Only cautious optimism as no sustainable sign of private spending recovery seen yet
SINGAPORE should prepare for the possibility of a sluggish world economy or even a double-dip recession next year, Finance Minister Tharman Shanmugaratnam cautioned yesterday.
Improvements seen in the United States economy and around the world were mainly down to aggressive government stimulus packages and a correction in private sector inventories, he told those attending Singapore Exchange's (SGX) 10th anniversary celebration yesterday.
'We have yet to see a firm or sustainable rebound in private spending that can underpin global economic growth in 2010 and beyond,' he said. 'This is why we can only be cautiously optimistic about the next few years, globally and in Singapore.'
A double-dip recession - also known as W-shaped - refers to an economy pulled out of recession by a short period of growth, but which then slides back into negative growth.
Singapore's gross domestic product grew 20.7 per cent in the second quarter compared with the first, signalling a rebound in the economy after four consecutive quarters of decline.
But the Government has forecast that the economy will still shrink by 4 to 6 per cent over the full year.
Mr Tharman said that although the asset management industry's portfolio declined in value by 26 per cent to $864 billion in 2008 from a year earlier, fund flows have resumed. In the first half of this year, the assets under management of the 20 largest asset managers in Singapore grew by 23 per cent. As well, the corporate debt market only shrank by 2 per cent to $168 billion last year.
At the event last night, the minister looked back on the decade since the SGX was formed by a merger of the Stock Exchange of Singapore and the Singapore International Monetary Exchange.
In that time, he noted, 'the SGX has seen through the ups and downs of a tumultuous decade in financial markets', but has grown tremendously and is today regarded as a serious international player.
From less than 500 listed firms in 2000, SGX has grown to include more than 760 firms on the mainboard and Catalist - 40 per cent of which hail from 20 countries outside Singapore.
Today, almost half of SGX's revenue is foreign-sourced, said Mr Tharman. Still, the firm must continually innovate to stay ahead of the game, he added.
SGX chairman J. Y. Pillay yesterday acknowledged Mr Tharman's efforts to 'drive the project and nurtured it to the point where SGX was formed'.
'SGX is a responsive... internationally-oriented exchange. It is seen as a credible gateway to Asian markets,' he added.
He credited outgoing chief executive Hsieh Fu Hua for turning the organisation around, and for his 61/2 years of unremitting effort.
Mr Pillay said SGX will be in safe hands when incoming chief executive officer Magnus Bocker takes over in December.
To mark its 10-year anniversary, SGX presented awards to six outstanding individuals and institutions in recognition of their contribution to Singapore's capital markets.
Securities Investors Association of Singapore (Sias) chief executive David Gerald was recognised for championing individual investors' interests. 'I'm quite humbled by the award,' he said. 'It's a reflection of all the hard work by everyone at Sias.'
Other winners included DBS Bank, Deutsche Bank AG and chairman of PhillipCapital Lim Hua Min.
SGX also donated $200,000 to a new organisation - Shared Services for Charities - set up to promote corporate governance and organisational excellence in the charity sector.
The celebrations ended with Mr Tharman presenting a 1919 edition of the works by economist John Maynard Keynes on behalf of SGX to Mr Pillay, acknowledging his efforts in guiding the firm over the past decade.
Source: Straits Times, 10 Sep 2009
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