DAILY MARKET UPDATES 21st October 2008

DAILY MARKET UPDATES
21st October 2008

$150b unlikely to be tapped
Minister of Trade and Industry, Mr Lim said that the blanket guarantee released by MAS for all the bank deposits of individuals and corporates here until the end of 2010 was necessary to keep local banks competitive and to prevent a flight of deposits overseas. This amounts to about $700 billion in Singapore dollar and foreign currency deposits in banks, finance companies and merchant banks. Bank guarantees given earlier by regional governments such as Australia and Hong Kong had 'set off a dynamic' that put pressure on other economies to do the same or else risk disadvantaging their own financial institutions, he said. 'If Singapore had not introduced a similar guarantee, there was a real risk that depositors would have shifted some of their deposits out of Singapore banks, to banks in other jurisdictions which guarantee deposits,' Mr Lim added.
- The Straits Times, A1
(See also, The Business Times, P4 – “Enough muscle to defend Sing MAS”)
3rd ERP gantry on PIE to kick in
The gantry along the expressway near the Eunos exit will charge $2 between 7am and 7.30am, and $1 between 7.30am and 8am. One of six congested stretches of road identified but the only one with a gantry to go 'live', because the LTA has noted in its that motorists' average speeds there have fallen below 45kmh. Of the remaining five 'problem' locations, traffic speeds at four - Commonwealth Avenue, Jalan Bukit Merah, Alexandra Road and the west-bound Ayer Rajah Expressway - have improved, so ERP charges will be held off next month. At the fifth location, Geylang Road, the LTA will look into changing the physical infrastructure of the area, such as widening the roads there, to improve traffic conditions. The LTA has also decided to raise ERP rates by 50 cents between 6.30pm and 7.30pm at two locations - on the east-bound East Coast Parkway (ECP) at Marina South and on the slip road to the ECP from Ophir Road. This will bring the ERP charges at these two points from $1 to $1.50 on Nov 3. Charges at all other gantries remain unchanged.
- The Straits Times, B4
SMRT to roll out 112 more train trips each week
The fourth increase in number of trips made by SMRT will bring the total number of weekly trips added in eight months to 895, translating to an 11 per cent increase in trips. The extra weekly train trips starting on Friday will be made on weekdays, shortening waits by up to two minutes and making commutes more comfortable. In the mornings, more train trips will be made on the westbound, southbound and eastbound services; in the evenings, additional trips will head east and north to the suburbs. After 9pm, north, east and westbound services will also go up in number.
- The Straits Times, B4
Travel with LTA website
LTA has launched a new website that will let commuters do everything from surveying bus schedules to navigating the island's streets with an interactive map. The portal, www.publictransport.sg, is especially geared towards new arrivals to Singapore and infrequent public transport users. Visitors can browse through travel information and navigate with the help of an interactive map that features bus and train stations. Or simply key in their destination and let a journey planner make suggestions. Resident users can locate Park & Ride carparks, access information on premium bus services and compare fares. The site offers news on public transport promotions and initiatives as well. Meanwhile, commuters can also tap into a new SMS alert featuring bus arrival times for both public transport operators. The pilot project will be available for 166 bus stops along the western academic belt. The area covers the NUS, Singapore Polytechnic, the Institute of Technical Education's Clementi campus, Jurong JC, as well as secondary and primary schools. Commuters can get real-time bus arrival information by sending an SMS to 77722 with the five-digit bus stop code located on the bus stop pole. Normal charges apply for the SMS request. The information sent will be free during the six-month trial period.
- The Straits Times, B4
3,500 vying for positions at Marina Bay Sands
The resort's website received almost 1,000 applications, while 700 others applied via SMS text messages. Another 200 hopefuls walked into an NTUC employment office at Redhill Road. Marina Bay Sands has become the first employer here to woo traditionally overlooked groups like seniors, housewives and the jobless. Resort officials say finding the 10,000 workers will be no mean feat. The challenge is expected to get tougher when Singapore's second integrated resort, on Sentosa, begins hiring. Scheduled to open in 2010, it will also need 10,000 workers to staff a casino and theme park, among other things.
- The Straits Times, A10
STI gains 3.2% after three days of losses
Stock markets across Asia shrugged off last Friday's losses as investors temporarily shifted their attention from global recession worries to a further easing of interbank lending rates - a key indicator of the state of credit markets. Another boon was a move by South Korea to inject liquidity into its financial system, following similar moves in the United States and Europe. Seoul guaranteed US$100 billion (S$147.8 billion) of lenders' foreign currency debts and provided US$30 billion to banks. Leading the gains were blue chip banking and property stocks which had buckled under selling pressure in recent days. Most second-line indexes also mirrored gains on the STI. Banking stocks United Overseas Bank (UOB) and OCBC were among the best performers. However, general investor sentiment was still very cautious.
- The Straits Times, B17
Billions more for schools, roads and health care
Extra funds worth more than 2 per cent of Singapore's gross domestic product (GDP) will soon be available for government spending each year. The change, arising from a proposed amendment to the Constitution on spending of investment returns on reserves, will enable government income to keep pace with expenditure. Based on last year's GDP of $243 billion, the new rule could add at least $4.86 billion to beef up the annual Budget. The 2007 hike in the GST to 7 per cent adds 0.8 per cent of GDP a year to revenues. Firstly, investments in schools, worker training, research and development, as well as the flexibility to cut income taxes if needed, to keep the economy competitive. Secondly, improvements to the transport network, housing estates and leisure areas to keep Singapore a top-quality home. Thirdly, higher social spending as the population ages and the income gap between rich and poor widens. Now, the Government can spend up to half of the net investment income on the reserves, from interest and dividends paid out each year. The new spending rule sets the cap at 50 per cent of net investment returns (NIR), which include capital gains, that is, the change in the value of investments as prices rise.
- The Straits Times, B6
(See also, The Business Times, P1 – “Govt acts to cope with major spending ahead”)
Dirty power? Senoko gets top green award
It earned the accolade by burning natural gas instead of oil to produce electricity for the country's grid. The switch, made in 2004, means it belches 2.5 million tonnes less carbon into the air every year, about the same as taking all Singapore vehicles off the road for a year. The other two winners are Alexandra Hospital and the South West Community Development Council. Launched in 2006, the award goes to three recipients every year - individuals, organisations or companies which have made green contributions and built an excellent track record.
- The Straits Times, B1
(See also, The Business Times, P12 – “Going green reaps rewards for Alexandra Hospital”)
Unemployment rate this year will be higher
Trade and Industry Minister said that unemployment rate this year will be higher than last year's 2.1 per cent as employers 'exercise more caution in their hiring. However, inflation has peaked and is expected to 'revert to the more normal 2 to 3 per cent' over the next 15 months. The Government will also be watching the construction sector closely for the right time to resume public sector infrastructure projects that have been put on hold, and so offset a possible decline in private sector construction demand. Overall, the construction sector is estimated by his ministry to grow by 7.8 per cent in the third quarter of this year, compared to 18 per cent in the first half of the year. A total of 144,600 jobs were added in the first half of the year, a slight rise over the same period last year, although 'moderation in employment growth is expected in the second half of 2008 through to 2009', said Mr Lim.
- The Straits Times, A8
Singaporeans 'not grabbing' Johor land
Domestic Trade and Consumer Affairs Minister and Johor Baru MP Shahrir Abdul Samad said Singaporeans have been buying property in Johor since colonial times, and it was untrue to say that Johor Malays would become landless because of this. 'These people talk about the purported grabbing of land in Iskandar Malaysia by Singaporeans, and how it will drive the landless Malays to live in the jungle,' said Datuk Shahrir. 'They never highlight actual facts and figures to support their claims. The people of Johor, especially those in Johor Baru, should prosper with the Iskandar Malaysia project and not listen to outsiders out to undermine it, he said.
- The Straits Times, A14
DBS now smallest of three local banks
Falling share prices last week have wiped an astonishing $2.76 billion off DBS' market value yesterday. A rise of 28 cents in OCBC's stock to $6.38 gave it a market value of $19.95 billion while DBS' market cap sat at $19.83 billion after its shares gained just four cents to $13.04. United Overseas Bank (UOB) remains the most valuable of the three local banks. Its market capitalisation rose to $23.77 billion, after its shares rose 84 cents to $15.60 yesterday. Traders noted that DBS appeared to have suffered greater collateral damage from the sell-off, compared to UOB and OCBC.
- The Straits Times, B18
OCBC seeks bigger slice of regional corporate pie
OCBC saw higher corporate loans growth in the first nine months this year but expects volumes growth to fall, said Mr Tsien, head of OCBC global corporate bank. Real estate loans growth has weakened, while exporters of consumer goods have also been hit by the slowdown. OCBC continues to see the Singapore market as the largest contributor to its corporate banking earnings growth, but expects its business in Greater China to have the fastest growth. The bank has followed its corporate customers from Singapore, Malaysia, Taiwan and Hong Kong to China, where it has built up a business serving these clients as well as their suppliers and wholesalers, said Mr Tsien.
- The Straits Times, B21
(See also, The Business Times, P6 – “Corporate loan growth likely to slow: OCBC”)
Merrill chief expects thousands of job cuts
Merrill Lynch chief executive officer John Thain said he expects 'thousands' of job losses from the bank's US$50 billion (S$74 billion) takeover by Bank of America. Most of the cuts will fall in information technology, operations and finance. Jobs will not be eliminated in the fixed income and commodities divisions, he said. 'We haven't mapped it out in terms of actual number of people, but we are committed to saving US$7 billion across the combined platforms, and that will be a challenge,' he said. 'Between our two companies it will be clearly thousands of jobs.'
- The Straits Times, A11
Rattled contractors give projects a miss
Many contractors are refusing to tender for new jobs as they fear their projected profits could dissolve into losses if the prices of raw materials keep climbing. According to data from BCA noted that cement, steel bars, granite, concreting sand and ready mixed concrete have in some cases doubled over the past two years. The government is likely to respond to the slowdown in demand from the private sector by restarting some of the $4.7 billion worth public sector projects it put off, CIMB’s Mr Song & Citigroup’s Mr Kit said.
- The Straits Times, A11
Lehman US$3.4b property fund looks for sponsor
US$3.4 billion LBREP III fund raised at the end of last year is rim by bank staff who want to find a new partner to take Lehman’s US$780 million stake said Keith Greengrove a managing director for private equity at Lehman Brothers. ALAM which is 24.5 per cent owned by the Lehman fund hopes to raise up to US$750 million for Chinese property over the next three years said Mr Greengrove, ALAM’s deputy chairman. Property fund managers are eager to invest in Asia now because they believe that developers especially in China and India will offer plum deals because they are starved of funding. Merrill Lynch unveiled a US$2.6 billion Asia property fund last week. LaSalle Investment Management raised a US$3.9 billion fund in
August and Citigroup is raising a similar multibillion fund for the region.
- The Business Times, P37
India, Vietnam cut rates
India, Asia's third biggest economy after Japan and China, unexpectedly cut rates by an aggressive full percentage point, as did Vietnam. Both central banks judged that the risks to growth outweighed the pressure from inflation. Inflation in Vietnam has been running at about 28 per cent, which has forced its central bank to keep rates high in an effort to control prices by making credit expensive. At 13 per cent after yesterday's cut, Vietnam's interest rates are still the highest in Asia. India's inflation has persisted in double-digits, although there is some indication that this may be starting to ease.
- The Straits Times, A5
(See also, The Business Times, P17, “India cuts key rate for first time since 2004”)
Sept gross mortgage lending in UK down 10%
Gross mortgage lending fell 10 per cent in September to the lowest level for any month since
January 2005 hit by weak demand and the global financial crisis Britain’s Council of Mortgage
Lenders said yesterday. Banks and building societies loaned S$45 5 billion in September down 42 per cent from the same month last year. It was the lowest gross landing Figure for
September since 2001 the council said.
- The Business Times, P36
London home buyers hold out
Residential property prices in London probably will fall about 14 per cent this year with the biggest declines in homes costing about 1 million or more Knight Frank LLP estimates. In 2009 houses and apartments will lose another 11 per cent of their value according to Knight Frank, Europe’s biggest closely held property broker by revenue. Lenders now won’t issue a mortgage of more than 79 per cent of the value of the property compared with 90 per cent a year ago according to personal finance website Moneyfacts. The number of available mortgages has sunk to 3,123 from 15,599 at the peak of the market in July 2007.
- The Business Times, P36
China wants to stabilise property market
More than a dozen cities including Shanghai, Hangzhou and Nanjing rolled out new measures to encourage house purchases such as offering cash subsidies for home-buyers and lowering taxes and fees for developers. A State Council meeting led by Premier Wen Jiabao on Friday concluded that China should build more affordable housing and reduce taxes on residential
property transactions, state media reported. Real estate investment, the second largest contributor to the country’s urban fixed assets investment dropped in recent months due to sluggish sales falling property prices and developers funding difficulties.
- The Business Times, P36
China’s Q3 growth slows to 9%
China’s economic growth rate slipped into single digits in the third quarter for the first time in at least four years under the impact of the global credit crisis and weakness in the domestic property sector. Annual GDP growth slowed more sharply than expected to 9.0 per cent from 10.1 per cent in the second quarter the National Bureau of Statistics NBS said yesterday. Industrial production slowed to 11.4 per cent in the year to September, the lowest rate since 2002 suggesting that the economy was losing momentum as the quarter went on. However, the pace of retail sales and fixed asset investment growth both accelerated last month beating forecasts and providing reassurance to policy makers counting on domestic demand to take up the slack from ebbing exports.
- The Business Times, P2
China’s GDP can grow 8% over 10 years
China’s economy will continue to grow very strongly throughout the current global downturn and should be able to manage 8 per cent average annual expansion over the next 10 years
World Bank chief economist Justin Yifu Lin predicted yesterday in Tokyo. Mr Lin s forecast was for 9-10 per cent this year and 8-9 per cent in 2009. It is well within China’s capacity to maintain growth at high levels in the face of an expected slowdown in exports by using its huge reserves to finance spending on infrastructure and on education. While exports will slow imports will also fall and the net impact on GDP growth will be muted, he said. Meanwhile Chinese domestic investment can continue growing at 10-15 per cent annually and domestic consumption by 7-8 per cent.
- The Business Times, P2
LaSalle eyes plum Asia deals from troubled landlords
LaSalle Investment Management is keen to snap up property bargains in Japan, China and Australia and is also drawing more investors looking for stable long term returns in the region an executive said yesterday. The property fund unit of JLL unveiled a US$3 billion Asia opportunity fund in August which will be boosted by borrowing to US$12 billion of spending power. The fund hopes to pick up buildings on the cheap as landlords who borrowed heavily are squeezed by a clampdown on bank lending, said David Edwards Asia Pacific director for LaSalle Investment Management. Meanwhile LaSalle’s opportunity fund is keen to buy warehouse and logistics buildings especially in Japan. The logistics market has got many years of growth Mr Edwards said. Some markets are seeing short term oversupply and Osaka is one. But the Tokyo bay is still in good shape, he added. In China, assets are likely to spring
up as developers have been squeezed by a clampdown on bank lending and other government austerity measures aimed at stamping out property speculation.
- The Business Times, P37
K-Reit income jumps 180.7% on new assets
K-REIT Asia, Keppel Land’s listed office trust yesterday reported a 180.7 per cent increase in
third quarter distributable income as contributions flowed in from new acquisition, One Raffles Quay (ORQ). Distributable in come hit 15.2 million up from 5.4 million a year ago. Net property income for the three months ended Sept 30 2008 rose 27.2 per cent to 9.5 million from 7.5 million in Q3 2007. K-Reit reiterated that it has no debt refinancing requirements until 2011.
- The Business Times, P9
Tokyo should help Reits in Japan to merge Mitsubishi UBS
Japanese Reits corporations that pool investor funds to buy and manage property are under pressure after the global credit crunch led to a series of failures in the property industry. The Tokyo Stock Exchange Reit Index reached an all time low of 711.30 on Oct 10 compared with
1.000 at its April 2003 inception. The index rose 5.9 per cent to 828.24 in Tokyo yesterday. BOJ governor Masaaki Shirakawa said yesterday that the bankruptcies in the industry are making it more expensive for some companies to borrow money. The central bank needs to carefully watch the increase in credit costs on the back of a rise in bankruptcies in the construction and real estate sector Mr Shirakawa said at a quarterly meeting of its branch managers in Tokyo.
- The Business Times, P37
Berjaya Land confident of target
Berjaya Land Bhd expects to sell over RM300 million (S$126 million) worth of properties in its financial year ending, April 2009. The company inked a RM150 million deal with Hanju Savanna (M) Sdn Bhd yesterday and already sold closed to RM200 million worth of properties. It will launch three new developments soon, namely, Berjaya Park in Shah Alam, Taman Semutih high-end bungalows and a condominium in Bukit Jalil and recently received approval of four overseas projects in Vietnam worth over US$2 billion.
- The Business Times, P36