SINGAPORE : Blast From the Past And The Oct MPS

Look what the cat dragged out yesterday from the old book pile. I must have nicked this some 2 decades ago from either my grandparents or my auntie’s troves even though it has British Red Cross Society neatly stamped inside the cover. No, it is not the oldest book in my collection (my oldest book with living ties would be a 1928 collection of english poetry my grandfather had won as a schoolboy).

SINGAPORE YEARBOOK 1953 COVER Well, 1953 was the year my mother was born and perhaps that was sentimental enough.

Skimming through the first few chapters, I am astounded by some striking similarities I found.

Such as the population problems.

“The rapid increase of the population has imposed a severe strain on public utility services.”

Doesn’t that sounds familiar except our current problem appears to be with transportation ?

“The city becomes more crowded every day and encroaches upon the surrounding country. In the outskirts the expansion of the population overruns the supply of urban amenities and leads to slum conditions…. The Government has financed a series of major housing schemes. It has so far pledged over $100 millions in loans to the Singapore Improvement Trust, its housing agency, and by the end of 1953 was the owner of nearly 10,000 houses and flats.”

This is hilarious.

The population then was already 1.1 million, including Christmas and Cocos-Keeling Islands, which I have entirely forgotten about. But the beauty of the population then was that majority were within the ages of 0-10. The Baby Boomers ! My mommy was one of the 0’s that year and they had about 31 thousand private cars that year compared to over half a million now which is pretty good going considering that there a 170 thousand bicycles and tricycles then.

Over 40% of the population was employed but income tax was Higher with the tax rate peaking at 30%. There were just over 2 dozen banks then and I am pleased to see some familiar names in their midst especially Bank of China, Bank of East Asia, Bank of India and Indian Overseas Bank ! Our POSB was started in 1949.


Singapore succeeded as a free port in a vision conceived by Stamford Raffles not before it was destroyed by the Javanese about 400 years before that. And a mighty trade centre Singapore remains in the world today. 60 years down and some of our problems remain largely the same – land (housing), water and transport, thus, we still have the same things to complain about.

Strategically positioned as a financial centre now, Singapore is still in the trade business. Yes, a trading centre for money and global wealth and not rubber as it was 60 years ago. If I am not mistaken, financial/insurance services continue to be the fasting growing contributor to our GDP over the last 3 years, using information from the Singstats website. This is all within the grand scheme of emulating the Swiss model here in the far east and we can say we more than succeeded.

The plan is simple. To keep it going, the currency will have to be strong and stable, the lower interest rate impact is cushioned with qualitative measures such as the recent Total Debt Service Ratio for property loans and the new credit card rulings to prevent domestic over leveraging.

The risks are there.

1. Local corporate over leveraging is an issue not addressed (just look at the spate of sub standard bond issues that have flooded the marketplace)

2. Susceptibility to regional outflows

So much for trying to second guess MAS’s motives next month, the result of the semi annual monetary policy statement will be a stalemate unchanged i.e. modest and gradual appreciation. So much for my prediction in April that October will make the difference in the monetary policy. Yes, October is the last stand and the stand is that we have to keep the Singapore dream going.


I did some rough correlation and found some interesting links in the past 5 years. SGD strength correlated mostly strongly with the STI, of all things followed closely by the 6M SOR which does not correlate as well with the STI.

Thus, the best hedge for the SGD would be the STI which has staged a remarkable come back since end Aug as companies continue to leverage up and mid cap stocks race to heaven to bubble up their valuations. Volumes are lower than their 15 day moving average which is usually an inflection point and I daresay a correction would be in store. 3,000 has always been the magic number for us just like 1.28 has been the cap on USDSGD for this year.




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