DAILY MARKET UPDATES 3rd November 2008

YTL sparks hope in dreary property sector
YTL Corp inked a $285 million agreement to take a stake in Macquarie Prime Reit as well as the manager of the Reit (real estate investment trust). This was the first bit of positive news the property sector had heard for a long time. Macquarie Prime has stakes in Wisma Atria and Ngee Ann City - key landmarks along Orchard Road. It paid 82 cents apiece for the units, a very attractive discount of 49 per cent to the Reit's net asset value. For the brave, the weak equity and credit markets are a chance to buy in at much lower levels than at the start of the year. Hopefully, he is right about Singapore's structural transformation - that the country is moving into the league of global cities.
- The Straits Times, B16
Firms find business prospects best in China, Singapore
China and Singapore hold the best business prospects for local and foreign firms here in the next six months, according to the latest BT-UniSIM business climate survey. Of the 154 firms polled, close to three quarters of them have business dealings overseas. Of these, about 22 per cent cited China and 21 per cent picked Singapore as most promising in their line of business. Singapore's business prospects appear rosier to small or local firms, and particularly those from the construction, and financial and business services sectors.
- The Business Times, P2
Days of sky-high HDB rents numbered: Analysts
Rents of HDB flats, which have been climbing steadily, largely on demand from foreigners squeezed out of the private homes market, are up only slightly in the third quarter. But property experts say HDB rents have likely peaked. They will hold steady for the next several months before they begin to crack from the pressure of falling rents in the private homes market. Rents for HDB flats have shown smaller increases in the third quarter. Median rents for five-room flats have risen by $100 every quarter this year to $2,000 in the third. Median rents for three-room flats remained unchanged at $1,500 in Q3 while median rents for four-room flats showed a smaller $50 rise to $1,800, from $1,750 in Q2 and $1,600 in the first. Private home rents are expected to continue dropping given the weaker economic outlook, particularly as supply is expected to rise next year when more developments are completed, experts say. HSR says HDB rents are likely to stay stable for the next few months until the gap between private home rents and HDB rents starts to narrow. There are now 21,400 HDB flats approved for subletting, up from 20,200 in the second quarter. But HDB subletting deals fell 4 per cent to 3,960 cases in Q3.
- The Straits Times, B20
All systems go for key manufacturing projects
As three major manufacturing projects testify, key planned investments are going through, for now. The announcements over the course of last week that these three projects were on track were welcomed with cautious optimism by government officials and analysts. Last Thursday, oil and gas services giant Halliburton opened a US$50 million (S$74 million) plant in Jurong which will employ about 400 people when it becomes fully operational at the end of next year. Last Friday, Renewable Energy Corporation (REC) broke ground on the first of two phases of its estimated $6.3 billion complex at Tuas South. The Norwegian energy giant plans to continue rolling out the project at the current speed. The facility is on target to begin operations in early 2010 and will reach full production capacity by 2012. REC expects to employ 1,300 people at the plant. Last Wednesday, Geocycle Singapore opened a US$6 million plant which will recycle used copper slag to make concrete.
- The Straits Times, B18
Qualcomm adds test centre to S'pore ops
Qualcomm has doubled its local workforce with the opening of a new facility to provide round-the-clock testing of its cellular chipsets. The Singapore centre is the firm's flagship test operation outside its home base in San Diego and will be responsible for tasks such as design verification and failure analysis. The latest move is Qualcomm's third major investment in Singapore in the last decade.
- The Business Times, P31
Diversified, yet recession looms
For years, Singapore has been diversifying its economy to protect itself against the vagaries of the business cycle. Yet Singapore was one of the first countries in this region to fall into a technical recession. Firstly, Singapore's domestic market is small, so there are limits to how truly diversified the economy can be. Secondly, while Singapore is not alone in being an open economy, it differs from some others in who it exports to. So while we may have diversified our industries, these continue to be heavily reliant on economies such as those in the European Union and the United States.
- The Straits Times, A2
Surprise RBI move to boost growth, liquidity
India's central bank unexpectedly cut its key lending rate for the second time in two weeks on Saturday and took other steps to spur growth and counter fallout from the global financial crisis. The Reserve Bank of India (RBI) reduced its key short-term lending rate, the repo, by 50 basis points to ease a credit crunch. The repo is the rate at which it lends funds to commercial banks. As part of a three-pronged move, the bank also cut the amount commercial banks must keep in reserve, easing the cash reserve ratio to 5.5 per cent from 6.5 per cent - pumping billions of dollars into the financial system. It also cut the statutory reserve ratio to 24 per cent from 25 per cent to boost liquidity.
- The Business Times, P19
China, India will reshape world: Murdoch
Media tycoon Rupert Murdoch says the ongoing metamorphosis of China and India from historic backwaters into economic powers will reshape the world in the next few decades. The News Corp chief gave an upbeat assessment of the future and made a vigorous case for free markets despite troubled economic times. The rise of their economies is creating a new middle class that would be 3 billion-strong within 30 years and is setting a new benchmark for global competitiveness, he said.
- The Business Times, P13
All indicators down: BT-UniSIM survey
Key indicators of a business activity survey have fallen to their lowest readings in five years, with the sentiment measure down to nearly a seven-year low. The findings from the latest BT-UniSIM business climate survey - which have been found to correlate closely with Singapore's economic performance over the poll's near 13-year history - point to possibly a 1.2 per cent gross domestic product (GDP) contraction in Q4. Conducted in the first two weeks of October, the quarterly survey of 154 local and foreign companies found that all four indicators - sales, profits, new business orders and business prospects - worsened across the board in Q3 2008. Foreign firms, which produced the poorest readings in the Q2 survey, did not fare much worse on profits and new orders in Q3. But they were the most pessimistic group for a third consecutive quarter.
- The Business Times, P10
World recession will hit China's economy badly
A global recession will have a huge impact on China's economy while currency volatility is expected to add further pressure on the country's banks. Figures out on Saturday showed that China's factory output contracted sharply last month. The purchasing managers' index fell to 44.6 per cent, the lowest since its inception in January 2005. A reading below 50 indicates a contraction, while one above 50 suggests an expansion. China's economy slowed to 9 per cent growth in the third quarter, down from 11.9 per cent last year.
- The Business Times, P10
More market turbulence ahead
Investors, who have endured turbulent market conditions for more than a month, can expect more of the same this week. The upside for the local stock market may be limited, given that the outlook remains weak for the global economy and for the financial performance of Singapore companies. Investors are also likely to remain cautious ahead of the release of earnings of key local companies and United States economic data. The benchmark Straits Times Index (STI) was up 12.12 per cent last week at 1,794.2, but losses in the previous weeks dragged the index down 23.94 per cent for the month.
- The Business Times, P10
Just how safe is your job?
The five riskiest sectors:
- Banking and finance: Considering the root of this crisis was in the banking and finance sector, its employees face the biggest risk of layoffs as the industry consolidates.
- Tourism and services: Visitor arrivals have suffered four months of decline, so tourism will also be hit as regional travellers forgo holidays here.
- Luxury and retail: Consumers are likely to cut back on luxury goods.
- Manufacturing: Singapore's manufacturing production numbers have been sliding because of weakening demand for exports.
- Transport and aviation: As consumers adopt a more conservative outlook and tighten their belts, demand for transport services such as taxis and flights is likely to be affected.
Five low-risk sectors:
- Law: Analysts see a shift in terms of skill sets required, with a stronger call for insolvency and bankruptcy lawyers.
-Accountancy: Demand remains healthy for accountants, and those skilled in tax restructuring and managing distressed assets.
- Public sector: The public service sector has always been a 'relatively stable sector' and remains the largest employer in Singapore.
Health care: Health care is generally regarded as recession-proof, although this depends on the nature of the service provided.
Energy: Countries will still need energy to run, so jobs related to oil and gas, and alternative, renewable energy are likely to remain relatively stable.
- The Straits Times, B19