TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
Comments
Anthony Rowley
24 March 2015
People who are in a position to know have been saying loudly and clearly of late that we may be headed towards another global financial crisis. But it seems that these are “voices crying in the wilderness” and even if others are able to understand the threat, they do not care.
If the world came through the global crisis of 2008 with only a few bank collapses to show for it, some may think, then it can probably survive another crisis or two. All that is needed is a bit of luck and a further bout of monetary easing by central banks.
This kind of complacency is worse even than simple ignorance of history. It suggests a willingness to tolerate financial excess to the point where a mega crisis may intervene - one big enough to dwarf the ability of all the world’s leading central banks to deal with.
A “throw-money-at-the-problem” approach originated during the tenure of Alan Greenspan when, as chairman of the US Federal Reserve, he initiated the so-called “Greenspan Put” by bailing out investors caught up in the “IT bubble” of 2001 with large injections of central bank liquidity.
The Fed’s largesse carried the global system through until the years preceding the 2008 global financial crisis when excess liquidity created partly by the Fed led to the sub-prime mortgage crisis and to the consequent collapse of investment bank Lehman, insurance giant AIG, etc.
A near-meltdown of the financial system at that time panicked the Fed into quantitative monetary easing (QE) on a hitherto unprecedented scale (although Japan has earlier dabbled nervously). The Bank of England then followed suit and QE became incorporated into the armoury of central banks.
It has succeeded, apparently, in pulling the US economy out of recession, although the exercise there was supposedly aimed at rescuing the world’s leading financial system from crisis and at controlling unemployment rather than at restoring overall economic growth as such.
We need not spend time analysing the quality of US growth (with its lack of convincing wage expansion to support consumption, withdrawals from the labour force, etc). What matters is the wider impact that QE in the US and now in Japan and Europe is having on asset and currency markets.
Some people are worried about the paper chase this is creating, and whether too much money is chasing too few good-quality financial assets, threatening a possible new crash. These are real dangers now with leading stock markets chasing multi-year highs and bond yields going negative.
IMF managing director Christine Lagarde is among those worrying out loud and she is not alone. IMF financial counsellor Jose Vinals is equally concerned, as is former US Treasury senior official Tim Adams who now heads the Institute of International Finance (IIF).
They are concerned not only that many financial assets appear overpriced in relation to quality, but also that the sheer quantity of paper that is being purchased with QE-financed resources threatens a potentially devastating market liquidity crunch once investors head for the door.
Ms Lagarde said last week that diverging monetary policies pose a risk to the global economy. Citing “risks stemming from monetary policies”, she said we can expect a return to more normal monetary policy by the Fed, along with “continued or renewed accommodative policies by Japan and the European Central Bank”.
BOOM AND BUST
This “will clearly involve more volatility and it will also have currency impact (on) countries or corporates that have borrowed extensively in dollar-denominated loans”, she said. They “are going to suffer”.
Ms Lagarde has also suggested, more colourfully, that the global financial sector “may be flying too close to the sun” and that “history teaches that the bigger the boom, the bigger the bust. A sudden shift in sentiment could easily cascade across the globe. Financial flows can zap and zoom across the world at lightning speed”.
The Washington-based IIF, which speaks on behalf of some of the world’s biggest banks and other financial institutions, has said that investors are confronted with a fundamental “asset-liability mismatch” owing to low interest rates and a shortage of high-quality assets.
“Risks could accumulate and render the (global) financial system more fragile as long players become more exposed to a severe market downturn. Globally, institutional investors have boosted their holdings of corporate and foreign bonds by 65 per cent since 2008 to US$5.1 trillion, including a record level of US$2.1 trillion of high-yield bonds,” according to Hung Tran, executive managing director at the IIF.
“This strategy has produced good returns in recent years as rates declined and credit spreads narrowed. However, investors may find it difficult to rebalance their portfolios away from credit risk as market liquidity has deteriorated greatly in recent years.”
The warnings continue to pile up, but is anyone listening? When will they ever learn? Only, it seems, once the voices crying in the wilderness become strident enough to drown the siren call of mammon. By then crisis could be upon us - yet again.