MAS strikes upbeat tone amid trade tensions

MAS strikes upbeat tone amid trade tensions

10/10/18, 01:34 pm

(Oct 10): Global economic risks may have risen but there’s no need to overreact just yet, said Singapore’s central bank chief Ravi Menon.

“Dark clouds are an appropriate phrase but it’s not raining yet,” Menon, managing director at the Monetary Authority of Singapore, said in an interview on Bloomberg Television on Tuesday. “I don’t want to paint too glossy a picture on it but I don’t think we should overreact.”

Menon struck a relatively upbeat outlook for the world economy, cutting through the gloom that’s followed escalating trade tensions between the US and China, among Singapore’s largest trading partners, and a global emerging-market rout. The International Monetary Fund on Tuesday cut its global growth forecast for the first time in more than two years, while early indicators already show a possible slide in manufacturing.

See: IMF cuts forecast for global growth as trade war takes its toll

The MAS chief said he’s taking a balanced view, pointing to still solid growth in Asia, despite an expected slowdown in China, and a US economy that’s “chugging along.”

“We’re not seeing any major collapses in growth in any part of the world,” said Menon, 54. “What is interesting I think is the underlying resilience of the global economy.”

The bulk of trade disputes that dominated the news last year have also largely subsided with the exception of the conflict between the US and China, he said.

A prolonged US-China trade war and a sharper downturn in the world economy have serious implications for export-reliant Singapore. The city state’s exports amounts to 173% of gross domestic product, and a rebound in trade last year helped to spur economic growth to 3.6%. Growth is forecast at 2.5% to 3.5% this year.

The solid growth outlook enabled the MAS to tighten monetary policy in April, as other global central banks also began doing the same. Menon declined to comment on the central bank’s policy decision due on Friday, but just over half of the 21 economists in a Bloomberg survey predict the MAS will tighten again.

Menon’s comments helped to spur a rebound in the Singapore dollar from a 15-month low. The currency gained 0.1% to 1.3810 against the US dollar as of 3:10 pm on Wednesday.

Global trade risks are set to dominate talks as the world’s financial elite gather in the Indonesian island of Bali this week for the IMF-World Bank’s annual fall meeting.

Global Confidence
Menon’s sanguine outlook doesn’t mean that everything is “hunky dory.” He said a major worry is a possible slump in investment if global sentiment takes a knock.

“The bigger casualty may well not be trade but investment,” Menon said. “If corporates start feeling uneasy or uncertain about their future, they may well not make investments and that may well have a much stronger impact.”

Trade Minister Chan Chun Sing last week cautioned that the confidence in the global economy could suffer if there’s a protracted trade war. Adding to that, the IMF said a further inflaming of the conflict between the US and countries including China would accelerate capital flight from emerging markets.

Asia’s emerging economies are in better shape, with sound fundamentals and policy responses making them well-placed to avoid the financial crisis that struck the region two decades ago, Menon said.

“Emerging Asia should ride through this period of volatility,” he said.

Don't demonise China but neither be its vassal state: Ho Kwon Ping

SINGAPORE (Apr 23): The current United States and China trade tensions, businessman Ho Kwon Ping thinks, is not about a trade war but about a paradigm shift towards China becoming a major global player who does not want to play by Western rules. Ho says: “The current US-China tensions are not only not about the trade war, it is not even about geopolitical or geo-economic rivalry. It is about an entire paradigm shift in civilisational relationships which has not happened for the last 200 to 300 years ever since the ascendancy of Western civilisation to become the dominant civilisation in t....

UOB Kay Hian remains positive as SPH turns to student accommodation to arrest flagging media business

SINGAPORE (Apr 23): Despite continued weakness in its core media business, UOB Kay Hian is staying positive on Singapore Press Holdings (SPH) on the back of its foray into the student accommodation segment. SPH last week announced it has acquired a portfolio of three purpose-built student accommodation (PBSA) assets in the UK for £134 million ($237 million). See: SPH expands UK student dorm portfolio with $237 mil acquisition The assets span three cities in the UK – Southampton, Sheffield and Leads – and has a total capacity of 1,243 beds, bringing SPH’s total portfolio to over....

Ascott transforms digital ecosystem to support expansion

SINGAPORE (Apr 23): The Ascott Limited, CapitaLand’s wholly-owned lodging business unit, is embarking on a digital ecosystem transformation to support its expanding global lodging portfolio. The company aims to drive revenue growth, improve operational efficiency and enhance value to its customers and business partners through a comprehensive front-to-backend systems makeover. As part of its digital transformation, Ascott has launched the Ascott Star Rewards, the world’s first loyalty programme in the serviced residence industry to offer full flexibility to earn and redeem points. It....