See the Disclosure Appendix for the Analyst Certification and Other Disclosures
E C O N O M I C S R E S E A R C H : A S I A P A C I F I C
Economics & Market Analysis
7 July 2008
Kit Wei Zheng +65-6328 5079
wei.zheng.kit@citi.com
Singapore
Singapore Market Weekly
2Q08 GDP Preview: Biomedicals Led Slowdown
Advance GDP estimates for 2Q08 probably showed a significant slowdown to 3.2% from a year ago, from 6.7% in the previous quarter. The plunge in biomedical output likely exaggerated the extent of the slowdown, although other manufacturing segments also slowed. Excluding the volatile biomedicals sector, we estimate GDP growth may have picked up slightly to 6%, from 4.8% in 1Q08, lifted by services and construction Services likely sustained strong growth of 7.5%, led mainly by trade related services, supported by stronger re-exports. Tourism however likely slowed as higher costs may have discouraged visitors. Retail sales may have been temporarily lifted by higher prices and car sales, but this is unlikely to be sustained, in our view Construction activity likely grew in the high teens, and would have been stronger were it not for supply-side constraints. Higher costs could cause project delays and slowdown in the sector in the coming quarters Markets: The SGD rates market underwent another volatile week, with rates falling and the curve steepening on ample liquidity conditions. USD-SGD ended the week slightly higher than the week before, with the SGD NEER breaching slightly the top end of the band. All eyes this week will be on 2Q08 Advance GDP estimates, to be released on 10 July
Asia Pacific
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Singapore Market Weekly
Contents
Economics 3
2Q08 GDP Preview: Biomedicals Led Slowdown ..................................................................................... 3
Fixed-Income Market 7
Week in Review......................................................................................................................................... 7
Market Snapshot Key Economic Data and Forecasts 10 11
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Singapore Market Weekly
Economics
2Q08 GDP Preview: Biomedicals Led Slowdown
Kit Wei Zheng +65-6328 5079 wei.zheng.kit@citi.com
Second quarter GDP advance estimates will be released on 10 July. We expect a significant slowdown in growth to around 3.2% from a year ago, from 6.7% in the first quarter, marking the slowest quarterly growth rate in almost five years. The extent of the slowdown was likely exaggerated by a double-digit plunge in the volatile biomedical output. The rest of manufacturing fared better, but still fell nonetheless on softer external demand. Excluding biomedical, growth likely rose to around 6%, up from 4.8% in 1Q08. Resilient construction, trade related and financial services likely kept growth in positive territory, although we expect moderation is likely in the coming quarters. Overall, we expect GDP growth at 3-5% in the coming few quarters, consistent with our full-year GDP forecast of 4.7%. Manufacturing production plunged 8.9% in April and May from a year ago, after a 12.6% jump in 1Q08. The 39.1% plunge in biomedicals output, as well as a higher base of comparison from a year ago exaggerated the extent of the fall. Electronics output also slowed sharply in the April-May period to just 0.15%, from 10.2% in 1Q08, largely dragged down by weaker performance in the semiconductors, computer peripherals and the infocomm/consumer electronics sectors.
Figure 1: Manufacturing Rebounded on Pharmaceuticals and Petrochemicals
YoY % change Manufacturing IPI IPI: Electronics IPI: Chemicals IPI: Precision Engineering IPI Transport IPI: General Manufacturing IPI: Biomedical IPI Ex Biomedical IPI Non Electronics IPI Ex Biomedical and Electronics Non-Oil Domestic Exports Non-Oil Domestic Export Volumes Non-Oil Retained Imports of Intermediate Goods
Source: CEIC Data Limited
2Q07 8.6 7.4 0.5 3.6 -2.3 30.6 6.8 9.7 6.9 14.2 11.2 1.5 6 -8.7
3Q07 11.0 11.8 6.0 2.1 -1.3 21.2 8.2 26.4 8.4 15.1 10.0 6.1 10.9 1.1
4Q07 0.2 -1.2 5.8 3.4 1.5 16.5 -0.03 -25.3 5.9 -4.2 5.9 -0.4 4.8 4.9
1Q08 12.4 12.6 4.9 1.1 -1.8 4.7 -0.04 49.8 4.8 15.9 4.8 4.8 6.1 4.9
Apr-08 -4.9 -4.1 -0.3 3.2 9.2 5.2 -23 -1.7 -4.7 -0.1 5.3 12 2.6
May-08 -12.8 3.8 2.2 -4.8 13.0 3.4 -55.1 -0.4 -18.9 -2.6 -10.5 -4.5 -21.9
Apr-May 08 -8.9 0.15 0.95 -0.8 11.1 4.3 -39.1 -1.1 -11.8 -1.4 -2.8 -3.6 -10.8
Biomedicals aside, the underlying trend of the manufacturing sector continues to point south. Excluding biomedicals, IPI fell 0.5%, after a 5% expansion in 1Q08. Manufacturing ex-biomedicals had been moderating since the peak in 3Q07, but the plunge in the April-May period marked the first fall in nearly 5 years. Part of the slowdown was likely due to electronics, but even after excluding both biomedicals and electronics, the underlying trend continued to point south.
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Figure 2: Manufacturing Ex Biomedical Fell For the First Time Since Mid-2003…
25 20 15 10 5 0 -5 -10 -15 -20 -25 -30 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07
Figure 3: …although GDP ex Biomedical may have edged up to 6% lifted by services and construction
15
% YoY
% YoY
10
5
0
-5
-10 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07
Manufacturing Manufacturing ex Biomed
GDP
GDP ex Biomed
Source: CEIC Data Limited
Source: CEIC Data Limited
Figure 4: Services Likely Sustained Strong Growth, Lifted Largely By Trade Related Services
YoY % change Services Wholesale and Retail Trade Retail Sales Retail Sales (ex Motor Vehicles) Re-exports Transport and Storage Air Cargo Handled Air Passenger Traffic Sea Cargo Handled Container Throughput Vessels Arrivals Hotels and Restaurants Hotel Room Occupancy Rate (%) Visitor arrivals Catering Sales Index Information and Communications International Telephone Calls Number of Mobile Phone Subscribers Financial Services DBU Loans ACU Loans DBU + ACU Loans SGX Turnover Value SIMEX Turnover FX Turnover
Source: CEIC Data Limited
2Q07 8.6 8.5 6.1 11.3 6.3 5.5 -3.6 5.5 6.9 14.1 9.1 5.6 86.0 5.0 3.3 6.6 24.6 13.8 17.0 9.7 19.1 14.3 82.4 3.5 25.8
3Q07 8.5 6.8 3.5 8.7 3.6 5.0 -0.3 5.3 4.1 11.2 12.0 4.9 88.7 5.5 4.0 6.6 27.5 19.1 20.1 11.5 27.4 19.2 173.5 38.4 43.5
4Q07 7.8 6.0 3.1 11.1 4.1 5.4 -2.0 4.2 10.5 11.6 14.1 2.5 86.3 5.9 4.0 6.1 30.3 20.1 15.9 17.2 31.2 24.1 89.9 40.3 34.9
1Q08 7.5 5.4 4.7 10.9 10.3 5.5 2.5 7.2 13.3 11.4 14.1 2.4 83.7 6.6 2.5 6.7 26.8 23.3 13.4 22.1 41.6 31.7 0.9 51.0 16.6
Apr
May
April-May Average
8.0 7.5 7.7 13.8 1.9 2.9 15.4 14.1 18.8 84.0 0.8 1.0 15.2 12.1 15.5 15.3 13.1 17.2 84.0 0.8 1.0 7.0 34.5 23.6 34.5 23.6 20.9 7.5 7.7 17.4
24.4 41.2 32.8 -7.6 43.4 16.8
26.1 35.3 30.8 -19.6 43.1
25.2 38.3 31.8 -13.6 43.3 16.8
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While manufacturing as a whole remained in the red, robust services and construction likely kept GDP in positive territory. Indeed, excluding biomedicals, GDP growth may have actually accelerated in 2Q08 (Figure 3). Services likely sustained growth of 7.5-8%, broadly similar to the 7.5% pace in 1Q08. A pick up in trade related services, including wholesale and retail trade, transport and storage, and steady growth in tourism related sectors partly compensated for a slowdown in financial services and the infocomm sector. Despite the fall in NODX, sea cargo volumes growth accelerated, helped largely by the acceleration in re-exports, with both oil and non-oil re-exports showing signs of a pick-up. Air cargo, the main mode of transport for electronics exports, slowed in April-May, in tandem with weak performance in the sector. The hotel and restaurants sector likely slowed from 1Q08. Even as hotel occupancy rates held steady, there was a sharp slowdown in visitor arrivals in April. This was due mainly to a 0.2% fall in visitor arrivals from Asia, led by a 1.7% fall in visitors from ASEAN, with Indonesian tourist arrivals falling nearly 8%. Visitors from Northeast Asia, including Hong Kong (-31.1%) and Japan (-4.9%) also fell sharply. Rising domestic costs, alongside a stronger SGD may have been one reason discouraging tourist arrivals. Hotel room rates soared over 32% in April from a year ago. Catering sales also slowed sharply, as rising costs, and a generally more cautious sentiment, may have deterred consumers from dining at restaurants. Given the slowdown in tourist arrivals, the surprising pick up in nominal retail sales in April-May was due largely to purchases by residents. However, the headline nominal retail sales figure was inflated by higher prices. Nominal retail sales growth accelerated to 7.5% in April, but only rose marginally by 1.7% after adjusting for price increases. Excluding motor vehicles, retail sales volumes (ex motor vehicles) only rose 1.2% from a year ago, down sharply from 6.1% in March. In addition, there was also a surprising turnaround in motor vehicle sales, which rose 7.1% in April, after an 8% fall in March. Given the unfavourable mix of higher car and petrol prices, and more cautious sentiment, we doubt that the rebound in motor vehicle sales will be sustained.
Figure 5: Hotel Rooms Rates Surged 32% in April
50 40 30 20 10 0 -10 -20 -30 Jan-00
Figure 6: Nominal Retail Sales Inflated By Higher Prices and Jump in Motor Vehicle Sales
25
% YoY % YoY
20
15
10
5
0
-5
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
-10 Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Current Price
Constant Price
Constant Price: Excluding Motor Vehicles
Source: CEIC Data Limited
Source: CEIC Data Limited
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Financial services likely moderated further, as capital market related activities have fallen significantly. Growth in stock market trading volumes fell more than 13% in April-May, after a 0.9% increase in 1Q08, and is now in negative territory. This was largely cushioned by the continued acceleration in both ACU and DBU loans, as difficulty in raising funds in capital markets may have led to diversion of fund raising activities towards the banking sector. Major projects, which have lifted loan demand, include the two integrated resorts the purchase of Tuas Power from Temasek Holdings, and the refinancing of a loan to buy the building housing DBS Group. Mortgage lending however slowed, in line with lackluster residential property transaction volumes. Construction GDP likely picked up after a surprising fall in 1Q08. Sustained strong growth in the high teens. Notably construction progress payments, a coincident indicator of construction GDP surged 41.4% in April, from 30.5% in 1Q08, with work on both public and private sector projects picking up.
Figure 7: Construction Progress Payments Surged 41.4% in April, Led by Public and Private Sector Projects
50 40 30 30 20 10 0 -10 -20 Jan97 20
5 10
Figure 8: Construction Wages Surged 10.6% in 1Q08, highest in nearly a decade
20
%-pt
% YoY
% YoY
40
15
10
0
0
-5
-10
-10
-20 Jan98 Jan99 Jan00
Public
Jan01
Jan02
Jan03
Jan04
Jan05
Jan06
Jan07
Jan08
-15 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07
Construction Wages New Jobs Added
Private
Progress Payments (RHS)
Source: CEIC Data Limited
Source: CEIC Data Limited
Nonetheless, supply bottlenecks may be placing a speed limit on construction activity in the coming quarters. Shortages of sand, steel, and cement have led to an escalation of prices of these inputs. Construction wages surged 10.6% in 1Q08, the highest in nearly a decade. Indeed, anecdotal evidence suggests that some construction companies may have been refusing to take up contracts, as surging input costs may mean there is no profit, or even losses to be made. We would therefore not be surprised if construction GDP moderates in the coming quarters to the mid-teens. Overall, our full-year forecast of 4.7% this year and 4.5% next year anticipates that GDP growth will fluctuate in the 3-5% range over the next 2-4 quarters. This assumes that the global economy continues to slow next year. Rising inflation and record oil prices pose additional headwinds to the outlook. We expect a slowdown, possibly to below trend growth of 4-6% for a couple of quarters, but not a slump. There are however downside risks to our forecasts, particularly in 3Q08, due to the high base of comparison from 3Q07, when GDP growth peaked at 9.4%. The wildcard will be volatile biomedicals output, which could be large growth surprises in either direction. Excluding biomedicals, we would still expect GDP growth to see a gradual slowdown over the course of the next 2-4 quarters, with a decisive recovery not likely till late 2009 at earliest.
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Singapore Market Weekly
Fixed-Income Market
The SGD rates market underwent another volatile week with rates falling and the curve steepening in the process USD-SGD ended the week slightly higher at 1.3629 vs. 1.3626 the week before. The SDG NEER spent the week 153-183bps above the mid-point of the band This week, all eyes will be on 2Q08 Advance GDP estimates, to be released on Thursday 10 July
Week in Review
The SGD rates market underwent another volatile week, with rates falling and the curve steepening in the process. The 5Y IRS moved from intraday highs of 3.75/80 on Friday to collapse to 3.64/66, with the weeks high at 3.85mids before receivers came setting in. 2s-10s spreads widened slightly to 150bps, from 142bps the week before. 10Y SGS yields collapsed on Friday, dropping from 3.50 to 3.41mids while 6mth fixes also collapsed towards the end of the week, dropping to 1.54559 versus week highs of 1.59155. Technically, the charts on the swaps are showing some signs of fatigue as swap rates look incapable of breaking out any higher. The overnight deposit rates have been gradually moving to the left, (15d MA at 0.23% compared to 0.34% abt 20 days ago) indicating ample liquidity in the system. Short-term FX swaps have been drifting lower and it would not be surprising if IRS moved to the left sharply as the market looks to be overpaid versus the liquidity conditions. There were some addition of steepeners, as the sell-off in bonds the previous week appeared to have stabilised. Another aspect weighing on the markets is the possibility of MAS re-centering the band once more in an attempt to fight inflation during the Monetary Policy Meeting in October. If this happens, it should take the pressure off the IRS curve and improve liquidity outlook as inflows increase.
10-yr SGS and 10-yr UST Yields (Percent)
3.9 5 3.4 4.5 2.9
4
2.4
3.5
1.9 0 /0 /2 0 1 3 05 0 /1 /2 0 2 4 05 0 /2 /2 0 3 8 05 0 /0 /2 0 5 9 05 0 /2 /2 0 6 0 05 0 /0 /2 0 8 1 05 0 /1 /2 0 9 2 05 1 /2 /2 0 0 4 05 1 /0 /2 0 2 5 05 1 6 06 /1 /2 0 2 7 06 /2 /2 0 4 0 06 /1 /2 0 5 2 06 /2 /2 0 7 /2 0 /3 0 6 8 4 06 /1 /2 0 9 5 06 /2 /2 0 1 /6 0 6 1 /2 0 1 /1 /2 0 2 8 06 1 9 07 /2 /2 0 3 2 07 /1 /2 0 4 3 07 /2 /2 0 6 /2 0 /4 0 7 7 6 07 /1 /2 0 8 7 07 /2 /2 0 1 /9 0 7 0 /2 0 1 /2 /2 0 1 0 07 1 /2 0 /1 0 8 2 2 08 /1 /2 0 3 5 08 /2 /2 0 5 /2 0 /6 0 8 6 7 08 /1 /2 0
3
10 yr SGS
10 yr UST
Source: Bloomberg
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USD-SGD ended the week slightly higher at 1.3629 vs. 1.3626 the previous week. The SGD started the week slightly weak on the back of Asian currency weakness, due to concern that rising oil prices would boost demand for dollars, and further stoke inflation concerns. Towards the end of the week, the SGD strengthened against the USD, alongside a similar strengthening of the MYR, on suspected intervention by the respective central banks to support their currencies and stem imported inflation. The SGD NEER spent most of the week hugging or breaching slightly the topside of the estimated band, hovering between 153-183bps above the mid-point of the band.
SGD NEER Spent The Week Between 153-183bps above the Mid-Point of the Band
116 114 112 110 108 106 104 102 100 Jul-07 Jan-07 Jun-07 Oct-07 Apr-07 May-07 Feb-07 Mar-07 Aug-07 Sep-07
Re-Calibrated SGD NEER Estimates and Band Parameters
Nov-07
May-08
Feb-08
Mar-08
Aug-08
Sep-08
Dec-07
Nov-08
12/8/2006
Jan-08
Jun-08
Jul-08
Oct-08
Apr-08
Source: CEIC Data Limited
Weekly Swap and SGS Yield Curve Changes, 4 July –27 June 2008 (Basis Points)
50.0 40.0 30.0 20.0 10.0 0.0 -10.0 -20.0 -30.0 -40.0 -50.0 2
2 by 10-year SG and US IRS Yield Spread (Percent)
3.5 3
2X10 US IRS 2X10 SG IRS
IRS
SGS
2.5 2 1.5 1 0.5 0 -0.5 05/07/1999 01/14/2000 09/22/2000 06/01/2001 02/08/2002 10/18/2002 06/27/2003 3/5/2004 11/12/2004 7/22/2005 3/31/2006 8/17/2007 4/25/2008
5 7 10 Swap Maturity/SGS Benchmarks
15
Source: MAS, Bloomberg.
Source: MAS, Bloomberg
This week, we expect some key economic data to be released from the US. All eyes should be on the Trade Balance (11-Jul), U. of Chicago Confidence Indes (11-Jul) and the Budget Surplus (11-Jul) figures. Out of Singapore, all eyes will be on the 2Q08 Advance GDP estimates to be released on Thursday 10 July. We expect a significant slowdown in growth to around 3.2% from a year ago, from 6.7% in the first quarter, the slowest quarterly growth rate in almost five years. The extent of the slowdown was likely exaggerated by a double-digit plunge in volatile biomedical output. The rest of manufacturing fared
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Singapore Market Weekly
better, but still fell nonetheless on softer external demand. Excluding biomedical, growth likely rose to around 6%, up from 4.8% in 1Q08. Resilient construction, trade related and financial services likely kept growth in positive territory, although we expect moderation is likely in the coming quarters.
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Market Snapshot
Market Snapshot (at 4 July 2008)
CURRENT WEEK AGO 3 MONTHS AGO 6 MONTHS AGO CHANGE VERSUS WEEK AGO 3 MONTHS AGO 6 MONTHS AGO 2-YEAR PERIOD AVERAGE HIGH LOW
SGD/USD STI Index Interbank Rates
1.362 2,892.5
1.363 2,955.9
1.380 3,155.6
1.434 3,416.5
-0.001 -63.4
-0.019 -263.0
-0.072 -523.9
1.490 3,104.0
1.589 3,814.4
1.355 2,320.1
0.19 3M SIBOR 6M SIBOR SGD Swap Offer Rate 1-Day 3-Month 6-Month Interest Rate Swap 1-Year 2-Year 3-Year 5-Year 7-Year 10-Year Government Bond Yields 3-Month T-Bill 1-Year T-Bill 2-Year SGS 5-Year SGS 7-Year SGS 10-Year SGS 15-Year SGS 1.16 1.56
0.31 1.25 1.63
0.81 1.31 1.38
0.63 2.13 2.25
-0.13 -0.09 -0.06
-0.63 -0.16 0.19
-0.44 -0.97 -0.69
2.01 2.59 2.65
3.50 3.56 3.63
0.16 1.16 1.38
0.55 1.18 1.55
0.88 1.18 1.55
0.88 1.46 1.66
0.85 2.16 2.23
-0.33 0.00 0.00
-0.33 -0.28 -0.12
-0.29 -0.98 -0.69
2.35 2.68 2.75
4.32 3.85 3.86
0.19 1.18 1.35
1.77 2.53 3.09 3.63 3.85 4.03
2.01 2.73 3.28 3.76 3.98 4.15
1.74 1.91 2.13 2.59 2.89 3.18
2.39 2.46 2.56 2.81 3.01 3.23
-0.24 -0.20 -0.19 -0.13 -0.13 -0.13
0.03 0.62 0.96 1.04 0.97 0.85
-0.62 0.07 0.53 0.83 0.84 0.80
2.78 2.86 2.96 3.13 3.27 3.40
3.79 3.78 3.79 3.89 4.10 4.18
1.40 1.46 1.71 2.28 2.63 2.95
0.41 0.72 0.98 2.25 2.96 3.42 3.98
0.47 0.93 1.27 2.69 2.99 3.62 4.04
0.70 0.79 0.77 1.59 1.90 2.32 3.10
1.92 1.94 1.72 2.08 2.30 2.48 3.02
-0.06 -0.21 -0.29 -0.44 -0.03 -0.20 -0.06
-0.29 -0.07 0.21 0.66 1.06 1.10 0.88
-1.51 -1.22 -0.74 0.17 0.66 0.94 0.96
2.20 2.23 2.20 2.57 2.20 2.90 3.20
3.33 3.25 3.13 3.43 3.52 3.94 4.12
0.41 0.72 0.77 1.40 1.80 2.08 2.89
Swap Spreads (IRS-SGS, Unmatched Maturity) 2-Year 154.5 145.5 5-Year 138.0 107.0 7-Year 89.0 99.0 10-Year 60.5 53.0 Swap Spread Curve 2Y - 3M 5Y - 2Y 7Y - 5Y 10Y - 7Y
Source: Reuters, Citi.
113.5 100.0 98.5 85.5
73.8 72.5 71.0 74.5
9.0 31.0 -10.0 7.5
41.0 38.0 -9.5 -25.0
80.8 65.5 18.0 -14.0
66.0 55.9 52.8 50.7
166.0 138.0 104.0 97.5
33.0 29.0 30.5 24.0
134.5 110.5 22.0 17.5
154.1 103.5 22.0 17.0
47.7 68.5 29.5 29.0
29.4 34.8 20.5 21.5
-19.5 7.0 0.0 0.5
86.8 42.0 -7.5 -11.5
105.1 75.8 1.5 -4.0
18.7 26.5 13.8 14.0
165.1 110.5 41.3 38.5
-21.3 -6.5 0.2 0.2
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Singapore Market Weekly
Key Economic Data and Forecasts
Singapore — Key Economic Data and Forecasts
2002 2003 2004 2005 2006 2007 2008E 2009E
Real Sector Real GDP (% yoy) Domestic demand ex Inventory (% yoy) Real Consumption: Private (% yoy) Real Gross Fixed Capital Formation (% yoy) Consumer Prices (period average, % yoy) Nominal GDP (US$ bn) GDP per capita (USD) Unemployment Rate (%) External Sector Exports (% yoy, US$) Imports (% yoy, US$) Trade balance (US$ bn) Current account (% of GDP) International Reserves ex. Gold (US$ bn) Local Currency/USD (period average) Other 3M Interbank Rate (period average, %) 10 Year SGS Yield (period average, %) Fiscal balance (% of GDP) Population (persons million)
Source: CEIC Data Company Limited, Citi estimates.
4.2 -0.5 5.1 -11.4 -0.4 88 21,089 3.6 2.8 0.4 8.7 12.6 79 1.79 0.9 3.5 4.3 4.2
3.1 -0.1 1.2 -3.3 0.5 92 22,443 4.0 27.8 17.0 23.7 23.4 88 1.74 0.7 2.9 6.5 4.1
8.8 6.2 5.6 10.2 1.7 109 26,197 3.4 24.2 27.4 25.0 16.7 103 1.69 1.0 3.2 5.5 4.2
6.4 2.7 3.1 0.1 0.5 120 28,078 3.1 15.6 15.2 29.6 18.6 115 1.66 2.2 2.9 6.7 4.3
9.4 7.6 4.1 11.7 1.0 137 31,029 2.7 18.4 19.3 33.1 21.8 128 1.59 3.5 3.4 9.7 4.4
7.7 9.2 4.6 20.2 2.1 161 35,170 2.1 10.1 10.2 36.1 24.3 147 1.51 2.7 2.9 12.2 4.6
4.7 9.5 4.2 18.3 6.2 200 41,616 2.2 9.0 9.5 38.1 16.9 160 1.35 1.6 3.1 6.0 4.8
4.5 8.2 4.5 13.8 3.2 223 45,608 2.6 12.3 14.0 37.8 14.3 185 1.30 1.8 3.2 4.8 4.9
Interest and Exchange Rate Forecasts
3-Jul 3Q08 4Q08 1Q09 2Q09 In 3M In 6M In 12M
SG
3-Month Interbank Rate 10-Year SGS SGD/US$ Fed Fund Rate 10-Year Treasuries
1.17 3.47 1.3580 2.00 3.96
1.40 3.50 1.3700 2.00 4.10
1.60 3.30 1.3550 2.00 4.10
1.80 3.20 1.3800 2.50 4.20
2.00 3.20 1.4000 2.75 4.30
1.41 3.49 1.3693 2.00 NA
1.61 3.30 1.3561 2.00 NA
2.00 3.20 1.3987 2.75 NA
US
Sources: MAS, Citi estimates, Reuters.
Week Ahead Calendar
Date Country Period Topic Forecast Market Median Prev 1 Prev 2
10-Jul 11-Jul 11-Jul 11-Jul 11-Jul
Singapore Malaysia US US US
2Q May May Jul P Jun
Advanced GDP Flash Estimate Industrial Production (% YoY) Trade Balance (US$ bn) University of Michigan Confidence Budget Surplus (US$ bn)
3.2 2.5 -65.0 56.0 45.1
3.5 -62.2 55.8 33.0
7.2 4.3 -60.9 56.4 27.5
6.0 3.50 -56.5 -59.8 -165.9
Source: Citi estimates, Bloomberg.
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Singapore Market Weekly
Recent Issues of Singapore Market Weekly
Topic A Slowdown, Not a Slump Slipping on the Oil Slick? Part 2 Slipping on the Oil Slick? End of Fairy Tale Economy – Part 4 Highlights from National Wages Council Recalibrating our SGD NEER Estimates Is the Property Market Turning Will Unit Labour Cost Continue to Rise? Has the Storm Already Arrived Implications of MAS Band Re-Centering Preview: Will MAS Tighten? 1Q08 GDP Review: Calm Before Storm? End of Fairy Tale Economy? Part 3 Tale of Two Budgets: Singapore and Hong Kong Will Rising Inflation Threaten Singapore’s Competitiveness? Will A Stronger SGD Hurt Export? Budget for Households and the Future Budget Preview: Investing for the Future Budget Preview: Coping with Higher Living and Business Costs End of Fairy Tale Economy? Part 2 End of Fairy Tale Economy? Bullish Outlook for Construction into 2008-2009 Highlights from MAS Financial Stability Report Will a Stronger SGD Tame Inflation? Part 2 Will a Stronger SGD Tame Inflation? Growth and Inflation Prospects in 2008 US Slowdown: Singapore Decoupling or Vulnerable? Is the Economy Overheating? Deferred Payment Scrapped: Is Party Over? HDB Supply and Property Prices “Slightly” Stronger Appreciation: Will Rates Plunge? Growing at BRIC Speed Population Boom: Immigrants Offset Baby Blues Preview: Will MAS Tighten? When the Fed Cuts, Part II Gauging the Subprime Fallout When the Fed Cuts Tackling Ageing and Income Gap Financial Turmoil and Economic Risks Upgrading GDP Growth Despite US Subprime Rout Hot on the Inside, Cold on the Outside The Bottleneck Economy The Property Supply Crunch Date 30-Jun-08 22-Jun-08 5-Jun-08 26-May-08 19-May-08 12-May-08 5-May-08 27-Apr-08 20-Apr-08 13-Apr-08 7-Apr-08 31-Mar-08 24-Mar-08 17-Mar-08 02-Mar-08 25-Feb-08 18-Feb-08 03-Feb-08 28-Jan-08 14-Jan-08 07-Jan-08 17-Dec-07 10-Dec-07 03-Dec-07 26-Nov-07 19-Nov-07 12-Nov-07 05-Nov-07 29-Oct-07 22-Oct-07 15-Oct-07 08-Oct-07 01-Oct-07 24-Sep-07 17-Sep-07 10-Sep-07 3-Sep-07 27-Aug-07 20-Aug-07 13-Aug-07 6-Aug-07 30-July-07 23-July-07
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Disclosure Appendix A1
ANALYST CERTIFICATION I, Wei Zheng Kit, hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject issuer(s) or securities. I also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or views in this report.
Other Disclosures
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