S’pore MAS may let S$ continue gaining muscle

S’pore MAS may let S$ continue gaining muscle

It could hit 1.44 to US$, provide inflation buffer
By LARRY WEE
(SINGAPORE) The Monetary Authority of Singapore (MAS) is likely to leave unchanged its current policy for modest and gradual appreciation of the trade-weighted Singapore dollar when it issues its next semi-annual monetary policy statement on Wednesday.

While some economists point out that signs of slower global growth next year are a concern, the broad consensus is that the more immediate threat comes from domestic and international price pressures. This could persuade the MAS to retain the status quo for its main monetary policy tool.

After all, imports will cost less in local currency terms if the Singapore dollar becomes stronger. This will take some sting out of the inflation that could seep into an open economy like Singapore’s.

And further ahead, JPMorgan’s head of Asia forex research Claudio Piron cautioned that a stronger stance may even become necessary. He said last Friday: ‘The longer-term risk is whether domestic inflationary expectations become unanchored as asset price inflation spills over into the real economy. The MAS is not alone in this respect, as central banks around the world have swerved to avoid a head-on collision with a credit market crash by either cutting rates or postponing rate hikes to a later date.’

In practical currency terms, currency forecasters predict that an unchanged MAS stance will translate into further US dollar losses versus the local unit - towards S$1.47 by year-end, and then - quite possibly - fresh 10-year lows of S$1.44 by 2008.

They warn, in particular, that higher oil and food prices threaten to nudge the republic’s trend inflation rate higher than the 0.5-1.5 per cent range mentioned in the MAS’s April 2007 policy statement.

Specifically, August’s 2.9 per cent year-on-year surge in the local consumer price inflation (CPI) was highlighted, versus the far more modest rises of 0.5 and one per cent in the first and second quarters of 2007 respectively.

DBS researchers, for example, predicted in a note last week that for 2007 as a whole, local CPI could hit 1.7 per cent.

Worse, Bank of America’s currency strategist Yeo Han Sia said: ‘Full-year CPI could average close to 2.5 per cent in 2008, the highest since 1994 and well above long-term average of 1.7 per cent.’

Aside from that, currency researchers highlighted the danger that the already weak US dollar may lose even more ground across a broad front.

Mr Piron, for example, warned that the Group of Seven finance ministers’ meeting on Oct 19-21 and the US Federal Reserve’s next interest rate meeting on Oct 30-31 (where he expects another rate cut) may accelerate the already weak US dollar’s decline.

And though the trade-weighted Singapore dollar or S$NEER may have spent much of the past few months in the lower half of the undisclosed trading bands monitored by the MAS, it has already started its trek back into the top half, suggested DBS’s senior currency economist Philip Wee.

Mr Yeo concurred: ‘We expect the MAS to guide the S$NEER back to the upper end of policy band in Q4 2007, and the US dollar is likely to reach S$1.47 by year end.’

And, warned Mr Wee: ‘If, as we expect, the G-7 meeting leads to a loss of confidence in the US dollar, it could overshoot on the downside to S$1.412 to S$1.456 - but this is a risk scenario and, anyway, one we think more likely to occur next year than this. Our central scenario continues to envision a 2008 close for USD/SGD of S$1.44.’

Since the early 1980s, the MAS has adopted the S$NEER as its main monetary policy tool for offsetting imported price pressures in the very open local economy.

Estimates of the model employed by the MAS to fine-tune the local currency’s international value suggest its current policy of modest and gradual appreciation should translate into trend S$NEER appreciation of something like 1.5-2 per cent per annum - fine-tuned by the local central bank inside estimated trading bands of between 1.5 and 2.5 per cent on either side of a gradually rising central value.

That central value, in turn, is a basket of currencies representing Singapore’s most important trading partners - such as the US dollar, Malaysian ringgit, euro and Japanese yen.
Source : Business Times - 08 Oct 2007

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Singapore Real estate scheme helps youth to build solid job foundation

Singapore Real estate scheme helps youth to build solid job foundation

Mentorship programme helps seven at-risk or disabled young people become property agents
By Jessica Lim
WINDOW OF OPPORTUNITY: Real estate ‘is perfect for those who are not highly qualified but have great interpersonal skills”. — ST FILE PHOTO

THE property boom is offering disadvantaged youth a new lease on life.
Under a programme called Project Youth Regeneration, seven young people who are at risk or physically disabled are soon to become real estate agents.

Among them is Miss Zaina Tahir, whose life was tumultuous for several years before she turned 21. At 16, she had been sent to a girls’ home for drug abuse and truancy.

But finally deciding she did not want her life ‘to be corrupted like this’, she approached Mr Adrian Lim of ERA for help in March.

He oversees training, and says that while the money is good, learning the ropes is, in fact, ‘extremely difficult’.

‘It is a long process to teach many of these youth to understand what integrity, responsibility and honesty is,’ said the 43-year-old.

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‘We started off with 60 youth, only seven have pulled through.’

But the apprentices who have made it are reaping rewards already.

They handle telemarketing to source for sellers and buyers, then arrange for viewings and, with an agent-mentor, learn to close deals.

Of a real estate agent’s commission of 2 per cent for each sale or tenancy deal, these recruits then get a 15 per cent cut - or about $900 and up.

That, as well as renewed confidence and direction.

Institute of Technical Education graduate Ivan Lin’s severe limp due to cerebral palsy has become less of an issue for him in the months since he joined the programme in January.

The 20-year-old said: ‘Sometimes when I meet a client face-to-face I can tell they are shocked to see I am disabled… but I can overcome my disabilities.’

Joanne Tan, 17, whose left spastic hemiparesis condition weakened her left arm and made it difficult for her to focus, is enthusiastic, too.

‘I am willing to learn. I am so glad I got this chance and started early,’ said the N-level holder. ‘I used to be scared to take phone calls, and now I am not. That’s progress!’

After they prove themselves, ERA will then register them as full-fledged agents who are entitled to their full commission, said Mr Lim.

He was so convinced about the project, he even quit his five-figure-salary job to work on it. He and his partner, 77th Street retail chain owner Elim Chew, even put in about $150,000 of their own money to the cause.

‘Real estate is perfect for those who are not highly qualified but have great interpersonal skills,’ he said.

Pundits agree. The project won a non-profit organisation contest, The Pitch, by the National Volunteer & Philanthropy Centre in June last year, which came with an award of $50,000 from UBS bank.

The President of the Institute of Estate Agents (IEA), Mr Jeff Foo, also believes the industry is a level playing field for those who do not have paper qualifications.

‘There are no entrance requirements apart from age,’ he pointed out.

In fact, IEA’s estimates are that 60 per cent of Singapore’s 19,500 agents hold O-level or lower qualifications.

‘That means almost anybody can be a real estate agent if the person has the aptitude. With proper training and mentorship, they have an equal shot at success.’

For Miss Zaina, an N-level holder who just two years ago thought she was a no-hoper, it means a second chance.

She currently works part-time at a factory while she understudies ERA agents, and boards with a friend’s family for $150 a month.

But not for long, she hopes.

‘I know I can do it this time. Now I really want to. I want to have a good life and earn a decent salary.’
Source : Straits Times - 08 Oct 2007

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