Its been a busy week for members of parliament in Britain, with Brexit votes every night for three consecutive days. While these votes are not politically binding, they are hard for Theresa May to ignore. On Tuesday, MPs rejected her Brexit plan, and voted to rule out a no-deal Brexit in all circumstances the next day. And on Thursday they voted for May to delay Brexit.
Meanwhile, the vote to leave the EU in June 2016 has already cost the UK about €800 million per week. According to Lloyds Banking Group, optimism among companies is at a seven-year low and businesses have recorded the longest continuous decline in investments in a decade. The pound is also down more than 10% since Britain voted to leave the EU, increasing the cost of imported goods and eroding purchasing power for consumers.
Private economists have lowered Singapore’s economic growth forecasts to 2.5% from 2.6%. The survey by the Monetary Authority of Singapore included 23 private sector economists and analysts. Since the previous survey in December, economists expectations for manufacturing, finance, wholesale, retail and trade, and accommodation and food services have lowered. Construction was the only sector which saw positive sentiment, with growth estimates rising from 1.5% to 2.1%.
Headline inflation is now expected at 1.1%, down from 1.3% predicted in December. Core inflation is forecasted at 1.7% from 1.8%. The unemployment rate is expected at 2.2% from 2.1% in the previous survey.
Airlines and plane manufacturer, Boeing were in the spotlight this week. Boeing shares slid more than 10% since the crash of a second fatal Boeing 737 Max 8 this week in just six months. The similarities between the two crashes have led to the grounding of Boeing 737 Max 8 planes in most countries. On Wednesday afternoon, the United States was the latest country to ground its 737 Max planes. Boeing has a history of compensating airlines if planes they own are grounded because of safety orders. The CEO of a European discount carrier has said it will bill Boeing for lost revenue from the grounding of its 18 737 Max 8 Jets.
The days of the Malaysian flag carrier, Malaysia Airlines, could be numbered. Prime Minister Mahathir Mohamad said the government is making a decision on options regarding the national carrier. In 2018, the money-losing airline accounted for around half of the US$1.5 billion losses suffered by its parent company, Khazanah Nasional Bhd., Malaysia’s sovereign wealth fund.
Besides the negative publicity after the tragic loss of the MH370 disappearance and the downing of MH17 over Ukraine, Malaysia airlines have struggled to compete with efficient low-cost carriers. As of 2018, low-cost carriers claimed around 28% of all airline seat capacity flown in South-east Asia. The Malaysia government has already injected some RM23.4 billion into Malaysian Airlines since it took over ownership in 2001.
Meanwhile, Singapore’s very own flag carrier is seeking to raise S$2 billion through a medium-term bond programme for senior unsecured debt. The bonds may be issued to retail investors in varying amounts and tenors. This is not the first time that Singapore Airlines Ltd (SGX: C6L) is tapping into the bond market. In October 2018 and August 2017, the flag carrier issues $600 million of five-year 3.16% bonds and S$700 million worth of 10-year 3.13% bonds respectively.
Lastly, a survey by Mercer found that Singapore has the highest quality of living in the Asia Pacific. The survey, which included 231 cities, ranked Singapore ahead of five Japanese cities, namely Tokyo, Kobe, Yokohama, Osaka, and Nagoya. Australia and New Zealand also rank highly with Auckland, Sydney, Wellington and Melbourne remaining in the top 20.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Jeremy Chia doesn’t own shares in any companies mentioned.