CapitaGreen's contribution finally kicked-in.

CapitaLand Commercial Trust Management announced that CCT recorded higher net income in 4Q16 compared to a year ago, which translated into a 10.1% increase in distribution per unit of 2.39 cents.

Meanwhile, gross revenue increased by 32.7% to $89.7m. and net property income (NPI) grew by 35.4% to $70.8m. This is a result of CapitaGreen’s contribution to CCT’s 4Q 2016 gross revenue and NPI after becoming a wholly-owned property of the Trust. It in turn arose from CCT’s acquisition of the remaining 60.0% interest in MSO Trust that owns CapitaGreen which completed on 31 August 2016.

The Trust’s investment properties, including its joint venture interest in Raffles City Singapore, have been assessed by independent valuers to be worth $8,491.9m as at December 2016. This represents a 13.6% y-o-y increase in portfolio value mainly due to the increased stake in MSO Trust. The Trust’s adjusted net asset value per unit is $1.73, after deducting the distributable income payable to unitholders.

CCT Management Chairperson Soo Kok Leng said CCT has delivered a set of credible results for 2016 notwithstanding headwinds in the macroeconomic environment and Singapore office market. This is due to our proactive leasing strategy and acquisition of the remaining 60.0% interest in CapitaGreen.

"The acquisition is a strong testament to the successful execution of our portfolio reconstitution strategy resulting in not only an enhancement of the quality of CCT’s portfolio but also improved financial return. Our proposed redevelopment of Golden Shoe Car Park represents another value creation opportunity which will potentially further strengthen CCT’s foothold and position as the largest office landlord in Singapore’s Central Business District.," Soo said.

Meanwhile, the manager's Chief Executive Officer Lynette Leong said CCT's portfolio committed occupancy rate of 97.1% as of December is driven by expansion of existing tenants and take-up by new tenants.

"About half of 2017 leases have been renewed, and we will continue to proactively attract and retain tenants to mitigate leasing risk. We do not expect to be significantly affected by rising interest rates given that about 80.0% of CCT’s borrowings are on fixed interest rates and that it has minimal debt due for refinancing in 2017," she noted.

"Beyond the current challenging market conditions, we are looking at the next wave of the office market upcycle as well as “the future of work” – that is, how the way people work will possibly evolve in the future given the trend of globalisation, mobility and digital technology – and incorporate that in our evaluation of the financial feasibility of the redevelopment of Golden Shoe Car Park, while seeking approvals from the government authorities. Our wish is to replicate the success of CapitaGreen so as to spark a new growth catalyst for the Trust.," she added. 

Brace for a pullback today.

The Straits Times Index (STI) ended 0.35 points or 0.01% lower to 3012.77 on Tuesday, taking the year-to-date performance to +4.51%.

The top active stocks today were DBS, which gained 0.16%, Global Logistic, which gained 0.78%, Singtel, which gained 0.26%, CapitaLand, which declined 0.32% and ComfortDelGro, with a 1.61% fall.

According to OCBC, U.S. stocks retreated as investors remained cautious in the wake of President-elect Donald Trump’s charge that a strong dollar is hurting the economy.

Meanwhile, six out of eleven S&P 500 industries ended lower, with Financials (-2.28%) leading the declines while Consumer Staples (1.35%) led the gains.

"The pullback on Wall Street overnight could spark a similar correction in the local bourse," it said.

Here's more from OCBC:

With today’s tone likely to be more cautious, we could see the index sliding back towards its 3000 immediate base.

Below that, we see 2070 as the subsequent base. On the upside, the initial hurdle is pegged at 3040, ahead of 3065.

Overall volume tumbled 30.9% with 1.9b units traded, and total value dipped 4.9% to S$0.7b, while average value/unit gained 37.5% to S$0.39. 

It led to a 6% revenue decline for the period.

On back of the gloomy economic growth, companies are shying away from placing ads in publications, leading to SPH to lose 12 to 16% of its ad revenue, according to DBS Group Research.

The firm said the lower revenue was led by the Media business on weaker adspend which led to lower than expected operating profit. The decline in earnings decline was also impacted by fair value loss on hedges for portfolio investments due to the strengthening USD.

It noted that newspaper ad revenue declined between 12% and 16% with Display ads falling by 16%, newspaper ads by 15%, and classified ads falling by 12.5%.

"As expected, adspend has continued to decline. However, the ad revenue decline for SPH in this quarter was more severe than expected. Outlook for adspend will likely continue to be lackluster given that our 2017 GDP growth forecast for Singapore based on our economics desk’s estimate is flattish at 1.3% from 1.2% in 2016. While there are measures put in place to control costs including manpower, we believe the bleak outlook for adspend will be a drag for earnings going forward," it said.
 

Tender for the site closes on February 28.

A freehold landed residential redevelopment site bounded by One Tree Hill, Jalan Arnap and Jalan Kelawar is no up for sale by tender, according to Knight Frank.

One Tree Hill Garden is a freehold three-storey residential development comprising six maisonettes and seven apartments, with a site area of 3,629.1 sqm., which is approximately 39,063 sq ft. Knight Frank said under the 2014 Master Plan, it is zoned for use under “Residential, 2-storey Semi-detached” and can potentially be redeveloped into a combination of 13 detached houses and semi-detached houses.

Knight Frank executive director & head of investment and capital markets Ian Loh said the site is in close proximity to the Orchard Road shopping belt and the upcoming Orchard Boulevard MRT station.

"The immediate vicinity is predominantly residential in nature, comprising landed housing as well as high-end condominium and apartment developments," he said.

The owners of the site are expecting offers of above $72.8 million, which translates to a land rate of approximately $1,864 psf.

"“We continue to see very strong interest for redevelopment opportunities – in the past two months alone, three prime residential redevelopment sites at Grange Road, Cuscaden Walk and Hullet Road were transacted. In addition, sizeable residential redevelopment sites for landed homes are rarely available, thus One Tree Hill Garden is expected to attract strong interest in view of its location and relatively affordable investment size,” Loh added.

The tender for One Tree Hill Gardens closes on February 28. 

The refurbished hotel in the site can contribute up to an additional $15m annually.

City Developments Ltd. can expect brighter days ahead this year as contributions from the newly rebranded JW Marriott hotel with 634 rooms in South Beach mixed development is expected to fully kick-in, according to RHB.

"We expect the hotel component to contribute an additional $10-15m pa to CDL’s (50% stake) recurring income stream based on an 80% occupancy and room rates of $350-400," the research house said.

It noted that the Office Tower is 99% leased with average rents or around $10 psf while more than three quarters of the South Beach retail space has also been leased with 70% of retail outlets commencing operations.

CDL is yet to launch its 190-unit luxury residential units in the project.

It will slow down, but the impact will be manageable, says Moody's.

Singapore's three largest banks, DBS Bank Ltd., Oversea-Chinese Banking Corp Ltd, and United Overseas Bank Limited, face continued downward pressure on their solvency metrics of asset quality and profitability in 2017, but the impact will be manageable, according to Moody's Investors Service.

Moody's vice president and senior analyst Simon Chen said declining asset quality and profitability for the three large Singapore
banks contributed to the recent downgrades of their standalone credit assessments.

"Problem loans will increase in 2017, but new problem loan formation, primarily from the embattled oil services sector, will slow from the peak levels observed in 2016. The gradual recovery of oil prices from the troughs seen in early 2016, if sustainable, will lead to a re-start of production activities and higher utilization of oilfield services," Chen said.

Furthermore, Chen noted the deterioration in the banks' regional loan quality will stay mild as the banks remain cautious on business growth amid continued macroeconomic headwinds.

Meanwhile, downside risks on profitability will continue over the next few quarters due to elevated credit costs and slower loan growth, somewhat offset by higher interest rates. Profitability metrics are just in line with highly rated global peers, despite the banks' relatively larger exposure to higher yielding emerging markets.

It followed the strong 11.5% growth in the previous month.

Singapore's non-oil domestic exports continued the strong uptrend with a 9.4% growth in December, following 11.5% growth in the previous month, latest data by International Enterprise said.

On a MoM basis, NODX increased by 1% in the said month following the 13% growth recorded in the past period due to the ise in electronic NODX which outweighed the decrease in non-electronic NODX. The level of NODS reached $14b in the said month.

Meanwhile, total trade rose 9.9% in December, after the 8.7% increase in the previous month. Total exports grew by 9.5% while total imports expanded 10.2%.

Electronic products rose 5.7%, mainly driven by the expansion ICs, parts of PCs and consumer electronics at 29.9%, 4.9% and 8.8%, respectively. Non-electronic NODX also increased, registering a 11.3% growth. Specialised machinery, petrochemicals and primary chemicals grew by 63.6%, 28.5% and 58.2% respectively, contributing the most to the rise in non-electronic NODX.
 

It may continue to drift sideways.

The Straits Times Index (STI) ended 11.95 points or 0.4% lower to 3013.12 on Monday, taking the year-to-date performance to +4.52%.

The top active stocks today were Global Logistic, which declined 2.64%, DBS, which gained 0.06%, Singtel, which declined 0.52%, UOB, which gained 0.05% and OCBC Bank, with a 0.32% fall.

This came as the US market was closed for Martin Luther King, Jr. Day, according to OCBC Investment Research. More so, European stocks slumped Monday, with auto makers and banks losing ground as investors mulled policy signals coming from the U.K. and the U.S.

"Given the lack of cues with Wall Street shut overnight, the STI is likely to continue to drift sideways, trading around 3000 level," OCBC said.

Here's more from the brokerage firm:

On the upside, we continue to peg the initial hurdle at 3040, ahead of 3065; on the downside, we peg the immediate and next support level at 3000 and 2070, respectively.

While overall volume surged 64.1% with 2.8b units traded, total value dipped 27.1% to S$0.8b, average value/unit fell 55.6% to S$0.28.
 

Another strong motor vehicles sales were recorded.

The strong motor vehicles sales have, yet again, saved the lacklustre retail sales from diving into the red in November.

According to the latest figures by the Department of Statistics, retail sales were up 1.1% in the said month, driven strongly by a 17% spike in motor vehicle sales. Medical goods & toiletries also boosted overall retail sales with its 4.4% growth. Recreational goods and optical goods also contributed to the positive growth with 1.3% and 0.3% spike, respectively.

On the other hand, the computer & telecommunications equipment posed the biggest drag in overall retail sales, registering a 13.5% decline. Likewise, retail sales of watches& jewelry, wearing apparel & footwear, furniture & household equipment, supermarkets, food & beverages, department stores, mini-marts & convenience stores and petrol service stations fell between 1.1% to 6.6% during the said period. 

It will offer 151.8m units at $0.80 per unit.

Dasin Retail Trust, a REIT with properties in China's Pearl River Delta region, will launch an $121 million initial public offering on the Singapore Exchange Mainboard this week.

The offering of 151,768,900 units, priced at $0.80 per unit, consists of an international placement of 149.8 million units and a public offering of 2 million shares.

Concurrently with, but separate from the Offering, Dasin Retail Trust has secured commitments of S$25 million from two cornerstone investors, China Orient Asset Management (International) Holding Limited and Haitong International Investment Fund SPC.

Dasin Retail Trust’s initial property portfolio comprises three retail malls – Xiaolan Metro Mall, Ocean Metro Mall and Dasin E-Colour –located in Zhongshan City, PRC.

The public offer closes at 12 noon on Wednesday, January 18.
 

Only 50% of global firms exude the same confidence.

According to the annual EY Global Information Security Survey, 80% of Singapore businesses are confident of their ability to detect a sophisticated cyber attack, surpassing the global average of 50%.

EY Asean cyber security leader Gerry Chng said Singapore has been driven by strong regulatory guidance in both the government and financial sectors to uplift the adoption of digital platforms as well as address the corresponding risks.

"This has resulted in a comparatively matured ecosystem of regulators, businesses, customers, and service providers,” he said.

The study garnered responses from over 1,735 organizations globally regarding some of the most compelling cybersecurity issues businesses face today.

The top security threats that the Singapore respondents mentioned are attacks that disrupt or deface the organization, spam, zero-day attacks, and phishing.

Meanwhile, the survey found out that the top cyber security priorities for Singapore respondents are data leakage and data loss prevention, security testing for attack and penetration, and identity and access management.
 

It placed second, trailing behind Switzerland.

According to INSEAD's 2017 Global Talent Competitiveness Index, Singapore still leads with Switzerland in terms of attracting and retaining talent.

The index measures how countries grow, attract and retain talent, providing a resource for decision makers to develop strategies for boosting their talent competitiveness.

This year's report explores the effects of technological change on talent competitiveness, arguing that while jobs at all levels continue to be replaced by machines, technology is also creating new opportunities.

Switzerland and Singapore occupy the top spots in GTCI 2017, with four Nordic countries in the top 10 (Sweden, Denmark, Finland and Norway). The United Kingdom and the United States rank third and fourth respectively.

Commenting on these results, Ilian Mihov, Dean of INSEAD, said the report underlines the role of education that remains fundamental to reach complex set of goals.

“With this fourth edition, the GTCI report has clearly reached the level of international recognition we were aiming for when it was first launched. By focusing on ‘technology and talent’, this year’s report points at some of the most challenging issues that the world economy will face in the coming years, having to combine the creation of new job opportunities and sustainable growth, while offering new generations the possibility to live and work in a world that reflects the values they believe in," she said.  

Adopting a pure territorial taxation system is one.

Global leader in tax and advisory services EY urged the Singapore government to encourage more business to set up shop in the city-state.

In its proposal ahead the Budget 2017, EY said one way is to adopt a pure territorial taxation system as not all foreign-sourced income derived by companies can be exempt from tax.

It noted that the permanent tax exemption of all foreign-sourced income without prerequisites, supplemented with safeguards such as explicit tax rules on the determination of source of an income without creating opportunities for double non-taxation, will encourage companies to grow beyond Singapore.

Ernst & Young Solutions LLP head of tax services Chung-Sim Siew Moon said this could place Singapore as a place for blooming industries.

“In the long run, it can boost Singapore’s position as a launch pad for new industries with base operations in Singapore, including digital service sectors such as media, travel, FinTech and gaming,” she said.

More so, EY also noted how enhancing tax incentive for venture capital fund managers can attract new businesses.

To recall, it was announced in Budget 2015 that an approved venture capital fund management company that manages Section 13H funds will be accorded a 5% concessionary tax rate. EY said Section 13H tax incentive is administered by SPRING Singapore and may have conditions related to the investment objective of the fund, which may not be possible for every venture capital fund manager to meet.

“As Singapore seeks to be a regional hub for start-ups and entrepreneurs, it may wish to attract smaller start-up venture capital fund managers by extending the Financial Sector Incentive – Fund Manager tax incentive to this group of managers," Ernst & Young Solutions LLP partner for financial services tax Desmond Teo said.

He furthered, "While the incentive can continue to be linked to headcount, the government can consider removing the minimum assets under management of S$250m for these start-up venture capital fund managers. Instead it could be linked to making a minimum number of investments for the funds in a certain growth industry, for instance, FinTech.”
 

It doesn't have any experience in operating a mobile network.

It may seem that the wireless market is TPG's Achilles heel as it lacks experience in operating a mobile network, DBS Vickers Securities said.

DBS said its mobile operations in Australia is an MVNO, meaning it does not own the wireless network infrastructure.

"[It] may find it difficult to build a network from scratch to compete with some of the best network operators in the world," the research firm said.

More so, DBS argued that TPG would have to find suitable base station sites, which can become difficult with Singapore’s urban density.

"Singapore does not have a passive infrastructure pool that can be freely leased by third parties," it stated.

To recall, this was also a concern raised by MyRepublic when it showed interest to enter the telco market. 

On the back of global trade headwind fears.

A survey conducted by Singapore Management University revealed that Singaporeans' one-year-ahead median inflation expectations inched up to 2.7% from its lowest level since September 2011.

According to the institution, this may be attributed to the weakness in global growth, further worsened by unknown foreign policy stance of the incoming US administration.

The results of the December 2016 survey showed that compared to September 2016, the median One-year-Ahead headline inflation (or CPI-All Item inflation) inched up to 2.7% compared to its five-year low of 2.63% recorded in September 2016. As a comparison benchmark, the mean One-year-Ahead headline inflation rate, also moved up to 2.95% in the December 2016 survey compared to its five-year low of 2.82% in the September 2016 survey, continuing its sub 3% value since December 2015.

Meanwhile, the one-year-ahead median Singapore core inflation expectations saw a significant jump to 2.82% from its lowest ever recorded average of 2.47% in September 2016 since the survey’s inception in September 2011. More significantly, for a subgroup of the population who own their accommodation and use public transport, the One-year-Ahead median Singapore core inflation rate for the subgroup increased to 2.65% from its record low of 2.3% polled in September 2016.

"These results indicate that there has been a substantial increase in the perception of future price changes in the Singapore core inflation rate which excludes housing and private road transportation. This might be attributed to both domestic and global price pressures and expected increase in oil and commodity prices," SMU said in a statement.

Commenting on the issue, SMU Assistant Professor of Finance Aurobindo Ghosh said there are two main challenges that are facing the global economy despite unmistakable signs of recovery.

"First, it is policy uncertainty rather than political uncertainty. Even though the markets have recovered somewhat from the fallout of the BREXIT referendum and nearly euphoric rise in consumer confidence levels despite the largely unexpected US presidential election outcome riding largely on corporate tax cut promises, the market exuberance belie the trepidations of the uncertain and largely untested future," he said.

He added, "Second, geopolitically we can see the BREXIT vote and the results of the US presidential election as indicators of a protectionist, populist and possibly anti-trade fervour. Global growth is at a cross roads, with the nascent growth in the US seemingly a beacon of better days ahead. Any protectionist mindset might translate to a loss of opportunity of the stimulus spending and consequent continuation of the aftermath of the global financial crisis. Against this backdrop, it is to be expected that for the consumers of a trade dependent economy like Singapore would prepare for possible increase in overall price levels.” 

Fundraising via IPOs in the city-state hit $1.7b in 2016.

Singapore is set to be 2017's hottest spot for initial public offerings (IPOs) in tropical Southeast Asia with sales of stakes in business and real estate trusts, while currency volatility and weak investor sentiment curb deals elsewhere in the region, according to a report from Reuters.

Singapore's stock exchange has promoted itself as a centre for business trusts and real estate investment trusts (REITs), which offer stable dividends. That has helped it partly make up for a drop in major share sales as large Chinese firms favour the higher valuations and liquidity of Hong Kong. Fundraising via IPOs in Singapore hit $1.7 billion last year, up fivefold from 2015 when it slumped to its lowest since 1998, Thomson Reuters data showed.

Click here to know more about the story.

Palm oil prices may tick up, says DBS.

Indonesia's plan to impose a moratorium on new palm oil concessions is expected to have minimal impact on Singapore-listed agribusiness players, according to a report by DBS.

DBS noted that most of Singapore's agri players have already adhered to sustainable planting practices, including High Carbon Stock and High Conservation Value studies prior to undertaking new planting.

However, DBS added that the planned moratorium may have a favorable effect on palm oil prices in the long term.

"We do not expect any immediate impact on global palm oil supply, as available and suitable land has long dwindled, causing new plantings to slow down since 2013. [However], there is an upside risk to palm oil prices if there is any large-scale replanting programme in Indonesia; as these would remove some palm oil supply from the market, as it takes newly planted oil palm tree four years to start bearing fruit," DBS said.