SOURCE: Singapore Fund

June 15, 2010 11:09 ET

The Singapore Fund Announces Second Quarter Earnings

JERSEY CITY, NJ--(Marketwire - June 15, 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 April 30, 2010, the second quarter of its 2010 fiscal year.

For the quarter ended April 30, 2010, the Fund earned net investment income of approximately U.S. $562,000 (equivalent to income of U.S. $0.06 per share) resulting in net investment income for the six-month period of approximately U.S. $569,000 (equivalent to income of U.S. $0.06 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. $14,298,000 (equivalent to a gain of U.S. $1.51 per share). As a result, the net realized and unrealized gains were approximately U.S. $17,366,000 (equivalent to a gain of U.S. $1.83 per share) for the six months ended April 30, 2010.

In comparison, during the quarter ended April 30, 2009, the Fund earned net investment income of approximately U.S. $874,000 (equivalent to income of U.S. $0.09 per share) resulting in net investment income for the six-month period of approximately U.S. $1,259,000 (equivalent to income of U.S. $0.13 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. $8,967,000 (equivalent to a gain of U.S. $0.94 per share). As a result, the net realized and unrealized gains were approximately U.S. $4,709,000 (equivalent to a gain of U.S. $0.49 per share) for the six months ended April 30, 2009.

On April 30, 2010, total net assets of the Fund were approximately U.S. $146.9 million. The net asset value ("NAV") per share on that date was U.S. $15.47, 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 13.90% for the six months ended April 30, 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 six months ended April 30, 2010, the Fund's benchmark, the Straits Times Index ("STI"), increased by 14.50% in U.S. dollar terms.

In comparison with the same quarter-end of the previous fiscal year, total net assets on April 30, 2009 were approximately U.S. $85.1 million, equivalent to a NAV of U.S. $8.97 per share, based on 9,477,893 shares outstanding.

As of April 30, 2010, the Fund had 87.59% of its net assets invested in Singapore equity securities, 3.73% invested in Thai equity securities, 2.11% invested in Malaysian equity securities and 1.98% invested in Indonesian 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") (3.78%), U.S. Dollars ("USD") (0.07%), Malaysian Ringgits (0.02%) and assets in excess of other liabilities 0.72%.

As of June 14, 2010, the Fund's NAV per share was U.S. $14.34, based on net assets of approximately U.S. $136.1 million. On the same date, the Fund's shares on the New York Stock Exchange closed at U.S. $12.60, representing a trading discount to NAV per share of 12.13%.

Singapore Market Review

The STI finished the six month period ended April 30, 2010 on a strong note despite volatility caused by the sovereign debt crisis in Southern Europe and tightening fear in China. Underlying economic momentum in Singapore and its regional neighbors remained robust, leading to continuing upgrades in corporate earnings.

Advanced estimates of first quarter 2010 ("1Q10") real Gross Domestic Product ("GDP") growth in Singapore was a stunning 13.1% YoY, much stronger than consensus. The official growth forecast for 2010 was subsequently raised to 7-9% YoY, while inflation was also revised upwards to 2.5-3.5%. The rapid expansion in 1Q10 GDP was driven by the manufacturing sector which grew a strong 30% YoY. The services sector expanded 8.4% and the construction sector rose 11.3% YoY during the quarter.

In conjunction with these numbers, the Monetary Authority of Singapore ("MAS") announced a one-off revaluation of the SGD trade-weighted trading band, and a shift to a gradual and modest appreciation (from zero) of the SGD trade-weighted trading band. These two moves surprised the market and suggested a more decisive tightening move than the market expected.

During the period under review, the Singapore government introduced a series of measures to cool down the residential property market which has seen a strong pick up in demand and rising prices. According to the Urban Redevelopment Authority ("URA"), as at the end of 1Q10, residential property prices rose more than 30% since bottoming in the second quarter of 2009 ("2Q09"). Some of the anti-speculation measures included the imposition of a seller's stamp duty on all residential properties sold within a year of purchase and lowering of the loan-to-value limit to 80% for housing loans.

Within the STI indexed components, major gainers included Neptune Orient Lines, Gold Agri, SMRT, SIA Engineering and Jardine Cycle & Carriage. Major losers included Genting Singapore, Capitaland, CapitaMall Asia, OLAM and Singapore Exchange.

Outlook and Strategy

Given the encouraging economic data that was announced recently, the consensus view is now moving towards a broad-based and more sustainable recovery. This is a positive backdrop for corporate earnings growth. However, it also portends greater inflationary pressure as the output gap is fast closing.

The Singapore market trades at an earnings multiple of 15.1 times estimated 2010 earnings and has an anticipated earnings growth average of 14% earnings growth over this year and next. This is in line with the average for the past five years. The near term market direction will be driven by external events such as the sovereign blowouts in Europe, Chinese monetary tightening, Chinese Yuan revaluation and anti-speculation property measures in this region.

We remain convinced that market returns are expected to be rather modest this year, as the various drivers for market performance are relatively balanced. While liquidity conditions will be tighter than last year, we expect stronger than expected earnings growth to support the stock market.

The portfolio is overweight in the transportation sector, while underweight in the defensive telecommunications and policy vulnerable property sectors. We expect strong earnings upgrades from the transportation sector owing to improving volume demand and an upward trend in rates as a result of supply constraint. While physical properties have seen significant pick-up in activity, we remain wary of policy measures to curb asset inflation. We would turn more positive on companies in the property sector provided their share prices move closer to their revalued net asset value.

Outside of Singapore, we have built up some exposure to Thailand, Indonesia and Malaysia from a bottom-up basis. These positions seek to take advantage of attractive valuations prevailing in those stocks when selected segments of the regional economies are expected to do well. These include consumption, plantation and utilities.

The ten largest industry classifications of the Fund's equity investments held at April 30, 2010 were:


                                           Percentage of
                     Industry               Net Assets
        ---------------------------------- -------------
1.         Banks                           22.55%
2.         Property Development            10.08
3.         Conglomerate                     9.38
4.         Telecommunications               7.41
5.         Health & Personal Care           7.01
6.         Transportation - Air             5.08
7.         Transportation - Marine          4.91
8.         Shipyards                        3.35
9.         Transportation - Land            3.13
10.        Industrial                       2.93

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


                                           Percentage of
                     Issue                  Net Assets
        ---------------------------------- -------------
1.      Oversea-Chinese Banking Corp. Ltd.    10.81%
2.      United Overseas Bank Ltd.             10.40
3.      Singapore Telecommunications Ltd.      7.41
4.      Wilmar International Ltd.              7.01
5.      Singapore Airlines Ltd.                5.08
6.      Jardine Matheson Holdings Ltd.         5.05
7.      Noble Group Ltd.                       4.33
8.      Keppel Corp. Ltd.                      3.35
9.      SMRT Corp. Ltd.                        3.13
10.     Hongkong Land Holdings Ltd.            3.08




QUARTERLY RESULTS OF OPERATIONS


                                       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
April 30, 2010         562     0.06   14,298       1.51   14,860      1.57
                    ------    -----  -------     ------  -------    ------

For the Six Months
 Ended
 April 30, 2010      $ 569    $0.06  $17,366     $ 1.83  $17,935    $ 1.89
                    ======    =====  =======     ======  =======    ======

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
                    ======    =====  =======     ======  =======    ======



PER SHARE SELECTED QUARTERLY FINANCIAL DATA

For the Quarter Ended       Net Asset        Market       Share
                              Value          Price*      Volume*
                         --------------  --------------  ------
                          High     Low    High     Low    (000)
                         ------  ------  ------  ------  ------
January 31, 2010         $14.95  $13.73  $13.66  $12.15     526
April 30, 2010            15.68   13.54   14.01   11.75     402

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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