Cypriots elect Anastasiades as new president

Democrat Nicos Anastasiades was elected yesterday as new president of Cyprus with 57.48% of the votes. Euphoric supporters were pouring into the streets of the divided island, honking horns and waving blue and white Greek flags.

The Democratic Party leader stated that there were no winners or losers in this election as Cyprus has to be unified to face the new challenges and financial problems which lie ahead.

Anastasiades confirmed that he will immediately start working on the bailout conditions with the Troika in order to sign an agreement as soon as possible. He explained that as a result Cyprus will be closer to Europe and that they will make an effort to follow European obligations. He also sent a message to the people of Cyprus that he will work to give back to Cyprus its stability and credibility.

The new president task is not easy as he will have to negotiate a bailout to avoid a disastrous default. Cypriot banks alone face a £10 billion capital hole. The government can’t afford to borrow that amount (equivalent to 50% of the GDP), since its debt is already approaching 100% of GDP, and therefore would become unsustainable.

Germany, has categorically ruled out direct recapitalization by the European Stability Mechanism. That leaves the possibility of imposing loses on the providers of capital to the Cyprus banking system. But there is not enough equity and subordinated debt to absorb the losses, so depositors would somehow have to be bailed in too.

How the Cyprus situation will be resolved could have profound consequences for the euro zone. Once again, its members must strike a balance between solidarity and sovereignty. Berlin’s preference appears to be a traditional euro-zone can-kicking exercise. But euro-zone policy makers may not have the luxury of time, particularly if loose talk of depositor haircuts continues in a country where a quarter of deposits are foreign-owned with overnight notice.

The long term future of the Eurozone is pending on Cyprus solution.

Bad news for employment permit (E-pass) seekers in Singapore

The Singapore government has presented the White Paper on its vision of the demographics of Singapore. Singapore like any other developed nation is facing very difficult decisions on immigration and foreign workforce. The population of Singapore is aging with a fertility rate of only 1.3 which has put an increasing strain on the social welfare system. The inflation rate for 2012 was 4.6% and in 2012 the economy demonstrated the weakest growth in 3 years of 1.2%.

The government solutions was to keep the door open to attract a foreign workforce. After many heated debates, the White Paper has been passed with some amendments. However, the game is not over. Singapore has seen its first public demonstration in years with people are protesting against a foreign workforce. Some Singaporeans are blaming foreigners for increased living costs and property prices. According to the Economist research, Singapore has become 6^th most expensive city for living in the world and 3^rd most expensive in Asia.

The number of work permits being issued has decreased due to cooling measures and caps already introduced by the Singapore government. New measures (for example the S$650 levy for hiring a foreign construction worker, the S$550 levy for the service industry sector and the S$500 levy for the manufacturing industry) have been imposed. There is also a restriction on the ratio of a foreign workforce to Singaporeans; 7:1 for the construction industry, 1.5 for the manufacturing industry and 0.8 for the service industry.

IMF Chief has not ruled out Bail-In option for Cyprus bank depositors

After the recent G20 meeting, the IMF Chief Christine Lagarde has not ruled out a possibility of Bail-In of Cyprus bank. A Bail-In means that Cyprus bank depositors will lose part of their deposits as a measure of saving Cyprus banks. The previous Cyprus government had never considered this outcome when it was deliberately delaying negotiations with the Troika.

If the Bail-In happens, it will have a drastic effect on the Cyprus banking system which is a haven for Russian money. The Russian officials have voiced their concern with this approach. The Russian officials are not alone in caution from Troika on this move. The credit rating agency Moody is saying that this might lead to a knock off effect on entire Eurozone banking system as this will demonstrate a move from use the EU funds to save struggling banks to shifting responsibility for it on depositors.

At this moment, the Bail-In is under consideration of non-insured deposits in the troubled Cyprus banks. The European Central Bank (ECB) is currently offering an insurance up to €100,000 per client.

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Central Bank searches for Troika approval to inform Cypriot banks on their needs.

The Central Bank has asked the International Lenders for approval to officially inform banks about their recapitalization needs, in a suitable way to enable the banks to accurately announce to investors, their financial results for 2012.

The deadline for publishing the first results is February 28^th. The principal entities, Bank of Cyprus and the Popular Bank argued that they are unable to present results on this cut-off date as they have not yet been informed about how much recapitalization they will require. Announcing the results without this information might be misleading to investors. Both banks have asked the Stock Exchange authorities for an extension.

However to give them an extension on the date is prohibited by law governing transparency and market manipulation. In addition Investment Managers Pimco have been hired to carry out due diligence of the Cypriot banks to establish their capital needs ahead of an overall bailout package sought by Cyprus.

The final findings of the due diligence will only be made public if the new president of Cyprus, to be decided next Sunday, signs off the final loan agreement.

Limassol Business Network meeting

DON'T LOSE THE CHANCE TO GET REFERRALS!

Place: Chambers of Commerce - http://goo.gl/maps/6BbB1
Time: Thusday 20th of February 2013 at 18:00
Find out more: http://www.facebook.com/events/598060700220761/

No news conference but Christofias will address nation

Cyprus Mail February 2013

PRESIDENT DEMETRIS Christofias will address the nation tomorrow night, providing an overview of the achievements of his government in the last five years. 

Christofias had originally planned to hold a press conference today at midday. The presidential palace sent out invites last week to journalists to attend the live event scheduled for today. 

However, the palace press office informed news outlets yesterday morning that the press conference, where Christofias would have accepted questions from journalists present, had been cancelled. No reason was given for the cancellation. 

Instead, he will read out a 20-minute recorded address to the state which will be aired tonight after the evening news on the state broadcaster CyBC. Journalists will not be present to pose questions on his government’s achievements during the last five years.  

Asked why the address had been moved to Friday evening, a government source said it had something to do with the availability of CyBC camera crews. 

Christofias’ address to the nation will likely be the last before this Sunday’s presidential elections. Under Cyprus’ electoral laws, election campaigns have to wrap up from midnight tomorrow, with no electioneering allowed 24 hours before the elections.