70% of The Parc Condo taken up in one week

70% of The Parc Condo taken up in one weekBy KALPANA RASHIWALA
A JOINT venture between Chip Eng Seng and Lehman Brothers has sold about 70 per cent of their 659-unit freehold project, The Parc Condominium, at West Coast Walk, over the past week.

The Parc Condo: Average prices have risen from the low-$800 psf range initally to the high-$800 psf range now
The developers began selling the project on Aug 1 at an initial average price in the low-$800 psf range but this had increased to the high-$800 psf range by yesterday evening, according to the project’s sole marketing agent Savills Singapore.As of 7pm yesterday, about 460 units had been sold and sales were still going on.

The Parc Condo’s pricing is slightly higher than that of the nearby Botannia condo, where units are going for just over $800 psf on average, up from the initial $700 psf when the project was released around March/April. The 493-unit condo, being developed by a City Developments-CapitaLand tie-up, is about 70 per cent sold. It is being built on a 956-year leasehold site.

Chip Eng Seng and Lehman Brothers are developing The Parc on the former Westpeak site. The acquisition cost of the site in April last year was $206.09 million, reflecting a unit land price of $348 psf of potential gross floor area inclusive of an estimated development charge of $21.5 million then.

Savills said that most of those who have bought units in The Parc Condo over the past week are locals, while foreign buyers made up only a small number. ‘The local buyers seem to be buying mostly for their own use; we’re seeing a lot of young families. Some purchasers also picked up units for their children. Those who sold their Westpeak homes through the collective sale last year were given the first bite of selecting units,’ a Savills spokesman added.

The development comprises seven 24-storey blocks. Units range from one bedders (plus study) to five bedders. There are nine five-bedroom apartments of 2,433 sq ft each. Penthouses come with either three or four bedrooms, the majority above 3,000 sq ft, inclusive of roof gardens. A typical three-bedroom apartment costs around $1.1 million.

Source :  Business Times - 09 Aug 2007

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Investors lining up for a piece of Seattle’s property comeback

Investors lining up for a piece of Seattle’s property comeback
Rosy office sector due to booming trade with Asia and job market recovery

(SEATTLE) The Seattle office market has made a spectacular recovery in the last few years. As a result, many real estate investors want to park their money there. No one knows that better than Alfred Clise.

Boom town: This year, Seattle was deemed the best place in the US to buy and sell office buildings in the Urban Land Institute’s annual survey of property professionals
His real estate investment company, Clise Properties, is selling a 5.3 hectare parcel in downtown Seattle that his family cobbled together over 80 years. The land, amounting to nearly seven blocks, now mainly occupied by parking lots and low-rise office buildings, has no asking price.

Still, there have been plenty of suitors. Mr Clise has fielded 69 requests for tours since he put the parcel on the market in June. It is the biggest piece of land for sale in any downtown in the country, brokers say, and could sell for as much as US$1 billion, according to an estimate by Real Capital Analytics, a national research and consulting company.

The Clises, one of Seattle’s oldest families, won’t sell to just anyone. The buyer, if one emerges by the family’s October deadline, must have a grand vision for the parcel - a development like Rockefeller Center in New York or Canary Wharf in London - or the family will not part with the land. Family members say they will not sell it in pieces.

‘You really can do anything you want with it’ because it is already zoned for a wide variety of uses, said Mr Clise, chairman and chief executive of Clise Properties and the fourth generation to run the company. ‘It’ll have a major impact and reshape the city.’ A buyer could put as much as 14 million square feet of offices, condominiums and rental apartments on the parcel.

Seattle is now on every investor’s shopping list. This year, the city was deemed the best place in the country to buy and sell office buildings in the Urban Land Institute’s annual survey of real estate professionals. Office vacancies are at a six-year low of 7.7 per cent, and downtown landlords are getting as much as US$50 per square foot (psf) annually, according to Grubb & Ellis, a real estate brokerage firm.

Booming trade with Asia and a recovery in the job market are the secrets behind the rosy office market. Blue-chip companies like Starbucks, Amazon.com and Microsoft call the Seattle area home and have been steadily hiring thousands of new workers and funnelling millions into the local economy.

Boeing demoralised the city when it moved its headquarters to Chicago a few years ago, but it still has extensive production operations in the area.

The unemployment rate has slipped by 2 percentage points, to 4 per cent, in the last few years, and Seattle seems to be doing better than ever.

‘It’s not just Microsoft and Boeing,’ said Kelly Mann, executive director of the Urban Land Institute’s Seattle office. ‘It’s Starbucks, Costco and a wide array of small companies that were started by people from those corporations that are driving the growth.’

It is a big change from a few years ago. Seattle’s economy, hammered by the tech bust and a drop-off in jet orders after the Sept 11, 2001 attacks, was on life support. Computer programmers, who had fielded multiple job offers only a year before, were suddenly out of work. Tens of thousands of people were laid off. Vacancy rates for offices topped out at 18 per cent, rents sank to US$26.30 psf and new construction ground to a halt.

Then, three years ago, Seattle emerged from its economic deep freeze. Companies resumed hiring, developers started building and the port handled record cargo shipments. The recession, which hit Seattle harder and lasted longer there than elsewhere in the country, was finally over.

The current construction surge might eclipse the last one. There are now 31 projects, with more than 7.5 million sq ft of space, on the books in the city. In a previous construction boom that ended in 2001, more than 4 million sq ft of office space was built.

A zoning change that occurred last year may help. In April 2006, the City Council allowed office, apartment and condo buildings to go as high as 500 feet in parts of downtown, up from an earlier maximum of 360 feet. Mr Clise’s parcel sits squarely in that section. — NYT
Source :  Business Times - 09 Aug 2007

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Stanchart chalks up record half-year profit

Stanchart chalks up record half-year profit

By SIOW LI SEN
STANDARD Chartered Bank Singapore has turned in record operating pre-tax profit of US$205 million for the half-year ended June 30, up 53 per cent.
Its operations in the Republic are the strongest for the UK-based bank that is 14 per cent owned by Temasek Holdings.

‘Singapore had the strongest growth … the group grew 30 per cent,’ said Lim Cheng Teck, chief executive, Standard Chartered Bank Singapore, yesterday.

The Singapore operations’ profit contribution to the group is now more than 10 per cent, up from 9.1 per cent a year ago, he said.

Income was up 38 per cent to US$400 million while costs rose 36 per cent to US$187 million as the bank hired more people and invested in new products, he said.

One of the new products was the bank’s mortgage product which offered a flexible Singapore offer rate (SOR) with an interest rate cap, launched in May.

With this SOR-pegged loan, borrowers peg their interest rates to the 3-month Singapore wholesale offer rate with a guaranteed interest rate cap in the first two years.

Standard Chartered Singapore’s mortgage book had fallen to US$3.6 billion from US$3.9 billion a year ago as customers repaid home loans after the bank repriced them higher.

But with the latest mortgage product, home loans are growing again, he said.

Half of new home loans booked (since May 2007 when the product was launched) are SOR-pegged.

Consumer banking posted operating profit before tax of US$110 million, up 21 per cent with all major businesses doing well, led by small and medium sized banking and wealth management sales such as unit trusts.

The bank distributes third party funds and unit trust assets under management are S$1.7 billion.

Mr Lim said wholesale banking operating profit before tax more than doubled to US$95 million.

Commodity corporates including traders and financial institutions led the growth in revenues. Global market revenues were driven by derivatives and foreign exchange products together with strong contribution from debt capital markets and corporate finance.

The bank is confident that the strong momentum it achieved in the first six months of this year will continue into the second half of 2007.

‘We’re mindful of external changes of the last 2-3 weeks and confident of continued growth.

‘We believe this is a short-term market correction and do not see a big fallout,’ Mr Lim said.
Source : Business Times - 09 Aug 2007

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Local banks bask in profitable Q2

Local banks bask in profitable Q2
Fee income soars, housing loans climb, leading to 35% rise in core net earnings
By CONRAD TAN
HIGHER lending activity and soaring fee income saw the three Singapore-listed banks post another sharp rise in core net profit in the second quarter.
Their combined net profit rose 35 per cent to $1.77 billion, excluding one-time gains, fuelled by buoyant economic conditions and the frenzied stockmarket activity earlier in the year.

OCBC Bank saw its core net profit grow the fastest, rising 65 per cent year-on-year to $518 million.

Its larger rivals, United Overseas Bank (UOB) and DBS, also saw double-digit growth in their bottom lines over the year. DBS’s net profit rose 21 per cent to $664 million, while UOB’s grew 32 per cent to $585 million.

Non-interest income soared at all three banks, as they raked in fund management fees, stockbroking commissions and gains from investments.

DBS, the largest of the three lenders, saw the most rapid loans growth. Its net customer loans rose 19 per cent over the year to a record $99 billion at end-June, led by corporate and small business loans in Singapore and Hong Kong.

UOB saw the fastest growth in housing loans - the largest single component in the loan book of each bank, comprising about one-quarter of total loans. Its housing loans rose 18 per cent over the year and 5 per cent over the quarter to $20.7 billion at end-June.

DBS, the largest mortgage lender here, saw its home loans grow more slowly to $26.1 billion, while OCBC’s stayed largely unchanged at $18.1 billion.

Net interest margins, which measure the difference between what the banks earn on loans and pay on deposits, generally held steady, as all three banks worked to improve their asset-liability mix to offset the impact of declining interest rates.

In May, the three-month Singapore interbank offered rate (Sibor) used by the banks to benchmark most of their Singapore-dollar corporate and small business loans fell sharply, triggering concerns that their margins would be dragged down.

But some analysts warned at the time that the full impact of the lower Sibor on the banks would be seen only in their second-half earnings.

The Sibor has since recovered slightly, but at 2.6 per cent, it is still substantially below the 3.4 per cent level at the start of the year.

DBS chief executive Jackson Tai said at the release of the group’s results on July 27 that he did not believe interbank rates would remain low for long. ‘The fundamentals don’t support this kind of rates.’

OCBC’s net interest margin actually improved from the first quarter, rising to 2.13 percentage points from 2.04 points in Q1.

Its chief executive, David Conner, said the bank had worked ‘very hard’ to improve the bank’s mix of deposits by selling more current and savings accounts.

Yesterday, the banks’ share prices rose amid a rebound in the broader market after Monday’s sharp falls. DBS shares rose 5.3 per cent to close at $21.80, while OCBC ended 3.6 per cent up at $8.70. UOB’s share price rose the most, ending 6 per cent higher at $21.20.

Source : Business Times - 09 Aug 2007

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Horizon Towers sellers studying demand to extend deadline

Horizon Towers sellers studying demand to extend deadline

By MICHELLE QUAH
(SINGAPORE) The majority owners of Horizon Towers - who face possible legal action over a botched en bloc sale of the development - have huddled together to decide if they should extend the deadline for the completion of the collective sale.

Stymied: Horizon Towers’ buyers had threatened to sue every one of the sellers, when the en bloc sale collapsed on a technicality
Their lawyers have also denied all allegations that the sellers have not kept up their end of the deal.

BT understands the sales committee of Horizon Towers met with some of the owners of 173 units - who had agreed to the en bloc sale - yesterday, and are meeting others today, to decide if they should accede to demands of the buyers to push back the completion date and file a fresh application for the sale.

It’s believed the sellers’ lawyers from Tan Rajah & Cheah communicated this to the buyers’ representatives from Allen & Gledhill (A&G) yesterday, to hold off any legal action earlier threatened by A&G, if the sellers did not respond to the buyers’ demands by 3pm yesterday.

Tan Rajah & Cheah have also denied allegations by A&G that the majority sellers have breached the collective sale agreement.

This latest development comes on the back of a fresh dramatic twist to the saga on Monday: Horizon Towers’ buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - had threatened to sue every one of the sellers, when the en bloc sale collapsed on a technicality.

At a hearing before the Strata Titles Board (STB) last week, the STB had rejected the majority sellers’ application for a collective sale order on the grounds that certain statutory requirements had not been fulfilled. The buyers then sent a letter of demand to the majority sellers on Monday - asking that the sellers push back the collective sale completion deadline, currently on Aug 11, by four months and file a fresh application for a collective sale order.

Should they fail to do so, the sellers would be sued for between $800 million and $1 billion for a breach of the sales contract.

The majority sellers - which make up some 84 per cent of the owners of Horizon Towers - had agreed in February to sell their Leonie Hill development en bloc to HPL and company for $500 million.

They are now believed to be in the midst of discussing if they should accede to the buyers’ demands.

BT understands that, even if the sellers don’t push the sale deadline back by the full four months, they are considering extending the Aug 11 deadline by a shorter period of time - just to give themselves enough time to discuss the buyers’ demands.

The legal suit which the buyers have threatened to bring against the majority sellers would mean that the owners of the 173 units would be personally liable for $5.78 million per unit - a sum which is likely to wipe out any gains that can be hoped to be achieved from a fresh en bloc sale of Horizon Towers.

The $500 million price tag would have meant that the 199 apartment owners would have pocketed about $2.3 million each and the 11 penthouse owners at least $4 million each.

The neighbouring development, The Grangeford, had been pledged for sale in June for $625 million or about $1,820 psf ppr.

It’s been reported that the majority sellers of Horizon Towers had changed their minds, after signing off on the deal, after nearby developments such as The Grangeford started fetching much higher sales prices. The majority sellers are not allowed to renege on their deal with HPL. But the sale collapsed last week at the hearing before the STB, when minority sellers - who objected to the deal - raised arguments that the sale had failed to comply with legal requirements.

The minorities themselves are not being sued by the buyers, having not been a party to the sales contract.

These ongoing developments, however, are no doubt taking their toll on the minorities - whose fate of their homes will remain in limbo until all is settled.

Source :  Business Times - 09 Aug 2007

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H1 surprise boosts govt growth forecast

H1 surprise boosts govt growth forecast
Global backdrop favourable, S’pore ship is ready: PM
By ANNA TEO
(SINGAPORE) Economic growth in the first half of 2007 turned out to be higher than expected, and the government has raised its forecast for full-year growth to 7-8 per cent, Prime Minister Lee Hsien Loong announced in a highly upbeat National Day message.
While the upward revision of the full-year forecast was anticipated - it brings the official estimate in line with market projections - news that the economy grew 7.6 per cent in the first half, or 0.3-point higher than the advance estimates indicated last month, surprised most economists.

Details of Singapore’s second-quarter economic performance will be released tomorrow. But weak manufacturing data of late had led many economists to cut their estimates of Q2 GDP growth by an average 0.2-point from the 8.2 per cent flash estimate.

Instead, a 7.6 per cent first-half pace now suggests that Q2 growth could be as high as 8.7 per cent, assuming a small 0.1-point adjustment to the Q1 number to 6.5 per cent.

DBS Bank economist Irvin Seah believes the Q2 upside came from the services and construction sectors, which more than made up for the manufacturing slack.

And UOB economist Alvin Liew estimates that the Q2 momentum pace, in seasonally adjusted annualised terms, would have been a hot 14 per cent, faster than earlier announced.

‘Personally, I don’t think that pace of growth can be sustained,’ he said, adding that he’s factoring in growth to slow to minus-2.3 per cent quarter on quarter, seasonally-adjusted, annualised rate.

And even with a Q3 moderation, the economy would still be on track to achieve 7-8 per cent growth year-round, he added.

Indeed, Singapore has much to cheer about this National Day, PM Lee said in his message, broadcast last night.

‘While the global financial markets have been choppy the last few days, the medium-term fundamentals for Asia remain strong,’ he said.

‘We celebrate National Day in a happy mood. It has been another good year for Singapore. Altogether now, we have had four good years of growth.’

The economy added 111,000 jobs in the first half - the highest number ever - and unemployment is at a low 2.4 per cent. ‘Workers are enjoying good wage increases and higher bonuses because businesses are doing well,’ Mr Lee said.

The outlook ahead is favourable, and Singapore - at the heart of a rising Asia - is gearing up for ‘new and exciting’ projects.

If Singapore and Singaporeans ‘keep on adapting and readapting’ to global changes, ‘we can keep growing strongly for many more years’, he said.

The one potential party-pooper: Widening income gaps, which could threaten the country’s social harmony and national cohesion, Mr Lee said.

‘We cannot stop or reverse this global trend. But we can do a lot to help Singaporeans cope with it.’ The basic approach is to grow the economic pie and have everyone ‘benefit from Singapore’s success’.

Meanwhile, the government is making changes to help Singaporeans ‘work longer, earn more and build up’ their retirement savings, including improving the Central Provident Fund scheme.

Singaporeans have ‘every reason to be confident about our future’, Mr Lee said. ‘The global backdrop is favourable. The winds and tides are with us. Our spirit is high, and our ship is ready.’
Source :  Business Times - 09 Aug 2007

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UOB tightens up on home loans in face of dizzy market

UOB tightens up on home loans in face of dizzy market
Bank imposes caps on valuations and puts 80% ceiling on loans
By SIOW LI SEN

(SINGAPORE) Wee Cho Yaw has done it again, though only time will tell if he was ahead of the curve.

At a time when property prices have started to touch giddy heights, the chairman of United Overseas Bank (UOB) has reportedly asked his institution to tighten lending criteria.

Since late last month, UOB has been lending only 80 per cent of a home’s valuation, even though most banks are willing to stump up 90 per cent of the selling price.

UOB has also decided to put its own cap on valuations, which appear more conservative than the current market prices.

Mr Wee, arguably Singapore’s sharpest banker, stepped down as chief executive of UOB in April this year and was succeeded by his oldest son, Ee Cheong.

UOB’s stricter lending criteria mean that some potential borrowers have been turned away. A UOB mobile sales banker complained that she has been losing sales but has told prospective customers that she can try to appeal on their behalf. UOB is believed to be the first bank to make its lending norms more stringent.

At UOB’s second-quarter results on Tuesday, Eddie Khoo, executive vice-president, personal financial services, said that less than 10 per cent of the bank’s new home loans this year provided more than 80 per cent financing.

‘We require a higher cash portion,’ said Mr Khoo.

He said that more than 80 per cent of UOB’s home loans were for owner occupation and that foreigners accounted for 20 per cent of home loan customers.

For certain hot projects in the prime districts such as Orchard Residences, Scotts Square or St Regis Residences, UOB has put a valuation cap of $3,600 per square foot (psf), even though sales and sub-sales have been reported at much higher prices.

Scotts Square, launched last week, saw 169 units sold at an average price of $3,983 psf. The highest price paid was $4,430 psf for a one-bedroom apartment on the 41st floor, of the 338-unit project, said Wheelock Properties, the developer.

The median price for St Regis Residences on Cuscaden Road, developed by City Developments, is $3,713 psf, according to Urban Redevelopment Authority data. In June, it was reported that a unit went for $4,635 psf at the 173-unit St Regis Residences which has only 15 units unsold.

At selected projects in the upmarket districts 9, 10, 11 and in Marina Bay, UOB is said to have set the valuation cap at not more than $2,600 psf.

Sub-sales of The Sail @ Marina Bay are being advertised at prices ranging from $1,900 psf to over $3,500 psf. Caveats lodged show that units were sold from prices as low as $1,249 psf for The Sail which was first launched in 2004.

Even for the recently launched Fontaine Parry near Serangoon, UOB is said to have a valuation cap of $834 psf. According to sole agent Knight Frank, the first phase of Fontaine Parry, which was sold out, saw prices starting at $850 psf and some sub-sales are now going for $900 psf.

For the first half of 2007, UOB grew its total home loans book 18 per cent, outpacing the industry average, to $20.7 billion. DBS’s group home loans rose 8.75 per cent to $26.1 billion. UOB said Singapore mortgages were up 15 per cent while DBS reported an almost similar growth of 14 per cent.

In August 1995, Mr Wee said famously: ‘I don’t think the property market will collapse but prices have reached a high and the upside is limited.’

Although still sympathetic to first-time property buyers or HDB upgraders, he said the bank had more stringent criteria for speculative buyers and those investing in second properties.

The strategy meant that UOB lost some market share in property loans.

UOB that year reduced financing to only 65-70 per cent of the purchase price of a property, compared to about 90 per cent in 1992, just before the height of the property frenzy which peaked in 1996 before crashing.

Singapore’s property market subsequently went into a long depression, which lasted for the most part of the decade until 2003 and sent many borrowers into negative equity - where the size of their loan was larger than the value of their property.

The bank is opting for caution again.

Said a spokesman: ‘UOB has always taken a prudent approach in its credit assessment process. A loan application is assessed on the creditworthiness of the borrower as well as the merits of the property. We would consider the loan application favourably if the borrower meets our criteria. From time to time, the bank reviews its home mortgage policies, and if necessary, adjustments may be made to align with market conditions.’

Source :  Business Times - 09 Aug 2007

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Horizon Towers sellers debate possible options

Horizon Towers sellers debate possible options
They have ignored yesterday’s deadline imposed by buyers’ lawyers
By Joyce Teo, Property Correspondent
THE row over the thwarted Horizon Towers collective sale remains in limbo today after owners spent last night meeting lawyers to thrash out a course of action.
They ignored a 3pm deadline yesterday imposed by the estate’s thwarted buyers and will meet again today as they try to grapple with the threat of a $1 billion lawsuit.

The buyers - Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority - have threatened to sue the sellers if they do not respond to their demands.

‘We’re still in discussions with our lawyers on what step to take next,’ said the deputy chairman of the condominium’s sales committee, Ms Doreen Siow.

But there was an air of defiance emerging from the ranks of owners yesterday.

The owners know the legal deadline for the sale expires on Saturday so they have until then to decide on their next move.

They have also dismissed the buyers’ claims that they have not fulfilled their side of the sale contract.

‘Our lawyers, Tan, Rajah & Cheah, have denied allegations of any breach of contract,’ said Ms Siow.

The spiralling legal row was ignited last Friday when the Strata Titles Board (STB) axed the sale application for the Leonie Hill condominium, citing procedural errors.

It seemed the last act in a bitter row that began in February when the buyers inked the deal to buy the estate for $500 million.

But on Monday, the buyers made certain demands including asking the sellers to apply to extend the sale deadline from Saturday to allow a new application to go to the STB.

The sellers were also told that they could ask the High Court to reconsider the STB ruling.

But there was a sting in the tail: legal firm Allen & Gledhill, which is acting for the buyers, said the owners of 173 units who voted for the sale could be sued for lost profits of between $800 million and $1 billion. That works out to as much as $5.78 million per unit on average.

Senior Counsel K.Shanmugam, of Allen & Gledhill, said HPL, a listed firm, is answerable to investors and is facing a substantial loss.

The owners are likely weighing three obvious options. One is to extend the sale deadline and make a new application. The second option is to extend the deadline and appeal to the High Court over the STB ruling.

But these will mean the sale proceeding at the original price struck in February, one that looks low in today’s rising market.

Their $500 million price - which is also the reserve price agreed on last year - works out to about $815 per sq ft (psf) of potential gross floor area. The Grangeford estate nearby was recently sold for $1,820 psf.

The third option is to do nothing, which essentially leaves the buyers in a position to carry out their threat to sue for the lost profits of $800 million to $1 billion.

It is a huge sum but not out of sync with the booming property market, industry observers say.

Meanwhile, all sides are awaiting the STB’s explanation of its decision, which will be out ‘in due course’.

This would help the owners decide whether it is worthwhile appealing against the ruling.

The sellers’ lawyers and marketing agent First Tree Properties could also be in the firing line as the owners could counter-sue them for not getting the paperwork right, said an observer. ‘The case shows that there’s no incentive to be a consenting owner as you can end up being a potential defendant.’

A lawyer who declined to be named said it may scare off owners and kill the booming collective sale market.

Another observer said: ‘It’s a big Pandora’s box.’
Source :  Straits Times - 09 Aug 2007

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ST Index posts biggest one-day rise in nearly 8 years

ST Index posts biggest one-day rise in nearly 8 years
Buyers return in droves to pick up bargains after recent sell-off; banking shares hold centre stage
By Goh Eng Yeow, Markets Correspondent
ANOTHER day of dramatic action on the stock market but, this time, the wild swing was into positive territory with the biggest one-day increase in nearly eight years.
The Straits Times Index (STI) rocketed 111.16 points, or 3.4 per cent, to 3,413.17, putting a welcome spring in the step of traders after a nerve-wracking week.

The spark for the dramatic upswing came, as ever, from Wall Street.

Concerns over the crisis-hit mortgage market in the United States have subsided for the moment, while the Federal Reserve lifted spirits by keeping interest rates steady and implying that the world economy is not threatened by turmoil in credit markets.

It all added up to the STI’s biggest one-day gain since Jan 3, 2000, when it rose 103.36 points before the dot.com bubble burst.

A remisier said yesterday: ‘The strong rebound is a wonderful National Day present to investors. It reflects the strength of our economy.’

Dow rises higher
UNITED States shares opened higher in early trade yesterday with investors buoyed by comments from Federal Reserve policymakers, analysts said.

After three hours of trading, the Dow Jones Industrial Average was up 76.66 points or 0.57 per cent at 13,580.96. The Nasdaq Composite Index gained 42.23 points or 1.65 per cent to 2,603.83.

After the market closed, Prime Minister Lee Hsien Loong announced in a National Day message that Singapore’s full-year economic growth forecast has been raised to between 7 per cent and 8 per cent, from the 5 per cent to 7 per cent projected earlier.

During trading, there seemed to be panic buying of blue chips as investors, buoyed by Wall Street’s overnight gain, snapped up bargains.

Bank stocks led the charge. All three Singapore banks have stated that they have minimal exposure to the US mortgage crisis and analysts have issued a rash of buy calls following Monday’s selldown.

‘Banks now look attractive after the recent pullback. Concerns about exposure may be overdone and offer a buying opportunity,’ said Citigroup Singapore strategist Lim Jit Soon in a research note, referring to sub-prime exposure.

The outperformance of conglomerates such as Keppel Corp, SembCorp Marine and Singapore Technologies Engineering will continue to be underpinned by strong order books, he said.

The top gainer was United Overseas Bank (UOB), up $1.20 to $21.20, after a flurry of positive reviews from research houses. After the market closed, UOB said it had bought back 400,000 shares at between $20.30 and $21.30 apiece.

DBS Group Holdings’ stock gained $1.10 to $21.80. OCBC Bank’s shares were up 30 cents at $8.70, after it posted a 65 per cent jump in second-quarter core earnings to $518 million.

But while noting that it might take some time for the dust to settle on the US mortgage crisis, OCBC chief executive David Conner allayed fears that credit might dry up in Asia as a result.

‘Balance sheets are healthy, cash flows are strong, economies are growing. There is no reason for credit to suddenly tighten,’ he said.

Blue chips that may get a boost from Singapore’s strong economic performance also rose sharply higher.

SingTel’s stock gained by 14 cents to $3.40 on a heavy volume of 25.9 million shares, while Keppel Corp’s share price gained 60 cents to $13.30 as 5.5 million shares changed hands.

Penny stocks also staged a sharp rebound, with the UOB Sesdaq Index gaining 8.63 points, or 3.8 per cent, to 236.32.

STI’s gains were also reflected in rebounds on other Asian bourses. The Jakarta Composite Index surged 4.1 per cent, the Hang Seng Index rose 2.9 per cent and Japan’s Nikkei-225 Index closed 0.6 per cent higher. The red-hot Shanghai Composite Index closed up 0.3 per cent, another record high.

Source :  Straits Times - 09 Aug 2007

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Growth forecast raised to 7%-8%

Growth forecast raised to 7%-8%

PM in an upbeat N-Day message says: Country will be completely transformed within a decade
By Paul Jacob, Deputy Political Editor
HERE’S another reason for cheer on National Day.
The work to transform Singapore’s economy is paying off as Prime Minister Lee Hsien Loong announced a new and higher growth forecast for this year, of between 7 and 8 per cent.

The earlier projection was 5 to 7 per cent.

The positive outlook was not just because Singapore drew more investments or gave more people jobs. Mr Lee put it down to the way Singaporeans had responded.

‘Our people are adapting and working smarter. We are organising ourselves more efficiently, and making better use of our resources. In short, we have increased our productivity,’ he said yesterday in his National Day message.

‘Our efforts to transform our economy are paying off. The global economy is continuing to change. If we keep on adapting and re-adapting to it, we can keep growing strongly for many more years.’

Looking ahead

Growth in the first six months of the year hit 7.6 per cent which, he said, was higher than expected.

Just last month, the Monetary Authority of Singapore said it was not changing its forecast, although it acknowledged second-half growth could accelerate.

But private-sector economists had been predicting that full-year growth would be closer to the now-revised rates.

Said United Overseas Bank economist Alvin Liew: ‘Latest GDP figures show the economy has successfully diversified, so even when manufacturing is weak, we can still achieve stronger growth.’

‘Going by the new numbers, we reckon the economy grew 14 per cent from the first to the second quarter. It’s a blistering pace,’ he added.

However, there are dark clouds that could dampen growth.

Fortis Bank strategist Joseph Tan highlighted several, such as the office space crunch, a job market hungry for workers, and the mortgage woes in the United States.

‘With all this uncertainty, it is going to be tough for Singapore’s growth to be sustained in the second half,’ Mr Tan said.

PM Lee noted the financial markets had been ‘choppy’, but said Asia’s medium-term fundamentals remain strong.

Overall, his message was an upbeat one.

Singapore had four good years of growth, and much to look forward to, including the integrated resorts and the Formula One Grand Prix race.

A decade after the Asian financial crisis, the region had regained its balance and countries were moving forward.

Singapore was ‘at the heart of this rising Asia’ and had strengths like a corrupt-free society and disciplined workers to draw on.

‘Looking ahead, we are poised to take off,’ he said.

He added: ‘Within a decade, our city and our whole country will be completely transformed. The world is taking notice. It will be a new Singapore, but with our own unique identity, and the can-do spirit of the Lion City.’

Still, he was mindful about the concerns of Singaporeans who were being left behind and the widening wage gap.

Help was available, he said, adding: ‘We want everybody to benefit from Singapore’s success.’

He also assured older Singaporeans that they will not be neglected. ‘I know many older Singaporeans worry about whether they can make ends meet. We are making changes to help you to work longer, earn more and build up your retirement savings.

‘We will enhance the value of your HDB homes, which are a nest egg for old age. We will improve the CPF scheme, so that you can enjoy a steady income and peace of mind in your golden years.’

Singaporeans had every reason to be confident about the future, he said as he wished them a happy National Day. ‘The global backdrop is favourable. The winds and tides are with us. Our spirit is high, and our ship is ready.’

Source :  Straits Times - 09 Aug 2007

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