DAILY MARKET UPDATES 29th October 2008

Natura Loft to be launched on Friday
Chinese firm QingJian Realty is launching Singapore's fourth condo-style public housing project on Friday. Natura Loft at Bishan, a project under the Housing Board's Design, Build and Sell Scheme (DBSS), will feature three 40-storey blocks of 160 four-room units and 320 five-roomers. The four-room units of about 95 sq m each are priced from $465,000 to $586,000 while the five-roomers of 120 sq m will go from $600,000 to $739,000. That works out to $450 to $570 psf. QingJian Realty's move reflects the relative strength of the HDB market amid a downturn in the property market here. Flat prices at Natura Loft are a notch higher than HDB's third DBSS project, Park Central at Ang Mo Kio. This was priced between $400,000 and $500,000 each for four-roomers, and $600,000 and $670,000 for five-roomers.
- The Straits Times, B22
S'pore ranked 7th among top global cities
Singapore has been ranked seventh on a list of 60 cities compiled by Foreign Policy magazine, consultancy AT Kearney and The Chicago Council on Global Affairs based on five factors - business activity, human capital, information exchange, cultural experience and political engagement. Singapore is cited for its financial links and recognised as a regional gateway - an efficient economic powerhouse with incentives for businesses and easy access to natural resources of its region. It is a magnet for smart, well-trained people worldwide and it often reinvents itself to stay competitive. Singapore ranked sixth for business activity, seventh for human capital, 15th for information exchange - how well news and information is dispersed - and 16th for political engagement.
- The Business Times, P10
(see also The Straits Times, B2, Singapore ranks 7th in the world”)
YTL snaps up interest in Macquarie Reit for $285m
Malaysian conglomerate YTL Corp took over the Macquarie Group's entire interest in Singapore-listed Macquarie Prime Reit in a deal worth $285 million. Noting that the deal provides a 2009 yield of about 9.4 per cent, YTL said it offers very compelling returns and illustrates his optimism about the Singapore property space. The Reit currently has stakes in Wisma Atria and Ngee Ann City along Orchard Road. YTL is separately developing two luxury villas on Sentosa Island (one of them is Sandy Villas which sold 3 units) and last year bought the prime Westwood Apartments site at Orchard Boulevard for $435 million ($2,525 psfppr). Macquarie Prime will be rebranded Starhill Global Reit and will be YTL's main vehicle for strategically acquiring yield accretive prime retail space in Asia and the West. YTL is very confident that Singapore will pull through this turbulence and come out ahead of the crisis.
- The Business Times, P2
(also see The Straits Times, B24, “YTL buys stake in Macquarie Prime Reit”)
Inflation to fall to 2.5-3.5% in 2009
In its latest Macroeconomic Review, MAS predicts a fall in CPI inflation to 2.5-3.5 per cent in 2009. And it expects underlying inflation - which excludes accommodation and private road transport costs - to be around 2 per cent. Prices of big-ticket items are likely to ease quickest on the back of weak consumer sentiment. Retail sales volume fell 1.5 per cent year-on-year from June to August, due to cautious local spending and lower demand from tourists. For local businesses, slower growth will mean an easing of cost increases next year - the pace of wage rises will moderate and rents will gradually ease.
- The Business Times, P2
(also see The Straits Times, A3, “Inflation to ease next year”)
Hang Seng leads regional rally
Asian stocks rebounded yesterday, with Hong Kong's Hang Seng Index leading a broad regional rally that also saw steep gains in Tokyo and Seoul. The Hang Seng Index was up more than 14 per cent, adding 1,580.45 points as investors plunged back in, judging that valuations were low enough to limit risks on the downside. Singapore's Straits Times Index closed 66.21 points, or 4.14 per cent, higher at 1,666.49. South Korea's Kospi index added 5.6 per cent while the Nikkei ended 459.02 points up at 7621.92, a 6.41 per cent gain. But market players cautioned that the rally came after days of steep falls and should not be taken to mean a broader regional trend.
- The Straits Times, B17
(also see The Business Times, P1 “Lone rangers surge, drag stock indices up”)
US$125b Treasury bailout set to kick in
The US government has cleared the way to ship out US$125 billion this week to the country's largest banks. Not only is the money ready to be sent to nine major financial institutions, but the government is reaching preliminary agreements with a group of more than a dozen major regional banks, who will share a part of an additional US$125 billion that the government hopes to pump into the banking system. Before the end of the year, Treasury Secretary intends to spend US$250 billion of the US$700 billion bailout package buying ownership stakes in US banks. Another US$100 billion is earmarked to be spent buying troubled assets from banks as another way to spur banks to resume lending.
- The Business Times, H36
Brokers’ Take: Property Sector – OCBC Investment Research
The URA residential property price index fell 2.4 per cent to 173.3 in Q3 2008. The decline in prices was widespread across all regions in Singapore, with properties in the Core Central Region (CCR) the worst hit. New sale transaction volume remained firm in Q3, driven by sales in the Outside Central Region (OCR). Subsale and resale volumes tapered off in Q3. It is expected that 10,007 private residential units under construction are slated for TOP in 2009, higher than the expected 9,911 units for 2008. HDB resale price index grew by 4.2 per cent q-o-q, and the increase was backed by a 4.5 per cent q-o-q increase in transaction volume and a slight q-o-q increase in the median subletting rents. OCBC expects a further drop in demand for private properties. The sustainability of mass-market property demand from HDB upgraders could be in question as there is greater caution exercised by HDB upgraders, evident from the closing gap between HDB resale and OCR property prices. Physical completion of private properties is expected to remain high in 2009 and with the increasing number of launched but unsold units, the total supply of private properties could remain high.
- The Business Times, P6
Property auctions see few takers
Properties for auction are being left on the shelf as buyers hold out for further drops. 198 properties were put on the block by the five main auction houses from July to September this year, according to Knight Frank. Just 14 of these properties were sold. In October, there have been no takers at the two auctions held so far. Buyers are not biting because they are waiting for prices to fall, even though asking prices have come down as much as 20 per cent in some cases. Demand from investors is weak, but there is still some interest in value buys and properties that are well located and priced right, as investors are very price-sensitive, said Colliers. Demand from owner-occupiers is slightly better. Colliers says that it is seeing good interest in mass-market private homes from upgraders and for landed properties.
- The Business Times, P10
Stung on Wall St, Asian SWFs eye home turf
Asian sovereign wealth funds (SWFs) may become more visible shoring up markets closer to home as emerging economies look to steer around the damaging effects of global market turmoil. Wealth funds from Singapore, China and South Korea may instead look to invest in more defensive sectors such as Asian utilities and infrastructure firms, while keeping an eye on distressed property and financial assets in Western markets.
- The Business Times, P19
STB working hand-in-hand with Marina Bay Sands
The Singapore Tourism Board said it is working closely with Marina Bay Sands to ensure success of its integrated resort project, amid concerns over the financial position of parent company Las Vegas Sands (LVS). The LVS share price went into free fall on rumours the company is having trouble refinancing debt amid poorer outlook on the casino business in the US. Bankers and analysts say the Singapore government is not likely to allow the project to fail, even if Marina Bay Sands is forced to default on loans. The three local banks are financing $2.2 billion of the $5.44 billion project, according to sources.
- The Business Times, P4
Brokerages act to help 'vulnerable' investors
Sixstock brokerages last night unveiled compensation plans for 'vulnerable' investors burnt by toxic products linked to the collapsed United States investment bank Lehman Brothers. The six are: CIMB-GK Securities, DMG & Partners, Kim Eng, OCBC Securities, Phillip Securities and UOB Kay Hian. The buy-back will cover Lehman Minibonds and Merrill Lynch Jubilee Series 3 LinkEarner Notes. Vulnerable investors are defined as over 62 years, less educated and with little investing experience.
- The Straits Times, A4
India tops Asia-Pac political risk survey
India, Malaysia and Thailand face the highest political and social risk among Asia-Pacific countries in 2009, mainly because of internal instability, the Hong Kong- based Political & Economic Risk Consultancy (Perc) said in a report. The consultancy assessed 16 countries on factors such as the risk of disruptive political change, the threat posed by social activism and vulnerability to policy changes by other governments. Japan, Hong Kong, Singapore and Australia were ranked most stable and low in political risk for 2009.
- The Business Times, P14
(also see The Straits Times, A4, “Singapore most politically and socially stable in region”)
Economy to stay weak next year
Singapore’s slowing economy is likely to remain weak next year as the financial crisis hits home, said the Monetary Authority of Singapore (MAS). The economy, already in a technical recession, will see further decline expected to spread to almost all sectors, from manufacturing to tourism. The official growth forecast for this year has already been scaled down to about 3 per cent. Most economists expect expansion of between 0 and 1.5 per cent with a moderate recovery in the second half of next year. The crisis has battered consumer sentiment and affected the financial services, retail sector, property and real estate services. Cautious investors are choosing to put their money in safe assets or hoard cash, weakening the local wealth management industry. But the MAS believes that the domestic fund management industry has underlying strength. One spot of relief is that the pharmaceuticals sector may offer some cushion next year when two new facilities open. Another sector bucking the trend is construction, which will likely ride out 2009 well as backlogged projects awarded from previous quarters get under way. Large-scale projects like the integrated resorts and the Marina Bay financial centre will also keep the industry busy through 2010.
- The Straits Times, A1
(also see The Business Times, P1, “Ripples from crisis will be far-reaching: MAS”)
Unemployment likely to rise
Job losses are looming, with manufacturing and financial services companies expected to be among the first to cut staff. This means unemployment is likely to rise over the next few quarters, while salaries will grow at a much slower pace, said MAS. The jobless rate for the third quarter is expected to be higher than the 2.3 per cent seen in the second quarter.
- The Straits Times, A1
Zero payout for most High Notes 5 investors
Investors of DBS High Notes 5 who were not mis-sold the product will get nothing back as the unwinding process has turned up zero proceeds. The majority of High Notes 5 investors will not be receiving anything back, said a DBS spokeswoman. For investors deemed vulnerable and those who were mis-sold, their compensation is not affected by the total loss as DBS said its compensation in Singapore and Hong Kong could touch $70-$80 million.
- The Business Times, P3
NUS business exec MBA course in world's top 30 list
NUS Business School's Asia-Pacific Executive Master of Business Administration (Apex) programme has been ranked 20th in the world in the Financial Times EMBA 2008 survey. This is the third time the programme has made the top 30. It was 29th in 2006 and 30th in 2005. The Apex programme was also listed among the world's top 10 in specific categories. It was ranked sixth for 'International Students' and seventh for 'International Course Experience'. The programme was ranked ninth for 'Work Experience', which measures the experience of participants. Participants in the 17-month programme are senior executives from different countries.
- The Business Times, P10
New Jurong Port terminal a boost for lighter operators
Singapore’s lighter and ship-chandling operators now have bigger and better facilities to work from with the opening of the new Penjuru Terminal at Jurong Port. The opening of the new purpose-built terminal with 150 metres of berth space and 10,000 sq m of land area was a significant milestone for the operators. Currently, 11 out of about 20 lighter operators in Singapore operate from Penjuru Terminal.
- The Business Times, P10
SMEs feel pinch of electricity price hike
As many as 20 small and medium-sized enterprises (SMEs) which rely heavily on electricity say they have have been hit hard, about three weeks after Singapore Power increased its electricity tariffs by about 22 per cent. 12 of the 20 firms are thinking of passing costs on to customers. The Association of Small and Medium Enterprises, said SMEs have fewer resources than big corporations to perform energy audits, and less wiggle room to cut electricity use.
- The Straits Times, B11
Stanchart lays off senior staff
Standard Chartered (Stanchart) sacked several staff members from the group's consumer banking division last week. Senior people in Hong Kong and Taiwan were affected by the bank's 'restructuring exercise' but most of the 35 job cuts were made here. Sources say the restructuring exercise includes areas such as wholesale banking, but is particularly 'prevalent' at the group consumer bank. Sources say the lender is merely exercising caution and laying off senior staff to cut costs. But another reason has to do with the change in senior management. A Stanchart spokesman said that despite the financial turmoil, the bank is in great shape.
- The Straits Times, B23