Headlines - OCBC Wealth Management

Wednesday, 19 November 2008

Bear run for equities not over yet, says strategist

'It's going to get a lot worse before it gets better,' said Benjamin Pedley, managing director and head of advisory services for LGT Investment Management Asia, a Hong Kong-based unit of LGT Bank. He was speaking to fund managers in Singapore at a conference organised by Saxo Capital Markets for its clients. Although share prices worldwide have plunged in recent weeks, they could easily fall further as the extent of the damage to businesses from the economic slump becomes clearer in the coming months. Banking stocks, which have plummeted in recent months, are also unlikely to stage a sharp rebound, he said.

Tuesday, 18 November 2008

Outlook for commodities' demand dims

A slowdown in the global economy dimmed the demand outlook for commodities. Crude oil, which has lost two-thirds of its value from a record US$147.27 a barrel in July, dropped 3.7 percent to US$54.95 a barrel in New York yesterday, the lowest settlement since January 2007. A measure of six metals traded on the London Metal Exchange fell 3.3 percent. Copper slumped 4.2 percent, zinc 2.5 percent and nickel 3.2 percent. Demand for oil and metals is dimming as the global economy slows, dragging Hong Kong and Japan into recession.

Monday, 17 November 2008

Japan teetering on the edge; joins the rest

Japan's GDP figures due today are expected to show tepid growth of 0.1 per cent in the three months to September, after a contraction of 0.7 per cent the previous quarter. Asia's biggest economy is already in a technical recession and looks set to shrink in 2009 as the financial crisis bites. This will put Japan alongside Germany and Italy on the list of Group of Eight major economies in recession. Official figures showed last Friday that the Euro zone as a whole is also in recession, while the U.S. and British economies shrank in the third quarter.

Friday, 14 November 2008

Evidence of global economic turmoil grows

Germany has plunged into recession after a steeper-than-expected 0.5% fall in economic activity in the third quarter. In the US, the number of workers filing new claims for unemployment benefits rose last week to 516,000, its highest level since 2001. Meanwhile, China revealed that its industrial growth hit a seven-year low. Global economic conditions have taken a sharp turn for the worse, and with little chance of recovery until the second half of next year. Leaders of the G-20 group of nations are in Washington but challenges facing the global economy are unlikely to be resolved in a single weekend.

Thursday, 13 November 2008

Wall Street hits fresh lows due to concerns over toxic assets

Wall Street stocks neared fresh five-year lows on Wednesday after the US Treasury’s backtrack over toxic mortgage assets renewed investor concerns over authorities’ ability to deal effectively with the financial crisis. The bleak prospects facing corporate America in what is expected to be a severe downturn was heightened when Best Buy, the largest US electronics retailer, slashed its earnings forecast for the year due to slowdown in consumer spending. Meanwhile, oil dropped to US$56.16 in a sign of growing fears of a deep global economic slowdown.

Wednesday, 12 November 2008

SIBOR near 5-year low

Singapore's key three-month Sibor or Singapore interbank bank offered rate fell to 0.89 percent yesterday, not far from the all-time low of 0.69 percent on Nov 21, 2003. The benchmark rate, to which home loans are normally pegged, is now 60 percent lower from less than two months ago when it hit 2.23 per cent on Sept 26. While this may be good for borrowers, savings may earn no interest, as banks pay nothing for savings accounts. Singapore's interest rates are influenced by US interest rates and domestic demand.

Tuesday, 11 November 2008

New bailout plan for AIG

The bailout of American International Group Inc has been raised to a record US$150 billion, after a smaller rescue plan failed to stabilize the ailing insurance giant. The Federal Reserve and the Treasury Department announced the new plan as AIG reported a record third-quarter loss of US$24.47 billion, largely from write-downs of investments. The new package, at least US$27 billion more than was previously extended, will leave the government exposed to billions of dollars of potential losses. The restructured bailout should give AIG flexibility to sell assets in an orderly manner, closer to their intrinsic values rather than fire-sale prices.

Monday, 10 November 2008

China's US$586m stimulus plan to boost growth

Beijing has been under growing pressure to take fiscal measures to boost its economy to counter-balance the recession in the developed world. Its government has already cut interest rates three times, scrapped quotas for bank lending and unveiled measures to help housebuyers and some exporters. Now, it will spend an equivalent of almost a fifth of China's gross domestic product by the end of 2010 to to prop growth. The investments will focus on low-income housing, water, electricity, disaster relief and transport, with railways expected to see a big increase.

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