Reports » Singapore
Singapore stock market and companies daily report (Asiatravel, Chemoil Energy) (October 10, 2012)
Softer Inflation Bias Supports Monetary Easing
The Monetary Authority of Singapore is widely expected to implement monetary easing policy slightly this Friday to stimulate the economy as growth looks set to weaken further. However, if there is a reduction in the Singapore’s dollar pace of appreciation, this might not be aimed primarily at boosting export demand as it sometimes suggested. Rather, Singapore’s exchange rate policy, as articulated by the government over the years, is inflation-focused. The government has previously stressed that is does not wield the exchange rate to make Singapore’s exports cheaper for growth’s sake. Instead, the government has chosen to enhance Singapore’s competitiveness via other means, such as rental rebates, utility charges and tax rates. Also frequently raised is the fact that Singapore’s economy has a high import content, which makes it unclear whether a weaker Singapore dollar helps exports as producers may face higher costs due to the high import content of their export.
Significance: The implementation of monetary easing to expedite growth this Friday seems more than certain as the local economy grapples with a looming “technical” recession. However, notably that this expansionary monetary policy is justified on the basis of low inflation that usually tends to accompany it, which is also consistent with the government’s stance with monetary policy.
Asiatravel Expands Into B2B Segment Through New Platform
Online business and leisure travel specialist Asiatravel.com launched its business-to-business (B2B) platform TAcentre.com yesterday. The online wholesale system enables travel agencies to make bookings for flights, hotels and tour and attraction packages in one go. Agents will also be able to check on availability and get instant confirmation of their bookings. The move represents a significant shift in its clientele, as Asiatravel has until now focused on consumers. Boh Tuang Poh, chief executive officer and executive chairman said of this expansion of the business’s client base: “Although the online reservation of air tickets and accommodation is fairly developed in the online channel, the booking of travel packages, which we estimate to be at least 50 percent of all travel booking, is still being made via offline travel agencies.”
Significance: The launch of a new B2B platform will diversify Asiatravel’s revenue stream and allow it to tap on the offline travel agencies business which it has an optimistic view, despite being in an industry that has seen radical consumer behaviour changes, as consumers sway towards online reservations.
Chemoil Offloads Helios Terminal For US$285m
Marine fuel supplier, Chemoil Energy, now controlled by Swiss commodity giant Glencore, is selling of its Helios Terminal on Jurong Island for US$285 million to Germany’s Oiltanking, which also operates oil storage in Singapore’s oil hub. The move, which sent Chemoil’s shares soaring by more than a fifth yesterday, comes barely eight months after Glencore bought out Japanese trader Itochu Group, in early February 2012 for US$174 million, raising its stake in Chemoil from 51.5 percent to a controlling 89 percent. Spelling out its rationale for the Helios sale, Chemoil yesterday said: “structural changes that have occurred in the marine fuels market will in future favour an asset-light business model that is more able to respond quickly to volatility in volumes and margins.” Chemoil will realise an estimated net gain of around $152.3 million from the proposed sale, and intends to use part of the sale proceeds for its expanding fuel supply business and to make investments.
Significance: The marine bunker business in Singapore is a tough business and Chemoil could be exiting Helios because of that, coupled with oil prices largely in backwardation since early this year, this has not favoured oil storage companies.
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