Tuesday, July 24, 2012

Bright spots to be found


Business Times: Mon, Jul 23

Gary Lai
Managing Director
Charterhouse

MANY market analysts have forecast weak corporate earnings for Q2. This is based on the International Monetary Fund (IMF) cutting the global growth outlook, the US Fed chairman's bleak outlook for the US economy, China's quarterly gross domestic product (GDP) growing at its slowest in three years, Singapore Q2 GDP unexpectedly contracting, and the ongoing eurozone crisis. However, much of this pessimism has been priced into the market.

Although corporates have generally announced weaker earnings, many of them, especially those with a large interest in Asia, have beaten market expectations. Additionally, there have been positive surprises, such as the BOJ's (Bank of Japan's) upgrading its assessment of the world's third-largest economy, China's property prices bottoming out, and Singapore's NODX (non-oil domestic exports) year-on-year growth. The West may be going through a difficult period, but Asia has generally fared better. Many US and European companies have pumped greater resources and transferred key personnel to their Asian operations.

Singapore, being the regional headquarters for many international companies, has benefited from such investments. Although the global outlook remains uncertain and decisions taken to invest or hire may take longer, companies doing business in Asia are still wanting to grow headcount and to attract the best talents. The sentiment on the ground is at worse, one of cautionary optimism and we expect the Singapore economy to maintain a high level of employment opportunities for experienced professionals.

Manraj Sekhon
Chief Executive and Chief Investment Officer
Fullerton Fund Management

THIS results season will look subdued although pockets of strength will still be evident, largely reflecting stronger activity earlier in 2012 and completion of orders booked in prior years. More importantly, we will be paying close attention to management outlook statements. We expect these to be cautious, as corporates and individuals are likely to defer investment and spending decisions given ongoing uncertainties in the US and Europe, as well as the deepening slowdown in China. We expect the market to be downgrading earnings expectations for the full year as a result.

David Leong
Managing Director
PeopleWorldwide Consulting Pte Ltd

THE economic horizon and landscape is gloomy going into H2 2012, predicated on the stalemate in Europe and slower growth in China. The US Fed is also warning of a slowdown in the US, short of QE3. In Singapore, we are hit by a confluence of factors, including restrictive policies on foreign manpower and rising land, commodities, and raw material prices. A stronger Sing dollar affected our competitiveness vis-a-vis neighbouring countries. All these combined to make business challenging and difficult.

Businesses are finding creative ways to leverage on the government's Productivity and Innovation Credit scheme to build strengths, competencies, enhance productivity, and encourage innovations but these are mid- to long-term investments which will not see immediate results. In the short run, the business environment and its outlook remains bleak as the credits help the expense side of business but not the top revenue line.

Certain policies on foreign manpower, hopefully, will see some U-turns as those years of growth in Singapore were premised on these foreigners coming in to support our fast-growing economy. The concept is much like how the US uses QE1 and QE2 (quantitative easing 1 & 2) to jump-start and sustain economic growth. We should contemplate a labour quantitative easing for Singapore companies to sustain our growth in certain sectors and industries.

Ranjit Khanna
Head of South-east Asia & Global NRI
Coutts & Co Ltd

THE unexpected growth contraction, mostly related to manufacturing, shows that the European crisis is curbing demand. After tightening policy in April, chances of gradual easing by the Monetary Authority of Singapore (MAS) are growing, especially if a technical recession occurs in the third quarter. The forecast for corporates is muted. Investors should focus on companies with stable cash flows, which pay regular dividends, or are geared to Asian demand, such as telecoms, selected Reits, and industrials. Banks should be resilient given their well-capitalised balance sheets and negligible European exposure, while the offshore and marine sector provides opportunities on long-term demand prospects.

Vish Iyer
President Asia-Pacific
Tata Consultancy Services

GOING into the second half of the year, much of the world faces a challenging macroeconomic environment. We can expect the situation to last for some time. TCS is watching this very closely. However, businesses continue to make strategic investments, albeit with much more caution. The economic situation creates a burning platform for companies to become more efficient and this is best achieved by leveraging technology. We have not seen dramatic cuts in budgets, but given the global trends, I would say we are cautiously optimistic. Specific to our business, we continue to see growth opportunities. As you may have seen, TCS recently reported strong quarterly earnings, which included new deals here in Singapore.

Mark Billington FCA
Regional Director, South-east Asia
ICAEW (Institute of Chartered Accountants in England and Wales)

EARNINGS expectations are a useful leading indicator for economic growth because business profits are closely linked to the economic cycle. A broad-based downgrading of profit expectations by companies and equity analysts is a clear sign of a difficult economic outlook and can even herald a recession. The situation in South-east Asia is better than in many Western economies, but even with strong domestic demand growth, the local economies cannot escape the sharp fall in trade that's evident at a global level. A lack of confidence due to seemingly perpetual fears about a eurozone implosion hampers investment and falling commodity prices are a clear sign that China's economy is easing off from unsustainably high growth. The accounting sector, as with most others, is unlikely to be able to escape the slowing, with downside risks to the global economy continuing to grow, although those firms with a diversified offering will fare better.

George McFerran
Managing Director, Asia-Pacific
eFinancialCareers

THE weak corporate results are not surprising given the current economic mood. Results from our recently concluded job barometer suggest a tepid job market heading into the third quarter, with financial institutions facing continued pressures to justify headcounts due to the protracted global economic uncertainty. However, a low-hire environment does not mean a no-hire situation as there are industries that have performed well. Even in less-than-positive economic conditions, we do see that oil and gas commodities trading and private banks, especially those with a solid book of clients, being well placed to remain resilient - which could ensure their hiring patterns for at least the next quarter.

Hugues Delcourt
Country Executive, ABN AMRO Bank NV Singapore and
CEO of ABN AMRO Private Banking Asia & Middle East

THE global economy has been weak in the first half of this year with the re-escalation of the eurozone crisis. Many businesses and sectors have been affected by the weak market conditions and poor overall investor sentiment. Despite the ongoing uncertainty and market cyclicality, the fundamentals of private banking and wealth management remain unchanged.

We at ABN AMRO Private Banking continue to see strong demand for advisory services from high net worth individuals, who are now more concerned about wealth preservation and risk management compared to the pre-crisis period. Notably, our clients have been showing strong interest in fixed-income investments which offer attractive dividend yields, thus providing a reasonable cushion for downside risk.

In uncertain times like these, our role as a trusted adviser to our clients becomes more important. We continue to ensure that our relationship managers and investment specialists are kept abreast of current issues, as well as well-equipped with the necessary knowledge and skills to offer proper advice to our clients, in line with the shift of their investment needs and preferences. We advise our clients to adopt a long-term view on investments and focus on several investment themes, such as expanding global trade, industrialisation and urbanisation of fast-growing economies, global demand for scarce resources, and innovations in industries that cater to future societal needs.

Andrea Ross
Managing Director (Singapore & Malaysia)
Robert Walters Singapore

AS a specialist recruitment consultancy covering permanent, contracting, and resource process outsourcing solutions, Robert Walters is close to the ground when it comes to the job market. I am cautiously optimistic for the second half of the year. Companies in the financial services industry are likely to remain conservative in hiring as the general sentiment is one of caution, especially since most companies haven't quite rebounded from the 2010 days.

However, we have observed pockets of hiring within institutions' must-have areas, such as legal, audit, compliance, and risk management, where there are job opportunities for talented individuals. Areas that are likely to remain static, however, are financial control areas and operations as many institutions have offshored these activities to India or eastern Europe.

There have been positive signs of recruitment activity within the oil and gas industries, chemicals, FMCG (fast-moving consumer goods), retail, and manufacturing. With the continued shortage of talent in Singapore, employers will still be keen to bring on talented individuals at all levels, especially if they have the required skills and experience.

Rob Bratby
Managing Partner
Olswang

I don't see a slowdown in activity in the sectors we focus on - telecoms, media, and technology - across the Asean region and China. While other sectors of the economy may be slowing, the rapid adoption of smartphones and use of mobile data together with consumption of all types of content shows no signs of abating. In my view, the TMT sector will see continued strong growth and investment over the medium term and I am optimistic that Singapore-based companies serving those sectors will continue to be busy.

Philippe H J Huinck
Regional Managing Director, South and South-east Asia
International SOS

GIVEN the volatility and contraction in markets abroad, it is not surprising that expectations for corporate results for the quarter just ended are conservative. The outlook still appears to be uncertain, both globally and for Singapore's economy as well. Our strategy in Singapore for the second half of 2012 will continue to be one of pragmatism, one that involves careful balancing of priorities and spending.

However, from the perspective of the medical and security assistance industry, we do not believe business results in this sector will be hampered as the demand for such services remains high as companies and organisations still expand overseas. Providing medical and security services for employees helps fulfil an employer's duty-of-care obligations, enhances corporate reputation, and boosts employee retention. Hence, even in these times of uncertainty, many of our clients enlist our services as a necessity rather than as a secondary concern. I believe the outlook for our industry is still positive.

Yaj Malik
Area Vice-President, Asean
Citrix Systems

WHILE most sectors continue to be plagued by volatile markets and global economic woes, IT spending appears to be a bright spot. Gartner recently reported that IT spending in the Asia-Pacific is expected to grow, especially in the area of public cloud services. This reflects Citrix's belief that enterprises are increasingly looking towards cloud and desktop virtualisation as solutions to embrace mobile workstyles, raise productivity, and promote efficiency.

Mobility is increasingly crucial in enabling businesses to stay competitive in today's interconnected, 24/7 world. Enterprises stand to benefit from a reduction in real estate, travel, and labour costs with increased flexibility. Employees need to be equipped with the relevant technology solutions to complete their work smoothly. Being able to work with anyone from anywhere at any time on any device is key to attracting and retaining the best people and ultimately improving business performance. With expectations of lacklustre performance and the continued influence of global economic concerns in the near future, enterprises need to make mobile workstyles a priority to achieve the best business results.

Ronald Lee
Managing Director
PrimeStaff Management Services Pte Ltd

CORPORATE results for Q2 will be weaker than Q1, which was quite strong and provides a relatively high base for comparison. Recent Purchasing Managers' Index (PMI) data for China and Singapore, for instance, have shown signs of weakness. This, coupled with continued uncertainty in the eurozone and lower-than-expected US job growth, makes the outlook for the second half of the year cloudy. Despite such headwinds, the Q3 Employment Outlook just published by PrimeStaff suggests that there will still be pockets of growth in certain sectors, such as hospitality (retail, food & beverage), health care, pharmaceuticals, and biomedical sciences. Our recruitment industry, in particular, will benefit from a tight labour market here resulting from the government's restrictions on the hiring of foreigners.

Daniel Soh
Managing Partner
Leadership Advisory Inc

AT the moment, there is caution stemming from the flow of negative news from the US and Europe. The general sentiment is that while there may be further bumps along the road for some Asian economies, the underlying business and economic structure is sound. Real growth remains the trend across most of Asia and this is still the most exciting region in the world to do business. Global economic uncertainties aside, a main concern for many business leaders is the hiring and retention of their "Asia leadership talents".

On the whole, professional services for board and senior-level executive search remain positive and growing. This is mainly due to the following: 1. Demand for leadership talent remains strong. With their past experience of economic crises and understanding that developing regional leaders takes time, most companies are proactively planning ahead to maintain a competitive edge. Primary focus is on business leaders who can think globally and, at the same time, remain close to the ground. There is strong demand for leadership talent who can use influence (rather than control) to lead, are able to think out-of-the-box, and can drive the organisation to the next level of growth.

2. Increasing demand for independent board directors. There is an increasing recognition that boards should have the right composition, diversity, and independence. A board director is no longer just a "rubber stamp", but one who is prepared to challenge the management team and sharpen its strategic focus. This also strengthens corporate governance and fosters greater disclosure and transparency.

Andrew Pumphrey
Managing Director
AsiaRooms.com

WHILE the ongoing global economic situation has a dampening effect on the demand for travel in certain parts of the world, I am optimistic about the travel industry in Singapore. Based on the results from our inaugural Traveller Confidence Index released on July 19, Singapore comes out as having the highest propensity for overseas leisure travel at 67.9 index points, compared to the global average of 61.4.

The research findings tell us that business travel in Asia is also looking optimistic, where business travellers are willing to spend more on room nights than their European counterparts. In particular, most respondents in Singapore (81.7 per cent) also indicated that they will be maintaining or increasing their room bookings for overseas business trips. This compares with the average of 51.4 per cent of respondents in Asia. These insights help us to understand our customers better and develop effective strategies. I look forward to seeing increasing confidence and growth in the travel sector here, as Singapore and Asia both ride out the downturn.

Nick McGrath
CEO
AIMS AMP Capital Industrial REIT

DESPITE renewed fears over the eurozone debt crisis towards the end of the quarter, overall activity in the Singapore industrial property market remains healthy. Against this backdrop, we are cautiously optimistic about the industrial property outlook for the second half of 2012 and see potential for a moderate increase in rental rates, given the shortage of quality industrial property.

Dora Hoan
Group CEO
Best World International Ltd

WITH dampened European demand resulting from the eurozone crisis, coupled with slowing economic growth in major countries across the globe, Asia - and especially trade-driven Singapore - is expected to face similar pressures in Q2. While the economy is expected to rebound in the second half of the year, given the uncertainty posed by the debt crises, businesses in our industry, like all others in Singapore, are expected to gear up and exercise more caution to weather future unforeseen situations.

Lim Soon Hock
Managing Director
PLAN-B ICAG Pte Ltd

COMPANIES whose businesses come in lumps or are project-based and are heavily dependent on government or public sector spending in the region or elsewhere in the world, are likely to face tough challenges going into the second half of 2012. We can expect more governments to tighten their purse strings until the economy turns around.

While such companies may be thriving for now from revenue streams generated from past years, if few projects are won, or if there is a famine of orders during this current year, the financial repercussions will be felt for at least the next one year.

It will be a very trying time for such companies, unless more governments decide to introduce new economic stimulus packages, especially those for infrastructural developments and for large IT or telecommunications systems.

Ang Swee Meng, Allen
Group Managing Director
Aldon Technologies Services Pte Ltd

ALTHOUGH the Q2 GDP estimates were weak, portending weaker corporate results for the quarter, the outlook for the whole year should remain in the 2.5 to 3 per cent growth range. In the semiconductor and flat-panel display markets, sentiment is relatively more upbeat. On our part, we were able to perform better in Q2 than Q1 because we were able to secure new projects with our semiconductor customers who are implementing productivity improvement and cost containment projects to enhance their competitiveness. Obviously these customers must have felt confident enough about the market and broader economy to execute capex projects.

We are quite optimistic about our business for the second half of the year. We believe the semiconductor industry will continue, or at least maintain, its momentum underpinned by continuous demand for smart devices and automobile electronics.

Dhirendra Shantilal
Senior Vice-President, Asia-Pacific
Kelly Services

WITH a weaker global economy, it is no surprise that companies are reporting slightly weaker results. However, even in challenging times, it is likely that there will be some companies or industries that will do well, and it will be interesting to note the key performers. It is crucial that companies employ the right strategy to maximise efficiency with less resources. Despite a challenging economy, we are still witnessing a strong demand from companies seeking strategic hires for positions requiring niche skill sets or leadership qualities. This is a fundamental necessity for companies - maximising productivity and efficiency in the workplace in the long run - in riding out the economic storm.

Joshua Yim
CEO
Achieve Group

I EXPECT Q2 corporate results to be in line with the data released by the Ministry of Trade and Industry last week. However, we are still seeing signs of growth in certain sectors like biosciences, construction, and professional services. I expect that the outlook for the second half of the year will be moderate: 0.5 per cent to one per cent quarter-on-quarter growth.

The recruitment industry will generally be in step with this forecast. But there is an upside for our industry; we are in a unique situation because of the manpower shortage most companies are facing due to the lower quota for Work Passes for foreigners. We are experiencing a lot of manpower requirements across all industries so this is positive for our business.

Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd

I THINK most people agree that corporate results are generally weaker despite the recent stock market surge. For our industry, we adopt a cautious outlook. We hear anecdotally about companies reducing staff costs. Most people expect slower growth and are at the same time wary of inflationary pressures. We are watching developments in China, which for our company is a major market, in particular how the government handles inflationary and speculative pressures without stifling growth. Like most companies, we are watching for signs of how fast and hard any slowdown there will be since we have projects there.

Annie Yap
Managing Director
AYP Associates Pte Ltd

CHINA and India, two of the Big 4 economies and both our Asian counterparts, have recently reported economic slowdown for the second quarter. Singapore companies who are highly reliant on international markets will not be spared as well. The future of recruitment in the coming second half is becoming more and more uncertain. Companies are definitely much more cautious in their hiring, but surprisingly, candidates are still moving from their current jobs.

From my observations, more than half of the candidates in AYP's database want to switch jobs by this year, even though most of them anticipate difficulty in doing so. Their mindset reflects a healthy level of confidence amid the economic slowdown. Perhaps employment trends are not directly affected by the downturn, or its full effects have not sunk into the Singapore or Asia economy yet?

Low Lee Yong
CEO & Founder
MHC Medical Network

THE weak economic performance of the previous quarter is a blip. For 2012, I think we can still be optimistic on the outlook for Singapore. Generally, the healthcare industry is largely unaffected by weakness in the economy. If the global scenario of a "stagflation" plays out, there will be difficult challenges to many companies. We are currently in a period of sustained economic uncertainty and volatility. For MHC, we see it as an opportunity to work with companies to contain cost and increase their productivity. We simplify medical claims for them by making it paperless and cashless as well as manage their healthcare expenditure.

Bob Grove
Managing Director, South-east Asia
Edelman

IN uncertain times, results are unpredictable. What comes to the fore is that companies who are genuinely strong, with a clear focus on building trust internally and externally, will continue to do well. Companies who have mediocre management but could have grown because of Asia's booming markets will find it tougher. Yes, we will see some companies falter, but I suspect some companies will do extremely well. The median will be unchanged, just that the variance will be more extreme. It boils down to quality of management, the teams they have developed, and the trust equity they have established. The cream rises to the top when things get a little unsteady.

Anton Ravindran
CEO & Founder
Rapidstart Pte Ltd

FOLLOWING the global financial crisis, the world economy has been battling with one crisis after another. Western economies have been "ill" for some time now. Of late, the Chinese and Indian economies seem to have also run into some challenges as well. In the new economy driven by technology, change is the order of the day, and everything changes faster - not just computing power and IT applications but supply and demand, inventories and production, interest and exchange rates.

A slowing economy will inevitably lead to moderate spending in IT and will decelerate IT growth. Though the Singapore economy was strongly affected by the last financial crisis, it not only recovered quickly but also quickly gained more momentum. Government IT spending is likely to act as the driver for such momentum.

From a technology standpoint, we are now at an important juncture, with a new paradigm of cloud computing, social networks, and big data. As there are not many homegrown large listed IT companies, there will continue to be new opportunities for small- and mid-sized firms that can embrace the new technologies and provide niche services.

Teng Yeow Heng Michael
Managing Director
Corporate Turnaround Centre Pte Ltd

YES, the corporate results are generally weak for the last quarter. However, I believe that the two largest economies in the world, namely the US and China, are not going to go down the tubes this year at least. It is general election time and a change of leadership will take place in both countries. The incumbent political leaders will not allow the economy to collapse under their watch.

I expect the outlook for the second half of 2012 to be lacklustre. There will be nothing earth shattering, provided Israel does not attack Iran. Watch 2013. If the eurozone sovereign debt problem is still not resolved by then, it will cripple the global economy. Singapore's economy will be the first in Asia to fall when the global economy falters. For our industry, this will open up more business opportunities for corporate turnarounds.

David Low
CEO
Futuristic Store Fixtures Pte Ltd

THE uncertainties in the EU are undermining growth in emerging markets. Singapore's trade dependent economy is easily buffeted by such global headwinds. Without sound fiscal and government policies, the impact on Singapore would have been huge. Futuristic Store Fixtures has a portfolio of global clients, all leaders in the retail segment, where retail developments are directly correlated to economic outlook. The next half of 2012 could be a period of consolidation where global expansion is more conservative and plans are pegged to a shorter timeframe.

Flexibility is needed to seize opportunities and counter uncertainties, both for our clients and our organisation. Unlike the luxury goods market, our clients' target market is mass-oriented, and being leaders in their segment, they enjoy a sizeable following of consumers to give slight growth. The second half of 2012 for our industry should show slow growth at a more than sustainable pace.

  
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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