This week's fear-mongering headlines!

1) Italy's banks are burdened with a massive US$400 million worth of bad loans, which is highest in the EU by far. This hinders the banks' ability to provide credit to businesses, which in turn will affect the economy, leading to a vicious cycle. The Italian government could try to do a bailout but they are strapped for cash too. The Italian government debt level is the second highest in the EU after Greece. Furthermore, any attempt to carry out a bailout will likely run foul of certain EU central bank's regulations. Italy seems like the new weak link in the EU, bringing back the Grexit contagion fears. By the way, Greece is barely surviving too.

2) The systemically-critical Deutsche Bank never truly recovered from the 2009 financial crisis. Things are now in 'full-crisis' mode. Worse still, the recent Brexit will hit the bank hard. Deutsche Bank is the largest European bank in London and receives 19% of its revenues from the UK. Now the real question: what happens to Deutsche Bank’s derivative book, which has a notional value of €52 trillion, if the bank becomes insolvent? Financial Armageddon might be near......

3) With the sterling pound under severe pressure due to Brexit, three of the biggest commercial property funds in the UK have stopped redemptions. Investors are running towards the exit in herds. As more investors panic and do the same, the funds will have to sell more properties to meet the redemption demands. Usually the most-saleable and best properties will be sold first. This creates a vicious cycle as investors do not wish to be the ones still remaining in a fund which holds inferior properties in the end. This scenario brought back horrifying memories of how the 2008 GFC started. Dominoes started to fall when panicky investors started redemptions on two hedge funds from Bear Stearns.


This might become a regular thing on my blog seeing that there are always a few fear-mongering headlines from the mass media. Now I understand why people like Marc Faber are often pessimistic about the global economy. It can be rather fun in a morbid way. Ha!  >___<



Many of us are not living our dreams because we are living our fears
DK

Bravo, Britain. Nicely Done!

Don't rock the boat? What's the excitement in that! Despite bookies' odds favouring Bremain, the common British people made their voices heard around the world by making Brexit come true. Obviously, those bankers and executives of MNCs largely opposed Brexit as it will affect their fat bonuses. I guess the masses in Britain are frustrated of the status quo and being ruled by greedy corporate overlords.

When Singapore was separated from Malaysia, people doubt we could even survive. But we have proven those doubters wrong! We transformed from a third-world country to a developed nation within 5 decades. We built a strong and free nation with undying grit and wit from our pioneer generation. So, I have this message for the British youth - Your country will prevail. Do not use Brexit as an excuse for your problems. If Switzerland can prosper without being a member of the EU, you can do it too. Time to man up and show that famed bulldog spirit!

Kites rise highest against the wind, not with it.

Winston Churchill

Singtel Group - The SoftBank Corp of Singapore?

SoftBank Corp, one of the largest company in Japan, started as a traditional telecom in 1981. Over the years, SoftBank grew under the visionary leadership of Masayoshi Son through acquisitions and investing in start-ups. Gradually, it evolved from a boring 'old economy' telecom into a multinational internet company, with operations in mobile broadband, e-commerce, technology, media and marketing, finance services, robotics and other businesses. SoftBank successfully channelled resources from its core telecom business into new growth drivers. Example, it is one of the earliest investors in Alibaba and still remains the largest shareholder of the Chinese e-commerce giant.

Singtel can take a leaf out of SoftBank's playbook seeing that the impending 4th Telco is about to take a slice of its domestic pie. Singtel has been outperforming its two smaller local rivals this year, thanks to its vastly diversified earnings base. Core earnings from its overseas mobile associates such as Telkomsel, Advanced Info Service, Globe Telecom and Bharti Airtel increased 12% to $699 million. Singtel is also building ancillary services around its core business. For instance, Singtel re-launched its mobile payment app, Dash. Customers can use the app on their smartphones to pay for rides on trains & buses, ComfortDelgro & Prime taxis, and for purchases at merchants such as NTUC Fairprice, BreadTalk, Cheers, Food Republic, KFC, Pizza Hut & Watsons.

Another new revenue stream is coming from the cyber security division. The global cyber security market is growing at 9.8% a year. Hackers are becoming more sophisticated and daring as shown by recent cyber attacks on SWIFT, Sony Pictures Entertainment and Panama Papers data leak. For every lock, there's someone out there trying to pick it.

I was originally sceptical of SingTel's ambitious foray into the cyber security business in 2015, but watching the drama series 'Mr Robot' truly opened my eyes. This show is a masterpiece on the dangers of hacking. There is a huge shadowy world out there in cyberspace! Nerve Wrecking!

PwC estimates there are about 100 million cyber attacks every year, including data theft, leakage of intellectual property, corporate sabotage & denial-of-service attacks. That's 200 new cyber crimes committed every minute. The Singapore government wants to build a 'Smart Nation'. However, with greater use of connected devices like smartphones & tablets, comes greater vulnerability. Can a 'Smart Nation' be a 'Safe Nation' too? Will we be sufficiently protected from cyber terrorists? Singtel is poised to exploit opportunities in this rising and urgent demand for cyber security.

The pursuit of new growth engines requires substantial resources. This challenge could be solved soon. There are strong rumours of Singtel planning an IPO for NetLink Trust by 2H2017. If successful, the deal could raise as much as US$2 billion. Singtel will be armed with a huge warchest for pursuing new revenue streams as well as fight against the 4th Telco.