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Source:
www.mas.gov.sg
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Opening Remarks By Mr Heng Swee Keat, Managing
Director, at MAS' Annual Report 2005/2006 Press Conference, 20
July 2006 |
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An Excerpt |
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The Singapore economy grew by a robust 6.4%
last year. |
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Looking ahead, the factors that underpinned
the growth of the Singapore economy in 2005 will continue to support the
expansion this year. |
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Thus far, the economy has expanded by an
estimated 9% (year-on-year) in the first half of this year, based on the
advance estimates released last week. |
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Although global IT demand growth may be
capped somewhat by potentially slower growth in the US in H2 2006, the
prospects for continued economic growth in the quarters ahead appear
intact. |
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Barring any unexpected shocks in the
external environment including an escalation in geopolitical risks in
the second half of this year, GDP growth for the year as a whole is
likely to be in the range of 5 to 7%. |
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Although the pass-through of high oil prices
on both energy-related consumer items and business operating costs are
expected to strengthen, our overall domestic inflationary pressures
should be fairly well contained. |
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Taking into account the growth and inflation
prospects, MAS' assessment is that our current policy stance of a modest
and gradual appreciation of the S$NEER, with no re-centering of the
band, nor any change to its slope or width, remains appropriate. We will
continue to monitor and assess external and domestic economic
conditions. |
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Financial Markets |
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In June, we published our semi-annual
assessment of the stability of the financial system. |
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Not surprisingly, given the good
macroeconomic performance of the economy, our assessment was that
the financial system remains sound and robust and is in a strong
position to weather the risks in the external environment. |
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In particular, the banking, corporate
and household sectors are doing well and their balance sheets have
strengthened over the past year. |
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Rising wealth in Asia and the focus on
Asian growth prospects have resulted in more allocation of assets
to the region by investors. This, coupled with high regulatory
standards that are responsive to investors' demand, have created a
high level of trust and confidence in Singapore's financial
sector. |
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Our financial services sector
continues to perform well, growing at 6.5% in 2005. It is expected
to record further expansion this year. |
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Offshore-related activities have
generally performed well over the first half of 2006, and are
expected to be a key growth catalyst in the months ahead. |
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Although domestic equity prices were
also hit by the worldwide sell-off in May and June, this followed
a period of strong run-up in asset prices and did not reflect a
shift in underlying fundamentals. |
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The outlook for the domestic fund
management industry is positive and banking lending activities are
expected to remain firm this year. |
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As announced last week, at end-2005,
total assets managed by Singapore-based financial institutions was
reported to be S$720.4 billion, a 26% growth over S$572.6 billion
reported at end-2004. |
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The corporate debt market saw
continued positive developments. |
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While SGD corporate debt issuance
slowed slightly as a result of the interest rate environment, the
market saw increased diversity in issuer profile in the past year,
with first-time issuance from a number of Middle Eastern and Latin
American entities. Reflecting the sophistication of investors,
structured debt continued to account for a significant proportion
of SGD debt issuance. |
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Issuance of commercial mortgage-backed
securities remained strong on the back of a healthy REITS market. |
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Local asset managers have also become
more active in Collateralised Debt Obligation (CDO) origination.
Last year, the market saw the issuance of a US$1 billion
asset-backed securities CDO. |
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This year, we expect a continued
strong pipeline of SGD debt issuance as SGD-swap spreads have
widened. |
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In the first quarter of this year, SGD
issuance reached $7.4 billion, almost twice the level a year
earlier. |
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With the growth in wealth management
and an increase in more sophisticated investors, we see growing
interests in alternative asset classes. |
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There has been a significant growth in
the demand for alternative investments such as hedge funds, real
estate and infrastructure investments and commodity derivatives... |
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To conclude, we remain focused on
promoting sustained non-inflationary economic growth, and a sound
and progressive financial sector. |
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Full Text of Speech |
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Source:
www.mas.gov.sg News 20 Jul
2006 |
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FrontPage Edition: Thu 20 July 2006
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