SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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<ul>
<li>
Bucking the regional trend, China’s economy is expected to grow by 1.9% in 2020 on the back of a faster than expected recovery in 2Q20, placing the IMF’s GDP growth forecast for 2021 to 8.2% assuming a smooth transition from public sector support to private sector demand. 
	 </li>
	<li>
Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group. 
	 </li>
	<li>Business activities for CRCT, Sasseur REIT and Yanlord Land are also gradually resuming in tandem. As a result, the two REITs and Developer are more optimistic about financial performances in the near term, pointing to expectations of stronger retail sales &amp; housing demand in coming quarters.</li>
</ul>
 

China’s GDP growth has bucked the regional trend in 2020 and is expected to resume its more normalised path of 8% growth in 2021. As the IMF highlighted this month, after hitting a trough in February, China’s growth received a boost from infrastructure, real estate investment, and a surge in exports, mainly of medical and protective equipment, as well as work-from-home-related electronics. The regional economic outlook (click <a href="https://www.imf.org/en/Publications/REO/APAC/Issues/2020/10/21/regional-economic-outlook-apd">here</a>) added that this has been followed by a gradual recovery in private non-housing investment and consumption. In the 2020 year to 29 October, China’s Small-cap Stock Indices have also kept pace its Large-cap Indices, which compares to a significant under performance over the past three years

The FTSE ST China Index is based on the underlying constituents of the FTSE ST All-Share Index, which have the majority of their sales revenue derived from or operating assets located in Mainland China. The FTSE ST China Index,  aims to capture the performance of the largest Chinese-listed companies on the SGX Mainboard by full market capitalisation.

Companies eligible for inclusion in the FTSE ST China Index must feature in the FTSE ST All-Share Index, and at each review derive at least 50% of their sales revenue from Mainland China, or have at least 50% of their operating assets or revenue located in Mainland China. Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group.

For the factsheet on the FTSE ST China Index, click <a href="https://research.ftserussell.com/Analytics/FactSheets/Home/DownloadSingleIssue?openfile=open&amp;issueName=FSTCT&amp;isManual=False&amp;_ga=2.196891500.1772479919.1603072003-1604055795.1602829568&amp;">here</a>.

 

Highlight from CapitaLand Retail China Trust’s recent announcements

Strategy

<ul>
<li>On 30 September 2020, CRCT unveiled plans to <a href="https://links.sgx.com/1.0.0/corporate-announcements/7RR2ENVK7IY2ZI3I/a8fb6f403ef67626016c8e323d2f1584a7ff655c422a182d6a7c868c884ac2c7">expand its investment strategy</a> beyond the retail sector to include assets that are used for office and industrial purposes, focusing on long-term investment in real estate and real estate-related assets in China, Hong Kong and Macau</li>
	<li>This includes assets used primarily for retail, office and industrial purposes, such as business parks, logistics facilities, data centres and integrated developments</li>
	<li>With the expanded investment strategy, CRCT will be better positioned for growth as it will be the dedicated Singapore-listed REIT for CapitaLand Group’s non-lodging China business, with acquisition pipeline access to CapitaLand China’s assets</li>
	<li>In addition, CRCT would gain exposure to a more extensive pool of tenants across the sectors to reduce tenant concentration risk</li>
	<li>It allows CRCT to seize new opportunities in the growing China real estate market and enhance the manager’s ability to provide long-term and sustainable returns to unitholders</li>
	<li>A diversified portfolio of assets in this regard will make the portfolio more resilient and less susceptible to any adverse changes caused by unforeseeable external events and factors</li>
</ul>
Operations

<ul>
<li>With the easing of restrictions, all CRCT malls and trade categories are operational</li>
	<li>As retailers realign their business strategies and expansion plans, leasing demand is expected to be soft near term</li>
	<li>Sees continued recovery momentum in traffic and sales</li>
	<li>To focus on refreshed mall offerings and proactive tenant remixing to capture new consumer preferences</li>
	<li>Create community-based stickiness by organising interactive and exciting thematic activities</li>
	<li>Accelerated digitalisation journey in response to COVID-19</li>
</ul>
<ul>
<li>Over 1,200 retailers have been onboarded onto China’s CapitaStar platform YTD</li>
	<li>Leverage on Capitastar’s sizeable member base of more than 10 million people, to run targeted promotions such as live streaming to engage shoppers and stimulate more spending</li>
</ul>
 

Highlight from Sasseur REIT’s recent announcements

<ul>
<li>There has been concerted effort to promote domestic internal consumption by the authorities in China in a bid to balance volatile external environment, which will benefit outlet sales</li>
	<li>As the situation in China continues to improve, the REIT manager believes the remaining quarters of 2020 will deliver stronger performances and sales will return to pre-pandemic levels</li>
	<li>Growing middle-class population in China creates a large potential customer base for the outlet mall market in China</li>
	<li>China’s outlet industry expected to become the world’s largest outlet market in terms of sales revenue by 2030</li>
	<li>Strong growth potential
	<ul>
<li>Two right of first refusal properties (ROFR) and nine pipeline properties
		<ul>
<li>Assuming Sasseur REIT acquires the full interest in the ROFR properties and pipeline properties, it will almost quadraple the total gross floor area of the initial portfolio</li>
		</ul>
</li>
		<li>Strategically located portfolio in fast-growing cities</li>
		<li>Leading privately-owned outlet mall operator in the Chinese outlet mall industry</li>
		<li>First-mover advantage in the Tier-2 Chinese cities with an increasing addressable market size</li>
		<li>Diversified mix of tenants across various trade sectors</li>
	</ul>
</li>
</ul>
<ul>
<li>Market Leadership
	<ul>
<li>Unique Art-Commerce Business Model : Full alignment of interests of tenants, REIT unitholders, the REIT and entrusted managers, with the potential for sharing upsides</li>
		<li>Proactive Asset Management Strategy : Focus on asset enhancement, organic growth and yield accretive acquisitions</li>
		<li>Resilient Retail Segment : High growth sector offering attractive value-for-money branded products that cater to the rising aspirations and demand of the expanding Chinese middle class</li>
		<li>Strong Partnerships: Longstanding and strong business relationships with leading premium international and local retail brands</li>
	</ul>
</li>
</ul>
 

Highlight from Yanlord Land Group’s recent announcements

<ul>
<li>All of Yanlord’s construction sites in China had resumed works by April 2020, and around 70% of its construction sites are expected to catch up on their original construction schedule, with the balance 30% experiencing delays of one to two months from the original schedule</li>
	<li>In 1H 2020, China’s real estate sector recovered in a stable manner, with total investment in residential development rising 2.6% to RMB4.63 trillion, based on data compiled by the National Bureau of Statistics on 16 July 2020
	<ul>
<li>Buoyed by resilient demand for residential properties, primary commodity housing prices in the top 70 cities rose approximately 4.9% YoY in June 2020</li>
	</ul>
</li>
	<li>As at 30 June 2020, the Group together with its joint ventures and associates recorded an accumulated contracted pre-sale of RMB75.779 billion, representing a total GFA of approximately 2.4 million sqm, which are pending recognition in 2H 2020 and beyond</li>
	<li>In line with the stable recovery of China’s real estate industry, the Group together with its joint ventures and associates will continue to launch new projects for pre-sales in accordance with its development schedule; this would include launching new projects and new batches of existing projects in 2H 2020</li>
	<li>To better mitigate against potential volatility, the Group will continue to maintain its healthy cash position and prudent financial policies to support sustainable growth and development</li>
	<li>Barring any significant deterioration in the global economy and other unforeseen circumstances like policy fine-tuning in specific cities, the Board is confident of the Group’s performance relative to the industry trend for the next reporting period and the following 12 months, based on number of pre-sale units to-date, expected delivery schedules and on-schedule construction works in progress</li>
	<li>In view of the positive rebound on the sector and healthy demand from home upgraders in China, Yanlord, with its high-quality landbank and strong brand recognition, believes it is well poised to tap the continued demand growth for quality residential developments in the country</li>
</ul>
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Bucking the regional trend, China’s economy is expected to grow by 1.9% in 2020 on the back of a faster than expected recovery in 2Q20, placing the IMF’s GDP growth forecast for 2021 to 8.2% assuming a smooth transition from public sector support to private sector demand. 
	 
	
Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group. 
	 
	Business activities for CRCT, Sasseur REIT and Yanlord Land are also gradually resuming in tandem. As a result, the two REITs and Developer are more optimistic about financial performances in the near term, pointing to expectations of stronger retail sales &amp; housing demand in coming quarters.

 

China’s GDP growth has bucked the regional trend in 2020 and is expected to resume its more normalised path of 8% growth in 2021. As the IMF highlighted this month, after hitting a trough in February, China’s growth received a boost from infrastructure, real estate investment, and a surge in exports, mainly of medical and protective equipment, as well as work-from-home-related electronics. The regional economic outlook (click here) added that this has been followed by a gradual recovery in private non-housing investment and consumption. In the 2020 year to 29 October, China’s Small-cap Stock Indices have also kept pace its Large-cap Indices, which compares to a significant under performance over the past three years

The FTSE ST China Index is based on the underlying constituents of the FTSE ST All-Share Index, which have the majority of their sales revenue derived from or operating assets located in Mainland China. The FTSE ST China Index,  aims to capture the performance of the largest Chinese-listed companies on the SGX Mainboard by full market capitalisation.

Companies eligible for inclusion in the FTSE ST China Index must feature in the FTSE ST All-Share Index, and at each review derive at least 50% of their sales revenue from Mainland China, or have at least 50% of their operating assets or revenue located in Mainland China. Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group.

For the factsheet on the FTSE ST China Index, click here.

 

Highlight from CapitaLand Retail China Trust’s recent announcements

Strategy


On 30 September 2020, CRCT unveiled plans to expand its investment strategy beyond the retail sector to include assets that are used for office and industrial purposes, focusing on long-term investment in real estate and real estate-related assets in China, Hong Kong and Macau
	This includes assets used primarily for retail, office and industrial purposes, such as business parks, logistics facilities, data centres and integrated developments
	With the expanded investment strategy, CRCT will be better positioned for growth as it will be the dedicated Singapore-listed REIT for CapitaLand Group’s non-lodging China business, with acquisition pipeline access to CapitaLand China’s assets
	In addition, CRCT would gain exposure to a more extensive pool of tenants across the sectors to reduce tenant concentration risk
	It allows CRCT to seize new opportunities in the growing China real estate market and enhance the manager’s ability to provide long-term and sustainable returns to unitholders
	A diversified portfolio of assets in this regard will make the portfolio more resilient and less susceptible to any adverse changes caused by unforeseeable external events and factors

Operations


With the easing of restrictions, all CRCT malls and trade categories are operational
	As retailers realign their business strategies and expansion plans, leasing demand is expected to be soft near term
	Sees continued recovery momentum in traffic and sales
	To focus on refreshed mall offerings and proactive tenant remixing to capture new consumer preferences
	Create community-based stickiness by organising interactive and exciting thematic activities
	Accelerated digitalisation journey in response to COVID-19


Over 1,200 retailers have been onboarded onto China’s CapitaStar platform YTD
	Leverage on Capitastar’s sizeable member base of more than 10 million people, to run targeted promotions such as live streaming to engage shoppers and stimulate more spending

 

Highlight from Sasseur REIT’s recent announcements


There has been concerted effort to promote domestic internal consumption by the authorities in China in a bid to balance volatile external environment, which will benefit outlet sales
	As the situation in China continues to improve, the REIT manager believes the remaining quarters of 2020 will deliver stronger performances and sales will return to pre-pandemic levels
	Growing middle-class population in China creates a large potential customer base for the outlet mall market in China
	China’s outlet industry expected to become the world’s largest outlet market in terms of sales revenue by 2030
	Strong growth potential
	
Two right of first refusal properties (ROFR) and nine pipeline properties
		
Assuming Sasseur REIT acquires the full interest in the ROFR properties and pipeline properties, it will almost quadraple the total gross floor area of the initial portfolio
		

		Strategically located portfolio in fast-growing cities
		Leading privately-owned outlet mall operator in the Chinese outlet mall industry
		First-mover advantage in the Tier-2 Chinese cities with an increasing addressable market size
		Diversified mix of tenants across various trade sectors
	



Market Leadership
	
Unique Art-Commerce Business Model : Full alignment of interests of tenants, REIT unitholders, the REIT and entrusted managers, with the potential for sharing upsides
		Proactive Asset Management Strategy : Focus on asset enhancement, organic growth and yield accretive acquisitions
		Resilient Retail Segment : High growth sector offering attractive value-for-money branded products that cater to the rising aspirations and demand of the expanding Chinese middle class
		Strong Partnerships: Longstanding and strong business relationships with leading premium international and local retail brands
	


 

Highlight from Yanlord Land Group’s recent announcements


All of Yanlord’s construction sites in China had resumed works by April 2020, and around 70% of its construction sites are expected to catch up on their original construction schedule, with the balance 30% experiencing delays of one to two months from the original schedule
	In 1H 2020, China’s real estate sector recovered in a stable manner, with total investment in residential development rising 2.6% to RMB4.63 trillion, based on data compiled by the National Bureau of Statistics on 16 July 2020
	
Buoyed by resilient demand for residential properties, primary commodity housing prices in the top 70 cities rose approximately 4.9% YoY in June 2020
	

	As at 30 June 2020, the Group together with its joint ventures and associates recorded an accumulated contracted pre-sale of RMB75.779 billion, representing a total GFA of approximately 2.4 million sqm, which are pending recognition in 2H 2020 and beyond
	In line with the stable recovery of China’s real estate industry, the Group together with its joint ventures and associates will continue to launch new projects for pre-sales in accordance with its development schedule; this would include launching new projects and new batches of existing projects in 2H 2020
	To better mitigate against potential volatility, the Group will continue to maintain its healthy cash position and prudent financial policies to support sustainable growth and development
	Barring any significant deterioration in the global economy and other unforeseen circumstances like policy fine-tuning in specific cities, the Board is confident of the Group’s performance relative to the industry trend for the next reporting period and the following 12 months, based on number of pre-sale units to-date, expected delivery schedules and on-schedule construction works in progress
	In view of the positive rebound on the sector and healthy demand from home upgraders in China, Yanlord, with its high-quality landbank and strong brand recognition, believes it is well poised to tap the continued demand growth for quality residential developments in the country




Optimism Recently Returned to China Real Estate Players

Yoma Strategic Holdings / Equity Bottom-Up

Singapore Banks Attract Net Insti Inflows in Early 4Q20 

Capitaland India Trust / Equity Bottom-Up

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 <div class='content-caption'>a-iTrust-CEO</div>
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Prudence is very much a watchword for chartered accountant by training Sanjeev Dasgupta.

The CEO of the trustee-manager of SGX-listed Ascendas India Trust, whose early career spans corporate finance, investment banking, as well as private equity real estate, is big on risk management.

“I learned many lessons from the Global Financial Crisis that hit India’s real estate sector between 2009 and 2012,” he recalled. “For one, managing risk has to be a critical part of a sustainable and responsible growth strategy for any organisation.”

“During boom times, there’s a tendency to be over-aggressive on investing, with less focus on risk mitigation, which means there’s quite a bit of pain once a crisis hits.”

The second lesson came from an ex-colleague’s pithy remark: Nobody makes money when they invest – only when they divest. “During good times, everyone is focused on investing – they, at times, miss the crux of the issue, which is being able to make a meaningful profit when you exit the investment,” he added.

Dasgupta, a Bachelor of Commerce graduate from Mumbai University who also holds a Master in Business Administration from London Business School, joined a-iTrust in January 2014. Prior to this role, he held the position of President, Real Estate, at ICICI Venture Funds Management between 2009 and 2013, and was the Managing Director of Future Capital Real Estate from 2005 to 2009.

For Dasgupta, the differences between the worlds of private equity and listed REITs are stark.

“The key differentiator for REITs is their corporate governance framework, which investors draw a lot of comfort from. DPUs also keep REIT management teams disciplined, as they need to prioritise risk management to ensure distributions to unitholders are not compromised,” he noted, referring to distributions per unit, a closely watched industry metric.

“In comparison, private equity structures, arguably, have much more freedom and flexibility, but much greater risk.”

Ascendas India Trust (a-iTrust) was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

a-iTrust’s portfolio – which has a healthy committed occupancy rate of 98% – comprises seven world-class IT business parks and one logistics park in India. Assets under management (AUM) stood at S$2.1 billion as at 30 June 2020.

a-iTrust, structured as a business trust, offers stable income distributions similar to a real estate investment trust. It is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly owned subsidiary of SGX-listed CapitaLand Ltd.

CapitaLand became the Sponsor of the trust in June 2019 after its acquisition of Ascendas Pte Ltd and Singbridge Pte Ltd. CapitaLand is one of Asia’s largest diversified real estate groups, with AUM of more than S$130 billion. The Group has a significant global footprint in the real estate investment management business, managing seven listed REITs and business trusts as well as over 20 private funds.

DPU-Accretive

For a-iTrust, one primary growth driver has been its ability to execute value-add growth strategies. One example is its use of forward purchase deals to acquire assets in India at lower prices, instead of buying overpriced income-producing assets.

“The Ascendas Group has a 25-year operating history on the ground in India, with strong leasing, project execution and property management expertise. This gives us the confidence to deal with potential risks if the environment becomes challenging,” Dasgupta added.

More acquisitions are also on the cards for a-iTrust. “The assets must, first and foremost, be DPU-accretive,” he noted. “We’ve set a certain hurdle rate for our investments in India, and they have to be at or above that rate.”

The geographic focus remains on the country’s six metro cities, which are relatively large in size and have a lot of untapped potential. Staying within the IT corridors in those six cities is also a must, he added.

The logistics sector remains a key focus area for a-iTrust, which acquired its first logistics asset two years ago. “India doesn’t have a large base of Grade A warehouse assets, so there’s a need to create that pipeline for ourselves,” Dasgupta pointed out. “At the Sponsor level, we have created a platform with a local partner, which gives us the requisite expertise to grow faster in this asset class.”

“Following COVID-19, logistics has also become the one of the most coveted asset classes among investors globally, due to the acceleration of e-commerce growth.”

Another sector that a-iTrust is evaluating is data centres. “We’re looking at how we can participate in the growth of this asset class, which will, in part, be driven by the government’s data localisation regulations that require financial services and healthcare data to be kept onshore,” Dasgupta said.

According to the Ericsson Mobility Report 2020, Indians used about 12GB of data per month on average in 2019, the highest consumption globally, and this figure is expected to double to over the next five years. “So this is one sector that merits close attention, and we’re optimistic about its outlook,” he added.

Currently, IT business parks comprise 93% of a-iTrust’s portfolio, with logistics accounting for the remaining 7%. “IT business parks are still growing, and the IT services sector is expanding at a reasonable pace, even during COVID, due to the acceleration of digital transformation,” Dasgupta said.

“Over time, we expect logistics and data centres – which are at a nascent growth stage – to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.”

Mitigating Risks

Notwithstanding the robust outlook, a-iTrust continues to grapple with foreign currency risks, although these are mitigated by its hedging strategy, said Dasgupta.

“The fact that the rupee is a long-term depreciating currency – relative to the US dollar and Singapore dollar – is a big challenge.”

“We try to achieve a growth that is meaningfully higher than the annual currency depreciation rate of 2.5%-3.0%,” he added. “Over the last six years, we’ve been able to deliver 9%-10% dividend growth in Sing dollar terms to investors, which translates to 12%-13% rupee growth. This has helped us to mitigate the FX risks.”

a-iTrust’s financial position remains robust – it has a low gearing ratio of 29%, with cash and undrawn committed facilities totalling S$198 million. Of its total borrowings, 82% are effectively on a fixed-interest rate basis and 65% are hedged into rupees.

Meanwhile, the next biggest – and most obvious – challenge for the trust remains COVID-19, with India’s infection rate still climbing.

Following the economic consequences of the outbreak, the country’s gross domestic product is forecast to contract 5.9% in 2020 and recover to 3.9% next year, according to a UN Conference on Trade and Development (UNCTAD) report published in last month.

“We continue to monitor our physical occupancy levels closely,” Dasgupta said. “We also see this as an opportunity to differentiate our properties by bringing in know-how and infrastructure from Singapore, like thermal scanners and air purification technology, to keep our park population safe. The fact that we’re doing more than other landlords is very much appreciated by our tenants.”

Nonetheless, Dasgupta remains optimistic about a-iTrust’s portfolio occupancy rates. “The cost of real estate for IT parks in India is not high, whereas companies have to reimburse staff for bandwidth and utility costs for work-from-home protocols, so actually, the cost-benefit analysis in terms of rental savings doesn’t really work for India, unlike in other developed markets,” he added.

Looking ahead, Dasgupta has made it his personal target to develop a-iTrust into a much larger platform, delivering both profitable as well as sustainable growth.

“Given the size and scale of the Indian market, and despite healthy expansion rates over the last six years, there’s still a lot of room to grow,” he added.

Apart from managing the trust’s operations, Dasgupta, 53, also prioritises family time with his college-going son, and daughter, a recent university graduate. His wife, a social entrepreneur, has been actively involved in supporting Singapore’s COVID-19 containment efforts amongst migrant workers.

Belonging to a family of foodies, he bonds with his wife and children over kitchen activities. This usually involves him playing role of food critic, while they whip up delectable South Indian, Thai and Italian dishes.

“You can be the most successful CEO in any organisation, but the toughest job in the world is still being a parent,” he said with a chuckle. “As parents, we want to provide love and support for our kids, and ensure they grow up with the right values.”

“That’s always a work in progress.”

 

Ascendas India Trust

Ascendas India Trust (a-iTrust) listed on SGX in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or  uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. As at 30 June 2020, a-iTrust’s assets under management stand at S$2.1billion.

a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India – International Tech Park Bangalore, International Tech Park Chennai and CyberValein Chennai, International Tech Park Hyderabad, CyberPearl, and aVancein Hyderabad, aVancein Pune and Arshiya warehouses near Mumbai.

a-iTrust is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly  owned  subsidiary of SGX-listed CapitaLand Ltd, one of Asia’s largest diversified real estate groups, which owns and manages a global portfolio worth S$131.9 billion as at 31 December 2019.

The company website is: <a href="http://www.a-itrust.com">www.a-itrust.com</a>. 
Click <a href="https://www.sgx.com/securities/equities/CY6U">here </a>for the company's StockFacts page. 
For the six months ended 30 June 2020 financial results, click <a href="https://ir.a-itrust.com/newsroom/1._1H_FY2020_Press_Release_final.pdf">here</a>.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="///C:/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    a-iTrust-CEO


Prudence is very much a watchword for chartered accountant by training Sanjeev Dasgupta.

The CEO of the trustee-manager of SGX-listed Ascendas India Trust, whose early career spans corporate finance, investment banking, as well as private equity real estate, is big on risk management.

“I learned many lessons from the Global Financial Crisis that hit India’s real estate sector between 2009 and 2012,” he recalled. “For one, managing risk has to be a critical part of a sustainable and responsible growth strategy for any organisation.”

“During boom times, there’s a tendency to be over-aggressive on investing, with less focus on risk mitigation, which means there’s quite a bit of pain once a crisis hits.”

The second lesson came from an ex-colleague’s pithy remark: Nobody makes money when they invest – only when they divest. “During good times, everyone is focused on investing – they, at times, miss the crux of the issue, which is being able to make a meaningful profit when you exit the investment,” he added.

Dasgupta, a Bachelor of Commerce graduate from Mumbai University who also holds a Master in Business Administration from London Business School, joined a-iTrust in January 2014. Prior to this role, he held the position of President, Real Estate, at ICICI Venture Funds Management between 2009 and 2013, and was the Managing Director of Future Capital Real Estate from 2005 to 2009.

For Dasgupta, the differences between the worlds of private equity and listed REITs are stark.

“The key differentiator for REITs is their corporate governance framework, which investors draw a lot of comfort from. DPUs also keep REIT management teams disciplined, as they need to prioritise risk management to ensure distributions to unitholders are not compromised,” he noted, referring to distributions per unit, a closely watched industry metric.

“In comparison, private equity structures, arguably, have much more freedom and flexibility, but much greater risk.”

Ascendas India Trust (a-iTrust) was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

a-iTrust’s portfolio – which has a healthy committed occupancy rate of 98% – comprises seven world-class IT business parks and one logistics park in India. Assets under management (AUM) stood at S$2.1 billion as at 30 June 2020.

a-iTrust, structured as a business trust, offers stable income distributions similar to a real estate investment trust. It is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly owned subsidiary of SGX-listed CapitaLand Ltd.

CapitaLand became the Sponsor of the trust in June 2019 after its acquisition of Ascendas Pte Ltd and Singbridge Pte Ltd. CapitaLand is one of Asia’s largest diversified real estate groups, with AUM of more than S$130 billion. The Group has a significant global footprint in the real estate investment management business, managing seven listed REITs and business trusts as well as over 20 private funds.

DPU-Accretive

For a-iTrust, one primary growth driver has been its ability to execute value-add growth strategies. One example is its use of forward purchase deals to acquire assets in India at lower prices, instead of buying overpriced income-producing assets.

“The Ascendas Group has a 25-year operating history on the ground in India, with strong leasing, project execution and property management expertise. This gives us the confidence to deal with potential risks if the environment becomes challenging,” Dasgupta added.

More acquisitions are also on the cards for a-iTrust. “The assets must, first and foremost, be DPU-accretive,” he noted. “We’ve set a certain hurdle rate for our investments in India, and they have to be at or above that rate.”

The geographic focus remains on the country’s six metro cities, which are relatively large in size and have a lot of untapped potential. Staying within the IT corridors in those six cities is also a must, he added.

The logistics sector remains a key focus area for a-iTrust, which acquired its first logistics asset two years ago. “India doesn’t have a large base of Grade A warehouse assets, so there’s a need to create that pipeline for ourselves,” Dasgupta pointed out. “At the Sponsor level, we have created a platform with a local partner, which gives us the requisite expertise to grow faster in this asset class.”

“Following COVID-19, logistics has also become the one of the most coveted asset classes among investors globally, due to the acceleration of e-commerce growth.”

Another sector that a-iTrust is evaluating is data centres. “We’re looking at how we can participate in the growth of this asset class, which will, in part, be driven by the government’s data localisation regulations that require financial services and healthcare data to be kept onshore,” Dasgupta said.

According to the Ericsson Mobility Report 2020, Indians used about 12GB of data per month on average in 2019, the highest consumption globally, and this figure is expected to double to over the next five years. “So this is one sector that merits close attention, and we’re optimistic about its outlook,” he added.

Currently, IT business parks comprise 93% of a-iTrust’s portfolio, with logistics accounting for the remaining 7%. “IT business parks are still growing, and the IT services sector is expanding at a reasonable pace, even during COVID, due to the acceleration of digital transformation,” Dasgupta said.

“Over time, we expect logistics and data centres – which are at a nascent growth stage – to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.”

Mitigating Risks

Notwithstanding the robust outlook, a-iTrust continues to grapple with foreign currency risks, although these are mitigated by its hedging strategy, said Dasgupta.

“The fact that the rupee is a long-term depreciating currency – relative to the US dollar and Singapore dollar – is a big challenge.”

“We try to achieve a growth that is meaningfully higher than the annual currency depreciation rate of 2.5%-3.0%,” he added. “Over the last six years, we’ve been able to deliver 9%-10% dividend growth in Sing dollar terms to investors, which translates to 12%-13% rupee growth. This has helped us to mitigate the FX risks.”

a-iTrust’s financial position remains robust – it has a low gearing ratio of 29%, with cash and undrawn committed facilities totalling S$198 million. Of its total borrowings, 82% are effectively on a fixed-interest rate basis and 65% are hedged into rupees.

Meanwhile, the next biggest – and most obvious – challenge for the trust remains COVID-19, with India’s infection rate still climbing.

Following the economic consequences of the outbreak, the country’s gross domestic product is forecast to contract 5.9% in 2020 and recover to 3.9% next year, according to a UN Conference on Trade and Development (UNCTAD) report published in last month.

“We continue to monitor our physical occupancy levels closely,” Dasgupta said. “We also see this as an opportunity to differentiate our properties by bringing in know-how and infrastructure from Singapore, like thermal scanners and air purification technology, to keep our park population safe. The fact that we’re doing more than other landlords is very much appreciated by our tenants.”

Nonetheless, Dasgupta remains optimistic about a-iTrust’s portfolio occupancy rates. “The cost of real estate for IT parks in India is not high, whereas companies have to reimburse staff for bandwidth and utility costs for work-from-home protocols, so actually, the cost-benefit analysis in terms of rental savings doesn’t really work for India, unlike in other developed markets,” he added.

Looking ahead, Dasgupta has made it his personal target to develop a-iTrust into a much larger platform, delivering both profitable as well as sustainable growth.

“Given the size and scale of the Indian market, and despite healthy expansion rates over the last six years, there’s still a lot of room to grow,” he added.

Apart from managing the trust’s operations, Dasgupta, 53, also prioritises family time with his college-going son, and daughter, a recent university graduate. His wife, a social entrepreneur, has been actively involved in supporting Singapore’s COVID-19 containment efforts amongst migrant workers.

Belonging to a family of foodies, he bonds with his wife and children over kitchen activities. This usually involves him playing role of food critic, while they whip up delectable South Indian, Thai and Italian dishes.

“You can be the most successful CEO in any organisation, but the toughest job in the world is still being a parent,” he said with a chuckle. “As parents, we want to provide love and support for our kids, and ensure they grow up with the right values.”

“That’s always a work in progress.”

 

Ascendas India Trust

Ascendas India Trust (a-iTrust) listed on SGX in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or  uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. As at 30 June 2020, a-iTrust’s assets under management stand at S$2.1billion.

a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India – International Tech Park Bangalore, International Tech Park Chennai and CyberValein Chennai, International Tech Park Hyderabad, CyberPearl, and aVancein Hyderabad, aVancein Pune and Arshiya warehouses near Mumbai.

a-iTrust is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly  owned  subsidiary of SGX-listed CapitaLand Ltd, one of Asia’s largest diversified real estate groups, which owns and manages a global portfolio worth S$131.9 billion as at 31 December 2019.

The company website is: www.a-itrust.com.  
Click here for the company's StockFacts page.  
For the six months ended 30 June 2020 financial results, click here.

 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



Ascendas India Trust Targets Logistics, Data Centre Growth

Mapletree Industrial Trust / Equity Bottom-Up

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body><ul>
<li>
Effective the June 22 open, Mapletree Industrial Trust will join the STI with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting near 12.5%. 
	 </li>
	<li>
Since listing in October 2010, Mapletree Industrial Trust has generated average annualised total returns of 19% and grown its portfolio from 70 properties valued at S$2.1 billion, to 114 properties valued at S$5.9 billion (including joint ventures). 
	 </li>
	<li>
The STI Reserve List, which has averaged 3% total returns in the 2020 year to 5 June on S$122 million on net institutional inflow, will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. 
	 
	Last week, the Straits Times Index (“STI”) was the strongest benchmark across Asia Pacific, generating a total return of 9.6%, bringing its 2020 year-to-date decline in total return to 13.2%. After the Thursday close, FTSE Russell announced that as part of the quarterly rebalancing, Mapletree Industrial Trust was added to the STI, with Singapore Press Holdings (“SPH”) omitted. Quarterly STI reviews are a highly competitive process with the Index maintaining a fixed number of 30 constituents. The process involves ranking stocks of the broader FTSE ST All-Share Index by market capitalisation and a stock will be inserted into the STI at the quarterly review if it rises to 20th position or above when the eligible securities are ranked by full market capitalisation or will be deleted at the quarterly review if it falls to 41st position or below.   Mapletree Industrial Trust’s 19.4% Annualised Total Returns since IPO 
	This year, Mapletree Industrial Trust has generated a total return of 8.2% through to 5 June, on S$33.5 million of net institutional inflow. This has brought Mapletree Industrial Trust’s annualised total returns since listing in October 2010 to 19.4% and has seen its market capitalisation rise from approximately S$1.7 billion on its debut, to S$6.0 billion at present. 
	Since the end of 2010, the S-REIT Sector total market capitalisation has grown from S$35 billion to approximately S$100 billion as of 5 June 2020. The same period of time has seen the number of REITs in the STI rise from one to six effective 22 June. SPH has also been a part of the significant expansion of the S-REIT Sector over the past 10 years, with the spin-off of Paragon and The Clementi Mall into SPH REIT in July 2013. From 23 July 2013, through to 5 June 2020, SPH REIT has since delivered investors 5.1% average annualised total returns. SPH REIT currently maintains a market capitalisation of S$2.5 billion, in comparison to SPH’s S$2.2 billion. As noted in its FY19 Annual Report (click <a href="http://sphreit.listedcompany.com/ar.html">here</a>) as of 10 October 2019, SPH maintained a 70% deemed interest (approximately S$1.75 billion on the 5 June close) in SPH REIT. As detailed in the table below Mapletree Industrial Trust will join the STI on the 22 June open with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting close to 12.5%.
	 

	<table class="table table-striped"><tbody>
<tr>
<td>
				STI Stocks
				</td>
				<td>
				STI Code
				</td>
				<td>
				31 March 2020 Index Weight
				</td>
				<td>
				New Indicative Weight for 22 June, based on 31 March 2020 data
				</td>
				<td>
				Sector/Industry
				</td>
			</tr>
<tr>
<td>
				Ascendas REIT
				</td>
				<td>
				A17U
				</td>
				<td>
				3.61%
				</td>
				<td>
				3.60%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				CapitaCom Trust
				</td>
				<td>
				C61U
				</td>
				<td>
				1.81%
				</td>
				<td>
				1.80%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				CapitaLand
				</td>
				<td>
				C31
				</td>
				<td>
				3.09%
				</td>
				<td>
				3.08%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				CapitaMall Trust
				</td>
				<td>
				C38U
				</td>
				<td>
				1.87%
				</td>
				<td>
				1.86%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				CityDev
				</td>
				<td>
				C09
				</td>
				<td>
				1.47%
				</td>
				<td>
				1.46%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				ComfortDelGro
				</td>
				<td>
				C52
				</td>
				<td>
				1.36%
				</td>
				<td>
				1.35%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				DairyFarm USD
				</td>
				<td>
				D01
				</td>
				<td>
				0.86%
				</td>
				<td>
				0.86%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				DBS
				</td>
				<td>
				D05
				</td>
				<td>
				14.52%
				</td>
				<td>
				14.47%
				</td>
				<td>
				Banks
				</td>
			</tr>
<tr>
<td>
				Genting Sing
				</td>
				<td>
				G13
				</td>
				<td>
				1.74%
				</td>
				<td>
				1.73%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				HongkongLand USD
				</td>
				<td>
				H78
				</td>
				<td>
				2.69%
				</td>
				<td>
				2.68%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				Jardine C&amp;C
				</td>
				<td>
				C07
				</td>
				<td>
				0.85%
				</td>
				<td>
				0.85%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				JMH USD
				</td>
				<td>
				J36
				</td>
				<td>
				6.49%
				</td>
				<td>
				6.47%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				JSH USD
				</td>
				<td>
				J37
				</td>
				<td>
				2.50%
				</td>
				<td>
				2.49%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				Keppel Corp
				</td>
				<td>
				BN4
				</td>
				<td>
				3.29%
				</td>
				<td>
				3.28%
				</td>
				<td>
				Oil &amp; Gas
				</td>
			</tr>
<tr>
<td>
				Mapletree Com Trust
				</td>
				<td>
				N2IU
				</td>
				<td>
				1.74%
				</td>
				<td>
				1.73%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				Mapletree Log Trust
				</td>
				<td>
				M44U
				</td>
				<td>
				1.75%
				</td>
				<td>
				1.74%
				</td>
				<td>
				REITs
				</td>
			</tr>
<tr>
<td>
				OCBC Bank
				</td>
				<td>
				O39
				</td>
				<td>
				12.93%
				</td>
				<td>
				12.88%
				</td>
				<td>
				Banks
				</td>
			</tr>
<tr>
<td>
				SATS
				</td>
				<td>
				S58
				</td>
				<td>
				0.87%
				</td>
				<td>
				0.87%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				Sembcorp Ind
				</td>
				<td>
				U96
				</td>
				<td>
				0.61%
				</td>
				<td>
				0.61%
				</td>
				<td>
				Utilities
				</td>
			</tr>
<tr>
<td>
				SGX
				</td>
				<td>
				S68
				</td>
				<td>
				3.28%
				</td>
				<td>
				3.27%
				</td>
				<td>
				Financials
				</td>
			</tr>
<tr>
<td>
				SIA
				</td>
				<td>
				C6L
				</td>
				<td>
				1.27%
				</td>
				<td>
				1.27%
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				Singtel
				</td>
				<td>
				Z74
				</td>
				<td>
				8.21%
				</td>
				<td>
				8.18%
				</td>
				<td>
				Telecommunications
				</td>
			</tr>
<tr>
<td>
				ST Engineering
				</td>
				<td>
				S63
				</td>
				<td>
				2.07%
				</td>
				<td>
				2.06%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				ThaiBev
				</td>
				<td>
				Y92
				</td>
				<td>
				2.58%
				</td>
				<td>
				2.57%
				</td>
				<td>
				Consumer Goods
				</td>
			</tr>
<tr>
<td>
				UOB
				</td>
				<td>
				U11
				</td>
				<td>
				10.86%
				</td>
				<td>
				10.82%
				</td>
				<td>
				Banks
				</td>
			</tr>
<tr>
<td>
				UOL
				</td>
				<td>
				U14
				</td>
				<td>
				1.41%
				</td>
				<td>
				1.40%
				</td>
				<td>
				Real Estate
				</td>
			</tr>
<tr>
<td>
				Venture
				</td>
				<td>
				V03
				</td>
				<td>
				1.53%
				</td>
				<td>
				1.52%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				Wilmar Intl
				</td>
				<td>
				F34
				</td>
				<td>
				2.73%
				</td>
				<td>
				2.72%
				</td>
				<td>
				Consumer Goods
				</td>
			</tr>
<tr>
<td>
				YZJ Shipbldg SGD
				</td>
				<td>
				BS6
				</td>
				<td>
				0.76%
				</td>
				<td>
				0.76%
				</td>
				<td>
				Industrials
				</td>
			</tr>
<tr>
<td>
				SPH
				</td>
				<td>
				T39
				</td>
				<td>
				1.27%
				</td>
				<td>
				-
				</td>
				<td>
				Consumer Services
				</td>
			</tr>
<tr>
<td>
				Mapletree Ind Trust
				</td>
				<td>
				ME8U
				</td>
				<td>
				-
				</td>
				<td>
				1.61%
				</td>
				<td>
				REITs
				</td>
			</tr>
</tbody></table>
	Source: FTSE Russell (<a href="http://www.ftse.com/products/indices/SGX-ST">www.ftse.com/products/indices/SGX-ST</a>), SGX My Gateway, SGX StockFacts. Note weights above are only indicative and based on relative weightings on 31 March 2020 with Mapletree Industrial Trust free float on 31 March provided in the relevant FTSE ST Singapore Shariah Index. 
	 
	STI Reserve List 
	Effective 22 June, the STI Reserve List will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. Four of the five STI Reserve List stocks have been recipient of net institutional inflows in the 2020 year to June 5 as illustrated below. The five stocks have also averaged 3% total returns in the 2020 year to 5 June.
	</li>
</ul></body></html>

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-06/Capture_5.PNG' alt='capture' />
 </figure>
 <div class='content-caption'>capture</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>The STI Reserve List is used in the event that one or more of the STI constituents are deleted during the period up to the next quarterly review. As detailed in the STI Ground Rules, when a company is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion.</body></html>




Effective the June 22 open, Mapletree Industrial Trust will join the STI with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting near 12.5%.  
	 
	
Since listing in October 2010, Mapletree Industrial Trust has generated average annualised total returns of 19% and grown its portfolio from 70 properties valued at S$2.1 billion, to 114 properties valued at S$5.9 billion (including joint ventures). 
	 
	
The STI Reserve List, which has averaged 3% total returns in the 2020 year to 5 June on S$122 million on net institutional inflow, will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. 
	 
	Last week, the Straits Times Index (“STI”) was the strongest benchmark across Asia Pacific, generating a total return of 9.6%, bringing its 2020 year-to-date decline in total return to 13.2%. After the Thursday close, FTSE Russell announced that as part of the quarterly rebalancing, Mapletree Industrial Trust was added to the STI, with Singapore Press Holdings (“SPH”) omitted.  Quarterly STI reviews are a highly competitive process with the Index maintaining a fixed number of 30 constituents. The process involves ranking stocks of the broader FTSE ST All-Share Index by market capitalisation and a stock will be inserted into the STI at the quarterly review if it rises to 20th position or above when the eligible securities are ranked by full market capitalisation or will be deleted at the quarterly review if it falls to 41st position or below.    Mapletree Industrial Trust’s 19.4% Annualised Total Returns since IPO  
	This year, Mapletree Industrial Trust has generated a total return of 8.2% through to 5 June, on S$33.5 million of net institutional inflow. This has brought Mapletree Industrial Trust’s annualised total returns since listing in October 2010 to 19.4% and has seen its market capitalisation rise from approximately S$1.7 billion on its debut, to S$6.0 billion at present.  
	Since the end of 2010, the S-REIT Sector total market capitalisation has grown from S$35 billion to approximately S$100 billion as of 5 June 2020. The same period of time has seen the number of REITs in the STI rise from one to six effective 22 June.  SPH has also been a part of the significant expansion of the S-REIT Sector over the past 10 years, with the spin-off of Paragon and The Clementi Mall into SPH REIT in July 2013. From 23 July 2013, through to 5 June 2020, SPH REIT has since delivered investors 5.1% average annualised total returns. SPH REIT currently maintains a market capitalisation of S$2.5 billion, in comparison to SPH’s S$2.2 billion. As noted in its FY19 Annual Report (click here) as of 10 October 2019, SPH maintained a 70% deemed interest (approximately S$1.75 billion on the 5 June close) in SPH REIT.  As detailed in the table below Mapletree Industrial Trust will join the STI on the 22 June open with an indicative index weight of 1.6%. This will bring the total of number of REITs in the STI to six, with an indicative combined weighting close to 12.5%.
	 

	


				STI Stocks
				
				
				STI Code
				
				
				31 March 2020 Index Weight
				
				
				New Indicative Weight for 22 June, based on 31 March 2020 data
				
				
				Sector/Industry
				
			


				Ascendas REIT
				
				
				A17U
				
				
				3.61%
				
				
				3.60%
				
				
				REITs
				
			


				CapitaCom Trust
				
				
				C61U
				
				
				1.81%
				
				
				1.80%
				
				
				REITs
				
			


				CapitaLand
				
				
				C31
				
				
				3.09%
				
				
				3.08%
				
				
				Financials
				
			


				CapitaMall Trust
				
				
				C38U
				
				
				1.87%
				
				
				1.86%
				
				
				REITs
				
			


				CityDev
				
				
				C09
				
				
				1.47%
				
				
				1.46%
				
				
				Financials
				
			


				ComfortDelGro
				
				
				C52
				
				
				1.36%
				
				
				1.35%
				
				
				Consumer Services
				
			


				DairyFarm USD
				
				
				D01
				
				
				0.86%
				
				
				0.86%
				
				
				Consumer Services
				
			


				DBS
				
				
				D05
				
				
				14.52%
				
				
				14.47%
				
				
				Banks
				
			


				Genting Sing
				
				
				G13
				
				
				1.74%
				
				
				1.73%
				
				
				Consumer Services
				
			


				HongkongLand USD
				
				
				H78
				
				
				2.69%
				
				
				2.68%
				
				
				Financials
				
			


				Jardine C&amp;C
				
				
				C07
				
				
				0.85%
				
				
				0.85%
				
				
				Consumer Services
				
			


				JMH USD
				
				
				J36
				
				
				6.49%
				
				
				6.47%
				
				
				Industrials
				
			


				JSH USD
				
				
				J37
				
				
				2.50%
				
				
				2.49%
				
				
				Industrials
				
			


				Keppel Corp
				
				
				BN4
				
				
				3.29%
				
				
				3.28%
				
				
				Oil &amp; Gas
				
			


				Mapletree Com Trust
				
				
				N2IU
				
				
				1.74%
				
				
				1.73%
				
				
				REITs
				
			


				Mapletree Log Trust
				
				
				M44U
				
				
				1.75%
				
				
				1.74%
				
				
				REITs
				
			


				OCBC Bank
				
				
				O39
				
				
				12.93%
				
				
				12.88%
				
				
				Banks
				
			


				SATS
				
				
				S58
				
				
				0.87%
				
				
				0.87%
				
				
				Industrials
				
			


				Sembcorp Ind
				
				
				U96
				
				
				0.61%
				
				
				0.61%
				
				
				Utilities
				
			


				SGX
				
				
				S68
				
				
				3.28%
				
				
				3.27%
				
				
				Financials
				
			


				SIA
				
				
				C6L
				
				
				1.27%
				
				
				1.27%
				
				
				Consumer Services
				
			


				Singtel
				
				
				Z74
				
				
				8.21%
				
				
				8.18%
				
				
				Telecommunications
				
			


				ST Engineering
				
				
				S63
				
				
				2.07%
				
				
				2.06%
				
				
				Industrials
				
			


				ThaiBev
				
				
				Y92
				
				
				2.58%
				
				
				2.57%
				
				
				Consumer Goods
				
			


				UOB
				
				
				U11
				
				
				10.86%
				
				
				10.82%
				
				
				Banks
				
			


				UOL
				
				
				U14
				
				
				1.41%
				
				
				1.40%
				
				
				Real Estate
				
			


				Venture
				
				
				V03
				
				
				1.53%
				
				
				1.52%
				
				
				Industrials
				
			


				Wilmar Intl
				
				
				F34
				
				
				2.73%
				
				
				2.72%
				
				
				Consumer Goods
				
			


				YZJ Shipbldg SGD
				
				
				BS6
				
				
				0.76%
				
				
				0.76%
				
				
				Industrials
				
			


				SPH
				
				
				T39
				
				
				1.27%
				
				
				-
				
				
				Consumer Services
				
			


				Mapletree Ind Trust
				
				
				ME8U
				
				
				-
				
				
				1.61%
				
				
				REITs
				
			

	Source: FTSE Russell (www.ftse.com/products/indices/SGX-ST), SGX My Gateway, SGX StockFacts. Note weights above are only indicative and based on relative weightings on 31 March 2020 with Mapletree Industrial Trust free float on 31 March provided in the relevant FTSE ST Singapore Shariah Index. 
	 
	STI Reserve List  
	Effective 22 June, the STI Reserve List will include Keppel DC REIT, Suntec REIT, NetLink NBN Trust, Frasers Logistics &amp; Commercial Trust and Keppel REIT. Four of the five STI Reserve List stocks have been recipient of net institutional inflows in the 2020 year to June 5 as illustrated below. The five stocks have also averaged 3% total returns in the 2020 year to 5 June.
	



      
    
    capture

The STI Reserve List is used in the event that one or more of the STI constituents are deleted during the period up to the next quarterly review. As detailed in the STI Ground Rules, when a company is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion.


Sixth REIT, Mapletree Industrial Trust, to Join STI on 22 June

CapitaLand Ascendas REIT / Equity Bottom-Up





Amongst the 50 most traded SGX-listed stocks of 2020 through to 7 Feb, four Real Estate stocks were amongst the five strongest performers - Keppel DC REIT, Mapletree Logistics Trust, Ascendas REIT and Manulife REIT. 
	 
	
These performances coincided with low interest rate expectations continuing into 2020- consensus expectations for a Federal Funds interest rate cut in 2020 have increased to 80% from 50% at the end of 2019, with expectations for a 25 bps cut moving from Dec 2020 to Sep 2020. 
	 
	
Singapore Government has announced publicly-listed developers with substantial Singapore connections can apply to be QC-exempted. In reaction, on Friday, City Dev opened +1.8%, UOL opened +1.0% &amp; Bukit Sembawang +1.3% before broad afternoon declines weighed the trio.   


 As many as 22 of the 50 most traded Singapore stocks in the 2020 year through to 7 February, have been either Real Estate Developers, Managers or Real Estate Investment Trusts (“REITs”). Together the 22 stocks have seen net institutional inflows of S$204 million, with Ascendas REIT, CapitaLand and Mapletree Logistics REIT leading the inflows. Together the 22 Real Estate stocks generated a higher median total return than the broader 50 stocks in both the 2020 year to 7 February (+2%) and the past three years (+46%).  REITs supported by Interest Rate Outlook in Early 2020 
 

REITs led the broader market in 2019 on outlooks for lower global interest rates. This theme continued somewhat over the first five weeks of 2020 with the US Dollar Index gaining 2%, yields on 10 year US Treasury Notes declining from 1.92% to 1.59%, and WTI Crude Oil declining 18% to near US$50.20/bbl. Moreover, at the end of 2019, consensus expectations for a Federal Funds Rate cut in 2020 have increased. At the end of 2010, expectations for a 2020 cut in the Federal Funds Rate were at 50%, with the most likely scenario a 25 bps cut in December. Last week, expectations for a 2020 cut in the Federal Funds Rate were near 80%, with the most likely scenario a 25 bps cut in September.

The strongest S-REITs in the 2020 year through to 7 February that have also ranked amongst the 50 most traded stocks were Keppel DC REIT, Mapletree Logistics Trust, Ascendas REIT and Manulife REIT.

Publicly-listed Developers with Substantial Singapore Connection Supported by Measures

Early Thursday evening the Singapore government announced with immediate effect, publicly listed developers with a substantial connection to Singapore can apply to be exempted from the Qualifying Certificate (“QC”) regime. Successful application means the relevant listed developers would be no longer subject to certain conditions when they buy residential land for development.

The application will be assessed according to criteria such as i) incorporation in Singapore, ii) primary listing is on the Singapore Exchange and principal place of business is Singapore, iii) the chairperson and the majority of the company’s board are Singapore citizens, iv) A significantly Singaporean shareholding interest in the company and v) track record in Singapore. Click here for more.

As noted by the SLA, under the Residential Property Act, any housing developer that is not considered a Singapore company has to apply for a QC when it purchases residential land for development, other than from the Government. Under the QC regime, it is required to complete the development within five years and dispose of all units within two years of completion.

Developer stocks opened higher than the broader market on the open of trading on 7 February. While the market open of the 7 February saw the Straits Times Index open down 0.5% from the Thursday 6 February close, City Developments opened 1.8% higher, UOL Group opened 1.0% higher, and Bukit Sembawang opened 1.3% higher. However, broader market weakness in the course of the trading session weighed those gains into the close.




			22 Real Estate Stocks Amongst 50 Most Traded Stocks in 2020 YTD
			
			
			Stock Code
			
			
			Turnover Rank in 2020 YTD
			
			
			Approx Turnover Rank in 2019
			
			
			Net Insti Flow in 2020 YTD (S$M)
			
			
			Net Insti Flow in 2019 (S$M)
			
			
			MKT Cap (S$)
			
			
			2020 YTD Total Return
			
			
			2019 Total Return
			
			
			3 Yr Total Return
			
		


			CapitaLand
			
			
			C31
			
			
			5
			
			
			7
			
			
			58
			
			
			224.4
			
			
			18.66B
			
			
			-1%
			
			
			25%
			
			
			18%
			
		


			Ascendas REIT
			
			
			A17U
			
			
			6
			
			
			5
			
			
			64
			
			
			-28.4
			
			
			11.61B
			
			
			9%
			
			
			24%
			
			
			58%
			
		


			CapitaMall Trust
			
			
			C38U
			
			
			8
			
			
			8
			
			
			-1
			
			
			-45.8
			
			
			9.04B
			
			
			1%
			
			
			13%
			
			
			46%
			
		


			CapitaCom Trust
			
			
			C61U
			
			
			10
			
			
			10
			
			
			7
			
			
			34.0
			
			
			7.87B
			
			
			4%
			
			
			19%
			
			
			56%
			
		


			Mapletree Com Tr
			
			
			N2IU
			
			
			12
			
			
			11
			
			
			-2
			
			
			-2.8
			
			
			7.54B
			
			
			-4%
			
			
			53%
			
			
			75%
			
		


			CityDev
			
			
			C09
			
			
			13
			
			
			22
			
			
			9
			
			
			123.9
			
			
			10.01B
			
			
			1%
			
			
			38%
			
			
			22%
			
		


			Mapletree Log Tr
			
			
			M44U
			
			
			14
			
			
			18
			
			
			24
			
			
			36.8
			
			
			7.21B
			
			
			10%
			
			
			46%
			
			
			114%
			
		


			Suntec REIT
			
			
			T82U
			
			
			19
			
			
			21
			
			
			-7
			
			
			-63.3
			
			
			5.09B
			
			
			0%
			
			
			9%
			
			
			23%
			
		


			HongkongLand USD
			
			
			H78
			
			
			23
			
			
			17
			
			
			-1
			
			
			-96.9
			
			
			17.84B
			
			
			-2%
			
			
			-7%
			
			
			-14%
			
		


			Mapletree Ind Tr
			
			
			ME8U
			
			
			24
			
			
			26
			
			
			6
			
			
			17.9
			
			
			6.12B
			
			
			8%
			
			
			44%
			
			
			100%
			
		


			Mapletree NAC Tr
			
			
			RW0U
			
			
			25
			
			
			24
			
			
			7
			
			
			-38.7
			
			
			3.80B
			
			
			4%
			
			
			8%
			
			
			51%
			
		


			UOL
			
			
			U14
			
			
			29
			
			
			31
			
			
			14
			
			
			117.4
			
			
			6.91B
			
			
			-2%
			
			
			38%
			
			
			32%
			
		


			Keppel DC REIT
			
			
			AJBU
			
			
			32
			
			
			32
			
			
			10
			
			
			3.5
			
			
			3.79B
			
			
			13%
			
			
			66%
			
			
			131%
			
		


			Ascott Trust
			
			
			HMN
			
			
			34
			
			
			N/A
			
			
			-13
			
			
			N/A
			
			
			3.88B
			
			
			-2%
			
			
			31%
			
			
			38%
			
		


			Frasers L&amp;I Tr
			
			
			BUOU
			
			
			36
			
			
			34
			
			
			9
			
			
			27.3
			
			
			2.87B
			
			
			2%
			
			
			28%
			
			
			60%
			
		


			Keppel REIT
			
			
			K71U
			
			
			40
			
			
			35
			
			
			7
			
			
			42.0
			
			
			4.23B
			
			
			2%
			
			
			14%
			
			
			41%
			
		


			Manulife REIT USD
			
			
			BTOU
			
			
			41
			
			
			50
			
			
			9
			
			
			3.9
			
			
			2.29B
			
			
			9%
			
			
			40%
			
			
			64%
			
		


			CDL HTrust
			
			
			J85
			
			
			42
			
			
			48
			
			
			-11
			
			
			-12.5
			
			
			1.82B
			
			
			-4%
			
			
			17%
			
			
			33%
			
		


			CapitaR China Tr
			
			
			AU8U
			
			
			43
			
			
			51
			
			
			-2
			
			
			-3.2
			
			
			1.84B
			
			
			-6%
			
			
			28%
			
			
			25%
			
		


			Frasers Cpt Tr
			
			
			J69U
			
			
			45
			
			
			42
			
			
			6
			
			
			12.3
			
			
			3.20B
			
			
			3%
			
			
			36%
			
			
			65%
			
		


			Cromwell REIT EUR
			
			
			CNNU
			
			
			49
			
			
			57
			
			
			1
			
			
			-23.7
			
			
			2.14B
			
			
			3%
			
			
			28%
			
			
			N/A
			
		


			ESR-REIT
			
			
			J91U
			
			
			50
			
			
			49
			
			
			10
			
			
			13.0
			
			
			1.92B
			
			
			5%
			
			
			12%
			
			
			24%
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			2%
			
			
			28%
			
			
			51%
			
		


			Median
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			2%
			
			
			28%
			
			
			46%
			
		

Source: Thomson Reuters, Bloomberg (Data as of 7 February 2020)

The 20 strongest stocks of the 50 most traded stocks ranked by turnover in the 2020 year through to 7 February are tabled below. The five strongest performing stocks over the five weeks were Medtecs International Corporation, Keppel DC REIT, Mapletree Logistical Trust, Ascendas REIT and Manulife US REIT.

 




			20 Strongest Stocks Amongst 50 Most Traded Stocks in 2020 YTD
			
			
			Stock Code
			
			
			Turnover Rank in 2020 YTD
			
			
			Approx Turnover Rank in 2019
			
			
			Net Insti Flow in 2020 YTD (S$M)
			
			
			Net Insti Flow in 2019 (S$M)
			
			
			MKT Cap (S$)
			
			
			2020 YTD Total Return
			
			
			2019 Total Return
			
			
			3 Yr Total Return
			
		


			Medtecs Intl
			
			
			546
			
			
			31
			
			
			268
			
			
			-12
			
			
			0.1
			
			
			56.59M
			
			
			178%
			
			
			37%
			
			
			119%
			
		


			Keppel DC REIT
			
			
			AJBU
			
			
			32
			
			
			32
			
			
			10
			
			
			3.5
			
			
			3.79B
			
			
			13%
			
			
			66%
			
			
			131%
			
		


			Mapletree Log Tr
			
			
			M44U
			
			
			14
			
			
			18
			
			
			24
			
			
			36.8
			
			
			7.21B
			
			
			10%
			
			
			46%
			
			
			114%
			
		


			Ascendas REIT
			
			
			A17U
			
			
			6
			
			
			5
			
			
			64
			
			
			-28.4
			
			
			11.61B
			
			
			9%
			
			
			24%
			
			
			58%
			
		


			Manulife REIT USD
			
			
			BTOU
			
			
			41
			
			
			50
			
			
			9
			
			
			3.9
			
			
			2.29B
			
			
			9%
			
			
			40%
			
			
			64%
			
		


			Mapletree Ind Tr
			
			
			ME8U
			
			
			24
			
			
			26
			
			
			6
			
			
			17.9
			
			
			6.12B
			
			
			8%
			
			
			44%
			
			
			100%
			
		


			JMH USD
			
			
			J36
			
			
			20
			
			
			14
			
			
			6
			
			
			-13.3
			
			
			59.57B
			
			
			8%
			
			
			-19%
			
			
			-2%
			
		


			NetLink NBN Tr
			
			
			CJLU
			
			
			37
			
			
			38
			
			
			9
			
			
			-24.1
			
			
			3.94B
			
			
			7%
			
			
			31%
			
			
			N/A
			
		


			JSH USD
			
			
			J37
			
			
			28
			
			
			25
			
			
			4
			
			
			0.8
			
			
			48.20B
			
			
			5%
			
			
			-17%
			
			
			-17%
			
		


			ESR-REIT
			
			
			J91U
			
			
			50
			
			
			49
			
			
			10
			
			
			13.0
			
			
			1.92B
			
			
			5%
			
			
			12%
			
			
			24%
			
		


			CapitaCom Trust
			
			
			C61U
			
			
			10
			
			
			10
			
			
			7
			
			
			34.0
			
			
			7.87B
			
			
			4%
			
			
			19%
			
			
			56%
			
		


			ST Engineering
			
			
			S63
			
			
			17
			
			
			20
			
			
			40
			
			
			146.0
			
			
			12.80B
			
			
			4%
			
			
			17%
			
			
			38%
			
		


			Mapletree NAC Tr
			
			
			RW0U
			
			
			25
			
			
			24
			
			
			7
			
			
			-38.7
			
			
			3.80B
			
			
			4%
			
			
			8%
			
			
			51%
			
		


			Frasers Cpt Tr
			
			
			J69U
			
			
			45
			
			
			42
			
			
			6
			
			
			12.3
			
			
			3.20B
			
			
			3%
			
			
			36%
			
			
			65%
			
		


			Cromwell REIT EUR
			
			
			CNNU
			
			
			49
			
			
			57
			
			
			1
			
			
			-23.7
			
			
			2.14B
			
			
			3%
			
			
			28%
			
			
			N/A
			
		


			Frasers L&amp;I Tr
			
			
			BUOU
			
			
			36
			
			
			34
			
			
			9
			
			
			27.3
			
			
			2.87B
			
			
			2%
			
			
			28%
			
			
			60%
			
		


			Keppel REIT
			
			
			K71U
			
			
			40
			
			
			35
			
			
			7
			
			
			42.0
			
			
			4.23B
			
			
			2%
			
			
			14%
			
			
			41%
			
		


			Venture
			
			
			V03
			
			
			22
			
			
			16
			
			
			33
			
			
			-4.8
			
			
			4.74B
			
			
			1%
			
			
			21%
			
			
			81%
			
		


			CapitaMall Trust
			
			
			C38U
			
			
			8
			
			
			8
			
			
			-1
			
			
			-45.8
			
			
			9.04B
			
			
			1%
			
			
			13%
			
			
			46%
			
		


			CityDev
			
			
			C09
			
			
			13
			
			
			22
			
			
			9
			
			
			123.9
			
			
			10.01B
			
			
			1%
			
			
			38%
			
			
			22%
			
		

 Source: Thomson Reuters, Bloomberg (Data as of 7 February 2020)



Real Estate Stocks Led Most Traded Stocks Over Past 5 Weeks

Singapore

CapitaLand Limited is a real estate company focused on investment holding. The Company and its subsidiaries are principally engaged in investment holding, real estate development, investment in real estate financial products and real estate assets, investment advisory and management services, as well as the management of serviced residences.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

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Real Estate Stocks Led Most Traded Stocks Over Past 5 Weeks

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Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)