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Markets Cautious Awaiting US Jobs Reports
Review, Tradeable | 07 March 2014
By: Brian Brinker
Articles (44) Profile
By: Nicholas Tan
Articles (71) Profile

The FTSE Straits Times Index (STI) gained 12.53 points to close Thursday’s trading at 3,129.17 as investors remain cautious while awaiting growth data from the Eurozone, crucial US jobs data to be released today as well as amid the backdrop of political tensions in Ukraine.

Yesterday saw Lian Beng Group and Centurion Corporation gained 4.7 percent and 6.6 percent to close at $0.555 and $0.65 respectively, after the former made an announcement that it had acquired 38 million shares in the latter via a married trade at $0.57, alongside other private investors who took up an additional 42 million shares. The broader market saw 242 gainers and 182 losers, with total trading value at $1.1 billion.

Singapore Market Commentary

In Singapore…

Government Denies Claim That Singapore Is World’s Most Expensive City (06/03)
Singaporeans are rightfully proud of their place at the top of many international rankings, such as ease of doing business and quality of public education systems. One ranking that has been drawing a negative backlash, however, is the claim by the Economic Intelligent Unit that Singapore is the world’s most expensive city.

Living costs have become a hot button issue in recent years, so the backlash should come as no surprise. Government officials have pointed out that the ranking considers costs from the point of view of an expat and may not be relevant for Singaporean citizens. For example, the ranking assumes that one essentially “must” own a car, even though Singapore’s public transposition system is top notch.

Given the wide availability of subsidised housing, the city-state’s world class public transit system, and low income taxes, the government may have a point. On the other hand, few would argue against the notion that living costs have been rising sharply in recent years.

HDB COV Drops To Zero (06/03)
For the first time in nine years, the median cash-over-valuation (COV) for resale public flats dropped to zero last month. Data from the Singapore Real Estate Exchange showed that COV dropped from an already low $3,000 to zero in February.

12 of the 26 Housing Development Board (HDB) towns saw a COV of zero, or even negative, numbers in February. This represents an increase from eight HDB towns reporting the same in January and suggests that conditions may only be worsening.

Singapore Government Would Consider “Enhancing Taxes” (06/03)
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam has come on record stating that there is room to “enhance taxes” as fiscal demands rise. What does that mean? More or less, it’s a friendly way of saying taxes could be increased at some future point in time.

The Deputy Prime Minister pointed out that any changes to the tax system would have to remain equitable and the tax burden on average families must remain low. A tax hike in 2014 is highly unlikely as no hikes were presented in the recent annual budget. Tax hikes in the future, however, are not being taken off the table.

Around the World…

US Manufacturing Grew In February (03/03)
US manufacturing hit an eight month low in January, but rebounded in February according to the Institute for Supply Management. National factory activity rose from 51.3 in January to 53.2 in February, suggesting solid expansion. This reading beat the median forecast of 52.

The report was not all good news, however, as the production sub-index fell to 48.2, from 54.8. This marked the third month of decline and the first time the said index fell below 50 since August 2012. At the same time the employment index was flat at 52.3.

White House Projects Steady Growth, Declining Deficit (05/03)
The White House has released its 2015 budget. The White House believes that the US economy will expand by 3.1 percent this year and 3.4 percent next year while inflation will remain at a low 2 percent through 2015. The government projects that American’s debt burden will fall from 75 percent this year to 69 percent next year.

The White House’s budget also noted that tax revenues would have to be raised in order to keep the country on solid fiscal footing. Nonetheless, the US$3.9 trillion dollar budget is unlikely to be approved by a divided Congress, which would represent an increase of 6.8 percent from 2013.

Eurozone Recovery Confirmed With 4th Quarter (06/03)
Eurozone growth accelerated to 0.3 percent in the fourth quarter of 2013. While such a reading might not be particularly exciting, it is welcomed news after years of decline and stagnation. Indeed, in the third quarter, growth came in at only 0.1 percent, so the last reading suggests that the recovery may slowly be gaining momentum.

So far, it appears that growth is being spurred by increased investment. The data came from the European Union’s data agency, Eurostat. While China, the United States, and others have been enjoying solid economic growth in recent months, the Eurozone has largely remained stagnant.

Chinese Government Announces Financial Reforms At NPC (05/03)
The Chinese government is looking to introduce a host of changes to the country’s financial system. Among other things, the national government will look to increase the amount of risk in financial markets, meaning that companies and local governments should not be expecting handouts.

At the same time, the Chinese government may allow local governments to issue bonds, and will be creating a deposit insurance to stabilise the banking sector. The government has emphasised that its efforts to stabilise, strengthen, and modernise the financial sector will not come at the expense of growth.

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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.

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