5 things to know before the Singapore market trades this week: June 15-19

1. Fed may not hike rates

Will it, won't it? The US Fed is set to announce interest rates Thursday morning after the monthly meeting of its Open Market Committee, but although pivotal, no hike is expected this time.

The Fed has not raised interest rates since 2006, maintaining them at near zero at 0.25%. It has said rates will be raised only if data points to a recovery in the U.S. economy, which had come to a standstill in the first quarter of 2015. Fed Economists see an almost 40 per cent chance the Federal Reserve will delay raising rates beyond September if labour gains weaken or inflation fails to move higher, a Bloomberg News survey showed.

Asian markets had been volatile in the past when Fed announced plans of possible tapering, but policymakers in the region have taken measures since to improve the stability of their economies, including increasing taxes, reducing subsidies, freeing up markets and increasing currency reserves. So while its highly likely Fed won't hike rates, Asia seems to be ready for any outcome.

2. Greece talks fail, what next?

The "last attempt" talks between Greece and its international creditors broke up in failure late Sunday night (early morning Singapore time), with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro. The EU's executive Commission said euro zone finance ministers would now tackle the issue when they meet on Thursday.

Athens needs to secure funding to repay 1.6 billion euros ($2.41 billion) to the International Monetary Fund by the end of this month.

Failure to keep Greece in the euro, after years of arduous negotiations and two emergency bailouts totalling 240 billion euros, would send it lurching into the unknown and mark a historic blow to the EU's most ambitious project.

3. Rising inflation in Malaysia?

Malaysia's annual inflation rate is likely to go up to 2.0 percent in May as prices continued to rise after the introduction of a consumption tax in April. The figures will be out by Wednesday noon.

The economy grew 5.6 per cent in the first quarter, as domestic demand helped to counter the effects of weak global prices and commodity exports.

But, ringgit is slipping, and prices for food, housing, water, electricity and non-alcoholic beverages, the most important categories for consumer price index in Malaysia, are rising.

Consumer prices in Malaysia rose 1.8 per cent year-on-year in April of 2015, up from 0.9 per cent in March but slightly below market forecasts. It is the fastest inflation since January this year, mainly due to an increase in cost of alcoholic beverages & tobacco, food & non-alcoholic beverages, health and restaurants & hotels.

4. Singapore retail sale figures for April

Singapore is set to announce retail sales figures Monday that could indicate the economic health of the city. Car sales led the retail industry, with 1.1 per cent rise in March over Feb, but spending may have reduced in April due to a strong Singapore dollar. More of the same is expected this time as the city state announces its balance of trade numbers.

5. China housing price index

Most economic data for China is out, but the release of Housing Price Index is awaited by the markets that will determine the economic health of the Asian giant.

China's real estate climate index has been on the downward trend since 2010. The HPI - average price of new homes in 70 Chinese cities - had remained unchanged at -6.10 per cent in April 2015 as compared to the previous month, according to data released by the National Bureau of Statistics. It was down 10 percentage points in the first four months of 2015 compared with a year earlier. Concerns are that China's slowing property market is a result of speculative bubble that has led to a massive accumulation of debt. Add to that Three interest rate cuts in the space of six month and the continuing availability of cheap credit. But Economists are predicting that housing market could soon turn the corner, spurring new investment in the next six months.


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