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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 <div class='content-caption'>SRE- CEO</div>
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Despite spending nearly three decades of his career in the real estate investment and management industry, Desmond Tang has yet to experience a dull day. 
That’s because the real estate industry has continued to prove its resilience amid disruptive trends. And Tang’s start-up experience - prior to leading Straits Real Estate (SRE), a wholly owned subsidiary of SGX-listed The Straits Trading Company - has come in handy. 
“Real estate is never boring,” said Tang, the Chief Executive Officer of SRE. “Despite its image as a traditional old-fashioned industry - a common parochial view - real estate is difficult to replace, even as economies evolve, and technology changes lives and businesses.” 
“People talk about modernising real estate, but the truth of matter is that it has never stopped adapting itself to new uses, new user requirements, and new occupier habits,” he added. 
“When an old trade like real estate juxtaposes with never-ending changes in space usage, it’s both captivating and invigorating. It’s very much like playing a 40-year-old original-pressed vinyl on a modern sound system, and being surprised by the outcome.” 
The 55-year-old, who holds a Bachelor of Science with Honours degree in Real Estate from the National University of Singapore, and a Master of Applied Finance degree from Macquarie University, has helmed SRE since February 2014. 
At various times prior to joining SRE, he was Managing Director and Co-Head at Alpha Investment Partners, and Managing Director at GrowthPath Capital, which he co-founded.  
“I’ve possibly had more involvement with start-up businesses than most real estate investment professionals,” Tang acknowledged. “Every start-up is an adventure, and every adventure requires a first step, as the Cheshire Cat in Alice of Wonderland says.” 
“But mostly, that first step is error-laden, so the ability to respond, adjust and change course often makes the difference between ultimate success and failure. When you participate in a start-up knowing the odds are at best even, you‘re driven to better your chances, create options and seek control of your own luck. My career experience would have been that much poorer without all of that.” 
Now at SRE, Tang is grateful for having had the opportunity to create and build the company from scratch into what it is today.  
“My previous experience with start-up companies certainly helped. Having been mostly a real estate fund manager prior to this role, it was necessary for me and my colleagues to decide early on how the investment style should be adapted for a publicly listed company like Straits Trading,” he recalled. 
“We also worked on delivering quick, tangible results to garner confidence from the market. We were fortunate to achieve what we planned quite quickly, kept our discipline, and continued to produce the goods over the years.” Growth Driver 
SRE was established as a private equity real estate investment company in 2013. Since then, it has grown to manage a diverse investment portfolio, with over S$2 billion in assets spanning China, Malaysia, Singapore, Japan, Australia and South Korea. Its portfolio includes logistics, retail, office and business park properties. 
SRE is an important earnings driver and growth engine for Straits Trading. The latter is a conglomerate-investment company with operations and financial interests in resources, property, and hospitality. 
These include majority or strategic stakes in the world’s third-largest tin producer, Malaysia Smelting Corporation, which is dual listed on Bursa Malaysia and SGX; ARA Asset Management and Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group. 
In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman. 
For Tang, a key priority is ensuring that SRE remains relevant to its key stakeholders - namely its shareholders and employees - as it navigates the markets and takes advantage of business opportunities.  
“The alignment of interest between stakeholders is not always natural, so you must work on finding the balance that gives you sustainability,” he added. 
“I emphasise “work on” because you cannot leave that to chance. It requires conscious effort to ensure the company remains valid to shareholders and employees as environment and circumstances evolve.” 
In particular, SRE has been anticipating and keeping abreast of new trends following the onset of the pandemic. 
“COVID-19 brought about massive and swift changes in space usage habits that the industry could never have anticipated,” Tang noted. “Lockdowns, work-from-home regimes, exponential growth in online retailing, and safe-distancing requirements all contributed to the disruption.” 
“So we zeroed-in on opportunities that provide short- to mid-term insulation against current challenges, with asset quality to benefit from the eventual market recovery, such as new economy assets and business parks.” 
Looking ahead, SRE will continue to focus on building a portfolio of predominantly income-producing assets with stable cash flows. In the near term, it is looking to acquire business parks and warehouse retail parks in the UK, as well as logistics assets across key geographies.  
It has also ventured into greenfield developments in South Korea and Australia to reap development upside through build-to-suit opportunities, which are geared to fulfil secular, or longer term, demand. 
“We always focus on return maximisation by driving capital efficiency. This is reflected in SRE’s consistent ROE track record of 10% over the last five years,” Tang pointed out, referring to the key industry metric of return on equity. 
"We achieve this through a disciplined approach to capital allocation, risk pricing, asset management and divestment - all of which ensure capital is recycled into higher-returning investments in a systematic and timely manner. As part of our active asset management process, we also implement enhancement initiatives to improve the marketability and operational efficiency of these assets.” Burgeoning Potential 
In addition, the outlook remains bright in SRE’s key markets. South Korea offers enormous potential, driven by its rapidly emerging domestic e-commerce market and a supply shortfall in modern logistics assets, while in Japan, its real estate sector has emerged as one of the most resilient and best-performing property investment markets in the world amidst the pandemic.  
As for China, the quick containment of the pandemic and swift rebound in consumption has instilled confidence in domestic and foreign brands, which is set to spur further investment in the expansion of retail store networks in the country.  
Meanwhile, in Australia, a robust economy, continued expansion in e-commerce and infrastructure spending, coupled with a shortage of high-specification logistics space, continues to underpin growth. 
Despite such rosy prospects, challenges loom, not the least of which is how the pandemic has dramatically altered lives and livelihoods. 
“The current overriding concern, from the perspective of a real estate investment company, is how much of the changes in user habits that occurred during the pandemic are going to be permanent, and how much of that are temporary,” Tang said. 
“What can we do to our portfolio of properties to keep them relevant to users? What’s the impact on asset value if some of the pandemic-induced changes become permanent? Must new buildings be designed for a future pandemic that may or may not happen?” 
SRE is also competing with record amounts of private capital dry powder for deals - many investors are flush with cash and looking to deploy their funds.  
“There’s also a mismatch in price expectations between potential buyers and sellers,” he added. “The low interest-rate environment is a double-edged sword - there’s ample funding for investors, but also stronger holding and bargaining power for owners of distressed assets due to lower borrowing costs.” 
However, unlike conventional private equity funds, SRE is not constrained by a mandate. This gives the company the agility to allocate capital in the most efficient manner, allowing it to punch above its weight despite its relatively small size. 
“We have the advantage of being sector-agnostic, of being able to pursue opportunities that generate attractive risk-adjusted returns,” Tang added. 
“Our investment decisions are not only informed by our market outlook or the competitive landscape, but also the expected return on investment or invested capital, and our country-specific strategy.” 
 

The Straits Trading Company Ltd 
Incorporated in 1887, Straits Trading is a conglomerate-investment company with operations, as well as financial interests, in resources, property, and hospitality. These include majority or strategic stakes in Malaysia Smelting Corporation - the world’s third-largest tin producer that is dual-listed on Bursa Malaysia and SGX - ARA Asset Management, Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group. In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman. 
The company website is: <a href="http://www.stc.com.sg">www.stc.com.sg</a> 
Click <a href="https://www.sgx.com/securities/equities/S20">here </a>for the company's StockFacts page. 
For the half year ended 30 June 2021 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/X9SCUY9SG97QHZ9Z/678773_STC%201H21%20PR_Release%20FINAL%20FOR%20SGX%2013.08.2021.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="https://www.sgx.com/research-education/market-dialogues">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="https://www.sgx.com/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    SRE- CEO


Despite spending nearly three decades of his career in the real estate investment and management industry, Desmond Tang has yet to experience a dull day.  
That’s because the real estate industry has continued to prove its resilience amid disruptive trends. And Tang’s start-up experience - prior to leading Straits Real Estate (SRE), a wholly owned subsidiary of SGX-listed The Straits Trading Company - has come in handy.  
“Real estate is never boring,” said Tang, the Chief Executive Officer of SRE. “Despite its image as a traditional old-fashioned industry - a common parochial view - real estate is difficult to replace, even as economies evolve, and technology changes lives and businesses.”  
“People talk about modernising real estate, but the truth of matter is that it has never stopped adapting itself to new uses, new user requirements, and new occupier habits,” he added.  
“When an old trade like real estate juxtaposes with never-ending changes in space usage, it’s both captivating and invigorating. It’s very much like playing a 40-year-old original-pressed vinyl on a modern sound system, and being surprised by the outcome.”  
The 55-year-old, who holds a Bachelor of Science with Honours degree in Real Estate from the National University of Singapore, and a Master of Applied Finance degree from Macquarie University, has helmed SRE since February 2014.  
At various times prior to joining SRE, he was Managing Director and Co-Head at Alpha Investment Partners, and Managing Director at GrowthPath Capital, which he co-founded.   
“I’ve possibly had more involvement with start-up businesses than most real estate investment professionals,” Tang acknowledged. “Every start-up is an adventure, and every adventure requires a first step, as the Cheshire Cat in Alice of Wonderland says.”  
“But mostly, that first step is error-laden, so the ability to respond, adjust and change course often makes the difference between ultimate success and failure. When you participate in a start-up knowing the odds are at best even, you‘re driven to better your chances, create options and seek control of your own luck. My career experience would have been that much poorer without all of that.”  
Now at SRE, Tang is grateful for having had the opportunity to create and build the company from scratch into what it is today.   
“My previous experience with start-up companies certainly helped. Having been mostly a real estate fund manager prior to this role, it was necessary for me and my colleagues to decide early on how the investment style should be adapted for a publicly listed company like Straits Trading,” he recalled.  
“We also worked on delivering quick, tangible results to garner confidence from the market. We were fortunate to achieve what we planned quite quickly, kept our discipline, and continued to produce the goods over the years.”  Growth Driver  
SRE was established as a private equity real estate investment company in 2013. Since then, it has grown to manage a diverse investment portfolio, with over S$2 billion in assets spanning China, Malaysia, Singapore, Japan, Australia and South Korea. Its portfolio includes logistics, retail, office and business park properties.  
SRE is an important earnings driver and growth engine for Straits Trading. The latter is a conglomerate-investment company with operations and financial interests in resources, property, and hospitality.  
These include majority or strategic stakes in the world’s third-largest tin producer, Malaysia Smelting Corporation, which is dual listed on Bursa Malaysia and SGX; ARA Asset Management and Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group.  
In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman.  
For Tang, a key priority is ensuring that SRE remains relevant to its key stakeholders - namely its shareholders and employees - as it navigates the markets and takes advantage of business opportunities.   
“The alignment of interest between stakeholders is not always natural, so you must work on finding the balance that gives you sustainability,” he added.  
“I emphasise “work on” because you cannot leave that to chance. It requires conscious effort to ensure the company remains valid to shareholders and employees as environment and circumstances evolve.”  
In particular, SRE has been anticipating and keeping abreast of new trends following the onset of the pandemic.  
“COVID-19 brought about massive and swift changes in space usage habits that the industry could never have anticipated,” Tang noted. “Lockdowns, work-from-home regimes, exponential growth in online retailing, and safe-distancing requirements all contributed to the disruption.”  
“So we zeroed-in on opportunities that provide short- to mid-term insulation against current challenges, with asset quality to benefit from the eventual market recovery, such as new economy assets and business parks.”  
Looking ahead, SRE will continue to focus on building a portfolio of predominantly income-producing assets with stable cash flows. In the near term, it is looking to acquire business parks and warehouse retail parks in the UK, as well as logistics assets across key geographies.   
It has also ventured into greenfield developments in South Korea and Australia to reap development upside through build-to-suit opportunities, which are geared to fulfil secular, or longer term, demand.  
“We always focus on return maximisation by driving capital efficiency. This is reflected in SRE’s consistent ROE track record of 10% over the last five years,” Tang pointed out, referring to the key industry metric of return on equity.  
"We achieve this through a disciplined approach to capital allocation, risk pricing, asset management and divestment - all of which ensure capital is recycled into higher-returning investments in a systematic and timely manner. As part of our active asset management process, we also implement enhancement initiatives to improve the marketability and operational efficiency of these assets.”  Burgeoning Potential  
In addition, the outlook remains bright in SRE’s key markets. South Korea offers enormous potential, driven by its rapidly emerging domestic e-commerce market and a supply shortfall in modern logistics assets, while in Japan, its real estate sector has emerged as one of the most resilient and best-performing property investment markets in the world amidst the pandemic.   
As for China, the quick containment of the pandemic and swift rebound in consumption has instilled confidence in domestic and foreign brands, which is set to spur further investment in the expansion of retail store networks in the country.   
Meanwhile, in Australia, a robust economy, continued expansion in e-commerce and infrastructure spending, coupled with a shortage of high-specification logistics space, continues to underpin growth.  
Despite such rosy prospects, challenges loom, not the least of which is how the pandemic has dramatically altered lives and livelihoods.  
“The current overriding concern, from the perspective of a real estate investment company, is how much of the changes in user habits that occurred during the pandemic are going to be permanent, and how much of that are temporary,” Tang said.  
“What can we do to our portfolio of properties to keep them relevant to users? What’s the impact on asset value if some of the pandemic-induced changes become permanent? Must new buildings be designed for a future pandemic that may or may not happen?”  
SRE is also competing with record amounts of private capital dry powder for deals - many investors are flush with cash and looking to deploy their funds.   
“There’s also a mismatch in price expectations between potential buyers and sellers,” he added. “The low interest-rate environment is a double-edged sword - there’s ample funding for investors, but also stronger holding and bargaining power for owners of distressed assets due to lower borrowing costs.”  
However, unlike conventional private equity funds, SRE is not constrained by a mandate. This gives the company the agility to allocate capital in the most efficient manner, allowing it to punch above its weight despite its relatively small size.  
“We have the advantage of being sector-agnostic, of being able to pursue opportunities that generate attractive risk-adjusted returns,” Tang added.  
“Our investment decisions are not only informed by our market outlook or the competitive landscape, but also the expected return on investment or invested capital, and our country-specific strategy.” 
 

The Straits Trading Company Ltd  
Incorporated in 1887, Straits Trading is a conglomerate-investment company with operations, as well as financial interests, in resources, property, and hospitality. These include majority or strategic stakes in Malaysia Smelting Corporation - the world’s third-largest tin producer that is dual-listed on Bursa Malaysia and SGX - ARA Asset Management, Far East Hospitality Holdings, as well as a diversified property portfolio and real estate investments that are wholly owned by the Group. In August 2021, Straits Trading announced it was selling its 19% stake in ARA Asset Management for S$1.14 billion to Hong Kong-listed ESR Cayman.  
The company website is: www.stc.com.sg  
Click here for the company's StockFacts page.  
For the half year ended 30 June 2021 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.



Straits Trading Revs Up Real Estate Growth Engine

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are Hong Kong residents, homebuyers are subjected to a new AVD of 15%. Thus, Hong Kong residents who are not first-time homebuyers are subject to an AVD of 15%, replacing a previous AVD scale ranging from 1.5% to 8.5%. Nonresidents are subject to the new AVD of 15% in addition to an existing Buyer’s Stamp Duty, or BSD, of 15%. First-time homebuyers who are Hong Kong residents are subject to an AVD ranging from 0% to 4.25% based on the existing scale, unchanged from before.We believe <a href="https://www.smartkarma.com/entities/111" target="_blank" data-smartkarma-citation="entities:111:1">Sun Hung Kai Properties (16 HK)</a>, or SHKP, is going to be most affected, given its large exposure to residential properties as well as its status as a proxy for the sector. We believe <a href="https://www.smartkarma.com/entities/22650" target="_blank" data-smartkarma-citation="entities:22650:1">Cheung Kong Property Holding (1113 HK)</a>, or CKP, should be less affected, as it has aggressively sold down its residential inventories, while being very selective in land acquisitions in recent years. For both <a href="https://www.smartkarma.com/entities/376" target="_blank" data-smartkarma-citation="entities:376:1">Henderson Land Development (12 HK)</a> and <a href="https://www.smartkarma.com/entities/3320" target="_blank" data-smartkarma-citation="entities:3320:1">Kerry Properties Ltd (683 HK)</a>, the impact on our fair value estimates is expected to be minor.Analyst: Phillip Zhong

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are Hong Kong residents, homebuyers are subjected to a new AVD of 15%. Thus, Hong Kong residents who are not first-time homebuyers are subject to an AVD of 15%, replacing a previous AVD scale ranging from 1.5% to 8.5%. Nonresidents are subject to the new AVD of 15% in addition to an existing Buyer’s Stamp Duty, or BSD, of 15%. First-time homebuyers who are Hong Kong residents are subject to an AVD ranging from 0% to 4.25% based on the existing scale, unchanged from before.We believe Sun Hung Kai Properties (16 HK), or SHKP, is going to be most affected, given its large exposure to residential properties as well as its status as a proxy for the sector. We believe Cheung Kong Property Holding (1113 HK), or CKP, should be less affected, as it has aggressively sold down its residential inventories, while being very selective in land acquisitions in recent years. For both Henderson Land Development (12 HK) and Kerry Properties Ltd (683 HK), the impact on our fair value estimates is expected to be minor.Analyst: Phillip Zhong

New Stamp Duty Negative on Transaction Volume in the NearTerm

Hong Kong

SRE Group Limited, through its subsidiaries, develops and invests in residential real estate in the People's Republic of China.  The Company also constructs and operates telecommunications broadband networks as well as researches, develops, manufactures and sells photo electronic products, computer hardware, and computer software.

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SRE Group Ltd (1207 HK)

Straits Trading Revs Up Real Estate Growth Engine

Despite spending nearly three decades of his career in the real estate investment and management industry, Desmond Tang has yet...

Singapore Exchange Ltd (SGX)

New Stamp Duty Negative on Transaction Volume in the NearTerm

The Hong Kong government announced a new ad valorem stamp duty, or AVD, late on Nov. 4. Effective Nov. 5, except for first-time homebuyers who are...

Morningstar, Inc.

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