DAILY NEWS

Daily News – 31st August 2016

Singapore Economy

Strong demand for DBS US$ bond deal and two other issues
It was a busy Tuesday for the Asian US dollar bond market. Besides the DBS USD Additional Tier 1 Perpetual bond deal, two Chinese issuers also tapped the market and orders for the three exceeded a combined US$16.55 billion. DBS’s USD Additional Tier 1 deal received orders of over US$8 billion, which brought the pricing lower to 3.6 per cent. The initial guidance was around 4 per cent. Issue size is US$750 million. “DBS’s strong credit profile and name recognition, together with fixed income investors search for yield, helped to deliver a final order book of over US$8 billion, an excellent response,” said Sean Henderson, HSBC deputy head of debt capital markets, Asia Pacific.
http://www.businesstimes.com.sg/banking-finance/strong-demand-for-dbs-us-bond-deal-and-two-other-issues

E-commerce, bags to drive Asian plastics demand growth through 2017
Asian shoppers’ fondness for buying on the internet along with the region’s steady economic growth should boost Asia’s plastics demand for the next two years. Asia’s e-commerce market may expand by more than 30 per cent to an average per year of US$960 billion in 2017 and 2018, from an average per year of US$730 billion a year in 2015 and 2016, according to business consultants Frost & Sullivan. This will open up demand for polyethylene, a plastic mainly used in packaging materials like films, grocery bags and bubble wraps. Asia’s demand for polyethylene is expected to reach 41 million tonnes in 2017, up 5.1 per cent from 2016, according to an outlook from IHS Markit. Asia’s surging plastics demand will defy a broader downturn in the petrochemicals sector and will mitigate “go-green” efforts that are urging bans on plastic packaging.
http://www.businesstimes.com.sg/consumer/e-commerce-bags-to-drive-asian-plastics-demand-growth-through-2017

Singapore Real Estate

S’pore banks able to withstand a sharp property fall: Fitch
Singapore banks are strong enough to withstand a sharp downturn in the property market despite their large exposure to the sector, said Fitch Ratings. The downside risks for banks would be modest even if housing-loan quality were to deteriorate drastically, it said. Fitch said its worst-case scenario of a 45 per cent home-price collapse with housing non-performing loan (NPL) ratio of 5 per cent (end-June 2016: 0.4 per cent) – would shave 17 per cent to 24 per cent off their 2015 earnings. This excludes the negative impact of the stress on the other parts of the banks’ business.
http://www.businesstimes.com.sg/companies-markets/spore-banks-able-to-withstand-a-sharp-property-fall-fitch
http://www.straitstimes.com/business/property/banking-system-can-survive-sharp-housing-market-downturn-fitch

Yun Nam boss picks up GCB at Brizay Park
Yun Nam Hair Care boss Andy Chua is understood to have picked up a Good Class Bungalow (GCB) along Brizay Park off Old Holland Road for S$33 million. The price works out to S$1,108 per square foot (psf) on the freehold land area of nearly 29,800 square feet. On site is an old bungalow. Mr Chua owns an adjoining property on a land area of nearly 25,750 sq ft. Market watchers reckon he could redevelop the property he is buying, or even amalgamate the two plots for a bigger redevelopment. This would be the third time in as many years that Mr Chua would be making the headlines.
http://www.businesstimes.com.sg/real-estate/yun-nam-boss-picks-up-gcb-at-brizay-park

Central Boulevard site likely to attract keen interest
Developers are expected to show keen interest in a plum 1.1ha Marine Bay site in Central Boulevard launched for sale yesterday by the Urban Redevelopment Authority. It was triggered for release from the Government’s reserve list earlier this month, when a developer committed to bidding at least $1.536 billion at the tender. The white site, which will mainly be an office development, comes nearly 10 years after the last office sites in the Marina Bay area – those of Asia Square – were sold in 2007.
http://www.straitstimes.com/business/property/central-boulevard-site-likely-to-attract-keen-interest?login=true
http://www.straitstimes.com/business/property/ura-launches-tender-for-plum-white-site-at-central-boulevard

Companies’ Brief

CDLHT needs to bolster overseas presence
Overseas markets could prove key for CDL Hospitality Trusts (CDLHT) as a challenging hotel industry at home puts pressure on its performance. And with room supply slated to expand in Singapore between now and 2018, that pressure could last awhile. While visitor arrivals to Singapore have grown at over 12 per cent year on year in the first six months of 2016, surprisingly, the rate of growth for the hotel industry has been comparatively less exciting. This is due in part to the supply which has been injected into the market.

In addition, hotels which rely on the corporate dollar are having a tougher time as companies are scaling back travel budgets amid headwinds in the global economy.
http://www.businesstimes.com.sg/companies-markets/cdlht-needs-to-bolster-overseas-presence

Hafary sets eyes on overseas markets
Even as it works hard to fight competition amid tapering domestic demand, Singapore’s homegrown building materials supplier Hafary Holdings is seeking to widen its geographic base through overseas markets such as Malaysia and the UK. This comes as more overseas opportunities open up for the Singapore-listed company on two fronts: Malaysia-listed group Hap Seng Consolidated Bhd has come on board as a controlling shareholder a year ago and Hafary’s close business partners such as Oxley Holdings have spread their wings beyond the shores of Singapore.
http://www.businesstimes.com.sg/companies-markets/hafary-sets-eyes-on-overseas-markets

CapitaLand Mall Asia signs first third-party management contract in China
CapitaLand Mall Asia Limited, the wholly owned shopping mall business of property group CapitaLand, has signed its first third-party management contract to manage the retail component of a China mall. The contract was signed with Changsha Pilot Investment Holdings Group to manage the retail section of Fortune Finance Center, an integrated development in Changsha, the provincial capital of Hunan province in central China.
http://www.businesstimes.com.sg/companies-markets/capitaland-mall-asia-signs-first-third-party-management-contract-in-china

Viva Industrial Trust secures anchor tenant for business park’s ‘white’ space
Property trust Viva Industrial Trust said on Monday that it has secured an anchor tenant for an area at Viva Business Park that was converted from industrial usage. It said the tenant, which will take up 38,000 sq ft of space, is a leading household name with a showroom and retail chain in Singapore. Renovations at the business park to convert up to 15 per cent of space to “white” space for a variety of uses are due to be completed in the fourth quarter of the year.
http://www.businesstimes.com.sg/companies-markets/viva-industrial-trust-secures-anchor-tenant-for-business-parks-white-space

Ascendas-Singbridge tells of positive India experience
Ascendas-Singbridge has had its challenges in India despite having the most established presence in the country of almost any Singaporean company, according to group chief executive Manohar Khiatani. “We have faced delays in projects, changes in government policies, lack of clarity and consistency in tax environment and also, until two years back, a sharply depreciating rupee,” he told the Ninth India-Singapore Strategic Dialogue yesterday. “We have had our hits and misses, but overall the experience has been positive.”
http://www.straitstimes.com/business/property/ascendas-singbridge-tells-of-positive-india-experience?login=true

Views, Reviews & Forum

Global growth: Still made in China
Despite all the hand-wringing over the vaunted China slowdown, the Chinese economy remains the single largest contributor to world GDP growth. For a global economy limping along at stall speed — and most likely unable to withstand a significant shock without toppling into renewed recession — that contribution is all the more important. A few numbers bear this out. If Chinese GDP growth reaches 6.7 per cent year — in line with the government’s official target and only slightly above the International Monetary Fund’s latest prediction (6.6 per cent) — China would account for 1.2 percentage points of world GDP growth.
http://www.todayonline.com/chinaindia/china/global-growth-still-made-china

JTC’s treatment of Jurong Country Club notes grossly unfair, devoid of reason
I refer to “JTC makes early-buyback offer for Jurong Country Club notes” (BT, Aug 26). The Debenture Note Working Committee’s (DNWC) view is that JTC’s offer to repurchase the Noteholders Debenture Note (DN) of S$120,000 at only S$84,200 is grossly unfair and devoid of reason. Following the acquisition of the land on which Jurong Country Club (JCC) is situated, the club operations and memberships will be terminated by this year-end. It should also trigger the immediate redemption (at par or S$120,000 for each DN) of the DN as both the memberships and DN are legally bundled together, had always been traded together and now must be handled/terminated concurrently.
http://www.businesstimes.com.sg/opinion/jtcs-treatment-of-jurong-country-club-notes-grossly-unfair-devoid-of-reason

JTC should redeem JCC notes at par
I refer to “JTC makes early-buyback offer for Jurong Country Club notes” (BT, Aug 26). I am a noteholder and wish to say that JTC’s offer to repurchase my S$120,000 note at only S$84,200 is totally unsatisfactory and unfair. If JTC had made this offer when there was no impending land acquisition, I would be very thankful to JTC for offering me this “option to monitise my note early”. However, as the land acquisition has already been announced and will be completed before this year-end, JTC should be redeeming my note at par value of S$120,000 at the same time as the closure of the club facilities.
http://www.businesstimes.com.sg/opinion/jtc-should-redeem-jcc-notes-at-par