A Cautious Minister

Mr. Lim Hng Kiang, Singapore's Trade Minister, warned that the rebound in drugs and electronics output might falter, preventing a quick recovery from the country's deepest recession since Independence.

In an interview today, Mr Lim said demand for goods from US, Europe and Japan was still weak and any pick-up would be "bumpy". Whilst the economy expanded a whopping annualised 20.4% in 2Q09, compared to the previous 3 months, Mr Lim felt Singapore had to wait for a more general demand recovery to be on a sustained growth path. Mr. Lim did not expect a V-shaped recovery.

The service sector, for example, continued to languish and shrank for the third consecutive quarter. Tourism has slumped on the back of the global slowdown, as well as concerns over the H1N1 influenza. Fortunately, the employment situation appeared manageable and retrenchments in 2Q09 was not as high as in 1Q09. However, Singapore is still not "out of the woods" and the situation bears monitoring. As Mr. Gan Kim Yong, Manpower Minister puts it: " It remains uncertain whether companies can sustain hiring".

In the meantime, the local stock market seemed more positive than government officials. On the back of the more favorable US earning releases on Friday, the STI added a further 1.5% (as at 3.45pm) today. Sadly, I have long given up trying to explain the market... the articles and publications I read are not adrenalin-coated and therefore this 60% rally from the lows scares me.

My occupation as an applied psychologist (Trader), requires that I accept the view that "markets can choose to behave however they like". Often, traders have small ego and that is how we survive. Happy reading.