After Japan, and Hong Kong… Singapore falls into recession

Singapore became the third major Asia-Pacific economy to fall into recession after data released Friday showed the economy had contracted for two straight quarters.

The contraction, which followed a revised 5.3% fall in the second quarter from the first, means Singapore technically follows Japan and Hong Kong into recession.
(Market Watch)

Why should we care ? Because all these asian countries are… linked to Thailand. By trade and investments

Time to summarize… Here is the list of customers of Thailand’s exports. In billions THB. Monthly average, from january to september 2008. And in orange, countries that are already in recession (2 quarters negative growth), officially or quasi-officially….

Total amount (average per month) : 491,64 billions. Therefore USA is first customer with 11,2 % of the total, followed by Japan… (source Bank Of Thailand, table EC_XT_002)

listrec

Recession leads to lower demand. Lower demand leads to lower imports and lower investments.

It’s difficult to see how Thailand could escape the fallouts on its exports. And then the fallouts on its own GDP…

[ the first “others” on the excel sheet = all the other countries. But the second “others” = “Other Middle-East countries”. My mistake. I’m too lazy to redo the excel document. πŸ˜‰ ]

17 Responses to “After Japan, and Hong Kong… Singapore falls into recession”


  1. 1 chinesethai 22 November 2008 at 4:44 am

    It is not surprising to see Singapore among the first economies to fall into recession and fall quicker and deeper than its neighbouring economies. Singapore has no natural resources. Even fresh water is an import commodity. So opening the economy and promoting its banking industry, which relies heavily on human resources, are the only way out. In time of turmoil, recession is inevitable.

  2. 2 fall 22 November 2008 at 6:33 am

    Malaysian 28.47 billions?
    What the hell do we export to Malaysian that much?
    They just does not strike me as a major trading partner.
    (Singapore and Hong Kong are major port, that’s understandable).

  3. 3 thaichris 22 November 2008 at 6:34 am

    Don’t need to wat for the impact on Thailand. Here we go:

    Japanese camera-manufacturing giant Nikon yesterday laid off 1,500 of its subcontracting staff in Ayutthaya province after a slump in orders due to the global financial crisis.

    Nikon (Thailand) Co, whose manufacturing facilities are located in Rojana Industrial Estate in Ayutthaya, yesterday decided to terminate the employment of the workers because it has received far fewer orders from the United States, Japan and Canada. All the dismissed workers are under subcontracts and have worked with the company for less than a year, said Pongthai Musikapong, of the Labour Protection and Welfare Office in Ayutthaya. Company executives have promised severance pay for all the staff, he said.

    Nikon’s labour union chairman Prasit Sitidet said he would call on the Labour Ministry to immediately help find work for those who had lost their jobs. Several workers complained yesterday that they had not been informed in advance of the planned lay-offs. Some burst into tears because they had no idea how they would survive. The employees said if the economic situation worsens, subcontracting staff with many years of experience would be the next victims, to be followed by permanent staff.

    Nikon (Thailand) set up it first factory in Thailand in 1990. There are 8,000 permanent staff and 4,000 subcontracting staff at its four factories.

    Tosapol Wangsilabat, chairman of the Federation of Thai Industries (FTI) in Ayutthaya, said that by early next year more than 30,000 workers in the province are likely to be made redundant. He said that up to 100,000 workers could lose their jobs if the economy did not pick up.

    TC. You should start a littel statistic about ‘lay-off’s. As they are ‘subcontracted – employed less than 1 year’ they might never appear in any numbers.
    And it is not the political unrest in Thailand which causes the problems. It’s just global economy 1-on-1. Even Thailand might have the POTENTIAL to handle the crisis, the don’t have the GOVERNEMENT to do so. The GOVERNMENT and it’s supporting parties are only busy to amending the constitution (absolutally useless at this point in time as even the return of the banned polititians will not solve the economical crisis).

    Quastion to all – did you put enough aside to survive the economical winter?

  4. 4 dooda 22 November 2008 at 7:10 am

    Along with hong kong, japan, and US, Singapore is also a main source of FDI for Thailand. Looking quick at below chart, amongst top 5 this year i think.

    http://www.boi.go.th/english/download/statistics_foreign_investment/146/FINV0810.pdf

  5. 5 ThaiCrisis 22 November 2008 at 7:46 am

    Thanks for the link Dooda.

    Indeed, we shall not focus only on exports. Investments are the other side of the coin.

    A double whammy effect…

  6. 6 ThaiCrisis 22 November 2008 at 7:54 am

    Talking about Singapore…

    Temasek Holdings Pte, Singapore’s state-owned investment company, said its key managers will lead a companywide pay cut and that a global recession may extend beyond 2009.

    The firm, which oversees $130 billion, said senior management has volunteered to take a 15 percent to 25 percent pay cut. The key managers will provide almost 90 percent of the savings from the companywide cut, it said in an e-mailed response yesterday to a Bloomberg News query.

    (Bloomberg)

    Pay cut ? Things are really that bad ? ! πŸ˜‰
    Let’s remember that Temasek put huge amount of money into the “troubled” US bank Merrill Lynch last july… And before that (january), they invested in… Citigroup (6,88 billions USD) and UBS (9,75 billions) !
    Probably no their best investments… πŸ˜‰

  7. 7 chinesethai 22 November 2008 at 9:42 am

    ThaiCrisis:

    I have a question, which perhaps you may have some stats to answer to.

    Between Singapore’s Temasek and China’s CIC, who has taken the biggest hit from the crisis so far?

    Thanks!

  8. 8 ThaiCrisis 22 November 2008 at 10:05 am

    You’re talking about China Investment Corp, the so called “sovereign fund” of China ?

    I’ve got no idea. I guess : no winner. They are all taking hits now.
    πŸ˜‰

  9. 9 FDL 22 November 2008 at 4:21 pm

    The economic news we get daily TC keep getting grimmer and direr. Citigroup shares has dropped another 20%, to below $4/share, following the drop by nearly 90% during the past few weeks during the global crash (lots of sovereign funds including Singapore hold Citi shares). If Citi goes (it is almost gone), what would anyone think of the rest of US or Europe’s or Japan’s banks – – – most of them will probably be toast too because of their derivatives exposure (losses keep mounting because markets keep dropping . . . a moving target).

    Ominously: “The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions,” US Pres. Obama said just most recently.

    Underscore: “. . . we are facing an ECONOMIC CRISIS OF HISTORIC PROPORTIONS ”

    Does anyone in the Thai government understand the crisis that will hammer Thailand very very soon?

  10. 10 ThaiCrisis 22 November 2008 at 5:07 pm

    Indeed, it’s history in the making.

    More and more people start to understand this… But it took time ! πŸ˜‰

    If Obama is able to understand the gravity of the situation… his ideas to solve the situation are not convincing (so far). He’s a bailout fan. And check his latest plan : “President-elect Barack Obama promoted an economic plan Saturday he said would create 2.5 million jobs by rebuilding roads and bridges and modernizing schools while developing alternative energy sources and more efficient cars.”
    http://news.yahoo.com/s/ap/20081122/ap_on_go_pr_wh/obama_economy

    Jobs that come from “heaven” won’t solve the situation. It’s always the same shit they serve us : stimulus coming from public spending. Spend, spend, trillions, gazillons of dollars to build everything, anything… This is just “wind”. It’s not enough.

    The Japanese tried very hard in the 90s : they were famous for building “bridges to nowhere”. πŸ˜‰

    On Citigroup now, we could argue. Their situation is worse than other banks.

    Since the beginning, Citigroup is hidding the truth. They are expert of the “third level assets” and “off-book assets” !

    They have only one line of defense : “we are well capitalized” and “everything is fine”.

    It was funny at the beginning. Now it’s becoming insanely grotesque.

    http://globaleconomicanalysis.blogspot.com/2008/11/citigroup-under-siege-eyes-government.html

    Enough is enough. One day someone will write the story of the lies the banks (US and european) served to the public for months, even years.

    It’s a shame.

  11. 11 thaioutsidein 23 November 2008 at 4:31 am

    I got a couple of friends (interestingly one is Thai!) working at Temasek. Things are a bit stressful at their companies. Their equity portfolio value declined by over 40% since the crisis started. That is over $50B.

    The key part is not the bad bet they made at the big banks but their other core holdings like SingTel, SQ, etc.

  12. 12 ThaiCrisis 23 November 2008 at 4:52 am

    You mean that comes… on top of the losses Temasek already have with its stakes in Merril, Citigroup, UBS… ? πŸ™‚

    One of the biggest mistake they’ve made was Citigroup and USB, in december 2007 and january 2008.

    Applying regular analysis patterns, they saw a huge opportunity… and put the cash on the table. What an insane mistake. They were way too early. And we could even say that the best solution was not to wait : but scrap the whole idea of investing in those “banks”.

    In january Citigroup share was like 28 USD… 11 months later… 3.80…

    On the paper, the deal looked great : Temasek would received a 7 % annual dividend… But… will Citigroup pay ANY dividend AT ALL ? EVER ? And what would be the price of the conversion of the preferred shares ? The very own existence of Citigroup is at stake now…

    http://www.bloomberg.com/apps/news?pid=20601087&sid=anjGWhqi0PSE&refer=home

    I hear something in the back… “long term recovery”… “long term investment”…”growth potiental”….”huge opportunity”… Ah ah ah. πŸ˜‰

    Citigroup is in a difficult position. The last blow will be… a “bail out” from the US government…

  13. 13 Patiwat 23 November 2008 at 5:04 am

    I smell a Citibank – Goldman merger.

  14. 14 ThaiCrisis 23 November 2008 at 5:17 am

    Why not ? Merging 2 dead horses could eventually make a new one… I mean a new dead horse. πŸ˜‰ Just bigger.

  15. 15 ray 23 November 2008 at 9:19 am

    i would like to hear yr views on the thai banks. i dont think they have given out loans to people with sub par credit. the interest spread ( loan rates – deposit rates) is pretty high thus they make great profit. and in thailand i dont think they let people take out seconf or third mortgages like banks is europe and usa. i think once the political crisis is over the thai banks will be a good buy. but i am interested ot hear what do u guys think.

  16. 16 ThaiCrisis 23 November 2008 at 11:53 am

    On the paper, you’re right.
    Thai Banks were “burned” in 97… that made them more conservative. Certainly. Furthermore, they enjoy a well protected… environnement

    https://thaicrisis.wordpress.com/2008/11/15/competition-in-banking-sector-remains-weak/

    That’s always good for business… πŸ˜‰

    However, “pushing” credit cards to people with small wages is not really “conservative”.
    https://thaicrisis.wordpress.com/2008/09/23/chart-credit-cards-number-and-usage-until-july-2008/

    You speak about the “political crisis”… it’s undeniable. But quid of the… global financial and economic crisis ? πŸ˜‰
    That’s the big pie.

    For that matter, I think it’s too early to take positions. For one very simple reason : we just can’t foresee the scale of the problem, the scale of the damages.

    Light recession ? Or the big and dark unknown ? We need to wait to see which direction we are going to take.

    Second point : do not expect the crossroad for tomorrow… The poison of the crisis flows slowly, eventhough the events arrive quickly, like in cascade. But probably, many other will happen.

    So, you want to gamble ? Go for it now. You might for instance buy Bangkok Bank at 65,50 (closing friday). And you’ll enjoy strong capital gain. One day. But you might also be totally wrong. SET will continue to drop, in panic mode, for instance after very bad news coming from the US (GM bankruptcy, Citigroup etc.).

    The crisis officially started in august 2007. But then, it had been denied… It was the famous “our economy is resilient”, “our banking system are sound” from the clowns Bush, Bernanke, Paulson… Those lies were served to the public until august 2008… Their goal : hold until the presidential elections.

    But they were wrong : mid september everything started to crumble with the fall of Lehman.

    My point : that’s only 1 year… ! for a crisis that seems to be super huge and global… it is short

    Let it “cook” a little bit more… Let the unemployment increases a lot… let the foreclosures increase… let the companies publish their results for Q4 and Q1 2009… Or even better Q2 2009… It’s going to be a killing.

    Don’t be the classic sucker who call for the “bottom” every week… And do not forget the base effect. The drop is impressive because… we started from… very high.
    πŸ˜‰
    And those “highs” were… just a bubble. A paper dream.

  17. 17 Big Bob 24 November 2008 at 4:28 am

    TC,

    Why are the prices of so many new homes and condos for sale for 3 million THB and up? Besides rich foreigners, who is able to afford those homes?

    I recently talked to a thai girl that bought a used townhome for 2 million THB. She put 70,000THB as a down payment. Given that is only 3.5%, I asked how that was possible. She replied it was financed with two loans. The first loan from the previous owner of the property. Then the second loan was from a regular bank. This was done to bring down the ‘security risk’ to the real bank loan to make it look like a big down payment was used. It reminded me of those ‘creative financing’ schemes in the USA a few years ago as a way to get around the 20% down payment insurance requirement.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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