Merrill: Downgrades Singapore property and banking sectors, said residential property prices to fall 35%

Merrill reduces Singapore to heavy underweight

In a report, Merrill investment house has cut the portfolio weighting for Singapore to 4.27% - below the benchmark weighting of 5.14%. This follows downgrades in property and banking sectors which together account for around half of market capital. The report adds that Singapore is exposed to the global slowdown more than other countries, as its exports-to-GDP ratio is the highest in the region

Merrill expects Singapore residential property prices to fall by 10% this year and 25% in 2009

Merrill research house thinks any chance for a recovery in the second half of this year has disappeared with the deterioration in the economy. Citing demand weak and high inventories, rising debt cost and lower rentals ahead; as reasons for its gloomy outlook, it expects residential prices to fall by 10 per cent this year and 25 per cent in 2009.

Merrill said Singapore Banking Sector loan growth and wealth management products to suffer

Merill believes a sustained slowdown in the property market will impact loan growth in 2009. It expects loan growth to slow to mid-single digits from the current 26% year-on-year, while weaker capital markets and prevailing risk-aversion in the market for wealth management products will cause market-sensitive revenues to decline.

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