Bright spots amid downbeat outlook

Bright spots amid downbeat outlook

SINGAPORE - I have spent the past few months bemoaning that all the good stocks are leaving the Singapore Exchange and lamenting that there are so few attractive counters to take their place.

Take Fraser & Neave. Thai tycoon Charoen Sirivadhanabhakdi is offering $9.55 apiece for the shares, way up from the $6 plus they were trading at a year ago. The talk is that Mr Charoen will privatise the firm. With the price at $9.44 now, there is little point in entering the market.

Ditto with its former unit Asia Pacific Breweries, which had a share price of around $25 just over a year ago. The takeover offer was a whopping $53 a share, from Heineken.

Other stocks that were a good proxy for consumer spending included Brand's Essence of Chicken maker Cerebos Pacific. It also offered an attractive dividend yield but it has now been privatised.

With the Straits Times Index close to a two-year high, blue chips have become too expensive to invest in, while some of the listing newcomers are small and Catalist-listed.

And although the report card for local corporate earnings looks robust, the trend for gross domestic product (GDP) growth is set to slow.

The recent Population White Paper showed that the compound annual growth rate of GDP between 1970 and 1980 was 9 per cent. Between 1980 and 1990 it fell to 7.7 per cent. It dipped further to 7.1 per cent during the 1990s and declined to 5.6 per cent for the 10 years to 2010.

GDP growth for this decade looks like it will average 3 per cent to 4 per cent and could slow further to between 2 per cent and 3 per cent in the 2020 to 2030 period.

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