The Financial Tides Ahead

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We ask two faculty members and an alumnus to share their opinions on the financial tides ahead. They are Professor Joseph Cherian, Director of the Center for Asset Management Research & Investments (CAMRI) and Chairman of the CAMRI Advisory Council at NUS Business School; Professor Duan Jin-Chuan, Director of Risk Management Institute at NUS Business School, and Cycle & Carriage Professor of Finance; and Srinidhi Raghavendra (MBA 2006), Chief Operating Officer at Straits Financial Services Pte Ltd.

Globally, we see gold prices fluctuating, Merkozy “recipe” in the recent EU Summit working together to ensure the 27 EU members sign up on a treaty to overhaul fiscal rules, and how, now, Greece debt restructuring is the talk of the Eurozone Crisis; the Fed keeping interest rates low for maybe until 2014 (hinting the possibility of QE3); and Bank of England’s (BOE) direction towards the expansion of the bank’s asset purchase program (possibility of another quantitative easing).

It has been a few years since the onslaught of the stormy financial situation in 2007. Now, with waves of Eurozone Crisis hitting and the daunting headwinds of US’s QE3 blowing, will the global market finally be able to cross the financial storm and move ahead in the financial tides? What would be the global economic out look for 2012? What direction will the market take? How would this affect Singapore? We sought views from industry academics and players in our midst.

Excerpts from “The nagging Eurozone crisis and its implications”

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Professor Joseph Cherian
Director, Center for Asset Management Research & Investments (CAMRI), NUS Business School; and Chairman, CAMRI Advisory Council, NUS Business School

Overleveraging and overspending is the main cause of the Eurozone crisis unfolding in front of our eyes, and a period of belt tightening from the West is to be expected. However, even to the casual observer, only a few concrete decisive moves to mend this crisis have been taken to date. Growth in the Eurozone based on November 2011 data was about 1.4% which is similar to what US is experiencing. Both US and Europe are expected to be in economic doldrums for 2012.

Most Asia (ex Japan), on the other hand, … Read more

The European Sovereign Debt Crisis and the World Economy

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Professor Duan Jin-Chuan
Director of Risk Management Institute, NUS Business School and Cycle & Carriage Professor of Finance

With the second rescue package of €130 billion for Greece, the world seemed to breathe a sigh of relief. But is the sovereign debt crisis really over?

The Greek rescue package is a combination of some austerity measures, a financial assistance of €130 billion, and a 53.5% haircut, presumable voluntary, on the private sector bondholders. The “voluntary” nature of haircut was designed in the first place to avoid triggering the credit default swaps on Greece (about US$70 billion worth in notional). As such institutions have both bought and sold credit default swaps, the net amount is belived to be … Read more

Global Economy Predictions for 2012

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Srinidhi Raghavendra (MBA 2006)
Chief Operating Officer
Straits Financial Services Pte Ltd

“Economists make predictions only so that the weather guys have someone to laugh at.”

Making economic predictions is never easy and in a volatile global market, the task is ever more complex. For 2012, some of the following headwinds blowing against global economy will significantly dictate its outcome.

A US election year will leave little room for any significant legislative decisions boosting economic growth. While the Euro area appears to be somewhat settled following a 3-year ECB loan, new sovereign or bank crisis in the region could revive Euro contagion, having an adverse spillover effect on … Read more

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