Taking the Pulse of Singapore’s Economy

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The latest data from the Singapore government shows that the economy is still in contraction mode. The first quarter GDP shrank by 10.1% when compared to the same quarter last year.

Seasonally adjusted unemployment rate was  just 3.3%. This figure is artificially kept low by the government due to the many incentives offered to private employers to keep workers on payroll and offer them training program. As the 60% of the GDP is related to exports, Singapore’s economy  is severely affected in the current recession. Global trade has slowed and especially exports from Asia to the West has fallen significantly.

The following are a few observations:

Singapore Port – Total Traffic  in  May 39, 318 compared to 40,207.5 ( in 000s tons) in April. Last year in May it was 45,893 tons. Container traffic tonnage remained almost the same in May from previous month but oil shipments were down slightly.

Total exports in first quarter was down 26%  relative to same period last year.

Despite the fall in global trade, Singapore will weather this recession better due to sound policies implemented by the city state. Singapore’s banks were not heavily exposed to the subprime mess and balance sheets remain strong. The country does not have the foreclosure problem since default rates are very low. In addition savings rates are high and the real estate market is stable.

There are a couple of Singapore banks that trade in the OTC  markets. They are United Overseas Bank (OTC: UOVEY) and DBS Holdings (OTC: DBSDY). Both pay over 4% dividends. A simple and easier way to invest in Singapore is the iShares MSCI Singapore Index Fund (EWS).

Seven Steel Company ADRs traded in NYSE

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Today the Metals Service Center Institute(MSCI) based in Illinois announced that at current shipping levels US steel inventories represent a 2.9 months supply.

The news release stated:

“Steel shipments from U.S. metals centers totaled 2.25 million tons in May, a reduction of 48.5% from May 2008 shipments. Steel shipments for the first five months of the year, at 12.3 million tons, are down 44.3% compared with last year’s period. U.S. steel inventories at metals service centers totaled 6.46 million tons at the end of May, 38.3% lower than year-ago inventories. At current shipping rates, those stocks represented a 2.9-month supply.

Canadian metals service centers shipped 375,500 tons of steel products during May, or 40.3% lower volume than a year ago. Year-to-date shipments in Canada total 2.06 million tons, down 35.6%. End-of-month stockpiles of 1.12 million tons of steel products were 30.3% lower than last year and, at current shipping rates, are equal to a 3.0-month supply.”

Worldwide commodity prices have rebounded sharply in recent weeks.Steel makers’ stocks have been hot as investors loaded up on them. However commodity prices are extremely volatile and investment in this sector is not for the faint-hearted. With that in mind, lets take a quick review of the seven steel companies that trade in the New York Stock Exchange.

1.Luxembourg-based ArcelorMittal (MT) is a global steel producer with operations in 20 countries.In 2008, total revenue was $110B. MT is a high beta stock with a beta of 2.3. The current yield is 2.29%.

2.Companhia Siderurgica Nacional(SID) is a Brazil-based company that produces carbon steel and other steel products. SID has a profit margin of 31% and last year’s revenue was $1.8B.Current dividend yield is 3.46%. From a March of low nearly $8 the stock has rebounded to close at $22.73 today.

3.Gerdau(GGB) is another Brazilian steel maker engaged in the production of long, rolled steel. Gerdau operates in 14 countries mainly in Latin America.Annual earnings growth rate is 47%.

4.Russia-based Mechel OAO(MTL) is a vertically integrated mining and steel company with factories in Russia,Romania and Lithuania. Mechel also owns and operates two trade ports, a railway and an energy company.Beta is 2.6 and the stock has fallen 83% in the last 52 weeks.

5.Posco(PKX) is one of the world’s largest steel makers based in Korea. Posco does not pay regular dividends. The annual earnings growth rate is 30%. After hitting $40 in March, the stock has more than doubled in the recent rally.

6.Tenaris (TS) is engaged in steel pipe manufacturing and distributing operations. The dividend yield is 1.79% and the beta is 1.5.

7.Argentina-based Ternium (TX) has a beta of 2.5 and a market cap of $3.4B.Average annual revenue growth rate is 20%.TX more than tripled from lows reached in March.

Daily Wisdom: BRIC Revolution? Edition

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The conventional wisdom of academic investment theorists is taking a terrible beating in the post-bubble era. Rightly so, in the case of the efficient market theory, which now gives rise to growing skepticism.The flawed wisdom of crowds

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In depth analysis you won’t find anywhere else on what it takes to compete in one of the most competitive markets in the world.Tackling Taiwan’s Mobile Market

Three explanations have been suggested for the moderation in real GDP and inflation that has occurred in industrialized countries since the 1980s: good luck, better monetary policy, and structural changes in the economy.The Great Moderation: Good Luck, Good Policy, or Less Oil Dependence?

Russia’s choice of Yekaterinburg, scene of the execution of Tsar Nicholas II and his family, for the summit of Brazil, Russia, India and China may be telling. This week’s gathering could prove to be a milestone in developing a new global economic order as the countries seek to move away from US-dollar dependence. BRIC group plans its own revolution

Daily Wisdom: China Bulls Edition

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Alan Greenspan dubbed as “a conundrum” the failure of bond yields to respond to his 2004-05 Federal Reserve monetary tightening. Yet there was no mystery then, nor is there now, in the reverse situation. No conundrum, merely market forces working against the efficacy of Fed chairman Ben Bernanke’s helicopter money. No conundrum, again

The fund house is relying on China to emerge from recession sooner and stronger than its global peers.Mirae remains bullish on China

Do recently rising oil prices signal a resurgence of economic growth? Supply, demand, and the price of oil

Brazil and Mexico aim to ramp up their influence on the global financial scene by lending to the International Monetary Fund, with the pledges arriving as leaders from the world’s largest emerging markets gather in Russia on Tuesday.Mexico and Brazil bid for clout

The remote, rebellious western provinces of Tibet and Xinjiang are China’s poorest, but they hold vast natural wealth which Beijing is determined to control. On a 3,000-mile trek I saw how far the government is bending the whole central Asian region to its will.China’s final frontier