Price Pressures Remain In 2013 Despite November Inflation At 2-Year Low Of 3.6%
Although inflation for November have eased to a two-year low of 3.6 percent from 4 percent in October as housing and transportation costs moderated in year-on-year terms, it is still significantly above the historical inflation rate of about 2 percent and economists expect price pressures to remain elevated next year. The Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) said in a statement accompanying the consumer price index (CPI) release that inflation will remain elevated in the final quarter of this year and the first quarter of the next, as rentals and car prices continue to contribute significantly to the CPI’s gains. Nonetheless, this marked a second straight month of easing and was better than the 3.8 percent rise in CPI economists polled by Bloomberg had been expecting. Despite the continued weakness in the global economy that could see global food prices soften, it is however, likely to face further upward pressures in the next few months due to weather-related supply disruptions instead, and coupled with tight labour market that will push up wages, which would be passed on to consumers.
Significance: The official forecast for headline inflation remains at “slightly above 4.5 percent” for 2012 and 3.5 to 4.5 percent for 2013. MAS core inflation is expected to be broadly stable and average 2.5 to 3 percent in 2013, after coming in at around 2.5 percent this year.
Capitaland’s Unit Continues Expansion In China
The Ascott Limited, a wholly-owned serviced residence business unit of Capitaland, has been awarded contracts to manage three more properties with more than 500 apartment units in China. The 90-unit Ascott Heng Shan Shanghai, 250-unit Ascott Emerald City Suzhou and 194-unit Somerset Baitang Suzhou are scheduled to open in 2014, 2015 and 2017 respectively. The contract wins further reinforce Ascott’s leadership position as the largest international serviced residence owner-operator in China, with over 8,000 apartment units in 46 properties across 17 cities. It will also deepen its presence in the cities and help achieve economies of scale in its operations.
Significance: The Ascott is expected to ride on the strong foreign direct investment and growth in tourism and domestic travel, which are driving the demand for quality accommodation in China, and especially so in Shanghai as it reshapes itself as a top tourist destination with Shanghai Disney Resort.
SingPost Acquires General Storage Company For $37m
Singapore Post (SingPost) is acquiring General Storage Company from Asia Pacific Storage Company for $37 million as part of its strategy to grow its self-storage business, Self Storage Solutions (S3). General Storage operates a self-storage business under the Lock+Store brand and has facilities in Tanjong Pagar and Chai Chee. The acquisition is part of SingPost’s transformation initiatives, which CEO Wolfgang Baier expects to offer synergies with its existing business in logistics and e-commerce as well as to serve its customers and small-and-medium enterprises better. In its filing to the Singapore Exchange, SingPost said that the $37 million will be wholly satisfied in cash and funded from its internal resources.
Significance: SingPost’s self-storage business will be able to leverage on General Storage, which is an experienced and leading operator in this industry. This strengthened expertise in self-storage solutions can also potentially benefit the company’s regional partnerships.