Asian economies holding up: Merrill Lynch

Asian economies holding up: Merrill Lynch 

 

ASIA’S strong economic growth will persist despite an ailing US economy as the region diversifies its export markets and a new breed of young and wealthy citizens drive consumption, investment bank Merrill Lynch said on Wednesday.

Inflation is a bigger risk to the region than a slowdown induced by a recession in the United States, the world’s biggest economy, said Timothy Bond, Merrill Lynch’s chief Asia economist.

 

Despite a global credit crunch resulting from a crisis in the US housing market, Asian economies expanded 9.5 per cent and China grew 11.5 per cent in the second half of last year, he said at a Merrill Lynch conference in Singapore.

 

In the first quarter of this year, the region is expected to grow a slower but still robust 9.0 per cent, and China 10.5 per cent, he said.

 

‘I think we have a lot of evidence to support the decoupling view,’ he said, referring a view that Asian economies are now in a better position to withstand the impact of a US recession, unlike in the past.

 

Mr Bond also noted that while Asian exports to the US were flat last year, shipments of made-in-Asia goods to the rest of the world expanded 19 per cent.

 

‘I think the message here is that there is a lot of strength in the global economy despite some very clear headwinds in the US economy, and this is a region that exports to the world, not just the United States,’ he said.

 

Asian exports to Europe have been growing 25 to 28 per cent annually due mainly to the stronger euro currency which makes Asian goods cheaper, he said, adding that intra-Asian trade has also increased.

 

‘Europe has been the number one driver of Asian exports over the past few years, not the United States,’ Mr Bond said.

 

Any slowdown in exports should be offset by an acceleration in consumption, powered by the emergence of younger and wealthier Asians who, unlike their parents, would like to spend their money, Merrill Lynch experts said.

 

‘In the last five years, you have seen people become wealthier in this region… There’s many more millionaires in Asia now than there were five years ago,’ said Mark Matthews, chief Asia equities strategist at Merrill Lynch.

 

‘So even if their costs are going up and they are complaining about the gasoline (and) their food, the fact is that they are living in nicer places, they are going on longer holidays and they are spending more.’ — AFP

 

Source: Straits Times

Tax rebate won’t stem US recession: Merrill

Tax rebate won’t stem US recession: Merrill

 

The US economy is in a recession and stimulus from a government tax rebate later this quarter will only temporarily stem a fall in consumer spending, a Merrill Lynch economist said on Wednesday

 

US households will get tax rebates next month as part of a US$152 billion stimulus package passed earlier this year, aimed at propping up an economy hit by the sub-prime mortgage crisis, losses at top banks and a credit crunch.

 

‘I still maintain the business cycle is bigger than the government,’ Merrill’s North American economist David Rosenberg said at a client conference in Singapore.

 

He said the world’s largest economy was already in recession as consumer spending and confidence had fallen and jobs losses were rising, with the number of hours worked having fallen sharply.

 

Describing housing as ‘the quintessential leading indicator’, Mr Rosenberg, a long-time bear on the US economy, said he expected home prices to fall another 15-20 per cent before stablising.

 

He also predicted inflation in the United States would slow as consumer spending weakens, and that the Federal Reserve would be forced to cut rates further to deal with the recession.

 

‘No asset class security is priced today for a recession scenario,’ Mr Rosenberg said, which is why he was bullish on US Treasuries but bearish on stocks. — REUTERS

 

Source: Business Times

City Developments posts 31% rise in Q1 net profit to S$165m

City Developments posts 31% rise in Q1 net profit to S$165m

 

SINGAPORE : Property developer City Developments has reported a 31 percent rise in first-quarter earnings to S$165 million.

 

The results came at the lower end of expectations. Revenue fell 1.3 percent to about S$759 million.

 

The Singapore property market cooled substantially in the first quarter in the wake of the US sub-prime crisis late last year.

 

The government also scrapped a deferred payment scheme, which allowed home buyers to purchase properties with a small initial downpayment, with the bulk coming when the properties are ready to be occupied.

 

With the government’s moves to cool the red-hot market last year, private home prices have also risen at a slower pace.

 

City Developments said it deferred the launch of new projects in the first quarter due to the continued poor sentiment.

 

But going forward, City Developments said it is optimistic about its outlook. It said the uncertainty in the global economy is only temporary.

 

It believes it can remain profitable in the next 12 months, citing profits yet to be recognised from residential developments sold over the last three years. – CNA/ms

 

Source: Channel News Asia

HLA Q1 net proft up 38%; sales surpass $1 bln

HLA Q1 net proft up 38%; sales surpass $1 bln

 

Hong Leong Asia on Wednesday reported net profit for the first quarter ended March 31, 2008 rose 38 per cent to $30.16 million due to higher sales in China.

 

Revenue grew 34 per cent to surpass the billion dollar mark, at $1.05 billion.

 

The group is positive in its 2008 outlook but warned that growth may moderate.

 

It also said it was exploring investments and divestments opportunities. — BT newsroom

 

Source: Business Times

UOL Q1 net profit falls 44%; outlook cautiously optimistic

UOL Q1 net profit falls 44%; outlook cautiously optimistic

 

UOL Group Ltd on Wednesday reported net profit for the first quarter ended March 31, 2008 fell 44 per cent to $42.85 million, leaving the property and hotel group cautiously optimistic in its outlook.

 

Revenue rose 11 per cent to $161.72 million.

 

The increase in revenue came largely from improved performance of the group’s hotels in Singapore, Australia and Vietnam. Revenue from property investments also improved due to higher rental rates achieved for its investment properties.

 

Revenue from property development was marginally lower in the absence of revenues from Twin Regency and Newton Suites which were completed in 2007.

 

UOL said sentiments in the private residential market are likely to remain cautious while the increase in rental rates for office space is likely to be more moderate. The company is cautiously optimistic on the outlook of the tourism sector in Singapore and most of the region. — BT newsroom

 

Source: Business Times

CityDev Q1 net profit up 31%; more profits to be recognized

CityDev Q1 net profit up 31%; more profits to be recognized

 

Property developer City Developments Ltd said net profit for the first quarter ended March 31, 2008 rose 30.8 per cent to $164.97 million due to strong property development segment.

 

Basic earnings per share rose to 18.1 cents versus 13.9 cents a year ago – an increase of 30.2 per cent.

 

Revenue for the period, however, fell 1.3 per cent to $758.75 million.

 

Explaining the dip in revenue, CityDev said the group’s share of revenue in the jointly-controlled entities (JCE) is not included according to its policy of equity accounting for its JCE.

 

If its share of revenue in JCE was to be included, the revenue for Q1 2008 would show an increase of 6.9 per cent to $956.8 million, compared to $895.1 million a year ago.

 

For the period, profits were recognised from City Square Residences, One Shenton, Tribeca and The Solitaire. Profits were also recognised from joint-venture projects such as The Sail@ Marina Bay, St. Regis Residences, The Oceanfront @ Sentosa Cove, Parc Emily, The Botannia and Ferraria Park.

 

However, no profit recognition has been made yet for Cliveden at Grange and Wilkie Studio as these projects are still in the initial stage of construction.

 

Going forward, CityDev has lined up four projects for launch once the sentiments improve and when pent-up demand can be expected. These are Shelford Suites, The Arte @ Thomson, Pasir Ris Phase 1 and The Quayside @ Sentosa.

 

It expects office leasing to remain strong with upward adjustment of existing rentals to higher level when the existing leases are up for renewal.

 

It is expediting the construction of two commercial properties — 3-storey Tampines Concourse as well as the two 8-storey office towers, 9 Tampines Grande — to cater to the growing demand for office location, outside of the Central Business District.

 

With profits yet to be recognised from residential developments sold over the last three years which are still in the course of construction, the group is confident of remaining profitable during the next 12 months, even if it decides to continue to hold back or pace its property launches. — BT newsroom

 

Source: Business Times

US home foreclosures hit fresh high in April: survey

US home foreclosures hit fresh high in April: survey

 

WASHINGTON – In a further sign of the still-troubled US housing market, a survey on Wednesday showed home foreclosure actions hit a fresh all-time high in April of 243,353.

 

The survey by the research firm RealtyTrac said the percentage of foreclosure actions – including default, auction sale notices and bank repossessions – rose 4 per cent from the prior month and 65 per cent year-over-year.

 

The report showed one in every 519 US households received a foreclosure filing during the month.

 

‘The total number of US properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005,’ said James Saccacio, chief executive of RealtyTrac.

 

‘Although only about 2 per cent of households nationwide are in foreclosure, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values.’

 

Areas of California, Florida, Nevada and Arizona that had seen booming home values before the property meltdown continue to be particularly hard-hit by foreclosure activity, the survey showed.

 

Despite a 5 per cent month-over-month decrease in foreclosure activity in April, Nevada continued to hold the nation’s highest state foreclosure rate, RealtyTrac said, with one in every 146 Nevada households in foreclosure, 3.6 times the national average.

California had the second highest rate in April, with one in every 204 households receiving a foreclosure filing. — AFP

 

Source: Business Times

SC Global Q1 profit rises 75% to $19.2 million

SC Global Q1 profit rises 75% to $19.2 million

 

By ARTHUR SIM

 

 

SC GLOBAL Developments has reported profit after tax and minority interest (Patmi) of $19.2 million for the first quarter ended March 31 – an increase of 75 per cent over $10.9 million a year earlier.

 

 

Gross profit increased 22 per cent year- on-year. SC Global said higher selling prices were achieved, resulting in a higher gross margin of 58 per cent versus 38 per cent a year earlier. Group revenue fell 20 per cent to $43.1 million, from $54 million a year earlier.

 

SC Global said it had a low inventory of completed properties for sale compared with last year, when revenue was attributed to sales of completed properties.

 

During the quarter, it began revenue recognition of The Marq on Paterson Hill based on progress of construction.

 

Revenue also included contributions from The Lincoln Modern and Kairong International Gardens in Shenyang, China.

 

Contribution from the group’s associate company in Australia, AVJennings (AVJ), fell to $1.7 million, from $2.3 million a year earlier. SC Global said this was due to the absence of revenue from a land syndication arrangement with a joint-venture partner in the corresponding quarter last year. AVJ reported that, except for New South Wales, sales in all states were satisfactory.

 

Inventories, including development properties, under the group’s balance sheet comprise mainly projects under construction and land.

 

The liabilities of the group and company fell $10 million and $28 million respectively to $23.1 million and $5.1 million. The group had a cash and cash equivalent position of $67.9 million on March 31.

 

SC Global said it expects to debut a new project in Martin Road and the second phase of its residential units at Kairong International Gardens in the second half of 2008.

 

Earnings per ordinary share for the quarter on a fully diluted basis was 4.71 cents, up from 3.57 cents a year earlier.

 

SC Global’s share price closed three cents higher at $1.51 yesterday.

 

Source: Business Times

HSBC economist tips inflation at 6% this year

HSBC economist tips inflation at 6% this year

 

By Alvin Foo

 

INFLATION is set to peak in the coming months before falling to 4 per cent by the end of the year, said HSBC Bank economist Robert Prior-Wandesforde yesterday.

 

However, he expects overall inflation for the year to average 6 per cent because of higher oil and food prices.

 

The Monetary Authority of Singapore anticipates inflation this year to be in the upper half of the 4.5 per cent to 5.5 per cent range.

 

Inflation in March hit a 26-year high of 6.7 per cent.

 

Mr Prior-Wandesforde, who was speaking on the economic outlook for Singapore, said: ‘We think the central bank will need to raise its inflation projection.. .the size of the oil and food shocks has taken everyone by surprise.’

 

Oil hit a record high of nearly US$126 a barrel last week, and food prices have shot up recently due to supply shocks and rising demand.

 

Mr Prior-Wandesforde expects inflation in Singapore to reach a high of just over 7 per cent by next month, with electricity and petrol prices likely to go up.

 

But it should fall back to about 4 per cent by year end due to the dissipation of the effect of last year’s goods and services tax hike, and hit 3.5 per cent by the middle of next year.

 

DBS Bank economist Irvin Seah said of HSBC’s forecast: ‘Six per cent’s possible if food and fuel prices continue to creep upwards.’

 

He tips inflation to be 5 per cent this year.

 

Mr Prior-Wandesforde expects gross domestic product to grow by 6 per cent this year – at the upper end of the Government’s forecast range of 4 per cent to 6 per cent.

 

‘It will slow down gradually this year,’ he noted. ‘Some cooling in the Singapore economy is to be welcomed, because the economy was growing a little too fast, resulting in cost and price pressures.’

 

Source: Straits Times

HPL’s Q1 profit jumps 76.2% to $20.5m

HPL’s Q1 profit jumps 76.2% to $20.5m

 

By KALPANA RASHIWALA

 

HOTEL Properties Ltd (HPL), controlled by businessman Ong Beng Seng, yesterday posted a 76.2 per cent year-on-year increase in first-quarter group net earnings to $20.5 million.

 

Revenue rose 40.6 per cent to $146.1 million. The group said its hotels and resorts in Singapore, Maldives and Bali have generally made significant improvements in room rates as well as occupancy. Contributions from the property division also increased due to higher profits recognised for the group’s condo development in Bangkok, The Met, as well as higher rental income from the group’s investment properties, in tandem with the higher prevailing rental rates.

 

The group owns the Hilton and Four Seasons hotels, Forum and HPL House in Singapore’s Orchard Road area.

 

During the quarter ended March 31, 2008, the group made further contribution for its 22.5 per cent share of the remaining acquisition cost for the Farrer Court site, resulting in an increase in the group’s investment in associates and a corresponding increase in borrowings. Interest expense, however, remained constant due to lower prevailing interest rates.

 

The group’s cash and bank balances fell from $123.5 million as at Dec 31, 2007 to $95.3 million as at March 31, 2008.

 

Earnings per share rose from 2.43 cents (restated) for Q1 2007 to 4.07 cents for Q1 2008. Group net asset value per share rose marginally from $2.40 as at end-2007 to $2.43 as at March 31 this year. On the stock market yesterday, HPL closed four cents higher at $2.89.

 

HPL yesterday also announced the appointment of Stephen Lau as executive director. Mr Lau, 53, is currently head of the group’s hotel division.

 

The group is slated to complete later this year its fourth property in Maldives and the second managed by its hotel management arm, HPL Hotels & Resorts, according to information in HPL’s 2007 annual report.

 

Following the success of Hard Rock Hotel in Bali and Pattaya, the group is developing a Hard Rock Hotel in Penang.

 

Source: Business Times