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

Capitaland Commercial Trust / Equity Bottom-Up

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<li>
Among the 10 largest constituents of the FTSE ST Singapore Shariah Index, three are REITs – Mapletree Industrial Trust, Keppel DC REIT and Frasers Logistics &amp; Commercial Trust. 
	 </li>
	<li>Both MIT and KDC REIT are constituents of the STI Index while FLCT is the largest stock on the STI Reserve List. The three REITs averaged total returns of 28% and received net institutional inflows of S$145 million in 2020 YTD till 21 October. </li>
</ul>
<ul>
<li>All three REITs have seen limited impact from COVID-19, particularly for MIT and KDC REIT, whose data centre assets are seen as providers of essential services, and have benefited from the acceleration of digitalisation following widespread lockdowns. The performance of FLCT's industrial and logistics assets have also been relatively resilient, with only its retail segments taking a near- to mid-term hit.</li>
</ul>
 

The FTSE ST Singapore Shariah Index has been designed to be used as the basis of Shariah compliant investment products that focus on Shariah-compliant companies listed on SGX. Independent screening is carried out by Yasaar Ltd, an organization with a global network of expert Shariah scholars. 
Using the FTSE ST All-Share Index as a base universe, constituents are screened against a clear set of Shariah principles to create a robust Shariah-compliant index for the Singapore market. 
Among the 10 largest constituents of the FTSE ST Singapore Shariah Index, three are REITs – Mapletree Industrial Trust, Keppel DC REIT and Frasers Logistics &amp; Commercial Trust.

<table class="table table-striped"><tbody>
<tr>
<td>
			Stock
			</td>
			<td>
			Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			P/B 
			</td>
			<td>
			YTD 2020 to 21 Oct Total Returns
			</td>
			<td>
			Sector
			</td>
		</tr>
<tr>
<td>
			Singtel
			</td>
			<td>
			Z74
			</td>
			<td>
			34,618
			</td>
			<td>
			1.3
			</td>
			<td>
			-35.7
			</td>
			<td>
			Telecommunications
			</td>
		</tr>
<tr>
<td>
			CapitaLand
			</td>
			<td>
			C31
			</td>
			<td>
			14,177
			</td>
			<td>
			0.6
			</td>
			<td>
			-24.2
			</td>
			<td>
			Real Estate (excl. REITs)
			</td>
		</tr>
<tr>
<td>
			Hongkong Land
			</td>
			<td>
			H78
			</td>
			<td>
			12,100
			</td>
			<td>
			0.2
			</td>
			<td>
			-29.1
			</td>
			<td>
			Real Estate (excl. REITs)
			</td>
		</tr>
<tr>
<td>
			SIA
			</td>
			<td>
			C6L
			</td>
			<td>
			10,407
			</td>
			<td>
			0.6
			</td>
			<td>
			-44.9
			</td>
			<td>
			Industrials
			</td>
		</tr>
<tr>
<td>
			Mapletree Industrial Trust
			</td>
			<td>
			ME8U
			</td>
			<td>
			7,474
			</td>
			<td>
			2.0
			</td>
			<td>
			26.4
			</td>
			<td>
			REITs
			</td>
		</tr>
<tr>
<td>
			Venture Corp
			</td>
			<td>
			V03
			</td>
			<td>
			6,079
			</td>
			<td>
			2.4
			</td>
			<td>
			35.2
			</td>
			<td>
			Technology (Hardware/ Software)
			</td>
		</tr>
<tr>
<td>
			Keppel DC REIT
			</td>
			<td>
			AJBU
			</td>
			<td>
			4,883
			</td>
			<td>
			2.6
			</td>
			<td>
			47.2
			</td>
			<td>
			REITs
			</td>
		</tr>
<tr>
<td>
			Frasers Logistics &amp; Comm Trust
			</td>
			<td>
			BUOU
			</td>
			<td>
			4,540
			</td>
			<td>
			1.3
			</td>
			<td>
			11.4
			</td>
			<td>
			REITs
			</td>
		</tr>
<tr>
<td>
			NetLink NBN Trust
			</td>
			<td>
			CJLU
			</td>
			<td>
			3,780
			</td>
			<td>
			1.3
			</td>
			<td>
			5.3
			</td>
			<td>
			Telecommunications
			</td>
		</tr>
<tr>
<td>
			ComfortDelGro
			</td>
			<td>
			C52
			</td>
			<td>
			3,098
			</td>
			<td>
			1.3
			</td>
			<td>
			-37.7
			</td>
			<td>
			Industrials
			</td>
		</tr>
</tbody></table>
 Source: Bloomberg, SGX Stock Screener, FTSE Russell. Top 10 constituents based <a href="https://research.ftserussell.com/Analytics/FactSheets/Home/DownloadSingleIssue?openfile=open&amp;issueName=FSTSS&amp;isManual=False&amp;_ga=2.265123919.1772479919.1603072003-1604055795.1602829568">FTSE ST Singapore Shariah Index</a> as of 30 Sep 2020. Data based on Bloomberg and SGX Stock Screener as of 21 Oct 2020. 

 

Mapletree Industrial Trust

<ul>
<li>Mapletree Industrial Trust (MIT) on 15 Sept unveiled its plan to <a href="https://links.sgx.com/1.0.0/corporate-announcements/GWH9D34OI0Z76HN8/631454_20200914_The%20Proposed%20Acquisition%20of%20a%20data%20centre%20located%20in%20Virginia%20US.pdf">acquire a data centre and office</a> in the US state of Virginia for between US$200.6 million and US$262.1 million, a deal which it targets to complete by 1Q 2021

	<ul>
<li>Upon completion, MIT's assets under management will increase to S$6.9 billion from S$6.6 billion as at June 30, assuming that the proposed acquisition was completed on Sep 1 at the lower end of the total acquisition outlay</li>
		<li>Data centres will then comprise 41% of MIT's portfolio by AUM, up from 38.5%</li>
	</ul>
</li>
	<li>MIT has a stable and resilient portfolio anchored by large and diversified tenant base with low dependence on any single tenant or trade sector
	<ul>
<li>Long leases in MIT’s data centres in Singapore and North America as well as build-to-suit projects to underpin portfolio resilience</li>
	</ul>
</li>
	<li>MIT has enhanced financial flexibility after raising about S$410.0 million from private placement to fund the US acquisition
	<ul>
<li>It believes that the aggregate leverage ratio of 38.8% provides sufficient headroom for investment opportunities</li>
	</ul>
</li>
	<li>MIT intends to grow by acquisitions and developments
	<ul>
<li>Proposed acquisition of the remaining 60.0% interest in the 14 data centres in the US</li>
		<li>Has commenced works for redevelopment of the Kolam Ayer 2 Cluster</li>
	</ul>
</li>
	<li>The Manager estimates that the rental reliefs extended to tenants would amount to about S$20 million, which will affect MIT’s distributable income for FY20/21</li>
	<li>In view of the uncertainty from COVID-19, the Manager has withheld tax-exempt income of S$7.1 million in 1QFY20/21 and S$6.6 million in 4QFY19/20 for greater flexibility in cash management
	<ul>
<li>The Manager expects the income withheld will help to mitigate the impact of rental reliefs to FY20/21 distributions 
		 </li>
	</ul>
</li>
</ul>
Keppel DC REIT

<ul>
<li>Keppel DC REIT has been <a href="https://links.sgx.com/1.0.0/corporate-announcements/YP9ZX2L5JELQ0745/635391_20201015_KDCREIT%20Inclusion%20in%20STI.pdf">included in the benchmark Straits Times Index</a> (STI) from Oct 19, replacing CapitaLand Commercial Trust, which was delisted from the STI on Oct 16 as it prepares for its merger with CapitaLand Mall Trust</li>
	<li>The Manager believes that the prospects for the data centre market remain robust, underpinned by strong digital trends such as rapid cloud adoption, smart technologies, big‐data analytics, and 5G deployment
	<ul>
<li>COVID-19 has been a catalyst to go digital, and some of these online behaviours are expected to continue post-pandemic</li>
		<li>According to BroadGroup, the global colocation market is expected to grow by 15% in 2020, while enterprise spending on cloud infrastructure is forecast to grow by 22% CAGR over next 5 years</li>
		<li>According to Ericsson, data traffic increased by 20%-100% across markets in Europe, Asia and America as a result of COVID-19 lockdowns, while global mobile data traffic is expected to increase by 31% annually from 2019 to 2025</li>
		<li>According to Cisco, 5G subscriptions to generate 2.5 times more traffic than the average 4G  connection, and take up 10.6% of total mobile traffic by 2023</li>
	</ul>
</li>
	<li>The Manager will continue to leverage its competencies in investment, asset and capital management, and build on Keppel Group’s capabilities in project development and facilities management, to seek opportunities and strengthen its presence across key data centre hubs globally</li>
</ul>
 

Frasers Logistics &amp; Commercial Trust

<ul>
<li>To-date, the FLCT portfolio has not been materially impacted by COVID-19, but the situation remains dynamic, with ongoing uncertainty in terms of impact on the countries FLCT has a presence in</li>
	<li>The REIT Manager is focused on managing any financial implications arising from COVID-19 and will continue to work closely with FLCT’s customers to overcome challenges</li>
	<li>It intends to leverage on the Sponsor’s integrated development and asset management capabilities
	<ul>
<li>Diversified, sizeable ROFR pipeline of assets of more than S$5 billion from Sponsor</li>
	</ul>
</li>
</ul>
<ul>
<li>
Australia

	<ul>
<li>Limited impact on the industrial and commercial properties, with eligible SMEs representing a small proportion of FLCT’s Australian portfolio</li>
		<li>Expect near- to mid-term impact on the retail components of the Australian portfolio</li>
	</ul>
</li>
	<li>
Singapore
	<ul>
<li>Fully passing on any property tax rebate and rental reliefs, as applicable, to eligible tenants</li>
		<li>Expect near- to mid-term impact on the retail components of the Singapore portfolio</li>
	</ul>
</li>
	<li>
Europe
	<ul>
<li>Limited impact on the German and Dutch industrial portfolio</li>
		<li>The UK business park is seeing stable performance</li>
	</ul>
</li>
</ul>
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Among the 10 largest constituents of the FTSE ST Singapore Shariah Index, three are REITs – Mapletree Industrial Trust, Keppel DC REIT and Frasers Logistics &amp; Commercial Trust. 
	 
	Both MIT and KDC REIT are constituents of the STI Index while FLCT is the largest stock on the STI Reserve List. The three REITs averaged total returns of 28% and received net institutional inflows of S$145 million in 2020 YTD till 21 October. 


All three REITs have seen limited impact from COVID-19, particularly for MIT and KDC REIT, whose data centre assets are seen as providers of essential services, and have benefited from the acceleration of digitalisation following widespread lockdowns. The performance of FLCT's industrial and logistics assets have also been relatively resilient, with only its retail segments taking a near- to mid-term hit.

 

The FTSE ST Singapore Shariah Index has been designed to be used as the basis of Shariah compliant investment products that focus on Shariah-compliant companies listed on SGX. Independent screening is carried out by Yasaar Ltd, an organization with a global network of expert Shariah scholars.  
Using the FTSE ST All-Share Index as a base universe, constituents are screened against a clear set of Shariah principles to create a robust Shariah-compliant index for the Singapore market.  
Among the 10 largest constituents of the FTSE ST Singapore Shariah Index, three are REITs – Mapletree Industrial Trust, Keppel DC REIT and Frasers Logistics &amp; Commercial Trust.




			Stock
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			P/B 
			
			
			YTD 2020 to 21 Oct Total Returns
			
			
			Sector
			
		


			Singtel
			
			
			Z74
			
			
			34,618
			
			
			1.3
			
			
			-35.7
			
			
			Telecommunications
			
		


			CapitaLand
			
			
			C31
			
			
			14,177
			
			
			0.6
			
			
			-24.2
			
			
			Real Estate (excl. REITs)
			
		


			Hongkong Land
			
			
			H78
			
			
			12,100
			
			
			0.2
			
			
			-29.1
			
			
			Real Estate (excl. REITs)
			
		


			SIA
			
			
			C6L
			
			
			10,407
			
			
			0.6
			
			
			-44.9
			
			
			Industrials
			
		


			Mapletree Industrial Trust
			
			
			ME8U
			
			
			7,474
			
			
			2.0
			
			
			26.4
			
			
			REITs
			
		


			Venture Corp
			
			
			V03
			
			
			6,079
			
			
			2.4
			
			
			35.2
			
			
			Technology (Hardware/ Software)
			
		


			Keppel DC REIT
			
			
			AJBU
			
			
			4,883
			
			
			2.6
			
			
			47.2
			
			
			REITs
			
		


			Frasers Logistics &amp; Comm Trust
			
			
			BUOU
			
			
			4,540
			
			
			1.3
			
			
			11.4
			
			
			REITs
			
		


			NetLink NBN Trust
			
			
			CJLU
			
			
			3,780
			
			
			1.3
			
			
			5.3
			
			
			Telecommunications
			
		


			ComfortDelGro
			
			
			C52
			
			
			3,098
			
			
			1.3
			
			
			-37.7
			
			
			Industrials
			
		

 Source: Bloomberg, SGX Stock Screener, FTSE Russell. Top 10 constituents based FTSE ST Singapore Shariah Index as of 30 Sep 2020. Data based on Bloomberg and SGX Stock Screener as of 21 Oct 2020. 

 

Mapletree Industrial Trust


Mapletree Industrial Trust (MIT) on 15 Sept unveiled its plan to acquire a data centre and office in the US state of Virginia for between US$200.6 million and US$262.1 million, a deal which it targets to complete by 1Q 2021

	
Upon completion, MIT's assets under management will increase to S$6.9 billion from S$6.6 billion as at June 30, assuming that the proposed acquisition was completed on Sep 1 at the lower end of the total acquisition outlay
		Data centres will then comprise 41% of MIT's portfolio by AUM, up from 38.5%
	

	MIT has a stable and resilient portfolio anchored by large and diversified tenant base with low dependence on any single tenant or trade sector
	
Long leases in MIT’s data centres in Singapore and North America as well as build-to-suit projects to underpin portfolio resilience
	

	MIT has enhanced financial flexibility after raising about S$410.0 million from private placement to fund the US acquisition
	
It believes that the aggregate leverage ratio of 38.8% provides sufficient headroom for investment opportunities
	

	MIT intends to grow by acquisitions and developments
	
Proposed acquisition of the remaining 60.0% interest in the 14 data centres in the US
		Has commenced works for redevelopment of the Kolam Ayer 2 Cluster
	

	The Manager estimates that the rental reliefs extended to tenants would amount to about S$20 million, which will affect MIT’s distributable income for FY20/21
	In view of the uncertainty from COVID-19, the Manager has withheld tax-exempt income of S$7.1 million in 1QFY20/21 and S$6.6 million in 4QFY19/20 for greater flexibility in cash management
	
The Manager expects the income withheld will help to mitigate the impact of rental reliefs to FY20/21 distributions 
		 
	


Keppel DC REIT


Keppel DC REIT has been included in the benchmark Straits Times Index (STI) from Oct 19, replacing CapitaLand Commercial Trust, which was delisted from the STI on Oct 16 as it prepares for its merger with CapitaLand Mall Trust
	The Manager believes that the prospects for the data centre market remain robust, underpinned by strong digital trends such as rapid cloud adoption, smart technologies, big‐data analytics, and 5G deployment
	
COVID-19 has been a catalyst to go digital, and some of these online behaviours are expected to continue post-pandemic
		According to BroadGroup, the global colocation market is expected to grow by 15% in 2020, while enterprise spending on cloud infrastructure is forecast to grow by 22% CAGR over next 5 years
		According to Ericsson, data traffic increased by 20%-100% across markets in Europe, Asia and America as a result of COVID-19 lockdowns, while global mobile data traffic is expected to increase by 31% annually from 2019 to 2025
		According to Cisco, 5G subscriptions to generate 2.5 times more traffic than the average 4G  connection, and take up 10.6% of total mobile traffic by 2023
	

	The Manager will continue to leverage its competencies in investment, asset and capital management, and build on Keppel Group’s capabilities in project development and facilities management, to seek opportunities and strengthen its presence across key data centre hubs globally

 

Frasers Logistics &amp; Commercial Trust


To-date, the FLCT portfolio has not been materially impacted by COVID-19, but the situation remains dynamic, with ongoing uncertainty in terms of impact on the countries FLCT has a presence in
	The REIT Manager is focused on managing any financial implications arising from COVID-19 and will continue to work closely with FLCT’s customers to overcome challenges
	It intends to leverage on the Sponsor’s integrated development and asset management capabilities
	
Diversified, sizeable ROFR pipeline of assets of more than S$5 billion from Sponsor
	




Australia

	
Limited impact on the industrial and commercial properties, with eligible SMEs representing a small proportion of FLCT’s Australian portfolio
		Expect near- to mid-term impact on the retail components of the Australian portfolio
	

	
Singapore
	
Fully passing on any property tax rebate and rental reliefs, as applicable, to eligible tenants
		Expect near- to mid-term impact on the retail components of the Singapore portfolio
	

	
Europe
	
Limited impact on the German and Dutch industrial portfolio
		The UK business park is seeing stable performance
	





FTSE ST Singapore Shariah Index’s Three Largest REITs

Australia

Ansell Limited provides health and safety protection solutions. The Company has operations in North America, Latin America, EMEA, and Asia. Ansell holds positions in the industrial and medical gloves market, as well as health and well being category worldwide.

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Ansell Ltd (ANN AU)

FTSE ST Singapore Shariah Index’s Three Largest REITs

Among the 10 largest constituents of the FTSE ST Singapore Shariah Index, three are REITs – Mapletree Industrial Trust, Keppel DC REIT and...

Singapore Exchange Ltd (SGX)

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