Congratulatory Remarks by Mr Kola Luu, Executive Director, Financial Markets Strategy Department, Monetary Authority of Singapore at DZ Bank’s Official Opening of Capital Markets Department 14 June 2007
1 I am delighted to be with you this evening to help celebrate DZ Bank’s official opening of its new Capital Markets Department. I am also very happy to note the rapid developments of DZ Bank’s operations in Singapore. Just last September, the bank opened a new branch in Singapore to conduct private banking business and this new capital markets department headed by Mr Mahmood Jumabhoy is testimony to DZ Bank’s continued commitment to Singapore and the region.
2 The new capital markets department will undoubtedly herald many new opportunities for DZ Bank in Asia. Singapore's economy grew at an annual rate of 7.7% in 2006. The Asian region is also witnessing strong growth propelled by the two economic powerhouses, India and China, as well as other economies in South East Asia such as Vietnam. Trade and investments among Asian countries and with the rest of the world have also increased substantially.
3 The positive regional outlook presents substantial opportunities for DZ Bank to grow especially with this region’s increasing thirst for capital in the areas of infrastructure, real estate as well as trade financing. DZ Bank is one of leading banks in Germany and it would be best placed to lend its expertise to the growing capital markets in Asia.
4 In the area of real estate, Singapore is one of the pioneers in Asia ex-Japan to grow our REIT market. With 16 REITs listed on our exchange with a total market capitalization of S$30bn, Singapore has received recognition for pulling together an integrated package that has fostered this success. Current market capitalization is estimated to represent only 4% of investment grade real estate in Asia and this suggests immense growth potential for increased securitization of Asian real estate.
5 As for infrastructure financing, the Asian Development Bank estimates that US$300bn of investments is needed every year to meet Asia’s rising infrastructure needs. Singapore is poised to help bridge these huge funding requirements. Our financial markets is located in the heart of a rapidly developing region. Together with our conducive regulatory and tax environment and available pool of expertise, the Singapore capital markets is well suited to help finance regional infrastructure projects. Hence, we are home to the first listed infrastructure fund in Asia ex-Japan and witnessed the listing of the first infrastructure business trust in Asia.
6 Singapore is also a transportation hub for shipping and aviation. We have seen more ship financing activities being originated and structured out of Singapore fuelled by the entry of new specialized transportation bankers as well as the expansion of existing teams. To date, we have seen the listing of 3 shipping trusts on the SGX with a total market capitalization of US$3bn, including one sponsored by a Germany shipping company. Aircraft leasing businesses in Asia Pacific are also expected to see strong growth. Singapore’s strong Maintenance, Repair and Overhaul operations as well as our developed financial sector allows us to be an Asia-Pacific aircraft leasing centre. Growth of this business could spur securitisation of aircraft leases which has already been successfully done out of Singapore and we hope to see further developments in this area.
7 To further develop our capital markets, we have also taken steps to create a business friendly environment to reduce costs to issuers and facilitate cross border distribution of securities and other investment products. Examples of these initiatives include the Asian Bond Market Initiative as well as the much publicized Asian Bond Funds launched by EMEAP (Executives Meeting of East Asia and Pacific central banks group) central banks. Other initiatives to grow regional equity capital markets include the launch of the FTSE/ASEAN 40 Index and a ETF (Exchange Traded Fund) for the index last year.
8 Asian countries themselves have also undertaken various initiatives to help develop their domestic bond markets, particularly in the area of secondary market trading. Singapore was one of the first Asian countries to have rolled out an e-trading platform for its government securities which allow for price and information transparency which has resulted in a deeper liquidity pool and a broader investor base.
9 Along with these growth opportunities and initiatives, we at the MAS, have adopted an open-door, consultative approach and are receptive to hearing of any impediments which bankers faced when launching new financial products. MAS continues to work with the industry on new ways to develop our financial industry and we hope to work closely with banks like yourselves in developing capital markets in Singapore and Asia. It is hoped that this open dialogue with banks would help foster greater understanding and co-operation and allow our financial industry to flourish.
10 On that note, I would like to once again, congratulate DZ Bank on its official opening of its capital markets department. I am confident that DZ Bank will continue to play an important role in the development of the capital markets in Singapore and the region.
11 Have a pleasant evening. Thank you and all the best to your new business venture!