Market gained 23 points last week, follow-through buying expected

• The ST Index ended the week with a positive note. Last Friday, it inched up about 2 points to close at 1862.03. For the week, the ST Index was up 23 points or 1.2%.

• Positive market momentum is likely to continue this week, boosted by strong Singapore’s GDP growth of 11.7% y-o-y for 2Q04 (announced this morning) and good showing by Dow Jones and Nasdaq. Locally, economic prospects remain favourable. In the US, market expectation of sterling results from the big companies and easing of inflationary pressures will continue to give further support to the market’s upward move.

• Market focus today will be on situational stocks. Stocks that will take centrestage include UOL and UOB.

• The ST Index will test its immediate resistance of 1880. The 1860 level remains the immediate support.

- SBI E2 12/July/2004

S'pore economy seen growing 4-6% in H2 : After expanding at a sizzling near-12 per cent pace in the quarter just past, the economy will settle back into a more sustainable growth range of 4-6 per cent in the second half of the year, economists expect. Recovery from the Sars outbreak a year ago boosted the second quarter's year-on-year growth to an eight-year high of 11.7 per cent, official flash estimates show. The strong growth - driven by better than expected performances in both manufacturing and services - is 'indicative of the economy's recovery from the severe impact of Sars a year ago as well as the continuing pick-up in global economic activity', says the Ministry of Trade and Industry. Against the preceding Q1, growth in annualised, seasonally adjusted terms was also a robust 9.1 per cent, following three quarters of double-digit momentum pace. The extended stretch - four straight quarters - of strong sequential growth is unprecedented, economists note. So while the Q2 year-on-year growth was just about one percentage point higher than the average market forecast, most economists were way off in their estimates of the quarter-on-quarter measure, having predicted that it would be below 5 per cent.


Had market discounted this good news already? me hopes not...

STI CHHHEEEEOOOONNNNGGGG ARRRR :D

Market inched up further yesterday, firm market undertone remains

• Market was generally lacklustre yesterday. However, the ST Index managed to climb up again and inch up 7 points or 0.4% to end the session at 1878.15.

• Investors’ fears of disappointing Intel’s results will be allayed following Intel’s announcement yesterday that revenue was up 18% and profit almost doubled in 2Q. The results were in line with market expectation. Investors’ concerns will be on the inventory build-up, up 15% and lower margins expected going forward from 62% to 60%. Although share price of Intel eased after the results announcement, we do not expect any significant negative impact on Singapore tech stocks.

• Singapore’s strong economic fundamentals and market expectation of favourable corporate results for 2Q will continue to support the market’s upward move.

• The ST Index had been inching up and it is likely to test its immediate resistance at 1880 and the next level at 1890 level. Immediate support is intact at 1860.

SBI E2 14/July/2004

THe Technical Picture

Singapore Jun Non-Oil Exports Up 20.9% On Yr

Non-oil retained imports of intermediate goods, a short-term leading indicator of overall manufacturing activity, rose a seasonally adjusted 0.8% compared with May's 0.8% decline, IE Singapore said.

Singapore shipped S$5.8 billion worth of electronics goods, 29.6% more than a year ago. Electronics accounts for half of Singapore's exports.

Semiconductor exports rose 69.9% to S$1.88 billion in June from a year ago, while disk drive exports fell 16.7% to S$1.09 billion, IE Singapore said.

Singapore's key exports in June rose sharply on year, underscoring an export-led economic recovery that sets up the island to be one of Asia's fastest-growing economies this year, official data released Friday show.

Non-oil domestic exports rose 20.9% in June to S$11.1 billion (US$1=S$1.7060) from a year ago as companies such as Chartered Semiconductor Manufacturing Ltd. (CHRT) exported more computer chips to the U.S. and other markets.

Exports of disk drives, pharmaceuticals and chemicals fell on year in June, partially because of a high-base year, International Enterprise Singapore said.

Seasonally adjusted, non-oil domestic exports fell 6.9% in June from May, the government agency said in a news release. Economists had predicted exports would ease on month because of May's relatively high base.

While last year's SARS outbreak in the second quarter makes some of this year's data look rosy, and export growth will begin to cool down from here on, trends show Singapore's economic recovery remains on a firm footing.

For example, the state trade development agency Friday raised its full-year total export growth forecast to 15%-17%, significantly higher than its earlier 8%-10% forecast. The key non-oil exports, it said, should grow by 12% in the second half, after expanding a strong 17.8% to S$63.2 billion in the first six months.

JPMorgan Chase Bank economist Lian Chia Liang said he now expects the Singapore economy to expand 8.3% on year in 2004, "making Singapore the fastest-growing economy in Asia outside of China."

This, Lian said, "assumes that the growth momentum will cool fairly sharply toward an average 1.5% on quarter in the remaining two quarters, following four successive quarters of above-trend expansion," he added.

Singapore's export-driven economy - trade is three times the island's domestic economy - expanded an estimated 11.7% in the second quarter, and the strong growth in trade will ensure it expands faster than the government's now-conservative 5.5%-7.5% full-year growth forecast.

External demand remained the key driver for the economy, said Song Seng Wun, an economist at G.K. Goh Research Pte. Ltd., adding the domestic economy is showing signs of recovery after last year's SARS outbreak.

"We do see more resilient growth in the domestic economy, which will support GDP to our forecast of 8% for the year, definitely more than the government's forecast," Song said.

Non-oil retained imports of intermediate goods, a short-term leading indicator, rose a seasonally adjusted 0.8% compared with May's 0.8% decline, IE Singapore said.

June's export growth was in line with the 20.8% average expansion 10 economists Dow Jones Newswires polled had expected. Individual forecasts ranged from 14% to 18% growth.


Electronics Exports Rise


Exports of electronics rose for the fifth straight month to S$5.8 billion, or 29.6% higher than a year ago, amounting to half of total non-oil exports.

Companies shipped more semiconductors to the U.S., Hong Kong and the European Union, lifting exports by 69.9% to S$1.88 billion in June from a year ago.

But while Singapore remains optimistic that its electronics sector will continue to grow, analysts have warned that the global chip industry may be reaching a cyclical peak.

IE Singapore Chief Executive Lee Yi Shyan said the government was watching the industry closely, but added that any short-term deceleration had already been factored into its forecasts.

"We know that the projection is that demand will slow down; nevertheless, there will still be growth. Going into the horizon, in 2005, we are really looking at lesser growth in the electronics sector," he said.

In June however, pharmaceutical exports fell 20.1% to S$1.19 billion and chemicals sales contracted 0.1% to S$2.41 billion. In the same month last year, pharmaceutical exports, which tend to be volatile each month because factories manufacture in batches, more than tripled compared with the year before.

Singapore is aiming to double biomedical manufacturing output to S$24 billion in 10 years and boost employment in the sector to 15,000 workers, Deputy Prime Minister Tony Tan said Friday.

Tan said total biomedical manufacturing output has already almost doubled since 2000 and is expected to reach S$12 billion this year, a year ahead of the government's target, while employment has risen by 35% to 7,500.

Last year, output from the island's biomedical sector rose 15.9% to S$11.3 billion, making it the third-largest manufacturing cluster after electronics and chemicals.

Companies with significant manufacturing operations in Singapore include Pfizer (PFE), Aventis SA (AVE), Becton Dickinson & Co. (BDX), GlaxoSmithKline PLC (GSK) and Schering-Plough Corp.

Govt ups export growth forecast to 13.5-15.5% :

Economic growth for 2004 looks set to bust the official forecast of 5.5-7.5 per cent, as the government bumps up the outlook for key exports after a strong showing in the first half of the year. Non-oil domestic exports (NODX) for the full year is now expected to jump 13.5-15.5 per cent, up from 10-12 per cent projected earlier, according to International Enterprise Singapore yesterday. The trade promotion authority also raised the growth forecast for total trade from 8-10 per cent to 15-17 per cent.

The NODX rose 17.8 per cent from a year ago, picking up speed from 15.1 per cent rise in 2003. Growth momentum, powered by both electronic and non-electronic shipments, was especially strong in the April to June quarter with gains of 21.1 per cent, after the first quarter's 14.5 per cent increase.

Many economists have taken the cue from preliminary indicators pointing to a stronger than expected second-quarter economic expansion to up their full-year growth projections beyond the official 5.5-7.5 per cent. While shipments of disk drives may still be down, overall global electronics demand led by electronic chips is tipped to be stronger than earlier thought. Industry analysts have raised their forecasts for chip sales from 19.4-20.7 per cent to 24.7-28.6 per cent for the year.

Non-electronics shipments, led by chemicals and pharmaceuticals, are also expected to stay a big contributor to exports in the second half as drug giants like GlaxoSmithKline recently expanded capacity here, and Pfizer opened a new plant just yesterday.

$24b target gives a fillip to biomed

Upgraded $24b target gives a fillip to biomed : Singapore's biomedical manufacturing outlook is looking bright, going by a series of recent announcements.

Yesterday, Deputy Prime Minister Tony Tan said the biomedical industry's output is likely to reach $12 billion this year - one year ahead of the original 2006 target. This has prompted a revision of the goal, which is now to achieve $24 billion in output within the next 10 years and total employment of 15,000 people.

Total employment in the biomedical sciences sector has already risen 35 per cent to 7,500 people in the past four years. Value-add per worker, at $900,000, is among the highest, compared with $174,000 per head in the manufacturing industry.

The biomedical sciences industry is fast becoming one of the key pillars of Singapore's economy. Last year it was the third-largest output contributor in the manufacturing sector at $11.3 billion, behind the chemicals cluster's $39.1 billion and electronics' $62.2 billion.

STI Outlook

DBSV

This week the STI gained 0.5%. The past three weeks have seen the STI
rising up on strong inflow of funds and active trading in small cap stocks.
The last week saw some U.S technology heavyweights releasing their
quarterly results. On a year-on-year basis, it was a good showing, however
major investment houses downgraded the technology and semiconductor space.
The upside risks to these downgrades are that the end-demand could be
stronger than anticipated now that the semiconductor industry is in a much
better position to ride out a slump as players are amassing at much lower
level of inventories. Cyclical boom/busts aside, it is quite unthinkable,
in my view, to assume that the industry had actually learnt and gained
nothing from the painful experiences in 1999/2000 and 2002.

The numerous data that points to the softening macroeconomic picture should
be taken into context, in the sense that some of the indicators have indeed
rolled over from very robust levels. Take in the case of some of the
manufacturing leading indicators like the ISM survey.

Since the release of the jobs report, aside from technical considerations
that is still depicting a market heading towards 2100, we have been
advocating caution on market strength. Indeed, the major U.S indices
performed poorly with the S&P 500 index continuing its slide for the last
four weeks. However, Key North Asian markets barely batted an eyelid while
the STI surged. The consensus, or rather the aftermath explanation, is that
with rates easy, the very 'measured' pace adopted by the Federal Reserve
(as markets may finally be convinced now) may yet serve to ignite another
round of reflation and carry trades. After all, key North Asian Markets
slumped in April/May almost wholly due to interest rates fear. The China
slowdown story now seems to be well priced by the markets, as the latest
GDP figures reaffirmed hopes of a soft landing scenario for the Asian
dragon.

Can this decoupling last? To a large extent, it will depend on how
companies gauge the demand picture going forward into early 2005. We argued
that markets were willing to be patient on the employment front for a good
part of 2003. We have witnessed this again in Asia in the last two weeks.
This could well be the pause, a refresher, in the overall macro momentum,
as we know the economy does not move in a straight line. For the past two
weeks, U.S market action has largely been ignored in Asian sessions, only
because it is still deem to be locked in a trading range. If forthcoming
data continues to show a worrying trend and thus cause U.S stocks to go
down in a dangerous slide, then Asian markets may not display the
resiliency that we have so far been witnessing.

Overall, we will have a better idea of end demand picture by
August/September. Our economic research team has increased equities
weighting in 3Q04. The STI had displayed a tendency to stay resilient, and
if the upcoming data points to a revival of U.S economic momentum, we can
look forward to the STI hitting 2100.

Market recouped its earlier losses on Friday, positive market momentum continues
• Market recouped its earlier losses and the ST Index put on 4 points or 0.2%higher on Friday, mainly due to buying of index stocks. For the week, the ST Index gained about 9 points or 0.5% and closed the week at 1871.47.

• The positive market momentum is likely to follow-through in the absence of negative news. Although Dow Jones and Nasdaq posted losses last Friday, this should not dampen market sentiment as concerns over profit warnings would have been discounted by investors. Going forward, softer US economic data suggesting easing of inflationary pressures will provide the support for the market. Fed Chairman’s testimony before Congress this week on monetary policy is not expected to surprise the market on the downside.

• Announcement of the handover of premiership to DPM Lee Hsien Loong effective 12 Aug 2004 will clear the air on when the handover will take effect. Focus will be on what’s next and policy announcements following the changeover. On the back of strong economic fundamentals and continuity in political stability, we believe the market will react favourably to any change on the Singapore political front.

• Corporate results announcements will continue to feature strongly and impact on stocks. Situational stocks will remain in play.

• Trading will continue to be range bound. ST Index range : 1860 – 1880.

- SBI E2 14/July/2004

FOCUS

Singapore Economy: CPI data for June will be out on Friday, 23 July 2004. We expect the inflation to continue to trend higher with the headline figure rising 2.4% YoY versus 2.0% in May. While both the May and June inflation rates are at the fastest since at least December 2000, part of the increases is due to substantially low bases in the same months in 2003 due to the impact of SARS. The strong YoY figures should not be a cause for concern as we expect the MoM growth rate to stay unchanged at a moderate 0.1%, which is slower than the 0.2% pace in April. (Suan Teck Kin)

Technology: Tech investors are caught in the middle of a perception conundrum. Take for example yesterday's 1Q results announcement from global EMS company Flextronics. Flextronics boosted YoY revenue in its first quarter by 25% and turned last year's loss to a profit of 13 US cents a share. Flextronics earned a profit of US$74.3 million, or 13 US cents a share in the June quarter, compared with a loss of US$289.7 million in the same quarter last year

However, the company did not raise its guidance for the next two quarters, apparently causing a gap between market expectations and actual upside. The stock was subsequently pummelled in after hours trading, losing up to US$1.34, or 9.5%, to US$12.71. This negative perception was even stranger, considering that 2Q looks to fall slightly short of the high end of expectations, while 3Q (the traditionally strong December quarter) will handily exceed consensus. Specifically, Flextronics guided the market to expect a 2Q EPS at 15 US cents to 18 US cents a share on sales of between US$4.1 billion to US$4.4 billion, versus consensus of 17 US cents a share on sales of US$4.2 billion. For 3Q, the company expects to earn an EPS ranging from 21 US cents to 24 US cents a share on sales ranging from US$4.4 billion to US$4.7 billion, whereas Wall Street is forecasting EPS of 17 US cents on sales of US$4.8 billion.

Flextronics also said something about the dreaded "I" word. The company said that inventory had increased by 17%, but attributed it to a normal seasonal pick-up on behalf of customers. The company even said that they are building inventory for a reason, and that it was not a negative. CEO Michael Marks acknowledged that there has been a troubling slowdown in the technology-spending environment, demonstrated by a series of profit warnings and misses in the software. However, he saw no signs of a downturn for Flextronics or the electronics contract manufacturing sector (EMS).

In reality, Flextronics' prospects look excellent. It recently landed an extremely lucrative deal to handle some US$2.5 billion worth of manufacturing each year for Nortel. It has steadily been a very clear beneficiary of the outsourcing trend, with the company handling computer builds for Dell, inkjet printers for Hewlett Packard and cellular phones for Sony Ericsson.

Clearly, the tech market still remains extremely jittery, with investors and, worse still, analysts quick to jump on the bear bandwagon. While there is definitely anecdotal evidence of a build-up in the supply chain, this is in selective product channels, and specific tech sub-sectors. We are not seeing a wide ranging demand driven slowdown. As a result, investors have an opportunity to pick out the earnings outperformers. EMS companies that are executing well, such as Flextronics, definitely fall into this category. And so does Venture Corporation, which we maintain as an OUTPERFORM. (Research Team)

Being a newbie in this game, i often hear avoid tech stocks or go for growth stocks. While i roughly know the obvious ones, how can one tell what is a tech stock or growth stock???? Then the other word i hear is cyclical...Aiyo ...my head spins. :( So for instance the following, what are they?

- Autron
- Media ring
- 8tel

Dun wan to name too many...just few first lah...

I can hear some of u laffing at my silly question already...kekekeke :)

Market reversed its course after the pullback yesterday, trading range remains

• The market reversed its course yesterday with a gain of 8 points or 0.4% after the correction in the previous day. The ST Index ended the session at 1873.17, a shade away from its immediate resistance of 1880.

• The sharp fall on the Dow Jones and Nasdaq, due to concerns over slowing profit growth going forward, is not likely to put significant selling pressure on the Singapore market. We reckon the flurry of selling in the US market could be an over-reaction to the question on sustainability of strong forward earnings. It is a mixed bag of market expectation of forward earnings growth and this may temporarily cause market swings but not a severe selldown.

• We remain positive about market upside potential although there may be temporary hiccups arising from concerns over earnings growth, oil price increases, interest rate hikes and possible terrorist attacks.

• Situational stocks will remain in focus.

• ST Index is likely to retreat today in reaction to the weakness in the US market. Immediate support is at 1860. However, a recovery will lift the index to test its immediate resistance at 1880.

- SBI E2 22/July/2004

Smith Barney's analyst compares current situation to 1986, expecting a slow and steady recovery. He also sees a broader based recovery in the offing..


Have a profitable week everyone... :rolleyes:

Strong chip output explains high PMI June inventory

Robust Jun 04 IPI was led by semiconductors & infocomms
June 04 manufacturing output grew a robust 19.4% y-o-y, higher than market expectations of 16.6% and DBS’ forecast of 17.0%. On a seasonally adjusted m-o-m basis, IP fell 3.4%.

Despite concerns about a sharp slowdown in the global chip industry, electronics production continued to surge, rising 36.7% y-o-y from 23.2% in May 04. This was on the back of strong growth in semiconductors at 49.6% from 44.6% in May, infocomms & consumer electronics at 70.9% from 50.2%, and computer peripherals at 31.8% from 10.2% (refer to Table 1).

Biomedical manufacturing slowed to 17.5% y-o-y in June from 57.1% in May on the back of a decelerating, but still positive, pharmaceuticals sector. Excluding biomedical, IP rose 19.8% from 14.2% as most of the other main sectors stayed afloat. Chemicals jumped to 12.2% from 1.7% in May mainly due to the sharp turnaround of petroleum from –5.3% in May to 20.4%

Strong chip output explains high PMI Jun electronics inventory
We square the IP with the PMI and NODX Electronics data. Strong semiconductor output, which accounts for about half of the electronics output, is the reason for the higher PMI electronics inventory index. It jumped from 52.0 in May to 57.5 in June, the highest level in 3 years. Chip output growth may therefore moderate, going forward.

Excess supply not an issue for electronic finished goods
But at the same time, electronics demand continued to be strong as indicated by the robust electronics exports growth at 29% in June and the sharp drop in the PMI Electronics Finished Goods Index from 59.4 in May to 46.7 in June, a 3-year low. Excess supply or inventories is therefore not an issue for electronic finished goods as yet, with scope for growth coming from this segment. The strong IP growth rate of 20.5% in 2Q suggests that any revision to 2Q GDP growth will be upwards. We expect overall IP growth to slow down in 2H04, given signs of domestic demand weakness in the US and China, and the peaking of global electronics demand.

- DBSV 27/July/2004

the million dollar question ?

DO WE EXIT NOW ?

strategists and analysts in major global brokerages now seperate
the two arms; whilst on the one hand you have analysts downgrading
a particular stock or sector, the strategist from a macro viewoint
often gives a conflicting view

recently Merrrill Lynch's global strategist Mr Michael Hartnett was
in Singapore speaking to select private clients

he reckons risk assets (which includes Asian stocks, commodities
and cyclical sectors) will RALLY

his thoughts were also reported in today's Business Times in an
article written by Genevieve Cua ....a summary is below

he said "now is not the time to sell your Asian equities or commodities"
and goes on to add "you'll get a better selling level later on in the year"

note also this...

"but at some stage in the next 3 to 5 quarters, you have to
start thinking about quality assets"

IMO his views are also that of many others (though the camp is
now divided) in so far as the geopolitical situation in the middle
east and it's potential to disrupt oil supply and rising interest rates
(as many felt the Fed was behind the curve) and inflation ....
...factors we have to reckon with

but Mr Hartnett says

"the second quarter was spooked by fears of inflation, higher interest
rates and higher oil prices....BUT all three factors will become less
negative in the next few months

Genevieve Cua writes "if Mr Hartnett's expectations are played out,
higher "beta" or risk assets will rebound"

"we can expect interest rates to rise in the nest few quarters and also
bond yields are expected to rise spelling modest losses for fixed income
investors, but they will be compensated by equity gains"...he goes on
to add

what is significant are these statements of his...

"much more of the future returns will come from dividend yields
than in the last few years"

AND

"we do believe there is a super cycle coming for small caps....you'll
see small caps outperforming larger caps on a global basis"

"portfolios should have a healthy weighting in commodities like
energy and gold".....he adds

he also likes China related assets or companies with an exposure
to china's growth but "steer clear of direct investment in China"
because of the risk


happy reading and decision making
cheers $3

Thanks honey3! China and commodities like energy.... We've got to patient and ride out. :P

Singapore Idea Snippets :
[SIZE=7]

Corporate S'pore off to good start this season : With the July reporting season now under way, the half-year earnings of Singapore listed companies with December year-ends have so far met or exceeded analysts' expectations. Stealing the limelight has been a few blue chips, while the duo of Neptune Orient Lines and Singapore Exchange treated shareholders to a more generous dividend policy. But concerns persist over the technology sector and oil prices for the rest of the year, and some analysts expect slower earnings growth in the second half, if only because the first half benefited from a low base.

As of Friday, 50 companies have turned in results for the six months ended June 30 and all but nine saw their bottom lines improve, according to data compiled by The Business Times. Of the 50 companies, 46 are in the black, with 32 reporting higher profits and six rebounding from losses. The remaining eight companies had lower profits. Due in the next few weeks are the financial results of about 300 more companies with half-years that ended in June. But Singapore Exchange cautions that market activity may be volatile in the coming months, while SIA and NOL note risks in persistently high oil prices. On top of those concerns, the second half is widely expected to see slower earnings growth simply because the year-on-year base is higher than the first half-year.

Wall St flags earnings worries : As the second quarter earnings reporting season of listed US companies draws to a close, very few investors can complain about the results they have been seeing. In fact, this could very well be a record-breaking quarter in earnings growth. But investors have been expecting this for some time now, and as the preceding three weeks have shown, they are paying little attention to spectacular results. Instead, the focus is on corporate profits in the coming quarters, and the picture isn't quite so pretty. So US stocks, despite finishing with a winning week, came limping out of July. The Dow Jones Industrials has shed 4 per cent since the beginning of July, with the S&P 500 producing similar results, and the Nasdaq Composite faring even worse, losing 8 per cent. Although earnings growth is expected to remain in the double digits through to the end of next year, it will be sharply lower than the 25 per cent-plus rates of recent quarters.

Asian electronics giants dismiss talk of slowdown : Despite dire warnings of the slowdown in the global high-tech industry, top-tier Asian electronics giants have posted record quarterly earnings, with some beating even their own expectations. Most of them also expect the uptick to continue through the rest of this year. And several major players, including a couple with significant operations in Singapore, are ramping up their manufacturing facilities in the region. Taiwan's semiconductor giant United Microelectronics Corp (UMC) is one that is beefing up its Singapore operations using the latest chip-making technology. TSMC had earlier forecast capital expenditure of US$2.2 billion but boosted that to keep up with the continuing demand surge. On Friday, Semiconductor Manufacturing International Corp (SMIC), China's biggest contract chip maker, posted its third straight quarterly profit by tripling sales and keeping its factories running at capacity. Meanwhile, a slew of Japanese high-tech companies have also turned in robust quarterly results.



Showy posts earnings in H1 : Showy International, a kitchen and sanitary fittings supplier, turned in an interim net profit of $707,000 on revenue of $3.9 million for the six months ended June. Showy said there are no comparative figures for the group as the company has incorporated a subsidiary in the second half of 2003. On a company basis, Showy's net profit fell to $710,000 from $921,000 or 22.9 per cent due to competitive selling prices and increase in cost of materials. Earnings per share slipped to 1.16 cents from 1.51 cents a year ago. Net asset value per share rose to 12.83 cents from end-2003's 12.45 cent for the group. Showy made its debut on Sesdaq in July 2003.

Jets reports 40% rise in profit : Jets Technics International, a Hong Kong based-company listed on Singapore's mainboard in June this year, posted a 39.7 per cent increase in net profit to HK$25.3 million (S$5.6 million) for the year ended May 31, 2004. The increase was due to higher sales and lower operating expenses. Turnover was up 12 per cent to HK$124.2 million. Earnings per share improved to 14 HK cents from 10 HK cents a year ago. Net asset value per share almost doubled to 30.5 HK cents from 16 HK cents at end-May 2003. Jets, which turns shredded tyres and plastic into playground equipment and garden furniture, said it believes the next year would be 'another promising year'.

Innovalues interim profit up 15% : Innovalues Precision, a precision components maker, said its interim net profit rose 15.2 per cent to $4.8 million as revenue too jumped 15.2 per cent to $35.7 million on the back of healthy demand for machined parts. Innovalues said the percentage increase of gross profit was less than the rise in revenue due to higher raw material prices and a hike in depreciation for plant and machinery as the group expanded. Earnings per share improved to 3.08 cents from 2.70 cents while net asset value per share was 24.25 cents, up from end-2003's 22.03 cents. Innovalues has declared an interim dividend of half a cent per share, lower than the one cent per share a year ago.

Japan Asia going into property : Tetsuo Yamashita, executive chairman of mainboard-listed Japan Asia, is a man of detail. Fresh from chairing his first annual general meeting in Singapore, he displays this trait repeatedly, especially when he talks about his plans to systematically steer Japan Asia - which will be renamed Japan Land - into the Japanese property market. This penchant for details reflecting his clear-minded leadership is an invaluable asset for Japan Asia, especially during this new transitory phase to become a property player. Japan Asia was on the verge of turning itself into a financial services firm through a reverse takeover of JASG before the twice-scuttled deal to do so saw it announce its intentions to become a property player in Japan instead. JASG - in which Japan Asia has a 16.35 per cent stake - continues to be a cash cow for the company however.

Competition seen crimping DBS, UOB growth : As proxies to the strongly rebounding economy, DBS Group Holdings and United Overseas Bank will do well, but fierce competition will continue to be a drag on performance, going by the bank's latest second-quarter results. Both banks released their numbers yesterday and showed loans growth - DBS more than UOB - as well as sharply lower provisions that are down more than 90 per cent in line with the robust economic conditions. But they also had difficulty lifting customer margins as competition from foreign banks shows no sign of letting up. OCBC is due to release its Q2 results on Aug 11.

SIA beats forecasts with $259m net profit in Q1 : Singapore Airlines yesterday bettered analysts' expectations with a $258.6 million net profit for the three months to June 30, fuelled by higher passenger and cargo traffic. Revenue for the period, its first fiscal quarter, rose to $2.72 billion from $1.65 billion, helping SIA bounce back from a $312 million loss a year ago. Analysts had tipped a median $200 million profit. 'The strength of major revenue-generating currencies, particularly the Australian dollar and British pound, coupled with cost savings from a weaker US dollar against the Singapore dollar, provided a net gain of $81 million to the group,' the carrier said. Higher fuel prices added $80 million to expenditure after a hedging gain of $73 million. While the airline expects fuel prices to stay high and volatile in the near term, it will 'continue to manage costs carefully and remain competitive through initiatives such as increasing aircraft utilisation, improving fuel efficiency of operations and efficiency of engineering maintainence', it said. Units SIA Engineering and Singapore Airport Terminal Services (Sats) also reported better results for the quarter. SIA Engineering's profit rose 91 per cent from a year earlier to $43.7 million as aircraft maintenance and repair activities picked up. Sats, the baggage-handling and catering arm of SIA, earned $49.3 million, 77 per cent more than a year ago.

This is their recent comments on Singapore.
Economics — Singapore Market Weekly: Catching Up, Not Hollowing
Out
➤ Although Singapore’s high degree of openness leaves it sensitive to swings in
global demand, we argue that the economy is increasingly making a comeback
instead of hollowing out
➤ Improving external competitiveness has allowed the economy to play catch-up
with its Asian peers
➤ Challenge remains one of employment creation; “stickiness” in the 2Q04
unemployment rate probably reflects the structural transition to more capitalintensive production
➤ Liberalization of the services sector, reinforced by the free-trade agreements,
should raise the efficiency of the Singapore economy and promote employment
over time
➤ The swap curve at the 2/5 sector flattened as the short end came under pressure after the sharply higher forwards in the offshore market

Looks like they remain bullish!! :D

Kool,

care to update please. thks. :rolleyes: ;)

GirlGirl ,

As requested:

As of Close on 04 August: The short term top in the first chart is cancelled. But it is still testing strong resistanceat 1900 in the second chart.

Current prediction

Short term: double top points to 1,815 - cancelled / 1900 is being tested


Long term: double bottom (daily and weekly) points to 2,400

Advance GDP Estimates for 2nd Quarter 2004 - pdf

AUG 6, 2004
July's job ad volume sees 51% surge
THE volume of newspaper job advertisements grew a strong 51 per cent year on year in July, supporting Deputy Prime Minister Lee Hsien Loong's comment this week that economic recovery is taking place not just in one or two areas but across many sectors.

Following better second-quarter job figures reported recently by the Ministry of Manpower, data compiled by Singapore Press Holdings shows job-ad volume surged in all sectors last month. Leading the pack was advertising for manufacturing jobs, which jumped 99 per cent year on year. This followed a healthy 30 per cent rise in June.

Ads for executive positions leapt 84 per cent in July - the biggest year-on-year increase for several years. Growth in advertising for non-executive jobs lagged that for executive jobs but was still up 32 per cent in July from a year earlier. This followed a 42 per cent rise in June.

Job ads for the service sector grew 40 per cent in July, down slightly from a 45 per cent rise in June.

The figures are derived mostly from job ads in The Straits Times.

Acting Minister for Manpower Ng Eng Hen said recently that employment growth is likely to continue as the economy expands.

AUG 6, 2004
STI hits 3-yr high but driving force unclear

Questions remain over who is leading surge and whether it is sustainable



(SINGAPORE) The Singapore market continued its dizzying climb to a three-year high yesterday, fuelled by optimism for blue chips and a breather from record oil prices.

But market watchers still aren't sure who's in the driver's seat, and whether the surge of the past two weeks will turn out to be a sustainable rally or a short-lived thrill ride.

The Straits Times Index (STI) gained 31.85 points, or 1.7 per cent, to 1,935.70 as the Organisation of Petroleum Exporting Countries raised hopes that it may loosen capacity to meet ravenous world demand for oil.

Several other regional indices rose as well. Hong Kong's Hang Seng gained 1.72 per cent to 12,491.92, while the Taiwan bourse closed 2 per cent higher at 5,427.61. The Korea Composite Stock Price Index added 1.9 per cent to 743.35, while Jakarta moved up 0.49 per cent. In Japan, the Nikkei 225 gained 50.87 points to 11,060.89. But Kuala Lumpur dipped 0.06 per cent.

Most observers agree the local market's advance hasn't been broad-based. While the blue chip-dominated STI has surged, the UOB Sesdaq Index - which has mostly small-cap stocks - rose a mere 0.6 per cent to 95.52 points yesterday.

Among the big caps, the three local banks - DBS, United Overseas Bank and Oversea-Chinese Banking Corp - all gained, as did Singapore Airlines and Singapore Press Holdings.


So who's buying the blue chips? Or maybe we should ask, who isn't?

Portfolio manager Ho Kok Hua of APS Asset Management doubts that it's fund managers, most of whom remain cautious and are sitting on cash. 'I don't get a sense that funds are rushing to increase their equity weighting in Asia,' he said. 'Otherwise it would be a runaway.'

But retail investors aren't holding the wheel either, said a dealer with UOB-Kay Hian, who pointed out that retail traders aren't likely to have enough resources to move blue chips and the market. He did, however, note market talk that some local funds may be hoping for a 'big hurray' when Singapore's new prime minister takes office next week.

OCBC Investment Research's Lim Say Boon has voiced concern about the gap between falling volume and rising prices, arguing that global fundamentals don't seem to support recent rallies and that technical analysis is difficult without sufficient liquidity.

But DBS Vickers research head Timothy Wong isn't surprised that the market is rising. Corporate earnings are strong, domestic cyclical stocks like banks are riding on a better economy and there's optimism about the property sector, he said. At the same time, concerns about oil prices and interest rates have already been factored into the market.

Indeed, there's now a sense that Singapore may finally be getting a respite after several years of misfortune - the Asian financial crisis, the tech bubble, 9/11, the war in Iraq and Sars.

It's true that export-oriented cyclical stocks such as technology companies have been hit by fears of a possible slowdown, but this reaction may be 'overdone', Mr Wong said. 'People are trying to bargain-hunt in tech.'

Situational plays such as Neptune Orient Lines - now the target of a general offer by Temasek Holdings - have also stirred interest, he said.

Mr Wong isn't overly concerned about low volume, saying caution often reigns at the start of a rally. 'It should be interesting to see, if the blue chips have moved up, whether interest will rotate down to the small caps,' he said.

He maintains his end-September STI target of 2,000 to 2,100, and reckons the question now is sustainability. 'The key here is that things won't fall off a cliff in the second half,' he said.

Hi, I know this is kinda late but since I was looking at STI in my free time...
High Potential target seems to be 1955-65.

Need to add that I'm not familiar with STI at all since I don't normally look at it.
So this will be another laoya view. :P (even more laoya than my already laoya US mkt views)

DATAWATCH - Singapore GDP growth to moderate in H2; oil prices a risk - GK Goh

SINGAPORE - GK Goh regional economist Song Seng Wun said he
expects GDP growth in the second half of 2004 to moderate to 6.7-7 pct
year-on-year, after growing by 10 pct in the first half as manufacturing
growth slows down.

"Although the latest Singapore Purchasing Managers Index (PMI) survey
(for July) for local tech manufacturers saw a dip in the PMI reading, we are
not sure if that was just a blip after a strong June reading," Song said in a
research note.

"So we'll wait until the July non-oil domestic exports and actual factory
output data (for July) before we see if we need to adjust our second-half
manufacturing and GDP forecasts," he said.

"Currently we are looking for the Singapore economy to moderate from 10
pct in first half to around 6.7-7 pct in the second half to deliver full-year
growth of around 8.2 pct," he said.

"However, the rising cost of energy is a growing risk," he said.

The benchmark Nymex light sweet crude oil for September delivery is
currently trading at a record high near the 45 usd per barrel level.

"A year-long increase of 10 usd in oil prices is estimated to raise
inflation in Singapore by 0.5-0.8 percentage points and lower Singapore GDP
by about 0.5-0.7 percentage points," Song said.

But given the robust economic growth this year, with the government
expecting GDP growth of 8-9 pct, Song said the high oil prices would be more
of an issue next year than this year.

The government has initially forecast GDP growth of 3-5 pct for 2005.

Singapore economic and corporate news summary


- A summary of Singapore economic and corporate news

-MTI sees 2005 GDP growth at 3-5 pct;2004 growth at 8-9 pct

-Goh formally tenders resignation as PM

-Lee Hsien Loong asked to form new govt after Goh formally resigns

-Goh to become senior minister in new cabinet



-India's Meghmani Singapore IPO 2.1 times subscribed

-Noble Group Q2 net profit 45.27 mln usd vs 11.10 mln

Aug 11, 2004
BBDO Singapore clinches Tiger Beer account

ASIA Pacific Breweries said yesterday it has awarded the local Tiger Beer creative advertising account to BBDO Singapore after a four-way pitch.

APB decided in June to review Tiger's creative agency as it evaluated its position in the market.

'With a sense of greater buoyancy in the market, Tiger felt that this would be the right time to build for the future and further strengthen its position as Singapore's No 1 beer,' said APB's assistant general manager (marketing) Lester Tan. 'The search was for a new agency with a fresh perspective to take us to the next level.'

Four agencies - BBDO, Leo Burnett, M&C Saatchi and Y&R - were invited last month to pitch for the account.

'We were looking for creative concepts that were consumer-driven and could be translated into a campaign with scalability and endurance to bring the brand to new heights,' Mr Tan said.

BBDO, which has done campaigns for KFC, Pizza Hut, Mitsubishi Motors, ABC Stout and ICI Dulux, clinched the account after going through a selection process that comprised one round of agency interviews and two rounds of presentations.

Mr Tan said APB 'felt that BBDO recognised Tiger's strengths and its multi-discipline approach, and demonstrated all-round strength in interpretation and implementation of strategy, understanding of the beer market and creative ability'.

BBDO takes over from APB's former agency for Tiger Beer, DDB Worldwide.

BBDO, with a successful track record in promoting ABC Extra Stout, was also appointed in March as the advertising agency for Baron's Strong Brew, distributed by APB.

The agency starts its appointment on Sept 1 and will work with Mindshare, APB's media agency which is handling media buy.

The entire Tiger Beer Singapore account, comprising both the creative and media aspects, is worth $20 million.

MARKETS

After last Friday's sharp selldown, US stocks rebounded strongly last evening after the US Federal Reserve reiterated its plan to raise rates at a "measured'' pace to contain inflation and expressed its view that growth for the US economy is about to accelerate again. With this, the Dow Jones Industrial Average surged 130 points or 1.32% to 9944.67. The Standard & Poor's 500 Index added 14 points or 1.3% to 1079.04. The Nasdaq Composite Index was the best performer as it added 34 points or 1.9% to 1808.70. The Fed also raised rate by 0.25% to 1.5%, and this is largely in line with market expectation.

In Singapore, market concern over high oil prices dominated yesterday and this overshadowed the higher GDP projection for 2004. Market players used this to take profits on recent gainers. The STI, which reached a 2004 high of 1935.70 on Thu (5 Aug 2004), fell 1.1% to 1901.41 yesterday, but still managed to close above the 1900 mark. This is understandable, as the STI has outperformed several of the regional bourses as it gained 1.6% last week, while some of the bourses fell. For example, the ASX was down 1.3%, the KLCI shed 1.3%, the Nikkei fell 2.2% and the Thai SET was down 4.6% last week. As a comparison, the Hang Seng Index gained 2.2% last week, while the KOSPI rose 2.4%. For today, and with the positive lift from Wall Street and the "measured" pace of rate hikes, stocks could possibly recover some grounds this morning.

MARKET TECHNICALS

The suspension of reality is over -- the Straits Times Index is back below 1900 again. And it is headed lower.

For two happy days, on what seemed a pre-National Day "feel good factor", the STI broke the 1912 resistance zone, outperforming almost all other major world markets. But as we feared, it proved a "false break" that didn't sustain.

Granted, we did not expect the index to reach a high of 1942. However, even on hindsight we would not have recommended participating. The only way traders could have benefited from the pre-national day rally was if they were correctly positioned in a small handful of key index stocks. And then they would have needed the agility and luck to get in at the right levels and sell into strength. Such are the demands of a "flash in the pan" rally.

Our scepticism of any break above 1912 was informed by deteriorating volume and selective breadth, which are typically indications that any up move was not sustainable. Indeed, we stated that unless volume followed price, the move past 1900 was unlikely to be a bull market move.

The bearish outlook on the US indices was another reason for our cautious stance. To recap, we stated that a wave-2 correction had ended at 10487 for the Dow and that a wave-3 decline had started at the same level. We also stated last week that the rebound from 9940 to 10203 on the Dow was a countertrend rally and that sharp declines were likely. As of Monday's close, the Dow had already corrected below the prior week's low of 9940.

Numerous technical indications warn of further steep declines. Option volatility index on the S&P100 has broken above a 2-year downtrend and that historically warns of a quick reversal in sentiment between calls and puts, implying a highly nervous options market and a greater expectation of volatility expansion.

The Singapore bourse now appears to be paying attention to external factors and we think that the move to 1942 would have marked a significant high. Support in the near term is estimated at the Fibonacci retracement levels of 1850 and 1816, respectively. For the Dow, we could see a swift decline to 9300.

OCBC

Singapore's incoming PM to push reforms, but no major policy shifts seen

- Prime minister-designate Lee Hsien Loong will
press ahead with reforms aimed at sharpening Singapore's economic
competitiveness when he succeeds Goh Chok Tong tomorrow, but no major policy
shifts are expected, economists said.

Lee will inherit a resurgent economy, with growth of up to 9.0 pct
projected in 2004, making it one of Asia's fastest growing this year, but the
perennial issue of maintaining cost competitiveness against the likes of
China and Malaysia will dominate his economic agenda, they said.

"Singapore's policy at the moment is to keep business costs low to
attract foreign investments," said Eddie Wong, ABN Amro's chief Asian
strategist in Hong Kong.

"I will expect the status quo to remain ... it will not be changed
overnight because of the change in PM," he said.

Lee's other challenge is to find new growth drivers for Singapore's
economy, the dependence of which on external trade has left the city-state
vulnerable to any slack in the global economy, Wong said.

"Where's the growth area of Singapore, and where can future growth come
from?" Wong said.

"I think these are the key issues facing the (new) prime minister," he
said.

Leslie Tang, a Singapore-based economist at UOB Kay Hian brokerage, also
believes the incoming prime minister will concentrate on finding new ways to
lower business costs in Singapore to ensure the city-state stays attractive
to foreign investors.

"The cost of business has been the central focus of the government," Tang
said.

"So I think they don't want to be caught again by cost outstripping
productivity," he said.

Lee, son of Singapore's founding father, Lee Kuan Yew, served as deputy
prime minister, finance minister and chairman of the Monetary Authority of
Singapore (MAS) under Goh.

After being sworn in tomorrow, the younger Lee will retain the post of
finance minister, but will give up the MAS post to Goh, who will become
senior minister.

Lee is the architect of the main economic reforms undertaken here over
the last few years, including financial sector liberalisation which saw
smaller banks being merged with stronger players.

"We are harvesting the first fruits of restructuring, but our work is far
from over," Lee said in a recent speech.

He said many workers "still need to re-skill in order to find jobs or to
keep their jobs" and called for further wage restructuring "to make us more
flexible, and more attractive to investors."

While he remains upbeat on the city-state's future prosperity, Lee
stresses the need for Singaporeans to stay adaptable and nimble in order to
respond to the fast-changing global environment.

"Nothing is certain. Your company may have to restructure, the business
may go to China, new business may come in. We have to learn new skills and
take on new responsibilities," Lee said at another gathering ahead of his
rise to power.

Joseph Tan, an economist at Standard Chartered, said job losses stemming
from structural reforms will be one issue that the new prime minister will
have to grapple with.

While Lee has always been concerned about the loss of jobs, and economic
growth looks very strong, "there are still a lot structural issues" in the
economy, Tan said.

By Citigrp

the STI reached a high of 1942.8 last week

the rebound came from May 17th low of 1690.35
which is approx 252.45 points

23.6% fibo retracement from 1942 is 1883 (59.57 points)
and 50% retracement will be 1816 (126.22 points)

will it?????? hit 1816, now that 1883 broke....

one recommendation that hv been making the rounds
is sell or short the S'pore banks and long the HKG ones

will this play out?

but if rates continue to rise then interbank spreads will improve
which will be good for the banks.....so how?

will this mitigate the decline....

Singapore Market Today

Expect selective plays and bargain hunting of blue chips, the broad market ended
mixed. STI finished higher by 10pts with gainers and losers evenly matched. In the US,major indices rallied as investors ignored a surge in oil price to new highs to pick up oversold and undervalued stocks.

The behaviour of US markets yesterday should provide a relief for broad market stocks,battered in recent weeks partly by the surge in oil prices. This could be a sign that the market perceives the price of oil approaching a high point near the US$50/barrel mark or that stocks are becoming oversold.

Look for a firm day. Market mood should also stay buoyant ahead of the National Day Rally speech by the new Prime Minister this weekend. On the STI, a rise above 1894 sends the index towards 1912.

In recent days, the grossly oversold Phlx Semiconductor index (SOX) in the US has
been retracing up upon hitting technical support. Chip stocks here could do the same.


KE

Index now 1901...Vol 403m worth $336.2m...

Very interesting to see how the market goes...But am slightly bias towards the bulls

StarHub To Sell Only Vendor Shares In IPO

24/08/2004 08:41

SINGAPORE (Dow Jones)--Shareholders of StarHub Pte. Ltd. (STB.YY) are set to cash out some of their chips in an initial mainboard float that observers say could value the telecommunications company at more than S$2 billion, the Business Times reports.

StarHub said in a preliminary prospectus filed with the Monetary Authority of Singapore that all the proceeds from its coming IPO will go to existing shareholders who are expected to sell shares, the report says.

The company's long-awaited initial public offering won't be launched for at least another two weeks to allow for public scrutiny of its documents.

According to the report, shareholders include Singapore Technologies Telemedia Pte. Ltd., which holds 49.8% of StarHub's pre-IPO shares; Japan's NTT Communications Corp., which owns 14.3%; MediaCorp of Singapore Pte. Ltd., which holds a 13.9% stake; BT Group PLC (BTY), which owns 11.7%; and Singapore Press Holdings Ltd. (T39.SG), which holds a 9% stake.

StarHub has an issued and paid-up capital of about 2.1 billion shares, which will give it an initial market capitalization of at least S$423 million based on the Singapore Exchange's minimum IPO offer price of 20 cents, according to the report.

However, with some quarters estimating possible proceeds of S$600-S$700 million from the vendor sale of a 25% stake, StarHub could easily be the largest IPO since Singapore Post Ltd.'s (S08.SG) S$684 million effort in May last year and close to rival telco MobileOne Ltd.'s (M16.SG) S$762 million float in December 2002, the report says.


Newspaper Web site: http://business-times.asia1.com.sg


-By Singapore Bureau, Dow Jones Newswires; (+65) 6415-4150; djnews.singapore.bureau@dowjones.com


(END) Dow Jones Newswires 24-08-04 0041GMT

China hails Singaporean PM's stance on Taiwan


2004-08-25 19:07:10

BEIJING, Aug. 25 -- China says that new Singaporean Prime Minister Lee Hsien Loong's reiteration against "Taiwan Independence" is conducive to regional peace and stability.

"We have noticed that Lee Hsien Loong has reaffirmed Singapore's adherence to the one-China policy and its resolute opposition to 'Taiwan Independence,'" said Kong Quan, spokesman of the Chinese Foreign Ministry here Wednesday.

"This stance is in conformity with Singapore's interest and the consensus of the international community, and is conducive to regional peace and stability," Kong said.

He added that the Chinese government's stance on the Taiwan issue is clear, that is, all nations having diplomatic ties with China should observe the one-China policy by action. China is opposed to any leaders from these nations visiting Taiwan or sending the wrong signals to the "Taiwan Independence" forces, he said.

Lee Hsien Loong stressed Singapore will not change its long-held one-China policy when he delivered his first National Day rally speech Sunday. He also said that Singapore firmly opposes "Taiwan Independence" and if Taiwan provokes a conflict across the Taiwan Straits, Singapore will not support Taiwan. Enditem



Thanks Duke

From the Chartroom 26 August 2004

ST Index (1,917.09) – ST Index is expected to continue its upward momentum for the week. We are still looking at the Index gathering strength for a clear breakaway from the 1,900 levels in the current up move towards our technical objective of 1,950 levels over the next 1 – 2 weeks. The overall upward momentum is firmly intact, although some intra-day weakness is expected over the next few days.


Most importantly, we should be focusing on our technical objective of 2,100 levels by end of the year as of now, as the 1,950 level is only a short-term objective. We maintain our bullish outlook for the market.

Our immediate support is maintained at 1,870. The next support level, which is also our critical support in the shorterterm,is seen at the 1,840 levels. However, we see a remote chance of reaching this level, especially when 1,870 is poised as a strong support level. The immediate resistance level is at 1,950.

Contra-period traders should consider long positions selectively. Intra-day traders may consider taking long positions cautiously for today.

We see the current scenario as a good opportunity for further longer-term accumulation. This is in anticipation of a prolonged Bull Cycle to the 2,100 levels for the STI by the end of the year. Any further delay to our projected timeline to meet the 2,100 levels is confined to end 1Q05.

Oil prices plummet below US$44 :

Oil prices plummeted below US$44 (S$75.28) a barrel on Wednesday, sinking for the fourth consecutive day, as supply fears receded, gasoline futures plunged and profit-taking took over. Light crude for October delivery settled at US$43.47, down US$1.74.

The price of Nymex-traded oil futures has fallen by 11 per cent since last Thursday, when they settled at US$48.70 - the highest Nymex settlement on record. When adjusted for inflation, oil is more than US$13 cheaper than it was leading up to the first Gulf War. Strong demand and scant excess production capacity put markets on edge as traders worried there would be inadequate supplies in the event of output disruptions in Iraq, Russia and Venezuela.

Now prices are sliding on reports that Iraq is again exporting some 2 million barrels a day and that gasoline demand in the US has tapered off from peak levels. The political turmoil feared in Venezuela, the world's fifth-largest oil exporter, abated after President Hugo Chavez survived last week's recall vote.

MAS To Give Clear Definition Of Deposits

10/09/2004 14:17

[Dow Jones] MAS working on clearer definition of bank deposit, reports BT, move likely prompted by raft of investment products that could blur distinction for consumers; coming out with guidelines to define deposit, also "disclosure and sales practice rules" for non-deposit product, says MAS spokeswoman. Though not immediately clear what impact on local banks, as some traders quick to take profit on DBS (D05), down 1.8% at $16.20, which leads peers in deposits; stock also +4.4% since last Friday's $15.80 close to hit $16.50 yesterday. Order book shows strong sell at $16.30 wuth 541 offers, support at $16.10 with 492 bids. (CAW)

Singapore – Economic Outlook


Domestic Demand Taking the Lead

• Domestic demand is staging a meaningful rebound, which should help
to cushion growth as exports slow in 2H04.

• Strong growth and high material prices suggest that inflationary pressures
will continue to build, arguing for a tighter monetary stance.

Growth
Growth has continued to exceed expectations. The official 2004 growth forecast
was upgraded the second time in August to 8-9%. In addition, the detailed 2Q04
GDP breakdown confirmed that domestic demand recovery remains in full steam.

• Private consumption rose 11.6% YoY (2.8% QoQsa), reflecting in part a
stabilizing labor market.

• CAPEX, particularly the investment in machinery and equipment, continued
to recover strongly (up 13.3% YoY). Such pace of investment growth was last
seen during 1999-2000.

Inflation
CPI inflation remains moderate, with the July CPI (up 1.6%YoY) coming in softer
than market expectations.

Nevertheless, we do not see the soft July data as signaling a broad based easing in
inflationary pressures. Particularly, the CPI breakdown show that the monthly
decline in CPI reflected largely the fall in prices of miscellaneous items (down
1.8% MoM), with other major categories still registering month-on-month price
increases.Strong economic growth and high raw material prices suggest that the
trend of rising prices will not abate soon.

Policy Implications
The MAS adopted a tightening stance in April, but is targeting only a modest
exchange rate appreciation (about 2.5% annualized). With growth consistently
exceeding official expectations, and inflation trending up, we believe the central
bank may need to increase the trend appreciation rate of the trade-weighted
basket of currencies.