Compared to May, prices fell 1.4 per cent, led by declines in across all regions in Singapore, data from SRX shows.

The Rest of Central Region (RCR) marked the biggest price decline of 3.2 per cent, followed by 1.7 per cent in Core Central Region (CCR) and 0.3 per cent in Outside Central Region (OCR).

Some 452 resale transactions were inked in June, which is 7.9 per cent higher than in May. But this is still 23.8 per cent below the number of resale transactions inked in June last year.

 

THE Singapore economy performed worse than the market had expected in Q2 - expanding 2.1 per cent compared to a year ago - according to advance estimates of gross domestic product (GDP) released by the Ministry of Trade and Industry (MTI) on Monday morning.

This was slower than the 4.7 per cent growth seen in Q1.

Private-sector economists polled by Bloomberg prior to the data release had a median growth forecast of 3.1 per cent year-on-year.

On a seasonally-adjusted quarter-on-quarter annualised basis, MTI said overall GDP contracted 0.8 per cent - a reversal from the annualised 1.6 per cent growth in the preceding quarter.

 

UOB, WE Holdings, Jubilee Industries Holdings, SPH Reit, and Qian Hu all had recent developments that could affect trading activity on Monday.

United Overseas Bank (UOB) has been in play recently and jumped 83 cents, or 3.6 per cent, to all-time highs, closing at S$24.03 a share last Friday.

In a response to a query from the Singapore Exchange on its share price movement, UOB said it was unaware of any reasons that could have increased activity. SGX then issued a " Trade With Caution" on the stock, warning investors to trade with care.

WE Holdings and Jubilee Industries Holdings are both in the spotlight after Jubilee, an associate company of WE Holdings, said it was acquiring 26 per cent of Malaysia' s largest electronic manufacturing services (EMS) player EG Industries for S$8.4 million.

 

It' s unusual behaviour which pessimists and contrarians might interpret to mean ever-rising complacency or irrational exuberance, and therefore a sure sign of trouble ahead. Since volatility equates to risk in the stock market, the inevitable recommendation when faced with a non-stop five year bull market with no real major correction and no risk now is that players should trade with caution.

Yet momentum traders and investors (is there really any difference?) would argue that all it illustrates is high confidence in stocks to deliver superior returns and, if you really think about it, the ability of central banks to deliver on their promises to (a) engineer an economic recovery and (b) to stave off disaster if necessary. No risk? No problem.

Moreover, there' s been plenty of talk of traders being over-complacent for years and Wall Street has not cracked. So the bulls urge everyone to forget valuations, trailing earnings, book values, risk and so forth as long as central banks stand ready to prop the market up, there' s nothing to worry about, and keep buying - or at the very least, don' t sell.

 

' We would stay away from developers that are overextend- ed irrespective of how much they (pay us).'
- Gregory Wells, head of Asia, Forum Partners

[SINGAPORE] Recent defaults of some Chinese property developers have made it harder for others to raise funds amid tight onshore liquidity. But for at least one optimistic property investment firm, this creates a " compelling opportunity" to enter the market.

Forum Partners, which manages US$6 billion in assets, plans to invest in China through its offshore private equity (PE) fund and is banking on a surge in developer demand for funding, Gregory Wells, head of Asia, told BT in a recent interview.

Forum Partners is currently investing in its third real estate fund in Asia, and although sector-agnostic, it sees the most opportunities in residential properties, particularly in first-tier cities such as Beijing and Shanghai. It raises funds from mostly US and European institutional investors, targeting returns close to 20 per cent.

" Right now, the cooling measures are creating constraints in liquidity, which gives us opportunities. We think the downturn on the macro level is cyclical, not structural, and it will pick back up again in the next 6-18 months. We don' t think the property market is going to implode and give us liquidity issues, and now is a good time to invest."

The firm, he said, still believes in long-term Chinese growth - clearly not as robust as years before but still better than in much of the rest of the world. Going by private equity activity in the region, other such players in Hong Kong and China seem to think likewise, he added.

Forum Partner plans to invest another US$100 million in Chinese developers in the next 6-9 months, on top of its current portfolio of Chinese assets of around US$125-150 million.

This is despite the recent collapse of Ningbo developer Zhejiang Xingrun Real Estate in March, which fuelled speculation that other Chinese real estate companies could follow suit.

In April, Nanjing-based Sainty Marine Corp said that an entrusted loan (or inter-company loan) it made with a local property developer had gone bad. The latter failed to repay 90 million yuan (S$18.1 million) plus a dizzyingly high interest of about 18 per cent that Sainty was charging.

These are signs of a ticking time bomb in China' s burgeoning shadow banking system, where alternative financiers (mostly trust companies) offer high-interest loans to businesses which are unable to borrow from banks.

Yet, Mr Wells is indifferent to the development of shadow banking in China - which he believes is " a natural progression that financial markets develop to disintermediate away from banks, so that not all flows of credit have to involve banks" .

He noted that China' s financial system is heavily weighted towards banks as the only financial intermediary. Typically, besides trust banks, shadow banking also includes other respectable lenders such as insurance companies and private wealth management firms.

Citing data from BCA Research, he said China' s shadow banking segment - which represents about 30 per cent of the financial system - is in fact " underdeveloped" compared to the US - where the segment is 100 per cent, or equivalent, to the banking system. Insurance companies are also a huge shadow lender in real estate in the US.

" This isn' t happening in China yet, but you will see over time more of that disintermediation away from banks in China occur," he feels.

What then warrants the market' s concerns over shadow banking in China?

It is the astonishing growth of credit from the shadow banking system, coupled with the country' s not-so-robust regulatory environment, which leads to the worry of a major blow-up in the loans made, Mr Wells said.

" But we don' t think that will happen. If you look at real estate loans and the way trust companies are making loans, generally speaking, they are heavily over-collateralised.

" We expect more defaults to occur in industrial and natural resources. But even if you consider the likely worst-case scenario, the number of defaults and amount of losses shouldn' t be significant enough to disrupt the financial system," he said.

Asked if he isn' t worried about developers defaulting, he replied: " It' s certainly something to be cognisant of. What we' ve seen is a couple of relatively small local developers who have had defaults, and there is usually not a good story behind them maybe they were focused on a single city and became overextended."

Zhejiang Xingrun, for instance, is a small unlisted developer with projects mostly in Fenghua city in Zhejiang, a province which has experienced massive building in recent years.

" Some trust banks have undoubtedly made some loans to borrowers that will go bad just given the overall expansion in credit in the last few years," Mr Wells said.

" But most of the sponsors we work with tend to be larger regional players, have a broader sales base, and are not particularly focused (in one city or province). We would stay away from developers that are overextended irrespective of how much they are willing to pay for the money."

In the case of Singapore, the current property cooling measures and loan curbs could arguably create similar opportunities for the company, but Mr Wells said the company is not looking to actively invest here because the large local property firms that dominate the market have strong balance sheets and plenty of sources of capital.

" They can go to the local banks, which are cheaper sources of capital than ours. They don' t need us," he said.

 

THE Straits Times Index, having lost about eight points on Wednesday, yesterday first rose 16 points to an intraday high of 3,291, but eventually drifted to a net loss of 5.96 points at 3,269.50. Turnover was a weak 1.6 billion units worth $992 million. The broad market, excluding warrants, recorded 209 rises versus 217 falls.

Fifteen of the top 20 most actively traded stocks were priced below 20 cents each, with the list led by International Healthway Corp (IHC), which closed unchanged at 24 cents with 68 million shares traded. The stock listed on Catalist a year ago via a placement at 48 cents per share.

In the offshore oil-and-gas sector, Ezion Holdings' shares lost 2.5 cents at $1.975 with 24.3 million traded.

Credit Suisse (CS) said in a report on Wednesday that it has initiated coverage of Ezion with an " underperform" rating and a target price of $1.80.

 

At least seven established opinion survey firms said Mr Joko had bested his rival by a margin of four percentage points. Polls in the week leading up to yesterday' s election suggested the result would be much closer.

But Mr Prabowo has refused to concede defeat. Minutes after Mr Joko declared victory, Mr Prabowo claimed the mantle of Indonesia' s second directly elected president for himself - telling his followers at his campaign headquarters in Jakarta that the campaign would continue to follow the results.

" Today, it seems Indonesia has given me a mandate," Mr Prabowo said, basing his data largely on internal polling.

He appears to be playing for time, analysts say, waiting until official results are due on July 22 while building a public case for claiming the presidency for himself.

Critics worry that in one of the world' s most corrupt countries, the extra two weeks will give Mr Prabowo' s allies the chance to massage the results.

But his chances of success seem slim. Public sentiment risks turning against him, and his parliamentary coalition risks peeling away to Mr Joko as the parties vie to secure positions in the incoming administration.

" We will see public opinion turning against him," said Douglas Ramage, an analyst at consultancy Bower Group Asia. " The margin of victory seems too wide."

There is the risk of a protracted election dispute. Under Indonesia' s election laws, either party can challenge the results in the Constitutional Court. A result would not be due until Aug 24.

But Mr Joko' s victory may be just big enough to see off that risk, said Homin Lee, Asia economist for private banking at Lombard Odier in Hong Kong.

" The margin of victory seen in early counts more or less assures that Joko has sufficient room to project a national mandate and avoid a challenge in courts," Mr Lee said.

The victory may hand Mr Joko the mandate he needs to embark on far- reaching reforms to help shore up the rule of law and investor confidence in South-east Asia' s largest economy.

The country' s most respected survey organisations, including the state- owned Radio Republik Indonesia (RRI), have predicted that with more than 99 per cent of votes counted, Mr Joko has won with at least a 5 per cent margin over Mr Prabowo. RRI reported Mr Joko had won with 53 per cent compared with 47 per cent for Mr Prabowo.

Polling company Saiful Mujani Research reported a similar margin with a margin of error of 0.6 per cent. Kompas newspaper put the win at about 52 per cent for Mr Joko compared with 48 per cent for Mr Prabowo.

The results cap a meteoric rise for a man who less than a decade ago was a carpenter and a furniture salesman. Mr Joko was elected mayor of Surakarta in Central Java and burst onto the national stage with a startling upset win in 2012 to oust the incumbent governor of Jakarta.

He is expected to expand services for the poor, strengthen the country' s corruption-fighting agency and overhaul the police as well as the judiciary, after the ex-chief justice of the Constitutional Court, Anil Mochtar, was sentenced to life in prison for accepting bribes.

While the results were expected to be close, the margin of victory is roughly double what opinion polls had expected on the eve of Indonesia' s third direct election for president.

The result gives Mr Joko the opportunity to woo over parties such as Golkar, that had affiliated themselves with Mr Prabowo' s Great Indonesia Movement Party (Gerindra).

Golkar finished second in April' s parliamentary elections. Its 91 seats would give Mr Joko' s coalition - led by his Indonesian Democratic Party of Struggle (PDI-P), which finished first in April - a majority in the House of Representatives.

 

[KUALA LUMPUR] Malaysia' s central bank is expected to raise its policy interest rate for the first time in more than three years to rein in spending that has ratcheted up consumer debt and inflation.

Economists expect Bank Negara to favour tighter policy at its rate review on Thursday as growth has been strong and exports are improving. " Strong growth would help mitigate the impact of an interest rate hike on slower private consumption," said Michael Wan, a Credit Suisse economist. " Higher interest rates would serve as a deterrent to new borrowers and moderate household debt," Wan added.

A majority of economists in a Reuters poll forecast a 25-basis-point increase to 3.25 per cent. The central bank has held rates steady since mid-2011.

At its meeting in May, Bank Negara signalled that key rates" may need to be adjusted" to tackle " financial imbalances" .

 

WALL Street' s Tuesday plunge and Hong Kong' s 1.6 per cent loss yesterday meant a weak session for local stocks the Straits Times Index ended 7.88 points weaker at 3,275.46 and the broad market, excluding warrants, recorded 186 rises versus 235 falls.

The loss would have been well into double digits if not for a firm opening Europe-wide, which suggested a likely Wednesday rebound for the US market. At 5pm, the futures contract on the Dow Jones Industrial Average was down just 12 points, while the S& P 500 futures contract was almost unchanged.

Turnover in the local market picked up slightly from Tuesday' s $928 million to 2.6 billion units worth $1.07 billion yesterday.

Brokers have ascribed falls and bounces in recent sessions mainly to short-selling and short-covering, and many saw no compelling reason to change this view. A dealer said: " This is a market locked in a trading range. At the top of the range, you look to go short at the earliest possible opportunity."

 

THE Straits Times Index (STI) yesterday drifted to an 8.23-point loss at 3,283.34. Turnover was a low 1.5 billion units worth $928.3 million. Excluding warrants, there were 185 rises against 223 falls.

The ongoing soccer World Cup, a lack of direction from overseas - Wall Street and Hong Kong in particular - no institutional interest in emerging markets and weak retail participation were all cited as reasons for the largely featureless session. It has to be said that it closely resembled the dozens that preceded it since the start of the year.

On Monday, the STI jumped 19 points, driven mainly by UOB, DBS and the Jardine group yesterday, the index' s biggest losers were UOB and DBS, possibly because of a negative report by Moody' s Investors Service.

Turnover done in the 30 index components was valued at $501 million, roughly 54 per cent of the whole market' s dollar turnover.