Asian markets to see 2009 rebound: S&P

http://www.businesstimes.com.sg/sub/...07535,00.html?

Published November 27, 2008

Asian markets to see 2009 rebound: S&P

China, HK stocks seen as more resilient; STI target for end-09 - 2,300

By JAMIE LEE


STANDARD & Poor's (S&P) expects Asian markets to rebound next year on the back of a healthier banking system and lower corporate and financial-system gearing.

'There is limited de-leveraging to be undertaken in Asia and, thus, the absence of prolonged financial-system restructuring,' said Lorraine Tan, head of S&P equity research in a report launched on the Asian market outlook.

She told a media conferences that regional stock market could see range-trading over the short term and re-test the October lows, adding that '2009 is likely to be a market of two halves'.

'We suspect that first-quarter 2009 is likely to reveal ugly corporate performances and this may dampen sentiment in first-half 2009,' she said in the report.

'With economic growth anticipated to rebound in second-half 2009, we believe that equities are likely to have a strong fourth- quarter 2009 as the recovery becomes apparent and investors begin to re-rate stocks upward.'

Based on a comparison with the 1987-1988 market downturn, S&P expects the Hang Seng (HSI) index to hit bottom in 13-20 months' time. The HSI is targeted to hit 15,000 points at the end of this year, wrote Ms Tan, and could hit 21,000 points at end-2009.

S&P also favours China and Hong Kong as their economies are showing more resilience compared with the other Asian markets, wrote Ms Tan, who viewed both markets as 'overweight'. Most of the other regional markets are viewed by S&P as 'neutral'.

S&P also noted that falling commodity costs should favour the industrial and power sectors.

'We do not expect oil and coal prices to fall for too long and some rebound is likely in second-quarter 2009,' said Ms Tan.

'While we feel that there are increasing opportunities in the industrials space, we remain wary on most airlines as demand is likely to remain weak in light of slowing global demand for goods and given our view that the crude oil price may see some rebound in second-quarter 2009,' she added.

She put an end-2008 target for Singapore's Straits Times Index at 2,000 points and the end-2009 target at 2,300 points.

Commenting on the Asian economies, S&P Asia-Pacific chief economist Subir Gokarn told reporters that the 'relative strength of the Asian financial systems at this point should allow them to transmit the monetary stimulus through to the end-users of credit...somewhat quicker than elsewhere.'

He expects Singapore's GDP to grow between 2 per cent and 2.5 per cent this yar, and a 0.5 per cent to 1 per cent decline in 2009's GDP.

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Singapore households have enough wealth to weather the storm
Zhen Ming
AsiaOne
Tuesday, 25 November 2008

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By now, you're probably fed up with reading all that bad news about the economy.

By now, you're also sick of listening to all those 'I told you so' stock market prophets of doom who - after years of being totally wrong - are finally having their day.

So let me, for a change, try to provide you with some year-end cheer instead - at least towards the end of this column on the upside of doom and gloom.

But first - yes, it's official, folks - recession has finally come to Singapore.

And yes, after years of free-spending and saying 'charge it' at every turn, we're again using words such as 'scrimp and save' and 'scrape up some cash'.

We're also cutting back on almost all fronts, regardless of how much we earn, by trimming grocery costs and buying fewer luxuries.

We're also saying 'no' and 'maybe' to travel for the holidays, eating out at restaurants, and entertainment such as going to movies.

Fear factor

Blame it, if you like, on a falling stock market that has eaten away at our wealth and on all those other consumers (not me) who feel panic and fear.

Blame it also on those kiasu banks that are now cautious about making new loans, causing a ripple effect in the economy as more businesses have trouble surviving.

The Government has taken emergency measures to break the downward spiral by making available $2.3 billion in loan and credit facilities to companies and $600 million for retraining workers.

The upside is that we should realise how blessed we've been since 1965 when we as a nation finally stood on our own two feet.

Since independence, like the proverbial hard-working ants that we've been, we've managed to squirrel away huge surpluses that are now the envy of many.

Not counting the mountain of foreign reserves held publicly (which, strictly speaking, we can't touch as individuals), even if we were to take stock of only the wealth that we've personally accumulated, we should be gratified to learn that the average Singapore household has done outstandingly well.

At the turn of the new millennium, at end-2000, the average household's private balance sheet showed a net wealth of $578,160.

This personal household wealth comprises an assortment of highly-prized assets - from currency and deposits, shares and securities, to life insurance, Central Provident Fund savings and the value of our homes less any outstanding loan (mortgage or personal) we may still have.

By end-2006 (the latest available data), six short years later, this net wealth had grown by 22.9% to $710,400 per average household of 4.1 people.

Going by the rate at which we spent our money in 2006, even if all of us were to stop working all at once, it would still take us at least 8.75 years to totally run down our combined personal wealth totaling $762.6 billion to an absolute zero.

So never mind if others say the global economy need time (three, four, five years, according to Minister Mentor Lee Kuan Yew) to clean up the mess left behind by years of excessive debt and spending - we, as a people, will surely survive the worst that's yet to come.

So never mind if our own companies, too, need even more time to clean up their balance sheets - they will only emerge leaner to weather the slowdown and to expand even more when positive growth returns to the economy.

In the meanwhile, the hard times will only force a new generation of younger Singaporeans to regain control of their spending by foregoing a lifestyle beyond their means (through accumulating more debt than they can handle).

Rational behaviour

Lest we forget, during the current economic crisis, it is also important for all of us to keep a clear head and not get caught up in the fear.

After all, left unchecked, the credit crunch could inadvertently cause many of us to irrationally assume the worst and take drastic steps that can only make things worse.

To be sure, over time, this crisis will surely end and the economy will begin to expand once again.

So, go ahead, my friend, do spend more on Christmas gifts this year than last. But only if you can afford it.