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Headliners | 10 July 2009
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By: David Lee
Articles (57) Profile

Singapore Economy To Recover By 4Q09

According to economists at Barclays Capital, the Singapore economy should recover in y-o-y terms by 4Q09, with GDP increasing 2.2% – after 5 quarters of declines – boosted by the opening of 3 biologics plants and the anticipated opening of Shell’s US$3b petrochemical cracker in that quarter. GDP forecasts for 2009 remain at minus 4%, but 2010 growth has been revised upwards to 5.5% by the bank, reflecting the improved outlook for Singapore’s key trading partners – most notably China and other Asian economies.

In q-o-q terms, the bank added that 2Q09 could show a sharp improvement, stating that annualised seasonally adjusted growth could hit 17%, compared with 1Q09’s 14.6% fall. ‘Recent remarks by officials suggest that lay-offs were down sharply in May and June,’ added one of the economists. On another note, the economist forecasts that the MAS is likely to maintain its neutral policy stance at its next meeting in October as growth risks fade and that a resurgence of inflation will favour the Sing dollar.

Wilmar Set To List China Business

Wilmar International, the world’s largest listed palm oil company, has hired 3 banks, namely BOC International, Goldman Sachs and Morgan Stanley to handle what sources say could be a US$3b to US$4b flotation of its China business in Hong Kong if the company was valued at 25 times earnings. The IPO would be among the biggest so far this year in Asia, where companies have rushed back to the equity market as its gains have gathered pace.

The company plans to list 20-30% of its China operations – where it holds a strong position in the consumer cooking oils market – to tap investor interest in its biggest market and to raise cash for acquisitions. The IPO is believed to be set for listing late this year or early next year.

Baltic Dry Index Posts 2nd Straight Weekly Decline

The Baltic Dry Index, a measure of shipping costs for commodities, posted a 2nd straight weekly decline on concern that demand to haul iron ore is set to slow. The index tracking transport costs on international trade routes fell 152 points on Friday (3 July), or 4.1%, to 3,520 points, according to the Baltic Exchange. That gives a 4.9% decline for the week, following the previous week’s 9% retreat.

China’s iron-ore imports in March, April and May were the highest for data on Bloomberg going back to 1999, helping drive a record increase in 1H09 freight rates. Inventories are 6.6% short of a high reached last September according to data going to 2006 and as a result, demand may be sated for now, taking ship rates lower, according to Nomura Hldgs.

Singapore Warns Asia To Expect Lower Growth

Singapore’s finance minister Tharman Shanmugaratnam warned Asia to expect lower economic growth for years to come as a weakened US consumer buys less of the region’s exports. GDP expansion in Asia will likely fall to an average 6.5% over the next few years from 9% during the 2002 to 2007 period. The government expects GDP to shrink up to 9% this year, the biggest contraction since splitting from Malaysia in 1965.

Massive fiscal programs around the world, led by the US and China, were necessary this year to stave off a more severe downturn, but many countries have high debt levels and can’t continue to boost spending much longer. ‘There are serious concerns about how much you can do in the short term without setting yourself up for future bad debts,’ the minister said.

The minister added that the US will likely see average annual economic growth slow to between 2% and 2.5% over the medium-term from 3.5% during the last decade while Chinese growth will fall to 8% from 11% in the 2004 to 2007 period.

Wilmar Int'l  3.590 +0.03 +0.84%   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: May-19, 1Q19 revenue fell 6.2% to US$10.4b driven ... Read More

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