Warrants Highlight

Goodbye to half century loans

Amidst concerns over the rising housing prices in Singapore, the Monetary Authority of Singapore (MAS) announced cooling measures over the weekend for the sixth time.

New measures
Going forward, loans and refinancing can only be maximised to 35 years regardless of whether the property is privately or government owned. This new ruling came after United Overseas Bank started offering 50-year loans a few months ago, where National Development Minister Khaw Boon Wan then said: "There is now some gimmick, a bank offering 50-year loans. Please don't fall for that. It doesn't make sense."

In addition, the loan to valuation (LTV) will be lowered if the loan tenure is more than 30 years or if the loan period extends beyond the retirement age of 65 years. For a borrower without an outstanding loan, the LTV will be lowered to 60% from 80% while a borrower with outstanding loans, the LTV will be lowered to 40% compared to 60% previously.

Property and banking slips
Capitaland, the largest developer in Asia fell 3.3% leading the decline in the STI, while the financials fell more than 1% as a group. DBS, OCBC and UOB fell 1.5%, 0.4% and 1.3% respectively.

DPM Tharman will do what it takes to cool the markets
MAS defended its move saying that financial institutions have stretched the durations of home loans and this poses risks to both lenders and borrowers. Deputy Prime Minister Tharman Shanmugaratnam said that “We will do what it takes to cool the market, and avoid a bubble that will eventually hurt borrowers and destabilise our financial system”.

According to the central bank, average tenures have climbed to 29 from 25 years over the past three years. Also, more than 45% of new home loans exceed 30 years.

If interest rates were to rise, borrowers may find it hard to repay their loans and if interest rates were to fall further, lenders will find themselves stuck with the bad loans. Hence, there is an impending need to curb the housing situation.

This latest set of measures aim to not only target home buyers and existing owners but also the banks and property developers. The previous mortgage curbs had failed in dampening housing prices significantly as prices of both the HDB resale market and private residential property have continued to climb in Q2 and Q3 of this year. Whether a slowdown will happen following this latest move remains to be seen.

Singapore Market Wrap

The STI starts in negative territory for the week

The STI was down 1% (31.22 points) to 3076.65 yesterday. This is in spite of better than expected unemployment rates from the US last Friday night as well as improved HSBC China services PMI on Monday. Upcoming economic data releases this week may provide clearer directions for the markets.

STI 3250MBeCW121231 (Q4OW) exercise level 3,250.*
STI 3100MBePW121231 (Q4PW) exercise level 3,100.*

CapitaLand's Ascott bags prestigious awards
CapitaLand's wholly-owned serviced residence business unit, The Ascott Limited (Ascott), has garnered several prestigious awards from leading international travel publications in recent weeks, recognising it as the best serviced residence provider in Asia Pacific and Europe. Ascott was named the ‘Best Serviced Residence Operator' for the eighth consecutive year. This award came shortly after Ascott won the ‘Best Serviced Residence Brand in Asia-Pacific' award at the 2012 Business Traveller Asia-Pacific Awards held a fortnight ago in Hong Kong. Capitaland closed at $3.19, down 3.33% for the trading day.

CapitalaMB eCW130204 (Q4HW) exercise level 3.40.*
CapitalaMB ePW130103 (Q4EW) exercise level 3.00.*

Noble's medium term note programme
Noble has announced the proposal of its RM$300 million, 4.5% p.a. Sukuk medium term note, which matures on 16th October 2015. This note comes under Malaysian law and is currently expected to be issued on the 16th of October 2012. Noble closed down 1.9% to $1.29 day-on-day.

Noble MB eCW130201 (Q5OW) exercise level 1.40.*
Noble MB ePW130103 (QZ6W) exercise level 1.10.*

Overnight Market Wrap

No bailout for Spain?

Yesterday, European finance ministers declared that the European Stability Mechanism (ESM) is not about to be utilized anytime soon. The ESM was set up to buy bonds from troubled Eurozone countries to lower borrowing costs for these countries. Many have been anticipating Spain to request a bailout since their 10-year bond yield hit a high of 7.62%. However, it has now fallen back to 5.71%.

As European officials meet to discuss the debt crisis in the region, the S&P slid 0.4% last night to close at 1455.88. Apple, the largest company fell 2.2% as production stopped for the second time because of protests from workers.

US companies will start reporting earnings today and earnings at companies in the S&P are expected to fall 1.7% this quarter.

Overnight Markets

Indices	Last	Change
STI	3076.65	-1.0%
HSI	20824.60	-0.9%
DJIA	13583.70	-0.2%
S&P 500	1455.88	-0.3%
Nasdaq	3112.35	-0.8%
China A50	7187.32	-1.2%

Corporate News

Corporate Announcements

Earnings release dates:
Fri 12 Oct: SPH (4Q12)
Thu 18 Oct: SGX (1Q13)
Thu 18 Oct: Keppel Corp (3Q12)
Fri 19 Oct: CapitaMall Trust (3Q12)
Thu 25 Oct: NOL (3Q12)
Fri 9 Nov: SembCorp Industries (3Q12)

Ex-dividend dates:
Tue 9 Oct Ezra (1 Triyard Share for every 10 Ezra Shares)
Tue 6 Nov: Olam ($0.05)