Accommodation And Transport Costs Keep Inflation At 5%
Singapore’s consumer price index (CPI), a measure of price changes in a fixed basket of consumption goods and services commonly purchased by the households over time, moderated to 5 percent in May. This compared with the 5.1 percent market forecast and April’s 5.4 percent. While accommodation and car prices remain the main contributors to the headline inflation, slower accommodation cost inflation coupled with slower oil-related inflation helped offset an acceleration in car prices. MAS (Monetary Authority of Singapore) core inflation, which excludes accommodation and private road transport costs, was flat at 2.7 percent in May as lower inflation of oil-related items was erased by slightly stronger services and food inflation. Expecting the CPI to ease gradually in the second half of the year, the MAS and the Ministry of Trade and Industry (MTI) stuck to their forecasts of 3.5 to 4.5 percent headline inflation and 2.5 to 3 percent core inflation for the full year.
Significance: While the risks are now shifting away from inflation towards growth, most economists think the likelihood that the MAS will ease policy in October remains low.
Hyflux Among Prequalified Groups To Bid For Oman Water Project
Water solutions provider Hyflux is among the seven prequalified groups to bid for a major independent water project (IWP) at Ghubrah in Oman. The desalination project is expected to cost around US$350 million to US$400 million. Oman’s Daily Observer said the seven prequalified groups have set up consortiums and partnerships with investors and engineering contractors ahead of the 9 July deadline for bid submission. It is said that Hyflux has partnered Mitsui Corporation and Al Tahir Group. Unlike most desalination plants which are typically co-located with power generation capacity, the new Ghubrah IWP will be supplied with electricity from the grid, other reports said. The project will be constructed within the complex of the existing Al Ghubrah Power Generation and Water Desalination Plant in Muscat Governorate. This could explain why Sembcorp Utilities, which is largely a power player, did not make the IWP prequalification. Hyflux, which was coincidentally a sub-contractor for the Salalah independent water and power project in helping to build the desalination portion of the project, is itself starting to get into the power game. It is building an integrated 411-megawatt plant to power the new 70 million gallons per day Tuaspring desalination facility it is developing in Singapore.
Significance: The development may turn out to be a positive catalyst for Hyflux, which has been battling dampened investor appetite after 1Q12 results came in under expectations and the Tuaspring capital expenditure guidance was raised to $1.05 billion from $890 million. Still, investors would need to see the crystallisation of the contract.
OCBC Sets Aside $500m For A Fourth Round Of Share Buyback
Oversea-Chinese Banking Corporation is setting aside another $500 million for on-market purchases of its ordinary shares, following the approval from shareholders at its extraordinary general meeting held on 25 April 2012. Similar to its previous buyback programmes, OCBC intends to execute the buybacks in a controlled and orderly manner over a reasonable period of time to minimise undue movement in OCBC’s share price. The programme will be OCBC’s fourth $500 million share buyback programme. Its third programme, announced on 31 May 2006 and which commenced on 5 June 2006, is close to completion, with approximately $489 million utilised and 64 million shares purchased as at 22 June 2012. New share repurchases under the fourth programme will commence when the third programme is completed. OCBC plans to hold the shares re-purchased as treasury shares to meet delivery obligations under its employee share schemes.
Significance: The move takes the bank’s spending on this part of its capital management scheme to a total of $2 billion and may act as a sentiment booster against expected market weakness.
