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STI Flattish; Yellen Ponders Taper Retreat
Review, Tradeable | 28 February 2014
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By: Brian Brinker
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By: Nicholas Tan
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The FTSE Straits Times Index (STI) gained 8.49 points to close Thursday’s trading at 3,096.74 as investors awaited US Federal Reserve (Fed) chairperson’s Janet Yellen’s testimony before the Senate Banking Committee. Her speech revealed that if economic weakness persists, the US Fed might consider slowing down tapering or even halting it, which is a mark difference from its hawkish stance a couple of months back.

Earnings season is underway and approaching the end, City Developments gained 0.21 percent to close at $9.34 even though the developer saw its net income for 4Q13 falling to $221 million from $249.3 million a year earlier, as sales declined 12.6 percent year-on-year to $774 million due to a challenging domestic property landscape. The broader market saw 214 gainers and 207 losers, with a total trading value at a low of $890 million.

In Singapore…

Business Receipts For Services Sector Up 6.4% In 4Q13
Business receipts for the services sector expanded by a healthy 6.4 percent year-on-year in the fourth quarter of 2013. The expansion was seen across all sub-sectors, with the exception of the recreation and personal services sector, which actually saw a 1.7 percent decline. The education services and financial/insurance services industries showed the strongest growth of 15.4 percent and 12.4 percent, respectively.

While manufacturing is still an important component of Singapore’s economy, services are making up an increasing large portion. Singapore’s government has been working to expand the services sector so signs of strong growth may point to success.

Singapore’s Manufacturing Output Rose 3.9% In January
In January, Singapore’s manufacturing output grew by 3.9 percent year-on-year. Growth slowed from December 2013 when it came in at 6.4 percent and output actually declined by 8.1 percent on a seasonally-adjusted month-to-month basis from December 2013 to January. The reading, however, was in-line with expectations.

Computer peripherals and electronics in particular recorded strong growth. The pharmaceutical sector also showed a healthy growth of 4.5 percent year-on-year, rebounding from a 21.2 percent decline in December 2013. Growth in the transport engineering sector slowed to 2.7 percent, following a 14 percent expansion in December 2013.

Singapore And UK Look To Deepen Cooperation
Singapore and the United Kingdom are setting up a dialogue to discuss ways to increase financial and economic cooperation. Both countries announced their intention in a joint statement given by Monetary Authority of Singapore, Singapore’s Ministry of Finance, and the British Treasury.

Among other things, the two countries will work to boost offshore trading of the Chinese renminbi. The two countries will also establish a joint private sector forum and have agreed to regularly discuss domestic and international issues.

Around The World…

China Intentionally Lowering Yuan, Potentially Ahead of Liberalisation
The yuan has dropped against the US dollar over the past week, in a move engineered by the People’s Bank of China. It is believed that the Chinese are looking to loosen the reigns on the tightly regulated currency and are now trying to ward off speculators.

The Chinese have been angling to position the yuan as an alternative to the US dollar. With the US suffering economically and fiscally, many countries are looking for an alternative to the US dollar. With China now the world’s second largest economy, the yuan could emerge as a powerful contender.

Nationalism Rising In Japan Amid Regional Tensions
Tensions have slowly been rising with South Korea and China, Japan’s two traditional and historical rivals. A political party, the “Young Conservatives”, has been growing in power and has been likened to America’s Tea Party movement. The party has been stirring up resentment towards Japan’s neighbours, especially China.

Younger people, in their 30′s and 40′s, have been gravitating towards the party. Said individuals were born well after the conclusion of World War II and are not as pacifist as older generations are. While the movement remains small, it is making itself heard within the country.

US Jobless Claims Rise More Than Expected
Initial jobless claims jumped last week, rising 14,000 to a seasonally adjusted 348,000. The rise was worse than expected and highlights the underlying weakness of the US labour market. Economists at the Dow Jones had predicted 335,000 new claims.

The surprise jump may have been due to government office closings in the face of severe winter weather. Closed offices meant some claims were not filed on time and pushed back a week, which could have caused a momentary jump.

Yellen Open To Reconsidering Tapering Plans
For now, the American government will continue forward with its tapering plans. US Federal Reserve chairperson Janet Yellen has stated, however, that plans are not set in stone and could be subject to revision if the US economy weakens. So far, economic growth and indicators in the US have been steady but uninspiring. Strong economic growth and job creation remain elusive in spite of government stimulus efforts.

Yellen said that tapering could be halted, or at least slowed, if the US economy begins to weaken. She noted, however, that severe weather may be constraining the economy, and is likely responsible for recent tepid indicators and economic readings.

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This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

City Developments  9.660 -0.21 -2.13%   
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

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