DAILY MARKET UPDATES 13th October 2008

Sports Hub completion date: 2012
The deepening financial crisis and rising building costs have combined to set Singapore's biggest sports project back two years in completion. One of the final obstacles before the contract could be inked between the SSC and SSHC was securing and finalising loans from financial institutions. Also contributing to the delay is a worldwide increase in the cost of construction materials, which some market experts say has risen by up to 35per cent in the last year. It is almost certain to translate into a surge in the $1.2billion construction cost of the project.
- The Sunday Times, 12 Oct, P4
Financial slowdown may ease construction costs
Mr Simon Lee, executive director of the Singapore Contractors Association, said the downturn will most likely stabilise the cost of construction materials. Last year, the Government announced the delay of $4.7 billion worth of public sector projects to ease pressure on construction demand; projects include a new hospital in Jurong and a complex that will house the Communicable Disease Centre. Other projects, like Resorts World in Sentosa, are still going ahead as scheduled. The BCA spokesman said it expects total public construction demand to reach between $10.5 billion and $13.5 billion this year as the Government is proceeding with essential infrastructure projects such as the Marina Coastal Expressway, MRT Downtown Line and Gardens by the Bay.
- The Sunday Times, 12 Oct, P13
S'pore in 'better shape' to face crisis
Mr S. Iswaran said that measures put in place after 1997 Asian financial crisis will help S'pore fare better now. Last Friday, figures from the Ministry of Trade and Industry (MTI) indicated that the economy shrank in the third quarter, declining by 0.5 per cent from a year ago. The local economy has contracted quarter-on-quarter in three of the last four quarters, making this the first technical recession in Singapore since 2002. MTI also lowered its forecast for full-year growth to 'around 3 per cent', down from 4 to 5 per cent.
- The Sunday Times, 12 Oct, P8
Hello S'pore, you'll soon go 3-D on Google
Last week, cars were taking pictures of landmarks, hotels and stores for Google Street View, a three-dimensional application that combines thousands of photos to create a panoramic view of a city; part of a project to put Singapore on the virtual map. The program promises to offer netizens a 360-degree, ground-level perspective of Singapore. Tools will let users tilt, zoom in and move along the streets in any direction and scheduled to be finished in a few months. Singapore will be the fifth country after the United States, Australia, Japan and France to be featured on Street View. Google said the program would also allow tourists to preview restaurants, hotels, tourist attractions and public events before arriving. They declined to reveal which areas of the island will be covered. The Government is developing a similar virtual 3-D model of Singapore called Co-Space, but Google's would be the first based on photo imagery.
- The Straits Times, B2
Always eating on the job
Far East Food Concepts (part of Far East Organization), Chia Boon Pin lives to track down the best restaurants and dishes to develop into dining concepts for the shopping malls developed by his company. 'My job is to find the best cuisines - from hawker food to fine cuisine - and position them accordingly to fit the intended concept of our malls,' says Mr Chia, who is well known in Singapore's dining circles as a foodie par excellence. His current fixation is Mediterranean food which is the theme chosen for Far East's latest mall, Orchard Central.
- The Business Times, B19
More small supermarts sprouting in the heartland
Over the past year, about 100 stores have been added to the heartland's roughly 1,000 outlets now. PSC, which also runs veteran heartland player, iEcon, opened 10 new outlets last year, adding to its stable of about 90. The chain, formerly known as Econ minimart, was set up in 1982 when a group of provision shop owners grouped together to bulk purchase. It franchises all its stores to individuals and families giving them the authority to switch prices at will for most of their products, apart from essential items like bread, milk and rice. The stores are a hit with heartlanders because some essentials are cheaper than in the big chains.
- The Straits Times, B1
Triple whammy hits Orchard Road retailers
A Straits Times survey of 62 tenants in six malls along the street's main shopping belt found that more than half are suffering as receipts have dropped. Businesses from restaurants and cafes to fashion retailers and salons say takings have tailed off by about 10 to 30 per cent. Orchard Road Business Association (Orba) secretariat Mr Stephen Goh said while malls have been cagey about revealing figures on customer traffic and sales, carpark revenue has fallen 10 to 15 per cent, suggesting fewer shoppers are driving into the area. The fall-off in spending also parallels a slowdown in tourism figures. STB announced earlier that it was likely to miss its target for visitor arrivals this year, the first time that has happened since the Sars outbreak five years ago.
- The Straits Times, A6
STI sheds half its value in a year
STI comprising 30 blue-chip component stocks has lost almost half its market value from a year ago, when the measure hit a high of 3,831.19 last Oct 11. Since then, the STI has shed 49.15 per cent. This means that easily $250 billion has been wiped off the benchmark, whose market value now stands at $263.7 billion. Out of the 30 blue-chip stocks, 18 have lost half or more of their value since the heady high of last October. The two biggest decliners are the China plays listed in Singapore, the so-called S-chips - shipbuilder Cosco Corp and property developer Yanlord Land, which have lost over 84 per cent and 79 per cent in value, respectively.
- The Straits Times, B22
S'pore banks in sound shape: MAS MD
MAS managing director Heng Swee Keat cited a number of reasons for this optimism. First, Singapore has no sub-prime mortgages that originated here, which means that banks and insurance companies have limited exposures to such assets or to the banks that have failed. Second, MAS has been conservative in its approach to how it supervises financial institutions. 'Their assets must exceed liabilities by a good margin, and we require them to hold sufficient capital. Financial institutions here, both local and foreign, have invested resources in risk management,' he said. Lastly, unlike banks elsewhere that face liquidity problems, depositors and investors here maintain a high level of confidence in Singapore's banks, especially as the MAS is also very strict about the spreading of rumours.
- The Business Times, P1
S'pore pledges support for SWF guidelines
International Working Group of Sovereign Wealth Funds (IWG), set guidelines - called the Generally Accepted Principles and Practices (GAPP) – which will help government-owned wealth funds and the countries that accept their investments operate on an even playing field. IWG, which represents SWFs with total assets worth an estimated US$2.3 trillion, said that the framework would bring about greater levels of public disclosure to dispel mistrust surrounding such funds, even as more of them are called on to help rescue ailing global markets. The IWG made public the set of 24 voluntary principles in a 59-page report on its website, and also announced it had formed a committee to explore the creation of a permanent international sovereign wealth fund body.
The full list of principles can be found at www.iwg-swf.org/pubs/gapplist.htm.
- The Business Times, P3
(See also, The Straits Times, A3 – “SWFs lay out code of conduct”)
Aussie dollar slide hits Singaporean companies
The slide of the Australian dollar will hit Singapore companies with Aussie exposure, including Singapore Telecommunications Ltd. Other companies with Australian dollar exposure include transport operator ComfortDelGro, Singapore Power, property company CapitaLand, crane operator Tat Hong and systems integrator CSE Global. One unit of the Australian currency traded at 98 Singapore cents by Asian close on Friday, compared with $1.35 on July 11 last year.
- The Business Times, P2
Key industry Q3 earnings at risk: analysts
Third-quarter earnings numbers will focus on key sectors such as the banks, the property players, and the oil-and-gas industry. Singapore banks hold quality assets compared to other banks across the region, one analyst from a foreign brokerage told BT. With the recent property boom, the proportion of bank loans to the property and construction sector had jumped to a peak of 18.1 per cent in June 2008 before retreating to 17.9 per cent in August, said an OCBC research report dated October 10. Reits could be under pressure with their larger gearing, analysts said.
- The Business Times, P1
World races to contain contagion
15 leaders of the countries which use the euro as a common currency in Paris, draft plans included guaranteeing loans between banks and pumping fresh capital into struggling institutions. While Britain is not part of the eurozone, Mr Brown was invited because of plans to adopt an approach similar to the £50 billion (S$126 billion) bailout plan for British banks announced last week. That plan sees the government guaranteeing inter-bank lending and buying stakes in banks. French Cabinet will hold a special session today to approve a Bill offering state guarantees and recapitalisation to banks in trouble. Germany is also expected to unveil a bank bailout package. British banks were in talks with the government and regulators yesterday to determine how much capital each needed from the £50 billion offered by the government last week.
- The Straits Times, A1
(See also, The Business Times, P20 – “Euro leaders seek common crisis response”)
G-7's action plan faces market verdict
IMF chief confirmed that the credit squeeze is spreading to emerging market economies, forcing them to turn to the IMF for emergency balance of payments financing. This came after the Fund's International Monetary and Finance Committee (IMFC) warned of possible 'spillover effects' on emerging economies from the financial crisis. IMFC said at the weekend that 'many emerging market economies which have implemented sound policies in recent years' may experience spillover effects from the financial crisis. The global financial environment, including elevated food and fuel prices, adds to the challenges for emerging markets and developing countries to preserve macroeconomic stability, sustain growth and make progress on poverty reduction.
- The Business Times, P1
UK banks set to unveil bailout plans
Banks are in talks with the government and regulators to determine how much capital each needs from £50 billion (S$126.4 billion) offered by Britain on Wednesday. An announcement is expected before market opens today, said the source. The Sunday Times said Royal Bank of Scotland (RBS), HBOS, Lloyds TSB and Barclays could ask for a combined £35 billion lifeline. Resulting in the government becoming the biggest shareholder - and even a majority investor - in RBS and HBOS. The scale of the cash required by each will depend on estimates of more losses from their exposure to sub-prime mortgages and other financial instruments.
- The Business Times, P20
Abu Dhabi plans to be region's media hub
Abu Dhabi yesterday unveiled plans for a new media zone, those behind the zone - named 'twofour54' after the geographical coordinates of Abu Dhabi - envisage tie-ups with dozens of media companies to produce content for the Arab world, meaning more newspapers, magazines, movies, documentaries, books, dictionaries and online content, among others. A temporary media park with about 200 staff will be launched next year, but a media zone spread over a 200,000-sq m waterfront site will take shape in five years' time. National Geographic said it was signing up with a local company to produce 10 to 15 films on the region in the next five years. Yesterday, television network CNN said Abu Dhabi would be its fourth global hub after Atlanta, London and Hong Kong.
- The Straits Times, A17
Saudi govt sees indirect impact from global crisis
Mohammed al-Jasser, the Saudi central bank vice-governor, said on Wednesday there was no need to provide emergency funds to banks in the world's largest oil exporter as the financial sector faced no shortage in liquidity. Six Saudi banks launched a concerted effort to restore confidence on Tuesday, saying they had no direct exposure to toxic mortgages as shares plunged on fears about the impact of the global financial crisis. But Saudi Arabia's main stock index fell again on Saturday to close at its lowest level since July 2004.
- The Business Times, P9
China to ensure growth will be 'fast and stable'
'Despite the negative shocks of the financial crisis, China will accelerate transformation of the growth model, promote domestic demand - especially household consumption - and maintain fast and stable growth,' central bank deputy governor Yi Gang said. China's economy, grew 10.1 per cent in second quarter from a year earlier. Policy makers have shifted focus from taming inflation to sustaining economic expansion as slower growth in exports and food prices threaten corporate profits, jobs and social stability in the world's most populous nation. Exports rose 21.1 per cent in August from a year earlier, after climbing 26.9 per cent in July. Industrial production climbed 12.8 per cent, the slowest pace in six years.
- The Business Times, P9
(See also, The Straits Times, A8 – “China ‘to double rural income by 2020’”)
S Korean banks' FX problems easing
South Korean Finance Minister Kang Man Soo said the won was expected to stabilise from today and mentioned that a local private economic institute had said the currency's 'balanced level' was 1,002 per dollar, which is 23.5 per cent higher than Friday's domestic close, according to Newsis, a local news agency. 'Foreign currency debts stood at around US$200 billion and roll over ratio of the debts recovered to 100 per cent last week. The ratio fell to 70 per cent when the situation was really bad,' he said. He repeated that the country could manage the recent financial turmoil well, given the size of its foreign exchange reserves and foreign currency debt structures.
- The Business Times, P9
Japan's small firms feel pinch of financial crisis
In August, Japan's core machinery orders, which are a leading gauge for capital spending, slid 14.5 per cent, four times the expected contraction. Meanwhile, bankruptcies have been escalating among the small businesses amid the global credit crunch. Corporate bankruptcies jumped 34.5 per cent in September month-on-month from a year earlier to 1,408 cases, up for the fourth straight month, hitting transportation, construction and property firms, a research firm said last week. Japan's Nikkei share average plunged 9.6 per cent on Friday for its biggest drop since the 1987 stock crash, wiping out US$202 billion in market value.
- The Business Times, P9
India mutual funds turn to central bank for short-term cash
India's mutual funds have asked the central bank to lend them short-term cash via a repurchase facility after the global financial crisis virtually paralysed the country's money markets, fund executives said. Reserve Bank of India (RBI) is considering the proposal to let mutual funds deposit some of the short-term bank debt they hold with the central bank in exchange for cash. Central bank lowered the proportion of deposits banks must keep in their vaults by 150 basis points from Saturday, adding 600 billion rupees (S$18.5 billion) to the amount of cash available for lending. Central bank data shows that outstanding certificates of deposits (CDs) at the end of August totalled 1.71 trillion rupees, up nearly 40 per cent from the start of the year.
- The Business Times, P12
RBI may delay opening of banking sector
RBI is slated to review its policy on foreign banks in April 2009, which now could be delayed. RBI had stated ealier, 'The second phase will commence in April 2009 after a review of the experience gained and after due consultation with all the stakeholders in the banking sector.' The review would examine issues concerning extension of national treatment to wholly-owned subsidiary, dilution of stake and permitting mergers/acquisitions of any private sector banks in India by a foreign bank in the second phase, RBI had said. India has committed 12 branches of foreign banks in a From 2003 to October 2007, the central bank gave approval to about 75 new foreign bank branches.
- The Business Times, P12
Communist Party approves key land reforms
China's ruling Communist Party approved a major economic reform plan yesterday that will allow farmers to trade and mortgage their land rights and bolster the nation's food security. The move is part of a wider package of reforms aimed at reducing a gaping rural-urban income gap that has expanded during 30 years of capitalist market policies. The package was approved at an annual meeting here chaired by President Hu Jintao of up to 500 members of the party's central and disciplinary committees and other key officials, the official Xinhua news agency said. It calls for a doubling of China's per-capital rural income of 4,140 yuan (S$898) by 2020, Xinhua said, without giving further details.
- The Business Times, P14