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Headliners | 29 May 2009
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By: Lai Wyai Kay
Articles (53) Profile

SingTel’s Bharti Revisits MTN Stake
India’s largest wireless operator, Bharti Airtel, has revived talks with South African operator, MTN Group, of a possible combination between two of the world’s emerging telecom giants. Under the latest round of talks, Bharti is looking to acquire a 49% stake in MTN. The South African operator will in turn take an approximate 36% economic interest in Bharti. Both parties have set a 31 July 2009 deadline to hammer out the details.

SingTel, which holds a 30.5% stake in Bharti, would likely welcome the prospect. After a lower-than-expected dividend payout in FY08, market speculation was that SingTel was possibly readying itself for a major acquisition. However, talks between Bharti and MTN collapsed due to a conflict on what direction the deal should take.

If talks do bear fruit this time, the potential transaction would create a telecom behemoth in economies that still lag behind in penetration rates. And SingTel’s foreign investments are definitely in need of some cheer, which, of late, have been largely lacklustre.

Monthly CPI Falls First Time In 3 Years
Singapore’s consumer price index (CPI) in April fell 1.1% from March. In year-on-year terms, the fall was 0.7%. The month-on-month decrease was attributed largely to lower costs of housing, food and “recreation & others”, the last mainly due to the lower cost of holiday travel. The on-year drop, however, showed up the effects of a decrease in transport & communications costs, which declined 6.3% from a year ago, due to cheaper petrol and cars and also relief measures.

While April’s year-on-year drop was the first decline since June 2005, most economists queried said the economy is unlikely to go into a deflationary spiral. MTI’s forecast for inflation this year is from –1 to 0% with the consensus that prices should start creeping back into positive territory by 2010.

Industrial Production Expands 25% In April
Singapore’s industrial production expanded by a strong 24.7% in April, on a seasonally adjusted, month-on-month basis. Compared to a year ago, output dipped just 0.5%. The better performance this time was attributed, in particular, to biomedical manufacturing output, which jumped 68.4% from April last year. The volatile pharmaceuticals sector, however, was also responsible for past declines as well.

The electronics cluster also recorded a smaller 24.2% drop, as compared to the 38.8% in the first three months of the year. Still, the Singapore Manufacturers’ Federation said that the outlook for Singapore firms remains bleak, as sudden spurts due to pent-up demand are not sustainable.

In a separate survey conducted by the Singapore Economic Development Board, manufacturers are still expecting output to decline in the second quarter, as compared to the Jan-Mar period of 2009. Only the biomedical cluster is expecting an increase while the rest are still less upbeat about production activities.

Demand For Private Homes Hotting Up
The 14.1% drop in the private residential price index in the first quarter, released in April, was way worse than the 6.1% fall in the last quarter of 2008. However, encouraging home sales reported by developers since have led to the belief that prices could have bottomed out. The 14.1% fall, the worst quarterly drop on record, could also have prompted renewed interest in the residential market.

Amidst this optimism, several private residential developers, among them, City Developments and CapitaLand, have seen their share prices rising about 70-88% from their lows in March. Transaction volumes for residential properties have increased since 4Q08, likely due to improved sentiment in the physical residential market. Still, some analysts are calling for caution due to impending supply as well as the fact that most developers are also exposed to the office market, where demand for space is still weak.

Singtel  3.150 -0.01 -0.32%   
Business: Asia's leading communications group. [FY19 Turnover] Mobile Comm (31.1%), Data & Internet (19.2%), Infocomm Technology (17.5%), Sale of Eqmt (16.5%), Digital Biz (7.2%), Fixed Voice (5.2%), Pay-TV (2.1%), Leasing (0.8%), others (0.4%).

Insight: May-19, FY19 operating revenue remained flat at $1... Read More
City Developments  10.300 -0.09 -0.87%   
Business: Co is an international property & hotel conglomerate. [FY18 Turnover] Property development (48.4%), hotel operations (39.8%), rental properties (8.5%), others (3.3%).

Insight: May-19, 1Q19 decreased 29.5% to $746.2m compared t... Read More
CapitaLand  3.580 -- --   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More

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