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The Singapore Fund Announces Third Quarter Earnings JERSEY CITY, NJ--(MARKET WIRE)--Sep 3, 2008 -- The Singapore Fund, Inc. (SGF - News), a
closed-end management investment company seeking long-term
capital
appreciation through
investment primarily in Singapore equity securities, today
announced its
performance results for the
three months ended July 31, 2008, the third quarter of its
2008 fiscal
year.
For the quarter ended July 31, 2008, the Fund earned net
investment income
of approximately
U.S. $891,000 (equivalent to income of U.S. $0.09 per share)
resulting in
net investment income for
the nine-month period of approximately U.S. $1,735,000 (equivalent
to
income of U.S. $0.10 per
share). In addition, net realized and unrealized losses
from investment
activities and foreign currency
transactions during that same three-month period was approximately
U.S.
$16,713,000 (equivalent to
a loss of U.S. $1.81 per share). As a result, the net realized
and
unrealized loss increased to
approximately U.S. $56,874,000 (equivalent to a loss of
U.S. $6.14 per
share) for the nine months
ended July 31, 2008.
In comparison, during the quarter ended July 31, 2007, the Fund earned net investment income of approximately U.S. $587,000 (equivalent to income of U.S. $0.06 per share), resulting in net investment income for the nine-month period of approximately U.S. $1,024,000 (equivalent to income of U.S. $0.11 per share). In addition, net realized and unrealized gains from investment activities and foreign currency transactions during that same three-month period was approximately U.S. $19,839,000 (equivalent to a gain of U.S. $2.14 per share). As a result, the net realized and unrealized gain increased to approximately U.S. $62,380,000 (equivalent to a gain of U.S. $6.73 per share) for the nine months ended July 31, 2007. On July 31, 2008, total net assets of the Fund were approximately U.S. $144.4 million. The net asset value ("NAV") per share on that date was U.S. $15.42, based on 9,363,114 shares outstanding. Assuming the reinvestment of the U.S. $1.15 per share dividend paid on January 18, 2008 and the U.S. $0.309 per share dividend paid on February 21, 2008, the Fund generated a negative investment return of 26.01% for the nine months ended July 31, 2008, when measured against the NAV per share of U.S. $22.83 on October 31, 2007, based on 9,274,172 shares outstanding at that time. For the nine months ended July 31, 2008, the Fund's benchmark, the Straits Times Index ("STI"), decreased by 17.46% in U.S. dollar terms. In comparison with the same quarter-end of the previous fiscal year, total net assets on July 31, 2007 were approximately U.S. $193.9 million, equivalent to a NAV of U.S. $20.90 per share, based on 9,274,172 shares outstanding. As of July 31, 2008, the Fund had 86.72% of its net assets invested in Singapore equity securities. The balance of the Fund's net assets was in the form of time deposits and other cash equivalents denominated in Singapore Dollars (12.93%), U.S. dollars (0.10%) and other assets less liabilities of (0.25%). As of September 2, 2008, the Fund's NAV per share was U.S. $14.04, based on net assets of approximately U.S. $131.4 million. At the same date, the Fund's shares on the New York Stock Exchange closed at U.S. $12.27, representing a trading discount to the NAV per share of 12.61%. Singapore Market Review For the quarter ending July 31, 2008, the NAV of the Fund fell 9.9%, underperforming its benchmark, the STI by 2.2%. Factors contributing to that underperformance include an underweight position in banks (due to the Fund's investment restrictions), an underweight position in the Jardine group of companies and an overweight position in mid-cap stocks. In US$ terms, the STI started the quarter at 2,318.47 and fell progressively during the period. It ended the quarter at 2,140.31, 2% above the low for the quarter. Trading volume thinned significantly and that amplified the effect on share prices of small and mid-cap stocks. While the domestic economy remained in good shape with financial services and construction sectors leading the overall growth, the market fell in sympathy with external worries of a global slowdown and weakness in the U.S. financial system. Furthermore, a rise in the Consumer Price Index to a multi-year high owing to recent highs in energy and material prices led to concerns over a margin squeeze. Once again the banks outperformed the broad market as investors sought a safe haven in the volatile market. The offshore marine sector also did well with continuing strong orders building up. The property sector underperformed the benchmark, a reversal of its strong showing last year. Outlook and Strategy The balance of risks is inching towards growth, as inflationary pressure eases. Weakness in external demand is broadening to Asia and Europe, providing catalysts to the next down-leg to non-oil domestic exports. Consumer spending is slowing, with elevated inflation undercutting purchasing power of both residents and tourists. Inflation is likely to have peaked, with the recent slide in commodity prices and rolling over of the Goods and Service Tax ("GST") hike in July last year. Growth risks may soon command greater attention going forward. There is greater scope for fiscal measures to be employed. We believe the Singapore market continues to provide defensive exposure with minimal political risk, peaking inflation and buffers to slowing external growth. Valuations are around the 2003 crisis levels, but re-rating is likely to be gradual due to the macro headwind. While there are downside risks to market earnings, we expect growth to be defensive due to resilient earnings from banks, telecommunications and shipyards which are 60% of the STI. We remain overweight in the offshore marine sector, given its robust earnings stability and order book visibility. As quality of earnings matter in uncertain times, the Fund has trimmed its weighting in the small-cap and S-chips spaces. Cash is likely to be deployed in more defensive sectors such as telecommunications and other large-cap value stocks. Despite trading at a fairly large discount to their underlying net asset value, we think it is too premature to move into stocks in the property sector at this juncture. It is our view that there will be a further mark-down of asset value in due course.
Benchmark (%) Fund (%) Comments
------------- -------- -----------------------------------
Loan growth and interest margin
driving profit. Re-rating unlikely
for the time being owing to concern
over loan quality. Sector limit of
25% is applicable and Fund is
Financials 33.6 23.5 prohibited from owning DBS Group.
------------- -------- -----------------------------------
Fund is overweighted in REIT and
underweighted in property
developers, whose NAV could come
Real Estate 17.1 16.2 under further pressure.
------------- -------- -----------------------------------
Sing Tel's regional earnings come
under pressure from weak Australia
market and uncertain regulatory
environment in Indonesia. Current
Telecommunicati- price probably reflects risks. We
ons 11.7 9.5 are adding.
------------- -------- -----------------------------------
We are overweight domestic subway
transportation owing to structural
Transportation 5.0 5.4 growth drivers.
------------- -------- -----------------------------------
Weak pricing environment cap
upside, but probably little
Media 3.0 0.0 downside.
------------- -------- -----------------------------------
Underweight due to Fund avoiding
palm oil and discretionary
spending, owing to lower disposable
Consumer 11.1 2.1 income.
------------- -------- -----------------------------------
Overweight due to our high
conviction call in offshore marine
sector and supply chain in soft
Industrials 18.5 28.0 commodities.
------------- -------- -----------------------------------
IT Services 2.1 Single stock exposure in CSE.
------------- -------- -----------------------------------
Cash 13.2 Looking to reduce cash level.
------------- -------- -----------------------------------
100.0 100.0
------------- -------- -----------------------------------
The ten largest industry classifications of the Fund's equity investments
held at July 31, 2008 were:
Percentage of
Industry Net Assets
-------------
1. Banks 22.49%
2. Shipyards 11.01
3. Property Development 9.95
4. Telecommunications 9.54
5. Transportation-Marine 6.48
6. Real Estate Investment Trusts 6.16
7. Transportation-Land 3.77
8. Oil & Gas Extraction 2.87
9. Food, Beverage, Tobacco 2.76
10. Electrical Products & Computers 2.19
The ten largest individual common stock holdings at the same date were:
Percentage of
Issue Net Assets
-------------
1. United Overseas Bank Ltd. 11.81%
2. Oversea-Chinese Banking Corp. Ltd. 9.61
3. Singapore Telecommunications Ltd. 9.34
4. Keppel Corp. Ltd. 5.44
5. Capitaland Ltd. 4.36
6. Hong Kong Land Holdings, Ltd. 4.05
7. SMRT Corp. 3.79
8. Sembcorp Marine, Ltd. 3.77
9. Singapore Petroleum Co. Ltd. 3.04
10. Ascendas Real estate Investment Trust 2.95
QUARTERLY RESULTS OF OPERATIONS
Net Realized
and Unrealized Net Increase
Net Gains (Losses) on (Decrease) in Net
For the Quarter Investment Investment and Foreign Assets Resulting
Ended Income (Loss) Currency Transactions From Operations
-------------- ---------------------- ------------------
Total Per Total Per Total Per
(000's) Share (000's) Share (000's) Share
------ ----- -------- ------ -------- ------
January 31, 2008 $ (5) $0.00 $(48,499) $(5.22) $(48,504) $(5.22)
April 30, 2008 849 0.09 8,338 0.89 9,187 0.98
July 31, 2008 891 0.10 (16,713) (1.81) (15,822) (1.71)
------ ----- -------- ------ -------- ------
For the Nine
Months Ended
July 31, 2008 $1,735 $0.19 $(56,874) $(6.14) $(55,139) $(5.95)
====== ===== ======== ====== ======== ======
January 31, 2007 $ 59 $0.01 $ 27,685 $ 2.99 $ 27,744 $ 3.00
April 30, 2007 378 0.04 14,856 1.60 15,234 1.64
July 31, 2007 587 0.06 19,839 2.14 20,426 2.20
October 31, 2007 459 0.05 17,387 1.88 17,846 2.20
------ ----- -------- ------ -------- ------
For the Year
Ended October
31, 2007 $1,483 $0.16 $ 79,767 $ 8.61 $ 81,250 $ 8.77
====== ===== ======== ====== ======== ======
PER SHARE SELECTED QUARTERLY FINANCIAL DATA
For the Quarter Ended Net Asset Value Market Price* Share Volume*
--------------- --------------- -------------
High Low High Low (000)
------ ------ ------ ------ -----
January 31, 2008 $22.92 $15.66 $20.49 $14.03 1,546
April 30, 2008 17.32 14.95 15.98 12.90 1,024
July 31, 2008 17.64 15.31 15.50 13.21 1,083
January 31, 2007 17.38 14.66 16.77 13.27 1,887
April 30, 2007 19.01 16.38 19.47 15.01 3,502
July 31, 2007 21.71 18.67 19.23 16.39 1,552
October 31, 2007 22.97 17.81 20.72 14.17 1,891*As reported on the New York Stock Exchange. Contact: Contact:
John J. O'Keefe
The Singapore Fund, Inc.
Telephone: (800) 933-3440
or (201) 915-3054
http://www.daiwast.com
Email Contact
Source: Singapore Fund
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