The Motley Fool

The Week in Numbers: US Fed Patient on Rate Hikes

While the Federal Reserve expects to raise rates at some point this year, the timing and number of hikes are less certain, according to the minutes of the Fed’s December policy meeting. The Fed raised benchmark interest rates last month for the fourth time in 2018 but recent developments, including the volatility of financial markets and the concerns about global growth, made the appropriate extent and timing of future hikes less clear. The next Federal Open Market Committee (FOMC) meeting is set in three weeks’ time.

Amidst concerns of a slowing economy, China will cut banks’ reserve requirement ratios, taxes, and fees. China slashed reserve requirements four times last year, and analysts expect three to four more cuts this year. China reported last week that factory activity shrank in December for the first time in more than two years. The government forecasts 2018’s economic growth to be on target at 6.5%, albeit slower than the 6.9% in 2017. However, analysts are expecting a further deceleration in growth this year.

Smartphone maker, Xiaomi has seen its stock decline substantially since its listing six months ago. The company has shed US$14 billion in market value, as its share price has slipped from its listing price of HK$17 to HK$10.34. The situation was exacerbated on Wednesday as it marked the expiration of the six-month lockup period for some employees and cornerstone investors who were finally able to join in the selling. Most analysts, however, continue to be bullish, predicting that Xiaomi’s share price will rebound to HK$16.72 on average within the next year.

Meanwhile, Apple Inc slashed its planned production for its three new iPhone models by about 10% for the first quarter of 2019. The weaker sales outlook is attributed to weak China demand, with some analysts and consumers saying that the new iPhones are overpriced. Market research firm Canalys estimates shipments to China fell 12% last year and expects smartphone shipment to dip 3% in 2019.

Back home, Nasdaq-listed Equinix plans to build a fourth data centre in Singapore for an initial cost of S$116 million. The seven-storey facility in Tai Seng Industrial Estate is expected to open in the fourth quarter this year. Equinix operates a global colocation data centre business and is the market leader in terms of market share. It has 200 data centres across 52 markets and 24 countries, providing services for more than 9,800 businesses.

And lastly, condominium prices in Singapore slid 0.8% in December 2018 from the previous month, according to flash estimates by real estate portal SRX Property. Resale prices of non-landed private homes are now down 1.5% from its peak in July last year, when the additional cooling measures were announced. The total number of condominium resales also slipped to 479, down from the 630 sold in November and 972 sold in December 2017.

Rents for Singapore condominiums and private apartments also dipped by 0.2% in December from November. Year-on-year condominium rents are up 0.1% from a year ago but are still 19.8% below its peak in January 2013. HDB rents were down 0.4% in December from a year ago and 15.4% off its peak in August 2013.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation on Apple Inc. Motley Fool Singapore contributor Jeremy Chia does not own shares in any companies mentioned.