Roaring prime rents expected for Asia’s ‘tigers’

S’pore and Hong Kong rentals to skyrocket

SINGAPORE

Around 1.5 million square metres of office space was absorbed in the Asia-Pacific market in the second quarter of this year — almost five times the amount recorded during the same period last year.

A new research report released by property consultant DTZ has found that occupied space in the Asia-Pacific region increased significantly in the quarter, as companies resumed expansion plans and upgraded to better quality space on the back of strong economic growth.

DTZ forecasts that prime rents in the region will grow by an average of 6.2 per cent annually between this year and 2014, with two of Asia’s “tigers” — Hong Kong and Singapore — expected to outperform this forecast.

Chesterton Suntec International’s research and consultancy director Colin Tan agreed that 6.2 per cent is a reasonable forecast for Singapore but felt that this figure might be a bit conservative for Hong Kong.

“Hong Kong faces limited office supply, so the upside for its rent prices to go up is higher as compared to Singapore, which still has sufficient fixed supply for office space,” Mr Tan added. Property experts believe that prime rents for Singapore’s office property will rise closer to 2014, when most of the supply is taken up.— Singapore and Hong Kong are expected to outperform in the office space area as prime rents are expected to go up by an average of 6.2 per cent annually between this year and 2014.

Jonathan Peeris and Julie Quek

Ginseng, now a cure for CASH debt?

PRAGUE

However, Prague has turned down the deal, instead suggesting that Pyongyang pays in the valuable mineral zinc, which can be resold on international markets.

Consumption of ginseng in the European country is low, with only 1.4 tonnes used each year.

North Korea owes the Czech Republic US$10 million from the days when the Czech Republic was under communist rule and the two countries traded with each other regularly. Communist Czechoslovakia was a leading supplier of trucks, trams and machinery to North Korea, creating a large debt.

North Korea’s economy is struggling as sanctions tighten and it hopes to barter its way out of handing over valuable cash. Non-cash transactions between socialist countries are common, with Cuba sending Venezuela doctors in exchange for discounted oil.

— North Korea has offered the Czech Republic 20 tonnes of ginseng, worth about US$500,000 ($680,000), in lieu of payment for some of its debts.THE DAILY TELEGRAPH

Will   United States become  a   cheap place to  set up factories / cheaper labourers / cheap properties..............etc?  This will give a boost to their unemployment rate. 

May be 10 years down the road,  NO MORE going to China to set up factories!!   China people will lose their jobs especially those working in the MNC companies.  Their  Labourers are simply, too EXpensive to hire.  Also, must bear the huge insurance cost when each worker commit suicides.

Will you be seeing  United States' brides being imported into  China??   Now the boy/girl ratio is like 1:3?  hahahah!

The writer is a professor of economics at Boston University and author of Jimmy Stewart Is Dead: Ending The World’s Ongoing Financial Plague With Limited Purpose Banking. The opinions expressed are his own.

The fiscal gap isn’t affected by fiscal labelling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labelled, and incorporates long-term and short-term policy.Long-Term Budget Outlook, released in June, shows an even larger problem.

The US is bankrupt and it doesn’t even know it

Economy won’t be big enough to handle $5.4 trillion in entitlements owed to 78 million baby boomers

Laurence Kotlikoff

The United States is bankrupt.July 2010 Selected Issues Paper says: “The US fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.”

Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health care, retirement and financial systems, each of which is a complete mess. But this is the good news.

It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalise the economy.

Last month, the International Monetary Fund (IMF) released its annual review of US economic policy. Its summary contained these bland words about US fiscal policy:

“Directors welcomed the authorities’ commitment to fiscal stabilisation, but noted that a larger-than-budgeted adjustment would be required to stabilise debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the US bankrupt. Section 6 of the

It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of US GDP”.

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.Let’s get real.

That noise you hear is the sound of the exit door being slammed SHUT.

US Fed slams SHUT the exit door

The Fed will “keep constant” its securities portfolio, reinvesting the principal payments from agency and mortgage-backed securities (MBS) in long-term Treasuries, according to the statement released following Tuesday’s meeting.

The New York Fed, which conducts open market operations for the system, put out a qualifying statement saying its Treasury purchases would be concentrated in the two- to 10-year sector.

Much of the economic commentary coming over the transom following the meeting suggested that the Fed had embarked on a second round of quantitative easing, or QE2.

Quantitative easing occurs when central banks pump lots of money into the banking system to promote lending. This is done by buying large quantities of securities from banks’ balance sheets, giving them plenty of new money to lend.

So how can this be quantitative easing when the quantity remains the same?

What the Fed committed to, for the moment, is to maintain the size of its securities portfolio at US$2.05 trillion ($2.79 trillion) rather than engage in passive tightening by allowing the balance sheet to shrink due to principal payments and maturing debt.

The Fed had been letting its mortgage portfolio shrink ever-so-slightly in recent months, even though the balance sheet has been stable since mid-April.

Now, the Fed will buy US$100 billion to US$200 billion of Treasuries a year to offset the shrinkage, estimates Mr Neal Soss, chief economist at Credit Suisse in New York, based on the normal pre-payment and amortisation schedule on a similar-size mortgage portfolio.

Will the Fed will decide, next month or next year, to expand its US$2.3 trillion balance sheet?

Nothing in Tuesday’s statement indicates what lies ahead. The Fed’s current assessment of the economy (not so hot) is backward-looking, based on the most recent economic data and just as reliable.

The data was weak enough to “shake their confidence in the forecast”, Mr Soss says.

Earlier this year, the exit strategy was all the rage. Policy makers were focused on how to unwind the Fed’s bloated balance sheet without causing dislocations in the housing market and the economy at large.

That noise you hear is the sound of the exit door being slammed shut. On Tuesday, the Fed put us on notice that it is oiling the hinges on the entry door. The decision to substitute Treasuries for maturing MBS will be welcomed by Fed officials who want the central bank to get out of the credit business and return to a “Treasuries only” policy.Downgrading its assessment of the pace of the economic recovery from “moderate” in June to “more modest than anticipated”, the United States Federal Reserve took a symbolic step toward additional easing of monetary policy.

‘TRICKLE-OUT’  ECONOMICS

Credit policy pertains to what the Fed buys.

Quantitative easing tells us how much.

The first round of quantitative easing led to an explosion in excess reserves, the reserves banks choose to hold over and above what they were required — US$1 trillion, up from a pre-crisis range of US$1 billion to US$2 billion.

If the Fed wants to put some oomph into QE2, it needs to get the reserves out of the banks and into the economy. One way would be to raise the cost of not lending.

Banks now earn 0.25 basis points on their reserves. (It was not so long ago that paying interest on excess reserves was seen as a way to prevent an inflationary expansion of credit.) Reducing or eliminating the interest on reserves would, at the margin, entice banks to buy securities or make loans, expanding the money supply. That was one of two other options — aside from the one chosen on Tuesday — that Fed chief Ben Bernanke laid out at his semi-annual monetary policy testimony last month.

The second was tinkering with assurances of “exceptionally low” rates for an “extended period”. How the Fed can guarantee a longer “extended period”, both verbally and practically, when its outlook changes from one meeting to the next, is beyond me. Then again, I’m still trying to figure out where the Q is in QE2.

Bloomberg

The writer, author of Just What I Said, is a Bloomberg News columnist. The opinions expressed are her own.

During the 1997 Asia Financial Crisis, INDON economy was one of the WORST.

During the 2008 World Tsunami, INDON transformed itself into one of the BEST economies.

TODAY  INDON has a very stable growing domestic market enough to sustain its own economy.

With the NEW and BETTER GOVERNMENT, INDON RUPIAH  is  STABLE and nOt Risky, unlike  before.

In TODAY's BANKING SCENERIO, those banks which cannot NORMALISE their FIXED DEPOSIT INTEREST RATE are NOT SUSTAINABLE in the LONG TERM  because  there is an INHERENT  WEAKNESS  in their  HOST COUNTRY's ECONOMIES . . . .

INDONESIA  and  MALAYSIA  are  SAFE   BET  relative  to  SINGAPORE . . .

I  am  very  comfortable  with  both  RUPIAH  and  RINGGIT  in this decade.

I give you two examples to illustrate the two different expansion:

Zhongguo Jilong and China print and dye are both proceeded quantitative expansion(even in capital market corporate action they used to be having average every day big volume transaction i.e. both considered as very liquid counters) while UNIFOOD and CHINA JISHAN respectively respectively doing about the same sector business activities on the contrary proceeding QUALITATIVE expansion (but in SGX performing very bad as both not showing liquid or frequently traded by the traders as well as investors, considered as very illiquid counters) Reason is simple the later counters much more focus on their business activities rather than their corporate action in SGX market! Hence, fundamentally we should invest the later UNIFOOD and CHINA JISHAN.

Aussie opposition vows to nix fibre optic network

SYDNEY

The opposition coalition wants to replace the government’s A$43 billion ($53.1 billion) fibre optic network with an A$6.3 billion “backbone” to be used by competing telecom firms.

“The coalition’s plan will stimulate a vibrant, private sector-based broadband market, with government involved to encourage competition and ensure services reach all Australians,” Mr Smith said.

The new plan involves spending A$2 billion on fixed wireless networks across the huge country and another A$750 million to allow homes to receive high-speed Internet.

Other homes would access the Internet via fixed lines or by satellite, connecting 97 per cent of homes by 2017 with a minimum speed of 12 megabits per second.

The plan would replace the government’s initiative to wire 93 per cent of homes with high-speed fibre optic cable capable of up to 100 megabits per second.

Singapore Telecommunicationsowned Optus, Australia’s second-largest telco, said there was a fundamental and philosophical difference between the coalition and Labor plans.

“They think they can take an incremental approach and gradually get better at fixing these problems by targeting certain things, whereas the ALP (Australian Labor Party) has moved for root and branch reform,” said Optus spokesman for government and corporate affairs, Mr Maha Krishnapillai.

“It’s a lot less money but we’ll get a lot less for it as well,” he added.

Telecommunications analyst Paul Budde said the opposition’s plan had some merits but “lacks a vision and a strategy for the future”.

“It is like having many parts of a car spread out on the floor, with no plan on how to put it all together,” he said.

Mr Budde said ineptness when the Conservatives were last in power had left Australia “at the bottom of the international broadband ladder” and the policy would take the nation backwards.

“For more than a decade the coalition tried to create facilities-based competition and they failed. It doesn’t make sense to compete on infrastructure ... How is the opposition going to achieve this by simply referring back to the failed policies of the past?” he added.

Communications Minister Stephen Conroy said the coalition plan would “consign Australia to the digital dark ages, destroy jobs and risk our economy for decades”.

SingTel shares, which were trading when Mr Smith’s comments were broadcast, were not affected by the news. They ended up 1 per cent at $3.07 in Singapore yesterday.

— Australia’s opposition will scrap an ambitious national broadband network in favour of a cheaper patchwork of services if it is elected into government this month, shadow Communications Minister Tony Smith said yesterday.AGENCIES

grew 18.8% in Q2

Ryan Huang

ryanhuang@mediacorp.com.sg

SINGAPORE

Despite the economy growing slower than initially forecast, MTI said the headline number was still a record for quarterly growth — boosted by a broad-based recovery, especially in biomedical manufacturing, electronics and tourism.

“We have had an exceptional first half. Some of these factors are structural, and will continue to lend support in the second half,” said Mr Ravi Menon, MTI’s Permanent Secretary.

Overall, the first half growth was at 17.9 per cent on-year — a record since 1975.

Manufacturing drove the growth in the second quarter, led by production from the biomedical and electronics segments.

Overall, the sector expanded 44.5 per cent on-year.

The construction sector grew 11.5 per cent, supported by an increase in public sector construction activities, while the services industries advanced 11.2 per cent in the same period.

Tourist arrivals in Singapore exceeded the 1 million mark for a single month for the first time in July, aided by the opening of two integrated resorts with casinos.

However, the ministry warned that growth would moderate for the rest of the year.

For one, the volatile biomedical manufacturing sector may weigh on the second half due to a high base, after the segment saw a 70-per-cent surge in production in the first six months.

Mr Leong Wai Ho, senior regional economist at Barclays Capital, said that in the first half, Singapore saw a spike in pharmaceutical output, which was higher than usual and unlikely to be repeated.

“This really reflects the switch over in the product mix in pharmaceuticals from relatively more patented drugs to generic drugs, so it’s producing this large fall in output as a result,” Mr Leong said.

The MTI said one key risk on the macroeconomic front would be the US economy.

The ministry added that while a double-dip recession was unlikely in the US, the recovery there would remain sluggish going into next year.

This means that, while the downside risks to growth from the European debt crisis appear to have eased somewhat, the overall situation is still fragile.

The Government kept its forecast for Singapore’s economy to grow between 13 per cent and 15 per cent this year, which would still make the country the world’s fastest growing economy.

— The economy expanded 18.8 per cent in the second quarter from the corresponding period a year ago, slower than the initial estimate of 19.3 per cent, according to final data released yesterday by the Ministry of Trade and Industry (MTI).But MTI warns growth will likely moderate

Among the health benefits provided by employers, the respondents felt health insurance was the most attractive, followed by gym access or discounts, corporate exercise programmes, and a smoke-free environment.— Amid the Government’s call to raise productivity, the responses of Singapore workers to a survey by recruitment agency Kelly Services could provide some pointers: Almost 8 in 10 of those surveyed said they would be motivated to “perform at a higher level” if they were able to share in profits or have an ownership stake in their employer’s business.

They can also be fined up to $5,000, jailed up to six months or both.