DAILY MARKET UPDATES 14th October 2008

Stocks rebound as Europe gets to heart of the problem
Shares in Asia got an early boost as European governments reached an agreement to guarantee hundreds of billions of dollars in new debt issuance by banks until end-2009 and inject cash directly into banks in need of capital. The Bank of England, European Central Bank and Swiss National Bank said they would offer unlimited amounts of short-term US-dollar funding, in a further attempt to ease interbank strains and lower borrowing costs. Australia and New Zealand said they would guarantee all bank deposits, while Indonesia raised the limit on the amount of deposits guaranteed to 2 billion rupiah (S$304,000) from 100 million rupiah previously.
- The Business Times, P2 (also see The Straits Times, A1, “Europe acts, markets cheers”)
STI soars 6.6% on Asian rebound
The Straits Times Index (STI) ended 128.02 points or 6.6 per cent higher at 2,076.35, after swinging in a 160-point range throughout the day. Commodity-related and property stocks were the biggest gainers in percentage terms among the blue chips here. CapitaMall Trust jumped 14.7 per cent to $1.95. Yanlord Land gained 11.8 per cent to 90 cents. Keppel Land and City Developments rose 11.7 per cent and 11.1 per cent to finish at $2.01 and $7.20 respectively. OCBC Investment Research analyst said that volatility in the share price of developers is expected to persist with the weakening economic outlook and property market.
- The Business Times, P8
(also see The Straits Times, B15, “STI enjoys largest gain since 1999”)
Financial system stable: MAS
The Monetary Authority of Singapore (MAS) stressed yesterday that Singapore's financial system 'remains stable and robust'. MAS will take any necessary measures to safeguard the stability of Singapore's financial system and stands prepared to inject additional liquidity as required. In Singapore, the MAS said that banks, finance companies and insurance companies are required to have assets exceeding their liabilities by an appropriate margin. They are also required to abide by stringent regulations on capital, asset quality and risk concentration, and to put in place sound risk management systems and processes. The domestic Singapore dollar money and foreign exchange market have generally been calm and banks have been able to obtain funding in the interbank market, said the MAS.
- The Business Times, P16
US 'will bounce back and we'll survive'
Government of Singapore Investment Corporation (GIC) executive director Tony Tan told them the US would eventually bounce back and 'we will survive'. He said that the US will remain a resilient and well diversified economy. The problems will be overcome at some stage, the only thing we do not know is at which stage and how much damage will be done to the economies, institutions, consumers and householders before these issues are resolved. The markets will still go on and the economies will manage, he added.
- The Straits Times, A7
S'pore needs to be positioned to rebound
Economic conditions will be tough but Singapore must not lose track of the longer-term issues that affect the economy's competitiveness. Trade and Industry Minister Lim Hng Kiang said 'the global economy will eventually recover and we have to be positioned to bounce back. He added that the Government would have to strike a balance between regulating energy production and boosting economic growth.
- The Straits Times, B18
Property can still bruise Asia's banks, economy
Asian banks have largely escaped the worst of the global debt crisis but housing market downturns still threaten to pile up bad loans and slow the region's economy. Asian banks tend to limit loans to 70 per cent of home prices, compared to between 80 per cent and full value in the West. With half the wealth of Malaysia, Singapore, South Korea and India tied to property, the potential impact on banks and economies is wide. Hong Kong and Singapore home prices are widely tipped to fall 15 per cent next year as job cuts hit Asia's main financial centres. In South Korea, unsold homes are at a record high, prices are falling and small construction firms are vulnerable. India's property boom fizzled into a price drop of a third this year in some cities. The biggest risk of property loan defaults is in China. Developers are slashing prices to stem a sales slump, and dragging the whole market.
- The Business Times, P35
Robust demand for recent HDB launches
Demand has been hot for two recent launches from the Housing Board, with over 10 times more applicants than flats available. An offering of 150 smaller flats - studios to three-roomers - was swamped with 2,426 applications in the space of just a week. The sale of three-room premium, four-room and bigger flats achieved an extraordinary response: 7,036 applications have been submitted for 683 units. The launch of the smaller units featured three-roomers, two-roomers and studios in estates across the island. There were 582 applications for studios and 1,844 for two- and three-roomers combined in the offer from Oct 2 to 8. Studio prices range from $62,900 to $116,400. A two-roomer goes for $74,000 to $106,300, while a three-room flat goes for $134,500 to $275,200. Four-roomers at the Pinnacle@Duxton are priced from $457,000 to $555,000 and attracted 2,291 applicants; 825 people applied to buy five-room units at the same development priced from $545,000 to $646,000.
- The Straits Times, B7
Former school site up for tender in Bukit Timah
A plot of land in Upper Bukit Timah that can be used for commercial purposes or as a foreign system school will go up for tender tomorrow. The built-up site on Jalan Seh Chuan was occupied by the Jurong Garden School, and Seh Chuan High School before that. It is close to the Canadian International School, the German European School Singapore and the Beauty World Shopping Centre. It has an area of 3,464 sq m - about half the size of a football field. The building on it has a gross floor area of 4,221 sq m. Tenancy is for an initial period of three years with a renewal option for two further three-year terms.
- The Straits Times, B7
Hotel 81 developer to start new brand at Kallang Road site
Hotel 81-linked Citywide Land has been awarded a hotel site at Kallang/Jellicoe roads and has a new brand in the works to be completed in two-and-a-half to three years. The new hotel at Kallang/Jellicoe roads is in the 'development stage' and will be a three-and-a-half to four-star tourist class establishment. URA closed the tender for the site with one bid of $51 million from Citywide Land. Based on the site of 45,415 sq ft and a maximum permissible gross floor area of 204,363 sq ft, the unit land price works out to $249.56 psf ppr. Based on the bid price of $51 million and a projected yield of 8 per cent, Cushman & Wakefield reckons room rates could be in the vicinity of $100-$120 a night.
- The Business Times, P34
S'pore slips on Monocle ranking
Singapore now ranks 22nd on Monocle magazine's World's Top 25 Most Liveable Cities list, down from 17th position a year ago. Monocle is a global affairs, business, culture and design magazine set up by Tyler Brule, formerly editor of lifestyle magazine Wallpaper*. While Singapore scores high in some aspects of liveability, including the efficiency of Changi Airport, Mr Brule said that its 2008 ranking suffered from 'tolerance issues'. While Mr Brule did not elaborate on the 'tolerance issues', he said that communities need to be able to 'breathe' and ‘take the good with the bad'. Monocle's ranking goes beyond the usual metrics that only look at factors such as housing costs and the availability of schools. It also looks at softer issues such as the quality of new architecture; the ease of setting up a business and even the number of cinema screens per city.
- The Business Times, P16
Macquarie targets Asia's ultra-rich
Australia’s Macquarie Group said that its recently set-up Asian private banking unit will focus only on the very rich and that it will hire another 30 to 35 client advisers in the next three to five years. The unit, which now has five client or investment advisers in Singapore, plans to hire three more advisers by next March and another eight people the following year. Each adviser will deal with 20 to 25 clients and help manage about US$1 billion (S$1.5 billion) to US$1.5 billion in clients' money. The Singapore unit will focus only on ultra-high-net-worth individuals in Asia with assets of more than US$30 million.
- The Straits Times, B16
Soon: Better early warning system
The Government is planning a multimillion-dollar upgrade of a high-tech early warning system designed to help spot crises such as the current global financial meltdown. Known as a risk assessment and horizon scanning (Rahs) system, it is designed to ferret out information about impending wars, epidemics, financial meltdowns and other geo-political issues from information sources including newspapers, online forums and blogs. Sophisticated artificial intelligence programs then distil the data to see if it is important and if the issue is gaining momentum.
- The Straits Times, B5
CapitaLand and units raised $5b this year
CapitaLand and its various listed entities have raised more than $5 billion of debt year-to-date. The developer added that it has good access to capital markets. In July, the company secured a $2 billion development loan for its upcoming Farrer Road condo. CapitaLand shares have lost 56.5 per cent so far this year. In H1, the developer had a net debt of $8.2 billion. Cash reserves stood at $3.4 billion. CapitaLand announced that its serviced residence unit The Ascott Group has acquired a historic building in Paris for 21.5 million euros (S$42.9 million). Ascott currently has a portfolio of 5,620 units in 49 properties in Europe.
- The Business Times, P5
Making of a modern city-sate
Perhaps the URA's proudest achievement is that it has been able to take what is by any definition a tiny space - Singapore has a limited land area of only about 700 sq km - and optimise it to not only support sustainable economic growth but also provide a quality living environment. Take for example Marina Bay. The waterfront area on the southern part of Singapore is being transformed into a world-class financial hub with an integrated live, work and play environment. In facilitating the property sector, the URA introduced innovative approaches in its sale of sites. For example, an Option Scheme allows a large site to be purchased in phases to mitigate developers' risk. To achieve quality development, the URA also introduced a 'two envelope system' where both price and concept are considered before the government decides to award a site.
- The Business Times, P4, “Business Excellence” supplement
BCA's Green Mark debuts in M'sia, set to go beyond
As Singapore continues to shape an eco-friendly habitat by getting developers to embrace the Green Mark, this green building yardstick is starting to find its mark beyond these shores. The Green Mark scheme - a four-tier green building benchmark developed by the Building and Construction Authority (BCA) - made its debut in Malaysia last month, and looks set to move into regional countries such as Indonesia, Thailand, Vietnam and China.
- The Business Times, P17
Further losses ahead: Bankers
Emerging markets will face more gloom after suffering their worst quarterly loss in history as the global financial crisis starts to bite into their high growth economies, private bankers in Asia warned. They said emerging markets are most vulnerable to prolonged pessimism because investors have likely already cut exposure to more liquid markets. Emerging market equity funds saw more than US$30 billion (S$44 billion) in outflows in the first nine months of the year, according to Morgan Stanley. Corporate failures are likely to rise across Asia as the global financial crisis and its impact on access to credit, drive weaker firms to insolvency, said Citibank.
- The Straits Times, B16
Jakarta raises bank deposit guarantee
Indonesia raised its guarantee on bank deposits to head off a run on lenders and eased central bank rules so as to provide more liquidity. The latest measures provided support for the stock market, which reopened yesterday after a three-day trading halt. The Jakarta Composite Index added 10.2 points, or 0.7 per cent, to close at 1,461.87, after falling as much as 6.4 per cent earlier. Indonesia's move to guarantee up to two billion rupiah (S$303,700) in bank deposits is up from 100 million rupiah previously.
- The Business Times, P20
Indian shares rebound, 7.6% rise biggest in 4 yrs
Indian shares rose 7.6 per cent yesterday, their biggest rise in more than four years as the government sought to reassure investors it was working to shield India from the global crisis. The gains were led by a surge in ICICI Bank and helped by rallies in overseas markets after policymakers around the world took steps to rescue banks and prevent the global economy from sinking into recession. The 30-share BSE index ended up 7.64 per cent, or 804.38 points, at 11,332.23.
- The Business Times, P22
Johnny Depp's pied-a-terre won't save Paris from property slump
Paris has avoided price declines that hammered property markets in capitals such as London, which had a 9.4 per cent drop this year, thanks to fewer available apartments and demand for pieds-a-terre, lodgings used only for part of the time. Apartments go for as much as 11,010 euros a square metre. Now, tougher lending criteria and higher interest rates may start eating into the city's property prices, economists say. Growth in property loans slowed at the end of the second quarter to 8.9 per cent from 11 per cent a year ago, according to the Paris-based French Banking Federation. The average interest rate for property loans increased to 5.5 per cent in the second quarter, from 4.8 per cent in the same period a year before, the Banking Federation said. The volume of apartments sold fell 20 per cent in the year to May.
- The Business Times, P35