DAILY MARKET UPDATES 23rd October 2008

West Coast Plaza 70% leased ahead of launch
West Coast Plaza, which underwent a $26m makeover by Far East Organization is close to 70% leased ahead of its soft launch on Nov 15. $1.6m is committed to advertising and promotion programmes for the mall till Jan 09. Rentals at the mall, with a net lettable area of 160,000 sq ft will range from $7 to almost $30 psf per month. 31 per cent of its three floors of retail space are for F&B outlets. The proportion of retail space typically allocated to eateries across Far East’s malls has grown from 20 to 25% previously to 38 and 35% now. Refurbished to feature an alfresco dining area, the visitors it aims to draw are students and work professionals from educational and research institutions nearby and families from private residences in the area. Positioned as a “mid-market surburban mall”, West Coast Plaza’s anchor tenant will be Cold Storage supermarket.
- The Business Times, P33
(See also, The Straits Times, B8 – “Ginza Plaza gets $26m makeover”)
Park’s Clarke Quay hotel to open in March
The company has spent S$130 - $150m developing the 336-room hotel and will position it as a four-star business establishment. Its proximity to Clarke Quay will make it attractive to free and independent travelers. They have plans to acquire 10-12 more hotels in the next few years, mainly in the Asia-Pacific region, said Park director. They also announced yesterday that it has acquired a third hotel in China – Grand Park Xian – as well as its first in Japan.
- The Business Times, P33
Sime Darby Prop to boost portfolio through selective purchases
Sime Darby Property Berhad (SDP), a unit of Malaysian conglomerate Sime Darby, is looking to grow their portfolio in Singapore through selective buys. They are looking at all sectors for acquisitions. At the moment, they hold two sites, a small site in Orchard and another in Tanjong Rhu. A warehouse is on the latter which SDP intends to redevelop into a residential site in a few years. SDP manages $470m of property assets locally which accounts for 15% of their bottom line. Malaysia, SDP’s largest market accounts for 80%.
- The Business Times, P33
‘Buy property stocks now, reap fruits later’ : Wheelock CEO
David Lawrence’s advice is investors looking for value is to buy property counters at the moment, because they are cheap and will give good returns over the next couple of years. He acknowledged that it will be a tough couple of hears for the local property market but he adds that Singapore is going to be the big beneficiary of this credit crunch because there aren’t many places like this left to go. 'The indirect market - which is property counters - is completely out of line with the physical market. So the real value at the moment - and it won't be there for long - is the indirect market. Some of these shares have come down so much.
Other plus point, interest rates are low and there is huge liquidity in the system, he adds.
- The Business Times, P34
Three property, infrastructure funds alley fears
Facing a possible rating downgrade by Moody's Investors Service, MacarthurCook Industrial Reit (MI-Reit) reassured investors that it is 'advanced in negotiations' to refinance a $220 million facility maturing in April 2009. MacarthurCook Property Securities Fund announced their priority is to further reduce debt and prudently manage its underlying portfolios. One strategy is to cut its weightings on unlisted property and use those funds to reduce debt. A third fund, the Macquarie International Infrastructure Fund Limited (MIIF), said yesterday that it has no bilateral dealings with known troubled financial institutions. According to the fund, borrowings held by its underlying businesses have remaining maturities of three to 14 years, and most of its interest exposures are also hedged for the medium to long term.
- The Business Times, P8
KepLand Q3 profit falls
Keppel Land has reported a net profit of $46.17 million for the third quarter, a fall of 43.6 per cent from a net profit of $81.84 million a year ago. Revenue for the quarter was $185.79 million, down 51.4 per cent from $381.97 million a year ago. Earnings from overseas were about 50 per cent of its attributable profit compared with 29.6 per cent for Q3 2007. In China, it expects to launch 2,796 residential units for sale in 2009 and 5,654 units the following year. For Vietnam, Thailand, India, Indonesia, Middle East and the Philippines combined, it is aiming to launch 2,799 units in 2009 and 3,663 units the following year. In Singapore, the launch of the 221-unit Marina Bay Suites has been postponed to 2009.
- The Business Times, P4
(See also, The Straits Times, B18 – “KepLand gains down 43.6%”)
Ascott Reit's DPU up 31% in Q3
ASCOTT Residence Trust (ART) achieved a unitholders' distribution of $15.86 million for the third quarter ended Sept 30, a 32 per cent increase year-on-year. Distribution per unit (DPU) for the quarter is 2.61 cents, a 31 per cent increase from a year earlier. The trust's average cost of debt was 3.3 per cent, and its interest cover a healthy 5.1 times. Ascott Residence Trust Management Ltd said that more than 70 per cent of ART's debt is on a fixed-rate basis, as it has consistently taken a conservative approach to capital management. Some $84.6 million or 15 per cent of total debt is due for refinancing in the current Q4. The trust said it has sufficient cash and bank facilities to meet these refinancing needs. More than 80 per cent of total debt is not due for refinancing until 2011 and beyond.
- The Business Times, P8
I-Bhd and CapitaLand venture to build mall in limbo
I-Bhd had revealed the company was negotiating with a number of foreign institutional investors with a view to establishing a 70:30 joint venture (JV) to build the shopping complex component - the second phase component - of i-City. A 29-hectare intelligent township in Shah Alam, i-City's total GDV is estimated at RM2 billion (S$840 million). Saudi Al Rajhi Bank acquired 36 of the 44 units of three- and five-storey office suites to be built in the first phase, for an en bloc price of RM95 million, or RM457 per square foot - said then to be a new pricing benchmark for Shah Alam. CapitaLand was said to own 70 per cent of the proposed JV firm, which would buy a 6 ha plot for the 800,000-odd sq ft mall and manage the centre upon its completion. The company may have also looked at another retail mall in Shah Alam: the 1.23 million sq ft mall which Singapore-based Lend Lease Asian Retail Investment Fund 2 acquired a half share in with a unit of Malaysian-listed SP Setia and plans to build at an estimated GDV of RM750 million.
- The Business Times, P15
Old checkpoint may stay open
The old Woodlands Checkpoint, opened in March to ease Causeway congestion, looks set to stay open permanently. Plans are afoot to open lanes during peak hours by the end of the year for motorcyclists, in addition to those now used by buses and trucks, traveling to and from Malaysia. It is not known if there are plans for the reopened old checkpoint to have lanes for cars. The current checkpoint is operating beyond its capacity of 35.2million vehicles a year – dealing with about 37.8 million vehicles passing through last year. The Immigration and Checkpoints Authority has also called for tenders to construct new offices and to refurbish the current premises.
- The Straits Times, B5
DBS will pay up to $80m to investors
DBS will pay $70million to $80 million to customers in Singapore and Hong Kong who bought its Lehman Brothers-related structured products. Only some investors will get all their money back, while others will get a partial payment or none. For Singapore and Hong Kong as a whole, 4,700 customers invested a total of $360 million in Lehman-related notes. In Singapore, 1400 customers invested a total of $103 million in High Notes 5. Maybank and Hong Leong have also announced action to help investors stuck with Lehman-linked products. Hong Leong Finance would buy back Minibond notes from customers with only primary school education and who are 62 years or older at the time of the investment. The settlement amount will be the original investment made, minus interest. Maybank promised full compensation to some ‘deserving cases’ of Minibond investors.
- The Straits Times, A8
(See also, The Business Times, P1 – “Hope flickers for victims of Lehman-linked notes”)
Crisis drives Asians to travel closer to home
The global financial crisis has driven Asian travellers to cut back on long-distance trips. Instead, travellers are heading to destinations closer to home like India or South-east Asia. The regional travel bug was why event organiser Messe Berlin decided to start a trade show in Singapore. Over 70 per cent of ITB's 651 exhibitors and 5,000 visitors hail from Asia. STB said that while the next two years could be rougher than normal, Singapore should not have trouble remaking itself into an exciting destination with a slew of new attractions. The convention and business meeting industry has remained resilient in the face of the economic downturn. Last year, the sector earned a record $5 billion in tourism spending, up from the $4 billion in 2006. The Republic hosts some 6,000 business events on average a year and, even with the downturn, it is still working hard to seek new international events.
- The Straits Times, B9
(See also, The Business Times, P10 – “Tourism impetus to return in 2 years: STB”)
FTA ‘show China is willing to open up’
The China-Singapore free trade agreement (FTA) is a sign of China’s commitment to greater openness with its partners despite the current difficulties in global trade talks, said Prime Minister Lee Hsien Loong. China and Asean aim to wrap up their FTA negotiations by 2010, a move that would, on paper, create a zero-tariff market of 1.7 billion people. PM Lee will witness the signing of the China-Singapore FTA today. Asked what the Asian economies should do in the face of a global slowdown, Mr Lee said the best option for the moment was to keep economies moving by increasing investment where appropriate, and encourage domestic consumption as a buffer against the slide in exports.
- The Straits Times, A12
High-flying bankers told to cut back
Banks are going through expenses and travel bills as the recession starts, revenues fall. At Credit Suisse, bankers must book the least expensive standard rooms at hotels and the lowest airfare through a designated travel agency. All Credit Suisse staff, including managers are told to use alternatives to travel, such telephone or video/Web conferencing. HSBC Holdings' Asia unit has asked its Hong Kong department heads and branch managers to cut travel expenses by 15-20 per cent next year. The three Singapore banks - DBS, United Overseas Bank and OCBC Bank - said that they have not introduced new cost-cutting measures but have stringent processes to ensure that only authentic claims are reimbursed.
- The Business Times, P3
Tough balance between growth, foreign talent
Countries in need of foreign manpower must manage the political friction that can arise from the presence of large numbers of foreign workers, according to Mr Goh. They must therefore continue to enjoy benefits which foreigners do not - significant subsidies for public housing, education and health, and various top-ups from government budget surpluses. Welcoming foreigners remains one of two key planks of Singapore's strategy to build human capital and talent - and human capital is even more critical in these uncertain times. The other plank is to develop Singaporeans to their fullest potential, Mr Goh said. Singapore's talent strategy is simple, the real challenge is in its execution - and there are three thrusts to it: heavy investment in developing Singaporeans, from the young to adults; building Singapore into a distinctive global city to attract and retain talent; and making Singapore 'cool and funky' for creative and entrepreneurial types to live in, he said.
- The Business Times, P3
(See also, The Straits Times, B4 – “Doors open to foreigners : SM”)
World growth to recover in 2011: UBS
UBS sees US economic growth slowing sharply from a projected 1.4 per cent this year to 0.3 per cent next year and sees Asia leading globally with a projected 7.3 per cent GDP growth next year (down from 9.3 per cent last year) and 6.1 per cent next year. 'UBS forecasts economic growth in 58 countries and regions around the world; we're forecasting slowing growth in 58 countries and regions next year,' he said. 'Everybody is going to suffer; this is a synchronised global slowdown. But the damage will be limited in those countries that have the ability to stimulate domestic demand.' - UBS deputy head of global economics Paul Donovan.
- The Business Times, P11
Fed offers another lifeline but markets keep sinking
US Treasury Department announced that the Federal Reserve will be making a massive US$540 billion capital injection into a crucial financial market, the latest in a series of Fed actions designed to shore up the short-term debt market. Under the programme, called the Money Market Investor Funding Facility, the Fed will provide the US$540 billion in funding to be used in an effort - this time controlled by the private sector - to purchase assets from US money market mutual funds. 'By facilitating the sales of money market instruments in the secondary market, the facility should improve the liquidity position of money market investors, thus increasing their ability to meet any further redemption requests and their willingness to invest in money market instruments. Improved money market conditions will enhance the ability of banks and other financial intermediaries to accommodate the credit needs of businesses and households,' a Fed statement said.
- The Business Times, P2
Real economies will feel the pain in Asia: PM Lee
While countries are taking individual action, they must coordinate their efforts to keep one another in the loop and 'better understand' the different lines of thinking. This will ensure that whatever one country does will not complicate matters for others, Mr Lee said in his five day visit to Beijing. He believes the overall impact of the US election on Asia will be 'indirect' because Asian banks are sound and property woes have not been as widespread. However, real economies in Asia will be affected because when developed nations go into recession, others invariably feel the effects, he said. The best solution is for each country to keep its economy moving, increase investment where feasible and gradually raise the proportion of consumption, particularly in countries like China where this has been on the low side. '(The FTA) is a signal of the good bilateral relations between our two countries,' he said. 'The volume of trade has been growing, but with an FTA we can cement this and grow it even faster.', Mr Lee said.
- The Business Times, P2
(See also, The Straits Times, A7 - “Asian stocks hit by economic worries”)
US$ hits S$1.50, pound gets pounded
The Singapore dollar recorded a fresh 2008 low of S$1.4995 per US dollar yesterday, the local unit was also able to chalk up fresh 2008 highs versus even faster-falling currencies like the pound and euro yesterday - which ended the day at S$2.4546 and S$1.9338 respectively. In Asian trading, the pound fell as much as 5 per cent from Tuesday's Asian close to hit a fresh five-year low of US$1.62, before recovering to close the day at US$1.64. In the process, the UK currency also nosedived to eight-year lows of S$2.4290 and 160.90 yen - the latter a slide of 28 per cent since the end of 2007. The euro, meanwhile, was forced well below US$1.30, and at one point found itself the best part of 10 yen weaker than its Tuesday highs - at its worst yen lows in more than four years - before regaining some composure by the Asian close.
- The Business Times, P1
China makes it easier for first-home buyers
China's Ministry of Finance yesterday announced a series of policy changes that will make it easier for people to buy their first homes. The move comes just days after China said that annual economic growth slowed sharply to 9 per cent in the third quarter compared with 10.1 per cent in the second quarter. From Nov 1, the property deed tax will decline to 1 per cent from 1.5 per cent for people buying their first home if it is smaller than 90 sq m. For those buying their first home, regardless of the size, the downpayment requirement will be lowered to 20 per cent from 30 per cent, and banks will be allowed to charge as little as 70 per cent of benchmark lending rates for such mortgages. It also removed the 0.05 per cent stamp tax and land value-added tax for home purchases. The government is focusing its efforts to revive the property sector on enabling poorer people to buy homes. The government may launch a 1 trillion yuan (S$219 billion) fund to build houses for poorer citizens. China's urban property prices rose 3.5 per cent in September from a year earlier, down from an annual increase of 5.3 per cent in August.
- The Straits Times, B20