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

Mapletree North Asia Commercial Trust / Equity Bottom-Up

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 <img src='https://api2.sgx.com/sites/default/files/2022-06/reit%201.PNG' alt='Indicative timeline for Trust Scheme between MCT and MNACT' />
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 <div class='content-caption'>Indicative timeline for Trust Scheme between MCT and MNACT</div>
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 <img src='https://api2.sgx.com/sites/default/files/2022-06/reit%202.PNG' alt='Geographical breakdown of MPACT' />
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 <div class='content-caption'>Geographical breakdown of MPACT</div>
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THE ongoing merger of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) is on track to create one of the top 10 largest Reits in Asia.

 
The merged entity, Mapletree Pan Asia Commercial Trust (MPACT) will have an estimated market capitalisation of over S$10 billion and will hold a diversified portfolio of 18 commercial assets across Singapore, China, Hong Kong, Japan and South Korea, with assets under management (AUM) of approximately S$17.1 billion.

 
The Reit managers believe that the merger will provide a pathway for growth by merging MCT, a Singapore-focused Reit, with MNACT, a ready and established platform that has scale and reach in North Asia.

 

MCT said that this will in turn bring about immediate financial benefits and access to attractive footholds into North Asia supported by established local operating teams with extensive experience and a strong track record.

 
Other key benefits cited by the Reits include enhanced financial flexibility to pursue more growth opportunities such as larger acquisitions and capital recycling opportunities, increased liquidity and index representation, enhanced geographic diversification, reduced single asset concentration and improved tenant diversification as well as immediate financial benefits in terms of distribution per unit (DPU) and net asset value (NAV) accretion on a historical pro forma basis.

 
Post-merger, MPACT will hold best-in-class assets such as Festival Walk in Hong Kong, Mapletree Business City and VivoCity in Singapore.

 

The Reit managers believe that together, these will improve overall cash flow stability and resilience through market cycles.

 
MPACT will host major tenants with global businesses such as Google, BMW, Seiko, HP Japan and NTT UD.

 
Together, the top 10 tenants by gross rental income (GRI) will contribute 23 per cent of its GRI post-merger. This is down from MCT’s 27.7 per cent and MNACT’s 37.7 per cent, reducing income concentration.

 
Unitholders of MCT and MNACT have voted in favour of the merger last month.

 
The merger will be effected through the acquisition by MCT of all the issued and paid-up units of MNACT by way of a trust scheme of arrangement.

 

During the election period, each MNACT unitholder is entitled to choose only one form of scheme consideration: scrip-only, cash-and-scrip or cash-only options. The cash-only consideration will be the default form of the scheme consideration.

 

Based on indicative dates announced by the Reit managers, the election period is expected to run from Jun 15 to 29 while the merged entity is expected to begin trading on Jul 29.

 
MNACT’s estimated date of delisting will be on Aug 3.

 

REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/merger-of-mct-and-mnact-creates-pathway-for-growth">read </a>the original version.
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    Indicative timeline for Trust Scheme between MCT and MNACT

      
    
    Geographical breakdown of MPACT


THE ongoing merger of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) is on track to create one of the top 10 largest Reits in Asia.

 
The merged entity, Mapletree Pan Asia Commercial Trust (MPACT) will have an estimated market capitalisation of over S$10 billion and will hold a diversified portfolio of 18 commercial assets across Singapore, China, Hong Kong, Japan and South Korea, with assets under management (AUM) of approximately S$17.1 billion.

 
The Reit managers believe that the merger will provide a pathway for growth by merging MCT, a Singapore-focused Reit, with MNACT, a ready and established platform that has scale and reach in North Asia.

 

MCT said that this will in turn bring about immediate financial benefits and access to attractive footholds into North Asia supported by established local operating teams with extensive experience and a strong track record.

 
Other key benefits cited by the Reits include enhanced financial flexibility to pursue more growth opportunities such as larger acquisitions and capital recycling opportunities, increased liquidity and index representation, enhanced geographic diversification, reduced single asset concentration and improved tenant diversification as well as immediate financial benefits in terms of distribution per unit (DPU) and net asset value (NAV) accretion on a historical pro forma basis.

 
Post-merger, MPACT will hold best-in-class assets such as Festival Walk in Hong Kong, Mapletree Business City and VivoCity in Singapore.

 

The Reit managers believe that together, these will improve overall cash flow stability and resilience through market cycles.

 
MPACT will host major tenants with global businesses such as Google, BMW, Seiko, HP Japan and NTT UD.

 
Together, the top 10 tenants by gross rental income (GRI) will contribute 23 per cent of its GRI post-merger. This is down from MCT’s 27.7 per cent and MNACT’s 37.7 per cent, reducing income concentration.

 
Unitholders of MCT and MNACT have voted in favour of the merger last month.

 
The merger will be effected through the acquisition by MCT of all the issued and paid-up units of MNACT by way of a trust scheme of arrangement.

 

During the election period, each MNACT unitholder is entitled to choose only one form of scheme consideration: scrip-only, cash-and-scrip or cash-only options. The cash-only consideration will be the default form of the scheme consideration.

 

Based on indicative dates announced by the Reit managers, the election period is expected to run from Jun 15 to 29 while the merged entity is expected to begin trading on Jul 29.

 
MNACT’s estimated date of delisting will be on Aug 3.

 

REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Merger of MCT and MNACT creates pathway for growth

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Kenedix Residential Investment / Event-Driven

<ul>
<li>Today after the close, small-cap JREIT <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a> ("KDR") announced a follow-on equity offering to fund part of their recently-announced property acquisition. </li>
<li>The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,375 units. The total size of this offering could be roughly ¥9.4bn (~US$82mn). </li>
<li>Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.</li>
</ul>


Today after the close, small-cap JREIT Kenedix Residential Investment (3278 JP) ("KDR") announced a follow-on equity offering to fund part of their recently-announced property acquisition. 
The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,375 units. The total size of this offering could be roughly ¥9.4bn (~US$82mn). 
Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.


Kenedix Residential Investment (3278 JP): Could Outperform Peers in the Next Few Weeks

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a> announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.</li>
<li>That is an occasion to look at how much of float is held by passive trackers. </li>
<li>A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.</li>
</ul>



Nippon Building Fund (8951 JP) announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.
That is an occasion to look at how much of float is held by passive trackers. 
A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.


Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers

NTT UD REIT Investment Corporation / Event-Driven

<a href="https://www.smartkarma.com/entities/premier-investment-corp" target="_blank" data-smartkarma-citation="entities:19428:1" rel="noopener">NTT UD REIT (8956 JP)</a> ("NUR") announced a follow-on equity offering after market close on 18th October 2021 to fund part of their recent property acquisition. The primary offer quantity is 80,600 units. In addition, there will also be an over-allotment quantity of 4,040 units. The total size of this offering could be roughly ¥12bn (~US$105mn). 
On average,  J-REITs have historically outperformed the TSEREIT Index in the wake of follow-on equity offerings, with win rates exceeding 80%. While JREIT offerings are mostly of interest to primary market investors, we also see such offerings as potential catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. We have previously discussed the historical pre- and post-offering performance of JREITs in <a href="https://www.smartkarma.com/insights/j-reit-offering-primer-get-ready-for-offering-season-2021" target="_blank" data-smartkarma-citation="insights:46416" rel="noopener">J-REIT Offering Primer: Get Ready for Offering Season 2021</a>.
Below, we take a look at the attractiveness of NUR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.

NTT UD REIT (8956 JP) ("NUR") announced a follow-on equity offering after market close on 18th October 2021 to fund part of their recent property acquisition. The primary offer quantity is 80,600 units. In addition, there will also be an over-allotment quantity of 4,040 units. The total size of this offering could be roughly ¥12bn (~US$105mn). 
On average,  J-REITs have historically outperformed the TSEREIT Index in the wake of follow-on equity offerings, with win rates exceeding 80%. While JREIT offerings are mostly of interest to primary market investors, we also see such offerings as potential catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. We have previously discussed the historical pre- and post-offering performance of JREITs in J-REIT Offering Primer: Get Ready for Offering Season 2021.
Below, we take a look at the attractiveness of NUR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance. 

NTT UD REIT (8956 JP): Offering Could Be Catalyst for Outperformance Vs TSEREIT Index

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</div><div>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/weimob-inc" target="_blank" data-smartkarma-citation="entities:27394:1" rel="noopener">Weimob Inc. (2013 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>. Shorts increased in the Materials, Communication Services and Industrials sectors, while decreasing in the Consumer Discretionary, Financials and Information Technology sectors.</div><div>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a>, <a href="https://www.smartkarma.com/entities/shimizu-corp" target="_blank" data-smartkarma-citation="entities:8530:1" rel="noopener">Shimizu Corp (1803 JP)</a>, <a href="https://www.smartkarma.com/entities/premier-investment-corp" target="_blank" data-smartkarma-citation="entities:19428:1" rel="noopener">Premier Investment (8956 JP)</a>, <a href="https://www.smartkarma.com/entities/screen-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5563:1" rel="noopener">SCREEN Holdings (7735 JP)</a> and <a href="https://www.smartkarma.com/entities/activia-properties-inc" target="_blank" data-smartkarma-citation="entities:9498:1" rel="noopener">Activia Properties (3279 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/kubota-corp" target="_blank" data-smartkarma-citation="entities:12926:1" rel="noopener">Kubota Corp (6326 JP)</a>, <a href="https://www.smartkarma.com/entities/asics-corp" target="_blank" data-smartkarma-citation="entities:16287:1" rel="noopener">ASICS Corp (7936 JP)</a>, <a href="https://www.smartkarma.com/entities/nabtesco-corp" target="_blank" data-smartkarma-citation="entities:13176:1" rel="noopener">Nabtesco Corp (6268 JP)</a>, <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> and <a href="https://www.smartkarma.com/entities/pharma-foods-international" target="_blank" data-smartkarma-citation="entities:10530:1" rel="noopener">Pharma Foods International (2929 JP)</a>. Shorts increased in the Information Technology, Real Estate and Materials sectors while decreasing in the Industrials and Consumer Discretionary sectors.</div><div>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">SK Innovation (096770 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung SDI (006400 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a> and <a href="https://www.smartkarma.com/entities/oci-co-ltd" target="_blank" data-smartkarma-citation="entities:1904:1" rel="noopener">Oci Co Ltd (010060 KS)</a>.</div><div>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/yuanta-financial-holding-co" target="_blank" data-smartkarma-citation="entities:685:1" rel="noopener">Yuanta Financial Holding Co (2885 TT)</a>, <a href="https://www.smartkarma.com/entities/quanta-computer-inc" target="_blank" data-smartkarma-citation="entities:2754:1" rel="noopener">Quanta Computer (2382 TT)</a> and <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel (2002 TT)</a>, <a href="https://www.smartkarma.com/entities/wan-hai-lines-ltd" target="_blank" data-smartkarma-citation="entities:14262:1" rel="noopener">Wan Hai Lines (2615 TT)</a>, <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a> and <a href="https://www.smartkarma.com/entities/wisdom-marine-lines-co-ltd" target="_blank" data-smartkarma-citation="entities:10001:1" rel="noopener">Wisdom Marine Lines (2637 TT)</a>. </div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Kuaishou Technology (1024 HK), JD.com Inc. (9618 HK), Weimob Inc. (2013 HK), Wuxi Biologics (2269 HK) and Tencent (700 HK) while there was short covering on Meituan (3690 HK), Geely Auto (175 HK), Ping An Insurance (H) (2318 HK), Sunny Optical (2382 HK) and Alibaba Group (9988 HK). Shorts increased in the Materials, Communication Services and Industrials sectors, while decreasing in the Consumer Discretionary, Financials and Information Technology sectors.In Japan, stocks increased on Showa Denko K.K. (4004 JP), Shimizu Corp (1803 JP), Premier Investment (8956 JP), SCREEN Holdings (7735 JP) and Activia Properties (3279 JP) while there was short covering on Kubota Corp (6326 JP), ASICS Corp (7936 JP), Nabtesco Corp (6268 JP), Cocokara Fine (3098 JP) and Pharma Foods International (2929 JP). Shorts increased in the Information Technology, Real Estate and Materials sectors while decreasing in the Industrials and Consumer Discretionary sectors.In Korea, shorts increased on SK Innovation (096770 KS), SK Hynix (000660 KS), Hyundai Motor Co (005380 KS), Celltrion Inc (068270 KS) and Samsung Electronics (005930 KS) while shorts were covered on Doosan Heavy Industries &amp; Construction (034020 KS), HMM Co., Ltd. (011200 KS), Samsung SDI (006400 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS) and Oci Co Ltd (010060 KS).In Taiwan, shorts increased on Yang Ming Marine Transport (2609 TT), AU Optronics (2409 TT), Yuanta Financial Holding Co (2885 TT), Quanta Computer (2382 TT) and United Microelectronics Corp (2303 TT) while shorts covered on Evergreen Marine Corp (2603 TT), China Steel (2002 TT), Wan Hai Lines (2615 TT), Pegatron Corp (4938 TT) and Wisdom Marine Lines (2637 TT). 

Asia Shorts: Kuaishou, JD, Geely, Alibaba, Shimizu, Kubota, ASICS, SK Inno, Hynix, Doosan, Yang Ming

Japan

NTT UD REIT Investment Corporation is a real estate investment trust with income producing properties primarily in the Tokyo area.  The Trust's properties include office buildings and apartment projects.

NTT UD REIT Investment Corporation (8956 JP)

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NTT UD REIT Investment Corporation (8956 JP)

REIT Watch - Merger of MCT and MNACT creates pathway for growth

THE ongoing merger of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) is...

Singapore Exchange Ltd (SGX)

Kenedix Residential Investment (3278 JP): Could Outperform Peers in the Next Few Weeks

Small-cap JREIT Kenedix Residential Investment announced a follow-on equity offering to fund part of their recently-announced property acquisition....

Janaghan Jeyakumar, CFA

Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers

Nippon Building Fund (8951) - Japan's oldest and largest REIT - announced a small secondary offering. That provides an occasion to look at J-REIT...

Travis Lundy

NTT UD REIT (8956 JP): Offering Could Be Catalyst for Outperformance Vs TSEREIT Index

NTT UD REIT announced a JPY12bn (US$105mn) follow-on equity offering to fund part of their recent property acquisition. This could act as a...

Janaghan Jeyakumar, CFA

Asia Shorts: Kuaishou, JD, Geely, Alibaba, Shimizu, Kubota, ASICS, SK Inno, Hynix, Doosan, Yang Ming

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

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