today Monday July 12, 2010
Business
A ‘vote of confidence’
for Asian growth
SINGAPORE ­— Recent moves
by Asian central banks to
ra i s e i n te re st ra te s a re
a st ro n g vote o f c o n f i -
dence that the region will
weather risks stemming from
the European debt crisis, ana-
lysts say.
Since June 24, the cen-
tral banks of Taiwan, India,
Malaysia and South Korea
have lifted interest rates
by between 12.5 and 25
basis points, citing the need
to tame inflation as their econ-
omies rebound from the global
downturn.
While Asia is not totally
immune to the effects of a
slowdown in Europe and
the United States, the re-
gion's dependence on them
has been reduced as Asian
consumers now play a big-
ger role in supporting do-
mestic economies, analysts
said.
“Concerns over Eu-
rope’s debt crisis continue
to smoulder but that hasn’t
stopped Asia's central banks
from pushing ahead with
monetar y tightening” in
the wake of rapid and sustained
GDP growth, said DBS Bank.
Inflation rates are
“nearly back to average
in all Asian countries and
surely headed higher in months
to come”, it noted in a market
analysis.
DBS said the latest in-
¢ Fraud-hit Satyam eyes World Cup rehabilitation
Nearly 18 months ago, India’s
Satyam was rocked by a false-
accounting scandal that threat-
ened its very existence. But
bosses believe the firm’s image
has been restored — thanks to
the World Cup.
The software outsourc-
ing giant, rebranded as
Mahindra Satyam, has been the
main IT services provider for
the tournament in South Africa,
¢ ECB launches offensive on euro zone fears
The European Central Bank
insists the euro zone will not
fall back into recession, say-
ing the worst of the debt crisis
is past and other economies
should now be fixing their public
finances.
ECB chief economist
Juergen Stark told reporters last
week: “It seems that the worst
is over” after a key ECB loan
B4
terest rate increases “are
a loud vote of confidence
from Asia’s central banks
that (Asia’s) growth will con-
tinue despite weakness” in
Europe, the US and Japan,
the region’s top trading part-
ners.
By increasing interest
rates, Asian central banks
are signalling that while
these three markets mat-
ter, “Asia matters more”, DBS
added.
Mr David Cohen, a Singa-
pore-based regional econo-
mist with Action Economics,
said the spate of interest
rate hikes reflected grow-
ing Asian confidence as the
region leads global growth.
“As far as the economic
outlook is concerned, glo-
b a l m a rkets a re c l e a rly
nervous about potential
faltering in the global re-
covery but so far the data
out of Asia has been encourag-
ing,” he told AFP.
Mr Cohen added that
second quarter gross domes-
tic product (GDP) figures,
expected to come out this
month, are likely to show
a continuation of Asia’s
healthy economic expansion.
The International Mon-
etary Fund on July 8 upgrad-
ed its GDP growth forecast
for Asia this year to 7.5 per cent
from 7 per cent, moderating to
6.8 per cent next year. AFP
ensuring the logistics were in
place for the mega-event to
pass off without a hitch.
The firm’s logo has been on
pitch-side advertising hoardings
at every match, while around
150 staff have been working
behind the scenes to ensure
fans, organisers, volun-
teers and the media are in
the right place at the right
time. AFP
deadline passed smoothly and
German data showed industri-
al production in Europe’s top
economy had soared in May.
ECB president Jean-
Claude Trichet cautioned
that “it is still too early to
declare the crisis over”, but
added: “The latest signs that we
are receiving from the economy
are encouraging.” AFP
Dubai World arm sells M’sia stake
‘You
DUBAI — A property arm of struggling state US$23.8 million ($32.8 million) in the deal,
forced me
conglomerate Dubai World is backing out according to a regulatory filing on Malay-
out, Rafa’
of a plan to build luxury homes in Malaysia sia’s stock exchange.
as it looks to shore up its finances. Limitless said in a statement yes- Benayoun says
ex-boss Benitez
The cash-strapped company’s Limitless terday that it continues “to review our
made life
division is selling off its stake in a partner- business activity to reflect market condi- miserable for
ship with Malaysia’s Bandar Raya Develop- tions”. him at Liverpool.
ments to develop waterfront land in the The company’s parent, Dubai World,
¢ Page 28
southern city of Nusajaya. needs cash as it works to pay back
Limitless will generate about US$23.5 billion in debt. AP
EYE ONTHE MARKET
Asian markets still attractive to investors
As the World Cup season draws to a Visit www.siasresearch.com
close, investors are starting to take for daily market calls and invest-
an interest in the equity markets ment strategies reports.
again.
Last week the MSCI World Equity Contributed by Edmund Seow
Index rose 4.6 per cent at the end of from SIAS Research
Thursday, week on week, to end at
1,084 points. Asia-Pacific markets,
too, saw a recovery late in the week. Upcoming Events
The MSCI Asia-Pacific ex Japan
Index closed on Thursday at 389 Structured Warrants —
points, up 3.2 per cent from the week covery is on the way. The Hang Seng Going Beyond the Basics
before. World commodity prices rose tested its resistance level at about by SGX Academy
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overall, and the Dow Jones UBS index 19,790 points last week and has since Time: 9.00am to 1.15pm
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per cent rise week-on-week. ly-significant 20,000 point mark. The www.sgxacademy.com
In June, there were some con- South Korean MSCI Korea recovered
cerns over the possibility of a glo- to close at 479 points on Thursday Understanding Extended
Settlement Contracts in
bal economic slowdown after debt evening after testing a low of 464 Volatile Markets by
issues in the European Union (EU) points last Monday. In Singapore, the Phillip Securities
Date: July 19
came to light. Last week, however, Straits Times Index (STI) has been Time: 6.30pm to 7.30pm
we saw some of those fears put to trading upwards steadily and closed Venue: Raffles City Tower, Level 7
rest for the time being and the Asia- above 2,900 points on Friday evening. Registration: Call 6336 4564 or
email esc@phillip.com.sg
Pacific region remains at the fore- There might be significant vola-
front of economic recovery. tility in individual equity markets as Approaching Commodities
Globally, the International Mon- they recover in the coming weeks. and Money Markets via
Exchange Traded Funds by
etary Fund raised its global growth As such we recommend investors Phillip Securities
forecast for 2010 to 4.6 per cent. In diversify their portfolios using Ex- Date: July 31
Time: 9.00am to 1.00pm
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Market Outlook for Second
Malaysia, Taiwan and India allowed to minimise risk while remaining in- Half of 2010 / Portfolio
their central banks to raise interest vested in the region. While there is no Allocation using Exchange
rates over the last two weeks — sig- way to directly hedge open positions Traded Funds and Warrants by
OCBC Securities
nalling that debt issues in the EU did in Asia-Pacific, buying structured Date: July 31
not have a detrimental effect on the put warrants on key market indices Time: 2.00pm to 5.00pm
Venue: OCBC Bank Centre Auditorium,
region’s economic recovery. such as the Hang Seng, the Nikkei 225 Level 50
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many markets in Asia Pacific bot- against any unforeseen downsides email seminar@ocbcsec.com
tomed out over the last week and re- in the markets.
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