Singaporean spending habits revealed: Paying more but buying less
The latest economic statistics say this about you and your spending: you're paying more but buying less. And if you're like most Singaporeans, you're spending more on things that make you feel good about yourself, and less on things you really need.
Now, I'm not a fan of using economic statistics as investment guides but I have to say this morning's mundane-sounding release of Monthly Retail Sales and Catering Trade Indices for Dec 2007 was full of juicy news. This pulse-check of local consumer sentiment showed two things: first, just how much prices have risen (surprise, surprise), and second just how much this has impacted on spending and therefore potentially on the sales and profits of local companies. It's also exposed what Singaporeans will continue to buy, no matter what.
Here is the evidence:
If there's one silver lining it's that excluding car sales, total expenditure was up 3.9% if prices had remained steady. It seems Singaporeans are buying fewer cars (probably a good thing), but more clothes, shoes, phones, computers and fast food.
Hmm… now what does that say about the priorities of our society?!
Mark Laudi, who's watching the budget being released at time of writing, with a keen eye on how inflation will be mitigated through non-inflationary actions.
To comment on this blog, go to the Investor Central blog.
Now, I'm not a fan of using economic statistics as investment guides but I have to say this morning's mundane-sounding release of Monthly Retail Sales and Catering Trade Indices for Dec 2007 was full of juicy news. This pulse-check of local consumer sentiment showed two things: first, just how much prices have risen (surprise, surprise), and second just how much this has impacted on spending and therefore potentially on the sales and profits of local companies. It's also exposed what Singaporeans will continue to buy, no matter what.
Here is the evidence:
Total retail sales and catering: up 2.5%, but if prices had remained steady they would have fallen 2.6%.In short, inflation is crimping demand (=we're paying more but buying less as a result), and that's not good for local companies selling in the local market. In addition, these stores may well be absorbing some price increases from their suppliers. That's not good for profit margins.
Provision & sundry shops: up 5.3%, but on a same-price basis down 1.4%
Food & beverages: flat, but down 5.3% if prices had remained steady
Petrol stations: up 33.9%, but only up 1.3% if prices were steady. The oil price obviously played a big factor here
Watches & Jewellery: up 6.4% but down 3.8% if prices were steady. The rising price of gold and strengthening Singapore Dollar may have played a role
If there's one silver lining it's that excluding car sales, total expenditure was up 3.9% if prices had remained steady. It seems Singaporeans are buying fewer cars (probably a good thing), but more clothes, shoes, phones, computers and fast food.
Hmm… now what does that say about the priorities of our society?!
Mark Laudi, who's watching the budget being released at time of writing, with a keen eye on how inflation will be mitigated through non-inflationary actions.
To comment on this blog, go to the Investor Central blog.
Labels: inflation, Monthly Retail Sales and Catering Trade Indices, Singapore Economy
GDP figures: the reality check
There has to be a more accurate way for investors to measure the strength of the economy than by the GDP figures - the percentage increase in the value of goods and services sold last quarter. It's not that the numbers are wrong. Quite the contrary - a lot of effort goes into researching and publishing them. But most investors have no idea what to do with the GDP numbers, to the extent that they generally have very little impact on the stock market.
The Ministry of Trade & Industry published a 13-page release announcing the downgrade of the economic outlook to 4%-6% growth, from 4.5%-6.5% earlier. The document used phrases like:
If the US slips into a more severe recession … the effects on Singapore will … be stronger, particularly in the sentiment-sensitive and external oriented sectors like electronics, wholesale trade and financial services.
In theory, the worrying outlook should have sparked a fall in the Straits Times Index. Instead, the market climbed 86 points, with the value of shares traded exceeding yesterday's. Perhaps it was because investors read the rest of the document which showed strong growth in some areas like construction.
But I doubt it. First, because the only really interesting part is the forward-looking statement, not the review of what happened. That's in the past. We invest for the future. Second, because of the peculiar way the numbers are dissected. Not only do we get to see how the economy fared in Q4 2007 compared to Q4 2006. We're also presented with a baffling annualised quarter-on-quarter number, whose usefulness is perhaps the most questionable: Considering how volatile quarterly growth is, what sense is there in extrapolate a full-year number by saying "assuming every quarter in the past year was like this quarter…". Because, invariably, it never is.
But back to the stockmarket. What are you to do with these GDP figures?
In short, nothing. Your time is better spent looking at individual companies:
Cashflow. Is the companies you're investing in generating cash? Simple question, simply answered. In a sense, the GDP numbers already measure this, but not on an investible company level.
Dividends. How much of the cashflow is finding its way into your pocket? Again, simple question, simply answered.
Until the SGX launches a futures contract with GDP growth as the underlying, this micro view of the world serves you far better than macro econo-babble.
Mark Laudi, forever indebted to my good friend Bernard Lo for inventing that word, and to all the economists who make it so entertaining.
To comment on this blog, go to the Investor Central blog.
The Ministry of Trade & Industry published a 13-page release announcing the downgrade of the economic outlook to 4%-6% growth, from 4.5%-6.5% earlier. The document used phrases like:
If the US slips into a more severe recession … the effects on Singapore will … be stronger, particularly in the sentiment-sensitive and external oriented sectors like electronics, wholesale trade and financial services.
In theory, the worrying outlook should have sparked a fall in the Straits Times Index. Instead, the market climbed 86 points, with the value of shares traded exceeding yesterday's. Perhaps it was because investors read the rest of the document which showed strong growth in some areas like construction.
But I doubt it. First, because the only really interesting part is the forward-looking statement, not the review of what happened. That's in the past. We invest for the future. Second, because of the peculiar way the numbers are dissected. Not only do we get to see how the economy fared in Q4 2007 compared to Q4 2006. We're also presented with a baffling annualised quarter-on-quarter number, whose usefulness is perhaps the most questionable: Considering how volatile quarterly growth is, what sense is there in extrapolate a full-year number by saying "assuming every quarter in the past year was like this quarter…". Because, invariably, it never is.
But back to the stockmarket. What are you to do with these GDP figures?
In short, nothing. Your time is better spent looking at individual companies:
Cashflow. Is the companies you're investing in generating cash? Simple question, simply answered. In a sense, the GDP numbers already measure this, but not on an investible company level.
Dividends. How much of the cashflow is finding its way into your pocket? Again, simple question, simply answered.
Until the SGX launches a futures contract with GDP growth as the underlying, this micro view of the world serves you far better than macro econo-babble.
Mark Laudi, forever indebted to my good friend Bernard Lo for inventing that word, and to all the economists who make it so entertaining.
To comment on this blog, go to the Investor Central blog.
Labels: gdp, Singapore Economy
Economy; where is it going?
Singapore has and is currently experiencing a boom in more than one of the current industries.
There's the oil and gas sector, the construction sector and of course the highly rated property sector.
Its all fun and games when there's money to be made and opportunities galore.
The current positive business sentiment has been going strong for.....hmmm slightly more than a year....
Sure! There were talks about the property bubble bursting and the oil and gas sector tapering down.
But up till now, it seems to be mostly talk and speculations.
Up till now....
According to the latest BT-UniSIM Business Climate Survey in the Business Times article today by Oh Boon Ping, the survey yielded that business profts sentiments have weakened slightly in the second quarter of 2007.
The survey is now in its twelfth year, and polls 125 local and foreign firms form a range of industries, with regards to their earnings numbers such as sales, profits, new orders and business prospects.
Here are some of the results:
The percentage of firms which reported more than 10% increase in its profits have dropped from 38% in Q1 2007 to 29% in Q2 2007.
And slightly more companies are expecting things to turn for the worse for the remaining year.
Before you become a worry pot, Chow Kit Boey the survey director says that the numbers 'are still positive and healthy' but it could also indicate that the Singapore Economy 'is close to the peak of the business cycle and an economic slowdown looks imminent'.
However in her statment, she added that she is confident the slowdown would blow over by next year.
Conclusion of the survey?
That the numbers indicate that the economy is still growing but at slower rates, and that the current expansion phase is taking longer than the average past cycles.
Well, that's not for certain that the economy would stay up, but its a worthwhile thought.
But considering that anything that goes but must come down. Even though studies show that the economy is not likely to spiral downwards anytime soon, we can't escape the fact that the day is drawing near!
Currently, manufacturing was the best performer in sales and the contruction sector has held the best business prospects for six quarters straight.
If you're asking me, that day is certainly closer than we all expect.
But considering that we are in the midst of a construction boom, we still have that time until all the construction projects in Singapore have been completed.
We would love to hear your views on whether the Singapore market is indeed heading south pretty soon, or if you agree with the survey that its just a minor slowdown that will only last till next year.
Nurwidya Abdul
ArchivesThere's the oil and gas sector, the construction sector and of course the highly rated property sector.
Its all fun and games when there's money to be made and opportunities galore.
The current positive business sentiment has been going strong for.....hmmm slightly more than a year....
Sure! There were talks about the property bubble bursting and the oil and gas sector tapering down.
But up till now, it seems to be mostly talk and speculations.
Up till now....
According to the latest BT-UniSIM Business Climate Survey in the Business Times article today by Oh Boon Ping, the survey yielded that business profts sentiments have weakened slightly in the second quarter of 2007.
The survey is now in its twelfth year, and polls 125 local and foreign firms form a range of industries, with regards to their earnings numbers such as sales, profits, new orders and business prospects.
Here are some of the results:
The percentage of firms which reported more than 10% increase in its profits have dropped from 38% in Q1 2007 to 29% in Q2 2007.
And slightly more companies are expecting things to turn for the worse for the remaining year.
Before you become a worry pot, Chow Kit Boey the survey director says that the numbers 'are still positive and healthy' but it could also indicate that the Singapore Economy 'is close to the peak of the business cycle and an economic slowdown looks imminent'.
However in her statment, she added that she is confident the slowdown would blow over by next year.
Conclusion of the survey?
That the numbers indicate that the economy is still growing but at slower rates, and that the current expansion phase is taking longer than the average past cycles.
Well, that's not for certain that the economy would stay up, but its a worthwhile thought.
But considering that anything that goes but must come down. Even though studies show that the economy is not likely to spiral downwards anytime soon, we can't escape the fact that the day is drawing near!
Currently, manufacturing was the best performer in sales and the contruction sector has held the best business prospects for six quarters straight.
If you're asking me, that day is certainly closer than we all expect.
But considering that we are in the midst of a construction boom, we still have that time until all the construction projects in Singapore have been completed.
We would love to hear your views on whether the Singapore market is indeed heading south pretty soon, or if you agree with the survey that its just a minor slowdown that will only last till next year.
Nurwidya Abdul
Labels: BT-UniSIM Business Climate Survey, economy slow down, profits, Singapore Economy
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