Singapore Fortnightly : Dismantle the Speed Cameras

Economic Data

Sep Industrial Production +0.5% MoM, expected +1.2%
Sep Industrial Production -4.8% YoY, expected -4.5%
3Q15 Unemployment Rate 2%, expected 2.1%
Oct PMI 48.9, expected 48.9
Oct Electronics Sector Index 48.6, expected 49.0
Oct Nikkei Singapore PMI 50.2, previous 51.4


All eyes on the world on the Fed and not on their own economies, for it barely matters what happens at home when the most powerful central bank in the world decides to give the world a global rate cut via a courtesy hike on their end which is a foregone conclusion after a phenomenal Non Farm Payrolls number last Friday.

Not a single currency has been spared this time round and a certain risk-on mode has gripped markets globally at a heavy price to EM as we learn from reports that half a trillion has flown the EM coop in the past 6 months and the OECD slashed global growth citing that “further sharp downturn in emerging market economies and world trade has weakened global growth to around 2.9% this year – well below the long-run average – and is a source of uncertainty for near-term prospects“, just a few hours ago.

Dismantle those speed cameras, for we are in a fine jam.

Singapore is quite caught up in the EM story, sharing in the gains and now sharing in the pain with the PMI numbers showing contraction again.

Credit card bad debts at a record high and nearly double its pre crisis rate.

Singapore Fortnightly : Dismantle the Speed Cameras

COE prices at a 5 year low as supply hits the market.

Singapore Fortnightly : Dismantle the Speed Cameras 1


Yet Singapore had her largest IPO for 2015, the S$28.42 mio listing of a chilli crab restaurant chain, Jumbo Group, whose value soared 58% on debut trading, just 2 weeks after the largest bond issue for 2015 out of newly rated Aaa, HDB.

The S$ 1.2 bio 5 year HDB bond is not as lucky, notching a 1.5% drop in price since its debut as interest rates rose across the board on curve steepening, trading at 98.5 cts or thereabouts.

Singapore Fortnightly : Dismantle the Speed Cameras 2

The outlook remains cloudy at best even as M&A activity picks up with NOL, Biosensors and Tiger Airways seeing gains in their share prices. Indonesia’s tax amnesty efforts are starting to pay off as corporations look to shift funds back onshore which does not spell rosy times ahead for Singapore’s financial markets.

It adds to the EM drag that the Singapore economy is shackled to, leaving the USDSGD at risk in the medium term and the 1.45 target beckons which looks a tad too promising for a Christmas present possibly because most of the market is long USD and short bonds. The SOR fixings are mostly unfazed by the prospect of the Fed hike which lends confidence that fx will be measurably calm going going ahead. We have the year end coming up which means books will have to be adjusted, making it possible for folks to pick up USDSGD cheaper into year end.