Electronics to benefit from currency woes
Electronics to benefit from currency woes
SINGAPORE (AFP): Southeast Asian electronics firms are
benefiting from the regional currency crisis since they earn US
dollars and weak local currencies cut operating costs, an
international investment house said yesterday.
"I think electronics companies as a whole are net
beneficiaries in the currency crisis," said Pearly Yap, research
manager at SocGen-Crosby Securities Pte. Ltd., a subsidiary of
French bank Societe Generale.
"Southeast Asia is highly dependent on demand from the U.S.
and Europe. If you look at Singapore alone, exports to the U.S.
and Europe make up 53 percent of total electronics exports," she
said at a media briefing on the industry.
Yap predicted a synchronized recovery in the Group of Seven
(G-7) industrial economies and said that with Southeast Asian
electronics companies earning in U.S. dollars, "there's no real
impact" on the industry from the currency crisis.
"They would also have benefits from lower operating costs with
weaker currencies," she said.
"Of course we are referring to companies that are really
selling to the global marketplace," Yap said.
"I think there are some Malaysian companies which are selling
consumer products to the Malaysian market. Those will be probably
hit," she added.
Southeast Asian currencies have fallen sharply since the Thai
baht's de facto devaluation on July 2 set off a regional currency
crisis, but regained lost ground this week on expectations of
reforms that would boost confidence.
Yap said that in the Singapore stock market, the highest
growth opportunities come from the electronics sector, despite
lingering skepticism following the severe slump in 1996 which
eased only in the middle of this year.
SocGen-Crosby made bullish forecasts, particularly for
semiconductors, despite a slowdown in Singapore's electronics
output growth in August, which other analysts saw as signs of a
bumpy recovery.
Yap said there was still some "overhang" from last year's
slump but predicted that electronics stocks will outperform the
rest of the Singapore stock market in 1998.
Singapore is the world's biggest manufacturer of computer hard
disk drives and a major exporter of semiconductors.
Worldwide demand for electronics will be propelled in 1998 by
aggressive product innovation led by U.S. chip giant Intel Corp.,
the G-7 recovery, and rising semiconductor content in electronic
products, Yap said.
Semiconductors will be the "most positive segment" of the
market, Yap said, predicting 9.5 percent revenue growth for 1997
against a nine-percent fall in 1996, and 22-25 percent growth
beyond 1997.
She said global billings of Singapore semiconductor firms rose
15.3 percent in August, when the electronics industry's output
growth was only 3.7 percent.