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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 <img src='https://api2.sgx.com/sites/default/files/2021-10/Capture_6.PNG' alt='Retail SREIT' />
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 <div class='content-caption'>Retail SREIT</div>
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At over 80 per cent of the population, Singapore has one of the highest Covid-19 vaccination rates globally. Booster shots are also underway as part of efforts towards a progressive full reopening and strategy to treat Covid-19 as endemic.

Sectors such as retail, travel and hospitality remain poised to benefit in the long run as borders reopen progressively and social activities return.

Singapore is working on establishing a vaccinated travel lane with several countries including some European countries, the United States and South Korea. 
In the near term and somewhat physically closer to our homes, suburban malls have demonstrated relevance and resilience amid extended restrictions and Work-From-Home (WFH) trends with exposure to essential trades such as supermarkets and food and beverage outlets. 
There are five S-REITs with exposure to suburban-focused retail malls in Singapore – Frasers Centrepoint Trust, CapitaLand Integrated Commercial Trust, SPH REIT, Mapletree Commercial Trust, and Lendlease Global Commercial REIT through its 31.8 per cent indirect interest in JEM. These five have averaged 7.6 per cent in total returns in the year-to-date. 
These five have averaged 7.6 per cent in total returns in the year to date (YTD). 
Suburban malls are located near residential neighbourhoods and provide residents with necessities and convenience.

SPH Reit, which owns a portfolio of retail malls in Singapore and Australia, recently reported full-year fiscal year (FY) 2021 results.

Gross revenue increased 14.8 per cent year on year to S$277.2 million and net property income increased 11.4 per cent year on year to S$202.6 million.

Distribution per unit (DPU) for Q4 FY 2021 was 1.58 cents, bringing its full year DPU to 5.40 cents which is 98 per cent higher year on year and 3.6 per cent away from FY 2019's DPU (pre-Covid).

Despite softer leasing sentiments across its portfolio, SPH Reit noted that the defensive nature of suburban malls has supported tenant sales at The Clementi Mall, bringing it to pre-Covid levels and in line with resilient suburban malls' performances.

The Clementi Mall observed a 33 per cent decrease in footfall but a 5 per cent increase in tenant sales, mitigated by its close proximity to residential homes.

CapitaLand Integrated Commercial Trust has a portfolio of suburban retail malls including Bedok Mall, Junction 8, Tampines Mall, and Westgate.

In the Reit's earlier first half (H1) 2021 results announcement, it noted that retail tenant sales continued to outpace shopper traffic, with both improving more than 104 per cent year on year on a low base effect.

H1 2021 tenant sales have recovered to 86.3 per cent against the 2019 average while shopper traffic was at 61.3 per cent against 2019.

Frasers Centrepoint Trust has a portfolio of nine Singapore suburban retail malls.

In its earlier business update, the Reit's tenant sales had recovered to near pre-Covid levels at end 2020 and in early 2021, despite being impacted in the third quarter (Q3) 2021 from April to June due to the tightened control measures during Phase 2 (Heightened Alert).

Mapletree Commercial Trust's VivoCity mall also noted year-on-year improvements in shopper traffic and tenant sales in Q1 FY21/22 but recovery momentum was disrupted by re-tightened Covid-19 measures.

Aside from SPH Reit, the rest of the S-Reits will be reporting quarterly results and business updates over the next few weeks.  REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/china-focused-s-reits-resilient-amid-onshore-property-focus"> </a><a href="https://www.businesstimes.com.sg/companies-markets/suburban-focused-retail-s-reits-average-76-in-total-returns-ytd">read </a>the original version.
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    Retail SREIT


At over 80 per cent of the population, Singapore has one of the highest Covid-19 vaccination rates globally. Booster shots are also underway as part of efforts towards a progressive full reopening and strategy to treat Covid-19 as endemic.

Sectors such as retail, travel and hospitality remain poised to benefit in the long run as borders reopen progressively and social activities return.

Singapore is working on establishing a vaccinated travel lane with several countries including some European countries, the United States and South Korea.  
In the near term and somewhat physically closer to our homes, suburban malls have demonstrated relevance and resilience amid extended restrictions and Work-From-Home (WFH) trends with exposure to essential trades such as supermarkets and food and beverage outlets.  
There are five S-REITs with exposure to suburban-focused retail malls in Singapore – Frasers Centrepoint Trust, CapitaLand Integrated Commercial Trust, SPH REIT, Mapletree Commercial Trust, and Lendlease Global Commercial REIT through its 31.8 per cent indirect interest in JEM. These five have averaged 7.6 per cent in total returns in the year-to-date.  
These five have averaged 7.6 per cent in total returns in the year to date (YTD).  
Suburban malls are located near residential neighbourhoods and provide residents with necessities and convenience.

SPH Reit, which owns a portfolio of retail malls in Singapore and Australia, recently reported full-year fiscal year (FY) 2021 results.

Gross revenue increased 14.8 per cent year on year to S$277.2 million and net property income increased 11.4 per cent year on year to S$202.6 million.

Distribution per unit (DPU) for Q4 FY 2021 was 1.58 cents, bringing its full year DPU to 5.40 cents which is 98 per cent higher year on year and 3.6 per cent away from FY 2019's DPU (pre-Covid).

Despite softer leasing sentiments across its portfolio, SPH Reit noted that the defensive nature of suburban malls has supported tenant sales at The Clementi Mall, bringing it to pre-Covid levels and in line with resilient suburban malls' performances.

The Clementi Mall observed a 33 per cent decrease in footfall but a 5 per cent increase in tenant sales, mitigated by its close proximity to residential homes.

CapitaLand Integrated Commercial Trust has a portfolio of suburban retail malls including Bedok Mall, Junction 8, Tampines Mall, and Westgate.

In the Reit's earlier first half (H1) 2021 results announcement, it noted that retail tenant sales continued to outpace shopper traffic, with both improving more than 104 per cent year on year on a low base effect.

H1 2021 tenant sales have recovered to 86.3 per cent against the 2019 average while shopper traffic was at 61.3 per cent against 2019.

Frasers Centrepoint Trust has a portfolio of nine Singapore suburban retail malls.

In its earlier business update, the Reit's tenant sales had recovered to near pre-Covid levels at end 2020 and in early 2021, despite being impacted in the third quarter (Q3) 2021 from April to June due to the tightened control measures during Phase 2 (Heightened Alert).

Mapletree Commercial Trust's VivoCity mall also noted year-on-year improvements in shopper traffic and tenant sales in Q1 FY21/22 but recovery momentum was disrupted by re-tightened Covid-19 measures.

Aside from SPH Reit, the rest of the S-Reits will be reporting quarterly results and business updates over the next few weeks.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Suburban-focused retail S-Reits average 7.6% in total returns YTD

Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/730/original/image_54312508231633489341255.png?1633489342" class="editor-image img-responsive" data-smartkarma-image-id="233730"></figure><h3><a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994" rel="noopener">SPH REIT (SPHREIT SP)</a> FY21 DPU +98.5% YoY; Rental reversions still weak, cap rate flat</h3><ul><li>2H21 revenue and NPI rose by 27% and 24.6% to S$137.2m and S$97.8m, respectively. FY21 revenue and NPI increased by 14.8% and 11.4% YoY to S$277.2m (107% of BB est) and S$202.7m (122% of BB est), respectively. The increase was mainly due to overall market recovery, lower rental assistance, and the full year contribution from Westfield Marion Shopping Centre</li></ul>

SingaporeSPH REIT (SPHREIT SP) FY21 DPU +98.5% YoY; Rental reversions still weak, cap rate flat2H21 revenue and NPI rose by 27% and 24.6% to S$137.2m and S$97.8m, respectively. FY21 revenue and NPI increased by 14.8% and 11.4% YoY to S$277.2m (107% of BB est) and S$202.7m (122% of BB est), respectively. The increase was mainly due to overall market recovery, lower rental assistance, and the full year contribution from Westfield Marion Shopping Centre

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In this weeks recap, we look at:<ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul>There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>.

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

On 30 March, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> announced that it was undergoing a strategic review to consider options for its various businesses. On 6 May, the company announced that it would be transferring its media business to a not-for-profit entity.Then, on 2 August, <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> announced that it was proposing to acquire <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> ex the media business and then delist and privatise SPH. Under the terms of the Scheme, for each share of <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> held, shareholders will receive cash of S$0.668, 0.596 units of <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and 0.782 units of <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>.The offer valued <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> at S$2.0987/share (a 11.63% premium to the close of S$1.88/share for SPH) using the closing prices for <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> and <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994:1" rel="noopener">SPH REIT (SPHREIT SP)</a>. Since then, the offer value has dropped to S$2.0507/share while <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> has moved higher to S$1.94/share.On 10 September, <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> shareholders voted in favour of the spin-off of the media business. This paves the way for the next EGM and Scheme Meeting where <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> shareholders will vote on the proposed privatisation by <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a>.<a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> still trades at a 5.4% discount to the offer value and is lower from the 3.1% discount at the close on 31 August. With around 3 months to go before the privatisation is complete (if voted through), there is good value is arbitraging the spread.

On 30 March, Singapore Press Holdings (SPH SP) announced that it was undergoing a strategic review to consider options for its various businesses. On 6 May, the company announced that it would be transferring its media business to a not-for-profit entity.Then, on 2 August, Keppel Corp (KEP SP) announced that it was proposing to acquire Singapore Press Holdings (SPH SP) ex the media business and then delist and privatise SPH. Under the terms of the Scheme, for each share of Singapore Press Holdings (SPH SP) held, shareholders will receive cash of S$0.668, 0.596 units of Keppel REIT (KREIT SP) and 0.782 units of SPH REIT (SPHREIT SP).The offer valued Singapore Press Holdings (SPH SP) at S$2.0987/share (a 11.63% premium to the close of S$1.88/share for SPH) using the closing prices for Keppel REIT (KREIT SP) and SPH REIT (SPHREIT SP). Since then, the offer value has dropped to S$2.0507/share while Singapore Press Holdings (SPH SP) has moved higher to S$1.94/share.On 10 September, Singapore Press Holdings (SPH SP) shareholders voted in favour of the spin-off of the media business. This paves the way for the next EGM and Scheme Meeting where Singapore Press Holdings (SPH SP) shareholders will vote on the proposed privatisation by Keppel Corp (KEP SP).Singapore Press Holdings (SPH SP) still trades at a 5.4% discount to the offer value and is lower from the 3.1% discount at the close on 31 August. With around 3 months to go before the privatisation is complete (if voted through), there is good value is arbitraging the spread.

Keppel Corp / SPH: One Step Closer to Privatisation

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Shinsei Bank, Hongkong Land, SOHO China, Bank Rakyat, Oil Search, JCNC

Singapore

SPH REIT is a Singapore-based REIT established principally to invest, directly or indirectly, in a portfolio of income-producing real estate which is used primarily for retail purposes in Asia-Pacific, as well as real estate-related assets.

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SPH REIT (SPHREIT SP)

REIT Watch - Suburban-focused retail S-Reits average 7.6% in total returns YTD

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Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

Keppel Corp / SPH: One Step Closer to Privatisation

SPH shareholders have voted in favour of the spin-off of the media business. This paves the way for the next EGM to vote on the privatisation by...

Brian Freitas

Last Week in Event SPACE: Shinsei Bank, Hongkong Land, SOHO China, Bank Rakyat, Oil Search, JCNC

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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