Traditionally, at this time of the year, predictions and forecasts for the financial future springs to life. As the world is flushed with so much investible wealth, there is a compelling need to peek into the financial future. With thousands of MBAs in economics and finance, being paid handsomely, there need to put their intellect to good use. Even geomancers and ‘fengshui’ masters, unable to avoid the temptation, too, jump into the forecasting bandwagon. The truth is simple, in economic jargon, it is about wealth creation. In layman term, it is to make money.
“Crystal Balling” the future is an art. Because the economy is affected in so many ways and there are too many variables and unknowns. Even religion and politics can have severe impact on economy. Sometimes forecasting correctly is just plain luck. So what is my take on the economy? I too am entitled to my amateurish views on Singapore economy. Right or wrong, it cost me nothing.
Singapore is officially out of the recession and is expected to grow moderately with GDP around 3 to 5%. Unemployment rate will naturally drop as economy picks up. Most sectors are headed for modest recovery.
What is exciting for Singapore in 2010 is the opening of the two integrated resorts. It is a milestone in the remaking of Singapore. The host of conventions and meetings expected in the 2 IRs will certainly create many jobs in the service sectors. Universal Studios will pull in more tourists for Singapore, thus propping up the transport and communication sectors. With the opening of the casinos, many more associated economic activities will definitely kick-start the services sectors. The F1 race held annually in September will add more buzz and vibrancy to Singapore. The hotels and shopping malls too will benefits from the two IRs and F1 race
.
The property sectors will remain stable with upward bias. It will not rocket as the government is keeping a very vigilant lookout for overheating, and will not hesitate to cool it. Property bubble is very harmful and has negative effect to any economy. The mass market condominiums may even test the $1000psf threshold if the high- end segment continues its upward surge. With government allowing more foreigners to immigrate to Singapore; I can’t see the HBD sectors softening.
On investment, I think it is anybody guesses. Market will remain volatile as the financial crisis is not really over. Investors having been burnt badly in 2008/09, are now very focus and vigilant. Any slightest rumours or impending bad news will trigger them to scamper and take cover for safety. This is the reason for the expected volatility. As the market has move up strongly over 2009, many felt that it has already factored in the growth expected in 2010. I see the market to remain as a trading market. Market will trend up in anticipation of good news and dive down when expectations are not made.
I favoured the oil & gas related companies as well as the commodities sectors. Singapore will benefit from any increase in commodities prices. Next, some select properties companies with overseas exposure may benefit strongly from the growth in Asia. One unknown will be any companies associated with clean energy. Such companies may attract punters. One need to thread very nimbly in this market as indices are expected to be range bound. Timing for traders is paramount in this volatile environment.
As we are greatly dependent on trade, any slump in the major economies will impact us deeply. And on the contrary, a strong pick up will also augurs well for Singapore but I don’t expect that to happen. What is unsettling will be a natural disaster like big earth quakes in Japan or USA, or another 9/11 incidents or if Israel decide to unilaterally take military action against Iran, then the consequences will be far reaching. Politically, the larger countries like China, India, Brazil and Indonesia remain stable and any imploding from within are unlikely. There other worry is the strength of the US dollars. Unless the US government do something stupid, it will remain stable for the foreseeable future as there is no other reserve currency to replace it as alternative.
This in a new decade and the only constant in a globalised world is change. Knowledge is the common currency for all. Those that can anticipate and embrace change will stay ahead.
I look forward to the next decade 2010. I am optimistic that we will be better off than the last.
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