Singapore Retail Report Q1 2013

The Singapore Retail Report examines the long-term potential of the local consumer market, but flagsshort-term concerns about the impact on Singapore's economic outlook of inflationary pressure ashousing and transportation prices in the city-state continue to soar.

The report examines how best to maximise returns in the Singapore retail market while minimisinginvestment risk, and also explores the impact of a more severe deterioration among Singapore's maintrading partners (the US, the EU and China) on the Singaporean consumer and on the ability of producersand exporters to realise returns in the short term.

The report also analyses the growth and risk management strategies being employed by the leadingplayers in the Singapore retail sector, as they seek to maximise the growth opportunities offered by thelocal market.

Singapore comes sixth (out of seven) in BMI's Asia Retail risk/reward ratings, although it outperformssignificantly for risk.

Among all retail categories, consumer electronics will be the outperformer through to 2016 in growthterms, with sales forecast to increase by 20.7% between 2013 and 2016, from US$4.36bn to US$5.26bnas demand grows for higher-end product categories such as smartphones, HD TV sets, Blu-ray DVDplayers and entertainment notebooks.

In the competitive arena, BMI sees upside potential in government initiatives that should put thesemiconductor and electronics industries on a long-term path to renewed viability.Over the last quarter, BMI has revised the following forecasts/views:

Our ongoing view is that Singapore's economy will have slowed in 2012 to a pace of 2.6% forthe entire year (before witnessing a mild recovery to 3.6% in 2013) as the globally connectedcity-state's relatively healthy domestic economy battles the deleterious effects of languid externaldemand. Revised estimates for Q212 indicate that Singapore's GDP contracted by 0.7% inquarter-on-quarter (q-o-q) annualised, seasonally adjusted (SA) terms (versus initial estimates of1.1%), following a revised 9.4% expansion in Q112.

BMI has revised its private consumption growth outlook down to 4.5% from 5.3% previously inline with H112 numbers, but we maintain a relatively sanguine outlook for the sector, and expecteven stronger growth of 6.0% in 2013 as the economy bounces back from its middling 2012performance.