Month-on-month, the NODX tumbled 7.5 per cent last month, against a 9.0 per cent jump in April, according to the latest trade figures released on Tuesday by International Enterprise Singapore.

Electronic NODX plunged 15.3 per cent from a year ago, extending the 8.7 per cent decline in the previous month. Non-electronic NODX dropped 2.4 per cent, following a 5.5 per cent rise.

Non-oil re-exports, about the only key indicator to have risen consistently, slipped 4.7 per cent last month. They jumped 6.6 per cent in April.

 

[WASHINGTON] The International Monetary Fund on Monday slashed its forecast for the United States and urged policymakers to keep interest rates low and raise the minimum wage to strengthen growth in the world' s largest economy.

The global crisis lender said in its annual report card on the US economy that the country will likely grow only 2.0 per cent this year, compared with the previous 2.8 per cent estimate, blaming mainly the unexpected contraction in the first quarter.

It said growth is likely to rebound to 3.0 per cent next year, but to ensure that, the government should take measures like increasing the minimum wage and embarking on a strong infrastructure-building programme.

Moreover, the US Federal Reserve should not expect the economy to get back to full employment before the end of 2017, and that it could afford to hold its key interest rate at the zero level past the middle of next year, when the Fed has signaled it expects to raise the rate.

 

Singapore stocks struggled to get out of bed yesterday, shuffling through a quiet session to a modestly lower close.

" It' s very tiring if you' re watching a lot of games," one trader said. " I have clients where halfway through the day they took the day off and went back to take a rest."

The Straits Times Index of blue chip stocks drifted up and down over the day before settling at 3,290.26, lower by 2.99 points or 0.09 per cent.

 

But such robust sales are unlikely to be repeated this month, a seasonally slow period because of the school holidays. Even the World Cup soccer competition could become a distraction for potential buyers in this tepid market, analysts say.

" It is premature to conclude that the market has revived from its slump," said Ong Teck Hui, national director of Research and Consultancy at JLL, pointing to the mixed showing at new launches last month.

Latest data from the Urban Redevelopment Authority showed that developers sold 1,470 private condos last month, the highest level since June 2013 and a 96 per cent jump from the 749 units sold in April. The top five projects made up 78 per cent of total sales in May.

The strong showing is driven by new launches, with 1,790 condo units launched last month compared with only 600 units in April. There were no new launches for executive condos (ECs) last month 58 ECs were sold, up from 48 in April.

" The increase in the number of new projects launched in May and the strong launch figures do show that developers are more confident in resuming launches as there still many buyers in the market but who are now more price-sensitive," Mr Ong said.

The two top sellers were Coco Palms and Commonwealth Towers - both located near MRT stations and deemed attractively priced. Together, they made up more than half the month' s unit launches and sales. Some 590 units at Coco Palms were sold at a median price of $1,018 per square foot (psf), and 275 at Commonwealth Towers were sold at a median price of $1,626 psf.

The Panorama in Ang Mo Kio became a top seller last month, with some 100 units sold at a median $1,241 psf after developer Wheelock Properties slashed prices by around 10 per cent in its re-launch last month. The project moved only 56 units in the initial launch in January at a median $1,343 psf.

Not all new launches fared well, however. Oxley' s The Rise@Oxley Residences - the only new launch in the Core Central Region (CCR) - sold eight units out of 120 at a median price of $2,452 psf.

Sing Holdings' Singa Hills and Loft 33 managed to move only two units and 12 units respectively. These projects were apparently launched with little or no fanfare.

" Projects that lack visibility will see greater difficulty in attracting buyers, especially if they are not near transport nodes and the price point is not attractive," said Alice Tan, Knight Frank' s head of research and consultancy.

Colliers International director of research and advisory Chia Siew Chuin noted that Commonwealth Towers in Queenstown and Kallang Riverside in Kampong Bugis have benefited from pent-up demand, given the lack of new launches in the two locations.

But developers' sales volume is expected to ease to 600-900 units in the traditional lull period of June, before developers resume their launches ahead of August, which is the lunar seventh month and regarded by the Chinese as an inauspicious period to commit to home purchases, Mr Chia said.

Potential launches in the pipeline include Roxy-Pacific' s Trilive, a freehold project in Tampines Road of which 70-80 per cent of the 222 units are dual-key units, which are essentially a 2-in-1 apartments.

Wing Tai opened the showflat last Saturday for its 469-unit The Crest at Prince Charles Crescent, while China Sonangol Land and OKP Land are slated to launch their 109-unit freehold project Amber Skye on Amber Road soon.

Nicholas Mak, executive director at SLP International, expects mass-market condos in suburban areas to continue leading sales islandwide.

Last month, mass-market suburban condos accounted for 64 per cent of sales and slightly over half of total units launched.

This is followed by city-fringe condos in the Rest of Central Region (RCR) that made up about 34 per cent of sales and 39 per cent of units launched. There were only 32 units sold in the CCR or 2 per cent of total islandwide sales.

Mr Mak noted that some developers hurried to launch mass-market condos last month ahead of new EC launches this year. From August to December, five EC projects with a total of 3,100 units could potentially be launched for sale.

With the increased competition, some developers may adopt " a more flexible pricing strategy" to boost their sales, he added. For the whole of 2014, sales volumes in the primary market could total 9,500-12,500 units, Mr Mak predicted. This compares with some 15,301 units sold by developers for the whole of last year.

 

[HONG KONG] Asian markets were mostly lower on Monday as a positive lead from Wall Street was trumped by fears over the growing crisis in Iraq that has sent oil prices to nine-month highs.

The uncertainty fuelled by the insurgency that has seized a swathe of Iraq sent traders into safer assets, with the yen ticking higher against the dollar and the euro while gold also rose.

Tokyo fell 0.65 per cent, Hong Kong was 0.13 per cent lower, Sydney slipped 0.27 per cent and Seoul was 0.12 per cent down. However, Shanghai was 0.14 per cent higher following another batch of upbeat economic data last week.

Investors are nervously tracking events in Iraq as Islamic militants sweep though the country, taking over key cities and moving towards Baghdad as US-trained Iraqi government forces crumble.

 

IT' S the million-dollar question no one agrees on. As China data continues to weaken and the property sector shows clear signs of cooling, analysts are questioning whether the real estate bubble (if indeed there was ever one) has finally burst and what could be the possible spillover effects.

A recent Bloomberg survey showed there is no one answer to the puzzle. Twelve of the economists interviewed said there is oversupply. Seven said there is a nationwide bubble.

Property sales in the first five months to May dropped 10.2 per cent year-on-year by value, while property investment grew 14.7 per cent against 16.4 per cent last year during the same period. And this despite other indicators pointing to a stabilisation of growth for May.

Central bank governor Zhou Xiaochuan himself said China may indeed have a housing bubble, but only in certain cities.

 

INVESTORS ought to look beyond a company' s share price, and at its fundamentals instead, and that would help them find companies that can potentially offer better returns, said Clive Tan, co-founder and director of 8 Investment.

He was sharing his knowledge of value investing on Saturday during the Malaysia Gems 2014 roadshow, organised by ShareInvestor.

Mr Tan said that analysing the underlying fundamentals of a company is important, as the stock price is ultimately driven by a company' s performance.

" If your company doesn' t do well . . . you can have all your various market forces or market makers or whoever is playing the market, (but) in the long term, they are not going to go up, they are going to collapse."

 

LAST week, the US stock market' s record run paused and it will remain on hold this week unless there are pleasant surprises from the Federal Reserve or the price of petrol.

The US central bank takes centre stage with its latest policy statement on Wednesday. While it' s virtually guaranteed that Janet Yellen and her board will continue the gradual unwinding of quantitative easing known as tapering, traders will listen for hints about the next step.

If, as in the minutes from the last meeting, the Fed emphasises concerns about weakness in the housing market, traders will likely buy stocks in the belief that the " doves" in the central bank are holding sway, and that rate hikes are not on the table any time soon. If, however, the Fed' s statement plays up recent signs of rising inflation, traders could sell stocks in the belief that the " hawks" are in charge.

Some of those hawks, including Kansas City Federal Reserve president Esther George, have called for rate hikes as soon as tapering is completed at the end of this year.

 

[SINGAPORE] The Straits Times Index (STI) is expected to continue its upward trend as money supply in the US is still increasing, but analysts say that growth will be at a modest 3 per cent since projected market return on equities are still below long-term averages.

In its June report, UOB Kay Hian estimated the STI' s year-end target to be 3,400 due to a price earnings and price-to-book valuation cut of 10 per cent on below-trend return on equity.

" Also, the world will have to contend with implications from an eventual, albeit modest, rise in interest rates as US tapering continues with the bond buying programme scheduled to end in Q414 and for interest rates to gradually trend up in mid-15.

" US 10-year treasury yields have been trending down (currently 2.53 per cent), which suggests markets believe interest rates are unlikely to rise in the near term," said the report.

 

ESCALATING violence in Iraq sent ripples through financial markets yesterday, as the world nervously watched the unfolding of the worst sectarian conflict to grip the country since the 2003 US invasion.

Oil prices jumped to a nine-month high on concerns that supplies from the second-largest Opec (Organization of the Petroleum Exporting Countries) producer could be cut, even though its main oil-producing region in the south is unaffected for now.

Brent futures recorded a session peak of US$114.69 a barrel, their highest since September.

But reactions on Asian markets were more upbeat, compared to the sell-off in the United States on Thursday night. The benchmark Straits Times Index inched up 0.24 points, or 0.01 per cent, to 3,293.25, as positive Chinese data on retail and industrial production soothed jitters over the Iraq conflict regional markets such as Hong Kong, Shanghai and Tokyo also ended the day higher.

Earlier this week, Sunni extremists led by the Islamic State of Iraq and Syria, riding on growing Sunni discontent with the Shiite-dominated government, took over Iraq' s second-biggest city, Mosul. They are now advancing towards Baghdad and two other Shiite holy cities.

Alarmed by the possibility of Sunnis growing in power, Shiite-ruled Iran has sent units to aid the Iraqi government, which is dominated by Shiites.

Meanwhile, Kurdistan' s military forces, known as Peshmerga (" those who face death" ) have taken control of the northern oil city of Kirkuk. With Kurds making up a fifth of Iraq' s 32.5 million population, the Kurdish regional government has been agitating to become an independent state.

These developments have sparked fears that Iraq is headed for a split into Shiite, Sunni and Kurdish areas.

The Financial Times quoted Feisal al-Istrabadi, Iraq' s former deputy ambassador to the United Nations, as saying: " The state of Iraq is in imminent collapse."

Here at home, KPMG Singapore' s head of energy and natural resources Pek Hak Bin said: " Iraq had been finally showing some signs of a turnaround in fortunes, with oil production steadily increasing to pre-war levels. It is no surprise then that many political leaders are concerned about the impact of the ongoing crisis."

The US, seen to be reluctant to directly involve itself again in Iraq, having completed the withdrawal its troops from the country only three years ago, has raised the possibility of air strikes. President Barack Obama said on Thursday that he does not rule out anything.

With oil prices up from geopolitical tensions in the Middle East, sectors that deal with oil exploration and offshore and marine could benefit, said CIMB research head Kenneth Ng.

Oil-and-gas exploration firm RH PetroGas was a clear winner on the stock market yesterday, ending 5.5 cents or 6.1 per cent higher at 95.5 cents amid heavy trading.

Higher oil prices would, however, hurt transport stocks, with higher costs eventually crimping corporate margins across the economy, said Mr Ng.

The conflict has come during a tight global oil market, given the outages and geopolitical conflicts that have already erupted in several oil-producing regions this year.

With the world' s oil market now in equilibrium with about 90 million barrels a day of production and consumption, " there is little room for manoeuvre" , said KPMG' s Mr Pek.

For now, fighting in the north of Iraq should not have much of an impact on current oil production or exports, since most of its oil production and all its export facilities are based in the south, said commodities economist Tom Pugh at macroeconomics research firm Capital Economics.

Iraq now produces about 3.5 million barrels per day (bpd), making up 4 per cent of the global oil supply.

Mr Pugh said: " The most significant impact from the insurgency is likely to be the disruption to Iraq' s already ambitious targets for oil production over the medium to longer term."

The government has announced plans to boost output to four million bpd by the end of this year, and to seven million bpd by 2016, with most of this growth to come from the underdeveloped northern and Kurdish areas, which have large amounts of untapped, easily accessible oil.

The ongoing conflict is likely to make it " largely impossible" to develop these, said Mr Pugh.

If the insurgents were to attack Baghdad, Brent futures could climb to US$125 a barrel, estimated CMC Markets' chief strategist in Sydney.

Bloomberg reported him as having said: " The market got concerned about potential disruption in Libya Iraq is a much more serious situation."

Besides the insurgents taking control of the oil-producing region in south Iraq, there are also concerns that an escalation of the situation into the Persian Gulf could affect tanker travel through the Strait of Hormuz.

" When this happens, the world' s supply and demand balance will fall out of sync," said Mr Pek of KPMG. " There will surely be an impact on prices, as there is very little swing capacity outside of Saudi Arabia."

In the days ahead, observers will be closely watching not only the insurgents threatening Baghdad, but also forces operated by the Kurdish powers, the Iranian authorities and the US.

Mr Pek said: " As the world looks westwards for leadership in this current crisis, one thing is for sure: The situation in Iraq may escalate very rapidly, and if it does, the impact will certainly be global."

 

Stripping out sales of motor vehicles - which were down 36.1 per cent from April 2013 - sales still experienced a contraction of 1.3 per cent.

Economists polled before the Department of Statistics released the figures were expecting retail sales to decline 3.6 per cent year-on-year. Excluding motor vehicles, they were anticipating a marginal 0.1 per cent increase in retail sales.

Compared to March, the seasonally adjusted retail sales figure decreased 0.7 per cent in April. Excluding motor vehicles, they declined 1.5 per cent.

 

[BEIJING] China' s industrial output growth accelerated to 8.8 per cent year-on-year in May, official data showed Friday, while retail sales hit their highest level since December in signs of renewed strength in the world' s second-largest economy.

The industrial production figure was stronger than the 8.7 per cent recorded a month earlier and matched the median forecast of 8.8 per cent in a poll of 15 economists by the Wall Street Journal.

Retail sales, a key gauge of consumer spending, increased 12.5 per cent last month from a year ago, the National Bureau of Statistics said, up from a gain of 11.9 per cent in April and the highest since 13.6 per cent at the end of last year.

Fixed-asset investment, a main measure of government spending on infrastructure projects, rose by 17.2 per cent year-on-year in the January-May period, slowing from a 17.3 per cent rise in the first four months of the year.