Survey ranks Singapore as best place to live for Asian expats

Survey ranks Singapore as best place to live for Asian expats

Posted: 04 March 2008 1647 hrs


SINGAPORESingapore is the best city in the world for Asian expatriates to live in due mainly to its quality of life and low crime rate, a survey released Tuesday by ECA International showed.


Sydney was rated second in the survey, with third spot shared by Melbourne and Kobe in Japan, the human resources firm said.


Rounding out the top 10 list for Asian expatriates was Copenhagen in fifth spot, followed by Canberra and Vancouver. Wellington and Yokohama shared eighth spot, with Dublin next.


ECA said Singapore, Southeast Asia‘s most advanced economy, was also ranked above the other cities because it offered Asian expatriates a similar feel to their home countries.


“Since quality of living is relative to where someone comes from and to where they are going, our scores take into account the home and destination country,” said Lee Quane, ECA International’s general manager in Hong Kong.


Hong Kong, Singapore‘s long-running regional rival as a business hub, was ranked 15th in the global cities list, with the territory’s air pollution cited as a drawback.


Among Chinese cities, Shanghai was seen as the best place for top Asian professionals while Xian ranked as the worst location, according to the survey, which compared living standards in 254 locations worldwide.


Beijing, host of the 2008 Olympic Games in August, fared worse than other Chinese cities such as Nanjing and Tianjin because of its notorious air pollution, the survey showed.


ECA International’s annual survey is based on categories such as climate, air quality, health services, housing, political tension and personal safety.


Within Asia, Hong Kong and Tokyo were ranked joint fourth behind Singapore, Kobe and Yokohama, the survey said.


Trailing in sixth spot was Taipei, followed by Macau and Bangkok, with Malaysia‘s Kuala Lumpur and Georgetown cities sharing ninth spot while Shanghai and Seoul were in 11th and 12th places, respectively.


Brunei‘s Bandar Seri Begawan was in 13th place in Asia and 89th place globally.


Manila was ranked 24th in Asia and 133 globally, while Jakarta was in 39th place regionally and 190th worldwide.


Chennai was the highest ranked Indian city within Asia, in 26th spot, with Mumbai in 30th and New Delhi 37th. – AFP/ir


Source: Channel News Asia

This OLD SCHOOL is going HI-TECH

This OLD SCHOOL is going HI-TECH


SLA awards site of former Nanyang Institute of Management to James Cook University


STUDENTS at the Singapore campus of Australia‘s James Cook University (JCU) will soon have a sprawling campus of their own with state-of-the-art classrooms and a more student-friendly environment.


By Karen Wong



05 March 2008


STUDENTS at the Singapore campus of Australia‘s James Cook University (JCU) will soon have a sprawling campus of their own with state-of-the-art classrooms and a more student-friendly environment.


The Queensland-based university’s search for a more suitable campus to cater to its growing student enrolment ended last month when the Singapore Land Authority (SLA) awarded it a site at Upper Thomson Road.


The former Nanyang Institute of Management site, for which JCU submitted its winning bid, is about 18,500 sq m.


Located at 600 Upper Thomson Road near Sembawang Hills and Lower Peirce Reservoir, it comprises two blocks of three-storey buildings with covered linkways, five single-storey blocks and a substation, said an SLA spokesman in reply to The New Paper’s queries yesterday.


Professor Sandra Harding, JCU’s vice-chancellor and president, said: ‘We intend to significantly refurbish the buildings to meet student and staff needs.


‘Our investment in creating a new and bigger campus is proof of our solid commitment to the university’s future in Singapore and our aim to add to the nation’s talent pool.’


Dr Dale Anderson, chief executive officer of JCU Singapore, said the new campus would have state-of-the-art classrooms.


‘Our university has world-class e-learning facilities and these will be linked to the new campus,’ he said.


About a year ago, the university was reported to be looking for a new campus because of its increasing student population.


It is currently using the Spring Singapore building in Bukit Merah, which has 16 lecture rooms across three floors. Its administrative offices and student lounge take up an additional two floors.


JCU, which started a branch here in 2003 with 50 students, currently has about 1,100 students pursuing about 15courses ranging from psychology to information technology and business.


SLA says the tenure for the Upper Thompson site is for three years, with the option of renewal till 2017.




The JCU site is the latest of five sites tenanted out to commercial schools last year.


The former Lee Kuo Chuan Primary School at Ah Hood Road was recently awarded to EASB Institute of Management.


At Tanglin Village, the 40-ha former camp site’s latest tenant is the University of Chicago Graduate School of Business. The school plans to set up its new campus over three buildings at Loewen Road next year, said SLA.


Chicago GSB‘s dean, Mr Edward Snyder, said in a press statement last week that the school has ‘outgrown the existing facility’ at Penang Road.


He added: ‘We have increased the class size and expanded the services we offer to our students in Singapore to include career services and alumni affairs.’


SLA‘s assistant chief executive, Mr Simon Ong, said: ‘In recent years, there has been strong interest and demand by operators from both commercial- and foreign-systems schools, in taking up state properties.’


He noted that many of these properties have been adapted successfully for academic pursuits.


Source: The New Paper

Never mind rising rentals, they want order

Never mind rising rentals, they want order


Wednesday • March 5, 2008


Tan Hui Leng



EVEN as skyrocketing rentals, other rising costs and the competition for places in international schools have raised concerns about whether Singapore is losing its attractiveness to expatriate talent, one survey has laid such fears to rest — at least where Asian expats are concerned.


According to the survey by United Kingdom-based human resource consultancy ECA International of living standards in 254 international locations, Asian expats ranked Singapore as the best place to live. Hong Kong ranked 15th.


The annual survey is based on categories such as climate, air quality, health services, housing, political tensions and personal safety. ECA International general manager Lee Quane said the survey helps firms decide if they should pay a hardship allowance “to encourage employees to move to a location”.


Last year, another survey by Watson Wyatt showed that most foreigners got the same wages as their Singapore counterparts, as companies do not see the need to pay employees a premium to work here.


The overwhelming appeal of Singapore it seems, lies in its “orderliness”.


“I worked in Malaysia for 12 years but chose to come here to set up my business because everything here is systematic and proper,” said Indian Sunil Francis, 35, who holds an Employment Pass for entrepreneurs.


Singapore International Chamber of Commerce executive director Phillip Overmeyer told Today the merits of Singapore as cited in the ECA survey confirms what the chamber has been hearing from its members.


But Mr Quane said that while Singapore scored well in most categories, expats are concerned about the deterioration in air quality and rising property prices.


Indeed, Mr Francis said he had to give up renting a HDB master bedroom when the monthly rental rose from $450 to $800 last year. He now stays with a relative.


Both Mr Quane and Mr Overmeyer also noted the shortage of places in international school places, a crucial consideration for many expat parents.


Mr Quane added: “In news and media, we regard Hong Kong as much freer and fairer than in Singapore.” But Mr Overmeyer said while people miss the “excitement” of political debate, this is not of concern to expats as they cannot vote here. Also, the Government here is equated with security and stability.


Source: TodayOnline

‘Magic dollars’ scam lets HDB flat sellers pocket cash

‘Magic dollars’ scam lets HDB flat sellers pocket cash


They declare a lower price, thus keeping the difference instead of returning funds to CPF


By Jessica Cheam


A NEW scam involving HDB flats has surfaced, this time allowing flat sellers to pocket extra cash by craftily getting around the rules.


The so-called ‘magic dollars’ scam involves reporting a falsely low sale price to the HDB – an offence which is punishable by a jail term and/or a fine.


Agents say they are seeing these cases pop up on a more regular basis, but it is not rampant yet.


This is how it works.


The seller is typically a flat owner who bought his HDB flat at the peak of the last property boom, so he has made significant paper losses despite the recent run-up in prices.


If he sells the flat, the proceeds may be barely enough to cover the balance of his mortgage and any leftover will probably have to go back into his CPF account. So he ends up not getting his hands on any ready cash at all.


To pocket some cash or what is sometimes known as ‘magic dollars’, he strikes a deal with the buyer of his flat.


He gets the buyer to agree to declare to the HDB that the flat was sold for a much lower price. The buyer then pays the difference between the actual and declared price to the seller in cash.


To sweeten the deal, the seller usually gives the buyer a discount on the market value of the flat.


The scam is crafty because, on paper, these transactions can look flawless and are hard to detect.


Privately, the agent drafts a ‘letter of undertaking’, binding the buyer to pay the seller cash – sometimes under the pretext of paying for furniture and fixtures.


When the buyer pays up and the deal is done, the agent destroys the document and any paper trail. Neither the HDB, property agencies or lawyers will ever see it.


Everyone is a winner. The buyer gets a good deal and the seller gets some cash. But the catch is: The scam carries a jail term and/or a fine.


The deal is illegal because the seller is indirectly siphoning off money in advance from his CPF.


The HDB told The Straits Times that it was a ‘serious offence’ to declare false resale prices, adding that if there was sufficient evidence, the case would be referred to the police.


Conviction could bring fines of up to $5,000 or jail of up to three years.


Such scams are not new to the market and HDB flat owners sometimes resort to them when they want to unlock cash.


In 2001, a ‘cash-back’ scheme was exposed, which involved over-declaring the agreed selling price.


It allowed the buyer to get a higher loan either from a bank or the HDB, with the ‘extra’ cash divided out among those involved.


Agency bosses told The Straits Times that they strictly discourage agents from handling these sales.


But despite the risk of getting caught, agents say such deals are popular in estates such as Simei, Pasir Ris and Bishan, which commanded high prices in the previous boom.


Some say the deals started surfacing as early as last April, when the HDB market started to pick up.


Resale prices rose 17.5 per cent last year after years in the doldrums, prompting more flat owners to think about selling their flats.


An agency boss, who declined to be named, has heard of up to 30 such cases.


PropNex chief executive Mohamed Ismail said it was hard to determine exactly how many such deals are being done, but he estimated that about 80,000 – or 10 per cent – of HDB homes are still in negative equity.


Negative equity means a flat owner’s mortgage is worth more than the home’s value now. Owners of these flats are more likely to take part in such deals.


Another agent said he is approached at least once a month to take part in such deals but he turns them down. ‘This is my rice bowl. Why would I want to risk going to jail for just a sale?’ he said.


Source: Straits Times

Foreign workers a boon: minister

Foreign workers a boon: minister




THE secret of Singapore‘s strong job growth, according to Manpower Minister Ng Eng Hen, is not to rely solely on locals to fill the vacancies. Instead, it was the ministry allowing businesses here to readily tap foreign workers to meet their needs that has proven to be the Republic’s key competitive advantage, said Dr Ng in Parliament yesterday.


‘If we had relied on our limited manpower supply, growth would be slower and fewer jobs would be created. This is the experience in other countries that tend to close their labour markets,’ he told the House.


Some MPs were concerned that the government’s recent moves to relax the rules on hiring foreign workers had dented opportunities for locals. But Dr Ng reassured them this was hardly the case.


‘The unemployment rate among local polytechnic diploma-holders has fallen from 5.6 per cent in June 2004 – before the introduction of the ‘S’ pass (for foreign skilled workers) – to 3.4 per cent in June 2007. Last year, we saw a 47 per cent increase in the number of job vacancies requiring at least a diploma qualification,’ said Dr Ng.


To further boost productivity, MPs such as Josephine Teo (Bishan-Toa Payoh GRC) suggested that foreign worker access could be linked to industry upgrading and re-development efforts. Another suggestion was to have employers show that they had put in enough effort to hire locals before being allowed to hire foreigners.


Dr Ng disagreed with both ideas. ‘It would be both ineffective and counter-productive to tie foreign worker quotas to specific outcomes. Doing so would restrict the growth of companies, especially in this tight labour market, and in turn reduce job opportunities for locals.’


The solution, then, is a three-pronged effort. First, re-create more jobs to boost workers’ value and productivity. Second, get companies to upgrade. Lastly, develop a ‘first-class Continuing Education and Training (CET) system to help our workforce stay ahead’, said Dr Ng. As such, the Lifelong Learning Endowment Fund will be topped up to $3 billion. More CET centres, too, will be developed to benefit adult learners, while an Institute for Adult Learning will also be set up to conduct research and develop new training methods.


Source: Business Times

Parkway got the medicine right for Novena deal?

Parkway got the medicine right for Novena deal?




AS THE property investment chant goes, there are three factors that one needs to consider in a purchase: location, location, and location.


But for a hospital operator, does location count too?


In Parkway Holdings’ case, apparently it does.


Having been punished by the market recently for paying what is considered an exorbitant price for a piece of land in Novena, Parkway has been taking pains to explain the rationale for its bid.


A key reason was the group’s need for new capacity, given that its existing Mt Elizabeth, Gleneagles and East Shore hospitals are already facing expansion constraints. The group has had to move out some of its administrative functions from the hospital premises in recent years.


And the trend is not unique to Parkway. Also in close proximity to Novena, Thomson Medical Centre, too, has shifted its non-clinical functions across the road from its hospital building. And even in the public sector, administrative staff at Tan Tock Seng Hospital will soon have to operate from temporary offices in containers as a result of the space crunch.


Adding to the urgency is the long lead time required to build up a hospital from a green field before it becomes operational. That means development work has to start now to cope with the rising demand for hospitals in the coming years.


Considering that about 60 per cent of its patients today are foreigners, Parkway’s new venture is aimed at capturing this pool which is growing at double-digit pace a year. And as major projects like the integrated resorts take shape, more high net worth individuals and expatriates descending here could use the ‘hospital of the future’ and six-star services that Parkway plans to deliver.


Critics would argue that all these plans could still be delivered without such an aggressive bid. As Health Minister Khaw Boon Wan has announced previously, three other land parcels have been identified for the construction of private hospitals. One of them will be in Outram, another in Buona Vista, and the third in the northern part of the island. It is not known when the sites would be released.


Compared to the rest, the Novena location appears to be the most strategic one for Parkway. Being minutes away from the Orchard Road shopping belt, and easily accessible by MRT, it would be attractive to international patients looking to combine their healthcare needs with leisure.


It would also be easier for incoming overseas patients who come with their families to find temporary accommodation in close proximity to the Novena hospital. Apart from the Newton/Orchard Road area, foreign patients could also look towards upcoming commerce-hotel projects at nearby Sinaran Drive and Race Course Road.


Right next door, doctors taking up space at Far East Organisation’s Novena Medical Suites add another potential pool of users to Parkway’s Novena Hospital. It could provide that extra wing, like what Paragon Medical Centre is to Mt Elizabeth Hospital now.


Clearly, clinching the Novena site is paramount to its expansion. With a rising expatriate population and more than 400,000 foreign patients arriving in Singapore every year, getting a new hospital up and running in time is pivotal for it to maintain its lead in the private healthcare space.


Parkway itself has said its new venture will set a new benchmark in private healthcare here. It will have an emphasis on cardiovascular disease, oncology, and orthopedics, and healthcare delivery designed with a great deal of attention to individual patients.


At $1,600 psf per plot ratio, the bid works out to more than $1.2 billion just for the 99-year leasehold land. Add another $500 million to the development cost and the total bill comes closer to $2 billion.


When compared to the next highest bid of $694.50, the price is seen as excessive. But seen against the light of the location’s potential, Parkway may have the last laugh in the longer term.


Source: Business Times

4th varsity may offer courses in high-growth industries

4th varsity may offer courses in high-growth industries


It will have an annual intake of between 2,500 and 3,000 students




PLANS to set up a fourth publicly-funded university in Singapore are beginning to take firm shape.


Two preliminary recommendations by the committee overseeing the local university sector’s expansion were announced in Parliament yesterday.


The first, said the group’s chairman, Minister of State for Education Lui Tuck Yew, is to have a new mid-sized university set up within a few years’ time, with an eventual annual intake of between 2,500 and 3,000 students.


These extra places will ensure that, by 2015, 30 per cent of each cohort will enjoy a subsidised university place. Already this year, one in four students will get a subsidised place, two years ahead of schedule.


Having consulted with industry leaders, students and parents, Mr Lui said possible courses to be offered could be an interplay between the fields of design, engineering and business. The focus would be on high growth areas such as clean technology and sustainable building design, and tourism and hospitality. ‘It was felt that a combination of such programmes would support the university’s integrated, inter-disciplinary approach and provide rich opportunities for learning and collaboration,’ said Mr Lui.


For example, engineering students could practice design thinking and principles to help come up with creative solutions and products that suit the user’s needs. These students would also be well-versed in the business aspects of engineering that would help them develop strong project management and entrepreneurial skills.


The committee’s other recommendation is to establish a small liberal arts college, affiliated to one of the three existing local universities. This would allow the college to leverage on the branding and resources of the parent institution.


Already, the National University of Singapore (NUS) has submitted a proposal to develop the college as a ‘self-contained autonomous entity’, similar to the NUS-Duke Graduate Medical School. The Singapore Management University is also studying ways to offer a liberal arts education to its students as it expands its disciplinary coverage.


Mr Lui’s committee is expected to put up a recommendations report by the end of June, when it is due for discussion by the International Academic Advisory Panel. The final report is expected by this August.


On the recent announcement to raise university fees – an issue raised by three MPs yesterday – Mr Lui explained that 70 per cent of local universities’ expenditure goes towards manpower costs.


‘Our universities must pay competitive wages if they are to compete effectively against global competition to attract and retain top quality faculty. This is necessary in order for them to uphold the quality of education they provide.’


Most students entering NUS or Nanyang Technological University this year will face a one-off fee increase of 4 per cent, or about $250 more per year compared to existing students.


Source: Business Times

For sale: 18th floor of Peninsula Plaza at $17.5m

For sale: 18th floor of Peninsula Plaza at $17.5m




NOVELTY Department Store Pte Ltd, part of the Novelty Group, has put the entire 18th floor of Peninsula Plaza up for sale, with a price tag of about $17.5 million or about $2,050 per square foot (psf) of strata area.


Peninsula Plaza is a 999-year leasehold building near Raffles City. DTZ is marketing the property.


The 18th floor comprises six strata units adding up to 8,514 sq ft – all of which are leased. Tenancies for five units are up for renewal/expiry later this year, while the lease on the sixth unit runs out in mid-2009.


The $17.5 million price tag reflects a passing net yield – that is based on existing contracted rents – of about 2 per cent.


However, DTZ notes that current monthly asking rents for offices in the building range from $7 psf to $8 psf.


Assuming an average rental of $7.50 psf, the $2,050 psf asking price reflects a net yield of about 3.5 per cent.


‘The potential buyer may also further capitalise on this investment opportunity and subsequently offer to resell the six strata units individually to take advantage of rising capital values of smaller strata office space,’ said DTZ senior director (investment advisory services and auction) Shaun Poh.


The property provides an opportunity to invest in ‘good quality and well maintained office space’, he said. ‘Strong demand and rising rental rates for office space in the Central Business District are expected to continue, providing income growth from the asset.’


DTZ is marketing the property through an expression of interest exercise that closes on April 1.


In December, a first-storey freehold office unit at United House, behind Le Meridien Singapore Hotel at Orchard Road, fetched $2,497 psf of strata area at an auction.


Far East Organization is said to have sold an entire office floor last year at The Central, a 99-year leasehold development above Clarke Quay MRT Station, for $3,050 psf.


Novelty Group is involved in the property and department store businesses. Its upcoming residential developments include i Residences, a freehold development with 70 apartments in the Irrawaddy Road area, and the 35-unit Evania at Upper Paya Lebar Road.


Source: Business Times

Energy-efficient properties popular with companies

Energy-efficient properties popular with companies




(SINGAPORE) Contrary to what some developers think, a majority of companies are willing to pay a premium for properties designed with ‘sustainable’ principles in mind, a recent survey by real estate firms Jones Lang LaSalle and CoreNet Global shows.


The bottleneck is, rather, on the supply side, where the ability to address market demand is ‘presently sporadic at best and needs to be urgently addressed’, says the survey, which was published yesterday.


Entitled Global Trends in Sustainable Real Estate: An Occupier’s Perspective – Feb 2008, it was conducted on 400 corporate occupiers at conferences in Singapore, Denver, Melbourne and London last year.


Most occupiers recognise that energy-efficient and environmentally friendly property, such as buildings designed to US LEED or equivalent standards, could cost 10 per cent more to build.


However, 62 per cent of respondents globally, said they were prepared to pay a premium of up to 10 per cent, and 8 per cent indicated willingness to pay even more.


The willingness to pay varied across markets. American occupiers were most enthusiastic, with 77 per cent willing to pay more, followed by occupiers in Australasia and Europe.


In Asia, 48 per cent were willing to pay up to 10 per cent more, significantly less than elsewhere, but 16 per cent were willing to pay a premium of over 10 per cent, significantly higher than elsewhere. This was ‘possibly due to the market scarcity of solutions’, said JLL and CoreNet.


Globally, ‘despite willingness to pay the price, a lack of options and services in some areas has been a limiting factor’, the survey found.


Overall, 46 per cent of respondents felt there was minimal availability, while about 38 per cent felt it was good in some markets but not in others. The remainder felt there was good availability in all markets.


‘Various elements of the real estate industry are not yet doing a good job in thinking and acting ahead’, or at least that’s what the market perceives, the survey said.


Appraisers, brokers, contractors and landlords, in that order, were perceived as the least proactive, though architects and designers were regarded as generally proactive.


The survey also asked the corporates what factors might influence their future attitudes to sustainability.


The most common factor, cited by four-fifths of respondents, was significant increases in energy costs – showing that cost-saving through green design is very much on the mind, said JLL and CoreNet.


Other well-cited factors were increased regulation, influence from customers or employees, and better technology.


Specific environmental issues like water utilisation and carbon emissions were ‘ranked lower , and by a significant gap’, suggesting that not all the details of sustainability are yet in full focus, the survey said.


‘Corporate occupiers may not fully grasp how interdependent the components are in terms of their cumulative impact on the environment’, it said.


Source: Business Times

Time to plan for the recovery that’s lying around the corner

Time to plan for the recovery that’s lying around the corner




(NEW YORK) Say the economy has fallen into recession, as so many people on and off Wall Street think. Is it time to bail out of stocks?


Selling may be the reflexive response by shareholders who have watched the value of their assets decline in step with economic indicators, but investment advisers contend that they should consider buying instead. Recessions tend to be short, and by the time one is widely acknowledged, they say, investors have often sold just in time to miss the recovery that lies around the corner.


‘People should be preparing for the next upswing because the downturn is already priced in,’ advised Ron Muhlenkamp, manager of the Muhlenkamp Fund.


Brendt Stallings, a fund manager for the TCW Group who specialises in shares of medium-size companies, suggests that investors may not be fearing the worst but that they certainly have it on their minds. And that has already registered in stock prices.


Portfolio managers who foresee a rebound concentrate their buying on segments of the economy that tend to outperform as a new growth cycle gathers momentum. They are not allocating all of their resources to such recovery plays, though, and are making allowances for conditions that seem to be different from those of other recessions.


‘The normal rotation that occurs is a move into financials and consumer cyclicals,’ Mr Muhlenkamp noted before conceding that ‘normal’ does not quite describe the financial sector and such cyclical industries as housing these days. He likes some financial stocks, notably the mortgage buyer and seller Fannie Mae, but he prefers consumer-oriented companies like appliance maker Whirlpool and two transportation companies: Harley-Davidson and Winnebago.


Continuing with his eclectic list of companies that get people from here to there, he expects the stocks of Boeing and Caterpillar to rise with, or ahead of, the economy. A point in their favour, he said, is the level of the US dollar; it is far weaker than it was during the 2001 recession, giving American exporters a competitive edge.


Barbara Walchli, manager of the Aquila Rocky Mountain Equity fund, is another advocate of transportation stocks. The sector, she said, is ‘usually one of the groups that moves fastest coming off the bottom’.


One of the fastest of the fast may be Knight Transportation, a midsize trucking concern. Ms Walchli lauded Knight’s management for keeping the company’s books free of debt, unlike rival Swift Transportation, which she said had borrowed heavily to take itself private.


She also likes Avnet, a distributor of electronic components to businesses. It fits well with her expectation that businesses will open their wallets before consumers as the economy emerges from its torpor.


Mr Stallings also foresees business spending picking up sooner, and he prefers potential beneficiaries of the trend that have a global reach.


Examples include Spirit AeroSystems, a supplier of commercial airline assemblies and components, and two companies, Cognizant Technology Solutions and Resources Connection, that provide outsourced labour to fulfil administrative or technical services for other businesses.


He also expects consumers to do their fair share in helping the economy bounce back. Among his favourite recovery plays here are three chains of different sorts: P F Chang’s China Bistro, which operates restaurants; pet supply company PetSmart; and Dick’s Sporting Goods.


‘It’s an interesting time to be a bottom-up fundamental growth manager,’ Mr Stallings said. ‘Everything is on sale across the board.’


Before buying stocks to anticipate a blast-off out of recession, investors must buy the premise that a recession is here. Many do not, including John Lynch, chief market analyst at Evergreen Investments.


‘The classic ingredients for a recession have been tight monetary policy and runaway inflation, especially wage inflation, and neither of those exists today,’ Mr Lynch said, despite some signs that inflation has been increasing.


He acknowledges that a third sign of recession – fear – is here, and then some, but he still describes the economy as being in ‘the late stages of expansion’ or possibly ‘knocking on the door of a recession’. That is only likely to postpone the reckoning until next year, he said.


In his view, the best companies in which to invest between now and then are in defensive areas like health care and basic consumer items, or in segments of technology that derive much of their revenue from businesses. Despite his less positive economic outlook, he, too, anticipates strong capital spending.


Defensive selections include Procter & Gamble, Pfizer and Johnson & Johnson. Among tech stocks that he mentioned are Intel, Microsoft and Oracle.


Even investment advisers who say the economy is approaching a trough prefer to hedge against the possibility that they are wrong.


David Fording, co-manager of the William Blair Growth fund, prefers consumer businesses that derive much of their sales abroad, where economic conditions appear less fragile. Mr Fording said he recently bought shares of the retailer Coach for that reason.


‘There are a number of growth drivers for Coach in the US and, more important, it’s a global brand,’ he said. His more conventional recovery choices include Fastenal, a supplier of construction and industrial supplies, and McCormick & Schmick’s Seafood Restaurants.


Such domestically focused companies are worth owning ‘if you feel that there’s a decent probability that we’ll make it through this rough patch’, Mr Fording said.


How rough will it be? He cautioned investors to expect conditions over the short term that are uncomfortable, but not necessarily unprofitable.


‘Regardless of whether we see really negative headlines for the next three to six months,’ he said, ‘it might very well be the case that the market climbs the wall of worry and looks past the bad news to a recovery in 2009’\. \– NYT


Source: Business Times