The Edge Singapore - Issue 708

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Singtel is harnessing its geographical spread to build an advantage for itself and its units. Mark Chong, CEO International, explains how these overseas investments are paying off in our Cover Story on Pages 12 and 13.

RegionalREACH

12

SINGAPORE (INCLUSIVE OF GST) $5.00

B U S I N E S S & I N V E S T M E N T W E E K L Y

OTHERHIGHLIGHTS

MCI (P) 046/03/2015 PPS 1519/09/2012 (022805)

1

| BY ESTHER HOON & LIN ZHIQIN |

Sellers are letting go of their properties,

even if they have to incur seller’s stamp

duty. However, they generally wait until

the SSD falls to 4% in the fourth year of

purchase. Based on the latest revision of

the SSD measure, homeowners who purchased

their houses on or after Jan 14, 2011 and resold

them within four years of the date of purchase

are required to pay SSD. The SSD rates vary with

t 16% 12% 8% and 4%

in three years of purchase in 2015, when SSD

rates were hefty at between 8% and 16% (see

table on Page EP2).

There could be several factors behind this.

First, sellers might prefer to hold cash or oth-

er liquid assets in the current market so they

can re-enter the market when property pric-

es bottom.

The number of sellers who paid 4% SSD in

2014 and 2015 had purchased the properties

in 2011 and 2012 and most of them netted a

profit even after paying the 4% SSD.

S nd sellers who do not wish to hold on

th r rea

peak. If this trend continues or worsens, sell-

ers might be better off incurring the 4% SSD

now instead of waiting another year and risk

selling their properties at lower prices as a re-

sult of a higher supply in the market.

Third, there are sellers who are forced to let

go of their properties because of the soft rental

environment and interest rate hikes. These

properties might be sold at a loss or within

the first three years of purchase. The propor-

tion of unprofitable transactions moves in tan-

dem with the decline in SSD rates, declining

from 80% at 16% SSD rate in the first year to

22% at 4% SSD rate in the fourth year and

hen SSD is lifted (see

homes as at Nov 24, 2015, with their previous

transactions on or after Jan 14, 2011.

Investors pressured to offload shoebox

and large units

Projects with the highest number of resale

transactions in the fourth year of purchase

were Parc Rosewood, A Treasure Trove and

Ripple Bay, with 19, 11 and 10 resale caveats

respectively. Interestingly, these caveats in-

volved mostly shoebox units.

Of the 19 resale caveats at Parc Rosewood,

84%, or 16 caveats, were for shoebox units

averaging 445 sq ft. Similarly, for Ripple Bay,

90% — or nine of the 10 caveats — were for

h b x units averaging 490 sq ft.its as

Star Wars wisdom

Five insights for

property investors PG2

Singapore’s

ageing society

Impact on Iskandar

Malaysia PG5

Home Ideas

SuMisura offers tips

on decorating for

the holidays PG6

Deal Watch

Condo near East Coast

Park selling slightly

above $1,100 psf PG7

Let it go Sellers do not mind paying seller’s stamp duty in anticipation of further downside

Visit TheEdgeProperty.com to find properties,

research market trends and read the latest news

A PULLOUT WITH M A K E B E T T E R D E C I S I O N S

MCI (P) 046/03/2015 PPS 1519/09/2012 (022805)

THE WEEK OF DECEMBER 21, 2015 708

LEM

CHE

RN JI

ANG

24, 2015, wwith their previous

or after Jaan 14, 2011.011.

ssured to offload shoebd shoeboxox

tshe highest numnumber of resale

n the fourth year of purchf hasease

ewood, A Treasure Trove and

th 19, 11 and 10 resale caveats

nterestingly, these caveats in-

shoebox units.t Parc Rosewood,

ownside

esale caveats at Parc Rosewood,

aveats, were for shoebox units

l Bay

NIRGUNAN TIRUCHELVAM: Asean economiesthreatened by debtPG15

Creative culture Naiise puts Made in Singapore products on the good design map

Affordable alternative P2P funding platform Capital Match offers small firms more options

Live to deliver Foodpanda helps local restaurants such as The Soup Spoon expand reach

Shashank Dixit’s cloud-basedenterprise computing softwareis slowly but surely gaining themindshare of Asia’s small- andmedium-sized enterprises

enterpriseENTREPRENEURSHIP. LEARNING. CAREERS

THE WEEK OF DECEMBER 21, 2015

Sidekickfor SMEs

CDL establishing track record in monetising assetsEdgewise PG5

Asian economies to take cue from China next year, says JP Morgan’s Jehangir AzizEconomy Watch PG6

UG Healthcare shares play catch-up with larger peers, valuations still trailingCorporate PG8

Cogent seeks to replicate success of integrated logistics hub on Jurong IslandCorporate PG10

CapitaLand goes high-techCorporate PG14

Relief rallyCapital PG17

ComfortDelGro, SATS, Singapore Airlines, Sembcorp Industries, Sembcorp Marine, SMRT CorpHot Stocks PG31

THE WEEK OF DECEMBER 21 — DECEMBER 27, 2015 708

NOTEWORTHYSAMUEL ISAAC CHUA/THE EDGE SINGAPORE

SSShShhhhaaaaassssshhhhaaaneenenenentententententeteteerererrprppprrisiisisisisisisis sslsloslosloslowslowowwlymimindmindsmindsharmedium-s

SidSiSididffffffffffffffffffoooooooooooorfffffffffffffffffoofffffffffffoooooooooooroor

Impact investing done rightPERSONAL WEALTH

THE ASCOTT INTERVIEW

Van Cleef & Arpels’ strategyOPTIONS

IGB Corp’s St Giles opens hotel in SydneyCITY & COUNTRY

Genting Singapore hurting from poor credit assessments and lack of presence in Macau PG16

JP Morgan’s Richard Titherington on what’s next for emerging markets PG18

2 • THEEDGE SINGAPORE | DECEMBER 21, 2015

THEEDGE SINGAPORE | DECEMBER 21, 2015 • 3


On Dec 17, Singapore Myanmar Investco entered into a joint-venture agreement with Japan-listed logistics group Senko Co to provide logistics and warehousing services in Myanmar to a growing base of domestic and international customers across various industries. According to the Logistics Per-formance Index by the World Bank, Myan-mar is ranked 145 out of 160 in 2014. How-ever, the strong economic growth outlook and further easing of sanctions will likely fuel the growth and development of Myan-mar’s logistics sector.

IPC Corp said on Dec 17 that it is proposing a capital reduction move to return $136.5 million in cash to shareholders, or $1.60 a share, following the sale of seven hotels in Japan for about ¥14.94 billion ($172.2 million). An extraordinary general meet-ing will be called to seek shareholders’ ap-proval for the exercise. Upon approval, the company’s net tangible assets per share for FY2014 would drop from $2.44 to $1.21. The company said in a filing with the Singa pore

exchange that the capital reduction will al-low IPC to “achieve a more efficient capi-tal structure”, as the paid-up capital is “in excess of the immediate requirements of the company”.

Addvalue Technologies said its data relay ter-minal was successfully launched into a low Earth orbit on Dec 16 on board the VELOX-II satellite by an Indian rocket. The satellite, which was built by Nanyang Technological University under contract by subsidiary Ad-dvalue Innovation, carries the proprietary data relay terminal as its primary payload. Addvalue’s data relay terminal is an essen-tial component of its new LEO Inter-Satellite Data Relay System, which serves to address a long-standing constraint on the operation of low Earth orbit satellites.

The Trendlines Group said on Dec 17 that its unit, Trendlines Medical, has established two new portfolio companies, Tandem Tech-nologies and Zeev Implants, and subscribed fully diluted stakes of 48.8% and 49.8% in

them respectively. Tandem Technologies aims to make the process of removing and retriev-ing colon polyps more efficient and accu-rate. Zeev Implants owns a modular dental implant technology that is designed to solve the most common sources of dental implant problems and diseases, including peri-implant disease, without the need to remove or re-place the implant. The two new companies bring the total number of Trendlines portfo-lio companies to 47.

Securities Investors Association (Singapore) president and CEO David Gerald on Dec 16 assured unitholders of Fortune Real Estate Investment Trust they can continue to trade its shares in Singapore and Hong Kong, fol-lowing the REIT’s proposed change in listing status from primary to secondary on the Sin-gapore Exchange. Gerald said in a statement that the only change is that annual gener-al meetings will be held in Hong Kong and that the change in listing “does not affect the rights of unitholders in Singapore and it is not a delisting”. — Compiled by Gwyneth Yeo E

Yellen voices economic optimism as Fed begins gradual tightening

TheWeek

WEEK IN REVIEW

| BY RICH MILLER |

US Federal Reserve chair Janet Yellen delivered a two-pronged message that stock market investors cheered: The US economy is performing well and the central bank is in no rush to raise interest rates again.

She tells a news conference that the central bank had put itself in a position to nurture the 6½-year-old expansion by raising rates a bit now to avoid having to increase them a lot later. That will enable the Fed to tighten policy gradually, moving rates up in fits and starts to keep the economy on track.

While US exports had been hurt by weaker overseas growth and a stronger US dollar, Yellen says these headwinds were being offset by a solid expansion in domestic spending.

“Americans should realise that the Fed’s decision today reflects our confidence in the US economy,” Yellen says. “While things may be uneven across regions of the country and different industrial sectors, we see an economy that is on a path of sustainable improvement.”

Equity prices rallied in response, with the Standard & Poor’s 500 index of US stocks rising 1.5% to 2,073.07 in New York. Bond prices fell on the prospects of higher short-term interest rates,

though yields on the benchmark 10-year Treasury note remained below levels seen last month.

‘True leadership’“She has managed to pull it all together,” says Chris Rupkey, chief financial economist with Bank of Tokyo-Mitsubishi UFJ in New York. “Speaking out to the American public and telling them with a first rate hike that the economy is on the path to sustainable improvement is a move that shows true leadership.”

The quarter-point increase in borrowing costs on Dec 16 was the culmination of a year-long effort by the

Fed to prepare investors, consumers and companies for the end of an unprecedented era of ultra-easy money.

The Federal Open Market Committee lowered its benchmark rate to zero to 0.25% in December 2008, three months after the collapse of investment bank Lehman Brothers Holdings and 10 months before unemployment in the US peaked at 10%.

“The first move is very significant,” Richard Davis, CEO of US Bancorp, the nation’s largest regional bank, says in an interview. “It gives everyone permission to agree that we are now moving forward with the recovery.”

Confident outlookYellen repeatedly stressed her confidence in the health of the US economy and played down concerns that it would be knocked off course by weakness overseas or the recent tumult in the high-yield bond market.

Since the recovery began in June 2009, GDP has grown at a steady, albeit unspectacular, pace of 2.2% per quarter on average. The expansion has already lasted longer than the post-World War II mean of just under five years.

“It’s a myth that expansions die of old age,” Yellen says. “I don’t see anything in the underlying strength of the economy that would lead me to be concerned” about a recession.

She acknowledged in response to a question that central banks in the past have killed off expansions by tightening policy. But she argued that was because policymakers felt compelled to raise rates sharply and abruptly because they had waited too long to move.

“It is because we don’t want to cause a recession through that type of dynamic at some future date that it is prudent to begin early and gradually,” she says.

Yellen used the word “gradually” or “gradual” about a dozen times in her hour-long press conference to describe the pace of future rate increases. — Bloomberg LP

One must question whether Mr Goh has the necessary knowledge about the business, experience and time to undertake what sounds like a rather onerous task— Mak Yuen Teen, associate professor at NUS Business School, raising concerns about corporate governance at Singapore Post, including the appointment of Goh Yeow Tin as executive director following the surprise resignation of CEO Wolfgang Baier. Goh, 64, joined SingPost’s board in July last year.

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Yellen: While things may be uneven across regions of the US and different indus-trial sectors, we see an economy that is on a path of sustainable improvement

BLO

OM

BERG

EDGEWISE


CDL establishing track record in monetising assetsCity Developments has been among the worst-performing Straits Times Index com-ponent stocks this year. In particular, it has lagged well behind CapitaLand. But that could change in 2016 if CDL continues monetising its formidable pool of investment properties.

On Dec 15, CDL announced plans to cre-ate another investment platform with so-called Profit Participation Securities. This time, it is working with Alpha Investment Partners, a unit of Keppel Land. CDL will of-fload three of its office properties for $1.071 billion to a joint-venture (JV) vehicle, which will obtain financing through a PPS transac-tion and debt. A fund run by Alpha will sub-scribe for $220.2 million worth of PPS, while CDL will subscribe for a further $133.3 mil-lion. Oversea- Chinese Banking Corp and DBS Group Holdings will provide a senior loan facility of $750.1 million.

The three properties that CDL is monetis-ing are Central Mall Office Tower, Manulife Centre and Tampines Grande. The Tampines Grande stands on a 99-year leasehold plot of land. The other two buildings stand on free-hold land, but CDL is selling them to the JV vehicle as 99-year leasehold properties. “To make it consistent with Tampines, which is a 99-year leasehold property, we carved out 99-year leases for Central Mall and Manulife Centre,” explains Goh An Nee, CFO of CDL.

The average occupancy rates of the build-ings are 98% and their weighted average lease to expiry is as long as four years. According to Goh, the capitalisation rates for the assets range from 3.5% to 4% and they are expected to garner rents of $6 to $8 psf a month.

The three buildings currently comprise 2.3% of CDL’s net asset value. But CDL will realise a significant gain when they are sold to the JV vehicle. On a pro forma basis, based on CDL’s 2014 financials, the transaction will result in its net tangible assets rising 3% from $9.22 to $9.51 a share. Its pro forma earnings per share will rise 30% from 83 cents to $1.08.

The PPS that the Alpha fund and CDL will take up have a life of five years and will pay a coupon of 5% per annum. However, the trans-action provides for the Alpha fund to earn pre-ferred returns of up to an internal rate of re-turn of 12.6% per annum (including the 5% coupon), after which CDL will receive all cash flows until its capital is repaid. Beyond that, any further upside will be shared at a 40:60 ratio between the Alpha fund and CDL.

Grant Kelley, CEO of CDL, sees the Alpha fund as an ideal partner. “The intention is to find a quality partner, which, through its so-phistication, understands the PPS structure,” he says. “We felt we wanted assets that would be readily investible by the incoming investor, and these assets would be resilient over the coming five-year cycle.”

In December 2014, CDL monetised its Quay-side Collection in Sentosa for $1.5 billion us-ing a structure involving PPS. The investors included private equity group Blackstone and CIMB. As with that first deal, CDL’s latest PPS transaction requires that the investors take a long-term view on the assets.

Over the next 18 months, some four mil-lion sq ft of new office space is expected to hit the market, with Marina One, Duo and Guoco Tower slated to receive temporary occupation permits by end-2016 and early 2017. That ad-ditional space is coming just as growth across the region appears to be slowing down.

Yet, Kelley insists the longer-term picture of the office property sector is positive. “In the next five years, supply is a little under two mil-lion sq ft per annum,” he says. “The trick to this deal is not to get fixated on the next 18 months. If you look at the URA price index on a 10-year look-back basis, office space [grew at

E

Manulife Centre, which sits on freehold land, is being sold into CDL’s second PPS on a 99-year lease

a compound annual rate] of 6.5%. That’s an interesting number because there was quite a bit of volatility during the global financial cri-sis in 2008 and 2009.”

With a structure that focuses investors on that longer-term view, CDL has been able to extract more value from its assets. Terence Khi, an analyst at JP Morgan, says in a re-search note that the capitalisation rates of the PPS portfolio assets of 3.5% to 4% are lower than his own assumptions of 4.3% to 4.5%. “The divestment price of $1.1 billion or $1,619 psf implies a 74% premium to our revalued net asset value (RNAV) estimates of $617 mil-lion or $932 psf, largely owing to tighter cap rates,” Khi notes.

Moreover, the deal will enable CDL to shel-ter itself from the bleak period ahead for the office sector. “We think the divestment is time-ly, given the sizeable office supply in 2H2016 to 1H2017 and subdued net absorption rate, which will result in 10% to 15% rental decline in 2015 and 2016 and 50- to 60-basis-point cap rate expansion to 4.4% to 4.5%,” Khi adds in his report.

If CDL manages to pull off a couple more of these transactions, its shares might per-form a lot better in 2016 and trade closer to its RNAV. JP Morgan estimates CDL’s RNAV to be $10.40 a share. It has a price target of $9.90 for the stock.

CITY

DEV

ELO

PMEN

TS


| BY ASSIF SHAMEEN |

On Tuesday Dec 17, the US Federal Reserve’s Open Market Committee raised interest rates for the first time in nearly a decade.

Fed chair Janet Yellen reaffirmed that the committee will move gradually to normalise rates in the current cy-cle. The markets, which had been expecting the well-telegraphed rate hike, cheered not just at the 25-ba-sis-point hike itself but also her prom-ise to move cautiously over the next year. In the immediate aftermath of the hike, however, it was still unclear whether the unfolding drama in the US junk bond market, where a sel-loff has continued unabated for near-ly a week now, might end soon or be prolonged. The rate hike did not do much for beaten down markets like oil and commodities, which continue to hover close to their recent lows.

Investors in Asia should now fo-cus on the Fed’s path in 2016, says Jehangir Aziz, chief emerging Asia economist at US investment bank-ing giant JP Morgan in Singapore. The veteran economist believes Asia will take the Fed’s first rate rise in its stride. How the region’s economies fare next year will depend more on what happens to the Chinese econ-omy than on how aggressive the Fed will be in normalising rates.

Jehangir spoke to The Edge Sin-gapore just a day before the Federal Open Market Committee met to raise rates on Dec 16. Excerpts from the 45-minute interview follow.

Jehangir, JP Morgan’s view is that after the December hike, the FOMC will raise rates at least four times in 2016, bringing the fed funds rate to between 1.25% and 1.5% by the end of next year. How does that impact Asia?Our rate call is that by the end of 2016, we would have seen at least five rate hikes of 25 basis points. That’s differ-ent from the market view, which is that probably we will see 75bps of rate hikes in the entire 12-month period. So the market is pricing in a lot less than we are. The question is: Will the market eventually move to our view or will we have to move back clos-er to the current market consensus?

I don’t think we will get much clarity on whether the market is right or we are right until March, when the Fed meets to raise rates for the second time. Nothing will change in Asia until March. Actual-ly, policymakers and corporates will heave a sigh of relief when they see the Fed raise rates [on Dec 17] because the first rate increase is finally over and done with. The big call really is the March rate hike. If the Fed does raise in March as we expect, then it will be difficult for people to argue that the Fed won’t keep raising rates throughout 2016, or have a total of four rate hikes next year. Right now, the market does not believe the Fed will move every quarter next year. It only expects two more hikes next

year. So we believe it will only be in March that the market starts pricing in an aggressive Fed policy. That will be the time when Asian policymak-ers will start to see an impact of Fed policy on their own economies.

So, you are arguing that the Fed’s rate hikes will have no impact on Asia until March?No. What I was trying to say was that between now and March, what hap-pens in Asia will not be driven by just what the Fed is doing, but more by what is happening to the econo-my in China, or what the Chinese do with their interest rates as well as the renminbi. We believe because of the changes in the fiscal policy last year, we will probably see pretty decent industrial production, PMI [Purchas-ing Managers’ Index] as well as in-frastructure investment growth num-bers coming out of China next year.

Let’s talk about the rest of Asia. Clearly, demand for goods and ser-vices has not been that good in re-cent years and despite weaker cur-rencies, we are unlikely to see Asia export its way out of this?In 2015, we saw emerging Asia deliv-er the lowest growth rate since 2001. Growth this year will be lower than even 2009 or during the global fi-nancial crisis. But this is not a sud-den growth shock. We have seen this trend since 2011. Every year for the past four years, the growth rate in emerging Asia has fallen. To a large extent, the slowdown has been due to slower growth in China. But, as you pointed out, the slowdown in Asia has also been driven by the re-lentless slowdown in Asian exports from 2009. Global trade has been flat since 2011. Actually, global trade as a share of global GDP has been declining since 2010. Global trade grew exponentially after 2000 as we saw more globalisation all the way through to 2008. It crashed dur-ing the crisis because trade finance was squeezed out, but it recovered in 2009 and 2010. Since then, glob-al trade has fallen as a share of GDP and flatlined in dollar terms.

That brings the question, ‘Is the age of globalisation over?’ Think about what emerging Asia, China, India and Southeast Asia did be-tween 2000 and 2009. They all tried to piggyback on this globalisation trend. Every country moved to lib-eralise their economy on the exter-nal as well as internal side. They had industrial policy subsidies and tried to help manufacturing, and then tried to plug themselves into this global market. For more than a decade, we saw continuous in-crease in global trade. All the pol-icies, reforms and infrastructure built in emerging Asian economies were geared to catering to external demand. Everything was geared to-wards an export-driven model.

The export growth model is dead. That era is over. Our exports will still be needed, but exports will no longer be the driver of growth for Asia. What

is unfortunate is that emerging mar-ket policymakers — central banks, governments in Asia, Latin America and around the world — are still in denial. They can’t bring themselves to accept that emerging markets’ ex-port-driven growth model that served them so well for decades is now bro-ken and they now need to find new drivers of growth.

Why do you say the emerging mar-kets’ export growth model that has served Asia so well for 30 years is now over? There are various arguments and it is very difficult to pin down a few, but let me give you three reasons why I think global trade has stagnated. First, you need to look at who has been buying from Asia — mainly American and European corporates

and households. The trouble with US and European households is that they are ageing. They no longer need goods; they need services. When you are 35, you need a lot of things that have all the widgets that we in Asia used to make. When you are 75, you need more services like healthcare, tourism and restaurants, and there-fore, need fewer of the widgets that our Asian factories churn out.

That’s where Asia’s problem is. Everything is geared to serve that ex-port machine. We have been build-ing ports and container terminals that can ship goods to the US and Europe, goods they no longer need. We are building factories to make widgets that go into things they are no longer buying. Our policies in Asia, reforms and infrastructure have all been de-signed to build manufacturing hubs or logistics or services to cater to those hubs. Changing these things is akin to turning around a huge oil tanker in the middle of the sea.

If you look at the process that emerging Asia needs to go through, it has not even taken the first step

— to create a consensus in each of the countries that they can no longer rely on exports to be the main growth driver. Next, we need to see what the driver of growth in Asia will be over the next 10 or 20 years. Presumably, it will be domestic consumption. We also need to figure out what we need to do with our policies, reforms and infrastructure and steer them towards consumption. So far, we haven’t even had any public discussion, let alone be at a stage where we are imple-menting new policies in the region.

Secondly, US corporates are not investing. They are not investing because they don’t see any reason to believe that US productivity will come back in the next few years. So they would rather buy back shares or increase their dividend payout.

The third part is China. For sev-

eral years now, the Chinese econo-my has been slowing. The problem is that we in Asia never really be-lieved that China would slow so rap-idly. The world was fed the line that China needed more than 8% growth because there were a billion mouths that needed to be fed, so it had to keep its growth rate high. We were told that if China didn’t have a very high level of growth, it would com-pletely break apart and there would be even more trouble. The trouble is that China has a demographics issue. There are not enough people to work in those low-end factories. So China has moved away from manufactur-ing and is now focusing on servic-es. More employment is being gen-erated through growth in services.

I can also talk about this in the context of the Indian government’s push into manufacturing or [its] “Make it in India” campaign. It is not going to work because manu-facturing is becoming increasingly automated and it makes more sense to manufacture things closest to the end market.

Will Beijing try to keep GDP growth at around the 6.5% level or will they let it slide to 5% and force the rest of Asia to ratchet down their expectations dramatically?China has been slowly pulling down growth expectations over the last few years. Every year, they come up with a lower target and my guess is they will continue to do so. Even though we don’t know what China’s terminal rate is, the direction is clear: Growth will continue to slow. Growth will be driven by services and, therefore, China will need less resources and materials and commodities. So the commodities boom is over. Commod-ity prices, which have been languish-ing for the last 18 months or so, are likely to go down further.

But despite a lower growth rate and the services sector driving the economy, China will be able to deliv-er over eight million or nine million new jobs every year without being locked into 8% GDP growth. That is good for the economy because of the changing demographics. China is now producing only eight million new graduates compared with over 10 million a few years ago. The real question we need to ask is: Where will the services in China peak at? Can China have an economy that is driven only by services and no growth in manufacturing? Those are difficult questions for policy-makers to answer.

The so-called high-volume, low-cost manufacturing has largely moved out of the Pearl River Delta region and gone to Vietnam and Bangladesh. The recent TPP agreement makes it even easier for companies to relocate to countries like Vietnam.

You are not expecting more stim-ulus from Beijing to boost growth or keep it steady at 6.5%? No fis-cal stimulus? No, we will see fiscal and monetary policies remaining accommodative. The days of RMB10 trillion fiscal stimulus packages that build bridg-es to nowhere that we saw in 2008 and 2009 are long over.

But China has built a huge manu-facturing capacity that is now idle because the developed world isn’t buying what it produces. Do you mothball it? The excess capacity in manufacturing is a huge problem that China faces. Its mirror image is the massive amount of debt in the banking sector, much of which is of questionable quality. How does one kill that capacity? Do you destroy it? My guess is that they probably won’t. They will probably do what [former Prime Minister] Zhu Rongji did in 1994 and 1995, which was to allow certain factories in certain industries to just remain idle and gradually move to less-pol-luting new technology. That’s how this excess capacity will eventually get killed, I believe.

Or they could devalue the ren-

ECONOMY WATCH

Asian economies to take cue from China next year, says JP Morgan’s Jehangir Aziz

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Aziz: Emerging markets’ export-driven growth model is broken



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| BY BENNY TAN |

UG Healthcare Corp has seen a surge in the trading volume of its shares re-cently. An average of 1.3 million shares of the company changed hands daily in November, versus 394,514 units

in October. The glove manufacturer was also flagged as a Stock with Momentum by www.theedgemarkets.com on Nov 26, the third time in three consecutive weeks. The previous times it was flagged were on Nov 13 and 19. Year-to-date, shares in UG Healthcare have soared 111%, to close at 49.5 cents on Dec 16. That gives the company a market value of $93.1 mil-lion, or about 17 times its forward earnings.

On Nov 13, the Singapore Exchange queried UG Healthcare over unusual trading activity in its shares. The company responded that it was not aware of any information not previous ly announced that might explain the share price and volume movements. Subsequently, onNov 16, SGX issued a “trade with caution” warning on the company’s shares.

UG Healthcare is a fairly small player in the glove-making industry. Founded in 1989 by Ang Beng Teck, the CEO and executive director, and Lee Keck Keong, a non-execu-tive director, the company was listed on the Cata list board last December at 21.5 cents a share. Its peers include Riverstone Holdings, another Malaysia-based glove manufacturer listed in Singapore, which has a larger market value of around $826 million. Other companies in the same business include Malaysia-listed companies such as Top Glove Corp, Kossan Rubber Industries and Supermax Corp, with respective market values of about RM7.6 bil-lion, RM5.7 billion and RM2 billion. On top of this, there are other regional players such as Ansell and Kimberly- Clark Corp.

On the face of it, UG Healthcare seems to be playing catch-up with Riverstone. As at end- August, its shares were flat since the begin-ning of the year. Riverstone had registered a 71% jump in its share price at the time. Since then, shares in Riverstone have continued climbing. Year-to-date, they are up 129%, to close at $2.23 on Dec 16.

UG Healthcare’s financial performance has not been great though. For FY2015 ended June, it reported a 35.4% decline in earn-ings to $3.2 million, despite a 13.7% rise in revenue to $55.7 million. According to the company, revenue rose on a higher volume of gloves sold, in line with the expansion in its production capacity. Earnings were lower because of one-off expenses related to its IPO last year, as well as costs related to on-going expansion plans. Higher personnel costs, re-alised foreign exchange loss, and loss in fair value of deri vative financial instruments also added to administrative expenses.

On Oct 14, Maybank Kim Eng Research initiated coverage of the stock, saying that it is an underresearched name, despite having the highest growth profile among its peers. UG Healthcare’s shares were trading at 30.5 cents at the time. Maybank Kim Eng has a “buy” recom mendation on the stock, with a price target of 41 cents.

According to Maybank Kim Eng, UG Health-care is a differentiated glove maker, unlike most of its peers, which tend to be original equip-ment manufacturers. With two manufacturing facilities located in Seremban, Malaysia, UG Healthcare markets its products around the world under “UniGloves”, a strong brand name in the US, UK, China, Germany and Nigeria. More than half of UG Healthcare’s gloves are

sold under its own distribution network and brand; the remainder are sales as an original equipment manufacturer.

In particular, UG Healthcare focuses on gloves for the healthcare and hygiene spec-trum, and distributes ancillary products such as surgical, vinyl and cleanroom gloves, face-masks and other medical disposables. For FY2015, latex examination gloves contributed 58% of its revenue. Nitrile examination gloves accounted for another 36%, while other ancil-lary products provided the balance.

Macro tailwindsMaybank Kim Eng expects UG Healthcare to continue to benefit from the strengthening US dollar against the Malaysian ringgit, as well as subdued raw material prices. The company’s products are priced in US dollars, while its ope rating costs are in ringgit. In the past year, the ringgit has depreciated over 23% against the US dollar.

However, about 40% of UG Healthcare’s sales are hedged through forward contracts as at end-June, which contributed to a fair value loss on financial derivatives. But the company’s management has guided that this will be reduced in the coming months.

On top of this, Maybank Kim Eng projects that rubber input prices — a key cost compo-nent — could remain benign in the near term, with supply growth outpacing demand growth. The International Rubber Study Group is fore-casting that natural and synthetic rubber sup-ply will attain a surplus of one to three mil-lion tonnes respectively by 2020. According to Maybank Kim Eng, around 50% to 60% of UG Healthcare’s cost of sales is related to natural rubber latex and synthetic latex.

Maybank Kim Eng sees the glove manu-facturing industry remaining resilient in the event of an economic downturn, as gloves are essential in the healthcare industry to prevent transmission of infectious diseases. It also sees strong growth potential from improved health-care and hygiene standards, especially in the

emerging markets, which are largely under-penetrated.

Notably, UG Healthcare is trying to expand its global footprint, especially in emerging markets, where per capita glove consumption is as low as 3% of that of developed markets. Global demand for gloves has grown at a pace of 8% to 10% per annum in the past 13 years, according to the Malaysia Rubber Glove Manufacturing Association.

UG Healthcare is now in the process of ramp-ing up production capacity to about 1.9 billion pieces of gloves per annum by end-FY2016, up from 1.5 billion pieces currently. This will enable it to meet increasing market demand.

It is currently operating at a utilisation rate of about 80% to 85% of its installed capacity.

“We are in the midst of upgrading some of our existing production facility to produce surgical examination gloves to keep up with the new technologies and meet customers’ requirements,” says Lee Jun Yih, executive director of UG Healthcare.

Lee adds that increased spending by the company to expand its distribution network in the UK, China and Nigeria weighs on the company’s profitability now, but it will even-tually pay off. “The increase in marketing, dis-tribution and administrative expenses, to us, is needed to lay this very important founda-tion and network for the next stage of growth in FY2016 and FY2017,” he explains.

Potential takeover target?Maybank Kim Eng expects that contribution from the new capacity expansion will be more than enough to offset any additional expenses. The research house is forecasting a 72% surge in UG Healthcare’s earnings to $5.5 million for FY2016, and a further 45% increase to $8 mil-lion for FY2017.

Revenue is also projected to increase 24% to $69 million in FY2016, and an additional 32% to $90.9 million in FY2017, spurred by a pickup in production volume.

With the recent run-up, UG Healthcare’s share price has surpassed the price target de-termined by Maybank Kim Eng. Yet, even at current levels, it is trading at 17 times forward earnings, lower than the 21 times forward earn-ings at which Riverstone trades.

Interestingly, Maybank Kim Eng says UG Healthcare, with its relatively small market value, could well be an acquisition target. The company’s strong distribution network and established branding could be key in-tangibles sought by potential buyers. The re-search firm notes that Top Glove, the world’s largest glove manufacturer by volume, is on the lookout for potential acquisition targets in Malaysia, Indonesia and Thailand.

UG Healthcare’s relatively small market value, strong distribution network and established branding make it an acquisition target, says Maybank Kim Eng

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*Valuation score — Composite measure of historical return and valuation**Fundamental score — Composite measure of balance sheet strength and profitabilityNote: A score of 3.0 is the best to have and 0 is the worst to have

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| BY AMY TAN |

Logistics firm Cogent Holdings is reaping the rewards of a major investment in a new logistics hub. The Cogent One-Stop Logistics Hub, which received its Tempo-rary Occupancy Permit on Dec 30, 2014,

has allowed the company to secure several long-term warehousing contracts. The logistics hub is now fully occupied and has contributed to a rise in Cogent’s revenue and earnings. For the nine months ended Septem ber, it saw a 32% y-o-y increase in earnings to $18.1 million, on the back of a 9% rise in revenue to $95.9 million.

Now, Cogent is hoping to replicate that success with a multipurpose logistics hub on Jurong Island. On Oct 12, it announced that it had signed and accepted a letter of intent issued by the Economic Development Board (EDB) in respect of the company’s potential appointment as the developer of the Jurong Island Chemical Logistics Facility. If appointed, Cogent will develop, own and operate the facility.

Cogent has four core business units: auto-motive logistics management services, con-tainer depot management services, ware housing and property management services, and trans-portation management services.

The Cogent One-Stop Logistics Hub, located at Buroh Crescent, marks the first time all four business units are being housed under one roof. Its completion has also meant a substan-tial increase in warehousing space. The hub has a gross floor area (GFA) of approximately 1.6 million sq ft, taking Cogent’s total warehousing space to approximately 2.1 million sq ft today.

Benson Tan, CEO of Cogent Holdings, recalls that when the company decided to embark on this $160 million project in 2011, its market cap-italisation stood at approximately $40 million. Cogent had to fund the project through bank borrowings. Yet, Tan says he had no doubt the investment was necessary if the company was to compete for contracts from blue-chip companies.

Today, the completed five-storey hub com-prises multilevel ramp-up facilities built to store flammable chemicals, project cargoes and gen-eral cargoes. In addition, the hub sports a pat-ented rooftop container depot with the capac-ity to hold approximately 16,000 twenty-foot

equivalent units of empty containers. The space occupied by this depot is not included in the building’s GFA and allows Cogent to maxim-ise the project’s plot ratio of 2.5. “The rooftop container depot is the first in the world and is especially useful when it comes to efficient land utilisation in land-scarce Singapore,” says Tan.

The biggest revenue driver for Cogent One-Stop Logistics Hub is warehousing, followed by automotive logistics management, he adds. Currently, the facility stores some 1,500 vehi-cles. “These vehicles come in through the port and we transport them to our warehouse us-ing our trailers for storage. When a customer requests for [his] car, we will deliver it to the car showroom. Basically, we manage the whole process for our clients,” Tan explains. The hub is within 3.5km of Jurong Port and less than 30 minutes’ drive from the Pasir Panjang Terminal.

Eyes on Jurong IslandThe chemical logistics facility that Cogent hopes to develop on Jurong Island is roughly the same size as its new logistics hub. Tan estimates the investment value of this project will be sim-ilar too. When completed, the Jurong Island Chemical Logistics Facility is expected to be the largest integrated logistics hub on Jurong Island. Construction is set to commence in 3Q2016 and will be completed within three years.

The industrial land at Tembusu that has been identified for the facility is located next to the Jurong Island barging terminal, built as part of the Jurong Island Version 2.0 initia-tive led by JTC Corp and EDB to support the movement of hazardous chemicals from petro-chemical plants there.

Currently, containers that come through the terminal are moved to mainland Singa-pore for storage. Tan reckons that the Jurong Island Chemical Logistics Facility will appeal to petrochemical companies as an alternative storage location. Given that chemical logistics is a niche market, and that there are less than five logistics operators on Jurong Island to-day, he thinks Cogent stands a good chance of winning contracts for the facility.

He points out that Cogent also has long- established relationships with key Jurong Island petrochemical manufacturers. It has been pro viding logistics services to The Poly-olefin Company since 2006 and Sumitomo Chemical Co since 2008. Last year, it secured a five-year logistics service agreement with

ExxonMobil Asia Pacific.In fact, Tan himself has worked on Jurong

Island. He joined Cogent in April 2004 as an assistant manager and spent the first three years of his career based there. “There is strong de-mand [for] but undersupply of logistics service providers on Jurong Island. An integrated logis-tics hub with full-fledged logistics ser vices next to the barging terminal will serve us well and provide us competitive advantage.”

Doing things differentlyCogent was founded more than 40 years ago by Tan’s father, Yeow Khoon, who is currently executive chairman. It started out as a trans-port management business with a small fleet of trucks. The logistics business has become a great deal more competitive since then and Tan says the company has had to carve out its own niche and competitive advantage.

“There is an oversupply of logistics hubs in mainland Singapore,” he laments. “This is why we came up with innovative ideas such as the rooftop container depot, which gives us the edge over our competitors when it comes to cost management.”

The company is also behind the redevelop-ment of the former Turf Club, now a one million sq ft lifestyle hub called The Grandstand. Locat-ed in the heart of Bukit Timah, The Grandstand offers a mix of F&B concepts and retail outlets. Its anchor tenants are Giant Hypermarket and PasarBella, which features more than 70 inde-pendent gourmet grocers and specialty stores.

Tan explains that initially, The Grandstand was intended to boost Cogent’s position in the automotive logistics industry. Cogent pro-vides logistics services for brand-new vehicles as well as deregistered ones under the Export Processing Zone scheme. It is one of two EPZ operators in Singapore.

However, this business is dependent on Certificate of Entitlement prices. When COE prices are high, Tan says, people tend to choose second-hand vehicles over new ones. This, in turn, reduces demand for Cogent’s automo-tive logistics services.

“What is not apparent to most people is that The Grandstand actually houses the most used-car centres in Singapore,” he adds. By tender-ing for the contract to redevelop the Turf Club, Cogent hoped to also provide storage, manage-ment and ancillary logistics services for the used-cars segment. “This was an effect ive way to hedge our automotive logistics business,” he says. As the operator and landlord of The Grandstand, Cogent would also be a landlord for the used-car centres. “Even though my target was the latter, I couldn’t choose it piecemeal.”

Tan’s lack of experience in managing a re-tail property was no deterrent. “We saw po-tential for this building because it was in bad shape when we tendered for it, but in a very good location in an affluent neighbourhood. We thought this place could do well if we just brought in the right tenant mix,” he says.

Today, the occupancy rate at The Grand-stand is around 98%. After the expiry of the first lease at The Grandstand, the group suc-cessfully renewed the term for another three years, effective March 1, 2015. Now, Tan thinks Cogent could even participate in similar prop-erty management ventures where there are op-portunities to turn old properties into bustling lifestyle hubs.

Year-to-date, Cogent’s shares are up 8.8% as at Dec 14. At current levels, the stock is trading at 7.4 times historical earnings and the compa-ny has a market capitalisation of $181.8 million.

“Our share price is stable and does not move much because my family holds about 85% of the issued share capital,” says Tan. He owns 0.5% of Cogent while his father is the largest shareholder, with a 70.3% stake. “From day one, we have been holding our shares and buying shares back. I believe we have a good future and that’s why we put our own money into the company.”

Cogent seeks to replicate success ofintegrated logistics hub on Jurong Island

Cogent One-Stop Logistics Hub received its TOP last Dec 30

Tan: The rooftop container depot is the first in the world and is especially useful when it comes to efficient land utilisation in land-scarce Singapore

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Valuation score* 2.40Fundamental score** 1.70TTM PER (x) 5.15TTM PEG (x) 0.04P/NAV (x) 1.89TTM dividend yield (%) 9.89Market capitalisation ($ mil) 181.83Shares outstanding (ex-treasury) (mil) 478.50Beta 0.4712-month price range ($) 0.33 to 0.45

ECONOMY WATCH


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Asean economies unlikely to see growth resurgenceminbi now that it is in the International Monetary Fund’s Special Drawing Rights (SDR) basket.One thing I believe China won’t do is use ex-change rates to save factories where there is over-capacity. Clearly, they haven’t done that for the last few years when they had ample opportuni-ties to do so. In fact, on a trade-weighted basis, China has allowed its exchange rate to appreci-ate substantially over the past two years. Why would they do it now? A cut in prices does noth-ing anymore to exports. As I said earlier, the end users in America and Europe no longer need the things China was exporting a few years ago. Since 2007, the world has changed. The demograph-ics in the developed world have changed. Think about oil and copper. Oil is down 65% over the past 18 months. Has it done anything to boost oil consumption? Copper and other metal prices have fallen dramatically but the world doesn’t need cheaper metals just because they are 50% or 60% cheaper.

The other thing is devaluations work only when others don’t devalue. If China deval-ues, every other emerging economy in Asia and Latin America will quickly devalue, so how does that make China any more com-petitive? During the Asian financial crisis 18 years ago, a 50% devaluation in Asia was not followed by a similar devaluation in Latin America or Eastern Europe, so Asian econ-omies benefited. Today, if China devalues, you will see every other emerging economy devalue as well.

We haven’t seen Asian economies benefit hugely from cheap oil this past year. At $35 a barrel, the next move on oil might be up, which means Asian economies could start hurting soon.Let me address all the points you have made here. First, the impact of oil has been massive across every emerging Asian economy with the exception of Malaysia, which is an export-er. Just look at the massive drop in inflation rates and massive increase in current account balances. A year ago, we thought that most of the improvement in current accounts would actually be invested or consumed. Corporates saw material benefits from lower input prices and households saw material improvement in their purchasing power from lower fuel costs. But they saved most of it. They did that be-cause they were uncertain about future growth. All the cash surpluses of corporates in the US, Europe and Asia have been used to buy back stocks or boost dividends because there is no visibility of demand.

As for the trajectory of oil prices, I think it is still unclear whether oil stays at these lev-els or goes down further. There are people out there who see oil heading to US$20 a barrel. My own guess is that [in a year’s time] oil will probably be fairly close to where it is now. In these turbulent times, the old ways of look-ing at things may not be relevant. Just because oil prices are falling doesn’t necessarily mean people will automatically consume more and corporates will invest more.

How do you see Asean economies? Will they do better in 2016?Our view is that we won’t see a massive resur-gence in growth. We will probably see some stabilisation to slight improvement. There are two reasons. We are adjusting to the fact that Malaysia, Indonesia and Thailand are now moving to a lower growth phase and there-fore exchange rates need to be adjusted. The biggest change in Asean economies since the Asian crisis is that they have left the exchange rate to be the first line of defence. That’s now the buffer for all the shocks. The lesson Asean economies learnt from that crisis in 1998 was

that they stopped the exchange rate from be-ing the buffer, so the real economies had to absorb most of the shock. Now they are al-lowing the shock absorber to work, so the exchange rate has absorbed the shock and as such, in dollar terms, asset values in Malay-sia and Indonesia are substantially lower than they were a year ago.

In some of the countries, particularly Indo-nesia and Thailand, the budgetary process has managed to get over its capacity constraints and

governance issues to start delivering some cap-ital spending. We are starting to see a pickup in public spending in Indonesia and Thailand. We expect that to continue in 2016.

What about Singapore? Singapore is not only a trade dependent econo-my, it is also an advanced economy now. It is ridiculous to compare Singapore with emerg-ing Asia or China or India. Compare Singapore with its peers. Look at growth in Luxembourg

or Switzerland. The growth is comparable. Singapore needs to adjust to the fact that it is not an emerging economy anymore and can’t grow at the rates it used to. In the past, Singa-pore was helped by trade, but as trade stagnat-ed, Singapore stagnated. Singapore has rein-vented itself from a manufacturing and trading hub into a financial services hub, and as such it should grow at the rate that financial cen-tres grow, which is 2% a year. That’s Singa-pore’s ‘New Normal’.

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| BY JOAN NG |

In Thailand, a start-up called Socialgiver is hooking customers up with hotel stays and gym classes through a Groupon-like plat-form with a charity element. Hotels, gyms and restaurants donate spare rooms, classes

or tables in exchange for tax benefits; custom-ers pay less than the market value for these items; and the money goes to charity. Soon, customers in Singapore may be able to score deals on Socialgiver too. Singapore Telecom-munications is helping the company expand its platform across the region.

Socialgiver is winner of this year’s Singtel Group-Samsung Regional Mobile App Chal-lenge, a competition jointly organised by mo-bile phone maker Samsung Electronics Co, alongside Singtel and its subsidiaries and as-sociate companies. The winning app devel-oper team gets the opportunity to work with Singtel to market its app to 577 million mo-bile customers within the group’s markets in Asia, Australia and Africa.

The first challenge was held last year and saw Australian start-up Wattcost crowned cham-pion. Wattcost’s app pairs with a wireless bea-con to deliver real-time alerts that help con-sumers save on electricity costs and improve their home safety. Mark Chong, Singtel’s CEO for the international division, admits that Wat-tcost’s progress is not as great as he would have liked. “The app was device-dependent,” he says. Unfortunately, the Wattcost Beacon is not quite ready yet. “We have learnt that les-son, so we are de-emphasising apps and ide-as that come with hardware.”

Chong admits that the challenge has yet to find a killer app, but he says the event has be-come more popular. There were more than 700 applicants this year versus about 500 last year. “Africa also decided to join the whole compe-tition,” he adds. “In-country, for many of the operating companies, the programme attracts quite a fair bit of following.” As awareness of the challenge grows in the region, Chong says, Singtel’s units are benefiting from a pos-itive association.

“The perception of the operating companies is that they are quite innovative in the digi-tal space.” He notes that the opco’s share of

industry revenue of has improved in the last two years. “We’re not saying the apps are the whole contributor. But the halo effect of their being in touch with the digital world has helped them.” In addition, Chong believes the event helps the Singtel group access new and win-ning ideas quickly. “All these guys with ide-as are trying to solve a problem. We can tap the creativity and innovativeness of people out there, so that it shortens our own devel-opment time. We are crowdsourcing, in some way, ideas and concepts.”

Singtel is not, of course, the only large com-pany with deep coffers that is trying to tap the start-up ecosystem to get ahead. DBS Group Holdings recently announced a $10 million in-vestment in the local start-up ecosystem. AIA Group and Konica Minolta last month joined hands to launch a digital health accelerator. And Japanese video game giant SEGA has put money into a mobile game publishing start-up in Singapore.

For Singtel, however, the regional competi-tion is also an outward manifestation of tighter integration within the group. In recent years, the company has taken steps to better harness

the advantages of owning stakes in telcos out-side Singapore. The companies are sharing best practices and ideas while negotiating better deals as a group. Now, as 4G connectivity in emerging markets takes off and new compet-itors make inroads into the telecoms market, the advantages of being part of a group could stand out more clearly.

Centres of excellenceChong is the point man for the Singtel group’s regional associates overseas. An engineering graduate from the Grenoble Institute of Tech-nology in France, he joined Singtel as CEO of its global offices unit in 2001 and has mostly served in global roles since: He was vice-presi-dent for global accounts for three years and chief operating officer for Singtel’s 23.3%-owned Thai unit Advanced Info Service (AIS) for two years. He was appointed to his present role in January 2013.

In March 2012, Singtel announced an or-ganisational restructuring. It switched from reporting lines by geography to reporting by business. It appointed a CEO to oversee the entire consumer business, another for the en-

terprise-related ICT business and a third for a new Digital L!fe business group focused on the digital ecosystem. At the time, it was unclear how Singtel would be able to run a consumer business spread over several countries — es-pecially since it owned no majority stakes in its emerging-market investments.

More than three years on, the company’s efforts are becoming visible. “The level of en-gagement and collaboration among the asso-ciates has risen in the last two to three years,” Chong says. “We have set up for about two years now a [Centres of Excellence framework]. We tried to put more structure in the sharing of best practices and knowledge.” Some initi-atives within this framework are the app chal-lenge and a Product Innovation Fair, which was introduced in 2014.

“There’s a lot of sharing of what products each opco has launched in its home market and are successful. It’s a bit of a trade fair — people pick it up, learn and then adopt it in their home markets. This has contribut-ed to our opcos being the most digitally sav-vy and advanced in their home markets,” he adds. For example, a mobile plan introduced by Globe Telecom in the Philippines allows customers to flexibly allocate their credits to voice, text and data. “Now, practically every-one in the group does it. In Singapore, it’s called Easy Mobile. In Thailand, they have iSWOP,” Chong explains.

The Singtel units also share innovations that have helped their businesses. AIS, which has been spectrum-starved for some years, adapt-ed an existing antenna solution in the mar-ket to double its capacity. “Now, the whole group is using it. India loves it because spec-trum there is very fragmented,” Chong says. The Thai telco also introduced a WiFi connec-tion manager that automatically searches and latches on to available WiFi networks. “Your experience of the connection process is easy. You don’t have the hassle of searching for a network and logging on. They had interest to offload mobile traffic onto WiFi networks, so they came up with this connection manager.”

Sharing ideas this way makes the Singtel group more competitive, Chong says. “It re-duces your search for ideas. The time that we need to launch products in the market is re-

Singtel’s regional reachSingapore’s largest telco is harnessing its geographical spread to build an advantage for itself and its units.

Mark Chong, CEO International, explains how these overseas investments are paying off.

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Chong: The level of collaboration among the associates has risen in the last two to three years

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some advocacy for being aggressive before they come in, to make it more difficult,” he says. “We talk about fortifying our current network builds, because it takes years to build a good mobile network. It kind of validates some of the ideas we have, because you hear two or three CEOs say the same thing and that pretty much seems the right way to move.”

Better performanceChong readily concedes that the benefits of greater integration among Singtel’s units are difficult to quantify financially. Nevertheless, investors are probably happier now than they were five years ago. In 2010, Singtel went through a period in which most of its regional associates were not living up to market expec-tations. Having long been important drivers of Singtel’s bottom line and significant contrib-utors to the stock’s valuation, units such as Bharti Airtel, AIS, Globe and Telekomunikasi Selular (Telkomsel) in Indonesia were weigh-ing the group down, thanks to competition and increased investments.

Today, they are on a roll. For 1HFY2016 ended Sept 30, Singtel’s share of its associ-ates’ pre-tax earnings rose 2.8%. The positive impact was diluted somewhat by the appre-ciation of the Singapore dollar against the ru-piah. In constant currency terms, its share of pre-tax earnings would have increased 3.6%. The best performer has been Telkomsel, with growth of 23.7% in constant currency terms. AIS reported growth of 6.8% and Globe was down 0.4%, owing to the consolidation of re-sults from an acquisition. Singtel’s share of Airtel’s pre-tax earnings fell 20.4% mostly because of poor performance in Africa. But the India and South Asia business has shown steady growth. For 2QFY2016, pre-tax earnings for this portion of the business increased 10% in local currency terms.

The steady performance of Singtel’s over-seas associates has made the telco a favour-ite in the local market. For the year to Dec 15,Singtel is the sixth-best-performing compo-nent of the Straits Times Index. Its shares are down 3.6% against a 16.3% decline in the STI. Including dividends, Singtel has returned -1.1%. Shares in StarHub, on the other hand, are down 13.3% this year, and M1 has seen its stock decline 24.7%. “Singtel’s appeal is its diversity and cash flows,” says Nomura in a report dated Nov 12. “In 1HFY2016, it gen-erated $1.45 billion in free cash, and 65% of this was from associate dividends.”

There are risks ahead for Singtel’s units. San-ford C Bernstein, a unit of AllianceBernstein (Singapore), writes in a Dec 2 report that the entry of Telstra and San Miguel into the Phil-ippines is likely to reduce Globe’s valuation by as much as 40%. AIS will probably be forced to cut its dividend payout ratio, owing to “ex-tremely expensive” spectrum auctions. Bern-stein analyst Chris Lane says earnings can be expected to fall 36% over the next three years.

Also, the impending entry of Reliance Jio in In-dia has already put pressure on Airtel shares while currency headwinds in Africa will contin-ue to weigh on its reported profitability.

At the same time, Lane points out that Sing-tel’s Australian subsidiary Optus is gaining mo-mentum and Telkomsel continues to outperform. “When we add up the components and update the exchange rates, we conclude the current share price of Singtel is fair compared with its intrinsic value,” he says. Lane has a “market perform” rating on Singtel and a price target of $3.90. “Singtel has a stable core business, exist-ing portfolio of dominant emerging Asia opera-tors and limited currency headwinds.”

More to doRiriek Adriansyah, president director of Telkom-sel, says the company has been more fortunate than its peers in the Indonesian market. “In the industry, legacy revenue [from voice and text] has been declining. We are quite lucky because our revenue is still growing. But we believe that, at some point, it will decline,” he says.

Telkomsel is therefore aiming to rely more on data and digital services to generate future revenue. “[Challenges such as our regional mo-bile app challenge] open up the opportunity to work with app developers,” he says. Telkom-sel has what he calls a “DNA” strategy, based on devices, the network and apps. It is work-ing with manufacturers to bring lower-priced smartphone devices into the Indonesian market to boost data usage and it is rolling out 4G. Being able to push out relevant apps to its customers should help boost data consumption even fur-ther, Ririek explains. Last year, Telkomsel also began hosting its own domestic app challenge called NextDev. Last year’s challenge was fo-cused on gaming and entertainment apps where-as this year’s theme was smart cities.

The potential for data growth is a major opportunity for emerging-market telcos with-in Singtel’s stable. Ririek says that, today, only 35% to 40% of Telkomsel’s customers are us-ing smartphones. In the Philippines, the num-ber is similar. Singtel CEO Chua Sock Koong says that, excluding Singapore and Australia, the smartphone penetration rate across the group is roughly 30%. To tap that opportuni-ty, the various companies are spending huge sums on spectrum and network infrastruc-ture. Chua says the group chalked up nearly $9 billion a year on capital expenditure over the last two years.

Greater benefits may also come from ac-cess to some of the digital services that Sing-tel has bankrolled. Andrew Kitson, senior tel-ecoms analyst at BMI Research, points to the potential that Singtel’s video-on-demand ser-vice HOOQ has to attract new customers to the group. It currently streams popular movies and TV shows to viewers in the Philippines, Thailand and India. “We believe HOOQ will be the service that offers the greatest insights into Singtel’s diversification strategy,” he says.

“By offering HOOQ to mobile subscribers in these overseas markets, Singtel will be able to accelerate the pace of value-added service adoption. There is a well-established address-able market for ‘TV everywhere’ services that Singtel would do well to nurture.”

HOOQ is jointly owned by Singtel, Sony Pictures Television and Warner Bros Entertain-ment. The unit of Singtel that owns HOOQ is the Digital L!fe business group, which is also responsible for investments in industries such as mobile advertising and data analytics. Be-yond HOOQ, Kitson thinks Singtel’s associ-ates will eventually be able to tap these other Digital Life initiatives to grow. “As those mo-bile operators also deploy advanced fibre-optic networks, there is greater potential for Sing-tel and its affiliates to offer even more com-plex services, either on a standalone basis or in bundles,” Kitson says. “In turn, this opens up more opportunities for Digital L!fe products and services, as the smart homes and Internet of Things sectors develops.”

Digital services such as HOOQ undoubted-ly also gain traction more quickly from having the support of opcos in various countries. Ar-guably, Singtel would not have won the coop-eration of companies such as Sony and Warn-er if it did not have a ready market of half a billion mobile customers. Likewise, Singtel is now leaning on its large network to launch partnerships with popular digital services. It has announced agreements with online shop-ping company Lazada, online gaming compa-ny Asiasoft and taxi booking app GrabTaxi to offer customers of all three platforms the abil-ity to make payments using the mobile wal-lets of Singtel’s affiliates. Chong explains that Singtel has developed an Open Platform that allows partners such as GrabTaxi to easily inte-grate their apps with the mobile payment ser-vices of all the companies in the Singtel group.

While it seems unlikely that consumers in Singapore will opt to use Singtel’s Dash mobile payment app to shop online at Lazada, emerg-ing-market consumers without credit cards are likely to be quicker to adopt such solutions. While Singtel sought GrabTaxi out for this part-nership, Chong says the latter was quick to see its benefits. “By talking to us, in one fell swoop they talked to the whole group. They conclud-ed the deal quite quickly — from discussion to now, it was a matter of two to three months,” Chong says. The deal with GrabTaxi was an-nounced on Dec 9. GrabTaxi is also available in Thailand, the Philippines and Indonesia.

Chong says Singtel hopes to announce more of such partnerships in the future. “We are try-ing to follow our customers where they go,” he says. GrabTaxi and Lazada are popular in this part of the world. By partnering established players and building up new ones such as So-cialgiver, Singtel hopes to secure a reputation as the region’s most innovative telco group. In the process, it may also become a more ex-citing stock for investors.

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duced. In the old days, you could take a long time to slowly produce a product. Every nine or 12 months, you could come out with one product. Today, I think you cannot compete that way. You need to tap the ideas of other peo-ple, learn quickly and execute fast. Your mar-gin of error has been reduced. And to reduce your error rate, you learn from other people.”

Learning from peersCertainly, the CEOs of Singtel’s units appear to appreciate this closer collaboration. Ernest Cu, CEO of Globe, says events such as the app challenge have helped with branding. “We at-tract many more people who want to partner us. Globe is all about partnership — to en-hance how the digital lifestyle can be lived in the Philippines. Many more people are relying on smartphones for numerous things, and so the more things we can put on smartphones to help people in general the better,” he says. Singtel owns 47.2% of Globe.

Cu likes being part of a larger group be-cause he can lean on other CEOs for tips and advice. He particularly appreciates the CEO Forum, an annual groupwide event that now takes place in the same week as the app chal-lenge. “The CEOs get together for 1½ days and we share experiences and opinions about cer-tain things that are pressing in our business — things like the issue of being disrupted by over-the-top [OTT] players. We learn from each other how to manage that sort of disruption. We talk about the potential entry of new play-ers in various markets,” he says.

In Singapore, two companies — MyRepublic and OMGTEL — are expected to bid for spec-trum next year in an attempt to become the fourth mobile network operator. In India, Re-liance Jio Infocomm — backed by Reliance In-dustries — is expected to launch mobile servic-es next year. In Thailand, broadband operator Jasmine International participated in a recent auction for mobile spectrum but lost. In the Philippines, Telstra and San Miguel are said to be in talks to bankroll a new telco.

“There’s no better way of learning than to learn from your peers,” Cu says. “A lot of these things are uncharted waters. We’ve not had a new player in the Philippines in the last 12 years. And when you have a new player in the era of data, it isn’t the same as in the era of call and text. Call and text tend to be walled gardens, whereas the data world is open.”

One of the things that has been discussed is pricing in preparation for competition. “There’s

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Adriansyah: We are quite lucky because our [legacy] revenue is still growing. But we believe at some point along the way it will decline.

Cu: There’s no better way of learning than to learn from your peers

Dec 21, 2012 Dec 15, 2015

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integrates what we do in the off line world with what we do online with social media.”

Online shopping is usually carried out in a matter of minutes. “There is only so much you can do online and your attention span is very short. But, you can spend one to two hours in a mall,” Chan points out. No surprise then that online stores are feeling an increasing need to have a physical presence. “Even online brands want to establish a physical presence. To generate traffic online isn’t that simple,” Chan says, adding that physical malls boost brand awareness.

To cite a few examples, Amazon, the doyen of online retailers, last month opened a book-store in Seattle’s University Village. Zalora, a popular local online retailer, regularly opens pop-up stores. This year, it has held one in Bugis+ and is currently in One Raffles Place. Naiise, an online store offering house-hold goods, has a physical store in Westgate. Ingood company@ION is yet another online store with a physical presence after it tied up with local café operator Plain Vanilla.

CMA is arming mall managers with digital tools to help them understand the profile of shoppers and better engage with them. “We also have a partners’ index that allows our tenants to know which shoppers are at their stores. The index allows partners to customise programmes for whomever they want to reach [out to] on CAPITASTAR,” Chan says, citing Watsons and Challenger as two retailers that have made use of CMA’s digital dashboard.

In 2013, CMA set up CMA Labs to experiment with new ideas. One of the pilot schemes it came up with was Food-to-Go. Office workers in and around Raffles City can order their lunch online and pick it up without having to queue at any food outlet at Raffles City. The idea is to provide an online channel to help F&B tenants generate additional gross turnover rent.

“The concept can be replicated in any suit able mall, but there must be a demand for such a service,” Chan says. He envisages a point where Food-to-Go will include dinner, which commuters can order on their way home. “When you’re taking the MRT, you can use your phone to order and pay, then pick up [your food] when you get to your destination.” All the F&B outlets have to do is to latch on to the platform developed by CMA.

As Chan sees it, this is not a competition between online and offline. “At the end of the day, it’s consumption. A certain part of con-sumption may be more effectively done online, and we recognise that, [while] a certain part is still best done in the physical world. But they are not discrete products. We must be able to combine the different touch points,” he says.

Chan’s efforts seem to be paying off. For the nine months to Sept 30, CMT was the only retail REIT to announce that tenant sales per square foot rose faster than rental reversions. Furthermore, CAPITASTAR membership more than doubled from around one million in March to 2.2 million as at end-September.

Innovation revolutionCAPITASTAR is part of a larger digital revolution that is gripping the CapitaLand group. In 2013, CapitaLand set up its Innovation Hub at IMM, where the group tests various con-cepts. “You just can’t design something and hope it works. You need to try it out. Is the basin in the bathroom too high or too low? Is it the right size? How do the lamps look?” Chan says. “The Innovation Hub allows us to try out designs, from drawings to prototype, to observing usage and understanding in practice how they work.”

Another area is how the group cross-sells

Dec 14, 2012 Dec 14, 2015

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Valuation score* 2.70Fundamental score** 2.20TTM P/E (x) 14.15P/NAV (x) 0.87TTM Distribution yield (%) 6.84Market capitalisation (mil) 1,244Shares outstanding (ex-treasury) mil 843.26Beta 0.7912-month price range 1.32 to 1.77



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| STORIES BY GOOLA WARDEN |

Chan Kong Leong of CapitaLand Malls Asia (CMA) recently demonstrated a futuristic way of buying a pack of chips. Chan, who is head of regional investment, fund and asset manage-

ment at the trust, whipped out his smartphone to access a digital voucher, scan it into a Take It Myself or TIM vending machine and out popped a packet.

Property giant CapitaLand aims for efficiency in everything, from raising capital to construction and interior design. Now, it is turning to tech-nology to help its tenants gene rate more sales and overcome Singapore’s labour and space constraints. If this strategy bears fruit, this could bode well for its real estate investment trusts, CapitaLand Mall Trust (CMT) and CapitaLand Retail China Trust (CRCT).

Through CMT, the property group owns 17 malls and another two outside of the REIT. In China, CMA owns 54 operating malls through CRCT, funds, joint ventures and the Raffles City integrated development. In Malaysia, CMA owns seven malls, five of which are in Bursa-listed CapitaLand Mall Malaysia Trust. CMA owns and operates another five malls in Japan and four in India, with five more under develop-ment in the sub-continent. These malls have annual shopper traffic of around 960 million.

“Besides developing real estate and integrat-ing with the capital market, it’s very impor-tant for us to own the customer. That means the insights and understanding of what is hap-pening to the customers, the trends that are shifting, and that will put us in a strong posi-tion to design products for the customer of the future. This is what we’re focusing on. Tech-nology allows us to build the foundation and platform that allow us to scale,” said Capita-Land CEO Lim Ming Yan last month at a brief-ing in Suzhou.

DigitalisationIn its bid to harness technology, CMA began experimenting with digitalising its portfo-lio of malls in Asia. In November 2011, it launched a rewards programme in Singapore called CAPITASTAR, whereby members are awarded $5 for every 5,000 STAR$ they notch

up. The initiative was introduced in China a year later. Currently, out of a total of 84 oper-ational malls across Asia, CMA has a CAPITA-STAR programme in 18 in Singapore, 47 in China, five in Malaysia, and one mall each in Japan and India.

“We’re beginning to roll [the programme] out in Japan and Malaysia to serve the market and our malls,” Chan Kong Leong, head of regional investment, fund and asset management at CMA, tells The Edge Singapore. “The key markets are Singapore and China, where we are still growing very fast. It’s now a matter of further developing CAPITASTAR to serve the comprehensive needs of shoppers.”

In Singapore, the CAPITASTAR app can be downloaded onto a smartphone. Shop-pers need to scan their receipts using the app and CAPITASTAR then awards STAR$ based on that. With the aid of the scanning techno-logy, CAPITASTAR has evolved into more than a rewards programme that disburses shopping vouchers. Through the scanned receipts, it has built up a database of shoppers’ preferences

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The TIM vending machine, which allows a customer to scan a digital voucher to purchase a product, aids the process of ‘targeted marketing’

The developer is using technology to enhance customer experience and boost tenant sales

and tastes. In addition, the programme pro-vides mall managers and retailers with details on customers’ shopping habits, such as where they shop, what they buy and how often they scan their receipts.

“CAPITASTAR is a digital platform that allows us to effectively engage our shoppers — the rewards are part of the programme, but the fundamental part of it is understanding your shoppers, knowing what they want and the ability to give customised offers to shop-pers,” Chan says.

“If you give samples on the street, you have no idea who the consumers are,” he adds. “But if you only want to target an age group, say 25- to 36-year-olds, I’m able to do that. Through the CAPITASTAR app, I can send the voucher to the 25-year-old, who will then go to a con-venient TIM machine in the mall near his or her house. You have the instant feedback that says, yes, they’ve collected the sample,” he elaborates.

If the shopper uses the sample and goes back to the shop to buy something, or uses the discount voucher attached to the sample at the shop, the retailer will know it is effective. So will CAPITASTAR, when the shopper scans the receipt. “I know I targeted you, you take the sample, you take the voucher to the shop and that allows the retailer to measure the effectiveness of its campaign,” Chan explains.

While CAPITASTAR is not designed as an e-commerce marketplace, shoppers can use their STAR$ to participate in e-activities such as online bidding and online redemption of gifts. “It centres around the lifestyle needs of a shopper, less so as an e-commerce market-place to sell things. That’s not the whole point of this platform,” he adds.

CAPITASTAR can be used to send e- vouchers to targeted shoppers, so they can go to the TIM machine at the mall closest to where they work or live. “It addresses what the retailers and shoppers want. Retailers want to reach a meaningful market and shoppers want custom-ised offers that suit their lifestyle,” Chan notes. “Part of the offering is e-commerce, such as e-placings, because that is what the customer requires at that point in time.”

He reckons that whether online or offline, the retailer’s aim is to engage customers. “When [online shopping] started, everyone thought it would take away offline business, but this is not the case, though there is a trend towards online,” he notes. “Now, our CAPITASTAR [programme]

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products among office and mall tenants, shoppers at its malls, ser-viced residence customers and buyers of residential units. Capita Land CEO Lim reckons that the overlap between these groups can be as high as 90%.

“We had been working on cross-selling even before [digitalis-ing],” Chan says. Customers of The Ascott Ltd’s serviced residences can get STAR$, which they can then use at the shopping malls. “You will see more of this cross- selling between re-tailers and the mall ecosystem, and between the CapitaLand group busi-nesses and residential apartments, serviced residences and shopping malls,” he adds.

CapitaLand also has a referral programme whereby customers are rewarded STAR$ if they refer friends who purchase properties or shop at a shopping mall in China. “We will know how interested you are in that particular product. You’ve gone on WeChat or you’ve looked at a property,” Chan says. “We’ve seen tenants working together, obviously facilitated by the mall manager. If you go to Starbucks, you can get a voucher or discount at other shops. The digital CAPITASTAR platform allows us to do so in a more effi-cient manner by aggregating all this collaboration.”

The group’s serviced residence arm, The Ascott Ltd, has experiment-ed with cleaning robots in certain properties. At The Mercer Hong Kong, an Ascott property, guests receive complimentary smartphones with un limited 3G data connectivity and free IDD calls to selected countries. Earlier this year, Ascott signed a JV with Tujia.com, China’s equivalent of Airbnb. Ascott’s properties in Chi-na are available on Tujia’s platform, and it will be adding its properties outside of China next year.

The Ascott Ltd and Tujia are also exploring a separate platform to deve-lop a mass-market serviced residence product, which will add to Ascott’s current portfolio of 14,300 units in China and its target of 20,000 units there by 2020. “It’s a very big market

we’re looking at. Last year, we had 100 million outbound tourists from China, not counting internal domes-tic tourism. If you put the numbers together, it’s a few hundred million travelling inside and outside of China,” says CEO Lim, adding that Ascott’s target of 80,000 units by 2020 will not be enough to meet that demand.

“[We want] to scale in such a way that we can continue to benefit from this megatrend,” he says. That includes a shopping ecosystem in terms of targeted marketing, cross- selling items such as furniture to people buying homes, and directing ski accessories and other travel items to travellers.

To be sure, CapitaLand and CMA are not the only developers keen on tapping techno logy. Suntec REIT and Frasers Centrepoint have introduced reward apps too, and this month, AsiaMalls is introducing a similar app, AMPerkz. “I’m sure everyone will have ini tiatives. We won’t be the only ones,” Chan acknowledges. “We are very focused. We want to use technology to enhance the physical space and make that space more pro-ductive for retailers and shoppers.”

Thumbs up One way to ride this trend is through CMT. On Dec 7, Citi upgraded CMT to

a “buy”. “Retailers have increasing ly realised the labour crunch is struc-tural, and hence made efforts to raise productivity and/or innovate to drive sales and profitability,” says Adrian Chua, an analyst at Citi.

“We believe well-managed malls in good locations have an advantage. We also expect occupancy to stabi-lise or see a slight improvement next year as certain assets such as IMM, Clarke Quay and Bukit Panjang Pla-za complete their Asset Enhance-ment Initiatives.”

Another feather in CMT’s cap is the extension of its debt maturity to 5.8 years, the highest among the REITs. Cost of debt of 3.3% is just 20 basis points lower than during the glob-al financial crisis. This should give comfort to investors that ne gative sur prises will be mini mised, Chua reckons. Citi is forecasting distribu-tion per unit of 11.7 cents for FY2016, giving a forward yield of 6.1%.

OCBC recently upgraded CMT as well. In a report dated Dec 11, it reite rated its “buy” recommendation with a price target of $2.09. “We like CMT’s constant efforts to enhance the value of its portfolio and seek op-portunities to unlock its asset value, with the latest being its proposed redevelopment of Funan DigitaLife Mall,” said the report.

Social media plays an important part in the way the Mainland Chinese communicate because of the country’s social and political structure. For instance, WeChat — the equivalent of WhatsApp — does much more than the latter. WeChat has more than 500 million active users in China, and one in five WeChat users utilises WeChat’s payments feature. They upload their banking information or credit card number and can buy products or services from any official account in WeChat’s app, or they can transfer funds to family and friends. Moreover, WeChat offers users a deposit account with interest.

WeChat also has millions of third-party apps. Here, a company can create an app and launch it on WeChat. Chan Kong Leong, head of regional investment, fund and asset management at CapitaLand Malls Asia (CMA), realised early on that Singapore and China are very different e-commerce and digital worlds. “Social media plays a very big

part in China. In Singapore, a lot of shoppers use apps, the market here is very app-driven,” he says.

In China, many shoppers use WeChat. “We are fully integrated into the WeChat platform,” Chan adds. A CAPITASTAR member can search, scan the QR (quick response) code, scan receipts, access mall promotions and e-vouchers, and more, through WeChat. “We don’t have to develop a separate app for customers in China. Our China customers can access CAPITASTAR through the WeChat platform.”

According to Chan, the China market is very developed in terms of social media and digital payment. The two dominant payment programmes are WeChat and Alipay. “To fully integrate, we just plug in. We don’t have to redevelop from scratch. In China, if you go into a shop, instead of taking out cash or your credit card, you can take out your mobile phone to make a payment.”

This means CAPITASTAR can plug

into different features, including mobile payments, without having to develop them separately. “To be able to offer mobile payment, I don’t have to develop a whole payment gateway that I have to set up myself. If I have an open infrastructure, I plug them in and they’re happy to work with different partners,” Chan says.

China’s highly developed social networks also provide an ideal platform for CapitaLand to plug into. This is good news for CMA’s China-focused REIT, CapitaLand Retail China Trust (CRCT). The REIT, which owns 10 malls valued at $2.81 billion, saw its tenants’ sales rise 12.7% psm y-o-y in 3Q2015.

CRCT’s rental reversions grew 10.9% for the same period. Its yield, based on an annualised distribution per unit of 10.56 cents, is 7.2% and units are trading at a 12.8% discount to its book value of $1.68. OCBC Investment Research has estimated DPU of 10.9 cents for FY2016, giving it a forward yield of 7.44%.

China: A different beast

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Chan: Even online brands want to establish a physical presence. To generate traffic online isn’t that simple.

OPINION

Will Asean’s dalliance with debt spark another financial crisis?

Cocktails are the rage in Singapore’s bars, long after the domination of whiskey. Meanwhile, a cocktail of ambition,

debt and inertia threatens to create a hangover in Asean.

In 1997, when indebted corpo-rates faced weakening currencies, the region suffered a debilitating crisis. In 1999, economists Barry Eichengreen and Ricardo Hausmann applied the term “original sin” to the difficulty emerging markets faced when borrowing overseas in their own currencies. They also suggest-ed that it was hard for borrowers in these countries to even obtain long-term domestic debt.

There are ominous signs of a repeat of that. With US interest rates at records lows, Asean has been on a credit binge. Asean corporates now have six times more debt than they did in 1997. The Indonesian and Ma-laysian governments and companies have issued more US-dollar debt in 2015 than they did in 2014. This has occurred even as their bond yields were rising and their currencies were weakening. The unravelling could be driven by three Cs — consumers, commodities and currencies.

The consumer sector has been at the heart of the debt upsurge. Consumer spending, in turn, has spurred corporate investment.

The Thai 7-Eleven operator CP All, controlled by Dhanin Chearava-nont, is emblematic of the debt-fuelled extravagance. CP All’s interest coverage ratio has collapsed from six times in 2013 to 1.3 times in 2015. In 2013, CP All agreed to pay US$6 bil-lion for Siam Makro, a listed hard-ware store. The price tag valued Siam Makro at 45 times estimated earnings for 2013. This exorbitant price was twice the average valuation garnered by retailers in 20 other ac-quisitions in Asia’s emerging markets over the past five years.

Strangely, CP All once had a large stake in Siam Makro but it sold that in 2005. The price it paid to acquire Siam Makro in 2013 was 13 times what it had sold the asset for only eight years before. CP All’s net gear-ing is now 5.7 times.

The Siam Makro acquisition was made with fanciful expectations. It was hoped that Thai consumer spending would grow indefinitely. In fact, consumer spending has fallen sharply in the face of political up-heaval and weak demand for Thai exports. CP All’s same-store growth has averaged just 3% in the last four quarters. It is unlikely to im-prove as the com pany has relent-lessly added up to 600 new stores.

The commodity sector has also been a prominent issuer of debt. This region is a major producer of palm oil, copper and rubber. The

decade-long commodity boom enticed ambitious commodity companies to borrow heavily. Wilmar Internation-al, the world’s biggest palm oil pro-cessor, has been particularly aggres-sive in its capital expenditure. In the last five years, its capex total-led some $6.6 billion. The compa-ny now has US$15 billion ($21.17 billion) of net debt, three times the level in 2009, and partly denominated in US dollars. Wilmar’s market capitalisation is US$13 billion.

The trouble is that a decent return from this intense investment seems to be elusive. There is a glut of palm oil-processing capacity. Palm oil- processing capacity exceeds palm oil supply by 50% in Indonesia. As with CP All, Wilmar’s foot is firmly on the expansion pedal despite the adversity. Wilmar seems eager to continue with a capital expendi-ture programme of over US$1 bil-lion annually.

Currency exposure is the third factor that may be the re-gion’s undoing. The Indonesian rupiah and Malaysian ringgit are at their lowest levels versus the US dollar since 1998. Currency depreci-ation may spark a bitter end for the debt-fuelled expansion. According to Standard & Poor’s, foreign-cur-rency debts have risen three times more rapidly than local debt for Malaysian, Philippine and Indone-sian companies since 2010.

A case in point is Thai Bev-erage, which took on $3.6 billion of debt to acquire a nearly 30% stake in Singa porean conglomerate Fraser and Neave. Some of the debt is in US dollars, while the revenues are in the regional currencies.

The current situation has chill-ing parallels with 1997. However, a harrowing crisis is unlikely. The re-gion’s currency mismatch is not as dire as 18 years ago. Foreign curren-cy borrowing is only 34% of Malay-sia’s GDP. It was 60% at end-1998. Also, non-performing loans are about 10%, compared with 50% in 1997.

Nevertheless, a nasty shock from the vile mixture of the three Cs may be looming.

Nirgunan Tiruchelvam is director, research at Religare Capital Markets

| BY NIRGUNAN TIRUCHELVAM |

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Impairments hurting Genting Singaporeas casino shows poor credit assessments| BY JEFFREY TAN |

Having trended down for most of this year, shares in Genting Singapore were lifted in early November to a three-month high of 86 cents after rival casino operator Marina Bay Sands

reported strong results. On Oct 21, MBS an-nounced a 10.8% growth in quarterly earn-ings before interest, taxes, depreciation and amor tisation (Ebitda) to $542.9 million. Its VIP volume grew 25% y-o-y while mass market gross gaming revenue was flat in US dollar terms despite the weak Malaysian ringgit and Indonesian rupiah. Malaysia and Indonesia are core contributors to mass-market revenue.

Investors, believing that the slump in the local gaming market had bottomed, promptly began buying into Genting Singapore on ex-pectation of earnings improvements there too. They were disappointed. On Nov 12, the op-erator of Resorts World Sentosa (RWS) report-ed a 47% decline in earnings for 3QFY2015 to $66.9 million from $127.1 million a year ago. Total revenue slipped 1% to $636.1 mil-lion from $644.8 million, largely owing to a 5% decline in gaming revenue. The counter fell to 78 cents the next day, down 4.3% from 81.5 cents, following the results announce-ment. It closed on Dec 14 at 76.5 cents, down 29.2% on a year-to-date basis. That compares with a 16.5% decline in the benchmark Straits Times Index.

Genting Singapore says it saw fewer VIP gam-blers patronising its tables in the quarter. Cer-tainly, fewer gamblers are visiting from China following President Xi Jinping’s anti- graft cam-paign. And the weak ringgit and rupiah have discouraged gamblers from the two neighbour-ing countries. But analysts point to another reason for the divergence in performance: the company’s poor credit assess ment of its high rollers. And, they suggest that Genting Singa-pore is at a disadvantage to MBS because it is part of a smaller group that lacks a presence in the Chinese gambling haven of Macau.

Over the last few years, Genting Singapore has racked up receivables and notes owed to it at an accelerated pace. In FY2010, that amount stood at $476.1 million. Last year, according to Bloomberg data, the amount more than dou-bled to $1.04 billion. Much of it came from VIP gamblers, to whom Genting Singapore has directly extended credit. Singa pore does not allow casi-no operators here to employ junket operators, which in Macau would typical ly be responsi-ble for extending credit to these high rollers.

Now, Genting Singapore is having some trou-ble collecting its debts. During the quarter, it recorded impairment losses on trade receiva-bles of $92.5 million — more than double the $39.7 million recorded a year ago. “Manage-ment seems to be aggressively impairing re-ceivables… bringing down receiva bles to about $770 million, a level last seen three years ago,” Nomura analysts Tushar Mohata and Alpa Aggarwal wrote in a note dated Nov 13.

At a disadvantageGenting Singapore says the “continued uncer-tainty of China’s economic strength and en-vironment” led it to rightsize its credit pro-gramme in line with its risk management criteria. It also laments that the lack of a “col-laborative partnership in another gaming ju-risdiction with a high volume VIP premium business” has disadvantaged the group’s mar-keting efforts.

“This means it is harder for [Genting Singapore] to judge the creditworthiness of

these players, compared with MBS, which has a presence [in Macau] under the Sands group,” DBS Vickers Securities’ analyst Mervin Song tells The Edge Singapore.

Hong Kong-listed Sands China operates and owns a casino and an integrated resort in Macau. It is a subsidiary of US-listed Las Vegas Sands Corp, which owns and oper-ates MBS. Genting Singapore is a subsidiary of Malaysia-listed Genting, which also owns stakes in Genting Malaysia and locally-listed Genting Hong Kong. Genting Malaysia runs

a casino and a theme park in Malaysia, while Genting Hong Kong operates a cruise business and has partial ownership of an inte grated resort in the Philippines.

Vincent Khoo, UOB Kay Hian’s head of re-search, suggests that MBS has been able to grow its VIP segment partly because it is part of a group with a presence in Macau. A “key deviating factor” has been RWS’ shrinking VIP volume versus MBS’s growth, he says.

Genting Singapore’s rolling chip volume tumbled 50% y-o-y in 3Q. Rolling chips are chips used by VIP customers and the rolling chip volume is representative of the amount in bets that these players make. By comparison, MBS was up 40% y-o-y. Genting Singapore’s VIP market share also declined from 48% in 2Q2015 to about 40%, a record low, according to CIMB Research. Credit Suisse, in a Nov 13report, says stricter credit extension policies on Genting Singapore’s part may have pushed some VIP gamblers from RWS to MBS.

“If Genting Singapore is not confident of the creditworthiness of its VIP gamblers, which means tightening credit extension, it cannot generate sufficient VIP gross gambling reve-nue. But if it is confident, and it turns out to be wrong, Genting Singapore will face prob-lems in collection six to nine months down the road,” says a Maybank Kim Eng analyst.

Is the worst over?Most analysts warn that the impairment losses on receivables will continue to be a drag on earnings for Genting Singapore in the near term. “Impairments will remain high for one to two more quarters,” says Nomura’s Mohata via email.

CIMB Research, in a report dated Nov 12, reckons that bad debt charges will remain “high” until 2H2016 as Genting Singapore continues to provide for credit extended 12 to 18 months ago.

Deutsche Bank, in a report dated Nov 12, cut its earnings forecasts for 2015, 2016 and 2017 by 41%, 29% and 12%, respectively. “We reiterate our ‘sell’ rating as we do not see any near-term improvement potential,” say ana-lysts Jeffrey Ng and Loo Pei-Yu.

UOB Kay Hian, however, says impairments are lagging indicators and that Ebitda should theoretically improve significantly when im-pairment charges eventually become more aligned to current credit extension practices. It estimates a “sustainable” annual Ebitda run rate of $1.1 billion from 2H2016 onwards, when impairment charges normalise.

“I believe that the worst is over for Genting Singapore. The market underappreciates the company’s ability to generate cash,” says Khoo of UOB Kay Hian. He has retained his “buy” call on the stock. Genting Singapore’s cash and cash equivalents stood at $4.57 billion as at end-September, compared with $3.19 billion a year ago.

Credit Suisse, meanwhile, believes Gent-ing Singapore can wrestle market share from MBS once it begins ramping up marketing and promotional activities for its premium mass business. The research house says the addi-tional capacity at Genting Hotel Jurong will be an added advantage. The 550-room hotel opened in July.

Genting Singapore did manage to report some positive numbers during the recent quar-ter. It returned to a theoretical win rate of 2.8% from 2.1% in 2Q. The group’s mass-market volume has been relatively stable, according to Credit Suisse. And its derivative financial instruments exposure has been significant-ly reduced. As a result, fair value loss on the derivatives was narrowed to $61.4 mil-lion in 3Q from $95 million in the preced-ing quarter. “We further understand that the exposure would be diminished by year-end,” adds UOB’s Khoo.

Fewer VIP gamblers, especially from China, and the weaker ringgit and rupiah have affected the earnings of Genting Singapore, the operator of RWS

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THEEDGE SINGAPORE | THE WEEK OF DECEMBER 21, 2015

| BY JOAN NG |

After US Federal Reserve chair Janet Yellen declared the beginning of a progressive rate-hiking cycle in the wee hours of Dec 17, local time, in-vestors appeared to breathe a sigh

of relief. Major market indices were lifted fol-lowing Yellen’s speech, in which she stressed her confidence in the health of the US econo-my. In the US, the Dow Jones Industrial Aver-age ended Dec 16 at 17,749.09 points, up 2.8% from 17,265.21 points on Dec 11.

Similar patterns were seen across Asia. The Straits Times Index closed at 2,861.18 points on Dec 17, up 0.9% from 2,834.63 points on Dec 11. The Kuala Lumpur Composite Index closed at 1,656.52 points, up 1%. The Nikkei 225 closed at 19,353.56 points, up 0.6%. And the Hang Seng Index closed at 21,872.06 points, up 1.9%.

In a report following the announcement of the rate hike, Credit Suisse analyst Gerald Wong says the development will have an im-pact on the locally listed banks and the prop-erty sector. Singapore banks could see an im-provement in net interest margins. “For every 100-basis-point move in the Singapore inter-bank offered rate, DBS Group Holdings’ net interest margins would be boosted by rough-ly 15 basis points or 5% to 6% of earnings on our estimates,” Wong says. “However, asset quality concerns are likely to linger, as there appears to be a wide gap in terms of market perception and bank managements’ confi-dence in the asset quality of their loan books.”

Wong expects that spreads on returns from investment properties will narrow considera-bly next year as interest rates rise while rent-als weaken. “However, overall mortgage af-fordability remains manageable in our view, and is thus unlikely to precipitate significant distressed sales and price declines in the sec-ondary market,” he adds. “On our estimates, office real estate investment trusts are the most sensitive to rising rates.”

A 25-basis-point rise in rates would reduce Keppel REIT’s distributions per unit by 1.1% and Suntec REIT’s by 0.8%, he says. Capita-Land Mall Trust and Mapletree Industrial Trust are seen to be the least sensitive as the bulk of their debt is fixed and they have long debt expiry profiles. “Retail is our preferred REIT subsector with attractive yields of ap-proximately one standard deviation over his-torical averages.” Credit Suisse has “outper-form” calls on CMT, Mapletree Commercial Trust and Frasers Centrepoint Trust. Its top pick in the sector is CMT.

Its top picks for 2016 are property group City Developments, Singapore Telecommu-nications and DBS. Preferred stocks include Singapore Airlines, commodity supplier Wilmar International, casino and resort operator Genting Singapore, CMT, conglo-merate Sembcorp Industries, ground handler and caterer SATS and Raffles Medical Group.

Big moversSome of the STI’s outperformance over the week probably had less to do with Yellen’s op-timism and more to do with corporate action.

Shares of commodity supply chain manager Noble Group were among the most heavi-ly traded over the week. On Dec 15, Noble confirmed it is in discussions to sell its 49% stake in Noble Agri. The latter is its agricul-tural partnership with Cofco, China’s largest food company. According to a Bloomberg re-port, Noble is seeking US$750 million ($1.1 billion) for the stake. An asset sale would put the company on firmer ground. Ratings agen-cies Standard & Poor’s and Moody’s Investors Service warned in November that Noble’s cred-it rating could be downgraded if the agricul-tural firm does not improve its liquidity posi-tion. The stock rose 7.7% over the four days to Dec 17, closing at 42 cents.

Another STI component that saw a big move was City Developments. The company has an-nounced a $1.1 billion securitisation deal with

Keppel Land. The deal will allow City Devel-opments to realise additional value for share-holders from properties that it currently holds on its books at what most analysts describe as depressed values (see story on page 5). The stock gained 5.9% to close at $7.54.

Global Logistic Properties saw its shares increase a smaller 2.5% following its comple-tion of a strategic investment in CMST Devel-opment Co, China’s largest state-owned ware-house logistics provider. GLP says the transaction will raise its net asset value by RMB1 billion ($218 million) or five cents a share. Shares of GLP ended Dec 17 at $2.06.

Separately, the Singapore Exchange de-clared 91 trades involving 52.3 million shares of New Silkroutes Group as “error trades”. These trades had been matched at about 1.5 cents a share before the opening bell on Dec 16. Market participants seemed not to have re-alised that New Silkroutes had undertaken a 500-to-1 consolidation effective that day. The shares traded at about 52.5 cents on Dec 16. New Silkroutes had been among the most ac-tively traded stocks on Dec 14, ahead of the consolidation.

What to look out forSecura Group has lodged an offer document for a Catalist listing. The company does secu-rity printing and provides security guard ser-vices. Its customers include integrated resort Marina Bay Sands, telcos Singtel and M1 and government agencies such as the Central Prov-ident Fund Board. Secura also supplies secu-rity guarding and executive protection servic-es to Peter Lim, the so-called “remisier king”. Lim controls 53.8% of Secura. Some other notable corporate honchos on Secura’s list of shareholders are Wee Ee Chao, chairman and managing director of brokerage UOB-Kay Hian Holdings, with a 10% stake; and Kuok Khoon Hong, chairman and CEO of Wilmar, with a 2.4% stake. City Developments also holds 9.5%.

HIGHS&LOWS Relief rallyGlobal indices lifted by Fed decision

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HIGHLIGHT

US dollar, China stabilisation key to recovery, says JP Morgan’s Titherington

INVESTING IDEAS PG18

Brokers’ Digest ................. 20Insider Moves ................... 22Singapore companies’earnings estimates ............ 25Global markets round-up ... 26

Regional companies’ earnings estimates ............ 27Bonds ................................ 28Trading Ideas .................... 29Right Timing ...................... 30

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CAPITAL INVESTING IDEAS


| BY ASSIF SHAMEEN |

With the US Federal Re-serve’s rate hike de-cision out of the way, focus is turning again on an asset class that

is considered most vulnerable to a strong US dollar: emerging markets. Investors who had thought EMs had shaken off labels such as “subpar” and “volatile asset class” are astound-ed to see such tags attached to mar-kets from São Paolo to Shanghai once again. Net inflows into EMs have fallen to just US$66 billion ($93.3 billion) this year from US$285 bil-lion last year.

The benchmark MSCI Emerging Markets Index is down 41% from its October 2007 peak and 30.3% from its September 2014 highs and down 14.2% this year. Global investors have actually lost a lot more because, in US dollar terms, investors have lost more than 55% from the peak in the troubled asset class.

Should investors start nibbling at beaten-down EMs or should they wait for another leg down? “EMs are basically a very cyclical asset class, so when they are out of favour, as they are now, investors should look to own them,” says Richard Tith-erington, chief investment officer and head of emerging markets and Asia-Pacific equities at JP Morgan Asset Management in Hong Kong.

“What differentiates emerging markets from developed ones is that economic growth, currencies, corpo-rate earnings and equity-market re-turns go up more in good times but go down more during bad times,” he says. As such, correctly timing entry into EMs can be extremely difficult. “At these levels, we are very close to a bottom, if we haven’t hit bottom yet,” he says.

A “toxic combination” of a strong US dollar and weakening economic growth has been weighing on de-veloping markets, says Tithering-ton, who has been covering EMs for 25 years. “A strong dollar makes US assets more attractive and tightens global liquidity, and weaker growth reduces the attractiveness of emerg-ing-market assets relative to devel-oped markets,” he says. “Add high valuations to that cocktail and you get disappointing outcomes and a de-rating of EM equities.”

The way he sees it, because EMs are so cyclical, they are overvalued at the top of the cycle and tend to be way undervalued at the bottom of the cycle.

“At the peak of the cycle, inves-tors were claiming ‘this time it’s different’ or the ‘BRICs are the new economic superpowers’,” he notes. “Now, everybody is saying, ‘BRICs are finished and the China story is over’. Titherington jokes that he is only just starting to read newspaper

columns that say, “EMs aren’t real-ly an asset class”, which he says is a good indicator that there is maxi-mum pessimism and EMs are about to turn. “When something is under-valued, there is a good reason it is undervalued; but, unless you buy a stock when it is not popular, you are not going to get good returns,” he tells The Edge Singapore in a re-cent interview.

Yet, he concedes, EM cycles can be vicious, and even experienced invest-ment managers such as himself need to tread very carefully. “You can get a currency hit on top of the stock’s de-rating during a downturn,” he says. “So, you can lose 50% of your money very quickly in an emerging

market, which investors find very frightening,” he says. Volatility is a sword that cuts both ways, though. “Stocks that go down a lot can bounce back very quickly. So, typically, you might get a sharp spike in the stock, followed by a rebound in currency, rising earnings and rising valuations when the cycle turns,” he says. He cites the volatility in Russian stocks over the past two years. “Last year, you could have bought Sberbank of Russia, the No 1 bank in Russia at 2.5 times earnings. It’s up more than 60% since and is now trading at more than four times forward earn-ings,” he says.

When to load up on EM stocksSo, what signs should investors watch out for, for a turn in EM stocks? “First, we need to see a stabilisation in the dollar,” says Titherington. “A strong dollar is negative, but a stable dol-lar is good and a weak dollar is very good. Following the first Fed inter-

est rate hike, we need to see whether the dollar stabilises. Then, we need to see whether economic growth is stabilising or, indeed, starting to pick up.” That would be the sign that it is time to load up on EMs once again. For that to happen, he argues, in-vestors need to see whether China’sgrowth is stabilising. “The old China— steel, capital goods — is in a re-cession,” he notes. “The New Chi-na — Internet, e-commerce, consum-er plays — is growing very rapidly or over 10% a year and, if you add them together, you get that 5% to 6% growth,” he notes.

By next year, the Old and New Chi-na would account for about half each of the economy. “As the New China

starts to grow bigger than the Old Chi-na, we will see stability in China’s GDP growth,” he argues. That would trig-ger a rebound in developing markets.

Titherington says China is the real driver of EMs. “Only two things mat-ter right now,” he says. “US mone-tary policy and the direction of Chi-nese growth.” The outlook for China is really the key to the outlook for EMs over the next two years. “The rest of the EMs will take their lead from China,” he says.

The benchmark MSCI Emerging Markets Index is currently trading at just over 11 times next year’s earn-ings compared with US benchmark Standard & Poor’s 500, which is trad-ing at more than 17 times next year’s earnings. Titherington says, despite the yawning gap, he prefers to meas-ure EM stocks by using book value. MSCI EM Index is trading at 1.4 times price-to-book,” he says. “At the peak, EMs were close to three times price-to-book, so valuations have more than

halved from the peak.” At their low-est point during the Asian crisis in 1998, EMs traded at 1 times price-to-book.” In comparison, S&P 500 stocks in the US currently sell at just over two times price-to-book. “Nor-mally, EMs sell at a slight premium because they represent growth,” says Titherington.

He adds that corporate earnings in EMs are a lagging indicator. In-stead of waiting for earnings to turn, investors need to watch a few key signals such as currency stability, which will be followed by stabili-ty in GDP growth. Earnings growth might be visible only several quar-ters after the US dollar weakens by which time EM stocks would have

already taken off.“If the US dollar stabilises over

the next six months and we see eco-nomic growth in China stabilising, corporate earnings in 2017 will be better than they have been over the past two years,” he says. “The first half of next year is going to be chal-lenging for EM earnings. If I am right on China, earnings in EM will sta-bilise in the second half and start to pick up in 2017.” Titherington says investors with a 12- to 18-month time horizon will soon be able to see that building blocks are slowly being put in place for an EM equities rebound.

Avoid Latin AmericaSo, where should investors look in EMs? “Anywhere but Latin Amer-ica, and anything but commodi-ties and raw materials,” he says. “Commodities will lag in emergingmarkets’ recovery, so markets that are more heavily dependent on oil, gas, mining and metals will be laggards.

Commodities and Brazil are more a 2018 or late 2017 story.

“China and markets closest to China as well as markets that bene fitfrom a recovery in developed econo-mies will be the first to recover. That means Asia in general and North Asia in particular [will be the first off the gates].”

He is neutral on India because it has had a good run and a lot of the good news is already priced in. “We think India will deliver, but it will take some time,” he says. “There is more room for disappointment in In-dia right now than in China.”

He is less sanguine about Asean.“Some Southeast Asian markets — such as Indonesia and the Philip-pines — are priced to perfection while others have limited upside. It is still too early to be looking at Malaysia.”

He likes consumer discretionary stocks in China, including autos and Internet names. “Look what hap-pened to auto sales in China over the last few months after they an-nounced more tax incentives,” says Titherington, who also likes Asian banks because they are beneficiar-ies of rising interest rates as net in-terest margins go up. “I would avoid state banks and focus on private-sec-tor banks in Asia. We like financial services in China such as insurers, brokers rather than banks and, in India, we like private-sector banks.”

Right now, JPMorgan’s flagship Emerging Markets Equity Fund is overweight the Indian financial sector, Indian IT, Chinese Internet and con-sumer discretionary names. Among its top holdings are India’s Housing Develop ment Finance Corp (HDFC) and HDFC Bank. HDFC stock is up 51% over the past two years and HDFC Bank shares are up 55% in the same period.

The fund’s portfolio also includes Tata Consultancy Services and Info-sys, which are beneficiaries of the global outsourcing boom and de-rives most of their earnings in dollars. Among its top picks is fast-growing Hong Kong-listed e-commerce play Tencent Holdings. The stock is up 37% over the past year and trades at just over 35 times next year’s fore-cast earnings.

The JPMorgan Emerging Mar-kets Fund also owns the world’s largest chip foundry Taiwan Semi-conductor Manufacturing Co, which has emerged as the major supplier to Apple. Orders from the world’s most profitable firm now account for 15% of TSMC’s revenue stream. The US asset management giant also likes Hong Kong-listed regional life insurance player AIA Group, Indian consumer play ITC and conglomerate The Bidvest Group, South Africa’s second-largest company. After anoth-er painful year, there is a glimmer of hope that EMs might start to crawl back in the second half of 2016. E

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Titherington: Avoid state banks and focus on private-sector banks in Asia


CAPITAL FROM THE EDGE MARKETS

Asia sentiment at a four-year low, with Singapore most pessimistic: surveyDec 16 — Sentiment at some of Asia’s biggest firms deteriorated again in the fourth quarter, falling to a four-year low under the weight of concerns about slowing growth in China, the region’s biggest economy, a Thomson Reuters/Insead survey showed.

The Thomson Reuters/Insead Asian Business Sentiment Index, representing the six-month outlook at 103 firms, was 58 in the December quarter from 60 in September and 72 a year pri-or. A reading over 50 indicates a positive view. In Singapore, which counts China as its top trading partner, the business sentiment index was at 21, the lowest among the 11 economies in the poll. The reading for Australia, a major supplier of resources to China, was also the lowest in three years.

China’s economy — growing at its slowest pace in six years — ranked as the chief risk to corporate forecasts for the second consecutive quarter, with volatile financial markets also of concern, showed the survey whose respondents included SoftBank Group, Kia Motors, Tata Steel and Olam International.

“A very strong revision to the expected growth rate of China (in recent months) is having a big-ger effect on all these numbers, across all coun-tries, across all sectors,” said Antonio Fatas, economics professor at Insead in Singapore. “If you think of growth in Asia, Asia will do well, Asia will grow faster than most of the regions of the world, but it will grow at a rate very dif-ferent from the previous 10 years.”

At the start of the December quarter, analysts estimated China’s 2016 growth at 6.5%, versus 6.7% estimated three months prior.

After polling closed for the Thomson Reuters/ Insead survey over the weekend, China report-ed November data that beat market estimates, including factory output, retail sales and in-vestment. The showing indicated that stimulus measures might be steadying the economy, an-alysts said, though falling property prices and high domestic debt featured among challenges.

The impact of change in China’s economy is particularly acute for the region’s smaller

and less diverse countries.Thomson Reuters and global business school

Insead conducted the poll from Nov 30 toDec 12. Of 103 respondents, 21% were nega-tive — the most in over six years — while 42% were neutral and 37% positive.

Philippine companies emerged as the most optimistic for a second consecutive quarter with a reading of 77, followed closely by those in South Korea, while firms in Taiwan were only a little less pessimistic than those in Singapore.

Indonesia recorded the survey’s biggest re-bound in sentiment from the previous quarter with a 36 -point jump to 63, with China more of a concern than a rise in US interest rates.

Some market watchers had said a US hike, widely expected this week, would prompt an outflow of funds from emerging markets, but Insead’s Fatas said these fears appeared to be receding in countries such as Indonesia and Malaysia. Sentiment in Malaysia remained pes-simistic albeit improved at 41 from 25 three months prior, with five of 11 respondents saying their view of the next six months was negative.

Shipping-related firms comprised the most downbeat sector for the third consecutive quar-ter, with a record four negative responses from seven yielding an index of 36. China topped their risk list while others cited oil prices at seven-year lows. Both food and financial firms ended the poll with a neutral reading of 50. For food, that matched the sector’s lowest-ever reading of two years earlier, while for finance firms, which included Yuanta Financial Hold-ings Co Ltd, the result improved over a lowest reading of 44 hit in September.

At the other end of the sentiment scale were building-related firms, including DLF Ltd, with a reading of 90, followed closely by pharma-ceutic al companies. — Reuters

Aviva taps ‘Call of Duty’ expert to reach new generation of customersDec 16 — In his previous job at Activision, Charles Reeves was a lead designer for the wildly popular computer game, Call of Duty, immersing millions of players in virtual World War II combat.

Today, Reeves is fighting a different battle for Aviva. He has been tapped by the UK-based insurer to win the mindshare of Millennials.

Andrew Brem, Aviva’s chief digital officer, believes hiring Reeves and others like him from areas as diverse as gaming and enter-prise resource planning, will help the insurer develop products tailored to a new generation of digital natives. “This industry doesn’t have a brilliant history of innovation, but it doesn’t need to be like that. The Internet has finally arrived at the ordinary and the boring world of insurance,” quips Brem.

Brem and other Aviva executives were speaking at the Wednesday launch of its Digital Garage facility located in a refurbished four- storey shophouse on Armenian Street. Staffed by around 100 people and 200 technology spe-cialists, this will be the second facility after London where Aviva is developing an incu-bator of sorts for them to come together and invent new products.

“This garage will build the next version of our global digital offerings,” says Chris Wei, who wears two hats as executive chairman of Aviva Asia and Friend Provident Internation-al, as well as global chairman of Aviva Digital.

Wei explains that Aviva needs to transform itself fast as new players are trying to chip away at its businesses. “We see ourselves being dis-rupted by somebody else,” he says, rattling off a list of competitors in the field of personal finance and insurance purchases.

But betting big on digital channels does not mean the world will see the end of the persis-tent and pesky insurance agent. “The whole of Aviva needs to be digital, but that doesn’t mean digital only. We complement with the human face as well,” he says. — By Chan Chao Peh

Ezion Holdings enters into cooperation agreement with China state-owned enterpriseDec 14 — Liftboats and service rigs provider Ezion Holdings has entered into a strategic cooperation agreement with a Chinese state-owned enterprise (SOE) to support offshore wind power installation projects in China.

These projects are mainly along the coastal regions of China. As part of the environmental goals in China’s 12th Five Year Plan, targets have been set for non-fossil energy to account for 11.4% of the total energy consumption and for CO2 discharge per unit of GDP to be re-duced by 17%.

Offshore wind power development can help to reduce air pollution in certain Chinese coast-al cities, which currently burn coal to generate electricity. Wind turbines installed along the coast can help provide more clean energy to the power grid of coastal cities. The SOE is part of a central enterprise power generation corporation under the supervision of the state-owned Assets Supervision and Administration Commission of the State Council of China.

Ezion will be supporting the SOE using its service rigs for the loading, construction, transportation and installation aspects of the wind turbine development projects. In addi-tion, the group will be providing the relevant technical expertise required for the construc-tion and installation of the wind turbine foun-dation and components.

Shares in Ezion Holdings closed 1.77% lower at 55.5 cents. — By Amy Tan

Secura Group lodges offer document for Catalist listingDec 15 — Secura Group lodged its offer docu-ment on Tuesday, ahead of its planned Catalist listing on Singapore Exchange early next year.

The company, which is 53.8% controlled by Singapore billionaire Peter Lim through Kestrel Capital, provides services and products in the area of guarding and security printing.

It is also building new business areas, in-cluding homeland and cybersecurity solutions. The company has been a distributor of Morpho explosive detection devices in Singapore, Cam-bodia and Laos since May 2015. In Singapore, it counts United Overseas Banks, CPF Board and Marina Bay Sands among its major customers.

Last year, the company reported net profit of $8.17 million on the back of $30.41 million reve-nue, inclusive of a $5 million one-off gain from a property divestment. — By Benjamin Tan E

ww w ww.t heedgeemma rkets..com/sg

Stocks with momentum*

NAME DATE PRICE MARKET CAP P/E PEG P/NAV DIVIDEND YIELD ROE GEARING INTEREST VALUATION FUNDAMENTAL FLAGGED ($ MIL) (%) (%) (%) COVER FACTOR* FACTOR**

Eucon Holding Dec 16 0.033 18.20 NA NA 1.18 NA (44.79) NA (1.23) 0.30 0.95Cambridge Industrial Trust Dec 16 0.56 704.00 1.85 NA 0.81 NA NA 36.97 NA 3.00 1.40Asian Pay TV Trust Dec 16 0.64 905.20 3.78 (0.32) 0.72 12.90 3.52 88.68 3.34 2.00 0.70Versalink Holdings Dec 15 0.156 21.30 NA NA 1.01 2.88 NA NA NA NA NAAlliance Mineral Assets Dec 11 0.137 55.50 NA NA 3.21 NA NA NA (744.22) NA NAImperium Crown Dec 11 0.07 30.90 NA NA NA NA NA 14.89 55.48 NA NACSC Holdings Dec 11 0.016 19.70 NA NA 0.13 NA (8.97) 60.81 4.78 0.90 0.35Del Monte Pacific Dec 11 0.385 768.30 (14.79) NA 1.80 NA 11.60 665.76 1.68 0.30 0.30Petra Foods Dec 11 0.635 1,283.40 11.61 (1.54) 3.90 3.78 2.37 NA 13.80 1.10 1.55Zagro Asia Dec 11 0.3 77.60 0.97 (388.25) 0.87 3.33 9.15 NA 15.28 2.40 1.70Enviro-Hub Holdings Dec 10 0.087 85.20 1.28 0.08 1.23 NA 16.64 645.29 (0.48) 1.10 0.55Informatics Education Dec 9 0.047 65.00 NA NA 4.74 NA (30.66) NA NA 0.00 2.25Grand Banks Yatchs Dec 8 0.3 53.40 NA NA 1.21 NA (4.73) NA NA 0.30 1.95Ace Achieve Infocom Dec 7 0.026 15.80 1.08 (0.15) 0.17 NA 3.22 35.95 2.16 1.10 0.45GKE Corp Dec 4 0.09 55.00 NA NA 0.70 NA (3.94) 67.89 3.88 0.90 0.95Oriental Group Dec 4 0.125 47.30 NA NA 1.52 NA (16.43) 74.49 (1.31) 0.30 0.00SBS Transit Dec 4 2.03 602.90 6.12 6.08 1.82 1.38 4.96 156.89 19.33 0.80 0.20Terratech Group Dec 4 0.031 30.10 NA NA 2.47 NA NA NA (40.69) NA NASunmoon Food Co Dec 4 0.08 24.90 NA NA 1.78 NA (10.13) NA 1.13 0.30 0.95Sinotel Technologies Dec 2 0.128 54.40 NA NA 0.81 NA (59.25) NA NA 0.90 1.65Zhongmin Baihui Retail Group Dec 2 1.78 349.50 1.33 0.35 13.76 1.98 52.95 NA 122.15 1.10 2.10Mencast Holdings Dec 1 0.245 87.70 0.45 (0.3) 0.67 4.08 10.46 125.62 5.98 2.40 0.65Linc Energy Dec 1 0.2 123.20 NA NA (2.26) NA NA NA (2.38) 0.00 0.00Hongkong Land Holdings (USD) Nov 30 7.3 16,587.30 2.62 1.21 0.60 2.70 4.71 9.30 9.27 2.60 2.15Nam Lee Press Metal Industries Nov 30 0.32 77.20 0.07 0.72 0.64 4.69 10.91 NA 146.54 3.00 2.05

*Stocks With Momentum are counters that have exhibited heightened trading volume and price movements versus their historical averages. A list of these counters is provided daily at www.theedgemarkets.com.

Table updated as at Dec 16, 2015

** Valuation factor is a composite measure of the historical return and valuation of the company’s stock. Fundamental factor is a composite measure of the company’s balance sheet strength and profitability. In both cases, the measure ranges from zero to three, with three being best and zero being worst.


DCF — Discounted cash fl owDPS — Dividend per shareDPU — Dividend per unitEbitda — Earnings before interest, taxes, depreciation and amortisationEPS — Earnings per shareNAV — Net asset valueNTA — Net tangible assetsPatmi — Profi t after tax and minority interestsP/BV — Price-to-book valuePEG — Price earnings to growthPER — Price-to-earnings ratioROE — Return on equity

Every week, The Edge Singapore brings you digested excerpts of research reports of Singapore Exchange-listed companies available in the public domain or received from brokers. Investors interested in research on companies are also encouraged to register for free access to reports from stockbrokers that participate in the SGX-Monetary Authority of Singapore Research Incentive Scheme (research.sgx.com).Disclaimer: The Edge Publishing Pte Ltd does not accept any liability whatsoever for any direct, indirect or consequential losses (including loss of profi t) or damages

that may arise from the use of information or opinions in this publication. The information and opinions in this publication are not to be considered as an offer to sell or buy any of the securities discussed. Opinions expressed are subject to change without notice. The brokers may, from time to time, have interests or positions in the securities mentioned. The Edge Singapore welcomes brokers submitting their reports for investor information to [email protected].

| COMPILED BY RAHAYU MOHAMAD |

Cosco Corp (Dec 16: 29.5 cents)FULLY VALUED. Cosco’s hefty gross order book of US$7.9 billion ($11.1 billion) is a double-edged sword. The shipbuilding contracts on its order book are of low value while its offshore segment continues to see a steep learning curve with its diversifi ed product range. Making things worse, its oil and gas customers are delaying rig deliveries in view of the lacklustre chartering market. Meanwhile, the fourth Sevan cylindrical rig unit, which is near completion, faces risk of cancellation, as the customer has failed to secure a charter contract and Cosco is held responsible for the delivery delay. We lower our price target to 32 cents, pegged to a lower multiple of 0.6x FY2016 P/BV (0.8x previously). P/BV is a more appropriate valuation metric than PER, given the low earnings visibility and expectation of losses ahead. — DBS Vickers Securities (Dec 14)

CSE Global (Dec 16: 46 cents)MAINTAIN BUY. At a meeting on Dec 4, the Organization of the Petroleum Exporting Countries failed to agree on reducing oil production but has set aside its quota of 30 million barrels a day until the next meeting in June. As a result, WTI Crude and Brent prices fell 5.8% and 5.3% respectively, on Dec 7, settling at a seven-year low. While we acknowledge a slowdown in new greenfi eld projects, we still think CSE Global’s earnings are likely to remain largely resilient, given its exposure to recurring brownfi eld maintenance jobs, which contribute about half of its total annual revenue. That said, on a weaker outlook, we cut our FY2015/16 forecasts by 3.7%/6.7%. Consequently, our fair value decreases from 58 cents to 54 cents (9x FY2016F PER), supported by a decent FY2015F dividend yield of 5.9%. — OCBC Investment Research (Dec 11)

Ezion Holdings (Dec 16: 60 cents)MAINTAIN BUY. Ezion is well positioned to benefi t from the rising popularity of liftboats in this region, capitalising on its fi rst-mover advantage. We believe service rigs are in an early growth phase, buoyed by the substitution effect to replace typical work boats/barges in this region. Ezion has taken delivery of 26 service rigs and the fl eet is expected to grow to 28 units by year-end and 37 units by 2016, propelling earnings CAGR of 11% from 2015 to 2017. Ezion has a prudent business model. Fleet expansion is backed by long-term charters of three to fi ve years. Demand is also relatively more resilient, as service rigs are exposed to the production phase in the shallow-water segment. We value Ezion based on 0.8x FY2015 P/BV, arriving at a price target of $1. This implies 81% upside potential. — DBS Vickers Securities (Dec 15)

IPS Securex Holdings (Dec 16: 31 cents)MAINTAIN BUY. IPS has secured a fi ve-year US$64.46 million letter of award for the sale of Hyperspike acoustic hailing devices and supporting accessories to a Southeast Asian government body — a signifi cant positive that provides it with a stable US$12.9 million average annual income during this period. Owing to production delay issues, as well as incorporating lag time in revenue recognition, we recognise US$25 million worth of PepperBall orders in FY2016 ending June, shifting the remaining US$25 million balance to FY2017. With secured contracts over a longer term providing stability to IPS’ earnings, we have also switched our valuation methodology to DCF. This resulted in a slightly higher DCF-based price target of 40 cents on conservative 0% TG and 10.5% WACC backed by 11x FY2017F PER. — RHB Research (Dec 16)

Keppel DC REIT (Dec 16: $1)MAINTAIN BUY. We expect KDCREIT to be a key benefi ciary of the proliferation of “big data” and cloud-computing trends. Being the fi rst data centre REIT to be listed in Asia, KDCREIT offers investors a unique pure-play exposure to this fast-growing industry. Management has been proactively sourcing for accretive acquisition opportunities to fuel its growth, making acquisitions in Australia and Germany since its IPO last December. We like KDCREIT for its strong positioning within the data centre industry, as well as its long WALE (8.9 years as at Sept 30) and prudent capital management. It has hedged 90% of its total borrowings and hedged 100% of its forecast foreign-sourced distribution up till 1HFY2017. Valuations are also attractive, with the stock trading at FY2016F distribution yield of 7%. Fair value estimate of $1.24. — OCBC Investment Research (Dec 11)

Olam International (Dec 16: $1.77)MAINTAIN HOLD. Olam recently announced that its grain platform plans to expand into animal feed and related businesses in Nigeria. As the global animal feed industry is a large and growing part of the agri-commodity complex, with attractive returns and a strong growth outlook, particularly in emerging markets, it makes sense for Olam to pursue such a move. In a way, the downstream expansion will also create “demand” for its upstream origination business. While such a move is positive to Olam and the farming community in Nigeria over the medium to long run, the near- to medium-term outlook for the group and the commodities sector is still fraught with uncertainties. As such, we opt to remain conservative and not accrue any benefi t from the animal feed expansion into our model yet. Unchanged fair value of $1.86, based on 10x FY2016F EPS. — OCBC Investment Research (Dec 14) E

| BY GWYNETH YEO |

Second Chance Properties will trade ex-dividend on Jan 6 for a first and final dividend of 3.55 cents a share for FY2015

ended August. This represents a dividend yield of 10.9%, based on the stock’s closing price of 32.5 cents on Dec 15. In FY2014, the group declared total dividends of 3.5 cents a share, comprising an interim dividend of two cents and a final dividend of 1.5 cents.

In FY2015, revenue fell 5.5% to $45.8 million as the group’s apparel and proper-ty business segments recorded declines of $3.3 million and $870,000 respectively. The apparel business was impacted by the clo-sure of eight shops in Malaysia, while rental revenue from its properties fell after the sale of four investment properties. Earnings fell 37.9% to $10.3 million on the back of an un-realised loss of $6 million recorded on finan-cial assets. As at end-August, the group held cash and cash equivalents of $7.1 million.

Meanwhile, Frasers Centrepoint will trade ex-dividend on Feb 3 for a final divi-dend of 6.2 cents a share for FY2015 ended September. Including the interim dividend of

Second Chance Properties, Frasers Centrepoint and F&N to trade ex-dividend

2.4 cents a share announced in May, the group has declared total dividends of 8.6 cents a share for FY2015. This translates into a dividend yield of 5.1%, based on the stock’s closing price of $1.69 on Dec 15. In FY2014, the group declared total dividends of 8.6 cents a share, comprising an interim dividend of 2.4 cents and a final dividend of 6.2 cents.

In FY2015, earnings rose 54% to $771.3 million as group revenue rose 61.7% to $3.6 billion. The increase in its earnings came from the full-year contribution from Aus-traland, which was acquired in August 2014 and renamed Frasers Property Australia, and Frasers Hospitality Trust, which was list-ed in July 2014. FHT’s results were boosted by the newly acquired Malmaison Hotel du Vin Group, which owned 29 boutique life-style hotels in the UK, as well as the prop-erties acquired at end-2014, including Sofi-tel Sydney Wentworth, Australia, and the six hotels from TCC Group. As at end-Septem-ber, Frasers Centrepoint held cash and cash equivalents of $1.4 billion.

Elsewhere, Fraser and Neave will trade ex-dividend on Feb 3 for a final dividend of

three cents a share for FY2015 ended Septem-ber. Including the interim dividend of two cents a share announced in May, the group has declared total dividends of five cents a share for FY2015. This represents a dividend yield of 2.3%, based on the stock’s closing price of $2.17 on Dec 15. In FY2014, the group declared total dividends of five cents a share, comprising an interim dividend of two cents and a final dividend of three cents.

In FY2015, Fraser and Neave recorded a fourfold earnings growth to $632.6 mil-lion, as revenue rose marginally to $2.1 bil-lion on higher sales at its dairies business in Thailand. Profit before interest and tax fell 22.4% to $131.6 million on the back of higher brand investment costs, lower soft drinks sales and higher logistic costs from the flooding on the East Coast of Peninsu-lar Malaysia in 1QFY2015. However, group earnings received a boost from the $541.5 million divestment gain on the sale of its 55% stake in Myanmar Brewery to Myan-ma Economic Holdings for US$560 million ($789.5 million) in August. As at end-Sep-tember, the group held cash and cash equiv-alents of $961 million.

Dec 21, 2012 Dec 15, 2015

Second Chance PropertiesVolume (‘000) Price ($)

0.325

0

2000

4000

6000

8000

10000

0.2

0.4

0.5

Valuation score* 2.00

Fundamental score** 0.70

TTM PER (x) 21.45

TTM PEG (x) (0.57)

P/NAV (x) 0.87

TTM dividend yield (%) 4.62

Market capitalisation ($ mil) 220.09

Shares outstanding (ex-treasury) (mil) 677.21

Beta 0.57

12-month price range ($) 0.24 to 0.45


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DIVIDEND WATCH

CAPITAL BROKERS’ DIGEST


CAPITAL EXCHANGE-TRADED FUNDS

TOP 20 TURNOVER RANK ETF NAME SGX STOCK BLOOMBERG TICKER REUTERS TURNOVER FOR AVG TURNOVER FOR VOLUME FOR AVG VOLUME FOR NAV LAST PRICE PRICE CODE CODE TICKER WEEK ENDED WEEK ENDED WEEK ENDED WEEK ENDED (DEC 11, 2015) (DEC 11, 2015) CHANGE DEC 11, 2015 ($) DEC 11, 2015 DEC 11, 2015 DEC 11, 2015 ($) ($) (%)

1 SPDR® STRAITS TIMES INDEX ETF ES3 STTF SP Equity STTF.SI 4,306,847.00 861,369.40 1479500 295900 2.879125 2.89 -2.4

2 ISHARES MSCI INDIA ETF I98 INDIA SP Equity INDI.SI 3,362,049.01 672,409.80 369600 73920 9.15748 9.04512 -2.0

3 DB X-TRACKERS MSCI INDONESIA INDEX UCITS ETF KJ7 XMIN SP Equity DMIN.SI 2,383,133.70 476,626.74 151650 30330 15.43491 15.44737 -4.6

4 SPDR® GOLD SHARES O87 GLD SP Equity SGLD.SI 1,814,201.67 362,840.33 12520 2504 145.04415 144.60886 -0.8

5 ISHARES BARCLAYS CAPITAL USD ASIA HIGH YIELD BOND INDEX ETF O9P AHYG SP Equity AHYG.SI 789,261.09 157,852.22 53800 10760 14.49648 14.58526 -0.9

6 DB X-TRACKERS FTSE VIETNAM UCITS ETF HD9 XFVT SP Equity DFVT.SI 769,948.42 153,989.68 24620 4924 31.32138 31.29046 0.1

7 DB X-TRACKERS MSCI BRAZIL INDEX UCITS ETF J0O XMBR SP Equity DMBR.SI 679,134.69 135,826.94 193700 38740 3.44845 3.50498 -2.2

8 DB X-TRACKERS FTSE CHINA 50 UCITS ETF HD8 XX25 SP Equity DFXI.SI 674,475.58 134,895.12 16200 3240 40.37913 40.29318 -4.4

9 DB X-TRACKERS MSCI RUSSIA CAPPED INDEX UCITS ETF J0R XMRC SP Equity DMRC.SI 495,401.14 99,080.23 204560 40912 2.35509 2.38848 -2.9

10 ISHARES J.P. MORGAN USD ASIA CREDIT BOND INDEX ETF N6M AJAC SP Equity BRJP.SI 431,270.47 86,254.09 29700 5940 14.53597 14.58526 0.0

11 LYXOR ETF MSCI INDONESIA P2Q INDO SP Equity LIND.SI 311,257.84 62,251.57 3160 632 96.76883 97.15024 -4.6

12 DB X-TRACKERS MSCI CHINA INDEX UCITS ETF LG9 LG9 SP Equity DMCN.SI 261,721.92 52,344.38 14850 2970 17.16638 17.21399 -3.3

13 LYXOR ETF HONG KONG (HSI) A9B HSI SP Equity LHSI.SI 234,108.32 46,821.66 62020 12404 3.73862 3.70285 -3.8

14 DB X-TRACKERS MSCI KOREA UCITS INDEX ETF IH2 XMKO SP Equity DMKO.SI 231,367.20 46,273.44 3230 646 71.80394 71.35752 -1.5

15 DB X-TRACKERS CNX NIFTY UCITS ETF (INDIA) HE0 XNIF SP Equity DNIX.SI 201,030.98 40,206.20 1200 240 162.30072 163.84387 -1.9

16 ISHARES MSCI INDIA ETF QK9 INDIAS SP Equity INDI-D.SI 185,165.00 37,033.00 20500 4100 9.1575 9.04 -1.8

17 LYXOR ETF CHINA ENTERPRISE (HSCEI) P58 ASI SP Equity LASI.SI 179,460.49 35,892.10 9600 1920 18.34649 18.44357 -4.5

18 NIKKO AM SINGAPORE STI ETF G3B DBSSTI SP Equity DSSE.SI 175,665.00 35,133.00 59300 11860 2.9258 2.94 -2.3

19 LYXOR ETF RUSSIA (DJ RUSINDEX TITANS 10) JC7 RUS SP Equity LRUS.SI 162,498.96 32,499.79 51000 10200 3.20916 3.22232 -3.7

20 DB X-TRACKERS MSCI PHILIPPINES IM INDEX UCITS ETF N2E N2E SP Equity DPQP.SI 156,130.83 31,226.17 60020 12004 2.55224 2.54677 -2.8

TOP 20 GAINERS RANK ETF NAME SGX STOCK BLOOMBERG TICKER REUTERS TURNOVER FOR AVG TURNOVER FOR VOLUME FOR AVG VOLUME FOR NAV LAST PRICE PRICE CODE CODE TICKER WEEK ENDED WEEK ENDED WEEK ENDED WEEK ENDED (DEC 11, 2015) (DEC 11, 2015) CHANGE DEC 11, 2015 ($) DEC 11, 2015 DEC 11, 2015 DEC 11, 2015 ($) ($) (%)

1 DB X-TRACKERS S&P 500 INVERSE DAILY UCITS ETF HD6 XSPS SP Equity DSPS.SI 6,299.81 1,259.96 210 42 30.69732 30.03263 2.2

2 DB X-TRACKERS MSCI PAKISTAN IM INDEX UCITS ETF O9D O9D SP Equity DPAK.SI 3,733.75 746.75 1450 290 2.57698 2.61319 1.6

3 DB X-TRACKERS FTSE VIETNAM UCITS ETF HD9 XFVT SP Equity DFVT.SI 769,948.42 153,989.68 24620 4924 31.32138 31.29046 0.1

4 ISHARES J.P. MORGAN USD ASIA CREDIT BOND INDEX ETF N6M AJAC SP Equity BRJP.SI 431,270.47 86,254.09 29700 5940 14.53597 14.58526 0.0

5 ABF SINGAPORE BOND INDEX FUND A35 SBIF SP Equity ABFB.SI 51,956.70 10,391.34 45000 9000 1.1473 1.152 -0.2

6 LYXOR ETF MSCI KOREA AO9 KRW SP Equity LKRW.SI 6,297.54 1,259.51 1000 200 6.35164 6.34572 -0.5

7 DB X-TRACKERS MARKIT IBOXX ABF KOREA GOVERNMENT UCITS ETF KT2 KT2 SP Equity DCSA.SI 68,302.85 13,660.57 325 65 208.50371 207.7975 -0.7

8 SPDR® GOLD SHARES O87 GLD SP Equity SGLD.SI 1,814,201.67 362,840.33 12520 2504 145.04415 144.60886 -0.8

9 ISHARES BARCLAYS CAPITAL USD ASIA HIGH YIELD BOND INDEX ETF O9P AHYG SP Equity AHYG.SI 789,261.09 157,852.22 53800 10760 14.49648 14.58526 -0.9

10 LYXOR ETF DOW JONES INDUSTRAL AVERAGE JC6 DJI SP Equity LDJI.SI 3,518.75 703.75 140 28 24.50079 24.94475 -0.9

11 LYXOR ETF NASDAQ-100 H1Q NDX SP Equity LNDX.SI 115,430.49 23,086.10 4430 886 25.36944 25.97645 -0.9

12 DB X-TRACKERS MSCI JAPAN UCITS INDEX LF2 LF2 SP Equity DMJP.SI 1,363.13 272.63 20 4 69.28747 68.58745 -1.0

13 SPDR® S&P 500® ETF S27 SPY SP Equity SPY.SI 8,751.60 1,750.32 30 6 285.34174 290.89954 -1.3

14 DB X-TRACKERS DB COMMODITY BOOSTER DJ-UBSCI UCITS ETF L5F L5F SP Equity DBBN.SI 15,356.28 3,071.26 600 120 25.47782 25.76446 -1.4

15 DB X-TRACKERS MSCI BANGLADESH IM INDEX UCITS ETF O9C O9C SP Equity DBAN.SI 1,830.27 366.05 1300 260 1.37938 1.38927 -1.4

16 DB X-TRACKERS MSCI INDIA INDEX UCITS ETF LG8 LG8 SP Equity DMNI.SI 764.98 153.00 60 12 12.71732 12.70557 -1.5

17 LYXOR ETF MSCI INDIA G1N INR SP Equity LINR.SI 8,920.45 1,784.09 440 88 20.09907 20.02646 -1.5

18 DB X-TRACKERS MSCI KOREA UCITS INDEX ETF IH2 XMKO SP Equity DMKO.SI 231,367.20 46,273.44 3230 646 71.80394 71.35752 -1.5

19 DB X-TRACKERS MSCI WORLD INDEX UCITS ETF J0P XMWO SP Equity DMWO.SI 31,516.59 6,303.32 5000 1000 6.19335 6.28919 -1.6

20 LYXOR ETF MSCI EM LATIN AMERICA H1O LTM SP Equity LLTM.SI 62,695.87 12,539.17 10600 2120 5.6032 5.76626 -1.8

TOP 20 LOSERS RANK ETF NAME SGX STOCK BLOOMBERG TICKER REUTERS TURNOVER FOR AVG TURNOVER FOR VOLUME FOR AVG VOLUME FOR NAV LAST PRICE PRICE CODE CODE TICKER WEEK ENDED WEEK ENDED WEEK ENDED WEEK ENDED (DEC 11, 2015) (DEC 11, 2015) CHANGE DEC 11, 2015 ($) DEC 11, 2015 DEC 11, 2015 DEC 11, 2015 ($) ($) (%)

1 LYXOR ETF MSCI INDONESIA P2Q INDO SP Equity LIND.SI 311,257.84 62,251.57 3160 632 96.76883 97.15024 -4.6

2 DB X-TRACKERS MSCI INDONESIA INDEX UCITS ETF KJ7 XMIN SP Equity DMIN.SI 2,383,133.70 476,626.74 151650 30,330 15.43491 15.44737 -4.6

3 LYXOR ETF CHINA ENTERPRISE (HSCEI) P58 ASI SP Equity LASI.SI 179,460.49 35,892.10 9600 1,920 18.34649 18.44357 -4.5

4 CIMB S&P ETHICAL ASIA PACIFIC DIVIDEND ETF QR9 CIMDVDS SP Equity CISA-D.SI 28,856.30 5,771.26 26800 5,360 1.0644 1.05 -4.4

5 DB X-TRACKERS MSCI THAILAND INDEX UCITS ETF LG7 LG7 SP Equity DMTH.SI 1,200.13 240.03 50 10 22.08378 22.98026 -4.4

6 DB X-TRACKERS FTSE CHINA 50 UCITS ETF HD8 XX25 SP Equity DFXI.SI 674,475.58 134,895.12 16200 3,240 40.37913 40.29318 -4.4

7 LYXOR ETF THAILAND (SET50 NET TR) P2P SET SP Equity LSET.SI 105,093.25 21,018.65 700 140 142.98807 142.96943 -4.1

8 CIMB S&P ETHICAL ASIA PACIFIC DIVIDEND ETF P5P CIMBDVD SP Equity CISA.SI 1,084.08 216.82 1000 200 1.06442 1.0515 -4.1

9 LYXOR ETF FTSE EPRA / NAREIT ASIA EX JAPAN MT7 AER SP Equity LAER.SI 627.92 125.58 50 10 11.8166 11.80106 -3.9

10 LYXOR ETF HONG KONG (HSI) A9B HSI SP Equity LHSI.SI 234,108.32 46,821.66 62020 12,404 3.73862 3.70285 -3.8

11 LYXOR ETF RUSSIA (DJ RUSINDEX TITANS 10) JC7 RUS SP Equity LRUS.SI 162,498.96 32,499.79 51000 10,200 3.20916 3.22232 -3.7

12 CIMB FTSE ASEAN 40 ETF QS0 ASEANS SP Equity CFTS-D.SI 9,962.00 1,992.40 900 180 11.1687 11.07 -3.7

13 CIMB FTSE ASEAN 40 ETF M62 ASEAN SP Equity CFTS.SI 4,482.99 896.60 400 80 11.16871 11.08027 -3.5

14 DB X-TRACKERS MSCI EMERGING MARKETS INDEX UCITS ETF J0M XMEM SP Equity DMEM.SI 2,626.84 525.37 580 116 4.45163 4.49429 -3.4

15 UNITED SSE50 CHINA ETF JK8 USSE50 SP Equity USCH.SI 69,094.00 13,818.80 29500 5,900 2.311 2.29 -3.4

16 DB X-TRACKERS MSCI CHINA INDEX UCITS ETF LG9 LG9 SP Equity DMCN.SI 261,721.92 52,344.38 14850 2,970 17.16638 17.21399 -3.3

17 LYXOR ETF COMMODITIES CRB A0W CRB SP Equity LCRB.SI 9,299.97 1,859.99 4010 802 2.28531 2.31781 -3.0

18 DBXT MSCI MALAYSIA INDEX UCITS ETF LG6 LG6 SP Equity DMMY.SI 1,050.06 210.01 70 14 14.72491 14.78312 -3.0

19 DB X-TRACKERS MSCI RUSSIA CAPPED INDEX UCITS ETF J0R XMRC SP Equity DMRC.SI 495,401.14 99,080.23 204560 40,912 2.35509 2.38848 -2.9

20 DB X-TRACKERS MSCI AC ASIA EX JAPAN

HIGH DIVIDEND YIELD INDEX UCITS ETF N2F N2F SP Equity DPVJ.SI 5,004.89 1,000.98 2400 480 2.06889 2.07048 -2.9

India now has a Keqiang Index — and it paints a bleaker growth pictureDec 15 — Chinese Premier Li Keqiang’s name has been attached to another economic gauge, covering another billion people: This time, in India. And the picture the Indian Keqiang in-dex is painting is more downbeat than glow-ing official data.

Indian stock brokerage Ambit Capital es-tablished the Keqiang index for the subcon-tinent as it tries to unravel the mysteries of new GDP data introduced in January that has puzzled economists since.

Li, as a regional official in China, liked to

scrutinise electricity consumption, rail cargo volumes and loan disbursements to take the pulse of China’s economy. He told a US am-bassador that such data captured the reality of growth better than “man-made” GDP, ac-cording to WikiLeaks.

In neighbouring India, doubts over GDP have increased as a new data series showed a booming economy outpacing China, which doesn’t square with data on the ground, ac-cording to Ritika Mankar Mukherjee, an an-alyst at Mumbai-based Ambit who worked on the index.

“Everything you know from corporate cap-

tains, from corporate management, from the government machinery is telling you that the economy is slowing down, but the GDP data is telling you something that doesn’t quite add up,” Mukherjee said.

Ambit’s Keqiang index combines motor vehicles sales, power consumption, capital goods imports and cargo handled at airports to capture private consumption and invest-ment demand. The name is easy to grasp and remember by investors, Mukherjee said.

While the government reported growth ac-celerated to 7.4% in the three months through September from 7% in the prior quarter, Ambit

estimates a deceleration to 6% from 6.3%.Yet, there is a silver lining, according to

Ambit. The slowdown actually reflects Prime Minister Narendra Modi’s efforts to break from India’s old growth model.

“You’ll have smaller subsidies coming from the central government, you’ll have a smaller black economy and you’ll have crony capitalism curtailed to some extent,” Mukherjee said. “While each of these resets will be very positive for the country from a long term perspective, all of this in the short term is extremely negative for GDP growth.” — Bloomberg LP E


CAPITAL INSIDER MOVES

| BY GWYNETH YEO |

Hong Fok Corp, a property development company, has seen buying activity from its joint chairmen and man-aging directors, Cheong Pin

Chuan and Cheong Sim Eng, who are brothers.

From Dec 2 to 14, Pin Chuan ac-quired 333,000 shares in the compa-ny, bringing his direct stake to 10.9 million shares, or 1.4%. He is also deemed interested in another 129 mil-lion shares, or 16.3%, of the company.

Sim Eng acquired 38,000 shares at 71.5 cents apiece on Dec 3, bring-ing his direct stake in the compa-ny to 94.4 million shares, or 11.9%. He is deemed interested in anoth-er 40.9 million shares, or 5.2%, of the company.

Hong Fok has businesses in prop-erty development and construction, property investment, as well as prop-erty management. For 3QFY2015 ended September, the group report-ed earnings of $56.6 million com-pared with net losses of $373,000 in the previous corresponding quarter.

Group revenue fell marginally to $14.4 million, as the increase in rental

income from the residential units at Concourse Skyline was mitigated by the decrease in rental income from its office units, which arose from lower occupancy during the period. How-ever, the group’s earnings received a boost from the $81.9 million gain on disposal of its shares in Hong Kong-listed Winfoong International.

Meanwhile, Gordon Tang, non-ex-ecutive director of SingHaiyi Group, has seen his stake in the property development company grow in re-cent weeks. From Dec 2 to 11, 2.2 million shares were acquired on Tang’s behalf by Haiyi Holdings. Tang is deemed interested in 1.8 billion shares, or 63.7%, of the company, held by Haiyi and Acquire Wealth. Tang is the husband of Chen Huaidan @ Celine Tang, group managing director of SingHaiyi.

The company develops residen-tial properties in Singapore, such as Pasir Ris One, CityLife@Tampines and The Vales. It also owns a joint stake in Park Mall and plans to re-develop the site into a commercial and retail development. In the US, the group develops residential prop-erty and owns a retail mall in Ohio, known as Tri-County Mall.

For 2QFY2016 ended September, revenue more than doubled to $13.3 million on the back of higher reve-nue contribution from the group’s design, build and sell scheme project, Pasir Ris One, which was completed in 1QFY2016. The group also record-ed a $2 million increase in other in-come from foreign exchange gains. However, owing to the $1.5 million increase in marketing expenses for the launch of The Vales, a $1.6 mil-lion fair value loss on financial as-sets and a $300,000 increase in fi-nance costs, earnings fell 50.7% to $918,000.

Elsewhere, New Silkroutes Group’s independent director Chen Chou Mei Mei Vivien has seen her deemed interest in the company grow. On Dec 10, 30 million shares were acquired on Chen’s behalf at 0.1 cent each. She now has a deemed inter-est in 207 million shares, or 0.4%, of the company, held by Avec Inc, Chow Wen Hsien Estate and another nominee.

The energy, healthcare and tech-nology company, formerly known as Digiland International, posted net losses of US$1.3 million ($1.8 million) for 1QFY2016 ended Sep-

tember compared with earnings of US$387,000 in the previous corre-sponding quarter. Revenue fell by US$12.8 million to US$2.8 million during the quarter, as the company reduced its credit risks relating to marine gas oil sales, which in turn

resulted in lower sales volumes. The net losses during the quarter were the result of higher personnel expenses relating to the staff costs of a new-ly acquired subsidiary company and higher other expenses arising from foreign exchange losses.

DEC 7 ASCENDIA INDIA TRUST 983,300 MASSACHUSETTS FINANCIAL SVCS CO — 65,431,900 ACQUISITION (4/12)

DEC 4 ASCENDAS REAL ESTATE INVT TRUST 222,900 BLACKROCK INC — 144,755,156 ACQUISITION (3/12)

DEC 9 ASPIAL CORP LTD 145,000 KOH WEE SENG 347,161,601 1,122,273,082 ACQUISITION (9/12)

DEC 14 ASPIAL CORP LTD 40,000 KOH WEE SENG 347,201,601 1,122,273,082 ACQUISITION (14/12)

DEC 4 BUMITAMA AGRI LTD 8,000,000 LIM HARIYANTO WIJAYA SARWONO — 903,157,774 ACQUISITION (3/12)

DEC 11 CITY DEVELOPMENTS LTD -425,200 ABERDEEN ASSET MGMT PLC — 172,552,130 DISPOSAL (9/12)

DEC 3 COMFORTDELGRO CORP LTD -40,000 SUM WAI FUN, ADELINE 260,000 — DISPOSAL (3/12)



DEC 14 CORDLIFE GROUP LTD 8,621,100 KUNLUM INVESTMENT HOLDING LTD 41,739,400 — OFF MARKET ACQUISITION (11/12)

DEC 3 EPICENTRE HOLDINGS LTD -2,300 GOH ANN ANN JOHNSON 6,107,700 — DISPOSAL (1/12)

DEC 9 EPICENTRE HOLDINGS LTD -250,000 GOH ANN ANN JOHNSON — 5,857,700 DISPOSAL (7/12)

DEC 4 FORTUNE REAL ESTATE INV TRUST -1,110,000 ARA ASSET MGMT (FORTUNE) LTD 8,591,746 — DISPOSAL (3/12)

DEC 4 FORTUNE REAL ESTATE INV TRUST -4,000 ARA ASSET MGMT (FORTUNE) LTD 8,587,746 — DISPOSAL (4/12)



DEC 3 FRAGRANCE GROUP LTD 708,100 KOH WEE MENG 4,986,692,500 735,000,000 ACQUISITION (3/12)

DEC 8 FRAGRANCE GROUP LTD 1,707,500 KOH WEE MENG 4,988,400,000 735,000,000 ACQUISITION (8/12)





DEC 15 GL LTD 215,600 QUEK LENG CHAN 735,000 913,791,234 ACQUISITION (11/12)

DEC 15 GL LTD 89,400 QUEK LENG CHAN 735,000 913,880,634 ACQUISITION (14/12)

DEC 8 GLOBAL PREMIUM HOTELS LTD 100,000 KOH WEE MENG 665,765,000 58,800,000 ACQUISITION (8/12)




DEC 7 HL GLOBAL ENTERPRISES LTD -30,400 FLORENCE TAY ENG NEO 2,490,792 1,129,981 DISPOSAL (7/12)

DEC 3 HONG FOK CORP LTD 65,400 CHEONG PIN CHUAN 10,680,644 128,980,959 ACQUISITION (2/12)

DEC 4 HONG FOK CORP LTD 38,000 CHEONG SIM ENG 94,400,760 40,923,435 ACQUISITION (3/12)







DEC 10 HOTUNG INVESTMENT HOLDINGS LTD 300 TSUI-HUI HUANG — 20,892,412 ACQUISITION (10/12)

DEC 14 HOTUNG INVESTMENT HOLDINGS LTD 32,600 TSUI-HUI HUANG — 20,925,012 ACQUISITION (14/12)

DEC 15 HOTUNG INVESTMENT HOLDINGS LTD 2,600 TSUI-HUI HUANG — 20,927,612 ACQUISITION (15/12)

DEC 3 INT’L HEALTHWAY CORP LTD -500,000 FAN KOW HIN 12,771,533 375,621,695 DISPOSAL (1/12)

DEC 7 INT’L HEALTHWAY CORP LTD 500,000 CHING CHIAT KWONG 291,481,200 — ACQUISITION (7/12)

DEC 9 INT’L HEALTHWAY CORP LTD 823,600 CHING CHIAT KWONG 292,304,800 — ACQUISITION (9/12)

DEC 10 INT’L HEALTHWAY CORP LTD 7,500,600 CHING CHIAT KWONG 299,805,400 — ACQUISITION (10/12)

DEC 15 INT’L HEALTHWAY CORP LTD 1,779,300 CHING CHIAT KWONG 301,584,700 — ACQUISITION (14/12)

DEC 4 ISEC HEALTHCARE LTD 100,000 WONG JUN SHYAN 27,457,805 15,000,000 ACQUISITION (3/12)

DEC 14 LINC ENERGY LTD 5,365,586 CREDIT SUISSE GROUP AG — 61,659,952 ACQUSITION (10/12)

The information in Insider Moves is provided as a service to readers. The explanations fi led are at times abridged, indirect interest dec larations summarised together with direct interests and fi gures totalled for space. While every effort is made to ensure accuracy, the information presented is not the offi cial record of shareholder fi lings. Readers who are interested should check the original fi lings fi led with the SGX.

FILING COMPANY SHARES ACQUIRED DIRECTOR/SUBSTANTIAL SHARES HELD AFTER CHANGE REASONDATE (DISPOSED) SHAREHOLDER DIRECT DEEMED

Hong Fok Corp, SingHaiyi Group and New Silkroutes Group see buying activity

E

Volume (‘000) Price ($)

Dec 21, 2012 Dec 16, 2015

SingHaiyi Group

0.093

0

100000

200000

300000

400000

500000

600000

700000

800000

0.05

0.15

0.20

0.25

0.30Volume (‘000) Price ($)

Dec 21, 2012 Dec 16, 2015

Hong Fok Corp

0.72

0

5000

10000

15000

20000

25000

0.4

0.6

0.8

1.0

1.2

BLO

OM

BERG

BLO

OM

BERGMarket

capitalisation Dec 16, 2015 $569.9 mil

52-week high April 14, 2015 97.9 cents

52-week low Sept 7, 2015 59 cents

PER 5.07 times

Gross dividend yield 1.39%

Earnings FY2014 ended $48.1 mil Dec 31

Earnings FY2013 ended $300.5 mil Dec 31

Market capitalisation Dec 16, 2015 $266.3 mil

52-week high April 6, 2015 16.6 cents

52-week low Nov 27, 2015 7.8 cents

PER 7.26 times

Gross dividend yield —

Earnings FY2015 ended $21.2 mil March 31

Earnings FY2014 ended $23.2 mil March 31

CAPITAL INSIDER MOVES


The the ses ew-and om

DEC 15 M1 LTD 150,000 KAREN KOOI LEE WAH 950,000 — DISPOSAL (14/12)

DEC 14 MARCO POLO MARINE LTD 1,560,500 LEE WAN TANG 514,200 204,981,874 ACQUISITION (11/12)

DEC 15 MARCO POLO MARINE LTD 1,054,700 LEE WAN TANG 514,200 206,036,574 ACQUISITION (14/12)

DEC 10 MEGACHEM LTD 200,000 TAN BOCK CHIA 24,557,083 — ACQUISITION (9/12)

DEC 10 MEGACHEM LTD 82,400 TAN BOCK CHIA 24,639,483 — ACQUISITION (10/12)

DEC 9 MEWAH INT’L INC 80,900 CHEO TONG CHOON @ LEE TONG CHOON — 746,991,820 ACQUISITION (8/12)



DEC 4 MM2 ASIA LTD 532,600 YEO KHEE SENG BENNY 6,102,500 6,816,700 ACQUISITION (1/12)

DEC 7 NEO GROUP LTD 14,600 YEO KOK TONG 34,600 — ACQUISITION (4/12)

DEC 14 NEW SILKROUTES GROUP LTD 30,000,000 CHEN CHOU MEI MEI VIVIEN — 207,070,300 ACQUISITION (10/12)

DEC 7 OSIM INTL LTD 100,000 RON SIM 390,069,835 116,259,199 ACQUISITION (4/12)

DEC 7 RAFFLES MEDICAL GROUP LTD -377,100 FIL LTD — 28,398,791 DISPOSAL (3/12)

DEC 3 RESOURCES PRIMA GROUP LTD -29,000,000 HO WEN YAN 75,800,000 — OFF MARKET TRANSACTION (2/12)

DEC 8 SHS HOLDINGS LTD 2,000,000 TENG CHOON KIAT — 123,403,100 OFF MARKET TRANSACTION (23/11)

DEC 4 SIIC ENVIRONMENT HOLDINGS LTD 551,000 VALUE PARTNERS CLASSIC FUND 134,206,720 — ACQUISITION (3/12)

DEC 3 SINGHAIYI GROUP LTD 405,000 GORDON TANG — 1,822,877,481 ACQUISITION (2/12)








DEC 9 SINOSTAR PEC HOLDINGS LTD 100,000 INTELLIGENT PEOPLE HOLDINGS LTD 330,681,800 — ACQUISITION (9/12)

DEC 3 SINOTEL TECHNOLOGIES LTD 1,150,500 JIA YUE TING — 343,875,867 ACQUISITION (2/12)


DEC 7 SINOTEL TECHNOLOGIES LTD 1,825,000 ADVANCE TECHNOLOGY HOLDING LTD — 346,767,867 ACQUISITION (4/12)

DEC 8 SINOTEL TECHNOLOGIES LTD 900,000 JIA YUE TING — 347,667,867 ACQUISITION (7/12)





DEC 7 SOILBUILD CONSTRUCTION GROUP LTD 50,000 TAN JEE MING 250,000 — ACQUISITION (18/11)

DEC 14 SOILBUILD CONSTRUCTION GROUP LTD 50,000 TAN JEE MING 300,000 — ACQUISITION (14/12)

DEC 4 SUNNINGDALE TECH LTD 10,000 KOH BOON HWEE 15,050,758 22,008 ACQUISITION (4/12)

DEC 4 TEE INTL LTD 32,600 PHUA CHIAN KIN 278,047,656 16,526,264 ACQUISITION (3/12)






DEC 3 TEE LAND LTD 45,000 PHUA CHIAN KIN 21,351,893 283,700,428 ACQUISITION (2/12)

DEC 8 TT INT’L LTD 680,168 SNG SZE HIANG 274,189,587 102,779,306 OFF MARKET TRANSACTION (8/12)

DEC 15 VENTURE CORPORATION LTD 198,500 ABERDEEN ASSET MGMT PLC — 24,806,900 DISPOSAL (14/12)

DEC 3 WILLAS-ARRAY ELECTRONICS (HOLDINGS) LTD 15,000 LEUNG CHUN WAH 154,000 18,831,770 ACQUISITION (1/12)











DEC 4 WILMAR INT’L LTD 2,400,000 ARCHER DANIELS MIDLAND ASIA-PACIFIC LTD 444,535,580 374,961,795 ACQUISITION (3/12)

DEC 7 WILMAR INT’L LTD 1,550,000 ARCHER DANIELS MIDLAND ASIA-PACIFIC LTD 447,585,580 374,961,795 ACQUISITION (7/12)

DEC 3 YANLORD LAND GROUP LTD 1,000,000 ZHONG SHENG JIAN 16,860,200 1,278,390,000 ACQUISITION (1/12)

DEC 3 YANLORD LAND GROUP LTD 1,000,000 ZHONG SHENG JIAN 17,860,200 1,278,390,000 ACQUISITION (2/12)

DEC 3 ZAGRO ASIA LTD 819,000 POH BENG SWEE 127,517,713 50,303,360 ACQUISITION (3/12)








DEC 11 ZAGRO ASIA LTD 2,342,000 POH BENG SWEE 133,081,913 50,303,360 ACQUISITION (11/12)

DEC 14 ZAGRO ASIA LTD 1,483,000 POH BENG SWEE 134,564,913 50,303,360 ACQUISITION (14/12)


nted

E

FILING COMPANY SHARES ACQUIRED DIRECTOR/SUBSTANTIAL SHARES HELD AFTER CHANGE REASONDATE (DISPOSED) SHAREHOLDER DIRECT DEEMED

0.093

0.05

0.15

0.20

0.25

0.30

BLO

OM

BERG

mil

ts

es

l

l

Share buybacks

DATE COMPANY SHARES ACQUIRED SHARE PRICE CUMULATIVE HIGH LOW NET OUTSTANDING TREASURY SHARES

DEC 9 AEM HOLDINGS LTD 4,000 0.270 0.270 660,600

DEC 11 AEM HOLDINGS LTD 47,000 0.270 0.270 706,600

DEC 14 BRC ASIA LTD 38,200 0.700 0.700 1,281,200

DEC 15 BRC ASIA LTD 10,000 0.700 0.700 1,291,200

DEC 10 CENTURION CORP LTD 60,000 0.396 0.396 4,801,200



DEC 10 COURTS ASIA LTD 30,000 0.385 0.385 34,300,547



DEC 10 DBS GROUP HOLDINGS LTD 100,000 16.440 16.390 12,600,000



DEC 9 GCCP RESOURCES LTD 3,000,000 0.142 0.141 3,000,000

DEC 11 GCCP RESOURCES LTD 10,000,000 0.133 0.130 13,000,000

DEC 10 GP BATTERIES INT’L LTD 56,600 0.930 0.920 5,772,600




DEC 11 GP INDUSTRIES LTD 10,000 0.670 0.670 36,544,100

DEC 11 HG METAL MANUFACTURING LTD 40,600 0.039 0.039 23,308,600DEC 14 HG METAL MANUFACTURING LTD 100,000 0.039 0.039 23,408,600DEC 9 LUM CHANG HOLDINGS LTD 135,600 0.370 0.370 2,418,700DEC 10 LUM CHANG HOLDINGS LTD 500,000 0.370 0.370 2,918,700DEC 10 NORDIC GROUP LTD 157,500 0.186 0.186 4,062,500DEC 14 NORDIC GROUP LTD 106,300 0.181 0.181 4,168,800DEC 15 NORDIC GROUP LTD 78,300 0.183 0.183 4,247,100DEC 9 PACC OFFSHORE SERVICES HOLDINGS LTD 100,000 0.320 0.320 6,896,800DEC 10 SIA ENGINEERING CO LTD 38,000 3.590 3.570 996,300DEC 11 SIA ENGINEERING CO LTD 3,000 3.580 3.580 999,300DEC 14 SIA ENGINEERING CO LTD 36,200 3.580 3.580 1,035,500DEC 15 SIA ENGINEERING CO LTD 24,300 3.550 3.520 1,059,800DEC 11 SINGAPORE TECH ENGINEERING LTD 500,000 2.900 2.890 20,827,248DEC 14 SINGAPORE TECH ENGINEERING LTD 141,400 2.890 2.880 20,968,648DEC 10 TIONG SENG HOLDINGS LTD 54,500 0.240 0.240 790,500DEC 14 TIONG SENG HOLDINGS LTD 19,000 0.240 0.240 809,500DEC 15 TIONG SENG HOLDINGS LTD 9,000 0.240 0.240 818,500DEC 10 UNITED OVERSEAS BANK LTD 51,386 19.400 19.220 12,809,089DEC 11 UNITED OVERSEAS BANK LTD 58,027 19.250 19.140 12,867,116DEC 14 UNITED OVERSEAS BANK LTD 21,397 19.080 18.810 12,014,513DEC 15 UNITED OVERSEAS BANK LTD 45,100 19.120 18.910 12,059,613

DATE COMPANY SHARES ACQUIRED SHARE PRICE CUMULATIVE HIGH LOW NET OUTSTANDING TREASURY SHARES


FTSE STI : Dividend per share forecasts (ex Dec 17, 2015 to Dec 16, 2016) including special dividends (forecasts) M

ARKI

T, FA

CTSE

T

Asia-Pacific dividend forecasts (week beginning Dec 21, 2015)

Largest change in short interest — Singapore(week beginning Dec 14, 2014)

Top payouts expected

Top DPS changes expected

STOCK NAME INDEX EXPECTED ANN DATE DIV TYPE DIV FORECAST CURRENCY CHANGE (%)

National Storage REIT S&P ASX 200 21-Dec-15 INT 0.0430 AUD 7.5

Goodman Group S&P ASX 50 21-Dec-15 INT 0.1190 AUD 7.2

Dexus Property Group S&P ASX 50 22-Dec-15 INT 0.2083 AUD 5.8

GPT Group S&P ASX 50 21-Dec-15 FIN 0.1130 AUD 5.6

EXPECTED ANN DATE DIV TYPE DIV FORECAST CURRENCY CHANGE (%)STOCK NAME

S&P ASX 200

S&P ASX 50

S&P ASX 50

S&P ASX 50

INDEX

INT

INT

INT

FIN

DIV TYPE

AUD

AUD

AUD

AUD

CURRENCY

STOCK NAME INDEX EXPECTED ANN DATE DIV TYPE PAYOUT* (MIL) CURRENCY YIELD** (%)

Goodman Group S&P ASX 50 21-Dec-15 INT 210.6 AUD 4.0

GPT Group S&P ASX 50 21-Dec-15 FIN 202.8 AUD 5.0

Dexus Property Group S&P ASX 50 22-Dec-15 INT 201.6 AUD 5.8

National Storage REIT S&P ASX 200 21-Dec-15 INT 14.4 AUD 5.7

Markit commentaryGoodman Group aims to distribute the higher of 60% of operating earnings or taxable income. For FY2016, the group is positioned to deliver its forecast op-erating earnings per share of A$0.394, up 6% y-o-y, and its estimated distribu-tion of A$0.238. We are projecting a semi-annual dividend of A$0.119 per share.

According to GPT Group’s 3QFY2015 update, the group has been on track to achieve EPS growth of 5%-6% for the full year 2015, driven by the core performance of its portfolio. The group has a target to deliver total returns of more than 9% for security holders. We are projecting 5.6% distribution growth, assuming earnings growth to be around the mid-point of its guidance range.

Dexus Property Group’s dividend policy is to distribute approximate-ly 70% to 80% of funds from operations. For FY2016, the group has guid-ed its earnings growth of 5.5%-6% with FFO from underlying business to be up 3%-3.5%. The group’s free cash flow will support its target distribution growth of 5.5%-6.0%, and our current estimate represents a 5.8% annual in-crease in its payout.

National Storage REIT expects its full-year underlying EPS to improve by 8.7%-8.8%, assuming no material changes in market conditions. With its dis-tribution payout ratio anticipated to remain between 90% and 100% of un-derlying earnings, our current forecast is set at 7.5% higher from the prior year. — By Maojun Ye

Markit is a leading global diversified provider of financial information services. The company provides products that enhance transparency, reduce risk and improve operational efficiency. Customers include

banks, hedge funds, asset managers, central banks, regulators, audi-tors, fund administrators and insurance companies. Founded in 2003, Markit employs more than 3,000 people in 11 countries.

For more information, please contact:Telephone: +65 6922 4200 Email: [email protected]: www.markit.com. One Raffles Place Office Tower 2 #15-61 Singapore (048616)

MAR

KIT

MAR

KIT,

FACT

SET

Largest change in short interest — Asia(week beginning Dec 14, 2014)

* Short interest as % of shares outstanding. Subject to a minimum level of short interest of 1%

TICKER SECTOR EQUITY NAME SHORT CHANGE OVER INTEREST (%) WEEK (%)

2678 Japan Retailing Askul Corp 2.11 252

7013 Japan Capital Goods IHI Corp 1.72 57

1680 Asia Consumer Services Macau Legend Development Ltd 1.20 50

902 Asia Utilities Huaneng Power International Inc 1.30 -45

3668 Japan Software & Services Colopl Inc 1.61 -45

4321 Japan Real Estate Kenedix Inc 2.62 -40

9107 Japan Transportation Kawasaki Kisen Kaisha Ltd 4.00 39

3099 Japan Retailing Isetan Mitsukoshi Holdings Ltd 1.30 36

4185 Japan Materials JSR Corp 1.22 35

6988 Japan Materials Nitto Denko Corp 1.08 33

TICKER SECTOR EQUITY NAME SHORT CHANGE OVER INTEREST (%) WEEK (%)

A7S Asia Materials Sunvic Chemical Holdings Ltd 1.22 12

U96 Asia Capital Goods Sembcorp Industries Ltd 3.03 10

5GJ Asia Capital Goods AusGroup Ltd 1.22 9

BGK Asia Energy Swiber Holdings Ltd 1.35 8

N03 Asia Transportation Neptune Orient Lines Ltd 2.50 8

EB5 Asia Food, Beverage & Tobacco First Resources Ltd 1.05 -8

5DN Asia Energy Ezra Holdings Ltd 5.60 -8

S53 Asia Transportation SMRT Corp Ltd 2.12 -7

E5H Asia Food, Beverage & Tobacco Golden Agri-Resources Ltd 1.71 -6

BN4 Asia Capital Goods Keppel Corp Ltd 3.44 6

* Short interest as % of shares outstanding. Subject to a minimum level of short interest of 1%. *Asia Pacific: 13 countries consisting of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand

STOCK NAME SECTOR DIVIDEND CURRENCY DPS (F) DPS (A) Y-O-Y (%) CHANGE YIELD (%) CHANGE

Ascendas Real Estate Investment Trust Real Estate SGD 0.15599 0.18361 -15.0 Fall 7.0 Down

CapitaLand Ltd Real Estate SGD 0.095 0.09 5.6 Rise 3.1 Up

CapitaLand Mall Trust REIT Real Estate SGD 0.1127 0.1123 0.4 Rise 6.1 Up

City Developments Ltd Real Estate SGD 0.12 0.16 -25.0 Fall 1.7 Up

ComfortDelGro Corp. Ltd Travel & Leisure SGD 0.0925 0.085 8.8 Rise 3.1 Down

DBS Group Holdings Ltd Banks SGD 0.62 0.6 3.3 Rise 3.8 Up

Genting Singapore plc Travel & Leisure SGD 0.01 0.01 0.0 Same 1.3 Up

Global Logistic Properties Ltd Real Estate SGD 0.063385 0.055 15.2 Rise 3.2 Up

Golden Agri-Resources Food & Beverage SGD 0.008451 0.00585 44.5 Rise 2.6 Up

Hongkong Land Holdings Ltd Real Estate USD 0.19 0.19 0.0 Same 2.7 Down

Hutchison Port Holdings Trust Industrial Goods & Services HKD 0.335 0.38 -11.8 Fall 8.2 Up

Jardine Cycle & Carriage Ltd Retail USD 0.68 0.831659 -18.2 Fall 2.8 Up

Keppel Corp Ltd Oil & Gas SGD 0.41 0.48 -14.6 Fall 6.5 Up

Noble Group Ltd Industrial Goods & Services USD 0.021 0.007 200.0 Rise 7.6 Up

Oversea-Chinese Banking Corp Ltd Banks SGD 0.37 0.36 2.8 Rise 4.3 Up

SATS Ltd Industrial Goods & Services SGD 0.15 0.14 7.1 Rise 3.9 Down

Sembcorp Industries Ltd Oil & Gas SGD 0.15 0.16 -6.3 Fall 5.0 Up

SembCorp Marine Ltd Oil & Gas SGD 0.12 0.12 0.0 Same 7.2 Up

Sia Engineering Co Ltd Industrial Goods & Services SGD 0.145 0.145 0.0 Rise 4.1 Up

Singapore Airlines Ltd Travel & Leisure SGD 0.37 0.27 37.0 Rise 3.4 Up

Singapore Exchange Ltd Financial Services SGD 0.32 0.29 10.3 Rise 4.2 Up

Singapore Press Hldgs Ltd Media SGD 0.2 0.2 0.0 Same 5.1 Up

Singapore Technologies Engineering Ltd Industrial Goods & Services SGD 0.16 0.16 0.0 Same 5.6 Up

Singapore Telecom Ltd Telecommunications SGD 0.178 0.175 1.7 Rise 4.7 Up

StarHub Ltd Telecommunications SGD 0.2 0.2 0.0 Same 5.6 Up

Thai Beverage Public Co Ltd Food & Beverage THB 0.63 0.61 3.3 Rise 3.7 Up

United Overseas Bank Ltd Banks SGD 0.75 1.1 -31.8 Fall 3.9 Down

UOL Group Ltd Real Estate SGD 0.15 0.15 0.0 Same 2.5 Up

Wilmar International Ltd Food & Beverage SGD 0.080287 0.08 0.4 Rise 2.8 Up

Yangzijiang Shipbuilding Holdings Ltd Industrial Goods & Services SGD 0.047961767 0.055 -12.8 Fall 4.4 Down

E* Markit Dividends & Factset number of shares as of publication date** Markit Dividends & WM/Reuters shares as of publication date

DPS (F): DPS (Forecast) — ex Dec 17, 2015 to Dec 16, 2016 DPS (A): DPS (Actual) — ex Dec 17, 2014 to Dec 16, 2015 y-o-y %: Change of DPS (F) over DPS (A) Yield: Based on DPS (F) over the stock price as at Dec 16, 2015


CAPITAL SINGAPORE EARNINGS ESTIMATES

This table pre sents the earnings fore-cast of Singaporean equities based on the Bloomberg Professional service’s Bloomberg Estimates (BEst) consen-sus data.

The Bloomberg Professional ser-vice utilises statistics and accounting, as well as market, industry and com-pany knowledge to determine which estimates to include in the consensus for the best representation of the cur-rent and future fundamentals of the company.

For example, if the majority of bro-kers provide an earnings per share (EPS) estimate that includes stock compensa-tion expense, the estimates that exclude stock compensation expense are, in turn, excluded from the consensus. Likewise, if an estimate has not been reiterated or revised for one reporting period (typi-cally around 100 days), it is removed from the consensus.

Glossary to Bloomberg Estimates Consensus Table

• Price: Closing price as of stated date

• Market Cap : Market capitalisation ($)

• Consensus Recommendation: The following rating is assigned to each type of re commendation provided by participating brokers:

5 = buy 4 = weak buy 3 = hold 2 = weak sell 1 = sell – = no recommendation from

brokers at that point of timeThe average of all recommendations is then calculated to give the consensus rating

• Consensus Recommendation 3-Mth Change: Change in the con-sensus analyst recommendation over the past three months

• No of recommendations: Number of recommendations that are in-cluded in the consensus calculation

• BEst PER: Ratio calculated by di-viding the price of the security by BEst earnings per share on a blend-ed forward 12-month basis (N.A. — unable to calculate, for example negative earnings per share fi gures)

• BEst EPS: Earnings per share from continuing operations, which may exclude the effects of one-time and extraordinary gains/losses

• EPS 1-yr change: Earnings before extraordinary items year over year growth in percentage

• Price performance 3-mth: Three-month price performance for that equity

DisclaimerIn no event will Bloomberg or The Edge be responsible for special, indirect, inci-dental or consequential damages that may be incurred or experienced on account of entering into or relying on the data.

Bloomberg acts solely as a transmit-ter of information provided by certain brokers, certain corporations and cer-tain other sources.

Neither Bloomberg, any source or any third party which Bloomberg con-tracts to effect transmission makes any warranty of merchantability or fitness for a particular purpose with respect to the Bloomberg financial information, nor shall any of them be liable for any error or omission in the information supplied to The Edge or its subscribers or the accuracy, completeness or time-liness of the data.

COMPANY PRICE MARKET CONSENSUS CONSENSUS NO OF BEST PER BEST EPS 1-YR PRICE (DEC 17) CAP RECOMMENDATION RECOMMENDATION RECOMMENDATIONS (X) EPS CHANGE (%) PERFORMANCE 3-MTH CHANGE 3-MTH (%)

E

AIMS AMP CAPITAL INDUSTRIAL 1.35 856,766,784.00 4.33 -0.67 3.00 11.70 0.12 11.22 -0.37ARA ASSET MANAGEMENT 1.15 1,121,938,048.00 5.00 0.00 2.00 12.64 0.09 17.75 -16.23ASCENDAS INDIA TRUST 0.87 809,401,664.00 4.00 0.00 4.00 14.97 0.06 30.90 6.06ASCENDAS REAL ESTATE INV TRT 2.25 5,377,550,336.00 4.29 0.46 24.00 14.38 0.16 -17.59 1.81ASCOTT RESIDENCE TRUST 1.17 1,804,277,248.00 3.91 0.00 11.00 15.46 0.07 -51.02 -4.94ASIAN PAY TELEVISION TRUST 0.64 933,920,000.00 3.83 -0.33 6.00 11.10 0.06 N.A. -20.00BIOSENSORS INTERNATIONAL GRO 0.81 1,359,282,688.00 1.00 -1.50 1.00 21.65 0.03 N.A. 18.38BREADTALK GROUP LTD 1.15 320,973,472.00 3.67 0.00 3.00 20.14 0.06 -10.35 -0.44BUMITAMA AGRI LTD 0.75 1,316,457,472.00 4.56 -0.44 9.00 11.20 663.61 34.77 -5.06CACHE LOGISTICS TRUST 0.89 784,824,576.00 3.89 0.00 9.00 11.14 0.08 0.60 -11.56CAMBRIDGE INDUSTRIAL TRUST 0.58 746,220,736.00 3.80 0.40 5.00 12.68 0.04 -62.68 -8.20CAPITALAND COMMERCIAL TRUST 1.35 3,912,634,112.00 3.79 -0.08 24.00 15.28 0.09 17.81 -1.50CAPITALAND LTD 3.26 13,848,376,320.00 4.57 -0.16 21.00 18.33 0.18 40.29 16.97CAPITALAND MALL TRUST 1.93 6,763,632,128.00 4.09 0.17 23.00 16.50 0.12 7.65 1.59CAPITALAND RETAIL CHINA TRUS 1.48 1,256,451,712.00 4.25 0.00 8.00 16.02 0.09 0.97 11.94CDL HOSPITALITY TRUSTS 1.30 1,278,342,272.00 3.88 0.18 17.00 11.81 0.11 -13.24 -2.26CDW HOLDING LTD 0.14 66,344,352.00 3.00 0.00 2.00 7.04 0.01 -26.97 -13.58CENTURION CORP LTD 0.39 289,459,232.00 5.00 0.00 3.00 7.22 0.05 19.40 -10.47CHINA EVERBRIGHT WATER LTD 0.63 1,643,048,960.00 4.75 0.00 4.00 16.49 0.21 -39.61 -6.02CHINA MERCHANTS HLDGS PAC LT 0.87 1,552,263,296.00 4.50 0.00 2.00 11.88 0.40 4.03 -4.92CITIC ENVIROTECH LTD 1.48 1,669,092,352.00 4.25 -0.15 4.00 23.35 0.06 90.24 -2.31CITY DEVELOPMENTS LTD 7.54 6,919,782,912.00 4.17 0.35 23.00 11.50 0.67 12.43 -4.60COMFORTDELGRO CORP LTD 2.97 6,364,783,616.00 3.92 0.26 13.00 18.40 0.16 6.92 3.12CORDLIFE GROUP LTD 1.39 363,016,288.00 5.00 0.00 3.00 33.01 0.04 4.90 -0.36COSCO CORP SINGAPORE LTD 0.30 682,969,728.00 1.38 -0.13 8.00 N.A. 0.00 -32.12 -21.33COURTS ASIA LTD 0.39 202,342,320.00 3.75 0.50 4.00 8.80 0.04 -37.80 -2.53CROESUS RETAIL TRUST 0.80 506,475,936.00 4.40 0.00 5.00 12.94 5.25 35.92 -3.66CSE GLOBAL LTD 0.45 232,230,528.00 4.67 0.00 3.00 7.57 0.06 944.37 -8.00CWT LTD 1.84 1,125,571,200.00 3.50 0.30 4.00 9.19 0.20 6.12 -4.34DAIRY FARM INTL HLDGS LTD 5.95 11,266,216,960.00 3.56 0.44 9.00 16.39 0.36 1.62 -1.95DBS GROUP HOLDINGS LTD 16.59 41,154,293,760.00 4.24 -0.24 25.00 9.25 1.79 8.67 -5.28DEL MONTE PACIFIC LTD 0.45 816,149,952.00 4.25 0.25 4.00 N.A. N.A. N.A. 25.00EU YAN SANG INTERNATIONAL 0.45 190,094,512.00 1.50 0.00 2.00 32.32 0.01 -69.82 6.25EZION HOLDINGS LTD 0.60 954,542,912.00 4.58 0.28 12.00 3.52 0.12 21.10 -13.04EZRA HOLDINGS LTD 0.10 282,140,256.00 3.38 0.00 8.00 11.09 0.01 569.17 -21.95FAR EAST HOSPITALITY TRUST 0.64 1,144,911,744.00 2.40 -0.20 10.00 14.04 0.05 -51.27 4.07FIRST REAL ESTATE INVT TRUST 1.18 881,283,584.00 4.00 0.00 5.00 13.65 0.09 -25.90 -7.45FIRST RESOURCES LTD 1.89 3,028,006,656.00 4.72 0.00 18.00 13.51 0.10 -27.19 19.87FRASER AND NEAVE LTD 2.17 3,119,577,856.00 2.00 0.00 3.00 24.52 0.09 N.A. 8.00FRASERS CENTREPOINT LTD 1.67 4,834,666,496.00 4.88 0.02 8.00 7.98 0.21 22.70 11.63FRASERS CENTREPOINT TRUST 1.83 1,673,910,656.00 3.89 -0.11 18.00 15.64 0.12 -3.06 -2.68FRASERS COMMERCIAL TRUST 1.27 1,002,875,392.00 4.86 0.02 7.00 13.40 0.09 -16.94 -3.44FRASERS HOSPITALITY TRUST 0.74 1,005,499,136.00 4.00 0.33 4.00 16.81 0.04 N.A. 1.38GENTING HONG KONG LTD 0.33 3,839,785,984.00 3.00 -0.25 3.00 25.17 0.01 -31.57 9.29GENTING SINGAPORE PLC 0.78 9,180,083,200.00 3.55 -0.41 22.00 22.82 0.03 -12.24 -1.94GLOBAL INVACOM GROUP LTD 0.15 36,799,364.00 4.00 0.00 2.00 N.A. 0.02 -40.94 -7.93GLOBAL LOGISTIC PROPERTIES L 2.06 9,620,477,952.00 4.44 -0.33 18.00 20.07 0.07 -31.36 -1.93GOLDEN AGRI-RESOURCES LTD 0.32 4,138,795,776.00 3.35 0.00 17.00 12.88 0.02 -63.64 6.56GREAT EASTERN HOLDINGS LTD 19.76 9,348,051,968.00 3.75 -0.25 4.00 11.15 1.77 30.07 -3.38GUOCOLAND LTD 1.84 2,153,597,184.00 4.50 0.00 2.00 17.79 0.11 -28.87 -3.66HO BEE LAND LTD 2.00 1,345,794,304.00 4.60 0.00 5.00 11.78 0.17 -45.72 0.51HONGKONG LAND HOLDINGS LTD 6.95 23,098,265,600.00 4.38 -0.13 16.00 16.94 0.41 11.59 0.88HUTCHISON PORT HOLDINGS TR-U 0.53 6,469,429,760.00 3.43 0.30 14.00 21.19 0.19 N.A. -7.01HYFLUX LTD 0.57 451,538,880.00 1.67 -0.83 3.00 N.A. 0.01 -31.40 -23.94IFAST CORP LTD 1.39 361,453,568.00 4.00 0.00 2.00 24.88 0.06 -6.60 6.54INDOFOOD AGRI RESOURCES LTD 0.47 663,054,656.00 3.20 0.02 10.00 10.06 466.80 46.17 -2.08INNOVALUES LTD 0.77 253,689,536.00 4.67 0.00 3.00 9.45 0.08 81.11 10.87INTERPLEX HOLDINGS LTD 0.70 386,538,912.00 5.00 0.00 2.00 4.35 0.11 150.00 7.75IREIT GLOBAL 0.68 413,987,040.00 4.00 0.00 2.00 12.60 0.03 N.A. 3.85JARDINE CYCLE & CARRIAGE LTD 34.50 13,461,747,712.00 4.00 0.00 7.00 12.76 1.94 -10.36 20.96JARDINE MATHESON HLDGS LTD 46.03 45,763,022,848.00 3.55 -0.25 11.00 10.95 4.28 8.45 0.37JARDINE STRATEGIC HLDGS LTD 26.35 41,636,655,104.00 4.33 -0.17 9.00 9.89 2.67 8.24 -1.18KEPPEL CORP LTD 6.47 11,627,421,696.00 3.57 0.07 23.00 8.29 0.77 1.47 -5.87KEPPEL DC REIT 1.01 891,806,336.00 4.67 0.07 6.00 13.83 0.07 N.A. -0.50KEPPEL REIT 0.93 3,007,076,352.00 3.05 -0.14 22.00 16.38 0.06 -34.01 -2.63KRISENERGY LTD 0.25 387,434,944.00 4.67 0.00 6.00 7.00 0.03 -150.00 -23.08LIBRA GROUP LTD 0.14 16,986,126.00 5.00 0.00 2.00 2.12 0.07 892.31 -13.33LIPPO MALLS INDONESIA RETAIL 0.31 853,333,312.00 3.33 0.00 3.00 10.34 0.03 -18.30 -4.69M1 LTD 2.70 2,511,001,088.00 2.96 -0.17 24.00 13.49 0.20 8.62 -7.53MANDARIN ORIENTAL INTL LTD 1.46 2,576,120,832.00 1.00 -1.00 2.00 25.67 0.06 0.62 0.21MAPLETREE COMMERCIAL TRUST 1.31 2,736,117,760.00 3.83 0.65 12.00 15.30 0.09 -10.14 2.75MAPLETREE GREATER CHINA COMM 0.92 2,501,263,360.00 4.00 0.13 9.00 14.76 0.06 N.A. -3.23MAPLETREE INDUSTRIAL TRUST 1.55 2,740,070,656.00 3.71 0.47 17.00 13.87 0.11 15.45 2.68MAPLETREE LOGISTICS TRUST 1.02 2,458,824,192.00 4.06 0.13 16.00 12.39 0.08 -18.42 -1.00MEMTECH INTERNATIONAL LTD 0.13 89,459,360.00 4.67 0.17 3.00 7.79 0.01 N.A. 5.83MERMAID MARITIME PCL 0.15 202,106,032.00 4.50 1.00 2.00 4.68 0.83 71.31 -10.62MIDAS HOLDINGS LTD 0.28 328,756,800.00 3.67 -0.33 3.00 13.62 0.09 18.11 -1.85MTQ CORP LTD 0.48 74,099,088.00 3.00 0.00 2.00 N.A. 0.02 -79.55 -4.00NAM CHEONG LIMITED 0.12 255,768,832.00 1.63 -0.63 8.00 14.19 0.03 46.08 -16.08NEPTUNE ORIENT LINES LTD 1.24 3,212,631,808.00 3.10 -0.90 10.00 N.A. -0.01 -240.68 44.71NOBLE GROUP LTD 0.42 2,744,871,936.00 3.91 0.14 11.00 4.68 0.06 -69.71 -6.67OLAM INTERNATIONAL LTD 1.80 4,922,872,320.00 3.44 0.08 9.00 10.75 0.17 70.04 -11.94OSIM INTERNATIONAL LTD 1.03 771,257,280.00 2.60 -0.90 10.00 11.00 0.09 -4.42 -31.33OUE COMMERCIAL REAL ESTATE I 0.67 861,484,992.00 2.75 0.08 4.00 18.74 0.04 N.A. 6.35OUE HOSPITALITY TRUST 0.75 1,001,565,888.00 3.38 0.49 8.00 10.92 0.07 N.A. -5.70OUE LTD 1.77 1,598,835,456.00 4.57 0.13 7.00 24.85 0.07 N.A. -2.22OVERSEA-CHINESE BANKING CORP 8.73 35,634,753,536.00 4.04 -0.24 26.00 9.15 0.95 35.20 -3.57OVERSEAS EDUCATION LTD 0.58 240,910,864.00 3.20 -0.40 5.00 15.83 0.04 -7.02 -12.12PACC OFFSHORE SERVICES HOLDI 0.31 580,193,024.00 3.80 0.40 5.00 6.31 0.04 -48.50 0.00PACIFIC RADIANCE LTD 0.31 220,232,576.00 3.38 -0.25 8.00 7.36 0.03 -5.05 -4.69PARKSON RETAIL ASIA LTD 0.27 179,484,496.00 3.00 0.00 2.00 10.70 0.02 N.A. -19.70PARKWAYLIFE REAL ESTATE 2.27 1,373,355,392.00 3.60 0.00 5.00 18.43 0.12 23.28 0.89PERENNIAL REAL ESTATE HOLDIN 0.96 1,597,527,040.00 4.67 0.00 3.00 18.37 0.06 -30.58 4.86PETRA FOODS LTD 2.10 1,289,541,248.00 1.50 -0.30 4.00 31.50 0.05 -17.82 -27.34Q & M DENTAL GROUP SINGAPORE 0.70 564,610,432.00 4.33 0.00 3.00 33.90 0.02 28.97 -2.78RAFFLES MEDICAL GROUP LTD 4.14 2,414,020,352.00 4.17 0.71 12.00 30.34 0.14 -21.65 -6.87REGAL INTERNATIONAL GROUP LT 0.16 34,819,896.00 5.00 0.00 2.00 3.63 0.15 N.A. 8.75RELIGARE HEALTH TRUST 0.99 789,863,552.00 3.50 0.00 4.00 15.13 0.07 -10.10 4.74RIVERSTONE HOLDINGS LTD 2.28 855,952,064.00 4.33 0.13 6.00 18.59 0.37 19.29 37.65SARINE TECHNOLOGIES LTD 1.44 474,620,576.00 3.50 -0.50 4.00 19.03 0.07 12.50 -12.34SATS LTD 3.85 4,333,327,360.00 3.64 0.04 11.00 18.29 0.21 8.70 -0.52SEMBCORP INDUSTRIES LTD 3.04 5,498,335,744.00 4.06 0.17 18.00 8.32 0.36 -3.04 -11.24SEMBCORP MARINE LTD 1.79 3,665,436,160.00 2.18 -0.19 22.00 10.16 0.17 0.83 -26.72SHENG SIONG GROUP LTD 0.84 1,262,971,136.00 4.78 0.22 9.00 20.71 0.04 18.86 0.60SIA ENGINEERING CO LTD 3.55 3,927,608,576.00 3.00 0.29 7.00 20.98 0.17 -31.38 -3.30SIIC ENVIRONMENT HOLDINGS LT 0.76 1,683,543,168.00 4.71 0.05 7.00 15.67 0.22 6.62 -9.58SILVERLAKE AXIS LTD 0.69 1,826,149,760.00 3.50 0.00 4.00 16.96 0.12 36.23 26.17SINGAPORE AIRLINES LTD 11.04 12,843,257,856.00 3.61 0.22 18.00 16.09 0.68 2.61 5.06SINGAPORE EXCHANGE LTD 7.67 8,154,909,184.00 3.47 0.26 19.00 21.49 0.35 8.67 -0.26SINGAPORE POST LTD 1.67 3,660,161,792.00 4.13 0.00 8.00 20.04 0.08 -26.52 -3.98SINGAPORE PRESS HOLDINGS LTD 3.91 6,229,637,632.00 2.27 -0.06 11.00 21.29 0.18 -20.00 -1.02SINGAPORE TECH ENGINEERING 2.96 9,025,441,792.00 3.77 -0.08 13.00 16.58 0.17 -8.92 -2.36SINGAPORE TELECOMMUNICATIONS 3.78 60,107,284,480.00 4.48 0.24 25.00 14.73 0.26 3.53 1.90SMRT CORP LTD 1.48 2,201,966,080.00 2.54 -0.29 13.00 24.03 0.06 46.34 17.14SOILBUILD BUSINESS SPACE REI 0.73 686,814,656.00 4.83 0.17 6.00 12.89 0.06 N.A. -7.01SPH REIT 0.96 2,394,177,024.00 2.67 -0.33 6.00 18.99 0.05 N.A. 0.00STARBURST HOLDINGS LTD 0.26 65,000,000.00 5.00 0.00 2.00 N.A. 0.03 34.86 -7.14STARHILL GLOBAL REIT 0.74 1,624,997,248.00 4.40 0.00 10.00 14.00 0.05 21.06 -1.33STARHUB LTD 3.65 6,272,397,824.00 2.38 -0.08 24.00 16.97 0.21 -2.71 1.69SUNTEC REIT 1.56 3,882,707,712.00 2.45 0.00 22.00 17.73 0.09 -19.52 2.34SUPER GROUP LTD 0.82 908,804,864.00 2.67 0.00 9.00 17.51 0.05 -31.14 1.87TAT HONG HOLDINGS LTD 0.49 301,213,888.00 3.67 0.00 3.00 20.47 0.03 -85.22 -3.03THAI BEVERAGE PCL 0.69 17,074,817,024.00 4.00 0.13 7.00 17.04 1.00 13.16 -2.19TIGER AIRWAYS HOLDINGS LTD 0.41 1,025,034,048.00 3.00 -0.13 7.00 78.62 0.01 -7.74 42.11TRIYARDS HOLDINGS LTD 0.43 133,048,656.00 5.00 0.00 4.00 3.16 0.09 -6.75 36.67UNITED OVERSEAS BANK LTD 19.11 30,574,520,320.00 3.56 0.08 25.00 9.51 2.01 7.61 -1.24UOL GROUP LTD 6.09 4,825,086,976.00 4.90 0.34 10.00 10.76 0.56 -13.73 -1.15VALUETRONICS HOLDINGS LTD 0.41 155,733,888.00 5.00 0.00 4.00 5.57 0.40 -1.48 0.00VARD HOLDINGS LTD 0.25 289,100,000.00 1.57 0.07 7.00 N.A. 0.00 0.00 -41.77VENTURE CORP LTD 8.33 2,308,049,664.00 4.67 0.22 9.00 13.57 0.61 6.71 -0.72WILMAR INTERNATIONAL LTD 2.92 18,264,764,416.00 4.10 0.05 20.00 10.41 0.20 -12.14 9.89WING TAI HOLDINGS LTD 1.71 1,338,892,928.00 4.09 0.09 11.00 14.60 0.12 -40.85 3.32YANGZIJIANG SHIPBUILDING 1.06 4,062,001,664.00 3.19 -0.13 16.00 6.69 0.73 12.50 -13.82YANLORD LAND GROUP LTD 1.00 1,948,736,512.00 2.67 -0.22 9.00 7.61 0.61 -7.76 -4.29YING LI INTERNATIONAL REAL E 0.15 393,784,160.00 5.00 0.00 1.00 10.17 0.07 22.22 9.35YOMA STRATEGIC HLDGS LTD 0.45 789,341,568.00 4.00 0.25 4.00 32.64 0.01 58.12 21.92ZHONGMIN BAIHUI RETAIL GROUP 1.78 349,449,600.00 5.00 0.00 2.00 23.46 0.35 225.82 0.56


Stocks, US dollar climb as Fed takes a first Dec 17 — Asian stock markets jumped on Thursday as in-vestors chose to take a historic hike in US interest rates as a mark of confidence in the world’s largest economy, lifting the US dollar and piling on the pain for oil prices.

European shares were expected to follow, with the UK’s FTSE 100 set to open 1.1% higher, according to IG. Germany’sDAX was seen rising 1.2% and France’s CAC 40 1.4%.

China also allowed its currency slip for a 10th straight session to hit its lowest since June 2011. This steady decline puts pressure in turn on other Asian currencies to depreciateto stay competitive.

The US Federal Reserve’s 25-basis-point increase was al-most a decade in the making and easily one of the most tel-egraphed in history. So, there was some relief that, after months of waiting and several false starts, the move was fi-nally done and dusted.

“The Fed will be absolutely delighted with the lack of vola-tility across all asset classes,” said Alan Ruskin, global head of forex at Deutsche. “Nothing here to change a view that we can have a moderate ‘risk-positive rallyette’, even if the prob-ability of a March hike is significantly higher than priced.”

Japan’s Nikkei ended up 1.6%, on top of a 2.6% gain the previous day. Australian stocks climbed 1.6%, while Shanghaiput on 1.7%. MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.7%.

On Wall Street, the Dow Jones Industrial Average ended Wednesday with gains of 1.28%, while the Standard & Poor’s 500 rose 1.45% and the Nasdaq 1.52%.

Markets were soothed by Fed chair Janet Yellen’s assur-ance that future tightening would be “gradual” and depend-ent on inflation finally moving higher as long forecast.

The rate forecasts, or dot points, from Fed members were a little higher than many expected with 100bps of hikes pen-cilled in for next year and a terminal rate of 3.5%.

Fed fund futures dipped in response, yet the December 2016 contract implies a rate of only 0.83%, well below the 1.25% to 1.5% favoured by the central bank.

Moves in the Treasury market were also modest. While yields on two-year notes hit their highest since April 2010, they were up only 4bps in all at 1.009%.

Still, that did widen the premium over German yields to 132bps, the fattest since late 2006 and a positive draw for

the US dollar, which added 0.9% to 98.794 against a basket of major currencies and looked set for another test of stiff re-sistance around the 100.00 mark.

The euro dropped to US$1.0852, having fallen from US$1.1000 in the wake of the Fed’s statement, while the dol-lar advanced to ¥122.47.

Richard Franulovich, a currency strategist at Westpac, noted that, historically, the US dollar tended to soften at the start of Fed tightening cycles. Yet, he doubted it would last, given that most other major central banks were very much in easing mode. “A follow-up Fed hike could come as soon as March, aided and abetted by favourable oil price base-effectsthat will lift inflation almost a percentage point and a poten-tially mild winter,” said Franulovich. “We should see a resump-tion of the dollar’s longer-term uptrend as 2016 progresses.”

Such an outcome would spell further trouble for com-modities, making them more expensive when measured in other currencies.

Reuters Support: (1 800) 776 7188Dealing Code HELP | Customer zone: www.reuters.com/customers | Product info: www.reuters.com/productinfo

Gold falls on Fed rate hike, US dollar surgeDec 17 — Gold slipped on Thursday to give back some of its overnight gains, with trading choppy as the US dollar surged afterthe Federal Reserve hiked US interest rates for the first time in nearly a decade.

The US central bank raised the range of its benchmark interest rate by a quar-ter of a percentage point on Wednesday, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.

Gold has slumped nearly 10% this year, largely on uncertainty around the timing of the rate rise and on fears that higher rates would hit demand for the non-interest-pay-ing metal. It had fallen to a near-six-year low earlier this month.

Spot gold had dipped 0.6% to US$1,066.20 an ounce by 0609 GMT. The metal had ral-lied before the Fed decision on Wednesday and managed to hold most of those gains after the central bank statement, ending the day up 1.2%. US gold fell 1% to a ses-sion low of US$1,064.20, following a 1.4% gain in the previous session.

“This morning, it is more of a dollar story,” said a Hong Kong-based precious metals trader. “The market pretty much ex-pected the comments we heard from the Fed.” The trader added that the most like-ly move for gold was to go lower.

The US dollar index, which measures its strength against a basket of six major currencies, rose 1% on Thursday. A ro-bust dollar makes greenback-denominat-ed gold more expensive for holders of oth-er currencies.

Other precious metals also took a hit from a stronger dollar. Palladium fell nearly 3%

COMMODITIES

GLOBAL MARKETS

CREDIT DEFAULT SWAPS

Rates as at Dec 17 (%)

DEPOSIT RATE GOV BOND 1M 3M 6M 1Y 10Y

AUD 2.9200 2.7100 2.7100 2.8200 2.8460CNY 4.9000 1.1000 1.3000 1.5000 3.0260HKD 0.1200 0.2900 0.4500 0.7800 1.5850JPY -0.1000 -0.2000 -0.1100 -0.0600 0.3000NZD 2.4500 3.0700 3.1100 3.2300 3.6450USD 0.3800 0.8200 0.9500 1.2500 2.2393

E

E

to a session low of US$552.22 an ounce, while silver and platinum dropped about 1% each.

With the much-anticipated first rate hike out of the way, the focus now shifts to the pace of future rate increases. The US central bank made clear the rate hike was a tenta-tive beginning to a “gradual” tightening cycle.

But the rate forecasts, or dot points, from Fed members were a little higher than many expected, with 100bps of hikes pencilled in

for next year and a terminal rate of 3.5%.The divergence between the Fed forecasts

and the market could hurt gold prices as in-vestors begin to align their views with the central bank. “Gold has been extraordinarily sensitive to perceived changes in monetary policy for many months,” said HSBC analyst James Steel. “The rate rise may finally clear the deck and remove rate-related uncertain-ty from the bullion market.” E

Precious-metals prices (Dec 17) METAL LAST CHANGE PCT CHG

SPOT GOLD 1066.2 -6.36 -0.59SPOT SILVER 14.06 -0.114 -0.8SPOT PLATINUM 860.2 -12.9 -1.48SPOT PALLADIUM 555.55 -12.9 -2.27COMEX GOLD 1065.7 -11.1 -1.03COMEX SILVER 14.055 -0.193 -1.35

COMEX gold and silver contracts show the most active months

Daily Thomson Reuters Jefferies CRB Commodity Index with 50- & 100-day moving average

Performance of SGD against Asian currencies (Dec 17, 2014 to Dec 17, 2015)

-10 -5 0 5 10 15 20

%

Performance in %

1.53

-2.51

-7.37

-1.88

5.49

14.82

-4.43

-3.12

2.52

-7.41

-3.09

4.43

SGDUSD

SGDTWD

SGDTHB

SGDPHP

SGDNZD

SGDMYR

SGDJPY

SGDINR

SGDIDR

SGDHKD

SGDCNY

SGDAUD

Credit races in after Fed pulls the triggerDec 17 — European markets are opening with a twinkle in their step after a strong night in Asia.In Japan, the Nikkei continued the renaissance seen yesterday, gap-opening up 1.6% and adding to those gains into the mid-session break. After that break, some minor selling appeared, and the index slipped back to close more or less where it opened.

In China, the Shanghai Composite Index also gapped higher on the open by 0.5% and continued to rally to currently trade up 1.8%. The Hang Seng is up 0.6%.

In Europe, Bund and BTP futures are up 40 ticks. Equity equivalents are up around 2% even though Brent is down a touch at US$37.5. Synthetic cred-it is racing tighter again, with the Main in 5bps at 75.5bps, the Crossover 19bps lower at 315bps and the Senior Financials in 5.5bps at 70.5bps.

And all of this comes after the US Federal Reserve finally pulled the trigger on a 25bps hike last night. The knee-jerk reaction was fairly predictable: 10-year Treasury yields spiked to 2.33% from 2.29% and stocks moved into negative territory after being in the black in the run-up. That all lasted for less than a couple of minutes, though, and as the dot projec-tions and statement were digested, everything came back to where they were before the hike. Then we got Fed chair Janet Yellen’s press conference, which was predictably dovish and also poured some oil on last week’s turbulent credit waters.

That was enough to lead to a bout of buy-everything. Thus, by the end of the session, CT10s were at 2.27% and Red Dec fed funds had slipped from 99.21 to 99.17 on the dots. Stocks were up 1.5%. Brent tradeddown from US$37.6 before the hike to US$37.25.

Today, all and sundry will be falling over them-selves to further dissect the Fed’s decision and what it means for all asset classes as we head into 2016. We also get the last auction supply before Christ-mas when the Spanish Tesoro taps five-, eight- and 25-year Bonos.

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CAPITAL THOMSON REUTERS I/B/E/S ESTIMATES


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COMPANY LONG NAME COUNTRY NAME MARKET CAP CURRENCY PRICE EPS FY1 EPS FY1 (US$ MIL) (LATEST) MEAN PER

COMPANY LONG NAME COUNTRY NAME MARKET CAP CURRENCY PRICE EPS FY1 EPS FY1 (US$ MIL) (LATEST) MEAN PER

BASIC INDUSTRIES CITIC LTD HONG KONG 51,648.63 HKD 13.76 2.11 6.51CHINA SHENHUA ENERGY CO LTD CHINA 38,036.60 CNY 14.90 1.33 11.22WESFARMERS LTD AUSTRALIA 31,353.86 AUD 38.80 2.24 17.31COAL INDIA LTD INDIA 29,617.23 INR 314.55 23.90 13.16FORMOSA PETROCHEMICAL CORP TAIWAN 22,407.18 TWD 77.00 4.29 17.94HYUNDAI MOBIS SOUTH KOREA 20,431.16 KRW 251,000.00 — —INNER MONGOLIA BAOTOU STEEL UNIO CHINA 18,548.53 CNY 3.68 -0.01 -287.50LG CHEMICAL LTD(P) SOUTH KOREA 17,998.43 KRW 320,500.00 18,218.38 17.59SINOPEC OILFIELD SERVICE CORP CHINA 16,348.94 CNY 8.77 -0.10 -87.37NAN YA PLASTICS CORP TAIWAN 13,906.50 TWD 57.40 4.51 12.72BAOSHAN IRON AND STEEL CO LTD CHINA 13,842.71 CNY 5.43 0.26 20.92FORMOSA PLASTICS CORP TAIWAN 13,826.31 TWD 71.10 4.56 15.59RIO TINTO LTD AUSTRALIA 13,122.89 AUD 43.02 2.55 12.22PETRONAS CHEMICALS GROUP BHD MALAYSIA 12,580.94 MYR 6.80 0.34 19.85ASIAN PAINTS LTD INDIA 12,562.10 INR 878.55 18.79 46.75ZHEJIANG TRANSFAR CO LTD CHINA 12,426.09 CNY 24.64 0.23 107.79ULTRATECH CEMENT LTD INDIA 11,712.97 INR 2,863.30 96.62 29.63POSCO SOUTH KOREA 11,313.85 KRW 166,000.00 9,471.14 17.53POSCO SOUTH KOREA 11,313.85 KRW 166,000.00 2,258.00 73.52AMCOR LTD AUSTRALIA 10,927.40 AUD 12.90 0.56 16.70CAPITAL GOODS SAMSUNG ELECTRONICS SOUTH KOREA 143,118.82 KRW 1,299,000.00 136,108.44 9.54CRRC CORP LTD CHINA 45,977.29 CNY 12.96 0.45 29.05HON HAI PRECISION INDUSTRY TAIWAN 38,309.32 TWD 80.20 9.20 8.72CHINA RAILWAY GROUP LTD CHINA 31,936.63 CNY 11.07 0.53 20.71CHINA STATE CONSTN ENGG CORP LTD CHINA 29,349.85 CNY 6.32 0.87 7.31CHINA SHIPBUILDING IND CO LTD CHINA 27,684.62 CNY 9.74 0.09 110.93CHINA COMMUNICATIONS CONSTRUCTIO CHINA 24,858.31 CNY 13.67 0.95 14.39CHINA RAILWAY CONSTRUCTION CORP CHINA 24,181.75 CNY 13.58 0.95 14.29CHEUNG KONG INFRASTRUCTURE HONG KONG 22,741.23 HKD 69.95 4.18 16.72SHANGHAI ELECTRIC GROUP CO LTD CHINA 19,107.28 CNY 12.53 0.18 68.28SAMSUNG ELECTRONICS SOUTH KOREA 18,105.67 KRW 1,084,000.00 147,949.00 7.33LARSEN & TOUBRO LTD INDIA 17,812.78 INR 1,283.20 52.17 24.60POWER CONSTRUCTION CORP OF CHINA CHINA 17,331.69 CNY 8.14 0.48 16.96METALLURGICAL CORP OF CHI CHINA 16,289.28 CNY 6.48 0.25 25.61BOE TECHNOLOGY GROUP CO LTD CHINA 15,609.04 CNY 2.97 0.07 39.96SIAM CEMENT PCL THAILAND 14,426.59 THB 434.00 36.81 11.79SIAM CEMENT PCL THAILAND 14,426.59 THB 434.00 — —TRANSURBAN GROUP AUSTRALIA 13,737.97 AUD 9.94 0.14 68.77DELTA ELECTRONICS INC TAIWAN 12,497.73 TWD 157.50 7.60 20.73BHARTI INFRATEL LTD INDIA 11,001.19 INR 389.10 12.66 30.74CONSUMER DURABLES SAIC MOTOR CORP LTD CHINA 34,868.78 CNY 20.43 2.64 7.73HYUNDAI MOTOR CO SOUTH KOREA 26,992.86 KRW 153,000.00 24,322.20 6.29MARUTI SUZUKI INDIA LTD INDIA 20,804.23 INR 4,620.00 181.59 25.44MIDEA GROUP CO LTD CHINA 19,664.55 CNY 29.78 2.94 10.14GREE ELECTRIC APPLIANCES INC OF CHINA 19,369.54 CNY 20.80 2.38 8.73KIA MOTORS CORP SOUTH KOREA 18,822.12 KRW 55,100.00 7,250.11 7.60ASTRA INTERNATIONAL TBK PT INDONESIA 18,048.62 IDR 6,275.00 412.53 15.21TATA MOTORS LTD INDIA 16,333.40 INR 379.50 36.14 10.50BYD CO LTD CHINA 15,199.21 CNY 62.90 0.96 65.52GUANGZHOU AUTOMOBILE GRUP CO LTD CHINA 14,638.78 CNY 22.40 0.59 37.90MAHINDRA AND MAHINDRA LTD INDIA 11,934.75 INR 1,289.05 57.90 22.26GREAT WALL MOTOR CO LTD CHINA 11,271.67 CNY 12.08 1.04 11.65BAJAJ AUTO LTD INDIA 10,513.46 INR 2,437.30 134.17 18.17CHONGQING CHANGAN AUTOMOBILE CO CHINA 9,623.48 CNY 16.53 2.11 7.83JARDINE CYCLE & CARRIAGE LTD SINGAPORE 9,496.56 SGD 33.85 1.89 12.73QINGDAO HAIER CO LTD CHINA 9,421.70 CNY 9.94 0.78 12.76BOSCH LTD INDIA 8,818.45 INR 18,840.40 427.77 44.04GOERTEK INC CHINA 8,352.91 CNY 35.35 1.04 34.03WANXIANG QIANCHAO CO LTD CHINA 7,753.03 CNY 21.83 0.38 58.14HERO MOTOCORP LTD INDIA 7,643.63 INR 2,567.80 155.27 16.54CONSUMER NON-DURABLES KWEICHOW MOUTAI DISTILLERY GROUP CHINA 41,594.54 CNY 213.90 13.31 16.07ITC LTD INDIA 38,669.70 INR 322.95 12.69 25.45HANJAYA MANDALA SAMPOERNA TBK PT INDONESIA 29,799.35 IDR 95,000.00 2,328.27 40.80HINDUSTAN UNILEVER LTD INDIA 27,695.53 INR 858.60 20.32 42.26GUANGDONG WENSHI FOOD GROUP CO L CHINA 26,830.20 CNY 47.81 2.11 22.65SAMSUNG C&T CORP SOUTH KOREA 20,774.60 KRW 146,500.00 15,320.97 9.56AMOREPACIFIC CORP SOUTH KOREA 20,533.96 KRW 412,500.00 9,417.87 43.80AMOREPACIFIC CORP SOUTH KOREA 20,533.96 KRW 412,500.00 9,620.00 42.88UNILEVER INDONESIA TBK PT INDONESIA 19,041.12 IDR 35,125.00 787.91 44.58SDIC ESSENCE HLDGS CO LTD CHINA 16,669.43 CNY 29.15 — —JIANGSU YANGHE BREWERY JSC LTD CHINA 15,037.22 CNY 64.46 3.53 18.28YIBIN WULIANGYE CO LTD CHINA 14,649.14 CNY 24.93 1.57 15.88FOSHAN HAITIAN FLAVOURING AND FO CHINA 14,620.43 CNY 34.90 0.96 36.41AVIC AVIATION ENGINE CORP PLC CHINA 14,042.24 CNY 46.55 0.58 80.19INNER MONGOLIA YILI INDUSTRIAL G CHINA 13,932.14 CNY 14.84 0.80 18.52LG HOUSE & HEALTHCARE SOUTH KOREA 12,802.60 KRW 1,025,000.00 27,499.50 37.27WILMAR INTERNATIONAL LTD SINGAPORE 12,785.32 SGD 2.85 0.18 11.37FORMOSA CHEMICAL & FIBRE TAIWAN 12,227.15 TWD 68.50 4.16 16.47KT&G CORP(P) SOUTH KOREA 11,698.39 KRW 109,000.00 7,820.00 13.94JG SUMMIT HLDG PHILIPPINES 10,440.14 PHP 69.00 3.33 20.73CONSUMER SERVICES WOOLWORTHS LTD AUSTRALIA 21,185.70 AUD 23.26 1.44 16.13WIPRO LTD INDIA 20,580.05 INR 558.90 37.39 14.95WANDA CINEMA LINE CORP CHINA 19,920.74 CNY 114.90 1.10 104.90HAITONG SECURITIES CO LTD CHINA 19,666.63 CNY 15.70 1.30 12.11GOLDIN FINANCIAL HLDGS LTD HONG KONG 17,779.79 HKD 19.72 — —SUNING COMMERCE GROUP CO LTD CHINA 15,508.96 CNY 13.57 0.03 453.85SHANGHAI ORIENTAL PEARL MEDIA CO CHINA 15,035.51 CNY 36.98 1.09 33.93GALAXY ENTERTAINMENT GROUP LTD HONG KONG 12,695.03 HKD 23.10 1.22 18.90BRAMBLES LTD AUSTRALIA 12,225.85 AUD 10.85 0.39 19.95BEIJING ORIGINWATER TECH CO LTD CHINA 10,513.21 CNY 55.24 1.26 43.68CP ALL PUBLIC COMPANY LTD THAILAND 10,326.83 THB 41.50 — —CP ALL PUBLIC COMPANY LTD THAILAND 10,326.83 THB 41.50 1.47 28.29JIANGSU BROADCASTING CABLE INFOR CHINA 9,940.29 CNY 21.49 — —AYALA CORP PHILIPPINES 9,908.02 PHP 757.00 33.17 22.83SWIRE PACIFIC LTD HONG KONG 9,811.14 HKD 84.00 6.81 12.34SHENZHEN OVERSEAS CHINESE TWN CO CHINA 9,608.00 CNY 8.44 0.77 10.95HUAYI BROTHERS MEDIA CORP CHINA 8,733.26 CNY 40.63 0.77 52.87GUANGDONG INVESTMENT LTD HONG KONG 8,522.90 HKD 10.56 0.64 16.58CHINA INTNL TRVL SRVC CORP LTD CHINA 8,375.09 CNY 55.42 1.78 31.12WASU MEDIA HLDG CO LTD CHINA 7,943.34 CNY 35.80 0.35 101.42ENERGY PETROCHINA CO LTD CHINA 212,052.65 CNY 8.46 0.31 26.89CHINA PETROLEUM CHEMICAL CORP CHINA 73,961.12 CNY 5.00 0.36 13.84RELIANCE INDUSTRIES LTD INDIA 47,122.93 INR 975.90 83.18 11.73CNOOC LTD HONG KONG 47,066.45 HKD 8.17 0.48 14.17BHP BILLITON LTD AUSTRALIA 39,677.59 AUD 17.18 0.54 22.90OIL & NATURAL GAS CORP INDIA 27,777.32 INR 217.80 26.08 8.35HANERGY THIN FILM POWER GRUP LTD HONG KONG 21,061.81 HKD 3.91 — —PTT PUBLIC COMPANY LTD THAILAND 18,514.52 THB 234.00 — —PTT PUBLIC COMPANY LTD THAILAND 18,514.52 THB 234.00 26.19 8.94NTPC LTD INDIA 16,200.11 INR 131.80 11.21 11.76

WOODSIDE PETROLEUM LTD AUSTRALIA 16,026.39 AUD 27.05 1.35 14.56INDIAN OIL CORP LTD INDIA 15,137.83 INR 418.25 46.28 9.04SK INNOVATION CO LTD SOUTH KOREA 10,418.94 KRW 133,000.00 13,137.59 10.12PETRONAS GAS BHD MALAYSIA 10,113.32 MYR 22.10 0.91 24.28PTT EXPLORATION AND PRODUCTION P THAILAND 7,917.98 THB 72.00 — —SINOPEC SHANGHAI PETROCHEMICAL C CHINA 7,836.48 CNY 6.93 0.26 26.40CHINA OILFIELD SERVICES LTD CHINA 7,359.93 CNY 16.06 0.45 35.66S-OIL CORP SOUTH KOREA 7,328.45 KRW 76,400.00 7,346.00 10.40S-OIL CORP SOUTH KOREA 7,328.45 KRW 76,400.00 6,413.15 11.91KUNLUN ENERGY CO LTD HONG KONG 6,780.72 HKD 6.51 0.48 13.67FINANCE INDUSTRIAL & COMMERCIAL BANK OF CHINA 191,566.42 CNY 4.59 0.78 5.86AGRICULTURAL BANK OF CHINA LTD CHINA 147,482.69 CNY 3.24 0.55 5.85BANK OF CHINA LTD CHINA 131,810.01 CNY 4.04 0.59 6.84COMMONWEALTH BANK OF AUSTRALIA AUSTRALIA 92,803.33 AUD 79.09 5.57 14.20CHINA LIFE INSURANCE CO LTD CHINA 91,932.98 CNY 28.52 1.56 18.27WESTPAC BANKING CORP AUSTRALIA 73,488.72 AUD 31.46 2.53 12.42AIA GROUP LTD HONG KONG 72,211.43 HKD 46.45 0.31 19.36PING AN INSURANCE GROUP CO OF CH CHINA 59,110.13 CNY 35.25 3.02 11.68CHINA MERCHANTS BANK CO LTD CHINA 54,158.96 CNY 16.96 2.37 7.16AUSTRALIA AND NEW ZEALAND BANKIN AUSTRALIA 53,861.43 AUD 26.01 2.53 10.27SHANGHAI PUDONG DEVELOPMENT BANK CHINA 52,553.12 CNY 18.20 2.67 6.81CK HUTCHISON HLDGS LTD HONG KONG 50,996.90 HKD 102.40 8.17 12.53NATIONAL AUSTRALIA BANK LTD AUSTRALIA 50,117.83 AUD 28.38 2.57 11.05INDUSTRIAL BANK CO LTD CHINA 47,483.38 CNY 16.10 2.65 6.07HDFC BANK INDIA 39,845.94 INR 1,059.45 49.18 21.54CHINA MINSHENG BANKING CORP LTD CHINA 39,661.59 CNY 8.67 1.32 6.57BANK OF COMMUNICATIONS CO LTD CHINA 39,554.66 CNY 6.51 0.88 7.43CHINA CITIC BANK CORP LTD CHINA 35,905.66 CNY 7.27 0.89 8.18HANG SENG BANK LTD HONG KONG 35,424.14 HKD 143.60 12.25 11.72SUN HUNG KAI PROPERTIES LTD HONG KONG 35,186.70 HKD 94.25 8.55 11.03HEALTHCARE CSL LTD AUSTRALIA 33,723.55 AUD 100.89 2.95 24.77SUN PHARMACEUTICAL INDUSTRIES LT INDIA 27,759.01 INR 773.75 22.74 34.02SHANGHAI RAAS BLOOD PRODUCTS CO CHINA 16,947.16 CNY 39.72 0.10 395.22JIANGSU HENRUI MEDICINE CO LTD CHINA 15,022.04 CNY 49.60 1.10 45.26LUPIN LTD INDIA 12,037.57 INR 1,792.90 51.60 34.74IHH HEALTHCARE BHD MALAYSIA 11,981.29 MYR 6.30 0.12 54.76YUNNAN BAIYAO GROUP CO LTD CHINA 11,571.47 CNY 71.78 2.79 25.73KANGMEI PHARMACEUTICAL CO LTD CHINA 11,490.50 CNY 16.88 0.78 21.51CHINA GRAND AUTOMOTIVE SERVICES CHINA 9,859.86 CNY 17.37 0.32 54.28RAMSAY HEALTHCARE LTD AUSTRALIA 9,166.15 AUD 63.56 2.30 27.69BANGKOK DUSIT MEDICAL SERVCS PCL THAILAND 8,968.45 THB 20.90 — —BANGKOK DUSIT MEDICAL SERVCS PCL THAILAND 8,968.45 THB 20.90 0.50 41.56CIPLA LTD INDIA 7,649.46 INR 638.90 23.17 27.57DRREDDYS LABORATORIES LTD INDIA 7,614.95 INR 2,994.20 155.98 19.20AUROBINDO PHARMA LTD INDIA 7,165.17 INR 823.10 34.93 23.57BEIJING TONGRENTANG CO LTD CHINA 7,152.45 CNY 33.69 0.66 50.72DABUR INDIA LTD. INDIA 7,147.17 INR 272.55 7.29 37.40SHANGHAI FOSUN PHRMTCL GR CO LTD CHINA 7,048.63 CNY 23.83 1.08 22.08SINO BIOPHARMACEUTICAL HONG KONG 6,484.39 HKD 6.78 0.25 27.41TASLY PHARMACEUTICAL GROUP CO LT CHINA 6,437.70 CNY 38.49 1.49 25.89PUBLIC UTILITIES CHINA MOBILE LTD HONG KONG 236,455.75 HKD 89.50 5.65 13.21TELSTRA CORP LTD AUSTRALIA 46,858.44 AUD 5.33 0.35 15.05SINGAPORE TELECOMMUNICATIONS LTD SINGAPORE 42,547.38 SGD 3.76 0.24 15.39CHINA YANGTZE POWER CO LTD CHINA 35,119.97 CNY 13.75 0.70 19.53CHINA UNICOM HONG KONG LTD HONG KONG 29,385.01 HKD 9.51 0.52 15.14KOREA ELECTRIC POWER (KEPCO) SOUTH KOREA 26,719.10 KRW 48,850.00 19,399.29 2.52CHINA NATIONAL NUCLEAR POWER CO CHINA 23,540.91 CNY 9.77 0.25 39.65CHUNGHWA TELECOM CO LTD TAIWAN 23,223.76 TWD 98.00 5.28 18.56HONG KONG & CHINA GAS CO HONG KONG 22,196.73 HKD 14.88 0.67 22.12CLP HLDGS LTD HONG KONG 20,912.22 HKD 64.15 4.37 14.67TELEKOMUNIKASI INDONESIA TBK PER INDONESIA 20,507.07 IDR 2,940.00 165.26 17.79CHINA UNITED NETWORK COMMUNICATI CHINA 20,474.73 CNY 6.24 0.22 28.84POWER ASSETS HLDGS LTD HONG KONG 19,249.41 HKD 69.90 3.69 18.95BHARTI AIRTEL LTD INDIA 18,424.88 INR 309.20 15.13 20.44ADVANCED INFO SERVICE PCL THAILAND 17,706.80 THB 215.00 13.16 16.34ADVANCED INFO SERVICE PCL THAILAND 17,706.80 THB 215.00 — —TENAGA NASIONAL BHD MALAYSIA 16,732.45 MYR 12.82 1.17 10.94ZHEJIANG ZHENENG ELECTRIC POWER CHINA 16,042.92 CNY 7.62 0.55 13.95HUANENG POWER INTERNATIONAL INC CHINA 14,189.63 CNY 8.73 1.02 8.57SK TELECOM CO LTD(P) SOUTH KOREA 14,139.82 KRW 228,500.00 24,987.35 9.14TECHNOLOGY TAIWAN SEMICONDUCTOR MFC CO LTD TAIWAN 113,672.14 TWD 143.50 11.62 12.35TATA CONSULTANCY SERVICES LTD INDIA 69,371.43 INR 2,375.85 122.96 19.32INFOSYS LTD INDIA 36,713.76 INR 1,077.55 58.12 18.54HANGZHOU HIKVISION DGTL TECH CO CHINA 21,414.59 CNY 34.00 1.54 22.01SK HYNIX INC SOUTH KOREA 18,300.32 KRW 30,400.00 6,076.93 5.00HCL TECHNOLOGIES LTD INDIA 17,738.47 INR 845.20 54.28 15.57SAMSUNG SDS CO LTD SOUTH KOREA 17,464.41 KRW 265,000.00 5,792.27 45.75LESHI INTERNET INFORMATION AND T CHINA 16,886.11 CNY 58.80 0.25 233.61NAVER CORP SOUTH KOREA 16,218.48 KRW 646,000.00 16,742.98 38.58EAST MONEY INFORMATION CO LTD CHINA 15,179.80 CNY 57.70 0.96 59.95SK HLDGS CO LTD SOUTH KOREA 12,770.69 KRW 261,000.00 36,438.47 7.16MEDIATEK INCORPORATED TAIWAN 12,086.11 TWD 253.00 17.46 14.49BEIJING XINWEI TELECOM TECHNOLOG CHINA 11,894.11 CNY 26.28 — —LENOVO GROUP LTD HONG KONG 11,524.18 HKD 8.04 -0.01 -141.72SANAN OPTOELECTRONICS CO LTD CHINA 10,278.93 CNY 26.05 0.83 31.41LENS TECHNOLOGY CO LTD CHINA 9,009.06 CNY 86.43 2.22 39.02LARGAN PRECISION CO LTD TAIWAN 8,769.21 TWD 2,140.00 180.98 11.82BEIJING KUNLUN TECH CO LTD CHINA 8,537.99 CNY 48.93 0.39 125.87ADVANCED SEMICONDUCTOR ENGINEERING TAIWAN 8,196.76 TWD 35.50 2.47 14.40AAC TECHNOLOGIES HLDGS INC HONG KONG 8,144.31 HKD 51.40 2.50 17.16TRANSPORTATION MTR CORP LTD HONG KONG 27,660.33 HKD 36.60 1.86 19.69SHANGHAI INTL PORT GROUP CO LTD CHINA 24,178.11 CNY 6.74 0.30 22.83DAQIN RAILWAY CO LTD CHINA 19,906.77 CNY 8.65 0.96 8.97NINGBO PORT CO LTD CHINA 16,188.24 CNY 8.17 0.24 33.69CHINA COSCO HLDGS CO LTD CHINA 13,746.58 CNY 11.63 -0.03 -447.31AIRPORTS OF THAILAND PCL THAILAND 12,781.94 THB 323.00 12.85 25.14AIR CHINA LTD CHINA 10,936.21 CNY 8.29 0.67 12.41CHINA SHIPPING CONTAINER LINES C CHINA 10,719.42 CNY 8.73 0.01 761.78SYDNEY AIRPORT HLDGS LTD AUSTRALIA 9,737.30 AUD 6.11 0.11 54.81CHINA EASTERN AIRLINES CORP LTD CHINA 9,570.75 CNY 7.29 0.59 12.46MISC BHD MALAYSIA 9,394.20 MYR 9.10 0.57 15.85SHANGHAI INTERNATIONAL AIRPORT C CHINA 8,972.59 CNY 30.08 1.30 23.06SINGAPORE AIRLINES LTD SINGAPORE 8,958.46 SGD 10.85 0.56 19.45SOUTHWEST SECURITIES CO LTD CHINA 8,729.82 CNY 9.99 0.54 18.65CHINA SOUTHERN AIRLINES CO LTD CHINA 8,501.10 CNY 7.82 0.67 11.67CHINA MERCHANTS HLDGS INTERNATIONAL HONG KONG 8,047.16 HKD 24.00 1.78 13.50ADANI PORT AND SPECIAL ECONOMIC INDIA 7,782.70 INR 252.10 12.79 19.70AURIZON HLDGS LTD AUSTRALIA 7,675.45 AUD 5.03 0.30 16.97SPRING AIRLINES CO LTD CHINA 7,270.59 CNY 58.71 1.89 31.10HAINAN AIRLINES CO LTD CHINA 7,003.53 CNY 3.83 0.15 25.53


CAPITAL RIGHT TIMING

Blue Christmas on frail rebound In the short term, the Straits Times Index may have some upside as it rebounds towards 2,900, triggered by the upturn of its short-term stochas-tics. But, the index may not be able to regain its flattish 50-day moving average currently at 2,949. Volume contracted during the bounce on Dec 16 and 17, suggesting that this is a temporary move with no strong buying behind it. As a guide, the STI closed at 2,815 on Dec 14, and its closing low in September was 2,787, indicating that support is being established at the 2,787-to-2,815 range.

Blue chips managed to rebound off oversold lows and some provided traders with gains. These too may be temporary rebounds, as they have yet to build clear base formations. Among stocks that were sold down, Global Logistic Properties has formed a minor double bottom and could have upside if it moves above $2.10.

North Sea Brent (US$37.13) is in a down-trend after falling below a support area at the US$42-to-US$44-a-barrel range. The breakdown indicates a target of US$30. There is a nega-tive confluence of the declining 50- and 100-day moving averages, currently at US$45.42. As a guide, the lowest level reached by North Sea Brent in the past 10 years was US$36 in 2008. The negative outlook would be invali-dated if prices are able to move above US$43.

The Hang Seng Index’s (21,872) 172-point gain during the past five trading sessions belies its weak chart pattern. The index touched a low of 21,309 on Dec 14, and managed to hold above its Sep-tember low of 20,556. However, the 50- and 100-day moving av-erages appear poised for a nega-tive cross at 22,454, exerting ad-ditional resistance at this level. In the meantime, ADX has turned up from a low level, and the DIs are negatively placed, which points to a weaker phase ahead. An earlierbreak below 22,394 indicated a measuring objective of 20,400. The down-side target would be invalidated if the index regains 22,394.

Dow holds above support The Dow Jones Industrial Average (17,749) man-aged to stay within a sideways range. On Dec 14, the index touched a low of 17,159, which coin-cided with its flat 100-day moving average. In-dicators are negative, with quarterly ROC poised for a downturn. ADX is flat, and the DIs are neg-atively placed. Support has been established at

17,159. Resistance appears at 18,000. The Standard & Poor’s 500 in-

dex (2,073) struggled to stay within a sideways range. On Dec 14, the index fell to an intra-day low of 1,993, below its support at 2,032, but managed to rebound swiftly. Quarterly ROC has turned down. ADX continues to start to turn up from a low level, and the DIs are negatively placed. That may exert downward pressure on the index. Resistance appears at 2,100, and the breakdown level is at 2,032.

STI (2,861)

Long term: down; medium term: downturn; short term: upturn Short termRSI (Chart B) is falling. ADX (Chart B) is turning up and the DIs are negatively placed. Stochastics (Chart B) is turning up from the bottom of its range. Quarterly momentum (Chart A) could be in the process of turning down from its equilibrium line.

Long term Annual momentum (Chart C) remains in a downtrend. 24-month ROC (Chart C) is falling.

Short-term stochastics is at the bottom of its range and appears poised for an upturn. This should provide the STI with sufficient impetus for a short-term rebound. Resistance appears at 2,900 initially, and subsequently at 2,949. Other indicators such as 21-day RSI and quar-terly momentum offer less clarity. Quarterly momentum has encountered resistance at its equilibrium line and appears to be in the pro-cess of turning down. RSI has formed a down-trend. Elsewhere, ADX is turning up from a low level and the DIs are negatively placed.

Although the STI is in a rebound phase, the overall chart pattern looks somewhat fragile.The index continues to make lower lows, such as 2,855 in November and 2,815 on Dec 14, indicating that the minor trend is downwards. Support has been established at the 2,787-to-2,815 range.

Long-term indicators have formed clear downward channels. Annual momentum has formed a progressive downtrend and contin-ues to fall, as does 24-month ROC.

Chart A Chart B Chart C

GETTING TECHNICAL

| BY MICHAEL KAHN |

The decline of high-yield bonds is finally making headlines — hard not to after a fund col-

lapsed and the largest junk bond exchange-traded fund lost 2% in a day — but the slide has been a long time in the making. The SPDR Bar-clay’s High Yield Bond ETF has been in decline for the better part of the past two years. It is now, however, in an accelerated declining trend that is flashing a warning for this market and, indeed, all risk-based financial markets.

Junk bonds are considered a “risk on” asset since the credit risk they carry is by nature higher than that of many other assets. When investors feel bold, they flock to these bonds, along with stocks and perhaps ex-otic investments in art and automo-biles. When they are nervous or out-right bearish, investors move money into safer assets such as Treasury bonds and cash. Right now, it seems that investors are fleeing from junk bonds in a hurry, especially on Dec 11, when the iShares iBoxx $ High

Yield Corporate Bond fund had its worst day in four years.

The relative paths of junk bonds and stocks have been fairly close for the past 2½ decades (see chart). The chart shows the Vanguard High Yield Corporate Bond mutual fund over-laid on the Standard & Poor’s 500. (The junk bond ETF is only eight years old, so we can use the Van-guard fund as a proxy.)

Since bonds do not trade in the same degree of price range as stocks do, we should consider only the rel-ative direction rather than look for perfect alignment on the chart. What we see is that junk bonds seem to flash a warning ahead of major incidents in stocks, includ-ing the crash of 1987, the stealth bear market in 1994 and the end of the bull market in 2000.

To be sure, the lead time ahead of some events, such as the 2007 peak, was nearly too large to provide much of a signal in this time frame. Switching to the dai-ly time frame, however, one can see an even more ominous pat-tern in play now between the

stock market and the junk bond ETF.We can see falling junk bond prices

ahead of the August selloff in the stock market. After the stock-market bottom, junk bonds went on to set a lower low. Later in October, stocks ral-lied to get back what they lost in Au-gust, but junk bonds barely bounced. The junk bond ETF is now trading at levels last seen in May 2009 — just shortly after the financial crisis.

The junk bond trend in all time frames is to the downside, although it is technically oversold. That means it is prone to an upside reaction at

any time, which is convenient, with the US Federal Reserve’s interest rate decision due on Dec 23. Of course, we do not know whether the junk market will like the decision.

There have been countless articles discussing the fundamentals of the falling junk market, including such topics as excessive debt now on the books at corporations and rising fear of default. Since inflation expecta-tions are low, rising yields demanded by investors must be due to expecta-tions of corporate problems ahead.

Technically, this fear shows up in the CBOE Volatility Index. The so-called “fear index” started to rise a few weeks ago. Sectors in the stock market have changed their positions, with the “aggressive” consumer discretionary group now falling versus the “defen-sive” consumer staples group. And market breadth has deterio-rated tremendously, with riskier small-capitalisation stocks clear-ly lagging bigger stocks. Indeed, market leadership has got quite narrow, which is itself a warn-ing of a nervous market.

Fear also shows up as US Treasuriesrally in price. In fact, the ratio of the junk bond ETF versus the iShares20+ Year Treasury Bond ETF broke down earlier this month below a very significant four-year support level. There is little to stop it from falling back to its financial crisis low, set in 2008. To be sure, the Fed’s decision can change that.

The Fed has signalled that it wants to raise short-term rates, but some pundits think it would be a mistake in the current economic environment, especially as other central banks sig-nal they will add new stimulus to their economies.

With newly rising fear and a pal-pable shift from the “risk on” stock rally in October to a “risk off” feel, the sinking junk bond market seems to be warning of a change in the air, and that change is not for the better. — © 2015 Dow Jones & Co, Inc

Michael Kahn is the author of three books on technical analysis, most re-cently A Beginner’s Guide to Chart-ing the Financial Markets, and was chief technical analyst for BridgeNews

Junk bonds send ominous warning to the market

E

E

| BY GOOLA WARDEN |

1997 2015

Junk bonds versus stocks(C,VWEHX,M) Dynamic, 0:00-24:00(C,$SPX - S&P500 INDEX) (Delayed)

ESIG

NAL

9.002011.218.00

7.00

6.00

5.00

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Vanguard High Yield fund

S&P 500

CAPITAL HOT STOCKS


COMFORTDELGRO ($2.97) — Could breach support

Extreme oversold readings for Sembcorp Industries and the beaten-down Sembcorp Ma-rine could help trigger a temporary rebound for these counters. As they stand, the re-bound is likely to fizzle out because medium-term indicators are weak. Transportation

stocks are a mixed bunch. ComfortDelGro and SMRT Corp have been holding within sideways ranges for a while, but there could be some weakness ahead. Singapore Air-lines may gain strength.

SEMBCORP INDUSTRIES ($3.04) — Short-term extensively oversold

SATS ($3.85) — Building a top SEMBCORP MARINE ($1.785) — Temporary bounce, downtrend intact

SINGAPORE AIRLINES ($11.04) — Could challenge resistance SMRT CORP ($1.475) — Facing resistance

Prices are testing a support area around $2.90 for the third time in six weeks. Volume ex-panded on the test, an indication of weakness. The support coincides with the confluence of the 50-, 100- and 200-day moving averages. In the meantime, quarterly momentum ap-pears poised to break below its own moving average. Directional movement is turning up gradually as directional indicators turn negative, a sign that prices could fall below $2.90. If this materialises, a target of $2.70 is indicated. Resistance has been established at $3.08.

Signs of fatigue are setting in as prices test the 100-day moving average at $3.81 for the third time. Directional movement is rising, but directional indicators are neutral, suggesting a possible turn in the trend from an uptrend to, at the very least, a top formation, which could then be followed by a downtrend. The process is likely to take several weeks. The breakdown point is $3.81. In the meantime, prices are likely to trend sideways in an ef-fort to build a top. Resistance is at $4.03.

Prices are at their lowest level since 2008, when they tested $1.34. Meanwhile, quarterly momentum is at the lowest level in more than five years, and 21-day RSI fell briefly below 20 before rebounding. RSI is still oversold at its current level of 31. Since the downtrend is entrenched, it is unlikely that any rebound will be able to move towards resistance at $2. More likely, prices are likely to form a new lower resistance level around $1.85. Sup-port is at the Dec 14 low of $1.65 and this may well be breached.

Prices are hovering around a support at $10.76 to $10.80. Since quarterly momentum has formed a gradual uptrend, and 21-day RSI has rebounded off neutral levels, prices should be able to rebound. In addition, directional movement is rising, and directional indicatorsare positively placed. All these indicators point to strength ahead. Only the moving ave-rages are diverging. Resistance appears at the four-times-tested $11.10 level. At present, volume appears insufficient to sustain a clear break above this. Prices may continue to trend sideways for several sessions till the moving averages converge before attempting to break out. A successful breakout indicates a target of $$12.20.

Prices are likely to weaken if they sink below the confluence of a support and the 50-day moving average at $1.41. This is underscored by the break below an uptrend by quarterly momentum. In addition, directional movement has turned up, and directional indicators have turned negative, all confirming a weaker phase ahead. Support appears next at $1.35. On Dec 4, prices moved above a thrice-tested resistance level at $1.50 to close at $1.56, but reversed this move immediately during the next trading session, indicating that the market changed its mind swiftly, indicating a negative signal. Resistance stays at $1.50.

Prices are attempting to form a support at $3. Twenty-one-day RSI tested an oversold low of 25 and is turning up. Directional movement is at its highest level in a year, represent-ing an oversold position as directional indicators are negatively placed. Prices are ready for a rebound, which is likely to find initial resistance at $3.18. They could then move sideways to build more of a base. A strong recovery may be prevented by the 50- and 100-day moving averages falling in tandem.

Oversold offshore stocks set for bounce, transport stocks lacklustre


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NATION REVENUE (US$ MIL) TOP BANK BY NATION MARKET SHARE (%)

Singapore 269 DBS 10.5Malaysia 203 CIMB Group 17.6Indonesia 132 Citi 5.7Thailand 129 Siam Commercial Bank 16.9Philippines 121 First Metro Investment Corp 12.1

SECTOR REVENUE (US$ MIL) TOP BANK BY SECTOR MARKET SHARE (%)

Energy & Natural Resources 180 Credit Suisse 8.5Financial Institutions 162 Credit Suisse 6.5Real Estate 139 Sumitomo Mitsui Financial Group 9.5Industrials 120 RHB Capital Bhd 14.7Consumer & Retail 83 Citi 8.8

Southeast Asia IB revenue by product US$ mil

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Note: Dealogic Revenue Analytics employed where fees are not disclosed Figures for YTD comprise Jan 1 to Dec 15, 2015

Dealogic is the platform utilised by investment banks worldwide to optimise performance and improve competitiveness. Copyright and database right: Dealogic. The information should not be copied, stored, abridged or utilised in any way without the written consent of Dealogic. The information is the responsibility of Dealogic and any queries should be addressed to [email protected]. Website: www.dealogic.com.

Top 5 Southeast Asia M&A transactions in 2015 YTD

Southeast Asia announced M&A advisory ranking — 2015 YTD Southeast Asia completed M&A advisory ranking — 2015 YTD

Southeast Asia DCM bookrunner ranking — 2015 YTD

Southeast Asia IB revenue nationality analysis Southeast Asia IB revenue top 5 sector analysis

Top 5 Southeast Asia ECM transactions in 2015 YTD

Top 5 Southeast Asia DCM transactions in 2015 YTD

Southeast Asia ECM bookrunner ranking — 2015 YTD

RANK BOOKRUNNER DEAL VALUE (US$ MIL) NO SHARE (%) 2014 YTD RANKING

1 JPMorgan 1,853 8 11.4 42 UBS 1,455 11 8.9 53 CIMB Group 1,132 23 7.0 14 Credit Suisse 1,112 10 6.8 35 RHB Capital Bhd 883 22 5.4 76 Morgan Stanley 846 5 5.2 297 Maybank 784 19 4.8 28 Siam Commercial Bank 724 3 4.5 129 Bangkok Bank pcl 711 4 4.4 1010 First Metro Investment Corp 617 3 3.8 62

RANK ALL ADVISER DEAL VALUE (US$ MIL) NO SHARE (%) 2014 YTD RANKING

1 Bank of America Merrill Lynch 21,138 6 21.3 22 JPMorgan 17,519 10 17.6 83 Nomura 12,355 11 12.4 144 UBS 10,987 3 11.0 65 Somerley Ltd 10,394 2 10.5 205 CITIC Securities 10,394 2 10.5 –7 Mizuho 10,357 3 10.4 848 HSBC 9,668 11 9.7 179 Citi 8,872 10 8.9 110 Deutsche Bank 5,675 6 5.7 5

RANK ALL ADVISER DEAL VALUE (US$ MIL) NO SHARE (%) 2014 YTD RANKING

1 Bank of America Merrill Lynch 26,585 10 25.7 22 Citi 15,614 14 15.1 123 UBS 14,379 8 13.9 104 JPMorgan 12,374 8 12.0 65 Nomura 12,064 10 11.7 136 Somerley Ltd 10,357 1 10.0 196 Mizuho 10,357 3 10.0 786 CITIC Securities 10,357 1 10.0 –9 Barclays 9,844 6 9.5 4710 Deutsche Bank 8,690 10 8.4 9

RANK BOOKRUNNER DEAL VALUE (US$ MIL) NO SHARE (%) 2014 YTD RANKING

1 HSBC 10,091 62 9.9 12 CIMB Group 9,526 96 9.3 23 Citi 7,559 25 7.4 74 DBS 6,166 65 6.0 55 RHB Capital Bhd 5,073 52 5.0 106 Bank of America Merrill Lynch 4,804 20 4.7 87 Standard Chartered Bank 4,540 42 4.4 38 Maybank 4,364 40 4.3 49 JPMorgan 4,037 15 3.9 1810 OCBC 3,041 39 3.0 13

ANNOUNCEMENT DATE TARGET TARGET ADVISER PARENT ACQUIRER ACQUIRER ADVISER PARENT DEAL VALUE (US$ MIL)

Dec 7 Neptune Orient Lines Ltd Citi CMA CGM SA BNP Paribas, HSBC, JPMorgan 5,342

Jan 6 Kenon Holdings Ltd Bank of America Merrill Lynch, Deutsche Bank Existing Shareholders – 4,315

Nov 23 Edra Global Energy Bhd Rothschild, Maybank China General Nuclear Power Corp HSBC 2,299

Jan 23 Keppel Land Ltd (40.6208%) – Keppel Corp Ltd Credit Suisse, DBS, KPMG Corporate Finance 2,060

March 5 Hemaraj Land & Development pcl (92.88%) JayDee Partners Ltd WHA Corp pcl Siam Commercial Bank 1,765

PRICING DATE ISSUER NAME DEAL TYPE ISSUER NATIONALITY DEAL BOOKRUNNER PARENT EXCHANGE DEAL VALUE (US$ MIL)

Feb 3 Jasmine Broadband Internet Growth Infrastructure Fund IPO Thailand Morgan Stanley, Bangkok Bank pcl Thailand 1,686 Oct 1 PT Hanjaya Mandala Sampoerna Tbk FO Indonesia Goldman Sachs, JPMorgan, Citi, Credit Suisse, PT Bank Mandiri (Persero) Tbk Jakarta 1,415 April 29 Malakoff Corp Bhd IPO Malaysia Maybank, CIMB Group, RHB Capital Bhd, Credit Suissem, JPMorgan, Deutsche Bank, Hong Leong Financial Group Bhd, Bank of America Merrill Lynch, Morgan Stanley, Nomura, HSBC Kuala Lumpur 792 July 20 Jardine Cycle & Carriage Ltd FO Singapore CITIC Securities, Morgan Stanley, HSBC Singapore 751 March 31 Metropolitan Bank & Trust Co – Metrobank FO Philippines JPMorgan, UBS, First Metro Investment Corp Philippines 715

DEAL PRICING DATE ISSUER DEAL TYPE DEAL NATIONALITY DEAL BOOKRUNNER PARENT SECTOR DEAL VALUE (US$ MIL)

March 11 Petroliam Nasional Bhd — Petronas Corporate Bond-Investment-Grade Malaysia JPMorgan, Deutsche Bank, Morgan Stanley, HSBC, Maybank, Mitsubishi UFJ Financial Group, CIMB Group, Citi, Bank of America Merrill Lynch Oil & Gas 4,964 Jan 8 Republic of Indonesia Sovereign, Local Authority Indonesia Standard Chartered Bank, HSBC, Citi Government 3,965 Dec 1 Republic of Indonesia Sovereign, Local Authority Indonesia HSBC, CIMB Group, Citi, Bank of America Merrill Lynch Government 3,482 Jan 13 Asian Development Bank Supranational Philippines JPMorgan, Goldman Sachs, Daiwa Securities, Citi Finance 2,983 Feb 10 Asian Development Bank Supranational Philippines Morgan Stanley, TD Securities Inc, RBC Capital Markets, Bank of America Merrill Lynch Finance 2,245


Tuesday, Dec 22SingaporeChasen Holdings Ltd EGMMoya Holdings Asia Ltd EGMWeiye Holdings Ltd EGMUS Personal Consumption (3QT)US GDP Price Index (3QT)

Wednesday, Dec 23SingaporeMiyoshi Ltd AGMS I2I Ltd EGMUS MBA Mortgage Application

Thursday, Dec 24SingaporeAlpha Energy Holdings Ltd EGM

Monday, Dec 28SingaporeSwee Hong Ltd AGM

Tuesday, Dec 29SingaporeAlibaba Pictures Group Ltd EGMAnnica Holdings Ltd EGMBowsprit Capital Corp Ltd EGMInformatics Education Ltd EGMUS Consumer Confidence Index

Wednesday, Dec 30SingaporeEzra Holdings Ltd AGMQ & M Dental Group (S) Ltd EGMSecond Chance Properties Ltd AGMShinvest Holding Ltd AGMSHS Holdings Ltd EGMUS MBA Mortgage Application

SHAREHOLDERentitlements

COMPANY TYPE PARTICULARS EX-DATE REC DATE PAID/ PAYABLE

SINGAPORE TELECOMMUNICATIONS Dividend $0.068 one-tier tax Dec 21 Dec 23 Jan 13CNMC GOLDMINE HOLDINGS Dividend $0.0018 one-tier tax Dec 28 Dec 30 Jan 20OSIM INTERNATIONAL Dividend $0.01 one-tier tax Dec 28 Dec 30 Jan 6FALCON ENERGY GROUP Dividend $0.005 one-tier tax Dec 31 Jan 5 Jan 20HUPSTEEL Entitlement Share Consol Offer of 1 for 5 Jan 5 Jan 7 NASECOND CHANCE PROPERTIES Dividend $0.0355 one-tier tax Jan 6 Jan 8 Feb 24FRASER AND NEAVE Dividend $0.03 one-tier tax Feb 3 Feb 5 Feb 19FRASERS CENTREPOINT Dividend $0.062 one-tier tax Feb 3 Feb 5 Feb 19AVI-TECH ELECTRONICS Dividend $0.007 one-tier tax Feb 15 Feb 17 Feb 29

Temasek willing to give StanChart time for turnaround

MARKETdiary

Announced dividends and capital issues: Dec 21 to Feb 15, 2016 (by ex-date)

| BY SAEED AZHAR |

Temasek is willing to give Standard Chartered time to work on its turn-around before deciding on the fate

of its underperforming US$4 billion ($5.7 billion) stake in the UK bank as part of a portfolio reshuffle, people fa-miliar with the matter say.

Pressured by weak returns from low interest rates and a commodities rout, the Singapore state investor is taking a hard look at its US$190 bil-lion portfolio and may exit unprofit-able assets, these people tell Reuters.

This approach was evident when Temasek sold at below book value a controlling stake in shipping firm Neptune Orient Lines (NOL), its big-gest disposal since 2009.

Standard Chartered, in which Te-masek is the biggest shareholder with an 18% stake, has launched a pain-ful restructuring under new CEO Bill Winters after being hit by bad loans in emerging markets and suffering a 70% tumble in its shares over the past 2½ years.

“Temasek is giving them time. They’ve had a lot of engagement with the board, and Bill has sort of man-aged expectations in terms of turning this ship around,” says one of the peo-ple familiar with Temasek’s thinking.

Temasek declined to comment.It is not clear how long Temasek

will wait to see the results of the re-structuring.

By subscribing this month to its al-lotted portion of Standard Chartered’s US$5 billion share sale, the Singapore investor has buttressed that position for now. But Temasek may become increasingly uncomfortable with the investment if shares in the bank do not recover.

Its paper loss on the Standard Char-tered investment was US$1.2 billion, excluding dividends, just on the 12% stake it bought in 2006, according to calculations by Reuters. Temasek raised its stake to 18% in December 2007. Since then, Standard Chartered’s shares have lost about two-thirds of their value.

“Clearly, Temasek wants to pro-

actively manage its underperform-ing portfolio and get rid of stocks that are causing pain,” says one Hong Kong-based banker who works close-ly with Temasek, which is headed by Ho Ching, wife of the current prime minister of Singapore. “That means even the Standard Chartered stake could be on the block if a right solu-tion comes around.”

The size of Temasek’s portfolio has doubled since it lost US$40 billion during the global financial crisis of 2008/2009, owing to losses on Western banks such as Bank of America.

But returns lagged Temasek’s own internal metric of making gains above the cost of capital in five out of the last eight financial years, its annual reports show.

A concentration of investments in a few large-cap stocks mostly in Singa pore and China limits its ability to outperform.

Ten companies, including Singapore Telecommunications, Singapore’s big-gest lender DBS Group Holdings and China Construction Bank, account for half of its assets.

To boost returns, Temasek could sell some underperforming assets, such as Jakarta’s No 6 lender Bank Danamon and the rail business of Singapore train and taxi operator SMRT Corp, a senior Southeast Asian banker says.

Danamon, which is 68% owned by Temasek, is trading below its book val-ue and its return on equity is the sec-ond weakest among Indonesia’s top 10 lenders over the last financial year, according to Thomson Reuters data.

SMRT is under pressure after suf-fering a series of operational break-downs.

Bertrand Jabouley, credit analyst at Standard & Poor’s, says that even though the timing of the NOL disposal seems suboptimal given the ongoing crisis in the sector, Temasek may want to use the proceeds for more profita-ble investments.

“They may have much more profit-able investment opportunities in their pipeline to put the disposal proceeds to work,” he says. — Reuters

LISTINGS

CAPITAL

Dec 21Topic: The Basics of InvestingHighlights: Understanding what investing is, why invest, how to get started, what to look out for, introduction to the local stock market, understanding stocks, opening a CDP account, selecting and investing through a stockbroker, introduction to IPOs and investing in the secondary marketTime: 7pm to 10pmVenue: SGX Auditorium, Level 2, 2 Shenton Way, SGX Centre 1Organiser: Singapore ExchangeTel: 6327 5438 Email: register@sgxacademyWebsite: www.sgxacademy.com

Dec 22Topic: Currency Futures Trading SeminarHighlights: What is currency trading? What are the different ways traders approach trading? How do proprietary trading teams operate? What is the best way for a beginner to start? How does our forex training programme offer you the solutions to your trading doubts/problems?Time: 7pm to 9pmVenue: Academy 1 & 2, Level 2, 2 Shenton Way, SGX Centre 1Organiser: Singapore ExchangeTel: 6327 5438Email: register@sgxacademyWebsite: www.sgxacademy.com

Dec 30Topic: The Search for Value (Applied Value Investing)Highlights: This seminar is designed for individuals who want to build long-term wealth using a proven approach of value investing. This wealth building process is executed through a systematic approach of diligent research and patient execution of an investment strategy. In three hours, participants learn to adapt this value investing strategy to fit his own risk appetite and investment objectives.Time: 7pm to 10pmVenue: Academy 1 & 2, Level 2,

2 Shenton Way, SGX Centre 1Organiser: Singapore ExchangeTel: 6327 5438 Email: register@sgxacademyWebsite: www.sgxacademy.com

Jan 5Topic: The Potential of Gold in 2016 — How to Benefit from InvestingTime: 7pm to 8pmVenue: 250 North Bridge Road, Raffles City Tower, Level 7Organiser: Phillip FuturesOnline registration: www.phillipfutures.com.sg/investors/education/seminars-events

Jan 7Topic: Trading US Stock Index Futures in 2016Highlights: What is indices trading, types of products and their differences, identify opportunities and risks, short summary of 2015, seven habits of a professional trader that have long-lasting results and practical adviceTime: 7pm to 8pmVenue: 250 North Bridge Road, Raffles City Tower, Level 7Organiser: Phillip FuturesOnline registration: www.phillipfutures.com.sg/investors/education/seminars-events

Jan 8Topic: Basics of Forex TradingHighlights: The different currencies involved, trading hours of forex, advantages of forex trading, what is margin trading on forex, swap interest rate involved in forex trading, different order types to help in your trades, how much does forex move and what is your risk/reward from it?Time: 12.30pm to 1.30pmVenue: Phillip Investor Centre (Marine Parade), Blk 80 Marine Parade Central, #01-782Organiser: Phillip Securities Pte LtdTel: 6812 1577Email: [email protected]: www.phillipfutures.com.sg/investors/education/seminars-events — Compiled by Rahayu Mohamad

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Standard Chartered has launched a painful restructuring after being hit by bad loans in emerging markets and suffering a 70% tumble in its shares over the past 2½ years

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| BY ANDREW ROBERTS |

Collapsing demand in China, the strong US dollar and the Paris terror attacks made 2015 a year to forget for the likes of Prada, Burberry Group and Cartier owner Richemont. Prada’s

shares hit a record low on Dec 16 on slump-ing Asian sales, which has led the maker of US$3,000 ($4,241) handbags to dial back store openings, slash costs and introduce more af-fordable products. Prada’s woes show what ails the entire luxury industry. The outlook for 2016 is better, but not much. The US$278 billion market for designer dresses and other expensive stuff will expand by no more than 4%, better than 2015’s 1% gain, yet still half the average annual rate of the past five years. Here are five ways companies are grappling with the slowdown:

Fee frenzyWith cash sloshing about, interest rates due to rise and some independent companies under pressure, deal making could top this year’s €2.5 billion ($3.8 billion), according to IESE Busi-ness School professor Fabrizio Ferraro. Brands such as Balmain, Dolce & Gabbana, Furla, Lan-vin, Longchamp, Maurice Lacroix and Parmi-giani could garner interest from buyers includ-ing Kering, which is poised to exit sportswear maker Puma. Ferraro sees more private equi-ty buyouts, while larger transactions could re-turn if conditions worsen. IPOs of Valentino and Versace are likely as well. “There’s going to be more consolidation,” he says.

Digital driveLuxury was late to the party online, but with Internet sales growing more than twice the rate of the overall market, brands such as Hugo Boss and Mulberry are realising they need to take the Web seriously if they want to com-pete, according to Fflur Roberts, head of lux-ury research at Euromonitor. In addition to hiring tech-savvy executives — LVMH Moet Hennessy Louis Vuitton snatched Ian Rogers from Apple to be its new digital chief — that means things such as same-day delivery and

more experimentation, or Burberry making on-line ads based on consumer photos. “It’s not just about clicking on sweaters,” says Roberts. “Brands need to make the online experience more exciting.”

Retail rebootThe slowdown has already prompted Louis Vuitton and Burberry to downsize some retail outlets and shut others. Now, they and oth-er companies will have to squeeze more dol-lars out of the stores they have left, particu-

larly in developed markets such as Europe, according to Boston Consulting Group part-ner Olivier Abtan. Brands will need to refur-bish shops, improve service and stock more relevant merchandise, he says. “You have to pull all the classical retail levers to regain like-for-like sales.”

Haute techTechnology is rarely as fashionable as it is smart, but that is about to change as wardrobe staples get connected, according to Lucie Greene, head of J Walter Thompson’s trend-forecasting unit. We are not just talking about smartwatches from TAG Heuer or the Hermes-designed leath-er strap for the Apple Watch. Google and blue jeans maker Levi Strauss are among compa-nies developing textiles that contain conduc-tive “smart” threads so a pair of trousers can be used like a touch screen. Technology “will be integrated into our tailoring and normal ac-cessories,” says Greene. “From a creative as-pect, we are just beginning.”

Skinny jeans and ‘car wash’ skirtsFinally, expect to see fewer skintight jeans, ac-cording to Katherine Ormerod, editorial direc-tor of online luxury shopping aggregator Lyst, who says 2016 may be the year “the stretchy skinny jean finally dies”. Many fall collections also featured “car wash skirts”, named for the fringed hem that resembles the cloth strips that hang from a car wash. They are “sexy but also unusual enough to feel like an update on this year’s midi-skirt styles,” says Ormerod. — Bloomberg LP

What went wrong at Prada and fashion’s miserable outlook for 2016

| BY ANDREAS CREMER |

German environmental lobby group DUH turned on carmak-er Daimler on Dec 16, saying

test results had shown nitrogen oxide emissions from one of its Mercedes diesel models far exceeded Europe-an legal limits.

Daimler describes the results from a Mercedes C-Class 200 CDI as “ques-tionable”, saying the model used technology that met European Un-ion (EU) standards and threatening legal action should “false claims” damage its reputation.

Citing tests carried out by Uni-versity of Applied Sciences in Bern, Switzerland, DUH tells a news con-ference that the car, a 2011 model, had released emissions of nitrogen oxides that were more than twice the legal limits when tested with a warm engine under new European testing cycles.

The carmaker took issue with DUH’s assertions. “The test results are questionable as the conditions of the test are not clear. We don’t know the specific car, the temperature at the time of the tests, the loading

weight,” a Daimler spokesman says.Fellow German carmaker Volkswa-

gen is engulfed in a scandal after rig-ging the results of exhaust emissions tests in the US.

DUH has made charges against a number of other motor manufactur-ers. In October, it said a model built by General Motors’ Opel division had shown excessive emissions of nitrous oxides, an assertion that was denied by Opel at the time.

French rival Renault has also con-tested findings cited by DUH that one of its minivans released toxic diesel emissions 25 times over legal limits.

Daimler says in a Dec 16 state-ment that the car tested in Switzer-land used technology certified in 2007 that met the EU’s Euro-5 standard. It acknowledges that results under real driving conditions often differ from those in a laboratory.

In September, DUH accused Daim-ler of also rigging emissions data, charges the company denied at the time.

It repeated the denial on Dec 16, saying: “We reserve at all times the right to take legal action should false claims or unjustified allegations dam-

age the reputation of our company.”The discrepancies between labo-

ratory-based results and real-world emissions measurements are part of a wider pattern that affects the entire auto industry and not just Volkswagen, Opel and Renault, ac-cording to DUH.

Axel Friedrich, a former official at the German environmental protec-tion agency, says this was also the case with the Mercedes model. “If we had tested other vehicles from other

manufacturers, we would have deter-mined the same or similar results,” he tells the DUH news conference.

Friedrich is a co-founder of the Washington-based International Coun-cil on Clean Transportation, which commissioned the original investi-gation that led to the exposure of Volkswagen’s test-rigging in the US.

Separate tests commissioned by German public broadcaster ZDF, also conducted by the Swiss university and aired on Dec 15, found that a BMW

3-Series 320d model released more toxic diesel emissions in real-world testing than in the laboratory.

BMW denies its cars have the kind of “defeat device” that Volkswagen used to manipulate the tests.

“Our vehicles carry no illegal de-vices,” a BMW spokesman said on Dec 16. “The emissions behaviour does not distinguish between a vehi-cle on a dynamometer or in on-road use. We emphatically reject any spec-ulation to the contrary.”

Separately, public prosecutors in the German city of Stuttgart said on Dec 16 they were investigating whether staff at auto parts suppli-er Robert Bosch were involved in the rigging of emissions tests by Volkswagen.

Stuttgart-based Bosch, which makes a diesel engine management programme used by several top au-tomakers including Volkswagen, de-clined to comment on specific inves-tigations.

A company spokesman says: “We are cooperating in principle with all authorities who want to contribute to the clarification of the facts.” — Reuters

German lobby group says excess emissions detected in Mercedes model

Many fall collections featured ‘car wash skirts’, named for the fringed hem that resembles the cloth strips that hang from a car wash

In September, DUH accused Daimler of rigging emissions data, charges the company denied at the time and repeated on Dec 16

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it. The Berlin-based company — founded by Oliver, Marc and Alexander Samwer — needs these regions to grow because unlike Amazon.com in the US and Alibaba Group Holding in China, Rocket does not dominate one large home market.

In Africa, with its more than one billion po-tential customers, Rocket has been among the first to introduce online shopping. That has meant educating customers on e-commerce,

building a delivery supply chain and handling collection of the mostly cash payments. Suc-ceeding in Africa could mean dominating the overall retail sector, because bricks-and-mor-tar competition is much weaker than in West-ern countries or even non-existent.

“In the US, you have one retail outlet for about 1,100 people; in Africa, it’s more like one for every 100,000 people,” Kudlich says. “You’re offering customers access to products that they didn’t have before.”

Rocket’s Lazada, active in Southeast Asia, more than doubled sales to US$154 million ($217.5 million) in 2014. It is the most popular shopping site in markets including Vietnam, Thailand and Indonesia, where retail e-com-merce sales are expected to jump 66% to US$3.2 billion this year, according to research-

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| BY STEFAN NICOLA |

The Samwer brothers have made a fortune copying successful US Inter-net businesses in Europe. Now, their company Rocket Internet is trying the same approach in Africa and South-

east Asia, where the opportunities — as well as the hurdles — are much higher.

“What happens in Europe will be repeat-ed, with a time delay, in emerging markets,” Rocket managing director Alexander Kudlich says in an interview. “The more complex the market, the smaller the competition. And the smaller the competition, the higher the mar-gins. It’s more difficult, but if you succeed, it’s very good.”

When Rocket’s shopping site Daraz held a Black Friday sale in Pakistan, orders jumped 55-fold compared with regular days, with re-bated Apple iPhone 6s handsets selling out in five minutes. The same day, Rocket’s African shopping site Jumia had 35,000 orders main-ly from Nigerian customers, with one in four of them new to the platform.

Rocket, which has already built up online retailers in countries including Indonesia, Ni-geria and Pakistan, plans to expand further in Africa and Southeast Asia in a bet that young and growing populations, rising Internet and smartphone use and a widening middle class will fuel revenue growth and eventually prof-

Rocket Internet targets emerging markets to beat online giants Amazon and Alibaba

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AdobeMarta DeBellis has been appointed VP, marketing, Asia-Pacific wef DecemberWork experience: VP/group account director, MRM/McCann, Salt Lake City; director, Asia-Pacific, Intel Corp

Anwell Technologies LtdLing Yew Kong has been appointed executive director/chairman wef Dec 7Work experience: ED/CEO, China Sky Chemical Fibre Co Ltd; executive chair-man, Firstlink Investments Corp Ltd

BMO Financial Group Ravi Sriskandarajah has been appoint-ed MD/head, BMO Global Asset Man-agement, Asia-Pacific wef December

Work experience: Has more than 15 years’ asset management experience in senior roles

Credit SuisseMichael Levin has been appointed head, asset management, Asia-Pacif-ic wef DecemberWork experience: Head, asset manage-ment products, non-Japan Asia, Cred-it Suisse; over 20 years’ experience in the asset management business

Hutchison Port Holdings Management Pte LtdWong Kwai Lam has been appoint-ed independent non-ED wef Dec 2Work experience: Chairman, IncitAdv

Consultants Ltd; senior client advis-er, Merrill Lynch (Asia Pacific) Ltd

Jacks Int’l LtdZhong Wenqing has been appoint-ed CEO wef Dec 7Work experience: Director, VAV SG Investment Pte Ltd; director, Cam-sing SG Investment Pte Ltd

Manulife Asset Management (Singapore) Pte LtdWendy Lim has been appointed CEO wef DecemberWork experience: CEO, Singapore/MD, business development and mar-keting, Asia-Pacific, BNY Mellon In-vestment Management

Nippecraft LtdConnie Oi Yan Chan has been ap-pointed ED/CEO wef Dec 2Work experience: GM, British Amer-ican Tobacco Sales & Marketing (S) Pte Ltd; marketing director, Gener-al Electric

RHTLaw Taylor WessingProfessor Stephen Phua has been appointed senior consultant, corpo-rate practice wef Nov 6Work experience: Teaches Income

Tax, VAT/GST, International Tax Law and Business & Finance for Lawyers in the Faculty of Law, National Uni-versity of Singapore

Roland BergerDamien Dujacquier has been pro-moted to senior partner wef DecemberWork experience: Partner/head, tech-nology, media and telecom, South-east Asia, Roland Berger; marketing manager, Orange — Compiled by Rahayu Mohamad

Companies are invited to submit notices of senior corporate appointments and changes. Photographs (in jpeg format) are welcome. Announcements will be edited for brevity. Email [email protected]; attention: editorial coordinator, Rahayu Mohamad.

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CORPORATE MOVES

er eMarketer. Lazada Indonesia had 11 million unique visitors in July, compared with 1.9 mil-lion for Amazon and 1.7 million for Alibaba, eMarketer says.

“Lazada has established a dominant po-sition,” says Lucas Boventer, an analyst at Warburg Research in Hamburg. “Alibaba or Amazon who have shunned these markets also see their potential by now, but Rocket went there first.”

The push has not worked everywhere. Rock-et pulled out of food delivery in Vietnam by selling its Foodpanda unit to a rival. In India, its fashion retailer Jabong is facing strong lo-cal competition that may in the long term re-sult in Rocket exiting the market or selling the asset, Boventer says. Rocket says it sees “big potential” for Jabong in India, recently hiring a former Benetton executive in India as CEO. Potential long-term risks for Rocket’s emerg-ing markets push include local currency de-valuations, Boventer says.

Rocket is determined to succeed and make the two areas profit centres for the company. To get there, the company needs to first cough up more cash. Rocket invests “double-digit million euro” figures each month in Southeast Asia and Africa as it tries to grow and domi-nate both regions, Kudlich says.

“We’re seeing very strong growth and we have no doubt that if you’re patient — and you have to be — it will continue this way in the coming years,” he says. — Bloomberg LP

Oct 3, 2014 Dec 16, 2015

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Kudlich: The more complex the market, the smaller the competition

Rocket’s Lazada is the most popular shopping site in markets including Vietnam, Thailand and Indonesia


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personalWEALTHTHE WEEK OF DECEMBER 21, 2015

M A N A G I N G Y O U R M O N E Y

Find out how wealthy US families get their investment portfolios to profitably reflect their values

Market outlookPredictions for 2016 from

14 of the brightest

investment minds

Fund focusJunk bond managers battle

fallout from Third Avenue

credit fund blowup

CollectiblesValue of HK billionaire’s

Chinese porcelain collection

surges more than tenfold

Fi d t h lth US f ili t th i

Impact investing done right Children gather scraps at the Steung

Meanchey garbage dump in Phnom Penh. To meet the UN’s Sustainable Development

Goals for ending extreme global poverty by 2030, it is estimated that governments,

businesses, and investors need to kick in US$172.5 trillion to build out

infrastructure, combat infectious diseases, and stop endemic hunger.

PW2 • THEEDGE SINGAPORE | DECEMBER 21, 2015

| BY MICHAEL BOYLE |

Top investment experts warned of recessions and crisis next year, while others shared their tips for finding yield. Read on for more of their predictions for

the coming year.

Watch for a worldwide recessionRuchir Sharma, head of emerging mar-kets equity and global macro, Morgan Stanley Investment Management

“We are now just one big shock

away from a global downturn, and the next one seems most likely to originate in China, where heavy debt, excessive investment and population decline are combining to undermine growth, while relatively low-debt countries from East-ern Europe to South Asia look better po-sitioned to weather the inevitable next turn in the cycle.”

Fixed income faces a rocky roadDan Fuss, vice-chairman at Loomis Sayles & Co and co–portfolio manag-er of the US$20 billion ($28.1 billion)

Loomis Sayles Bond FundYields on the benchmark 10-year

Treasury note will likely rise to 2.6% to 2.8% by end-2016, Fuss says, although he cautions that the current geopolitical turmoil makes forecasting especially dif-ficult. For investors with a bond portfolio in these rocky times, Fuss recommends a mix of Treasuries, investment-grade corporates (with maturities of five to 12 years), and high-yield debt as having the best chance of success in 2016. And you’ll need to be especially picky when it comes to high-yield bonds instead of relying on an index fund, he says. “It’s quite clear that high yield has the best value relative to stocks, but there’s a lot more scatter there.”

Know which equities to watchThomas J Lee, managing partner at Fundstrat Global Advisors

“Equities are going to do really well in 2016, especially banks and blue-chip businesses. Banks will benefit from the Fed tightening and will boost their returns on equity as the economy expands. And when you look at blue chips, they’re going to have the abili-ty to generate stronger returns as the economy picks up.”

The EU faces its biggest challenge yetRebecca Patterson, chief investment of-ficer of Bessemer Trust, which oversees more than US$100 billion in assets

The biggest risk for Europe in the year? “It’s the refugee crisis,” says Patterson. “I think it’s the biggest challenge to the European Union yet. The horrible terror-ist attacks in Paris increased the risk that the refugee crisis could result in a polit-ical and/or policy shift, or simply lead consumers to change their spending pat-terns. Either could weigh on sentiment

Predictions for 2016 from 14 of the brightest investment minds

PERSONAL WEALTH FUND FOCUS

EDITORBen Paul

SECTION EDITORKelvin Tan

COPY-EDITING DESKElaine Lim, Evelyn Tung,Chew Ru Ju, Tan Gim Ean, Choy Wai Fong

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EDITORIAL COORDINATOR Rahayu Mohamad

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In 2016, Koch is especially keen on Netflix, Nike, H&M — companies that resonate with the two billion millennials worldwide

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growth, the economy will create jobs, espe-cially in the labour-intensive services sector. And it’s unlikely that China’s financial indus-try is headed for a crisis because most of the country’s institutions are backed by the gov-ernment. Should any systematically impor-tant financial institutions have any problems, we believe that the government will step up to rescue them.”

Think like a millennial Katie Koch, a managing director at Goldman Sachs Asset Management, which oversees al-most US$100 billion in global stocks

“The rise of the millennials will have long-term investment implications,” Koch says. “Their spending trajectory is getting steeper and in-creasing compared with baby boomers, who are decreasing their spending as they retire.” In 2016, Koch is especially keen on Netflix, Nike, H&M and PChome Online, a Taiwan-ese e-commerce company, because they prior-itise instant information, quick consumption and healthy living — themes that resonate with the two billion people worldwide born from 1980 to 2000.

More of ‘whatever it takes’ from the European Central BankErik Nielsen, chief economist at UniCredit

“Expect further divergence between the Fed and the ECB, with the former hiking rates a couple of times next year and the latter expand-ing its balance sheet more than it has present-ly announced.” — Bloomberg LP

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PERSONAL WEALTH

THEEDGE SINGAPORE | DECEMBER 21, 2015 • PW3

around European growth and corporate profits.” Patterson is on alert for any such changes, but remains overweight European equities and po-sitioned for a weaker euro, she says. “The Par-is attacks sadly shone a light on the European refugee crisis; I assume more investors globally now are thinking more about what millions of immigrants can mean for an economy and re-spective markets. However, I am still not sure that investors globally have adequately thought through what market spillovers the European ref-ugee crisis could trigger over the coming year.”

Return of inflation-risk premia Jim Caron, a managing director at Morgan Stanley Investment Management

“I believe inflation risk premia will return to the markets. This should provide an up-ward lift for 30-year Treasury yields, possibly toward 3.75%. The markets may also be sur-prised by how slowly the Fed hikes rates in the face of what we think will be an improv-ing economic climate.”

Unicorns will have their moment — or notAlan Patricof, co-founder of Greycroft Partners

“I am concerned about the over-exuber-ance in the financing of start-ups. There are just too many at the moment, and there isn’t enough money to sustain them. I think, inev-itably, we’re going to see more of these uni-corns” — start-ups valued at more than US$1 billion — “try the public market, and that will finally tell us whether they can support them-selves. By the way, I don’t think there’s enough money around to sustain all of them. We’re go-ing to find out which unicorns can make it.”

The search for yield will intensify Russ Koesterich, global chief investment strat-egist at BlackRock, the world’s largest mon-ey manager

“The Fed is going to be less important in 2016,” says Koesterich, who expects Ja-net Yellen & Co to raise interest rates in-crementally. He predicts global growth will stay sluggish, increasing the thirst for high-er-yielding assets. Investors who have relied on high-coupon bonds they bought before the financial crisis are running out of those securities, he says — and there’s little to re-place them that is a slam dunk. “You won’t be able to find income without risk. Asset classes from [master limited partnerships] to high-yield bonds each have their own risks — and none of them are cheap. You’re go-ing to have to have a multi-asset-class, di-versified-yield play.”

Get energisedBarbara Byrne, vice-chairman of investment banking at Barclays Capital

“We will begin to see a recovery in the pric-es of natural resources for largely — and criti-cally important — political reasons. We’re be-ginning to see sovereign wealth funds decline — Norway, Saudi Arabia. I think we’ll see a reversal on that; countries will not be able to afford fluctuations in their reserves. We’ll prob-ably move to a more stable oil price, which I would say is US$60 per barrel. And I think energy assets that are investing in sustaina-bility at the same time that they are focusing on meeting the needs of the current demands will probably do well.”

Study Latin AmericaTulio Vera, chief global investment strategist for the JP Morgan Latin American Private Bank

“There’s a ray of sunshine from Argenti-na,” says Vera (right). “That’s not only impor-tant for the country, but also for the region.” While Vera says the investment landscape in Brazil remains uncertain, he sees Mexico continuing to benefit from the US econom-ic recovery, especially in the auto industry. “There will be some very interesting entry points in Latin American assets between now and the end of next year,” he says. “We are getting closer to a re-entry moment for some of these markets.”

Growth is coming… in 2017Joseph LaVorgna, chief US economist at Deutsche Bank (above)

“I’ve got growth accelerating a bit because it seems like there are reasons that the econo-my should get better, but it’s concerning that 2010 was the best year for growth since before the recession. As I look forward, the message is ‘more of the same,’ with maybe some opti-mism into 2017 that whomever the US elects president will pursue growth policies, since this economy hasn’t done well.”

Impact investing will target cancerMark Haefele, global chief investment officer at UBS Wealth Management

“The world’s populations are ageing, and demand for cancer treatments will only in-crease,” says Haefele. “Yet, the supply of cap-ital for the riskiest stages of development is limited.” Healthcare companies tend to focus on later-stage research, providing an opportu-nity for earlier-stage investors to earn an at-tractive long-term return — and benefit socie-ty. “This type of practice” — known as impact investing — “is likely to become more popu-lar as investors seek to align their portfolios with their social values as well as generating a return,” says Haefele.

China will be just fineYang Zhao, chief China economist at Nomura Holdings, which cut its 2016 GDP forecast to 5.8% from 6.7% on Oct 6

“Is there going to be a hard landing in Chi-na? I don’t think so. The labour market re-mains largely balanced; even with 5.8% GDP E

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PERSONAL WEALTH COVERSTORY

| BY ROBERT MILBURN |

Impact investing — the art of creating port-folios that earn market-rate returns while also seeking to advance social or environ-mental aims — is a mercurial child of the 21st century. Hard to pin down with pre-

cise definitions and interpreted in a variety of ways, impact investing is nonetheless a fast growing force below the surface of our finan-cial markets, effectively blurring the lines be-tween philanthropy and investing.

Liesel Pritzker Simmons is a Hyatt Hotel heiress, a leader of the impact investing move-ment, and a co-founder of the impact invest-ing family office Blue Haven Initiative, which she runs with her husband, Ian. Two years af-ter winning a 2005 lawsuit against her family and extracting US$500 million in inheritance, Pritzker Simmons and her husband were trav-elling in Rwanda and thinking about how their investments could have a more direct impact on the lives of impoverished Africans. After returning home, she ran their idea by her fi-nancial adviser, who sneered, saying, “How much money do you want to lose?”

The adviser was fired. Today, with the help of the Caprock Group’s Matthew Weath-erley-White and impact consultant Jed Emer-son, Blue Haven’s portfolio is 100% invested for impact, aiming to earn market-rate returns across asset classes. “This isn’t philanthropy,” the 31-year-old Pritzker Simmons insists. “The people I know who are thoughtful about impact investing are not crunchy tree-huggers. This is part of the way investing should be done.”

Pritzker Simmons is a kind of poster child for an entirely new generation of investors coming up the ranks and rattling convention-ally minded private bankers. From 2007 to 2061, US$59 trillion ($83.3 trillion) in assets will pass on to heirs, many of them as social-ly conscious and demanding as Pritzker Sim-mons. These folks want their investments to not just make money but also make a better world. An industry association, the Forum for Sustainable and Responsible Investment, or US SIF, using a very loose and broad definition of impact investing, claims it is already a US$6.57 trillion business in the US, after growing 76% from 2012 to 2014.

Top concerns for impact investors today in-clude climate change, gender equality, educa-tion and agricultural sustainability, but below the surface, it seems that most of these inves-tors are either consciously or unconsciously aiming to end global poverty. More important-ly, today’s devotees argue that impact invest-ments do not mean sacrificing financial returns in an effort to do good, and towards that end they are investing in everything from private equity to exchange-traded funds (ETFs). Some go even further, insisting that impact invest-ments are, in fact, less volatile and outperform traditional financial benchmarks, especially in bear markets.

Of course, many eminent financiers are sceptical about the wisdom of trying to com-bine investment objectives with social caus-es. Venture capitalist Marc Andreessen, of An-dreessen Horowitz, expressed this view best when he once said that impact investments are “like a houseboat. It’s not a great house and not a great boat”.

Perhaps so, but a survey conducted by US Trust finds that roughly a third of high-net-worth investors either own or are interested in owning social impact assets. The survey also notes that about 60% of millennial investors either own impact assets or have expressed in-

Street vendors in Kigali, Rwanda. Hyatt Hotel heiress Liesel Pritzker Simmons and her husband were travelling in Rwanda when they thought about how their investments could have a more direct impact on the lives of impoverished Africans.

Impact investing done rightFind out how wealthy US families got their investment portfolios to profitably reflect their values

terest in impact investing, versus 24% of baby boomers; it also says 40% of women are simi-larly intrigued, versus 26% of males.

Meeting a demand And what the client wants, Wall Street pro-cures. In April, private equity firm Bain Capi-tal hired former Massachusetts governer Deval Patrick to build the firm’s social-impact-invest-ing business. Then, in July, Goldman Sachs ac-quired, for an undisclosed sum, Imprint Capital, a firm that creates bespoke impact portfolios for wealthy families. And in October, not to be outdone, BlackRock launched a targeted US equity impact strategy, the BlackRock Im-pact US Equity fund.

“We think we’re opening up the market in a way that hasn’t been available to retail in-vestors,” says Deborah Winshel, head of im-pact investing at BlackRock.

It is happening at all levels of the wealth management industry. Bank of America, for example, manages US$9.8 billion in impact-in-vesting-like assets, from green bond funds to socially responsible ETFs. Its private bank, US Trust, has clients’ money invested in six inter-nally managed public-equity impact strategies — such as a women’s and girls’ equality fund and a religious values fund.

The fund minimums are a digestible US$100,000 for an off-the-shelf option. For the more demanding impact investor will-ing to commit at least US$3 million, US Trust portfolio manager Jason Baron says a bespoke public equity portfolio can be created. These funds seek to hug traditional and relevant fi-nancial benchmarks in the near term, but out-perform over longer stretches. That’s because studies, such as an audited financial analysis of the San Francisco-based KL Felicitas fami-ly foundation’s impact portfolio, suggest that companies that obsessively take care of the environment or their employees tend to out-perform more conventional firms over time.

What’s interesting to note here is that even

Goldman Sachs now considers an impact in-vesting arm to be a vital part of its services to families. Advising the wealthy on their asset allocations is the bank’s bread and butter, ex-plains Hugh Lawson, a managing director. “But if you said, ‘Tell me how I can better align my portfolio with my values,’ we didn’t have an answer. [Impact investing] sits right alongside those other capabilities that are core.”

So we are entering a golden age for socially conscious capitalists, with more impact invest-ment options arriving daily. Investors need to take care, however, to ensure they understand these products and their nuances.

Making it workTo have a better understanding on impact in-vesting that has done well, here is a look at how three US families have committed to align-ing their portfolios with their values.

Doug Spencer of Denver was at the helm of firearms manufacturer Cooper Arms in 1997 when he sold the business for an undisclosed sum. He was just 41 years old, and, like many young ex-CEOs who suddenly find themselves rich, Spencer wanted his next job to be a pas-sion project. He had served as director of fund-raising for Mile High United Way, managing its US$30 million in annual community cam-paigns, but his interest in charitable fund-raising quickly waned. “I realised that, while there is a role for philanthropy, it wasn’t go-ing to solve most of the world’s pressing prob-lems,” he says.

He has a point. To meet the United Nations’ Sustainable Development Goals for ending extreme global poverty by 2030, it is estimat-ed that governments, businesses and inves-tors need to kick in US$172.5 trillion to build out infrastructure, combat infectious diseases and stop endemic hunger. And yet total phi-lanthropy and government-assistance remit-tances flowing from developed to developing countries was US$365 billion annually, by the UN’s last count.

In contrast, the McKinsey Global Institute puts global financial markets at US$225 tril-lion. The gap speaks for itself. Spencer, now 59, and other like-minded impact investors be-lieve, not unreasonably, that real solutions to the world’s endemic problems will ultimate-ly come more from capital markets than from philanthropic giving.

But how? In 2005, Spencer was development director of Friendship Bridge, a microfinance non-profit that provides loans to impoverished Guatemalan women. While Spencer was trav-elling in Guatemala, Hurricane Stan battered the country, causing an estimated US$1 billion in damages as heavy rains triggered mudslides and buried entire villages. The death toll was estimated at 1,500. “We got to see firsthand the desperate situation for the poor,” Spencer says. The horrors he saw led to one of his first impact investments, a start-up called Empow-ering Business Latin America, which builds low-cost homes for the country’s poor.

Guatemala and neighbouring El Salvador have a 1.9 million-unit housing deficit, Spen-cer says, pointing out the possibility of earning decent returns while also addressing a social need. But that initial investment also triggered some soul-searching within the family.

His wife, Kathleen, is a court-appointed special advocate for children, their young-est daughter is intensely interested in climate change and their oldest daughter is an oncology nurse concerned with healthcare and ageing.

The family quickly realised that the prob-lems related to all of these issues dispropor-tionately impact lower-income communities, Spencer says, and that was the thread running through all of their interests.

By 2012, they had developed a broad thesis for their impact portfolio — to combat glob-al poverty through investments in economic empowerment and access to financial servic-es, education, alternative energy and environ-mental sustainability. “We like to say we’re not investing for the world of today, but investing

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for an account of at least US$5 million. And they wanted it to be “animal friendly”, as well as reflect other deeply held values.

Investors are allowed to choose from a menu of nine preconfigured strategies, such as the “animal friendly” option, which excludes companies known to have inhumane practic-es like factory farms and certain types of an-imal testing. Its “environmental impact [10% tilt]” option is a portfolio that strips out pol-luters and overweights companies deriving at least 10% of their revenue from alternative energy, energy efficiency, green building, pol-lution prevention or sustainable water. From there, clients have the possibility of excluding from their portfolio whole industries or indi-vidual companies.

Along the way, the Trapanis got a reality check. For their bespoke public-equity portfo-lio, they wanted no part of companies using factory farming, and they found alcohol pro-ducers, the gambling industry and gun manu-facturers to be morally objectionable. But they quickly discovered that being too pure could negatively impact returns. “Zero exposure to gaming cut out a lot of companies that were performing well and turned out to be pretty responsible,” Kevin says. In the end, the cou-ple decided to tolerate companies with 5% or less of their total revenue in gaming.

For fixed income, they chose the Breckin-ridge Intermediate Term Muni fund, a tax-ef-ficient bond strategy that evaluates the en-vironmental and social purpose of a bond, charging 0.15% in fees annually. Community Capital’s CRA Qualified Investment, another holding, is a market-rate bond fund, investing in high-credit-quality US bonds for everything from small-business loans to home mortgag-es for low-income families. It charges a net fee of 0.48%.

“We aren’t wearing tie-dye, Birkenstocks, and eating granola,” Kevin says, but the Tra-panis do want to “reward good actors with low-cost capital and starve the bad actors. That’s going to change the way business behaves”.

Some might argue that the Trapanis are sim-ply passively screening sin stocks, a service that has been around for decades, and that they are not real impact investors using their portfolio to change behaviour and improve the world as they see it. But, for one, their impact portfolio is transitional. A mere seven months after they sold the Redwoods Group, the Tra-panis are still deciding how much of their mon-ey will go to charity and how the rest might be deployed for more active-impact bets. All, ultimately, will benefit their 14-year-old twins and 30-year-old daughter and her husband.

More important, we think such criticism rather misses the point — which is that the line between investing and do-good works, be-tween impact investing and passive screening, is starting to blur.

The World Economic Forum narrowly de-fines impact investing and figures that, by its definition, it is less than a US$40 billion in-dustry. But consider the California Public Em-ployees’ Retirement System, or Calpers, which alone manages US$305 billion in assets. Calp-ers is making all of its internal and external as-set managers articulate precisely how they are incorporating environmental, social and gov-ernance risks into their investment process, while using its financial muscle and voting rights to force oil companies, for example, to slowly shift their businesses toward a low-car-bon economy. That looks a lot like impact in-vesting to us, even if Calpers’ huge portfolio isn’t officially characterised as such.

It’s the 21st century, and the fast growing field of impact investing can’t be contained by any one tidy definition. That’s because the “im-pact” parameters of each portfolio are defined anew by every family or institution, according to their values and worldview, and that makes it a shape shifting beast.

But its mercurial nature is precisely why im-pact investing is a force to reckon with, and here to stay. — © 2015 Dow Jones & Co, Inc

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Impact examples Comment

Boston Common Public equity portfolio of international corporationsInternational ADR Portfolio scoring highly on human rights and environmental impact

Green Alpha Public equity portfolio of green companies addressing Next Economy economic/environmental challenges affecting the eco- efficiency of operations

Soko Direct investment in for-profit women-owned enterprises connecting artisans in the developing world with the global consumer marketplace

Sarona Frontier Fund-of-funds vehicle investing via local fund managers in small and Markets Fund II medium-size enterprises in frontier and emerging markets


Bridge to Success Private debt fund for affordable housing and credit counselling in Minneapolis-St Paul

MicroVest Short Private debt fund with loans to global microfinance Duration Fund institutions operating in developing countries

Vanguard FTSE Social Large-cap domestic equity portfolio of companies Index Fund/VFTSX scoring in environmental, social and governance metrics, devoid of tobacco and weapons

Jibu Private equity investment in a potable-water franchiser based in East Africa, delivering water to those lacking access


Aperio Custom Public equity portfolio of international corporations Global Index scoring highly on human rights and environmental impact

Breckinridge Intermediate Tax-efficient bond fund investing in taxable minis, Term Municipal corporate, Treasury and agency bonds addressing Fixed Income environmental and social needs

Community Capital CRA A market-rate bond fund investing in affordable housing, small business development Qualified Investment Fund and home mortgages for low-income families

100% invested for impact



Cordes Foundation

Spencer Family Portfolio

Trapani Family Portfolio

Cash 12%

Public Equity38%

PrivateEquity26%

PrivateDebt14%

Public Debt10%

Public Equity62%

Public Debt

9%

PrivateEquity

9%

PrivateDebt 10%

RealEstate

3%

Cash7%

ments in MicroVest and Finca, which make loans to financial institutions that focus on the poor, took no haircut and paid their 5% to 8% coupon rates throughout the crisis. “The sub-prime crisis and resulting fallout across devel-oped markets did not spread to the far corners of the developing world, where micro finance institutions were making responsible loans,” Cordes says.

And so, “In the worst investing period of my professional lifetime, when everything else went down the same drain, we found this in-vestment category that was largely immune from that,” he says. Having stumbled across an asset class uncorrelated to the rest of the market, he doubled down, and in 2011, he went to the White House with a consortium of similarly minded impact investors to com-mit 100% of his foundation’s endowment to impact investments.

With the guidance of Cordes’ wife, Marty, and daughter Stephanie, many of the founda-tion’s investments to combat global poverty have targeted women-owned businesses, including a US$50,000 direct investment in Soko, a website that sources jewellery from developing-world artisans for sale in developed markets. Mean-while, the foundation’s bespoke fixed income portfolio through Breckinridge, called Sustaina-ble Taxable Bond Strategy, uses 16 different gen-der-equality metrics to find related investments in government, sovereign and green bonds.

Cordes’ portfolio performed well in a bear market, but how, we pressed, did his portfo-lio perform during the recent bull run? Cord-es says the portfolio is not constructed to be a “concessionary” trade-off between financial return and impact. He claims that his private debt has “stacked up well against traditional alternatives”.

Private equity is longer-looking, however, with capital still being deployed, so the jury

is still out, but there has been “no unexpected negative performance”, he says. And his early returns in public equity, which was fully in-vested by August 2014, beat by 1% its bench-mark, a 70/30 blend of the Standard & Poor’s 500 and MSCI ex-US and Canada. Taken to-gether, Cordes says, the target for the overall portfolio is an 8% return annually. Not bad, considering it also has a seemingly effective bear-market hedge built into that return.

Reality checkIn 1997, Kevin and Jennifer Trapani founded the Redwoods Group, a North Carolina-based insurance company. It was one of the first cer-tified B Corps — companies that an independ-ent rating system has deemed to be working to solve social or environmental problems. To earn that B Corp star, the Redwoods Group be-came the low-cost insurance provider to un-derserved institutions such as YMCAs, Jewish Community Centers and camps for kids. Kevin did not feel any tension running his compa-ny that way. “Profit isn’t a swearword — it’s actually an important measure of sustainabil-ity,” he says.

All of their hard work paid off when the couple sold Redwoods for US$20 million ear-lier this year. With their windfall, they set out to build an impact portfolio, and their Mor-gan Stanley adviser, Joseph Eisler, introduced them to Aperio Group, a Sausalito, California–based company that creates customised im-pact portfolios in public equities. The firm’s clients must commit at least US$1 million to an Aperio impact portfolio, and it charges a 0.4% annual fee.

The process began with a questionnaire. “Essentially, Aperio talked to us about what made us cringe, and let our moral compass guide us,” Jennifer says. The Trapanis wanted a bespoke portfolio, which Aperio will build

for the world that we hope for,” Spencer says.Now, the practical bit. That same year, Spen-

cer went to an impact investing conference in San Francisco where he met Jonathan Firestein, head of private capital at Ascent Private Cap-ital Management, a US Bank unit for clients with US$75 million or more in assets. “I was impressed with Ascent’s investment in capac-ity and resources,” Spencer says. At any one time, Ascent tracks about 800 impact funds, Firestein says, and managing a client’s impact portfolio is included in its annual fee. To tap a line of independent information in the field, Spencer also joined a peer-to-peer group called the 100% Impact Network, a global organisa-tion based in San Francisco that is made up of 73 wealthy families collectively sitting on US$4.5 billion in capital and committed to in-vesting all of their wealth for impact.

Currently, 68% of the Spencers’ portfolio is invested with an eye on the larger world, and they are gradually moving to their goal of 100%. You can see a more detailed snapshot of their portfolio in the chart, Spencer Fami-ly Portfolio.

Spencer has a nuanced approach, demand-ing market-rate returns with some investments and, with others, compromising on returns to boost social impact. His public equity, fixed income and private debt investments are ear-marked for the best returns possible.

But for direct investments in companies such as Jibu, a potable-water distributor em-powering local entrepreneurs in East Africa, he is more philosophical about how the in-vestments play out.

“I always expect to get my money back, but understand that with direct investments, or venture-type funds in particular, I will win some and lose some,” Spencer says.

Family valuesInvestors who don’t believe that a portfolio aligned with a family’s values can possibly match the muscular returns of a traditional port-folio should talk with Wall Street veteran Ron Cordes. The executive, now 56, was heading up independent financial advisory AssetMark Investment Services in 2006 when he and his co-founders sold it for US$230 million to Gen-worth Financial Wealth Management. Cordes says he decided to “dedicate the rest of my productive years to doing something good for the world”. And so, the US$10 million in as-sets Cordes Foundation was born, focused on alleviating poverty around the world.

Not so fast. Cordes quickly realised that giving away the small foundation’s 5% in fed-erally mandated grants each year would not move the needle. “We’re not the Gates Founda-tion, so we can’t write a US$10 million cheque every time we see a problem that we want to solve,” Cordes says.

What he needed to do, he realised, was mo-bilise his foundation’s entire balance sheet for its anti-poverty mission. To build his impact portfolio, Cordes consulted with advisers at US Trust, donor-advised fund ImpactAssets and First Affirmative Financial Network, a Colo-rado Springs, Colorado–based advisory with US$850 million in assets under management.

In 2007, in a first move, the Cordes Founda-tion decided to invest 20% of its endowment across a range of impact investments, most-ly private debt and private equity funds. The Wall Street veteran invested in Katalysis Boot-strap, a Central American microfinance fund, and the Northern California Community Loan fund, which provides affordable-housing and economic-development loans to low-income communities. The foundation’s timing could not have been worse. Within the year, the fi-nancial crisis tore through the markets. “My thought was, ‘Well, let’s see how much we lose when everything gets marked to market at the end of the year,’” Cordes recalls.

At the end of 2009, however, Cordes was shocked to discover that his impact invest-ments outperformed the rest of his portfolio. For example, private-debt microfinance invest-

Public Equity62%

Public Debt38%

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PERSONAL WEALTH FUND FOCUS

Junk bond managers battle fallout from Third Avenue credit fund blow-up

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| BY TIM MCLAUGHLIN |

Junk bond fund managers are shy-ing away from big cash trades after liquidity in the high-yield market took another hit from the recent meltdown of the US-registered

Third Avenue Focused Credit Fund.The blow-up of Third Avenue

Management’s junk bond fund, the biggest mutual fund failure since the financial crisis, shows the dangers of loading up on risky assets that are hard to trade even in good times.

At least one-fifth of Third Avenue’s Focused Credit Fund, with less than US$1 billion ($1.4 billion) under man-agement, was composed of illiquid as-sets, meaning they trade so infrequent-ly that they don’t have a market price. That’s one of the highest percentages of exposure in the junk bond sector.Third Avenue’s decision to block re-demptions and liquidate its Focused Credit Fund jolted Wall Street and caught the attention of the US Se-curities and Exchange Commission.

“We are in communication with representatives of the fund and are currently monitoring the situation,” an SEC spokesperson says.

The junk bond market is already reeling from a meltdown in the en-ergy sector as oil prices fall below US$40 a barrel.

Retail investors were expected to extend their run of withdrawals from junk bond funds, while creating op-portunities for hedge funds and in-surance companies that might have more ability to stomach the fallout.

Meanwhile, some of the most popular US junk bond funds also have made large bets on assets considered the hardest to trade and value in the industry, and their portfolios may not re-flect the full extent of the cur-rent downturn in the junk bond market, says junk-bond analyst Marty Fridson, chief investment officer of Lehmann Livian Frid-son Advisors LLC.

“Precisely because these [as-sets] are hard to price, they won’t necessarily show the full extent of the market decline,” Fridson says. “That can make a fund with lots of illiquid security look bet-ter than a fund with big, liquid names where the price declines are very transparent.”

AllianceBernstein’s AB High Income Fund has the biggest holdings on a per centage ba-sis this year among the largest junk bond funds. At the end of July, the fund reported US$1.08 billion in il-liquid assets, or 15% of the secu-rities in a US$7.3 billion portfolio, according to a Reuters analysis of the 10 largest US junk bond funds. The Third Avenue fund is not in the top 10. “Liquidity is bad,” says Ger-shon Distenfeld, portfolio manager of AllianceBernstein’s US$5.8 billion High Income Fund. “It is marginally worse than it was a month ago, but much of the decline in liquidity has been much steeper since the [2008] credit crisis.”

Pain was also being felt by hedge

fund managers. Stone Lion Capital Partners LP, a manager of US$1.3 billion that specialises in distressed debt, has suspended redemptions in one of its funds after “substantial re-demption requests”, the firm said in a statement on Dec 11.

With the US$236 billion junk bond mutual fund sector on course for its worst performance in seven years owing to a rout in commodity pric-es and expectations of higher inter-est rates, some big junk bond funds already are scaling back exposure to their riskiest assets.

The US$17 billion American Funds High-Income Trust Fund, which this

year realised nearly US$200 mil-lion in losses on its most illiq-uid assets, told Reuters it plans to reduce its current exposure of 1.6% of securities that are hard to price and trade.

High-yield, also known as junk, debt issuance has sky-rocketed from US$147 billion in 2009 to more than US$300 billion in each of the last three years. Record-low interest rates have encouraged investors to take on more risk, including the debt of less creditworthy issuers, to get a higher return.

The illiquid debt favoured by junk bond funds ranges from subprime loans bundled into mortgage-backed bonds by Wall Street banks on the eve of the credit crisis to bank loans to distressed companies in the en-ergy and chemical industries.

Fund managers favour illiquid as-sets because they may pay 50 cents on the dollar to buy them, for ex-ample, and they get a yield premi-um for carrying the extra risk, says Sumit Desai, an analyst at fund re-search firm Morningstar.

Most of the trading in the junk bond market is being done by ex-change-traded funds, Distenfeld says.

“There’s not a lot of cash bond trading on deals of US$2 million to US$3 million and up,” he adds. “It’s not zero. There’s some trading, but it’s too costly to trade big size.”

Meanwhile, several junk bond fund managers interviewed by Reu-

ters sought to distance themselves from the Third Avenue fund. They acknowledged plenty of retail inves-tors will read the headlines and pull money from junk funds.

“The headlines get too much for them and they tend to sell at the ab-solute worst time,” says Greg Hopper, who runs the US$1.1 billion Aberdeen Global High Income Fund. The fund’s total return this year of minus 6.86% is lagging 94% of peers, according to Morningstar. Investor withdraw-als have helped cut the size of his fund nearly in half this year.

Third Avenue’s fund had nearly half its assets in below “B”-rated debt, compared with the peer average of just 12%, according to Morningstar data.

Still, “there’s never just one cock-roach,” DoubleLine Capital CEO Jef-frey Gundlach says. “People are too long credit and the credit is melting down and the stock market is whis-tling through the graveyard. It is so similar to 2007, it’s scary.”

“Investors should look closely at what they are holding in fixed income and should certainly look closely at their credit exposure in high-yield funds,” Todd Rosenbluth, director of mutual fund and ETF research for S&P Capital IQ, says. “There are concerns that junk bond defaults will rise, and they will rise modestly in the next year from a historically low level now.”

Hopper says in recent months, he has sold investments in the emerg-ing markets of Ethiopia and Mozam-bique to boost his fund’s liquidity. — Reuters

Retail investors are expected to extend their run of withdrawals from junk bond funds

| BY NISHANT KUMAR |

Funds copying hedge fund strategies to make money are on track to record their best ever net inflows this year as investors look for

ways to escape volatile markets.These funds, known in the asset manage-

ment industry as liquid alternatives, charge lower fees than hedge funds, allow investors to take out money on a daily or weekly basis, and provide better transparency on how ex-actly they make money. As a result, both retail investors and institutions have poured money into the funds, especially in Europe, helping them grow faster than the hedge fund industry.

Investors’ interest is fuelled by fears that their traditional stock-and-bond portfolios won’t be able to absorb shocks from market turbu-lence and stock market valuations are hovering near record highs. Capital flows are stronger in Europe, where investors are also trying to shield their assets from negative interest rates.

“Investors are moving into liquid alterna-tive funds because they want to insulate their portfolios from market swings and be able to take money out if anything goes wrong,” says Peter Laurelli, global head of research at

industry tracker eVestment.The open-end funds, typically designed to

provide protection during a market decline, can short sell a security to make money in a falling market and borrow money to increase their bets like a hedge fund. Retail investors can, through a broker or private bank, invest US$1,000 ($1,411) or even less. Hedge funds typically require a minimum initial investment of US$1 million.

Liquid alternative funds received about US$110 billion in the first 10 months of the year, 14% more than in the whole of 2014 and exceeding the previous record of US$106.6 bil-lion in 2013, according to data compiled by research firm Morningstar. Total assets under management have increased by a tenth to about US$715 billion this year after stock-market tur-moil in China hit values, the data shows. By comparison, assets managed by hedge funds increased by 1% to US$2.9 trillion in the first nine months of the year, according to data from Hedge Fund Research.

About seven in every US$10 invested in liquid alternative funds this year have gone to European funds, boosting assets to €344.5 billion ($533.1 billion).

ALTERNATIVES

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“The advent of not only low and zero-inter-est rates but now negative interest rates from the ‘safer’ Northern European economies is the driver of the increase in interest among European investors,” says Jeremy Beckwith, the director of manager research for Morning-star UK. “The flows in Europe took off in 2014 as the European Central Bank adopted, first, quantitative easing and later, negative rates.”

These “products may even require more due diligence than buying ’traditional’ hedge funds

that have years of demonstrable track records, and can often use a much wider spectrum of instruments to not only generate returns, but also manage risk,” says Bruno Schneller, chief investment officer at fund of funds group Sken-derbeg Alternative Investments.

Research firm Preqin estimates more than 100 liquid alternative funds have been start-ed so far this year.

While the universe of liquid alternative- investment managers is expanding rapidly because they offer investors the convenience of mutual funds and the potential advantages of alternative investments, not all are created equal. Their proliferation has also attracted scrutiny from regulators, who are considering new rules to ensure mutual funds’ migration into complex strategies does not pose risks to the financial system.

In the three months through September, the MSCI ACWI Index, which measures the over-all performance of global equity markets, de-clined by almost 10% as China surprised in-vestors with its currency devaluation. Liquid alternative funds tracked by Preqin lost about 3.5%, while hedge funds declined by almost 4% on average. — Bloomberg LP E

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collectibles PERSONAL WEALTH

Value of HK billionaire’s Chinese porcelain collection surges more than tenfold | BY YOOLIM LEE |

Billionaire Alan Chuang’s hill-top residence on Victoria Peak is impeccably decorated with flowers, antique Chinese fur-niture made of prized huang-

huali hardwood, exquisite chandeliers from France, and windows offering breathtaking views of Hong Kong.

But the really extraordinary fea-ture of his HK$2 billion ($363.04 mil-lion) mansion lies behind a nonde-script door in the basement: a small part of his collection of some 300 rare and ancient porcelain pieces, which he is showing for the first time to a journalist.

His hoard — most of which is stored in carefully guarded locations around Hong Kong — includes specta-cular ceramic art from the Yuan (1271-1368), Ming (1368-1644) and Qing (1644-1911) dynasties. “Mr Chuang is one of the world’s top collectors of Chinese imperial porcelain,” says Jason Tse, a Hong Kong–based for-mer director of Chinese ceramics at Sotheby’s. “What really sets him apart is the refinement of his collec-tion. He goes for quality rather than quantity.”

For the 67-year-old chairman of investment holding company Chuang’s Consortium Internation-al, the cream-coloured basement room is a warmly lit sanctuary he shares with a few friends such as Fidelity Investments chairman Ed-ward C “Ned” Johnson III. Chuang says Johnson once came here to take

| BY FATHIN UNGKU |

When Bathing in the Shower by the late Indonesian artist Hendra Gunawan went under the hammer at Sotheby’s

autumn auction in Hong Kong in October this year, the oil painting of three female bathers was sold for HK$9.7 million ($1.76 million).

That price was more than five times high-er than the most expensive Southeast Asian painting sold at Sotheby’s first auction of the region’s work in 1996 in Singapore.

At the 1996 auction, Sotheby’s achieved US$3.77 million of sales — but prices for South-east Asian art and sales volumes have since soared, Sotheby’s says.

With its Southeast Asian auctions now an-chored in Hong Kong, the world’s biggest art market, Sotheby’s says its sales have improved sharply: Last year it sold HK$350 million of art by the region’s artists.

Rival auctioneers Christie’s says that in November 2011, it sold six Singapore art works for a shade over HK$2.7 million, while at an auction in May this year, it sold 30 works for HK$19.8 million.

“Southeast Asian art is increasingly becom-ing an internationalised category and sees in-creased buying from other parts of Asia as well

as from the West,” Kim Chuan Mok, head of Southeast Asian Paintings at Sotheby’s, says in an interview.

Many of the collectors are from the region, and the rise of Southeast Asian art correlates with increased affluence, name-ly in Singapore, Malaysia, Indo-nesia, Thailand and the Philip-pines, Mok says.

He declines to give speci-fic information on clients’ pro-files, but said many of them are drawn to works because of their diversity.

“You give Southeast Asian artists one theme and they all would come up with different things because of diverse influences,” Mok says, “which is unlike, for example, Chinese artists who have similar backgrounds and experiences.”

Koh Seow Chuan, an architect and avid art collector based in Singapore, says he has been acquiring Southeast Asian artworks for the last 50 years because of their unique attributes.

“They reflect the convergence of the great cultures of the world over the past 200 years,” he says.

Ryan Su, a Singapore trainee lawyer and

art collector who owns the largest collection of Andy Warhol Polaroids in Asia, says collect-ing Southeast Asian art is a way to go back to one’s roots and can be a celebration of heritage.

“I started my art collecting by collecting West-ern contemporary art. This was only natural for me as I was living in the West. Upon return-ing to Singapore, I feel that the type of South-east Asian art that resonates best with me are works by the Nanyang School artists,” he says.

Southeast Asian art, compared to art in other regions, is also relatively affordable, making it a popular entry point for new collectors, Mok says.

“Collectors can get their hands on a quali-

ty Southeast Asian art piece by a blue-chip artist for a fraction of the price paid for an artwork from the more mature and es-tablished categories,” he adds.

It is important for artists in the region to be seen as a co-hesive Southeast Asian brand to garner more international attention, he says.

Singapore is riding on this need for a collective South-east Asian identity by investing heavily in art development with the intent of becoming the re-

gion’s art market hub. The island-city opened the National Gallery Singapore last week, fea-turing the largest public collection of South-east Asian art.

While Indonesia dominates the region’s art market with a 54% market share based on to-tal auction sales at Sotheby’s and Christie’s, Singapore provides the necessary infrastruc-ture for an art market to flourish, Mok says.

The late S Sudjojono’s Our Soldiers Led Under Prince Diponegoro held the record for Southeast Asian artists. The painting by the Indonesian artist fetched HK$58.36 million at a Sotheby’s auction in 2014. — Reuters

Appeal of SEA art soars as region’s affluence grows

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Pasukan Kita Yang Dipimpin Pangeran Diponegoro holds the record for Southeast Asian art

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a look at an antique chair in Chuang’s collection of Chinese furniture. John-son, who has a similar chair, wanted to see Chuang’s before sending his own off for repairs.

One piece in Chuang’s collec-tion is a famous Ming-era porcelain cup that, because of its ornamenta-tion, is known as a “chicken cup”. Only a few people are aware that Chuang owns one of the few Chen-ghua chicken cups that exist outside of museums. In April 2014, billion-aire businessman Liu Yiqian paid a record US$36 million for a chicken cup, making international headlines.

Chuang is especially fond of a rare 18th-century Yongzheng porcelain bowl with a famille rose peach-and-bat (the flying kind, symbol of good

fortune) design. He says his bowl is believed to be the only one decorat-ed with five peaches on the exterior (symbolising blessings of longevity). In October, Sotheby’s estimated the value of the bowl at HK$40 million to HK$60 million. Not that Chuang would ever sell it. He says he does not collect Chinese ceramics as an investment. “It’s a hobby,” he says. “Simple as that.”

In his basement, the moustachioed Chuang can barely contain his enthu-siasm for the stunning possessions displayed on antique tables and in a custom-made cabinet. As he admires a Guanyin (Goddess of Mercy), who was worshiped by Yuan dynasty em-perors, he says, “She has brought a lot of good fortune.” He bought the

piece, about the size of an infant, for about £2 million from a London-based dealer in 2005.

Chuang estimates the cost of his acquisitions at HK$2 billion; he says experts now value his collection at HK$10 billion to HK$20 billion. Chuang says only Hong Kong proper-ty has fared better over the four dec-ades he has been collecting.

During that time, China’s econ-omy went from being one of the world’s poorest to the second larg-est. In recent years, China’s eco-nomic growth has slowed, but it will “eventually emerge stronger”, Chuang says, and when it does, there will be more and more wealthy Chi-nese chasing a limited number of collectibles. “In the future, there

will be another 100 entrepreneurs like Jack Ma in China,” he says of the founder of Alibaba Group, one of mainland China’s richest people. “And they will want to own a piece of their history.”

In 1975, when he started col-lecting Chinese ceramics at the age of 27, Chuang worked as a qual-ity-control officer at his father’s manufacturing company, earning HK$750 a month and learning the business from the ground up. He took over the family firm in 1993 and successfully diversified it into an investment empire. Now that his four grown children are working in the family business, Chuang trav-els the world (he has three yachts and a private jet), does some scuba diving and sailing, and, of course, builds his collection.

When the planned M+ museum in the West Kowloon Cultural District opens in 2018, Chuang says, he in-tends to lend part of his collection to the Hong Kong government for ex-hibition. For the time being, short of visiting Chuang in his basement, the only way to experience any of his treasures is to peruse a beau-tifully printed, 408-page catalogue that costs US$600 if you can find one. By printing only 2,000 copies of The Alan Chuang Collection of Chinese Porcelain in 2009, he made sure that the book itself would be a work of art. The catalogue covers only 121 of his pieces. Another vol-ume, Chuang says, is in the works. — Bloomberg LP

Chuang estimates the cost of his acquisitions at HK$2 billion; he says experts now value his collection at HK$10 billion to HK$20 billion

Chuang says this Goddess of Mercy figu-rine has ‘brought a lot of good fortune’

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PERSONAL WEALTH

| BY FRANCIS CHEUNG |

China’s economy entered a cyclical downturn in 2014 that will take several years to stabilise. China is unlikely to have a hard land-ing, but it may feel like one as

investment and credit growth continues to slow. It will be a hard landing for the manufacturing and commodity sectors.

2016 is another year of adjustment with the slowing economy, deflationary pressure and further rate cuts. The rate cut could come as early as late December after the Central Economic work confer-ence. For the first time, property invest-ment will experience negative growth. The Purchasing Managers Index (PMI), a reliable stock market indicator, will stay in contraction at least into 1H2016. The risk is that it could run longer.

On the positive side, the renminbi will depreciate less than bears think. Consumers and employment will likely remain resilient. China’s “new normal” is necessary to work out the excesses of the past, but it will take time.

Renminbi depreciation will follow the euro China has a clear roadmap for the ren-minbi as part of its 13th Five-Year Plan. In the draft, getting the renminbi included in the Special Drawing Rights (SDR), capital account opening and renminbi converti-bility are explicit goals of the plan, which spans 2016 to 2020. The People’s Bank of China (PBOC) has steadily made progress with currency swap agreements totalling RMB3.1 trillion ($675.83 billion) with 33 monetary authorities. The renminbi has also become the second-largest currency used for trade. We believe a large deval-uation of the renminbi is unlikely as it will be a big setback for the plan.

The 3% renminbi devaluation in Au-gust shocked markets mainly because it was poorly managed and the currency likely dropped more than the PBOC had anticipated. The best gauge of the renmin-bi/dollar in 2016 is the direction of the euro as Europe is China’s largest trading partner. The renminbi may perform bet-ter than expected as the renminbi is to be included in the SDR, but the Internation-al Monetary Fund has delayed the actual implementation until next October. The incentive is to keep the renminbi relative-ly stable and not do a large depreciation.

Consumer less optimistic China’s silver lining is services and consumption. These are now the larg-est parts of the economy and have been relatively resilient. This is partly be-cause the government has pushed up the minimum wage, but it is also driv-ing manufacturing jobs to Vietnam and other countries.

CLSA’s recent survey of 500 consum-ers shows they are less optimistic and are feeling the impact of lower wage growth. China consumers are still plan-ning to spend more next year even on basics and will upgrade brands. Travel is a top priority and so is upgrading ap-pliances and buying a modest car. There is optimism for stocks again, but that is mainly because of government support and only small investments are planned.

Property investment goes negative The biggest question next year is how much property investment growth will decline. Property recovery is secure in top-tier cities, but much less so in low-er-tier cities. Property sales in square me-tres peaked in 2013 and have been falling about 10% per year. This trend is likely to continue. We expect residential prop-erty sales in sq m to fall about 10% next year as government policies have pulled forward demand in 2015. Our consumer survey shows that 68% of respondents have no plans to purchase property next year despite repeated rate cuts.

Market outlook and investment ideas The China/Hong Kong markets will like-ly end in negative territory this year. Since we warned of an A-share bubble in June, the market has corrected sharp-ly and had a technical rebound. We ex-pect the market to be weak into 1H2016 as the economy continues to slow and then become stronger towards the year-end. We foresee 6% upside for MSCI China mainly because of the newly add-ed Internet sector and MSCI HK for its low valuation. We are overweight au-tos, construction, healthcare, Internet, telcos and Hong Kong conglomerates; neutral China consumer, China proper-ty and Macau gaming; and underweight Hong Kong consumer, China and Hong Kong banks, materials, oil & gas and Hong Kong property.

It is important to be positioned in sec-tors that can grow earnings during cy-clical downturns and have government support. There are strong secular themes such as the Internet, healthcare and the environment. Reforms will continue with expansion of the stock connect scheme, with Hong Kong and state-owned enter-prises (SOE) restructuring. Policies to boost growth such as One Belt, One Road (OBOR) and Made in China 2025 will accelerate. The consumer will remain a key theme with the new two-child poli-cy, plus the strong demand for travel, au-tos and appliances. A-share volatility is likely to return as the government finds an exit strategy for its rescue efforts. We believe A-shares will likely see a correc-tion in 2016.

Key takeaways • The economy entered a cyclical down-

turn in 2014 that will take years to sta-bilise;

• We expect the market to be weak into 1H2016 as the economy slows and improves towards year-end with the peaking of property inventory and the low base effect of commod-ity prices;

• A-shares will likely see a correction as the government pulls support;

• 2016 will be another year of adjust-ment with slowing investment, slow-ing credit, deflationary pressure and further rate cuts;

• Property investment growth is like-ly to turn negative for the first time. PMI will stay in contraction at least into 1H2016, but it could last longer.

• On the positive side, the renminbi will depreciate less than bears think. Con-sumers and employment are likely to remain resilient;

• Our 500 consumer survey shows that consumers are still planning to spend more next year, even on basics. Top big-ticket items are travel, applian ces and autos;

• Top investment themes include (1) sec-ular trends of the Internet, healthcare and environment, (2) reform policies for stock connect scheme and SOE re-structuring, (3) growth policies such as OBOR and Made in China 2025. —

© 2015 Dow Jones & Co, Inc

Francis Cheung is head of China and Hong Kong strategy at CLSA

China A-shares could see more pain in 1H2016

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FUND WATCH10 best-performing funds over 3 mths(Sept 11 to Dec 11, 2015)

NAME RETURNS % JPM China A-Share Opportunities A (acc) - RMB 14.87Fullerton Lux Funds-China A Equities I USD 12.05UBS (Lux) Eq Fd – Greater China (USD) P-acc 10.13Schroder ISF Japanese Smaller Companies A Acc 9.99Fidelity Funds – Global Technology A-EUR 9.88Henderson HF China A2 USD 9.71UBS (Lux) Eq Fd – China Opportunity (USD) P-acc 9.60Allianz Indonesia Equity – A – USD 9.54Allianz Global Hi-Tech Growth – A – USD 9.18Henderson HF Japanese Smaller Companies A2 JPY 9.10

10 worst-performing funds over 3 mths (Sept 11 to Dec 11, 2015)

NAME RETURNS % Allianz Global Metals and Mining – AT – EUR -20.78JPM Africa Equity A (perf) Acc USD -18.64BGF World Mining A2 USD -16.78Schroder ISF Global Energy A Acc -14.67PARVEST Commodities C C USD -13.95Franklin Biotechnology Discovery A (acc) USD -13.90Schroder AS Commodity A Acc -12.90Templeton Africa A (acc) USD -12.56Fidelity Funds - Em Eu M East and Afr A-USD -12.41PIMCO GIS Commodity Real Return Strategy E USD Inc -12.28

5 best-performing sectors over 3 mths (Sept 11 to Dec 11, 2015)

NAME RETURNS % Equity Sector Information Tech 6.34Equity Sector Real Est US 5.87Equity Indonesia 5.84Equity Japan Sm&Mid Cap 5.51Equity Japan 5.40

5 worst-performing sectors over 3 mths (Sept 11 to Dec 11, 2015)

NAME RETURNS % Equity Sector Biotechnology -13.90Equity Emerging Mkts Other -13.44Equity Sector Materials -13.01Commodity Blended -10.59Commodity Energy -9.76

10 most-volatile bond funds (Dec 11, 2012 to Dec 11, 2015)

NAME VOLATILITY % UTI Indian Fixed Income Ret 0.58AXA WF Global Infl ation Bonds A C EUR 0.57Schroder ISF Glo Infl ation Linked Bd A Acc 0.57Natixis Global Infl ation Fund R/A (EUR) 0.57Schroder ISF Asian Convertible Bond A Acc 0.54NN (L) EM Debt (HC) P C EUR Hgdi 0.54Parvest Convertible Bond World C RH EUR Cap 0.53Schroder ISF Global Conv Bond A Acc 0.52JPMorgan Global Convertibles USD A Acc USD 0.52Franklin Global Convertible Secs A (acc) USD 0.52

10 least-volatile bond funds(Dec 11, 2012 to Dec 11, 2015)

NAME VOLATILITY % Nikko AM Shenton Short Term Bond SGD 0.03United SGD Fund-Class A SGD Acc 0.04Fullerton Short Term Interest Rate A 0.05Deutsche Lion Bond A SGD 0.06LionGlobal Short Duration Bond A SGD 0.09Fullerton SGD Income A 0.10Schroder Asian Investment Grade Credit A 0.11ML Income Series-Strategic Income 0.12Legg Mason WA Asian Bond Trust A SGD Acc 0.13Fullerton Singapore Bond A 0.13

How to read the Lipper Volatility RatingsVolatility is standard deviation of performance for the previous 36 months. The higher the value is, the riskier the fund is.

About LipperLipper, a wholly owned subsidiary of Reuters, is a leading global provid-er of mutual fund information and analysis to fund companies, finan-cial intermediaries and media organisations. Founded in 1973 and head-quartered in New York, the firm tracks 125,000 funds worldwide through its offices in major financial capitals in North America, Europe and Asia.

Lipper Asia LtdEmail: [email protected] Tel: (852) 2973 6600 Fax: (852) 2973 6622

Return: NAV-to-NAV or Bid-to-Bid, income re-invested, calculated in SGD

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An electronic stock ticker in the Lujiazui district of Shanghai. Cheung says China A-shares could rebound towards end-2016.

Creative cultureNaiise puts Made in Singapore

products on the good design map

Affordable alternativeP2P funding platform Capital Match

offers small firms more options

Live to deliverFoodpanda helps local restaurants

such as The Soup Spoon expand reach




SidekickSidekickfor SMEsfor SMEs

EN2 • THEEDGE SINGAPORE | DECEMBER 21, 2015

Creative cultureNaiise puts Made in Singapore

products on the good design map

Affordable alternativeP2P funding platform Capital Match

offers small firms more options

Live to deliverFoodpanda helps local restaurants

such as The Soup Spoon expand reach




SidekickSidekickfor SMEsfor SMEs

Keep your friends close, and your laptop charger closer— David Karp, founder and CEO of Tumblr

TheBriefLocal entrepreneurs start young

Singapore is challenging convention-al notions and stereotypes of entre-preneurialism, according to the lat-

est research from HSBC Private Bank. Local business owners tend to embark

on their entrepreneurial careers earlier than their global peers and rely on personal net-works to start up their business ventures.

The research found that the average age at which Singaporeans set up their first business was 28, close to the Asian average of 29 but much earlier than the Western average of 34. Some 33% of en-trepreneurs surveyed in Singapore are under the age of 35.

In addition, nearly two-fifths (38%) of Singapore entrepreneurs utilised family wealth when setting up their first busi-ness, while 21% looked towards sourc-ing for investment from friends and ac-

quaintances. This was slightly lower than the 47% average of Asian entrepreneurs who utilised family wealth and 25% who capitalised on funds from their personal networks to set up their businesses. In contrast, a much lower average of only 24% of entrepreneurs in the West relied on family wealth, while about 9% looked towards investments from friends and acquaintances.

The research, aimed at understand-ing how entrepreneurs differ across the world, surveyed more than 2,800 active business owners globally, of which 334 were from Singapore, with a net worth of more than US$1 million ($1.4 million). It found that entrepreneurs in Singa-pore have contrasting characteristics and achievements from their other Asian and Western counterparts.

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EDITORIALEDITOR | Ben Paul SECTION EDITOR | Ben PaulCOPY-EDITING DESK | Elaine Lim,Evelyn Tung, Chew Ru Ju, Tan Gim Ean, Choy Wai FongPHOTO EDITOR | Samuel Isaac ChuaPHOTOJOURNALIST | Bryan TayEDITORIAL COORDINATOR |Rahayu MohamadDESIGN DESK | Tan Siew Ching, Christine Ong, Monica Lim, Nik Edra, Mohd Yusry, Henry Lee

ADVERTISING+MARKETING HEAD | Edward Stanislaus GROUP SALES MANAGER | Cecilia Kay SENIOR MANAGER | Windy Tan MANAGERS | Mabel Wong, Danna Pusta, Elaine TanThe Edge Property GROUP SALES MANAGER | Cowie Tan SENIOR MANAGERS | Diana Lim, Cheryann Yeo ACCOUNT MANAGER | Ken TanEvents Marketing SENIOR MANAGERS | Sivam Kumar EXECUTIVE | Gerald AwDIGITAL MARKETING ASSISTANT | Tim JacobsCOORDINATOR | Nor Aisah Bte Asmain

CIRCULATIONMARKETINGMANAGER | Coleman LimOPERATIONSMANAGER |Cesar Banzuela De Jesus, Jr EXECUTIVES | Keith Lee, Malliga Muthusamy, Sandrine Gerber

CORPORATECHIEF EXECUTIVE OFFICER | Ben PaulMANAGING DIRECTOR | Edward StanislausCORPORATE AFFAIRS DIRECTOR | Ng Say Guan

PUBLISHERThe Edge Publishing Pte Ltd150 Cecil Street #08-01Singapore 069543TEL | (65) 6232 8622FAX | (65) 6232 8620

PRINTERKHL Printing Co Pte Ltd57 Loyang DriveSingapore 508968TEL | (65) 6543 2222FAX | (65) 6545 3333

We welcome your comments and criticism:[email protected]


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Mentorship programme forpoly students

First-year students attending Ngee Ann Polytechnic, Singapore Polytechnic and Temasek Polytechnic will soon

benefit from a new Industry Mentors’ Network programme.

Students will be linked to industry professionals who can provide career ad-vice. Previously, such mentorship was usually extended to final-year students during their internship stint.

The initiative is in line with the SkillsFuture movement to provide great-er opportunities for Education and Ca-reer Guidance.

More than 200 mentors from at least 20 companies are part of the Industry Mentors’ Network programme so far. The companies — ranging from MNCs

to local enterprises — inked a memo-randum of understanding with the pol-ytechnics on Dec 14.

Ngee Ann Polytechnic started a pi-lot programme involving 850 students in October. They come from eight diplo-ma courses such as real estate, advertis-ing and public relations. The polytech-nic said three to four students will be paired to a mentor who best matches their career interests.

Students will receive advice on ca-reer goals and where possible, shad-ow their mentors at work or network-ing functions. The Education Ministry hopes the early exposure will help stu-dents achieve their aspirations and pre-pare for the jobs of tomorrow. E

Finance pros believe firms unequipped for advanced analytics: Survey

New research by SAP SE and CFO Research found that eight in 10 fi-nance professionals in Asia-Pacif-

ic think their company’s success over the next five years will increasingly de-pend on its ability to adapt to the rap-id pace of change and greater business complexity, as well as to translate data into swift and decisive action.

Yet, only half of the surveyed finance professionals believe their finance func-tions are well equipped to produce mean-ingful business analysis and reporting that can keep up with the speed of change their companies are experiencing. Titled “Thriving in the Digital Economy: Four Reasons Why Finance is Excited about the Future”, the global study surveyed more than 1,500 finance professionals, including close to 300 respondents in

Australia, China, Hong Kong, India, Ja-pan and Singapore.

The study found that finance func-tions are gaining more responsibility within organisations as the pace of busi-ness becomes faster and more volatile, owing to the shifting global economy,new financial regulations, changing government policy and greater custom-er demand. Better tools are needed to deliver the in-depth financial analysis that will ultimately drive businesses forward. Only 17% of respondents in Asia-Pacific think their companies have developed or acquired capabilities in ad-vanced analytics, such as sophisticated analytical tools and methods to predict outcomes, assess risk, model complex business scenarios, and support man-agement decision-making.

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ENTERPRISE ENTREPRENEURSHIP

| BY AMY TAN |

T here are few signs telling shoppers where to head if they are looking for Naiise’s “A Secret Christmas” pop-up store, which is tucked away on the second floor of a shophouse on Telok

Ayer Street. Still, the store, which is designed to look and feel like an intimate speakeasy club, draws a steady flow of customers. The store showcases locally designed and made products, and is open until Dec 24. “Pop-up stores are a good way for us to bring great lo-cally designed products to consumers because shopping is still a culture here and people still want to see and touch things,” observes Den-nis Tay, founder of Naiise.

He started the online design store in 2012 with the aim of making design accessible to all. Tay, who used to run his own creative agency, says he came up with the idea for Naiise after working with local designers. “These were local product designers who won awards overseas for their work and I would always ask them why they don’t make and sell their products; and they would tell me that there’s no market in Singapore,” he says.

Tay, who strongly believes “design has the ability to better the lives of others”, set out to change this. He says: “No matter what, if you’re home-grown, you need your own local economy to support you. If it doesn’t, it’s very difficult to scale. I really wanted to change that and see the creative culture grow in Singapore so that we don’t all just aspire to be bankers and lawyers but designers as well.”

With just $3,000, he started Naiise as a plat-form to showcase and sell the works of local designers. What started out as a platform that featured the works of only 20 designers has expanded into a design marketplace that sells the work of more than 700 different designers and suppliers. This year, the start-up marked its foray into the physical retail space with the opening of five brick-and-mortar stores.

Omni-channel retailingTo be sure, Tay had no plans to open so many stores at once. In fact, Naiise started out usingpop-up stores like the one on Telok Ayer to showcase and sell these locally designed prod-ucts. Thanks to these pop-up stores, land-lords started seeing the potential of having Naiise’s presence in their shopping malls and Tay was offered “favourable rates” to open his brick-and-mortar stores. “The landlords un-derstand that a lot of people are taking their businesses online because it is a lot cheaper and that’s why the rates are really favoura-ble to us,” he says.

Instead of replicating the retail stores’ offer-ings and to avoid customer fatigue, Tay ensures that each store provides a different shopping experience. Its store at WestGate, for example, is stocked with home and living accessories and children’s apparel to cater for families in the neighbourhood.

Elsewhere, its store at Wheelock Place fea-tures bestsellers and new arrivals to maximise the use of the smaller space. He explains: “We actually have too many products, so it’s impos-sible for us to put all of them in one store. We try to figure out what products will appeal to customers in the area and we put those there while maintaining a portion that will always represent the local designers.”

In July, Naiise opened its design megastore at Central. Spanning 6,500 sq ft, the space was previously occupied by Hong Kong lifestyle brand, Goods Of Desire (G.O.D.), which closed

down earlier this year. Tay admits having his doubts when he was approached by Far East Organization to take over the space, but he signed a six-month lease anyway, thinking the customer experience he could provide at that location would be worthwhile. The store has done well and Naiise plans to extend its lease.

Tay’s strategy of differentiating each store’s offering has also paid off and helped Naiise at-tract a wider customer base to both its phys-ical and online stores. While most customers are locals, he points out that the locally made products it retails are increasingly seeing de-mand from tourists as well.

Meanwhile, Tay is also ramping up efforts to educate consumers about locally designed products. Naiise’s Central and Orchard Gate-way stores have a dedicated area for work-shops on bracelet making, watercolour paint-ing, calligraphy, lamp making and other craft activities.

He believes such workshops are useful in helping consumers understand why locally de-signed products sometimes cost more. “Through the process of making, consumers can see why a locally made product is more expensive. At the same time, it helps them understand the supplier story, and I think this form of organ-

ic marketing is important,” he says. Naiise has been cautious about spending.

Today, it spends less than $3,000 a month on marketing and Tay prefers to let the busi-ness grow organically instead. While he has been approached by investors, he has opted for Naiise to remain independent. “We are a cost-effective company and it’s ingrained in our company culture. We know that every cent counts and everyone in the team thinks that way too,” he says. “At the end of the day, if we fold because we take money from investors and spend money excessively, it’s not just us who go down. It’s all my 700 suppliers who might depend on us to sell their products, and we don’t want that to happen.”

To minimise cost, the company tries to work around the existing furnishing and lay-out of each of the pop-up and brick-and-mor-tar stores that Naiise opens. The team is also involved in much of the redecorating, such as carpentry and painting.

Evolution of design Tay reckons that, by getting the team involved in the redecoration of each store, the company can also stay close to its roots of promoting lo-cal design and enabling the team to understand what local makers go through. One of the things Naiise hopes to do is inspire more hobbyistswho have attained a level of proficiency in what they do to start selling their products.

To this end, Naiise has a pre-order func-tion on its online store that allows makers and designers who have come up with just one prototype to test market demand. Nai-ise works closely with these designers to de-termine the lead time to make the product, then lists it for pre-order on the site. “This is good exposure for the designers. Of course, a longer lead time needed to make a prod-uct may cause us to lose sales, but the most important thing is that we are able to expose that one designer to the market and help him or her get a sense of what product the mar-ket is ready for so they can work on future products accordingly,” he says.

Meanwhile, Tay has seen a shift in local design. When Naiise started, it used to be that designers made products with a local theme, as these resonated better with the lo-cal consumer. This idea spawned products such as the Kueh Tu Tu tote bag and ice gem biscuit cushions.

Now that these designers have gained a steady following for their brands, they are starting to design products that appeal to a wider audience. “What we realise now is that a lot of them are making everyday ob-jects that can sell to an overseas market. So, for example, you have home and living piec-es that have no local context except that it is made by a local guy,” he adds.

To help designers gain confidence, Naiise will be starting community sessions for them next year. These sessions will help designers take the next step in developing products for an overseas market. Naiise currently ships internationally and takes a flexible commis-sion from designers.

According to Tay, about 40% of Naiise’s suppliers are designers who have quit their full-time jobs to start their own businesses. He observes: “Some of them have [been in the business] even before Naiise existed and, now, we are adding about 12 new brands to the online store a week. That’s the beauty of it. When people see that it is possible to survive as a designer, more get inspired and start designing too.”

Naiise’s Dennis Tay on growing the businessand putting Made In Singapore on the map

Naiise’s ‘A Secret Christmas’ pop-up store on Telok Ayer Street

Tay: If you’re home-grown, you need your own local economy to support you. If it doesn’t, it’s very difficult to scale.

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New productivity highNew productivity highDeskera’s cloud-based enterprise computing software is helping people such as

Sushi Tei’s David Ng store and deliver their goods more efficiently

| BY TRINITY CHUA |

When Shashank Dixit, founder of enterprise computing companyDeskera, first visited Singapore in 2008, he slept on the cold hard floor of Changi Interna-

tional Airport.A customer in Mumbai wanted him to im-

plement the software at his Singapore office but did not pay for his hotel. “The floor of Changi Airport is better than most hotels in India. There used to be a food court in Termi-nal 1, where I could I get a decent vegetarian meal for a dollar,” Dixit recalls the experience fondly. “Sometimes, I stayed for 10 days.”

From 2008 to 2012, Dixit made many trips to Singapore to hawk his software to small and medium-size enterprises (SMEs). “I sold door-to-door. I know some tie-wearing guys who won’t do that. But it was the best thing I could have done.”

He found that while Singapore had a first-world economy, many SMEs still used third-world processes.

“They do the same things many SMEs in mainland China and India do and their process-es are not any more sophisticated,” says Dixit.

The SMEs turned Dixit down because, at that time, the software did not have enough functions. So, Dixit had to build up the pro-gram one function at a time. “Each time they said Deskera couldn’t do this or that, I went

back to India and developed them.”Deskera is now a cloud-based integrated

business platform that helps carry out many of the mundane and tedious tasks at work. These can range from book-keeping and stock-checking to payroll and human resource management. It can also file IRAS Board-ap-proved taxes, manage employees’ appraisals as well as company projects. By using cloud-based solutions, users are spared the hassle of hardware complexities such as upgrades and breakdowns of physical servers.

Last year, Deskera raked in revenue of $14 million; this year, it is expected to bring in more than $30 million. It has also more than 40,000 paid users, mostly from Singapore, Malaysia, Indonesia and India.

But what makes Deskera successful is its affordable price of US$65 ($91) per-user-per-month price tag, making it the go-to solution for the Asian SMEs. Its customers include Su-shi Tei and SATS Creuers, as well as MNCs such as Google and Starbucks. Deskera also has a partnership with StarHub and Goog-le to provide better security for customers.

Dumping school for start-upDixit’s dream to start his own company writ-ing enterprise software took shape more than 10 years ago, right outside his university dorm in Kanpur, India.

“The campus was located right in the mid-dle of the cotton-manufacturing hub of India

and there were lots of small-scale companies in the surrounding area, which were grow-ing,” he recalls.

The owner of one of the companies ap-proached Dixit when he was a third-year stu-dent and asked him to build software to ena-ble his two offices in different places to work on a common set of accounts.

“What we built then was similar to the-cloud-computing of today, where you could get the latest accounting data from different offices,” he explains.

Word spread quickly, and soon other com-panies were approaching him for help. In six to eight months, he was coding software for dozens of companies for free.

The following year, he dropped out of uni-versity. “You go to university to study and get a job, but I got a job already in my own com-pany. So, I left,” he explains.

He managed to persuade four other IT guys — one of whom was his childhood best friend — to work for him in a dingy flat, al-though he still could not persuade people to pay for his work.

“At that time, no one wanted to buy ac-counting software from a kid,” he says.

But that did not deter Dixit in the least. He says, “At some point, I figured out that the product would be hot. Enterprise software is very slow to catch on, but success is propor-tionate to hard work.

“On the contrary, consumer software such

as Facebook grows quickly. But chances of failure are also very high. Just look at MyS-pace. Your effort is never proportionate to success. Luck is.”

So, for the next six years, he lived without a salary. “I prayed to God and got help from friends and family.” Meanwhile, his mother paid his rent.

In the end, he also found a way to charge his customers. “I realised the software I made needed maintenance. I came up with a pro-posal for the companies to pay me INR100 to INR200 a month,” he says, “I got 500 paying customers this time round and it was enough to get me by.”

Trial by fireStill, Dixit admits achieving success with Deskera has not been easy. He remembers how challenging it was to break out of India to the rest of Asia.

“In those days, there were no investors. Trial by fire, I’d say. But now, it is easy. [In-vestors] throw money at you.”

Investors began showing interest in Deskera about three years ago. That was about the same time Deskera could do most things SMEs wanted and sales quickly hit a sweet spot.

“Today, we have close to 90% of processes you need in a company, thanks to the count-less times I was rejected,” he says. Deskera now has country-specific GST services and language-specific functions. In addition, the

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With the help of enterprise software, Sushi Tei’s 2,000 sq ft warehouse is

solely managed by one storekeeper, Ng, who also serves as the company’s driver

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company partnered IBM, Hewlett-Packard and NEC to provide more complete solutions to customers.

But Dixit is not stopping there. “Next, I want to create a project plan soft-

ware. If an employee goes to the project office, for instance, he can be tracked on the employ-er’s phone,” he says, “It is not about moni-toring. It is about improving accountability.”

SME boom or bust?More than 80% of Deskera’s revenue today comes from its four major markets — Singa-pore, India, Indonesia and Malaysia — and most of its customers are SMEs.

Singapore’s released recently annual SME Development Survey found that 47% of res-pondents did not expect revenue growth this year amid a lacklustre global economy. This is up from 40% last year.

SMEs are also facing a manpower crunch. The local employment growth rate is expect-ed to slow dramatically to 20,000 a year for the rest of this decade from 95,000 in 2014.

To counter the tight labour market and a slowing economy, many SMEs are turning to automation and IT to raise productivity. Ac-cording to DP Information’s chief operating officer Lincoln Teo, 68% of SMEs in the SME Development survey invested in technology and innovation, up 64% from last year. Among two-third of firms affected by the tight labour market, 74% said they planned to improve

productivity by cutting off low-value jobs and enhancing their human resource capabilities.

Dixit saw that one way to boost productiv-ity was by using enterprise software such as Deskera to automate back-end office process-es such as payroll and inventory management. Competition in the field of enterprise resource planning is keen, though. There are Germa-ny’s SAP, Australia’s MYOB, as well as Oracle and Salesforce from the US. All four are bigger than Deskera, have global reach and can cater for more diverse industries than Deskera. For instance, Oracle has enterprise software spe-cifically for engineering companies.

Still, Dixit argues, their solutions are a lot more expensive than what SMEs can afford. “It is very hard to build a suite of applications and sell them at a price suitable for SMEs,” he says. Deskera’s selling point therefore must be its affordability.

Deskera customers agree. Both F&B chain Sushi Tei and data management company PTC System say many vendors are charging their enterprise software packages by the number of licences. “If you want to have four or five staff in the office to access the software, you have to pay for four or five licences. That is not fea-sible to us. Deskera comes in one price,” says Sejal Adani, finance manager at PTC System,which started using Deskera in August for human resource management.

Many software vendors also cater specifically for the manufacturing industry, which makes

it more difficult for companies in non-manu-facturing areas to use their software. “To be fair, there is other software that can do what Deskera can do, but some are more than dou-ble Deskera’s price and, if you want addition-al functions, most times you end up paying even more,” says Janice Lee, Sushi Tei’s as-sistant director of administration and finance. She adds that Deskera’s software was also de-signed to be easy to use, as there was anoth-er F&B client before Sushi Tei.

Stock-taking made easySushi Tei uses Deskera for inventory manage-ment. When the company bought a 2,000 sq ft warehouse near Lower Delta Road in 2013, they decided they needed a software to fa-cilitate orders from their outlets to the new warehouse, as well as from the warehouse to their suppliers.

“We wanted a cloud system because it is instantaneous and our storekeeper and our restaurants can keep track of the stock being ordered. We used to use Excel spreadsheets to keep record of stock and fax invoices to each other. There were a lot of discrepan-cies,” Lee explains.

“The system also allows us to monitor order and re-order patterns over a period of time, which helps us purchase stock more ef-fectively and reduce wastage,” she says, add-ing that Sushi Tei’s warehouse is now entire-ly operated by one storekeeper, David Ng, thanks to the enterprise software. Ng is also Sushi Tei’s driver.

Lee admits it takes a lot of time and moneyto fully integrate the entire software into the company’s day-to-day operations though. “You need to train your staff, you need to trouble-shoot and you have to talk to the software ven-dor about your needs time and time again.”

For these reasons, many SMEs just aban-don the idea of implementing a new system altogether, she says. A research by insurance firm QBE shows that only 38% of smaller SMEs are concerned about planning for their busi-nesses. Most are more concerned about grow-ing profitability as abuffer for difficult times.

“For companies to automate to increase productivity, you need someone to push re-ally hard in the company,” says Lee.

Locally, it is SPRING Singapore that en-courages SMEs to increase their productivity by giving them vouchers and grants.

To be clear, the grants are not meant spe-cifically for enterprise software solutions but

productivity solutions.For example, SPRING’s Innovation and Ca-

pability Voucher supports bite-sized produc-tivity solutions, while the Capability Devel-opment Grant supports larger-scale enterprise software projects by defraying up to 70% of certain costs. Sushi Tei took the latter grant when they bought Deskera’s software.

Asian giantDixit’s next mission is to turn Deskera into an Asian enterprise software brand to be reck-oned with. “Name one Asian enterprise soft-ware brand that is well known. Even in In-dia, there isn’t a single brand in this space. We hope to become the Twitter for enterprise software. Not the cheapest, but the one that provides the best value for money,” he says.

That is because many SMEs expanding overseas tend to go for the more established names. Singapore’s Atlas Sound & Vision (ASV) adopted an SAP system in 2013 to sync differentprocesses from sales to accounts.

Sherwin Siregar, CEO of ASV, says: “We use SAP because we wanted a robust and es-tablished system whereby we can leverage their experiences to serve our needs. SAP is the largest in the market, so we took it.” He admits that the system was expensive, cost-ing them close to $700,000 in total.

Dixit says one way to increase the mind-share for smaller and younger players such as Deskera is to do an IPO. The purpose is not to raise funds, which he has enough of, but the general perception is that a listed brand is seen to be more trustworthy in Asia. Al-ternatively, he could follow in Oracle’s foot-steps and go on an acquisition spree — the US firm has acquired nearly 100 companies since 1994.

Ultimately, what should work in Dixit’s favour is the growing demand among SMEs for cloud-based solutions. In Asia-Pacific, de-mand has been rising in the last few years. Frost & Sullivan research estimates the mar-ket in Asia-Pacific was worth US$25.7 billion last year and will grow more than 20% from 2014 to 2019 to reach US$65.2 billion. Even Siregar has hinted that they are looking for cloud-based software, though Deskera is not yet on their radar.

In any case, Dixit remains undaunted.“The SME market is huge,” he says. “We

do not want to be the fastest-growing. We want to be the company that, decades from now, is still going to be No 1.” E

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, s , r

| BY TRINITY CHUA |

A new cross-continent Master of Business Administration (MBA) programme will be-gin next year. Spain’s IESE Business School has teamed

up with China Europe International business School (CEIBS) to offer the World Executive MBA starting Jan-uary 2016, specifically catering for those who work in multiple countries.

Over a period of 18 months, stu-dents will spend 71 residential days at IESE’s and CEIBS’ campuses on five continents. IESE has campus-es in Madrid, Barcelona, New York City, Munich and São Paulo. CEIBS is present in Beijing, Shanghai, Shen-zhen and Ghana. Graduates will re-ceive an MBA degree from both IESE and CEIBS.

The reason for its many locations is to allow students to experience di-verse cultures and learn how business

is done locally in different countries while pursuing an MBA, says Fr anz Heukamp, associate dean for IESE’s MBA programmes. The MBA is also designed for senior executives, typ-ically in their late 30s to early 40s, who are working cross-border or leading the business abroad.

“Take, for example, candidates who manage the operations of a com-pany’s subsidiaries in several oth-er countries. We want to work with their specific situation in a way that helps them prepare and expand their role abroad such as exposing them to how the differences in new geogra-phies can play out in their overseas organisation,” he says.

The programme size is kept small-er than most MBA courses at just 30 students a batch. Heukamp says the course is also intense and meant for those who are serious and committed to taking their responsibilities global. “So, we are all in the same position;

we can expect a much higher level of discussion that you do not typi-cally expect of executive MBA pro-grammes held abroad,” he says. The course is also focused on strengthen-ing leadership competencies through

exercises such as peer feedback and specific topics on global leadership.

Six core modules will be offered in Shanghai, Barcelona, Shenzhen, New York and Munich. Depending on geography and students’ objectives, some elective modules can take place in places such as India, Europe, Africa,Silicon Valley and South America. Students will spend five to eight days in these locations; everything else is online and likely to add up to 15 hours of work a week.

“The students meet for about two weeks every other month, as they are from all over the world; in between, they work on group projects online together,” says Heukamp.

IESE and CEIBS have teamed up for more than two decades, which yielded two global CEO programmes. Now, with its new MBA programme, Heukamp is also keen to focus on Asian emerging markets.

“Singapore is a major finance hub.

There is a good pool of very naturalcandidates for our programme here, as there are operations here in Singa-pore that are looking to operate glob-ally, and certainly in Asia, or entre-preneurs who are looking to expand to new markets,” he says, adding that there are components in the modules that cover growing markets such as Indonesia.

Founded in 1958, IESE is the world’s seventh top MBA school, according to Financial Times’ glob-al MBA ranking for 2015. The school has held the title for three straight years and was ranked top for exec-utive MBA programmes this year by The Economist.

Tuition for the World MBA pro-gramme costs US$135,000 ($190,280) and excludes airfare and accommoda-tion for the residential programmes. Heukamp says there are scholarships available, especially for entrepreneurs and women business leaders.

Heukamp says the MBA is designed for senior executives working cross-border or leading the business abroad

IESE’s cross-continent MBA for globetrotters

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| BY JEFFREY TAN |

Imagine having the perfect busi-ness plan — a unique model that could prove to be hugely profitable. The how and when to execute the plan has been de-

termined. Even the all-too-hipster-sounding brand name is ready. How-ever, there is one important element missing: funding.

Indeed, one of the main challeng-es that impede businesses is a lack of funding or, to be more exact, a lack of access to funding. Many tra-ditional financial institutions such as banks refuse to provide liquid-ity, saying that the business plan may be too risky or not feasible at all. Perhaps obtaining venture cap-ital may not be the best option or getting an angel investor is too de-manding. As a result, a brilliant busi-ness proposal could be downsized or, even worse, laid off. That would certainly be a shame, wouldn’t it?

Enter Capital Match, which might just widen the funding options avail-able out there. The company is a peer-to-peer (P2P) online lending platform that provides “affordable” working capital from investors to small and medium-sized enterpris-es (SMEs) in Singapore. It acts as an alternative provider of debt fi-nancing, while providing fixed-in-come investment opportunities to investors. For SMEs that have been scorned by traditional financial in-stitutions, Capital Match could be the perfect match for an alternative source of funding.

Pawel Kuznicki, director of Capi-tal Match, tells Enterprise in an inter-view: “We are doing what we are doing because banks are rejecting many SMEs. We have had a number of borrowers who tried the banks, [where the loan application process] takes a much longer [time] and they [eventually] get rejected. So, that’s where we come in.”

Capital Match was founded in June 2014. It processed its first loan in January 2015. As at Dec 7, the company had processed about $3.5 million worth of loans. Lately, it has pro-cessed an average of $700,000 worth of loans each month. “We started small but we are growing,” says Kuznicki, a co-founder. Cap-ital Match’s chief technology officer, Arnaud Bailly, is another co-founder. A third co-found-er has since left the company.

P2P lending platformHow the process works at Capital Match is simple. The entire process is completed on-line. SMEs may submit applications to Capital Match for a business loan of a certain amount, ranging from $50,000 to $200,000. They are re-quired to furnish the company with the rele-vant documentation — a procedure similar to that at most traditional financial institutions. This may include bank statements, financial statements, credit statements, tax assessments and other documents.

Once the loan application gets approved by a credit officer from Capital Match, the loan amount, which is known as a facility, will be open for pledges on the P2P platform. Indi-vidual investors can start pledging towards it from as little as $1,000. The facility request be-comes binding once a minimum of 80% has

been subscribed and the borrower has accept-ed it. Funds are transferred once the borrower signs the agreement.

Capital Match makes money when the bor-rower repays its loan by instalments, usually over a period of six to 12 months. It takes a cut from the regular repayments, earning 3% to 5% of the loan. On the other hand, the net return for lenders is even higher, from 19% to 24%, says Kuznicki.

For now, Capital Match facilitates only lend-ing of loans to SMEs from investment sums of individuals, funds and companies. It does not facilitate lending to individuals because that is highly regulated. Doing so would subject the company to Singapore’s Banking Act and Moneylenders Act. After all, Capital Match is neither a licensed moneylender nor a bank. “We mainly work with individuals on the in-vestor side and businesses on the borrower’s side. The regulations are more stringent on consumer lending, so we are doing only busi-ness lending,” says Kuznicki.

On the P2P requirements, Kuznicki points out that the “bigger issue” revolves around the borrower rather than the lenders. For one, the borrower has to be a registered private limit-ed or limited liability partnership. It also has to be in operation for at least a year and gen-erate a minimum turnover of $100,000 annu-ally. Moreover, the shareholding of the organ-isation has to comprise local ownership of at least 30%. “So, we do a process similar to that of banks, but we are more flexible [compara-tively],” he says.

Nevertheless, Capital Match is “pretty

much open-minded” when it comes to deal-ing with which industry the company belongs to, Kuznicki says. Capital Match has provided loans to SMEs operating in industries such as energy, logistics, construction, retail, IT and marketing.

As for lenders, there only two criteria to be met. Lenders can either be either a company or an individual who is at least 18 years of age. They are also required to wire transfer funds only via a Singapore bank-based account into a non-interest bearing account held by Capi-tal Match. This way, Capital Match eliminates the risks of breaching anti-money laundering regulations by piggybacking on the due-dili-gence process conducted by Singapore banks when opening a bank account. “So, this is how we are kept safe. We don’t accept funds from China or British Virgin Islands, for instance,” says Kuznicki.

At the moment, Capital Match is technical-ly not required to conduct any know-your-cus-tomer procedures or anti-money laundering checks, as it is not registered with the Mone-tary Authority of Singapore (MAS). In the near future, however, all this could change.

P2P lending industry to be regulated?On Feb 16, MAS published a consultation pa-per to gather feedback on securities-based crowdfunding from interested parties. This was in response to the “increasing interest” in crowdfunding from local start-ups and SMEs as an alternative source of funding. Naturally, MAS is looking to regulate equity-based crowd-funding to safeguard investors against fraud

and a lack of informed knowledge.While Capital Match is not in-

volved in equity crowdfunding, the company comes under lending-based crowdfunding. At the moment, the P2P lending industry has yet to be regulated. No consultation paper has been published on this yet. The industry is not illegal, but it seems to operate in a grey area within Sin-gapore’s legislation. Based on mar-ket talk, MAS plans to regulate the industry within the next one to two years, says Kuznicki. MAS could not be reached for queries by Enterprise at press time.

Kuznicki says Capital Match has been engaged in discussion with MAS via email. Much of these talks seem to be fact-gathering for the market regulator. The company has furnished documents to MAS over the last few months. “MAS has requested docu-ments from us a few times, which we duly provided, but there has been no update from them yet. I guess they just want to monitor whether we are in line with the current regulations. We never got any instructions from them,” he says.

The idea of regulation may seem stifling to the P2P lending industry, but Kuznicki thinks otherwise. He says in the US and the UK, regula-tions did not hinder market growth, although there are a bit more com-pliance and definitions put in place. He adds that a regulatory framework will give local P2P lending provid-ers a better grasp of what is legally possible or impossible. This should take the weight off Capital Match’s in-house legal counsel, which has experienced much headache. “To

be honest, we appreciate regulation because we are thinking of introducing a new product or financial instrument, but we are wondering whether this is okay or not okay,” says Kuznicki.

Capital Match is not the only local P2P lending player. It has two direct competitors: MoolahSense and Funding Societies. Kuznicki is not worried about competition, as the local market potential is huge. Currently, approved loans given to SMEs stand at about $20 bil-lion. “For each of us, probably for the next two to three years, we would exist alongside each other without competing with each other,”he says.

The way Kuznicki sees it, the P2P lending industry is a blue-ocean market. He views the industry as one that expands the pie for fund-ing, instead of eating into the existing shares of traditional financial institutions. He points to examples in the US and the UK, where there are partnerships between P2P lending plat-forms and banks that refer business to each other. The same could be done in Singapore. “I believe there will be cooperation between P2P lending platforms and banks, rather than competition. It is just different segments of the market that we are serving,” he says.

Although there is much to go around for local P2P lending players, Capital Match has set its sights on overseas markets. The com-pany intends to tap opportunities in emerg-ing markets in Southeast Asia once it has figured out how to assess credit risks in the region. Until then, Capital Match will be hap-py to match excess capital with local SMEs that need funding. E

Capital Match provides P2P lending funds as industry looks to be regulated

Kuznicki: We are doing what we are doing because banks are rejecting many SMEs

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Prior to using foodpanda’s delivery services, The Soup Spoon provided delivery ser-vices within a radius of only a 10-minute walk from its

restaurants in the CBD. Anna Lim, founder of The Soup Spoon, says the company did not consider starting its own food delivery fleet because of the high labour costs and difficulty in hiring riders.

Last year, when she was ap-proached by foodpanda, an online food delivery marketplace, to be an early adopter of its delivery services,she figured there was no harm in try-ing. For a start, delivery was fulfilled out of four outlets. Now, 10 out of The Soup Spoon’s 21 outlets fulfil these delivery orders. “We’re still deliver-ing to selected areas only but because foodpanda has come up with zon-ing, it’s pretty much good coveragefor us,” says Lim.

She adds that The Soup Spoon re-ceives a “substantial amount of or-ders” from foodpanda every day but this part of the business is unlikely to make up a significant portion of the company’s revenue.

Nevertheless, Lim finds foodpandauseful in helping The Soup Spoon reach out to customers who do not visit its restaurants. “Rental cost is very expensive, so offering our food through foodpanda allows us to uti-lise our stores better,” she says.

Reducing delivery timesWhile foodpanda orders were ini-tially placed through phone calls at each restaurant, The Soup Spoon has since automated the process. Lim says this move has helped the restaurant streamline the process so each order is prepared just as it would be for a dine-in customer.

What she finds most helpful about using foodpanda is that the platform has been “very aggressive in market-ing”. She adds: “They are doing the marketing for us, so we just have to fulfil the orders.”

To attract more orders, foodpandahas been focusing on reducing de-livery time. It now has a 45-minute delivery promise in the CBD. Ac-cording to foodpanda managing di-rector, Emma Heap, if this strategy goes well, the delivery promise will be rolled out islandwide.

While foodpanda also signs on restaurants that have their own de-livery fleet, she notes that most res-taurants prefer to use foodpanda’s fleet. “Nothing is stopping a restau-rant from having its own delivery fleet, and that’s why we support it as well. Delivering food is an econ-omies-of-scale game, so the more or-ders you have, the more you can op-timise and move your fleet around,” she explains. The platform has a fleet of more than 400 riders. While find-ing riders remains a challenge for the group, foodpanda may have found a solution by investing in and creat-

ing a career path for its rider fleet. “If you’re a good rider, you can end up managing a team. We recognise rider champions, rider of the week, rider of the month and we really try to integrate them into the company. So, for example, we have a rider BBQ every month to promote camaraderie within the ranks,” she says. Thanks to these initiatives, a significant num-ber of foodpanda riders have rec-ommended their friends for the job.

Meanwhile, foodpanda also has its own rider management and des-patching software called Urban Ninja.This enables the company to track where all its riders are and give a good estimate of how long it takes each rider to fulfil each order. “This is where foodpanda has an advan-tage over the restaurants because we have a level of technology that a single restaurant wouldn’t have on its own,” Heap says.

Quality offeringsFoodpanda was launched in Singa-pore in 2012, as the city-state was identified as a suitable market for the platform, given that its infra-structure allows food to be deliveredvery quickly islandwide. At the same time, smartphone penetration rate is incredibly high. “We position our-selves as a mobile-first business, so the orders come predominantlythrough the app, followed by the web-

site. We try to avoid taking phone or-ders,” Heap says. “Most of our or-ders come through the app now and we’ve been growing double digits month-on-month.”

Foodpanda operates in 40 coun-tries across five continents and is ac-tive in more than 580 cities world-wide. It has more than 60,000 partner restaurants and has raised more than US$310 million ($437.4 million) from

investors since its launch.This year, foodpanda added 300

restaurants to its platform in Singa-pore. Heap says the company is cau-tious about signing up restaurants, as some may not be able to fulfil orders.To this end, it conducts quality checks on every restaurant. She adds: “If a restaurant is not performing, we try to help them and give them feed-back. If they’re still not performing,

we take them off the platform be-cause the most important thing for us is delivering the good customer experience that comes from fast de-livery and good food quality.”

Now, foodpanda is looking to in-troduce health food vendors such as Shin-Sapporo and Sushi Burrito to the platform by year-end. In Sep-tember, it acquired food delivery company Singapore-Dine, adding restaurants such as Tony Roma’s, Chili’s, Subway and 4Fingers to the platform’s offerings.

The company has also rolled out a corporate account product targeted at companies offering to pay for staff meals at the office. The service makes it convenient for employers to con-trol food budgets and set maximum order values, and provides month-ly ordering reports and invoices to streamline accounting.

Heap highlights that surveys and research show that employees value free food at work as the best perk above and beyond gym memberships and further education. She says: “Pro-viding free food at work requires a high fixed cost, opening a canteen, hiring caterers and so on. Foodpanda allows companies to offer that perk with no fixed cost.”

This fact bodes well for restaurant owners such as The Soup Spoon’s Lim, who reckons that these initia-tives will help her restaurant receive more delivery orders.

Foodpanda may be facing stiff competition soon, though. In Novem-ber, delivery service Deliveroo was launched in Singapore as part of its global expansion. It recently raised a US$100 million Series D investment, enabling it to meet increasing con-sumer demand and drive interna-tional expansion.

Lim says she has been approached by “competing food delivery plat-forms that are fighting on price”. While the prices offered are “much lower”, she says she would rather stick with foodpanda, emphasising: “We have a good working relation-ship with foodpanda and we want to continue that. Track record is im-portant. You don’t know whether the new business coming in has that.” E

How foodpanda helps restaurants such as The Soup Spoon expand their reach

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We position ourselves as a mobile-first business, so the orders come predominantly through the app, followed by the website — Heap

Lim: Rental cost is very expensive, so offering our food through foodpanda allows us to utilise our stores better


ENTERPRISE BEST PRACTICES

| BY JACK CLARK |

Elon Musk, Peter Thiel and other technology entrepreneurs are betting that talented re-searchers, provided with enough freedom

and money, can develop artificial intelligence systems as advanced as those being built by the sprawling teams at Google, Facebook and Microsoft. Along the way, they would like to save humanity from oblivion.

Musk and Thiel are among the backers of OpenAI, a non-profit company introduced on Dec 11 that will research novel artificial intel-ligence systems and share its findings. Musk, CEO of Tesla Motors and Space Exploration Technologies, and Sam Altman, president of the Y Combinator, will serve as co-chairmen. OpenAI has received financial backing from Musk, Thiel, co-founder of PayPal Holdings and Palantir Technologies, Reid Hoffman and others as well as companies including AmazonWeb Services and Infosys.

The group’s backers have committed “signi-ficant” amounts of money to funding the pro-ject, Musk said in an interview. “Think of it as at least a billion.”

In recent years, the field of artificial intelli-gence has shifted from being an obscure, dead-end backwater of computer science to one of

the defining technologies of the time. Faster computers, the availability of large data sets and corporate sponsorship have developed the technology to a point where it powers Google’sweb search systems, helps Facebook understand pictures, lets Tesla’s cars drive themselves au-tonomously on highways and allowed IBM to beat expert humans at the game show Jeopardy!

That development has caused as much trep-idation as it has optimism. Late last year, Musk described the development of AI as being like “summoning the demon”. With OpenAI, Musk said the idea is: “If you’re going to summon anything, make sure it’s good.”

“The goal of OpenAI is really somewhat straightforward; it’s what set of actions can we take that increase the probability of the future being better,” Musk said. “We certain-ly don’t want to have any negative surprises on this front.”

OpenAI’s chief technology officer is Greg Brockman, formerly chief technology officer of Stripe, a start-up valued in excess of US$1 billion ($1.4 billion). Its research director is lauded AI researcher Ilya Sutskever, formerly with Google. At Google, his work included re-search into the technology that became Smart Reply, the auto email-writing feature, as well as systems that can learn to write their own

algorithms. This year, MIT Technology Review named him one of their 35 innovators under 35.

The organisation has attracted other tal-ented researchers, whose past work ranges from developing robots that can learn to per-form tasks based on human demonstrations, to software that can improve its own code to solve new problems.

The idea is that “real breakthroughs in re-search are serendipitous”, Brockman said, so the best way to develop powerful AI systems is to take a group of accomplished people and give them the latitude to focus on solving nov-el problems. A potential criticism is that the lack of a defined commercial motivation can make it difficult to home in on a precise area for research.

“This collection of people is stunning,” says Pieter Abbeel, a professor at the Univer-sity of California at Berkeley and an adviser to the company.

The best measure of the organisation will be to see the reaction to its research and the ideas it fosters, Abbeel says. “I expect it’s go-ing to be impressive and surprising.”

Other advisers to OpenAI include Yoshua Bengio, a founding figure of a powerful form of artificial intelligence called Deep Learn-ing, and Alan Kay, a lauded American com-puter scientist.

Wojciech Zaremba, one of OpenAI’s re-searchers, says the group’s openness can help serve as a balance to the narrower interests of researchers at commercial ventures.

“Here, Elon is saying, in a philanthropic way, ‘I have money, I want to solve AI for the good of humanity.’” — Bloomberg LP

| BY MANISH BAHL |

IDC predicts that, by end-2017, 60% of Asia-Pacific’s top 1,000 enterprises will have digital transformation as an integral part of their corporate strategy. Evidently, Asia is fast becoming the centre of digital

innovation for the world — the region alone accounts for 48.4% of the 2.9 billion Internet users globally.

With the growing economic power of the East over the last decade, Asia-Pacific is quickly rolling into a new era of business, technology and com-merce. Conventional business sentiments have been disrupted by the “digital-first” approach, introducing unforeseen challenges in the form of new investments, organisational structures, internal skills, change management, as well as roles and responsibilities within companies.

Digital transformation has intensified the mandate for businesses in Asia Pacific to rise to these challenges and transform them into opportunities, with digital participation being at the heart of this.

From analogue to digital leadershipOrganisations need strong digital leadership to helm the growth agenda, and one way to go about doing this is to inject “digital thinking” into an organisation’s core. In fact, this should even ex-tend to the social media presence of its leaders.

Yet, a recent survey conducted by Cognizant showed that the majority of business leaders in the region lack a digital presence, 40% are not on professional networking platform LinkedIn and 70% have yet to open a Twitter account.

As appalling as it may seem in this digital age, this attitude is what can be termed as a “lack-of-time syndrome” — business leaders feel that time should be used to fulfil more stra-

tegic tasks at hand. What they do not recog-nise is that the failure to leverage and expand their digital presence may affect the future of their own roles and businesses.

For a start, the key to understanding the digi-tal consumer’s state of mind and unlocking the true value of digital lies in personal participa-tion in the digital realm. Leaders need to take their ideas and transform them with the powerof digital. This should be done not in the hope of becoming a digital expert, but part of lead-ing a digital-first company by writing off old habits and paradigms.

Digital leadership not a part-time jobOrganisations cannot truly think “outside the box” until a clear digital leadership mandate has been established. The same survey revealed that the charter to digitally transform the business currently resides with the chief information officer/CTO (89%) or chief marketing officer (72%) as an added responsibility.

This approach is fundamentally flawed, as ef-fective digital transformation cannot be attained through a part-time responsibility. If CIOs, CTOs or CMOs are well equipped to lead the trans-formation, they should relinquish their current roles; if not, the business should hire another person to undertake the role separately. More than two-thirds of the survey respondents al-ready have or are about to establish a chief digi-tal officer/digital head role in their organisation.

The rise of the CDO has been well-charted, and while CMOs and CIO/CTOs will be on the forefront of digital events, the CDO role will lead companywide digital transformation. CEOs, it appears, recognise the need to have a leader in place with an explicit mandate to drive digital transformation at a time when so much is at stake.

Apparently, the increasing CDO-related jobs

in the market reiterate that companies are re-alising the need for a dedicated role to lead transformation.

CDO’s responsibilities and challengesIn charting the ascent of the CDO in an organi-sation’s digital transformation agenda, what is truly expected of a CDO must be clearly under-stood. They are seen as leaders with the abilityto connect all stakeholders, break down organi-sational silos, change the company’s culture, set up a digital office, and realign employee incentives, rewards and growth plans.

On top of that, they must also harness the capacity to address the challenges that com-panies are facing or will face, as digital trans-formation accelerates, such as:• A lack of organisational structures, inter-

nal skills and partnerships in the planning and managing of digital transformation;

• A lack of digital expertise/skills or collabo-ration across business units to develop new products/services related to digital transfor-mation;

• A lack of vision or communication failure; presence of a change-resistant culture; a lack of urgency to build consensus within the organisation;

• Insufficient budget and lack of resources; lack of roles and responsibilities to connect digital investments to enterprise business goals;

• Ambiguous value from digital transforma-tion efforts to drive tangible and measura-ble results; and

• Tracking continuously changing customer behaviour to improve customer experience to achieve business goals.Despite these challenges, developing fu-

ture-ready digital leaders is an attainable goal.

One of Asia’s leading financial services groups, DBS, held a “megahackathon” initiative in Singa pore, where employees were encouraged to develop new applications (apps), processes and organisational prototypes jointly with rel-evant start-ups to tackle business and societal challenges. This resulted in transformed dig-ital mindsets of hundreds of business leaders within DBS, which the bank plans to impart to every employee before end-2016.

The road aheadWhile every organisation will embark on a dif-ferent journey towards digital transformation, consistent fundamental insights can be gained and applied from digital winners.

Digital transformation should not be viewed as a “technology-fenced” development — in-stead, companies should first streamline the business complexities associated with digital transformation before identifying and implant-ing the technology needed to get there.

In their pursuit of digital transformation, leaders should examine additional steps re-quired for a business future filled with both uncertainty and phenomenal opportunities.

Winners of the new digital world will chal-lenge conventional thinking with regard to product innovation, customer engagement, organisational structure and strategy as well as business models.

All in all, as the digital revolution unfolds, CDOs/digital heads must be willing to make meaningful organisational transitions that align a strategic digital vision with bold precision in order to meet the greater ambitions of what it means to be truly digital.

Manish Bahl is the senior director at Cogni-zant’s Centre for the Future of Work

Musk says backers have committed at leastUS$1 billion in funding for the project

Elon Musk and other tech titans set upcompany to develop artificial intelligence

Rapid rise of the chief digital officer

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INNOVATION

Sleep sanctuaryA good rest is within reach

with Tempur mattresses

Club with heartThe Tanglin Club commemorates

150 years of illustrious heritage

Special seriesA smooth and comfortable

ride with the BMW 116d


Nicolas Bos, global president and CEO of Van Cleef & Arpels, is set on ensuring that the more than

100-year-old maison stays relevant in the 21st century


L I F E • S T Y L E • L E I S U R E

Jewellery + time

OP2 • THEEDGE SINGAPORE | DECEMBER 21, 2015

BUY RIGHT

| BY HANNAH MERICAN |

Sleep sanctuaryA good rest is within reach

with Tempur mattresses

Club with heartThe Tanglin Club commemorates

150 years of illustrious heritage

Special seriesA smooth and comfortable

ride with the BMW 116d


Nicolas Bos, global president and CEO of Van Cleef & Arpels, is set on ensuring that the more than

100-year-old maison stays relevant in the 21st century


L I F E • S T Y L E • L E I S U R E

Jewellery + time

EDITORBen Paul

SECTION EDITORAudrey Simon

CONTRIBUTORS Debbie Reyes-Coloma, Hannah Merican, Jamie Nonis, Justin Harper, Shalini Yeap,Vasantha Ganesan

COPY-EDITING DESKElaine Lim, Evelyn Tung,Chew Ru Ju, Tan Gim Ean,Choy Wai Fong


PHOTOJOURNALISTBryan Tay


DESIGN DESKTan Siew Ching, Christine Ong, Monica Lim, Nik Edra, Mohd Yusry,Henry Lee

ADVERTISING + MARKETING HEAD | Edward Stanislaus GROUP SALES MANAGER | Cecilia Kay SENIOR MANAGER | Windy Tan MANAGERS | Mabel Wong, Danna Pusta, Elaine TanThe Edge Property

GROUP SALES MANAGER | Cowie Tan SENIOR MANAGERS | Diana Lim, Cheryann Yeo ACCOUNT MANAGER | Ken TanEvents Marketing

SENIOR MANAGER | Sivam Kumar EXECUTIVE | Gerald AwDIGITAL MARKETING ASSISTANT |Tim Jacobs COORDINATOR | Nor Aisah Bte Asmain CIRCULATIONMARKETING MANAGER | Coleman Lim

OPERATIONSMANAGER |Cesar Banzuela De Jesus, Jr EXECUTIVES | Keith Lee, Malliga Muthusamy, Sandrine Gerber


PUBLISHERThe Edge Publishing Pte Ltd150 Cecil Street #08-01Singapore 069543TEL: (65) 6232 8622FAX: (65) 6232 8620

PRINTERKHL Printing Co Pte Ltd57 Loyang DriveSingapore 508968Fax: (65) 6545 3333



Space odysseyGear up for an epic adventure in a galaxy far, far away as the

latest instalment of epic sci-fi film series Star Wars premieres soon. Get into the mood with these galactic selections.

Fans of droid R2-D2 will love these white

sunglasses from Prada that strike a fine

balance between form and function

The iridescent finish of this Market tote in hologram

leather from Coach is totally out of this world

These Timberland Savin Hill medium shaft tall

boots are just the thing for a Jedi traversing the sandy dunes of Tatooine. Perfect

with jeans too.

These Star Wars ZX Flux shoes from adidas for children will heat up any sidewalk with a Flametrooper on the

tongue and a fire graphic that runs across the shoe

Make your stand against the Galactic Empire with these Rebel Alliance cufflinks from Royal Selangor

Travel around the galaxy with the Lego Star Wars Millenium Falcon set. The set includes six mini char-

acter figures — Han Solo, Chewbacca, Rey, Finn, Tasu Leech and Kanjiklub gang member

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THEEDGE SINGAPORE | DECEMBER 21, 2015 • OP3

YourWeekOutMuseum. Free admission.

CHECK out South Asia and the Islamic World: Highlights from the Collection, an exhibition that explores the arts of Hinduism, Jainism and Islam in the

subcontinent of South Asia, namely Pa-kistan, India and Bangladesh. Until June 30, 10am to 7pm (Saturday to Thursday), until 9pm on Fridays, Asian Civilisations Museum. Free admission.

*Sistic hotline: 6348 5555

WATCH Carol (opens on Dec 24), which is based on the novel The Price of Salt. Set in 1952, the story follows a young department store clerk who meets and falls in love with an older, married woman named Carol, trapped in a loveless, convenient marriage. Stars Cate Blanchett and Rooney Mara. Directed by Todd Haynes.

DON’T miss Choying Drolma’s Re-building with Love World Tour. One of the most renowned musicians in the world, the singer with a heaven-ly voice launches her world tour in Singapore in support of survivors of the Nepal earthquake. Dec 25, 7.30pm, Esplanade Concert Hall. Tickets at $108 to $250 from Sistic*.

CATCH Of Music and Dance, a multi-disciplinary concert of original Chinese chamber music compositions by Phang Kok Jun and Xu Zi Qing performed by Ding Yi Music Company and re:Dance Theatre, with choreography by Albert Tiong. The concert features pipa soloist Chua Yew Kok. Dec 27, 5pm, Espla-nade Recital Studio. Tickets at $25 from Sistic*.

BE entertained by the photography of Peter Steinhauer. The American photographer, known for his architec-tural portraits of Asia over the last 20 years, has a solo exhibition comprising two collections: Singapore Number Blocks, which showcases colourful HDB blocks, and Cocoon, which captures the bamboo fabric construction technique of Hong Kong. Until Dec 31, 10am to 9pm daily, Red Sea Gallery, Block 9 Dempsey Road #01-10 Dempsey Hill. Free admission.

SEE Do Ho Suh’s exhibition, simply titled New Works. The South Korean artist showcases his brand of mixed media art featuring works of everyday objects, such as electrical sockets and lift buttons. Many of them show Suh’s use of thread and fabric to create ar-chitectural forms. Until Jan 2, 10am to 7pm (Monday to Friday), 9am to 6pm (Saturday), Singapore Tyler Print Institute, 41 Robertson Quay. Free admission.

GET acquainted with the most famous Peranakans in Singapore in the exhibi-tion Great Peranakans: Fifty Remark-able Lives. It celebrates the achieve-ments of 50 men and women who have made significant contributions and shaped Singapore culture in the last 20 years. Until April 3, 10am to 7pm daily, until 9pm on Fridays, Peranakan

E


FASHION

E

The early 1970s saw the anti-war Flower Power move-ment, which advocated peace and love. It was a time when

law enforcers and police personnel were offered flowers during widespread protests. The Seventies was also an interesting time for fashion, which was going through a revolution of its own. Fashion was used as a means of expression, in line with the sentiments of that era —

minimalistic and fuss-free with bohemian bloom patterns on voluminous fabric. This boho-chic

look is back in action this season.

Seventies hippie

Take your pick from the assortment of colours and step out in style with these mirrored aviators from Polaroid

Accessorise your outfit and complete the look with Versace’s gold metal necklace with tiger eye pendant for men

The floral motifs pop up against the yellow back-

ground of this wide-sleeved Michael Kors sundress

Jumpsuits can be laidback or dressy, like this deep V-necked one by Aigner with billow-ing trousers and embel-lishments at the torso

The mini saddle bag by Tory Burch combines applique flower designs and tassels —

an ideal recreation of that Seventies look

| BY SHALINI YEAP |


E

The versatile denim jeans were worn flared in this era and you can emulate that look with these boot-cut ones from Levi’s

Embrace the vibrant hues and relaxed fashion of the era with this kaftan from Farah Khan’s resort collection

This olive coloured suede pair from Stuart Weitzman is bound to put that Seventies groove into your step

These Marmont pumps by Gucci

are typical of the era — square-toed,

platform-heeled and with fringe details at the tip

What better way to channel your Seventies fashionista than with Emilio Pucci’s sling bag with elaborate fringe details

Burberry’s empire line maxi dress comes in an interesting shade of olive and has tiers of patterned silk patchwork and nature motifs throughout


| BY AUDREY SIMON |

Nicolas Bos is a wanted man. It is only the second day of Watches&Wonders — a watch fair featuring 12 exhibiting mai-sons held in October in Hong

Kong — and the global president and CEO of Van Cleef & Arpels (VCA) has meetings after meetings with his team from Asia. The stream of staff going in and out of the room does not seem to end; it seems like everyone wants a piece of him.

If he is tired and frazzled from the end-less round of meetings, he does not show it, as he is a picture of calm when Options meets him in the private room at the back of the VCA booth at the Hong Kong Con-vention and Exhibition Centre. In line with the horological theme of the event, we ask Bos about some of the star time-pieces at this year’s exhibition.

He explains that the timepieces launched this year are dedicated to nature. “It is a tribute to nature and the inspiration for the pieces as well as the design of the booth. This booth illustrates the way a jewel-ler looks at watches, which is what we are. We are originally a jewellery house, which has, since its creation, always devel-oped watches. But of course, we develop watches with a slightly different point of view and angle from a Swiss watchmak-er, which is a movement manufacturer.”

The three collections that caught the attention of the media and visitors were the Cadenas, Charms Extraordinaire and Extraordinary Dials collections. Bos de-scribes the Cadenas collection as “prob-ably one of the strongest and most iconic designs of a watch that doesn’t look like a watch in the history of VCA”.

That is because, at a glance, this in-credible timepiece looks like a bracelet — a 1935 design that still stands the test of time. The first version of the Cadenas was done in gold and jewellery was add-ed later. In the 2015 reinterpretation, we see a few tweaks to the dial in a way that it now gains better visibility with an in-crease in its dimensions. Diamonds have

also been added, a clear testimony to the maison’s skill at stonesetting. Trivia buffs will be pleased to know that the clasp was thought to have been inspired by the zip necklace (also by VCA) that was adored by the Duchess of Windsor.

VCA chose to relaunch the Cadenas because more women have become in-creasingly interested in timepieces over the years. Bos explains, “It’s a piece of jewellery with its own shape. It is very ar-chitectural with a strong reminiscence of the Art Deco period. It was always in our collections, on and off, but we wanted to bring it back because we felt that it was a design that kept all its modernity and strengths in a market where we see more and more offerings for feminine watches, most of which are still round in shape.”

The maison’s aim was to highlight the fact that a feminine watch can be some-thing other than a round watch with some

diamonds and an elaborate dial, he says. “It’s like a bracelet with a time function. It is nicely integrated and almost hidden in the shapes.”

As with everything VCA, the romantic elements are highlighted in the Charms Extraordinaire and Extraordinary Dials collections.

Of the Charms Extraordinaire collec-tion, Bos says, “It tells a story through the three-dimensional design — it is like a miniature theatre on different levels and backgrounds. It is inspired by flowers and tells a story about the language of flow-ers, which is a secret language that goes back to the 18th century, where flowers stood for some words and it was a secret language of lovers. So, the combination of flowers actually means sentences and we try to revisit that beautiful idea of a love story.”

The Lady Arpels Cardinal Carmin watch from the Extraordinary Dials collection de-picts various species of birds and is made of real feathers. For its design, VCA tapped the talent of feather artist Nelly Saunier. In a presentation and movie clip shown to the media, feathers of various sizes, shapes and colours were laid out in front of Saunier, who proceeded to cut and fashion them to works of art on the dial.

L’École Van Cleef & ArpelsVCA was founded in 1906 at 22 Place Vendôme, Paris, with the union of Estelle Arpels, the daughter of a dealer in precious stones, and Alfred Van Cleef, the son of a stonecutter. The couple fell in love and began a romantic and business partner-ship, and VCA was born.

The maison may be more than a centu-ry old, but it has stayed relevant through-out the years. Bos says that staying rel-evant has become a bit of an obsession with him. He questions, “How do you keep making watches relevant when you have quartz and digital watches? How do you keep high jewellery relevant when the great days or golden age of high jewellery was at a time when social life and royalty were different?”

Bos, who joined Richemont Group in 1992 under Cartier and then moved to VCA in 2000, stresses on the importance of designing pieces, whether jewellery or watches, that will stand the test of time. He believes the design should appeal to a young lady who will wear a piece that does not look outdated. “It’s very impor-tant that she wears a watch that does not look like a relic from the 19th century,” he quips.

Staying relevant is not about being a new or old brand, Bos says. It is “more about the way you can create and pro-mote it. I think that when you’re an old brand, you have the amazing richness of the patrimony of the archives. It provides an unlimited source of inspiration.”

An old brand runs the risk of becom-ing old-fashioned if it does not “follow the evolution of lifestyle and you have the ob-ligation to stay true to your patrimony”, he adds. “So, in terms of creation, you can’t go in a very different direction. You can’t go into avant garde and say, ‘Okay, we’re going to work with that designer and do something completely shocking and different.’”

Bos says some old brands that have managed to keep their relevance and iden-tity. On the other hand, some have lost their identity and soul, while other young

Jewellery and timeNicolas Bos, global president and CEO of Van Cleef & Arpels, has his mind set on ensuring the more than 100-year-old maison stays relevant in the 21st century and keeping expansion plans at a modest level

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Another innovative way VCA is using to stay relevant and still appeal to a broader base of customer is through L’École Van Cleef & Arpels.

Founded in Paris in 2012, L’École Van Cleef & Arpels’ aim is to instil an intellec-tual and emotional understanding of the spirit of the exceptional crafts, encourage mastery of their techniques through per-sonal experience, and educate with the help of experts who are passionate about their subjects to share their knowledge with students from all over the world.

VCA wants to share with the world what goes on behind closed doors and the pri-vate world of the men and women who work behind the scenes to produce great works of art. This is done via a curriculum that is put together by experts such as art historians, craftsmen, jewellers, gemmol-ogists and master watchmakers.

This year, as part of a series of evening conversations, Options attended The Sun King’s blue diamond, a rediscovered mas-terpiece, which proved that the Blue Di-amond and Hope Diamond are one and the same. This year’s evening conversa-tion series was hosted by Professor Gislain Aucremanne and Professor of Mineralo-gy, National Museum of Natural History (Paris) François Farges.

Bos explains the importance of such activities for VCA: “It [L’École Van Cleef & Arpels] is kind of a new interpretation or translation of the importance of trans-mission and communication, which have always been very high for this house. It is a new way to put that together, and to bring information, education, experience and knowledge to the public.

“As you’ve experienced, the reasoning behind it is very simple and naïve: We be-

lieve the world of jewellery is fascinating and we know that it is not well known. It is difficult to access, so we believe that since we are lucky to be part of a house that has the resources to put together this type of programme, it is our duty to ex-pose the world of jewellery.”

According to Bos, the world of jewel-lery is a rather secretive one, and such events help customers understand and experience the history of diamonds and other related topics. In the works is a new course on the association between European jewellery craftsmanship and Japanese lacquerware craft. For the Jap-anese lacquerware session, experts will be invited to speak about their craft and show that different civilisations can co-exist on the same piece and with the same mindset.

VCA invites independent lecturers, so customers get to experience a wide range of topics that are not about hard-selling

the brand. Bos says, “We have art histo-rians who specialise in creative arts com-ing in to speak. It is about education and very different from communication and in-formation. We put this information into a lesson and school environment, so it be-comes educational.”

The right timeBos says that while there will not be any new categories added to the maison, he is looking at opening new stores. Last month, VCA opened boutiques in Singa-pore and Bangkok. He has his sights set on Sydney and Melbourne in the coming year. “We are about jewellery and watch-es, and that’s it. We have a licence every month for fragrance, but it’s a very small part of the business. We’d rather stick to what we know… in the sense that we don’t think we will diversify into fashion or handbags,” he says.

He wants to expand the VCA footprint

through territories. “We have plans in Southeast Asia. We want to be in a loca-tion for a long time. We see opportuni-ties in these markets. Yes, we are looking at both Sydney and Melbourne,” he says.

Myanmar is not yet on his radar. “I know that there are a lot of countries that will re-emerge and redevelop in the future, but historically, I don’t believe that VCA [will be among] the first luxury brands to open in these markets,” he says.

VCA already has a network of about 110 boutiques worldwide. That’s why Bos is proceeding with caution. It’s all about timing, he says. “We will take it step by step. We will open a store if we find the right location. We only want to go to plac-es at the right moment. We have time on our side.”

This will only mean more meetings for Bos. As the interview ends, there is an-other member of his team — armed with files — ready to have a chat with him.

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Designed in 1935, the Cadenas was done in gold, and jewellery was added later. In the 2015 edition, a few tweaks were made to the dial

The Lady Arpels Cardinal Carmin watch features real feathers on the dial of the watch

Van Cleef & Arpels was founded in 1906 with the union of Estelle Arpels, the daughter of a dealer in precious stones, and Alfred Van Cleef, the son of a stonecutter

Whether jewellery or watches, the design should not look outdated on a young lady


WELLNESS

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| BY DEBBIE REYES-COLOMA |

The benefits of good sleep are obvious. Going with-out sleep for prolonged pe-riods makes us feel slug-gish and even moody.

Getting undisturbed sleep can make us feel ready to face the world. The emphasis is on “un-disturbed”, and to get to that state of slumberland, a good mattress matters.

There are many mattresses. And then there is Tempur, the only mattress recognised by Nasa and certified by the Space Foun-dation. It is made of, well, tem-pur — a material that has been scientifically tested to suit the re-quirements of astronauts on mis-sions to outer space.

In the early 1970s, Nasa devel-oped a pressure-absorbing mate-rial to help cushion and support astronauts during the strain of lift-off. They needed an exceptional way of evenly distributing weight and pressure. The unique tempur material was temperature-sensi-tive and evenly distributed body weight. Nasa released it to the public in the 1980s.

“What makes us different from the others is the tempur material, which was developed by Nasa for the space programme,” says Simon Walsh, senior vice-president for Asia-Pacific, Tempur Sealy Inter-national. “We were able to take that technology, modify it and put it into the application of bedding products that come with all the pressure-relieving properties that was developed by Nasa.”

Since then, through further R&D by scientists and engineers, the company (which named the brand after the Nasa material) has perfected and extended this technology to create a collection of mattresses and pillows.

When Tempur mattresses were introduced in 1992, they were an instant success. Today, they are available in more than 80 coun-tries. All Tempur mattresses and pillows are 100% made in Den-mark.

Only a handful of Tempur sci-entists know the brand’s proprie-tary formula. It manufactures the material in its own production facilities in Denmark. Each year, the firm invests more in R&D to ensure that the technology con-tinues to deliver the best unin-terrupted sleep possible.

“We believe that Tempur pro-vides the ultimate night’s sleep. It’s all about having a deep sleep, a better sleep, so you wake up feeling rejuvenated,” Walsh says.

The company has introduced three mattress collections with different “feel” levels — the Origi-nal for a firmer feel, the Cloud for a softer feel and the Sensation for

Sleep sanctuaryA good rest is within reach with a mattress recognised by Nasa and certified by the Space Foundation

Walsh: We believe that Tempur provides the ultimate night’s sleep. It’s all about hav-ing a deep sleep, a better sleep, so you wake up feeling rejuvenated.

The 1,500 sq ft flagship Tempur Sleep Sanctuary store in Singapore has the most extensive range of Tempur products in the country, including a Pillow Bar

Pair the Tempur mattress with the Zero-G and this remote-controlled all-in-one adjustable bed base allows you to adjust your bed to ideal positions when you read, watch TV, surf the Internet or eat

support and ease of movement.Tempur mattresses have no

springs. They are made to adapt and conform to the body in res-ponse to an individual’s temper-ature, weight and shape in a way that makes you feel weightless. They are designed to quickly re-cover to their original position night after night, year after year, so you will have dependable com-fort and support for the life of the mattress. No need to worry about rolling to the centre or tossing and turning in bed. And even if there are two of you sleeping on the same bed, Tempur dramatical-ly reduces motion, so your part-ner’s movements will not disturb you because you are supported independently.

In comparison, convention-al spring mattresses can cause unnatural sleeping positions and pressure points, resulting in numbness and discomfort. They can also break down quickly, leading to crevasses in the cen-tre of the mattress. And, unlike generic foam, the tempur ma-terial springs back to its usual shape, so it is like sleeping on a new mattress every night.

Tempur has expanded its range from mattresses to pillows, bed bases and accessories. The mat-tresses come with a 15-year lim-ited warranty and the pillows come with a three-year warranty.

Tempur products are pricier than conventional ones. But,

Walsh says, the company focus-es on health benefits. “We spend millions of dollars on R&D to en-sure we’re staying ahead of the competition in terms of the qual-ity of the material.”

He also points out that now-adays, consumers view buying a premium mattress as a signif-icant investment, so they do a lot more research. Before they go into a store, they are armed with a considerable amount of information, including consum-er feedback.

Outstanding comfort and su-perior support features have earned Tempur the top rankings for “overall customer satisfaction” and “overall quality of sleep” in a survey. The findings are based on interviews with over 1,300 Tempur mattress owners in 13 European countries.

Loyal customers also report that the products have provided comfort to people suffering from back, joint and neck problems, as well as sleeping difficulties. Furthermore, Tempur products are recognised and purchased by hospitals, nursing homes and sleep centres worldwide.

In its ongoing effort to pro-vide consumers with innovative products, the company has de-veloped the Tempur Zero-G bed

system. This remote-controlled, all-in-one adjustable bed base allows for customised positions of the header/footer areas, com-bining form and function to pro-vide the ideal sleep experience. It allows you to adjust your bed to different positions when you read, watch TV, surf the Inter-net or eat. For example, by ele-vating the legs, the Zero-G pre-set position increases circulation throughout the body.

One of Zero-G’s functions is the relaxing passive massage. According to your preference, choose between three intensity levels and set the timer for 10, 20 or 30 minutes. It also comes with head and foot massage functions.

To test the full benefits and functions of the Tempur offerings, head to the newly opened Tem-pur Sleep Sanctuary. It has a test area with the mattress collections for consumers to try out various options and combinations. The 1,500 sq ft flagship store has the most extensive range of Tempur products in the country, includ-ing a Pillow Bar.

Incorporating modern technol-ogy into the Pillow Bar, also the first of its kind in Singapore, the tablets provided are set up with specific software that helps cus-tomers identify the best pillow for their sleeping style, an essen-

tial item to sleep better at night.“The pillows are made from

the same tempur material, so it delivers the same benefits. Con-sumers in general look at pillows as quite a commodity-type prod-uct. It’s an impulse purchase. We were really the first to put technology, shape and design into a pillow,” says Walsh. “So, when you’re sleeping on a Tem-pur pillow, you’re getting support for your neck, and when you’re sleeping on a Tempur mattress, you’re getting alignment of your total body.”

Drawing inspiration from its Danish heritage, Tempur Sleep Sanctuary exemplifies contem-porary Scandinavian style with clean lines in a neutral palette of earthy brown, elegant white and modern grey. The soothing ambience in this bedroom won-derland will tempt you to linger just a little bit longer.

Some say good sleep is a lux-ury that is hard to achieve. May-be all they need is a Tempur mat-tress and pillows.

Tempur Sleep Sanctuary is at 1 Nassim Road, #01-03

Singapore-based Debbie Reyes-Co-loma is a freelance feature and lifestyle writer for various publi-cations in the region


FEATURE

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| BY JAMIE NONIS |

The Tanglin Club’s 150th anniversary is especially symbolic for Robert Wiener, current president of the club. “This has got to be the greatest pleasure of my life, being the pre-

sident of the club in the year of its 150th anniversary,” says Wiener, whose affection for the club is palpable.

Chatting over an afternoon drink in a cosy al fresco area of the club along Stevens Road, Wiener recounts his love affair with the club, dating back almost 50 years. He was born in Singapore to a German father and Eurasian mother, and was a junior member of the club since boyhood. Now 61, Wiener talks about how he literally grew up at the club, reminiscing about his courtship days and all the friends he has made and still drinks with at the club’s bar these days.

“It was great fun. Being able to cele-brate the 150th anniversary means the club hasn’t lost what it traditionally was: a place for gathering, to bring family, to eat, to play sport and so on. We’ve re-mained relevant, whereas a lot of clubs in Southeast Asia that were in great spirit 30 years ago are now in very bad con-dition. Not only have we remained rele-vant, but we have also excelled. That’s a big thing to say after 150 years,” notes Wiener, who has served on the club’s general committee for 11 years and was voted in as president for a one-year tenure starting May.

One hundred and fifty years are indeed a long time. That is three times as old as Singapore herself. And The Tanglin Club marked this impressive milestone with year-long celebrations culminating in a black-tie charity gala held on Nov 23.

The charity gala was graced by guest of honour President Tony Tan, who was presented a cheque for $195,975 in aid of the President’s Challenge. Altogether, club members raised $391,950. The other half of the amount will be divided equally and donated to the Kidney Dialysis Foun-dation, Food from the Heart and Focus on the Family.

“This has been our largest contribution in the club’s 150-year history. It is impor-tant to us that our focus and efforts ex-tend beyond our club walls with generosity and support,” says Wiener.

Besides the charity gala, another high-light of the anniversary celebrations was a poolside carnival in October for 100 un-derprivileged children from Beyond Social Services and Lakeside Family School.

About 100 club members and staff volunteered their time to ensure the children had a great day, while the club do-nated swimsuits and personal floats. The children were en-tertained by various activi-ties, such as a giant inflata-ble castle slide, glitter tattoos and henna art, as well as the appearances of a magician, stilt walker and juggler. The afternoon was topped off with a child-friendly buffet.

“It was just fabulous. Some of the kids had never seen a pool before and they just went straight in. They loved it,” re-calls Wiener.

As part of the comme-morative activities, Wiener planted a Saraca tree, also known as the Tanglin tree, on the property. It mirrors the one planted in 1990 by then-presi dent lawyer George Sandosham at the entrance of the main clubhouse to mark the club’s 125th anniversary.

“Planting a tree allows us to create a lasting reminder of not only our anniver-sary, but also the joy and generosity sur-rounding this milestone. The two Saraca trees mark a significant period of growth and prosperity both at The Tanglin Club and in Singapore,” says Wiener.

The Tanglin Club is an important land-mark in Singapore history. It was founded in 1865 as a social club for the British living in the settlement at the time. Among its early members were prominent historical figures of society.

The club’s first president was Thomas Dunman, the first Commissioner of Police in Singapore. Other notable past presi-dents include Andrew Caldecott, John Anderson, James Birch and John Finlay-son, all of whom have streets in Singa-pore named after them.

Building upon this extraordinary herit-age, The Tanglin Club remains one of the most prestigious and exclusive clubs in Singapore today, and the premier social club of choice for some of the island’s elite.

In fact, membership is so exclusive that Wiener says there is a waiting list of seven to 10 years.

“You don’t just buy membership. You have to sit in line for a long time and it’s not transferable,” he says.

Membership currently stands at about 4,200, comprising more than 40

Club with HEART

One of the most prestigious and exclusive social clubs in Singapore, The Tanglin Club

commemorated its 150th anniversary with year-long festivities culminating in a black-tie charity

gala graced by President Tony Tan

nationalities. About half are Singaporeans and the expatriates make up the other half.

“The greatest part of this club is that we are multinational, multireligious and multiracial. At any time, you can sit in the tavern bar and have 20 to 30 nation-alities mingling and chatting. So, it’s a great melting pot for relaxing socially,” says Wiener.

Excellent facilities, a great ambience and

a strategic location in the heart of town complemented by exclusivity that money cannot buy — it is clear why people are willing to wait up to 10 years to be a mem-ber of The Tanglin Club.

A veteran writer and editor, Jamie Nonis also owns a marketing communications consultancy and an online magazine centred on holistic well-being

Wiener: Being able to celebrate the 150th anniversary means the club hasn’t lost what it traditionally was: a place for gath-ering, to bring family, to eat, to play sport and so on

The charity gala was graced by guest of honour President Tony Tan (left), who was presented a cheque for $195,975 in aid of the President’s Challenge

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TRAVEL

A desert wonderlandAbu Dhabi, the capital of the United Arab Emirates, is not as popular as its

neighbour Dubai, but this is set to change

Therem

| STORIES BY VASANTHA GANESAN |

From beaches and deserts to theme parks and skyscrapers, the largest of the United Arab Emirates’ (UAE) seven emirates has something for every visitor as well as filmmak-

ers. Abu Dhabi’s desert will be featured as a planet called Jakku in the upcom-ing Star Wars Episode VII — The Force Awakens. A scene in Fast & Furious 7 — where a car speeds through a building, smashes through the window and lands in another skyscraper — was filmed at Etihad Towers.

Abu Dhabi’s progress is attributed to the foundation laid by the ruling Al Nahyan family, in particular, the late Sheikh Zayed bin Sultan Al Nahyan, who was also behind the formation of the UAE. The late president of the UAE is fondly remembered for many things, including initiating the construction of the Sheikh Zayed Grand Mosque as a gift to his peo-ple. Today, it is one of the most visited buildings in the UAE.

Built at a cost of US$545 million on a 30-acre site, the pure-white marble build-ing, which incorporates ponds and court-yards that are reminiscent of the Taj Ma-hal, took 11 years to complete. The walls are decorated with floral motifs, while seven large chandeliers hang in the foyer and main prayer hall. These colourful chandeliers are made from gilded stainless steel, brass, galvanised gold and sparkling Swarovski crystals. The most spectacular one measures 10m by 15m and weighs a whopping 12 tonnes.

The mosque, which is the largest in the UAE and the third largest in the world, can accommodate 43,000 worshippers at any one time — 10,000 in the main hall, 30,000 in the courtyard and another 1,500 each in prayer halls designated for men and women.

Materials for the mosque, which was built as a symbol of bringing people to-gether, were sourced from far and wide. For example, the 5,700 sq m handwoven carpet in the main hall is made with wool from Iran and New Zealand.

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The Emirates Palace: Sitting on 100ha, it is touted as one of the most expensive hotels ever built. In the lob-

by is the world’s first gold-plated vending machine that dispenses 18K, 22K or 24K gold coins or biscuits.


If the response to Etihad Airways’ new three-room suite — The Residence by Etihad — is anything to go by, there is no limit on how much people are willing to spend on luxurious air travel.

Etihad Airways started receiving bookings for The Residence on the Abu Dhabi-New York sector within hours of announcing the Airbus 380’s apartment. A return ticket on this route is a whopping US$64,079.88 ($90,145). Take a companion and the total cost is just US$64,181.98. The difference is taxes.

Launched late last year, Etihad’s A380 also plies the Abu Dhabi-London route and tickets cost US$42,305.65 for one passenger and US$42,620.10 for two.

The ultra-luxurious 125 sq ft The Residence offers a living room with a two-seater reclining sofa, 32in LCD television, dual marquetry dining tables, a minibar and an ensuite bathroom. The bedroom has an 82in-long double bed with a custom-made mattress, a 27in LCD TV, bedside unit, wardrobe and under-bed storage for hand luggage. A personal butler who doubles up as a concierge is available to serve passengers breakfast in bed, among other things.

Etihad has also enhanced its First Class experience in its A380 and Boeing 787 Dreamliner with the First Apartment and the First Suite respectively.

The 39 sq ft First Apartment offers a lounge chair, an ottoman that converts into an 80.5in fully-flat bed, 24in flat-screen TV, vanity cabinet, wardrobe and

a bathroom. In the First Suite, you get an

enhanced experience with a minibar, complete privacy and centre seats that can be joined to create a double bed.

If your budget is smaller, the economy class seats are designed with a “fixed wing” headrest and adjustable lumbar support. Passengers on longer flights are provided with a unique pillow that converts into a neck pillow, as well as socks, a toothbrush and a reversible “do not disturb/wake me up for meals” eye mask.

A fairly new entrant in the commercial long-haul business — it commenced operations in 2003 — Etihad’s fleet and destinations are constantly growing. By 2025, the airline will have 10 A380s.

Flying high

The US$545 million, pure-white Sheikh Zayed Grand Mosque is reminiscent of the Taj Mahal

Scale model of Guggenheim Abu Dhabi, which is scheduled to open by the end of the year on Saadiyat Island

Yas Island is home to Ferrari World Abu Dhabi, the world’s first and only Ferrari-branded and largest indoor theme park

The new three-room suite offers a living room with a two-seater reclining sofa (top picture), an ensuite bathroom and a bedroom (above)

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The atmosphere in the mosque is hushed, with the exception of sooth-ing prayers coming from a distance. The prayers are for Sheikh Zayed, who passed away three years before the mosque was completed. The prayers are said round-the-clock over his tomb on the grounds; photography is prohibited in this area. In-terestingly, photography of local women and people performing prayers is also dis-couraged, while taking pictures of mili-tary areas, palaces and courts is forbid-den in the UAE.

Anyone can visit the mosque provided they adhere to the rules and dress code. Women, for example, are expected to wear a headscarf and the traditional robe, abaya, which will be provided by the mosque if needed. Another strictly observed rule is no holding of hands or kissing. The guards at the mosque are quick to advise visitors if a headscarf accidentally slips and reveals one’s head or if one is being intimate.

From desert to architectural splendourAbu Dhabi takes its name from an unusual encounter. In 1761, a hunting party from Liwa tracked a gazelle to a place where spring water was available at a shallow depth, a rare find along a coastline. The leader of the party then decreed that the place be named Abu Dhabi, which means “The Father of a Gazelle” in Arabic. To-day, Abu Dhabi comprises Abu Dhabi City, which is located on an island, mainland Abu Dhabi and 200 smaller islands dot-ted along the coast.

Just four to five decades ago, Abu Dhabi, which encompasses 375.5 sq miles, was barren desert with some pockets of greenery from the mangrove forests. Once a pearling nation, the discovery and export of oil from 1962 saw the start of major transformation and development in Abu Dhabi. Back then, people were no-madic and it was not unusual for them to travel from one island to another on cam-els during low tide. Today, bridges con-nect the islands.

Some of these islands have been iden-tified for themed-based developments. Yas Island, for example, is the entertain-ment island. It is home to the Yas Island Marina Circuit, which is the venue of the Abu Dhabi Grand Prix, and Ferrari World Abu Dhabi, the world’s first and only Ferrari-branded and largest indoor theme park.

Growing in prominence is the 27 sq km Saadiyat Island, or Happiness Island, which is a 10-minute drive from the island of Abu Dhabi. Saadiyat was conceptual-ised with a focus on quality of life, rang-ing from culture and education to leisure.

As part of its cultural goal, this is-land will build four museums and a five-stage performing arts centre. The

upcoming Louvre Abu Dhabi — built in collaboration with the world’s most-vis-ited museum and home of Mona Lisa, The Louvre in Paris — is scheduled to open by year-end and offer 6,000 sq m of permanent galleries and 2,000 sq m of temporary exhibition space. Current-ly in the final stages of completion, it is easily spotted by its distinctive 180m white dome roof.

Also on the cards is a 450,000 sq ft Gug-genheim Museum, which will be opened in 2017. Twelve times the size of Frank Lloyd Wright’s Guggenheim in New York, this museum will showcase modern and contemporary art from the Guggenheim Foundation’s extensive collection and pro-vide prominence to Middle Eastern con-temporary art.

Another museum that is set to capture the attention of visitors is the Zayed Na-tional Museum. The architecture derives its inspiration from the falcon, the nation-al bird. The five towers are shaped to rep-resent the wing tips of the falcon. As the UAE’s first national museum, it serves as a memorial to the founding president, Sheikh Zayed. The falcon is so important in the UAE that it often flies in business class with its owner.

A taste of luxuryNo trip to Abu Dhabi would be complete without a visit to the Emirates Palace. Sit-ting on 100ha, it is touted as one of the most expensive hotels ever built; the cost was estimated at US$3 billion. In the lob-by is the world’s first gold-plated vend-ing machine that dispenses 18K, 22K or 24K gold coins or biscuits. All you need is your credit card.

While you luxuriate in one of the 394 luxury rooms and suites, be sure to or-der the signature cappuccino sprinkled with 24K gold flakes. Served on a sil-ver platter, the Palace Cappuccino is de-scribed as a drink that will “give you a taste of royalty”. And it can be enjoyed for just AED50 ($19). Alternatively, you can have the coffee with the Emirates Pal-ace’s afternoon tea (AED240 to AED380 for two people).

The hotel uses 5kg of gold annually in its food and beverages.

For those who would like to enjoy lux-ury at new heights, Seawings Seaplane Tours does a 25-minute aerial tour that of-fers great photo opportunities and views of the islands, coastline and desert.

Home to 2.33 million people, 80% of whom are foreigners, Abu Dhabi’s appeal as a tourist destination has been increas-ing significantly. In 2014, it welcomed 3.39 million tourists, as compared with 1.54 million five years ago.

Vasantha Ganesan is an associate editor at The Edge Malaysia

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DRIVE

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| BY JUSTIN HARPER |

New BMW 1 Series cars are becoming a familiar sight on Singapore roads, and for good reason. A few years ago, it would have

been laughable to think you could buy a brand new BMW for under $140,000. But now, this is very much a reality as 1 Series cars qualify for Cat A status.

Having already test-driven the 116i, it was now time to take the 116d for a spin. The “i” stands for injection and the “d”, diesel. The latter may not be as exciting as the former, but it is worth a test drive nevertheless.

I confess that when I first saw the new 1 Series some years back, it did not really get me excited or even enthused. I saw the Ba-varians as diluting the brand by launching budget models to appeal to younger cost-conscious driv-ers. But having driven a few and seen so many on the roads, my opinion has changed dramatically. The reason for the U-turn is that BMW’s 1 Series has stayed true to the marque’s roots and managed to achieve what could be cleverly described as “affordable luxury”.

Getting back to the new and re-designed 116d, it has an unusual shape and does not automatical-ly fit within the BMW portfolio of

cars, which makes it a standout. But then again, the X6 does not look like a typical BMW either. The styling of the hatchback is truly unique with its boxy back end and coupé-style nose. The front end looks sharper now and comes with nice bright LED head-lights, while the redesigned tail lights, also with LEDs, make the rear end sleeker.

Under the bonnet is another surprise. The engine is actually the same turbocharged 1.5-litre three-cylinder model that also powers the Mini Cooper D (BMW owns Mini). However, the output at 116bhp is smaller than the 136bhp produced by the 116i’s petrol tur-bo 1.6-litre four-cylinder engine.

These numbers can be a distrac-tion when what you really need to do is take the car for a spin and see its power in reality. While 116bhp may not sound like a huge amount, it is more than adequate to power this car. Indeed, during my test drive, I never felt short of power and was actually in danger of go-ing over the speed limit once or twice when faced with an open road. The steering was smooth, accurate and very responsive.

It seems that the bulk of the updates on the 1 Series are on the exterior, as very little seems to have changed inside the cabin. Sometimes, car designers change

things just for the sake of it, with-out improving the driving experi-ence. This may be the case with the 116d, as the layout and con-trols are unchanged.

If anything, the interior feels a bit bare, which is refreshing to a minimalist like me. It could be that the designers want to remind drivers this is the entry level for BMW, or that they did not want to overwhelm the driver with lots of gadgets and buttons (probably the latter). All the functions are easy to use and navigate. There is an old-fashioned handbrake (as op-posed to the electronic version), which also gets my thumbs up.

With so many new and cheap-er models to choose from, it will probably take a lot longer these days to pick a BMW from its show-room than before. While the big guns of the 7 Series and its popular X-labelled SUVs may still take the

lion’s share of sales, the 1 Series will definitely appeal to younger and trendier drivers. Other than the compelling price point, the 116d also has excellent fuel consump-tion, which is good for the envi-ronment and your pocket.

Given its size and power, the 116d’s main rivals would proba-bly be the Audi A3 and Volkswa-gen Golf. While the two models are more well-established in Sin-gapore, the 116d may win over mo-torists with its rear-wheel drive. On the road, this means that you do not feel the steering wheel be-ing tugged around in your hands when you accelerate. And because of the rear-wheel drive, you can guide it with better precision.

The only problem here is that research shows most uninitiated drivers do not realise whether a car is front- or rear-wheel drive, and more crucially, do not even care. But with a little educa-tion and enlightenment, the dif-ference becomes clear. Even for those not well-versed in front- and rear-wheel drive, the 1 Series cars should be taken seriously enough. Having now driven my third model from the range, I am pretty convinced that BMW has got it right.

Justin Harper is a freelance journalist with a passion for all things fast

Special seriesThe BMW 116d proves to be a rather smooth and comfortable ride

BMW 1 SERIES HATCHBACKDIESEL 116D $138,800 including COEEngine: 1,496cc, three-cylinder, in-line 12-valve, turbochargedPower/torque: 116bhp/270NmFuel consumption: 4.1l/100km0 to 100kph: 10.3 secondsTop speed: 200kph

THE WEEK OF DECEMBER 21, 2015OO C ,,

CDL and Keppel’s property fund

in $1.1 bil venture

New price benchmarks at The Berth, Ritz-

Carlton Residences

IGB Corp’s IGB Corp’s St Giles opens St Giles opens a hotel ina hotel in SYDNEYSYDNEYThe Tank Stream’s name is tied to the city’s history and it has stayed true to the building’s original design. But there are contemporary elements tailored for the business traveller.

CC2 • THEEDGE SINGAPORE | DECEMBER 21, 2015

CITY&COUNTRY

Property briefs

EDITORBen Paul

SECTION EDITORCecilia Chow

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PHOTOJOURNALISTBryan Tay


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URA releases Central Boulevard white site for saleThe URA has released a 1.1ha (117,000 sq ft) 99-year leasehold white site at Central Boulevard in Marina Bay for sale under the Reserve List of the Government Land Sale programme for 2H2015. With a plot ratio of 13.0, the site could yield 1.52 million sq ft of potential gross floor area, with buildings of up to 50 storeys. About 71% or 1.07 million sq ft of GFA has to be set aside for office use. Retail is to be capped at 53,820 sq ft or a maxi mum of 3.5% of GFA. The remaining GFA can be allocated for complementary use, including hotel, serviced apartments, residential or even more office space.

The site sits at the intersection of Central Boule-vard and Raffles Quay, just across the street from the Lau Pa Sat food centre. The future develop-ment will be directly connected to the adjacent Downtown MRT station on the Downtown Line, with links to the Raffles Place MRT interchange station and the future Shenton Way station on the Thomson Line.

Given the size of the site, the total develop-ment cost is likely to exceed $2.5 billion, reckons Nicholas Mak, executive director of research and consultancy at SLP International. An estimated 10.7 million sq ft of office space is expected to be completed from 2016 to 2019, he estimates, with the majority within or near the CBD.

“It would take seven to eight years to absorb this amount of space, assuming that the local economy grows at a steady pace,” Mak adds. He therefore expects developers to be cautious and to “closely watch” the take-up rate of the commercial space in the pipeline. Consequently, he expects the site to be triggered only if the demand for office space is seen to be “sustainable” from 2019 to 2021.

CDL and Keppel’s property fund in$1.1 bil ventureCity Developments Ltd (CDL) has teamed up with Keppel Land’s property fund management arm, Alpha Investment Partners, to create a joint office investment platform via its second Profit Participa-tion Securities (PPS) transaction. AIP’s investment will be made via Alpha Asia Macro Trends Fund II (AAMTF II).

The joint PPS platform will acquire three of CDL’s prime office assets worth a total of $1.1 bil-lion. They are Central Mall (Office Tower) for $218 million; 7 & 9 Tampines Grande for $366 million; and Manulife Centre for $487.5 million. AAMTF II and CDL will co-finance the portfolio in the ratio of 60:40.

In addition to participating in asset divestment exercises in the future, investors in the PPS will be paid a fixed coupon rate of 5% per annum for the five-year period. CDL will continue to manage the office asset portfolio, which currently has a strong occupancy of 98%.

This is CDL’s second PPS. Last year, it partnered Blackstone’s Tactical Opportunities Fund and CIMB Bank in a $1.5 billion PPS that invests in the cash flow of CDL’s upscale properties in Sentosa Cove, namely the Quayside Collection, which comprises three adjacent properties — Quayside Isle, a water-front and F&B commercial podium; the apartments at Residences at W Singapore, Sentosa Cove; and the W Singapore hotel.

JCC may appeal for higher compensationJurong Country Club (JCC) has been awarded $89.8 million by the Singapore Land Authority’s (SLA) Collector of Land Revenue. The amount is about half the $168 million the club had asked for in its claim for compensation.

In a statement issued on Dec 12, the club said it is “concerned about the gulf between the two fig-ures”. Some of its members have also expressed dis-appointment. It is contemplating whether to lodge an appeal, and will be calling an extraordinary

general meeting of all members in a few weeks. According to the club, the claim of $168 million

reflects its true value and is based on the valuation carried out by Knight Frank, its appointed real es-tate consultant in the compulsory acquisition. SLA said the club will be paid the market value of the acquired land, which took into account improve-ments made to the property and the remaining tenure of the land.

The JCC’s land is being acquired by the govern-ment to make way for the upcoming Kuala Lumpur- Singapore High Speed Rail terminus.

Developers sell 759 new homesin NovemberDevelopers sold a total of 759 private residential units in November, a 39% uptick from the 548 units sold in October, and 79% higher than a year ago. Including executive condominiums, developers sold a total of 945 units in November, 15% higher than in the previous month, but 26% lower com-pared with a year ago.

The top-selling project last month, and also the only new project launched in November, was MCC Land’s The Poiz Residences at Potong Pasir. It was launched on the last weekend of Novem-ber, and saw 277 units sold at a median price of $1,440 psf.

This was followed by CapitaLand’s Sky Vue in Bishan, which was first launched in September 2013. Sky Vue cleared 59 units at a median price of $1,522 psf after the developers slashed prices by up to 10% or $150,000, according to Jay Choong, senior marketing director of ERA Realty.

According to Nicholas Mak, execu tive director and head of research at SLP International, 2015 could end with 7,350 to 7,450 new private homes sold, with ECs likely to ring in with 2,530 to 2,630 units.

Como Lifestyle wins Dempsey site Singapore Land Authority (SLA) and the Singa-pore Tourism Board (STB) have awarded a site within the Dempsey cluster of Tanglin Village to Como Lifestyle for retail and F&B use. Como Life-style is a subsidiary of Club 21 Pte Ltd, owned by businesswoman Christina Ong, whose husband is tycoon Ong Beng Seng of Hotel Properties Ltd. This tender to develop Blocks 17 and 18 Dempsey Road was conducted on Aug 13, and Como Life-style is said to have scored the highest of six bids received under a price and quality evalua-tion format.

SLA and STB aim to rejuvenate and strengthen Tanglin Village’s position as a unique lifestyle en-clave, and encourage the development of interest-ing lifestyle concepts.

Como Lifestyle is introducing a refreshing and attractive concept for an integrated cluster of retail and F&B outlets featuring a concept store by multi-label boutique Dover Street Market; a spe-cially conceived restaurant and bar by French chef Jean-Georges Vongerichten; and Como Cuisine, a new restaurant concept that will offer signature dishes from Como properties around the world. Popular local Peranakan restaurant Candlenut has been included as part of the proposal for the fu-ture Como Dempsey.

Fresh Start Housing Scheme to offer second HDB loan, two-room flexi flatsThe Fresh Start Housing Scheme, a new scheme to help public housing renters own a home again, could be tweaked to allow these second-timers to receive a second HDB concessionary loan. The government is considering allowing them to buy two-room flexi flats on shorter leases, which are now made available only to elderly buyers.

While a new grant will be offered under the scheme, HDB is looking into disbursing the housing grants gra dually over a period of time, subject to

conditions, as a way of motivating the new home-owners. National Development Minister Lawrence Wong shared these latest suggestions for the new Fresh Start Housing Scheme in his blog post onDec 15. The MND and HDB are gathering views on the scheme through public dialogues.

Sim Lian acquires two Queensland retail properties worth $71 milSim Lian Group has acquired two retail proper-ties, Woolworths Shopping Centre and Masters Home Improvement Everton Park located in Queensland, Australia for A$70 million ($71 mil-lion). The properties were valued at A$70.1 mil-lion as at Oct 15 and sit on a combined land area of 599,872 sq ft.

Woolworths Shopping Centre, which opened in May, occupies a site area measuring 183,740 sq ft, and is anchored by a Woolworths Supermarket that occupies 71% of the gross lettable area of 61,215 sq ft. Other tenants include medical-related services, F&B outlets and a gym. Masters Home Improvement store spans 148,004 sq ft and sits on a land area of 416,132 sq ft which has a 15-year lease.

Oxley signs MOU with Swiss-Belhotelin Cambodia Oxley Holdings has signed a memorandum of understanding with Swiss-Belhotel that will see the latter providing technical and pre-opening services for a branded serviced residence in Cam-bodia called Swiss-Belresidences Phnom Penh and a hotel, Swiss- Belhotel Phnom Penh”. Swiss-Bel hotel will operate and manage the properties upon their completion.

Roxy-Pacific acquires third Australian property in a monthRoxy-Pacific has acquired a 10,011 sq ft site at Bays-water Road in New South Wales (NSW), Australia for A$27.5 million ($27.9 million). The site has received approval from the relevant authorities for the development of a project with 46 apart-ments and one retail unit, with total gross floor area of 38,546 sq ft. The acquisition is subject to approval from the Foreign Investment Review Board of Australia.

This is Roxy-Pacific’s third property acquisition in NSW within a fortnight, bringing its total invest-ments in December to A$175.88 million. The ear-lier acquisitions were two vacant sites in Glebe in the southeast of Sydney for A$67.4 million, and a 14-storey commercial building at 117 Clarence Street in the Sydney CBD for A$81 million.

1H2016 GLS sees fewer residential sitesin anticipation of softer marketThe latest 1H2016 government land sales pro-gramme has four sites on the Confirmed List and 12 on the Reserve List, which will yield up to 7,420 private residential units (including 1,460 execu-tive condos) and 2.93 million sq ft of commercial space. In the 2H2015 GLS programme, a similar number of sites were released on the Confirmed List (four) and one more on the Reserve List (13). The sites could yield 7,825 residential units, in-cluding 1,340 Ecs, and close to 3 million sq ft of commercial space.

However, it is evident that the government has reduced the supply of residential sites on the Con-firmed List in anticipation of softer demand, says Nicholas Mak, executive director of research and consultancy at SLP International.

The four sites released as part of the Confirmed List in 1H2016 are estimated to yield 1,560 units — 26.8% fewer compared with the 2,130 units for the four sites in the 2H2015 GLS programme. One of the residential sites on the Confirmed List is located at Martin Place in prime district 9, which is “very rare”, adds Mak.— Compiled by Michael Lim & Tay Hock Meng E

THEEDGE SINGAPORE | DECEMBER 21, 2015 • CC3

CITY&COUNTRY


COVERSTORY

| BY RACHEL CHEW |

All the tiredness caused by a close-to-nine-hour flight and 20-minute drive from the airport quickly vanishes at the sight of IGB Corp

Bhd’s newest business hotel — The Tank Stream — in Sydney. As ex-pected, it has everything a business traveller would hope for.

“I understand what is important for a business traveller in a hotel room. The Tank Stream guest rooms are compact yet offer everything, such as high-quality toiletries, high-speed WiFi, beverage and tea bags and even a coffee machine,” says Tank Stream Holdings Pty Ltd managing director Tan Boon Lee.

Officially launched on Nov 4, the hotel, which comes under the St Giles Premier Hotel banner, was developed and is operated by Tank Stream Hold-ings, a subsidiary of IGB Corp.

The 16-floor hotel comprises 280 twin, queen, and king rooms. Every room comes with high-quality natu-ral detailing, luxury, hypoallergenic

pillows and quilts, as well as natural latex mattresses with latex toppers to ensure that guests get restful sleep. After all, Tan understands how im-portant good sleep is to frequent travellers.

“We may have slightly smaller rooms and fewer facilities than the other hotels but we provide what a business traveller really needs with-out any extra charge, except for laun-dry services. We preferred to invest in something our target customers would look for when staying with us,” he explains. “The lack of facili-ties marked us down to three stars but with our room furnishings, ser vices provided and location, we should be ranked four stars.”

The rooms are from 15 to 25 sq m (161 to 270 sq ft) in size and the rates — ranging from A$280 ($284)to A$360 per night — vary depending on occupancy.

The Tank Stream is strategical-ly located in the corner of Pitt and Hunter streets in the financial dis-trict of Sydney. The closest railway station is Wynyard, which provides

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IGB Corp’s St Giles opens a hotel in SYDNEYThe Tank Stream’s name is tied to the city’s history and it has stayed true to the building’s original design. But there are contemporary elements tailored for the business traveller.

Artist’s impression of The Tank Stream in Sydney, which has 280 rooms

a 20-minute transfer from Sydney Airport. Other railway stations in close proximity are Martin Place and Circular Quay.

Additionally, Sydney’s popular shops, restaurants, bars and places of interest are nearby. In fact, the Sydney Opera House, Queen Victoria Building and Australia Square are within walking distance.

Since The Tank Stream was soft-launched in July, its occupancy has averaged 50%. “We have seen good occupancy since the soft opening. People like the concept we offer and the response so far has been positive,” says director of rooms and market-ing Ezio Russa.

Tan hopes the hotel will achieve an average occupany rate of 85% with-in a year of operations. “The Sydney hotel market has been strong and last year, it saw close to 85% [ave-rage occupancy]. We are targeting [85%] next year and we believe the market will be even stronger than this year,” he says, adding that for

the time being, IGB does not plan another hotel in Australia.

Preserving historyThe Tank Stream’s premises was pre-viously a 12-storey office block built 52 years ago. It was purchased by IGB Corp from Charter Hall Group in 2011 for A$36 million. In 2012, the City of Sydney granted the developer ap-proval to convert the building into a hotel and to add four floors.

The hotel’s name is linked to the history of the city. Sydney, Australia’s first settlement, began as a small village around the foreshores of a cove, now called Circular Quay. The settle-ment was sited there because a fresh-water stream ran parallel to Pitt Street and alongside where The Tank Stream is located and flowed into the cove. The stream provided the colony with water in its early years and during a drought in 1790, storage tanks were built into the bedrock of the stream, giving it its name.

The Tank Stream ceased being

used for drinking water in 1826 and was gradually enclosed with oviform drains of sandstone or brick in 1860. Today, it is a part of Sydney’s under-ground drainage system.

As a result of The Tank Stream hotel’s historical background and its many high-end peers in the vicinity, the developer realised it had to do something different to make it stand out from the crowd. IGB Corp design director John Bailey decided to give the hotel a cosy, personal and relaxed ambience. He did this by incorporat-ing design elements such as curved walls to provide a softer feel and a warm colour palette accented with lighting to give the hotel a welcoming atmosphere.

“In designing the hotel, it was important to us that we respected the existing building which, with its gridded façade embellished with Wombeyan stone, was a beautiful example of post-war international style,” Bailey says. “When the team built the additional four storeys, we

Russa: People like the concept we offer and the response so far has been positive

Tan: With our room furnishings, services provided and location, we should be ranked four stars

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were careful to respect the original building but at the same time, we wanted to build something that was more contemporary.”

He reveals that to incorporate the contemporary design into the build-ing, opaque glass was used to max-imise the light entering the rooms and also to ensure privacy.

The biggest challenge for the de-signer was the conversion of the interior of the hotel rooms. “We had to utilise a space that was originally designed for commercial use in a manner that was suitable for a hotel. Once we knew what kind of hotel we wanted, everything flowed from there. The way we set out our space and furnished our interior had one singular purpose — develop a hotel that was warm, bright and welcom-ing,” Bailey explains.

Moreover, with the smaller space, the team had to “be a little smarter with the design. Everything had to fit perfectly with no waste of space and yet be comfortable and friendly to the end user. We also worked to maximise the light coming through, even playing with the positioning of mirrors to help each room look a lit-tle bigger”, he says.

Bright future for hotel marketWhile Sydney expects to see an additional 3,000 hotel rooms tover the next five years, consultants still say there is a need for more hotel rooms.

“The long-awaited addition to room supply in the Sydney city mar-ket is much needed as demand has continued to rise and the lack of any notable new supply in the last five years has created pent-up demand. In fact, there have been minimal new supply additions to the market since the 2000 Olympics. Thus, the 3,000 rooms likely to be added will only go part of the way to satisfy the pent-up demand in the market,” says Knight Frank Australia Pty Ltd head of research, Matt Whitby.

Adds Knight Frank Australia direc-tor of valuations, hotels and leisure Alistair Bell, “Sydney’s hotels are cur-rently at near capacity several nights a week. Therefore, the existing room supply is not considered sufficient to meet projected demand.”

Bell says occupancy of Sydney’s hotels rose through the year to 85% as at end-October, up from 83% a year ago and 81% two years ago. This was accompanied by an aver-age room rate growth of around 6% as the market responded to improv-ing demand.

“Consequently, the Sydney hotel market experienced an increase in room yield/revenue per available room of some 8% through the year to end-October,” Bell observes.

Whitby adds that as measured by independent researcher IPD- MSCI, Sydney hotels outperformed all oth-ers in Australia over the past year with total returns well above 15%; the strongest performance was in the five-star segment.

Consultants anticipate Sydney’s room night demand to rise and the development of new hotel capacity to remain somewhat challenged owing to the differential between develop-ment cost and value on completion. They expect appetite for hotel assets to strengthen, headed by Asian high- net-worth individuals, operators and institutional investors.

“Over the last year, significant sales have included the Westin Hotel to Singapore’s Far East Organization and Hong Kong’s Sino Land; Hilton Hotel to China-based Singapore investment house Bright Ruby; and the Sheraton on the Park to Sunshine Insurance Group of China,” Whitby says.

Recent analysis compiled by Knight Frank Research on the own-ership of four and five-star hotels between January 2010 and end- September 2015 in the Sydney city centre shows that Asian ownership increased 77% to 8,363 rooms from 51% previously.

“Greater China has increased from effectively zero to almost 2,000 rooms or 18.4%, the majority of which occurred over the past two years. Malaysian ownership has in-creased from 1,254 rooms to 1,932 rooms or 18% with the likes of MKH

Bhd, Low Yat Group, Galileo Malay-sia, Starhill REIT and Mulpha In-ternational Bhd becoming current owners of major hotels in the Syd-ney city centre,” Whitby points out.

Hotel expansionCurrently, the St Giles Premier Hotel brand is present in London, New York, Manila, Kuala Lumpur and Penang. According to Tan, the brand will con-tinue to expand.

“We wish to be in cities that every-body wants to visit … timeless desti-nations such as Paris and Singapore,” he says. “My wish [for another hotel] is Tokyo. We are actively looking at Tokyo; however, we are focusing on the Bangkok one now. That should be our next hotel.”

Tan declines to give details about the Bangkok hotel but does reveal that it will be a mixed-use development

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Artist’s impression of the Le Petit Flot deli in The Tank Stream

The spacious bathroom in the rooms

Bell: Existing room supply in Sydney is not sufficient to meet projected demand

Whitby: The addition to room supply in the Sydney city market is much needed

The hotel’s reception area

with retail, office, shopping mall and hotel components.

“One thing is for sure [about the development] — it is strategically located. Location has always been our strategy. If you look closely at the locations of the St Giles hotels, you will find that we are always right

in the heart of the city, such as the 39th Street in New York, the Bedford Avenue in London and Pitt Street in Sydney,” he says. “You can never go wrong with location.”

Rachel Chew is a writer with Options at The Edge Malaysia

The façade of The Tank Stream

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CITY&COUNTRY DoneDeals

New price benchmarks at The Berth, Ritz-Carlton Residences| BY TAY HOCK MENG |

A penthouse at The Berth by the Cove was recently sold for $3.2 million ($1,047 psf) according to a caveat lodged on Dec 1. The 3,057 sq ft, four-bedroom penthouse was purchased for $2.4 million ($784 psf)

in February 2005. Even at $1,047 psf — the lowest in nine years — the seller still saw a capital gain

of 33.5% over the past decade. “This was an urgent sale as the seller had an

opportunity to invest elsewhere,” says a property agent who declined to be named. “But it’s not a dis-tressed sale.” The lower per square foot (psf) price is because of the size of the unit, as it is a penthouse. The seller is believed to be a foreigner, while the buyer is said to be a Singapore permanent resident.

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is currently tenanted at $9,000 per month, which translates to a gross rental yield of about 3.38%, based on the latest purchase price. The lease is said to expire at end-August, 2016.

When the 200-unit The Berth first hit the mar-ket in November 2004, it was the first seafront con-dominium development offered for sale at Sentosa Cove. The developer was Ho Bee Land, a first mover in the waterfront enclave. Units at The Berth were sold at prices ranging from as low as $680 psf (for a 3,089 sq ft penthouse) to $1,212 psf for a 1,625 sq ft second-floor unit. Average prices were around $850 psf. Many of the owners who had bought units at The Berth when the project was first launched made money when they sold them subsequently in both the sub-sale and resale market.

In line with the price correction in Sentosa Cove, other units at The Berth have changed hands at prices ranging from $1,259 to $1,492 psf this year. At the peak of the market in the last property boom, a third floor, 1,905 sq ft, four-bedroom unit had changed hands for $4.19 million or a high of $2,200 psf in November 2007. Completed in 2006, The Berth is now considered the oldest private condo in Sentosa Cove.

At The Ritz-Carlton Residences on Cairnhill Road, a unit was recently sold after a two-year lull. The 3,057 sq ft, four-bedroom unit on the 29th floor of the 36-storey luxury condo tower fetched $8.56 million ($2,800 psf), according to a caveat lodged on Nov 30. In terms of price psf, it’s an all-time low for the property. The price is a far cry from the lofty levels of $4,515 to $5,146 psf that a handful of units had transacted at when the project first pre-viewed in December 2007. The buyer of the unit is believed to be a Singa pore PR or citizen, given the HDB address. The four-bedroom unit is currently leased at $25,000 a month, which translates to a gross rental yield of 3.5% for the buyer.

The seller is said to be a Singapore-based UAE property fund, which also owns the other four-bed-room unit on the same floor of Ritz-Carlton Resi-dences. The other unit was sold several years ago for $10 million, according to the agent who brokered

the sale. As the transaction was done in cash, no caveat was lodged then.

The 58-unit Ritz-Carlton Residences was developed by KOP Properties, the property arm of listed KOP Group. The project was completed in 2011 and is con-sidered the second hotel-branded luxury residential development in Singapore, after St Regis Residences.

The developer still has unsold units, but is not offloading them at a discount. According to proper-ty agents, premium units above the 27th floor with views of Marina Bay are said to have price tags of $4,000 psf, while those facing Botanic Gardens are priced in the range of $3,000 to $3,200 psf. E

A unit at The Ritz-Carlton Residences changed hands for $2,800 psf at end-November, the lowest since the luxury condo previewed in December 2007

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| BY ESTHER HOON & LIN ZHIQIN |

Sellers are letting go of their properties, even if they have to incur seller’s stamp duty. However, they generally wait until the SSD falls to 4% in the fourth year of purchase. Based on the latest revision of

the SSD measure, homeowners who purchased their houses on or after Jan 14, 2011 and resold them within four years of the date of purchase are required to pay SSD. The SSD rates vary with the holding period, at 16%, 12%, 8% and 4% within the first, second, third and fourth years from the date of purchase respectively.

The number of sellers who paid 4% SSD grew from 200 in 2014 to 244 between January and November this year. On the other hand, only 68 sellers let go of their properties with-

in three years of purchase in 2015, when SSD rates were hefty at between 8% and 16% (see table on Page EP2).

There could be several factors behind this. First, sellers might prefer to hold cash or oth-er liquid assets in the current market so they can re-enter the market when property pric-es bottom.

The number of sellers who paid 4% SSD in 2014 and 2015 had purchased the properties in 2011 and 2012 and most of them netted a profit even after paying the 4% SSD.

Second, sellers who do not wish to hold on to their properties, for financial or other rea-sons, might do well to offload them now rath-er than next year, in case prices drop further. Prices of private non-landed homes have fall-en an average of 1% a quarter since 3Q2013’s

peak. If this trend continues or worsens, sell-ers might be better off incurring the 4% SSD now instead of waiting another year and risk selling their properties at lower prices as a re-sult of a higher supply in the market.

Third, there are sellers who are forced to let go of their properties because of the soft rentalenvironment and interest rate hikes. These properties might be sold at a loss or within the first three years of purchase. The propor-tion of unprofitable transactions moves in tan-dem with the decline in SSD rates, declining from 80% at 16% SSD rate in the first year to 22% at 4% SSD rate in the fourth year and 12% on the fifth year, when SSD is lifted (see chart on Page EP2).

The findings are based on matched URA’s re-sale and subsale caveats for private non-landed

homes as at Nov 24, 2015, with their previous transactions on or after Jan 14, 2011.

Investors pressured to offload shoebox and large unitsProjects with the highest number of resale transactions in the fourth year of purchase were Parc Rosewood, A Treasure Trove and Ripple Bay, with 19, 11 and 10 resale caveats respectively. Interestingly, these caveats in-volved mostly shoebox units.

Of the 19 resale caveats at Parc Rosewood, 84%, or 16 caveats, were for shoebox units averaging 445 sq ft. Similarly, for Ripple Bay, 90% — or nine of the 10 caveats — were for shoebox units averaging 490 sq ft.

The eagerness to offload shoebox units as CONTINUES NEXT PAGE

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Home IdeasSuMisura offers tips on decorating for the holidays PG6

Deal WatchCondo near East Coast Park selling slightly above $1,100 psf PG7

Let it go Sellers do not mind paying seller’s stamp duty in anticipation of further downside

Visit TheEdgeProperty.com to find properties, research market trends and read the latest news

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EP2 • THEEDGE SINGAPORE | DECEMBER 21, 2015

EDITORIALEDITOR | Ben PaulTHE EDGE PROPERTY

HEAD OF RESEARCH | Feily Sofi an ANALYSTS | Esther Hoon, Lin Zhiqin, Tan Chee Yuen

COPY-EDITING DESK | Elaine Lim, Evelyn Tung, Chew Ru Ju, Tan Gim Ean, Choy Wai FongPHOTO EDITOR | Samuel Isaac ChuaPHOTOJOURNALIST | Bryan TayEDITORIAL COORDINATOR | Rahayu MohamadDESIGN DESK | Tan Siew Ching, Christine Ong, Monica Lim, Nik Edra,Mohd Yusry, Henry Lee

ADVERTISING + MARKETING HEAD | Edward StanislausGROUP SALES MANAGER | Cecilia KaySENIOR MANAGER | Windy TanMANAGERS | Mabel Wong, Danna Pusta, Elaine Tan

THE EDGE PROPERTY

GROUP SALES MANAGER | Cowie TanSENIOR MANAGERS | Diana Lim,Cheryann YeoACCOUNT MANAGER | Ken Tan

EVENTS MARKETING

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MANAGER | Coleman LimOPERATIONS

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Bigger units also affected by soft rental environment

THEEDGE P R O P E R T Y COVER STORY

FUN

FACT

Behind Chun Tin Road in the

ANAK BUKIT area is a series of connected roads

named after banana varieties

— Lor Pisang Batu (stone), Lor Pisang

Udang (prawn), Lor Pisang Hijau

(green), Lor Pisang Emas (gold), Lor

Pisang Raja (king) and Lor Pisang

Asam (sour)

soon as SSD fell to 4% in the fourth year could have been motivated by a soft rental market, yield compression and the interest rate hike. In addition, shoebox units in the mass-market con-tinue to face strong competition from HDB flats for tenants. Based on our basket of properties, monthly rents for shoebox units in the mass-market were estimated to have fallen 21%, or more than $500, from $2,552 in 3Q2013 to $2,016 in 3Q2015.

In fact, URA data shows that monthly rents for a 400 to 500 sq ft unit at Parc Rosewood averaged just $1,657 in 3Q2015. Parc Rosewood was completed in 2014. Similar-sized units commanded an average month-ly rent of $1,815 in 3Q2014. Over the course of one year, the average rent for shoebox units in the development has fallen 8.7%.

At A Treasure Trove, 58% — or seven of 12 caveats — were for 775 sq ft units, the smallest apartments in the project. Although the project was completed this year, there is evidence of rental decline within the course of just a few months. For example, 700 to 800 sq ft units were let at an average monthly rent of $2,367 in July. Similar units fetched an average monthly rent of $2,230 in October, reflecting a 6% decline over a period of three months.

On a more positive note, all the transactions at Parc Rosewood, A Treasure Trove and Ripple Bay were profitable after accounting for the

4% SSD payable, as the sellers had purchased the properties at attrac-tive prices in 2011.

Larger units are also likely to be the most affected by the interest rate hike and soft rental environment. In dollar terms, Reflections at Keppel Bay accrued the most SSD from Jan 14, 2011, amounting to $1.81 million for seven resale caveats. Four cave-ats were for units measuring between 1,200 and 2,207 sq ft. The Minton trailed closely with $1.29 million for 18 resale caveats, with an aver-age unit size of 1,159 sq ft.

The highest SSD incurred for a sin-gle transaction was for a 3,821 sq ft unit at Four Seasons Park, amount-ing to $1.14 million in SSD.

At least 18,145 non-landed homes to be freed from SSDin 1H2016Based on our study, 18,145 non-land-ed homes will no longer be subject to SSD in 1H2016, as their holding peri-ods cross the four-year mark. Of these, 1,574 units will be located in Core Central Region, 4,164 units in Rest of Central Region and 12,407 units in Outside Central Region. Some of these units could turn out to be value deals, as the owners who are under pressure to sell have weaker bargaining power.

The top three projects with at least 100 shoebox units entering the fifth year of their holding period are Parc Rosewood, Guillemard Edge and Casa Cambio.

Spike in sales volume nearing the expiry of the four-year SSD holding period

SSD RATE (%)

SOLD IN 16 12 8 4 0

2011 16 – – – –

2012 19 27 – – –

2013 10 44 94 – –

2014 8 18 106 200 –

2015 6 11 51 244 595

Grand total 59 100 251 444 595

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Seller’s stamp duty has significant impact on profitability

100

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Loss Profi t

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| BY LIN ZHIQIN |

Star Wars takes place in a cinematic universe a long time ago in a galaxy far, far away. As the curtain rises on Star Wars: The Force Awakens,

we chose our favourite Star Wars moments that can teach us a thing or two about investment.

Avoid acting on dark side emotions. In the cur-rent market, with prices and rents sliding, as well anticipation over an interest rate hike, some inves-tors might feel pressured to cut their losses and sell sooner than later. Like the Jedi, who believe there is a Dark Side but refuse to dwell on or fol-low it, property investors should avoid acting on emotions such as panic and fear. Instead, they should calmly take stock of their circumstances and consider options such as mortgage refinanc-ing or adjusting their spending to support the in-vestment mortgage. A temporary reduction in dis-cretionary spending could help provide sufficient cash flow to tide them over the period taken to secure a tenant.

Let go of attachment. If you own an HDB flat and a condo, which should you stay in and which should you rent out? Or should you sell one of them to raise capital for something else? Prop-erty purchases are often fraught with emotions, including instances where investors fall in love with their property, particularly their primary res-idence. Those who are in it for the money should weigh the worth, in terms of resale price and po-tential rental yield, and other factors as objec-tively as possible.

Your eyes can deceive you. It is important to learn more about the property and surroundings by visiting it before buying. Additional informa-

tion can be gleaned from talking to neighbours, who can give an unbiased view compared with the seller or agent. A house that looks to be in great shape could mask hidden issues. Buyers can take advantage of the following Council for Es-tate Agencies guideline in the Professional Service Manual to probe deeper: “When asked by a buyer or through his salesperson, the seller’s salesper-son must find out from the seller and convey to the buyer or the buyer’s salesperson information on the property, such as loan shark harassment, bankruptcy issues, recent deaths from unnatural causes, and defects such as spalling concrete and water leakages.”

Search your feelings. Most of us are familiar with buyer’s remorse, and seller’s remorse is not uncommon for big-ticket items like property. As human investors and not droids, it would be im-possible to be completely unfeeling. Perhaps the

key question to ask is, “Would I be able to sleep soundly tonight after acting on my decision?” If an investment will cause you to lose sleep over issues such as stretching your finances too thin, then it should sound off alarm bells. Although the Total Debt Servicing Ratio stands at 60%, a pru-dent investor might want to trade some leverage for a better night’s rest.

Unlearn what you have learnt. We all have pre-conceptions about property and the market, but can we rely on them? The common practice of drawing parallels between past and present could be unreliable when there are no rational or eco-nomic underpinnings for the relationships. Ac-cording to Alan Cheong, head of research and consultancy at Savills Singapore, dangerous ide-as about property can turn out to be falsehoods, and the public needs to think carefully about the information they are fed with.

Star Wars wisdom: Five insights for investors

FROM PREVIOUS PAGE

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THEEDGE SINGAPORE | DECEMBER 21, 2015 • EP3


| BY JENNIFER RYAN |

The price of homes in central London will stagnate next year as prospective buyers priced out

of the UK capital look for property farther afield, Rightmove predicted.

Asking prices in outer London will rise 6%, creating a 3% gain across the capital, the property website operator said in a report published on Dec 14. Prices in London fell 0.5% this month, compared with a 1.1% drop nationwide.

A home in London now costs £616,548 ($1.3 million) on average, 20 times the average yearly salary of £30,821, after prices jumped almost 10% over the past year.

“2016 may be the year when many young urban professionals finally give up on the London market” and move to cities such as Manchester in northwest England and Edinburgh in Scotland, said Alasdair Rae, a Univer-sity of Sheffield professor who ana-lysed the data for Rightmove. “They are already very popular and pricey because of what they offer, but may

seem cheap to London émigrés priced out of the capital.”

UK asking prices rose an annual 7.4% in December amid a continu-

ing shortage of homes for sale, ac-cording to Rightmove. The number of prospective buyers making enquiries at real estate agencies rose 37% in

the fourth quarter from a year ear-lier, while the number of properties coming to market fell 5%.

Asking prices usually fall in

December, but the drop across the country was the smallest for the month since 2006. All 10 regions tracked by Rightmove posted declines, led by a 3.6% drop in Wales.

In London, the borough of Cam-den was the best performer, with a 15.3% increase from November. The biggest drop was in the City of West-minster, which fell 8.5%.

Describing housing as “a peren-nial British challenge”, Chancellor of the Exchequer George Osborne pledged financial incentives to spur homebuilding last month and said he is increasing a tax on purchas-ing properties for rental and second homes in a bid to reduce competi-tion for first-time buyers.

While a pickup in wages this year helped affordability measures, there might not be much further improve-ment. Bank of England deputy gov-ernor Minouche Shafik said on Dec 14 that gains may have levelled off, while data due to be published on Dec 16 may show basic pay growth cooled to 2.3% in the three months to October. — Bloomberg LP

A home in London now costs £616,548 on average, 20 times the average yearly salary of £30,821, after prices jumped almost 10% over the past year

Ivan Lee is a real estate salesperson and group division director with ERA Realty Network. He started out in the industry in 2009 as a part-timer. Lee now heads a team of more than 200 agents and has won nu-

merous awards including ERA Top 100 Achiev-er and Top Recruiter.

Your success story is an inspiration to many aspiring agents. Can you tell us about your past before joining the real estate industry, and what led to your success today? I was a Chinese medical shop helper when I was young. I became a medical herb delivery man after eight years. I entered the real estate industry in 2009 as a part-timer. I closed my first office rental case in Shenton Way, which earned me a commission of $3,600. At that time, this amount was huge as I was earning only $3,000 per month as a delivery man. This case actually turned my life around. Immedi-ately, I became a full-timer and began to be-lieve in the industry. Every day, I would wake up early and work late at the office or be at viewings until late. My success today actual-ly came from the realisation that I loved being a real estate agent. This career has no limits as to how much you can grow and it can take you from rags to riches.

What were the challenges you faced as a new agent and how did you overcome them?I was very shy and felt uncomfortable in crowds when I was just starting out. I had difficulties communicating with people be-cause for years, my job was to deliver goods

and leave. IT was also a major issue as I had never used a PC before. Lady Luck was with me, however. I met some nice clients-cum-investors who are still my friends today. They gave me a lot of opportunities to become active in the market. Through them, I picked up a lot of knowledge, learnt without any pressure and overcame my communication problem. I pro-gressed to attending ERA’s training sessions and also external courses to improve my IT knowledge and equip myself with more knowledge.

Could you share with us about your team and what sets it apart from others?My team was formed in 2014 and grew rapidly to 200-plus real estate salesper-sons in a span of two years. It has to be the strong bond as well as the ef-fort put in by everyone that has got-ten us to where we are now. We share and learn together unselfishly. Every-one is willing to share and help each other out without an agenda. This is the culture we cultivate and probably the reason we are still growing strong-ly. Our motto is to provide clients with utmost sincerity and concern. We be-lieve with this in mind, everyone will be headed in the right direction in carving out a successful real estate career with ERA. We are also blessed to be able to leverage ERA’s branding, the training provided and new ini-tiatives by the company to improve ourselves.

How have your priorities changed in the course of your career?My priorities have changed from doing my own sales to seeing my agents succeed. I derive a great sense of happiness when they message

me and thank me for helping them close certain cases. All this motivates me to keep on upgrading myself in order to provide for the group. I also attend courses to help me with pub-lic speaking and have applied to be a trainer in RIA School of Real Estate, so I can contribute back to the industry.

What challenges do you foresee and how are you preparing for them? Market sentiment is not good now. I foresee many more will leave the indus-try if the market gets worse. The way to keep our real estate career strong is to increase our portfolio. Assuming you focus on just the HDB market in good times, you should get involved and gain more knowledge in other areas such as commercial, landed or new project sales. You need to get more products to sell in such an environment. I’m now preparing and encouraging my team to go for more training in ERA. Effec-tive training is beneficial and makes up for your shortfalls.

If you had one piece of advice for aspiring agents, what would it be?Th ere are so many inspirational stories in the industry about how you can suc-

ceed if you are willing to work hard, believe in the industry and give your best to your cli-ents. You must also be willing to keep learn-ing. When you feel like quitting, think about why you started.

THEEDGE P R O P E R T Y SALES PERSONALITY

‘There are no limits to how much you can grow in this industry’

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Lee: My priorities have changed from doing my own sales to seeing my agents succeed

Central London home prices seen stagnating as buyers ‘give up’

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THEEDGE P R O P E R T Y PROPERTY TAKE

Why your retirement plan is good news for Iskandar Malaysia

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One major trend that is highly posi-tive for Iskandar Malaysia is Singa-pore’s ageing population. According to Singa pore’s Department of Statis-tics, there will be 900,000 residents

aged at least 65 by 2030 in the city-state. This effectively creates two outcomes. The

first is that Singapore, with its low birth rates and an ageing society, has to continue its policy of population growth via immigration. The old age support ratio (OASR) was 6:1 in 2014, which means there were six working adults to support each retiree in the country. By 2030, the ratio could fall to 2:1, which would be dis-astrous for economic productivity. A clear ex-ample of that today is Japan, where the econ-omy has stagnated for more than two decades.

To avoid a similar fate, Singapore would have to continue pursuing population growth via immigration — thereby increasing popu-lation density on the island owing to limited land — as per the much-maligned 2013 Popu-lation White Paper, to hit a 6.9 million popula-tion by 2030. Singapore is currently the third most-densely-populated country in the world, according to a recent government statistic. Hence, the cost of space here will remain high and climb higher in the longer run, making the business case for Iskandar Malaysia stronger.

The second outcome is how Iskandar Malay-sia has become an option for retirement plan-ning for Singapore’s elderly. The median age for Singapore today is 40 years, and observa-tions on the ground show that much of the real demand for properties in Iskandar Ma-laysia has been by the country’s older popula-tion. Many in this segment are sitting on cash savings of $100,000 to $200,000, yet are not able to buy a second or third property because of lower loan amounts owing to the total debt servicing ratio and additional buyer’s stamp duty for additional properties. So, buying a property in Iskandar Malaysia becomes a viable option because of the affordable pricing and the proximity to Singapore.

Property in Iskandar Malaysia can serve as a potential retirement home and an invest-ment. Other overseas property investments will not be able to achieve both these objec-tives. Those who buy properties in faraway locations such as Australia or the UK cannot possibly expect to retire there unless they em-igrate, thus weakening links to Singapore, and only if they can afford the higher cost of liv-ing in these countries. Iskandar remains the only practical retirement option as they can enjoy Malaysia’s lower cost of living, a bigger living space, and family ties, convenience and a sense of familiarity.

Many who buy properties in Iskandar today may not have retired yet, but are planning for when they do. With another 10 to 15 years to go before retirement, they can afford to look at the long term for Malaysian properties and not be affected by short-term market senti-ments. There are several more reasons why retiring in Malaysia is attractive.

Healthcare options in Malaysiaare attractiveHealthcare is one promising area for Iskandar to target as the Singapore consumer gets older, richer and better informed. Healthcare costs in Malaysia are between 30% and 50% cheap-er than in Singapore and Iskandar is just an hour’s drive from most parts of the city state. The local healthcare market is also significant and growing as Malaysians living in Iskandar — many of whom work or do business with Singapore — become more affluent as well.

Private healthcare in Iskan-dar Malaysia is still underdeve-loped, but big plans are on the cards. Gleneagles Medini, which was recently launched, is em-blematic of the rapid growth in greenfield Nusajaya, located just across the famed Legoland Theme Park and Afiniti Medini, the urban wellness joint-venture project by Singapore’s Temasek and Malaysia’s Khazanah. Glen-eagles Medini has a generous 15 acres of land for future expan-sion and immediate plans include a 17-storey tower for specialist suites.

The next highly anticipated player is billion-aire Peter Lim’s Vantage Bay healthcare city in Johor Baru City Centre. Lim’s Vantage Bay mixed-development project covers 23 acres, with plans of it being a healthcare and well-ness hub, and healthcare education hub. His privately owned Thomson Medical will operate the recently named Iskandariah Hospital, scheduled to open by 2018.

Other private players in the market include US-based Columbia Asia, Singapore-operated Regency Specialist Hospital and Malaysia- listed KPJ Healthcare. There are also numerous small-er operators that cater for another tier of the healthcare market — nursing homes and pri-vately managed retirement villages.

A little known fact is that Singaporeans can use their Medisave in selected Medisave- accredited hospitals in Malaysia. Today, this includes Regency Specialist Hospital in Johor Baru and Gleneagles Medini, and will like-ly be extended to all other privately operated hospitals in Iskandar Malay sia in the future.

Another big opportunity for healthcare in Iskandar Malaysia is healthcare tourism, with Indonesians being the largest number of medical tourists in Malaysia today. Medi-cal tourists from the West, China and Japan are also signifi cant. Private hospitals in Singa-pore’s Novena and Orchard Road do big busi-ness in this sector and as more options open up in Iskandar Malay sia, there is a large oppor-tunity to tap into the trend. Frost & Sullivan expects healthcare expenditure in Malaysia to

hit US$25 billion ($35.3 billion) by 2020, growing at 8% to 10% per annum.

High Speed Rail andRapid Transit Systemwill improve linksTravelling between Singapore and Iskandar Malaysia today can be a big hassle. Thousands cross the border daily, with Malaysians going into Singapore during the morning rush hour, and head-ing back home in hordes in the

evening. Traffic jams on the Causeway and the Second Link have throttled further growth.

While plans for a third bridge are unlikely to materialise anytime soon, discussions on the Rapid Transit System linking Woodlands North and Johor Baru City Centre have been going on for several years. Recently, the site for the Johor Baru RTS station was identified at Bukit Chagar, an empty plot of land that currently serves as a huge open-air carpark. With this confirmation, plans can now proceed towards detailed engineering studies.

The High Speed Rail has also seen pro-gress, with the Malaysian government set-ting up MyHSR Corp, a company dedicated to building the HSR in Malaysia. Recently a Request for Information initiated by Singa-pore’s Land Transport Authority and Malay-sia’s SPAD (Land Public Transport Commis-sion) saw more than 150 firms responding, indicating high interest to participate in this massive infrastructure project. The location of the HSR stations for Iskandar and Singapore will be at Gerbang Nusajaya and Jurong East (Jurong Country Club) respectively.

These rail links are important as experience in other cities show that three to six times more people can be moved when such rail links are in place. For Singaporeans planning to retire in Iskandar in the future, these rail links will make it easier to travel and save a lot of travel ling time, opening up opportuni-ties in services and the retail industry, serving the Singapore market on top of its own grow-ing local population. Imagine the economic benefits that Iskandar will enjoy if the Singa-

pore consumer market can be unleashed onto Johor Baru in its entirety.

Because of the proximity of both countries, Singaporeans retiring in Iskandar will not need to apply for the Malaysia My Second Home (MM2H) programme. Singaporeans currently enjoy 30 days’ visa-free entry into Malaysia. My personal experience is that with the city state so close by, retirees can easily spend one day in 30 to renew their entry documents. Liv-ing here and in Iskandar concurrently will be a reality for many, especially with the upcom-ing rail links linking both cities.

Cost of living in Malaysia is significantly lower than in SingaporeDepending on which survey you refer to, living costs in Iskandar Malaysia are between two and three times cheaper than in Singa-pore. Again, for retirees, this is an impor-tant consideration to stretch their savings. The lower costs of food and other essentials have been well documented, so let me fo-cus on transport.

While public transport in Malaysia is still behind Singapore’s, you can consider buying a car in Iskandar. Say, a brand new car costs about RM85,000 ($28,333) in Malaysia. You could get as high as 90% financing and up to a 10-year loan. The car is “freehold”, with no Certificate of Entitlement cost; in Singapore, it comes with only a 10-year lease. A more prac-tical option would be to get a second-hand car; small sedans are available for between RM15,000 and RM50,000.

What is a car worth to you if you live in Iskandar? Well, it buys you freedom of move-ment — something quite close to priceless if you have spent years travelling via buses and MRTs in Singapore. And that is part of the draw of having an Iskandar “retirement plan” and why an ageing Singapore population is good news for the Iskandar region.

Ryan Khoo is co-founder of Singapore-based Alpha Marketing, a real estate investment consultan-cy that focuses on the Malaysian market, espe-cially Iskandar Malaysia. The views express ed here are his own. He can be contacted at ryan.khoo@alpha marketingsg.com.

| BY RYAN KHOO |

Puteri Harbour residential and commercial development in Nusajaya. Buildings in Singapore can be seen in the distance. Proximity to the city state is an attraction for retirees who plan to live in Iskandar Malaysia.

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THEEDGE P R O P E R T Y HOME IDEAS

| BY ANGELA LIM |

For most people, there is nothing more rewarding than entertaining during the holidays. Holding small intimate par-ties for extended family members and your loved ones at home can be fun and

cozy. There are so many different elements that go into decorating a home for the holi-days that it is impossible to list all of them. Hence, here are some takeaways from the team at SuMisura.

Serving that Christmas dinnerThis is the time of the year for some glitz and glamour on the table. Nestle sparkly, colour-dipped ice cubes in your Champagne ice bucket, add a candelabra or a colour-ful floral centrepiece in a decorative vase to make a show-stopping statement. Try setting the table with ribbons on the napkins. Guests will be rewarded with a pretty presentation! For more festive flair, you can also tie ribbons around the stems of your Champagne flutes or wine glasses for that extra bit of festivity.

More greeneryFor more festive cheer, bring a touch of green

into the house by placing lush greenery at door-ways and on the balcony. This creates an in-viting atmosphere and adds a woodsy aroma to the room. For those who lack green fingers, faux greenery can also look fabulous. Boughsof holly and pots of evergreen topiary make for a glossy yet understated decoration. Group various sizes and shapes together for astronger statement.

Casting the perfect glowThose who prefer a more romantic setting can create soft, flickering lights for the man-telpiece or Christmas tree. Or, have a soft warm white LED glow on a table in a dark corner. You can group inexpensive frosted or clear glass vases of different sizes or add tea lights and enjoy the glow. If you like a brighter party setting, work with

cool white lights that diffuse through some cabinetry or wall features to prevent harsh light-throw. Striking accent colours such as red and tangerine on throw cushions and area rugs jazz up the festive mood.

Decorative photo collageTo decorate a fireplace mantel or media mantel, collect your family’s holiday photo-graphs and frame them up. The right mix ofaccessories can enhance a simple mantel piece. Apart from favourite pictures, you can fill the area with smaller accessories such as vases, candlesticks and decorative objects. Pick up on colours and materials found elsewhere in the room. Vary the height and visual weight of items and you’ll be on your way to a well-dressed mantelpiece!

Have fun decorating and cheers!

Angela Lim is the co-founder of SuMisura, a multiple award-winning interior design firm. It is the official interior designer for the tallest resi-dential building in Singapore and Malaysia, The Astaka in Iskandar Malaysia, scheduled for com-pletion in 2018. Better known for her glamorous, haute-couture show flats, Angela’s work has been featured in many design magazines.

Holiday decorating ideas

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If you prefer a brighter setting, jazz up the room with cool white lights and colour accents

Greenery at doorways and on the balcony add festive cheer to the occasionFamily photos and accessories draw the eye to the mantelpiece. Vary the height and visual weight of decorative items.

Have a soft glow in dark corners for a romantic setting A floral centrepiece, candles and glasses spell class when it comes to entertaining


THEEDGE P R O P E R T Y DEAL WATCH

Condo near East Coast Park selling slightly above $1,100 psf

Historical transactions for 1,500 to 1,600 sq ft units at The Makena

CONTRACT DATE FLOOR AREA (SQ FT) PRICE ($) PRICE ($ PSF)

11-Nov-15 Low 1,582 1,950,000 1,232

10-Jul-15 High 1,582 2,120,000 1,340

3-Jun-15 Mid 1,507 1,800,000 1,194

4-Dec-14 Mid 1,582 1,812,000 1,145

17-Apr-14 Mid 1,518 2,100,000 1,384

2-Apr-14 Mid 1,582 2,150,000 1,359

21-Feb-14 High 1,582 2,300,000 1,454

8-Jan-14 Mid 1,582 2,008,888 1,270

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| BY TAN CHEE YUEN |

A 1,582 sq ft unit at The Makena is looking for a buyer on TheEdge-Property.com at $1.78 million, or $1,125 psf.

The Edge Fair Value, a valuation tool on TheEdgeProperty.com, puts the indic-ative value of the property at slightly above $1,150 psf. Last month, another 1,582 sq ft

unit on the seventh floor changed hands for $1.95 million, or $1,232 psf. There were three transactions involving similar-sized units this year with prices ranging from $1,194 to $1,340 psf.

The listed price of $1,125 psf has not been seen since 2012 when two 1,582 sq ft units were sold for that exact same price.

In the past three months, there were eight rental contracts involving three-bedroom

Table 2

Rental contracts for 1,500 to 1,600 sq ft units at The MakenaLEASE DATE MONTHLY RENT ($) ($ PSF)

Oct-15 4,200 2.7

Oct-15 3,600 2.3

Sep-15 3,800 2.5

Sep-15 4,300 2.8

Aug-15 4,000 2.6

Aug-15 3,500 2.3

Aug-15 4,300 2.8

Aug-15 4,500 2.9

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units measuring 1,500 to 1,600 sq ft at The Makena. The average rent for these units was $4,025, or $2.61 psf a month. Based on the listing price of $1.78 million, the average

rent translates into a potential gross rental yield of 2.7%.

The Makena is a 504-unit freehold con-dominium development at Meyer Road. Completed in 1998, it is located across East Coast Park. Nearby schools include Haig Girls’ School, Kong Hwa School, Canadian International School and Chatsworth Inter-national School.

Scan the QR code for value deals at The Makena and nearby projects

As we are not party to the contract between the client and agent, we are not able to verify information provided by the agent

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The Makena is a 504-unit freehold condominium development at Meyer Road

Documents

The Edge Singapore - Issue 708