250,000 revellers usher in 2009 at Marina Bay

250,000 revellers usher in 2009 at Marina Bay

By Valarie Tan,

SINGAPORE: Over a quarter million people ushered in the New Year at Singapore’s new downtown Marina Bay.

There was high energy to reflect the troubled times, but there were also quiet moments of peace and hope for 2009.

The specially-choreographed fireworks at Marina Bay took spectators’ breath away.

“Fantastic fireworks, great show, all good,” said a man in the crowd.

An Indian woman added: “It’s definitely something different compared to New York, so it’s great to be out here.”

More than 10,000 spectators came to watch the very first full-length concert out on Marina Bay.

Revellers were entertained with 90 minutes of song and dance by local celebrities from Singapore’s MediaCorp Channel 5, Asian Idol Hady Mirza and Filipino band ‘River Maya’.

As much as many would say that 2008 has been a rough and unforgettable year, many more celebrating at Marina Bay would hope for 2009 to be a much better one. - CNA/de

Source : Channel NewsAsia - 01 Jan 2009

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Singapore will emerge stronger from crisis

Singapore will emerge stronger from crisis

THE year 2008 has been an eventful and challenging year. The world is entering the most serious economic crisis in 60 years.
The global financial system has seized up, companies are finding it harder to obtain credit, and economies everywhere are slowing down. Europe and Japan have joined the United States in a simultaneous recession. Asia too is seeing a sharp slowdown.

A world in recession is not a world without opportunities. In the midst of the storm, we must keep pursuing new growth chances, and look beyond the immediate problems to ensure that Singapore emerges stronger after the downturn.

As a small, open economy, Singapore cannot avoid being hit. We earn our living by trading with and servicing the world. So the fall in worldwide demand has hit our exports, our tourism sector, and our broader economy. We have gone into a recession, though growth for the year as a whole is still positive at 1.5 per cent.

The outlook is highly uncertain. At each stage of this crisis, events have turned out worse than the experts predicted. Governments everywhere have been implementing monetary and fiscal measures, rescuing troubled financial institutions and key corporations and pumping money into the economy. But no one is sure how financial systems and economies will respond, or which policies will work.

There is a loss of business and consumer confidence. Hence, one thing is certain: Things cannot turn around overnight. Quite likely, the global recession will be followed not by a quick rebound, but by several more years of slow growth.

We must therefore prepare for a difficult year ahead, especially the first half of 2009. Our economy will probably contract further. More companies will be forced to downsize. So far, we have not seen many job losses, but I expect more retrenchments in the next few months. We must be psychologically prepared.

Doing more to preserve jobs

THE Government has responded promptly to this economic storm. Our key focus is jobs - keeping people in jobs, helping workers who lose jobs find new ones, and retraining them with new skills. To do this, we have to help businesses ride over this rough period. So long as people have work, they can take care of themselves and their families.

We have already implemented two significant initiatives. The first initiative is the Skills Programme for Upgrading and Resilience (Spur), which was jointly launched by the tripartite partners on Dec 1.

Spur helps businesses pay for their staff training. The tripartite partners have reported good response. Already, more than 120 companies have come on board, which together will train more than 4,200 workers.

The second initiative is enhancing government financing programmes for companies. This is to ensure that basically sound firms, especially the smaller ones, can still obtain financing despite the tight credit climate, and so keep their operations going.

We have also recently reduced interest rates and increased insurance premium subsidies under the schemes. These measures will benefit some 13,500 existing loans worth $550 million and an estimated $3 billion in new loans.

Apart from these two measures, we also lowered corporate taxes in 2008. New enterprises and smaller companies enjoy further tax exemptions, which mean that many pay little or no taxes.

For households, the 2008 Budget package included Growth Dividends, Utilities- Save, service and conservancy charges and rental rebates, and top-ups to post- secondary education accounts. These schemes are helping Singaporeans, particularly lower-income families, to tide over the difficult period.

Our next major move will be the 2009 Budget, which we have brought forward to January. The emphasis is still to protect jobs. We will do more to help viable companies to stay afloat and continue to employ their workers. We will introduce measures to help them with their business costs, including rental and wage bills. We are also studying further financing support for companies.

Compared to the 1997 Asian financial crisis, this crisis is more difficult for us to overcome because it is global. Still, it will not last forever. After a few years, conditions will go back to normal, though we cannot expect a quick return to the boom years before the crisis.

Meanwhile, a world in recession is not a world without opportunities. In the midst of the storm, we must keep pursuing new growth chances, and look beyond the immediate problems to ensure that Singapore emerges stronger after the downturn.

Hence, the Budget will also contain measures to develop our competitiveness and build up new and long-term capabilities. Some businesses may not recover from the slump in global demand, but most should survive. We will help them to build up their operations, and also encourage new businesses to grow, so that there will always be good jobs for Singaporeans.

The Budget package will not restore our economy to high growth overnight. But our measures will moderate the impact on Singaporeans, and on our economy. We will continue to monitor closely how events unfold. If more measures become necessary, we have the resources, and the will, to do more to see Singapore through this recession.

Taking care of one another

GOVERNMENT help alone will not solve the problem. Every one of us has a part to play. Companies should work with the unions to find ways to cut costs, and consider downsizing only as a last resort.

Businesses should try hard to keep their core team together, to hold on to their critical knowledge and skills. They should also take advantage of this slack period and the available schemes to build new and better capabilities. Such a far-sighted approach will pay off when the upturn comes.

On their part, workers should go for upgrading and pick up new skills. There are still many good jobs even now. Singapore has attracted exceptionally high investment commitments in the last two years. For 2009, the Economic Development Board forecasts that investment commitments will be lower, but could still exceed $10 billion. When these projects are completed, they will create many new jobs.

In addition, sectors like construction and marine, which have not been popular with Singaporeans, still offer many jobs. There are also vacancies in the service industry, such as in health care and education, the integrated resorts and retail trade, and in the Home Team and security.

There are jobs not only for the rank and file, but also supervisory and technical positions for professionals, managers and executives. If you are job hunting, I hope you will venture beyond your comfort zone to take up these available jobs, even if they are not your first choice.

In this difficult period, families must bind together, as Asian societies have always done in times of trouble. We must all fulfil our duties to our parents, our spouses and our children. In particular, we must safeguard our children’s future. Parents must ensure that children continue to attend kindergarten or childcare centres, and keep up their school attendance and school work.

Singaporeans must also take care of one another beyond our immediate families. Community and welfare organisations, as well as grassroots organisations, have expanded their schemes to help needy citizens - food hampers, FairPrice vouchers, bursaries and pocket money for needy students.

The Government will also continue to play its part, by helping the poor through ComCare. These efforts must be supported by all Singaporeans. If you are able to contribute, do volunteer your help.

Protecting ourselves better

BESIDES the economic downturn, 2008 has also brought political instability and security threats to some countries in our region, making it harder for these countries to focus on their economic problems.

Extremist terrorism is a continuing threat. The recent terrible attacks in Mumbai were a vivid reminder of this. Singapore was not the target, but tragically a Singaporean, Ms Lo Hwei Yen, became a victim. We all mourn her loss.

We must also understand what this incident means for our security, and how we can protect ourselves better from the threat of terrorism.

We are doing our utmost to prevent something like this from happening here. Our security and intelligence agencies monitor potential threats closely, and cooperate quietly with their counterparts in neighbouring countries. We are tightening up border security, and taking physical precautions at major events. Ordinary citizens can help in this too, by being on the alert and reporting anything suspicious.

But there is no 100 per cent guarantee that we will never be hit. Therefore, we must strengthen our psychological resilience and our social cohesion, so that should an attack ever occur despite all our efforts, we can absorb the shock, pull together and recover from the blow.

Most importantly, extremist terrorism must not be allowed to undermine our racial and religious harmony. Singaporeans understand that terrorism is a threat to all of us. All religious groups have unequivocally condemned the Mumbai attacks.

We need to work continuously to further strengthen this unity, trust and resilience. This is the purpose of the Community Engagement Programme - to prepare ourselves to respond to any crisis, not as individuals or different communities but as one nation.

Our strengths will see us through

DESPITE the storm clouds, we have good reasons to be quietly confident. Around the world, people recognise that Singapore started with precious little but built a prosperous and cohesive multiracial nation through our ingenuity and effort.

On my recent journeys abroad, I found everywhere a high regard for Singapore. Whether in Latin America, China or the Middle East, people admired what we have achieved, and were eager to learn from our experiences.

I was asked many questions about how we tackle our problems, and in particular how we are responding to the crisis. They were confident that we would pull through and wanted to pick up ideas from us. Perhaps that is why the World Bank is setting up a World Bank-Singapore Urban Hub in Singapore, to share some of our experience and expertise with other developing countries.

Singapore’s key strengths are our honest and capable leadership, sound policies which look beyond the short term, social cohesion and talented and hardworking people. These strengths have brought us peace, prosperity and progress for decades, and they will see us through these difficult times.

When the environment was favourable, we upgraded and grew our economy, lived within our means and patiently built up sizeable reserves. So when this sudden, severe storm struck, we were ready.

Together, we will overcome this downturn, as we have overcome many previous ones, and emerge stronger from the experience. Together, we can meet the future with confidence.

I wish all Singaporeans a Happy New Year.

Source : Straits Times - 01 Jan 2009

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Facebook faces ire of 85,000 mums WASHINGTON

Facebook faces ire of 85,000 mums WASHINGTON

Nearly 85,000 people have joined a Facebook group formed to protest against the networking site banning overly revealing breastfeeding photos from online profiles.

WASHINGTON: Facebook has become the target of protest by more than 80,000 irate mothers, after the social networking website banned overly revealing breastfeeding photographs from online profiles.
A Facebook group entitled ‘Hey, Facebook, breastfeeding is not obscene!’ has attracted nearly 85,000 members since Tuesday, with hundreds joining every hour.

The organisers of the page, which is hosting a lively debate, said they received more than 10,000 comments. They launched their ‘official petition to Facebook’ after it pulled profile pictures showing women nursing their babies.

Hundreds of women have had their pictures removed without warning and have been informed that they may be barred from using the site, the London Times reported.

‘The pictures have been reported as ‘obscene’ and have been removed… We’re wondering: What about a baby breastfeeding is obscene? Especially in comparison to many other pictures posted all over Facebook that really are obscene,’ the group’s organisers said.

Facebook, which has more than 120 million members, said there was no ban on breastfeeding pictures but it did have a policy on how much of a woman’s breast can be revealed similar to that of United States newspapers and other media outlets.

According to Facebook spokesman Barry Schnitt, photos of a fully exposed breast (defined by showing the nipple or areola) violate Facebook rules and may be removed.

‘We take no action on the vast majority of breastfeeding photos because they follow the site’s terms of use,’ Mr Schnitt said, but added that some photos were removed to ensure the site remains safe for all users, including children.

Last Saturday, the Facebook breastfeeding group staged a virtual protest online, called the Mothers International Lactation Campaign, where more than 11,000 angry supporters posted for a day a profile picture of a mother breastfeeding and changed their Facebook status to say ‘Hey Facebook, breastfeeding is not obscene!’

Real-life mothers also held a ‘nurse-in’ outside Facebook’s headquarters in Palo Alto, California the same day, the Palo Alto Daily News reported, where a handful of activists attended the protest, singing songs, displaying signs and breastfeeding their children.

AGENCE FRANCE-PRESSE

Source : Straits Times - 01 Jan 2009

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Israel rejects 48-hour ceasefire with Hamas

Israel rejects 48-hour ceasefire with Hamas

GAZA: Israeli leaders yesterday decided to reject an immediate 48-hour pause in fighting and push ahead with the devastating air offensive against the Hamas Islamist group.
Jets and assault helicopters pounded targets in the Hamas-ruled Gaza Strip through pouring rain as the Israeli offensive entered its fifth day.

Israel is facing growing international pressure to halt the assault, and Prime Minister Ehud Olmert discussed a ceasefire proposal - floated by France - with his ministers overnight. The meeting ended with a decision to continue operations, said government officials speaking on condition of anonymity.

Foreign Ministry spokesman Yigal Palmor said Israel had not rejected the proposal, one of several under consideration, outright. But he described it as unrealistic. ‘That proposal contained no guarantees of any kind that Hamas will stop the rockets and smuggling. It is not realistic to expect Israel to cease fire unilaterally,’ Mr Palmor said.

Another Israeli official said France might propose amendments to its plan.

Israel began attacking Gaza last Saturday to put an end to rocket fire from Gaza, which intensified after Hamas declared the end of a six-month-old truce on Dec 19. The scale of destruction in Gaza and a death toll that Gaza officials now put at more than 380 have sparked growing diplomatic action.

Calls for an immediate ceasefire have come from the European Union, the United States, the United Nations, the European Union and Russia.

In two phone calls to Israel Defence Minister Ehud Barak on Monday and Tuesday, French Foreign Minister Bernard Kouchner appealed to him to consider a truce to allow time for humanitarian relief supplies to enter Gaza, two officials in Mr Barak’s office said.

Foreign Minister Tzipi Livni was expected to travel today to Paris for talks with French President Nicolas Sarkozy.

Israel’s air campaign could morph into a ground operation if no ceasefire is reached.

Gaza militants, meanwhile, kept up their fire and expanded their range.

ASSOCIATED PRESS, REUTERS

Source : Straits Times - 01 Jan 2009

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Tenants leaving with debt unsettled

Tenants leaving with debt unsettled

Crisis takes its toll on rental market

By Jessica Cheam

THE economic crisis is posing a new problem for landlords: tenants who break leases or even skip town without notice, leaving debts in their wake.
Property agencies told The Straits Times that increasing numbers of tenants, mostly foreign, are cutting short their leases on anything from high-end luxury apartments to Housing Board flats.

While the official index dipped just 0.9 per cent in the third quarter following an increase of 2.5 per cent in the April-July period, agents say rents have fallen as much as 20 per cent in some areas.

Two tenants skipped town without paying the last month’s rent, said property agent Sally Tan. This was six months after they signed a one-year contract to rent a three-room flat in Yishun for $1,800. The tenants, Indian nationals who were working in a foreign bank’s IT department, told her by SMS that they were leaving for good and left the key in the flat’s letterbox.

Advice on how to break leases is also making the rounds on some online expatriate forums such as www.expatsingapore.com, as the financial crisis takes its toll on a previously booming rental market and expats get sent back home.

The discussions on these sites range from how to renegotiate with landlords to how to find replacement tenants and even how to make a run for it.

C&H Realty managing director Albert Lu put the number of cases at about 5 to 10 per cent out of 100 rental agreements in the last few months of 2008 - compared with ‘a rare few’ in 2007.

ERA Asia Pacific associate director Eugene Lim said that while there were no tenants breaking leases in 2007, the firm has seen 10 corporate tenants struggle with their rent recently.

These companies, which often lease high-end apartments in prime districts 9, 10 and 11, have had to look for replacement tenants and make up the difference in rents after cutting staff numbers.

Rents themselves have also started to fall. While the official index dipped just 0.9 per cent in the third quarter following an increase of 2.5 per cent in the April-July period, agents say rents have fallen as much as 20 per cent in some areas.

PropNex agent Michael Tan, 37, who specialises in leasing prime district apartments, cited units at Cosmopolitan in River Valley. They used to go for $8,500 for a 1,300 sq ft three-bedroom home but levels have dropped about 24 per cent to $6,500 per month.

Cost-cutting measures and retrenchments mean there are fewer expats renting pricey flats, said Mr Tan.

Although agents are seeing the effects of the crisis more severely in the high-end rental market, even HDB landlords have not been spared.

Dennis Wee property agent Sally Tan told The Straits Times that two Indian nationals had skipped town without paying the last month’s rent. This was six months after they signed a one-year contract to rent a three-room flat in Yishun for $1,800.

Ms Tan said the two tenants, who were working in a foreign bank’s IT department, told her by SMS that they were leaving for good and left the key in the flat’s letterbox.

When she rushed to the flat, all their belongings were gone and a day later, their telephone lines were terminated.

‘It poses a lot of problems for agents and landlords. We also can’t get the same level of rent,’ she said. The same flat is now being rented for $1,600 a month.

The director of Dennis Wee Properties, Mr Chris Koh, said landlords of such tenants have little recourse as tracing them in their home country would be too costly.

Landlords can cut their losses by keeping the deposit paid by the tenant and finding a replacement as soon as possible.

If the tenant can be located, landlords can take legal action at the Small Claims Tribunal, said Mr Koh.

Breaking lease agreements does not always have to be nasty, however, said HSR Property Group executive director Eric Cheng.

Most rental contracts with foreigners have a ‘diplomatic clause’ which states that tenants can break the lease after a year if they have a valid reason, such as returning to their home country.

‘Tenants in this case should give their landlords two months’ notice so a replacement can be found,’ said Mr Cheng. Even if one year is not up, tenants can still negotiate with landlords so a mutually beneficial arrangement can be sorted out, he added.

Meanwhile, agency bosses expect the situation to get worse in the next six months to a year as firms continue to cut costs and retrench staff.

The recent flood of units onto the rental market from en bloc projects where developers have postponed redevelopment, such as Fairways in Telok Blangah or Grangeford at Leonie Hill, could also contribute to the softening of the rental scene, they added.

As ERA’s Mr Lim put it: ‘I would say we’re only seeing the beginning.

Source : Straits Times - 01 Jan 2009

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Singapore Economy grew 1.5%, difficult year ahead

Singapore Economy grew 1.5%, difficult year ahead

PM assures S’poreans that efforts to help them will be stepped up

By Sue-Ann Chia, Senior Political Correspondent

ALTHOUGH Singapore slipped into recession last year, its economic growth was still positive at 1.5 per cent, said Prime Minister Lee Hsien Loong.
It is, however, lower than the annual growth forecast of 2.5 per cent, owing to the severe fallout from the global financial crisis.

NEW YEAR GREETINGS
The Prime Minister wishes all Singaporeans a Happy New Year.
The Straits Times wishes all its readers a Happy 2009.

The anaemic economy dominated Mr Lee’s New Year message yesterday, which outlined an outlook that continues to be ‘highly uncertain’ with the threat of a rise in retrenchments.

‘We must therefore prepare for a difficult year ahead, and especially the first half of 2009,’ he said.

‘Our economy will probably contract further. More companies will be forced to downsize…I expect more retrenchments in the next few months. We must be psychologically prepared.’

There were 6,418 layoffs in the first nine months of last year, and analysts predict the figure in the new year could surpass the peak of 30,000 in 1998 during the Asian financial crisis.

Mr Lee, however, assured Singaporeans the Government will intensify its efforts to help companies and citizens cope with the crisis. The details will be in the Budget to be unveiled on Jan 22.

‘The emphasis is still to protect jobs,’ he said. ‘We will do more to help companies to stay afloat and continue to employ their workers.’

Keeping a lid on business costs, such as rental and wage bills, was among the measures he highlighted, adding that more financing support for companies is under study.

These measures are on top of its swift response to the global crisis when it introduced some help schemes in December.

They include a Government-backed enhanced loan scheme for companies and a training scheme that gives bosses more money to retrain, rather than retrench, workers. More than 120 companies will send over 4,200 workers for training under this programme.

Mr Lee also pledged that there could be off-Budget measures if the need arises, saying: ‘We have the resources, and the will, to do more to see Singapore through this recession.’

In the meantime, he cautioned against viewing Budget 2009 as a cure-all for the ailing economy.

‘The Budget package will not restore our economy to high growth overnight. But our measures will moderate the impact on Singaporeans, and on our economy,’ he said.

This is because the global recession, unlike the Asian financial crisis, is the worst in 60 years. It will take longer to recover, with several years of slow growth.

In the interim, Singapore needs to seek out new growth opportunities so that it emerges stronger after the downturn, Mr Lee said.

‘Hence, the Budget will also contain measures to develop our competitiveness and build up new and long term capabilities.’

Elaborating, he said the Government will help companies build up their operations, and also encourage new businesses to grow.

But the Government can only do so much, said Mr Lee as he stressed the importance of tackling the crisis as one nation. He called on companies, unionists, and Singaporeans to help each other ride out the tough times.

Layoffs should be the last resort, he stressed and urged workers to upgrade their skills and take up even unpopular jobs in the marine and construction sectors.

Singaporeans can also look forward to new jobs from investment commitments which the Economic Development Board forecasts could exceed $10 billion this year.

Amid the economic struggle, Mr Lee also highlighted the security threat from terrorism. Referring to the recent Mumbai attack which claimed the life of Singaporean lawyer Lo Hwei Yen, he said: ‘We all mourn her loss. We are doing our utmost to prevent something like this from happening here.’

Despite the turmoil, Mr Lee believes Singapore has good reasons to be ‘quietly confident’. In his recent visits to Latin America, China and the Middle East, he said ‘people admire what we have achieved, and were eager to learn from our experiences’.

‘They were confident that we would pull through and wanted to pick up ideas from us,’ he added.

Singapore’s 1.5 per cent growth took analysts like Mr Chua Hak Bin by surprise. ‘It is much lower than expected and this year is going to be equally rough, with job losses expected to exceed job creation,” said Mr Chua, head of Singapore equity research at Citigroup.

Source : Straits Times - 01 Jan 2009

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Mindy Yong

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Singapore Orchard Rd rents fall 1.9% in Q4: CBRE

Singapore Orchard Rd rents fall 1.9% in Q4: CBRE

This is the first time these rents have headed south since Q4 2003

By UMA SHANKARI

PRIME Orchard Road rents fell 1.9 per cent quarter-on-quarter to an average of $36.10 per sq ft per month (psf pm) in Q4 2008, property firm CB Richard Ellis (CBRE) said yesterday.

It is the first time these rents have headed south since Q4 2003, it said. They also contracted 0.8 per cent year-on-year, reversing their 5.4 per cent growth in Q4 2007.

Prime suburban rents dipped a more moderate one per cent quarter-on-quarter to an average of $29 psf pm in Q4 2008. The last time quarterly suburban mall rents contracted was Q2 1999. For the whole of 2008, they grew one per cent.

‘Retail rents were resilient in previous economic downturns (such as Sars, and the Asian Financial Crisis) due to limited supply then,’ CBRE said in a report released yesterday.

‘But going forward, weak demand is likely to coincide with an increase in supply. As such, downward pressure on rents is unavoidable. We expect renegotiations to commence in 2009, after the Chinese New Year festivities.’

The main danger to rents, analysts say, is the new supply of retail space set to kick in over the next two years. According to CBRE, known supply for 2009-2012 is 6.36 million sq ft, with most of this - 80.5 per cent or 5.13 million sq ft - completing in 2009 and 2010.

‘Developers and landlords, especially those with developments along Orchard Road, face increasing competition from the imminent supply of new malls, shops within the integrated resorts as well as refurbished shopping centres,’ CBRE noted.

Retailers are now more resistant to further rental increases, as local consumers, spooked by the prospects of unemployment and lower wages, have cut spending, it said. In addition, the economic recession has led to a drop in tourist arrivals.

In the light of this, CBRE reckons that prime Orchard Road rents could contract 5-10 per cent in the first half of 2009. At prime suburban malls a 2-3 per cent decline is likely, it said. Suburban rents will fall more moderately due to a ready population catchment, steady demand for basic necessities and comparatively less competition from new supply.

However, some resilient retailers could take the opportunity presented by lower rents and costs to expand their retail network, CBRE said.

‘Certain trades will continue to thrive, despite the gloomy outlook. Supermarkets, hypermarts and F&B in suburban malls might emerge more hardy, particularly those with unique F&B themed eateries,’ it said.

Source : Business Times - 01 Jan 2009

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Mindy Yong

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Welcome ‘09, year of bubbles and bonds

Welcome ‘09, year of bubbles and bonds

Many analysts are bracing for a sombre year but some predict a rebound

By TEH HOOI LING

(SINGAPORE) An enormous amount of evidence suggests that humans simply can’t forecast. Perhaps the indisputable evidence is right in front of us. What happened in 2008 was beyond the wildest expectations of most of the market participants.

Grim picture: The bubbles in US Treasuries and the US dollar could burst this year, marking the start of a long cyclical trend of rising interest rates — AP
Still, investors like to know what the future will look like. So just as a pure intellectual exercise, we polled a few market watchers who are still brave enough to share their views on how 2009 will turn out. The predictions, we tell our respondents, can be serious or fun ones.

As it turned out, not many are in the mood for fun. Most opted to present a very grim picture of the year ahead.

Pradeep Verma, who has 25 years of investment experience and has worked with major financial institutions in London, Dubai, Bahrain and Luxembourg, said as a result of the very loose monetary and fiscal policies and poor regulatory policies of the US government since the 1990s, five big bubbles were created: in housing, credit, equity, US Treasury and the US dollar.

‘In 2008, we saw the bursting of the first three bubbles. We will see the bursting of the remaining two bubbles in 2009. That would rock the markets, in my view,’ said Mr Verma. Hence high volatility is likely to persist and markets could test new lows, he said. Mr Verma moved from London to Singapore in September 2008 to set up his investment advisory company, Quant Invest.

‘Money printing is the only thing the government can do to keep the system going, and this will only result in inflation. I would never have believed that the world’s largest creditor would have been able to get 30-year credit at below 3 per cent.’

- Pradeep Verma,
who has 25 years of investment experience and has worked with major financial institutions in London, Dubai, Bahrain and Luxembourg

The coming inflation is inevitable, he added. ‘Money printing is the only thing the government can do to keep the system going, and this will only result in inflation. I would never have believed that the world’s largest creditor would have been able to get 30-year credit at below 3 per cent.’

This, he said, just confirms that the US is monetising its debts as US Federal Reserve chairman Ben Bernanke said he would. ‘These rates will not last and their reversal will mark the beginning of a long lasting cyclical trend of rising interest rates. As the decline of the US dollar accelerates, yields will increase very quickly as the reality bites all those investors sitting in low yields.’

Citi Global Wealth Management & Global Consumer Group’s Haren Shah said the US bank expects global economic growth to contract in 2009.

‘Although the severity of the contraction will likely ease in the second half of the year, there is nonetheless a risk that the recession could be more protracted than anticipated and a meaningful recovery will not take place until 2010 as consumers and corporates take a longer-than-expected period to ‘de-leverage’ their respective balance sheets,’ he said.

As for CIMB-GK economist Song Seng Wun, he said ‘the only prediction which has some certainty of playing out is the worst contraction in Singapore since independence’.

‘There may be one final ra ra when Barack Obama implements his stimulus package before the market goes back to reality,’ he said.

Given the severity of the situation, Mr Song said there is a chance the Singapore government may give a tax holiday to taxpayers.

This year (2009) will be a perfect time to do that, given the significant surpluses built up by the government in the last few years. ‘The government goodies of no tax will allow businesses to hang on to people,’ he said.

A tax holiday will also be a relief for individuals, said Stephanie Wong, head of research at Kim Eng Securities. Due to the huge bonuses in early 2008, many especially those in the financial sector will be slapped with a huge tax bill in 2009. This comes at a time when a number have been retrenched and others have had their pay docked.

‘So some could find themselves in a negative cash flow situation, in that their income tax payment exceeds their income,’ she said.

Added Mr Song, after the tax holiday, the Singapore government may take the opportunity to move to a Pay As You Earn tax system - that is you pay your taxes at the same time as you are paid your salaries. Malaysia gave a tax holiday and moved to the PAYE tax system during the Asian financial crisis, he noted.

Markedly more bullish is Kim Eng’s Ms Wong. ‘We see the Singapore economy technically coming out of recession by the second quarter of this year (2009),’ she said, adding that the stock market is not expected to breach its last October low and the Straits Times Index could end 2009 some 15 per cent higher than 2008.

But most agree that the first half of the year will remain volatile. So what should investors do?

‘Under these difficult market conditions, diversification, dollar-cost-averaging and portfolio rebalancing remain good advice for anyone investing for the long haul,’ said Mr Verma. ‘By systematically rebalancing, one is forcing himself to buy low and dollar- cost-averaging really pays off as it forces investors away from trying to time the market, which is a losing game.’

For 2009, Mr Verma recommends the following investment strategies, in order of priority:

Bonds: Sell US Treasury and buy investment grade bonds.

Currencies: Sell US dollar and buy a basket of currencies like the euro, Swiss franc, Australian and Singapore dollars.

Commodities: Buy gold, energy and agriculture.

Equities: Sell S&P 500 Index and buy sectors like alternative energy, infrastructure and bio-tech.

Real estate: Avoid.

Hedge funds and private equities: Avoid

The only person to have the mood to comtemplate the lighter side of things is Carmen Lee, head of research at OCBC Investment Research. ‘As Asia moves into the Year of the Ox in 2009, which is the distant cousin of the American bull, this will hopefully put Asia in a more favourable place than the US.

‘Another key event to watch is the possible offspring of the prized China pandas, Tuan Tuan and Yuan Yuan, currently residing in Taiwan. An auspicious name has already been picked and he is likely to be called He Ping.

‘At home, and with Singapore’s famed chicken rice selling for as much as $50 per plate in Russia, chicken rice sellers may venture out beyond Singapore’s shores for higher margin opportunities. There will be more sales to beat the annual Great Singapore Sale, but the illusive Hermes Birkin bag is likely to continue to stay out of the reach of most Singaporeans,’ she said.

Source : Business Times - 01 Jan 2009

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Mindy Yong

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Singapore GDP growth shrinks to 1.5%, focus on saving jobs

Singapore GDP growth shrinks to 1.5%, focus on saving jobs

Prepare for tough year ahead with no quick turnaround in sight: PM Lee

By ANNA TEO

(SINGAPORE) With the economy likely to contract further and more layoffs expected in the months ahead, Prime Minister Lee Hsien Loong has urged Singaporeans to brace for a difficult 2009, especially the first half.

GDP growth plunged to just 1.5 per cent in 2008 - down from 2007’s 7.7 per cent pace and a full point below the November estimate of 2.5 per cent. It’s also below what seemed to be the more bearish forecasts - of around 1.7 per cent.

With the economy in recession and faced with a ‘highly uncertain’ outlook, more companies will be forced to downsize, he said in his most sobering New Year message to date.

The 2008 growth pace - slowest since 2001 - indicates that the economy, contrary to earlier expectations, remained in the red for a second straight quarter in Q4 in year-ago terms. GDP growth in the first nine months of 2008 amounted to about 2.8 per cent.

Against the preceding quarter, Singapore’s GDP has been in decline since Q2 2008, as the slump in external demand extended beyond exports and the tourism sector to the broader economy.

Economists expect at least two more negative quarters through the first half of 2009.

That would spell a more severe slump than the last big downturn in 2001, when the economy suffered three periods of quarter-on-quarter contraction and four quarters of year-on-year declines.

The one certainty in the current global economic crisis is - things cannot turn around overnight, Mr Lee said. So there will be no quick rebound, but more likely several more years of slow growth.

‘We must therefore prepare for a difficult year ahead, and especially the first half of 2009,’ Mr Lee said. ‘Our economy will probably contract further. More companies will be forced to downsize. So far we have not seen many job losses, but I expect more retrenchments in the next few months. We must be psychologically prepared.’

The upcoming Budget on Jan 22 will focus on protecting jobs, Mr Lee said, promising more measures to keep viable companies afloat, including help with rental and wage bills. On top of recent initiatives, the government is also looking into further financing support for firms.

But there remain opportunities even in recession, Mr Lee pointed out. Hence the Budget will also see measures to build up new and long-term capabilities and hone Singapore’s competitive edge. There will also be moves to help companies build up their operations, and also encourage new businesses to grow.

While the Budget package will not restore high economic growth overnight, it should soften the impact of recession on Singaporeans and the economy, Mr Lee said.

And if more measures become necessary, ‘we have the resources, and the will, to do more to see Singapore through this recession’, he assured.

Compared to the 1997 Asian financial crisis, the current crisis is more difficult for Singapore to overcome because it is global, Mr Lee said. ‘Still, it will not last forever. After a few years, conditions will go back to normal, though we cannot expect a quick return to the boom years before the crisis.’

But it’s not all bleak. Investments in Singapore - while well below 2007 and 2008 levels - could still exceed S$10 billion this year.

Despite the storm clouds, Mr Lee said, Singapore has good reasons to be ‘quietly confident’, having upgraded and grown the economy during the good times, lived within its means and ‘patiently built up sizeable reserves’.

Source : Business Times - 01 Jan 2009

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Goodbye ‘08, year of pain and big losses

Goodbye ‘08, year of pain and big losses

Market cap shrinks more than 50% with several sectors in turmoil; wait for recovery begins

By LYNETTE KHOO

(SINGAPORE) As 2008 faded from the calendar, investors were probably relieved to see the back of a nightmare year.

The combined market capitalisation of equities here shed 50.3 per cent of its value from $790.34 billion at end-2007 to $393.04 billion yesterday as jittery investors pared down their stakes and new listings waned. The current market cap is even below that of 2005.

Not surprisingly, the stock market ended the year in a sea of red with most companies suffering declines in market caps. Anyone who had invested in equities last year probably made losses, as the battering across the stock market left few stocks unscathed.

Only 31 out of 763 stocks (excluding exchange traded funds) still managed a rise in market caps from a year ago. Despite their defensive nature, blue chips were among the top losers due to massive redemptions by fund managers as these stocks are seen as a proxy to the economy that is now weakening.

The membership of the so-called billion-dollar club in corporate Singapore also shrank. There were only 62 such members as at end-2008, down from 115 at end-2007. Another telling sign of a poor 2008 showing was the weak IPO market last year. According to Ernst & Young, there were 22 IPOs on the Singapore Exchange raising total funds of US$931 million in 2008, down from some 30 IPOs that raised US$1.3 billion the previous year.

SingTel retains its No 1 crown with a market value of $40.59 billion, despite a 36.2 per cent slump from a year ago.

Local banks switched places. DBS, once the largest Singapore bank and known as the largest South-east Asian bank by market value, has now fallen behind local rival UOB, which ranks second on the roll call of all listed companies here.

DBS’s market cap fell 38.9 per cent to $19.21 billion during the year. UOB’s was down 35.1 per cent at $19.69 billion, while OCBC fell 39.8 per cent to $15.6 billion. Some dealers attributed DBS’s weakness partly to the bad publicity over financial structured products such as High Notes 5.

Commodity-related stocks slipped down the league table after surging oil prices took a U-turn in the second half of this year along with the weakening of demand fundamentals. After a meteoric rise in 2007 to second position, Wilmar’s market value fell 48.2 per cent to $17.82 billion, bringing it to fourth position. Golden Agri saw its market cap slide 77.8 per cent to $2.34 billion and fell 17 places to 34th position.

Property stocks also saw their market values eroded when the sector stumbled in the second half of the year, amid slower residential and investment sales, as well as lower office space demand from the deteriorating financial institutions and corporates.

CapitaLand’s market cap fell 50 per cent to $8.78 billion but it remained the largest property developer here, followed by Hong Kong Land, whose market value slumped 51 per cent to $8.02 billion. City Developments’ market cap dipped 55.1 per cent to $5.79 billion.

Analysts note that with bad news likely to stream in early this year from the earnings and economic front, there is the risk of further erosion of market values in the first half of this year.

‘People have become really pessimistic at this juncture and going into next year, there is no denying that there will be more bad news but all such bad news has already been taken care of by the valuations,’ said Gabriel Yap, senior dealing director at DMG & Partners Securities.

He noted that funds are holding cash at the sidelines, waiting to inject it into the market again. Risk aversion has led funds to hold cash that makes up as much as 62 per cent of their portfolio, Mr Yap estimated.

‘The funds are still waiting because there is no stimulus, catalyst or whatsoever to stimulate a sustainable recovery,’ he said. ‘We should see more sustainable recovery only in the second half but equities normally exhibit the ability to surprise on the upside as much as they have surprised us on the downside.’

Kim Eng’s director of retail research Ong Seng Yeow said he thinks that in the best case scenario, we will see a brief relief rally in January ahead of the Singapore Budget announcement. Post-event, the market may back off again and retest the lows in 2008 by the second quarter.

Analysts note that typically, a recovery in the equities market precedes a recovery in the economy, followed by corporate earnings and then the property market. This provides some hope for a recovery in market values in the first half - six months before the economy bottoms out.

Given the weak macroeconomic outlook, Mr Yap eyes more downside in cyclical stocks such as banking, property, commodity-related stocks that include Noble, Golden-Agri, Wilmar, as well as offshore marine plays Keppel Corp, SembCorp Marine and Swiber, which he considers as highly beta stocks.

Mr Ong, however, holds a different view. He thinks that while investors adopt defensive strategies to protect the value of their portfolios, they should still overweight commodity and crude-oil related sectors.

‘The latter sectors tend to outperform in a weak US dollar environment. On a similar note, an outflow of institutional funds from the Singapore equity market must also be factored in for first-half 2009 as MAS is likely to adopt a soft Sing dollar policy at its April policy meeting,’ he said.

Source : Business Times - 01 Jan 2009

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Mindy Yong

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