SOURCE: Singapore Fund

February 24, 2010 11:28 ET

The Singapore Fund Announces First Quarter Earnings

JERSEY CITY, NJ--(Marketwire - February 24, 2010) - The Singapore Fund, Inc. (NYSE: SGF), a closed-end management investment company seeking long-term capital appreciation through investment primarily in Singapore equity securities, today announced its performance results for the three months ended January 31, 2010, the first quarter of its 2010 fiscal year.

For the quarter ended January 31, 2010, the Fund earned net investment income of approximately U.S. $7,000 (equivalent to income of less than U.S. $0.01 per share). In addition, net realized and unrealized gains from investment activities and foreign currency transactions during that same three-month period were approximately U.S. $3,068,000 (equivalent to a gain of U.S. $0.32 per share).

In comparison, during the quarter ended January 31, 2009, the Fund earned net investment income of approximately U.S. $385,000 (equivalent to income of U.S. $0.04 per share). In addition, net realized and unrealized losses from investment activities and foreign currency transactions during that same three-month period were approximately U.S. $4,258,000 (equivalent to a loss of U.S. $0.45 per share).

On January 31, 2010, total net assets of the Fund were approximately U.S. $132.0 million. The net asset value ("NAV") per share on that date was U.S. $13.91, based on 9,493,516 shares outstanding. Assuming the reinvestment of the U.S. $0.26 per share dividend paid on December 30, 2009, the Fund generated an investment return of 2.41% for the three months ended January 31, 2010, when measured against the NAV per share of U.S. $13.85 on October 31, 2009, based on 9,477,893 shares outstanding at that time. For the three months ended January 31, 2010, the Fund's benchmark, the Straits Times Index ("STI"), increased by 3.20% in U.S. dollar terms.

In comparison with the same quarter-end of the previous fiscal year, total net assets on January 31, 2009 were approximately U.S. $75.2 million, equivalent to a NAV of U.S. $7.94 per share, based on 9,477,893 shares outstanding.

As of January 31, 2010, the Fund had 90.76% of its net assets invested in Singapore equity securities, 3.25% invested in Thai equity securities, 1.78% invested in Indonesian equity securities and 1.34% invested in Malaysian equity securities. The balance of the Fund's net assets were in the form of time deposits and other cash equivalents denominated in Singapore Dollars ("SGD") (3.46%), U.S. Dollars ("USD") (0.14%) and liabilities in excess of other assets 0.74%.

As of February 23, 2010, the Fund's NAV per share was U.S. $14.21, based on net assets of approximately U.S. $134.9 million. On the same date, the Fund's shares on the New York Stock Exchange closed at U.S. $12.34, representing a trading discount to NAV per share of 13.16%.

Singapore Market Review

The Singapore stock market was higher by 3.2% in USD terms during the quarter under review. During its first two months, the Straits Times Index surged by nearly 7% at its peak, before succumbing to profit-taking owing to concern over policy tightening in China.

The advanced estimate of Singapore 4Q09 GDP saw a growth of 3.5% YoY, in line with expectations. Non-oil domestic exports rose a strong 26.1% YoY in December, while other domestic economic indicators such as tourist arrivals and retail sales also put on better showings. In other words, it was very much a broad-based recovery.

Banks outperformed the property sector during the quarter after the authorities' expressed concern over potential speculative activities in the physical market. The 3Q09 results of all the Singapore banks were impressive on the back of improving credit costs and net interest margins which generally held up despite falling interest rates.

Other than the above, there were no discernable sector trends. Most of the trading activity was focused on stock-specific issues. Among the key benchmark stocks, Olam, Capitaland, Sembcorp Marine, SPH and Jardine Strategic were the worst performers, while Golden Agri-Resources, SIA Engineering, Starhub, SMRT and Cosco Holdings did well.

In the middle of January, well-owned key benchmark stocks such as Genting Singapore, as well as banking and property developer stocks were sold down on fears over policy tightening in China. However, investors took advantage of market weakness to build positions in selected small-caps and Chinese stocks, with the view that some profit can be made from stock picking in a range-bound market.

Outlook and Strategy

Earlier-than-expected policy tightening in China has resulted in market weakness at the start of the year, contrary to our earlier view of a strong 1Q10. However, we expect better performance to follow in the coming months, as improving corporate earnings should lead the market moderately higher by year-end, in our view. Hence we see this current window as a buying opportunity, as valuations start to look attractive again.

We expect markets to remain volatile in the short-term as investors ponder the implications of China's policy normalization against the backdrop of a recovering global economy. However, we believe China's investment spending and loan growth will moderate in the coming months and lead to an improvement in market sentiment.

We expect the current round of corporate results to surprise on the upside and lead to further earnings upgrades. We favor companies geared to regional domestic demand and export recovery, as these could see the most upgrades, in our view.

Singapore's Budget 2010 is expected to aim for longer term growth amid the ongoing global recovery. Strategic implications for the stock market should come from the findings and recommendations of the Economic Strategies Committee (ESC), which are scheduled to be unveiled ahead of the Budget. We are looking to build up positions in niche companies leveraged to the growth in regional domestic demand, ahead of the ESC's announcement of its recommendations.

A key risk to the market includes fiscal blowouts in peripheral Europe which could lead to a strong rally in the USD. This could undermine risky assets including Singapore equities in the near term, as the USD has been used, as a funding currency for carry trades.

The ten largest industry classifications of the Fund's equity investments
held at January 31, 2010 were:

                                                    Percentage of
          Industry                                    Net Assets
          --------                                  -------------
1.      Banks                                           23.08%
2.      Property Development                            13.12
3.      Conglomerate                                     9.05
4.      Telecommunications                               7.94
5.      Shipyards                                        7.19
6.      Transportation - Air                             5.02
7.      Health & Personal Care                           4.15
8.      Electronic Components                            3.51
9.      Transportation - Land                            2.83
10.     Transportation - Marine                          2.59

The ten largest individual common stock holdings at the same date were:

                                                    Percentage of
                Issue                                Net Assets
                -----                               -------------
1.      Oversea-Chinese Banking Corp. Ltd.              10.93%
2.      United Overseas Bank Ltd.                       10.10
3.      Singapore Telecommunications Ltd.                7.94
4.      Singapore Airlines Ltd.                          5.02
5.      Hongkong Land Holdings Ltd.                      4.93
6.      Jardine Matheson Holdings Ltd.                   4.58
7.      Noble Group Ltd.                                 4.47
8.      Wilmar International Ltd.                        4.15
9.      Keppel Corp. Ltd.                                4.10
10.     Venture Corp. Ltd.                               3.51


                                       Net Realized
                                       and Unrealized      Net Increase
                                     Gains (Losses) on    (Decrease) in
                          Net          Investment and       Net Assets
For the Quarter       Investment      Foreign Currency      Resulting
 Ended               Income (Loss)      Transactions      From Operations
                    ---------------  ------------------  -----------------

                     Total     Per    Total        Per    Total      Per
                    (000's)   Share  (000's)      Share  (000's)    Share
                    ------    -----  -------     ------  -------    ------
January 31, 2010    $    7    $0.00  $ 3,068     $ 0.32  $ 3,075    $ 0.32
                    ======    =====  =======     ======  =======    ======

January 31, 2009    $  385    $0.04  $(4,258)    $(0.45) $(3,873)   $(0.41)
April 30, 2009         874     0.09    8,967       0.94    9,841      1.03
July 31, 2009           98     0.01   39,272       4.15   39,370      4.16
October 31, 2009       500     0.06    6,305       0.67    6,805      0.73
                    ------    -----  -------     ------  -------    ------

For the Year Ended
 October 31, 2009   $1,857    $0.20  $50,286     $ 5.31  $52,143    $ 5.51
                    ======    =====  =======     ======  =======    ======


For the Quarter        Net Asset           Market          Share
 Ended                   Value             Price*         Volume*
                    ---------------    ---------------   ----------

                     High      Low      High      Low       (000)
                    ------   ------    ------   ------   ----------

January 31, 2010    $14.95   $13.73    $13.66   $12.15          526

January 31, 2009    $ 9.26   $ 7.71    $ 8.84   $ 6.11        1,111
April 30, 2009        8.97     6.78      7.91     5.68          919
July 31, 2009        13.13     8.97     11.65     7.92          717
October 31, 2009     14.26    12.48     13.00    10.88          934

*As reported on the New York Stock Exchange.

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