Quoteworthy:“Everybody is scared, including the biggest financial institutions.” - Wang Jiangyu, a law professor at the City University of Hong Kong, after China introduced a new set of security laws for Hong Kong.
Singapore’s bank lending hit by circuit breaker
Bank lending in Singapore fell for the third consecutive month in May, as both consumer and business loans took a hit from the “circuit breaker” measures restricting the operations of non-essential services throughout the month.
Total loans from the domestic banking unit — which captures lending in all currencies, but mainly reflects Singapore-dollar lending — slipped 0.6% m-o-m to $685.3 billion in May. Still, this is a 5% y-o-y increase, said the Monetary Authority of Singapore (MAS) on June 30.
Total business loans dipped 0.7% to $430.6 billion in May from April, with a similar drop in loans to both financial institutions and general commerce borrowers. Yet, compared to the year-earlier period, business loans grew 3.0% y-o-y. Selena Ling, OCBC’s head of treasury research and strategy, believes that this was lifted by loan financing schemes extended by the government.
Meanwhile, consumer loans were also down 0.5% m-o-m to $254.7 billion in May, marking the 13th consecutive monthly decline. Car loans dropped to a four-year low as showrooms were shut and certificate of entitlement bidding suspended. Ling expects loan growth to remain tepid in the months ahead. “Bank loans grew at just 2.2% y-o-y for the first five months of this year, which suggests room for disappointment going ahead as the recent June MAS survey of professional forecasters had tipped a full-year loan growth forecast of 2.8% y-o-y,” she says.
Ling warns that private consumption “may remain cautious” in the near term amid second-wave infection concerns globally and anticipation of a softening domestic labour market.
In addition, she expects lenders to exercise caution about potential credit deterioration that is likely to follow a sharp economic downturn. “The risk remains that overall bank loans growth could actually contract in the coming months if there is no snapback in consumer demand and business capital expenditure intentions,” she reiterates. —Amala Balakrishner
Jeff Bezos’ wealth soars to US$171.6 bil to top pre-divorce record
Jeff Bezos’ net worth has smashed through its previous peak, even after he relinquished a quarter of his stake in Amazon.com as part of a divorce settlement last year.
Shares of the Seattle-based retailer surged 4.4% to a record US$2,878.70 on July 1, boosting the founder’s world-leading fortune to US$171.6 billion ($239 billion). That tops his previous high of US$167.7 billion, set on Sept 4, 2018, according to the Bloomberg Billionaires Index.
His gains — US$56.7 billion this year alone — underscore a widening wealth gap in the US during the worst economic downturn since the Great Depression. Initial public offerings and buoyant equity markets have bolstered mega-fortunes, even as tens of millions of people have lost their jobs. This week, after receiving complaints about ending pandemic hazard pay,
Amazon said it would spend about US$500 million to give one-time US$500 bonuses to most front-line workers. The company declined to comment on its founder’s wealth.
Amazon has been on a tear, with the pandemic accelerating the consumer shift to e-commerce from brick-and-mortar retail. Bezos owns 11% of the stock, which constitutes the bulk of his fortune.
Most of those with the biggest wealth gains also hail from the tech sector. They include Tesla CEO Elon Musk, who has added US$25.8 billion to his fortune since Jan 1, and Zoom Video Communications founder Eric Yuan, whose wealth has almost quadrupled to US$13.1 billion.
Mackenzie Bezos, who acquired a 4% stake in Amazon after the couple split, has a net worth of US$56.9 billion and climbed to No. 12 in Bloomberg’s ranking. She recently leapfrogged Alice Walton and Julia Flesher Koch to become the world’s second-wealthiest woman, and now trails only L’Oreal heiress Francoise Bettencourt Meyers.
Not every billionaire has come out ahead this year. Spain’s Amancio Ortega, the titan behind the Zara fast-fashion brand, has lost US$19.2 billion, the most of anyone on the Bloomberg index. Berkshire Hathaway chairman Warren Buffett has dropped US$19 billion and French luxury-goods tycoon Bernard Arnault is down US$17.6 billion.
But most have weathered the downturn. The collective net worth of the world’s 500 richest people now stands at US$5.93 trillion, compared with US$5.91 trillion at the beginning of the year. —Bloomberg
Phillip Securities to acquire RHB Securities Singapore
Phillip Securities is taking over RHB Securities Singapore (RHBSS), as the local stockbroking industry goes through another round of consolidation.
The acquisition will improve Phillip Securities’ competitive position and distribution scale in Singapore and Asia, and accelerate its ambition to be Singapore’s leading retail financial service provider, says the leading Singapore brokerage in a statement.
“We have long respected RHB Securities Singapore,” saysid Luke Lim, managing director of Phillip Securities. “As fellow advocates for investors, both companies have a combined wealth of experience that span more than 70 years".
Phillip Securities celebrates its 45th anniversary this year while RHB Singapore can trace its roots to 1987.
“We believe that our acquisition of RHB Securities Singapore’s stock broking businesses, specifically new clients and a team of experienced dealers and trading representatives, will strengthen PhillipCapital’s position as an integrated financial house,” says Lim.
“We look forward to working closely with RHBSS to ensure a seamless integration".
The transaction covers only the stock-broking business. The exact number of RHB Securities Singapore’s remisiers and dealers moving to Phillip Securities will not be known until the deal is completed. Phillip Securities has around 550 trading representatives now.
As part of the deal, RHB Group will do an internal transfer of its capital markets businesses that is now under RHB Securities Singapore to RHB Bank, Singapore. That means existing RHB staff in client coverage, research and corporate advisory services, equity capital markets and institutional equities sales are not part of the transaction.
The proposed transaction is subject to the approvals of the relevant regulatory authorities, and is expected to be completed in the third quarter of 2020.
Talks between both parties for this deal were reported by The Edge Singapore on June 3.
