Singapore congratulates Barack Obama on his inauguration as US President

Singapore congratulates Barack Obama on his inauguration as US President

By Bhagman Singh

SINGAPORE: Singapore’s President S.R. Nathan has congratulated Mr Barack Obama on his inauguration as the 44th President of the United States of America, and wished him success in all his endeavours.

President Nathan said Mr Obama’s inauguration comes at a time when there are many challenges facing the US and the rest of the world.

He said many countries grappling with the global economic downturn will look to the US for leadership in addressing the downturn, as well as security and environmental challenges.

And Mr Obama’s active initiatives will contribute immensely towards promoting trust, greater understanding and active co-operation among the peoples of the US and the international community.

On Singapore-US relations, President Nathan said they have been long-standing, close, multi-faceted and versatile.

And have grown from strength to strength over the years.

The US-Singapore Free Trade Agreement and the Strategic Framework Agreement are the centre-pieces of the relations in recent times.

President Nathan said he looked forward to broaden and deepen the relations - and is confident that under Mr Obama’s leadership, the US will respond effectively to the various challenges, domestically and internationally.

President Nathan said he also looked forward to welcoming Mr Obama to Singapore for the APEC Summit in November this year. - CNA/de

Source : Channel NewsAsia - 21 Jan 2009

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Recession-hit Singapore still needs foreign workers

Recession-hit Singapore still needs foreign workers

SINGAPORE: Singapore, which relies heavily on foreign workers, will still need overseas labour despite a recession, a minister said in comments released Tuesday.

With Singapore in recession, the inflow of foreign workers will slow, Acting Minister for Manpower Gan Kim Yong said in a written response to an MP’s question in parliament.

“However, even in a slowdown, our economy still needs foreign workers. Many of them take on jobs that Singaporeans may not want to do or are unable to fill, like in construction and marine,” Mr Gan said.

Almost 25 per cent of Singapore’s population were estimated to be non-resident foreigners last year, according to the statistics department.

Mr Gan said that foreign workers allowed Singapore companies to remain globally competitive and contributed to keeping jobs within the country.

“If companies become uncompetitive in Singapore, they may decide to relocate to other countries and we will lose more jobs. This will be a lose-lose outcome,” he said.

Singapore in October became the first Asian economy to enter recession.

- AFP/ir

Source : Channel NewsAsia - 21 Jan 2009

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Singapore seen unveiling anti-recession budget

Singapore seen unveiling anti-recession budget

SINGAPORE: Singapore’s budget to be unveiled on Thursday should contain tax cuts and a hefty financial package to help the country weather what could be its worst recession since independence, analysts said.

As the open, trade-driven economy takes a sharp turn for the worse, the spectre of rising bankruptcies and mass layoffs is striking fear in a country long used to near-full employment and bustling economic activity.

“The Singapore economy is probably headed for its deepest recession since independence” in 1965, said Citigroup economist Kit Wei Zheng.

Officials might even take the unprecedented step of dipping into the country’s multi-billion-dollar national savings, Senior Minister Goh Chok Tong was quoted as saying on Monday.

The government is announcing its budget one month early, underscoring the need to react quickly.

Prime Minister Lee Hsien Loong warned at the weekend that forecasts for the economy to contract by as much as two per cent this year would be further scaled down.

Many analysts believe the economy could shrink by three per cent, while some said the contraction could be even more severe. That would leave the economy in its worse shape ever, after 2001 when growth fell by 2.4 per cent.

The city-state became the first Asian economy to enter recession last year after problems in the US subprime, or higher-risk, mortgage sector developed into the worst global economic crisis since the Great Depression of the 1930s.

“The weather is so bad and we’ve always said the reserves are for a rainy day,” Goh was quoted as saying in The Straits Times. “If this is not a rainy day, I don’t know what is a rainy day,” he said.

Experts, business executives and trade unionists have said they want an aggressive budget to cushion the impact of a worsening economic situation.

Loans to small businesses have tightened, and companies have laid off workers or slashed wages.

Macquarie Research said that, in addition to cost-cutting measures, it expects the budget “to include sizeable infrastructure spending and transfer payments to middle/lower income Singaporeans”. It also expects the budget to include incentives for new growth industries and programmes aimed at upgrading workers’ skills.

During previous economic crises the government responded with financial muscle. In the 1985 economic downturn, it unveiled about 2.5 billion dollars in fiscal measures, or 6.5 per cent of gross domestic product (GDP), while the 1998 Asian financial crisis saw fiscal programmes worth 12.5 billion dollars, or 9.1 per cent of GDP, Macquarie Research said.

The 2001 budget measures totalled 13.5 billion dollars or 8.8 per cent of GDP, Macquarie added.

Singapore’s GDP in 2007 totalled 243.2 billion dollars (164 billion US).

Finance Minister Tharman Shanmugaratnam has said this year’s “significantly expansionary” budget will emphasise help for businesses. Late last year, the government pledged 2.3 billion dollars in credit support for firms trying to survive the economic turmoil.

In a commentary published in The Straits Times, Citigroup’s Kit said the budget should focus on easing financial stress on companies, improving cost-competitiveness, providing support for affected families and giving a modest demand stimulus to the economy.

This would translate into corporate and individual tax cuts, rebates on taxes and utility bills, financial doleouts and funding for the retraining of laid-off workers so they can find jobs in less-affected sectors, other analysts said.

Accounting firm KPMG suggested the government should reduce the corporate tax rate from 18 per cent to 17 per cent.

Kit proposed a wider two or three-percentage point cut that would “send a powerful signal of the government’s commitment to maintain Singapore’s competitive position and encourage companies to make longer-term investments in the country”.

While the government should draw up a power-packed budget this year it should also reserve ammunition in case the recession gets worse and lasts longer, analysts said.

Singapore is Southeast Asia’s wealthiest economy in terms of gross domestic product per capita, but its trade dependence makes it sensitive to problems in developed economies, particularly key export markets of the United States and Europe, which are also in recession.

- AFP/yt

Source : Straits Times - 21 Jan 2009

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Credit Suisse predicts 300,000 jobs on the line here

Credit Suisse predicts 300,000 jobs on the line here

By Robin Chan

A NEW Credit Suisse report has predicted that an astonishing 300,000 jobs could be lost in Singapore this year and next.
Most of the workers to lose jobs would be foreigners, who would then have to leave the country, leading to a drop in Singapore’s population, it said.

But other economists and industry body heads say the Credit Suisse figure is extreme, even in an unprecedented crisis such as this one.

Monday’s report was written by Singapore-based Credit Suisse economists Cem Karacadag and Kun Lung Wu. They estimated that, notwithstanding government action, a deep, economy-wide recession will mean that 160,000 jobs could be lost in the services sector, a further 100,000 from manufacturing and about 40,000 in construction over this year and the next.

Most of the job losses would be from the 725,000 new jobs created over the past five years which were taken mainly by foreigners, who make up a quarter of the population here.

‘As harsh as our assumptions may seem, they only imply that the economy gives up all of the jobs it created in 2008 and a portion of the new jobs in 2007,’ they wrote.

Of the total, 200,000 would be foreigners and permanent residents who, if they leave Singapore, would reduce its population by around 160,000, after accounting for births, to 4.68 million.

The drop in population would have serious implications for any economic recovery as it would lead to a fall in private consumption, a surge in unemployment to 5.6 per cent in 2010 - it was 2.2 per cent in September last year - and a plunge in residential property prices.

The job losses would represent a reduction of about 10 per cent of Singapore’s workforce of just under three million. By comparison, the Asian financial crisis of a decade ago led to job losses of over 30,000, or about 1.4 per cent of the workforce.

However, other economists say the numbers are far too bearish, even given the severity of the global crisis.

OCBC economist Selena Ling said: ‘The socio-economic implications of that would be severe… The figures discount the Government policy responses which would kick in before we get to that stage.’

CIMB-GK economist Song Seng Wun said: ‘Our labour growth has been well above trend…so job losses of that magnitude are not unimaginable.

‘But the Government has indicated that it is willing to dip into the reserves, and it has shown a strong response to the crisis right from the word go.’

Still, they believe that in a worst-case scenario, job losses here could reach 100,000.

President of the Singapore Manufacturers’ Federation Renny Yeo also disputed the Credit Suisse numbers. He said Singapore has seen growth in higher-end manufacturing industries such as biotechnology and renewable energy, which are not as susceptible to a dip in consumer demand. The manufacturing sector employs about 230,000.

The Credit Suisse report comes just days before the Budget, which will set the tone for how the Government plans to tackle a worsening recession. In Parliament on Monday, ministers faced questions from MPs over the job market. Acting Minister for Manpower Gan Kim Yong said that job losses this year could exceed 30,000, while Minister for Trade and Industry Lim Hng Kiang said more than 30,000 new jobs would be created this year.

Source : Straits Times - 21 Jan 2009

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Obama pledges a new era

Obama pledges a new era

PRESIDENT PROMISES SWIFT, BOLD ACTION TO REMAKE AMERICA

By Chua Chin Hon, US Bureau Chief

Mr Barack Obama, with his wife Michelle by his side, taking the Oath of Office as the 44th President of the United States. He was sworn in by Chief Justice John Roberts during the inauguration ceremony in Washington.

WASHINGTON: ‘America, the Beautiful’ may not always ring true in these crisis-ridden times, but early this morning if you heard him, Mr Barack Obama believed it could be so again.
In his much-awaited inauguration speech, he called on Americans to choose ‘hope over fear, unity of purpose over conflict and discord’.

After turning a new page in United States history by becoming the first African-American President, all eyes are now on how exactly he would lead a superpower weary of war and recession.

The answer he gave was this: bold and swift action on the economic front, decisive steps to restore America’s standing in a world disillusioned with its power and a call to a new era of American responsibility.

‘Today I say to you that the challenges we face are real, they are serious and they are many,’ he said, shortly after being sworn in as the 44th President of the US in a ceremony redolent with historic significance.

‘They will not be met easily or in a short span of time. But know this, America - they will be met,’ he said, watched by a two-million-strong crowd that had gathered overnight to witness history unfolding before their eyes. Millions more across the globe watched on TV and over the Internet.

Mr Obama also pledged to revive a US economy that he said had been badly damaged by ‘greed and irresponsibility’ and an avoidance of hard choices.

He said the economic crisis showed that markets can spin out of control ‘without a watchful eye’ and that prosperity must be shared more broadly.

In his two-year race for the White House, the 47-year-old former senator from Illinois campaigned on a message of hope and change that struck a chord with millions of frustrated Americans.

Despite the wave of optimism generated by Mr Obama’s election triumph last November, tough questions abound about whether his administration can nurse the world’s largest economy back to health, and end the two unfinished and unpopular wars in Iraq and Afghanistan.

How these questions unfold will have major consequences for the world at large.

Like many other US leaders who took office during times of crisis, Mr Obama also sought to inspire his countrymen with a broad call to action, service and sacrifice.

Stressing the enormity of the tasks before him and America, he declared: ‘Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.’

The crowd who had braved freezing temperatures to witness his inauguration, at times chanting ‘Obama, Obama’ in unison, applauded at many turns as he delivered his speech with passion.

A sizeable portion of his speech was devoted to the wider world, promising an America that would listen, even as he vowed to spare nothing to keep the US safe from terrorism. He promised to withdraw troops from Iraq and forge a ‘hard-earned peace’ in Afghanistan.

‘We will not apologise for our way of life, nor will we waver in its defence, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you,’ he said, addressing terrorist enemies.

He also spoke to the Muslim world, pledging ‘a new way forward’ in ties, based on mutual interest and respect.

If the speech was the moment watchers were waiting for, for many more among the millions gathered at the US Capitol, the defining moment came minutes past noon - when Mr Obama, the son of a Kenyan man and a white American woman, placed his left hand on the Bible used by Abraham Lincoln, the 16th US president who ended slavery, and took the oath of office.

To many, this marked the ultimate victory of the civil rights movement and the fulfilment of Dr Martin Luther King Jr’s ‘dream’ that his children might be judged by their character rather than the colour of their skin.

Acknowledging the historic nature of his inauguration in a nation with a deeply troubled racial past, he said: ‘This is the meaning of our liberty and our creed - why men and women and children of every race and every faith can join in celebration across this magnificent mall, and why a man whose father less than 60 years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.’

Today, Mr Obama, the nation’s fourth youngest president, will walk into the Oval Office to begin his first day in office.

America, the Beautiful will be very much a work in progress.

Obama ushers in ‘new era of peace’
HIGHLIGHTS from United States President Barack Obama’s speech:
‘…To all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and that we are ready to lead once more…’

‘We will not apologise for our way of life, nor will we waver in its defence, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you.’

‘To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society’s ills on the West - know that your people will judge you on what you can build, not what you destroy.’

‘What is required of us now is a new era of responsibility - a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.’

Source : Straits Times - 21 Jan 2009

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Insurance offers challenging careers

Insurance offers challenging careers

By TEH SHI NING

A KEY challenge for the insurance industry at the moment is attracting the right talent, says Scott Ryrie, chief executive officer of Allianz SE Reinsurance Branch Asia Pacific.

Mr Ryrie: ‘I believe reinsurance offers a great career opportunity and is very portable across the world, as the principles are quite similar.’
According to Mr Ryrie, given the rising number of insurers and reinsurers in Singapore, there will be ‘additional demand for staff, as well as competition in some sectors of the insurance industry’.

The way current market conditions are evolving will also amplify the importance of attracting and retaining talent in the insurance industry.

Mr Ryrie explains: ‘In certain countries in Asia, we have seen rates, terms and conditions deteriorate, in some cases dramatically. At the same time, we have an increase in catastrophe losses and also large-risk losses, which have placed additional pressure on results for insurers and reinsurers.’

The financial crisis has also ‘placed an additional burden on the market via lower investment returns and more limited access to capital’, he adds.

Hence, Mr Ryrie thinks, ‘the challenge in the area of talent attraction and retention is definitely increasing’.

In his view, the problem lies not so much in the nature of careers in the insurance industry itself, but perhaps more a lack of understanding of it. ‘I believe reinsurance offers a great career opportunity and is very portable across the world, as the principles are quite similar.’

A deliberate entry

Mr Ryrie speaks from experience, having been in the general insurance industry for over 30 years.

‘The industry is very dynamic and constantly changing due to shifts in the underwriting cycle, and that makes my job very exciting,’ he says.

At a young age, Mr Ryrie frequently accompanied his father, a marine loss adjustor, when he went to assess claims. He had been exposed to the possibility of a career in insurance earlier than most people would have been, and thus, he says, ‘entered the insurance industry deliberately’.

Since then, he has forged his career, working across most of general insurance’s market segments, from senior management to underwriting and broking positions.

He moved here from Sydney more than six years ago and, prior to joining Allianz Re, was the general manager and in charge of the Asia-Pacific region at XL Re’s Singapore office.

In his current role as Allianz Re’s CEO, Mr Ryrie oversees the property & casualty and life & health reinsurance business for 20 countries in the region.

Not all who enter insurance do so with the confidence of previous insight into the industry’s operations, however. The insurance industry might not have been an obvious career option to Danny Ooi, head of Allianz Re’s claims department, with his degree in engineering.

He first entered the insurance industry as a risk engineer, after spying an ad for such a position in the papers, and deciding that it could marry his professional training in engineering with his personal interest in risk management.

Like Mr Ryrie, however, Mr Ooi soon realised that the insurance industry affords opportunities other than assessing the risks of properties and manufacturing plants. He moved into underwriting and, eventually, claims - an aspect of insurance which he most enjoys.

‘I enjoy handling claims very much because you deal with the real issues as they arise. In underwriting you assess risks and write the policies, but won’t see how it’s played out. With claims, you deal with actual situations,’ he explains.

His day usually begins with snatching precious moments on the train during his commute to work, to read a few reports undisturbed. Then, there are emails to clear, as 40-50 typically arrive in his inbox overnight from other time zones in the region.

With potential claims and reports coming in from locations as varied as Korea, Australia, Guam or India, his work is ‘continually challenging and interesting’, Mr Ooi says. Different shipping practices and laws in various countries could lead to varied opinions on how claims involving a sunken barge should be handled, for example.

‘What’s really needed to be a claims handler is someone willing to acquire knowledge constantly, because it’s a very knowledge-intensive job. You need good judgment - but that again falls back on knowledge,’ he explains.

One who works in claims is also constantly watching the news, says Mr Ooi, to remain aware of where losses might come from. Typhoons, earthquakes, or even slashed corporate profits, could all mean potential claims from insurers’ policyholders.

Mr Ooi says: ‘I know there are people who may find it dull, but the most interesting part of my work is the reading and the analytical skills it demands.’

‘It can be a high-pressure job,’ he admits. But, he adds, the work-life balance at Allianz is quite good, with a good record of long-serving employees bearing testament to that fact.

Attracting and retaining talent

As CEO of Allianz, Mr Ryrie’s assessment is that ‘in attracting talent, a certain level of employer branding counts’. But he believes that ‘our staff are our best brand ambassadors. People in the industry have worked with them and know their capabilities and professionalism.’

In terms of retaining talent once they enter the industry, Mr Ryrie thinks offering planned ‘career development and skill enhancement for staff’ is key.

Mr Ooi, for instance, encourages his staff to sign up for relevant training courses. Lunchtime talks are also frequently conducted, either by people from other departments or external parties, on specific topics.

Recently, Mr Ooi himself completed a law degree, studying part-time, which he says has given him a firmer grasp of the insurance legalese he often encounters on the job.

Also key to talent retention, Mr Ryrie says, is communication. ‘We always aim to keep our communication lines open between all working levels. The managers are trained with knowledge and tools to continually engage their team members,’ he says.

Source : Business Times - 21 Jan 2009

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Taking off into a world of opportunities

Taking off into a world of opportunities

Rebranding and restructuring have positioned RSA Group Singapore to meet the challenges of operating in a difficult economic climate, reports TEH SHI NING

ONE of Mark Mitchell’s passions is collecting Asian art pieces - paintings, sculptures, installations. In his view, the art scene here is vibrant and diversified, a ‘melting pot’ of cultural influences. In fact, not unlike the insurance industry in which he has established his career over the past 23 years.

Mr Mitchell: ‘Whether you work for a major international firm or a smaller specialist, there are opportunities to build a rewarding, challenging, long term career in one of the world’s most significant industries’
‘What’s unique about Singapore’s insurance industry is that you have talent coming in from all around the world, strong local talent, but also foreign talent, which contributes to Singapore’s identity as a hub for insurance in Asia. It is a dynamic market with a global outlook,’ Mr Mitchell says.

Mr Mitchell, who took up his current position as the chief executive officer of RSA Group Singapore last September, is himself an example of the talent Singapore’s insurance industry has attracted from abroad.

His career in insurance started out as a summer job after leaving high school, back in his Australian hometown of Ballarat, some distance north of Melbourne.

Having decided to continue in insurance instead of pursuing full time university studies, Mr Mitchell obtained his associateship from the Australian Insurance Institute, and did part-time studies in management at Deakin University, on a programme sponsored by his employer then.

‘Like many people, I fell into insurance, and stayed because it seemed like there were almost limitless opportunities to progress, if you were mobile and willing to work hard,’ he says. Indeed, he sees mobility as key in his career advancement thus far, whether in terms of a readiness to move to another country, or another business segment.

He first arrived here to work in 1999 and stayed till 2004, when he was transferred to Hong Kong. In late 2006, he returned to Singapore, where he now lives with his Singaporean wife and their young son.

Over the years, Mr Mitchell has moved from handling claims to reinsurance, although the bulk of his experience has been in underwriting property and engineering lines.

Prior to joining RSA, Mr Mitchell says, he felt that he had ‘hit a bit of a ceiling’ in his previous job with Chubb Insurance Group. Thus, when the opportunity arose for him to switch from the more ‘technical, hands-on, market-facing side of the insurance business’ to his current leadership role, involving management and strategic planning, he decided to make the move.

One hobby of Mr Mitchell’s is flying, and the unrestricted private pilot’s licence he holds allows him to fly privately in most of the world’s airspaces, which in fact mirrors the flexibility and adaptability he credits with allowing him to take off in the world of insurance.

Why insurance

‘I have never had any thoughts of moving into another industry,’ Mr Mitchell says. ‘It’s a global industry and the only one I know of that gives you the opportunity to test a wide range of skills - from sales to mathematical analysis, from technical know-how to customer service skills and of course business and management expertise as well. There are not too many jobs that can provide all of the above,’ he explains.

Succeeding in a line such as his, which has everything to do with risk, Mr Mitchell says, ‘you need to be comfortable with risk-taking, it’s difficult to go far without a risk-taking nature’. But, it also requires being ‘ready to be accountable for the decisions you make’, and to be able to ‘turn losses into opportunities’, he says.

A very challenging aspect of the insurance industry, in his experience, is the ‘cyclical nature of the business and the need to be constantly adjusting strategy to remain profitable at all stages of the market cycles’.

New look for a new year

‘2009 is already presenting a raft of challenges for insurers in the region,’ says Graham Edwards, director of sales, marketing and communications at RSA Singapore. Mr Edwards observes that with the current market climate, ‘rates in general will continue to fall, whilst insurer’s investment income will be further impacted by falling interest rates due to the global economic slowdown’.

‘Insurers will be under pressure from shareholders to continue to deliver growth so I would expect to see more insurers looking for vulnerable acquisition targets, niche product opportunities, and diversification into new product classes in order to generate the required premium levels,’ he adds.

In such a context, Mr Mitchell says, RSA will need to manage the downturn’s impact through a ‘prudent investment strategy, effective rate planning and claims inflation initiatives’.

The RSA Group, whose Asian headquarters here are headed by Mr Mitchell, underwent a rebranding exercise last April. The substantial departure from its old name, the more cumbersome ‘Royal and Sun Alliance’, came with a new purple and magenta logo to replace the old blue and yellow one.

Last July, RSA Singapore also put in place a new retail structure to improve its sales and service. Under this new set-up, a dedicated sales team was created to service direct clients, agents, Investment Financial Advisors (IFAs) and insurance brokers, thus separating sales from underwriting responsibilities, Mr Edwards explains.

The staff have been enthusiastic and the restructuring has already resulted in an ‘immediate increase in the number of enquiries and quotations’, observes Mr Edwards.

It is with a new look both inside and out then, that RSA Singapore has entered this new year. Mr Mitchell says: ‘The difficult economic climate will present some great opportunities for strong businesses such as ours. RSA will continue to manage the impact of the economic downturn through our prudent investment strategy, effective rate planning and claims inflation initiatives.’

In his view, this is not the time to slow down nor hide away. RSA Group will be launching a new trading unit this year, Specialty, which focuses on writing large and complex risks for clients in Asia and the Middle East.

There are other initiatives too, such as iCargo, a tool to speed up policy processes online for small and medium-sized enterprises, and an SME business package that will cater for multi-location programmes across numerous industry segments.

‘We know that 2009 will certainly look and feel very different from 2008,’ says Mr Mitchell.

Talent in Singapore

At any rate, it is not the current economic climate which is discouraging people from joining the insurance industry.

In Mr Mitchell’s view, it could just be a lack of awareness that ‘within the insurance industry, there is an enormous range of opportunities for talented and high calibre people’.

‘Whether you work for a major international firm or a smaller specialist, there are opportunities to build a rewarding, challenging, long term career in one of the world’s most significant industries,’ Mr Mitchell says.

Even though Singapore has been able to attract talent from all over the world in recent years, it is an acknowledged fact that more people are needed.

‘If Singapore is to continue to develop as a regional insurance hub, the insurance market needs to attract more graduates to enter the industry bringing fresh passion, energy and innovation,’ says Mr Edwards.

Source : Business Times - 21 Jan 2009

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Singaporeans less likely to cut spending on property and renovations: survey

Singaporeans less likely to cut spending on property and renovations: survey

By NISHA RAMCHANDANI

SINGAPOREANS are less likely than most of their Asia-Pacific neighbours to cut spending on property and renovations, according to a MasterCard survey.

The MasterCard Worldwide Index of Consumer Purchasing Resilience measures the resilience of planned expenditure categories to cutbacks, with zero the most vulnerable and 100 the most resilient.

In the property and renovation category, Singapore had a resilience score of 77.

The index looked at the categories of goods and services that consumers will spend on in the next six months, their importance to consumers and whether consumers will cut discretionary spending.

In Singapore, the fitness and wellness segment had the second-highest resilience index score of 73, followed by personal travel at 59. Dining and entertainment had a score of 54, while fashion and accessories rated 49.

Like most of the markets, Singapore failed to register a score in the consumer electronics category, since a market response of less than 30 per cent was not counted. Of the 14 markets surveyed, only Indonesia at 59.9 and Vietnam at 58.2 generated resilience index scores for consumer electronics.

‘There is a high rate of home ownership in Singapore and house-proud consumers here will continue to spend on renovations and property category, to finance their mortgages and spruce up their homes,’ said Yuwa Hedrick-Wong, MasterCard’s economic adviser (Asia-Pacific).

‘Spending on fitness and wellness has become increasingly important, especially for younger and better educated consumers and, therefore, it is not surprising that this category has emerged with a high resilience score,’ he said.

As far as general purchasing is concerned, Singapore’s average resilience index score of 62 trailed the Asia-Pacific average of 67. In comparison, China’s score of 81 was the highest, while Japan was second with 76. Indonesia and India tied for third with 74.

Across the region, China had the highest resilience scores in two categories - personal travel at 75 and property and renovations at 85. Japan had the highest resilience score for dining and entertainment at 81, while India was top for fitness and wellness with 90. Indonesia had the highest score for fashion and accessories at 76.

‘In general, the spending priorities of Chinese and Indian middle-class consumers are relatively resilient, showing their disposable income has so far remained healthy,’ Dr Hedrick-Wong said.

The survey polled 6,000 consumers, about 400 of whom were from Singapore.

Source : Business Times - 21 Jan 2009

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Bank sees most of Asia hitting bottom in Q2

Bank sees most of Asia hitting bottom in Q2

Region’s gradual recovery to fuel sustained stock rebound in H2

By CONRAD TAN

MOST Asian economies are likely to hit bottom in the second quarter of this year and then begin a slow recovery, analysts from Credit Suisse’s private banking division said yesterday.

Ms Fan: Investors should stay cautious and position themselves in companies that are cash-rich
Fan Cheuk Wan, head of Asia-Pacific research for Credit Suisse Private Bank, said the expected recovery will fuel a sustained rebound in Asian equity markets in second-half 2009.

The bank is telling clients to pick stocks most likely to benefit from China’s plan to spend four trillion yuan (S$883 billion) in 2009-10 on infrastructure projects and social programmes to help its poor.

These aggressive measures to stimulate the economy, including efforts to expand bank lending by cutting interest rates and bank reserve requirements, mean China will lead Asia’s recovery from the downturn, said Credit Suisse’s Asian chief economist Joseph Tan.

‘It’s not just the size of the stimulus package but the speed and the willingness of the authorities’ to act to save jobs and prevent social unrest that will sustain China’s growth at 8 per cent this year, he said.

Also, the central control exerted by the Chinese government gives it the ability to push out new loans to businesses and people quickly - a task that governments in the US and Europe are struggling with, Mr Tan said.

Overall, Ms Fan said investors should adopt a ‘defensive’ strategy for the first six months of 2009, buying stocks and bonds of firms that are cash-rich and do business in sectors such as utilities and consumer staples, which are most likely to survive the recession well.

‘Although we expect a short-term one to three- month equity rally, we recommend investors stay cautious and position themselves in companies that are cash-rich,’ she said.

The next few months will probably bring more nasty shocks for stockmarket investors, as analysts cut their earnings forecasts further after the latest results reporting season, she added. But by the end of Q2, the outlook should look cheerier.

‘We expect a trough for Asia economic growth towards the end of the first half, then a slow recovery,’ she said. This will support a rebound in Asian equity markets in the second half.’

Source : Business Times - 21 Jan 2009

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Investor confidence rises in Germany

Investor confidence rises in Germany

Index’s third straight increase follows ECB rate cut and govt stimulus package

(BERLIN) German investor confidence improved more than economists forecast in January after the European Central Bank cut interest rates and the government announced a second spending package to battle the deepening recession.

The ZEW Centre for European Economic Research in Mannheim said its index of investor and analyst expectations rose to minus 31 from minus 45.2 in December, its third successive increase and to the highest in less than a year.

Economists expected a gain to minus 43.1, according to the median of 37 forecasts in a Bloomberg News survey.

The index reached minus 63.9 in July, the lowest since it was first compiled in December 1991.

The ECB last week cut its benchmark lending rate by half a percentage point to 2 per cent, the fourth reduction since early October, while Chancellor Angela Merkel’s coalition agreed to spend an extra 50 billion euros (S$97.7 billion) to stem Germany’s worst recession since World War II.

European Union Monetary Affairs Commissioner Joaquin Almunia said on Monday that looser monetary and fiscal policies should ‘create the conditions for a gradual recovery in the second part of 2009′.

Nick Matthews, an economist at Barclays Capital in London said yesterday’s ZEW reading suggests ‘that investors see a silver lining and that the worst may soon be behind us’.

ZEW’s gauge of the current situation slid to minus 77.1, the lowest since December 2003, from minus 64.5.

Companies are scaling back output and cutting jobs as the global economic slump curbs demand for products made in Europe’s largest economy.

Volkswagen, Daimler and BMW are among car manufacturers that have suspended production, cancelled shifts and shortened working hours in recent weeks. German car sales fell last year to the lowest level since reunification in 1990.

Germany’s benchmark DAX share index has lost almost 10 per cent this year after dropping 40 per cent in 2008. Business confidence dropped to the lowest in more than a quarter of a century in December and unemployment rose for the first time in almost three years.

Since November, the German government has agreed to fiscal rescue packages worth 80.3 billion euros over two years, which at about 1.6 per cent of gross domestic product is the biggest stimulus programme in Europe.

Meanwhile, Germany’s Finance Minister Peer Steinbrueck said his government could back ‘very limited’ use of reduced value added tax (VAT) rates in the European Union, in an apparent softening that may pave the way for a deal in the bloc.

In December, European Union leaders deferred until March a decision on whether to prolong reduced rates of sales tax on local services, amid reluctance from Germany in particular.

At a meeting of EU finance ministers in Brussels, Mr Steinbrueck noted the December meeting foresaw allowing reduced VAT rates to be permitted in very specific cases.

‘But that will have to be very limited, in Germany’s view,’ he told reporters yesterday when asked if Germany might give ground on the issue.

The European Commission has proposed extending the system, which allows 18 EU states to levy VAT rates below the 15 per cent standard level, on services from bicycle and home repairs to haircuts. It is due to expire in 2010.

EU finance ministers want to reach an agreement on extending the measure by end-March. However it needs unanimity among the 27 member states to be adopted as in all EU tax matters. — Bloomberg, Reuters

Source : Business Times - 21 Jan 2009

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