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    Default Reporter's International Business and Economy Thread


    Singapore pulls in $932M of biomed investments
    Jessica Cheam
    The Straits Times
    Wednesday, 16 April 2008

    Singapore again proved to be a powerful investment magnet in the cutting-edge biomedical sciences industry, even though regional competition for these investments is heating up.


    The Republic pulled in $932 million in fixed-asset investments last year, up from $901 million in 2006, the Economic Development Board (EDB) said on Tuesday.

    The sector - a relatively new pillar of Singapore's economy - covers pharmaceuticals, including the development of new drugs, medical products such as heart stents, and medical equipment, among other things.

    Total business spending in the sector also grew to a record high of $245 million last year, surpassing 2006's $217.3 million.

    Despite the recent economic turmoil in global markets, Singapore continues to attract new facilities.

    The projects sealed last year will contribute $2.1 billion of expected value added per year, creating more than 1,780 new jobs, said the EDB.

    Last year, the total value of output from biomedical sciences manufacturing reached a high of $24 billion.

    The industry adds value of $13.4 billion to the wider economy through economic spin-offs - making Singapore's drug factories the second highest contributor to gross domestic product among manufacturing sectors.

    The sector also employed 11,518 workers last year, up 8.9% from 2006.
    Trade and Industry Minister Lim Hng Kiang said on Tuesday that 'Asian countries are developing infrastructure to facilitate biomedical manufacturing and R&D activities in anticipation of a wave of investments'.

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    Default Asian Business Outlook Positive, Says Survey


    Asian business outlook positive, says survey
    Bernama
    Bangkok, Thailand
    Tuesday, 15 April 2008

    A new survey released this week by a leading independent brokerage and investment group in Asia has found that business sentiment in Asia, including in Malaysia, through the first quarter of 2008 is generally positive despite pressure on margins and indications of a slowing in capital expenditure.

    The Asian Business Pulse survey of 425 Asian corporations in 11 markets carried out by CLSA Asia-Pacific Markets showed that 62% of businesses volume growth in the first quarter of 2008 was stronger than 2007 and nearly half (47%) of companies reported stronger export volume growth.

    While 42% of respondents described business conditions as better in 2008 than a year ago, a third (32%) said conditions were tougher.

    CLSA head of thematic research, Mr Amar Gill, said the generally optimistic outlook of Asian businesses provided tentative signs of economic decoupling despite high financial-markets correlation.

    'The markets are correcting, but what we are seeing is a slower knock-on effect in Asia to the credit crisis in the United States. Demand from the growing middle class, as well as rising incomes for those already in the middle-class and continued investment in infrastructure is sustaining domestic demand even if there is some slowdown in trade with the developed economies,' Mr Gill said.

    In Malaysia, some 81% of respondents reported stronger volume growth (versus 62% for the overall sample), while 46 percent reported stronger export growth, similar to the overall average, but a much lower proportion than the overall sample average compared to last year.

    In the survey, about 52% of Malaysian respondents indicated better overall operating conditions and 43% expected to grow headcount at a faster rate, while 47% intended to increase capex, 42% were keeping it at last year's levels.

    CLSA said of the 1,000 questionnaires sent out, 34.4% responded, with the highest rates (over 50%) came from the Philippines, Taiwan and South Korea while the lowest response were from companies in Malaysia, Singapore and Japan (less 30%), possibly indicating tougher conditions in those sectors/countries and hence less inclination to respond.

    Mr Gill said the need to contain domestic cost pressures appeared to be a far greater preoccupation for companies than the expected weakening in the global appetite for Asian goods.

    In terms of capital expenditure, only 52% of companies indicated they would increase spending, which Gill attributed to the higher material and equipment costs while 61% indicated input costs had risen in first quarter 2008 while only 53% were able to raise average selling prices.

    'The squeeze in margin and caution over the medium-term growth outlook could explain the reluctance to commit to higher capital expenditure,' he said.

    Companies in power and gas, automotive and materials were planning higher capital expenditure while those in petrochemicals, infrastructure and transport indicated they would cut capex.

    Japan, Hong Kong and Taiwan have proportionately more companies indicating tougher business conditions and also more indicating a margin squeeze, while Thailand, Indonesia and the Philippines appeared less affected by margins, with companies saying they will continue to increase capex.

    The survey also showed that two thirds of companies reported increases in total overheads for first quarter 2008.

    About 87% of the respondents indicated that salaries will rise this year, and a similar number said they expect to increase headcount at or above last year's rate.

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    Default Singapore To Gain Significantly From ASEAN-Japan Economic Pact


    Singapore to gain significantly from ASEAN-Japan economic pact
    It covers 96% of Singapore's trade with Japan and will cut 173 out of 200 items to zero tariff.
    The Straits Times
    Wednesday, 16 April 2008


    "This means immediate tariff elimination on 91% of Singapore's total trade volume with Japan,' said Mr Lim. -- ST Photo: Joyce Fang

    The economic trade pact signed between Asean and Japan will benefit Singapore significantly, said Trade and Industry Minister Lim Hng Kiang on Tuesday.

    Mr Lim, who signed the Asean-Japan Comprehensive Economic Partnership (Ajcep) Agreement for Singapore on Monday said it covers 96% of Singapore's trade volume with Japan, including key chemicals, electronics, and leather products.

    Tariffs for 173 out of Singapore's 200 items traded with Japan will go down to zero when the agreement enters into force.

    "This means immediate tariff elimination on 91% of Singapore's total trade volume with Japan,' said Mr Lim.

    He added that beyond the tangible gains are strategic benefits, as the Ajcep agreement is a building block from the Japan-Singapore Economic Partnership Agreement (Jsepa), signed in 2002.
    "Deepened Asean-Japan relations through the Ajcep agreement also means another essential link between Asean and a key economic partner in the wider regional architecture,' said the minister.

    Under the pact, which was finalised in November after 11 rounds of negotiations spanning four years, about 90% of trade between Asia's largest economy and the 10-member Asean bloc will be tariff-free within 10 years.

    It will be the first multinational free trade agreement (FTA) for Japan, which also has been seeking to conclude a flurry of bilateral pacts amid a breakdown in global trade negotiations.

    Besides market access through lower tariff concessions, the pact also offers traders in Singapore the advantage of cumulation to more easily meet rules of origin (ROO). This means that traders can enjoy a larger sourcing base, as they will be able to use raw and intermediate materials from any of the Ajcep parties and enjoy preferential tariffs.

    In addition to chapters on Trade-in-Goods, ROO, and SPS, other key elements of the Agreement are chapters in Technical Barriers to Trade (TBT), Economic Cooperation, and Dispute Settlement Mechanism (DSM), as well as the commitment to start negotiations on services and investments within one year after entry into force of the agreement.

    The agreement will come into force on completion of domestic procedures of Japan and at least one Asean member state. This is expected in the next few months.

    Japan is Asean's second largest trading partner and Singapore's fifth largest trading partner.

    Moving forward, the 10-member groupng and Japan will start talks on services and investment.

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    Default Dollar Strengthens Following Robust US Data


    Dollar strengthens following robust US data
    Agence France-Presse
    London, U.K.
    Tuesday, 15 April 2008, 5:15 PM EET


    US dollar bill reflecting into a euro coin. The US dollar got a boost from a government report Tuesday that showed energy and food prices surging higher which economists say could pressure the Federal Reserve to ease back on aggressive rate cuts. - Photo: Joel Saget, AFP

    The dollar strengthened across the board Tuesday, briefly hitting a seven-week high against the pound following a raft of robust data from the United States.

    The European single currency fell in late European trade to 1.5795 dollars from 1.5828 in New York late on Monday.

    Against the Japanese currency, the dollar rose to 101.39 yen from 101.05.

    The dollar was buoyed by a 1.1% rise in the US Producer Price Index for March following February's 0.3% increase, and an unexpected rebound in the New York Federal Reserve Bank's Empire State Manufacturing Index.

    Further support came shortly after from the Treasury Department's TICS report that net monthly purchases by overseas investors of US securities totaled 64.1 billion dollars in February, nearly reversing the decline seen in January.

    "Today's TICS report dovetailed with US PPI and Empire Manufacturing to knock the wind out of dollar bears who are searching this week for a catalyst to test the 1.6000 barrier in the euro/dollar," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.

    If the US consumer price index comes in stronger than expected on Wednesday, this could add more support to the dollar by suppressing expectations for further aggressive cuts in interest rates from the Federal Reserve.

    Woolfolk said an "upward surprise to consumer prices would help establish a floor under the dollar on the basis of reduced expectations regarding the upcoming Federal Open Market Committee meeting on April 29-30."

    Consumer price index (CPI) inflation is forecast to rise by 0.3% in March, from a flat reading in February.

    Elsewhere, the euro remained on the backfoot against the dollar following an unexpected drop in the German ZEW business confidence survey for April, which suggests the eurozone's largest economy is increasingly feeling the impact of the credit crunch.

    The ZEW said its confidence indicator fell to -40.7 from -32.0 in March, going against analysts' forecasts for a mild improvement to -29.0.

    But the euro was able to largely hold its own as inflationary concerns lingered in the single currency zone.

    "A series of hawkish remarks from European Central Bank officials have helped stabilize the euro," said Ashraf Laidi, chief forex strategist at CMC Markets US.

    CPI inflation data is due in the eurozone on Wednesday, and is expected to be left unrevised at 3.5% in March from a year earlier, the highest level recorded since the launch of the single currency in 1999.

    The pound remained weaker, briefly hitting an all-time low of 0.8063 against the euro after a slew of soft British data raised speculation that the Bank of England has room to cut interest rates again soon.

    The annual rate of CPI inflation unexpectedly held steady in March at 2.5%, against expectations for a modest rise to 2.6%.

    In London on Tuesday, the euro changed hands at 1.5795 dollars against 1.5828 late on Monday, at 160.41 yen (159.99), 0.8048 pounds (0.7998) and 1.5837 Swiss francs (1.5805).

    The dollar stood at 101.39 yen (101.05) and 1.0026 Swiss francs (0.9985).

    The pound was at 1.9623 dollars (1.9785).

    On the London Bullion Market, the price of gold rose to 929.75 dollars per ounce from 926.50 dollars late on Monday.

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    Default US March Retail Sales Rebound 0.2%


    US March retail sales rebound 0.2%
    Justin Cole
    Agence France-Presse
    Washington, D.C., U.S.
    Tuesday, 15 April 2008, 3:54 PM U.S. EDT


    Customers shop in North Miami, Florida. US retail sales have rebounded 0.2% in March after declining sharply in the prior month as consumers appeared to step up spending despite swirling economic pressures, a government report has showed. - Photo: Joe Raedle, AFP

    US retail sales rebounded 0.2% in March after declining sharply in the prior month as consumers appeared to step up spending despite swirling economic pressures, a government report showed Monday.

    Some economists said the gain was partly explained by accelerating food prices, however, which have been stoked higher by rocketing global commodity costs.

    "Consumer spending was not as weak as feared, but that is because people are paying a lot more for food and energy. There were strong increases in food and gasoline demand, which is likely just the result of the price spikes in these goods," said Joel Naroff, the president of Naroff Economic Advisors.

    Core retail sales, which exclude auto sales, rebounded by 0.1%, the Commerce Department said in a monthly snapshot.

    The headline increase was a notch better than forecasts as most analysts had expected retail sales to rebound 0.1%.

    The latest retail sales survey revealed an improved picture compared with February, but analysts say American consumers are still being pinched by the housing slump, a related credit squeeze and surging gasoline prices.

    "Today's retail sales report for March continues to highlight the precarious state of the US consumer, with sales only seeing a modest pop that doesn't come close to making up for the decline posted last month," Merrill Lynch economist David Rosenberg said in a briefing note.

    The government revised its February retail sales readings to show a decline of 0.4% for the overall index and a fall of 0.1% for core sales, compared with initial estimates showing a decline of 0.6% and 0.2% respectively.

    Economists track retail sales closely because consumer spending accounts for around two-thirds of all US economic growth.
    The overall rise in sales last month was supported by gasoline station sales, which rose 1.1%, and Internet retailing, as online retail turnover increased 2.1%.

    Americans meanwhile appeared to regain some of their appetite for eating out as restaurant and cafe sales rebounded to show a gain of 0.3% compared with a sales decline of 0.2% in February.
    But the lingering housing market downturn continued to weigh on consumers as home furniture store sales declined 0.3% while gardening store sales dropped 0.1%.

    US economic growth has slowed dramatically in recent months and a growing number of economists believe the world's largest economy will experience a recession during the first half of 2008.

    The Federal Reserve has cut interest rates aggressively in a bid to shore up growth and avert a worsening of the credit crisis ravaging the banking and financial sector.

    "The next FOMC (Federal Open Market Committee) meeting is scheduled for April 30th. We look for a 50 basis point cut to 1.75%" in the federal funds interest rate, said Stephen Gallagher, an economist at Societe Generale.

    The central bank has slashed the fed funds short-term rate by three percentage points to 2.25% since September and many economists believe the Fed will cut rates again later this month.
    Analysts believe housing woes, the credit crunch and rising job losses will pressure the Fed to make fresh rate cuts.

    Motor vehicle and parts sales rose 0.2% in March, vexing some economists who pointed out that big auto makers reported hefty sales declines last month.

    General Motors, Ford and Chrysler all reported a double-digit plunge in sales in March compared to the same month a year earlier.

    In the year to March, overall retail sales were up two% while sales excluding autos had gained 3.3%.

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    Default Intel Posts In-line Results, Stock Climbs


    Intel posts in-line results, stock climbs
    Duncan Martell
    Reuters
    San Francisco, California, U.S.
    Tuesday, 15 April 2008, 1:31 PM U.S. PDT


    Workers prepare an Intel booth for the Consumer Electronics Show (CES) in Las Vegas on 6 January 2008. - Photo: Steve Marcus, Reuters

    Intel Corp on Tuesday posted a lower quarterly net profit and reported revenue that was slightly ahead of expectations in the face of a weakening U.S. economy, and its shares rose 5.5%.

    The world's largest maker of semiconductors said first-quarter net income fell to $1.44 billion, or 25 cents per share, from $1.64 billion, or 28 cents a share, a year ago. Revenue rose to $9.67 billion from $8.85 billion.

    Intel, one of the big bellwethers for technology, said it expected second-quarter revenue in a range of $9.0 billion to $9.6 billion and a gross margin of 56%, plus or minus a couple of points.
    Analysts' current expectations for the current quarter are for a profit of 28 cents a share, on average, on revenue of $9.26 billion, according to Reuters Estimates.

    Early last month, Intel cut its first-quarter gross-margin forecast, citing weaker pricing on certain memory chips. Prices in the NAND flash memory-chip market have been under pressure for more than a year now.

    Shares of Intel have declined 21% this year, compared with a 14% decline in the Nasdaq. After the earnings report, Intel stock rose to $22.06. In regular trade, the stock had gained 22 cents, or 1.1%, to $20.91.

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    Default J&J Profits Beat Estimates


    J&J profits beat estimates
    Ransdell Pierson
    Reuters
    New York, New York, U.S.
    Tuesday, 15 April 2008, 3:28 PM U.S. EDT


    Models look at a Johnson and Johnson product in a handout image.

    Johnson & Johnson posted better-than-expected quarterly earnings on Tuesday as the weak dollar and cost cutting offset plunging sales of anemia drugs hit by safety concerns and medicines facing generic competition.

    Demand for the company's vast array of consumer products, including a new over-the-counter form of Pfizer Inc's Zyrtec antihistamine and an array of products recently acquired from Pfizer, boosted results.

    But its two other major businesses, pharmaceuticals and medical devices, would have fared poorly if they had not been propped up by the beaten-down dollar.

    "International sales and exchange rates in overseas markets that benefit from the weak dollar are the only things that are keeping Johnson & Johnson afloat," said Steve Brozak, an analyst with WBB Securities.

    Sales of J&J and other U.S.-based companies could be hurt if interest rates rise and allow the dollar to rebound, he said. "What the weak dollar giveth, the dollar can take away."

    The diversified health care company earned $3.6 billion, or $1.26 per share, up from $2.57 billion, or 88 cents per share, a year earlier, when it took several merger-related charges.

    Analysts polled by Reuters Estimates, on average, had expected a profit of $1.20 per share.

    "Cost savings and over $1.5 billion spent on share repurchases in the first quarter are major reasons for the beat on earnings," said analyst Tim Nelson of FAF Advisors in Minneapolis.

    J&J said global sales rose 7.7% to $16.2 billion, above the average forecast of $15.85 billion. Revenue would have risen only 2.6% if not for the weak dollar, which boosts the value of sales in overseas markets when converted back into dollars.

    "It's not fantastic growth, but when you compare it with General Electric and other large-cap stocks, and the expected earnings of Merck and Schering-Plough, I'll take it," said Eldene Doyle, an analyst for Optique Capital Management.

    Sales of the consumer brands, including Band-Aids and Listerine mouthwash, jumped 16% to almost $4.1 billion, revenue from medical devices rose 7.2% to $5.7 billion, and prescription drug sales rose 3.3% to $6.4 billion.

    Excluding the benefit of the weak dollar, sales of consumer brands rose 6.3%, revenue from medical devices increased just 1.4%, and prescription drug sales fell 0.6%.

    Combined sales of anemia drugs Procrit and Eprex fell 23% to $629 million in the quarter, hurt by concerns that overuse of such medicines can increase the risk of adverse events and death.
    Sales of Duragesic, a skin patch for pain now competing with cheaper generics, also fell 23%, to $233 million.

    Schizophrenia treatment Risperdal, once the company's biggest drug, fell almost 7% to $809 million amid growing competition with other drugs.

    Revenue from arthritis treatment Remicade, however, leaped almost 37% to $998 million. Topamax, for epilepsy, rose almost 6% to $646 million.

    The company raised its 2008 earnings forecast slightly, to a range of $4.40 to $4.45 per share, reflecting growth of up to 7%. That represents a slowdown, however, from growth of more than 10% last year. Its previous forecast was $4.39 to $4.44 per share.
    J.P. Morgan analyst Michael Weinstein has predicted U.S. Procrit sales will plunge almost 40% this year to $1 billion, half the sales seen in 2006. He sees overseas revenue of Eprex falling 10% to $1.1 billion.

    Moreover, J&J is bracing for generic competition by June for Risperdal and by March 2009 for Topamax, and the expected approval of Abbott Laboratories Inc's Xience stent could hurt sales of J&J's Cypher product.

    Launches of new J&J medicines -- including a new psoriasis drug, an antibiotic called ceftobiprole and the once-monthly injectable schizophrenia drug paliperidone -- are expected to help offset some of those sales declines.

    Even so, Weinstein expects company pharmaceutical sales to slip 1% this year and more than 5% next year before growing again in 2010.

    J&J shares were down 38 cents at $65.36 in afternoon trading on the New York Stock Exchange, amid slight declines for the drug sector.

    Optique Capital's Doyle said some investors remain worried about sales of the anemia drugs and may be disappointed that J&J raised its 2008 earnings forecast by just a penny.

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