SOURCE: Singapore Fund

Singapore Fund

September 16, 2011 10:48 ET

The Singapore Fund Announces Third Quarter Earnings

JERSEY CITY, NJ--(Marketwire - Sep 16, 2011) - 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 July 31, 2011, the third quarter of its 2011 fiscal year and also a correction to its previous announcement regarding its benchmark index.

As of August 6, 2011, Aberdeen Asset Management Asia Limited replaced DBS Asset Management (United States) Pte. Ltd. as the Fund's Investment Manager.

For the quarter ended July 31, 2011, the Fund earned net investment income of approximately U.S. $276,000 (equivalent to income of U.S. $0.03 per share) resulting in net investment income for the nine-month period ended July 31, 2011 of approximately U.S. $488,000 (equivalent to income of U.S. $0.05 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. $23,000 (equivalent to a gain of less than U.S. $0.01 per share). As a result, the net realized and unrealized gains were approximately U.S. $7,493,000 (equivalent to a gain of U.S. $0.76 per share) for the nine months ended July 31, 2011.

In comparison, for the quarter ended July 31, 2010, the Fund earned net investment income of approximately U.S. $466,000 (equivalent to income of U.S. $0.05 per share) resulting in net investment income for the nine-month period of approximately U.S. $1,035,000 (equivalent to income of U.S. $0.11 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. $1,007,000 (equivalent to a gain of U.S. $0.10 per share). As a result, the net realized and unrealized gains increased to approximately U.S. $18,373,000 (equivalent to a gain of U.S. $1.93 per share) for the nine months ended July 31, 2010.

On July 31, 2011, total net assets of the Fund were approximately U.S. $161.4 million. The net asset value ("NAV") per share on that date was U.S. $16.19, based on 9,968,414 shares outstanding. Assuming the reinvestment of the U.S. $1.85 per share dividend paid on December 30, 2010, the Fund generated an investment return of 5.40% for the nine months ended July 31, 2011, when measured against the NAV per share of U.S. $17.26 on October 31, 2010, based on 9,493,516 shares outstanding at that time. For the nine months ended July 31, 2011, the Fund's benchmark, the MSCI Singapore Free Index ("SIMSCI"), increased by 7.54% in U.S. dollar terms.

In comparison, total net assets on July 31, 2010 were approximately U.S. $148.4 million, equivalent to a NAV of U.S. $15.63 per share, based on 9,493,516 shares outstanding.

As of July 31, 2011, the Fund had 94.43% of its net assets invested in Singapore equity securities and 0.99% 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") (3.24%) and U.S. Dollars ("USD") (1.51%) and liabilities in excess of other assets (0.17%).

As of September 15, 2011, the Fund's NAV per share was U.S. $13.48, based on net assets of approximately U.S. $134.4 million. On the same date, the Fund's shares on the New York Stock Exchange closed at U.S. $12.80, representing a trading discount to NAV per share of 5.04%.

Singapore Market Review

The SIMSCI Index increased 0.39% in USD terms during the quarter ended July 31, 2011. Trading activities continued to be volatile driven by external risk events. The positive market performance was driven by positive economic growth and resilient first half corporate earnings announcements. The banking, offshore-marine and defensive sectors outperformed expectations. The SIMSCI Index, which started the quarter at SGD 374.70 decreased to a low of SGD 346.24 on June 17, 2011 but recovered in the final month of the quarter.

Economic performance in Singapore continued to show strength. Singapore's Gross Domestic Product ("GDP") during the second fiscal quarter of 2011 was better than expected, growing 0.9% year-on-year ("YoY"), which was higher than the earlier estimate of 0.5% growth YoY. Although 2Q11 numbers were better than expected, GDP contracted 6.5% quarter-on-quarter ("QoQ"). During the first quarter of 2011 GDP grew 9.3% YoY. The slower second quarter growth was attributed largely to weakness in manufacturing output due to slower external demand. However, inflation continued to stay high at 5.2% YoY in June 2011 compared to 4.5% YoY in May 2011, prompting the Monetary Authority of Singapore to raise its 2011 headline Consumer Price Index forecast to 4.5% from the previous forecast which was in the 3% to 4% range.

Outlook and Strategy

We continue to be cautious of near-term headwinds in the Asian markets, which will likely keep market uncertainty and volatility at elevated levels. While investors were able to breathe a sigh of relief following Greece's second bailout, we believe the risk of insolvency in Greece and other troubled economies in Europe remains. Additionally, the slowdown in the U.S. economy continues to weigh on global markets. Hence, despite the strong foreign inflows seen in July 2011, we are wary of sudden bouts of risk aversion which could trigger a reversal of fund flows from the Asian markets. We continue to expect "risk-on, risk-off" activity to dominate going into August 2011.

We continue to expect the Chinese government's monetary tightening measures to result in a slower third quarter of 2011. We believe that, as property prices and inflation remain stubbornly elevated, further tightening measures will be rolled out, which will continue to put the brakes on China's growth. Recent macroeconomic data, though remaining generally positive, has continued to show signs that the pace of China's expansion is moderating.

Our outlook for Singapore remains largely unchanged. We continue to expect economic momentum to moderate in the short term, and remain cautious of further property tightening measures. We continue to see modest near-term upside for Singapore stocks, and believe market direction will remain largely driven by global events in the coming months.

The ten largest industry classifications of the Fund's equity investments held at July 31, 2011 were:

Percentage of
Industry Net Assets
1. Banks 19.30%
2. Property Development 15.74
3. Conglomerate 11.48
4. Shipyards 9.35
5. Health & Personal Care 8.32
6. Telecommunications 6.84
7. Diversified Financial 4.80
8. Agriculture & Food 4.19
9. Food, Beverage, Tobacco 3.17
10. Transportation - Air 3.12

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

Percentage of
Issue Net Assets
1. United Overseas Bank Ltd 10.25%
2. Oversea-Chinese Banking Corp. Ltd 9.05
3. Wilmar International Ltd 7.09
4. Genting Singapore Plc., Ltd 6.12
5. Jardine Matheson Holdings Ltd 6.01
6. Keppel Corp. Ltd 5.63
7. Singapore Telecommunications Ltd 4.82
8. Singapore Exchange Ltd 4.80
9. Golden Agri-Resources Ltd 4.19
10. Hongkong Land Holdings Ltd 4.13
QUARTERLY RESULTS OF OPERATIONS
Net Realized and Unrealized Gains (Losses) on Investment and Foreign Currency Transactions
Net Increase (Decrease) in Net Assets Resulting From Operations
Net Investment Income (Loss)
For the Quarter Ended
Total Per Total Per Total Per
(000's) Share (000's) Share (000's) Share
January 31, 2011 $ (231 ) $ (0.02 ) $ 1,402 $ 0.14 $ 1,171 $ 0.12
April 30, 2011 443 0.04 6,068 0.62 6,511 0.66
July 31, 2011 276 0.03 23 0.00 300 0.03
For the Nine Months Ended July 31, 2011 $ 488 $ 0.05 $ 7,493 $ 0.76 $ 7,981 $ 0.81
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
July 31, 2010 466 0.05 1,007 0.10 1,473 0.15
October 31, 2010 432 0.04 15,081 1.59 15,513 1.63
For the Year Ended October 31, 2010 $ 1,467 $ 0.15 $ 33,454 $ 3.52 $ 34,921 $ 3.67
PER SHARE SELECTED QUARTERLY FINANCIAL DATA
For the Quarter Ended Net Asset Value Market Price* Share Volume*
High Low High Low (000)
January 31, 2011 $ 18.41 $ 15.08 $ 17.88 $ 13.80 1,003
April 30, 2011 16.13 14.27 15.20 13.38 568
July 31, 2011 16.23 14.94 15.15 13.75 444
January 31, 2010 $ 14.95 $ 13.73 $ 13.66 $ 12.15 526
April 30, 2010 15.68 13.54 14.01 11.75 402
July 31, 2010 15.63 13.46 14.27 11.82 499
October 31, 2010 17.61 15.24 16.82 13.44 801
* As reported on the New York Stock Exchange.

Benchmark Index

The press release issued by the Fund on March 31, 2011 incorrectly stated that, effective May 1, 2011, the Fund would change its primary benchmark index from the Straits Times Index to the "MSCI Singapore Total Capital Index." However, the Fund has determined that the appropriate primary benchmark index is the SIMSCI. The Fund's previous monthly reports for June and July 2011 on its website have been restated to compare the Fund's performance to the SIMSCI.

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