money 쐽 ★
Citi shares revive
to hit 3-month high
Surge baffling to many
observers but some say
bank is getting healthier
BY GABRIEL CHEN
BY SOME accounts, it is near death’s
door, yet Citigroup shares are not only
showing robust signs of life but surged to
a three-month high this week.
Many market watchers on Wall Street
and elsewhere remain baffled by the
once-mighty financial giant’s remarkable
Lazarus act over the past month.
Citi shares are trading around US$4
and have hit US$4.48 this week – a stun-
ning revival given that just a month ago,
they were below US$1, driven down by in-
vestor concerns that the tens of billions
of dollars being pumped into it appeared
to be having little effect.
The stock’s surge means the invest-
ment made by Government of Singapore
Investment Corporation (GIC) into the
bank is looking far prettier.
GIC is exchanging its US$6.88 billion
(S$10.35 billion) in preference shares for
ordinary shares at US$3.25 apiece. With
Citi’s shares at US$3.97 on Wednesday,
GIC’s investment is theoretically in the
black.
Home sales set to rise in 3 to 12 months: CDL
BY JESSICA CHEAM
PROPERTY developer City Developments
(CDL) said yesterday that it expects in-
creasing numbers of homebuyers to enter
the market in the next three to 12 months.
Its optimism stems from the sale of
more than 80 per cent – or 150 units – of
its newly-launched development, The
Arte at Thomson. CDL has put 180 units
of the 336-unit project on sale.
It said The Arte was “a record breaker
of sorts”, being one of the few large
projects launched in the global economic
meltdown “that has tasted success”.
CDLs’ statement comes on the heels of
newly released data that showed 1,220
new private homes sold last month, just
Corporate
race sees
9,927 run
for charity
BY JOANNA SEOW
CORPORATE Singapore put its best foot
forward yesterday to raise cash for chari-
ty in an annual fun run.
A total of 9,927 runners from 330
companies took part in the JP Morgan
Corporate Challenge, a 5.6km madcap
dash around the central business dis-
trict.
The participants were flagged off at
Esplanade Drive at 6pm by Dr Vivian
Balakrishnan, Minister for Community
Development, Youth and Sports, and
JP Morgan Singapore chief executive
Philip Lee.
The race ended at the F1 Pit Building.
JP Morgan had the largest contingent
with 950 runners, while more than 400
StarHub staff turned up, including chief
executive Terry Clontz.
PricewaterhouseCoopers, Citigroup,
M1 and software giant SAP all put in a
good showing as well.
But it was Mr Andrew Hallam of the
Singapore American School who led eve-
ryone home, completing the run in
20min 25sec.
CITI REBOUNDING
US$
8.00
7.00 April 15, 2009:
6.00 US$3.97
5.00
4.00
3.00
2.00
1.00
Jan 1 ‘09 Feb 6 March 9 April 15 ‘09
Source: BLOOMBERG
ST GRAPHICS
Citi shares crossed the US$3.25 mark
on Monday.
While the run-up is good for Citi inves-
tors, experts cannot seem to agree as to
why the stock is gaining.
Some investors say the price rise is un-
derpinned by fundamental reasons, like
growing signs of profitability, while oth-
ers suggest it is technically driven.
Those who think Citi is getting healthi-
er cite the fact that the bank, which has
reported five straight quarterly losses to-
talling US$37.5 billion, is turning around.
Chief executive Vikram Pandit said
last month that it was profitable in Janu-
ary and February. The bank reports
first-quarter results today and investors
shy of the 1,332 units sold in February.
This makes two consecutive months
with more than 1,000 units sold – the
first time it has happened in a year.
First-quarter private home sales have
hit 2,660 units – about 62 per cent of all
of last year’s new home sales.
It has led some to speculate that the
market has indeed turned a corner.
CDL said that “after absorbing news of
forecasts of a steep decline in GDP
growth for 2009, the upbeat in sales vol-
ume could mean that there is greater con-
fidence that a turnaround is in sight –
with a steady rise expected in the proper-
ty market within the next three to 12
months”.
But analysts maintain that this level of
Participants of the JP Morgan Corporate Challenge crossing the finish line at the F1 Pit Building in downtown Singapore. A total of 9,927
participants took part in the 5.6km annual fun run yesterday to raise funds for the Asian Civilisations Museum. ST PHOTO: CAROLINE CHIA
Ms Vivian Tang of CIMB-GK Securi-
ties retained her women’s champion ti-
tle, coming in at 22min 20sec.
Temasek Holdings chief executive Ho
Ching completed the run alongside the
are expecting a positive performance –
something which cannot be ruled out af-
ter US bank Goldman Sachs posted sur-
prisingly strong results this week.
Wells Fargo, the second-biggest US
home lender, has also reported net profits
of about US$3 billion for the first-quarter
– figures that beat analyst expectations.
Other experts say the share price rise
is down to technical reasons.
Traders like the kind of strategy where
they have a dollar each way – buying a
firm’s bonds while shorting its stock.
This investment strategy was extreme-
ly popular for a stock like Citi. At the end
of last month, nearly 1.21 billion Citi
shares, or about 23 per cent of its float,
were sold short.
So market experts suggest that the Citi
rally could be explained by institutional
traders covering their short positions.
Furthermore, they also stress that the
stock run-up must be “technical” be-
cause fundamentally, the bank is still be-
seiged with problems.
For one thing, it faces significant risks,
including writing down loans in areas like
commercial property and credit cards.
Meanwhile, there is market talk that
Citi plans to sell its Japanese investment
banking unit Nikko Citigroup as well as
Nikko Asset Management, a move that
should strengthen its balance sheet.
A Citi spokesman declined to com-
ment on the speculation.
buying may not be sustainable.
Knight Frank director of research and
consultancy, Mr Nicholas Mak, has esti-
mated that only 6,000 to 7,000 new pri-
vate homes are expected to be sold this
year, unless the Singapore economy and
employment market improve significant-
ly.
However, CDL’s group general manag-
er, Mr Chia Ngiang Hong, said that re-
cent launches have shown that “buyers
are still willing to spend when they see
value and see a good deal”.
Developers, prompted by the challeng-
ing economic conditions, have lowered
selling prices – by between 5 to 25 per
cent – and these factors have contributed
to larger transaction volumes, said CDL.
company’s incoming chief executive,
Mr Chip Goodyear.
Some Temasek runners ran in tutus
to raise awareness about contributing to
charity.
THE STRAITS TIMES FRIDAY, APRIL 17 2009 PAGE B14
There are conflicting reports about whether Saudi Arabian Prince Alwaleed Bin Talal Alsaud is
planning to sell the Raffles Hotel. PHOTO: ST FILE PHOTO
Raffles Hotel reported
to be going on sale
THE wealthy Arab owner of Raffles Ho-
tel is reported to have put the local icon
back on the market in a bid to offset bil-
lion-dollar losses racked up in the finan-
cial meltdown.
Prince Alwaleed Bin Talal Alsaud of
Saudi Arabia is said to have put a price
tag of $674 million on Raffles, the iconic
heritage hotel on Beach Road.
London’s Times newspaper said yes-
terday that Fairmont Raffles Hotels In-
ternational is seeking buyers for Raffles
and other hotel assets, despite a severe-
ly depressed market.
If true, this is the second time in as
many years that the Singapore landmark
has been the subject of a sale.
However, the communications man-
ager for Prince Alwaleed’s Kingdom
Holding Company, which has a control-
ling stake in Fairmont Raffles, said early
this morning that the Prince was not
seeking a buyer for Raffles Hotel.
Last May, a proposed sale of Raffles
Hotel to a consortium led by former
Credit Suisse banker Mark Pawley failed
to materialise for reasons that remain
unclear. The deal was said to have been
tagged at about $650 million.
The hotel is more than 120 years old
and gazetted as a national monument.
Built by the Sarkies Brothers in 1887
on the site of a 10-room bungalow, the
hotel expanded quickly and its fame
grew far and wide, partly thanks to it be-
ing mentioned in the works of writers
Somerset Maugham and Joseph Conrad.
In 2005, it was part of a hotel portfo-
lio belonging to Raffles Holdings – since
delisted – that was sold to US-based
Colony Capital for $1.7 billion.
Colony Capital later merged that
portfolio with Fairmont’s assets to cre-
Their slogan: “Don’t skirt the issue...
Go the extra mile for charity!”
The annual race, now in its sixth
year, raised funds for the Asian Civilisa-
tions Museum.
ate Fairmont Raffles. Other local assets
owned by Fairmont Raffles include Fair-
mont Singapore and Swissôtel The Stam-
ford.
The group has 123 hotels under the
Fairmont, Raffles, Swissôtel and Delta
brands.
The Saudi Arabia-based firm is one
of the world’s leading hotel investors.
But industry sources told The Times
the Saudi Prince is considering a range
of disposals after a sharp fall in value of
some of his biggest investments.
The Evening Standard in Britain yes-
terday said he is also looking for a buyer
for the Savoy, London’s most famous ho-
tel, which could be worth more than
£200 million (S$445 million). Kingdom
Holding has denied this report as well.
Prince Alwaleed’s investments have
taken bruising hits, most notably in
American banking giant Citigroup. His
initial 3.9 per cent stake has plunged in
value from more than US$50 a share
two years ago to about US$4 today.
Last October, the Prince tried to sta-
bilise the situation by increasing his
stake to 5 per cent, but the shares have
continued to nosedive.
KHC also lost a bundle of cash on its
investments in Songbird Estates, the ma-
jority owner of London’s Canary Wharf
financial complex, Euro Disney and
Rupert Murdoch’s News Corporation.
Kingdom Hotel Investments, a small
London-listed vehicle in which the
Prince has a 55 per cent stake, has also
lost more than two-thirds of its value in
the past 12 months.
Fortune magazine said his wealth has
fallen from US$21 billion to about US$13
billion (S$19 billion) over the past year.
BLOOMBERG
NOL warns of
steeper losses
WORSENING business conditions have led
shipping heavyweight Neptune Orient Lines
(NOL) to warn of widening losses for the
first three months of this year.
NOL, South-east Asia’s largest container
carrier, said yesterday it expects to post an
estimated net loss of US$240 million (S$361
million) for the first quarter.
This is a larger shortfall than the US$149
million net loss reported for the fourth quar-
ter of last year, it noted in an update to the
Singapore Exchange.
NOL also expects its full-year loss to be
“significantly worse” than financial analysts
are expecting, as the recession continues in-
to the year.
This is despite the cost-cutting measures
the group recently adopted, which include
pay reductions for its chief executive and di-
rectors. These steps are expected to help
NOL save as much as US$550 million this
year.
The shipping group said its first-quarter
results will be dragged down partly because
January to March “is a seasonally slower pe-
riod for the global container shipping sec-
tor”.
“However, this deterioration in perform-
ance is also due to a worsening of business
operating conditions in the first quarter,” it
added.
Singapore’s exports fell by a record 34.8
per cent in January and continued to decline
in February and last month, although at a
slower pace.
FIONA CHAN