SG Economy

Economy: Singapore's GDP expanded 1.5% y/y in 4Q, lower than estimates of 1.8%, weighed by a weaker manufacturing sector (-2%) due to the slowing growth in China and an uneven global recovery. Services improved 2.6%, supported by the finance and insurance, as well as business services, while construction grew just 0.8%, supported by public-sector works. This brought 2014's overall GDP growth to 2.8%, narrowing from 3.7% in 2013. For the year ahead, the Ministry of Trade and Industry expects the economy to grow by 2-4%. However, it flagged downside risks to its estimate, citing a list of external factors: 1) Weak recovery in the eurozone, dampened by poor business and consumer sentiment due to the ongoing tensions in Russia and Ukraine; 2) Economic expansion in Japan and China may be capped by fiscal consolidation and sluggish real estate market, respectively; 3) Concerns that the eurozone may slip into a deflationary spiral, uncertainties over the timing of Fed interest rate hikes, as well as the risk of a sharp correction in China's property market. With headwinds increasingly pointing towards a subdued economy, investors may continue to seek exposure to stocks with stable growth and yield. Market Insight's Yield basket picks include: - HPH Trust, - Mapletree Greater China Trust, - Perennial China Retail Trust, - Sim Lian, - UMS, and - Venture Corp.