19th Jan 2008
INSIGHT DOWN SOUTH
By SIAH CHIANG NEE
The pulse of the Singaporean consumer is weakening, hammered as he is on both sides – a painful stock market fall and the highest inflation in 25 years.
IT'S the sale of the year, so says the salesman shouting over a hailer at a suburban mall: “LCD TV sets for only S$990 (RM2,270) each cash-and-carry, usual price S$1,350 (RM3,100).”
“Promotion only for three days,” proclaimed an overhead banner.
Elsewhere, shops were promoting cheaper computers (tabletop for S$999, or RM2,290) as well as branded clothes, cameras, jewellery and other luxury goods to catch the pre-Lunar New Year shoppers.
Even prostitutes, many of them from China, are offering special “discounts” to make as much money as possible from the Lunar New Year crowds in Chinatown, a newspaper reported.
According to Shin Ming Daily, they are charging customers S$50 (RM115) instead of the usual S$70-S$80 (RM160-RM180).
My letterbox is stuffed with more brochures than I can count, screaming offers for products ranging from cosmetics to canned abalone, from post-holiday tours to gym equipment.
This pre-festival sale is nothing unusual. This year, however, as the city gears for a downturn, there is a greater degree of urgency over previous occasions.
The pulse of the Singaporean consumer is getting weaker as he gets sandwiched between two evils – a painful stock market fall and the highest inflation in 25 years.
His biggest concern, however, is the prospect of a world economic recession.
The statistics show what could be the start of a trend regarding Singaporeans’ greatest addiction: shopping. In November, the retail index unexpectedly fell by 0.3% after a gain of 3.8% in the previous month.
“Many businessmen see the coming festival as the last chance to sell their products before trouble hits,” a stockbroker said.
“After that, a consumer lull is likely to settle in.”
Sales of cars and high-end property have begun to fall, not to mention share values. The latest involves taxis.
In a spontaneous reaction to the official fare increases that many drivers opposed, many customers have abandoned taxis for public transport.
Last week, at the Singapore General Hospital, I saw so many empty cabs cruising for passengers that they were contributing to the traffic jam.
A pall of gloom has descended on this city over the big sharp stock market sell-off and the feared global recession.
“I fear for the consequences. Tens of thousands of people, from the super-rich to heartland retirees, have suffered losses,” said a remisier who has seen many financial storms in the last 30 years.
The punters include workers, housewives and university students, who had been attracted by last year’s market boom.
Some are now facing bankruptcy because of the forced sale of their devalued shares, which were bought on borrowed money.
In an uneasy environment the biggest risks are in luxury goods, which have had a good run in recent years.
“People are already buying less, and fewer are eating in restaurants,” the remisier noted.
This pessimism is in contrast to the relative exuberance of a strong economy over the past four years. That momentum was still evident until recent weeks.
It is also contrary to Minister Mentor Lee Kuan Yew’s expression of confidence that Singapore will emerge stronger in the next five years whether or not there is a downturn in the United States and Europe.
Lee said Singapore would be “at a different plateau” by 2012.
“The old Singapore, we are leaving behind,” he said.
Many feel that while last year’s 7% growth (this year’s projection: 5% or less) was great news for the nation, the benefit to the people could have been much less than thought possible.
Already hit by inflation, many are now struggling with stock losses that could take years to resolve.
“My hands are cold and my heart pounds every time I read news from Wall Street and see my stocks plunging by the minute,” said an investor who has lost S$150,000 (RM344,000) in just one month.
The main stock index has fallen 20% in just two months.
Slowly, Singaporeans are getting used to living with a global economy and with the realisation that a strong GDP does not immediately mean strong earnings for workers.
Another is that irrespective of sound local fundamentals, the republic can be dragged down by a banking crisis half a world away.
“Asians are paying the price of overspending and over-borrowing by Americans; and with no say on the matter,” a Chinese-language teacher lamented.
Apart from the all-embracing government policies, the property and stock markets are factors that most affect Singaporean lives – and both face poor prospects in the coming year. (Malaysians are the second-biggest foreign buyers of property here.)
Economists who have seen all this before say they will recover and move higher, but while it lasts the ripples will be widely felt on people’s jobs, incomes and spending.
Last year, property prices shot up by a dramatic 27%, with more than 14,800 new private homes sold – or 1,200 a month.
In December, however, only 305 deals were done.
For the tens of thousands of troubled families, the immediate crisis is managing losses in the stock market.
In a Channel News Asia online survey involving 27 traders:
> Almost half (47%) declared they had lost up to S$50,000 (RM115,000);
> Some 14% admitted to losing S$50,000-S$150,000 (RM115,000-RM344,000); and,
> Three persons said they had lost more than S$1mil (RM2.3mil).
The chat site reflects many of the painful individual – and family – woes, with workers losing an equivalent of several months to a few years of their salary.
One said the recent crash would result in him working for 10 months without pay to clear his debts.
“I don’t know how to tell my wife. She may divorce me,” he moaned.
