About 65% of condo units at The Gale sold at preview

About 65% of condo units at The Gale sold at preview

By May Wong

SINGAPORE: About 65 per cent or 215 units of The Gale condominium development in Loyang were sold at a preview that started last Friday.

The units were sold at an average price of S$650 to S$700 per square foot.

Due to the strong demand, Hong Leong Holdings had decided to release more than the 80 units originally slated for release.

The official launch of The Gale will be held this Saturday, July 18.

Hong Leong had earlier attributed the strong response to pent-up demand for freehold properties in the area. - CNA/vm

Source : Channel NewsAsia - 14 July 2009

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Strong demand at two weekend condo previews

Strong demand at two weekend condo previews

By Joanna Seow

Interested buyers visiting the condominium The Gale at a preview over the weekend. — PHOTO: FACEBOOK

DEMAND for new private property developments remains strong, judging by the interest generated at two previews held over the weekend.

At high-end condominium Ascentia Sky’s preview for selected clientele, over 90 per cent of the 80 units released were snapped up for as much as $1,250 per sq ft (psf), according to developer Wing Tai’s spokesman.

‘We received strong public demand at the launch,’ said the spokesman, citing the prime location in the Alexandra-Tanglin area as a key selling point.

A public preview is set to be held this weekend before the official launch, which is likely to take place over the following weeks.

The high-rise development has 373 units comprising two- to four-bedroom units, two five-bedroom penthouses and three super penthouses.

Mass-market-priced freehold condominium The Gale, located at Flora Road, was already 65 per cent taken up after its preview that began last Friday. Units were sold at an average price of between $650 and $700 psf.

Hong Leong Holdings had originally planned to release 80 units at the preview, out of a total of 329, but ended up opening 135 more units to interested buyers.

It had employed a novel marketing strategy by setting up a Facebook page featuring information about the property and the preview dates.

The official launch will be held on Saturday, where units including one-bedroom and two-plus-one types - the largest being four-bedroom apartments with a roof terrace - can be viewed.

Buyers have the option to join the Interest Absorption Scheme, meaning they have to pay only 20 per cent of the price of the unit upfront and the remainder upon the condominium’s completion.

The Gale is the latest project from Tripartite Developers’ Upper Changi properties. Tripartite Developers is a joint venture involving Hong Leong Holdings, City Developments, and Trade and Industrial Development.

Source : Straits Times - 14 July 2009

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Property plays fall on tax concerns

Property plays fall on tax concerns

Uncertainty over how tax proposal will hit top-end of residential market

By Goh Eng Yeow

A PROPOSED tax change designed to make the rules clearer on profits made from the sale of property was still creating a stir yesterday about a week after news of it first broke.

Even though the Government has clarified that the proposal is not intended to stifle speculation, traders are still concerned that it might have a detrimental impact on the property sector.

Under the proposed change, an individual will escape tax on gains made from selling a property if he has not sold any other property over the preceding four years.

But there remain lingering fears among analysts that home buyers might interpret it negatively, despite government assurances that there are no plans to change the tax treatment of individuals selling more than one property within a four-year period.

Market watchers spent the weekend carefully gauging the mood at showflats. And, going by the carnival atmosphere witnessed by many, some analysts have concluded that sentiment remains positive - especially for condos targeted at mid-range buyers and HDB upgraders.

This positivity, however, has not allayed concern that the planned tax change - set to become law in January - may well dent the top-end of the residential market, where condos are invariably bought for investment purposes.

So it was not surprising to find property counters caught in a fierce tug-of-war between the bulls and bears as the tax-change debate continued to rage.

Among the property sector’s big losers of the day were City Developments which fell 20 cents to $8, CapitaLand which lost eight cents to $3.31, United Overseas Land which slipped nine cents to $3.21, and Wing Tai Holdings which was down four cents at $1.23.

Elsewhere, local banks were hit by selling activity as investors looked forward with some apprehension to United States lenders, such as Citigroup and JPMorgan Chase, reporting their quarterly earnings later this week.

DBS Group Holdings fell 22 cents to $11.42, United Overseas Bank lost 16 cents to $14.42, and OCBC Bank was down 20 cents at $6.86.

Given somewhat reduced investor appetites, even the telcos - which were being snapped up last week because of their high dividend yields - came under selling pressure. SingTel lost four cents to $3.12 and StarHub fell six cents to $2.13.

The general sell-off caused the benchmark Straits Times Index to plummet 41.34 points, or 1.8 per cent, to 2,266.64. Because of the lacklustre investor interest, only 1.05 billion shares worth $863.2 million changed hands.

Across the region, a general state of uncertainty saw both Hong Kong’s Hang Seng and Japan’s Nikkei-225 dropping about 2.6 per cent each.

Citigroup Investment Research noted in a report yesterday that funds investing in Asian markets suffered a net outflow of US$365 million (S$534 million) last week. Although trifling when compared to the second-quarter net inflow of US$13.2 billion, the outflow raised fears that it might signal the shape of things to come.

Source : Straits Times - 14 July 2009

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Smaller drop in prime Orchard Road rents expected

Smaller drop in prime Orchard Road rents expected

By Joyce Teo, Property Correspondent

CB Richard Ellis revised its earlier forecast, pointing to the healthy demand for existing shop space and the high pre-commitment levels seen at yet-to-be completed malls. — ST FILE PHOTO

PRIME Orchard Road rents are tipped to fall about 10 per cent to 12 per cent this year, and not up to 20 per cent as forecast earlier, said CB Richard Ellis (CBRE).

The consultancy pointed to the healthy demand for existing shop space and the high pre-commitment levels seen at yet-to-be completed malls.

Mandarin Gallery, for instance, is 93 per cent pre-committed.

Prime Orchard Road rents fell 6 per cent in the first half of this year and now average $33.90 per sq ft (psf).

CBRE painted a gloomy picture of the retail market in March, saying it was looking at a 15 per cent to 20 per cent fall in Orchard Road prime rents this year.

It cited a weakening economy, a shift away from luxury goods and falling visitor arrivals. Many retailers were then crying out for rent cuts.

Major retailer RSH Group recently said that it is still renewing shop rents at higher levels even though its profits have fallen. At some locations, it may have to downsize its stores.

But CBRE has since become more upbeat. The retail landscape along Orchard Road is about to hot up with plush new malls - which are said to be signing leases at rents lower than last year’s - nearing completion.

Orchard Central has ’soft-opened’ while Ion Orchard, Mandarin Gallery and 313@Somerset look ready to open in the next six months.

And existing malls on Orchard Road are trying to keep up with the new arrivals.

The Heeren has announced revamp plans, while Ngee Ann City is sprucing up the former Sparks space into a chic lifestyle cluster catering to young adults, said CBRE.

Suburban malls are doing far better. Rents fell just 2.4 per cent in the first half.

Prime suburban rents remained unchanged at $28.30 psf a month on average in the second quarter. Support came from the limited upcoming suburban supply, said CBRE.

Suburban malls owned by real estate investment trusts are under pressure to be yield-accretive and are therefore less likely to drop rents drastically, said CBRE.

The consultancy has also moderated its forecasts for suburban mall rents, saying they are likely to contract by 5 per cent to 6 per cent this year, down from an earlier estimate of a 10 per cent to 15 per cent decline.

Source : Straits Times - 14 July 2009

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33,000 HDB flats to be upgraded over 3 years

33,000 HDB flats to be upgraded over 3 years

$1 billion to be spent to speed up improvement to homes

By Goh Chin Lian & Joyce Teo

THE Government is ramping up a programme to spruce up older HDB flats over the next three years - a move that is expected to benefit 33,000 households.

It will spend about $1 billion to speed up the Home Improvement Programme (HIP) to take advantage of lower construction costs and to create more work for the construction industry, Senior Minister of State (National Development) Grace Fu said yesterday.

‘It is a good time not only because there is manpower, materials and capacity in the construction industry, but it is also for us to benefit more residents and give more jobs to the industry,’ she said after visiting the first block of 103 flats at Yishun Street 21 completed under HIP.

The nationwide upgrading initiative, announced by Prime Minister Lee Hsien Loong at the 2007 National Day Rally, covers flats built in 1986 or earlier.

It provides for optional improvements within a flat such as new toilets and metal grille gates, as well as compulsory upgrades such as repairs for spalling concrete and ceiling leaks.

In all, 300,000 households islandwide are eligible for the improvements.

More than 13,000 have been selected in the past two years from estates such as Tampines, Toa Payoh and Ang Mo Kio. This year, at least another 8,000 households will be selected.

It is timely to expand the programme as construction costs, as reflected in bidding prices, have fallen by about 10 per cent to 15 per cent, Ms Fu said.

The decline is in line with estimates by analysts that bidding prices would drop this year compared to last year.

But plans to ramp up HIP raised the question of whether residents can afford it, given that the economy is in recession.

Responding, Ms Fu said she did not think there would be a problem as government subsidies were ‘very significant’.

‘Residents generally pay about 5 per cent to 12.5 per cent depending on the room type. On top of that, they can use their CPF or they can even discuss paying by instalments through CPF,’ she said.

According to the HDB website, cost estimates range from $630 for a one- to three-room flat, to $1,575 for an executive flat.

Madam Lee Kwai Heng, 55, paid less - $550 - for upgrades to her three-room flat at Block 228 in Yishun Street 21.

She went for all the optional upgrades, including new toilets, and a new entrance door and grille gate. The cost is three-quarters of her $700 monthly income - $300 which she earns as a part-time cleaner and $400 from renting out a room.

Said Madam Lee, who is single: ‘I used my CPF to pay for it, so it is not a problem. I have lived here for 20 years, and I have not made any major renovations.’

Ms Fu said residents not only enjoyed subsidies under HIP, but also the convenience of having all the improvements done at one go.

As an indication that the changes were well-received, she noted that 99 per cent of residents surveyed gave the thumbs-up to their upgraded Block 228.

The high proportion of residents who voted for the upgrading last year - 92 per cent on average - was another indicator.

The minimum requirement for such work to be carried out is 75 per cent.

The convenience of these improvements was also not lost on permanent residents who own HDB flats but who do not enjoy HIP subsidies, as these are meant only for Singapore citizens.

Even though they knew they had to pay the full amount, Ms Fu noted that households decided to join in - and even went for the optional improvements.

Ramping up the upgrading plans also applies to the Neighbourhood Renewal Programme. This provides facilities such as letterboxes and covered linkways based on residents’ feedback.

This year, 13 precincts - each of which typically has eight to 10 blocks - will be picked under the programme.

Source : Straits Times - 14 July 2009

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Growing assets cushion S’poreans

Growing assets cushion S’poreans

‘Huge buffer’ has helped households here weather recession better

By Fiona Chan

IF THE current recession seems less painful than previous downturns, part of the reason could be that Singaporeans are richer this time around.

While consumers in the United States and Europe spent with abandon and piled up loans in the boom years, Singaporeans saved, invested and paid down debt.

Last year, as the world succumbed to the financial meltdown, Singapore households were sitting comfortably on six times more assets than liabilities, according to new estimates by French investment bank BNP Paribas.

This means that for every $1 of debt they owed in mortgages or other loans, households owned $6 in assets such as stocks and property.

This was down slightly from 2007 levels, when assets outnumbered liabilities by seven-to-one, according to Department of Statistics’ data. But it is still an advance on 2000 - before the dot.com bust, when the ratio was five-to-one.

Since then, Singaporeans have seen the value of their asset holdings soar on the back of stock and property values.

And although they became wealthier, Singaporeans refused to splurge on credit, keeping debt at roughly the same level throughout the period.

Between 2000 and last year, Singaporean households’ assets jumped 60per cent to $1.12trillion, but liabilities rose only 28per cent to $178.4billion.

Their net wealth - assets minus liabilities - rocketed to $942billion last year, according to BNP’s estimates. This is more than double the $450billion Singaporeans had in 1997 before the Asian Financial Crisis.

‘What this means is that Singaporean households entered the 2008 recession in very good shape with a huge buffer,’ said BNP Paribas chief economist Chan Kok Peng.

A substantial part of this buffer was in cash, with Singaporeans careful to put a large proportion of their assets in the bank - even though property and stock markets have been roaring.

The result is that for every $1 of liabilities held last year, households had $1.13 in cash deposits.

In sharp contrast, US households only had 50 cents of cash deposits for every $1 in liabilities and UK households 73 cents.

Apparently, despite being mired in its worst-ever downturn, Singapore still has a large kitty of cash. Singaporeans are sitting on $301billion of cash deposits in the bank, in addition to $67billion in Central Provident Fund accounts that can be used to buy either property or stocks, according to the latest figures for May.

This totals a ’staggering’ $368billion - 143per cent of Singapore’s gross domestic product - said Mr Chan.

It is good news for the banking system which, added Mr Chan, depends on household deposits for its main source of funding.

But, he and other economists tempered this upbeat picture by cautioning that the data may not be representative across-the-board, as it does not take into account the different income levels of Singaporeans.

‘Those who have recently become unemployed or have mistimed their property purchases at the peak of the cycle and leveraged up beyond their means, are likely to be a source of concern for their bankers,’ said Mr Chan.

Citigroup economist Kit Wei Zheng suggested that some of the data could be skewed by foreigners, who may have deposited a lot of cash or parked their money in assets here, but left their liabilities at home.

However, Housing Board residents - who make up 85per cent of Singapore homeowners - are likely to be less financially stressed than others, given that HDB flat prices have held up fairly well in the current recession.

Source : Straits Times - 14 July 2009

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Potong Pasir, Hougang to get lift upgrading

Potong Pasir, Hougang to get lift upgrading

By Kor Kian Beng & Cai Haoxiang

Lift upgrading for blocks in opposition-held Potong Pasir and Hougang marks a shift from the Government’s stand after the 2006 general election, when it said the two wards would be placed “at the end of the queue” for the LUP.

RESIDENTS living in Housing Board flats in the two opposition wards can expect to benefit from lift landings on every floor under the Lift Upgrading Programme (LUP) earlier than expected.

Ms Grace Fu, Senior Minister of State for National Development, said yesterday that precincts in Hougang and Potong Pasir will be among 65 selected for the LUP in the current financial year, which started in April.

This marks a shift from the Government’s stand after the 2006 general election, when it said the two wards would be placed ‘at the end of the queue’ for the LUP.

The number of precincts for this year is higher than the 50 in each of the past few years.

Speaking to reporters at an HDB event, Ms Fu said town councils and grassroots advisers in the two opposition wards, along with those in other constituencies, have made their nominations for the LUP. The selected precincts will be announced in ‘a few months’ time’.

Falling construction costs and available capacity in the industry were the reasons for the ramping up, she said.

‘The Government is committed to rejuvenating the HDB estates, in good and bad times. Given that this is the right time of the cycle - costs are coming down, there is available capacity in the construction industry - it is a good time for us to step up our efforts,’ said Ms Fu.

Ms Fu also said the inclusion of the opposition wards did not signal an imminent general election.

Started in 2001, the LUP is popular with HDB residents, especially those living in older blocks with lift landings on fewer floors.

During the 2006 election, a number of candidates promised to get residents onto the coveted project.

The Government foots between 75per cent and 90per cent of the upgrading bill, depending on the resident’s room type. The remaining 10per cent to 25per cent is shared between the town council and the resident, with the resident’s share again depending on his room type.

Permanent residents pay the full cost.

Potong Pasir MP Chiam See Tong, secretary-general of the Singapore People’s Party (SPP) and chairman of the town council, could not be reached for comment yesterday as he was on a flight to London.

Mr Desmond Lim, the SPP’s assistant secretary-general and consultant to the town council, said the move could win further support for the SPP.

‘It shows that the selection of precincts is done according to the criteria set out by the HDB, like the age of the blocks, and not due to political reasons,’ he said.

He added: ‘This is what we’ve been fighting for. During the last general election, we made a promise to have lift landings on every floor. Now it’s happening.’

Hougang MP Low Thia Khiang could not be reached for comment yesterday.

Potong Pasir resident Benedict Chen, 26, said the LUP was long overdue in his estate but wondered whether it was a sign of an imminent general election.

Said the bank analyst, who has lived in Potong Pasir all his life: ‘If you’ve lived here long enough, you are used to seeing these things as ‘pre-election candies’.’

Over in Hougang, logistics official Doreen Tan, 33, said: ‘The lift upgrading is good to have because there are a lot of elderly residents in these estates.’

Married with one child and another on the way, however, she worried about the dust that the construction will cause.

She was also concerned that retirees and elderly residents in the estate might not be able to pay their share of the lift upgrading cost.

‘I am not sure how much we have to pay…If the price is okay then it should be all right,’ she said.

She added: ‘Perhaps the Government can do something more for us other than lift upgrading. For example, they can build covered linkways - they are simple, just from one block to another.’

As for the politics of the project, she said she had no comment, ’so long as there is an upgrade’.

Another Hougang resident, student Ho Chi Sam, 25, said lift upgrading would benefit elderly residents most and could increase house values in the area.

He added: ‘It’s about time that the Government put public funds to good use and helped the people without discriminating against specific constituencies.’

Source : Straits Times - 14 July 2009

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Becoming a biomedical hub

Becoming a biomedical hub

S’pore’s ambition to mold sector into another engine of economic growth is turning into reality, reports EMILYN YAP

THE biomedical sector here is humming along nicely, given the government’s determined push to make Singapore a globally competitive and trusted centre for scientific and related commercial activities.

According to the Economic Development Board, biomedical companies from around the world invested more than US$500 million in Singapore last year. And research and development spending exceeded US$760 million.

More than 50 international pharmaceutical, biotech and medical technology companies are carrying out R&D in Singapore, besides 30 public sector research and medical institutes.

In the past few months, biomedical giants have also boosted their presence locally despite the recession. For instance, Japanese drug maker Takeda launched its regional headquarters and regional clinical coordination here last week.

And in June, GlaxoSmithKline opened a $600 million vaccine plant while Agilent Technologies set up a new life sciences manufacturing facility.

Supporting the biomedical cluster

There are grand ambitions for the biomedical sciences sector, as these developments show. The industry is slated to become another engine of economic growth.

Several government agencies - such as the Economic Development Board, Agency for Science, Technology & Research and JTC Corporation - share the job of turning Singapore’s ambition to be a biomedical hub into reality. As the country’s industrial landlord, JTC has been supporting the specialised real estate requirements of the biomedical sciences industry.

One of the agency’s key projects is the Biopolis at one-north, a purpose-built biomedical estate that offers more than 200,000 sq m of space for R&D in the first two phases of development. The ’science mini-city’ houses researchers from the private and public sectors, and boasts big names such as Abbott, Eli Lilly and Novartis as tenants.

Biopolis provides researchers with cutting-edge facilities such as laboratories for DNA sequencing. There are also business support facilities such as meeting rooms. The aim is to help biomedical companies cut R&D capital spending and accelerate drug discovery and development.

To meet continued demand for R&D space, Biopolis’s third phase of development is under way.

Building a biomedical manufacturing cluster

Besides Biopolis, JTC is preparing land for manufacturing activities in the biomedical sciences sector. The 183ha Tuas Biomedical Park I and 188ha Tuas Biomedical Park II are located at Tuas View - the western tip of Singapore, 20 minutes away from Jurong Port and just five minutes from the Tuas Checkpoint to Malaysia.

The park has all essential infrastructure, such as roads, power lines, telecommunication lines, sewer pipes and water and gas supplies. And third parties are providing utilities such as steam, natural gas, chilled water and waste treatment services.

To improve the appearance of the industrial estate, JTC has spent $6 million on lush landscaping.

With the estate’s ‘plug-and-play’ design, pharmaceutical, biologics, medical device and other biomedical companies can set up manufacturing operations with minimal lead time. They can either move into fully-serviced facilities or custom-build their own.

By staying within a cluster, these firms can enjoy economies of scale from sharing major infrastructure. It is also easier for JTC to look after their niche requirements.

Attracting big names to Tuas Biomedical Park

Already, Tuas Biomedical Park has attracted a host of global biomedical players - including Merck, Novartis, Pfizer, Wyeth, Genentech and GlaxoSmithKline. According to JTC’s 2007 annual report, the estate hosts manufacturing operations belonging to six of the world’s top 10 pharmaceutical companies.

Merck was the first tenant to move into Tuas Biomedical Park in 1998 and has been allocated some 19.4ha of land for its production plants.

More recently, US-headquartered Genentech committed US$140 million to set up a biologics facility within the estate. The firm is a leading developer of some of the latest cancer drugs, and the facility will be the first in Singapore by a US biotechnology manufacturer.

Swiss life sciences company Lonza is also building two manufacturing plants for mammalian cell-derived products, investing a total of about US$600 million.

Then there is Novartis, which will spend US$448 million setting up a state-of-the-art cell culture facility. The facility will support the clinical and commercial production of protein-based drugs for various medical conditions such as arthritis, cancer, asthma and spinal cord injury. Novartis’s Singapore facility is its largest investment in 140 countries.

‘Singapore is the only country in Asia with capabilities across the entire value chain of biologics, from research and development to pilot projects and beyond that to commercial manufacturing,’ JTC said in its annual report.

Besides enjoying infrastructural support, biomedical companies here can also depend on solid government support, strong intellectual property protection laws and a thriving biomedical sciences community.

With all these developments, Singapore is well on its way to fulfilling a dream.

Source : Business Times - 14 July 2009

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CBRE expects smaller fall in retail rents this year

CBRE expects smaller fall in retail rents this year

It cites healthy demand for Orchard Rd space, limited suburban supply

By UMA SHANKARI

CB RICHARD Ellis (CBRE) now expects Orchard Road retail rents to fall 10-12 per cent this year - less than its earlier estimate of 15-20 per cent.

Good demand at new malls: Ion Orchard said recently that it is 94 per cent leased while 80 per cent of the space at Orchard Central (above) is committed
‘We expect the rate of rental decline for prime space along Orchard Road to ease given the healthy demand for existing shop space as well as high pre-commitment levels at yet-to-be completed malls,’ CBRE said in a report released yesterday.

The firm now also expects suburban mall rents to contract just 5-6 per cent for the whole year - down from its earlier estimate of 10-15 per cent.

Prime Orchard Road rents fell to $33.90 per sq ft (psf) per month on average in Q2 2009 - down 2.9 per cent quarter-on-quarter and 7.8 per cent year-on-year. This means that according to CBRE’s data, prime Orchard Road rents fell 6 per cent in the first half of this year.

Prime suburban rents were unchanged in Q2, averaging $28.30 psf pm. They were supported by the limited pipeline of supply in the suburbs, and the fact that suburban malls owned by real estate investment trusts (Reits) are under pressure to be yield-accretive and so are less likely to drop rents drastically. Prime suburban rents dipped a marginal 2.4 per cent in H1 2009.

The three new major malls coming up in Orchard Road have so far reported healthy leasing figures. Ion Orchard said recently that it is 94 per cent leased. And at the other end of Orchard Road, 80 per cent of the space at Orchard Central is committed. 313@Somerset, which is due to open at year-end, has said that it is 85 per cent leased so far and will be 100 per cent let by the time it opens.

Analysts have said that the fall in retail rents is expected to moderate in H2 2009 with seasonal activities such as the Great Singapore Sale, F1 Grand Prix and Christmas festive season.

Source : Business Times - 14 July 2009

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Recession over, strong V-shaped recovery seen

Recession over, strong V-shaped recovery seen

By LI DAN WEI

THERE are tentative signs that Singapore’s worst ever recession is over and a strong V-shaped recovery is to follow over the rest of this year, according to HSBC’s Asian Economics report for the third quarter.

‘It’s typically the most open economies, like Singapore and Malaysia that crashed the most, which we think will see the greatest trade recovery kicking in.’

- Robert Prior-Wandesforde,
HSBC senior Asian economist

‘Unemployment is expected to peak at the end of this year at 4.2 per cent and then come down to 3.4 per cent at the end of 2010,’ said Robert Prior-Wandesforde, HSBC senior Asian economist, at a media briefing for Asian Outlook 2009.

‘For Singapore, we’re looking at negative 6 per cent GDP growth this year, towards the better end of the government’s forecast range. For 2010, we’re looking at positive 5.3 per cent growth.’

For Asia ex-Japan, GDP growth is expected to 4.2 per cent this year, and 6.9 per cent in 2010.

‘We are optimistic about the recovery and we see increased evidence that recovery has begun,’ Mr Prior-Wandesforde said.

In the Asian Economics report for Q3, three overlapping stages of the recovery process which underpin HSBC’s belief in a sustained pick-up in growth are discussed - initial post-crisis relief bounce, effects of various policy stimulus packages across Asia, and the self-sustaining phase of growth.

‘Since the collapse of Lehman Brothers, there was a feeling that we were heading into a second great depression, the end of the financial world as we know it,’ said Mr Prior-Wandesforde.

‘But thanks to the very aggressive policy action that is being taken by governments and central banks around the world, particularly the US, it seems to us that scenario is pretty much gone.’

Asia ex-Japan will see quarter-on-quarter annualised GDP growth of more than 8 per cent in the second quarter, the report says. ‘Omens are looking even better for the third quarter, with double-digit quarter-on-quarter annualised GDP growth.’

The HSBC coincident indicator includes Chinese and South Korean composite lead indicators, the Commodity Research Bureau index, German IFO business expectations and the S&P 500 equity market index.

This means that ‘we can rule out an L-shaped kind of recovery, and also an U-shaped one’, explained Mr Prior-Wandesforde.

The second phase relates to various policy stimulus packages put in place across Asia - the biggest and most synchronised easing of fiscal policy and monetary policy ever.

It is estimated that these will add ‘at least one per cent of GDP growth in the region this year and another 2 per cent in 2010′.

‘This reflects the length of time it often takes in Asia to get these infrastructural projects in place, and also the fact that monetary policy works with a significant lag in Asia - with 12 to 24 months’ lag being typical,’ noted Mr Prior-Wandesforde.

With all these policy effects stimulating domestic demands within Asia, it is expected to ‘at least create a regional trade recovery before world recovery’.

Tracking the level of Asia ex-Japan private consumption and investment as a proportion of the equivalent series for the US, the latter was actually 20 per cent higher than its American counterpart last year.

Asian private consumption came to just 40 per cent of the US level in 2008 but it has grown more in absolute terms in each of the last two years.

‘Our Asia ex-Japan and China export lead indicator points to a pick-up in year-on-year real export growth Q309,’ Mr Prior-Wandesforde said.

‘It’s typically the most open economies, like Singapore and Malaysia that crashed the most, which we think will see the greatest trade recovery kicking in.’

Source : Business Times - 14 July 2009

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