SINGAPORE (Nov 4): “Being obsessed with the movement of some money and people to Singapore — and ignoring the movement of people and money elsewhere to [the US], Canada, Australia, the UK, especially for their professional talents — just misses the point.” — Temasek Holdings CEO Ho Ching, on reports of Hong Kong funds fleeing to Singapore.

Singapore manufacturers see dimmer outlook

More firms in Singapore’s manufacturing sector are predicting a less favourable business outlook in the next six months compared with 3Q2019, according to a survey by the Economic Development Board (EDB).

While the majority of firms in the manufacturing sector expect business conditions for the period from October 2019 to March 2020 to remain similar to a quarter ago, a net weighted balance of 5% of manufacturers predicted a less favourable business situation.

The net weighted balance — the difference between the weighted percentage of “up” responses and the weighted percentage of “down” responses — is commonly used to reflect the direction and extent of the business sentiments.

The electronics and general manufacturing industries, as well as the precision engineering and chemicals clusters, were found to be the least optimistic about the operating environment in the next six months.

The chemicals cluster is the most pessimistic about business prospects, as firms within the cluster remain concerned about weak refining margins and cite softer orders for mineral oil additives and fragrances from the region.

In the electronics and precision engineering clusters, the weaker outlook is mainly due to the subdued demand for semiconductors and semiconductor-related equipment, as well as concerns about the US-China technology conflict.

Within the general manufacturing industries cluster, the food, beverages and tobacco segment is more cautious about orders, despite the traditionally higher demand, owing to the festivities in the months ahead.

Meanwhile, the biomedical manufacturing cluster was the most optimistic, with a net weighted balance of 10% of firms expecting improved business conditions for the next six months. — By Stanislaus Jude Chan

MAS sees economy undergoing ‘fits and starts’

Singapore’s economic growth will remain uneven through the end of the year, with weakness concentrated in trade and manufacturing, before halting its downtrend in 2020, the central bank said on Oct 30.

The city state’s prospects are in line with the path of the global economy, which should “stabilise” next year, the Monetary Authority of Singapore said in its Macroeconomic Review on Oct 30. The domestic economy “could experience fits and starts for the rest of the year, and into 2020”, it added.

MAS managing director Ravi Menon said in a recent interview that the current cycle should bottom out towards year-end, as the downturn appears to be confined to the trade and manufacturing sectors. The central bank elaborated on that view in its report on Oct 30, showing inflation will remain subdued while the labour market will soften.

MAS, which uses the exchange rate as its main tool, eased policy in October for the first time since 2016. The move was a “measured adjustment”, given that economic growth, business costs and consumer prices are expected to stabilise rather than decelerate further, the MAS said in its report.

A “more aggressive easing of policy is unwarranted at this juncture”, it said, although risks to growth and inflation are tilted to the downside. MAS reiterated that it is prepared to adjust policy if the outlook weakens significantly.

The services industry remains resilient for now and will continue to be a key support for growth, the central bank said. The outlook for the trade sector is “uncertain”, with prospects also depending on a recovery in the global electronics cycle.

Singapore’s labour market has weakened and wage growth is likely to slow into next year, the central bank said. The latest data shows retrenchments are on the rise, companies are cautious about raising wages and unemployed people are taking more time to find new work.

“Hiring sentiment has become more restrained amid the economic slowdown,” according to the report. “Looking ahead, domestic wage growth should ease as the labour market softens, even while sluggish demand could limit the pass-through of cost increases to consumers.” — Bloomberg LP

Hong Kong crashes into recession as protests hit economy

Hong Kong’s economy contracted sharply in the third quarter as it entered a recession, exceeding economists’ worst estimates of the damage from nearly five months of protests.

Third-quarter GDP retreated 3.2% from the previous three months, after a 0.4% contraction in the second quarter. That is the worst slump since 2009, in the aftermath of the global financial crisis. Two consecutive periods of negative growth mean Hong Kong has fallen into a technical recession.

The economic debate now is focused on how long the downturn will last, whether recent glimmers of stabilisation point to a bottom, and whether the US-China trade war and the demonstrations have done lasting damage. Financial secretary Paul Chan said last week that a full-year economic contraction was “very likely”.

“It’s completely driven by social events, and this is something the government needs to consider,” said Raymond Yeung, chief Greater China economist at Australia & New Zealand Banking Group. “It’s obviously comparable to the global financial crisis. We have a very similar situation that we don’t know when it’s going to end.” — Bloomberg LP

Temasek JV Reefknot makes first investment

Reefknot Investments, a Singapore-based global joint venture between Temasek Holdings and Kuehne + Nagel, has made its first strategic investment in UK-based artificial intelligence (AI) company Prowler.io.

Reefknot Investments is a global fund that invests in high-growth technology companies in the supply chain and logistics space. This fund provides not just financial support but also leverages its ecosystem of partners to support the companies with the necessary domain or technical expertise.

Valued at US$100 million ($136 million), following its most recent round of investment led by Tencent Holdings, along with participation from SGInnovate and Atlantic Bridge, Prowler.io utilises AI to help turn dynamic, real-time data into optimal decisions about business problems.

The start-up was founded in 2016 and is the first portfolio company Reefknot Investments is committing to as part of its US$50 million fund, which closed earlier this year.

Other domains the fund is actively exploring opportunities in include digital logistics and trade finance. In particular, the latter is where Reefknot is currently seeking transformative start-ups developing integrated digital platforms that leverage not only financial and transactional information, but also unlock the value in supply chain and logistics data to enable timely funding to underserved companies earlier in the pre-shipment cycle.

Marc Dragon, managing director of Reefknot Investments, said, “We are excited about supporting the application of Prowler.io’s leadership in using its data-efficient AI techniques to feasibly tackle long-standing challenges in the supply chain and logistics industry. Prowler.io’s AI platform and capabilities will greatly enhance decision-making in complex and uncertain environments that represent the type of transformational technologies Reefknot is committed to supporting to drive supply chain and logistics sector innovation.” — By Samantha Chiew

JB-Singapore RTS to go ahead

Malaysia will proceed with the construction of the Johor Bahru-Singapore Rapid Transit System (RTS) Link project, Malaysian Prime Minister Dr Mahathir Mohamad said on Oct 31. The project was earlier delayed as the then newly formed government weighed its finances. The new estimated cost of the project has been reduced by 36% to RM3.16 billion ($1.03 billion). “We will go ahead with that project,” Mahathir said.

The RTS Link, which connects Bukit Chagar in Johor Bahru to Woodlands in Singapore, is expected to ferry up to 10,000 passengers per hour each way. The project was meant to be completed by 2024.

Mahathir revisited his old proposal of a third bridge between Singapore and JB. He said RTS would not fully resolve the congestion at the Causeway and the Second Link, but the third bridge would. “RTS isn’t going to solve the problem for motorcyclists who go to and fro,” he said.

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