Wealth Management Singapore

Previously I commented about the need for the financial advisory industry in Singapore to be more mature. There has been sweeping changes to the financial advisory industry in UK this year.

Changes affect 3 main areas: more stringent entry educational requirements for financial advisers, higher capital requirements for financial advisory firms, banning of commissions paid to advisers for products purchased by clients.

Some criticism has surfaced against the Financial Services Authority deadline for the changes. Strong points include insufficient time to adjust to meet the deadline, small firms having to suffer with the high capital requirements and the fear that independent financial advisers will be forced to restrict their services to rich customers.

Financial adviser struggles

Ernst & Young Report

There has been changes earlier this year too, to the financial industry in Singapore. Much more needs to be done, one important aspect I will really like to see is that the regulatory requirements is adjusted to improve the quality of Financial Advisers in Singapore.

SFA & FAA Admendments

Published in Reuters, contributed by Felix Salmon on 17 Nov 2009

Berkshire Hathaway has a lot of equity: its book value is about $125 billion. And since equity is forever, it makes sense for Berkshire to have a very long time horizon when it comes to buying assets. But still:

Berkshire Hathaway Inc.’s Warren Buffett, who agreed to buy Burlington Northern Santa Fe Corp. in his biggest takeover, said the railroad’s results in the next 100 years will justify a $26 billion bid that’s “not a bargain.”

“It’s a good asset for Berkshire to own over the next century,” Buffett said in an interview with Charlie Rose.

It’s refreshing to see the 79-year-old Buffett taking such a long view. But the fact is that Berkshire Hathaway is not going to exist in anything like its present form in 100 years’ time. It’ll probably last no more than 10 years after Buffett dies before it’s broken up into various component parts. And when he gives quotes like this to Charlie Rose, it seems as though he’s somewhat in denial about what his legacy is really going to be.

The minute that Buffett dies, Berkshire becomes a large conglomerate, and will trade, like all conglomerates, at a discount to its sum-of-the-parts valuation. Sooner or later, Berkshire’s CEO will be persuaded to monetize the difference, and the storied company will come to its natural end. That’s no bad thing: it’s intrinsic to the nature of capitalism, which Buffett loves. But it does mean that buying companies on a 100-year time horizon is somewhat unrealistic.

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Update for Oct 2009

Stock markets in the developed economies were mostly down in October, while Asian and emerging economies held up better. Commodities such as gold and crude oil made new highs in October.

The global financial markets have made a V-shaped recovery while the global economy has done a slow pickup. In the coming month, the financial markets will be take a breather while the economy catches up.

Developed countries

Australia has raised interest rates by 0.25%, for a second month. US and Europe kept their interest rates steady when their central banks met in October for review.

Singapore

MAS has kept its policy unchanged on the Nominal Effective Exchange Rate, maintaining the policy band width and the level at which the Singapore dollar is centered. Singapore cut negative GDP for 2009; the government expects 3% growth in 2010.

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Private banks need to focus much more on advising clients on their investments rather than selling products to restore the industry’s reputation, a Swiss banker said yesterday.

Before the crisis, ‘banks were using private bankers to sell products they make – that’s very bad for the industry’, said Jean-Pierre Cuoni, founder and chairman of Swiss bank EFG International.

The proper role of private banks

This is the same for financial advisers. I think the first thing that comes to mind when your hear “I’m a financial adviser” is “I do not want to buy anything”.

On Tuesday after its monthly meeting, Australia’s central bank, Reserve Bank of Australia, raised its key interest rate for the second month in a row, by 0.25 percent to 3.5 percent.  RBA declaring the effects of global downturn over and warning that inflation was set to rise.

A month earlier, Australia became the first major economy to raise interest rates since the outbreak of the financial crisis when the bank hiked its key rate by a 0.25 percent from a 50-year low.

Australia has been a rarity among developed economies by avoiding recession during the worst global economic slump since World War II. It survived the downturn better than most thanks to A$42 billion (S$53 billion) of government stimulus spending and strong demand from China and other Asian nations for its iron ore and other mineral resources.

The decision was widely expected by analysts and underlines Australia’s quick recovery compared with other developed countries. Australia’s GDP will rise 1.75 percent this year and 3.25 percent in 2010, RBA said. Three months ago, it forecast gains of 0.5 percent and 2.25 percent respectively. While European Union’s economy is forecasted to expand 0.7 percent next year

The European Central Bank took its first step toward unwinding its extraordinary support measures for the euro zone economy on Thursday by signaling one-year loans to banks will not be repeated next year. The ECB kept its main interest rate on hold at 1 percent for the sixth month in a row.

The Federal Reserve signaled on Wednesday it was not close to raising interest rates, saying that the economy remained weak even though the recession appeared to be over.

In a move that could spell the continued success of investment banks’ fixed-income units, the Fed said it would keep its benchmark interest rate at virtually zero, and it made no change to its longstanding mantra that economic conditions were likely to warrant “exceptionally low” rates for “an extended period.”

For practical purposes, analysts said, policy makers are still at least six months away from tightening monetary policy.

Oct 27 (Reuters) – South Korea’s economy grew at its fastest rate in 7-½ years in the third quarter, joining China and Singapore that have also reported faster growth in Asia in the September quarter.

In the Asia-Pacific region, Japan, Singapore, Hong Kong, Thailand, Taiwan and New Zealand all pulled out of recession in the second quarter, although the recovery is expected to be gradual.

In Europe, Germany, France and Sweden have also announced a return to growth, however Britain’s economy, by contrast, contracted in the third quarter.

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