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

<ul><li>Ever wondered what is currently driving the local and regional markets? Pranay Yadav is a Senior Research Analyst at Mint Finance, a Singapore based research and consulting firm offering nuanced and deep insights on global macro and its impact on Singapore stocks, REITs, and ETFs.</li><li>From Pranay Yadav, Senior Research Analyst, Mint Finance: Among Singapore REITs with exposure to data centre properties, only Digital Core REIT (DCRU) and Keppel DC REIT (AJBU) have models focused entirely on data centres.</li></ul>

Ever wondered what is currently driving the local and regional markets? Pranay Yadav is a Senior Research Analyst at Mint Finance, a Singapore based research and consulting firm offering nuanced and deep insights on global macro and its impact on Singapore stocks, REITs, and ETFs.From Pranay Yadav, Senior Research Analyst, Mint Finance: Among Singapore REITs with exposure to data centre properties, only Digital Core REIT (DCRU) and Keppel DC REIT (AJBU) have models focused entirely on data centres.

What's Trending: GenAI unleashes hyper demand for Data Centres

<ul><li>Institutions were net sellers of Singapore stocks over the four trading sessions spanning August 2 through to August 7, with S$586 million of net institutional outflow.</li><li>The four sessions also saw 12 primary-listed companies conduct buybacks with a total consideration of S$20.4 million.</li><li>Digital Core REIT Management also acquired units of Digital Core REIT over each of the four sessions.</li></ul>

Institutions were net sellers of Singapore stocks over the four trading sessions spanning August 2 through to August 7, with S$586 million of net institutional outflow.The four sessions also saw 12 primary-listed companies conduct buybacks with a total consideration of S$20.4 million.Digital Core REIT Management also acquired units of Digital Core REIT over each of the four sessions.

Cohen & Steers Ups Digital Core REIT Interest, Beng Kuang Marine CEO also adds to Interest

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Setting up to be a crucial quarter for the major cloud infrastructure providers and broader tech as investors focus on the cost/benefits of AI.</li><li>Over the last decade, AMZN, MSFT, and GOOGL have garnered outsized investor attention, in part due to their size, but equally due to each of their rapidly growing tech infrastructure businesses (AWS, Azure, and GCP, respectively).</li><li>Based on the capex commentary from all three exiting the December quarter, investors are hoping for early signs of business AI traction, but also bracing for greater clarity around the costs.</li></ul>

Setting up to be a crucial quarter for the major cloud infrastructure providers and broader tech as investors focus on the cost/benefits of AI.Over the last decade, AMZN, MSFT, and GOOGL have garnered outsized investor attention, in part due to their size, but equally due to each of their rapidly growing tech infrastructure businesses (AWS, Azure, and GCP, respectively).Based on the capex commentary from all three exiting the December quarter, investors are hoping for early signs of business AI traction, but also bracing for greater clarity around the costs.

Cloud Infrastructure Monitor - Upcoming Earnings Season Marks a Crucial Point for Sector and AI

Alpha-Centric ESG Research

Kyle Rudden

<ul><li>New SGX climate-related disclosure requirements based on ISSB's standards are more stringent than current requirements, most notably regarding mandatory Scope 3 emissions reporting.</li><li>The implications for S-REITs are significant. Real Estate is one of the most emissions-intensive sectors, and Scope 3 emissions comprise 85-95% of total emissions for real estate companies.</li><li>Motivated by a strong "business case" for best-in-class climate performance and transparency, many S-REITs are ahead of the curve, evidenced by prominence in climate-related indexes.</li></ul>

New SGX climate-related disclosure requirements based on ISSB's standards are more stringent than current requirements, most notably regarding mandatory Scope 3 emissions reporting.The implications for S-REITs are significant. Real Estate is one of the most emissions-intensive sectors, and Scope 3 emissions comprise 85-95% of total emissions for real estate companies.Motivated by a strong "business case" for best-in-class climate performance and transparency, many S-REITs are ahead of the curve, evidenced by prominence in climate-related indexes.

S-REITs: Climate Disclosures and Inclusion in ESG-Related Equity Indexes

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 <div class='content-caption'>IPO</div>
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Digital Core Reit is a pure-play data centre S-Reit sponsored by Digital Realty, one of the largest owners, operator, developer and acquirer of data centres globally. Digital Core Reit is expected to commence trading in Singapore on Monday, Dec 6.

The Reit has an initial portfolio (IPO Portfolio) of 10 institutional quality freehold data centres located in the United States (in Silicon Valley, Los Angeles, and Northern Virginia) and Canada (in Toronto) with an aggregate appraised value of approximately US$1.4 billion and with 100 per cent occupancy rates.

In addition to the public and placement offering of 267.0 million units, a total of 26 cornerstone investors, including Affin Hwang Asset Management, Blackrock, B&amp;I Capital, Cohen &amp; Steers Asia, DBS Bank, Eastpring Investments, FIL Investment, JP Morgan Asset Management, Kasikorn Asset Management, and Principal Global Investors, have subscribed for an aggregate of 414.8 million units, which represents 36.9 per cent of the units in issue after the offering. 
Digital Core Reit is established with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of stabilised income-producing real estate assets located globally which are primarily used for data centre purposes, as well as assets necessary to support the digital economy.

Its sponsor, Digital Realty, is also among the 10 largest US-listed Reits, with a market capitalisation of US$44 billion and over 290 data centre facilities in 47 metros throughout 24 countries. Digital Realty also provides Digital Core Reit with the growth opportunity to capitalise on its potential pipeline of over US$15 billion comprised of existing and under construction data centres that could fit the global right of first refusal (Global ROFR) mandate to support the Reit's growth post listing.

In its prospectus, Digital Core Reit cites that North America's data centre market is expected to grow at a compound annual growth rate (CAGR) of approximately 15 per cent from 2020 to 2024, with hyperscale demand projected to grow at a CAGR of approximately 23 per cent, driven by digitalisation, new technologies and digital trends such as social media, 5G, Internet of Things, and growth of online streaming. 
The Reit has properties in 4 of North America's top 10 data centre markets and has 68.5 per cent of its IPO portfolio focused on hyperscale segment and 70 per cent of its portfolio certified for sustainability. According to the prospectus, the Reit has distribution yields of 4.75 per cent for forecast year 2022 and 5.00 per cent for projection year 2023 based on the offer price of US$0.88 per unit. As at the listing date, Digital Core Reit is expected to have an aggregate leverage of approximately 27.0 per cent, below S-Reits' average of 37.4 per cent. 
As of Jun 30, 2021, the IPO portfolio is fully occupied with a blue-chip customer base including a Fortune 50 software company, a leading global colocation and interconnection provider, a social media platform and IT services companies. The aggregate weighted average lease expiry (WALE) for the IPO portfolio is 6.2 years as of Jun 30, 2021.

Following the listing of Digital Core Reit, the S-Reits and property trusts sector will consist of 44 listed trusts of which 11 are industrial and data centre Reits. The average distribution yield of the 11 Reits is approximately 5.8 per cent, including Digital Core Reit's forecasted distribution yield of 4.75 per cent for 2022. REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/pure-play-data-centre-digital-core-reit-to-start-trading-on-monday"> read </a>the original version.
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    IPO


Digital Core Reit is a pure-play data centre S-Reit sponsored by Digital Realty, one of the largest owners, operator, developer and acquirer of data centres globally. Digital Core Reit is expected to commence trading in Singapore on Monday, Dec 6.

The Reit has an initial portfolio (IPO Portfolio) of 10 institutional quality freehold data centres located in the United States (in Silicon Valley, Los Angeles, and Northern Virginia) and Canada (in Toronto) with an aggregate appraised value of approximately US$1.4 billion and with 100 per cent occupancy rates.

In addition to the public and placement offering of 267.0 million units, a total of 26 cornerstone investors, including Affin Hwang Asset Management, Blackrock, B&amp;I Capital, Cohen &amp; Steers Asia, DBS Bank, Eastpring Investments, FIL Investment, JP Morgan Asset Management, Kasikorn Asset Management, and Principal Global Investors, have subscribed for an aggregate of 414.8 million units, which represents 36.9 per cent of the units in issue after the offering.  
Digital Core Reit is established with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of stabilised income-producing real estate assets located globally which are primarily used for data centre purposes, as well as assets necessary to support the digital economy.

Its sponsor, Digital Realty, is also among the 10 largest US-listed Reits, with a market capitalisation of US$44 billion and over 290 data centre facilities in 47 metros throughout 24 countries. Digital Realty also provides Digital Core Reit with the growth opportunity to capitalise on its potential pipeline of over US$15 billion comprised of existing and under construction data centres that could fit the global right of first refusal (Global ROFR) mandate to support the Reit's growth post listing.

In its prospectus, Digital Core Reit cites that North America's data centre market is expected to grow at a compound annual growth rate (CAGR) of approximately 15 per cent from 2020 to 2024, with hyperscale demand projected to grow at a CAGR of approximately 23 per cent, driven by digitalisation, new technologies and digital trends such as social media, 5G, Internet of Things, and growth of online streaming.  
The Reit has properties in 4 of North America's top 10 data centre markets and has 68.5 per cent of its IPO portfolio focused on hyperscale segment and 70 per cent of its portfolio certified for sustainability. According to the prospectus, the Reit has distribution yields of 4.75 per cent for forecast year 2022 and 5.00 per cent for projection year 2023 based on the offer price of US$0.88 per unit. As at the listing date, Digital Core Reit is expected to have an aggregate leverage of approximately 27.0 per cent, below S-Reits' average of 37.4 per cent.  
As of Jun 30, 2021, the IPO portfolio is fully occupied with a blue-chip customer base including a Fortune 50 software company, a leading global colocation and interconnection provider, a social media platform and IT services companies. The aggregate weighted average lease expiry (WALE) for the IPO portfolio is 6.2 years as of Jun 30, 2021.

Following the listing of Digital Core Reit, the S-Reits and property trusts sector will consist of 44 listed trusts of which 11 are industrial and data centre Reits. The average distribution yield of the 11 Reits is approximately 5.8 per cent, including Digital Core Reit's forecasted distribution yield of 4.75 per cent for 2022.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Pure-play data centre Digital Core Reit to start trading on Monday

United States

Digital Realty Trust, Inc. owns, acquires, repositions, and manages technology-related real estate.  The Company's properties contain applications and operations critical to the day-to-day operations of technology industry tenants and corporate enterprise data center tenants.  Digital's property portfolio is located throughout the United States and in England.

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Digital Realty Trust (DLR US)

Cohen & Steers Ups Digital Core REIT Interest, Beng Kuang Marine CEO also adds to Interest

Institutions were net sellers of Singapore stocks over the four trading sessions spanning August 2 through to August 7, with S$586 million of net...

Singapore Exchange Ltd (SGX)

Cloud Infrastructure Monitor - Upcoming Earnings Season Marks a Crucial Point for Sector and AI

Setting up to be a crucial quarter for the major cloud infrastructure providers and broader tech as investors focus on the cost/benefits of AI.

Water Tower Research

REIT Watch - Pure-play data centre Digital Core Reit to start trading on Monday

Digital Core Reit is a pure-play data centre S-Reit sponsored by Digital Realty, one of the largest owners, operator, developer...

Singapore Exchange Ltd (SGX)

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What's Trending: GenAI unleashes hyper demand for Data Centres

Ever wondered what is currently driving the local and regional markets? Pranay Yadav is a Senior Research Analyst at Mint Finance, a Singapore...

Singapore Exchange Ltd (SGX)

Cohen & Steers Ups Digital Core REIT Interest, Beng Kuang Marine CEO also adds to Interest

Institutions were net sellers of Singapore stocks over the four trading sessions spanning August 2 through to August 7, with S$586 million of net...

Singapore Exchange Ltd (SGX)

Cloud Infrastructure Monitor - Upcoming Earnings Season Marks a Crucial Point for Sector and AI

Setting up to be a crucial quarter for the major cloud infrastructure providers and broader tech as investors focus on the cost/benefits of AI.

Water Tower Research

S-REITs: Climate Disclosures and Inclusion in ESG-Related Equity Indexes

​New SGX climate-related disclosure requirements based on ISSB's standards are more stringent than current requirements, most notably regarding...

Kyle Rudden

REIT Watch - Pure-play data centre Digital Core Reit to start trading on Monday

Digital Core Reit is a pure-play data centre S-Reit sponsored by Digital Realty, one of the largest owners, operator, developer...

Singapore Exchange Ltd (SGX)

New SGX climate-related disclosure requirements based on ISSB's standards are more stringent than current requirements, most notably regarding...