Prices for latest preview are 15-20% higher

MORE than 30 units were sold at a preview for Marina Bay Suites yesterday. They were among a batch of 36 apartments released on nine floors in the 66-storey condominium project and which are priced between $2,167 per square foot and $3,133 psf.

Analysts observe this pricing is about 15 to 20 per cent higher than the $1,900-2,600 psf for the initial batch of about 90 units sold in the condo late last year.

Some potential buyers may have found the quantum of price hike, taking place within a space of less than six months, ‘a bit too heavy’, as a market watcher put it.

The most expensive unit sold yesterday is said to cost about $8.4 million; it is a four-bedder-with-study on the 51st level. The ‘cheapest’ of the 36 apartments is a three-bedroom apartment on the seventh storey priced at $3.5 milllion.

The 90-odd units sold last year were mostly below the 46th storey sky terrace.

Those who picked up a unit yesterday are said to comprise a good mix of foreigners and Singaporeans. BT understands the 36 apartments offered range from 1,615 sq ft for a three-bedder to 2,690 sq ft for a four-bedder with study.

Marina Bay Suites has a total 221 units, comprising 218 three- or four-bedroom apartments and three penthouses. A typical floor has only four apartments with private lift lobbies in every unit. Each penthouse comes with its own swimming pool.

While the earlier preview was held on the mezzanine level of One Raffles Quay, yesterday’s sales were at a showflat built on the fourth floor of the Marina Bay Financial Centre Office Tower 1.

The latest preview was open to those who had registered interest. From today, sales will be by appointment. The project is being marketed by CB Richard Ellis and DTZ.

This week’s preview is timed to ride on the partial opening of the nearby Marina Bay Sands integrated resort on Tuesday.

Marina Bay Suites is being developed by a consortium controlled by Keppel Land, Cheung Kong Holdings and Hongkong Land Holdings.

Source: Business Times, 30 Apr 2010

Joint ventures, led by Parvis project, are key contributors

PROPERTY developer Ho Bee Investment’s net profit for the first quarter ended March 31, 2010, rose to $41.7 million, an 11.8 per cent improvement from the same year-ago period.

The increase was due chiefly to a surge in share of profit of jointly controlled entities, from $1.9 million to $10.8 million, of which the joint-venture project Parvis at Holland Hill was the main contributor.

Group turnover for the first quarter of 2010 fell 16.1 per cent year on year to $92.4 million – primarily because of lower recognition of revenue from property development.

In Q1 2009, the group enjoyed higher revenue recognition as two projects, Vertis and Quinterra, obtained Temporary Occupation Permit in that period.

Ho Bee chairman and CEO Chua Thian Poh said the group has benefited from the economic recovery and strong property market sentiment.

‘Our residential projects, Trilight, located at Newton Road, and the JV project with MCL Land, Parvis, at Holland Hill, have sold very well. The progressive recognition of income from the residential projects sold will be a significant contributor to the group’s profitability for 2010,’ he added.

In the first three months of this year, Ho Bee sold 198 residential units in various projects – Orange Grove Residences, The Orange Grove, Trilight, Parvis, Dakota Residences and Seascape. About 17 per cent of the group’s 151-unit Seascape condo at Sentosa Cove was sold as at end-March this year, although this has since improved to 21 per cent.

Cash and cash equivalents shrank from $171.7 million at end-Dec 2009 to $52.4 million at end-March 2010 as the developer repaid term loans of $104.7 million and put a deposit for its stake for the purchase of a prime residential site in Shanghai’s Qingpu district. Ho Bee has teamed up with Yanlord Land Group for the acquisition.

Ho Bee posted earnings per share of 5.66 cents in Q1 2010, higher than Q1 2009′s EPS of 5.07 cents. Net asset value per share rose from $1.63 at end-Dec 2009 to $1.68 at end-March 2010.

The counter closed two cents higher at $1.66 on the stockmarket yesterday.

Source: Business Times, 30 Apr 2010

US$51m writeback helps bring MCL’s Q1 net earnings to US$48.7m

A WRITEBACK of about US$51 million for an impairment charge on The Estuary condo in Yishun helped to boost MCL Land’s first-quarter net earnings to US$48.7 million. In the same period of last year, it posted net profit of US$1.4 million.

‘The group’s results for 2010 should benefit from the completion of two development projects in Singapore, Waterfall Gardens and D’Pavilion, as well as the writeback of the impairment charge on The Estuary,’ MCL chairman YK Pang said in yesterday’s results statement.

MCL recognises revenue and profit on units sold in residential property developments when the projects receive Temporary Occupation Permit. Unlike most other listed property groups, it does not book profit and revenue progressively as the projects are completed.

Waterfall Gardens at Farrer Road and D’Pavilion at Upper Serangoon Road are slated for completion by Q2 and Q4 this year respectively. The 132-unit Waterfall Gardens is fully sold and 74 per cent of D’Pavilion’s 50 apartments were taken up as at end-Q1 this year.

The Hongkong Land subsidiary writes back impairment charges on residential sites when the projects are launched and substantially sold.

Following the writeback on The Estuary, which MCL began to sell in February this year, the group continues to carry US$134 million in impairment charges against four other Singapore residential projects – on the Nob Hill site in Ewe Boon Road, the Nim Park site at Nim Road, the Dynasty Garden Court 1 plot at Sixth Avenue, and the Casa Nassau site at Upper East Coast Road.

The plan is to launch the Nim Road and Upper East Coast projects next year but hold back developments on the two other sites until the market improves further, MCL’s chief executive Koh Teck Chuan told BT.

MCL had shareholder funds of US$583 million at end-March 2010, up from US$533 million at Dec 31, 2009. Progress payments received for the group’s development properties continued to enhance MCL’s financial position with net cash of US$140 million at end-Q1 2010, compared with US$93 million at end-2009.

‘Sentiment in Singapore’s residential property market remains positive, underpinned by an improving economic outlook,’ Mr Pang observed.

MCL’s net asset value per share rose from US$1.44 at end-December 2009 to US$1.58 at end-March 2010.

It posted earnings per share of 13.15 US cents in Q1 2010, up from 0.38 US cent in Q1 2009. On the stock market yesterday, the counter closed unchanged at S$2.22.

Source: Business Times, 30 Apr 2010

WHILE the European Union grapples with the risk of a contagious sovereign debt crisis and Japan with deflation, most Asian economies are growing at a rate where their very success is threatening them with problems of possible overheating and inflation, according to the International Monetary Fund.

For the first time, Asia’s contribution to global economic recovery has outstripped that of other regions, the IMF said in its latest Regional Economic Outlook for Asia and the Pacific.

The stark contrast between Asia’s performance (led by China, India and Indonesia but excluding Japan) is underlined by looming fiscal crises in Europe and also by high unemployment, weak household balance sheets and anaemic bank credit in advanced economies, the IMF noted.

‘Asia’s faster recovery relative to the rest of the world seems to mark a break from the past. Although Asia’s GDP trend growth has exceeded that of advanced economies over the last three decades, this is the first time that Asia’s contribution to a global recovery has outstripped that of other regions.

‘In past recessions Asia’s recovery generally was driven by exports, this time it has also been reinforced by resilient domestic demand, particularly household consumption.’

Asia is expected to continue leading the global recovery, the IMF said. The global and domestic inventory cycle is likely to boost Asia’s industrial production and exports further for most of 2010 as demand finally recovers in advanced economies.

In many Asian economies, ‘private domestic demand appears to have sufficient momentum to sustain near-term growth, as high asset values, strong consumer confidence, and a gradual improvement in employment conditions are expected to sustain consumption.’

Meanwhile, net capital inflows to the region have surged, the IMF said. This is ‘a reflection of extremely high levels of global liquidity but also a testament to Asia’s improved resilience and economic framework.’

But it warned that ‘Asia’s relatively strong cyclical position may pose near-term risks, particularly if bright growth prospects and widening interest rate differentials with advanced economies lead to further capital inflows to the region.

‘These could lead to overheating in some economies and increase their vulnerability to a strong upswing in the credit and asset price cycles, with the propensity for a subsequent abrupt reversal.

‘Although asset-price inflation in Asia has so far been generally contained, the increase in excess liquidity in many regional economies over the course of 2009 raises concerns’ especially in asset and housing markets.’

The IMF report added that over the medium term, Asia’s main policy challenge will be to ensure that private domestic demand becomes a more prominent engine of growth.

Source: Business Times, 30 Apr 2010

SHANGHAI: The International Monetary Fund (IMF) warned yesterday that Asian economies are at risk of overheating as strong capital inflows increase inflationary pressures and raise the risk of damaging bubbles.

It urged regional leaders to return to ‘more normal’ monetary policies after the global financial crisis, and increase the flexibility of their exchange rates to counter speculative funds flowing into their economies.

‘For China, like in other economies in the region, the risk is to ensure that the boom we see in asset flows does not, like in the past, lead to a cycle of boom and bust,’ Mr Anoop Singh, director of the IMF’s Asia-Pacific department, told a news conference.

In its latest report on the regional outlook, the IMF said brighter economic growth prospects and widening interest rate differentials with developed economies ‘are likely to attract more capital to the region’.

‘This could lead to overheating in some economies and increase their vulnerability to credit and asset price booms with the risk of subsequent abrupt reversals,’ the report said.

The IMF raised its growth forecasts for Asia to 7.1 per cent for both this year and next, higher than its prediction last week when it estimated regional economies would expand an average 6.9 per cent this year and 7 per cent next year.

But the fund warned that export-driven Asia remains vulnerable to a slower-than-expected recovery in the West, and urged governments to reduce their reliance on overseas shipments and boost domestic consumption.

‘It will be important to implement reforms that boost the productivity and the competitiveness of the services sector,’ IMF senior economist Olaf Unteroberdoerster told reporters.

The IMF said Asian policymakers need to safeguard against the build-up of imbalances in asset and housing markets caused by ‘excess liquidity’, and one way to do this was to adopt more flexible exchange rates.

‘Letting the exchange rate appreciate can forestall short-term inflows,’ the fund said, without specifically referring to China.

The IMF said last week a stronger yuan was ‘essential’ for both the Chinese and world economies, heaping more pressure on Beijing to revalue its currency, which has been effectively pegged at 6.8 to the US dollar since mid-2008.

Critics say the policy has given Chinese manufacturers an unfair advantage by making their exports cheaper.

Source: Straits Times, 30 Apr 2010

Nouriel Roubini, the New York University professor who forecast the US recession more than a year before it began, said sovereign debt from the US to Japan and Greece will lead to higher inflation or government defaults.

Almost US$1 trillion of worldwide equity value was erased on Tuesday on concern that debt will spur defaults, derailing the global economy, data compiled by Bloomberg show.

German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis, after bonds and stocks fell across Europe in the past week.

‘The bond vigilantes are walking out on Greece, Spain, Portugal, the UK and Iceland,’ Mr Roubini, 52, said on Wednesday during a discussion at the Milken Institute Global Conference in Beverly Hills, California. ‘Unfortunately in the US, the bond market vigilantes are not walking out.’

‘The thing I worry about is the buildup of sovereign debt,’ said Mr Roubini, a former adviser to the US Treasury Department and IMF consultant. If the problem isn’t addressed, he said, nations will either fail to meet obligations or experience higher inflation as officials ‘monetise’ their debts, or print money to tackle the shortfalls.

‘While today markets are worried about Greece, Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems,’ Mr Roubini, who teaches at NYU’s Stern School of Business, said. Increasing tax revenue won’t be enough to ‘save the day’, he said.

Greece ‘could eventually be forced to get out’ of the 16-nation euro region, he said in a Bloomberg Television interview on Wednesday. That would lead to a decline in the euro and make it ‘less of a liquid currency’, he said.

‘Eventually, the fiscal problems of the US will also come to the fore,’ he said during the discussion. ‘The risk of something serious happening in the US in the next two or three years is going to be significant’ because there’s ‘no willingness in Washington to do anything’ unless forced by the bond markets.

Mr Roubini said the US probably will need a combination of increased tax revenue and lower government spending, while Europe needs to curb spending.

Mr Milken compared the excess debt of US consumers, companies and government to the nation’s obesity problem. ‘If we could just get Americans to reduce their weight to the same as they weighed in 1991, we could save US$1 trillion and the US could create US$1 trillion of value,’ the junk-bond billionaire-turned-philanthropist said. — Bloomberg

Source: Business Times, 30 Apr 2010

WASHINGTON: The Federal Reserve has sounded a more confident note that the US economy is strengthening but pledged to hold rates at record lows to make sure it gains traction.

Wrapping up a two-day meeting on Wednesday, the Fed in a 9-1 decision retained its pledge to hold rates at historic lows for an ‘extended period’. Doing so will help energise the recovery.

The Fed offered a more upbeat view even as it noted that risks remain. It said the job market is ‘beginning to improve’, an upgrade from its last meeting in mid-March, when it said the unemployment situation was merely ‘stabilising’.

It also noted that consumer spending has ‘picked up’, an improvement from its last observation that spending was expanding at a ‘moderate pace’.

Even with the gains, the Fed noted reasons to be cautious. High unemployment, sluggish income gains and tight credit are still dampening consumer spending, a major contributor to economic activity.

Commercial real estate remains fragile. And though housing activity has edged up, it is still at depressed levels. Bank lending continues to shrink.

The Fed’s statement included nothing that would lead most economists to move up their forecasts for when the central bank will start raising rates.

The soonest the Fed will do so is the fourth quarter, 34 of 44 leading economists polled told The Associated Press.

‘The Fed did upgrade its assessment of the economy, but clearly there is too much headwind for the recovery’ for the Fed to signal any plans to boost rates, said economist Sung Won Sohn at California State University.

Kansas City Fed chief Thomas Hoenig was, for the third straight meeting, the sole member to dissent from the overall decision to keep the ‘extended period’ pledge. He worries that this will limit the Fed’s stated ‘flexibility’ to start modestly bumping up rates.

He fears keeping rates too low for too long could lead to excessive risk-taking by investors, feeding new speculative bubbles in stocks, bonds and commodities.

The Fed’s brighter assessment helped give a modest lift to stocks. The Dow Jones industrials gained about 53 points, a rise of 0.48 per cent, on Wednesday.

The Fed has held its target range for its bank lending rate at between zero and 0.25 per cent, where it has remained since December 2008. In response, commercial banks’ prime lending rate, used to peg rates on certain credit cards and consumer loans, has stayed at about 3.25 per cent – its lowest point in decades.

Nonetheless, signals are growing that the US economy has turned a corner. Employers added a net total of 162,000 jobs in March, the most in three years. Consumer confidence is rising and manufacturers are boosting production.

Source: Straits Times, 30 Apr 2010

It’s been a long journey for tycoon whose firm is asked to pay rental arrears

Agus Anwar may have once owned banks in Indonesia, but now he is owing rent.

The Singapore investment holding firm controlled by the once prominent banker has proposed a plan at the eleventh hour to pay $1.2 million in arrears it owes Ngee Ann Development – just as the landlord was about to auction the firm’s property to offset the unpaid rent.

Sources told BT that the public auction, which was supposed to be held on Wednesday, was called off after Investoasia (formerly known as Kapital Asia) proposed to make an initial payment of part of the arrears it owes by the end of the week.

No date has been set for another auction – if it is on the cards – to sell Investoasia’s furniture and moveable property.

According to court documents, Investoasia owes Ngee Ann Development rent for two offices it occupied on the 24th and 25th storeys of Ngee Ann City’s Tower A.

Investoasia owes Ngee Ann Development 13 months rent amounting to about $900,000 for the 24th floor office.

It also has to pay the landlord additional rent after it failed to hand over the office despite a notice to do so by Dec 11 last year.

Ngee Ann Development seized the office – and Investoasia’s property in it – through a court order issued on April 1.

Investoasia also owes Ngee Ann Development another $190,000 for office space it rented on the 25th floor between September and November 2008.

The investment holding firm’s failure to pay the arrears prompted Ngee Ann Development to file a suit against it in February through its lawyer Edward Tiong of Allen & Gledhill.

Early this month, an order issued by the High Court allowed Ngee Ann Development to auction property owned by Investoasia located at its former 24th floor office – unless it pays up.

Mr Agus and his lawyers have declined to comment.

The suit is one of many filed by creditors against Mr Agus and firms controlled by him and his family.

Last December, he applied for a stay of bankruptcy proceedings, saying he was looking to raise income from certain sources. His application was turned down – a decision he is appealing against.

Indonesian-born Mr Agus, now in his late 50s, moved here in 2000 to start afresh amid the fallout from the 1997 financial crisis, which hit Indonesia hard.

He became a Singapore citizen in 2004 – the year news reports quoted Indonesian officials as saying that he owed the Indonesian government 3.2 trillion rupiah.

The money, equivalent to $633 million at the time, was said to have been used to bail out two of his Indonesian-based banks which collapsed as a result of the 1997 crisis.

The banks, Bank Istimarat and Bank Pelita, are now defunct. According to the Indonesian Bank Restructuring Agency (IBRA), Bank Istimarat and Bank Pelita misused the Indonesian government’s emergency loan.

When BT visited Investoasia’s former office on the 24th floor of Ngee Ann City Tower A last week, the premises were locked. A notice instructed that mail be delivered next door – which houses listed telecommunications firm Teledata. Some Investoasia employees were in the Teledata office but declined to speak.

According to data from the Accounting and Corporate Regulatory Authority (ACRA), Investoasia was set up in 2001 and is controlled by Mr Agus and Marcel Tjia Han Liong, chief executive and executive director of Interra Resources, a petroleum exploration and production company which is listed in Singapore and Australia.

The latest financial data provided by Investoasia to ACRA dates back to 2006, where it reported a $24 million loss – after tax from continuing operations – and $4.8 million in revenue.

Companies it has an interest in include Keppel Telecommunications and Transportation (Keppel T&T), in which it had a 6.5 per cent stake, according to Keppel T&T’s 2009 annual report.

In January this year, High Court judge Lee Seiu Kin ordered Mr Agus to repay a $10.5 million loan he received in 2008 from investment company Orion Oil.

The loan was secured by a mortgage on shares in Keppel T&T, among various things, and was to have been repaid in three months with $500,000 in interest. However, Mr Agus argued in court that the loan was void since Orion Oil did not have a licence to lend money. This claim was rejected by Justice Lee.

Mr Agus is appealing against the decision.

Last November, Mr Agus’s two sons were ordered by the High Court to pay $15 million their father owes to the local branch of Societe Generale Bank & Trust after they signed documents agreeing to be liable for his debts.

When Mr Agus defaulted on payments in October 2008, the bank terminated the credit services it offered him. It held off taking legal action on condition that his sons Patrick Adrian Anwar and Andrew Francis Anwar take out mortgages on two apartments in Devonshire Road, which he bought in their names.

The sons signed an agreement to pay the bank all the money their father owed.

When Mr Agus again failed to make payments, the bank turned to the sons – who also failed to pay. This led the bank to sue Mr Agus, his sons and two investment holding companies, each owned by one brother.

Last July, the sum due to the bank was about $17 million.

Some $2.3 million has been recovered from the sale of shares, payment of dividends and sale proceeds from the two mortgages.

Source: Business Times, 30 Apr 2010

News that negotiators may okay package for debt-laden nation soon boosts financial markets

BRUSSELS: Hopes that a bailout plan for debt-stricken Greece would be finalised soon gave financial markets some welcome respite yesterday.

European and German officials assured markets that they were working quickly on approving the bailout as they tried to keep Greece’s crisis from dragging others into a continent-wide financial meltdown.

Germany’s largest opposition party said it would move quickly to approve German participation, while European Union Monetary Affairs Commissioner Olli Rehn said yesterday he was ‘confident the talks will be concluded in the next days’.

He said negotiators from the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) were ‘working day and night’ and were nearing an agreement on ‘a multi-annual programme’ that will include major changes in Greece.

However, Mr Rehn said he still could not provide details of the deal. He said the financial lifeline was being put together to avoid a wider crisis and was ‘for every euro area member state and their citizens, to safeguard the financial stability in Europe and globally’.

Mr Rehn’s appearance at the European Commission’s daily news briefing was scheduled at the last minute and appeared designed to reassure financial markets that the money will come through and a Greek government debt default was not on the cards. Markets had been in turmoil the last few days as the seemingly never-ending Greek crisis threatened to drag countries like Portugal and Spain into the mire.

‘Rehn’s appearance means that we expect this deal to be wrapped up on the weekend,’ said an EU official who asked not to be named.

Greece says it needs a bailout in order to pay €8.5 billion (S$15.4 billion) in bonds due on May 19. Mounting fears that Germany might hold up its share of the overall €45 billion bailout package agreed earlier this month was the catalyst to this week’s market turmoil.

Europe’s debt crisis ratcheted up a notch or two this week when Standard & Poor’s downgraded Greece to junk status and cut its ratings on Portugal and much larger Spain.

As global stock markets plunged and the euro dived to a one-year low against the US dollar, the powers that be were finally mobilised into action, culminating in a meeting in Berlin on Wednesday between German Chancellor Angela Merkel, IMF managing director Dominique Strauss- Kahn and ECB president Jean-Claude Trichet.

The consensus in the markets is that a much more extensive package will be offered to Greece than the original one-year €45 billion deal agreed. This has helped to shore up confidence in the markets and Europe’s main stock indexes advanced yesterday while the euro has clambered off its recent lows.

Many investors now think that a three-year €120 billion deal may be in the offing.

Greek stocks rallied yesterday after Mr Rehn’s comments, with bank stocks heading for their biggest one-day rise on record. The Athens bourse’s banking index was up 13.9 per cent in afternoon trading.

Meanwhile, union officials in Greece said yesterday that the country will impose steeper salary cuts and new austerity measures to clinch the aid deal and avoid default. They vowed to protest. Prime Minister George Papandreou met unions to discuss the EU and IMF bailout to prepare the ground for what are set to be unpopular measures.

Source: Straits Times, 30 Apr 2010

It says economy is getting better but decides to keep rates low for extended period

IT was a message awash with hope and a surprisingly gentle punchline.

The employment market is improving, household spending is on the rise, business investment is picking up, the Federal Reserve’s interest rate policymaking committee said on Wednesday. Despite this, the Federal Open Market Committee’s stance on keeping short-term interest rates near zero for an ‘extended period’ remains unchanged.

The decision to peg the key federal funds rate in the range of 0 per cent to 0.25 per cent – where it stays – was initially taken more than a year ago, at a time when the financial crisis was running at fever pitch and the US economy appeared in imminent danger of plunging into its first depression since the 1930s.

The FOMC’s decision to leave unchanged its promise to keep interest rates low ‘for an extended period’, brought to a somewhat surprising end weeks of speculation on Wall Street that the April meeting would mark the unofficial beginning of a period in which the Fed will begin to prepare investors for an eventual rate hike off its current historic low levels with an alteration or modification of some sort of the much-invoked phrase.

Steady improvement in economic data and minutes from the March FOMC meeting, which was marked by a steady chorus of dissent and debate among the committee’s voting members regarding the need to keep interest rates so low, had investors braced for a new signal on how the central bank will begin pulling liquidity from the system.

‘The betting was that we would get an upgrade on the committee’s outlook on the economy, and along with that a downgrade on its belief that interest rates need to be kept at nearly zero without a change in the Fed’s policy stance even on the horizon,’ said Max Bublitz, the chief market strategist at San Francisco, California-based SCM Advisors, which manages over US$3.5 billion in institutional and private assets. ‘Instead what we got from the Fed was a kind of a yawner of a statement,’ he observed.

‘While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the committee anticipates a gradual return to higher levels of resource utilisation in a context of price stability,’ the FOMC said, using new, more optimistic language on the economy and pointing to improvements in various economic sectors at the beginning of its statement.

The key portion of its commentary, on its intentions, however, could have been lifted from any of the FOMC’s policy meeting statements of the past several months:

The committee ‘continues to anticipate that economic conditions, including low rates of resource utilisation, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.’

The Federal Reserve Board’s mostly unchanged statement had a welcome calming effect on Wednesday on a stock market still feeling jolted by the unravelling of attempts to fix Greece’s debt woes and the ripple effect those attempts are having on the value of the euro and the sovereign debt of first Portugal and now Spain, which on Wednesday saw its debt rating downgraded by S&P.

Stocks ticked higher after the Fed left interest rates unchanged and kept the ‘extended period’ language in its statement, turning a morning of losses into an afternoon of gains.

The Dow Jones Industrials finished with a gain of 53 points, or 0.5 per cent, to 11,045.27.

The S&P 500 gained eight points, or 0.7 per cent, to 1,191.36, while the Nasdaq Composite edged up by only a fraction of a point, or 0.01 per cent, at 2,471.73.

Debate over the merits of and the reasons for the Federal Reserve’s willingness to maintain the ‘extended period’ language, despite strengthening in economic activity began almost immediately.

Some market strategists argued the Fed might feel handcuffed by the turmoil coming out of Europe’s sovereign debt crisis, while others said the Fed might actually be hoping to see some inflation enter the economy as a way to raise values of the mountain of distressed assets still weighing on banks, which remain reluctant to lend.

‘If they don’t get their act together soon and start raising rates, it’s not going to be too bullish when we have all this debt to refinance and the dollar keeps on weakening,’ said Dave Rovelli, managing director of equity trading at Canaccord Addams.

Mr Bublitz agreed that looking longer-term, the Fed’s willingness to keep rates so low could weigh on the economy and the financial markets in various ways. ‘But bottom line is that for now, the Fed is keeping intact the basis for the 13-month-long rally, and that’s obviously bullish for risk assets,’ he said.

Source: Business Times, 30 Apr 2010