Singapore, Hong Kong budgets unveil divergent responses to intensifying challenges

Singapore is big on welfare, while Hong Kong is propped up by tax cuts.

Regional powerhouses Singapore and Hong Kong last week unveiled divergent responses to the intensifying challenges of rising income disparity, the need to strengthen the supply side to underpin growth, and aging populations.

According to Fitch Ratings, Singapore is adopting a more explicitly redistributionist fiscal policy while Hong Kong is introducing tax cuts as part of its latest budget round.

The emphasis of Singapore's growth policy seems to be on strengthening total factor productivity, partly through fiscal incentives. These include extending a wage credit scheme and corporate income tax rebates.

Hong Kong's approach is to boost infrastructure expenditure to deepen the capital stock, while letting the supply side take care of itself to a greater degree. The government's long-term fiscal plan calls for capex to rise by a compound annual growth rate of 9.9% from FY15 to FY19.

Fitch's analysis suggests Hong Kong is spending slightly less on identifiable social items as a percentage of GDP than in 2000, whereas in Singapore the percentage is about the same. The share of expenditures on social items in both has been rising in recent years after dipping in the early 2000s.

Nonetheless, the fiscal positions for both cities are likely to remain significant sources of credit strength over the medium term.

Fitch expects that policymakers will continue to place a high priority on long-term fiscal sustainability.
Hong Kong continues to forecast surpluses through to FY20, which means it will accumulate fiscal reserves in nominal terms over the medium term.

In Singapore, the budget plan includes a deficit of SGD6.7bn in FY15, however non-budget sources of revenue will mean that the overall general government balance will remain in surplus.

It is also notable that both governments have a tendency to budget on the conservative side, and have historically outperformed their fiscal plans. In the case of Singapore, the fiscal balance has outperformed the budget for the past 11 consecutive years.

STI MARKET REVIEW- 5th Oct 2015

Singapore’s benchmark Straits Times Index opened today at 2,778.59 points, up by 1.21 per cent or 33.92 points and ended 58.10 points or 2.08% higher to 2851.25. STI came off from its intra-day peak of  2851.25 and  low of  2822.28 Wall Street's unexpected bounce on Friday helped add some stability to Asian markets on Monday, enabling the Straits Times Index (STI) to jump 58.1 points or 2.1 per cent to 2,851.25. Turnover however, remained low and concentrated in the 30 index stocks - the entire market traded just 1.1 billion units worth S$942 million of which S$697 million or 74 per cent was generated by STI components.

LOCAL BOURSE  
                                                                        
Singapore Exchange (SGX) has launched a new index business, SGX Index Edge, that will offer comprehensive services aimed at addressing the rising demand for index-linked investment in Asia.

Market forecast:

STI is expected to be bullish tomorrow. STI has the resistance at 2860. If it breaks this level it is expected to go up till 2875. STI has its support at 2820. The bullish trend is supported by weak U.S. job data  which has eased out the fear of U.S. rate hike by FED.

STI COUNTER SPECIFIC NEWS    

• Ascendas Reit has kicked off bookbuilding on its much-anticipated Singapore dollar perpetual non-call 5, with guidance offered in the 5 per cent area.
• OSIM International is down 1.23% at $1.605 after Taiwan's Food and Drug Administration reportedly found excessive levels of pesticide residues in OSIM's majority-owned TWG Tea's "Chamomile Green Tea" that was exported from India.
• Two senior US-based energy executives have left commodity trader Noble Group in the past week.

GLOBAL FACTORS AND WORLD INDICES:

• Hong Kong stocks bounced sharply on Wednesday from the previous session's two-year lows, wrapping up a tumultuous quarter in which the benchmark Hang Seng Index plunged more than 20 per cent. At market close, the Hang Seng was up 1.4 per cent, to 20,846.30, while the China Enterprises Index gained 1.9 per cent, to 9,405.50 points.
• China's stocks rose, paring the biggest quarterly loss since 2008, as the government struggled to halt a US$5 trillion rout and the world's second-largest economy showed signs of a sharper slowdown.
• European stocks advanced, rebounding from Tuesday's decline, as investors paused to assess value in what is heading for the worst quarter in four years. The Stoxx Europe 600 Index jumped 1.8 per cent to 345.43 at 8:07 am in London.
• Nikkei The pan-European FTSEurofirst 300 index rose 2.2 per cent. The euro zone's blue-chip Euro STOXX 50 index advanced 2.5 per cent.
• Hong Kong stocks closed 1.62 per cent up on Monday. The benchmark Hang Seng Index gained 348.41.79 points to end at 21,854.5.

STI MARKET REVIEW - 1st Oct 2015

STI MARKET REVIEW :

Singapore benchmark Straits Times Index (STI) opened at 2,800.54 points, up 9.65 points or 0.35 per cent, after US stocks gained the previous night and ahead of the release of China's official purchasing managers' index (PMI) data, a manufacturing gauge and ended 11.51 points or 0.41% higher to 2772.36. STI came off from its intra-day peak of 2799.80 and low of 2772.36

Singapore stocks posted gains midday on better-than-expected economic data out of China. China's official Purchasing Managers' Index climbed to 49.8 in September, compared with a median estimate of 49.7 in a Bloomberg poll, as well as an August reading of 49.7.

LOCAL BOURSE

Singapore home prices dropped for an eighth quarter, matching the longest losing streak in 13 years, as tighter mortgage curbs cooled demand in Asia's second-most expensive housing market.
An index tracking private residential prices fell 1.3% in the three months ended Sept. 30 from the previous quarter. The slump was the most since June 2009, in the aftermath of the global financial crisis.

Market forecast:

STI is expected to be positive tomorrow as China’s official Purchasing Managers' Index has come better than expected. STI has the support level of 2778. STI has its resistance at 2828.

STI COUNTER SPECIFIC NEWS

• Singtel's Thai associate Advanced Info Service Public Company Ltd has submitted for arbitration, on Sept 30, a claim for 70 billion baht (S$2.7 billion) from Thai state-owned telco TOT Public Company Ltd.
• QT Vascular has successfully defended itself against a patent infringement lawsuit filed by another medical company- AngioScore.
• ST Engineering CEO will retire next year.
• Hong Leong Asia expects to post a loss for its third quarter and nine months ended Sept 30.

GLOBAL FACTORS AND WORLD INDICES:

• European shares rose on Thursday, buoyed by a further rebound for mining and trading company Glencore after a painful sell-off earlier in the week and bid talk for German salt and fertilizer company K+S
• Malaysian shares closed higher on Thursday, with the Kuala Lumpur Composite Index gaining 12.89 points to 1,633.93. Some 1.52 billion lots, valued at RM 1.82 billion, were traded. Gainers out numbered losers 465 to 306.
• Australian shares closed higher for a second session on Thursday, continuing to recover from a recent slide to a two-year low with the help of solid gains in the financial sector. The S&P/ASX 200 index put on 1.8 per cent, or 90.5 points, to 5,112.1, pulling further away from a trough of 4,918.4 set on Tuesday. The index has gained nearly 4 per cent in the past two sessions.

Forex And Comex Report-30th Sept 2015

EUR/USD

EURUSD fell slightly during the day on Wednesday, after making a Doji on the daily chart. Though the pair is in the up trend so we believe that the pair will bounce back around 1.1295 level. With the next daily and monthly candle we feel market may give some consolidation range so we can be short term traders in this market.

GBP/USD

GBPUSD rose during the day as the quarter on quarter Final GDP came out. Also, the pair has changed the trend with the Doji on the daily chart. We now feel that it is only a matter of time that the pair will reach 1.53 level. The monthly candle is also expected to change the trend and take the market up.

AUD/USD

AUDUSD went up and forth during the day slicing towards 0.7030 level. The 0.7045 level is giving massive resistance so if we break this level we may head up to 0.7135 level to the up. Though the pair is in the longer term down trend, we believe that with the new monthly candle we may change the trend. If not, we are longer term sellers below 0.69 level.

NZD/USD

NZDUSD rallied during the day, trying to reach 0.6400 level. Looking at the 4 hourly chart, the pair is in the up trend so if we cross 0.6400 level we are buyers for the short term. The pair is in the longer term down trend so with the next daily and monthly candle we may get a clear picture that whether the pair is changing its trend or it will continue to be in the longer term down trend.

STI MARKET REVIEW - 28th Sept

Straits Times Index (STI) opened on Monday slightly lower at 2,828.07 points, down 4.57 points or 0.16 per cent and ended 40.72 points or 1.44% lower to 2780.74. STI came off from its intra-day peak of 2829.64 and low of 2780.74.

Singapore stocks sank in first half of Monday session as worries build about global growth and volatility spilling out from China. STI kicked off the week on a distinctly poor note, dropping 40.72 points or 1.4 per cent to 2,791.92, its lowest close since June 2012.

LOCAL BOURSE

Singapore's manufacturing sector continues to be a negative in the economy in third quarter of 2015. The headline inflation forecast for Singapore at between -0.5% and 0% for 2015.

Singapore inflation fell 0.8 per cent in August compared to a 0.4 per cent slide in July.

Market forecast:

STI is expected to consolidate with bearish sentiment as technically market has fallen more than 20 percent which is generally taken to be an indicator of a bear market. STI has broken the crucial support level of 2800. STI has its next support level at 2768. If it breaks this level it might falls upto 2735. Investor sentiments are cautious over the slowdown of china’s economy as data showing China industrial profits has fallen 8.8 per cent.

STI COUNTER SPECIFIC NEWS

• Olam International, a commodity trader controlled by Singapore investment company Temasek Holdings, plans to more than double coffee-plantation acreage in Africa to improve quality control on the continent.
• Sunright has reported a increase in net profit to S$3.1 million for its full year ended July 31, 2015
• CMC Infocomm Ltd won S$4 million worth of contracts from Singapore telcos.

GLOBAL FACTORS AND WORLD INDICES:

• The Straits Times Index on Monday kicked off the week on a distinctly poor note, dropping 40.72 points or 1.4 per cent to 2,791.92, its lowest close since June 2012.
• Malaysian shares closed lower on Tuesday with the Kuala Lumpur Composite Index slipping 6.58 points to 1,608.43. Some 1.64 billion lots, valued at RM1.55 billion were traded. Losers outnumbered gainers 412 to 366.
• Chinese stocks rose, paring the benchmark index's biggest quarterly loss since 2008, as a rally for technology companies overshadowed a report showing industrial companies' profits dropping the most in at least four years. The Shanghai Composite Index climbed 0.3 per cent to 3,100.76 at the close, erasing a loss of as much as 1.6 per cent.
• Tokyo shares closed 1.32 per cent lower Monday as the yen strengthened and an ex-dividend issue affecting Topix-listed firms weighed on sentiment. The benchmark Nikkei 225 index shed 235.40 points to end at 17,645.11, while the broader Topix index of all first-section shares was down 1.04 per cent, or 15.14 points, at 1,438.67.
• Asian stocks sagged on Monday after Wall Street's uninspiring Friday performance and ahead of key economic indicators, while the dollar consolidated its gains against the yen and euro.
• Prices of completed non-landed private homes in Singapore fell 0.6 per cent in August 2015 over July, according to the National University of Singapore (NUS) flash estimate for its Overall Singapore Residential Price Index (SRPI) released on Monday.
• Competition authorities in Switzerland announced an investigation into some of the world's biggest banks, including HSBC Holdings Plc, on suspicion that they colluded to manipulate the prices of gold, silver and other precious metals.
• Oil halted its advance near US$45 a barrel as a drop in Chinese industrial companies' profits signaled demand may be weakening in the world's second-biggest consumer.
• Indonesia stock index fell 1 per cent on Monday, extending its losses to a fifth day and reaching its lowest point since Aug 26.The index lost 3.9 per cent between Tuesday and Friday, as the rupiah continued

Weekly Technical view on STI : 21st Sept 15 to 25th Sept 15

Weekly wrap of STI:

Straits Times Index (STI) opened at 2855.04 ie., 24.55 or 0.85% lower and ended at 2832.64 ie., 46.95 points or 1.63% lower to 2832.64 this week. STI came off from its weekly peak of 2904.98 and low of 2816.76.
Singapore's August industrial production data due later today will likely hint at a risk of a technical recession, says DBS. A technical recession occurs when there are two consecutive quarters of decline in gross domestic product. According to prediction a 6.8% on-year decline in industrial output in August.



LOCAL BOURSE

Factory output contracted for the seventh consecutive month in August, performing worse than private-sector forecasters had expected. The latest manufacturing data, which showed output sliding 7% last month from a year ago, came in below the 5.3% decline forecast.
Consumer confidence in Singapore fell 0.9 point to 129.6 in September on heightened concerns about the economy in the next five years.
TI remained in negative sentiment this weak. It is expected to consolidate next week. It has it weekly support at 2800. STI may take reboud after taking support at 2800. Concern over US interest rate has increased after FED officials and Janet Yellen made a statement supporting rate hike by the end of this year. Market sentiment over slowdown of China’s economy is also negative.

TI COUNTER SPECIFIC NEWS :

• IPS Securex Holdings has placed out 8.9 million shares to "certain institutional investors" at 71 cents per share to raise $6.32 million.
  
• Ezra Holdings says Capt. Adarash Kumar Chranji Lal Amarnath has stepped down as group chief operating officer and executive director of the company effective Friday. His resignation is in compliance with the Code of Corporate Governance 2012 of having independent directors making up at least half of the board.
  
• Emas Offshore named Ezra ex-COO as CEO.
  
• NOL couldn't explain high volume, except maybe market talk of Temasek selling stake.
  
• Olam Intl is eyeing at US$2.72bn opportunity for acquisitions from commodity crisis.
  

GLOBAL FACTORS & WORLD INDICES:

• Shares in Hong Kong ended the week on a high Friday after tumbling more than three per cent in the previous two sessions but ongoing concerns about China's economy saw Shanghai check out with heavy losses. Hang Seng Index added 0.43 per cent, or 90.34 points, to close at 21,186.32.
• The pan-European FTSEurofirst 300 index, which had fallen 2.1 per cent on Thursday, climbed back up 2.2 per cent in early trading, while the euro zone's blue-chip Euro STOXX 50 index also advanced 2 per cent. Nevertheless, the FTSEurofirst was still down 2.3 per cent from the end of last week.
• The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.6 per cent, to 3,231.95, while the Shanghai Composite Index lost 1.6 per cent, to 3,092.35 points.
• Australian shares fell 0.6 per cent on Friday led by losses in banks after US Federal Reserve Chair Janet Yellen said she expects the central bank to begin raising rates later this year. The index ended the week down 2.5 per cent, after two straight weekly gains. It has lost 3.2 per cent in September so far, after falling 8.6 per cent in August - its worst monthly performance since the global financial crisis.
• Tokyo shares gained 1.76 per cent Friday, shrugging off a weak inflation report after Federal Reserve Chair Janet Yellen hinted at a US rate hike by the end of 2015.
• Taiwan stocks were up slightly on Friday after the central bank cut its benchmark interest rate for the first time since 2009 as the island's export-driven economy faces headwinds from a China-led global economic slowdown.
• Indonesia's economy is expected to grow at more than 5 per cent in the fourth quarter, a central bank official said on Friday, adding that gross domestic product was expected to expand at an annual 4.9 per cent pace in Q3.
• Gold dropped from its highest in a month on Friday as the dollar rallied on an assurance from Federal Reserve chair Janet Yellen that the US central bank would begin raising rates this year.
• Oil markets remained subdued in early trading in Asia on Friday after weak data from Japan reinforced concerns over global economic growth.

Singapore News Highlights - 23rd Sept 2015

• Singapore share prices opened lower with the Straits Times Index (STI) down 11.23 points or 0.39 per cent to 2,857.24
• Asian shares slipped on growth anxiety focus now shifts to China PMI.
• Asian futures point to more stock losses before China factory PMI
• Rowsley has decided not to wait for the Iskandar residential market to recover.
• YuuZoo Corporation is appointing James Sundram as chief executive officer, from Oct 1.
• SGX could face toughest questions yet at an annual shareholders' meeting as pressure mounts to find new sources of revenue.
• DBS will introduce cashless options through mobile app to F&B outlets in Singapore.
• NOL couldn't explain high volume, except maybe market talk of Temasek selling stake
• Industrial Reit in Singapore will remain resilient in the face of the current economic slowdown, underpinned by its "robust" financial profiles.
• Oil moves up on falling US inventories.
• De Beers has pushed gift-giving to halt China's diamond slowdown.
• Gold retains losses as firmer dollar.
• Dollar rises as Fed seen hiking rate this year.
• Impact of China slowdown is bigger than expected :IMF