Quoteworthy: "Client demand is rising. We are regulated on what we can do. We continue to evaluate it ... and engage on it." –— Goldman Sachs’ president and chief operating officer John Waldron, referring to the growing popularity of Bitcoin.
Grab mulls US IPO through SPAC merger
Grab Holdings is exploring going public in the US through a merger with a blank-check company as the Southeast Asian ride-hailing and delivery giant seeks to expedite its listing process, according to people familiar with the matter.
JP Morgan Chase and Morgan Stanley, which are already advising Grab on its initial public offering plans, are working with the startup to identify special purpose acquisition companies (SPACs) that it could combine with, the people said.
Still, a US listing via a traditional IPO is not off the table, said the people who asked not to be identified as the discussions are private.
Representatives for Grab and JPMorgan declined to comment, while a representative for Morgan Stanley did not immediately respond to requests for comment.
Merging with a SPAC, a shell company whose sponsors raise money from investors in order to buy a private company and give it a berth on a public exchange, would allow Grab — Southeast Asia’s most valuable startup backed by SoftBank Group Corp — to accelerate its listing process.
Several of the region’s tech unicorns including Indonesia’s Traveloka, Southeast Asia’s biggest online travel start-up, are considering going public through blank-check companies to ride on the red-hot sentiment.
Sea’s decade-long journey from a scrappy start-up to Southeast Asia’s most valuable company has inspired many internet companies in the region to tap the capital markets to bankroll their expansion.
The Singapore-based company, which runs mobile gaming and e-commerce businesses, went public in the US in 2017 after raising $989 million.
It now has a market value of $117 billion ($157.1 billion).
Grab’s listing considerations come after talks to combine with Indonesian rival Gojek collapsed. — Bloomberg
Economists expect Singapore’s GDP to grow by 5.8% in 2021: MAS survey
Singapore’s gross domestic product (GDP) is expected to expand by 5.8% in 2021, 0.3 percentage points above the 5.5% forecast in the previous survey, according to the quarterly survey released by the Monetary Authority of Singapore (MAS).
The MAS Survey of Professional Forecasters, which comprised 24 private-sector economists and analysts, said the Singapore economy is “most likely” to grow by 5.0% to 6.9% with a combined probability of 61.8%.
In the previous survey, the economy was projected to grow between 5.0% to 5.9% in 2021, with an average probability of 27.9%.
That said, the economists also foresee growth in 2022 tapering to 3.8%, with the highest probability within the 3.0% and 3.9% range. For 4Q2020, the Singapore economy contracted by 2.4%, which was lower than the 4.5% expected by the respondents in the previous survey. In 1Q2021, the respondents say they expect the economy to shrink by 1.1% y-o-y.
Market watchers expect the unemployment rate in Singapore to reach 2.9% at year-end, down from the 3% previously estimated.
Despite the optimism amid a recovering economy, market watchers cite the tightening global financial conditions, escalation in the Covid-19 situation, as well as a rise in geopolitical tensions as factors that could weigh on Singapore’s financial market and lending conditions.
Upside drivers of financial and lending market conditions include easing financial conditions, the effective containment of Covid-19 here, as well as capital inflows and a weaker Singapore Dollar Nominal Effective Exchange Rate (S$NEER).
Looking ahead, the escalation of the Covid-19 situation around the world was cited as the top potential risk that could affect the growth of the Singapore economy, while geopolitical tensions and insufficient stimulus came in second and third respectively.
Upsides to the growth of the economy include the containment of the Covid-19 outbreak, primarily attributable to the acceleration in the distribution of the vaccine globally as well as stronger-than-expected performance in the manufacturing sector.
In addition, re-opening borders and external growth were also identified as other key upside risks. — Felicia Tan
Expect lower returns as 60/40 portfolio no longer works, says GIC
Two of the world’s largest sovereign wealth funds say investors should expect much lower returns going forward in part because the typical balanced portfolio of 60/40 stocks and bonds no longer works as well in the current rate environment.
Singapore’s GIC and Australia’s Future Fund said global investors have relied on the bond market to simultaneously juice returns for decades, while adding a buffer to their portfolio against equity market risks.
Those days are gone with yields largely rising, they add.
“Bonds have been in retrospect this gift,” with a 40-year rally that has boosted all portfolios, says Sue Brake, chief investment officer of Australia’s A$218.3 billion ($227.6 billion) fund.
“But that’s over,” she adds, saying “replacing it is impossible — I don’t think there’s any one asset class that could replace it”.
Thanks to declining returns from bonds, the model 60/40 portfolio may eke out real returns after inflation of just 1% to 2% a year over the next decade, notes Lim Chow Kiat, chief executive officer of GIC.
That compares with gains of 6% to 8% over the past 30 to 40 years, he said.
“So that’s not particularly exciting,” says Lim at the Investment Management Association of Singapore-Bloomberg conference on March 9.
Brake said funds like hers will have to work harder to diversify their portfolios to seek out returns.
She cited six major ways in which markets have changed with the pandemic, including increased regulatory intervention, higher inflation risks, additional drivers of performance and more “fragile” markets.
Funds have “cried wolf” for over a decade in warning of falling returns, Brake said, only to see continued gains.
Nevertheless, investors should expect lower returns ahead, she said. Global bonds have gained 382% since 1991 — or about 5.4% a year — based on the Bloomberg Barclays Global Aggregate Index.
“We’re repeating the same message that going forward the returns are going to be much harder,” said Brake, whose fund has returned 9.2% a year over the past decade.
“You can’t hide in the corner and not invest any more because we have to get our returns and I don’t think it’s the kind of environment where we should be doing that”.
Norway’s US$1.3 trillion sovereign wealth fund has already made the shift, winning approval to adjust its equity-bond mix to 70/30 in 2017.
At the end of last year, it held about 73% in equities, and 25% in bonds.
Lim also cautioned about too much government stimulus and its effect on inflation.
“As a long-term investor, we have some concerns about the use of stimulus,” he says. “We tend to like the use of capital and money that goes toward building long-term growth, long-term structural factors, rather than using the money to spend”.
Investors will also have to deal with geopolitical risks, said Lim, whose fund has posted a real return of 2.7% annualised over the past 20 years.
“This is a chronic issue,” adds Lim.
“It is going to stay with us for a long time and we are likely to have occasional flare-ups, just like any chronic disease. You have to manage it properly”. — Bloomberg
Biden’s US$1.9 trillion Covid-19 bill wins final approval
The US House of Representatives gave final approval on March 10 to one of the largest economic stimulus measures in American history, — a sweeping US$1.9 trillion ($2.5 trillion) Covid-19 relief bill that gives President Joe Biden his first major victory in office.
The measure provides US$400 billion for US$1,400 direct payments to most Americans, US$350 billion in aid to state and local governments, an expansion of the child tax credit and increased funding for vaccine distribution.
Forecasters expect it to supercharge the US economic recovery.
“Help is here,” President Biden wrote in a tweet after the vote.
The White House said he plans to sign the bill on March 12.
Approval by a 220–211 vote in the Democratic-controlled chamber came with zero Republican support after weeks of partisan debate and wrangling in Congress.
Democrats described the legislation as a critical response to a pandemic that has killed more than 528,000 people and thrown millions out of work.
“This is a historic day. It is the beginning of the end of the great Covid depression,” Democratic Representative Jan Schakowsky said.
Treasury Secretary Janet Yellen said in a statement that passage of the legislation was a pivotal day for the US economy and would speed its recovery. — Reuters
