DAILY MARKET UPDATES 07th October 2008

Stocks Savaged as Recession Looms
The Straits Times Index suffered its biggest one-day since January, ending 5.6 per cent lower at 2,168.32. In Hong Kong, the Hang Seng Index finished 5 per cent lower, while Japan's Nikkei-225 index sank 4.3 per cent. Britain's blue chips saw 60 billion pounds (S$153 billion) of value wiped out in the first six minutes of trading. Russia, trading was halted after the benchmark Micex Index plummeted 15 per cent. It resumed trading later and fell further to close 19.1 per cent lower. Interbank rates throughout the world have stayed stubbornly high over the past week - a sign of deep mistrust among financial institutions - despite increasingly desperate efforts by central banks to lubricate interbank markets with hundreds of billions of dollars in liquidity.
- The Business Times, P1
(See attached, “Stocks” – Source, The Straits Times A1)
(See also, The Straits Times, A1 - “The Big Plunge”)
ST Index sinks 5.6% on Contagion Fears
STI plummeted 128.8 points to close at 2,168.32 - its lowest close in over three years. Only 1.14 billion shares worth $1.35 billion changed hands. Worst hit were financials. DBS Group Holdings plunged 96 cents to $15.60, United Overseas Bank was down 78 cents at $15.74, while OCBC Bank lost 49 cents at $6.61. Property counters were also badly hit, as traders shunned firms with big capital-intensive projects such as upmarket condominiums. City Developments fell 40 cents to $7.61, while CapitaLand lost 20 cents at $2.74 and Keppel Land was down 33 cents at $2.28. Rig-builders were also hard-hit. Keppel Corp fell 64 cents to $6.40, while Sembcorp Marine lost 37 cents to $2.38. Singapore Press Holdings, gained four cents at $4 on a volume of 6.64 million shares.
- The Straits Times, B14
(See also, The Business Times, P6 – “Panic Selling drags STI to 3 year low”)
More SMEs keen to Expand outside of Singapore
The latest SME Development Survey by DP Information Group, carried out in April-June, shows that 24 per cent of SMEs cited overseas expansion as a key strategy in the next one or two years, a jump from 21 per cent in 2007. Malaysia retained its crown as the favourite market to get into (69 per cent), China overtook Indonesia with 67 per cent of SMEs citing it as a key market, versus 60 per cent for Indonesia. Japan and Korea replaced Australia and the US in the top 10 preferred markets. 29 per cent of SMEs experienced annual growth of 10 per cent or more, compared to 27 per cent a year earlier. Loss-making companies, dropped to 13 per cent last year, from 21 per cent a year earlier. 7 per cent of respondents reported profits of more than $5 million, compared with 6 per cent in 2007. 58 per cent of respondents cited rising operating costs as a top concern. Increasing competition took second spot with 49 per cent. Manpower issues ranked third at 39 per cent. Asked what was causing costs to rise, 58 per cent of SMEs cited labour costs, followed by materials at 57 per cent. Rent was cited by 42 per cent of respondents. New finance was a hindrance to growth for only 6 per cent of SMEs, compared with 10 per cent a year earlier.
- The Business Times, P8
(See also, The Straits Times, B17 – “Rising costs Top SMEs concerns”)
Lending costs up but liquidity still OK
Companies here have seen borrowing costs go up on the back of tight lending conditions and a surge in interbank rates. But they say they are not yet feeling the full impact. Banks, though cautious, are still lending, and liquidity in Singapore is not yet a cause for concern, economists say. The three-month Singapore Interbank Offered Rate (Sibor) has risen sharply - a sign that banks remain cautious about lending to one another amid worries about more financial institution failures. The three-month Sibor hovered between one and 1.5 per cent for much of this year before leaping to an eight-month high of 2.2 per cent on Sept 26. CIMB-GK Research economist said that companies in the property sector and smaller companies could feel the pinch more. President of the Association of Small and Medium Enterprises agreed that affected companies would include those in real estate, who have to borrow a lot from banks, and those that borrow for capital expenditure and equipment.
- The Business Times, 06 Oct 08, P7
Dorm Access Road to cost S$2m
With the new two-way road to the dorm from Ang Mo Kio Avenue 1, vehicles ferrying the workers to and from their lodgings will not need to use Serangoon Gardens' Burghley Drive. The Burghley Drive entrance will be sealed up, and the dorm will be set further in. Dwellers of Kingsgrove Condominium next to Ang Mo Kio Avenue 1 will face the entrance to the new access road; others living along the canal - along Tai Hwan Terrace, Tai Hwan Grove, Tai Hwan Crescent and Tai Hwan Drive - will face the road.
- The Straits Times, B2
(See attached, “New Dorm”)
SICCI & India woo overseas Indians in Asia-Pac
Organised by the Singapore-Indian Chamber of Commerce and Industry (SICCI) and India's Ministry of Overseas Indian Affairs, the first PBD conference to be held outside India and will take place at Suntec City Convention Centre on Oct 10 and 11. There are currently over 3,000 Indian companies incorporated in Singapore. Last year, bilateral trade between Singapore and India stood at nearly $24 billion from $6.8 billion in 2002. Organisers expect 500 to 600 participants, mostly from the Asia-Pacific region. Business leaders such as DBS CEO Richard Stanley and group CEO of Hyflux Olivia Lum will be among those speaking at the various plenary sessions.
- The Business Times, P8
(See also, The Straits Times, B17– “Overseas Indian Event: Economic Issues on the Agenda”)
Europe Scrambles to Forge United Action Plan
Russia shut down both its stock markets after they fell almost 20 per cent. Germany's DAX closed down 410.02, or 7.07 per cent, at 5,387.01, while France's CAC-40 was down 3,711.98 points, or 9.04 per cent, at 3,711.98 and London's FTSE-100 down 391.06 points, or 7.85 per cent, at 4,589.19. The euro slid below the US$1.36 mark for the first time in over a year and Iceland halted trading in six bank stocks while the government drafted a crisis plan. New York, the Dow Jones Industrial Average plummeted below 10,000 points for the first time in four years. The blue-chip index fell to 9,965 in early trade, the first time the index was below the key psychological level since October 2004. ECB injected another US$50 billion into money markets while the BoE added another US$10 billion. The Swedish Central Bank increased its lending to 100 billion kronor (S$20.3 billion). Additionally, the US Fed said that 28-day and 84-day cash loans being made available to banks will be boosted to US$150 billion a piece, effective yesterday. Those increases will bring the amounts outstanding under the programme to US$600 billion.
- The Business Times, P3
(See also, The Straits Times, A4 – “Panic Grips Europe”)
US$, Yen Explode on Risk Aversion
The Korean won dropped 5 per cent to record lows not seen in more than six years versus the US dollar, while the Indonesian rupiah and Indian rupee posted fresh 2008 lows as well. Forward trading via six and 12-month non-deliverable forwards or NDFs saw the US dollar elbow its way back above seven Chinese yuan for the first time this year. Traders reported that the Australian dollar suffered outsized losses of 6 per cent against the yen on stop-loss selling out of Japan, after it fell through 80 yen for only the first time since February 2005. Locally, the high-yield Australian dollar also fell below S$1.10 for the first time in more than five years - punished not only by an expected rate cut this morning but also a sharp slide in commodity prices as well.
- The Business Times, P3
(See attached, “Fiodollar” – Source, The Straits Times A3)
(See also, The Straits Times, A3 – “US Dollar & Yen soar as Investors seek Safety”)
India Central Bank cuts Cash Ratio
Reserve Bank of India (RBI) said that the CRR would be cut by 50 basis points to 8.5 per cent from Oct 11, a step that it said would release 200 billion rupees (S$6.1 billion) into the banking system. The central bank said that the move was ad-hoc and temporary, and would be continuously reviewed. It was welcomed by traders and analysts looking for relief after the stock market fell 5.8 per cent to its lowest close since September 2006, and the rupee fell to its weakest against the dollar since February 2003. Over the last three trading days - Wednesday, Friday and yesterday - it has injected an average of 908 billion rupees per day. The cash rate hit an 18-month high of 17.5 per cent last Wednesday, and closed at 11.00/25 per cent yesterday, still above the repo rate of 9 per cent.
- The Business Times, P13
Jakarta holding meeting on Global Crisis
Indonesia's president was to hold a special meeting yesterday to discuss the impact of the global credit crisis on Southeast Asia's top economy as the central bank said that a fall in the rupiah currency was not a cause for worry. Mr Sarwono also said that economic growth targets of 6.4 per cent for 2008 and 6.3 per cent for next year were still within reach. Analysts, however, expect global demand for the country's commodities and mining products, which account for a major share of its exports, to weaken amid the credit crisis in the United States and other major economies. The benchmark Jakarta Composite Index, which has lost about a third of its value this year, plunged 10 per cent by the close of the trading session yesterday.
- The Business Times, P15
Raising Foreign Currency funds a Struggle for SKorean banks
The won fell almost 5 per cent to its lowest against the dollar in six and a half years yesterday, hit by a shortage in foreign currency funding as SKorean shares ended at a 21-month low. The currency erased some early losses to end local trade down 3.5 per cent as some traders spotted dollar-selling by foreign exchange authorities. Currency was quoted at 1,267.9/0.1, compared with Thursday's domestic close of 1,223.5. It weakened to as low as 1,286.9. Korea is also on track to post its first annual current account deficit since that crisis and foreign investors notched up net stock sales of 30 trillion won (S$34.6 billion) this year, already the highest on record.
- The Business Times, P20
China’s Richest sees Fortunes Shrinking
Last year, the fortunes of many of China's billionaires swelled as stock prices soared to record highs, with the benchmark Shanghai Composite Index surging to 6,124.04 in mid-October. In 2007 the top three on the list had wealth estimated at US$35 billion. This year, their fortunes total less than half that - US$16.3 billion. Making Mr Rupert Hoogewerf's Hurun Rich List are in order are appliance and property tycoon Huang Guangyu, a 39-year-old entrepreneur with assets estimated at US$6.3 billion (S$9.2 billion), followed by Mr Du Shuanghua, a 43-year-old steel tycoon whose wealth is estimated at US$5.1 billion. Third in rank is Ms Yang, the 27-year-old daughter of Guangdong property tycoon Yang Guoqiang, with US$4.9 billion.
- The Straits Times, A14
Atlantis Japan Fund finds Office Reits Attractive
Office Reits in Tokyo are said to be were attractive because occupancy rates are high, and rents can be increased every two years or so. Retail currently comprises 14.79 per cent of the fund, compared with 3.46 per cent in the Topix. Real estate is at 10.22 per cent, compared with a Topix weighting of 2.56 per cent. The fund has no exposure to cyclicals such as mining, iron and steel, and oil and coal, which hurt performance in the first half. The fund, which is almost 70 per cent invested in micro and small caps, has tended to underperform a falling market and outperform a rising market. Japanese small and mid caps have fallen further than large caps in the last 12 months, with the Mothers index down over 55 per cent, compared to 37 per cent for the Topix and 36 per cent for the Nikkei 225.
- The Business Times, P30
Dubai plans to build a US$95b City
The mixed use Jumeirah Gardens development will be 'an integrated city within a city', to be built over 12 years, Meraas Development said at the opening of Cityscape 2008, a four-day international real estate exhibition. Jumeirah Gardens will stretch north of Sheikh Zayed Road, Dubai's main thoroughfare linking it to the oil-rich emirate and UAE capital of Abu Dhabi, 150 kilometres to the south. It will comprise business, residential and leisure facilities linked by a transportation network and including some of the city's biggest towers, and with a large canal running through.
- The Business Times, P30
New 1km-High Nakheel Tower beats Burj Dubai's 688m
The Nakheel Tower, which will take more than a decade to complete, will be located between two of the city's artificial palm-shaped islands, which Nakheel also built. The project will include a man-made inland harbour and 40 additional towers up to 90-floors high. About 150 elevators will carry employees and workers to the Nakheel tower's more than 200 floors and will be composed of four separate towers joined at various levels and centred on an open atrium. That Burj Dubai, or Dubai Tower in Arabic, is being built by Nakheel's chief competitor Emaar Properties. Emaar is said to stand at a 'new record height' of 2,257 feet (688m) and due to be finished next September.
- The Business Times, P30
Dubai housing prices may stay flat: report
About 140,000 new homes will be completed in Dubai by the end of 2010, adding to the existing stock of about 300,000 units, Colliers said in a report released. Home prices average US$5,420 per square metre, or US$504 per square foot, in Dubai, compared with US$6,500 a square metre in neighbouring Abu Dhabi. Aiming to become a regional financial centre, Dubai is spending billions of dollars on finance and tourism projects to diversify its economy. Property values in the UAE, the second-biggest Arab economy, have quadrupled over the last five years, investment bank Al Mal Capital PSC said in a report on March 9. Dubai's residential property prices rose 40 per cent from a year earlier, slowing from an annual 41 per cent in May, Al Mal said on Aug 14.
- The Business Times, P31
US$7.2b project planned near Riyadh
Saudi Arabia's Al-Shoala Group and Dubai-based Emaar Properties have teamed up on a US$7.2 billion community project near the Saudi capital of Riyadh. Emaar said the Rawabi Rumah project will have luxury homes, apartments, commercial and retail space, hospitals and community centres. The community project will include a 162-hectare park. Several international designers are also said to be aiding in plans with 60 per cent of the area allocated for residential development. Al-Shoala's chairman Prince Meshal bin Abdul-Aziz said that the project will create 25,000 jobs. Construction on the site is expected to begin next year, with the first villas ready for handover in 2011.
- The Business Times, P31
China may move to revive property market
House prices in China's 70 major cities fell 0.1 per cent in August from July. Steel company shares tumbled yesterday after the China Securities Journal reported that some steelmakers will cut output by 20 per cent this month as demand cools. Property demand in Chinese cities has dropped by as much as half since the government last year raised minimum downpayment requirements and increased rates on some mortgages to cool home prices. For the first time in six years, China cut borrowing costs last month. 'Policies will likely be geared up to stimulate the economy while minimising those financial and economic impacts of an imminent real estate bust,' said Lu Ting, an economist with Merrill Lynch & Co in Hong Kong.
- The Business Times, P33
Firm delays payment for land
Asset Managers Holdings Co, a real estate investment firm whose shares are down more than 90 per cent this year, said it will delay by two months payment for land it bought from the Tokyo Metropolitan Government. The Tokyo-based company, which manages a 556 billion yen (S$7.9 billion) property fund, bought an 11,158 square metre parcel of land near Tokyo Bay for 10.8 billion yen in March last year. The total cost of the project, expected to be completed by March 2010, was estimated at the time to be around 28.1 billion yen. The construction plan will go ahead as planned, Mr Nitta of Asset Managers said.
- The Business Times, P33

¯ ST Index change 2,168.32 (-128.80)
SIBOR (3 mths): 1.75000 (S$)
SWAP (3 mths): 1.74020 (S$)