lim hng kiang : trade links and business opportunities for singapore congratulatory remarks by mr lim hng kiang, deputy chairman of the monetary authority of singapore and minister for trade and industry, at the daiwa securities group 35th anniversary, singapore, 25 june 2007. * * * your excellency mr takaaki kojima, ambassador of japan to singapore, mr. shigehara suzuki, president & ceo daiwa securities group inc., mr. shin yoshidome, president daiwa securities smbc, distinguished guests, ladies and gentlemen. good evening, i am delighted to be here this evening for the joyous occasion of daiwa securities group ’ s 35th anniversary in singapore. this marks yet another important milestone for daiwa, and your continued commitment to singapore. daiwa ’ s growth story in singapore set up in 1972, daiwa has grown from strength to strength over the years. from the early collaboration in 1971 with development bank of singapore to issue the first asian dollar bond, daiwa has over the years expanded to provide a full spectrum of financial services. today, all of daiwa ’ s major business units are represented in singapore, covering securities brokerage, investment banking, asset management and more recently, wealth management as well. singapore has also grown to become a key node in daiwa ’ s overseas network, managing your business operations in south asia & oceania. i am encouraged to hear that on the occasion of daiwa ’ s 35th anniversary celebrations, you have also announced plans to boost activities in singapore and the region. i understand these new activities include m & a and private equity investments. these are all very positive developments and you will be joining a vibrant community of financial institutions here in singapore. japan and the region ’ s recovery and growth daiwa ’ s increased focus in south asia attests to the dynamism of the region. not only has the region shown resilience, it is now powering ahead. led by asean economies such as vietnam, which is surging ahead strongly, india, pakistan and the middle east too are beckoning out to investors with their growth prospects. trade and investments within the asian region, and between asia and the middle east continues to grow. notably, japanese foreign direct investments into asean has been increasing steadily again since 2003. in fact, it has reached more than us $ 6. 4 billion1 which even outpaced that into china in 2006. the japanese economy too, continues to impress. economic

investors buying commodity futures, because they could profit from a socalled roll - yield. this yield can be interpreted as a risk premium priced into the futures contract to compensate the holder for bearing the commodity price risk. however, if the number of investors ready to bear this risk increases significantly, the risk premium could disappear or even turn negative. in fact, for some time now, the near - term structure of many commodity prices has experienced a change from backwardation to contango. it seems to me, there may well be a connection between this change from backwardation to contango and the growing trend to invest in commodity futures. contrary to other commodities, gold has typically been in contango. the reason is that there is plenty of gold around and plenty of market participant - including central banks - willing to lend it. as a consequence, gold lease rates are usually lower than usd interest rates and gold futures prices higher than spot prices. the roll yield is thus negative, which is one of the reasons why investment in gold futures did not generate the same returns as investments in broad commodity future price indices. so what return should we expect from investing in gold? history shows that gold has been able to keep its value in real terms, but compared to bonds or equities, no real return has been realized ( graph 2 ). for instance, metals economics group ( 2005 ) estimates that expenditures for commercial nonferrous metals exploration increased from a 12 - year low of usd 1. 9bn in 2002 to usd 5. 1bn in 2005, a level just slightly lower than in 1997, when expenditures were at their highest level. source : watson wyatt in gfms gold survey ( 2006 ). graph 2 : cumulative returns on gold, bonds and equities in usd since 1871 us equities : 7. 1 % p. a. us t - bonds : 4. 6 % p. a. gold : 2. 5 % p. a. us cpi : 2. 4 % p. a. 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 fourth argument : gold mine hedging is " passe " as you know, in the second half of the 1990s, gold mines increasingly sold their future production on a forward basis. in doing so, they pushed up gold supplies by more than 10 % per year, thus reinforcing the already negative price trend. as from 2001, mining companies increasingly abandoned this type of price hedging