DAILY MARKET UPDATES 10th October 2008

Shares rebound on Asian rate cuts
Stocks in parts of Asia rebounded yesterday, after central banks in the region cut interest rates. Hong Kong, China, South Korea and Taiwan reduced official lending rates to bring down borrowing costs for banks and other businesses. The Straits Times Index was the biggest gainer in the region, ending 3.4 per cent higher. China's central bank cut interest rates by 0.27 percentage point late on Wednesday, and reduced the proportion of deposits that banks have to hold in reserve by half a percentage point, making it easier for banks to lend money. In South Korea, the Kospi index finished 0.6 per cent higher, after the central bank reduced its benchmark interest rate to 5 per cent from 5.25 per cent. The overnight Singapore interbank offered rate or Sibor for US-dollar loans rose to 4.75 per cent from 4.36 per cent on Wednesday.
- The Business Times, P1
(also see The Straits Times, P1, “Rate cuts fait to bring Asia-wide rally”)
Short term crisis, long-term perspective
Labour chiefs yesterday urged companies not to react too hasty to the current financial turmoil but to take a long-term view of their businesses. Mr Heng Chee How, the deputy chief of Singapore's labour movement, called on them to seize opportunities to grow, to keep costs down, and to keep worker morale up. Paying attention to longer-term imperatives meant continuing with existing drives to improve productivity, train and upgrade workers, and re-hire older ones, among others.
- The Straits Times, A1
S'pore banks 'as close to being safe as possible'
Singapore's banks here are well regulated. Market watchers pointed out that the Monetary Authority of Singapore's (MAS) rules demanding that banks here retain plenty of capital - expressed as the capital adequacy ratio (CAR) - are among the toughest in the world. Kim Eng Securities analyst said that the market selldown will affect bank shares, but there is no real loss of confidence in them. That's because the banks are backed by very strong asset quality, and their CAR is maintained at levels that are way above the regulatory requirement.
- The Straits Times, A4
Region's banks strong, say Asean ministers
Ministers from the Association of South-east Asian Nations (Asean) said the bloc's economic fundamentals remain sound even though GDP growth might not match last year's 6.7 per cent. Ministers said banks in the region should be able to withstand the financial turmoil. They said the region's banks have no shortage of capital, do not carry large debt loads, and have limited exposure to the sort of toxic mortgage loans and other bad assets that have brought down banks in the US and Europe.
- The Business Times, P4
IMF pledges to aid any country that needs help
The International Monetary Fund (IMF) is ready to help any country that needs backing to get through the global financial crisis. IMF has activated emergency procedures to get financial and other resources flowing to countries in need of balance of payments or other assistance. The IMF's lending to countries in need has fallen to almost nil in recent years, and thus it has plenty of available resources. IMF said that advanced economies will have zero growth this year and said projected 3 per cent global growth will all come from emerging economies. But modest recovery should be possible on a global basis from mid-2009.
- The Business Times, P25
Economists look into '09 and stare into more gloom
Expect the global downturn to hit Singapore hard, as GDP growth in Q4 and 2009 weakens, economists said at a Singapore Business Federation seminar. CIMB-GK economist’s base case forecast for GDP growth is 2.5 per cent for this year, and 0 to 2 per cent for 2009. But he added that Singapore's relatively strong corporate sector, the government's fiscal surplus and consumers who are not heavily in debt are favourable in these trying times. While job creation will slow, employment is unlikely to fall sharply with the integrated resorts contributing jobs, and the relative resilience of the construction sector cushioning recessionary effects.
- The Business Times, P2
(also see The Straits Times, B33, “Global crisis may hit S'pore economy hard”)
Q3 property investment sales plunge 79% to $1.1b
Investment sales in the third quarter totalled just $1.1 billion, a 79 per cent slide from the second quarter, according to DTZ. And most deals in Q3 were small, at less than $100 million each, due to credit tightening. Investment activity is expected to stay low for at least the rest of this year. But DTZ said that assets are now priced more realistically and there are funds looking for opportunistic purchases, in particular distress sales. Deals are likely to be small and mostly from private equity. In Q3, Kuwait Finance House acquired 36 apartments at Goodwood Residences for about $2,800 psf. CBRE said that rents for factories and warehouses edged up or stayed flat in Q3. Monthly rent for high-tech space increased 9.5 per cent from Q2 to $3.45 psf in Q3. The average monthly rent for factory space rose 3.2 per cent from Q2 to $1.60 psf for ground-floor units and 3.8 per cent to $1.35 psf for upper-floor units. CBRE said high-tech and business park space is expected to continue on a moderate upward trend.
- The Business Times, P17
2 flyovers for CTE to ease congestion
2 flyovers will be built along the most congested stretches of the Central Expressway (CTE). They will be up by 2011. One will allow northbound motorists exiting the Pan-Island Expressway to continue their journey on the CTE without competing with those using the Braddell exit on the CTE, said the Land Transport Authority (LTA). The other new flyover will offer city-bound motorists headed for the exit to Changi and Serangoon an uninterrupted drive. The flyovers are part of a major CTE-widening project, which includes widening works between Ang Mo Kio avenues 1 and 3. This started in June and will be completed some time next year at a cost of about $17 million. When it is all done by 2011, 7.5km of the CTE from Bukit Timah to Yio Chu Kang will have four lanes in each direction, up from mostly three today. The expansion is expected to reduce travel time by 15 per cent in either direction.
- The Straits Times, B4
IPS to operate from Bukit Timah campus
One of Singapore's leading think-tanks is poised to complete a merger with the National University of Singapore's (NUS) public policy school. The Institute of Policy Studies (IPS), whose members include Ambassador-at-large Tommy Koh, will begin operating from the university's Bukit Timah campus on Monday. It was previously located near Pasir Panjang.
- The Straits Times, B13
Hotel site draws just one bidder
Tender for a hotel site on Kallang Road has attracted just one bidder, who has lodged the minimum price allowed under the process. Tenders typically attract prices above the minimum bid but on this occasion Citywide Land's $51 million offer was right at the limit for the plot next to Lavender MRT station. The 99-year leasehold site is on the reserve list. The bid was right on the money at $249.6 per square foot per plot ratio for the 4,219 sq m site. The site has a maximum allowed gross floor area of 18,986 sq m, which could accommodate a hotel of up to 25 storeys.
- The Straits Times, B33
Japan mulls over 2nd stimulus package
Japanese Prime Minister sought new ways to stimulate the economy, as a 14.5 per cent dive in machinery orders provided further evidence that the global financial crisis is pushing Japan into a recession. The fall in machinery orders was four times as big as the market expected, and the third monthly fall in a row. Tokyo has prepared an US$18 billion stimulus package. The Nikkei stock average fell to its lowest close in more than five years yesterday. The Bank of Japan says its interest rates, at 0.5 percent, do not need to be cut.
- The Business Times, P19
India watching global crisis, will act swiftly if needed
India is watching the global financial crisis and will react to the needs of the market and take steps to pump in cash if required, its finance minister said. The statement was the latest attempt to calm rattled markets, with the benchmark share index down 44 per cent this year and the rupee at its weakest in six years. India’s finance minister said that growth in the current financial year would be close to 8 per cent and 9 percent in the next year. Private economists forecast expansion will slow to about 7.5 per cent this year from 9 per cent last year. Growth in the June quarter slipped to an annual 7.9 per cent, the slowest in 31/2 years.
- The Business Times, P19
SWFs may eye assets from West
Sovereign wealth funds could pick up some assets from the West over the medium term, said the head of global private banking at Standard Chartered. He added that the private banking space continues to grow. Citi Singapore country officer said that he expects staff levels to go up as more employees in London and New York are likely to move to Singapore.
- The Business Times, P16
Efforts to engage investors pay off
CapitaLand received a merit award for corporate governance at this year's SIAS Investors' Choice Awards and came away tops in the property category for most transparent company. For corporate governance, companies were assessed against a checklist developed from the Singapore Code of Corporate Governance, and they scored extra points if they took the initiative to implement best international practices.
- The Business Times, P6 – “SIAS Investors’ Choice Awards 2008” supplement
Going beyond the Code
At this year's SIAS Investors' Choice Awards, Keppel Corp won the Most Transparent Company Award in the multi-industry/conglomerates category for the sixth year in a row. It also won the coveted Golden Circle Award for most transparent company. It came second in the Singapore Corporate Governance Awards category for mainboard-listed companies. Last year, it was first. The company has stayed in the top three every year since the award was launched in 2003.
- The Business Times, P10 – “SIAS Investors’ Choice Awards 2008” supplement