All excited about what Bernanke didn’t say

All excited about what Bernanke didn’t say

By CONRAD TAN
REPORTER
IF NOTHING else, this week should be more exciting than the last for investors, punters and armchair doomsday prophets alike.
Mr Bernanke: Didn’t really say anything that could be seen as an increased readiness by the Fed to lower its key federal funds rate target
Various observers and analysts read different meanings into US Federal Reserve chairman Ben Bernanke’s much-awaited speech last Friday, paying as much attention to what he didn’t say as to what he actually said.

Those who want the Fed to cut its main policy interest rate target later this month were happy he said nothing to dampen their hopes; those who think such a move would be premature and risky were happy he made no hint that it would do so.

Without any major bad news to distract investors from hearing what they wanted, shares in both Europe and the US ended solidly higher on Friday, which means shares here and elsewhere in Asia will probably enjoy a good start today.

But apart from making it abundantly clear that the US central bank is closely watching financial market developments and reassuring every one that it will act if problems in the US housing market get worse, Mr Bernanke really said nothing that could be seen as an increased readiness by the Fed to lower its key federal funds rate target at the next policy meeting on Sept 18.

The reluctance by the Fed to commit to any further action - or inaction - is all too easy to understand.

Already, its efforts in August - injecting large amounts of money into the banking system to keep borrowing costs stable, then lowering the interest rate it charges commercial banks who need to borrow directly from the Fed, rather than their peers - have fuelled expectations that it will cut its main Fed funds rate target by at least a quarter of a percentage point, from 5.25 per cent now.

These expectations appear to be hardening into near-conviction among some investors in the US and elsewhere, which spells further turbulence for financial markets and a strong negative reaction if the Fed does decide against lowering the rate in two weeks’ time.

The Fed probably doesn’t want to cut interest rates at all, since that would put its anti-inflationary goals at risk, but it may not be able to avoid doing so.

Meanwhile, investors will have to content themselves with trying to second-guess the Fed’s decision by gleaning clues from economic data releases in the US this week.

Any suggestion that consumer spending there is slowing sharply would make it more acceptable for the Fed to cut interest rates - since it would then be seen as acting to prevent an economic recession, rather than merely trying to please unhappy investors who have lost money in stocks.

There will be plenty of data to keep the speculation on the health of the US economy buzzing, including sales figures from retailers and car makers for August. This Friday, a government report on employment numbers in the US is also likely to heavily influence the broad movements of share prices in the US and Europe that day, and major Asian markets early next week.

For those who very much want to believe that last week’s relative calm in the local stock market and elsewhere in Asia is a sign of financial markets returning to normal, there are a few glaring signs that things are anything but.

On Friday, yields on short-term US Treasury bills - seen by most investors as the safest instruments to hold in a financial crisis - were still nearly a full percentage point lower than they were at the start of August. This suggests that - apart from strong market expectations of the Fed lowering interest rates - investors are still a lot more cautious and risk averse than they were a month ago.

Another sign that things have changed is the strength of the Japanese yen against the US dollar. At about 116 yen to the dollar on Friday, the yen has appreciated some two-and-a-half per cent over the past month against the dollar, despite coming off a high two weeks ago.

So far, the damage to blue chips here has still been limited. At Friday’s close, 25 of the 48 component stocks on the Straits Times Index were higher over the week, while 19 were lower and four unchanged.

Over the month of August, the index lost 4.4 per cent. Of its 48 members, 39 fell, while just eight were higher and one - United Test & Assembly Center - was unchanged.

Source : Business Times - 03 sept 2007

Singapore Property - Buy , Sell , Rent , Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com

85 firms post combined 30% higher gains

85 firms post combined 30% higher gains
SGX tops earnings chart; strong results from property, marine companies
By LYNETTE KHOO
IT has been a rewarding financial year for most Singapore-listed companies as they rode on the strong economy. Some 86 companies that released year ended June 30 results raked in a combined $2.4 billion in group profits.

Seventy-six out of these 86 companies posted profits, while 10 firms incurred losses. Fifty firms enjoyed higher profits from a year ago, against four that saw losses widen from the preceding year. Profits of the 85 companies with a year-ago comparison grew 30.2 per cent to $2.37 billion.

Topping the earnings chart was Singapore Exchange, which saw a bumper fiscal year as net profit surged 124.8 per cent to a record $421.78 million and revenue jumped 41.4 per cent to $576.22 million on robust trading volumes and stable contribution from listing fees, account maintenance, corporate action and price information fees.

‘Financial services will probably continue to remain supportive of overall growth but the outlook has certainly been tainted by the recent volatility in the financial market,’ DBS Bank economist Irvin Seah said. He expected the pace of growth in the financial services sector to ease towards the end of this year and 2008.

For the fiscal year ended June 30, the earnings of property and construction companies also ranked high among companies that released their full year results, given the bullish market conditions throughout the financial year.

Property and retail group Wing Tai Holdings saw its net profit tripled to $381.84 million from $128 million in the preceding year, as it recognised $189 million in fair value gains on investment properties (mostly Winsland House I & II) as well as profits from the sale of residential property units.

Trailing behind, GuocoLand’s full-year net profit jumped 81 per cent to $281.89 million on a 94 per cent surge in revenue to $702.48 million, due to higher profits from residential development projects in Singapore and from the sale of residential apartments in Beijing.

Thanks to the buzz in the property sector, construction activities here experienced a significant pick-up, lifting the earnings of construction companies, with double- or triple-digit percentage point growth from low comparative bases.

Sim Lian, which engages in property development and builds homes for the Housing Development Board and private developers, enjoyed a 71.6 per cent increase in net profit to $33.24 million. Construction cum property development firm Lum Chang Holdings saw a staggering 798.5 per cent growth in net profit to $2.99 million.

Economists said that the real estate industry here is likely to stay healthy as the property market boom shows no signs of tapering off in the near term.

Still riding the wave of high oil prices, earnings from offshore marine companies gathered pace on strong shipbuilding orderbooks and higher shipchartering rates. Jaya Holdings’ net profit rose 12.5 per cent to $120.77 million, CH Offshore’s net profit soared 210.2 per cent to $61.55 million and ASL Marine posted a record $40.25 million in net profit, 74.5 per cent higher than a year ago.

Some Chinese companies with a short listing history here also sprinkled pleasant surprises, with confectionery firm Hsu Fu Chi landing on eighth spot in the chart as net profit grew 20.8 per cent from a year ago to $51.32 million. China Yuanbang Property Holdings’ net profit surged 96 per cent to $15.97 million.

‘Given that the Chinese people’s disposable income is rising very fast and their buying ability is going higher and higher, it’s no doubt that these types of companies with domestic focus will do well,’ Phillip Securities analyst Zuo Li said.

While analysts believed that these companies will keep up with current growth momentum into the year ending June 2008, they were also quick to point out the downside risk coming from the recent US sub-prime woes.

‘The sub-prime problem remains the key risk factor to keep an eye on, but inflation would be a problem to contemplate with while keeping the growth momentum positive,’ Mr Seah of DBS Bank said.

UOB Group economist Alvin Liew noted that despite sound fundamentals here, equity markets continue to be hit by the unravelling of US sub-prime mortgage delinquencies and the related collateralised debt obligation issues.

‘So far, the financial sector problem seems contained and there is no material impact on the real sector in the region. The downside risk is when the real sector gets affected, such as weakened consumer spending and investment decisions,’ Mr Liew said.
Source : Business Times - 03 sept 2007

Singapore Property - Buy , Sell , Rent , Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com

Comex 2007 attracts over 700,000 visitors

Comex 2007 attracts over 700,000 visitors

By WINSTON CHAI
MEGA IT shows may be taking place every quarter, but if sales and visitor numbers at the just-concluded Comex 2007 are anything to go by, consumers and exhibitors are not showing signs of roadshow fatigue just yet.
Over the last four days Comex 2007 drew over 700,000 visitors to its 300,000 sq ft show halls which were spread across three floors of the Suntec Convention and Exhibition Centre.

In keeping with the Chinese seventh lunar month tradition of getais and auctions, some exhibitors were even seen standing on their booths with microphones in hand, peddling time-limited deals for MP4 players, thumb drives and portable hard disks at bargain basement prices.

The annual technology gadget extravaganza, now into its 16th year, was moved to the city centre from its former show ground at the Singapore Expo in Changi.

The switch to a more accessible location appears to have gone down well with exhibitors as vendor participation saw a jump from 750 companies in 2006 to 780 this year.

Familiar names like Microsoft, Canon, Creative, Samsung, LG and Sony all lent their weight to the event, along with smaller IT resellers like ATF and MemoryWorld.

Coupled with the improved economic outlook for Singapore, Eastern Directories, the company behind Comex, has also raised its sales outlook for this year’s show.
While exact numbers are being tabulated, an Eastern Directories spokesman said the sales target for Comex 2007 has been set at $50 million, up from $35 million in 2006.

His optimism is shared by some of the exhibitors in the show. ‘We hope to see a 40 per cent increase in sales for IT products (this year) from last year’s sales at Comex,’ said Ng Long Shyang, vice-president of sales and marketing for telecommunications and IT solutions at Samsung Asia.

Rival LG Electronics is also looking for a bountiful harvest. ‘We expect our sales to be as good, if not better than the PC Show and IT Show,’ said Howard Lee, managing director of LG Singapore.

Comex, the PC Show and IT Show are three of the four annual technology fairs that have been tugging at the purse strings of IT shoppers, the last one being Sitex which is organised by the Singapore infocomm Technology Federation.

Source : Business Times - 03 sept 2007

Singapore Property - Buy , Sell , Rent , Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com