Quoteworthy: America is forever a place not marked for the thirst for power at any cost but by a covenant of trust, and hope and promise. — US President Joe Biden during the July 4 Independence Day speech at the White House
MAS evaluates more crypto safeguards after blow-up
Singapore is considering new rules to protect consumers after plunging digital-asset prices triggered a series of high-profile crypto blowups, including firms based in the city-state.
The Monetary Authority of Singapore (MAS) “has been carefully considering the introduction of additional consumer protection safeguards”, its chairman Tharman Shanmugaratnam said in a written response to a question from Parliament. “These may include placing limits on retail participation, and rules on the use of leverage when transacting in cryptocurrencies.”
The central bank has repeatedly said this year that cryptocurrencies are not for retail investors, as a US$2 trillion ($2.8 trillion) market selloff engulfed a growing list of players. Terraform Labs, whose TerraUSD stablecoin imploded in May, is based in Singapore, as was Three Arrows Capital, the crypto hedge fund ordered into liquidation last month after failing to repay creditors.
To that end, the MAS has frozen the withdrawals of several crypto firms.
Vauld, a Singapore-based crypto lender, on July 4 said it froze withdrawals and hired advisers to pursue a potential restructuring after a surge in withdrawals sapped liquidity.
The MAS also last week reprimanded Three Arrows for providing false information and exceeding the limit on assets under management. It is continuing to investigate the fund for more rule breaches.
Authorities in the city-state have long maintained a wary embrace of crypto, granting just 14 firms the regulatory nod to provide digital token payment services locally, a fraction of almost 200 applicants.
Singapore has clamped down on crypto marketing and requires virtual asset providers to be licensed locally even if they only do business overseas.
The MAS’ chief fintech officer Sopnendu Mohanty recently said the regulator is “brutal and unrelentingly hard” on any bad behaviour in the crypto market. But he has also commended major players in the industry like Binance and Crypto.com for efforts to create a responsible and compliant industry.
Governments across the world are increasing their scrutiny of the industry amid a major meltdown in crypto markets. — Bloomberg
US Fed sees possibility of ‘more restrictive’ rates if inflation persists
US Federal Reserve officials solidified their resolve in June to keep raising interest rates for longer to prevent higher inflation from becoming entrenched, even if that slowed the US economy.
Policymakers increased interest rates by 75 basis points (bps) last month and backed hiking them at their next meeting in July by either 50 or 75 bps, according to minutes of the Federal Open Market Committee’s June 14-15 meeting released on July 6. They viewed maintaining the central bank’s credibility to control inflation as crucial.
“Many participants judged that a significant risk now facing the committee was that elevated inflation could become entrenched if the public began to question the resolve of the committee,” the minutes showed. “They recognised the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.”
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The record was heavy with references to price pressures and why they might take time to ease. Officials “recognised that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis”.
Two-year Treasury yields, which are sensitive to Fed policy, pushed higher after release of the minutes and investors continued to bet the central bank would hike by 75 bps later this month.
The Fed’s aggressive push to curb the hottest inflation in 40 years has convulsed financial markets as investors fret that tighter monetary policy will tip the US economy into recession. The word “recession” was not mentioned once in the minutes, compared with 90 references to inflation.
“They can lose the battle on the economy, but they can’t lose the war on the inflation anchor,” said Mark Spindel, chief investment officer at MBB Capital Partners. “Powell’s telling you, ‘We’re not blinking.’”
While officials have already hiked their benchmark rate to a target range of 1.5% to 1.75% in June, chair Jerome Powell suggested they could do the same thing again in July.
He told reporters at a post-meeting press conference that another 75 bps increase, or a 50 bps move, was most likely on the table when policymakers gather on July 26-27.
Officials went big last month — despite previously signalling they favoured a 50 bps hike — after inflation data came in hot and a key indicator hinted that expectations for future price pressures could be accelerating among US consumers. — Bloomberg
CDL CIO resignation a surprise
In an unexpected move, City Developments (CDL) on July 4 announced the resignation of group chief investment officer (CIO) Frank Khoo, for “personal reasons”. His last day will be Sept 30.
Khoo joined CDL in 2018, to kick-start its fund management business as part of group CEO Sherman Kwek’s GET strategy. GET stands for growth, enhancement and transformation.
During his sojourn at CDL, Khoo was instrumental in acquiring 125 Broad Street for GBP385 million in October 2018 and Aldgate House for GBP183 million in September 2018. In 2021, CDL announced it had applied for an IPO of a REIT that will own commercial assets in the UK. Aldgate House and 125 Broad Street, where CDL embarked on asset enhancement initiatives, are the likely initial assets, along with other Grade-A commercial properties.
In addition to the proposed UK REIT initiative, CDL has a 50% interest in the manager of Singapore Exchange-listed IREIT Global and currently holds 21% of the REIT’s units in issue. IREIT Global has assets under management (AUM) of GBP889.7 million ($1.49 billion) as at Dec 31, 2021, spread across Germany, Spain and France.
Following the special distribution in specie of 144.3 million of stapled securities in CDL Hospitality Trusts (CDLHT) on a pro rata basis to CDL shareholders, CDL will continue to hold approximately 27% interest in CDLHT, which has AUM of $2.9 billion as at Dec 31. The deconsolidation of CDLHT will enable CDL to divest assets from Millennium & Copthorne into CDLHT to grow the latter’s AUM.
In 2019, CDL expanded into the Private Rented Sector (PRS) segment and now has three projects in the UK with a pipeline of over 1,300 units. This includes a 352-unit forward funded project in Manchester acquired by CDLHT in August 2021.
CDL’s own first PRS project in the UK, The Junction in Leeds, is currently under construction and will be completed in phases starting from mid-2022. The project comprises 665 PRS units and 24,000 sq ft of commercial space. In December 2021, CDL acquired a 250-year leasehold PRS site in Birmingham’s Paradise precinct. The 16,760 sq ft site will be developed into The Octagon, a 155m tower with 370 units, at an estimated total development cost (including land cost of GBP6.5 million) of around GBP110 million. Completion of the development is expected in 2025.
In its effort to build the fund management platform, CDL has set a 2023 goal to achieve a targeted AUM of US$5 billion ($7 billion). The AUM of CDLHT, IREIT Global, along with that of the UK REIT (assuming a size of GBP1.5 billion), would have seen CDL attain its US$5 billion target.
CDL has not announced a successor to Khoo yet. — Goola Warden