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In his commentary on the global economic crisis, Tan Sri Dato Dr Lin See Yan mentioned that he had met two friends last month, one of whom was Princeton University's Professor Paul Krugman, who delivered a speech at the SMU Sim Kee Boon Institute for Financial Economics public lecture on 7 November. At the lecture entitled Global Economic Outlook: Preventing the Next Economic Crisis, Prof Krugman traced the key causes of the crisis, concluding that although the US has some of the tools needed to avert another crisis, they are still not ready enough to prevent the next crisis.

Philippe Ithurbide, the global head of research, analysis and strategy of Amundi Asset Management, listed lessons that market participants should take away from it. He made his points at a luncheon talk organised by SMU. The global financial crisis (GFC) has many consequences for investors, he noted. Many sacred cows in finance need to be slaughtered. Some have already been questioned by the market – the market-efficiency hypothesis, the capital-asset pricing model, the use of normal distribution to describe market outcomes, the rationality of market participants and the homogeneity of traders and investors. After the GFC, many more sacred cows may have to be slaughtered. At a time when more and more people are getting increasingly exuberant about the markets, Mr Ithurbide gave a timely reminder that the road to recovery remains long and arduous.

At a presentation on risk management post-financial and economic crises, organised by the Sim Kee Boon Institute for Financial Economics, Philippe Ithurbide, global head of research at Amundi Asset Management, commented that "Japan's bond market is not a safe haven”, and that it is “the most dangerous bond market". He cited an IMF paper indicating the "saturation point" for Japanese government debt will be reached in 10-15 years. “I might be interested (in JGBs) at 4%-6%, but we have the same at home without the forex risk," he said. He noted that Amundi is increasing the portion of Japanese equities in its portfolio. "It's not a question of stopping investment into Japan; it's where to invest," he said.

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Post-crisis world requires new thinking – Amundi's Ithurbide

Greater correlation among asset classes in recent years has caused some asset managers
to recalibrate their risk calculus, says Philippe Ithurbide, global head of research at Amundi
Asset Management, one of the world's biggest asset managers, with around EUR710 billion
in assets under management.

Related link:

Japan's bond market no safe haven – Amundi

Sim Kee Boon Institute for Financial Economics at SMU research fellow Hamish Macalister noted that very few people have a strong grasp of what investment risk means. He said that assessing risk when making an investment is hard because our brains have developed pattern recognition skills to such an extent that we see patterns where they do not exist. In sum, the world of institutional investment maintains teams of individuals attempting to measure risk with all manner of extremely complicated and esoteric mathematics. For the individual investor, it is critical to be aware of the pitfalls of common risk measures and bear in mind there is no such thing as a risk-free return.

Singapore’s central bank and a group of lenders are considering putting an end to the city-state’s U.S. dollar-linked interbank lending rate as regulators worldwide probe allegations of rigged benchmark borrowing costs. The banks are reviewing how Singapore interbank offered rates are set amid probes into rate manipulation worldwide. Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc have been penalised $2.6 billion for rigging the U.K.’s Libor, a scandal now set to engulf interdealer brokers such as ICAP Plc. "People are losing confidence because of manipulation," said SMU Professor of Finance (Education) Benedict Koh. "Given what has transpired, it’s important for the authorities to provide more transparency and audit by an independent body so that rates are fairly set and not biased to financial institutions that have conflict of interest.”

Finding solace in a new financial climate

Eugene Say, a second-year student at the SMU Lee Kong Chian School of Business and student trainer in the SMU-Citi Financial Literacy Programme for young adults, shared his thoughts on how the key to finding some comfort and peace in today's financial environment was to adopt the habit of saving, together with a view to incurring less debt. This would be possible only by reinforcing good decision-making skills when it comes to one's finances. He said that the act of saving money is the most fundamental financial discipline everyone should master, regardless of age and financial status. Mr Lee also advocated responsibility in using credit. He urged young Singaporeans to redefine wealth, happiness and success and cited a survey by OCBC Bank to show that, encouragingly, Singaporeans are shifting their focus towards intangibles defined by non-monetary values.

Researcher: Making better use of medical data to reduce patient visit frequency

Senior Research Fellow of the Centre for Silver Security (CSS) of the Sim Kee Boon Institute for Financial Economics (SKBI) at SMU and Visiting Professor of Economics, Rhema Vaithianathan suggested that Singapore’s healthcare industry could use medical data better to reduce the frequency of hospital visits for patients. She shared how hospitals in New Zealand and America would use a risk prediction model to reduce the frequency of a patient’s visits. She added that Singapore hospitals could use existing medical data to develop preventive measures, so that elderly patients do not need to be hospitalised. For patients who may have frequented hospitals in the past six months, the hospital could arrange for them to receive treatment at the polyclinic to reduce the number of hospital visits. By arranging for a nurse to take care of such patients, the risk of the patient losing the ability to care for himself is reduced.

Eugene Say, a second-year student at the SMU Lee Kong Chian School of Business and student trainer in the SMU-Citi Financial Literacy Programme for young adults, shared his thoughts on how the key to finding some comfort and peace in today's financial environment was to adopt the habit of saving, together with a view to incurring less debt. This would be possible only by reinforcing good decision-making skills when it comes to one's finances. He said that the act of saving money is the most fundamental financial discipline everyone should master, regardless of age and financial status. Mr Lee also advocated responsibility in using credit. He urged young Singaporeans to redefine wealth, happiness and success and cited a survey by OCBC Bank to show that, encouragingly, Singaporeans are shifting their focus towards intangibles defined by non-monetary values.