Tharman warns public against risks of crypto as world warms towards Bitcoin
Singapore once again warned the public about the risks of trading cryptocurrencies like Bitcoin, a market that, while relatively small in the city-state, has surged in significance over the past year.
“Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals,” Tharman Shanmugaratnam, the chairman of the Monetary Authority of Singapore, said in response to a parliamentary question on Monday, April 5. “They are hence highly risky as investment products, and certainly not suitable for retail investors.”
He said that cryptocurrency funds are not authorised for sale to retail investors. The MAS also has powers to impose additional measures on digital token service providers, under which exchanges offering the trading of cryptocurrencies are regulated, as needed, according to Tharman, who is also senior minister and coordinating minister for social policies.
Tharman’s comments come as the total market value of cryptocurrencies pushed past US$2 trillion ($2.68 trillion) for the first time, doubling in about two months amid surging institutional demand. Bitcoin has been on a tear as investors dabble in crypto as a way to boost returns on cash in a world of near-zero interest rates.
Cryptocurrency trading in Singapore remains small compared to shares and bonds, with the combined peak daily trading volumes of Bitcoin, Ethereum and XRP accounting for 2% of the average daily trading volume of securities on the main stock exchange last year, Tharman said. — Bloomberg
Grab to list in New York in largest SPAC deal at US$35 bil valuation
Singapore-based technology company Grab looks set to finalise its listing in New York, according to the Financial Times. The group’s listing will take place with one of Altimeter Capital’s two Altimeter Growth special purpose acquisition companies (SPAC), the fund Altimeter Growth 1, as soon as this week, according to the Financial Times’ sources.
Altimeter Growth 1 raised US$450 million in 2020. Its share price has risen 25% since its listing.
The listing will value the Softbank-backed tech group at some US$35 billion ($46.9 billion), making it the largest merger between a private business and a blank cheque company.
To prepare for the listing, Grab will raise some US$2.5 billion through a private investment in public equity (PIPE) deal. This is often raised in tandem with a SPAC deal that lets accredited or institutional investors buy stocks directly from a public company, usually below market price.
Of the US$2.5 billion, some US$1.2 billion will be funded by Altimeter for a total valuation of close to US$35 billion. Altimeter will also backstop or support the sale of any shares in the SPAC by public shareholders upon the announcement of the deal.
The deal has not been finalised, according to people close to the situation. Grab and Altimeter declined to comment. The merger discussions are being advised by Morgan Stanley and JPMorgan. — Felicia Tan
IMF upgrades 2021 global GDP forecast to 6%, warns of divergence
The International Monetary Fund (IMF) has raised its 2021 global GDP growth forecast to 6%, up from an estimate of 5.5% made in January. In either case, the projection for 2021 will mark a big turnaround from an estimated contraction of 3.3% last year, when the global economy was savaged by the Covid-19 pandemic.
For 2022, global GDP growth is seen to moderate to 4.4%, versus 4.2% estimated in January. IMF chief economist Gita Gopinath says the slightly more upbeat estimate is a reflection of additional fiscal support provided in the US, widespread vaccination efforts that are going to lead to a strengthening of recovery in the second half of this year, and also the continued resilience of economic activity to the pandemic in many parts of the world.
However, she stresses that a high degree of uncertainty surrounds the IMF’s projections as the pandemic is still ongoing, and, in many countries, the number of confirmed cases is growing.
As such, there is a risk of growing divergence in recoveries both across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliant on tourism do less well.
According to Gopinath, multi-speed recoveries could pose financial risks if interest rates in the US rise further in unexpected ways.
This could cause inflated asset valuations to unwind in a disorderly manner, financial conditions to tighten sharply, and recovery prospects to deteriorate, especially for some highly leveraged emerging markets and developing economies.
Gopinath says policymakers will need to continue supporting their economies while dealing with more limited policy space and higher debt levels than prior to the pandemic. This requires better targeted measures to leave space for prolonged support if needed.
She is also urging central banks to keep access to money easy in the current environment “Monetary policy should also remain accommodative while proactively addressing financial risks that we do see using macro prudential tools.” — The Edge Singapore
