DAILY MARKET UPDATES 24th October 2008

Convenient chutes promote recycling
Called the Recyclable Intermediate Chute Holding (Rich) system, it was developed by SembEnviro and installed next to the existing rubbish chute on every floor of the Block 297C Choa Chu Kang Ave 2 in December 2006. Within the first seven months, the participation rate of households in recycling increased to 93 per cent in July 07, from 67 per cent at the start. The scheme also resulted in an average of 850kg of recyclables collected a month - eight times that collected from any other HDB block. National Environment Agency said HDB would be providing separate chutes for recyclables in the Eco-Precinct of Treelodge@Punggol and Fernvale Vista in Sengkang. Separate chutes for recyclables will also be installed at the first two projects under the new generation public housing in the regenerated Dawson estate.
- The Straits Times, B1

Shop owners fight sale of Katong Mall
18 shop owners in Katong Mall have filed objections to a $219 million collective sale of the East Coast Road complex. Property group Tuan Sing Holdings bought the mall, which has 256 units, in June. The shop owners are saying that proper procedures were not followed and the deal was conducted in bad faith. Key among their concerns is that the two companies that owned 72 per cent of the mall, Golden Cape Investments and Megaton Investments, are wholly owned by buyer Tuan Sing Holdings. Store owners also complained the sales committee did not have the 80 per cent majority needed to approve the deal by Oct 4 last year. Ms Stella Hoh, a local director at Jones Lang LaSalle, which handled the sale, said proper procedures were followed. STB said the collective sale is scheduled to undergo mediation beginning on Nov 10.
- The Straits Times, B2

Time for rooftop revolution?
Mr Inglin, chairman of the clean energy committee of the Sustainable Energy Association of S’pore, said aiming to put solar panels on all rooftops here was unrealistic, but 70 per cent was achievable. Doing this, he said, would generate 11,550 gigawatt hours of power - enough for the needs of 2.8 million people. The prohibitive cost of solar panels - from $100,000 to a few million dollars, depending on the scale and technology used - has put some developers off investing in them. CDL has incorporated solar-powered eco-roofs into many of its award-winning projects, such as Oceanfront @ Sentosa Cove, City Square Mall and Republic Plaza. CDL said it sets aside up to 5 per cent of a development's construction cost for green design and features. Private developers may also apply for a government grant of up to $1 million per project to defray the cost of their investments in solar energy features by at least a third. The $20 million in grants which the Government is making available could spur up to 100 solar projects across the island in two years. ST Kinetics has tied up with S’pore Polytechnic to develop low-cost solar cells priced within the budget of individual home owners.
- The Straits Times, B22 & 23

$5.5m high-tech surgery training centre opens
The centre - built with funds from a $7 million donation by the Estate of Tan Sri Khoo Teck Puat, the late philanthropist - is based at the National University Hospital. Trainees can learn surgical procedures ranging from simple hernia repairs to highly complex brain tumour removals. The centre has attracted 1,000 local and international surgeons since its soft opening earlier this year.
- The Straits Times, B8

High praise for gardens in the sky
36-storey Newton Suites is a wall covered in Trumpet vine, at 100m, is the tallest in Singapore. The condominium, where units fetch over $1million, is filled with communal gardens and naturally lit common areas. Created by the NParks and the Singapore Institute of Architects, the Greenery Awards are meant to encourage builders to incorporate more plant life into their designs. The push is a relatively new one, as designers and officials look towards adding a touch of nature to Singapore's monoliths of steel and glass. Along with Woha, three other companies received awards yesterday. DP Architects won for its rooftop garden at VivoCity, DCA Architects was honoured for its outdoor terraces at One George Street and Eco-id was recognised for its work at the Naumi Hotel, which features a steel mesh, draped over its exterior, laced with climbing plants.
- The Straits Times, B16

(See also, The Business Times, P10 – “4 Buildings win Green award”)
A new skyline for The Concourse
Part of The Concourse at Beach Road is being demolished to make way for a new development called The Concourse Skyline. The 360-unit residential tower is designed by Sydney-based architect Philip Cox. The new 99-year leasehold property is currently open for previews to buyers. The demolition of the former retail and serviced apartment block is scheduled to be completed in the first quarter of next year.
- The Straits Times, B14

Optical equipment firm unveils $40m plant
QIOPTIQ Singapore, the local unit of a global optical equipment company, has unveiled a new $40 million manufacturing plant in Tractor Road in Jurong. The 200,000 sq ft factory was officially opened yesterday. In the commercial sector, it produces optical applications for medical, instrumentation, scanning, life sciences and projection use. Qioptiq has 800 employees at its new premises here.
- The Straits Times, B36

Prime retail rents to slip 5-15%: Knight Frank
Retail landlords are headed for a tough time as consumer spending weakens amid the economic downturn and with 3.4 million sq ft of new retail space scheduled for completion next year, property consultants say. Knight Frank's head of retail Sherene Sng predicts that average rents for prime retail space in Orchard Road and at suburban malls could slip 5-15 per cent in 2009. It now expects Orchard Road rents to edge up 2-3 per cent in 2008, lower than a 3-5 per cent increase it predicted earlier this year. CBRE is maintaining its 3-5 per cent increase forecast for prime suburban mall rents in 2008, due to the captive market of HDB heartland shoppers these malls can count on, as well as limited new supply of retail space in the suburbs. Ms Sng says the big factor affecting retail rents next year will be not so much the completion of 3 million-plus sq ft of new space but a slowdown in sales as people tighten their belts and cut spending due to the economic downturn.
- The Business Times, P9


Keppel Corp's earnings up 10% to $273m
Revenue was up 24 per cent at $3.22billion for the three months ended Sept30, with higher revenues from all divisions except the property unit. The group's profit contribution from its property division fell $43 million, or 27 per cent, from the previous year to $116 million, due to lower profit from Reflections at Keppel Bay and Keppel Land. But the progressive recognition of revenue and profit of homes sold in the past two years should provide a good base for the property division until confidence returns to the market, it said. The group's gearing is just 3 per cent.
- The Straits Times, B35

(See also, The Business Times, P5 – “Keppel profit rises 10.2% in Q3”)
Frasers Centrepoint Trust's Q4 DPU up 23%
FRASERS Centrepoint Trust (FCT) has announced distribution per unit (DPU) of 2.05 cents for its fourth quarter ended Sept 30, a 23 per cent increase from Q4 last year. Strong performance by Causeway Point and the reinvigorated Anchorpoint continued to drive gross revenue and net property income growth, according to FCT. Q4 leases at Causeway Point were renewed at 15 per cent above preceding rates, reflecting strong demand and tight supply situation in the suburban retail sector. Anchorpoint's Q4 2008 gross revenue more than tripled to $2.4 million from the year earlier. Rents increased more than 40 per cent as the mall reverted to full occupancy after the completion of enhancement work. Q4 gross revenue grew 11 per cent to $22.1 million, while net property income increased 10 per cent to $14.1 million. FY2008 gross revenue and net property income were both up 9 per cent to $84.7 million and $56.6 million respectively. Overall portfolio occupancy declined to 87.7 per cent.
- The Business Times, P7

CCT Q3 distributable income rises 46.1%
CAPITACOMMERCIAL Trust has reported distributable income of $43.2 million for the third quarter ended Sept 30, up 46.1 per cent from $29.6 million a year earlier and 3.8 per cent above the Reit manager's forecast. The strong result was attributed to higher gross rental income from CCT's portfolio and income from 1 George Street from July 11. Q3 net income from 1 George Street was $11.09 million. The trust's DPU of 3.1 cents for Q3 is 44.9 per cent more than in Q3 2007 and 4 per cent above forecast. Its gearing ratio rose to 36.3 per cent in Q3, from 29.1 per cent previously. Total debt increased to $2.54 billion, from $1.83 billion. CCT said its office properties are likely to perform well for the rest of the year as it expects positive rental reversions for leases expiring in the current Q4 and expects rental declines to be mitigated by low new office supply for the rest of 2008 and in 2009.
- The Business Times, P7


Zero tariffs for most items as S'pore and China ink FTA
The FTA - which will come into force on Jan 1 next year and is China's first bilateral pact with another Asian country - will see Singapore removing all tariffs from all products imported from China. Also significant is the move to soon allow certain professionals such as auditors, accountants and architects from both sides greater flexibility to work in either country. The FTA will see about 95 per cent of Singapore's exports to China - worth over $18 billion and including chocolate, instant coffee, ornamental fish and stainless steel - enjoying zero-tariff status by January 2010. For a start, more than 85 per cent of Singapore's exports will be at zero-tariff from next January, with an additional 10 per cent becoming duty-free the following year. There is, however, a list of 260 products from Singapore that will remain excluded from tariff-free access to China, such as pepper, rice, sugar, tobacco and crude palm oil.
- The Business Times, P1

Inflation climbs to 6.7%
Inflation, tracked through the consumer price index (CPI), was fuelled by the rising cost of food, housing and electricity. According to the Department of Statistics (DOS), housing costs shot up 14.6 per cent year-on-year because of higher accommodation costs and electricity tariffs. Food prices were up 8.2 per cent year-on-year. The sharpest rises were in prices for poultry, seafood, cooking oil, fresh vegetables, rice and milk products. According to the DOS, month-on-month, the rise in inflation was not as sharp because increases in food, housing and recreation prices had been offset by drops in the cost of education and stationery, transport and communication. The cost of education and stationery fell by 2.3 per cent on a month-on-month basis as charges at childcare centres and tuition fees at overseas universities had dropped. Falls in petrol and car prices cut the cost of transport and communication by 0.5 per cent month-on-month.
- The Straits Times, B37

PSD studying civil service pay revision
The Public Service Division (PSD) is still studying whether to revise civil service pay. Private sector salary data is still being compiled, PSD said yesterday. 'Given the recent turmoil in the financial markets and revised economic forecasts, PSD will need some time to study the data and salary trends before coming to a decision.' PSD said a significant part of a senior civil servant's pay is structured as a GDP bonus, linked to the economic growth rate. If the rate falls, the bonus will fall too, which will cut the annual salaries of top brass. The civil service lifted its salary scales in two phases last year in response to tight labour markets. The original target was a further increase in salaries at the top of the scale at the end of this year.
- The Business Times, P10

(See also, The Straits Times, B14 – “Senior civil servants’ pay to fall”)
Building leaders in Asia poses challenges
'Large Asian companies are still mainly family-owned or state-owned and this is a reason why 'building effective corporate leaders and CEOs in Asia is really a challenge', said CEO of CapitaLand. As he explained, succession in family-owned businesses is often determined by kinship and not just competence. And for state-owned enterprises, some CEOs and senior management previously from the public service may need time to develop business leadership. In addition, many traditions continue to shape the Asian business environment. Some practices, such as seniority-based promotions in Japan, can impede talent development, he said. But in CapitaLand, leadership and talent management is key, emphasised Mr Liew. Of the 20 CEOs and C-suite executives in the group, 18 are internally groomed, he said.
- The Business Times, P10

Local banks hit hard by falling share prices
DBS Group Holdings shares yesterday fell 62 cents or 5.3 per cent to $10.98, their lowest in five years. UOB shares yesterday shed 72 cents or 5 per cent to $13.80, while OCBC fell 41 cents or 6.9 per cent to $5.49. Third-quarter results will be released next week, starting with UOB on 31 Oct, OCBC on Nov 5 and DBS Nov 7.
- The Straits Times, A4

Two new directors for OCBC
OCBC BANK has appointed two new non-executive directors to its board with effect from Nov 1. They are Mrs Fang Ai Lian, chairman of OCBC's insurance subsidiary Great Eastern Holdings, and Mr Colm McCarthy, a retired veteran banker formerly with Bank of America.
- The Straits Times, B35

GIC RE to up stake in troubled Australian property group
The Government of Singapore Investment Corporation (GIC), through its real estate arm, will invest up to A$700 million (S$705 million) in Australian property trust GPT Group. GPT Group, one of Australia's largest and most established diversified listed property groups had been been hit hard by the current global financial crisis due to foreign currency exposure and the recent decline of the Australian dollar. GIC RE already has a 2.2 per cent shareholding in GPT Group. GPT Group, which has seen its share price fall over 70 per cent this year, released a statement saying that it is making an entitlement offer to raise a minimum of A$1.3 billion. It added that GIC RE would take up its pro rata entitlement as well as be issued with A$250 million in perpetual, exchangeable securities and agreed to sub-underwrite 504 million securities of the retail entitlement offer. GPT Group will place additional securities to GIC RE such that GIC RE receives a minimum of 250 million securities through its sub-underwriting of the retail entitlement offer.
- The Business Times, P2


Pay gap widens in richest nations
Two reports released this week on the urban environment covering global cities found growing economic inequality in rich countries, jeopardising the often-held dream of social mobility. One report, by United Nations (UN)-Habitat, ranked Asian cities among the most equal in terms of income, but put US cities among the most unequal in the world. It ranked New York, for instance, the ninth most unequal in the world, and showed that Atlanta, New Orleans, Washington, and Miami had similar inequality levels to those of Nairobi in Kenya and Abidjan in Ivory Coast. Beijing topped the list as the most egalitarian city, just ahead of Jakarta and Phnom Penh. Hong Kong was the most unequal city in Asia. Europe was also found to be generally more egalitarian than other continents. The report also noted that economic liberalisation and globalisation had resulted in rising inequality in such countries as India, and asserted that trade liberalisation did not bring about the expected benefits.
- The Business Times, P2

Goldman Sachs to axe 10% of workforce
Goldman Sachs Group Inc is cutting about 10 per cent of its workforce, or about 3,260 jobs, amid the ongoing downturn in the credit and lending markets, a source said yesterday. Goldman's workforce was at record high levels at the end of the third quarter, will be pared back close to 2006 and 2007 levels. No additional cuts are planned, the source said. The job cuts are a direct result of the current economic environment and significantly lower levels of business activity, they added. With the new status, Goldman Sachs will likely face increased regulatory scrutiny, which could force it to scale back some of more leveraged and aggressive business units.
- The Business Times, P4

Barclays launches govt-backed bonds
Barclays on Wednesday attracted solid demand for its first-of-its-kind sale of debt which carries a government guarantee under a programme put in place last week as part of a broader bank rescue plan. The issue is expected to pave the way for other banks in the UK and on Wall Street to use the Triple-A rated guarantees of their governments to raise capital and unlock frozen credit markets. Barclays sold three billion euros (S$5.8 billion) of three-year bonds priced at midswaps plus 25 basis points, similar to agency debt and in line with earlier guidance. The offer attracted more than four billion euros of orders from investors, according to IFR Markets, a service of Thomson Reuters. Barclays Capital was sole bookrunner on the deal, backed up by joint leads HSBC, Lloyds, RBS, Santander and Standard Chartered.
- The Business Times, P4

Foreigners first to be laid off in Japan
Foreigners are among the first labourers in Japan to lose their jobs as the global financial crisis eats into demand for cars, trucks and motorcycles, government officials say. The government does not track the number of jobless foreigners, but local officials, workers and employment agencies tell of hundreds of workers were let go by companies linked to top-flight producers - Toyota, Honda, Yamaha. The Labour and Health Ministry said the numbers of foreigners showing up at government-run job centres in affected regions have doubled to some 1,500 a month as of August, while Japanese job seekers have remained constant. And those centres handle only a small fraction of the foreign work force, officials say.
- The Straits Times, A13

KL to cut back on foreign workers
Malaysia wants to reduce the number of foreign workers by 400,000 people annually between this year and 2010, said Deputy PM Najib Razak. There are 2.1 million registered foreign workers and a total of 10.9 million people in the Malaysian workforce, according to government data. The amount of cash sent home by migrant workers is expected to rise to RM18.1 billion this year. Mr Najib said the government does not plan to impose a levy or tax on the money transferred out. He said foreign workers had contributed to Malaysia's economic development, especially in the manufacturing and plantation sectors. He noted the benefits of using these workers should be viewed in terms of their contribution to gross domestic product (GDP) growth. Every 1 percentage point rise in their number would mean a 0.19 point rise in GDP.
- The Straits Times, A22

India and Japan ink security pact
The agreement will cover 'information exchange and policy coordination on regional affairs in the Asia-Pacific region and on long-term strategic and global issues', defence dialogue and cooperation, military-to-military exchanges, policing the Indian Ocean, and the fight against terrorism and transnational crimes. Japan has similar agreements with only the United States and Australia, and the pact with India is seen by some analysts as part of a new Asian security architecture focused on the four players. The two prime ministers have also agreed to push for an early conclusion to a proposed bilateral comprehensive economic partnership agreement. Japan has also agreed to commit 450billion yen (S$7billion) for a dedicated rail freight corridor linking New Delhi and Mumbai - the largest-ever loan by Japan for any overseas infrastructure project.
- The Straits Times, A17

China takes steps to boost property sector
The moves to help home buyers comes after a Cabinet meeting last week which resolved to take steps to lift the slowing sector and head off a market crash after recent data showed a drop in China's property prices. Stamp tax on property purchases and value-added tax of land on property sales will be lifted from Nov 1, said the Finance Ministry. The People's Bank of China said minimum deposits for first-time home buyers would be slashed from Oct 27, a news agency said. Interest rates on mortgages for first-time home buyers would be cut by 27 basis points to boost domestic consumption, it added. Real estate prices in 70 major Chinese cities fell 0.1 per cent in August from July, the first month-on- month price decline since China began releasing the data in July 2005. Investment in the real estate sector accounts for more than 20 per cent of the country's urban fixed-asset investment.
- The Business Times, P13

Indian central bank raises cap on overseas borrowing
India's central bank raised the ceiling on overseas borrowing by domestic firms to US$500 million from US$100 million, a move aimed at boosting capital inflows and shoring up the rupee. A central bank statement said companies can use the new facility without its approval for rupee or foreign currency spending. The changes will take effect immediately. It also scrapped a rule that required loans above US$100 million for infrastructure spending to have a minimum maturity of seven years. The central bank unexpectedly cut its main lending rate by a full percentage point this week. That followed a reduction in banks' cash reserve requirements by 250 basis points to 6.5 per cent to ease cash squeeze in the banking system.
- The Business Times, P13

Monetary authority curbs rise in 'safe haven' HK$
The central bank, the Hong Kong Monetary Authority (HKMA), injected HK$3.877 billion (S$758 million) into the market yesterday afternoon as the HK dollar was trading at around 7.7540 per US dollar. The currency is pegged to the US dollar at 7.8, but can trade between 7.85 and 7.75. HKMA is obliged to keep the currency in that range under an arrangement known as the convertibility undertaking. Yesterday, the daily one-month Hong Kong interbank offered rate (Hibor) was fixed higher for the first time in a week at 2.92571 per cent.
- The Business Times, P16