REACH (Telegram) 45 - What are your thoughts on the annual financial stability review’s findings by MAS? How can households build up greater financial stability?
(SK)
28 Nov 2024 (10am - 7pm)
REACH (Telegram)
REACH Singapore, [28/11/2024 9:52 AM]
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REACH Singapore, [28/11/2024 10:06 AM]
π’ Topic π’
On 27 November, the Monetary Authority of Singapore (MAS) said that while mortgage rates are down and incomes are up, households in Singapore should continue to be prudent amid heightened geopolitical uncertainties and trade tensions.
Financial assets like cash and stocks grew at a faster pace than the increase in household debt, the regulator and central bank also said in its annual financial stability review.
π¬ What are your thoughts on the annual financial stability review’s findings by MAS? How can households build up greater financial stability?
π Mortage loans
MAS noted that mortgage rates, or the interest paid as part of a monthly home loan, have declined, so Singapore households’ ability to service their debts remained strong, especially as income growth has been stable.
The central bank noted that the credit quality of housing loans remains strong, with the housing non-performing loans ratio staying low at 0.3 per cent as at the third quarter of 2024. The 10-year historical average is 0.4 per cent.
MAS also said the fall in new sales of private homes was partly offset by a rise in resale transactions. It added that over the past six months, private home transaction volumes have been picking up gradually. The private rental market has also moderated from its peak.
“While the recent easing of domestic interest rates may have boosted market sentiments as developers resumed project launches, the macrofinancial outlook is subject to significant uncertainties arising from geopolitical conflicts and trade tensions,” warned MAS.
π Personal loans and credit card debt
MAS said personal loans climbed by 5.1 per cent year on year in the third quarter of 2024, but the growth rate has remained below the historical average of 5.7 per cent.
When it comes to paying off credit-card or charge-card debts, MAS said almost all borrowers have been able to do so despite rising balances, led by robust growth in resident outbound travel and domestic retail sales.
The credit-card delinquency rate has remained low at less than 1 per cent.
MAS said rollover balances as a share of personal disposable income edged up to 2.4 per cent in the third quarter of 2024, but is still below pre-pandemic levels. Around 18 per cent of total card holders have not paid off their balances in full over the past year – significantly lower than pre-pandemic levels.
π Heightened uncertainty in the global economy
Global economic activity has remained resilient and inflation has eased, but the probability of adverse shocks has increased given policy uncertainty, trade tensions and geopolitical conflicts.
“Rising protectionism and trade tensions, along with continuing conflicts in the Middle East and Ukraine, may lead to larger and more frequent supply shocks,” the report said.
Locally, MAS said corporations have maintained debt levels significantly below pre-pandemic averages. Firms that have borrowed to invest may see higher risks due to weaker earnings and still-elevated borrowing costs, but they continue to have healthy debt maturity profiles and enough buffers to meet short-term needs.
“MAS’ stress tests show that the corporate and household sectors have adequate capacity to manage shocks to incomes and financing costs,” the report said.
The banking sector has strong capital and liquidity positions, while insurers are well-capitalised. Investment funds have also mostly managed liquidity risks well.
“The results of the Industry-wide Stress Test 2024 exercise affirm that banks would be able to withstand a range of severe macrofinancial stresses,” MAS said.
π Call for households to be prudent amid much uncertainty
Looking ahead, MAS said risks to the household sector are expected to be contained, given strong financial buffers, but it urged households to be prudent amid so much uncertainty.
“The easing of mortgage rates in the first half of 2024, accompanied by stable income growth, has bolstered households’ debt servicing ability, while the liquidity position of households has further improved,” the central bank said.
REACH Singapore, [28/11/2024 10:06 AM]
It added: “However, given the heightened geopolitical uncertainties and trade tensions in the macrofinancial environment, households should continue to exercise prudence in their financial management.”
π https://www.straitstimes.com/business/spore-households-debt-up-in-2023-but-assets-grew-faster
π https://www.channelnewsasia.com/singapore/mas-financial-stability-review-household-banks-company-debt-levels-4773171
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Daniel, [28/11/2024 10:11 AM]
I find the marketing around personal loans is quite dangerous. I am getting very frequent calls from banks to entice me for personal loans and they offer very high amounts on my credit card limit (which has also been put very high automatically, it's a significant percentage of my yearly income). The same goes for in-app marketing from banks with misleading statements such as personal loan asvertised at 0%, but with a upfront fee.
I find the marketing around those products to be quite dangerous, I feel that there should be some stricter guidelines on that.
REACH Singapore, [28/11/2024 11:30 AM]
Dear Contributors,
We want to HEAR MORE from you!
π¬ What are your thoughts on the annual financial stability review’s findings by MAS? How can households build up greater financial stability?
We have had good feedback from this group, and we hope that we can keep the discussion robust and active!
Thank you!
Megan π
TreasureHunter, [28/11/2024 11:34 AM]
I can understand why SGreans flock to buy properties despite incurring large debt. There are no better place to park the money and let it grow. If you look at stock market (STI) on a longer horizon, the increase is mediocre. Bank savings interest too low, can't beat inflation. So between money market and property market, typical Singaporean chooses property as first choice. Singapore need to have a more prosperous money market to attract households to diversify away from all-in-property.
LCL (Danny εΏ), [28/11/2024 12:26 PM]
1. Many economists and financial analysts have assessed that the next 4 years will be a bumpy economic and financial roads ahead - and not conducive for our economic growth.
2. In fact, we need to be all hands on deck.
3. Financially, we need to be prudent with our spendings and avoid taking too many loans - as the economic headwinds could also impact jobs.
4. Instead of living on paycheck to paycheck, we must always strive to set aside our monthly earnings for savings in case rainy days hit.
LCL (Danny εΏ), [28/11/2024 12:29 PM]
"Implications of Trump’s policies for Singapore’s economy.
With Donald Trump set to become the next United States president, here’s what Singapore and the world can expect in the next four years, and what remains uncertain, says Linda Lim from the University of Michigan."
Not a rosy assessment.
https://www.channelnewsasia.com/commentary/donald-trump-impact-singapore-economy-tariffs-trade-us-china-4755016#:~:text=Implications%20of%20Trump%E2%80%99s,University%20of%20Michigan.
LCL (Danny εΏ), [28/11/2024 12:31 PM]
US trade partners warn Trump tariffs would harm all parties. Trading partners could retaliate.
https://www.channelnewsasia.com/world/donald-trump-tariffs-trade-us-canada-mexico-china-4772426
LCL (Danny εΏ), [28/11/2024 12:35 PM]
1. Specifically, our trade to US will be under pressure.
2. Our intermediary exports to China - our largest trading partners - in which our goods eventually will land in US will also come under pressure if tariffs across the board hit.
3. Hence business and jobs related to trade destined to US market - will be under stress.
4. There will be a need to look out for alternative routes to keep the impacted trade business and jobs afloat for the next 4 years.
LCL (Danny εΏ), [28/11/2024 12:43 PM]
1. Also with easing of financial regulations in US, US banks, insurance and financial institutions may also take on more risky products with less guardrails.
2. As a result, bank customers will face more risk in their financial investment products and even run on banks - if financial crisis hit - that happens not too long ago - when the new US government got to intervene in many banks.
3. Hence our government and MAS stress testing our local and foreign banks and financial institutions here as well as ring-fencing all financial obligations here is imperative to ensure whatever happens in US will not impact the banks and insurers financial obligations to our customers here.
LCL (Danny εΏ), [28/11/2024 12:46 PM]
During the COVID-19 pandemic, several banks faced significant challenges, but none of them required a direct bailout. However, some banks did benefit from government support and interventions. Here are a few examples:
- *Large US banks*: While they didn't require a bailout, large US banks like JPMorgan Chase, Bank of America, and Citigroup benefited from government support, such as the Federal Reserve's actions to stabilize financial markets ¹.
- *Smaller regional banks*: Some smaller regional banks faced difficulties due to their exposure to industries heavily impacted by the pandemic, such as tourism and hospitality.
- *European banks*: Certain European banks, like those in Italy and Spain, faced significant challenges due to their high levels of non-performing loans and exposure to sovereign debt.
It's worth noting that the banking system as a whole was more resilient during the COVID-19 pandemic compared to the 2008 financial crisis, thanks in part to increased capital requirements and regulatory reforms. However, the pandemic still posed significant challenges for many banks, and government support played a crucial role in maintaining financial stability ¹.
Source:- Meta AI
LCL (Danny εΏ), [28/11/2024 1:24 PM]
"Mexico says Trump tariffs would cost 400,000 US jobs".
https://www.channelnewsasia.com/world/mexico-says-trump-tariffs-would-cost-400000-us-jobs-4774986#:~:text=Mexico%20says%20Trump%20tariffs%20would%20cost%20400%2C000%20US%20jobs
Steven Ong, [28/11/2024 1:38 PM]
While the report is good, it'll be good to start financial literacy from P1 and thru IHLs. With this, younger Singaporeans can learn to be mindful of their financial decisions. MoneySense can continue to enhance the public financial education with MOE, SPF, ABS, LIA, GIA, IMAS etc to help improve financial awareness among Singaporeans..
LCL (Danny εΏ), [28/11/2024 1:42 PM]
https://www.forbes.com/sites/digital-assets/2024/11/26/sudden-panic-sparks-200-billion-bitcoin-and-crypto-price-crash/
"Sudden Panic Sparks $200 Billion Bitcoin And Crypto Price Crash".
LCL (Danny εΏ), [28/11/2024 1:45 PM]
See.
Bitcoin should not be the mainstream medium for financial investment.
It involves too much risk, more like a speculative product.
All the more it will be extremely risky if Elon Musk propose Bitcoin as a financial instrument to repay Treasury creditors using Bitcoins.
Our invested Treasury bonds are US$200 billions.
REACH Singapore, [28/11/2024 2:00 PM]
π’ Topic π’
LCL (Danny εΏ), [28/11/2024 2:40 PM]
Dismantling the capital requirements and regulatory reforms on banks - a sure way to run on banks.
So we need to be prepared to ring fence the banks here and not let financial crisis hit us here if it happens in US.
Khai Mun L., [28/11/2024 2:59 PM]
Protecting banks from failing can lead to 'zombie companies', and large influx of money into the financial system. It's one of the reasons why inflation is so high now
Khai Mun L., [28/11/2024 2:59 PM]
Rushing to a meeting now, so unable to elaborate
LCL (Danny εΏ), [28/11/2024 3:24 PM]
Yes.
By protecting and intervening in banks is a form of quantitative easing - and flooding commercial banks with cash by Fed leading to high inflation - as there are too much money chasing after limited supply of goods.
If Elon Musk proposal to pay treasury creditors with Bitcoins - it means Fed will repay its treasury debts with $37 trillion of Bitcoins (essentially printing money) and flooding the global financial system with money supply.
All these will have the effect of triggering global hyperinflation.
Crocodile speculators (dark money) will cash out their Bitcoins to reap big profit at the expense of State Treasury creditors - and trigger a global financial crisis.
LCL (Danny εΏ), [28/11/2024 3:41 PM]
That's dark money speculators, money lauderers, drug money, gambling money, arm smugglers will wash their Bitcoins clean and exchange for US$ while State Treasury creditors like us, China, Japan, Saudi etc. will be laden with Bitcoins minus the hard cold cash.
Hence we must be careful of this Bitcoin trap.
Khai Mun L., [28/11/2024 3:55 PM]
There has to be more financial education to the public.
Showcase both good and bad sides of investing. Reference dotcom bust or 2008 crisis how SG minimise. Publish thoughts by past local investors or even analyse everyday investment portfolios.
Highlight benefit of investing local stock market. Risks and taxes on overseas investments (similar to those overseas property purchases).
Khai Mun L., [28/11/2024 3:59 PM]
Regarding financial challenges, i find that lot of people spend their income on unnecessary things and not saving/investing properly.
Going for holidays is an entitlement, not compulsory spending. Getting a car vs riding taxi/public transport. Branded goods etc.
Need to show success stories of being thrifty whereby can enjoy or maximise when have stable income/savings. Stories by local businessman, sportsman, workers would be good to hear
REACH Singapore, [28/11/2024 4:02 PM]
π’ Topic π’
REACH Singapore, [28/11/2024 4:02 PM]
It added: “However, given the heightened geopolitical uncertainties and trade tensions in the macrofinancial environment, households should continue to exercise prudence in their financial management.”
π https://www.straitstimes.com/business/spore-households-debt-up-in-2023-but-assets-grew-faster
π https://www.channelnewsasia.com/singapore/mas-financial-stability-review-household-banks-company-debt-levels-4773171
Jun Ming, [28/11/2024 5:07 PM]
Maybe a course of how to not spend on things that you are addicted to or bad for you.
Jun Ming, [28/11/2024 5:08 PM]
Cause usually it's hard to control spending on addiction
Jun Ming, [28/11/2024 5:11 PM]
As in you know you shouldn't spend the money but you still spend on it. This is something that professionals may discuss and look into it
REACH Singapore, [28/11/2024 6:01 PM]
π’ Topic π’
Adam, [28/11/2024 6:05 PM]
Yaknow at this point im just skimming the article. I have lost all faith in gov to present data in non biased way
Adam, [28/11/2024 6:07 PM]
Everybody sees it. Knows it. Discussed it over and over again. What input is there for us to give. If gov knows best and has all the data, will they work in Our best interest?
Adam, [28/11/2024 6:08 PM]
If Oppo comes with an economic proposal, will the current gov take feedback seriously or make them sit down, telling them they dont really know whats going on?
Khai Mun L., [28/11/2024 6:27 PM]
Hence, there are avenues like this group. Gov is trying to get new ideas from other people, instead of having the same suggestions
Khai Mun L., [28/11/2024 6:29 PM]
I find that most of Opp's idea are very one-sided. Don't consider what are the long term impact or where the money is supposed to come from.
E.g. minimum wage is not the better solution, or banning everyone from a certain country, raising taxes for rich (but what is defined as 'rich'?)
Khai Mun L., [28/11/2024 6:35 PM]
There is no way to cater all policies to everyone.
Even 'data collected' can be lacking.
Would someone report all the 'undertable coffee money' they earned or undeclared property they own? So how to get exact income earned etc
LCL (Danny εΏ), [28/11/2024 6:39 PM]
At least found another credible kaki.
Adam, [28/11/2024 6:39 PM]
Thats the thing. The metrics measures are flawed
Adam, [28/11/2024 6:39 PM]
So flawed policies will be enacted
Adam, [28/11/2024 6:40 PM]
So we keep talking about income. How about wealth? Does under table dollars matter when big buck are flowing above?
Adam, [28/11/2024 6:41 PM]
If you dont spend your budget, it means that you are not utilizing it effectively, so less budget next year
Adam, [28/11/2024 6:41 PM]
This mindset runs through the system making it inefficient
Jun Ming, [28/11/2024 6:42 PM]
But as you can see income alone can't bring you to live good in Singapore
Adam, [28/11/2024 6:43 PM]
Yeah so the article talks about income, debt. Putting numbers in isolation that loses all grasp on reality
Jun Ming, [28/11/2024 6:43 PM]
What can 3k/month how to actually get a private property
REACH Singapore, [28/11/2024 6:45 PM]
Dear Contributors,
⏰ We will be closing the chat in 15 minutes ⏰
Thank you very much for being part of our Telegram chat and participating actively.
Goodnight!
Megan π
Adam, [28/11/2024 6:46 PM]
Perhaps we can suggest to Reach. Instead of articles by st, we can trial discussions on stuff that is more 'raw' from opinion pieces to interviews with people on ground
Jun Ming, [28/11/2024 6:47 PM]
A lot of the rich actually earns through other income where mlm, crypto etc. those rich told me in fact stock market is too slow
Adam, [28/11/2024 6:48 PM]
Yeah, and my wealth is locked in cpf. Why bother 2.5% when my chicken rice doubled in a few years
Adam, [28/11/2024 6:49 PM]
Why medisave is 4%? Do you really think a hospital bed prices will still keep up with 4% yoy?
Khai Mun L., [28/11/2024 6:49 PM]
They bring up those articles because it would be a starting place for discussion.
And numbers are still useful to certain extent. If ask how many rich people in your hdb, you say 10 vs i say 20, who to trust
Jun Ming, [28/11/2024 6:50 PM]
The truth is money is getting smaller and smaller. That's why people start a new currency systems.
Adam, [28/11/2024 6:51 PM]
Depends on hdb lol. My neighbour keep changing occupant every couple years
Khai Mun L., [28/11/2024 6:51 PM]
Want higher interest, then risk more. E.g. put in bitcoin, if price down, then negative cpf number. Would people want to see this?
speedperry θη, [28/11/2024 6:51 PM]
Prudent spending as a result of media constant flashing of high property purchases seems to be the goal. And we are putting the cart before the horse.
I consider myself a young parent and my own journey towards sustainable wealth building while meeting current needs compels me to learn more about financial world.
It’s often easy to dismiss this skill to deepen professional skill or in short “I’m busy”. Hence I echo sentiments to imbue personal finance awareness since young. The info on this are a lot on sites such as dollar and sense, seedly and many. This way, our people can carve out suitable financial planning for their needs.
I believe the govt is not trying to dictate how we spend. But more cautioning prudence. Yet to reach there, it assume basics application of personal finance. Therefore the availability of personal finance tips, apps, behaviour, over leverage examples, cautionary tales of scams, in related to personal finance are imo the sowing the seeds to meet prudence during harvest.
LCL (Danny εΏ), [28/11/2024 6:52 PM]
1. For majority of the people, financing housing loans specifically HDB flat come from the following sources:-
a. CPF OA account
b. Government grants
c. Salary or income topping up the OA account
d. Housing loans from HDB or bank loans
e. Durations of the loans and the loan amount taken
f. Job security
All these will determine if loans are serviceable.
And also money needed for monthly expenses.
Adam, [28/11/2024 6:52 PM]
Yeah so does it make sense for a 24 year old fresh grad to take the same risk free investment as the 50 year old?
Adam, [28/11/2024 6:52 PM]
All are locked in the same system
speedperry θη, [28/11/2024 6:53 PM]
Since people like to talk crypto. The time for crypto boom is now. You may not get 2x 3x but that’s bc you didn’t follow or pay attention when BTC $16k. I also not young or rich enough to buy condo 10yrs back. Everything have time; cannot complain if you miss the boat. ⛴️
Khai Mun L., [28/11/2024 6:54 PM]
How to split and why? Would need cutoff numbers.
Very hard to come up with absolute value.
Even within 24 year old, they have different priority. Some have family, some earn high income, some is paying card debt
Jun Ming, [28/11/2024 6:54 PM]
Agree. Crypto is the future. You cannot anticipate it
Adam, [28/11/2024 6:55 PM]
Ill do more crypto when backs will take it as collateral for loan
Khai Mun L., [28/11/2024 6:55 PM]
For me, i disagree crypto in it's current form is the future
LCL (Danny εΏ), [28/11/2024 6:55 PM]
The current MAS system that do reality check have been used for many years and can almost accurately project the health of the household financial health and banking health.
If I am not wrong, it is a world banking standard for stress test on banking and households adopted by all countries to verify their financial health.
Adam, [28/11/2024 6:55 PM]
Same for hdb. We need banks to allow us to take a loan with it as collateral
LCL (Danny εΏ), [28/11/2024 6:56 PM]
Project ubin cryptocurrency as legal tender by MAS possible.
But not Bitcoin.
speedperry θη, [28/11/2024 6:57 PM]
Again. I believe the personal finance understanding of the population is weak.
Many young and seeking personal finance growth have acted and positioned their investments accordingly.
Some anticipated it while others don’t. Some saw the opportunity but dismiss it as fag. So opinion are opinion. The real learning is through active engagement and research π¬. All boils down to your personal finance journey. It’s a journey bc it’s ongoing.
LCL (Danny εΏ), [28/11/2024 6:57 PM]
That's even Fed use similar measures to do financial health check.
Jun Ming, [28/11/2024 6:57 PM]
Gov will always try to control currency. That's for sure. But I think there will be multiple currency can be accepted in the future
LCL (Danny εΏ), [28/11/2024 6:57 PM]
Bitcoin do at your own risk.
Adam, [28/11/2024 6:57 PM]
Lmao no. Gov wont allow
Jun Ming, [28/11/2024 6:58 PM]
Cause there's no law that prohibits people from accepting other currency as for now
Adam, [28/11/2024 6:58 PM]
How are you gonna collect gst when you buy mcd with bitcoin?
Khai Mun L., [28/11/2024 6:58 PM]
But isn't that the same as different countries currency?
speedperry θη, [28/11/2024 6:58 PM]
Govt thru Temasek have invested in FTX. So I won’t be surprised we as have expossure to crypto in sovereign funds
Jun Ming, [28/11/2024 6:59 PM]
I mean no one stopping you accepting Brunei currency
Jun Ming, [28/11/2024 6:59 PM]
Even grab accept bit coin now
REACH Singapore, [28/11/2024 6:59 PM]
Dear Contributors
We will be closing the chat for today.
Thank you very much for being part of our Telegram chat and participating actively.
Goodnight!
Megan π
====
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