Singapore Offers Warning Global Turnaround Still Distant

City-state forecasts its economy will contract 6% to 9% in 2009, moves to weaken currency.

Sandra Fickweil

04-14-2009

02:30

Although Goldman Sachs has reported better earnings than expected, Singapore predicted that the global economy might have a ways to go till a recovery took hold when they reported a record contraction in the first-quarter GDP and predicted a massive decline for the full year due to the steep downturn in trade.

After the central bank devaluated the currency, the Straits Times Index of Singapore lost 0.7%, to 1,863.75. Furthermore, the Ministry of Trade and Industry said: "while there are tentative signs of some stabilization in the housing, financial and manufacturing sectors in the U.S., they do not point to a clear turnaround in economic activity”.

Just as in other countries, the Monetary Authority of Singapore started to waken the Dollar and readjusted the secret policy band at the existing level of its trade-weighted index in order to strengthen the economy. As a result, the Singapore dollar rose on Tuesday up to 1.4999 to the dollar, from 1.5146 the day before.

After Goldman Sachs reported their better earnings, banking stocks in Japan rose a lot—especially auto stocks. At the same time however Japan's Nikkei average fell 0.9% to 8,845.23 because automakers slid on increasing worries about the implications of a possible bankruptcy for GM bankruptcy. The Japanese currency increased to 99.77 to the dollar, from 100.10 the day before.

Also in China the Seng Index rose up 3.1%, to 15,368.56, and the S&P/ASX 200 in Australia increased 2.6%, to 3,765.30.

In this article one can see, that step by step the economy is getting a little better. It is very interesting, how fast economy can change. After for example Goldman Sachs reported better earnings, suddenly this announcement had its impact on global markets. I think it is always amazing how one single opinion, report or event can change so much. Actually nothing changed, however someone reported a positive opinion or prediction, everyone believes it, and stock markets rise. However, it is a interplay between many factors. As many governments acted the last couples of months and spent money to boost economy, these actions also have its impacts on global markets.

http://www.forbes.com/2009/04/14/briefing-asia-midday-markets-equity-singapore.html