Published by

The Edge Publishing Pte Ltd

150 Cecil Street, #13-00
Singapore 069543
Phone: (65) 6232 8622
Fax: (65) 6232 8620
Copyright 2007, The Edge Publishing Pte Ltd.
All rights reserved.
Editor: Tan Boon Kean
Research: Rahayu Mohamad
Design: Sharon Khoh, Jamy Gan
Printed by
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Phone: (65) 6543 2222 Fax: (65) 6545 3333
Published by
The Edge Publishing Pte Ltd
150 Cecil Street, #13-00
Singapore 069543
Phone: (65) 6232 8622
Fax: (65) 6232 8620
Copyright 2008, The Edge Publishing Pte Ltd.
All rights reserved.
Editor: Tan Boon Kean
Research: Rahayu Mohamad
Design: Sharon Khoh, Jamy Gan
Printed by
KHL Printing Co Pte Ltd
57 Loyang Drive, Singapore 508968
Phone: (65) 6543 2222 Fax: (65) 6545 3333
Events 2008
The price of gas is displayed on a board at a
Shell gas station in Singapore, onApril 20. Sin-
gapores economy expanded less than initially
estimated in 1Q, adding to concerns growth may
ease in the coming months as global demand
weakens and ination accelerates.
Tony Tan, deputy chairman and executive
director of the GIC, speaks during GICs staff
conference onApril 21. GIC says the world
economy may be facing its worst recession in
three decades.
Dec 31, 2007
JANUARY
2 The year starts with news that Singapores
economy in the previous quarter shrank for the
first time in more than four years by 3.2% as weak-
ness in manufacturing overtook the growth from a
construction boom. But inflation continues as US
crude oil breaks the US$100 per barrel barrier for
the first time.
9 Singapore opens its newstate-of-the-art Changi
Airport Terminal 3 in a bid to strengthen its regional
air hub status. Built at a cost of nearly $2 billion,
Terminal 3 expands the airports annual capacity by
22 million to 70 million passengers a year.
25 Singapore will spend about $20 billion to
upgrade the MRT rail network to cater for a
growing population and reduce congestion. Two
new rail lines are expected to be completed by
2018 and 2020.
31 Budget airlines begin flying the Singapore-Kuala
Lumpur route, ending 30 years of dominance by na-
tional carriers Singapore Airlines and Malaysia Airlines.
AirAsia Bhd, the regions largest budget carrier, is the
first to enter the sector, with a morning departure from
Kuala Lumpur. Singapore-based Tiger Airways and
Jetstar will have one daily flight each on the route.
FEBRUARY
15 Finance Minister Tharman Shanmugaratnam
presents the 2008 Budget, which will incur a deficit
of $800 million as it seeks to enhance tax incentives
for businesses and help the lower income and elderly
consumers cope with rising inflation. The govern-
ment will distribute $1.8 billion in tax rebates and
other cash to lower income groups and the elderly.
20 The US Treasury agrees with Singapore and Abu
Dhabi on a set of principles on sovereign wealth fund
(SWF) investing and receiving SWF investments
and say the principles emphasise transparency,
non-politicisation and avoidance of protectionism.
The agreement comes a day before the International
Monetary Fund board is scheduled to meet on the
formation of a set of international best practices
standards for SWFs.
21 Singapore beats Moscowin a vote of the
International Olympic Committee to host the Youth
Olympic Games 2010.
APRIL
21 The government assures the public there is
sufficient rice as prices jump and stocks deplete.
Singapores consumer price index in March rose at
an annualised rate of 6.7%, the highest in 26 years
as food, housing and energy costs surged.
22 The Singapore dollar rises to a record high of
$1.3476 against the US dollar ahead of the release
of the March inflation data. On April 10, the central
bank had allowed the Singapore dollar NEER to ap-
preciate at a faster rate to combat soaring inflation.
Economists say the Singapore dollar could rise to
$1.33 per US dollar by year-end.
29 The Monetary Authority of Singapore (MAS)
cautions the economy may not reach its 4% to 6%
GDP growth target this year if the US downturn is
severe and results in a worldwide slowdown a
first sign that earlier forecasts for a mild reces-
sion may not pan out.
MAY
15 The US tops world competitiveness rankings
for the 15th straight year, but Singapore and Hong
Kong are ranked just behind it, same as last year,
according to Switzerland-based IMD business
school, publisher of the World Competitive-
ness Yearbook.
JULY
1 Singapore private home prices grew the
slowest in almost four years in 2Q, showing the
property boom is ending. Prices increased only
0.4% after rising 3.7% in 1Q, URA says. Home
prices jumped 31% in 2007, an 11-year high.
11 Oil peaks at US$147.50 per barrel for North
Sea Brent and US$147.27 for US crude. But
on July 15, a sell-off begins after US Federal
Reserve chairman Ben Bernanke says consumer
demand is falling. By the middle of September,
prices would go below US$100 and continue
falling.
31 The Singapore unemployment rate rises to a
one-year high as firms slow hiring amid choppy
financial markets and a weakening global
economy, and analysts warn that unemployment
may climb in the coming months.
AUGUST
10 The Singapore economy shrank at an an-
nualised rate of 6% in 2Q after seasonal adjust-
ments. The balance of risk is shifting away from
inflation towards growth, market economists
note. The Singapore dollar also drops.
18 China beats Singapore for the womens
team gold medal in table tennis at the Beijing
Olympics but the consolation is, this is
Singapores first Olympic medal in 48 years.
TOP 10 GAINERS FTSE ST CHINA TOP
1 People's Food Holdings Ltd
2 Hyflux Ltd
3 China Aviation Oil (S) Corp Ltd
4 Li Heng Chemical Fibre Tech Ltd
5 Delong Holdings Ltd
6 Midas Holdings Ltd
7 China XLX Fertiliser Ltd
8 Epure International Ltd
9 Ferrochina Ltd
10 Pacific Andes (Holdings) Ltd
* For the period of Dec 31, 2007 to Dec 12, 2008
NAME YEAR-TO-DATE % CHANGE
-80 -70 -60 -50 -40 -30 -20 -10 0
-45.50
-47.02
-61.69
-61.84
-63.24
-66.12
-66.97
-70.00
-70.38
-73.02
TOP 10 LOSERS FTSE STI
1 Cosco Corp (S) Ltd
2 Keppel Land Ltd
3 Golden Agri-Resources Ltd
4 Yanlord Land Group Ltd
5 Neptune Orient Lines Ltd
6 Keppel Corp Ltd
7 Singapore Exchange Ltd
8 Sembcorp Industries Ltd
9 Olam International
10 Sembcorp Marine Ltd
* For the period of Dec 31, 2007 to Dec 12, 2008
NAME YEAR-TO-DATE % CHANGE
-100 -80 -60 -40 -20 0
-82.53
-79.82
-79.72
-77.11
-69.57
-66.37
-62.22
-61.72
-59.02
-58.66
TOP 10 LOSERS FTSE ST CHINA TOP
1 China Sky Chemical Fibre Co Ltd
2 China Energy Ltd
3 Synear Food Holdings Ltd
4 Hong Leong Asia Ltd
5 Cosco Corp (S) Ltd
6 FibreChem Technologies Ltd
7 China Hongxing Sports Ltd
8 CapitaRetail China Trust
9 Yanlord Land Group Ltd
10 Yangzijiang Shipbuilding Holdings Ltd
* For the period of Dec 31, 2007 to Dec 12, 2008
NAME YEAR-TO-DATE % CHANGE
-100 -80 -60 -40 -20 0
-87.16
-87.10
-84.32
-83.47
-82.53
-82.50
-78.13
-77.21
-77.11
-75.00
TOP 10 gainers & losers
DOW JONES
8,761.42
7000
8000
9000
10000
11000
12000
13000
Dec 10, 2008 Dec 28, 2007
Dec 10, 2008 Dec 28, 2007
GOLD SPOT PRICE (US$)
783.50
680
730
780
830
880
930
980
Bloomberg Global Spot
Price Commodity Index (US$)
137.87
120
140
160
180
200
220
240
260
137.87
Dec 10, 2008 Dec 28, 2007
CRUDE OIL
(US$ PER BARREL)
43.52
30
50
70
90
110
130
Dec 10, 2008 Dec 28, 2007
MAJOR CURRENCIES
GAIN AGAINST US DOLLAR
1.2
1.25
1.3
1.35
1.4
1.45
1.5
1.55
90
95
100
105
110
JPY
SGD
EURO
Dec 10, 2008 Dec 28, 2007
NASDAQ
1,565.48
1300
1500
1700
1900
2100
2300
2500
Dec 10, 2008 Dec 28, 2007
Stock-market indices
TOP 10 GAINERS FTSE STI
NAME YEAR-TO-DATE % CHANGE
-50 -40 -30 -20 -10 0
-27.49
-34.75
-35.58
-36.48
-36.65
-37.15
-37.37
-37.96
-39.86
-42.87
1 Singapore Press Holdings Ltd
2 Singapore Telecommunications Ltd
3 United Overseas Bank Ltd
4 Singapore Airlines Ltd
5 Singapore Tech Engineering Ltd
6 Oversea-Chinese Banking Corp
7 StarHub Ltd
8 Genting Int'l Public Ltd Co
9 Jardine Matheson Holdings Ltd
10 Jardine Strategic Holdings Ltd
* For the period of Dec 31, 2007 to Dec 12, 2008
AIA policyholders throng its Singapore ofce in
September on news of parent company AIGs
nancial distress
SEPTEMBER
15 Lehman Brothers, with assets of US$639 billion
($908.7 billion) at end-May, but failing to find
funds to continue operating, files for bankruptcy
to become the biggest casualty of the global credit
crisis. The 158-year-old institution is the biggest
investment bank to collapse. Merrill Lynch, also
stung by the credit crunch, accepts a takeover by
Bank of America. The Dow Jones Industrial Average
ends more than 504 points lower today, making its
biggest fall since the Sept 11 terror attacks.
OCTOBER
3 The US House of Representatives passes a
revised US$700 billion bailout plan, which will take
toxic mortgage assets off financial companies.
8 The US Federal Reserve leads a coordinated,
global round of emergency interest rate cuts to
stem a credit and lending crunch.
13 The UK puts up 37 billion ($82.25 billion)
to bail out three major banks Royal Bank of
Scotland, HBOS and Lloyds TSB.
NOVEMBER
4 Democratic candidate Barack Obama wins the
US presidential election, becoming the first Afri-
can American to be elected to the highest office
in the biggest economy in the world.
9 China announces an estimated US$586 billion
stimulus package to help the slowing economy,
boosting domestic investment and propping up
the hard-hit export sector.
15 World leaders pledge rapid action at a G20
summit in Washington DC to rescue a weaken-
ing global economy, setting out plans to toughen
oversight of major global banks and to try for a
breakthrough in trade talks by year-end.
19 Singapores budget deficit could be three
times larger than initially estimated this year
partly because of the global economic turmoil,
Finance Minister Tharman Shanmugaratnam says.
25 The US unveils a US$800 billion plan to buy
mortgage-related debt and back consumer loans.
Of this, US$600 billion is to buy mortgage-related
debt and securities. The remainder is to support
consumer debt securities.
26 European Commission chief Jose Manuel
Barroso proposes a 200 billion ($384.64 billion)
fiscal stimulus package to revive the groups
struggling economies.
DECEMBER
5 Prime Minister Lee Hsien Loong says the
countrys economy, which is already in recession,
may face years of slow growth. I think that the
recession to the best of the experts judgment
may last a year. Maybe if we are lucky, three
quarters, Lee tells members of Singapores
Foreign Correspondents Association at a lunch.
But the recovery from the recession is likely
to be weaker than from previous recessions and
we must be prepared for several years of slow
growth, he adds.
10 Steep falls in global commodity prices drive
Chinas producer-price inflation down to 2% in
November from 6.6% in October, the lowest level
since April 2006. On current trends, headline
inflation indicators could turn negative in early
2009, economists say, showing deflation could
hit China. In Singapore, the MAS survey of
economists forecasts show the economy will
likely to contract 1% in 2009 compared with the
4.6% expansion expected in the September survey.
More than half say growth would be zero or
negative next year, with a few even predicting
that the economy will contract by more than 2%.
Manufacturing will continue to contract while the
financial services, wholesale and retail trade sec-
tors would grow marginally. Construction activity
is to expand relatively stronger, but at around
half the rate.
12 The Civil Aviation Authority of Singapore
extends and increases its Air Hub Development
Fund to Dec 31, 2009, with an expanded budget
of $130 million. A 25% landing fee rebate will be
given to airlines operating flights at Singapore
Changi Airport and Seletar Airport, 10% higher
than the existing 15% rebate as a one-time
economic relief measure for 2009. There will also
be rental rebates as Singapore fights to retain
customers amidst a global recession.
| BY SIMON TAN |
T
hegreat bear market of 2008will
be remembered not only for its
ferocity and devastating efect
on fnancial markets and asset
values but also for the speed
of its onslaught. No other year in recent
times has seen such a contrast between
the frst six months and the second half,
in particular the last three months.
InJanuary, forecasters were optimis-
tic although mildly cautious, and the
year had started bullishly with the oil
pricebarrellingpast US$100. Tebiggest
headache worldwide, including in Sin-
gapore, was record infation and prices.
WhiletheUSsubprimecrisis was already
anissue, having its roots in2007, the rest
of theworld, especiallyAsia, frettedmore
about high salaries, full employment,
and commodity shortages.
By April, however, the headwinds of
the US slowdown started to be felt. Asia,
Europe, the BRIC economies of Bra-
zil, Russia, India and China were not as
decoupled fromthe US as thought, as
USimport slowdowns startedtobiteinto
shippers, container traf candexporters.
After oil reached its record US$147 in
July, the market tipped over as the un-
sustainability of world trade and growth
became clearer.
The worlds biggest consumer had
stopped consuming because it could
not keep up with its mortgage payments,
and foreclosures led to further property
value declines. Defaults started and that
poppedthestructuredproduct andderiv-
atives boomthat Wall Street had built on
since2002. Soon, ahousingcredit crunch
explodedintoaglobal credit squeezeand
panic that froze business activity, caused
commodity prices to collapse by more
than 50%, sucked down emerging mar-
kets current account surplusesbythebil-
lions, and exposed the fraudulent as well
astheunder-performing, over-leveraged,
andover-paidsalesmenandsaleswomen
of below-the-line and of-balance sheet
fnancial products.
Sovereign wealth funds, the much-
touted new players in the global fi-
nancial system with their billions of
taxpayer and pensioner savings or al-
located foreign reserves found their
investment skills sorely tested as they
continued to pump in more good mon-
ey after failed money.
By Dec 12, the Standard &Poors 500
index hadlost US$6.17trillion($8.77tril-
lion) since hitting record highs in Octo-
ber 2007, the Bloomberg news agency
noted. That reduction in global stock
wealth was far worse than the last bear
dotcomcrash of 2000-02 when the S&P
500 lost US$5.76 trillion. Te year 2008
may mark the worst performance since
1931. To make matters worse, this one
still has roomto run.
Te MSCI World Index has tumbled
44% this year, and is set for the biggest
annual declineinits four-decadehistory.
InSingapore, the Straits Times Index was
downnearly50%bymid-December, with
every blue chip down for the year. Te
STIs two top performers, SPHand Sing-
Tel, were bothstill downnearly 30%.
If youwere bornduring the Great De-
pression of 1929 and lived till today, you
wouldhaveseenthemarket capitalisation
of General Motors fall lower than it was
in1927. Tegrandnames of Bear Stearns
and Lehman Brothers have ceased to ex-
ist. Investment bankslikeGoldmanSachs
and Morgan Stanley have converted into
bank holding companies in order to ob-
taincapital security.
Singapore also made the news for
being the frst inAsia toslipintoa tech-
nical recession. Morgan Stanley econo-
mists outlook for the worldis a low0.9%
in 2009 and 3.3% in 2010, said to be the
second-weakest two-years of economic
forecasts since World War II.
Tebest of times
For value andbuy-and-holdinvestors, it
is opportunistically, the best of times.
Warren Bufett wrote to Te New York
Times an opinion piece entitled Buy
American. I am. He said, I dont like to
opine on the stock market, and again I
emphasise that I have no idea what the
market will do in the short term. Never-
theless, Ill followtheleadof arestaurant
that opened in an empty bank building
and then advertised: Put your mouth
where your money was. Today my mon-
ey and my mouth both say equities.
Te bargains are not just in the US,
but everywhere, including Singapore.
While sky-high valuations deserve to be
brought down to match a slow-growth
world, themarket panicinevitablymeans
many cash-rich, wide economic moat,
and well managed companies have also
been oversold. Still, to cite another vin-
tage Bufett quote: Its only when the
tide goes out that you learn whos been
swimming naked. New investors and
others with cash are fnding great op-
portunities to buy into Singaporean and
other world companies priced to earn-
ings that are giddily cheap. Tere is no
rush though, as no doubt the pain will
continue, if not deepen, into2009, as the
market crisis unfolds into the economic
recession that is inevitable.
Tereturnof theState
Onechangewill bethereturnof theState
which, after bailing out companies, has
become the owner of more banks and
fnancial institutionsinUSandEuropean
historysinceWWIIandtheBrettonWoods
monetary systemwas introduced.
Letting Lehman fail was supposed
to restore market discipline by showing
that not all large frms would be saved,
said Dino Kos, a former senior US Fed-
eral Reserve of cial and now a manag-
ing director at Portales Partners in New
York, toBloomberg. Paradoxically, since
Lehman, everybodyhas beenbailedout,
everybodyhas beensavedor mergedout
of existence with the taxpayers help.
Te ignominious ending of the neo-
liberal and unfettered market globalisa-
tion policies of the past three decades
since Reagan-
ismand Tatch-
erism is captured
in former US Fed-
eral Reserve chair-
manAlanGreenspans
dazed testimony before
US Congress, that those
of uswhohavelookedtothe
self-interest of lendinginstitu-
tions to protect shareholders
equity [myself especially] are in a state
of shocked disbelief. In his triumphal
exit book Te Age of Turbulence, Green-
span had questioned those who wished
to regulate hedge funds, saying it is a
vibrant trillion-dollar industrydominated
by US frms. Tey are essentially free of
government regulation, and I hope they
will remainso. Why dowe wishtoinhibit
the pollinating bees of Wall Street?
Apparently there are killer bees as
well as honey-makingones. Whencalled
to testify later and asked if his free-mar-
ket ideas were wrong, Greenspan said:
You know, thats precisely the reason I
was shocked, because I have beengoing
for 40 years or more with very consider-
able evidence that it was working excep-
tionally well.
Can Capitalism be saved from the
capitalists? By reducing interest rates to
near zero, is the US sliding into Japans
failed no-growth high-debt economy of
the past two decades from which there
has been no signifcant recovery?
Much will depend therefore not only
on the US with newly-elected President
Barack Obama but the next-generation
Chineseleadersintheworldsmost popu-
lous and fastest growing economic giant.
Together, both economies are more cou-
pledintheir trade, investmentsandassets
than realised, and whether the recovery
will be next year or take a decade may
well dependonatiredandover-borrowed
Americananda budding but savings-fx-
atedChinese consumer.
FTSE STI 3,465.63
FTSE ST CHINA 766.97
UOB CATALIST 215.85
FTSE STI 1,779.29
UOB CATALIST 75.56
FTSE ST CHINA 186.67
Dec 17, 2008
WORST of times,
BEST of times
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