Singapore slashes yearly growth forecast, stoking recession fears

Singapore’s shrinking annual growth forecast has fueled concerns over the state of the global economy. (Shutterstock)
Updated 13 August 2019

Singapore slashes yearly growth forecast, stoking recession fears

  • Global economic risks including protectionism, Brexit and China-US tariff dispute taking a toll, warns trade ministry

BENGALURU: Singapore slashed its full-year economic growth forecast on Tuesday as global conditions were seen worsening and data confirmed the slowest growth rate in a decade amid mounting fears of recession in the city-state.

The government cut its forecast range for gross domestic product in Singapore — often seen as a bellwether for global growth because international trade dwarfs its domestic economy — to zero to 1 percent from its previous
1.5 percent-2.5 percent projection.
Singapore’s downgrade adds to concerns globally about the effect of increasing protectionism on exports and production. The deterioration in the global outlook has pushed central banks to cut interest rates and consider unconventional stimulus to shield their economies.
“GDP growth in many of Singapore’s key final demand markets in the second half of 2019 is expected to slow from, or remain similar to, that recorded in the first half,” the trade ministry said.
The ministry flagged a host of growing economic risks, including Hong Kong’s political situation, the Japan-Korea trade dispute, the Sino-US tariff war, slowing growth in China and Brexit.
Final second-quarter GDP data on Tuesday showed a 3.3 percent on-quarter contraction on a seasonally-adjusted annualized basis. That was slightly smaller than the 3.4 percent decline seen in the government’s advance estimate but deeper than a
2.9 percent fall predicted in a Reuters poll and a sharp contrast to the robust 3.8 percent first quarter expansion, which was driven by brisk construction activity.
Tuesday’s data also confirmed annual GDP expanded 0.1 percent in April-June from a year earlier, its slowest rate in a decade, and lower than poll expectations of 0.2 percent and the first quarter’s 1.1 percent.
Singapore’s benchmark stock index fell 1.2 percent to a two-month low in early trade, underperforming other bourses in the region.
A central bank official said after the data that it was not considering an off-cycle policy meeting. The next of its scheduled semi-annual meetings is in October, when it is widely expected to ease policy.

HIGHLIGHTS

• Singapore sees 2019 growth at zero to 1 percent.

• Economists fear recession may be around the corner.

• Central bank says it is not considering an off-cycle policy move.

Singapore has been hit hard by the Sino-US trade war, which has disrupted world supply chains in a blow to business investment and corporate profits.
Also on Tuesday, Singapore cut its full-year forecast for non-oil domestic exports to a 9 percent contraction from an 8 percent fall previously. That comes after a 26.9 percent drop in electronics exports in the second quarter year-on-year.
“With trade tensions between the US-China unlikely to abate soon, we expect exports and trade-related services to push the economy into technical recession in Q3,” said Sian Fenner, lead Asia economist at Oxford Economics.
New Zealand, India and Thailand all cut interest rates last week, signalling major concerns about the outlook for economic growth. Last month, the US Federal Reserve cut interest rates for the first time since 2008.
Singapore Prime Minister Lee Hsien Loong said in an annual speech last week that the government stood ready to stimulate the economy.
“It feels like the storm is coming if you look at the whole macroeconomic fundamentals softening,” said Selena Ling,
head of treasury and strategy at OCBC Bank.
“All the downside risks are piling up on one side,” Ling added, pointing to the myriad of global risks flagged in the trade ministry statement.
A faltering economy is expected to crimp growth at Singapore’s three local listed banks, which have so far benefited from improved margins, steady interest rates and loan growth.


UBS fined $51 million by Hong Kong regulator for overcharging clients

Updated 11 November 2019

UBS fined $51 million by Hong Kong regulator for overcharging clients

  • Hong Kong regulator’s investigation exposed ‘serious systemic internal control failures’ at the bank
  • In March, the Securities and Futures Commission banned UBS from leading initial public offerings in Hong Kong for a year

HONG KONG: Swiss bank UBS was fined HK$400 million ($51.09 million) by Hong Kong’s securities regulator for overcharging up to 5,000 clients for nearly a decade, the watchdog said on Monday.
The Hong Kong Securities and Futures Commission (SFC) said in a statement that an investigation found UBS had overcharged clients on ‘post-trade spread increases’ and charges in excess of standard disclosures and rates between 2008 and 2017.
THE SFC said the investigation exposed ‘serious systemic internal control failures’ at the bank. UBS had failed to disclose conflicts of interests and had overcharged some clients in ‘opaque’ trades, it said.
The overcharging affected 5000 Hong Kong managed client accounts in about 28,700 transactions, it said.
UBS has also agreed to repay the clients HK$200 million, the SFC said.
The regulator said the over-charging occurred in the bank’s wealth management division on bond and structured notes transactions.
UBS was found to have increased the spread charged after the execution of a trade without the clients’ knowledge, it said.
In the statement, the SFC said UBS was also found to have falsified some account statements which were issued to financial intermediaries who were authorized to trade for the clients to “conceal the overcharges.”
UBS said the issues were ‘self-reported’ to the SFC and the results found were against the bank’s standard practice.
“The relevant conduct predominantly relates to limit orders of certain debt securities and structured note transactions, which account for a very small percentage of the bank’s order processing system,” the bank said in a statement.
SFC chief executive Ashley Alder said while each “overcharge represented a fraction of each trade” the bank’s “misconduct involved decisions and a pervasive abuse of trust resulting in significant additional revenue for UBS to which it was not entitled.”
In March, the SFC banned UBS from leading initial public offerings in Hong Kong for a year after it found the bank, and some of its rivals, had failed to carry out sufficient due diligence on a number of deals.
UBS was fined HK$375 million while Morgan Stanley was fined HK$224 million, Merrill Lynch HK$128 million and Standard Chartered (StanChart) HK$59.7 million, all for failures when sponsoring, or leading, public market floats.