Recession unlikely, but expect some gloom in market

Recession unlikely, but expect some gloom in market

S’pore can rely on construction projects to drive growth even if US downturn occurs

By Bryan Lee, Economics Correspondent
VOLATILE MARKET: The stock index at One Raffles Quay showed Asian markets have rebounded yesterday in response to the US interest rate cut.

THE week is turning out to be a most unsettling one for the world - and Singapore.
Stock markets have crashed while a succession of assessments pronounced the US already in recession - Merrill Lynch being the latest to join the chorus.

Policymakers, not least the US Federal Reserve, are being forced to make unprecedented moves to stave off a downturn and calm the market maelstrom.

Companies and financial investors, no doubt, are already feeling the pain from steep declines in share prices across the board.

And even those with little interest in finance or economics must be sitting up to the alarming headlines that seem to paint a gloomier picture with every passing day.

Yet what exactly should Singapore and Singaporeans be worried about?
Certainly, the heart-stopping action in the past three days on the Singapore stock market has clearly shown financial investors that markets here and in the region are not independent of developments in the world’s largest economy.

But even those who do not invest should be interested to know if, and how, a US contraction will affect the local economy.

If history is anything to go by, a US recession has always dragged Singapore’s economy into the red.

Will things be different this time round?

Dip in exports

THE manufacturing sector is one of Singapore’s key growth engines. With Singapore’s small domestic market, its health depends critically on external demand for its exports.

A slowdown in the US, the biggest market for local exports after Europe, will inevitably hurt manufacturers that sell most of their wares overseas.

The electronics sector will be one of the more vulnerable, as demand dries up for computers, phones and other gadgets.

Shipping companies, air cargo firms and other logistics firms will also take a hit, as will wholesale traders.

In fact, exports are already starting to slide with contractions in the past two months.

Much has been said in recent months about Asia weaning itself off Uncle Sam in this regard.

Some argue that the fast economic growth in recent years has given rise to an increasingly affluent middle class in Asia that can act as a counterweight to the almighty American consumer.

Flourishing trade within the region appears to support these ‘decoupling’ theories.

But experts say this may not be true, because much of the movement of goods within Asia is merely a manifestation of global production lines that are not contained within a single factory but span across countries.

For instance, microchips made in Singapore are shipped to China, where they are assembled, along with other imported components from elsewhere in the region, into a laptop computer that is ultimately bound for the US.

This trend is backed by empirical studies, which show that half of intra-Asian trade is driven by final demand outside the region.

In any case, the Asian consumer may not be as resilient as some are inclined to think.

Citigroup economist Chua Hak Bin warns that Chinese consumers, often held up as an important alternative source of demand, may not be as enthusiastic about a shopping spree if the export-driven factories many of them work in face tough times.

There are a few bright spots, however. Oil rig production should continue to be robust given that shipyards here are already fully booked for the next few years.

Pharmaceutical sales, which arguably are driven less by economic cycles, could also provide support.

New plants in the electronics and pharmaceutical sectors coming on stream later this year may also bolster exports, although the extra capacity will help little if demand caves in.

Financial contagion

WHAT about the services industries, which spectacularly contributed about 70 per cent of the economy’s phenomenal growth of 7.5 per cent last year?

Services geared at overseas markets and customers may see business slowing down.

But the deceleration may not be as acute because Singapore’s services industry is significantly driven by Asian economies, which are expected to fare better than those in the West.

And the Formula One race scheduled in September will also provide a boost to tourism-related activities.

But the financial sector, with its globalised nature, may prove to be a big spoiler. It will be hit harder as the shattered confidence of the Western financial sector spills over to Asia.

Companies are already postponing fund-raising activities. Share trading volumes are falling as stock market turbulence keeps investors, and private banking clients, on the sidelines.

Foreign banks that have been badly hit by the US sub-prime mortgage crisis may also turn more cautious about lending and hiring here.

On the domestic front, the uncertainty about the US economy may prompt property investors to hold back on purchases, which will hurt real estate-related services. It may also slow or stall property price increases.

What this means is that the local consumer who is looking at stock market losses and the absence of surging home values could hold back on spending.

And this will ultimately drag down sectors such as retail and restaurants.

Betting on construction

AMID the gloom, the building sector will most likely survive the US recession unscathed.

Mega projects like the integrated resorts will keep construction firms busy, as will the huge pipeline of projects from a property boom over the past two years.

Barclays Capital economist Leong Wai Ho says these projects are unlikely to be derailed by US - or global - economic woes and will be a key growth driver for the local economy this year.

So, all things considered, what will 2008 - hobbled by a failing US economy - be like for Singapore?

For all the growing worries about the US and the general world economy, economists reckon Singapore and Asia will escape a recession this year.

For one thing, the jury is still out on where the US is headed.

Many forecasters are still hoping for a benign slowdown, aided by aggressive interest rate cuts by the American and European central banks.

Even among the more bearish, and their number appears to be growing by the day, the consensus is that Singapore and the region are still expected to expand, even in the face of a twin recession in the US and Europe.

Regardless of the final GDP growth figure, it will represent a significant downshift after four years of spectacular economic growth in Singapore.

Even if the economy stays in the black, Singaporeans will need to take heed, and make their own adjustments for less exuberant times.

Source : Straits Times - 24 Jan 2008

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Singapore GIC against UBS plan to spin off investment bank

Singapore GIC against UBS plan to spin off investment bank

S’pore investment firm prefers restructuring over sale, managing director says in a report
CRUCIAL STEP: UBS is calling a shareholders’ meeting on Feb 27 to approve a 13 billion Swiss franc (S$17 billion) capital injection plan. — PHOTO: REUTERS

ZURICH - THE head of Singapore’s Government Investment Corporation (GIC), which has agreed to make a massive capital injection in UBS, is against the idea of the Swiss bank spinning off its investment bank unit, a Swiss media report has said.
Mr Ng Kok Song, GIC’s managing director, told Swiss newspaper Finanz und Wirtschaft in an interview that although the investment bank required restructuring, a spin-off of the entire business would be a mistake.

‘Losing the entire investment bank would mean throwing out the baby with the bath water,’ he told the business newspaper. ‘We prefer a restructuring of the investment bank over a sale.’

UBS’ investment bank business is reeling after the bank took US$14.5 billion (S$21.05 billion) worth of write-downs on exposures to the stricken United States sub-prime mortgage market.

Mr Ng confirmed that GIC, together with an unidentified Middle East investor, believed by analysts to be Saudi Arabia, agreed to inject 13 billion Swiss francs (S$17 billion) into UBS, subject to approval by the Swiss bank’s shareholders.

He also reiterated that Singapore’s investment management company would not seek a place on the UBS board.

‘We are not a strategic investor, nor do we pursue political aims. Therefore, we do not seek a place on the board, and we do not want to exercise direct influence on the management,’ he told the newspaper.

Meanwhile, the head of Switzerland’s Federal Banking Commission was quoted as saying he backed the planned capital injection into UBS, and that the Swiss bank would not end up with more capital than it needed as a result.

‘A bank cannot allow even the slightest doubt to arise over its solvency, especially in private banking,’ Mr Daniel Zuberbuehler told Swiss business newspaper HandelsZeitung.

UBS has called an extraordinary shareholders’ meeting on Feb 27 to approve the capital injection from GIC and the Middle East investor.

Several Swiss institutional investors have objected to being shut out of the capital increase, saying other investors should be entitled to subscribe to a rights issue.

UBS has said it will issue mandatory convertible notes to the new investors, paying a coupon of 9 per cent.

‘UBS is not overcapitalised, as some critics maintain,’ Mr Zuberbuehler told the newspaper. ‘In the current difficult times, one should show that one is well above the buffer zone.’

UBS has said it is important to keep its tier 1 capital high in order to protect its wealth management franchise, the largest of any bank in the world.

If the capital injection is approved, it would help raise UBS’ tier 1 capital to 12 per cent, after it fell to 10.4 per cent following the massive write-downs announced last month.

REUTERS
Source : Straits Times - 24 Jan 2008

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Strong bids expected for Singapore West Coast site

Strong bids expected for Singapore West Coast site

By Fiona Chan, Property Reporter

A RESIDENTIAL site released for sale at West Coast Crescent yesterday is expected to draw a good response.
Property consultants said the 1.2ha plot could fetch between $94 million and $112 million.

This works out to $260 per sq ft (psf) to $310 psf of the site’s potential gross floor area which stands at 361,667 sq ft. These expected prices are slightly higher than the $248 psf of gross floor area fetched for a site at Boon Lay Way last month.

The West Coast plot was launched for public tender by the Urban Redevelopment Authority yesterday as part of the Government’s confirmed land sales programme, which identifies sites to be sold at a pre-determined date.

It is attractively located near schools - including the Japanese Supplementary School - as well the National University of Singapore, said market experts.

A new condominium built on the 99-year leasehold parcel ‘promises a view of the sea and greenery at West Coast Park and Clementi Woods’, said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.

He added that such a condo, which can be built to up to 36 storeys, would be only the second high-rise development ‘on this stretch of West Coast’, after Blue Horizon.

Mr Nicholas Mak, director of research and consultancy at Knight Frank, expects the site to attract three to six bids. About 290 to 300 condo units can be developed on the land, he said.

The breakeven cost for a future building on the site is likely to be about $650 to $690 psf, he added. ‘The new units in this proposed development could be sold at prices between $740 and $780 psf.’

Mr Li also pointed out that some units in adjacent Blue Horizon were sold at about $750 psf in the fourth quarter of last year. Sub-sales of uncompleted homes at nearby Varsity Park were also in that price bracket.
Source : Straits Times - 24 Jan 2008

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Singapore Regent Garden owners deny trying to back out of deal

Singapore Regent Garden owners deny trying to back out of deal

By Lee Su Shyan, Assistant Money Editor

MAJORITY owners at Regent Garden have denied that they are ‘greedy’ and trying to back out of a collective sale they are challenging in court.
The 25 owners told The Straits Times that they only want the court to clarify if the agreement with Allgreen Properties can proceed even if the price undervalues their property.

They want to know whether the contract is still binding in a case where the development charge is wrong.

The owners are also upset that Allgreen paid more money to the six minority owners, who did not vote for the sale, than it did to those who backed it.

The 25 owners inked an agreement last April to sell their property in West Coast Road to mainboard-listed Allgreen for $34 million.

One of these owners is former MP Aline Wong, who stepped down from the chairmanship of the Housing Board last year.

But the owners are claiming that the price is too low as the actual development charge - which is much lower - was not obtained. They want damages of between $5.7 million and $6.685 million from Allgreen.

The damages claim is based on two revised valuation figures that use the correct development charge.

The owners wrote to Allgreen last month, claiming that the sale price of $34 million was a ‘mutual fundamental mistake’ as it factored in a far higher development charge.

Allgreen said last Friday that it intends to ‘vigorously contest this action, and the claims and allegations made by the majority vendors’.

The Straits Times understands from the majority owners that they are only ’seeking clarification and fairness’ from the courts.

They want to know if the sale can go ahead at this ‘undervalue’ and not at ‘market value’.

They also query if minority owners can be entitled to additional payments from Allgreen but not share them with the majority owners.
Source : Straits Times - 24 Jan 2008

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Inflation up 4.4%, hits 25-year high in Singapore

Inflation up 4.4%, hits 25-year high in Singapore

Rising transport, oil, food costs drive up index; economists still positive, though

By Nicholas Fang

COSTLIER food, transport and health care drove Singapore’s inflation rate to a 25-year high of 4.4 per cent last month.
This comes amid growing fears that a possible United States recession will drag the global economy into a slowdown.

Economists, however, do not believe the Republic faces the dreaded spectre of stagflation - when an economy becomes stagnant as inflation gets far worse.

The Department of Statistics announced yesterday that the consumer price index rose 4.4 per cent last month from a year earlier. The index was up 4.2 per cent in November.

The index is a key measure of inflation and reflects changes in the prices of a fixed basket of goods and services households commonly purchase.

The rise was the highest since April 1982, but it was largely in line with earlier forecasts.

Key contributors to higher prices included transportation costs, which grew 6.4 per cent, soaring crude oil prices and a hike in taxi fares towards the end of last year.

Food prices went up 5.5 per cent due to more expensive cooked food, fresh fruits and vegetables, and milk products.

At the same time, health-care costs went up 6.3 per cent, reflecting higher charges for daily ward and medical treatment.

Compared with 2006, consumer prices for the whole of last year rose 2.1 per cent, partly reflecting the two-percentage-point hike in the goods and services tax in July.

Market watchers expect this inflationary trend to continue into the early part of the year.

Minister for Trade and Industry Lim Hng Kiang flagged this in November, when he said inflation could hit 5 per cent in the first quarter before moderating in the second half.

Economists Robert Prior-Wandesforde and Prakriti Sofat of HSBC’s Asian Economics team said in a note yesterday that inflation this month could reach as high as 6 per cent.

They cited reasons such as another round of electricity tariff hikes kicking in, as well as higher imputed HDB rents due to the Inland Revenue Authority of Singapore (Iras) raising the annual values of HDB flats.

However, when asked if higher inflation could combine with a potential global economic slowdown in a brutal double-

whammy for Singapore, economists were more upbeat.

CIMB-GK economist Song Seng Wun said the local economy would likely grow next year, albeit at a slower pace than this year.

‘With the construction and services sectors likely to continue growing strongly, gross domestic product is likely to make the minimum 4.5 per cent to 5 per cent growth forecast by the Government.

‘High inflation should continue into the first half, but I expect oil prices to plunge in the second half. This could ease inflationary pressures very quickly.’

Citigroup economist Chua Hak Bin agreed, saying: ‘The inflation we are seeing now is still demand-driven, and I doubt that a lot of prices can stay up if there is an economic slowdown.

‘Oil prices have eased drastically last week, and food prices are stabilising. So, it’s unlikely for us to see any stagflation.’

However, Ms Selena Ling, an economist with OCBC Bank, was more circumspect.

‘A lot of the inflationary factors we are seeing are domestically driven, such as higher taxi fares and the Iras revision of property values, and these will not be affected by a cooling of the global economy.

‘We could see some stagflation on a very small scale, much different from that during the oil shocks some 20 years ago, as the inflation is not in double digits this time.’

Source : Straits Times - 24 Jan 2008

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Why Singapore Changi Airport could be the choice for Jetstar’s Asian hub

Why Singapore Changi Airport could be the choice for Jetstar’s Asian hub

By Karamjit Kaur, Aviation Correspondent

AUSTRALIAN low-cost carrier Jetstar’s chief said yesterday there was a good reason for the carrier to select Changi Airport as its Asian hub.
After all, parent Qantas Airways already has sizable operations out of Changi and sister carrier Jetstar Asia is also based in Singapore.

But Mr Alan Joyce, chief executive of Jetstar (Australia), who spoke to reporters yesterday on the sidelines of the two-day annual Asia Pacific Low Cost Airline Congress, stressed that a final decision on where the airline would situate its Asian hub would not be made until later this year.

Also in the running are Kuala Lumpur International Airport, Ho Chi Minh Airport, Bangkok’s Suvarnabhumi Airport and Hong Kong’s Chek Lap Kok Airport.

The final choice will depend on several factors, said Mr Joyce. These include the cost of operating through the airport, and availability of traffic rights and good landing and take-off slots.

Another factor is the cost of living for crew and other staff who will need to be based at the hub.

‘All of these will come come together as part of the decision-making process,’ he said.

Mr Bashir Ahmad, managing director and chief executive officer of Malaysia Airports Holdings, who also attended the conference said: ‘We have submitted a bid to Jetstar, and we are looking forward to winning.’

Jetstar, with a fleet of more than 30 mainly single-aisle aircraft, plans to operate long-haul Australia-Europe flights via Asia from next year.

In the meantime, the carrier is pressing on with other expansion plans, said Mr Joyce. He announced yesterday that the airline, which already operates a Singapore-Darwin-Cairns service, will also fly daily between Singapore and Melbourne via Darwin from April.

Promotional one-way fares, excluding taxes and other surcharges, of $8 for Singapore-Darwin flights and $88 for the full route to either Melbourne or Cairns are now available for travel between April 17 and May 31.

Singapore’s Tiger Airways which already flies between Singapore and Darwin and between Darwin and Melbourne, welcomed the competition.

A spokesman said it would be ‘good for the market’.
Source : Straits Times - 24 Jan 2008

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Singapore Cosco wins jobs totalling $608m

Singapore Cosco wins jobs totalling $608m

A SUBSIDIARY of Cosco Corp (Singapore) has won tanker conversion and building contracts totalling US$422 million (S$608 million).
Its 51-per-cent owned Cosco Shipyard Group, through Cosco Nantong Shipyard, will build two shuttle tankers for a Norwegian customer for US$171.6 million.

One is expected to be delivered in 2010 and the other, 2011. There is an option to build two more shuttle tankers.

Meanwhile, Cosco Shipyard has secured 18 conversion jobs valued at US$250 million. They include converting eight oil tankers to bulk carriers and another five oil tankers to ore carriers.

The contracts are expected to have a positive impact on Cosco Singapore’s net tangible assets and earnings per share this year.

Separately, Keppel Shipyard, a wholly-owned subsidiary of Keppel Offshore & Marine, has been awarded a $145 million deal to integrate and complete a drill ship. The new hull, to be built in China, will arrive at Keppel Shipyard in the first quarter of next year.

Shares of Cosco Singapore and Keppel Corp have been sold down recently over fears of a United States recession. They rebounded yesterday, in line with a broader market recovery. Cosco shares rose 1.2 per cent to $4.20, while Keppel Corp shares soared 6.9 per cent to $11.20.

Source : Straits Times - 24 Jan 2008

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China to allow its banks to invest in Singapore stocks market

China to allow its banks to invest in Singapore stocks market

Republic now open to $23b of funds meant for investing in overseas markets
By Grace Ng
MORE CHOICES: Chinese banks will soon be able to offer customers a range of investments such as Singapore equities, fixed income instruments and funds.
THE Singapore stock market may soon get a welcome boost from the influx of potentially billions of dollars from mainland China.
This follows a keenly- awaited decision by Beijing to allow its banks to invest in the Republic. China signed a memorandum of understanding with Singapore yesterday allowing China banks to put their clients’ money in Singapore stocks and funds.

Beijing’s move makes Singapore the third investment destination after its own territory of Hong Kong and Britain to be opened to mainland China banks.

The move will allow Singapore stocks and funds to tap the huge US$16 billion (S$23.2 billion) pool of funds that Chinese banks can invest in overseas markets under the Qualified Domestic Institutional Investor, or QDII, programme.

The scheme gives Chinese banks a quota for investments in overseas markets.

Singapore blue-chip counters and Singapore-listed Chinese firms, called ‘S- shares’, in particular, may attract Chinese investors looking to diversify their portfolios, said some analysts and brokers. This may, in turn, push up their share prices over the longer term, they added.

The Monetary Authority of Singapore (MAS) said last night that it had signed a ’supervisory cooperation arrangement’ to allow China’s banks to ‘conduct investments on behalf of their clients with Singapore-based financial institutions’.

The banks will then be able to offer customers a range of investments, such as Singapore equities, fixed-income instruments and funds authorised or recognised by the MAS.

MAS managing director Heng Swee Keat, who signed the memorandum yesterday, said in a statement: ‘We look forward to working closely with the CBRC on this initiative and on other areas of cooperation.’

The MAS and the China Banking Regulatory Commission (CBRC) statements did not say when QDII funds can start investing in Singapore. Still, the news released yesterday after the Singapore market closed has generated buzz among brokers and Singapore-listed firms.

Cosco Corp president Ji Hai Sheng, in a call from China, following a week-long roadshow in Beijing to institutional investors including QDII investors, welcomed the ‘good news’.

‘There was very strong interest from the Chinese investors during the roadshow in Singapore-listed stocks like Cosco, which are seen as being more stable and offering good growth potential,’ said Mr Ji. ‘Just last week, 39 Chinese fund managers came to visit us, as well as other Singapore companies.’

Cosco’s share price rose five cents to $4.20 yesterday.

Citigroup analyst Chua Hak Bin said Singapore stocks may get a ‘good lift in the medium to longer term’ as the investment base expands with the addition of QDII funds.

Still, ’short-term concerns over the US economy are likely to continue to dominate’.

But a broker said the news may spark ‘renewed interest’ in S-shares, which had recently suffered a decline.

S-shares enjoyed a brief rally last October in anticipation of more China-based funds investing in Singapore.

But the FTSE ST China Index, a new measure tracking 50 S-shares, has plunged 31 per cent so far this year.

The CBRC said yesterday it will soon sign similar agreements with the United States, Germany and Japan.

This reflects Beijing’s willingness to allow its banks to diversify their investments overseas, following the combined 11.8 billion yuan (S$2.37 billion) in losses of four QDII funds offered by fund houses in the fourth quarter last year.

Source : Straits Times - 24 Jan 2008

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MIT putting down roots at new campus - Singapore

MIT putting down roots at new campus - Singapore

200 of its top minds will link up with local talent to jumpstart research powerhouse

By Shobana Kesava

AFTER a 10-year engagement, Singapore and the Massachusetts Institute of Technology (MIT) have tied the knot.
The decade of research and teaching tie-ups between MIT, the National University of Singapore (NUS) and Nanyang Technological University (NTU) has culminated in MIT’s most ambitious international effort to date.

About 200 of MIT’s top minds will join hands with local and regional researchers at a centre here dubbed Smart - the Singapore-MIT Alliance for Research and Technology.

By 2010, they will join other global powerhouses at a new research campus at the NUS University Town @ Warren. The campus will boast academic, sporting and leisure facilities, as well as hostels and shops.

For a start, infectious diseases and environmental sensing and modelling are being put under the microscope.

MIT’s first two of five interdisciplinary research groups have already set up operations here, with about 60 researchers working in temporary labs at NUS. When fully operational, about half will be from MIT.

The effort is part of a $1-billion experiment to entice the world’s best and brightest research minds here, under a National Research Foundation (NRF) scheme dubbed the Campus for Research Excellence and Technological Enterprise (Create).

Plans are being drawn up to develop laboratories, office space and world-class facilities at the complex.

Using MIT as an example, NRF head Tony Tan said yesterday that research universities can make a big contribution to the economy.

‘If the companies founded by MIT graduates and faculty formed an independent nation, the revenues produced by the companies would make that nation the 24th largest economy in the world,’ Dr Tan said.

A total of 4,000 MIT-related companies employ 1.1 million people and have annual world sales of US$232 billion (S$325 billion).

Dr Tan pointed out that 64 members of MIT have won the Nobel prize, proving that ‘use-inspired research does not compromise the quality of scientific research’.

Speaking at the opening of the fifth international symposium of nano-manufacturing yesterday, he also announced an innovation centre to take great ideas to the marketplace.

In addition, the Education Ministry will match dollar for dollar gifts and donations to Smart to set up Singapore research professorships. These will be held by senior MIT faculty or scientists who are actively involved with Smart research programmes.

MIT provost Rafael Reif outlined his university’s contribution to Smart.

‘What MIT brings to the union is its talent. Our contribution is the people,’ he said.

And it will be a long-haul partnership. Said Smart director Thomas Magnanti: ‘We plan on working together for at least another 20 years.’

The exact amount being pumped into Smart is being kept under wraps, but Professor Magnanti, who is MIT’s former dean of engineering, estimated it will cost up to US$40 million to run the five research groups every year.

Smart’s work here will centre on research that cannot be conducted at MIT.

Said Prof Reif: ‘Of the two research areas we’ve chosen so far, getting access to pathogens from the region and the facilities of environmental sensing labs are not available at MIT, which makes it very attractive to work here.’
Source : Straits Times - 24 Jan 2008

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Singapore COE prices dip amid share market gloom, tax cut talk

Singapore COE prices dip amid share market gloom, tax cut talk

COE premiums for cars dived yesterday as buying faltered on the back of prevailing bad news - and also possibly impending good news.
Motor traders said the sharp falls in share prices in the past week or so have dampened car buying sentiment. At the same time, other potential buyers were holding back in anticipation of a cut in car registration tax - an expectation arising from Prime Minister Lee Hsien Loong’s New Year message.

The PM had said: ‘We need to enhance the ERP (Electronic Road Pricing) and extend its coverage so that driving costs significantly more, but we will balance that with lower vehicle ownership taxes.”

The motor industry is rife with talk of a 10 to 20 point cut in the additional registration fee or ARF, a major vehicle tax which currently stands at 110 per cent of a car’s approximate import price.

A 20-point cut translates to a saving of about $3,300 for a Toyota Corolla and $10,000 for a Mercedes-Benz E-class.

Even if COE (Certificate of Entitlement) prices rise - and they are likely to, on the back of an expected smaller supply of certificates this year - buyers reckon they will still be ahead if the ARF is cut.

Toyota agent Borneo Motors’ managing director Mark Choong said ‘this has caused used car dealers to give ridiculous trade-in prices”, thus discouraging car owners from switching to a new car.

COE premiums for cars up to 1,600cc ended 14.6 per cent lower yesterday at $12,001. Premiums for cars above 1,600cc closed 16.9 per cent lower at $13,289. Those for open COEs, which are used mainly for cars, fell 11.5 per cent to close at a 10-month low of $13,801.

COE premiums for commercial vehicles were 3.8 per cent lower at $12,501, while motorbike premiums were 8.1 per cent down at $1,012.

Motor traders said new car sales were down across the market in the last two weeks, and reckoned things would be slow up to the next COE tender, which is over the shorter Chinese New Year work week a fortnight from now.

Finally, the current Toyota Corolla Altis - one of the top selling cars here - has been sold out since last month. The new Altis ($65,988) will be available only next month.

The absence of this core model from the market has also eased demand for COEs.

Car dealers have started to lower prices. At Borneo Motors, reductions were up to $2,500 a car.

CHRISTOPHER TAN
Source : Straits Times - 24 Jan 2008

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