Singapore cuts 2020 economic forecasts for the third time on coronavirus concerns - CNBC
The Singapore economy is expected to shrink by between 4.0% and 7.0% this year, according to the Ministry of Trade and Industry.
Singapore drastically downgraded its economic forecast for 2020 after its coronavirus-hit economy contracted in the first quarter of the year, official data showed on Tuesday. The Singapore economy is now expected to shrink by between 4.0% and 7.0% this year, according to the Ministry of Trade and Industry. That's the third official downgrade in economic forecasts this year. The last projection was for a gross domestic product contraction of between 1.0% and 4.0%. The ministry said in a statement that since announcing its last economic forecasts in March, "the disruptions to economic activity in major economies around the world have been more severe than expected." It explained that lockdown measures aimed at containing the coronavirus which has been formally named Covid-19 have hurt economic activity in major economies such as the U.S., Europe and China. Such weakness would continue even after countries roll back those containment measures given that further waves of infections could emerge, said the ministry. For Singapore, that means that outward-oriented sectors such as manufacturing, wholesale trade, and transportation and storage will be hit, while many consumer-facing companies in retail and food services have suffered as a result of containment measures domestically, the ministry added. "Notwithstanding the downgrade, there continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery, in both the global and Singapore economies," it said. The downgrade in economic forecasts came as the Southeast Asian economy registered a 0.7% contraction in the first quarter from a year ago, the ministry said. That's better than the official preliminary estimates of a 2.2% fall in GDP and the 1.5% contraction forecast by analysts in a Reuters poll. On quarterly basis, Singapore's economy shrank by 4.7% also better than the 7.4% contraction projected by a Reuters poll. Here's how different sectors performed in the first quarter:
- Manufacturing jumped by 6.6% compared with a year ago;
- Accommodation and food services plunged 23.8% year over year;
- Transportation and storage fell 8.1% compared with the first quarter last year;
- Finance and insurance rose 8.0% from last year.
Scientists propose a 50 days on, 30 days off coronavirus lockdown strategy - CNBC
A new report has suggested that alternating strict measures with intervals of relaxed social distancing could be a more effective way of slowing the spread of Covid-19 than indefinite or milder lockdowns.
Fifty days of strict lockdowns followed by 30 days where measures are eased could be an effective strategy for reducing Covid-19 deaths while ensuring some level of economic protection, scientists claim. In an EU-backed study published on Wednesday, a cohort of researchers from nine countries simulated how various lockdown strategies would impact the spread of the coronavirus. There have been almost 5 million cases of Covid-19 confirmed globally, with over 300,000 deaths from the virus worldwide, according to data compiled by Johns Hopkins University. Many governments have imposed some form of lockdown to mitigate transmission of the virus. But policymakers around the world are now calculating ways to gradually lift those measures as the pandemic weighs heavily on economic activity. Scientists suggested in the new report that an alternative, more effective approach to indefinite or milder lockdowns could be alternating stricter measures with intervals of relaxed social distancing. Effective testing, contact tracing and isolation strategies, as well as efforts to shield society's most vulnerable, would be consistently kept in place. They modeled several different scenarios on 16 countries, including Australia, Mexico, Belgium, South Africa and Nigeria. In the first scenario, no mitigation or social-distancing measures were imposed. In every single country, this led to the number of patients requiring treatment in intensive care units (ICUs) quickly and significantly exceeding available capacity. Ultimately, this would result in 7.8 million deaths across the countries included in the analysis, researchers said, and the duration of the epidemic would be almost 200 days in the majority of those nations. The second scenario modeled a rolling cycle of 50-day "mitigation measures" followed by a 30-day period where those measures were relaxed. Analysts defined mitigation measures as strategies that gradually reduced the number of new infections, such as social distancing, hygiene rules, isolating individuals with the virus, school closures and restricting large public events. These measures did not include a total lockdown. This scenario was likely to reduce the R number the reproduction rate of the virus to 0.8 in all countries, the study showed. However, while it proved effective for the first three months, after the first relaxation period scientists found the number of patients requiring ICU care would exceed hospital capacities. This would lead to 3.5 million deaths across the 16 countries used in the simulation, with the pandemic lasting around 12 months in high income countries and at least 18 months in other nations. Researchers also modeled a third scenario, which involved a rolling cycle of stricter "suppression measures" for 50 days followed by a 30-day relaxation period. Suppression measures were defined as those that led to a faster reduction in the number of new infections, achieved by applying strict lockdown measures on top of other mitigation measures. In the third, most stringent scenario, the R number would be reduced to 0.5 and keep ICU demand within national capacity across all countries, scientists concluded. As more people would remain susceptible to catching the virus at the end of each cycle, however, the pandemic would be prolonged and last for more than 18 months in all countries. But the Covid-19 death toll during the pandemic would be significantly reduced in this scenario, with just over 130,000 deaths expected across the 16 countries included the analysis. Researchers noted that individual countries would need to define for themselves how long the durations of the intervals would last to suit their domestic needs and facilities. A continuous, three-month strategy of strict suppression measures would be the fastest way to end the pandemic, with most countries able to reduce new cases to near zero in this scenario, scientists said. Meanwhile, if looser mitigation strategies were continuously applied, it would take just over six months for new cases to fall close to zero. Rajiv Chowdhury, a global health epidemiologist at the University of Cambridge and the report's lead author, said the third scenario rotating strict suppression measures with relaxation periods may allow populations to "breathe" at intervals. "That might make this solution more sustainable, especially in resource-poor regions," he said. Oscar Franco, director of the Institute of Social and Preventive Medicine at the University of Bern in Switzerland, added that the research provided a strategic option for countries to better control Covid-19. "There's no simple answer to the question of which strategy to choose," he said. "Countries particularly low-income countries will have to weigh up the dilemma of preventing Covid-19 related deaths and public health system failure with the long-term economic collapse and hardship." The IMF has warned that the world is on course for the deepest recession since the 1930s thanks to the coronavirus pandemic, predicting that the global economy will contract by 3% this year.
From Alibaba to Xiaomi, China tech giants set to benefit as Hong Kong changes stock index rules - CNBC
A major revamp of Hong Kong's benchmark Hang Seng index is set to pave the way for Chinese tech giants to benefit and expand their trading presence in Asia, while letting more investors gain access to their stocks.
Major changes on Hong Kong's benchmark Hang Seng index could pave the way for China's tech giants to expand their trading presence in Asia, while giving more investors access to their stocks. In a major revamp announced on Monday, the Hang Seng index will for the first time allow companies with primary listings elsewhere, as well as those with dual-class shares, to be included in the 50-year-old benchmark. Companies listed in the U.S. can have a secondary listing on the Hong Kong Stock Exchange currently. But, before the latest rule change, they could not be included in the benchmark Hang Seng index (HSI), and by default, in the index funds that track the HSI. In particular, three Chinese tech stocks e-commerce giant Alibaba, phone maker Xiaomi and food delivery giant Meituan are set to reap the benefits of being included. Shares of Hong-Kong listed Alibaba and Xiaomi were up more than 2% by Tuesday afternoon, while Meituan rose 1.65%. All three companies are among the top five stocks traded in Hong Kong by value every month, according to Reuters. Collectively, they represent 15% of the total market capitalization of Hong Kong-listed companies, investment bank Morgan Stanley said. Alibaba, Xiaomi and Meituan are companies with dual-class shares or those with two classes of shares that have different voting rights, according to Reuters. One class allows founders and executives of the company to have more voting power, while the other class is issued to the general public, with limited or no voting rights. Additionally, Alibaba has a secondary listing in Hong Kong. It first listed in New York in 2014. If stocks of Alibaba, Xiaomi and Meituan are included under the Hang Seng index, they will have a bigger presence in index funds that are tracking the HSI. That means that those stocks will now be in the portfolios of more investors those who have bought into those index funds, in particular exchange-traded funds (ETFs). More investors have in recent years flocked to such passive investing by investing into such funds, as opposed to individual stock-picking. That inclusion could bring in $3.7 billion worth of passive fund inflows for those three companies, according to an analysis by Morgan Stanley. Of that, $1.9 billion will go to Alibaba, $1.3 billion to Meituan and $0.5 billion to Xiaomi, the investment house said. As of April 30 this year, total assets under management in those ETFs linked to the Hang Seng were worth $18.6 billion, according to Morgan Stanley. The Hang Seng index currently tracks a list of 50 stocks. The index is currently tilted toward financial services companies, which have an overall allocation of 47.8%, but that inclusion of other stocks would help the Hang Seng be "more balanced" in terms of sectors, Morgan Stanley said. "We expect bigger representation of internet/technology companies in the index to be long-term positive for Hong Kong equity market to attract more investors and capital," the investment bank said in a Monday report. The new changes will be implemented from August, the Hang Seng index provider said in a statement. After the new inclusion kicks in, Morgan Stanley expects the share of financials to go down to 41.7%, with communication services and consumer stocks forming the rest.
Singapore minister says 5G rollout still on track despite coronavirus challenges - CNBC
Minister S. Iswaran told reporters at a briefing that 5G is an important investment in Singapore's digital infrastructure for the future.
An illuminated 5G sign hangs behind a weave of electronic cables on the opening day of the MWC Barcelona in Barcelona, Spain, on Monday, Feb. 25, 2019. Singapore remains on track to roll out nationwide 5G services by 2025 despite the current economic uncertainties posed by the coronavirus pandemic, the country's communications and information minister S. Iswaran said. 5G refers to the fifth generation of high-speed mobile internet that aims to provide faster data speeds and more bandwidth to carry growing levels of web traffic. The country's telecommunication industry regulator, Infocomm Media Development Authority (IMDA), on Wednesday announced the two provisional winners who will build Singapore's nationwide 5G networks: Singapore Telecommunications and a joint venture between telcos Starhub and M1. The final awards will be given by June after the telcos complete the regulatory process in May. Iswaran told reporters at a briefing that 5G is an important investment in Singapore's digital infrastructure for the future. He explained the city-state is on track toward achieving nationwide 5G coverage by 2025 and be able to deploy the full breadth of services made possible with the new technology. 5G is for the 'long haul' To be clear, utilizing the full potential of 5G requires building what is known as standalone networks: These are infrastructure designed using 5G-specific technologies. Though the standalone networks are more efficient compared to many of the initial 5G networks that are being rolled out, they are also very expensive to build. Many of the current 5G networks are built by upgrading existing 4G infrastructure. Singapore's economy is facing a recession this year due to the Covid-19 crisis and the central bank this week said there's "significant uncertainty" over the depth and duration of the contraction. Our focus has been on overall network resilience and security, and ensuring vendor diversity. "Clearly, it's going to be a very challenging year economically," Iswaran said in response to CNBC's question about whether the government is planning any financial help for the telcos that are rolling out 5G and help them weather through the current crisis. "But the investment in 5G infrastructure is not something that's for the short term." "We're talking about a license for 15 years, so it's not about today, or tomorrow, or even next year, it's about the long haul," Iswaran said. "This investment commitment by the telcos who are recipients of this license is an indication of their confidence in the long term of the economy." "This is something not new to the telco industry, they make investments for the long haul and I think they would've factored all this into account," he added. At least $39 million When asked about how much Singapore will cumulatively invest into 5G, Iswaran told CNBC it would be up to the telcos to share what they've prepared in terms of their commitments. "But I would say that if you just take a reference from what has been announced or is in the public domain, based on different markets, it would not be wrong to conclude that the cumulative investments will run into billions of dollars," he said. Last year IMDA said telcos would have to pay more than 55 million Singapore dollars (almost $39 million) for one lot of the scarce 5G airwaves. The telcos would also have to build other 5G-related infrastructure including base stations to provide islandwide coverage. A man with a protective mask on taking a walk at Marina Bay Sands in Singapore's central business district seen in the background on April 1, 2020. Starhub and M1 declined to reveal how much they would invest or if they anticipate any delays in the rollout of 5G due to the virus outbreak, saying they can only share more details after the full license is awarded. Singtel did not immediately respond to CNBC's questions but pointed to a media statement from Group CEO, Chua Sock Koong who said, "In view of COVID-19's impact on the economy, we see this as a significant investment in the future one that will create sustainable economic and social value as industries and business models transform, unlocking new careers and skills in the process." Starting in January 2021 IMDA said the winners will have to roll out 5G standalone networks from January 2021. They would also be required to provide 50% islandwide coverage by the end of 2022 and full coverage by the end of 2025. Mobile operators will be able to access those networks through wholesale arrangements. IMDA did not immediately respond to CNBC's request for comments on how it would regulate the industry to ensure its competitiveness. Additionally, telco companies and other mobile virtual network operators will be able to use the shorter range millimeter waves to sell 5G services to retail users. Singapore's fourth telco, TPG, which submitted a separate bid, was the only major player left out of the nationwide 5G deployment. When asked about the city-state's stance on Chinese telecommunication equipment maker Huawei, Iswaran said IMDA will look at the overall security and resilience of the networks the winners will build when giving out the final award. Huawei is one of the major names in the race to build 5G infrastructure. But the United States has accused the company of including security vulnerabilities in its hardware that could be used for espionage by Beijing. The U.S. has urged its allies to exclude Huawei from their 5G networks. For its part, Huawei has denied allegations that it colludes with Chinese intelligence. "Our focus has been on overall network resilience and security, and ensuring vendor diversity," Iswaran said. WATCH: What is 5G?
Japanese stocks jump as Bank of Japan enhances monetary policy easing; oil prices drop - CNBC
The Bank of Japan of Monday announced on Monday an enhancement of its monetary policy easing measures to combat the hit on Japan's economy as a result of the coronavirus pandemic.
Stocks in Asia Pacific rose on Monday, as the Bank of Japan announced its decision to enhance monetary policy easing. Japanese stocks led gains among the region's major markets, the Nikkei 225 rose 2.71% to close at 19,783.22 as shares of robot maker Fanuc soared 11.95% following the release of the firm's financial results for the year ended March 2020. The Topix index also advanced 1.83% to finish its trading day at 1,447.25. The Japanese central bank announced a series of measures on Monday to combat the hit on Japan's economy as a result of the coronavirus pandemic. These included the increase in purchases of commercial paper and corporate bonds and further active buying of Japanese government bonds and treasury discount bills. The BoJ also kept the short-term policy interest rate target at -0.1% as well as a pledge to keep 10-year Japanese government bond yields around 0%. Stephen Davies, CEO of Javelin Wealth Management, told CNBC's "Street Signs" on Monday that the Japanese central bank's moves were "very much parroting the line established" by the U.S. Federal Reserve, which itself has taken significant steps in an attempt to quell market fears. "The do-what-it-takes mantra is very firmly in place across the globe," Davies said. "That's definitely helped stabilize the fixed income markets over the course of the last month which is pretty positive, it remains to be seen what positive effects that will have on the broader economy." Mainland Chinese stocks were up on the day, with the Shanghai composite rising 0.25% to about 2,815.49 while the Shenzhen composite fractionally higher at approximately 1,738.05. Hong Kong's Hang Seng index also jumped about 1.9%, as of its final hour of trading. The moves on the mainland came on the back of an earlier data release which showed industrial profits in China plummeting 34.9%, according to the country's Bureau of Statistics. Economic data from China, which was heavily impacted by the coronavirus, have been watched for signs of recovery as the country returned to production following an extended lockdown period earlier in the year. Over in South Korea, the Kospi added 1.79% to close at 1,922.77. Australia's S&P/ASX 200 also rose 1.5% to end its trading day at 5,321.40. Overall, the MSCI Asia ex-Japan index advanced 1.81%. Oil prices were also watched following recent volatility as concerns rose over weak demand as a result of the economic hit from the global coronavirus outbreak. In the afternoon of Asian hours on Monday, as international benchmark Brent crude futures fell 5.27% to $20.31 per barrel. U.S. crude futures declined 13.93% to $14.58 per barrel. "Unless there is a V-shaped economic recovery in the second half of this year, something we are not inclined to forecast, oil prices are likely to remain low for a considerable period," Taimur Baig, chief economist at Singapore's DBS Bank, wrote in a Monday note. "That will to be of limited comfort for Asian economies, as their outlook is dependent on global demand." The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.872 after an earlier high of 100.319. The Japanese yen traded at 107.15 per dollar after touching an earlier low of 107.62. The Australian dollar changed hands at $0.6459 after seeing levels below $0.63 last week.