 3Q, the total trade forecast for 2012 is revised downwards to between 3.0 and 4.0 per cent.

Total trade is projected to grow moderately by between 3.0 and 5.0 per cent in 2013, mainly due to expected slow growth of advanced economies.

According to IE Singapore, the on-year decline in total trade for Q3 can be attributed to a decrease in oil trade which outweighed the expansion in non-oil trade.

Singapore's non-oil domestic exports (NODX) also saw a decline in the third quarter.

On a year-on-year basis, NODX contracted by 3.2 per cent in the third quarter, following last quarter's increase of 3.7 per cent.

On a quarter-on-quarter basis, NODX declined by 5.9 per cent, following the 3.4 per cent contraction in the previous quarter. This is due to lower shipments of both electronic and non-electronic NODX.

The contraction in the third quarter NODX decline was largely contributed by the EU , Malaysia, United States and Thailand. NODX to EU declined by 16.5 per cent, while NODX to Malaysia contracted by 10.1 per cent. NODX to United States decreased by 7.5 per cent.

Domestic exports of electronics (comprising 33.1 per cent of NODX) contracted by 8.7 per cent in 3Q after increasing by 2.2 percent in the previous quarter, mainly due to to lower exports of PC parts.

As for non-electronics exports(comprising 66.9 per cent of NODX), it declined by 0.3 per cent in 3Q, after earlier growth of 4.6 per cent, led mainly by lower exports of ship & boat structures which saw a 70 per cent contraction.

- CNA/fa/sf

[seletar]

http://www.todayonline.com/Singapore...traction-in-Q3

MTI lowers growth forecast after 5.9% contraction in Q3


TODAYonline
Updated 08:58 AM Nov 16, 2012


SINGAPORE - Singapore said economic growth this year will be at the lower end of its forecast and the expansion in 2013 may hold near a three-year low, as easing demand for its goods weighs on expansion.

The economy will grow 1 per cent to 3 per cent in 2013 after expanding about 1.5 per cent this year, the Trade Ministry said in a statement today. It had previously forecast growth of as much as 2.5 per cent in 2012.

Gross domestic product contracted 5.9 per cent last quarter from the previous three months, worse than the 1.5-per-cent decline estimated earlier.

Singapore's central bank, which uses its exchange rate to manage inflation, unexpectedly held off from slowing the currency's appreciation in October even after the economy contracted last quarter. The trade ministry said this morning that the global economy will remain "sluggish" in 2013 and the island's growth may be lower than predicted next year if concerns of an escalation in Europe's sovereign debt crisis and fiscal cutbacks in the United States materialise.

"Potholes remain," said Standard Chartered economist Edward Lee. "We may not see improvement until the second half. The equation is skewed toward the external front and that remains the overriding factor."

Singapore's total trade declined by 2.8 per cent on-year for the third quarter to S$240 billion, after growing 2.9 per cent in the previous quarter.

On a quarter-on-quarter basis, Singapore's total external trade declined by 6.1 per cent for the third quarter, following a 3.1-per-cent contraction in the previous quarter.

According to statement by IE Singapore), total trade's on-year decline in the third quarter can be attributed to a decrease in oil trade, which outweighed the expansion in non-oil trade.

Singapore's non-oil domestic exports also saw a decline in the third quarter, dipping by declined by 5.9 per cent on-quarter.

Non-oil domestic exports will probably rise 2 to 3 per cent in 2012, lower than a previous forecast for shipments to grow 4 to 5 per cent, the trade promotion agency said. It predicts overseas shipments will climb 2 to 4 per cent in 2013.

The S$294-billion economy expanded 0.3 per cent last quarter from a year earlier, it said.

Consumer price gains will average more than 4.5 per cent in 2012 and will be in a 3.5-to-4.5 per cent range next year, the central bank predicted last month. Rising costs of car permits, higher housing rentals and a labour market that is near full employment have kept price pressures elevated in the city of 5.3 million people.

Manufacturing shrank 0.8 per cent from a year earlier in the three months ended Sept. 30. The services industry grew 0.3 per cent last quarter from a year earlier, while construction expanded 7.7 per cent. AGENCIES

[seletar]

http://sbr.com.sg/economy/news/chart...s-deteriorates

Singapore Business Review
ECONOMY | Staff Reporter, Singapore
Published: 16 Nov 2012


Chart of the Day: Singapore's export competitiveness deteriorates


This hurts the manufacturing sector.

DBS Group Research noted:

The manufacturing sector is likely to have contracted by 0.9% YoY in the third quarter, against the advance estimate of a 0.7% expansion.

Most of the drag came about from an unexpected decline in output growth in September when both electronics and the pharmaceutical industries performed poorly.

While weak external demand is the obvious reason, a more subtle factor to this poor outcome is the deterioration in Singapore’s relatively export competitiveness.

Singapore real effective exchange rate has continued to appreciate vis-à-vis regional peers due to a relatively higher domestic inflation as well as the strengthening of the Sing dollar. This inevitably hurts export and the manufacturing sector.

Click to zoom

Source: DBS Group Research

[seletar]

http://sbr.com.sg/economy/news/heres...c-figures-mean

Singapore Business Review
ECONOMY | Staff Reporter, Singapore
Published: 16 Nov 2012

Here's what the latest economic figures mean


Q3 GDP was revised down.

OCBC Treasury Research noted:

Q3 GDP was revised down from flash estimates of -2.9% qoq saar (+0.9% yoy) to -5.9% qoq saar (+0.3% yoy), but the Q2 data was revised up from -1.5% qoq saar (+1.3% yoy) to +0.5% qoq saar (+0.5% yoy).

The loss of momentum was broad-based across manufacturing (-9.6% qoq saar), construction (-17.2% qoq saar) and services (-3.5% qoq saar) – in particular, all the services industries shrank qoq except for business services which was flat qoq. This brought the first 9 months growth to 1.5% yoy, with the Q4 growth momentum unlikely to exceed 1.6% yoy ie. no strong pick up.

This clarifies why the full-year official growth forecast was narrowed to 1.5% yoy, the lower end of the original 1.5-2.5% forecast range, citing that growth is “expected to remain subdued for the rest of 2012”, with the electronics likely “weighed down by tepid external demand”, albeit the construction sector could “provide modest growth support”.

However, “growth may be slightly lower than forecast, if weakness in the externally-oriented sectors persists into the final quarter of 2012”. For 2013, the official forecast is 1-3% yoy, with the global economy remaining sluggish, but growth in specific sectors like transport engineering and construction could provide some support.

The caveat remains that concerns of the US fiscal cutback and potential escalation of the Eurozone debt crisis could materialize and impact Singapore’s 2013 growth to be lower than expected. Retail sales rose 3.9% yoy (-0.5% mom) in Sep, up from Aug’s revised +2.8% yoy (+1.0% mom).

[seletar]

http://www.bloomberg.com/news/2012-1...recession.html

Citigroup Faces Higher Hurdle as Fed Adds China Slump to Tests


Bloomberg.com
By Craig Torres and Donal Griffin - Nov 16, 2012 10:30 AM GMT+0800


The Federal Reserve changed its annual set of tests for the 30 largest U.S. banks to incorporate the risk of a deeper slump in Asia, where Citigroup Inc. (C) has a bigger presence than competitors.

Recessions in the euro area, the U.K. and Japan are features of the Fed’s “severely adverse” scenario in the new test. The main difference from last year is a more substantial slowdown in Asia, including “a sizable weakening of economic activity in China,” the Fed said yesterday in a statement.

Citigroup, the third-biggest U.S. bank, employs thousands of people across Asia. Former Chief Executive Officer Vikram Pandit, originally from Nagpur, India, pushed into markets across the continent, making credit-card, personal and corporate loans in countries such as China, India and Singapore.

“Citi has the most obvious gross exposure to a slowdown in Asia,” said David Knutson, a Chicago-based credit analyst with Legal & General Investment Management America. “My expectation is that Citi has gone a long ways over the last six to eight months to educate the Fed on the types of risks they’re taking in international markets.”

Pandit, 55, was pushed out by the board last month, a decision driven in part by the bank’s failure to get its capital plan approved by the Fed after the last stress tests, a person familiar with the matter said in October. Michael Corbat, who succeeded Pandit, said in an Oct. 16 conference call with analysts that submitting a new capital plan to the Fed by Jan. 5 is one of the issues “I’m going to spend time focused on.”


‘Pristine’ Assets

Total Asian assets in the bank’s Citicorp division, which include consumer banking and trading, jumped 33 percent to $356 billion in the three years ended Sept. 30, the company said last month. Credit-card and retail loans also increased 33 percent to $89.3 billion. The unit’s profit was $12.4 billion in that span.

Citigroup must prove to the Fed that these are “pristine”assets that can withstand a downturn in Asia, Knutson said.

“That’s what you want to hear as a regulator, that they didn’t allow themselves to be led down a dark path in the name of growth,” said Knutson, whose firm owns Citigroup debt.

Mark Costiglio, a spokesman for New York-based Citigroup, declined to comment.

The central bank started the tests in 2009 to restore confidence in the financial system after the worst crisis since the Great Depression brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc. Regulators have since complemented the reviews with a capital-planning requirement to improve boards’management of risk and dividend and stock-buyback decisions.

[Laguna]

http://www.singtao.com/yesterday/pro/1116ho05.html

二手車位交投活躍，中原經理胡順成表示，一周前市場推售之葵涌雍雅軒約九十個車位，售價介乎五十一萬元至六十萬元，全數沽清後，昨日錄最少五宗獲利「摸貨」，其中一車位剛以六十二萬元「摸出」，原業主周前以五十一萬元購入，轉手獲利十一萬元，賺幅約兩成二。他續指，該批拆售車位現時約有十個二手放盤，叫價介乎六十萬元至七十五萬元，售價調升約兩成。

[samuelk]

Yup! If I could remember.. his advise to wait was when Luxus Hills $1.6m.... wait & wait & wait.. wait till Luxus Hills now $2.8m..

Now again come back to advise ppl to wait..

Last time end 2008 talked BIG BIG worst is yet to come.. asked ppl to wait..
Till today.. no sound no shadow.. only act blur & come back again & saying "wait a bit more"

luxus now 3 mil

watch this video, then I understand the pain

http://video.xin.msn.com/watch/video...hills/pf6cs6qo

[seletar]

http://www.cnbc.com/id/49851885

Banks Seen Shrinking for Good as Layoffs Near 160,000

Published: Friday, 16 Nov 2012 | 6:46 AM ET
By: Reuters


Major banks have announced some 160,000 job cuts since early last year and with more layoffs to come as the industry restructures, many will leave the shrinking sector for good as redundancies outpace new hires by roughly 2-to-1.





A Reuters analysis of job cuts announced by 29 major banks showed the layoffs were much bigger in Europe than in Asia or the U.S. That is a particular blow to Britain where the finance industry makes up roughly 10 percent of the economy.

The tally of nearly 160,000 job cut plans, meanwhile, is likely to be a conservative estimate as smaller banks and brokers are also cutting staff or shutting up shop, and bigger banks have not always disclosed target numbers of layoffs.

The tally also does not include reports of 6,000 job cuts to come at Commerzbank, for example, which the German group would not confirm last week.

Well-paid investment bankers are bearing the brunt of cost cuts as deals dry up and trading income falls. That is particularly the case in some activities such as stock trading, where low volumes and thin margins are squeezing banks.

"When I let go tons of people in cash equities this year, I knew most would be finished in this business. It is pretty dead. Some will just have to find something completely different to do," said one top executive at an international bank in London, on condition of anonymity.

The job cuts eat into tax revenues usually reaped from the sector at a time when the global economic recovery is slowing.

This year's tax income from the industry in Britain could drop to around 40 billion pounds ($63 billion) this year, compared to 70 billion in 2007-08, when the financial crisis hit, the Center for Economics and Business Research think-tank said this week.

The job cuts announced since the beginning of 2011 come on top of job cuts already carried since 2009.

Of the 29 banks, from Europe's biggest bank HSBC to U.S. investment bank Morgan Stanley , just over 83,700 net jobs have been lost since 2009, with 167,200 jobs axed and 83,500 created.

Squeezed by regulations forcing banks to store up more capital in their trading businesses, firms are likely to shrink their investment banking units even further, as they overhaul their models to survive.

"It is structural as well as in response to cycles in the market. The market is still over-broked," said Zaheer Ebrahim at recruiters Kennedy Group.

Swiss bank UBS last month outlined a further 10,000 layoffs after announcing a plan for 3,500 job cuts last year. It said in October it had decided to exit most of its rates and debt trading units.

Workers in retail banking operation will not be immune to job cuts either, particularly in slowing European economies. In France, for instance, bank executives predict retail revenues will falter.

"There are still 300,000 too many full-time employees in the top financial services players in Europe," said Caio Gilberti from the financial services practice of consultancy AlixPartners. Gilberti said cutting those jobs could lop just over 20 billion euros off banks' collective cost base.

As banks shrink, fewer of those leaving are able to find equivalent jobs at rivals, head-hunters and bankers said, and only a small proportion of those are qualified to move into other jobs at hedge funds, for instance, which look for specialized, skilled traders.

Mergers and acquisition dealmakers are now also coming under pressure, with fees in that area down 21 percent worldwide to $13.9 billion in the first nine months, Thomson Reuters data showed.

More senior investment bankers are among those in the line of fire. Those ranking as managing directors (MDs), who can command base salaries of around 350,000 pounds ($556,000), are becoming costly to keep — and difficult to take on.

"At MD level, it is tougher to accept smaller jobs, and they do not have the same drive and ambition as the young bankers who have just graduated," Ebrahim from the Kennedy Group said.

Many of those that have enjoyed lucrative careers in the fatter years are instead leaving big banks for good, setting up their own small consultancies or different types of businesses.

[seletar]

http://www.todayonline.com/Business/...-risks-in-2013

Chinese officials see growing global risks in 2013


TODAYonline
Updated 05:38 PM Nov 16, 2012


BEIJING - China faces growing global economic risks in 2013, with the looming fiscal cliff in the United States, Europe's debt crisis and rising trade tensions all threatening growth in the world's second-biggest economy, senior officials warned on Friday.

The comments came a day after China unveiled the new leaders who will take charge of the world's most populous nation for at least the next five years. China's economy is showing signs of recovery after seven successive quarters of slowing growth that leave it on course for its weakest full year of expansion in 13 years.

"Uncertainties in the global economy will increase further in 2013, especially in Europe and the United States - China's largest export markets," Vice Finance Minister Zhu Guangyao told a financial forum in Beijing.


He cited the recent IMF forecast that the fiscal cliff in the United States - shorthand for budget cuts and tax hikes that could take effect next year - could amount to US$800 billion and cut could US growth by 4.8 percentage points in a worst case view.

"It could drag China's economic growth down by 1.2 percentage points," Mr Zhu said, adding that he hoped Washington lawmakers would come to an agreement on taxes that would keep the US economy on track.

He reaffirmed China's support for the euro zone's efforts to deal with its debt crisis and revive the bloc's economy.

Ms Wu Xiaoling, a senior lawmaker and former vice central bank chief, said China faced rising trade protectionism as the global economy continued to struggle.

"We need more trade to help the recovery from the global crisis, but trade protectionism is on the rise and nationalism is on the rise," she said.

She said that China must press ahead with market-based economic reforms and political reforms to help sustain long-term economic growth.

Economists say the seven-quarter long cyclical downturn in China's growth ended in the third quarter, when growth dipped to 7.4 per cent year-on-year. A tepid rebound to 7.7 per cent is anticipated in the fourth quarter but full-year growth remains on course for its slowest year since 1999. - REUTERS

[seletar]

http://www.todayonline.com/Business/...,-outlook-soft

Economic growth subdued, outlook soft

Growth forecast cut to 1.5% as weak external demand puts economy under pressure


by David Bottomley
04:45 AM Nov 17, 2012
TODAYonline


SINGAPORE - The Government has warned that economic growth for the rest of this year will be subdued while forecasting that 2013 may not be much better after revised data showed the economy performed much worse in the third quarter than had been estimated.

Gross domestic product (GDP) contracted by 5.9 per cent in the quarter from the previous three months, a much sharper decline than the 1.5 per cent contraction that was forecast in the advance estimate last month.

The gloomy performance was driven by the decline in externally-oriented sectors such as manufacturing, which shrank 9.6 per cent on a seasonally-adjusted annualised basis compared with the previous quarter.

The main reason for that was the contraction in electronics manufacturing, according to the Ministry of Trade and Industry (MTI). The normally robust construction sector contracted by 17.2 per cent due to a decline in private sector building activities.

"It is clear that the Singapore economy is struggling and will continue to do so," said Credit Suisse economist Robert Prior-Wandesforde.

Economic growth is expected to be subdued for the rest of this year, as tepid external demand weighs on key sectors. MTI now expects economic growth of around 1.5 per cent for the whole of 2012, at the bottom of its previous forecast of 1.5-2.5 per cent. It also cautioned that growth could be slightly worse than forecast if weakness in externally-oriented sectors persists.

"We are seeing sequential contraction in basically all key segments. That's where the worry is at: That the economy has lost a lot more steam than initially estimated, with almost all clusters contributing to the decline. And even though the government has narrowed its 2012 full year forecast, downside risks remain," said CIMB regional economist Song Seng Wun.

Looking ahead to 2013, MTI said it expects economic growth of 1-3 per cent, held back by the sluggish global economy which will keep external demand weak.

Although that forecast is "fairly miserable", according to Mr Prior-Wandesfore, there's no guarantee that it can be achieved.

MTI noted that concerns remain about the extent of the fiscal cutback in the US and the potential escalation of the ongoing debt crisis in the Eurozone. "Should any of these risks materialise, Singapore's economic growth could come in lower than expected," it said.

That view was echoed by Mr Song, who said that 1-3 per cent growth looks possible if China continues to anchor Singapore's growth.

"However, if US politicians can't resolve the fiscal cliff situation and the EU recession deepens, then we'll risk another recession heading into 2013. In that case, 1-3 per cent for the year will probably be too optimistic."

Meanwhile, the weak external demand means non-oil domestic export growth for 2012 is now forecast to be between 2 and 3 per cent, down from the previous estimate of 4-5 per cent, according to International Enterprise Singapore.

It's forecasting export growth of between 2 and 4 per cent in 2013.

[Rysk]

luxus now 3 mil

watch this video, then I understand the pain

http://video.xin.msn.com/watch/video...hills/pf6cs6qo

3-mil ardy!!?? ..... No wonder MR B go MIA.. act blur change id to SELETAR airbase come back continue with his copy & paste of bad news..

[seletar]

http://www.channelnewsasia.com/stori...237806/1/.html

Israeli air strikes hit Hamas HQ in Gaza


Channel News Asia
Posted: 17 November 2012 1452 hrs


GAZA CITY, Palestinian Territories: Israeli air strikes hit the cabinet headquarters of Gaza's Hamas government Saturday after militants fired rockets at Jerusalem and Tel Aviv as Israel called up thousands more reservists in readiness for a potential ground war.

The Israeli military said it had sealed off all the main roads around the Gaza border, declaring the area a closed military zone, in the latest sign that Israel's patience with the rocket fire was at an end and it was poised to launch its first ground offensive on the territory since 2008-9.

The Hamas government said its cabinet headquarters was targeted with four strikes, and witnesses reported extensive damage to the building.

"The IDF (army) has targeted (Hamas prime minister) Ismail Haniya's headquarters in Gaza," an Israeli army spokesman told AFP.

"Over the past six hours, the IDF targeted 85 more terror sites," the military spokesperson's official Twitter account said.

"The headquarters was completely destroyed and neighbouring houses were damaged as a result of the barbaric Israeli bombing," a Hamas official told AFP.

The raid on the building came as Israel renewed strikes across Gaza, bombing the headquarters of the Hamas police force in western Gaza City and the government's internal security headquarters in the north of the city.

In the northern Jabalia camp, a strike left at least five people injured from the same family, according a source at the Kamal Odwan hospital.

An AFP correspondent earlier reported seeing tanks massed along the Gaza-Israel frontier, and a steady stream of reservists arriving throughout the day Friday.

President Barack Obama reiterated US support for Israel's right to defend itself during a call with Israeli Prime Minister Benjamin Netanyahu about the conflict in Gaza.

Israeli air strikes on Gaza on Friday night killed six Palestinians, raising the toll in two days of violence to 30, a Hamas health ministry spokesman said.

An Israeli military spokesman said one strike destroyed a Hamas military drone production workshop.

Israeli ministers approved the call-up of as many as 75,000 reservists as Netanyahu held late evening talks at the defence ministry in Tel Aviv with his inner circle, Channel Two television reported.

The military wing of the Islamist Hamas movement that rules Gaza said it fired the rocket at Jerusalem, the first from the territory ever to strike the outskirts of the Holy City.

It marked a major escalation by Hamas in the face of a deadly pounding since Wednesday by Israeli aircraft that has sparked outrage across the Arab and Islamic world.

A rocket attack also killed three Israelis.

Neither rocket on Friday caused casualties or damage, police said, but they sowed panic in both of the Jewish state's main population centres, setting off warning sirens and sending people scurrying to shelters.

One hit a Jewish settlement bloc in the occupied West Bank just south of Jerusalem, which is home to many commuters, but caused no damage or injuries, an army spokesman told AFP.

A second rocket crashed into the sea off Tel Aviv "some 200 metres (yards)" from the beachfront US embassy, sending beachgoers fleeing, a witness told AFP.

The two rockets were the farthest Gaza militants have ever fired into Israel, exceeding even the 60 kilometres (36 miles) achieved by a rocket that hit the sea off Jaffa, just south of Tel Aviv, on Thursday.

UN and Palestinian officials said UN chief Ban Ki-moon would travel to the region in days to push for a truce.

"Ban went to the region during the last Israeli offensive against Gaza in 2009 and worked hard to end that conflict. He is looking to produce a truce and ceasefire this time as well," one senior UN diplomat said.


"Preparing all the military options"

Even before the latest rocket fire, senior cabinet minister Moshe Yaalon warned that Israel was poised for a ground offensive.

"We are preparing all the military options, including the possibility that forces will be ready to enter Gaza in the event that the firing doesn't stop," he said.

As ground troops massed, there was no let-up in Israeli air attacks.

A child was among the dead reported by the territory's emergency services on Friday, two of whom were brought in to Gaza City's Shifa hospital as Egyptian Prime Minister Hisham Qandil toured the wards on an unprecedented solidarity visit.

The overthrow early last year of veteran strongman Hosni Mubarak, a staunch supporter of Egypt's three-decade-old peace treaty with Israel, has cast a chill over the already lukewarm relationship between the two neighbours.

Egypt's new Islamist President Mohamed Morsi, who like Hamas has his roots in the Muslim Brotherhood, has moved to establish closer relations with the Gaza authorities.

Washington appealed to Egyptian leaders as well as to allies such as Turkey to use their sway with the Palestinians in a flurry of telephone diplomacy aimed at containing the crisis.

In Obama's call to Netanyahu, the president "reiterated US support for Israel's right to defend itself, and expressed regret over the loss of Israeli and Palestinian civilian lives", the White House said in a summary of the conversation.

Netanyahu, who initiated the call, expressed his deep appreciation for US investment in the Iron Dome rocket and mortar defence system, "which has effectively defeated hundreds of incoming rockets from Gaza and saved countless Israeli lives", according to the readout.

-AFP/ac

[seletar]

http://www.cnbc.com/id/49878372

Singapore Hotels Feel the Squeeze as Corporate Budgets Tighten


Published: Sunday, 18 Nov 2012 | 6:39 PM ET
By: Reuters


The best may be over for Singapore's booming hotel market as tightening corporate budgets and bank job cuts leave more luxury rooms empty, crimping profits at firms such as CDL Hospitality Trusts.





Singapore runs neck-and-neck with Hong Kong for the title of the world's busiest hotel market, with both boasting occupancy rates that exceeded 85 percent for 2011, according to the two cities' tourism boards. That's higher than in global tourist hot spots such as New York and London.

Hong Kong's occupancy rate may pull ahead of Singapore's in 2013, largely because it has fewer new hotels slated to open. If Singapore's demand stays lukewarm next year, as many hotel operators expect, room rates and profits will slip.

"We will see a slight drop in occupancy rate (in Singapore) mainly due to new supply that is about to come on board in 2013," said Jonas Ogren, Asia director at hotel data provider STR Global, based in Singapore.

"In Hong Kong, we are not seeing so much new supply coming on board, which means the hotels that are already there will continue to do better and better." The supply of four- and five-star hotel rooms in Singapore is expected to increase by 17.4 percent from 2011 to 2014, while Hong Kong's will grow by just 13.5 percent, according to real estate services firm CBRE.

The city-state's high-end hotels have been hit harder than moderately priced rooms, which suggests that weaker corporate travel rather than tourism is weighing on demand.

September's occupancy rate for upscale and luxury rooms dipped to an average of 81 percent, compared with 86 percent for mid-tier accommodations.

Far East Hospitality Trust , which operates 11 hotels and serviced apartments in Singapore, said some customers were downgrading to cheaper rooms.

"The uncertainty in the West and the slowdown in businesses in certain sectors have caused some to cut back on the deployment of expats and corporate travel," Gerald Lee, Far East's chief executive, said in a telephone interview. "Impact from the financial sector is the most visible," he said.

Demand has eased at Far East's Regency House serviced apartments, a popular choice among visiting or relocating bankers who can rent three-bedroom suites by the month.

CDL, which owns four- and five-star hotels in Singapore, reported weaker-than-expected results on Oct 30 and said its revenue per available room slipped to S$209 ($170) in the July-September quarter from S$217 in the previous three months.

That was the highest rate since the second quarter of 2008, just before the Lehman Brothers bankruptcy sparked a global recession that crushed hotel demand. CDL blamed slowing corporate and conferences demand for the sluggish performance.


Recovery Stalls

A booming financial services industry and the launch of two new casino resorts in 2010 helped Singapore's hotels come roaring back after the global financial crisis, which drove down the occupancy rate to just 76 percent in 2009.

But banks have cut jobs and casino revenues have softened. Other hotel operators, including Hotel Properties which owns the Four Seasons and Hilton hotels here, are cautious and blame the worsening business environment as the main culprit.

"Singapore's hospitality sector may close the year on a weakened note," Overseas Union Enterprise , which owns Marina Orchard on Singapore's main shopping belt, said in its third quarter earnings statement.

[seletar]

http://www.todayonline.com/Voices/ED...rty-developers

Better regulate property developers


From Raymond Lo Wan Mou
04:45 AM Nov 19, 2012


In a real estate industry, the main players are the property developers, architects, contractors, estate agencies, salespersons, bankers and home buyers.

Except for developers and buyers, all are regulated and guided by professional practices.

So, why does the Ministry of National Development (MND) not think it fit to regulate developers in the same way?

Without doing this, the MND is not holistically controlling the real estate industry.

Developers are the most important players, and there are good reasons to regulate them more stringently.

First, as in every industry, there are black sheep. As a real estate stakeholder, I have witnessed developers, particularly during the launch of their projects, mislead buyers by suddenly holding up the release of units to create pent-up demand in the name of "market conditions".

Second, many developers market their projects before their building plans are approved and say that these are "subject to change". This is unprofessional.

Third, property developers appoint agencies to market their projects and also have their own teams to do this, which is a conflict of interest that creates havoc among agencies and their salespersons. It is the public, as buyers, who suffer.

Last but not least, developers normally do not disclose accurate and time-sensitive information, which they should as responsible players and in the public's interest. Properties on sale must have clear details and information for buyers.

No doubt, developers want to maximise their profits.

It is under such circumstances that the MND should have better oversight of them, for them to be more responsible players.

[seletar]

http://sbr.com.sg/residential-proper...south-mid-2013

Singapore Business review
RESIDENTIAL PROPERTY | Staff Reporter, Singapore
Published: 19 Nov 2012


Singapore home prices heading south by mid-2013


All because of next year's supply overload.

Here's more from DBS:

We expect prices to come under slight pressure when the large incoming supply of private and public homes starts to kick in from 2H13.

More new launches to come. 10M primary homes sales have reached just under 20,000 units. With developers still planning to launch projects for the remainder of 4Q such as City Dev’s Echelon development, we believe monthly home sale volumes are likely to remain above average, particularly under a low interest rate environment. However, price momentum is expected to moderate. We expect prices to come under slight pressure when the large incoming supply of private and public homes starts to kick in from 2H13.

We continue to like CMA in anticipation of their acceleration in earnings growth as their portfolio matures and Capitaland which would benefit from their capital recycling activities in the coming years.

[seletar]

http://www.straitstimes.com/premium

Straits Times
19 Nov 2012


8 projects may be nearing sales deadline


By Esther Teo
Property Reporter


AT LEAST eight private housing projects, mostly in prime areas, are likely running out of time to sell their units within two years of completion, as stipulated by the authorities.

High-end developments such as The Marq on Paterson Hill and Hilltops in Cairnhill Circle, for instance, have been completed for at least a year but still have hundreds of new units sitting unsold.

If they are not sold within the next 12 months or less, developers may have to fork out extension charges to buy themselves more time after the two-year deadline.

Developers pay 8 per cent, 16 per cent and 24 per cent of the property purchase price for the first, second and third extra years, respectively. The amount is pro-rated based on the proportion of unsold units.

SC Global's 241-unit Hilltops, for example, was completed in the second quarter of last year and has till about June next year to sell its 196 apartments still unsold as at the end of September.

Its other luxury project, the 66-unit The Marq on Paterson Hill, completed in the first quarter of last year, has till about March next year to find buyers for its 33 unsold units.

Wheelock Properties' Scotts Square in Scotts Road also has 72 units unsold. It was completed in the third quarter of last year and also has less than a year to move its remaining units.

Other projects facing a similar predicament, with at least 10 units still unsold, include 88-unit Martin No. 38 with 21 units left and Residences at Emerald Hill with all its 33 units unsold.

SC Global and Wheelock Properties declined to comment about whether they had obtained or are planning to get an extension.

The high-end market has been languishing with slow sales and prices that are still below their peak. The additional buyer's stamp duty of up to 10 per cent introduced last year also whittled down foreign home demand, further hurting sales.

Under the Residential Property Act, housing developers whose shareholders and directors are not all Singaporeans have to get a Qualifying Certificate (QC) to buy residential property for development. This is imposed to control foreign ownership of land here.

This gives developers up to five years to build the project and requires them to sell all the units within two years of obtaining the temporary occupation permit (TOP). They are not allowed to rent out unsold units.

To ensure compliance, a developer has to put up a banker's guarantee for 10 per cent of the purchase price of the property, which may be forfeited if it fails to fulfil the QC's conditions.

Since January last year, a developer has been given the option to pay an "extension charge" if it cannot meet the five years' deadline from the issue of the QC to complete its project.

It might also be liable for a pro-rated extension charge, based on the proportion of unsold units it still holds, if it cannot meet the two-year deadline to sell all its units after the project is completed.

Some developers are understood to have sought extensions to the two-year window. However, since the implementation of the extension charge scheme last year, six developers have paid charges, the Ministry of Law said.

The Real Estate Developers' Association of Singapore has also submitted a proposal this year to extend this two-year period. The Law Ministry said that it is "looking into the feedback".

Experts say that while indirect discounts such as rental guarantees or stamp duty absorption might be offered by some projects as the deadline nears, large cuts in prices are unlikely.

Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, noted that developers are likely to opt to pay the extension charges instead.

"A majority of developers bought the land at lower historical prices and so paying the extension charge will not erode their profit margins significantly," he said.

"This option is preferred as cutting prices would not only affect their reputation but also face objections from earlier buyers."

[email protected]

[seletar]

http://sg.news.yahoo.com/u-heading-a...-business.html

U.S. heading for another crash, debt crisis looms: top economists



By Tim Reid | Reuters – Sat, Nov 17, 2012


SANTA MONICA, Calif (Reuters) - Two leading U.S. economists expressed deep pessimism on Friday that politicians in Washington will be able to strike a deal to rein in America's soaring national debt.

Sheila Bair, the former chairman of the Federal Deposit Insurance Corporation, and Stephen Roach, a veteran economist at Yale University's School of Management, also said the Federal Reserve was creating another catastrophic financial bubble with attempts to stimulate the economy through its policy known as quantitative easing.

The two were speaking at a conference on global risks sponsored by the Rand Corporation and Thomson Reuters, at Rand headquarters in Santa Monica, California.

Bair, who stepped down as head of the FDIC in July 2011, said the Federal Reserve's policy of pumping money into the economy, combined with an unprecedented period of historically low interest rates, was creating "the mother of all bond bubbles."

Bair said she believed the United States was heading for a financial crash on the scale seen when the housing market collapsed six years ago, but this time because of investors who were looking for higher and riskier returns in other asset classes.

Roach called the Federal Reserve policy of low interest rates and quantitative easing a "ticking time bomb that keeps on ticking."

The two spoke as congressional leaders in Washington met with Obama to try to find common ground on taxes and spending that will allow them to head off a looming "fiscal cliff" that could push the U.S. economy back into recession.

About $600 billion worth of tax increases and spending cuts begin to kick in on January 1 unless Congress can find a way to replace them with less severe deficit-reducing measures before then.

Bair and Roach both said they believed Congress will find some way to "kick the can down the road" on the question of the fiscal cliff. Neither believes Washington will pass the fundamental structural reforms necessary to deal with America's long-term debt crisis.

The United States has been running annual deficits of over $1 trillion for several years. National debt now tops $16 trillion.

A series of panels and commissions last year recommended a mix of revenue increases and spending cuts as a way to pay down the debt. Efforts by Obama and John Boehner, the Republican House Speaker, to reach a "grand bargain" on debt reduction collapsed amid acrimony last year.

"It's not hard to figure this out," Bair said. " it's lack of leadership that doesn't get us here. I just don't see that sort of leadership anymore." Roach said: "I am not optimistic we will get a grand deal that will really solve our long-term problems."

[seletar]

http://sbr.com.sg/economy/news/two-u...growth-targets

Singapore Business Review
ECONOMY | Staff Reporter, Singapore
Published: 34 min 36 sec ago


Two ugly charts blamed for downward revision of trade growth targets


The sharper-than-expected 7.9% NODX rebound in Oct is found insignificant.

After an average 7% yoy fall in the previous two months, NODX recovered to grow by 7.9% in Oct, ahead of consensus and our forecasts of +3.1% and +4.0% yoy respectively. The rebound was aided by a sharp yoy fall in Oct 11 (-16.3% yoy). Both tech and non-tech DX fared better than expected. Led by drugs (+2.7% in Oct vs. Sep’s -3.0%) and supported by lumpy exports (106% yoy in Oct, 127% in Sep), non-tech DX rose 12.7% yoy (3.9% in Sep), the strongest in eight months.

CIMB however notes that despite this positive development, Singapore has actually lowered its 2012-13 trade and NODX forecasts. Total trade is projected to expand 3-4% this year vs. its previous forecast of 4-5% (10M12: 2.1%). 2012 NODX growth has been lowered to 2-3% from 4-5% (10M12: 2.7%).

For 2013, citing subdued global demand, NODX growth is projected at 2-4% while total trade is expected to expand by 3-5%

Click to zoom

[seletar]

http://sbr.com.sg/financial-services...ingapore-banks

Singapore Business Review
FINANCIAL SERVICES | Staff Reporter, Singapore
Published: 36 min 15 sec ago

Here's how depressing 2013 would be for Singapore banks


Banks' profits barely grew 5% in 3Q and worse is expected going forward.

Here's from DBS Vickers:

Hit by NIM pressure, saved by low provisions.

Core net profits grew 5% q-o-q lifted mainly by sustained low provisions and higher non-interest income. Core preprovision profits grew a mere 2% q-o-q, thanks mainly to better than expected non-interest income.

Both UOB and OCBC saw strong y-o-y trends due to weak trading income the previous corresponding year. NIM was under pressure from lower asset yields. UOB’s NIM fell the steepest (-9bps q-o-q vs DBS: -5bps, OCBC: -2bps).

Deposit costs were higher except for OCBC (-5bps).

Slower loan growth while deposits picked up. Loan growth moderated as expected averaging 0.3% q-o-q, 8.7% y-o-y. By sector, the slowdown came from transportation, followed by general commerce and manufacturing. S$ loan growth remained strong (+3.2% q-o-q; +14.7% y-o-y) while US$ loans shrank (-5.8% qo- q, -1.0% y-o-y). OCBC’s S$ loans grew the slowest among peers as it focused on growth in higher margin countries i.e. Malaysia and Indonesia. Loan-to-deposit ratio eased as deposits largely outpaced loan growth (except for OCBC which saw deposits contract q-o-q).

Asset quality and capital remained strong.

Asset quality was largely stable but UOB saw an uptick from the transportation sector related to an account at an overseas branch. Capital ratios improved as banks issued Tier-2 capital in 3Q12. OCBC added the most with its retained one-off gain from FNN/APB share divestment.

Soft outlook.

Banks continue to guide for high single loan digit growth going into 2013; OCBC guided midto- high single digit loan growth. It is still too early to assess the impact of the recent property cooling measures. NIM pressure is not expected to ease soon.

We nudged up our FY12 core earnings growth to 16% because of higher-than-expected non-interest income. Our FY13F earnings points to a low single digit growth of 3% from NIM pressure and higher provisions.

Click to zoom

[seletar]

http://www.businesstimes.com.sg/prem...-line-20121120

Business Times
Published November 20, 2012


Report: (Another) 40,000 jobs in banking on the line

Global investment banking revamp set to slash headcount

By Joyce Hooi


[SINGAPORE] The new Maserati Quattroporte might be out next year, but bankers had better not trade up just yet. Globally, some 40,000 heads might have to roll off pin-striped suits as the investment banking sector restructures itself, according to the latest Roland Berger survey.

This is expected to take place over the medium-term, on top of the 15,000 job cuts announced and another 25,000 redundancies already in the works, the consultancy firm noted in its report.

Gallingly enough, these headcount slashes will happen alongside "permanently lower bonus payouts and a similarly steep non-compensation cost reduction," the report said.

While global investment banking revenues are expected to recover to around 250 billion euros (S$391 billion) in 2012 - a 10 per cent improvement from 2011 - this will hardly be enough.

"Even though 2012 industry profits and return will be much more palatable than 2011, we consider them far from sustainable. Basel 3 slowly but surely will create additional bottom-line pressure," the report said.

"The bottom-line pressure will in turn mean that the industry cost base has to be cut by another 15 per cent.

[seletar]

http://www.cnbc.com/id/49882389

Record Amount of Spanish Bank Loans Turn Sour


Published: Monday, 19 Nov 2012 | 4:47 AM ET
By: Reuters


Spanish banks' bad loans rose to 10.7 percent of their outstanding portfolios in September, reaching a fresh record high, Bank of Spain data showed on Monday, up from 10.5 percent a month earlier.





Loans that fell into arrears increased by 3.5 billion euros ($4.5 billion) from August, reaching 182.2 billion euros in September.

Non-performing loans on the books of the country's crippled banks have risen steadily since a decade-long property boom ended four years ago, with the country now in its second recession since 2009 and one in four Spaniards out of work.

[seletar]

http://www.bloomberg.com/news/2012-1...king-risk.html

Purple Palace Abandoned Shows China Shadow-Banking Risk


By Bloomberg News - Nov 20, 2012 6:01 AM GMT+0800




Sculptures of horses stand in Genghis Khan Square in the new district of Kangbashi in Ordos, Inner Mongolia, China. Designed for 300,000 people, Kangbashi, the new urban center of Ordos prefecture, may have only 28,000 residents, Bank of America-Merrill Lynch said last year. Photographer: Nelson Ching/Bloomberg




Residential apartment buildings stand in the new district of Kangbashi in Ordos, Inner Mongolia, China. Photographer: Nelson Ching/Bloomberg




A general view shows the skyline of the Dongsheng district of the inner Mongolian city of Ordos. Photographer: Ed Jones/AFP/Getty Images




A cement truck drives down a street in the new district of Kangbashi in Ordos, Inner Mongolia, China. Photographer: Nelson Ching/Bloomberg


Niu Dianqing stopped his motorbike at a construction site in China’s Inner Mongolia one morning last month. The front door was locked.

“They said they will pay me this month, but it seems I’m fooled again,” said Niu, who supplied nets for protecting workers from falling off bamboo scaffolding at the half- completed Purple Palace, a development including a luxury hotel and three residential buildings in the city of Ordos. “The doorman was still here last week, but now even he’s gone.”

The developer, Ordos Jin’ao Property Development Co., owes a lot more than the 10,000 yuan ($1,604) Niu is trying to collect, and it isn’t only suppliers who are out of the money. Dozens of investors nationwide have put 445 million yuan of savings into funding Purple Palace’s construction.

The two-year investment vehicles they purchased, called trusts, promised an annual interest rate of at least 10 percent and return of principal in March 2013. With at least 1,000 similar projects having ground to a halt this year in Ordos, where over-investment has resulted in a building boom gone bust, tens of thousands of investors risk default.

“The risks are significant there, and something must be done by the government to stop potential defaults of property trusts from spreading nationwide,” said Lian Ping, an economist at Shanghai-based Bank of Communications Co. “Trusts have become too large to fail.”


Sorghum Liquor

Trusts, targeting people with at least 1 million yuan to invest in alternatives to low-yielding bank accounts, are the fastest-growing segment of China’s nebulous world of shadow banking. They make up more than a quarter of the country’s estimated $3.35 trillion in non-bank lending, according to an Oct. 16 report by UBS AG chief China economist Tao Wang, or about 45 percent of the country’s gross domestic product.

Shadow banking worldwide is a $67 trillion industry whose size “can create systemic risks,” the Financial Stability Board said in a Nov. 18 report. The business in China, which includes banks’ off-balance-sheet vehicles such as commercial bills and entrusted loans, as well as underground lending by individuals, flourishes because more than 90 percent of the nation’s 42 million small companies can’t get bank loans.

China’s 64 trust firms, with sales offices in major cities, combine characteristics of commercial and investment banking, private equity and wealth management. They pool household savings to offer loans and invest in real estate, stocks, bonds, commodities, even bottles of sorghum liquor. No other financial firms operate across all these asset classes.


Overtaking Insurance

Trusts are set to overtake insurance by year-end as the nation’s second-largest financial business after banks, having expanded almost 16-fold since 2007, KPMG LLP said in a July report. Assets under management rose 47 percent in the 12 months through June, “a period during which the government supposedly clamped down on trusts,” UBS’s Wang wrote. Combined profit jumped 56 percent in the first nine months to 28.8 billion yuan after surging 88 percent in 2011, according to the China Trustee Association, a Beijing-based industry group.

Unlike other shadow-banking financing, trusts are supervised by the China Banking Regulatory Commission, which has to approve every product. The regulator last year published 36 rules and notices to curb risk, according to KPMG. It requires trust companies to honor commitments to investors or their business licenses will be revoked, forcing issuers to dig into their own pockets or issue new products to pay off old ones when borrowers can’t repay.


Repayment Risks

“China’s non-banking financial institutions are under strict regulatory supervision, rather than free of regulation as in some countries,” Central bank Governor Zhou Xiaochuan said at a press conference in Beijing last week during the Communist Party congress that chose Xi Jinping as China’s next president.

The party has pledged to promote freer movement of capital in and out of the country for investment purposes and to make the exchange rate more market-based.

Competition for trust licenses among foreign and Chinese investors has intensified as the number of permits dropped to 64 this year from more than 1,000 in 2002. Barclays Plc, Morgan Stanley and JPMorgan Chase & Co. are among global banks that have bought stakes in at least 10 Chinese trust firms.

Now, after plugging the capital shortfalls of developers amid a drop in real estate prices and a tightening of credit, trusts are facing repayment risks. As much as 15 percent of the nation’s 560 billion yuan of property-linked trusts that come due by the end of 2013 may default, according to brokerage China International Capital Corp.


‘Land Mines’

“The heyday of trusts is gone, and now they’re left with quite a few land mines to navigate,” said Ivan Shi, a Shanghai- based analyst at consulting firm Z-Ben Advisors Ltd. “Surviving the peak of repayment next year is probably the biggest challenge as we know many projects are dodgy.”

Trusts need to repay investors about 250 billion yuan in principal and return on property-linked investments this year, and an estimated 310 billion yuan more will come due in 2013, according to CICC. Issuers may be forced to extend payment deadlines, sell new trusts to pay off old ones or dispose of collateralized assets, the firm said.

“Nobody knows exactly how much obligation the sector has accumulated, but we know for sure the debt must be paid one way or another,” Shi said, adding that trust firms will have to step in to honor those debts if borrowers including property developers fail to make payment.


Silent Cranes

Risks may be “artificially suppressed” by rolling over debts into new products or buyouts by stakeholders, the International Monetary Fund warned in its October Global Financial Stability Report. Such bailouts “may create a false sense of safety that induces overinvestment,” the IMF wrote, adding that some trust assets are loans extended to developers and local government investment vehicles that can’t access bank credit and may be squeezed in a liquidity crunch.

“In the event of more severe credit problems in the trust sector, some financial losses might even spill over to banks, which often act as a marketing channel for trust products,” the IMF said in its report.

One backer of Purple Palace is Chongqing-based New China Trust Co. When the firm updated investors in October, there was no mention that work had been halted or that cranes and cement structures had been abandoned for more than six months.


Property Curbs

New China Trust didn’t respond to three calls seeking comment, and a contact number for Ordos Jin’ao couldn’t be located. An official who declined to give his name at Ordos Jinshan Property Development Group, identified in the trust prospectus as a former shareholder of the project, confirmed that construction had been halted.

Angie Tang, a Hong Kong-based spokeswoman for Barclays, said the London-based bank’s investment in New China Trust is “going very well.” A spokeswoman for JPMorgan in Beijing declined to comment on the company’s trust investments. Morgan Stanley didn’t respond to two e-mails seeking comment.

More than 35 percent of trust assets in China were funding infrastructure and real estate construction as of Sept. 30, according to China Trustee Association data. Property-linked trusts accounted for 677 billion yuan, or 11 percent of the total, a decrease of 3.3 billion yuan from a year earlier.

China’s policy makers have tried to curb the residential property market by raising down-payment and mortgage requirements and building affordable housing. The government also imposed property taxes in Shanghai and Chongqing, and placed home-purchase restrictions in about 40 cities. The result has been a 4 percent decline in home sales nationwide during the first nine months of the year and a price drop in October for new homes in 17 cities out of the 70 tracked by the government, according to the National Bureau of Statistics.


Trust Default

In May, repayments to a 200 million-yuan real estate trust issued by Jilin Province Trust Co. came eight days late, making it China’s first de facto trust default, China Securities Journal reported. The property developer failed to complete construction of a commercial building in Nanjing and generate enough cash flow from rentals, according to the report.

China Huarong Asset Management Co., one of four state-owned asset managers established in 1999 to take over trillions of yuan of bad loans from the largest lenders, bailed out the trust by buying the project and returning all of the money to investors, according to China Securities Journal.

Jilin Province is one of nine trusts borrowers were having difficulty repaying as of July 15, according to Benefit Wealth Co., a Chengdu-based data supplier that tracks China’s wealth- management market. The trusts had invested in natural resources, arts and properties.


Gas, Cashmere

Ordos, with a population of 1.9 million and rich in coal, natural gas and cashmere, is dotted with unfinished real estate projects as the drop in home prices and a collapse of private lending squeezed buyers and developers.

Work at almost two-thirds of the city’s 2,000 construction sites has been halted, while at least 300,000 migrant workers who came to build the city may have left over the past year, according to contractor Zhu Yadong. Zhu said his company was owed 20 million yuan in labor and material costs after laying the foundation for Ordos’s “World Trade Center,” where construction also stopped this year.

“The more we build, the more money we lose,” Zhu said as he watched two workers loading piles of rusty steel pipes onto a truck so they could be resold to reduce his losses. “This place was built on a bubble and needs a long time to get back on its feet. There are just too many properties and too few buyers.”


Dim Showroom

A few blocks from the Purple Palace, another developer’s plan to build a complex including two luxury hotels, a shopping center and office buildings funded by 1.1 billion yuan of trust investments also was put on hold.

The trusts, promising a 10 percent annual interest rate and set to mature starting in July, according to a prospectus, haven’t generated much income, said Lu Yixuan, the project’s only remaining saleswoman. The developer stopped selling residential homes in the complex this year, Lu said, sitting in a dim showroom.

Trusts have gone through the ups and downs of six periods of industry overhaul since the 1979 establishment of China International Trust & Investment Co. by the late Vice President Rong Yiren. Their functions have evolved from central and local governments’ borrowing arms to loan issuers and asset managers.


Unpaid Bonds

The 1998 collapse of Guangdong International Trust & Investment Corp., which borrowed domestically and overseas on behalf of southern China’s Guangdong province, was the most notorious. It left creditors including Germany’s Dresdner Bank AG and Chicago-based Bank One Corp., which later merged with JPMorgan, with $3 billion of unpaid bonds. The bankruptcy marked the first time Chinese authorities didn’t bail out a state-owned borrower. Only 50 of more than 240 trusts survived.

Trusts took off again in 2010 as they helped banks move loans off their balance sheets and circumvent lending quotas amid monetary tightening. Developers had to rely on trust loans for working capital even as borrowing costs including interest and fees amounted to about 15 percent this year and almost 20 percent last year, according to Benefit Wealth. That compared with the benchmark one-year lending rate of 6 percent.

When some loan requests were rejected by big banks because of repayment risks, they made their way to trust companies that offered financing at a higher cost, according to Zhou Hongliang, general manager of Agricultural Bank of China Ltd.’s private- banking unit, which competes with trust firms to manage assets for people with at least $1 million to invest.


Millionaire Households

China ranked third globally with 1.4 million millionaire households in 2011, following the U.S. and Japan, an increase of 16 percent from a year earlier, according to Boston Consulting Group. The world’s second-largest economy is set to dominate Asia’s wealth market, which Swiss bank Julius Baer Group Ltd. estimates may double by 2015 as the number of high-net-worth individuals increases to at least 2.8 million.

Trust buyers are mostly small-business owners and senior corporate managers, with half of them controlling at least 10 million yuan of assets, according to a 2012 survey conducted by a unit of Ping An Insurance (Group) Co. (2318), China’s second-biggest insurer. Almost 77 percent of trust investors bought real estate-linked products, while 75 percent said they achieved annual returns of more than 9 percent, the survey found.

The investments offer yields at least several times greater than bank deposits. China’s benchmark interest rate for savings accounts is 3 percent after two cuts since June.


‘Double-Edged Sword’

“The popularity of trusts is a reflection of the growing high-net-worth-individual market and demand for diversified financial services, especially with the help of implicit guarantees on repayment,” Z-Ben’s Shi said. “But that has turned into a double-edged sword. What made the trusts prosper in the past few years is now threatening to bring them down.”

Ke Kasheng, who until October oversaw trusts at the banking regulator, said in August that while some products face repayment risks the possibility of widespread defaults is limited. The amount of multi-investor real estate trust products that need to be repaid is 71 billion yuan this year and 184.2 billion yuan in 2013, he said.

The regulator in May required the four biggest state-owned asset managers to seek approvals before buying distressed real estate trusts and asked issuers to have a bailout plan six months before maturity if they foresee any risk of default. Firms were told earlier to impose higher weightings on property and other risky assets when calculating net capital, inspect compliance and risks of loans to property developers and stop offering them loans for working capital or land purchases.


Wenzhou Returns

Not all trust issuers heeded the call. Shanghai AJ Trust & Investment Co. in September raised 300 million yuan for a trust to invest in a residential project in a province including the city of Wenzhou, promising a minimum annual return of 11 percent for the three-year investment. Individual investors needed at least 3 million yuan.

The proceeds will help Zhejiang Kunlun Properties pay off its land purchase so the developer can start building. The annual return on investment can go as high as 17.4 percent if the selling price of the apartments reaches 12,100 yuan per square meter, according to the marketing document.

Home prices in Wenzhou dropped 16 percent in September from a year earlier, the seventh consecutive monthly decline, according to the statistics bureau.


‘Worst-Case Scenario’

Mao Zhen, a Shanghai-based sales manager of AJ Trust, said he spent hours on the phone fielding questions from potential clients suspicious of a return that’s almost four times the benchmark one-year deposit rate.

“I can’t stress enough that the return is guaranteed, though you won’t see that on the contract,” Mao said. “We did our homework and made careful selections on projects. Even in the worst-case scenario, investors will get what they were promised with money from the company’s own pocket. We will do everything to protect our business license.”

At least a quarter of trust buyers took such guarantees seriously and didn’t prepare for any losses, according to Ping An’s survey.

Prospects for the business remain unclear. Trusts weren’t mentioned in the 12th five-year plan China’s top regulators drafted for the financial industry in September. The plan detailed development guidelines through 2015 for banks, brokerages, mutual funds, futures firms, insurers and fledgling informal lenders such as loan guarantors and pawn shops.

“This speaks loudly of regulators’ concern about the unruly expansion of trusts and their sustainability,” said Fan Jie, a Chengdu-based analyst at Benefit Wealth. “The uniqueness and competitive edge of trusts as an all-inclusive asset manager will be undermined going forward as every other type of financial firm is encouraged to sharpen such skills.”


‘No Nothing’

The China Securities Regulatory Commission in September allowed mutual funds to manage money from designated investors with at least 1 million yuan for investment in both listed and unlisted securities and debts, putting them in head-to-head competition with trust firms.

At the Purple Palace in Ordos, Niu sees little chance of getting his money back.

“I came here every four to five days just to check whether there’s anything magically going on,” Niu said. “But did you see anybody around here? No buyers, no nothing. If anybody wants to get money back, they can finish this building in their dreams first.”

--Luo Jun and Bonnie Cao, with assistance from Alfred Cang in Shanghai. Editors: Sheridan Prasso, Robert Friedman