Headlines - OCBC Wealth Management

Wednesday, 10 March 2010

Malaysia's economy on track for 4.9% growth

According to Rating Agency Malaysia (RAM), the local economy is to expand 4.9 per cent this year, underpinned by growth in all industry categories. But the agency has kept two sectors - shipping and manufacturing - on a negative outlook because their turnaround remains inadequate for a revision given their operating environment is expected 'to stay challenging.'Growth is projected to accelerate to 5.4 per cent next year on increased private consumption, increased global demand for manufactured goods and ample liquidity. RAM group chief economist Yeah Kim Leng said Malaysia can afford a third economic stimulus package should the need arise, despite its fiscal deficit having widened to more than 7 per cent of gross domestic product last year.

Tuesday, 9 March 2010

Fed may hike rates within 6 months

Most US business economists expect the Federal Reserve to raise benchmark interest rates within six months by between a quarter and a half percentage point, according to a survey released yesterday. A majority of economists in the National Association of Business Economists' semi-annual survey found the Fed's current stance of rates near zero per cent is appropriate. A growing number, however, believe that the US central bank's policies are too stimulative, according to a poll of 203 members taken from Feb 4-22. 'A majority believes that a rise in interest rates is both likely and appropriate in the next several months,' said NABE president Lynn Reaser.

Monday, 8 March 2010

Surprise rise in US consumer credit in Jan

Borrowing by consumers unexpectedly rose in January for the first time in a year, led by auto and student loans, a sign Americans are gaining confidence in the economy. Consumer credit increased US$5 billion, or 2.4 per cent at an annual rate, the Federal Reserve said on Friday. Borrowing dropped US$4.6 billion in December, more than first estimated. The figures track credit card debt and non-revolving loans, including those for automobile purchases. Stocks rose after the report indicated that some banks may be more willing to lend as the economy recovers from the recession. Growth may get a bigger lift from consumer purchases that account for about 70 per cent of the economy when companies start to hire.

Friday, 5 March 2010

China sets 8% growth target for 2010

China has set an economic growth target of eight per cent for 2010, according to the test of a speech Premier Wen Jiabao was to give in Parliament on Friday. There are plans to pare spending on roads, railways and airports and boost outlays on health and social security as Premier Wen seeks to raise the role of consumer spending in the world’s third-largest economy. "The domestic economy still faces some prominent problems," Premier Wen said in the text of a speech to the National People’s Congress, similar to the U.S. State of the Union address. He cited a surge in property prices, one result of the record fiscal stimulus and credit expansion from last year that was designed to counter the impact of the global recession.

Thursday, 4 March 2010

India confident of reaching 10% growth target

India can reach its goal of 10 per cent annual economic growth even if its Congress party-led government fails to implement pressing structural reform, the country’s finance minister has said. Pranab Mukherjee told the Financial Times that the lack of a parliamentary majority for the Congress party was an obstacle to moves such as raising the cap on foreign investment in the pension and insurance sectors and steps to improve governance. Weakness in agriculture had checked the speed of India’s economic recovery after growth of 9 per cent a year before the global financial crisis, he said. However, a better harvest and strong contributions from the services and manufacturing sectors would propel the country towards its targeted double-digit growth rate.

Wednesday, 3 March 2010

Malaysia likely to put a hold on monetary stimulus too

Asia is leading a global recovery from the worst slowdown since World War II, prompting the region’s central banks to start removing some emergency steps taken to counter the slump. Malaysia may be the next Asian country to pull back monetary stimulus as its recovery strengthens, moving to raise borrowing costs or reduce excess cash in the economy ahead of neighboring Indonesia. Bank Negara Malaysia is expected to raise its benchmark interest rate to 2.25 percent from 2 percent or ask lenders to set aside more money as reserves at its March 4 meeting. Malaysia’s economy expanded 4.5 percent last quarter, rebounding from nine months of contraction, while Indonesia, which has avoided a recession, is trying to boost lending.

Tuesday, 2 March 2010

Gold price keeps rising even as demand wanes

Gold is currently trading at a record euro price of 824 euros (S$1,570) an ounce. This compares with a 9 percent decline in the international gold price from an all-time high of US$1,226 an ounce in December 2009 to the current level of US$1,121.The rise in the euro price illustrates a lack of faith in paper currencies as central banks boost money supply, and fear of stagflation - stagnation coupled with inflation - in the developed economies. The big question is whether gold itself is a good buy, especially at a time when jewellery and industrial demand has shrunk considerably. The supply-demand characteristics of gold are complex, so it is extremely difficult to forecast prices. The market is relying on investors to keep buying regardless of price, even though consumers in India, Asia, Europe and the US have cut purchases of expensive jewellery.

Monday, 1 March 2010

Australia likely to hike interest rates tomorrow

Expectations are high for Australia to resume leading the world in raising borrowing costs, increasing the benchmark interest rate for the fourth time in five meetings. Australia’s economy probably grew the most in 1 1/2 years in the fourth quarter, an analyst’s survey ahead of a report on March 3 shows, boosted by A$22 billion in spending by Prime Minister Kevin Rudd on roads and schools. Concerns about sovereign debt in Europe and financial markets turmoil may prompt Stevens to wait another month, some economists say. Boosting the benchmark rate tomorrow would make Stevens the first central banker from a Group of 20 economy to raise borrowing costs this year. He was the first in the world to increase rates three times last quarter, when he raised the key rate in three quarter-point steps to 3.75 percent from a half- century low of 3 percent.

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