Briefs

Embattled Singapore water treatment firm Hyflux has finally signed a $400-million restructuring agreement with Middle Eastern utility player Utico.

Announced on Nov 26, the deal came just days before debt-laden Hyflux was set to appear before the High Court on Nov 29 to seek an extension on its restructuring moratorium, which will expire on Dec 2.

An earlier rescue package involving Utico acquiring an 88% stake in Hyflux through a $300 million equity injection for senior unsecured creditors, as well as a $100 million shareholder loan, had failed to take off.

Under the latest deal, Utico and co-investors will acquire new Hyflux shares representing a 95% stake of the enlarged capital of the company for a total of $300 million. Hyflux will also get a working capital loan of up to $100 million. Since April, Hyflux has been searching for a new white knight investor after an earlier rescue deal by Indonesia-based SM Investments collapsed.

Hyflux found itself on the brink of bankruptcy after it went on a debt-fuelled expansion drive just as oil prices started to collapse and Middle Eastern states began to cancel their infrastructure projects.

In 2013, it also opened the Tuaspring desalination and power plant, which was built with more than $1.4 billion in bank loans as well as the sale of perpetual securities and an issue of preferred shares to 34,000 retail investors who now stand to lose almost all their money if the company goes bust. — By PC Lee

Real median income growth halved to 2.2% in 2019

Real median income growth of full-time employed residents in Singapore has slowed to 2.2% in 2019, falling sharply from the 4.4% growth recorded in 2018, according to an advance labour force report released by the Ministry of Manpower (MOM) on Nov 28.

MOM noted, however, that real median income growth averaged 3.8% a year over the last five years from 2014 to 2019, higher than the growth of 1.9% a year in the preceding five years.

At the same time, the resident unemployment rate edged up to 3.1% in June, from 2.9% a year ago.

“Overall, the resident unemployment rate remained low in June,” MOM said in a press release. “Despite economic headwinds, the resident employment rate was higher in June than a year ago.”

On a non-seasonally adjusted basis, unemployment rate for professionals, managers, executives and technicians (PMETs) held steady at 2.9% in June, the report said.

PMETs’ long-term unemployment rate fell to 0.6%, from 0.8% a year ago, with more taking up roles in PMET-concentrated sectors, including information and communications, financial and insurance services, and professional services.

Overall, the report found that employment rate for residents aged 25 to 64 improved to 80.8% in June, from 80.3% a year ago.

MOM warned, however, that the unemployment situation is uneven, with nonPMETs more affected than PMETs. “The increase in the number of employees on fixed-term contracts also suggests cautious hiring,” the ministry added.

MOM and Workforce Singapore say they are closely monitoring the labour market, and stand ready to step up employment support for Singaporeans. — By Stanislaus Jude Chan

Manufacturing output beats estimates with 4% growth in October

Singapore’s industrial production came in stronger than expected in October, increasing 4% y-o-y on the back of a 24% jump in biomedical manufacturing output.

Excluding biomedical manufacturing, output grew 0.2% in October, according to data released on Nov 26 by the Singapore Economic Development Board, a government agency under the Ministry of Trade and Industry.

Economists had predicted a 1.4% fall in October manufacturing output, according to consensus estimates.

On a seasonally adjusted m-o-m basis, manufacturing output increased 3.4%. Excluding biomedical manufacturing, output grew 6.5%.

The biomedical manufacturing growth was driven by the pharmaceutical segment, which rose 29.6% y-o-y with higher production of active pharmaceutical ingredients. This was supported by the medical technology segment, which rose 13.1% y-o-y on the back of higher export demand for medical devices.

“Output stabilisation has taken hold and the view remains one of a shallow lift following the stabilisation,” says Ong Sin Beng, analyst at JPMorgan Chase. “Given the turn in October output, we maintain our forecast of 1% q-o-q seasonally adjusted annual rate growth in 4Q2019.” — By Stanislaus Jude Chan

Southeast Asia bourses remain resilient amid economic headwinds

Capital markets across Southeast Asia remained buoyant in 2019, despite ongoing global geopolitical tensions and macroeconomic events such as the US-China trade conflict and potential outcomes of Brexit.

According to data from Deloitte Singapore, Southeast Asia bourses so far this year to mid-November have raised some US$6.8 billion ($9.3 billion) through 138 IPOs. The region also generated US$21.6 billion in market capitalisation.

This, however, paled in comparison to the full-year count of 152 IPOs for 2018, which raised US$9.5 billion and generated US$46.1 billion in market capitalisation.

The IPO performance in 2019 was spearheaded by Thailand and Singapore, which accounted for 39% and 33% of the total funds raised respectively. Thailand, in particular, has overtaken Vietnam as the biggest market for IPOs in Southeast Asia.

“The performance of Thailand’s IPO market in 2019 is largely driven by homegrown companies, and both foreign and domestic investor liquidity is high, which continues to generate strong appeal for investors and fund managers,” says Wilasinee Krishnamra, leader of the Disruptive Events Assurance team at Deloitte Thailand.

On the local front, the Singapore IPO market also saw a fourfold increase in funds raised this year. As at Nov 15, the Singapore Exchange raised a total of US$2.26 billion in proceeds from 11 IPO deals, compared with US$551 million from 15 IPO deals in 2018. — By Uma Devi

Singtel said to be talking to Grab on Singapore digital bank bid

Singapore Telecommunications is in talks with companies including Grab Holdings to jointly bid for a digital banking licence in the city state, according to people familiar with the matter.

Singtel, Grab and Great Eastern Holdings, the insurance unit of Oversea-Chinese Banking Corp, are discussing the formation of a consortium following Singapore’s decision to open online banking to non-bank firms, say the people, who asked not to be identified because the discussions are private.

The talks have not yet been finalised and the companies involved might yet decide on other structures, the people say.

A spokesperson for Singtel says the company is “still evaluating various options”, while a spokeswoman for Grab pointed to previous comments on the ride-hailing firm’s interest in applying for a digital bank licence in Singapore.

The Monetary Authority of Singapore unveiled plans this year to grant as many as five virtual bank licences to boost competition and innovation in the nation’s financial industry. — Bloomberg LP