SINGAPORE (Reuters) – U.S. companies are doing well but the country is faced with entrenched political divisiveness that makes reaching any kind of compromise on the budget deficit difficult, former IMF chief economist Raghuram Rajan said on Wednesday.

He said U.S. firms are enjoying huge profits and will likely step up hiring in the second half as margins remain at elevated levels.

The country’s politicians are, however, unlikely to agree on how to resolve the widening deficit and related issues like Medicare until after next year’s presidential election.

“The bottom line is the underlying private sector economy in the United States is extremely profitable at this point and is looking to grow,” Rajan said at an investment conference in Singapore.

“For the first time, I have heard my private sector businessmen friends talk about investing in the United States, especially in manufacturing,” said Rajan, a professor at the University of Chicago’s Booth School of Business and also economic adviser to the Indian prime minister.

The former International Monetary Fund chief economist said the high profit margins enjoyed by U.S. firms are unlikely to be competed away anytime soon as neither the high margins that usually attracted new entries nor higher input costs seemed to be materializing.

“It’s reasonable to accept some sort of narrowing of those margins over time but I don’t see the mean (average) revision happening as quickly,” he said.

SINGAPORE (Reuters) – U.S. companies are doing well but the country is faced with entrenched political divisiveness that makes reaching any kind of compromise on the budget deficit difficult, former IMF chief economist Raghuram Rajan said on Wednesday.

He said U.S. firms are enjoying huge profits and will likely step up hiring in the second half as margins remain at elevated levels.

The country’s politicians are, however, unlikely to agree on how to resolve the widening deficit and related issues like Medicare until after next year’s presidential election.

“The bottom line is the underlying private sector economy in the United States is extremely profitable at this point and is looking to grow,” Rajan said at an investment conference in Singapore.

“For the first time, I have heard my private sector businessmen friends talk about investing in the United States, especially in manufacturing,” said Rajan, a professor at the University of Chicago’s Booth School of Business and also economic adviser to the Indian prime minister.

The former International Monetary Fund chief economist said the high profit margins enjoyed by U.S. firms are unlikely to be competed away anytime soon as neither the high margins that usually attracted new entries nor higher input costs seemed to be materialising.

“It’s reasonable to accept some sort of narrowing of those margins over time but I don’t see the mean (average) revision happening as quickly,” he said.

SINGAPORE, June 13 (Reuters) – China faces a “meaningful probability” of a hard economic landing and the euro zone is storing up problems for the future by not tackling the debt crisis head on, said Nouriel Roubini, the economist who predicted the global financial crisis.

He said U.S. Treasury prices, which have risen sharply as investors sought a safe haven from the euro area debt crisis and worries about a slowdown in the global economy, were fairly valued although he was cautious about U.S. equities.

New York-based Roubini is closely followed by Wall Street because he predicted the U.S. housing meltdown that precipitated the global downturn.

China avoided a hard landing during the global credit crunch but faces a downturn after 2013 as it will struggle to keep increasing fixed investments, Roubini said.

“There is a meaningful probability of a hard landing in China after 2013,” he told a financial conference in Singapore.

Roubini said investment was already 50 percent of gross domestic product. Sixty years of data had shown that over- investment led to hard landings, he said, citing the Soviet Union in the 1960s and 70s, and East Asia before the 1997 financial crisis.

“I was recently in Shanghai and I took their high-speed train to Hangzhou,” he said, referring to the new Maglev line that has cut travelling time between the two cities to less than an hour from four hours previously.

SINGAPORE, June 13 (Reuters) – Philippine inflation may peak later than previously thought but the inflation target for 2011 is still in sight, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said on Monday, ahead of a central bank policy review later this week.

Guinigundo told Reuters inflation may peak either in the third or fourth quarter of this year, and the average for 2011 would be in the central bank’s target range of 3 to 5 percent.

“It seems to be stabilizing and may peak between the third and fourth quarter,” Guinigundo said in an interview. “Directionally, the outlook for 2011 will be more favourable than what it was during the May meeting.”

The BSP had previously expected inflation to peak in the second or third quarter.

The BSP raised its main policy rate at its past two reviews in March and May. A majority of analysts expect the central bank to raise rates again at a review on Thursday.

Guinigundo said even if key commodity prices eased, the impact of higher fuel and food prices earlier this year would keep the annual inflation rate high over coming months.

“Even if we see some easing, the peak may not happen today but a number of months from now,” he said.

SINGAPORE (Reuters) – China’s defense minister sought to reassure Asia Pacific neighbors on Sunday that his country’s growing economic and military power was not a threat, as long-running maritime disputes in the region flare up again.

General Liang Guanglie told the annual Shangri-La security conference in Singapore that the modernization of the People’s Liberation Army was in line with the country’s economic growth and to meet its security requirements.

“We do not intend to threaten any country with the modernization of our military force. I know many people tend to believe that with the wealth of China’s economy, China will be a military threat,” he said, speaking dressed in full military uniform.

“I would like to say that it is not our option. We didn’t seek to, we are not seeking to and we will not seek hegemony and we will not threaten any country.”

China will beef up its military budget by 12.7 percent this year, the government announced in March, a return to double-digit spending increases that stirred unease in the region as well as in the United States which has long had a strong presence in the Asia-Pacific region.

China’s growing military influence has coincided with a more assertive diplomatic tone, evident in rows with Japan and Southeast Asia over disputed islands, and in rows with Washington over trade, the yuan currency and this week over cyber-security after Google said email accounts had been hacked in an attack that appeared to originate from China.

But Liang said the situation in the South China Sea where a territorial dispute with Vietnam and the Philippines heated up last month was now stable.

SINGAPORE, Jun (Reuters) – India will feel pressured to retaliate if Pakistan-based militants launched an attack similar to the Mumbai assaults that killed more than 160 people and fueled anger across the country, a government minister said on Saturday.

The Indian government’s response was restrained despite the public calls to hit back over the November 2008 attacks blamed on a Pakistan-based guerrilla group, but it would be difficult to withstand the pressure again, Minister of State for Defense M M Pallam Raju told a security conference.

“If a provocation is to happen again, it would be hard to justify to our people self restraint, and I hope that it will not be repeated and that we will have a constructive dialogue with Pakistan in containing these terrorist elements which are causing strife not only in India but also within Pakistan,” Raju said.

Ties between the nuclear-armed rivals went into deep chill following the attacks with India insisting that Pakistan act against members of the Lashkar-e-Taiba (LeT) blamed for the attacks as well as its patrons in Pakistan’s powerful Inter-Services Intelligence (ISI) spy agency.

Pakistan has put seven people on trial, and says it needs more evidence from India to prosecute others including the founder of the LeT, Hafeez Mohammad Sayeed.

Raju said revelations made by a Pakistani-American who has confessed to scouting targets for the Mumbai attacks in a trial in Chicago in which he linked the attacks to the ISI have made it harder to show restraint in future.

The Pakistani-American, David Headly, who has pleaded guilty to avoid the death penalty, testified that he took orders from both the Lashkar-e-Taiba, and an ISI major as he laid the groundwork in the attacks.

SINGAPORE, May 19 (Reuters) – US-based hedge fund Whitebox Advisors, started by Deephaven Asset Management’s founding partner Andrew Redleaf, is setting up an office in Singapore, two sources familiar with the matter said.

The firm, which manages about $2.5 billion in assets, will start managing the Asian exposure of its fund from Singapore, one of the sources said. The sources declined to be identified as they were not authorised to speak to the media.

The fund is part of a flurry of overseas hedge funds setting up offices in the region which has drawn the likes of GLG, Soros Fund Management, Paulson and Fortress.

Hedge funds have been making a beeline for Asia, attracted by the region’s strong economic growth and lighter regulation, especially in Singapore, as the United States and European countries look to tighten the screws on what is still a largely unregulated industry.

Asia Pacific has emerged as the top-ranked region for net investor demand in 2011, according to a survey released by the prime broking unit of Credit Suisse in March.

Nearly half of the more than 600 investors surveyed by Credit Suisse said they had demand for exposure to the region which contributes about a fifth to the global hedge fund assets of about $1.9 trillion.

There was no response to a Reuters e-mail to Whitebox but the company recently registered a company in Singapore, according to the city-state’s Accounting and Corporate Regulatory Authority website.

SINGAPORE, May 12 (Reuters) – Singapore Telecommunications (SingTel) , Southeast Asia’s biggest telecoms firm, posted a 2.3 percent fall in quarterly profit due to a steep fall in contribution from its Indian unit Bharti Airtel and currency losses.

SingTel also announced a special dividend, citing lack of suitable acquisition opportunities, and said it was setting up a business trust to transfer some of its infrastructure assets.

Bharti posted a bigger-than-expected 31.5 percent fall in its quarterly net profit and said its loss-making operation in Africa, which it bought last year from Kuwait’s Zain for $9 billion, is expected to dent near-term earnings. [ID:nL3E7G40KL]

SingTel said it was also hurt by weakness in regional currencies against the Singapore dollar.

“Its regional operations are not doing that great, but now at the same time you have this impact from currency as well,” Credit Suisse analyst Sean Quek said.

“I think in the near term they probably just have to return more cash to the shareholders. They have said they will keep looking for other opportunities but I think in the short term it is going to be difficult.”

The company announced a final ordinary dividend of 9 Singapore cents and a special dividend of 10 Singapore cents, bringing the total dividend to a record 25.8 cents per share, or a yield of 8 percent.

SINGAPORE (Reuters) – Pressure may mount on Singapore Prime Minister Lee Hsien Loong to introduce policies that lift wages for low-income workers, make housing more affordable and limit the influx of foreigners after a less than sweet election victory.

The ruling People’s Action Party (PAP) won 81 of 87 seats in parliament in Saturday’s polls, but the opposition emerged victorious in six — the highest it has ever taken since independence in 1965.

The more significant factor was the swing of the popular vote away from Lee’s party, which won about 60 percent, the lowest since independence and below the around 67 percent at the last polls in 2006.

The swing is a strong signal that Singaporeans are not entirely satisfied with government policies despite strong economic growth in the last five years, including a record 14.5 percent expansion in 2010.

The PAP has resisted introducing social welfare schemes as practiced in the West, but there was strident criticism at this election over the widening gap between the rich and the poor, the high cost of living and complaints about foreign workers stealing jobs.

However, analysts said any changes on the margins are unlikely to threaten Singapore’s status as one of the world’s most friendly places to do business and as Asia’s major wealth management center.

“It is a wake-up call,” said Chua Hak Bin, an economist at Bank of America’s Merrill Lynch. “There will now be a tilt away from companies and more toward workers and wages, especially the lower income.”

SINGAPORE (Reuters) – Singapore’s ruling party swept back to power as expected in the most contested general election since independence, but the opposition made historic gains and the prime minister signaled there would be change in the tightly governed city-state.

Lee Hsien Loong said it had been a watershed election that had altered Singapore. The tiny Southeast Asian nation is one of the wealthiest and fastest-growing in Asia but is tainted by criticism of political restrictions.

“It marks a distinct shift in our political landscape,” Lee, the head of the long-ruling People’s Action Party (PAP), told a news conference after the results were announced.

“Many (Singaporeans) wish for the government to adopt a different style and approach. Many desire to see more opposition voices in parliament to check the PAP government.”

Analysts welcomed his comments but said they did not expect dramatic reforms.

“Profound change would be unrealistic,” said Garry Rodan, a professor at Australia’s Murdoch University who has written on Singapore politics.

“The real question we should be asking is whether this portends the possibility of change in the medium to long term. It does not mean we can answer it affirmatively but I think we can genuinely ask it now.”