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Headliners | 04 September 2009
By: David Lee
Articles (57) Profile

Wafer Fab Industry Recovering: Labour Chief
Labour chief Lim Swee Say has pointed out that the outlook for Singapore’s wafer fabrication industry is encouraging and that the global semiconductor revenue is expected to rise to $250b in 2010 and continue to grow in 2011, though at a slower rate. As the economy picks up gradually, fab utilization has also improved over the year. It fell to 49% in 1Q09 but improved to 60% in 2Q and is now expected to rise above 70% for the rest of the year. Singapore’s share of the global semiconductor market has risen to 10.9% last year despite the downturn. In terms of wafer fab output, Singapore is second only to Hsinchu among the world’s cities, and is 6th after the US, Taiwan, China, Korea and Japan in country terms.

Stocks ‘In Early Phase Of 3-5 Year Bull Market’
Global equities are at the early stage of a 3-to-5 year bull market, said Kerry Series, head of Asia Pacific Equities at AMP Capital Investors, in an interview with The Business Times. He noted that Asian stocks could outperform on the back of stronger earnings and investor demand. Despite the market run-up in the last few months, valuations are still at fair levels, with Asian ex-Japan stocks currently at nearly one time P/B value to long-term average of 1.8 to 1.9 times P/B value.

Series’ optimism in Asian stocks is founded on the region’s resilience amid the global financial crisis. He also projected an asset allocation shift over the next few years as global investors shift their money away from the US, Europe and Japan into Asia ex-Japan. At the same time, the downside risk is muted, he added. While there is concern over the sustainability of economic recovery and the risk of inflation, Series felt that these fears would not materialize in the next few years.

Maritime Sector Gets Into Limelight With Inaugural Sector Index Launch
The maritime sector will now be introduced into the limelight with the launch of the new FTSE ST Maritime Index by Singapore Press Holdings, Singapore Exchange and FTSE Group. The index, an extension of the FTSE ST Index series, comprises 12 companies that have at least 55% of their revenue derived from maritime-related activities.

The launch, which is in line with Singapore’s aim to be a leading international maritime centre, shall reflect the strength of the maritime component of companies in the energy, offshore and shipping industries listed on the SGX. The new index will provide investors and analysts with a benchmark tool to track and measure the performance of SGX-listed companies in the maritime industry that meet the indexing standards required by international investors.

Chances Of Double-Dip Recession Rising: Roubini
Nouriel Roubini, the professor who first predicted the financial crisis, said the chance of a double-dip recession is increasing because of risks related to ending global monetary and fiscal stimulus. He wrote in a Financial Times commentary that government and central bank officials may undermine the recovery and tip their economies back into ‘stagdeflation’ if they raise taxes, cut spending and mop up excess liquidity in their systems to reduce fiscal deficits. However, if they do maintain large budget deficits, bond market vigilantes will punish them, with inflationary expectations increasing, long-term government bond yields rising and borrowing costs climbing sharply, leading to stagflation.

Another reason to fear a double-dip recession is that oil, energy and food prices are now rising faster than that warranted by economic fundamentals, and could be driven higher by excessive liquidity chasing assets and by speculative demand. The global economy would not be able to withstand another contractionary shock if similar speculation drives oil rapidly towards US$100 a barrel, like it was at US$145 last year, he said.

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