Singapore represents the best overall value in ASEAN this week.
Global markets will be closely
watching the Fiscal Cliff issues in the USA and we will see a very choppy week
with the downside risk far too great to be buying anything other than value
stocks.
There is a correction coming without
any doubt.
The outlook for Singapore’s
economy is “cautiously positive”, the government said on Friday, reiterating
its growth forecast of 1-3 percent for this year after fourth quarter and 2012
gross domestic product data came in slightly better than expected.
Singapore’s trade-dependent
economy grew 1.3 percent in 2012, a touch above the advance estimate of 1.2
percent, the Ministry of Trade and Industry said in a statement. In 2011, the
economy grew 5.2 percent.
“The global macroeconomic
conditions have stabilized in recent months against the backdrop of improved
financial market conditions. Nevertheless, global economic growth is likely to
remain subdued,” the ministry said in a statement. “Against this macroeconomic
backdrop, the outlook for the Singapore economy remains cautiously positive.”
Ow Foong Pheng, permanent
secretary at the ministry, underscored that the outlook was based on no drastic
deterioration in the global economy. “Our assessment for Singapore’s growth
outlook in 2013 is based on modest fiscal cutbacks in the U.S. and no outright
crisis in the eurozone,” he told a news conference.
USA
Talks on the U.S. budget crisis
began again this week leading up to the March 1 deadline for the so-called
sequestration when $85 billion in automatic federal spending cuts are scheduled
to take effect.
“It’s at this point a political
hot button in Washington but a very low level investor concern,” said Fred
Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego,
Oregon. The fight pits President Barack Obama and fellow Democrats against
congressional Republicans.
Stocks rallied in early January
after a compromise temporarily avoided the fiscal cliff, and the Standard &
Poor’s 500 index .SPX has risen 6.3 percent since the start of the year.
But the benchmark index lost
steam this week, posting its first week of losses since the start of the year.
Minutes on Wednesday from the last Federal Reserve meeting, which suggested the
central bank may slow or stop its stimulus policy sooner than expected,
provided the catalyst.
National elections in Italy on
Sunday and Monday could also add to investor concern. Most investors expect a
government headed by Pier Luigi Bersani to win and continue with reforms to
tackle Italy’s debt problems. However, a resurgence by former leader Silvio
Berlusconi has raised doubts.
China
Economic growth is expected to
pick up 0.43 percentage points from last year to reach 8.23 percent in 2013,
according to a report released Saturday.
Export growth will accelerate to
12.22 percent this year, up from 7.9 percent in 2012. Import growth will hit
17.83 percent, in comparison to 4.3 percent last year, said a report compiled
by Xiamen University and the Economic Information Daily, a subsidiary of the
Xinhua News Agency.
Although global monetary easing
has to some extent piled up inflationary pressure for China, the economy will
not see serious price hikes this year, the report said.
It projected the rate of
inflation at 3.11 percent for 2013, up from 2.6 percent last year.
The report suggested
restructuring income distribution as a fundamental government measure to
correct the imbalance of the country’s economic structure, which is featured by
declining ratios of final consumption, especially residential consumption, in
gross domestic product.
The report, the 14th of its kind
so far, employs a macroeconomic model to calculate and demonstrate economic
trends in the country.
Japan
Japanese Prime Minister Shinzo
Abe stressed that his “Abenomics” recipe would be good for the United States,
China and other trading partners.
“Soon, Japan will export more,
but it will import more as well,” Abe said in the speech. “The U.S. will be the
first to benefit, followed by China, India, Indonesia and so on.”
Abe said Obama welcomed his
economic policy, while Deputy Chief Cabinet Secretary Katsunobu Kato said the
two leaders did not discuss currencies, in a sign that the U.S. does not oppose
“Abenomics” despite concern that Japan is weakening its currency to export its
way out of recession.
The United States and Japan
agreed language during Abe’s visit that could set the stage for Tokyo to join
negotiations soon on a U.S.-led regional free trade agreement known as the
Trans-Pacific Partnership.
In a carefully worded statement
following the meeting between Obama and Abe, the two countries reaffirmed that
“all goods would be subject to negotiations if Japan joins the talks with the
United States and 10 other countries.
At the same time, the statement
envisions a possible outcome where the United States could maintain tariffs on
Japanese automobiles and Japan could still protect its rice sector.
“Recognizing that both countries
have bilateral trade sensitivities, such as certain agricultural products for
Japan and certain manufactured products for the United States, the two
governments confirm that, as the final outcome will be determined during the
negotiations, it is not required to make a prior commitment to unilaterally
eliminate all tariffs upon joining the TPP negotiations,” the statement said.
Abe repeated that Japan would not
provide any aid for North Korea unless it abandoned its nuclear and missile
programs and released Japanese citizens abducted decades ago to help train
spies.
Pyongyang admitted in 2002 that
its agents had kidnapped 13 Japanese in the 1970s and 1980s. Five have been
sent home, but Japan wants better information about eight who Pyongyang says
are dead and others Tokyo believes were also kidnapped.
Abe also said he hoped to have a
meeting with new Chinese leader Xi Jinping, who takes over as president next
month, and would dispatch Finance Minister Taro Aso to attend the inauguration
of incoming South Korean President Park Geun-hye next week.
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