SGX Singapore News Update
SGX Singapore Closing Market Update
A SURPRISE announcement by the Singapore Exchange (SGX) that its boss Magnus Bocker does not want to stay on after his contract expires in June, commodities firm Noble Group's ongoing tussle with short-selling firm Iceberg Research and slight softness in the banking sector - these were the main local features of interest in this week's trading.On the external front there was not much happening - the US Federal Reserve's Janet Yellen delivered her semi-annual testimonies on the state of the US economy and said pretty much what markets expected, Greece and its European bailors reached an agreement of sorts on the country's debt repayments thus easing fears of a "Grexit", and the government here announced a Budget for the long term that had little impact on the market.
SGX Singapore News Update
In the year thus far, the FTSE ST Real Estate Index has gained 6.5%, while the STI gained 1.9%.
The 50 largest capitalised Real Estate stocks listed on SGX have a combined market cap of S$187 bn and generated a 5.9% average total return over the period.
Of the 50 stocks, the five best performers over the eight week period, were Sinarmas Land, Keppel Land, Fortune REIT, Ascendas India Trust, and Hongkong Land Holdings.
The largest capitalised Real Estate play listed on SGX - Hongkong Land Holdings - is expected to release its earnings next week.
After generating comparable price returns in 2014, the Real Estate plays in Singapore have performed more strongly than the Straits Times Index (STI) over the first eight weeks of 2015. In the year thus far, the FTSE ST Real Estate Index gained 6.5%, while the Straits Times Index (STI) gained 1.9%. These gains have added to 6.8% price gain of the FTSE ST Real Estate Index in 2014 and the STI’s 6.2% price gain in 2014.
One key difference in the two timeframes is that the larger capitalised Real Estate Holding & Development companies led the gains in the first eight weeks of 2015, while Real Estate Investment Trusts (REITs) led the gains in 2014. Real Estate Holding & Development stocks and REITs represent two important sides of the Real Estate Sector. While REITs have been listed on Singapore Exchange (SGX) since 2002, up to 10 of the Real Estate Holding & Development companies have grown out of businesses that were founded before 1965.
The types of real estate businesses that are listed in Singapore include Real Estate Development, Real Estate Operations and Diversified Real Estate Activities – which make up the Real Estate Holding & Development side; and the Retail REITs, Industrial REITs, Office REITs, Diversified REITs, Hotel & Resorts, Healthcare REITs, Residential and Specialised REITs. This is based on categorisations provided in SGX StockFacts.
Scope of Real Estate stocks
Over the course of 2014, the Urban Redevelopment Authority (URA) Property Price Index by residential type decreased by 4.0%, compared with an increase of 1.1% in 2013. More information on the recent price history of private residential properties can be found here. In 2014, the FTSE ST Real Estate Holding & Development Index gained 4.5% in price. The most obvious rational for the different performance of the Real Estate Holding and Development stocks was that many of the stocks have businesses than span outside the realms of residential real estate and in many cases outside the realm of Singapore.
On the REITs front, two Residential REITs make up just 1% of the combined market capitalised of the real estate plays. These are Ascott Residence Trust and Saizen REIT. Ascott Residence Trust attributed 10% of its revenue in Singapore in the last reported financial year while Saizen REIT reported all of its revenue to Japan. These two REITs averaged a 4.0% return in the first eight weeks of 2015 which took their average one year total return to 11.1%.
Different Segment Performances
The different segments of Singapore’s Real Estate Sector have performed differently in recent years – while all key segments have generated gains over the past three years – average gains have varied from 2.2% for Real Estate Operating Companies to 120% for Diversified REITs. In the longer timeframe of five years, Healthcare REITs, Industrial REITs and Office REITs and Retail REITs have outperformed the Diversified REITs.
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