Singapore has reason to keep party low key

                   The quote of the week goes to the Singapore
                   investment analyst who was talking about local
                   reaction to the news that the Singapore Straits
                   Times Index had reached a record high.

                   "Everyone's celebrating in a very quiet way," he
                   offered.

                   "We're always very sober here."

                   Really, my friend? Ever been to the Boat Quay of an
                   evening?

                   Look at the first chart and pick the index that has
                   just reached a record high.

                   That's right, it's the one at the bottom, the SES
                   Straits Times 55 Index in local currency terms set to
                   a base of 100 for June 24, 1989, to give you an exact
                   10-year record up to the day of that record high.

                   Of course you always have to be selective about
                   which Singapore index you decide to use.

                   There is a range of at least six of them, among
                   which the SES All Share had not quite made it yet
                   and the SES Foreign definitely had not although the
                   DBS 50 had topped the mark and the OCBC 30
                   may have done so.

                   Take your choice.

                   But while the 0.065 per cent of the world's
                   population which lives in Singapore may look at it in
                   local-currency terms, the rest of the world ranks
                   these stock market performances in US dollar
                   terms.

                   The second line from the bottom gives you a US
                   dollar version of the SES Straits Times 55 on those
                   rebased index terms.

                   It's a better performance than in local currency but
                   no way do we have a record high, not with a weak
                   Singapore dollar.

                   Now look at the Hang Seng Index on the same
                   basis. That's the top line in the chart in case you
                   didn't realise.

                   What it tells you is that Hong Kong has steadily done
                   much better than Singapore during that period, 178
                   per cent better in US dollar terms, in fact, and 219
                   per cent better in local-currency terms.

                   That previous Singapore record high, the one that
                   was supposedly beaten this week, was not much of
                   a high. They'll need something a little stronger in
                   their pipes down there.

                   This market has done virtually nothing since the
                   1993 bubble.

                   It all goes to confirm American economics guru Paul
                   Krugman's view that recovery in Asia has been
                   illusory.

                   What we have is governments keeping their
                   currencies weak and driving domestic interest rates
                   down to the ground to create domestic liquidity so
                   long as foreign money stays out.

                   In Singapore, for instance, overnight deposit rates
                   are down to 0.6 per cent, one month interbank
                   money is available for 1.2 per cent and you can get a
                   three-year car hire purchase loan for 5.5 per cent.

                   It's not surprising in these circumstances that the
                   punters are jumping back in.

                   And it's not the stock market alone.

                   The figures for April have motor vehicle sales up 42
                   per cent year over year on a three-month average
                   basis and, as the second chart shows, the volume of
                   total retail sales has rocketed. By now that growth
                   rate is probably at a 10-year high.

                   Bubble, bubble, boil and trouble, it's that old
                   phenomenon of party now, pay later. Let's be
                   grateful that our peg to the US dollar has stopped us
                   from doing it too.