Capitaland, GLP to suffer earnings cuts from renminbi depreciation

The two could endure a 3.5% to 4.5% profit impact.

The property sector in Singapore could see a limited impact from the liquidity curbs in China, which will see Chinese overseas investments face increased scrutiny from state regulators.

According to UOB KayHian, the depreciating renminbi would only impact Capitaland and Global Logistics Properties amongst the developers in their coverage by a significant rate, given the two's exposure to the country.

Global Logistics Properties, which has 56% net asset value exposure in China, could see 4.5% earnings impact from the 10% renminbi depreciation against the USD. On the other hand, Capitaland could endure a 3.5% earnings impact should there be a 10% renminbi depreciation against the SGD.

"We note that UOB Global Economics & Markets Research expects the S$ to depreciate against the US$ by 3.4% from current levels, while our UOBKH Greater China team expects the renminbi to depreciate against the US$ by about 4% from current levels," UOB stated.