Quoteworthy: “My orders to the police, the military and the village officials: if there’s a commotion, if they fight back and your life becomes at risk, shoot them dead.” – Philippine President Rodrigo Duterte, in a warning to violators of coronavirus lockdown measures.
Moody’s downgrades outlook for Singapore banks to ‘negative’
Credit rating agency Moody’s Investors Service has downgraded its outlook on Singapore’s banking system to “negative” as the city state grapples with an economic slowdown and declining interest rates amid the Covid-19 pandemic
Against this backdrop, Moody’s analysts Eugene Tarzimanov, Alka Anbarasu, Graeme Knowd and Stephen Long point out in an April 2 report that loan growth in Singapore is expected to be very limited this year. The analysts also foresee a resultant deterioration in asset quality.
“Problem assets will increase as delinquencies grow among small and medium-sized enterprises and larger corporates,” the analysts say. As such, they expect higher impairments of personal unsecured loans, especially as the labour market softens.
To this end, credit costs are slated to rise in tandem with worsening interest rates, causing a drag on the profitability of banks. This will further impede the banks’ ability to generate capital, the analysts add.
Even so, they note that funding and liquidity will remain strong, given Singapore banks’ historical strength in liquidity coverage and high net stable funding ratios that exceed 100%.
“Given the banks’ systemic importance, and government’s fiscal strength and ample reserves, the government is highly likely to support the largest domestic banks when needed,” Moody’s analysts say.
Singapore is not alone in Moody’s downgrade. The ratings agency has also downgraded its outlook on 11 other Asia Pacific countries – Australia, China, India, Indonesia, Korea, Malaysia, New Zealand, Philippines, Taiwan, Thailand and Vietnam.
Together with Hong Kong and Japan, which had been placed on the “negative” list earlier, Moody’s latest review puts 14 banking systems on its negative outlook radar. — Amala Balakrishner
Business optimism among SMEs tumbles to all-time low
Fears are mounting among SMEs – a key driver of Singapore’s economic growth – as the Covid-19 pandemic escalates.
A quarterly survey, jointly conducted by the Singapore Business Federation (SBF) and consumer credit reporting company Experian, revealed that business optimism for some 3,000 SMEs across six sectors is at its lowest since its inception in 2009.
The SBF-Experian SME Index for 2Q2020 to 3Q2020 registered an overall reading of 48.3.
A reading of below 50 signals contractionary sentiments.
For the first time, all six sectors surveyed – commerce and trading, construction and engineering, manufacturing, retail and F&B, business services, and transport and storage – registered readings below 50.
Given the escalating and accelerating impact of the rapidly evolving Covid-19 outbreak on the global economy, SME sentiments are likely to have contracted even further since the survey was conducted between Jan 13 and Feb 28, SBF and Experian note in a joint statement.
“These are unprecedented times for the business community. We’re facing one of the worst outbreaks in history, unprecedented border closures of entire countries and growing uncertainty in the global financial markets,” says SBF CEO Ho Meng Kit.
“While the findings of the latest Index reflect the broader sentiments, expectations and realities of our SMEs on the ground, the situation has since worsened,” he adds.
“We do expect a deeper contraction in SME sentiment in the coming days and weeks. The reality on the ground is that SMEs are focused solely on resilience and sustainability to bridge the deepening effect of the economy on their survival,” says James Gothard, Experian’s general manager for credit services and strategy in Southeast Asia. — Uma Devi
Landlords may have to pass on property tax rebate in full to tenants
Non-residential property owners were set to receive a property tax rebate of up to 100% for the tax payable in 2020 as part of the FY2020 Budget and Supplementary Budget. Now, they could soon be required to pass on this property tax rebate in full to their tenants.
According to the Ministry of Finance (MOF), the government will introduce new legislation at the next sitting of Parliament to place an obligation on property owners to pass on to their tenants the property tax rebate attributable to the rented property.
For most properties, the 100% property tax rebate works out to more than one month of rent. This was aimed at helping businesses cope with the impact from Covid-19.
In announcing the relief measures, Deputy Prime Minister Heng Swee Keat had urged property owners to pass on the property tax rebate to their tenants by reducing rentals.
“However, the government has also received feedback that other property owners have not yet passed on the rebate to their tenants. The proposed provisions ensure that property owners who have not passed on the rebate will do so,” MOF said in a statement on April 2.
Subject to Parliament’s approval, the proposed provisions and subsequent subsidiary legislation will require the property owner to pass the rebate received in full to the tenant, and in a timely manner according to a prescribed timeline.
The new legislation will also prohibit property owners from imposing conditions when passing on the property tax rebate.
A Valuation Review Panel, comprising members from the Valuation Review Board constituted under the Property Tax Act, will adjudicate disputes between the property owner and the tenant.
“Property owners who fail to fully pass on the property tax rebate attributable to the rented property unconditionally to the tenant concerned, without reasonable excuse, will be guilty of an offence,” MOF said. — Stanislaus Jude Chan
Authorities announce new guidance for companies to hold AGMs
The guidance for companies to provide safe distancing measures when conducting annual general meetings (AGMs) has been refined further amid the ongoing Covid-19 pandemic.
This comes after the Ministry of Law and the Ministry of Finance on March 31 announced that they will introduce legislative provisions at the Parliament sitting in April.
These legislative provisions intend to give “legal certainty” for companies to hold AGMs in compliance with the Ministry of Health’s safe distancing measures.
The new guidance supersedes the previous one that was jointly announced by the Accounting and Corporate Regulatory Authority (ACRA), the Monetary Authority of Singapore (MAS) and the Singapore Exchange Regulation (SGX RegCo) on March 19.
Under the new guidance, companies can still choose to defer their AGMs beyond April 30, subject to the fulfilment of specified criteria and conditions.
However, companies that choose to conduct their AGMs before April 30 must conduct the meetings in a certain manner.
This includes the opportunity for shareholders to ask questions, the meeting to be shown through “live” webcast and the allowance for proxy voting.
At these AGMs, any quorum requirements will be satisfied through the attendance of the minimum number of shareholders specified in the company’s constitution.
This may be satisfied through the attendance of any director or senior management of the company who holds shares, or up to the number of individuals permitted under regulations — whichever is lower.
The regulations refer to the Infectious Diseases (Measures to Prevent Spread of COVID-19) Regulations 2020, which came into force on March 27.
The new guidance also advises companies to allow shareholders to ask questions in several ways.
For one, companies must invite their shareholders to submit any questions they may have in advance.
Other arrangements may include organising virtual information sessions before the AGMs and the close of proxy voting to provide shareholders with a forum to ask questions. — Jeffrey Tan
