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Admin — Thu, 23 May 2013 11:48:10 +0000

Ford to Stop Production in Australia

Nine decades after Henry Ford introduced his Model T, Ford Motor Co will no longer make cars in Australia.

Ford Australia is subject to double costs for the European division and four times that of the Asian divisions of the company. Local president Bob Graziano said in a statement that this will result in the loss of about 1,200 jobs in two plants located in Melbourne and Geelong.

Production will cease in 2016. According to the Ford website, the company has been established in Australia since 1925 and produced 37,000 vehicles last year alone.

David Smith, national secretary of the vehicle division of the Australian Manufacturing Workers Union described it as a “bad day for the automobile industry”.

Microsoft to Increase the Number of Workers in China

In order to facilitate new cloud computing services and smartphones using its Windows operating system, largest software maker Microsoft Corp has hired several thousand new workers in China.

Chief executive Steve Ballmer said in a conference in Shanghai that the company will expand upon its current base of about 4,000 staff through 2014. China has become the fastest growing market for the company’s operating system.

Microsoft will be the first multinational to offer public cloud computing in China. It will start a public preview of its Windows Azure service in the country next month.

GM Recalls Cadillac Vehicles Due to Loose Nuts

Around 27,000 Cadillac crossover vehicles have been recalled worldwide by General Motors Co due to potentially loose wheel nuts, which could result in the wheels falling off.

This recall by the largest US automaker affects the 2013 Cadillac SRX series with 18- inch wheels. GM has appealed to owners to bring their vehicles to their dealers, so the wheels nuts can be tightened to specifications – free of cost.

The company said that no accidents have been reported, and no wheels have separated from the sports utility vehicles so far.

Dow, S&P Post Big Declines on Fed Minutes

Dow and S&P 500 have posted its greatest decline in stocks in three weeks, after minutes from the latest Federal Reserve meeting.

The minutes indicated that some officials are open to tapering large-scale asset purchases as early as its June meeting. Chairman Ben Bernanke said that the Fed could decide to scale back the pace of bond purchases at one of the “next few meetings” if the economic recovery looked set to maintain forward momentum.

This may be a potential blow to a market that has been accelerating. Bernanke said the central bank needed to see further signs of traction in the economy before it tapers stimulus.

China’s PMI Down for the First Time in Seven Months

The growth of the vast factory sector in China dipped in April for the first time in seven months as new orders fell.

The flash HSBC Purchasing Managers’ Index (PMI) for May fell to 49.6, slipping under the 50-point level for the first since October.

The final HSBC PMI stood at 50.4 in April. This may be a sign that China’s domestic economy is not strong enough, to offset soft external demand.

Qu Hongbin, chief China economist at HSBC has predicted that “a sequential slowdown is likely in the middle of the second quarter, casting downside risks to China’s fragile growth recovery.”

British Regulator Fines JPMorgan GBP3.0 million

British regulator Financial Conduct Authority said Thursday it has given US bank JPMorgan a fine of GBP3.05 million for failing to show it was giving clients the right advice.

“No matter who they are, customers of wealth managers should be able to expect the firm to keep complete, up to date client records so that they can give the right advice,” FCA director of enforcement Tracey McDermott said in a statement.

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STI Plunges More than 60 Points

Admin — Thu, 23 May 2013 11:31:28 +0000

by Donavan Lim

Singapore shares closed lower on Thursday.

Local equities fell in tandem with Asian stock markets after the Fed hinted at an earlier end to easy money and the release of weak Chinese manufacturing data.

Comments by Ben Bernanke that the Fed may reduce the size of its bond-buying programme led to the sharp plunge in Asian markets.

The 30-shares Straits Times Index (STI) lost 61.20 points, closing at 3,393.17.

ComfortDelGro closed 11.7 per cent lower at S$1.925 on reports that the Singapore Labour Foundation, its biggest investor, was selling part of its stake in the taxi operator.

Real estate stocks with Chinese link fell. CapitaMall Trust lost 5.7 per cent to S$2.17 while CapitaLand was off 2.7 per cent to end the day at S$3.66.

Separately, the Nikkei Index closed at 14,483.98 and the Hang Seng Index ended at 22,669.680.

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S$1.2 billion Worth of Tenders in Infocomm Sector Up For Grabs

Admin — Thu, 23 May 2013 11:25:38 +0000

by Donavan Lim

A total of S$1.2 billion worth of new infocomm tenders in the fiscal year 2013 will be called by the Singapore government.

This was announced at the annual Industry Briefing on Business Opportunities for Infocomm in the Public Sector held Thursday, where Infocomm Development Authority of Singapore (IDA) together with the Ministry of Defence (MINDEF) and Singapore Customs shared their infocomm procurement plans for FY2013.

“The government will focus on key areas of technology development to drive improvements within the public sector. These include Agile Software Development, Government Cloud Solutions, Data and Analytics, and Infocomm Security,” said James Kang, Assistant Chief Executive Officer, Government Chief Information Office of IDA.

Kang also revealed that the S$1.2 billion worth of new infocomm tenders this year is comparable to investments in FY2012, where the government awarded 577 infocomm contracts worth up to S$1.2 billion.

The government will call for a bulk tender on agile software development which will provide government agencies with access to a range of suppliers with agile expertise, resources and tools enabling a shorter turnaround time for the development of innovative applications and solutions.

In addition, Kang also shared on the need for businesses to adapt to a new provisioning model as the government continues its cloud journey after establishing the Government Cloud (G-Cloud) Infrastructure-as-a-Service. In this next phase, it will call for Software-as-a-Service (SaaS) tenders to allow agencies to tap on a wide choice of software offered on the cloud.

Data and Analytics is another key area of focus for the government. Through harnessing the value of available government data, the Apps4SG competition launched last month opens co-creation opportunities amongst citizens, businesses and government.

At the same time, the government is also continuing its thrust on data-driven decision making through the use of analytics where actionable insights derived from data will help improve operations, planning and policy formulation.

Consumer-centric businesses for instance are encouraged to adopt Social Analytics to unlock new business value in sectors such as retail, food & beverage, and tourism. To facilitate such business adoption of analytics solutions a Call-for-Collaboration on Social Analytics for Business Enterprise is currently underway for businesses to develop and deploy social analytics services together with infocomm enterprises and analytics solution providers.

To complement the government’s adoption of technology for better service delivery, infocomm security will also be enhanced for greater stability. A bulk tender to centralise the provision of data encryption products and services will be called in FY2013, while another bulk tender to enhance the Cyber-Watch Centre is currently available for participation.

Meanwhile, among the projects unveiled at the briefing were those from MINDEF and Singapore Customs.

MINDEF’s key projects are aimed at enhancing its organisational and operational effectiveness through the development of corporate IT systems. Substantial investments will also be made in developing a learning management system to deliver effective training and administer trainee evaluation for Enterprise Systems.

Singapore Customs, for its part, will be implementing several new systems in the coming years. These include the development of a customer relationship management (CRM) system that consolidates essential customer information onto a single platform. Together with the CRM system, a customer engagement portal will also be implemented. This system will allow traders to perform self-help transactions and have more direct interactions with Singapore Customs.

Singapore Customs is also developing a customs intelligence & investigation system to manage end-to-end processing of cases, and build up a repository of intelligence for profiling and data analysis. In addition, Singapore Customs is looking to revamp its trade statistics system and corporate website.

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Singapore’s Industrial Output Surprises with 4.7 Per cent Gain in April

Admin — Thu, 23 May 2013 10:55:52 +0000

By Ernie B. Calucag

Singapore’s industrial output posted a surprise gain in April as electronics sector recorded its first year-on-year gain in the past 24 months.

On a year-on-year basis, manufacturing output increased 4.7 per cent last month, reversing two consecutive months of contraction and surprised consensus estimates of a 1.6 per cent decline, the Economic Development Board reported Thursday.

Excluding biomedical manufacturing, output fell 2.7 per cent.

On a seasonally adjusted month-on-month basis, manufacturing output increased 2.5 per cent in April. Excluding biomedical manufacturing, output increased 4.0 per cent.

Having seen consecutive contraction for the past 24 months, Singapore’s electronics manufacturing cluster reversed the bearish growth trend by posting the first year-on-year growth of 1.1 per cent in April. It was held up by strong growth seen in the semiconductors segment which rose 6.9 per cent.

“As a gauge of global electronics demand, the US Semiconductor Book-to-Bill ratio had been on an improving trend since reaching a recent low in October 2012 and as of April 2013, it registered 1.08, above parity for the fourth consecutive month. With the turnaround in Singapore’s electronics manufacturing cluster in April, we are hopeful that the recovery will finally take off, although it will be a slow one,” said UOB economists Francis Tan and Jimmy Koh.

“Recent data showed that global economic growth had stabilised. However, we still remain cautiously optimistic, especially since China’s growth indicators recently had not been up to market’s expectations,” they added, as they maintained their full year industrial production growth forecast at 2.5 per cent.

Across other manufacturing clusters, performance was mixed. While biomedical and general manufacturing expanded, clusters such as chemicals, precision engineering, and transport engineering contracted.

Output of the biomedical manufacturing cluster grew 44.7 per cent in April on a year-on-year basis while the general manufacturing cluster’s output expanded 3.7 per cent year-on-year.

The chemicals cluster’s output declined 1.2 per cent, transport engineering cluster contracted 8.4 per cent and precision engineering cluster dipped 9.8 per cent.

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April Inflation Lowest in Three Years on COE, Property Measures

Admin — Thu, 23 May 2013 10:45:08 +0000

by Donavan Lim

Singapore’s headline inflation recorded its lowest rate in more than years in April as government implemented tightening measures on purchases of cars and properties.

The CPI-All Items inflation eased to 1.5 per cent in April from 3.5 per cent in March, the lowest since February 2010, according to a joint statement by Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) Thursday.

The slower pace of price increase, which had been anticipated in the March Inflation Report, largely reflected the continued effects of the motor vehicle-related policy measures introduced since late February , as well as the temporary impact from the disbursement of government rebates for HDB service and conservancy charges (S&CC).

Inflation rate for imputed rentals on owner-occupied accommodation (OOA) slowed to 2.4 per cent in April, from 5.8 per cent in March. With that, accommodation cost contributed 0.5 percentage point to headline inflation, down from 1.2 percentage point a month earlier.

Private road transport cost edged up by 0.5 per cent in April, a significantly smaller rise compared to the 8.6 per cent increase a month earlier. The deceleration was due to lower COE premiums in March and price adjustments by car dealers following the implementation of the motor vehicle-related policy measures.

As a result, the contribution of private road transport to CPI -All Items inflation fell to 0.1 per cent point from 1.2 per cent points in the preceding month.

MAS core inflation, which excludes the costs of accommodation and private road transport, slowed to 1.4 per cent in April from 1.7 per cent in March, led by a smaller increase in services costs and a larger decline in the prices of oil-related items.

“The impact of MAS’s financing measures on COE premiums had an immediate impact on private road transport costs. However, the impact will likely be volatile over the next few months as consumers and dealers adjust to the new condition,” said UOB economists Francis Tan and Jimmy Koh.

“Singapore may further ease price pressures and thus maintain our headline and core inflation forecasts at 3 per cent and 1.6 per cent respectively,” they added.

Singapore controls pollution and congestion on its roads by selling a limited number of vehicle permits every year. The cost of vehicle permits fell by the most in more than four years at a March 13 auction after the central bank in February limited the amount of money banks are allowed to offer for car loans.

The government has imposed steps to cool the housing market since 2009, with the last round in January including an increase of as much as 7 percentage points in stamp duties.

“Imported inflation will likely remain subdued this year, given ample supply buffers in the commodity markets. However, domestic cost pressures are expected to persist amid continuing tightness in the labour market, and cost pass-through to prices of consumer services could pick up slightly,” said the central bank in a statement.

MAS forecasts price gains to be between 3 per cent and 4 per cent this year, while core inflation will be at 1.5 per cent to 2.5 per cent.

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Singapore 1Q2013 GDP Revised Up on Stronger Financial Sector

Admin — Thu, 23 May 2013 10:16:03 +0000

by Ernie B. Calucag

The Singapore government said it expects the economy to improve gradually going forward as final estimates showed the gross domestic product (GDP) expanded in the first quarter due to stronger domestic sectors, such as finance and insurance.

The citystate’s 1Q2013 GDP grew 1.8 per cent quarter-on-quarter, and 0.2 per cent year-on-year, instead of contractions of 1.4 per cent and 0.6 per cent respectively in the advance estimates, said the Ministry of Trade and Industry (MTI) Thursday.

The revised expansion was due to strong support from domestically-oriented sectors, amid still-weak externally-oriented sectors.

Growth in the finance & insurance sector accelerated to 10.5 per cent on a year-on-year basis from 3.3 per cent in the preceding quarter. On a quarter-on-quarter basis, the sector surged by an annualised rate of 50.6 per cent, underpinned by robust growth in the sentiment-sensitive segment and the financial intermediation.

Supported by robust real estate activities, growth in the business services sector improved to 4.3 per cent on a year-on-year basis and an annualised rate of 8.5 per cent on a quarter-on-quarter basis.

On a year-on-year basis, growth in the accommodation & food services sector slowed marginally to 2.1 per cent from 2.2 per cent in the previous quarter, while other services industries contracted slightly by 0.1 per cent, compared to the growth of 0.9 per cent in the preceding quarter. On a quarter-on-quarter basis, these sectors grew by annualised rates of 6.2 per cent and 4.5 per cent respectively.

Among externally-oriented sectors, the manufacturing sector declined by 12.3 per cent quarter-on-quarter, reversing the 3.1 per cent gain in the previous quarter. The sequential decline largely reflected a contraction in the output of the biomedical manufacturing and transport engineering clusters, which more than offset the expansion in the electronics cluster.

“Although Singapore’s economic growth eased in the first quarter, it is expected to improve gradually over the course of the year. Externally-oriented sectors are expected to pick up in tandem with the gradual recovery in external demand, while construction and key services sectors such as finance & insurance and business services will continue to provide support to growth,” MTI said in a statement as it maintained its growth forecast of 1.0-3.0 per cent in 2013.

MTI noted that external macroeconomic conditions have stabilised since late last year, while it expects global economic growth to improve gradually this year, supported by a growing US economy and healthy domestic demand in Asia.

“With today’s optimistic 1Q2013 GDP number, we are more confident of maintaining our positive outlook for the rest of this year. In addition, we believe the stable global environment will provide a slow and steady recovery in Singapore’s economy. The growth trajectory will be supported by the resilient domestic sector and a cyclical recovery in the externally-oriented sector,” said UOB economists Francis Tan and Jimmy Koh, who expect GDP growth of 3.0 per cent, at the upper bound of official forecast.

They noted, however, that headwinds to growth this year remains in the form of higher production costs coming from the tight labour market, an appreciating Singapore dollar, climbing industrial property prices, and rising oil prices.

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Reciprocity Clause Clouds DBS-Danamon Deal: Analysts

Admin — Wed, 22 May 2013 12:43:35 +0000

by Ernie B. Calucag

The reciprocity clause included in the DBS-Danamon deal gives uncertainty whether Singapore’s DBS would proceed with its acquisition of Indonesia’s sixth largest bank, analysts said Wednesday.

Bank Indonesia’s (BI) governor Darmin Nasution said Tuesday that BI has approved the purchase by DBS of an initial 40 per cent stake in Danamon for US$2.75 billion, which could rise further if reciprocity conditions between Indonesia and Singapore are met.

In response, DBS in an e-mailed statement late Tuesday said it “hopes” its application will be approved as originally submitted, adding that it was awaiting official written notification from BI.

“Judging from DBS’ response, it appears that DBS would only decide on the next course of action only after written notification is received. We would not be surprised if the written notification gets delayed, pending discussions between MAS (Monetary Authority of Singapore) and BI, which means there would still be uncertainties over DBS’ next move,” said OSK DMG in a note.

The Indonesian central bank is seeking reciprocity for the three biggest state-owned Indonesian lenders’ operations in Singapore. Those lenders are PT Bank Mandiri, PT Bank Rakyat Indonesia and PT Bank Negara Indonesia.

MAS said in an e-mailed statement Tuesday that both central banks are exploring further access into each other’s markets. “In the case of Indonesian banks in Singapore, this will be by way of a broader provision of financial services, both in wholesale banking and to, for example, Indonesian students and work permit holders in Singapore,” it said.

Analysts also noted that it is unclear at this stage whether DBS will proceed with the acquisition if it is just for a minority stake, given DBS CEO’s reported preference for control.

DBS is “very reluctant” to buy minority stakes, Chief Executive Officer Piyush Gupta said on May 2, after the bank reported earnings for the three months to March 31.

The bank’s Chief Financial Officer Chng Sok Hui also noted that Basel III rules that require banks to deduct minority investments of 10 per cent or more from their capital make such deals “quite punitive,”

“Would DBS still proceed with an associate stake? We think it would, but a major consideration would be the timeframe it would take to raise its stake to a controlling interest, given that the deal is complicated by this reciprocity clause,” said Desmond Ch’ng of Maybank Kim Eng Research.

DBS shares lost 0.4 per cent to close at S$17.28 Wednesday.

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STI Up on Wall Street Gains

Admin — Wed, 22 May 2013 11:52:38 +0000

by Ernie B. Calucag

Singapore shares closed higher on Wednesday, taking cues from overnight gains on Wall Street and rise in Japanese stocks.

The blue-chip Straits Times Index (STI) gained 0.3 per cent or 10.47 points to end at 3,454.37.

In the broader market, 3.78 billion shares changed hands. Gainers outnumbered losers 327 to 162.

Commodities were among the gainers Wednesday. Olam International added 5.0 per cent to close at S$1.90 while Noble Group rose 1.4 per cent at S$1.07.

Among the telcos, Singapore Telecommunications gained 1.8 per cent to close at S$4.05 while StarHub chalked up 2.1 per cent at S$4.45. M1, on the other hand, ended 1.8 per cent lower at S$3.36.

In Japan, the Nikkei average climbed 1.6 per cent to a fresh 5-1/2-year high on Wednesday, spurred on by the Bank of Japan’s optimism about the economic outlook.

As widely expected, the Bank of Japan kept policy steady earlier in the day, and maintained its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of JPY60 trillion to JPY70 trillion.

The Nikkei added 246.24 points to 15,627.26, the highest closing level since December 2007. It rose as high as 15,706.63 earlier, also the best mark since the same time.

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Global Headlines

Admin — Wed, 22 May 2013 11:39:07 +0000

BOJ Leaves Policy Unchanged, Raises Growth Outlook

The Bank of Japan (BOJ) refrained from new easing measures Wednesday, saying that it “will continue with quantitative and qualitative monetary easing” as it aims to achieve price stability target of 2 per cent “as long as it is necessary for maintaining that target in a stable manner.”

The central bank also said that it will conduct money market operations so that the monetary base will increase at an annual pace of about JPY60-70 trillion. There is also no change to BOJ’s guidelines on its asset purchases. Board member, Takahide Kiuchi, proposed a looser timeframe of “medium to long term” to achieve the 2 per cent price target but it was voted down by 8-1 majority vote.

In its policy statement, the BOJ also raised its assessment for the outlook of the Japanese economy for the fifth straight month, expecting the economy to return to a moderate recovery path as Japan continues to show signs of a more evident recovery and favourable financial conditions while inflation expectations look to be on the rise.

Sony Shares Hit a New Two-year High

Shares of Sony Corp hit a new two year high Wednesday, rising 6.3 per cent to JPY2,393 after reports by the Nikkei newspaper that the company is considering evaluating a proposal by US hedge fund firm Third point LLC to sell off about 20 per cent of its profitable movie and music sectors.

This is the highest since April 2011. Billionaire Daniel Loeb’s firm Third Point is said to be Sony’s largest investor, through both direct and indirect holdings. This has been a rare bid by a foreign shareholder to participate in Japan’s corporate culture.

Mitsuo Shimsu, a Tokyo based analyst said that expectations that Sony will take action are driving the stocks higher. However, it is unclear whether this spinoff will strengthen Sony.

Dimon Remains JPMorgan Chairman

Jamie Dimon, CEO of JPMorgan Chase & Co, will remain as the bank’s chairman after winning support of more investors this year compared to 2012.

He has survived a 32 per cent protest vote that proposed to strip him of his chairmanship and divide his duties after the US bank suffered a record loss in trading. This win put an end to the speculations that Dimon might quit, and JP Morgan led in bank shares — with a rise of 1.4 per cent in New York to close at a six year high.

Dimon guided JPMorgan through the financial crisis, and his vote back has been a defeat for those investors who believed that companies are better served by a separate Chairman and CEO.

Malaysia’s CIMB Jumps in Asset Sales

Asset sales have resulted in a 37 per cent jump in net profit of CIMB Group Holdings Bhd. Shares of Southeast Asia’s fifth largest bank by assets went up after the first quarter and results were higher than expected.

A recent stock exchange filing in Kuala Lumpur suggests that the net income of Malaysia’s second largest bank went up to a record RM1.39 billion (US$460 million) or 18.65 RM-cents per share, in the three months ended March 31 from RM1.01 billion, or 13.6 RM-cents per share, a year earlier.

In early January, CIMB had announced that it would sell most of its stake in Malaysian insurer CIMB-Aviva, to Sun Life Financial Inc and Khazanah Nasional Bhd. However, research suggests that 2013 will bring pressures from overheads for CIMB which may limit its earnings growth.

Vietnamese Central Bank Official Says ‘Difficult’ to Cut Interest Rates

Central bank deputy governor of Vietnam, Nguyen Dong Tien, said in a statement that Vietnam would find it “difficult” to cut interest rates further this year. This is due to the country’s efforts to clean up debts and revive growth.

In an interview in Hanoi, Tien said, “The pressure on inflation still remains and there are still some factors that will cause inflation to quicken toward the end of the year”.

The economy of Vietnam is witnessing its slowest pace since 1999, and there is official pressure to rejuvenate the economy. Prime Minister Nguyen Tan Dung has approved the formation of an asset management company to acquire non-performing loans from the nation’s lenders.

Australian Miner Clive Palmer Wins Battle Against Citic

Australian mining entrepreneur Clive Palmer, whose empire is worth GBP2.5 billion, has won a lawsuit against Citic Pacific Ltd over the timings or royalty payments from an iron ore mine worth US$8.0 billion.

Palmer’s Mineralogy Pty had sued Hong Kong based steelmaker’s Sino iron unit under the claim that the company’s mining rights and site-lease agreements should be terminated because of failure to pay royalties.

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COE Premiums Mostly Up

Admin — Wed, 22 May 2013 10:58:47 +0000

by Ernie B. Calucag

Certificate of Entitlement (COE) prices for vehicles rose in most categories at the latest bidding exercise Wednesday.

The COE premium for small cars continued its rise, ending S$1,840 higher at S$64,839.

But premium for big cars rose higher, by S$5,604 to end at S$67,304.

COEs for the Open Category, which can be used for any vehicle type but end up usually for bigger cars, also increased, from S$62,301 to S$66,701.

Meanwhile the COE price for commercial vehicles fell S$162 to S$56,889.

For motorcycles, the premium dipped S$37 to S$1,663.

Since the car loan restrictions came into effect in February, increases in COE prices have been generally on a downward trend.

Private road transport cost moderated in March to 8.6 per cent from 17.4 per cent in February, mainly attributed to weaker COE premiums in February and price adjustments by car dealers following the introduction of financing restrictions on motor vehicle loans.

Car loans are now limited to no more than 60 per cent of the vehicle’s purchase price and the repayment period to no more than five years.

In March, a tiered Additional Registration Fee (ARF) structure was also applied to cars, taxis and goods-cum-passenger vehicles, replacing the previous flat rate of 100 per cent of the Open Market Value of the vehicle.

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