Posted by: bigtalksingapore | November 2, 2008

What’s next for Singapore future ?

It has been a roller coaster ride in the stock market, currency market and global economy ever since banks in America start falling like cow dung.

Some said that it is the “Destruction of Capital”, and it’s only beginning.
Many have already lose much of their wealth in stock market, unit trust and “Guarantee” bonds.

Let’s look at what has happened so far and see if we can infer what’s ahead.

WHAT’S HAPPENING ?

  1. Singapore Government stop the sale of land for development (See Attachment #1)
    What this mean is that property price is expected to plummet.
    Government stop the sale to reduce property supply, thereby pushing up the price to stabilize confidence.
    So, for those looking for a good deal at property market, it may not happen just yet.
    Personally, I think that Singapore property price is too high and the bubble is too big.
    The recent crisis might just be the needle that burst the bubble.
    If that happen, Singaporean will see their so called “Asset” goes down the drain.
    .
  2. Singapore next biggest wafer chip investment is dead and delayed (See Attachment #2).
    Sounds confusing ?
    Yup, it is confusing. One day, the media said they (Intel and Micron) would be scrapping plan, then next day they come in and said it’s just delayed while employees (Unknown numbers) are being retrenched.
    .
  3. Remember Barclay ?
    Right, the same Britain bank that Temasak Holding put so much money in (Click here).
    Guess what ? It looks like it’s running out of money….Again (See Attachment #3).
    .
  4. Talk about Temasak Holding, it is going to put additional S$223 million into Pakistan NIB bank (See Attachment #4).
    This will make them the majority shareholder of the bank at 75%.
    I don’t know about you, but this sound really like a shit investment.
    If world economy goes sour, I can’t really see any good opportunities in Pakistan.
    And talk about becoming the majority shareholder of another country bank, haven’t they learn their lesson from Thailand Shin Corp investment ?
    .
  5. More bad news from America.
    The next wave of crunch is coming, and it’s their credit card crunch (See Attachment #5).
    S$31 billion have already been written off, another US$55 billion over the next year.
    .
  6. Stock market is going up and down like crazy, there’s only one word for it “FEAR” (See Attachment #6).
    The reason it’s going down is fear and the main reason it’s still bouncing back is Government intervention.
    The question is how long can Government intervene ?
    .
  7. Singapore next life saving project, Marina Integrated Resort is facing problem (See Attachment #7).
    Las Vegas Sand is facing financial distress in US while having to deal with building new casino in Macau and Singapore.
    If they fall, the three Singapore big bank (OCBC, DBS and UOB) is going to be in a lots of trouble, OCBC will be the worst hit.
    You may want to divert some of your fund out of OCBC, just in case.
    Singapore Government may take out our National Reserve to keep the project going.
    Or perhaps Temasak Holding may cut their losses on their oversea investment and put in their lot, then it can be renamed to Tema-Sand resort.
    .
  8. Singapore Government has change the constitution to draw on Singapore reserve (S$150 billion) (See Attachment #8) .
    Though they mentioned that it will also be used to help household, I think the main bulk of it will goes into their Development project (Eg. Casino).
    This is because “Welfare” is a dirty word in Singapore.
    And it looks like they are going to use quite a huge sum of the reserve.
    This is because the report said “We do not expect to use up all $150 billion. If we are lucky, very little of it will be drawn upon, said Mr Lee”.
    Well, I’m not feeling particularly LUCKY with all these stuffs going on.
    .
  9. Singapore currency has been appreciating against many currency (Australia $, Euro, British Pound and New Zealand $) rapidly over the few weeks (See Attachment #9), except US$.
    Let’s look at each currency.
    Australia and New Zealand dollar – Main activities is commodities (dairy product, coal and etc.) and tourism. Dairy industry has been hit pretty hard thanks to China creative profiteering technique. Tourism is expected to go down. Naturally, people’s going to pull their money out of Australia.
    British Pound – After many of their bank nearly going bust (Some already did), nobody in his right mind will still want to hold on to their currency.
    Euro – I don’t know.
    Singapore dollar – Perception is that Singapore have lots of foreign reserve. Exactly how much ? Not many knows. So, it’s still considered safe haven for oversea investors (Especially when bank deposit is insure 100% till 2010). In time of uncertainty, people with money will want to park it somewhere safe. So, demand for Singapore currency increased.
    Of cos, MAS may be interfering to make Singapore dollar strong in order to fight inflation.
    .

WHAT’S GOING TO HAPPEN ?

  1. US has been the consumers of the world. Credit crunch (See WHAT’S HAPPENING #5) exacerbated by the new credit card crunch only mean that demand for world goods is plunging fast.
    This would mean that manufacturing will be over producing and really in for bad time.
    It will also mean the LCD TV and Bluray player that you’ve been eyeing for so long is going to be cheaper soon.
    .
  2. Singapore manufacturing (last I heard, account for 30% GDP) is definitely a sunset industry, except for some really high tech area like pharmaceutical and very high end semiconductor (I’m still figuring out which type cos China can basically do what we do here).
    Singaporean already in this industry should consider other alternative whenever possible.
    .
  3. Marina IR is going to start operation near end of 2009, by hook or by crook.
    Singapore Government had promise to deliver it at all cost, even if they dig into Singapore reserve.
    I suspect that it’ll probably lose money for at least one year.
    International gambling tourists would be minimum, so they may offer special promotion for local residents to enter their casino to tight over the crisis.
    Gambling restriction will have to be lifted or reduce temporary for the first two years in order to get some hard cash from local customers.
    There’s a report recently that said the lower income families is turning to gambling as a last resort. It’s probably going to get worse for this group.
    .
  4. Singapore Government reserve is definitely going to go down as private debt are being transformed into public debt.
    Public debt bubble is going to expand. Will it burst ?
    Direct tax is going to decrease further to attract investment.
    GST (Goods and Service Tax) is likely to go up in order to finance increase in public debt.
    .
  5. More companies is going to retrench staff.
    Those that remained will have to do extra work.
    Head hunters will come in to poach those not retrenched and these are likely to be poached.
    While those remain are being poached and left, the company is unlikely to hire more staff to replace them.
    .
  6. Many mid-price restaurants is going to go bust as the middle incomer families switch to low-price restaurants or eateries (Macdonald and Burger King is going to love this change).
    High-price restaurants will still be survivable, but they will start cutting cost by switching to cheaper food source.
    .
  7. Those working as civil servant and specialize jobs ( Specialist Doctor, Surgeon, famous hair dresser, divorce lawyers, and etc.) will survive better.
    .
  8. Micro entrepreneurship will emerge when unemployed switch to be their own small boss.

WHAT SHOULD SINGAPORE GOVERNMENT DO ?

  1. Setup special scheme and assist unemployed to switch to micro-entrepreneurship.
    .
  2. SAF (Singapore Armed Forces) should cut down on reservist in camp training and RT (Remedial Training) so that male Singaporean employee are not distracted and can keep their jobs.
    .

Attachment #1: Today, 1 Nov 2008, Page 1

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Attachment #2: Today, 1 Nov 2008, Page 34

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Attachment #3: Today, 1 Nov 2008, Page 34
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Attachment #4: My Paper, 30 Oct 2008, Page A10
.

Attachment #5: My Paper, 30 Oct 2008, Page A10

.

Attachment #6: My Paper, 29 Oct 2008, Page B1
.

Attachment #7: Today, 24 Oct 2008, Page B1

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Attachment #8: My Paper, 22 Oct 2008, Page A2
.

Attachment #9: Singapore Currency Trend

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