■ Market drivers:
FSSTI decreased by 3.5% in July to close at 3,203. Singapore tracked Asia-ex Japan (US$ terms), leading it by a marginal 0.3% over the month. The SGD depreciated by 2% and closed at 1.37/$. All sectors delivered negative returns over the month. 2Q GDP growth saw broad-based contraction, due to a weak manufacturing sector, and underlying softness in domestic demand, which appears likely to remain a drag. Our Economics Team believes that headwinds are expected to persist and rise in 2H15 given structural constraints plaguing the export sector and continued tepid domestic activity.
■ Economic review:
The economy contracted 4.6%q/q saar according to the flash 2Q print. While the manufacturing sector was the main source of 2Q softness, down 14.0%q/q saar, the other key sectors also contracted. Singapore’s June IP fell 3.3%m/m sa, rounding off a very weak quarter for production. The fall in the month left output down 4.4%oya. Headline CPI fell 0.1%m/m sa in June, leaving headline inflation at -0.3%oya. June non-oil domestic exports (NODX) rose 2.0%m/m sa in US$ terms, marking the first monthly rise of the quarter.
■ Company news: (1) The MAS released its refined proposals to strengthen the SREITs market.
(2) Private residential prices fell 0.9% QoQ in 2Q15, according to URA’s flash estimates.
(3) Jun-15 new home sales fell 42% MoM (-22% YoY) to 375 units, representing the lowest level this year and the second straight monthly decline after May-15.
(4) CAPL paid US$50.8m (S$69.7m) to acquire the remaining redeemable preference shares (RPS) in CapitaLand China Development Fund (CCDF), which represents 62.5% of total RPS capital of CCDF.
(5) GLP established its 2nd China-focused logistics infrastructure fund – CLF II, with AUM of US$7b backed by equity of US$3.7b on Loan-to-Cost of 45%.
(6) GLP announced the acquisition of a US$4.55B US logistics portfolio from IIT, a non-traded US industrial REIT.
(7) CAPL announced the divestment of Bedok Mall for S$783.1m to CT, based on the agreed value of S$780m for Bedok Mall and other net assets of S$3.1m.
(8) ART will acquire Element Times Square, a 411-room 98-yr leasehold extended-stay hotel in New York for US$163.5m (S$220.7m) or US$0.4m (S$0.5m)/key.
(9) M1 announced pricing on new SIM-Only plans that are c50-60% below similar SIM-only plans offered by peers Singtel and Starhub.
(10) Results announced for NOL, SIA, SIE, TGR, GLP, CDREIT, CRCT, CAPL, SUN, MCT, FCT, AREIT, ART, CT, MINT, KREIT, OCBC, SGX, UOB, DBS, SMM, KEP, HPHT, JM, JS, M1 and SPH. (Read Report)
Source : JP Morgan Asia Pacific Equity Research