Ringgit forwards point to further weakness weighed by oil, 1MDB

 KUALA LUMPUR] Offshore forwards show the ringgit may weaken another 2.7 per cent in the next 12 months as Brent crude prices below a 10-year average hurt export earnings, combined with controversy over a state investment company.

 

Twelve-month non-deliverable forwards retreated 0.2 per cent to 3.9145 a dollar as of 11:20 am in Kuala Lumpur, data compiled by Bloomberg show. The contracts declined to a record 3.9608 on July 8. The onshore ringgit fell to its lowest this month since the Asian financial crisis and is the region's worst-performing currency in 2015.

As Asia's only major net oil exporter, a 50 per cent slump in Brent crude from last year's peak is weighing on the ringgit, just as a looming US interest-rate increase may spur capital outflows. Investor sentiment has also deteriorated amid a probe into funds linked to 1Malaysia Development Bhd. that has embroiled Prime Minister Najib Razak.

"Downward pressure on oil prices, a stronger US dollar on Federal Reserve rate hikes this year and ongoing local political news are all weighing on ringgit forwards," said Khoon Goh, a strategist at Australia & New Zealand Banking Group Ltd in Singapore. "I expect to see a further weakening in the spot rate given the stronger US dollar." The ringgit was little changed in onshore trading Thursday at 3.8070 a dollar, and is down 0.3 per cent from July 10, according to prices from banks compiled. It fell to the 1997-98 Asian crisis low of 3.8130 this month and has lost 8.2 per cent in 2015. Malaysian financial markets will be shut Friday for a Muslim holiday.

Singapore stocks open higher after Greek Parliament approves bailout

SINGAPORE'S benchmark Straits Times Index opened on Thursday 9.02am at 3,354.03 points, up 15.17 points or 0.45 per cent, after the Greek Parliament approved a new set of austerity measures needed to qualify for a bailout.

Gainers outnumbered losers 85 to 39.

This caps a week of consecutively higher opens on positive sentiment surrounding the Greek deal. Top stocks by value traded were blue chips DBS, Singtel, OCBC, UOB and SGX.

S'pore's banking system outlook stable, as property market eases, credit growth moderates: Moody's

[SINGAPORE] Moody's Investors Service has revised its outlook for Singapore's (Aaa stable) banking system to stable, reflecting the domestic property market's soft landing, and moderating domestic and cross-border credit growth. The outlook was previously negative since July 2013.

Moody's analysis is contained in its just-published report 'Banking System Outlook: Singapore' by Eugene Tarzimanov, a Moody's vice president and senior credit officer.

Moody's rates Singapore's three major banking groups - that account for around 60 per cent of domestic system assets at end-2014 - DBS Bank (Aa1 stable, aa3), Oversea-Chinese Banking Corporation (Aa1 stable, aa3) and United Overseas Bank (Aa1 stable, aa3). Moody's also rates Bank of Singapore (Aa1 stable, a3), the private-banking subsidiary of OCBC.

Moody's expects that Singapore banks will continue to benefit from healthy - although lower - economic growth both domestically and in their regional operations. While real GDP growth in Singapore will slow to around 3 per cent in 2015 and 2016 as a result of slower growth in China, this will be offset somewhat by the recovering US economy.

Update: Singapore's non-oil domestic export up 4.7% year-on-year in June

Singapore's non-oil domestic exports (NODX) rose by 4.7 per cent from a year ago to S$14.2 billion in June 2015 due to an expansion in both electronic and non-electronic exports.

This is in contrast to May, when NODX fell 0.3 per cent on a year-on-year basis to about S$13.2 billion.

IE Singapore said on Thursday that electronic NODX grew by 7.6 per cent in June to about S$4 billion, in contrast to the 2.5 per cent decline to S$3.8 billion in May. The increase in electronic domestic exports was largely due to PCs (+69.6 per cent), ICs (+10.8 per cent) and telecommunications equipment (+79.3 per cent). 

The growth in non-electronic NODX was led by electrical machinery (+75.0 per cent), printed matter (+35.8 per cent) and non-electric engines & motors (+281.8 per cent).

China stock boom boosted GDP, raising sustainability questions

China's frenzied stock market boom, which soured in the second half of June, helped drive a surge in financial sector growth that underpinned the economy's better- than-expected gross domestic product result.

 

Financial services surged 17.4 per cent in the first six months from a year earlier, according to China's statistics authority, as exchanges and brokerages registered surging revenue amid record trading volume. It was the stand out industry as real estate languished and agriculture grew at about half the overall economy's pace of 7 per cent.

The data underscores the fragility of China's growth in the quarter, as a rout that wiped almost US$4 trillion in equity values may shake confidence in the sector. That could dent hopes for a pick up in the economy in the second half.

"To the extent that growth was supported by financial sector gains from the stock market, it won't be sustained without further stimulus," Bloomberg economist Tom Orlik wrote in a note after the quarterly GDP release on Wednesday.

Singapore shares continue gains from last week's correction

SINGAPORE'S benchmark Straits Times Index (STI) was at 3,299.99 points on Monday morning at 9.01am, higher by 20.11 points or 0.61 per cent.

The rise followed gains made towards the end of last week as stocks rebounded after a correction due to China and Greece fears.

Top stocks by value traded were blue chips DBS, Singtel, UOB, Jardine Matheson and ComfortDelGro.

Stocks to Watch: CapitaLand, Vallianz, Yuuzoo, Lian Beng

THE following stocks may see some activity on Monday:

CapitaLand's serviced residence unit, The Ascott Limited, is in a joint venture with Qatar Investment Authority to set up a US$600 million serviced residence fund with an initial focus on the Asia-Pacific and Europe regions.

Vallianz Holdings said on Monday morning that it has won a deal valued at up to US$300 million to supply two self-elevating platforms to a large national oil company in the Middle East.

Yuuzoo Corporation said on Friday it has taken legal action to collect from Infocomm Asia Holdings an outstanding debt of S$6.46 million plus interest.

Lian Beng Group on Friday announced that two of its independent directors have resigned with immediate effect "due to differences in opinion" with the board.