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Singapore's economy expanded less than initially estimated in 1Q, adding to concerns growth may ease in the coming months. GIC says the world economy may be facing its worst recession in three decades. 9 Singapore opens its newstate-of-the-art Changi Airport Terminal 3 in a bid to strengthen its regional air hub status.
Singapore's economy expanded less than initially estimated in 1Q, adding to concerns growth may ease in the coming months. GIC says the world economy may be facing its worst recession in three decades. 9 Singapore opens its newstate-of-the-art Changi Airport Terminal 3 in a bid to strengthen its regional air hub status.
Singapore's economy expanded less than initially estimated in 1Q, adding to concerns growth may ease in the coming months. GIC says the world economy may be facing its worst recession in three decades. 9 Singapore opens its newstate-of-the-art Changi Airport Terminal 3 in a bid to strengthen its regional air hub status.
150 Cecil Street, #13-00 Singapore 069543 Phone: (65) 6232 8622 Fax: (65) 6232 8620 Copyright 2007, The Edge Publishing Pte Ltd. All rights reserved. Editor: Tan Boon Kean Research: Rahayu Mohamad Design: Sharon Khoh, Jamy Gan Printed by KHL Printing Co Pte Ltd 57 Loyang Drive, Singapore 508968 Phone: (65) 6543 2222 Fax: (65) 6545 3333 Published by The Edge Publishing Pte Ltd 150 Cecil Street, #13-00 Singapore 069543 Phone: (65) 6232 8622 Fax: (65) 6232 8620 Copyright 2008, The Edge Publishing Pte Ltd. All rights reserved. Editor: Tan Boon Kean Research: Rahayu Mohamad Design: Sharon Khoh, Jamy Gan Printed by KHL Printing Co Pte Ltd 57 Loyang Drive, Singapore 508968 Phone: (65) 6543 2222 Fax: (65) 6545 3333 Events 2008 The price of gas is displayed on a board at a Shell gas station in Singapore, onApril 20. Sin- gapores economy expanded less than initially estimated in 1Q, adding to concerns growth may ease in the coming months as global demand weakens and ination accelerates. Tony Tan, deputy chairman and executive director of the GIC, speaks during GICs staff conference onApril 21. GIC says the world economy may be facing its worst recession in three decades. Dec 31, 2007 JANUARY 2 The year starts with news that Singapores economy in the previous quarter shrank for the first time in more than four years by 3.2% as weak- ness in manufacturing overtook the growth from a construction boom. But inflation continues as US crude oil breaks the US$100 per barrel barrier for the first time. 9 Singapore opens its newstate-of-the-art Changi Airport Terminal 3 in a bid to strengthen its regional air hub status. Built at a cost of nearly $2 billion, Terminal 3 expands the airports annual capacity by 22 million to 70 million passengers a year. 25 Singapore will spend about $20 billion to upgrade the MRT rail network to cater for a growing population and reduce congestion. Two new rail lines are expected to be completed by 2018 and 2020. 31 Budget airlines begin flying the Singapore-Kuala Lumpur route, ending 30 years of dominance by na- tional carriers Singapore Airlines and Malaysia Airlines. AirAsia Bhd, the regions largest budget carrier, is the first to enter the sector, with a morning departure from Kuala Lumpur. Singapore-based Tiger Airways and Jetstar will have one daily flight each on the route. FEBRUARY 15 Finance Minister Tharman Shanmugaratnam presents the 2008 Budget, which will incur a deficit of $800 million as it seeks to enhance tax incentives for businesses and help the lower income and elderly consumers cope with rising inflation. The govern- ment will distribute $1.8 billion in tax rebates and other cash to lower income groups and the elderly. 20 The US Treasury agrees with Singapore and Abu Dhabi on a set of principles on sovereign wealth fund (SWF) investing and receiving SWF investments and say the principles emphasise transparency, non-politicisation and avoidance of protectionism. The agreement comes a day before the International Monetary Fund board is scheduled to meet on the formation of a set of international best practices standards for SWFs. 21 Singapore beats Moscowin a vote of the International Olympic Committee to host the Youth Olympic Games 2010. APRIL 21 The government assures the public there is sufficient rice as prices jump and stocks deplete. Singapores consumer price index in March rose at an annualised rate of 6.7%, the highest in 26 years as food, housing and energy costs surged. 22 The Singapore dollar rises to a record high of $1.3476 against the US dollar ahead of the release of the March inflation data. On April 10, the central bank had allowed the Singapore dollar NEER to ap- preciate at a faster rate to combat soaring inflation. Economists say the Singapore dollar could rise to $1.33 per US dollar by year-end. 29 The Monetary Authority of Singapore (MAS) cautions the economy may not reach its 4% to 6% GDP growth target this year if the US downturn is severe and results in a worldwide slowdown a first sign that earlier forecasts for a mild reces- sion may not pan out. MAY 15 The US tops world competitiveness rankings for the 15th straight year, but Singapore and Hong Kong are ranked just behind it, same as last year, according to Switzerland-based IMD business school, publisher of the World Competitive- ness Yearbook. JULY 1 Singapore private home prices grew the slowest in almost four years in 2Q, showing the property boom is ending. Prices increased only 0.4% after rising 3.7% in 1Q, URA says. Home prices jumped 31% in 2007, an 11-year high. 11 Oil peaks at US$147.50 per barrel for North Sea Brent and US$147.27 for US crude. But on July 15, a sell-off begins after US Federal Reserve chairman Ben Bernanke says consumer demand is falling. By the middle of September, prices would go below US$100 and continue falling. 31 The Singapore unemployment rate rises to a one-year high as firms slow hiring amid choppy financial markets and a weakening global economy, and analysts warn that unemployment may climb in the coming months. AUGUST 10 The Singapore economy shrank at an an- nualised rate of 6% in 2Q after seasonal adjust- ments. The balance of risk is shifting away from inflation towards growth, market economists note. The Singapore dollar also drops. 18 China beats Singapore for the womens team gold medal in table tennis at the Beijing Olympics but the consolation is, this is Singapores first Olympic medal in 48 years. TOP 10 GAINERS FTSE ST CHINA TOP 1 People's Food Holdings Ltd 2 Hyflux Ltd 3 China Aviation Oil (S) Corp Ltd 4 Li Heng Chemical Fibre Tech Ltd 5 Delong Holdings Ltd 6 Midas Holdings Ltd 7 China XLX Fertiliser Ltd 8 Epure International Ltd 9 Ferrochina Ltd 10 Pacific Andes (Holdings) Ltd * For the period of Dec 31, 2007 to Dec 12, 2008 NAME YEAR-TO-DATE % CHANGE -80 -70 -60 -50 -40 -30 -20 -10 0 -45.50 -47.02 -61.69 -61.84 -63.24 -66.12 -66.97 -70.00 -70.38 -73.02 TOP 10 LOSERS FTSE STI 1 Cosco Corp (S) Ltd 2 Keppel Land Ltd 3 Golden Agri-Resources Ltd 4 Yanlord Land Group Ltd 5 Neptune Orient Lines Ltd 6 Keppel Corp Ltd 7 Singapore Exchange Ltd 8 Sembcorp Industries Ltd 9 Olam International 10 Sembcorp Marine Ltd * For the period of Dec 31, 2007 to Dec 12, 2008 NAME YEAR-TO-DATE % CHANGE -100 -80 -60 -40 -20 0 -82.53 -79.82 -79.72 -77.11 -69.57 -66.37 -62.22 -61.72 -59.02 -58.66 TOP 10 LOSERS FTSE ST CHINA TOP 1 China Sky Chemical Fibre Co Ltd 2 China Energy Ltd 3 Synear Food Holdings Ltd 4 Hong Leong Asia Ltd 5 Cosco Corp (S) Ltd 6 FibreChem Technologies Ltd 7 China Hongxing Sports Ltd 8 CapitaRetail China Trust 9 Yanlord Land Group Ltd 10 Yangzijiang Shipbuilding Holdings Ltd * For the period of Dec 31, 2007 to Dec 12, 2008 NAME YEAR-TO-DATE % CHANGE -100 -80 -60 -40 -20 0 -87.16 -87.10 -84.32 -83.47 -82.53 -82.50 -78.13 -77.21 -77.11 -75.00 TOP 10 gainers & losers DOW JONES 8,761.42 7000 8000 9000 10000 11000 12000 13000 Dec 10, 2008 Dec 28, 2007 Dec 10, 2008 Dec 28, 2007 GOLD SPOT PRICE (US$) 783.50 680 730 780 830 880 930 980 Bloomberg Global Spot Price Commodity Index (US$) 137.87 120 140 160 180 200 220 240 260 137.87 Dec 10, 2008 Dec 28, 2007 CRUDE OIL (US$ PER BARREL) 43.52 30 50 70 90 110 130 Dec 10, 2008 Dec 28, 2007 MAJOR CURRENCIES GAIN AGAINST US DOLLAR 1.2 1.25 1.3 1.35 1.4 1.45 1.5 1.55 90 95 100 105 110 JPY SGD EURO Dec 10, 2008 Dec 28, 2007 NASDAQ 1,565.48 1300 1500 1700 1900 2100 2300 2500 Dec 10, 2008 Dec 28, 2007 Stock-market indices TOP 10 GAINERS FTSE STI NAME YEAR-TO-DATE % CHANGE -50 -40 -30 -20 -10 0 -27.49 -34.75 -35.58 -36.48 -36.65 -37.15 -37.37 -37.96 -39.86 -42.87 1 Singapore Press Holdings Ltd 2 Singapore Telecommunications Ltd 3 United Overseas Bank Ltd 4 Singapore Airlines Ltd 5 Singapore Tech Engineering Ltd 6 Oversea-Chinese Banking Corp 7 StarHub Ltd 8 Genting Int'l Public Ltd Co 9 Jardine Matheson Holdings Ltd 10 Jardine Strategic Holdings Ltd * For the period of Dec 31, 2007 to Dec 12, 2008 AIA policyholders throng its Singapore ofce in September on news of parent company AIGs nancial distress SEPTEMBER 15 Lehman Brothers, with assets of US$639 billion ($908.7 billion) at end-May, but failing to find funds to continue operating, files for bankruptcy to become the biggest casualty of the global credit crisis. The 158-year-old institution is the biggest investment bank to collapse. Merrill Lynch, also stung by the credit crunch, accepts a takeover by Bank of America. The Dow Jones Industrial Average ends more than 504 points lower today, making its biggest fall since the Sept 11 terror attacks. OCTOBER 3 The US House of Representatives passes a revised US$700 billion bailout plan, which will take toxic mortgage assets off financial companies. 8 The US Federal Reserve leads a coordinated, global round of emergency interest rate cuts to stem a credit and lending crunch. 13 The UK puts up 37 billion ($82.25 billion) to bail out three major banks Royal Bank of Scotland, HBOS and Lloyds TSB. NOVEMBER 4 Democratic candidate Barack Obama wins the US presidential election, becoming the first Afri- can American to be elected to the highest office in the biggest economy in the world. 9 China announces an estimated US$586 billion stimulus package to help the slowing economy, boosting domestic investment and propping up the hard-hit export sector. 15 World leaders pledge rapid action at a G20 summit in Washington DC to rescue a weaken- ing global economy, setting out plans to toughen oversight of major global banks and to try for a breakthrough in trade talks by year-end. 19 Singapores budget deficit could be three times larger than initially estimated this year partly because of the global economic turmoil, Finance Minister Tharman Shanmugaratnam says. 25 The US unveils a US$800 billion plan to buy mortgage-related debt and back consumer loans. Of this, US$600 billion is to buy mortgage-related debt and securities. The remainder is to support consumer debt securities. 26 European Commission chief Jose Manuel Barroso proposes a 200 billion ($384.64 billion) fiscal stimulus package to revive the groups struggling economies. DECEMBER 5 Prime Minister Lee Hsien Loong says the countrys economy, which is already in recession, may face years of slow growth. I think that the recession to the best of the experts judgment may last a year. Maybe if we are lucky, three quarters, Lee tells members of Singapores Foreign Correspondents Association at a lunch. But the recovery from the recession is likely to be weaker than from previous recessions and we must be prepared for several years of slow growth, he adds. 10 Steep falls in global commodity prices drive Chinas producer-price inflation down to 2% in November from 6.6% in October, the lowest level since April 2006. On current trends, headline inflation indicators could turn negative in early 2009, economists say, showing deflation could hit China. In Singapore, the MAS survey of economists forecasts show the economy will likely to contract 1% in 2009 compared with the 4.6% expansion expected in the September survey. More than half say growth would be zero or negative next year, with a few even predicting that the economy will contract by more than 2%. Manufacturing will continue to contract while the financial services, wholesale and retail trade sec- tors would grow marginally. Construction activity is to expand relatively stronger, but at around half the rate. 12 The Civil Aviation Authority of Singapore extends and increases its Air Hub Development Fund to Dec 31, 2009, with an expanded budget of $130 million. A 25% landing fee rebate will be given to airlines operating flights at Singapore Changi Airport and Seletar Airport, 10% higher than the existing 15% rebate as a one-time economic relief measure for 2009. There will also be rental rebates as Singapore fights to retain customers amidst a global recession. | BY SIMON TAN | T hegreat bear market of 2008will be remembered not only for its ferocity and devastating efect on fnancial markets and asset values but also for the speed of its onslaught. No other year in recent times has seen such a contrast between the frst six months and the second half, in particular the last three months. InJanuary, forecasters were optimis- tic although mildly cautious, and the year had started bullishly with the oil pricebarrellingpast US$100. Tebiggest headache worldwide, including in Sin- gapore, was record infation and prices. WhiletheUSsubprimecrisis was already anissue, having its roots in2007, the rest of theworld, especiallyAsia, frettedmore about high salaries, full employment, and commodity shortages. By April, however, the headwinds of the US slowdown started to be felt. Asia, Europe, the BRIC economies of Bra- zil, Russia, India and China were not as decoupled fromthe US as thought, as USimport slowdowns startedtobiteinto shippers, container traf candexporters. After oil reached its record US$147 in July, the market tipped over as the un- sustainability of world trade and growth became clearer. The worlds biggest consumer had stopped consuming because it could not keep up with its mortgage payments, and foreclosures led to further property value declines. Defaults started and that poppedthestructuredproduct andderiv- atives boomthat Wall Street had built on since2002. Soon, ahousingcredit crunch explodedintoaglobal credit squeezeand panic that froze business activity, caused commodity prices to collapse by more than 50%, sucked down emerging mar- kets current account surplusesbythebil- lions, and exposed the fraudulent as well astheunder-performing, over-leveraged, andover-paidsalesmenandsaleswomen of below-the-line and of-balance sheet fnancial products. Sovereign wealth funds, the much- touted new players in the global fi- nancial system with their billions of taxpayer and pensioner savings or al- located foreign reserves found their investment skills sorely tested as they continued to pump in more good mon- ey after failed money. By Dec 12, the Standard &Poors 500 index hadlost US$6.17trillion($8.77tril- lion) since hitting record highs in Octo- ber 2007, the Bloomberg news agency noted. That reduction in global stock wealth was far worse than the last bear dotcomcrash of 2000-02 when the S&P 500 lost US$5.76 trillion. Te year 2008 may mark the worst performance since 1931. To make matters worse, this one still has roomto run. Te MSCI World Index has tumbled 44% this year, and is set for the biggest annual declineinits four-decadehistory. InSingapore, the Straits Times Index was downnearly50%bymid-December, with every blue chip down for the year. Te STIs two top performers, SPHand Sing- Tel, were bothstill downnearly 30%. If youwere bornduring the Great De- pression of 1929 and lived till today, you wouldhaveseenthemarket capitalisation of General Motors fall lower than it was in1927. Tegrandnames of Bear Stearns and Lehman Brothers have ceased to ex- ist. Investment bankslikeGoldmanSachs and Morgan Stanley have converted into bank holding companies in order to ob- taincapital security. Singapore also made the news for being the frst inAsia toslipintoa tech- nical recession. Morgan Stanley econo- mists outlook for the worldis a low0.9% in 2009 and 3.3% in 2010, said to be the second-weakest two-years of economic forecasts since World War II. Tebest of times For value andbuy-and-holdinvestors, it is opportunistically, the best of times. Warren Bufett wrote to Te New York Times an opinion piece entitled Buy American. I am. He said, I dont like to opine on the stock market, and again I emphasise that I have no idea what the market will do in the short term. Never- theless, Ill followtheleadof arestaurant that opened in an empty bank building and then advertised: Put your mouth where your money was. Today my mon- ey and my mouth both say equities. Te bargains are not just in the US, but everywhere, including Singapore. While sky-high valuations deserve to be brought down to match a slow-growth world, themarket panicinevitablymeans many cash-rich, wide economic moat, and well managed companies have also been oversold. Still, to cite another vin- tage Bufett quote: Its only when the tide goes out that you learn whos been swimming naked. New investors and others with cash are fnding great op- portunities to buy into Singaporean and other world companies priced to earn- ings that are giddily cheap. Tere is no rush though, as no doubt the pain will continue, if not deepen, into2009, as the market crisis unfolds into the economic recession that is inevitable. Tereturnof theState Onechangewill bethereturnof theState which, after bailing out companies, has become the owner of more banks and fnancial institutionsinUSandEuropean historysinceWWIIandtheBrettonWoods monetary systemwas introduced. Letting Lehman fail was supposed to restore market discipline by showing that not all large frms would be saved, said Dino Kos, a former senior US Fed- eral Reserve of cial and now a manag- ing director at Portales Partners in New York, toBloomberg. Paradoxically, since Lehman, everybodyhas beenbailedout, everybodyhas beensavedor mergedout of existence with the taxpayers help. Te ignominious ending of the neo- liberal and unfettered market globalisa- tion policies of the past three decades since Reagan- ismand Tatch- erism is captured in former US Fed- eral Reserve chair- manAlanGreenspans dazed testimony before US Congress, that those of uswhohavelookedtothe self-interest of lendinginstitu- tions to protect shareholders equity [myself especially] are in a state of shocked disbelief. In his triumphal exit book Te Age of Turbulence, Green- span had questioned those who wished to regulate hedge funds, saying it is a vibrant trillion-dollar industrydominated by US frms. Tey are essentially free of government regulation, and I hope they will remainso. Why dowe wishtoinhibit the pollinating bees of Wall Street? Apparently there are killer bees as well as honey-makingones. Whencalled to testify later and asked if his free-mar- ket ideas were wrong, Greenspan said: You know, thats precisely the reason I was shocked, because I have beengoing for 40 years or more with very consider- able evidence that it was working excep- tionally well. Can Capitalism be saved from the capitalists? By reducing interest rates to near zero, is the US sliding into Japans failed no-growth high-debt economy of the past two decades from which there has been no signifcant recovery? Much will depend therefore not only on the US with newly-elected President Barack Obama but the next-generation Chineseleadersintheworldsmost popu- lous and fastest growing economic giant. Together, both economies are more cou- pledintheir trade, investmentsandassets than realised, and whether the recovery will be next year or take a decade may well dependonatiredandover-borrowed Americananda budding but savings-fx- atedChinese consumer. FTSE STI 3,465.63 FTSE ST CHINA 766.97 UOB CATALIST 215.85 FTSE STI 1,779.29 UOB CATALIST 75.56 FTSE ST CHINA 186.67 Dec 17, 2008 WORST of times, BEST of times J A N F E B M A R A P R M A Y J U N E J U L Y A U G S E P T O C T N O V D E C