Daily Morning Note – 24 January 2019


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Asian equities look set for a mixed open after U.S. shares fluctuated Wednesday, ultimately edging higher after whipsawing investors throughout the day amid the ongoing debate over the outlook for global growth. The dollar’s six-day rally stalled and crude oil dropped after an earlier increase. The S&P 500, Dow and Nasdaq all turned green in the last hours of trading. Stock had initially rallied in the wake of a spate of better-than-forecast quarterly earnings from IBM, Procter & Gamble and United Technologies before dropping into the red mid-session.

China’s vice president said the world’s second-largest economy has delivered “significant” growth and pledged to the World Economic Forum in Davos, Switzerland, that it won’t falter. Brazil’s stock market cruised into new record territory Wednesday hitting 96,558 points, after Economy Minister Paulo Guedes reaffirmed plans to cut public spending while in Davos.

The beleaguered Australian dollar faces a growing threat: an addiction to real estate is creating a debt mountain. After being the worst-performing developed-nation currency in 2018, the Aussie is set to extend losses this year as rising indebtedness at households and the economy overall make it more likely the Reserve Bank of Australia will cut interest rates, according to both HSBC Holdings Plc and Rabobank.

Equity futures in Tokyo and Hong Kong dropped, while shares in Sydney were little changed.


CapitaLand Mall Trust – Still-weak reversions despite underlying recovery in tenant

Recommendation: NEUTRAL (Maintained); Last close S$2.31;

Target Price: S$2.09; Analyst: Tara Wong

– FY18 NPI and DPU in line with our forecast. Higher revenue in 4Q18 4Q18 from
remaining 70% stake of Westgate acquired on 1 Nov 2018.

– Slight recovery in tenant sales, with recovery in key trade categories.

– Stable portfolio occupancy amidst AEI works at Westgate and Tampines Mall.

– Still-weak rental reversions. Higher gearing and shorter term to maturity now with
debt consolidated from Infinity Mall Trust (which holds Westgate).

– Maintain Neutral with unchanged TP of S$2.09.

Mapletree Industrial Trust – Negative rental reversions

Recommendation: NEUTRAL (Downgraded); Last Close Price: $1.96;

Target Price: $2.03 (unchanged); Analyst: Richard Leow

– Revenue and DPU were in line with our expectation

– Positive inorganic contribution outweighed the underlying rental renewal weakness

– Distribution reinvestment plan (DRP) from 2Q19 had 40.6% take-up rate (historical
average: 42%); resulted in $22.8million cash retained

– DRP continued in 3Q19 to fund development project costs

– Downgrade to NEUTRAL; unchanged target price of $2.03


Koyo International Limited has been awarded a S$77 million contract for the supply and installation of mechanical services for Kim Chuan Depot Extension for Circle Line 6 by the Land Transport Authority.

Cromwell European REIT has completed the acquisition of three logistics assets in France.

Sony will shift its European headquarters from Britain to the Netherlands to avoid Brexit-related customs issues, but operations at its current UK company will remain unchanged.

Certificate of entitlement (COE) prices ended mostly higher on the back of sales whipped up by the recently concluded Singapore Motorshow.

Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR

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