Major Singapore industries in peril

Saudi Gazette

Falling profits, a weakened currency and decreased international travel all plagued Singarpore from its largest airline to its telecom company and its sovereign wealth fund.

The sovereign wealth fund Temasek Holdings, which helped bail out Wall Street icon Merrill Lynch, fell 31 percent over eight months last year, a minister said Tuesday, according to local radio.

Senior Minister of State for Finance Lim Hwee Hua told parliament that Temasek’s portfolio of investments fell to $84.7 billion, 31 percent down from $185 billion, in the eight months to the end of November.

But Lim said the fall in Temasek’s portfolio value was less than declines in two stock indices, including the MSCI Singapore Index, which she said dropped 44 percent in Singapore dollar terms over the same period, the report said.

Last August Temasek announced that in the year to March its portfolio rose in value to 185 billion dollars, up 13 percent from 164 billion dollars the previous year.

GIC, one of the world’s largest sovereign wealth funds, in September said its nominal rate of return over the past 20 years was 7.8 percent in US dollar terms.

It said it managed well over $100 billion in investments.

Singapore Airlines (SIA) said its net profit came in to $225 million, from $590 million, on revenue of $4.16 billion, which was down 2.6 percent year on year, the airline said in a statement, Tuesday

SIA, one of Asia’s major airlines, blamed the decreased earnings on decreasing numbers of international passengers which it said were down 4.2 percent to 4.8 million from the October to December period the year before.

It also said it was carrying 14 percent less freight during the quarter.

“Demand for air transportation is expected to remain weak for much of 2009,” SIA warned.

Last month SIA announced the suspension of some international flights, saying it did not want to fly half-empty planes around the world. Flights to India, Southeast Asia, the United States and Europe were among those affected.

Southeast Asia’s largest telecom company was also in trouble, reporting a 16 percent fall in third-quarter net profit blaming it on a depreciating currency which weighed heavily on earnings. SingTel said its performance was strong in Singapore and Australia, but some of its regional mobile associates in Indonesia, the Philippines and Pakistan were weaker.

“The global economic slowdown has started to impact the group,” added the company, which is majority-owned by Temasek Holdings.

Net profit in the three months to December 31 was 799 million Singapore dollars (532.7 million US), down from 952 million during the same quarter a year earlier, the company said.

The net profit was better than the $774 million forecast in a poll of analysts by Dow Jones Newswires.

Operating revenue fell by 3.2 percent to 3.7 billion dollars but would have risen by 14 percent if the Australian dollar – which dropped 23 percent against the Singapore currency – had remained stable, SingTel said.

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