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Economic News
- Thread starter FHBH12
- Start date
Fed to end stimulus, but keep watch on low inflation
29 Oct10:43 PM
[WASHINGTON] After six years of pump-priming a weak economy, the Federal Reserve is expected to take a big step back toward "normal" monetary policy on Wednesday by ending its asset-purchase operations.
But with the global economy frail and low inflation a danger, the Fed is hardly about to tighten the flood of cheap dollars that has propped up growth after the Great Recession.
The Fed has made clear it will not sell off the US$3.5 trillion worth of Treasury bonds and mortgage securities it has accumulated since 2008 in quantitative easing (QE) programs, even though a key goal - bringing down unemployment - has been reached.
Moreover, the policy-making Federal Open Market Committee will stick to its plan to hold its benchmark federal funds interest rate at the zero level well into next year.
The FOMC has signaled for months its plan to close out the third version of the asset purchase operations, QE3, at the end of its two-day meeting this week, with the announcement expected around 2:00 pm (1800 GMT).
While some analysts think the decision could be held off until December, that would likely serve a more symbolic purpose.
Last December the Fed was pumping US$85 billion a month into the economy via asset purchases to hold down long-term interest rates, to promote lending and investment.
That has been steadily tapered to just US$15 billion in October, and economists say that after six years the impact of QE is less and less - except for helping pump up prices of stocks and other financial assets.
The Fed's principal aim for the policy was to help bring down the unemployment rate, which peaked at 10.0 per cent in October 2009 and fell steadily to 5.9 per cent last month.
With jobs growth now running at a firm clip, the Fed's focus has turned to inflation, which remains well below its 2.0 per cent target.
"The decline in the inflation expectations will undoubtedly take the center stage of FOMC discussions," said BBVA in a client note.
"The focus of the committee's discussion is expected to progress beyond the timing to end QE3. Whether the FOMC ends its US$15 billion large-scale monthly asset purchases in October or December would likely be considered a minor concern." Crucial then is what the FOMC signals for the path of the fed funds rate. The committee has repeatedly stated that the first hike from the 0-0.25 per cent level, where the rate has stood since the end of 2008, will come only "a considerable time" after it ends QE.
Now that the asset purchases are ending, how it adapts that signal will be closely watched. The current expectation is for an initial rate rise in mid-2015.
But, as Fed Chair Janet Yellen repeatedly emphasizes, that depends on what the data says about the strength of economic growth.
AFP
http://www.businesstimes.com.sg/gov...-end-stimulus-but-keep-watch-on-low-inflation
29 Oct10:43 PM
[WASHINGTON] After six years of pump-priming a weak economy, the Federal Reserve is expected to take a big step back toward "normal" monetary policy on Wednesday by ending its asset-purchase operations.
But with the global economy frail and low inflation a danger, the Fed is hardly about to tighten the flood of cheap dollars that has propped up growth after the Great Recession.
The Fed has made clear it will not sell off the US$3.5 trillion worth of Treasury bonds and mortgage securities it has accumulated since 2008 in quantitative easing (QE) programs, even though a key goal - bringing down unemployment - has been reached.
Moreover, the policy-making Federal Open Market Committee will stick to its plan to hold its benchmark federal funds interest rate at the zero level well into next year.
The FOMC has signaled for months its plan to close out the third version of the asset purchase operations, QE3, at the end of its two-day meeting this week, with the announcement expected around 2:00 pm (1800 GMT).
While some analysts think the decision could be held off until December, that would likely serve a more symbolic purpose.
Last December the Fed was pumping US$85 billion a month into the economy via asset purchases to hold down long-term interest rates, to promote lending and investment.
That has been steadily tapered to just US$15 billion in October, and economists say that after six years the impact of QE is less and less - except for helping pump up prices of stocks and other financial assets.
The Fed's principal aim for the policy was to help bring down the unemployment rate, which peaked at 10.0 per cent in October 2009 and fell steadily to 5.9 per cent last month.
With jobs growth now running at a firm clip, the Fed's focus has turned to inflation, which remains well below its 2.0 per cent target.
"The decline in the inflation expectations will undoubtedly take the center stage of FOMC discussions," said BBVA in a client note.
"The focus of the committee's discussion is expected to progress beyond the timing to end QE3. Whether the FOMC ends its US$15 billion large-scale monthly asset purchases in October or December would likely be considered a minor concern." Crucial then is what the FOMC signals for the path of the fed funds rate. The committee has repeatedly stated that the first hike from the 0-0.25 per cent level, where the rate has stood since the end of 2008, will come only "a considerable time" after it ends QE.
Now that the asset purchases are ending, how it adapts that signal will be closely watched. The current expectation is for an initial rate rise in mid-2015.
But, as Fed Chair Janet Yellen repeatedly emphasizes, that depends on what the data says about the strength of economic growth.
AFP
http://www.businesstimes.com.sg/gov...-end-stimulus-but-keep-watch-on-low-inflation
US recovery = good news for Malaysia and Singapore
But Germany and China showing signs of slowdown.
But Germany and China showing signs of slowdown.
US is doing much better while China is stabilising now.
Dollar powers higher after GDP data, Fed action
POSTED: 31 Oct 2014 05:59
NEW YORK: The dollar jumped against other major currencies on Thursday (Oct 30) after better-than-expected US economic growth data added to a boost from the Federal Reserve's policy statement the prior day.
The dollar benefited from the government's first estimate of gross domestic product growth in the third quarter on Thursday, which came in at a strong 3.5 percent annual rate, well above the 3.0 per cent consensus estimate.
The reported fuelled speculation that the Fed could hike interest rates earlier than expected. "If growth continues at this pace - we think it will - the first Fed tightening could easily come in the spring, especially if wage gains start to pick up," said Ian Shepherdson of Pantheon Macroeconomics.
The Federal Open Market Committee announced on Wednesday the end of the central bank's asset-purchase programme and said interest rates would remain near zero for a "considerable time" - leaving unchanged expectations that the first rate hike would come in mid-2015.
The FOMC statement showed a more optimistic assessment of the labour market, strengthening the dollar sharply in gains that were extended on Thursday.
- AFP/de
http://www.channelnewsasia.com/news/business/dollar-powers-higher/1444740.html
China's official PMI seen edging up to 51.2 in October but still subdued
BEIJING Thu Oct 30, 2014 12:33am EDT
(Reuters) - Growth in China's manufacturing sector likely picked up slightly in October as demand improved, a Reuters poll showed, offering some tentative signs that the world's second-biggest economy may be stabilising but at levels which are subdued.
The official manufacturing Purchasing Managers' Index (PMI) likely edged up to 51.2 in October from September's 51.1, the median estimate from 24 economists showed.
A reading above the 50-point level indicates an expansion in activity while one below that points to a contraction on a monthly basis. The survey will be released on Saturday.
The pick-up in activity may assure investors that the Chinese economy, which has stumbled this year, is not doing as badly as some had feared, though a roaring recovery is unlikely.
"Electricity generation and the property sales have picked up somewhat in the past three weeks, which could reduce the downside risks facing the economy," economists at ANZ Bank said in a note to clients.
"Overall, we see that China's growth momentum will only pick up modestly in the upcoming months as massive policy easing is unlikely," the ANZ economists said.
Hurt by unsteady exports, a housing downturn and cooling investment growth, the Chinese economy is in danger of missing the government's growth target of about 7.5 percent this year. Third-quarter growth of 7.3 percent was the weakest since the global financial crisis.
Most analysts believe authorities will continue to roll out modest support measures in coming months to lift activity, but they are divided over whether it would act more aggressively, such as by cutting interest rates, unless there is a risk of a sharper slowdown.
Instead, Premier Li Keqiang has stated repeatedly that authorities will tolerate growth slightly below the 2014 official target as long as the labour market remains healthy and as the government tries to reshape the economy so it is driven more by domestic consumption and less by exports and investment.
A preliminary PMI survey released last week by HSBC/Markit showed the manufacturing sector gained momentum in October, even though analysts said the figure did not point to a fourth-quarter turnaround in the economy.
The official PMI is focused on larger, state-owned factories, as opposed to the HSBC/Markit PMI which focuses more on smaller manufacturers in the private sector.
(Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Kim Coghill)
http://www.reuters.com/article/2014/10/30/uk-china-economy-pmi-idUSKBN0IJ08P20141030
Singapore is suffering from self-inflicted pains (still coming poorly-thought policies :*: ) while Malaysia is enjoying high economic growth rate...
Singapore economy to grow at ‘moderate pace’: MAS
POSTED: 28 Oct 2014 12:08
UPDATED: 28 Oct 2014 23:26
The Republic’s GDP is expected to grow at between 2.5 per cent and 3.5 per cent this year, the Monetary Authority of Singapore (MAS) said in its half-yearly macroeconomic review.
SINGAPORE: The Republic’s economy is expected to grow at a moderate pace over the next few quarters, according to the Monetary Authority of Singapore (MAS).
In its half-yearly macroeconomic review released on Tuesday (Oct 28), MAS said that Singapore’s GDP growth forecast would come in at between 2.5 per cent and 3.5 per cent this year. A broadly similar pace is expected for 2015, it added.
"This should be seen in the context of the domestic economy settling down to a slower, but more sustainable growth path," it said.
The MAS report highlighted that some external-oriented sectors of the economy should benefit from the uplift in the US economy. Still, some activity in the sector may be subject to sluggish demand in the eurozone and China.
MAS also pointed out that the manufacturing sector is expected to move up the value chain towards high-margin activities such as research and development (R&D) as well as services. For instance, there has been an increase in the number of fabless semiconductor firms based in Singapore looking to expand their R&D and supply chain management operations, it said.
The share of total electronics output accounted for by these fabless semiconductor firms more than doubled from 11 per cent to 23 per cent between 2010 and 2012.
It added that the services content of Singapore's production output has also been on the rise.
TIGHT LABOUR SUPPLY
On the labour market, the central bank said the tight labour supply and strong demand for workers have continued to put pressure on costs at home. It expects the labour market to remain tight in the manufacturing or non-tradable sectors.
Going forward, continued growth of industries such as financial services, information and communications, and professional services, will create job opportunities in the non-manufacturing sectors.
"Singapore may well follow the experience of the advanced economies, where the relevance of skills, rather than academic qualifications, determines the employability and wages of workers," MAS said.
On inflation, MAS said CPI-All Items inflation could ease to below 0.5 per cent in the fourth quarter of this year, due to the high base a year ago. Looking forward, overall inflation is expected to come in at about 0.5 to 1.5 per cent in 2015, compared with 1 to 1.5 per cent in 2014.
- CNA/cy
http://www.channelnewsasia.com/news/singapore/singapore-economy-to-grow/1439100.html
Malaysia targets 6pc growth in 2014
10 OCTOBER 2014 @ 4:27 PM
Malaysia raised its growth forecast for 2014 and predicts government expenditure will support the expansion next year as subsidy cuts and a new consumption tax curb private spending.
Gross domestic product will increase 5.5 per cent to six per cent this year, and between five per cent and six per cent in 2015, the Ministry of Finance said in its 2014/2015 economic report today as Prime Minister Datuk Seri Najib Razak unveils the annual budget. The central bank projected 2014 growth of 4.5 per cent to 5.5 per cent in March.
Najib’s efforts to narrow Malaysia’s budget deficit through subsidy cuts have left companies and consumers grappling with higher costs, and inflation next year is forecast to be the fastest since 2008. The government will increase handouts to lower-income households to help them cope with the goods and services tax starting in April, while boosting public spending on infrastructure.
“The economic growth momentum in 2014 is expected to continue in 2015 driven by improving external demand and resilient domestic economic activity,” the finance ministry said. “The implementation of the GST will have a transitory impact on the cost of goods and services.”
Consumer prices are forecast to rise four per cent to five per cent in 2015, compared with an average 3.3 per cent in the first eight months of this year, the report showed.
“Inflation is expected to remain manageable despite trending above the long-term average,” according to the report. “The strong capacity expansion over the past years will help to mitigate the cost pressures, while a more cautious stance of consumers would also contribute to moderating demand and hence prevent inflation from becoming more entrenched.”
Malaysia narrowed the budget shortfall to 3.9 per cent of gross domestic product in 2013, and Najib said he is “committed” to further trimming the gap to 3.5 per cent this year and three per cent in 2015, heading toward a balanced budget by 2020.
“To ensure that public financial management remains sound, the government will continue to focus on its fiscal transformation agenda,” Najib said in the report. “The strategies encompass ensuring effective and efficient government spending, broadening the tax base including implementing GST as well as improving the subsidy targeting mechanism.”
The ringgit advanced by the most in six months yesterday, amid optimism Malaysia’s budget will outline commitments to improve public finances. The government will “ensure” its debt level is capped below 55 per cent of GDP, it said today.
Najib’s administration is forecasting federal spending of RM271.9 billion (US$84 billion) in 2015, according to the finance ministry’s report. Total expenditure for this year is estimated at RM262.2 billion.
The central bank kept its benchmark interest rate unchanged last month after an increase in July and said it will assess the balance of risks between the outlook for growth and inflation when considering further policy moves.
“In 2015, monetary policy measures will continue to support growth while mitigating risks to economic and financial imbalances that could undermine the long-term growth prospects,” according to the report.
Malaysia raised fuel prices for the first time in more than a year on October 2, and Najib’s administration has pledged to continue providing cash handouts to the lower-income group and extend various assistance programs to the needy, including affordable housing.
“The government is concerned with the difficulties faced by the rakyat in coping with the rising cost of living,” Najib said in the economic report, using the local term for citizens. “We will intensify efforts to ease the burden.”-- Bloomberg
http://www.nst.com.my/node/41523
Singapore economy to grow at ‘moderate pace’: MAS
POSTED: 28 Oct 2014 12:08
UPDATED: 28 Oct 2014 23:26
The Republic’s GDP is expected to grow at between 2.5 per cent and 3.5 per cent this year, the Monetary Authority of Singapore (MAS) said in its half-yearly macroeconomic review.
SINGAPORE: The Republic’s economy is expected to grow at a moderate pace over the next few quarters, according to the Monetary Authority of Singapore (MAS).
In its half-yearly macroeconomic review released on Tuesday (Oct 28), MAS said that Singapore’s GDP growth forecast would come in at between 2.5 per cent and 3.5 per cent this year. A broadly similar pace is expected for 2015, it added.
"This should be seen in the context of the domestic economy settling down to a slower, but more sustainable growth path," it said.
The MAS report highlighted that some external-oriented sectors of the economy should benefit from the uplift in the US economy. Still, some activity in the sector may be subject to sluggish demand in the eurozone and China.
MAS also pointed out that the manufacturing sector is expected to move up the value chain towards high-margin activities such as research and development (R&D) as well as services. For instance, there has been an increase in the number of fabless semiconductor firms based in Singapore looking to expand their R&D and supply chain management operations, it said.
The share of total electronics output accounted for by these fabless semiconductor firms more than doubled from 11 per cent to 23 per cent between 2010 and 2012.
It added that the services content of Singapore's production output has also been on the rise.
TIGHT LABOUR SUPPLY
On the labour market, the central bank said the tight labour supply and strong demand for workers have continued to put pressure on costs at home. It expects the labour market to remain tight in the manufacturing or non-tradable sectors.
Going forward, continued growth of industries such as financial services, information and communications, and professional services, will create job opportunities in the non-manufacturing sectors.
"Singapore may well follow the experience of the advanced economies, where the relevance of skills, rather than academic qualifications, determines the employability and wages of workers," MAS said.
On inflation, MAS said CPI-All Items inflation could ease to below 0.5 per cent in the fourth quarter of this year, due to the high base a year ago. Looking forward, overall inflation is expected to come in at about 0.5 to 1.5 per cent in 2015, compared with 1 to 1.5 per cent in 2014.
- CNA/cy
http://www.channelnewsasia.com/news/singapore/singapore-economy-to-grow/1439100.html
Malaysia targets 6pc growth in 2014
10 OCTOBER 2014 @ 4:27 PM
Malaysia raised its growth forecast for 2014 and predicts government expenditure will support the expansion next year as subsidy cuts and a new consumption tax curb private spending.
Gross domestic product will increase 5.5 per cent to six per cent this year, and between five per cent and six per cent in 2015, the Ministry of Finance said in its 2014/2015 economic report today as Prime Minister Datuk Seri Najib Razak unveils the annual budget. The central bank projected 2014 growth of 4.5 per cent to 5.5 per cent in March.
Najib’s efforts to narrow Malaysia’s budget deficit through subsidy cuts have left companies and consumers grappling with higher costs, and inflation next year is forecast to be the fastest since 2008. The government will increase handouts to lower-income households to help them cope with the goods and services tax starting in April, while boosting public spending on infrastructure.
“The economic growth momentum in 2014 is expected to continue in 2015 driven by improving external demand and resilient domestic economic activity,” the finance ministry said. “The implementation of the GST will have a transitory impact on the cost of goods and services.”
Consumer prices are forecast to rise four per cent to five per cent in 2015, compared with an average 3.3 per cent in the first eight months of this year, the report showed.
“Inflation is expected to remain manageable despite trending above the long-term average,” according to the report. “The strong capacity expansion over the past years will help to mitigate the cost pressures, while a more cautious stance of consumers would also contribute to moderating demand and hence prevent inflation from becoming more entrenched.”
Malaysia narrowed the budget shortfall to 3.9 per cent of gross domestic product in 2013, and Najib said he is “committed” to further trimming the gap to 3.5 per cent this year and three per cent in 2015, heading toward a balanced budget by 2020.
“To ensure that public financial management remains sound, the government will continue to focus on its fiscal transformation agenda,” Najib said in the report. “The strategies encompass ensuring effective and efficient government spending, broadening the tax base including implementing GST as well as improving the subsidy targeting mechanism.”
The ringgit advanced by the most in six months yesterday, amid optimism Malaysia’s budget will outline commitments to improve public finances. The government will “ensure” its debt level is capped below 55 per cent of GDP, it said today.
Najib’s administration is forecasting federal spending of RM271.9 billion (US$84 billion) in 2015, according to the finance ministry’s report. Total expenditure for this year is estimated at RM262.2 billion.
The central bank kept its benchmark interest rate unchanged last month after an increase in July and said it will assess the balance of risks between the outlook for growth and inflation when considering further policy moves.
“In 2015, monetary policy measures will continue to support growth while mitigating risks to economic and financial imbalances that could undermine the long-term growth prospects,” according to the report.
Malaysia raised fuel prices for the first time in more than a year on October 2, and Najib’s administration has pledged to continue providing cash handouts to the lower-income group and extend various assistance programs to the needy, including affordable housing.
“The government is concerned with the difficulties faced by the rakyat in coping with the rising cost of living,” Najib said in the economic report, using the local term for citizens. “We will intensify efforts to ease the burden.”-- Bloomberg
http://www.nst.com.my/node/41523
Even school kids in Singapore are affected due to poor planning of manpower:
Shortage of school buses for new school term next year
http://www.channelnewsasia.com/news/singapore/shortage-of-school-buses/1444184.html
Shortage of school buses for new school term next year
http://www.channelnewsasia.com/news/singapore/shortage-of-school-buses/1444184.html
Seminar raises more questions about the state of property sector
Saturday, 1 November 2014
By: THEAN LEE CHENG
Is high sales with high vacancies a good thing?
TWO common questions on the local property market... Will house prices ever come down? Is it better to buy now before GST?
While speakers at the 24th National Real Estate Convention, comprising an economist and a few property consultants, try to provide some form of answers, new questions have cropped up, due to interest in the residential sub-segment of the property sector.
Housing transactions comprised a big chunk of total property transactions in terms of both volume and value between 2008 and 2013, with prices taking an upward path at the end of 2009.
During this five-year period, residential sub-segment formed an average of 48% and 63% of total value and volume of the total property market. This has led to house mortgages taking up a major part of the total lending. Hence, the increase in household debt.
Yeah: ‘We need to rebalance credit growth’.
Yeah Kim Leng, the dean of the School of Business at Malaysia University of Science and Technology says the property market is “shaped by so many forces” and must be view against the national and internationl global economy.
While Malaysia has been enjoying five years of growth of between 5% and 6%, the country has to focus on the long-term prospect against the ever-changing national and international backdrop.
He says Malaysia’s issues with regards the property sector are not unique – other countries are also dealing with their respective challenges in the property sector.
“The current global economic conditions are important to the Malaysian economy, which, like other countries, has been impacted by ‘cheap money’ and low cost of financing,” he says.
He says just as growth is uneven in different countries, so are the property markets in the developed and developing countries. Prices are rising in UK and Australia, stable in Germany, easing off in the US and falling at a slower pace in Spain and Greece. In China, prices are falling while Singapore property prices are in a state of flux, rising and falling.
The question today is: How long does it take for property markets (in the world) to recover)?
On the home front, Yeah says, the local property prices are not sustainable. Prices are rising faster than income.
“We are over-leveraged and any increase in debt should be in relation with our income level,” he says. Financial institutions’ exposure to the property and construction industry in 2013 were massive.
Loans-to-deposit ratio hovered at 80% at the end of 2013, with almost 45% going into propety sector, says Yeah. Banks are flush with cash, but our household debt is no longer sustainable (for us to borrow anymore). Our property loans suggest that we have reached a stage where we need to rebalance credit growth, says Yeah.
“Property prices are also no longer sustainable. The questions to ask are: How fast are property prices cooling? How sustainable are price increases?
“The challenges for next year are how will we adjust to the new price environment, with the imposition of GST and the continuing subsidy rationalisation?”
The conclusion is that there may be some form of soft landing in the property sector.
Despite this rather sombre introduction, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri Fateh Iskandar Mohamed Mansor is adamant that prices will not come down because land prices and cost of construction are not coming down.
Fateh Iskandar says there are five components that make up the cost and price of a house, namely:
> land cost/price;
> construction cost;
> compliances;
> capital contribution charges; and
> financing and profit margin.
“All five are subject to cost pressures and are on an upward trajectory,” Fateh Iskandar, who heads the Glomac group says.
The daily wages of construction workers have risen by 81%-200% between 2007 and 2013. Building materials like cement, steel bars and bricks have gone up 15%-50% between 2009 and 2013, he says.
Corporatised utility companies like Tenaga Nasional Bhd (TNB), the water concessionaires, Indah Water, Telekom and the Construction Industry Development Board are frontloadiing capital expenditure to consumers by imposing it on private developers, who then pass the costs to house buyers, says Fateh Iskandar.
Compliance costs relate to local authorities’ planning requirements which involves issues like density vs plot ratio, development charges and other planning specifications. These are also passed on to buyers.
“Construction cost makes up 46%. If a developer’s background is agriculture, his land cost may be as little as 10% but for others, this may be 20%. Lenders are imposing stricter requirements when it comes to end-financing and bridging finance issues,” he says.
Since last year, and increasingly this year, the inability to get a mortgage loan has resulted in many walking away from a purchase.
“People want to buy but they are unable to get a loan,” says Fateh Iskandar.
About 80% of households earn less than RM6,900 monthly, and of this, 40% earn less than RM2,000, which explains why many are forced to walk way from a purchase, he says.
Assuming a RM500,000 loan for 30 years, with a 10% downpayment and 90% financing (base lending rate of 6.85% less 2.40%), the monthly repayment is about RM2,519, says Fateh Iskandar.
He says the loan rejection rate is 35%, 30% and 26% in Selangor, Kuala Lumpur and Penang the last two years compared to 20%, 20% and 13% respectively.
Foo Gee Jen, managing director of CH Williams Talhar and Wong Sdn Bhd offers no silver lining. He sums up the state of the housing situation in the Klang Valley with several observations.
Among the most obvious is that speculative activities of the last several years have resulted in high sales but this is accompanied with rising vacancies (see table).
Foo says investors and speculators are buying, or have bought, residential properties that genuine homemakers do not want (because they are either poorly located or are too small.) Foo draws attention to the small office, home office market and its variances.
Other concerns include the high house prices in non-prime locations. New launches in Semenyih and Rawang now cost almost 65% to 75% of those in Petaling Jaya and Bandar Utama, he says.
In Iskandar Malaysia, Johor, Chinese developers have flooded the high-rise market. Development trend has switched from high-rise to landed.
The key trend in Klang Valley’s housing market today has more developments near infrastructure projects, rail and highways.
Does the above observations help to enhance value?
http://www.thestar.com.my/Business/...uestions-about-the-state-of-sector/?style=biz
Saturday, 1 November 2014
By: THEAN LEE CHENG
Is high sales with high vacancies a good thing?
TWO common questions on the local property market... Will house prices ever come down? Is it better to buy now before GST?
While speakers at the 24th National Real Estate Convention, comprising an economist and a few property consultants, try to provide some form of answers, new questions have cropped up, due to interest in the residential sub-segment of the property sector.
Housing transactions comprised a big chunk of total property transactions in terms of both volume and value between 2008 and 2013, with prices taking an upward path at the end of 2009.
During this five-year period, residential sub-segment formed an average of 48% and 63% of total value and volume of the total property market. This has led to house mortgages taking up a major part of the total lending. Hence, the increase in household debt.
Yeah: ‘We need to rebalance credit growth’.
Yeah Kim Leng, the dean of the School of Business at Malaysia University of Science and Technology says the property market is “shaped by so many forces” and must be view against the national and internationl global economy.
While Malaysia has been enjoying five years of growth of between 5% and 6%, the country has to focus on the long-term prospect against the ever-changing national and international backdrop.
He says Malaysia’s issues with regards the property sector are not unique – other countries are also dealing with their respective challenges in the property sector.
“The current global economic conditions are important to the Malaysian economy, which, like other countries, has been impacted by ‘cheap money’ and low cost of financing,” he says.
He says just as growth is uneven in different countries, so are the property markets in the developed and developing countries. Prices are rising in UK and Australia, stable in Germany, easing off in the US and falling at a slower pace in Spain and Greece. In China, prices are falling while Singapore property prices are in a state of flux, rising and falling.
The question today is: How long does it take for property markets (in the world) to recover)?
On the home front, Yeah says, the local property prices are not sustainable. Prices are rising faster than income.
“We are over-leveraged and any increase in debt should be in relation with our income level,” he says. Financial institutions’ exposure to the property and construction industry in 2013 were massive.
Loans-to-deposit ratio hovered at 80% at the end of 2013, with almost 45% going into propety sector, says Yeah. Banks are flush with cash, but our household debt is no longer sustainable (for us to borrow anymore). Our property loans suggest that we have reached a stage where we need to rebalance credit growth, says Yeah.
“Property prices are also no longer sustainable. The questions to ask are: How fast are property prices cooling? How sustainable are price increases?
“The challenges for next year are how will we adjust to the new price environment, with the imposition of GST and the continuing subsidy rationalisation?”
The conclusion is that there may be some form of soft landing in the property sector.
Despite this rather sombre introduction, Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri Fateh Iskandar Mohamed Mansor is adamant that prices will not come down because land prices and cost of construction are not coming down.
Fateh Iskandar says there are five components that make up the cost and price of a house, namely:
> land cost/price;
> construction cost;
> compliances;
> capital contribution charges; and
> financing and profit margin.
“All five are subject to cost pressures and are on an upward trajectory,” Fateh Iskandar, who heads the Glomac group says.
The daily wages of construction workers have risen by 81%-200% between 2007 and 2013. Building materials like cement, steel bars and bricks have gone up 15%-50% between 2009 and 2013, he says.
Corporatised utility companies like Tenaga Nasional Bhd (TNB), the water concessionaires, Indah Water, Telekom and the Construction Industry Development Board are frontloadiing capital expenditure to consumers by imposing it on private developers, who then pass the costs to house buyers, says Fateh Iskandar.
Compliance costs relate to local authorities’ planning requirements which involves issues like density vs plot ratio, development charges and other planning specifications. These are also passed on to buyers.
“Construction cost makes up 46%. If a developer’s background is agriculture, his land cost may be as little as 10% but for others, this may be 20%. Lenders are imposing stricter requirements when it comes to end-financing and bridging finance issues,” he says.
Since last year, and increasingly this year, the inability to get a mortgage loan has resulted in many walking away from a purchase.
“People want to buy but they are unable to get a loan,” says Fateh Iskandar.
About 80% of households earn less than RM6,900 monthly, and of this, 40% earn less than RM2,000, which explains why many are forced to walk way from a purchase, he says.
Assuming a RM500,000 loan for 30 years, with a 10% downpayment and 90% financing (base lending rate of 6.85% less 2.40%), the monthly repayment is about RM2,519, says Fateh Iskandar.
He says the loan rejection rate is 35%, 30% and 26% in Selangor, Kuala Lumpur and Penang the last two years compared to 20%, 20% and 13% respectively.
Foo Gee Jen, managing director of CH Williams Talhar and Wong Sdn Bhd offers no silver lining. He sums up the state of the housing situation in the Klang Valley with several observations.
Among the most obvious is that speculative activities of the last several years have resulted in high sales but this is accompanied with rising vacancies (see table).
Foo says investors and speculators are buying, or have bought, residential properties that genuine homemakers do not want (because they are either poorly located or are too small.) Foo draws attention to the small office, home office market and its variances.
Other concerns include the high house prices in non-prime locations. New launches in Semenyih and Rawang now cost almost 65% to 75% of those in Petaling Jaya and Bandar Utama, he says.
In Iskandar Malaysia, Johor, Chinese developers have flooded the high-rise market. Development trend has switched from high-rise to landed.
The key trend in Klang Valley’s housing market today has more developments near infrastructure projects, rail and highways.
Does the above observations help to enhance value?
http://www.thestar.com.my/Business/...uestions-about-the-state-of-sector/?style=biz
Malaysian Insider 2/11/14
Greater congestion at the Singapore-Johor border crossing and higher toll rates are cramping growth in Iskandar Malaysia and stopping it from making a real difference in the lives of those staying in Malaysia's southern-most state.
Politicians, businesses and a top international school in Iskandar said that without ease of access, the movement of people and money between Johor and Singapore – a lifeline for both – is being choked off.
To fully tap into the potential of the Iskandar Malaysia economic region, they believe that both governments need to make it easy for their citizens to move between both regions.
And that requires Singaporeans and Malaysians to get over their love-hate relationship and realise how inter-dependent they are on each other.
Better paying jobs
A persistent complaint among residents is how their wages cannot keep up with the rising cost of living in southern Johor especially since Iskandar’s property boom has attracted increasing numbers of Singaporeans to move there.
Umno MP Datuk Nur Jazlan Mohamed, whose Pulai constituency lies within Iskandar, said that in order to raise incomes, the authorities have to get Singaporean businesses to come and expand their investments in the economic corridor.
Singaporean enterprises he said, would be attracted to the amount of space available to expand their businesses and the pool of skilled workers already present in southern Johor.
But those businesses will not come with the current traffic problems which can see motorists getting stuck for more than an hour just to clear Customs and Immigration.
Without the high income jobs and demand in services that those businesses bring, Johoreans will not earn better salaries and get opportunities that could raise their living standards, he said.
The reality, he said, is that Malaysia can only rely on Singaporean businesses to come to Iskandar.
“The Chinese and Middle East businesses that Iskandar authorities talked about bringing in have not come in,” he said, despite the huge hype about them a few years ago.
“Malaysian businesses are not interested in coming to Iskandar as they would rather expand or start in the Klang Valley,” said Nur Jazlan.
Figures released by Iskandar Regional Development Authority (IRDA) show that Singaporean businesses are still the top foreign investors in Iskandar, but the amount of money they are pouring in is still small.
In an email interview with The Malaysian Insider, an IRDA spokesperson said that of the RM156.35 billion in investments that have been committed, 63% (RM98.85 billion) are from domestic sources.
The remaining 37% (RM57.49 billion) came from foreign investors. Singaporean companies topped the list with a total committed investment of RM12.05 billion.
IRDA said in 2013 alone, a total of 98,440 jobs have been created in Iskandar Malaysia, 15% of which are skilled jobs.
Taking a toll on business
Ever since toll rates at the Causeway went up last month, a Singapore car on a round trip to Johor Baru has to pay S$12.80 (RM33) in toll charges.
Every business that has relied on weekend Singaporean travellers such as car workshops, car washes, restaurants and supermarkets have seen a plunge of about 30% to 50% in sales since the implementation of the new toll rates .
“For every Singaporean dollar that is spent here, three people benefit,” said a car accessories owner in Bandar Baru Uda who wanted to be identified only as Hong.
Those spending sprees come at a cost, however. Johor Baru residents claim that traders who have tasted the free-wheeling Singaporean shopper are wont to hike up prices and this hurts locals.
“In Johor, Singaporeans basically feel like everything is 60% off everywhere,” said Bukit Indah resident Mohd Izuan Zahid, due to the stronger Singaporean dollar.
As at press time, one Singapore dollar is the equivalent of RM2.56.
The higher spending power creates animosity between travelling Singaporeans and local residents who have to deal with higher prices.
Another glaring problem is that Singapore vehicles would gulp down huge amounts of subsidised petrol before returning to the island republic.
But Nur Jazlan believed that the Singaporean disposal income is an opportunity, provided that there is a greater mass of them spending it in southern Johor on a regular basis.
He has been critical of the new toll charges, saying that it has made crossing the border more costly and would discourage Singapore companies from moving to Iskdandar.
“If Singaporean companies expand here, there will be a greater need for support services for the high income earners working at those companies.
“If you were a low wage earner in Johor, you could probably quit your job to open up a professional childcare centre or laundry service which will earn you more.”
The IRDA spokesperson said the decrease in number of vehicles was only temporary while both sides adjusted to the new rates.
“In the long run, this will not have significant impact on Iskandar Malaysia’s growth targets as we still offer a unique and significant value proposition for Singaporean firms to expand here,” the spokesperson said.
Leaving the baggage behind
But a critical part of making Iskandar and Singapore complement each other is to change mindsets on both sides of the Causeway, said Robert B. Pick, Master of Marlborough College Malaysia in the Nusajaya suburb within Iskandar.
He believes that Iskandar and Singapore can benefit enormously from each other provided the people on each side can put their latent animosity behind them.
The elite Marlborough College has been both a catalyst and a beneficiary of the economic zone. Since opening its doors in 2012, the college has increased its student population every year.
This year, the school managed to attract 730 students, beyond its original target of 600, said Pick. About 60% of them are foreigners, the majority of whom are from the United Kingdom and the United States.
About 200 students come by day from Singapore by minibus and they too get stuck at the Immigration and Customs during the morning jam.
The college would always have a foothold in the Singaporean market but in the three years since it opened, Pick has seen an increase in students from Johor Baru and the Iskandar region.
In order for Iskandar to meet its full potential, he said, there needs to be an acceptance by the powers-that-be and ordinary folk on both sides that their fates are tied.
“If Iskandar is going to work there needs to be a breakdown of these barriers.
“Someone has to take the broad vision and say that Singapore can benefit enormously from Malaysia and Malaysia can benefit from Singapore.
“The animosity and suspicion that still exist from 1965 has to be put to bed; it needs a few like-minded people to stand up and say: this place could be fantastic. Because it could be.” – November 2, 2014.
Greater congestion at the Singapore-Johor border crossing and higher toll rates are cramping growth in Iskandar Malaysia and stopping it from making a real difference in the lives of those staying in Malaysia's southern-most state.
Politicians, businesses and a top international school in Iskandar said that without ease of access, the movement of people and money between Johor and Singapore – a lifeline for both – is being choked off.
To fully tap into the potential of the Iskandar Malaysia economic region, they believe that both governments need to make it easy for their citizens to move between both regions.
And that requires Singaporeans and Malaysians to get over their love-hate relationship and realise how inter-dependent they are on each other.
Better paying jobs
A persistent complaint among residents is how their wages cannot keep up with the rising cost of living in southern Johor especially since Iskandar’s property boom has attracted increasing numbers of Singaporeans to move there.
Umno MP Datuk Nur Jazlan Mohamed, whose Pulai constituency lies within Iskandar, said that in order to raise incomes, the authorities have to get Singaporean businesses to come and expand their investments in the economic corridor.
Singaporean enterprises he said, would be attracted to the amount of space available to expand their businesses and the pool of skilled workers already present in southern Johor.
But those businesses will not come with the current traffic problems which can see motorists getting stuck for more than an hour just to clear Customs and Immigration.
Without the high income jobs and demand in services that those businesses bring, Johoreans will not earn better salaries and get opportunities that could raise their living standards, he said.
The reality, he said, is that Malaysia can only rely on Singaporean businesses to come to Iskandar.
“The Chinese and Middle East businesses that Iskandar authorities talked about bringing in have not come in,” he said, despite the huge hype about them a few years ago.
“Malaysian businesses are not interested in coming to Iskandar as they would rather expand or start in the Klang Valley,” said Nur Jazlan.
Figures released by Iskandar Regional Development Authority (IRDA) show that Singaporean businesses are still the top foreign investors in Iskandar, but the amount of money they are pouring in is still small.
In an email interview with The Malaysian Insider, an IRDA spokesperson said that of the RM156.35 billion in investments that have been committed, 63% (RM98.85 billion) are from domestic sources.
The remaining 37% (RM57.49 billion) came from foreign investors. Singaporean companies topped the list with a total committed investment of RM12.05 billion.
IRDA said in 2013 alone, a total of 98,440 jobs have been created in Iskandar Malaysia, 15% of which are skilled jobs.
Taking a toll on business
Ever since toll rates at the Causeway went up last month, a Singapore car on a round trip to Johor Baru has to pay S$12.80 (RM33) in toll charges.
Every business that has relied on weekend Singaporean travellers such as car workshops, car washes, restaurants and supermarkets have seen a plunge of about 30% to 50% in sales since the implementation of the new toll rates .
“For every Singaporean dollar that is spent here, three people benefit,” said a car accessories owner in Bandar Baru Uda who wanted to be identified only as Hong.
Those spending sprees come at a cost, however. Johor Baru residents claim that traders who have tasted the free-wheeling Singaporean shopper are wont to hike up prices and this hurts locals.
“In Johor, Singaporeans basically feel like everything is 60% off everywhere,” said Bukit Indah resident Mohd Izuan Zahid, due to the stronger Singaporean dollar.
As at press time, one Singapore dollar is the equivalent of RM2.56.
The higher spending power creates animosity between travelling Singaporeans and local residents who have to deal with higher prices.
Another glaring problem is that Singapore vehicles would gulp down huge amounts of subsidised petrol before returning to the island republic.
But Nur Jazlan believed that the Singaporean disposal income is an opportunity, provided that there is a greater mass of them spending it in southern Johor on a regular basis.
He has been critical of the new toll charges, saying that it has made crossing the border more costly and would discourage Singapore companies from moving to Iskdandar.
“If Singaporean companies expand here, there will be a greater need for support services for the high income earners working at those companies.
“If you were a low wage earner in Johor, you could probably quit your job to open up a professional childcare centre or laundry service which will earn you more.”
The IRDA spokesperson said the decrease in number of vehicles was only temporary while both sides adjusted to the new rates.
“In the long run, this will not have significant impact on Iskandar Malaysia’s growth targets as we still offer a unique and significant value proposition for Singaporean firms to expand here,” the spokesperson said.
Leaving the baggage behind
But a critical part of making Iskandar and Singapore complement each other is to change mindsets on both sides of the Causeway, said Robert B. Pick, Master of Marlborough College Malaysia in the Nusajaya suburb within Iskandar.
He believes that Iskandar and Singapore can benefit enormously from each other provided the people on each side can put their latent animosity behind them.
The elite Marlborough College has been both a catalyst and a beneficiary of the economic zone. Since opening its doors in 2012, the college has increased its student population every year.
This year, the school managed to attract 730 students, beyond its original target of 600, said Pick. About 60% of them are foreigners, the majority of whom are from the United Kingdom and the United States.
About 200 students come by day from Singapore by minibus and they too get stuck at the Immigration and Customs during the morning jam.
The college would always have a foothold in the Singaporean market but in the three years since it opened, Pick has seen an increase in students from Johor Baru and the Iskandar region.
In order for Iskandar to meet its full potential, he said, there needs to be an acceptance by the powers-that-be and ordinary folk on both sides that their fates are tied.
“If Iskandar is going to work there needs to be a breakdown of these barriers.
“Someone has to take the broad vision and say that Singapore can benefit enormously from Malaysia and Malaysia can benefit from Singapore.
“The animosity and suspicion that still exist from 1965 has to be put to bed; it needs a few like-minded people to stand up and say: this place could be fantastic. Because it could be.” – November 2, 2014.
Star Online 4/11/14
Johor to ensure timeliness of PIPC project
KOTA TINGGI: Johor will ensure that the development of the multi-billion ringgit Pengerang Integrated Petroleum Complex (PIPC) here will be completed as planned and operational by 2019.
State Public Works, Rural and Regional Development executive councillor Datuk Hasni Mohammad said work on the infrastructure and support facilities for the oil and gas complex was moving on track.
Hasni said among the infrastructure projects that would start soon were the raw water supply project (Pamer) and the upgrading of the existing Federal roads linking the PIPC.
“The construction of the PIPC will see a total estimated investment of RM170bil and is expected to boost our Gross National Income by an additional RM20bil by 2020,” Hasni told reporters at the groundbreaking ceremony of the Pengerang Co-generation Plant (PCP), one of the components of the PIPC.
The PCP, to be built by a consortium comprising Siemens AG, Siemens Malaysia and MMC Engineering Sdn Bhd, will have four co-generation units, with the project costing about RM5bil.
It is expected to generate 1,220 megawatts of electricity and provide a reliable and continous supply of steam of up to 1,480 tonnes hourly for plants within the complex.
Johor to ensure timeliness of PIPC project
KOTA TINGGI: Johor will ensure that the development of the multi-billion ringgit Pengerang Integrated Petroleum Complex (PIPC) here will be completed as planned and operational by 2019.
State Public Works, Rural and Regional Development executive councillor Datuk Hasni Mohammad said work on the infrastructure and support facilities for the oil and gas complex was moving on track.
Hasni said among the infrastructure projects that would start soon were the raw water supply project (Pamer) and the upgrading of the existing Federal roads linking the PIPC.
“The construction of the PIPC will see a total estimated investment of RM170bil and is expected to boost our Gross National Income by an additional RM20bil by 2020,” Hasni told reporters at the groundbreaking ceremony of the Pengerang Co-generation Plant (PCP), one of the components of the PIPC.
The PCP, to be built by a consortium comprising Siemens AG, Siemens Malaysia and MMC Engineering Sdn Bhd, will have four co-generation units, with the project costing about RM5bil.
It is expected to generate 1,220 megawatts of electricity and provide a reliable and continous supply of steam of up to 1,480 tonnes hourly for plants within the complex.
Star Online 4/11/14
Johor to ensure timeliness of PIPC project
KOTA TINGGI: Johor will ensure that the development of the multi-billion ringgit Pengerang Integrated Petroleum Complex (PIPC) here will be completed as planned and operational by 2019.
State Public Works, Rural and Regional Development executive councillor Datuk Hasni Mohammad said work on the infrastructure and support facilities for the oil and gas complex was moving on track.
Hasni said among the infrastructure projects that would start soon were the raw water supply project (Pamer) and the upgrading of the existing Federal roads linking the PIPC.
“The construction of the PIPC will see a total estimated investment of RM170bil and is expected to boost our Gross National Income by an additional RM20bil by 2020,” Hasni told reporters at the groundbreaking ceremony of the Pengerang Co-generation Plant (PCP), one of the components of the PIPC.
The PCP, to be built by a consortium comprising Siemens AG, Siemens Malaysia and MMC Engineering Sdn Bhd, will have four co-generation units, with the project costing about RM5bil.
It is expected to generate 1,220 megawatts of electricity and provide a reliable and continous supply of steam of up to 1,480 tonnes hourly for plants within the complex.
Johor to ensure timeliness of PIPC project
KOTA TINGGI: Johor will ensure that the development of the multi-billion ringgit Pengerang Integrated Petroleum Complex (PIPC) here will be completed as planned and operational by 2019.
State Public Works, Rural and Regional Development executive councillor Datuk Hasni Mohammad said work on the infrastructure and support facilities for the oil and gas complex was moving on track.
Hasni said among the infrastructure projects that would start soon were the raw water supply project (Pamer) and the upgrading of the existing Federal roads linking the PIPC.
“The construction of the PIPC will see a total estimated investment of RM170bil and is expected to boost our Gross National Income by an additional RM20bil by 2020,” Hasni told reporters at the groundbreaking ceremony of the Pengerang Co-generation Plant (PCP), one of the components of the PIPC.
The PCP, to be built by a consortium comprising Siemens AG, Siemens Malaysia and MMC Engineering Sdn Bhd, will have four co-generation units, with the project costing about RM5bil.
It is expected to generate 1,220 megawatts of electricity and provide a reliable and continous supply of steam of up to 1,480 tonnes hourly for plants within the complex.
US: Dow, S&P 500 close at records for second day in a row
7 Nov6:46 AM
[NEW YORK] The Dow and S&P 500 on Thursday closed at new record highs for the second day in a row as investors looked ahead to Friday's jobs report.
The Dow Jones Industrial Average rose 69.94 points (0.40 per cent) to 17,554.47 and the broad-based S&P 500 gained 7.64 (0.38 per cent) at 2,031.21.
The tech-rich Nasdaq Composite Index tacked on 17.75 (0.38 per cent) at 4,638.47.
Art Hogan, chief market strategist at Wunderlich Securities, described sentiment as "fairly positive" following data earlier this week. Reports this week have shown solid activity in the services and manufacturing sectors and a gain in private-sector hiring in October.
Analysts on average expect Friday's nonfarm payroll report will show the US economy added 235,000 jobs in October, slightly fewer than in September but still solid jobs growth.
Hogan said investors were also cheered by comments from European Central Bank President Mario Draghi signaling that the central bank was readying further stimulus measures if needed to counter deflation and stagnation in the ailing eurozone economy.
Chip developer Qualcomm tumbled 8.6 per cent as it disclosed that the US Federal Trade Commission is in the early stages of an investigation into its licensing business.
Electric luxury car maker Tesla Motors gained 4.4 per cent as third-quarter sales came in nearly double the level of a year ago at US$851.8 million, overcoming doubts about the sustainability of its sales.
Whole Foods Market shot up 12.2 per cent after reporting a 5.8 per cent increase in fiscal fourth-quarter profits to US$128 million behind a 3.1 per cent rise in same-store sales.
Online real-estate site Zillow fell 4.2 per cent as its third-quarter net loss deepened to US$16 million from US$1.2 million a year ago following a large charge due to its proposed acquisition of rival Trulia.
Bond prices fell. The yield on the 10-year US Treasury rose to 2.38 per cent from 2.35 per cent Wednesday, while the 30-year advanced to 3.09 per cent from 3.07 per cent. Bond prices and yields move inversely.
AFP
http://www.businesstimes.com.sg/stocks/us-dow-sp-500-close-at-records-for-second-day-in-a-row
7 Nov6:46 AM
[NEW YORK] The Dow and S&P 500 on Thursday closed at new record highs for the second day in a row as investors looked ahead to Friday's jobs report.
The Dow Jones Industrial Average rose 69.94 points (0.40 per cent) to 17,554.47 and the broad-based S&P 500 gained 7.64 (0.38 per cent) at 2,031.21.
The tech-rich Nasdaq Composite Index tacked on 17.75 (0.38 per cent) at 4,638.47.
Art Hogan, chief market strategist at Wunderlich Securities, described sentiment as "fairly positive" following data earlier this week. Reports this week have shown solid activity in the services and manufacturing sectors and a gain in private-sector hiring in October.
Analysts on average expect Friday's nonfarm payroll report will show the US economy added 235,000 jobs in October, slightly fewer than in September but still solid jobs growth.
Hogan said investors were also cheered by comments from European Central Bank President Mario Draghi signaling that the central bank was readying further stimulus measures if needed to counter deflation and stagnation in the ailing eurozone economy.
Chip developer Qualcomm tumbled 8.6 per cent as it disclosed that the US Federal Trade Commission is in the early stages of an investigation into its licensing business.
Electric luxury car maker Tesla Motors gained 4.4 per cent as third-quarter sales came in nearly double the level of a year ago at US$851.8 million, overcoming doubts about the sustainability of its sales.
Whole Foods Market shot up 12.2 per cent after reporting a 5.8 per cent increase in fiscal fourth-quarter profits to US$128 million behind a 3.1 per cent rise in same-store sales.
Online real-estate site Zillow fell 4.2 per cent as its third-quarter net loss deepened to US$16 million from US$1.2 million a year ago following a large charge due to its proposed acquisition of rival Trulia.
Bond prices fell. The yield on the 10-year US Treasury rose to 2.38 per cent from 2.35 per cent Wednesday, while the 30-year advanced to 3.09 per cent from 3.07 per cent. Bond prices and yields move inversely.
AFP
http://www.businesstimes.com.sg/stocks/us-dow-sp-500-close-at-records-for-second-day-in-a-row
Singapore manufacturing PMI expands at faster pace in October
POSTED: 04 Nov 2014 21:31
The Purchasing Managers' Index posted a reading of 51.9 last month – an increase of 1.4 points over September – boosted by a rise in new orders and higher production levels.
SINGAPORE: The Purchasing Managers' Index (PMI) for the manufacturing sector expanded at a faster pace in October, helped by a rise in new orders and higher production levels. This was in contrast to the US and China where PMI readings declined last month.
The Singapore Institute of Purchasing & Materials Management (SIPMM), which compiles the index, said on Tuesday (Nov 4) its PMI posted a reading of 51.9 last month – an increase of 1.4 points over September.
A PMI reading above 50 indicates the manufacturing sector is generally expanding, while a reading below that number suggests activity is waning.
SIPMM attributed the increase in the overall PMI to further expansion in new orders and new export orders, production output and stockholdings of finished goods. Employment expanded last month, reversing from a contraction in September, while input prices declined for the fifth consecutive month.
Meanwhile, a separate PMI reading for the electronics sector rose to 52.5 in October, which was an increase of 0.6 point over September.
The higher PMI readings came about despite signs of weakness in the world's largest economies. On Monday, financial data firm Markit said its US manufacturing PMI fell to 55.9 from September's final reading of 57.5.
This followed news over the weekend that China's official manufacturing PMI had dropped to a five-month low in October, despite government support measures aimed at aiding growth. Japan, however, bucked the trend, with the final Markit/JMMA Japan manufacturing PMI rising to 52.4 in October – lower than the preliminary reading of 52.8 but higher than September's 51.7.
- CNA/cy
http://www.channelnewsasia.com/news/singapore/singapore-manufacturing/1452460.html
POSTED: 04 Nov 2014 21:31
The Purchasing Managers' Index posted a reading of 51.9 last month – an increase of 1.4 points over September – boosted by a rise in new orders and higher production levels.
SINGAPORE: The Purchasing Managers' Index (PMI) for the manufacturing sector expanded at a faster pace in October, helped by a rise in new orders and higher production levels. This was in contrast to the US and China where PMI readings declined last month.
The Singapore Institute of Purchasing & Materials Management (SIPMM), which compiles the index, said on Tuesday (Nov 4) its PMI posted a reading of 51.9 last month – an increase of 1.4 points over September.
A PMI reading above 50 indicates the manufacturing sector is generally expanding, while a reading below that number suggests activity is waning.
SIPMM attributed the increase in the overall PMI to further expansion in new orders and new export orders, production output and stockholdings of finished goods. Employment expanded last month, reversing from a contraction in September, while input prices declined for the fifth consecutive month.
Meanwhile, a separate PMI reading for the electronics sector rose to 52.5 in October, which was an increase of 0.6 point over September.
The higher PMI readings came about despite signs of weakness in the world's largest economies. On Monday, financial data firm Markit said its US manufacturing PMI fell to 55.9 from September's final reading of 57.5.
This followed news over the weekend that China's official manufacturing PMI had dropped to a five-month low in October, despite government support measures aimed at aiding growth. Japan, however, bucked the trend, with the final Markit/JMMA Japan manufacturing PMI rising to 52.4 in October – lower than the preliminary reading of 52.8 but higher than September's 51.7.
- CNA/cy
http://www.channelnewsasia.com/news/singapore/singapore-manufacturing/1452460.html
Johor upbeat on higher investments
BY CHUAH BEE KIM - 7 NOVEMBER 2014 @ 12:43 AM
PASIR GUDANG: The Johor government is confident of achieving its investment target of RM20 billion for the year, up from RM14.4 billion achieved last year.
State Tourism, Domestic Trade and Consumerism Committee chairman Datuk Tee Siew Kiong said the optimism is based on the steady increase of foreign investments flowing into the state.
He said Johor has received investments totalling RM18.7 billion in the first seven months of the year.
Tee also revealed that a foreign multinational company is keen on investing in the state.
“Talks with the international company is now in its final phase, and the state government is confident the investment worth some RM6 billion will be poured into the Sedenak Industrial Park in Kulai.
“Based on the new development, the state government is confident the total investments this year will reach more than RM20 billion, and this will propel Johor as the state with the highest investments in the country.
“We found that the manufacturing sector is a strong contributor to the economic development of Johor, contributing nearly 35 per cent to the gross domestic product of the state,” he said after opening the Langsat Bitumen Terminal in Tanjung Langsat, here, yesterday.
The terminal, built by Puma Energy (M) Sdn Bhd, a subsidiary of the Switzerland-based commodity trading multinational Trafigura Beheer BV, is part of its expansion move to serve the Asian market.
Puma Energy general manager and head of global supply bitumen Jonathan Ellisor said the company’s investment in Malaysia is a
significant step forward as it focuses on the growth of global bitumen capability.
“The modern storage facility can accommodate several grades of bitumen in bulk, with a capacity of 74,000 tonnes,” he said, adding that it is the largest new private terminal in Southeast Asia and is able to handle ships of 1,000 to 45,000 deadweight tonnes.
Puma Energy operates a bitumen distribution network, including a dedicated fleet of bitumen vessels and terminals, across Africa, Asia Pacific and Central America.
http://www.nst.com.my/node/50271
BY CHUAH BEE KIM - 7 NOVEMBER 2014 @ 12:43 AM
PASIR GUDANG: The Johor government is confident of achieving its investment target of RM20 billion for the year, up from RM14.4 billion achieved last year.
State Tourism, Domestic Trade and Consumerism Committee chairman Datuk Tee Siew Kiong said the optimism is based on the steady increase of foreign investments flowing into the state.
He said Johor has received investments totalling RM18.7 billion in the first seven months of the year.
Tee also revealed that a foreign multinational company is keen on investing in the state.
“Talks with the international company is now in its final phase, and the state government is confident the investment worth some RM6 billion will be poured into the Sedenak Industrial Park in Kulai.
“Based on the new development, the state government is confident the total investments this year will reach more than RM20 billion, and this will propel Johor as the state with the highest investments in the country.
“We found that the manufacturing sector is a strong contributor to the economic development of Johor, contributing nearly 35 per cent to the gross domestic product of the state,” he said after opening the Langsat Bitumen Terminal in Tanjung Langsat, here, yesterday.
The terminal, built by Puma Energy (M) Sdn Bhd, a subsidiary of the Switzerland-based commodity trading multinational Trafigura Beheer BV, is part of its expansion move to serve the Asian market.
Puma Energy general manager and head of global supply bitumen Jonathan Ellisor said the company’s investment in Malaysia is a
significant step forward as it focuses on the growth of global bitumen capability.
“The modern storage facility can accommodate several grades of bitumen in bulk, with a capacity of 74,000 tonnes,” he said, adding that it is the largest new private terminal in Southeast Asia and is able to handle ships of 1,000 to 45,000 deadweight tonnes.
Puma Energy operates a bitumen distribution network, including a dedicated fleet of bitumen vessels and terminals, across Africa, Asia Pacific and Central America.
http://www.nst.com.my/node/50271
US keeps pumping out jobs, but no gains for earners
POSTED: 08 Nov 2014 06:22
The US economy built on its record streak of job creation in October with the unemployment rate falling a notch to 5.8 per cent, its lowest level in six years.
WASHINGTON: The US economy built on its record streak of job creation in October with the unemployment rate falling a notch to 5.8 per cent, its lowest level in six years.
But the data released on Friday (Nov 7) also showed that earners are still not benefitting much from the recovery, illustrating why President Barack Obama's Democrats remain unpopular with some of the electorate.
Three days after voters delivered a thumping to Democrats in midterm elections, the Labor Department reported that the country churned out 214,000 net new jobs last month. That kept alive a nine-month streak over the 200,000 benchmark, and a record 56 months straight of growth in the US jobs market.
"With today's report, the unemployment rate is falling as fast as at any point in the last thirty years, and the economy is on pace for its best year of job growth since the late 1990s," said Jason Furman, Obama's top economic advisor.
The data suggested even more strength than that: the numbers for the previous two months were revised upward, and showed that the economy is smoothly absorbing more entrants and returnees into the jobs market.
For the past two years the sharp fall in the overall jobless rate, from 7.8 per cent in October 2012 to 5.8 per cent now, had been criticized as reflecting as much the large number of dropouts from the jobs market as the new jobs generated. But October's numbers showed the employment-to-population ratio, which plummeted in the 2008-2009 recession, crept up two-tenths of a per centage point to 59.2 per cent - still low, but the best level since August 2009.
"The sole reason why the unemployment rate had declined between January 2010 and December 2013 was the drop in the participation rate," said Harm Bandholz UniCredit.
"This pattern has changed completely since the beginning of this year... the entire decline in the jobless rate has been the result of strong employment gains."
WAGES STILL FLAT
But the numbers were not all so buoyant, and pointed to why the Republicans swept Tuesday's congressional elections, wresting power in the Senate from the Democrats and expanding their power in the House.
Even as the economy has generated some two million new jobs so far this year, voters said they were unhappy over conditions and laid the blame on Obama and his party.
Friday's jobs data showed that wages remain depressed despite the long stretch of job creation.
Economist Dean Baker of the Centre for Economic and Policy Research in Washington pointed out that average hourly wage growth is up at an annual rate of 2.0 per cent since last year, barely ahead of inflation.
And other analysts note that the new hiring is strongly weighted toward low-paid jobs. The October report showed the strongest new hiring was in the restaurant and retail industries, both low-wage sectors.
"This jobs mix issue remains an important factor in average hourly earnings growth remaining stuck," said Doug Handler, chief US economist at IHS. "Jobs isn't really this issue. It's 'good' jobs, and improved pay for those already punching the clock."
Even so, the numbers showed that the jobs market is taking up slack and that is likely to turn into higher wages over the next year.
"With skilled-labour shortages getting only worse, and employment gains outperforming the rise in the labour force... wage gains should accelerate further in the coming months," Bandholz predicted.
- AFP/fl
http://www.channelnewsasia.com/news/business/us-keeps-pumping-out-jobs/1460596.html
POSTED: 08 Nov 2014 06:22
The US economy built on its record streak of job creation in October with the unemployment rate falling a notch to 5.8 per cent, its lowest level in six years.
WASHINGTON: The US economy built on its record streak of job creation in October with the unemployment rate falling a notch to 5.8 per cent, its lowest level in six years.
But the data released on Friday (Nov 7) also showed that earners are still not benefitting much from the recovery, illustrating why President Barack Obama's Democrats remain unpopular with some of the electorate.
Three days after voters delivered a thumping to Democrats in midterm elections, the Labor Department reported that the country churned out 214,000 net new jobs last month. That kept alive a nine-month streak over the 200,000 benchmark, and a record 56 months straight of growth in the US jobs market.
"With today's report, the unemployment rate is falling as fast as at any point in the last thirty years, and the economy is on pace for its best year of job growth since the late 1990s," said Jason Furman, Obama's top economic advisor.
The data suggested even more strength than that: the numbers for the previous two months were revised upward, and showed that the economy is smoothly absorbing more entrants and returnees into the jobs market.
For the past two years the sharp fall in the overall jobless rate, from 7.8 per cent in October 2012 to 5.8 per cent now, had been criticized as reflecting as much the large number of dropouts from the jobs market as the new jobs generated. But October's numbers showed the employment-to-population ratio, which plummeted in the 2008-2009 recession, crept up two-tenths of a per centage point to 59.2 per cent - still low, but the best level since August 2009.
"The sole reason why the unemployment rate had declined between January 2010 and December 2013 was the drop in the participation rate," said Harm Bandholz UniCredit.
"This pattern has changed completely since the beginning of this year... the entire decline in the jobless rate has been the result of strong employment gains."
WAGES STILL FLAT
But the numbers were not all so buoyant, and pointed to why the Republicans swept Tuesday's congressional elections, wresting power in the Senate from the Democrats and expanding their power in the House.
Even as the economy has generated some two million new jobs so far this year, voters said they were unhappy over conditions and laid the blame on Obama and his party.
Friday's jobs data showed that wages remain depressed despite the long stretch of job creation.
Economist Dean Baker of the Centre for Economic and Policy Research in Washington pointed out that average hourly wage growth is up at an annual rate of 2.0 per cent since last year, barely ahead of inflation.
And other analysts note that the new hiring is strongly weighted toward low-paid jobs. The October report showed the strongest new hiring was in the restaurant and retail industries, both low-wage sectors.
"This jobs mix issue remains an important factor in average hourly earnings growth remaining stuck," said Doug Handler, chief US economist at IHS. "Jobs isn't really this issue. It's 'good' jobs, and improved pay for those already punching the clock."
Even so, the numbers showed that the jobs market is taking up slack and that is likely to turn into higher wages over the next year.
"With skilled-labour shortages getting only worse, and employment gains outperforming the rise in the labour force... wage gains should accelerate further in the coming months," Bandholz predicted.
- AFP/fl
http://www.channelnewsasia.com/news/business/us-keeps-pumping-out-jobs/1460596.html
Dow, S&P 500 inch to records after October jobs report
POSTED: 08 Nov 2014 05:45
The Dow and S&P 500 on Friday (Nov 7) edged to fresh records after the Labor Department reported the US economy added 214,000 jobs in October and the unemployment rate fell.
NEW YORK: The Dow and S&P 500 on Friday (Nov 7) edged to fresh records after the Labor Department reported the US economy added 214,000 jobs in October and the unemployment rate fell.
The Dow Jones Industrial Average gained 19.46 points (0.11 per cent) at 17,573.93, while the S&P 500 edged up 0.71 (0.03 per cent) to 2,031.92. Friday marked the third straight record close for the two indices. The tech-rich Nasdaq Composite Index fell 5.94 (0.13 per cent) to 4,632.53.
The October jobs growth came in below the 235,000 expected by analysts. But the Labor Department revised upward by a total of 31,000 the number of net new jobs gained in the previous two months. The report also said the unemployment rate fell one-tenth of a percentage point to 5.8 per cent, its lowest level since July 2008.
Analysts said the report marked another month of job growth above 200,000, but was not strong enough to prod the Federal Reserve to shift from its plan to keep interest rates low well into 2015.
The report "was fairly good for markets considering that it indicated a continued slow improvement in the labour market, which should continue to keep rates low into the second half of next year, if not longer," said David Levy, portfolio manager at Kenjol Capital Management.
Dow member The Walt Disney Company fell 2.2 per cent after reporting a 7.5 per cent rise in fourth-quarter earnings to $1.5 billion. Analysts expressed concern that the entertainment giant's earnings growth would slow in 2015.
Sears Holdings jumped 31.0 per cent as it announced it was considering the sale of some of its real estate to a newly formed real estate investment trust. The company could sell property housing 200-300 stores and then lease back the space from the trust.
Health-care company Humana fell 6.6 per cent after it reported third-quarter earnings of $1.85 per share, below the $2.00 projected by analysts.
Salix Pharmaceuticals plummeted 34 per cent as it disclosed that it had notified the Securities and Exchange Commission that it was investigating prior financial statements. Salix said its board had appointed outside counsel to review its prior statements about wholesaler inventory levels.
Bond prices rose sharply. The yield on the 10-year US Treasury fell to 2.31 per cent from 2.38 per cent Thursday, while the 30-year declined to 3.05 per cent from 3.09 per cent. Bond prices and yields move inversely.
- AFP/fl
http://www.channelnewsasia.com/news/business/dow-s-p-500-inch-to/1460582.html
POSTED: 08 Nov 2014 05:45
The Dow and S&P 500 on Friday (Nov 7) edged to fresh records after the Labor Department reported the US economy added 214,000 jobs in October and the unemployment rate fell.
NEW YORK: The Dow and S&P 500 on Friday (Nov 7) edged to fresh records after the Labor Department reported the US economy added 214,000 jobs in October and the unemployment rate fell.
The Dow Jones Industrial Average gained 19.46 points (0.11 per cent) at 17,573.93, while the S&P 500 edged up 0.71 (0.03 per cent) to 2,031.92. Friday marked the third straight record close for the two indices. The tech-rich Nasdaq Composite Index fell 5.94 (0.13 per cent) to 4,632.53.
The October jobs growth came in below the 235,000 expected by analysts. But the Labor Department revised upward by a total of 31,000 the number of net new jobs gained in the previous two months. The report also said the unemployment rate fell one-tenth of a percentage point to 5.8 per cent, its lowest level since July 2008.
Analysts said the report marked another month of job growth above 200,000, but was not strong enough to prod the Federal Reserve to shift from its plan to keep interest rates low well into 2015.
The report "was fairly good for markets considering that it indicated a continued slow improvement in the labour market, which should continue to keep rates low into the second half of next year, if not longer," said David Levy, portfolio manager at Kenjol Capital Management.
Dow member The Walt Disney Company fell 2.2 per cent after reporting a 7.5 per cent rise in fourth-quarter earnings to $1.5 billion. Analysts expressed concern that the entertainment giant's earnings growth would slow in 2015.
Sears Holdings jumped 31.0 per cent as it announced it was considering the sale of some of its real estate to a newly formed real estate investment trust. The company could sell property housing 200-300 stores and then lease back the space from the trust.
Health-care company Humana fell 6.6 per cent after it reported third-quarter earnings of $1.85 per share, below the $2.00 projected by analysts.
Salix Pharmaceuticals plummeted 34 per cent as it disclosed that it had notified the Securities and Exchange Commission that it was investigating prior financial statements. Salix said its board had appointed outside counsel to review its prior statements about wholesaler inventory levels.
Bond prices rose sharply. The yield on the 10-year US Treasury fell to 2.31 per cent from 2.38 per cent Thursday, while the 30-year declined to 3.05 per cent from 3.09 per cent. Bond prices and yields move inversely.
- AFP/fl
http://www.channelnewsasia.com/news/business/dow-s-p-500-inch-to/1460582.html
Asia-Pacific CEOs more bullish on revenue growth over next 12 months: PwC survey
By Lynette [email protected]@LynetteKhooBT
8 Nov 2:00 PM
CHIEF executive officers (CEOs) in the Asia-Pacific region are more confident of growth over the next 12 months, with the majority seen putting their money where their mouth is.
A survey of more than 600 CEOS in Asia-Pacific by PwC showed that some 46 per cent of respondents say they are "very confident" of revenue growth over the next 12 months, up from 42 per cent a year ago and 36 per cent in 2012, despite slowing growth in China, a major economic engine for the region.
The majority of CEOs (67 per cent) say they plan to increase investment in the Asia Pacific Economic Cooperation (Apec) region over the next 12 months. Such plans span across all 21 Apec member economies, with China, the US, Indonesia, Hong Kong and Singapore being the hottest investment destinations.
More than half of respondents revealed that they are either building or expanding facilities in Apec economies in the next three to five years. Among them, 37 per cent are building or expanding their facilities in China.
Some 38 per cent of the respondents also expect to raise their organisations' headcount globally by at least 5 per cent a year over the same period.
The PwC report, released on Saturday at an Apec meeting in Beijing, noted that underscoring this confidence among CEOs is "a vision of an Asia Pacific region that is more connected, both physically and virtually, and an outlook for more balanced regional growth".
PwC International chairman Dennis Nally noted that one loud and clear response from CEOs is the need to "be bold and break down barriers to growth".
"Asia Pacific today stands at a turning point as advancing technologies transcend national boundaries and create new demands and in some places, new industries," Mr Nally said in the report.
CEOs have expressed a desire to see the Trans-Pacific Partnership being finalised, intellectual property issues being addressed and greater regulatory harmony in the region, he added.
A majority of respondents believe Apec is moving closer to a Free Trade Area of the Asia Pacific (FTAAP), but 55 per cent concede that the progress is slow.
According to the report, businesses are looking for policy relief on behind-the-border issues. Changes to non-tariff trade barriers are ranked top in terms of having the most impact on their business.
Nearly 60 per cent of executives surveyed say they are now more willing to share insights and resources with business partners in order to speed up product development and gain market access. And more than 40 per cent say their company will likely enter a business combination outside of their core industry.
Jiang Zengwei, chairman of Apec CEO Summit 2014 Host Committee and China Council for the Promotion of International Trade, noted that the report highlights a continual shift towards greater inter-connectedness of businesses. "Business models used to be focused on competitiveness and the pursuit of self-interest. Now, the survey tells us there's an ever greater aspiration to formulate strategies that built trust and broader collaborations," Mr Jiang said.
He noted that the digital economy is also shaping the way businesses view risks and challenges. As the e-commerce landscape continues to evolve, opportunities that were once thought to be inconceivable are now within reach. "Against this backdrop, governments should continue to play a major role in facilitating greater cooperation and integration," Mr Jiang said.
http://www.businesstimes.com.sg/com...revenue-growth-over-next-12-months-pwc-survey
By Lynette [email protected]@LynetteKhooBT
8 Nov 2:00 PM
CHIEF executive officers (CEOs) in the Asia-Pacific region are more confident of growth over the next 12 months, with the majority seen putting their money where their mouth is.
A survey of more than 600 CEOS in Asia-Pacific by PwC showed that some 46 per cent of respondents say they are "very confident" of revenue growth over the next 12 months, up from 42 per cent a year ago and 36 per cent in 2012, despite slowing growth in China, a major economic engine for the region.
The majority of CEOs (67 per cent) say they plan to increase investment in the Asia Pacific Economic Cooperation (Apec) region over the next 12 months. Such plans span across all 21 Apec member economies, with China, the US, Indonesia, Hong Kong and Singapore being the hottest investment destinations.
More than half of respondents revealed that they are either building or expanding facilities in Apec economies in the next three to five years. Among them, 37 per cent are building or expanding their facilities in China.
Some 38 per cent of the respondents also expect to raise their organisations' headcount globally by at least 5 per cent a year over the same period.
The PwC report, released on Saturday at an Apec meeting in Beijing, noted that underscoring this confidence among CEOs is "a vision of an Asia Pacific region that is more connected, both physically and virtually, and an outlook for more balanced regional growth".
PwC International chairman Dennis Nally noted that one loud and clear response from CEOs is the need to "be bold and break down barriers to growth".
"Asia Pacific today stands at a turning point as advancing technologies transcend national boundaries and create new demands and in some places, new industries," Mr Nally said in the report.
CEOs have expressed a desire to see the Trans-Pacific Partnership being finalised, intellectual property issues being addressed and greater regulatory harmony in the region, he added.
A majority of respondents believe Apec is moving closer to a Free Trade Area of the Asia Pacific (FTAAP), but 55 per cent concede that the progress is slow.
According to the report, businesses are looking for policy relief on behind-the-border issues. Changes to non-tariff trade barriers are ranked top in terms of having the most impact on their business.
Nearly 60 per cent of executives surveyed say they are now more willing to share insights and resources with business partners in order to speed up product development and gain market access. And more than 40 per cent say their company will likely enter a business combination outside of their core industry.
Jiang Zengwei, chairman of Apec CEO Summit 2014 Host Committee and China Council for the Promotion of International Trade, noted that the report highlights a continual shift towards greater inter-connectedness of businesses. "Business models used to be focused on competitiveness and the pursuit of self-interest. Now, the survey tells us there's an ever greater aspiration to formulate strategies that built trust and broader collaborations," Mr Jiang said.
He noted that the digital economy is also shaping the way businesses view risks and challenges. As the e-commerce landscape continues to evolve, opportunities that were once thought to be inconceivable are now within reach. "Against this backdrop, governments should continue to play a major role in facilitating greater cooperation and integration," Mr Jiang said.
http://www.businesstimes.com.sg/com...revenue-growth-over-next-12-months-pwc-survey
KL trade surplus widens as import growth slows
By S Jayasankaran [email protected]
8 Nov 5:50 AM
Kuala Lumpur
MALAYSIA posted a sluggish 2 per cent year-on-year rise in export growth in September, underlining the central bank's recent remarks about the uneven pace of growth in advanced economies.
Nevertheless, a compression in import growth (1.1 per cent from 7.6 per cent in August) caused the trade surplus to widen sharply to RM9.3 billion (S$3.6 billion) from RM3.9 billion in August.
According to data released by the Department of Statistics on Friday, the export growth was led by palm oil (17.8 per cent), electronics (5.3 per cent), chemicals (3.5 per cent) and liquefied natural gas (2.4 per cent). Crude petroleum exports, however, contracted 9 per cent.
On a global level, growth was strong to the United States (16.2 per cent), Singapore (8.7 per cent) and India (56 per cent), but was weak to China (-8.4 per cent) and Japan (-1.8 per cent).
The figures reinforce Bank Negara Malaysia's (BNM) comments on Thursday that the "downside risks to global growth have increased".
Indeed, Malaysia's global export growth figures are generally consistent with most economic assessments of a US recovery and a growing weakness in both China and Japan's demand.
Meanwhile, BNM continued its wait-and-see approach to monetary policy on Thursday, keeping rates unchanged at 3.25 per cent, as was widely expected. It described its current stance as "accommodative", amid moderating GDP (gross domestic product) growth and higher inflation.
In its statement, the central bank highlighted the uneven pace of developed-country growth and for the first time acknowledged that "downside risks to global growth have increased".
As the September figures signalled, exports are moderating but BNM suggested that domestic demand was expected to remain the key driver of growth.
Inflation is projected to trend higher this year and BNM acknowledged that it "will continue to be above its long-term average next year". Even so, it saw some mitigating impact from the "absence of external price pressures and more moderate demand conditions".
But most economists think another rate hike is inevitable.
"We are penciling in a 25 basis point policy rate hike (to 3.5 per cent) in the middle of next year, after the 6 per cent goods and services tax (GST) is implemented in April 2015," said Bank of America Merrill Lynch economist Chua Hak Bin in a report on Thursday.
According to government estimates, inflation is projected to come in at 4-5 per cent in 2015 from an average 3.3 per cent in the first nine months of this year.
Dr Chua concurred: "We are forecasting inflation to average at 3.6 per cent in 2014 and a higher 4.5 per cent in 2015."
However, he has misgivings about the government's ability to meet its budget deficit targets which it projects to narrow to 3 per cent of GDP next year.
"Falling oil prices are, however, complicating the picture, given the government's high dependency on oil-related revenue (30 per cent of total revenue in 2013)," Dr Chua explained. "The probability of a miss to the 2015 budget deficit target is high if oil prices stay low or fail to recover significantly."
http://www.businesstimes.com.sg/government-economy/kl-trade-surplus-widens-as-import-growth-slows
By S Jayasankaran [email protected]
8 Nov 5:50 AM
Kuala Lumpur
MALAYSIA posted a sluggish 2 per cent year-on-year rise in export growth in September, underlining the central bank's recent remarks about the uneven pace of growth in advanced economies.
Nevertheless, a compression in import growth (1.1 per cent from 7.6 per cent in August) caused the trade surplus to widen sharply to RM9.3 billion (S$3.6 billion) from RM3.9 billion in August.
According to data released by the Department of Statistics on Friday, the export growth was led by palm oil (17.8 per cent), electronics (5.3 per cent), chemicals (3.5 per cent) and liquefied natural gas (2.4 per cent). Crude petroleum exports, however, contracted 9 per cent.
On a global level, growth was strong to the United States (16.2 per cent), Singapore (8.7 per cent) and India (56 per cent), but was weak to China (-8.4 per cent) and Japan (-1.8 per cent).
The figures reinforce Bank Negara Malaysia's (BNM) comments on Thursday that the "downside risks to global growth have increased".
Indeed, Malaysia's global export growth figures are generally consistent with most economic assessments of a US recovery and a growing weakness in both China and Japan's demand.
Meanwhile, BNM continued its wait-and-see approach to monetary policy on Thursday, keeping rates unchanged at 3.25 per cent, as was widely expected. It described its current stance as "accommodative", amid moderating GDP (gross domestic product) growth and higher inflation.
In its statement, the central bank highlighted the uneven pace of developed-country growth and for the first time acknowledged that "downside risks to global growth have increased".
As the September figures signalled, exports are moderating but BNM suggested that domestic demand was expected to remain the key driver of growth.
Inflation is projected to trend higher this year and BNM acknowledged that it "will continue to be above its long-term average next year". Even so, it saw some mitigating impact from the "absence of external price pressures and more moderate demand conditions".
But most economists think another rate hike is inevitable.
"We are penciling in a 25 basis point policy rate hike (to 3.5 per cent) in the middle of next year, after the 6 per cent goods and services tax (GST) is implemented in April 2015," said Bank of America Merrill Lynch economist Chua Hak Bin in a report on Thursday.
According to government estimates, inflation is projected to come in at 4-5 per cent in 2015 from an average 3.3 per cent in the first nine months of this year.
Dr Chua concurred: "We are forecasting inflation to average at 3.6 per cent in 2014 and a higher 4.5 per cent in 2015."
However, he has misgivings about the government's ability to meet its budget deficit targets which it projects to narrow to 3 per cent of GDP next year.
"Falling oil prices are, however, complicating the picture, given the government's high dependency on oil-related revenue (30 per cent of total revenue in 2013)," Dr Chua explained. "The probability of a miss to the 2015 budget deficit target is high if oil prices stay low or fail to recover significantly."
http://www.businesstimes.com.sg/government-economy/kl-trade-surplus-widens-as-import-growth-slows
M'sia GDP forecast to grow amid debt concerns
A new debt threat in the form of 1MDB, which recently recorded a loss of RM665m, may be emerging
By S Jayasankaran [email protected]
11 Nov 5:50 AM
Kuala Lumpur
WHILE prospects for Malaysia's economic growth this year and the next remain strong, concerns about its stubbornly high government and household debt levels continue to cast a pall over its performance.
On Monday, at least two economic research houses predicted that the country's real gross domestic product (GDP) would record between 5.8 per cent and 6 per cent in 2014 from 4.7 per cent last year and remain slightly over 5 per cent in 2015.
Hwang-DBS Investment Bank maintained its growth forecast of 5.8 per cent this year while Hong Leong Investment Bank expressed a slightly more bullish forecast of 6 per cent. Both said growth would come about through unflagging domestic demand and a recovery in exports thanks to economic recovery in the United States.
For all the South-east Asian country's strong fundamentals, however, the three international rating agencies have expressed concerns about its debt levels. None except Fitch Ratings, however, has downgraded the country's sovereign.
In July 2012, Fitch maintained Malaysia's sovereign at A- but downgraded its "outlook" from "stable" to "negative", a position it has maintained ever since due to what it said were concerns over the country's public finances.
Malaysia has run a budget deficit since 1998 but has pruned it back from its height of nearly 8 per cent of GDP to a projected 3.5 per cent by the end of the year. Its share of federal government debt to GDP is 53 per cent, a level that's surpassed only by India and Sri Lanka, outside of Japan.
Meanwhile, its share of household debt to GDP, at 86 per cent, is the highest in Asia. But its loans impairment ratio is low and mostly concentrated among mortgages.
Having said that, a new debt threat in the shape of sovereign wealth fund 1MDB (1Malaysia Development Berhad), an entity that's been dogged by controversy since its inception in 2009, may be emerging.
IMDB recently recorded a loss of RM665 million (S$257 million) for the year to March 31, 2014. Such is the alarm being generated by the fund that even former premier Mahathir Mohamad felt compelled recently to question its RM38 billion in debt that it had racked up in five years.
None of the rating agencies has so far flagged 1MDB as a serious concern but they all have begun to mention it. And it's telling that Bank of America Merrill Lynch economist Chua Hak Bin now routinely flags its performance in his regular economic reports on the country.
For all that, however, there is no indication that the economy is in peril. Even including off-balance sheet items and contingent liabilities, Malaysia's total debt hovers around 70 per cent of GDP, far below the initial warning siren of 85 per cent.
Meanwhile, the country's international reserves are over US$138 billion, a figure that all three rating agencies agree is healthy. According to Hwang-DBS, Malaysia's exports of goods and services in real terms are expected to recover to 5 per cent in 2014 and maintain that level in 2015.
Fears of a repeat of the current-account deficit that occurred during the 1997-98 Asian financial crisis have abated. But the surplus may have undergone a structural decline from over 13 per cent of GDP between 2002 and 2010 to between 3 and 5 per cent of GDP currently.
*Malaysia's support for wealth fund debt questioned
http://www.businesstimes.com.sg/government-economy/msia-gdp-forecast-to-grow-amid-debt-concerns
A new debt threat in the form of 1MDB, which recently recorded a loss of RM665m, may be emerging
By S Jayasankaran [email protected]
11 Nov 5:50 AM
Kuala Lumpur
WHILE prospects for Malaysia's economic growth this year and the next remain strong, concerns about its stubbornly high government and household debt levels continue to cast a pall over its performance.
On Monday, at least two economic research houses predicted that the country's real gross domestic product (GDP) would record between 5.8 per cent and 6 per cent in 2014 from 4.7 per cent last year and remain slightly over 5 per cent in 2015.
Hwang-DBS Investment Bank maintained its growth forecast of 5.8 per cent this year while Hong Leong Investment Bank expressed a slightly more bullish forecast of 6 per cent. Both said growth would come about through unflagging domestic demand and a recovery in exports thanks to economic recovery in the United States.
For all the South-east Asian country's strong fundamentals, however, the three international rating agencies have expressed concerns about its debt levels. None except Fitch Ratings, however, has downgraded the country's sovereign.
In July 2012, Fitch maintained Malaysia's sovereign at A- but downgraded its "outlook" from "stable" to "negative", a position it has maintained ever since due to what it said were concerns over the country's public finances.
Malaysia has run a budget deficit since 1998 but has pruned it back from its height of nearly 8 per cent of GDP to a projected 3.5 per cent by the end of the year. Its share of federal government debt to GDP is 53 per cent, a level that's surpassed only by India and Sri Lanka, outside of Japan.
Meanwhile, its share of household debt to GDP, at 86 per cent, is the highest in Asia. But its loans impairment ratio is low and mostly concentrated among mortgages.
Having said that, a new debt threat in the shape of sovereign wealth fund 1MDB (1Malaysia Development Berhad), an entity that's been dogged by controversy since its inception in 2009, may be emerging.
IMDB recently recorded a loss of RM665 million (S$257 million) for the year to March 31, 2014. Such is the alarm being generated by the fund that even former premier Mahathir Mohamad felt compelled recently to question its RM38 billion in debt that it had racked up in five years.
None of the rating agencies has so far flagged 1MDB as a serious concern but they all have begun to mention it. And it's telling that Bank of America Merrill Lynch economist Chua Hak Bin now routinely flags its performance in his regular economic reports on the country.
For all that, however, there is no indication that the economy is in peril. Even including off-balance sheet items and contingent liabilities, Malaysia's total debt hovers around 70 per cent of GDP, far below the initial warning siren of 85 per cent.
Meanwhile, the country's international reserves are over US$138 billion, a figure that all three rating agencies agree is healthy. According to Hwang-DBS, Malaysia's exports of goods and services in real terms are expected to recover to 5 per cent in 2014 and maintain that level in 2015.
Fears of a repeat of the current-account deficit that occurred during the 1997-98 Asian financial crisis have abated. But the surplus may have undergone a structural decline from over 13 per cent of GDP between 2002 and 2010 to between 3 and 5 per cent of GDP currently.
*Malaysia's support for wealth fund debt questioned
http://www.businesstimes.com.sg/government-economy/msia-gdp-forecast-to-grow-amid-debt-concerns
S'pore consumer confidence climbs to highest levels in 3 years
By Nisha [email protected]@Nisha_BT
11 Nov 5:50 AM
Singapore
CONSUMER confidence in Singapore climbed to its highest levels in three years, driven by an optimism in future job prospects and a positive outlook on personal finances.
According to the latest Consumer Confidence Index by Nielsen, consumer confidence levels in Singapore surpassed 100 points to hit 103 points in Q3 this year. Singapore's Consumer Confidence has remained under 100 points since Q3 2011.
The rise in consumer confidence is fuelled largely by a eight percentage point increase from the previous quarter in the number of consumers who feel that future job prospects would be positive. In addition, there was a four percentage point rise in consumers' outlook on their personal finances. Fifty-nine per cent of Singaporeans see their personal finances in the coming year as good or excellent.
Consumers in Singapore are also focused on saving for the future with two thirds putting spare cash into savings after living expenses are covered.
At the same time, there was an upswing in the number of Singaporeans planning to go on holiday (up eight percentage points to 51 per cent), buy new clothes (up three percentage points to 31 per cent) or pay off debts (up eight percentage points to 30 per cent).
"The consistent, steady climb of consumer confidence in the region highlights strong underlying factors that are buoying consumer outlook on the future," said Vishal Bali, Nielsen's managing director (consumer insights) for South-east Asia, North Asia and Pacific. "The recently emerged clarity on the political front in some markets and a variety of underlying economic factors have helped drive the surge in consumer confidence."
Across South-east Asia, consumer confidence picked up further in Q3, with Indonesia recording a consumer confidence index of 125, up two points from Q2. It was followed by the Philippines with an index score of 115, down from 120 in the previous quarter. Thailand showed the highest improvement in the region, with an eight-point improvement to 113. Vietnam's consumer confidence index went up three points to 101, while Malaysia's rose six points to 99.
http://www.businesstimes.com.sg/con...onfidence-climbs-to-highest-levels-in-3-years
By Nisha [email protected]@Nisha_BT
11 Nov 5:50 AM
Singapore
CONSUMER confidence in Singapore climbed to its highest levels in three years, driven by an optimism in future job prospects and a positive outlook on personal finances.
According to the latest Consumer Confidence Index by Nielsen, consumer confidence levels in Singapore surpassed 100 points to hit 103 points in Q3 this year. Singapore's Consumer Confidence has remained under 100 points since Q3 2011.
The rise in consumer confidence is fuelled largely by a eight percentage point increase from the previous quarter in the number of consumers who feel that future job prospects would be positive. In addition, there was a four percentage point rise in consumers' outlook on their personal finances. Fifty-nine per cent of Singaporeans see their personal finances in the coming year as good or excellent.
Consumers in Singapore are also focused on saving for the future with two thirds putting spare cash into savings after living expenses are covered.
At the same time, there was an upswing in the number of Singaporeans planning to go on holiday (up eight percentage points to 51 per cent), buy new clothes (up three percentage points to 31 per cent) or pay off debts (up eight percentage points to 30 per cent).
"The consistent, steady climb of consumer confidence in the region highlights strong underlying factors that are buoying consumer outlook on the future," said Vishal Bali, Nielsen's managing director (consumer insights) for South-east Asia, North Asia and Pacific. "The recently emerged clarity on the political front in some markets and a variety of underlying economic factors have helped drive the surge in consumer confidence."
Across South-east Asia, consumer confidence picked up further in Q3, with Indonesia recording a consumer confidence index of 125, up two points from Q2. It was followed by the Philippines with an index score of 115, down from 120 in the previous quarter. Thailand showed the highest improvement in the region, with an eight-point improvement to 113. Vietnam's consumer confidence index went up three points to 101, while Malaysia's rose six points to 99.
http://www.businesstimes.com.sg/con...onfidence-climbs-to-highest-levels-in-3-years
US stocks eke out new records for fifth straight session
POSTED: 12 Nov 2014 05:19
UPDATED: 12 Nov 2014 05:46
The Dow Jones Industrial Average was up a scant 1.16 point (0.01 per cent) at 17,614.90. Volume was light on the Veterans Day holiday; the bond market was closed.
NEW YORK: US stocks set fresh records for the fifth straight session on Tuesday (Nov 11), but just barely, amid holiday-dampened trade.
The Dow Jones Industrial Average was up a scant 1.16 point (0.01 per cent) at 17,614.90, and the broad-market Standard & Poor's 500 edged up 1.42 point (0.07 per cent) to 2,039.68.
Both the Dow and the S&P had scored records in the prior four sessions. The tech-rich Nasdaq Composite outpaced the other major benchmarks, rising 8.94 points (0.19 per cent) to 4,660.56. Volume was light on the Veterans Day holiday; the bond market was closed.
"The US equity markets, seemingly lacking a catalyst, traded in a relatively tight range around the flatline before ultimately closing with minimal gains," said Charles Schwab in a market note.
Health-related stocks were strong performers. On the Dow, UnitedHealth Group led the blue chips with a nearly one percent gain, followed close behind by Merck.
Financials were under pressure. Dow members JPMorgan Chase dropped 0.9 per cent and American Express shed 0.7 per cent.
Chinese e-commerce giant Alibaba reported US$8 billion of goods were sold so far through its online payment arm Alipay in its first global Singles Day promotion on Tuesday, with more than three hours to go before the end of the promotion at midnight. Shares in Alibaba, which completed the world's largest stock offering in September, tumbled 3.9 per cent.
DR Horton, one of the largest US home builders, reported fiscal fourth-quarter earnings of US$166.3 million that missed estimates, but higher revenues on stronger home prices. Shares jumped 2.2 per cent.
Ford Motor advanced 2.6 per cent after launching its new F-150 pickup truck, made with an aluminum alloy body and bed to improve fuel efficiency.
Zynga zoomed 10.9 per cent after an upgrade from Jefferies. The social gaming company last week reported solid third-quarter earnings and strong growth in mobile bookings.
- AFP/de
http://www.channelnewsasia.com/news/business/us-stocks-eke-out-new/1467252.html
POSTED: 12 Nov 2014 05:19
UPDATED: 12 Nov 2014 05:46
The Dow Jones Industrial Average was up a scant 1.16 point (0.01 per cent) at 17,614.90. Volume was light on the Veterans Day holiday; the bond market was closed.
NEW YORK: US stocks set fresh records for the fifth straight session on Tuesday (Nov 11), but just barely, amid holiday-dampened trade.
The Dow Jones Industrial Average was up a scant 1.16 point (0.01 per cent) at 17,614.90, and the broad-market Standard & Poor's 500 edged up 1.42 point (0.07 per cent) to 2,039.68.
Both the Dow and the S&P had scored records in the prior four sessions. The tech-rich Nasdaq Composite outpaced the other major benchmarks, rising 8.94 points (0.19 per cent) to 4,660.56. Volume was light on the Veterans Day holiday; the bond market was closed.
"The US equity markets, seemingly lacking a catalyst, traded in a relatively tight range around the flatline before ultimately closing with minimal gains," said Charles Schwab in a market note.
Health-related stocks were strong performers. On the Dow, UnitedHealth Group led the blue chips with a nearly one percent gain, followed close behind by Merck.
Financials were under pressure. Dow members JPMorgan Chase dropped 0.9 per cent and American Express shed 0.7 per cent.
Chinese e-commerce giant Alibaba reported US$8 billion of goods were sold so far through its online payment arm Alipay in its first global Singles Day promotion on Tuesday, with more than three hours to go before the end of the promotion at midnight. Shares in Alibaba, which completed the world's largest stock offering in September, tumbled 3.9 per cent.
DR Horton, one of the largest US home builders, reported fiscal fourth-quarter earnings of US$166.3 million that missed estimates, but higher revenues on stronger home prices. Shares jumped 2.2 per cent.
Ford Motor advanced 2.6 per cent after launching its new F-150 pickup truck, made with an aluminum alloy body and bed to improve fuel efficiency.
Zynga zoomed 10.9 per cent after an upgrade from Jefferies. The social gaming company last week reported solid third-quarter earnings and strong growth in mobile bookings.
- AFP/de
http://www.channelnewsasia.com/news/business/us-stocks-eke-out-new/1467252.html
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