What’s happening with Singapore’s Economy?

Even though Singapore’s a small nation with ‘only’ 5.4 million residents, there’re still innumerable moving cogs in the economic machinery here. In light of that, here’re some interesting local developments that investors can take note of. This week’s edition brings us to the dampening demand for HDB 5-room and executive flats, and an on-going investigation launched by the Commercial Affairs Department regarding last October’s penny stock bust.

Bigger HDB flats and executive flats continued their price retreat

According to the Singapore Real Estate Exchange (SRX), HDB resale prices rose slightly by 0.3% in March when compared to February. Smaller flats were leading the price increase as prices of both 5-room and executive flats continued its decline, falling by 0.2% and 0.7% respectively.

Jeremy Lee, co-founder of SRX, commented: “Bigger units face more challenges in today’s market. Buyers can only use up to 30 per cent of their monthly income to service a HDB loan, which significantly reduces their ability to afford bigger flats”.

Lee continued, “Overall HDB prices continue to face downward pressure as many buyers are paying at value below recent transactions, or what is known as the X-Value”.

Further weakness for high-end residential properties coupled with the property cooling measures may not bode well for local property developers such as Wing Tai (SGX: W05) and City Developments (SGX: C09).

Commercial Affairs Department Investigates Executives from SGX Listed Firms

While this development isn’t exactly macro-economic news, it might potentially have a big impact on the companies involved with the investigation and the penny-stocks scene here in Singapore.

Last Wednesday, the Commercial Affairs Department (CAD) and the Monetary Authority of Singapore (MAS) started announcing their investigation into possible trading irregularities in the trio of inter-linked companies: Asiasons Capital (SGX: 5ET), Blumont Group (SGX: A33), and LionGold Corp (SGX: A78).

The three shares were at the centre of a penny stock debacle last October when their prices collapsed by more than 90% in less than a week.

The CAD is currently collecting and analysing senstitive information concerning various executives and related-personnel from a number of listed firms as part of the investigations on possible offences committed under the Securities and Futures Act.

Other firms that are involved with the investigation include Innopac Holdings (SGX: I26), Magnus Energy (SGX: 576), and ISR Capital (SGX: 5EC) and they have been asked to assist the investigation process by providing all relevant and required information.

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