What Are The Prospects of A 2009 Recovery?

Mr Seng Wun Song, Regional Economist from CIMB-GK Research, delivered a seminar titled “What Are The Prospects of A 2009 Recovery?” at the SMART Investments & Properties 2009 held at Suntec Convention & Exhibition Centre today. Below are some of the keypoints (in my opinion):

• The better than expected economic figures for Jan & Feb in the US may be due to the ‘Obama Effect’ as Americans went out to spend with the election of a new charismatic President
• Spending is probably on credit
• The high number of job losses in 2008 will filter into the real economy
• More credit card debt will be written off by the banks. This is the same for banks in Singapore as foreign expats default on their debt as they are sent home
• The increase in bank lending in China is lacking transparency as they could be just loans to state-owned enterprises to satisfy the central government’s order. Half of the lending quota for 2009 was met in 2 months
• The recent increase in factory output in China may be due to inventory build-up in response to the stimulus package. This may reduce if there is no real demand
• The 1st quarter GDP figures for Singapore may be the worst in history. Figures in 2nd half is likely to be better due to the low base in late 2008
• S-Chips have been facing corporate governance issues recently. Are other Chinese companies really behaving themselves?
• The recent rally has coincided with end of month and end of quarter period. Larger fund inflows have been detected. Window-dressing in progress?
• Remember to take profit in the days ahead if market drops. Do not put in too much money

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