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Category : Financial Industry Update
With effect from 1st January 2012, the Monetary Authority of Singapore (MAS) will require all financial institutions to ascertain whether their clients possess the necessary knowledge or experience on the features and risks of the products that they intend to trade through the prescribed Customer Knowledge Assessment (CKA) or Customer Account Review (CAR).
The requirement will apply to all Specified Investment Products.
Specified invest products includes the following products: Stock listed on an exchange outside of Singapore, Futures contracts, Exchange Traded Options, ETFs, CFDs, FX Spot and FX options.
How will they affect you?
The following two new measures will apply to you if you wish to purchase a Specified Investment Product or open an account for trading Specified Investment Products:
(i) Assessing if you have relevant knowledge and experience
From 1 January 2012 onwards, intermediaries (your brokers and advisers) must assess if you have the relevant knowledge and experience before offering a Specified Investment Product to you or opening an account for you to trade Specified Investment Products listed on an exchange.
To do this, the intermediary will request information on your educational qualifications, investment experience and work experience. Based on the information you have provided, the intermediary will assess whether you may proceed to purchase an unlisted Specified Investment Product or open an account to trade listed Specified Investment Products.
This new process is known as
- the “Customer Account Review (CKR)” if you wish to open an account to trade Specified Investment Products listed on an exchange; and
- the “Customer Knowledge Assessment (CKA)” if you wish to purchase a Specified Investment Product that is not listed on an exchange.
If the intermediary assesses that you do not have the relevant knowledge or experience to purchase the unlisted Specified Investment Product or to open an account to trade listed Specified Investment Products, they may suggest that you undergo learning modules to learn more about Specified Investment Products.
(ii) Offering you financial advice
Intermediaries must offer to provide you with financial advice on whether the Specified Investment Product is suitable for you, taking into account your knowledge and experience in the product. (Only intermediaries that are authorized by MAS to provide financial advice may do so)
If you decide not to take up the offer of advice or to invest in a Specified Investment Product that the intermediary did not recommend to you, you will have to be responsible for your own investment decision.
What Information is required for the assessment?
The information required from you to evaluate relevant knowledge or experience would be as follows:
- Educational Qualifications (diploma or higher qualification in relevant course and/or Professional Finance related qualifications)
- Work Experience (worked at least 3 consecutive years in the past 10 years in a relevant field)
- Investment Experience (have made at least 6 transactions within the last 3 years in these categories of products)
For more information and background on the new requirements for Specified Investment Products, you can refer to MAS guide which can be found here.
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Category : Macro Economics
“We wish you well”, that is what British Prime Minister Cameron said during European Summit last week, when he is the only one refusing to agree the new EU treaty. He went even further saying “As long as I am the Prime Minister, this country will never join the euro!”
In my early blog of Four Potential Scenarios of Eurozone Debt Crisis, I said “the only solution to all crises has to be some form of unity. However, that is always the hardest thing to do in the mankind history.” The European summit clearly demonstrated the frictions between each parties and the difficulty to move forward with different agendas.
As Mohamed El-Erian, CEO of PIMCO, said in his CNBC interview,
Every week, if not every day, Europe influences stocks, overwhelms sector-specific news, and frustrates careful security selection. The result is wave after wave of manic risk on and risk off days, together with spiking correlations and unsettling volatility.
You must be wondering why these economists and government officials seem have no clue what is the right thing to do. The simple fact is, euro problem is unprecedented.
There was never euro before 1999 in the history. While western financial and political decisions are largely built on studies from past events, the euro problem becomes an experiment which is the study subject by only the future. Now, any prediction about where the crisis is going to is merely speculating or at best guessing.
Some central banks in Europe have started weighing contingency plans to prepare for the possibility that countries leave the euro zone or the currency union breaks apart entirely. The break of euro is no longer unthinkable.
I guess “we wish you well” is really probably the best we can say now.
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Category : Property
Singaporeans just have this obsession about “investing” in property.
In January this year, Singapore government has already pushed hard to curb property speculation. Unfortunately, the public never got the message and property prices continued shooting up.
Until mid of the year, new minister Khaw Boon Wan has publicly expressed his “worries about property buyers”. He wrote In his blog, “I must keep an eye on the medium term for possible pitfalls. Sharp property price increases cannot go on forever. Gravity cannot be wished away. … Those who borrow to go into properties thinking that prices will continue to rise, will be thrown into financial hardship should prices drop and banks start calling.”
Even with the DBSS Saga, it seems that the public still cannot resist the temptation of “healthy market” illusion created by “experts”. Just look at the chart of Private Property Index (PPI) and HDB Property Index.
Don’t fool yourself that property prices are only driven up by foreign demands and for luxurious projects.
Are you saying that the foreigners are also the culprits behind the sharp rise of HDB prices (blue line)? Are you saying that, after global financial crisis, with high unemployment rates and euro debt crisis, the property prices rose because of supply and demand? Have you noticed that the current property price index is far higher than where it was in 2008 peak?
Since beginning of the year, many of my clients have talked about buying a second property for “investment”. Some only dare to buy fixed deposits but yet are willing to risk millions into one single property. Some received a windfall from their first property bought in 2009 (just because they got married and needed to buy one, how lucky!) and believe the only way of property price is to go up.
Thanks to the public media who untiringly features “successful investors” who, although always lost money in stock market, have made fortunes with their faith in properties. This is most ironical to me because it is not rocket science to see the strong correlation (price moves in tandem) between property price and stock market and economy.
If indeed that curbing foreign speculators from buying Singapore property works, it should be more devastating news for recent property buyers. Foreign buyers are well informed and professional, the fall is always as fast and furious as when it rises.
The government has introduced additional buyer’s stamp duty for private residential properties.
With effect from today, foreigners and corporate entities purchasing private residential properties in Singapore would have to pay an extra 10% in the form of additional buyer’s stamp duty.
Permanent residents buying their second or subsequent homes and Singaporeans buying their third residential property or more in the local market would have to pay extra 3%.
Below are the new stamp duty rates and its impact on buyers (compiled by Straits Times)
I wonder if it has become an obsession or fun game for Standard & Poor’s to make their downgrades at the worst possible time.
The rating company, which downgraded the U.S. triple-A credit rating by one notch just after US debt ceiling was increased, warned it may carry out an unprecedented mass downgrade on the credit ratings of 15 euro zone countries.
The warning, came just after France and Germany’s jointly call for a new European Union Treaty to “re-estabilish confidence in the euro and the euro zone”.
S&P placed the ratings of 15 euro zone countries on credit watch negative — including those of top-rated Germany and France, the region’s two biggest economies — and said “systemic stresses” are building up as credit conditions tighten in the 17-nation region.
If you recall, S&P downgraded Guernsey and Isle of Man last month. Maybe Singapore will be the only AAA rated country in the world next year, after S&P’s wayang show.
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