Wednesday, July 30, 2014

Terratech up 8.7% at 25 cents as of 1pm

Shares of marble producer Terratech Group, which made its Catalist debut this morning, hit 28 cents, up about 22% compared to its IPO price of 23 cents a share.

At 1 pm, Terratech was trading around 25 cents each. More than 85.3 million shares changed hands.

Terratech, a unit of SGX-listed Tritech, had issued 108.7 million shares, comprising 43.5 million new shares and 65.2 million vendor shares, at a price of 23 cents each, to raise gross proceeds of $25 million.


 

OCBC rises most since April as $6.2 bil Wing Hang bid accepted

Oversea-Chinese Banking Corp. shares climbed the most in three months as it prepares to take Wing Hang Bank private after shareholders accepted its US$5 billion ($6.2 billion) takeover.

OCBC said it will delist Wing Hang after its stake in the Hong Kong bank rose to 97.52%, according to a statement made to the Singapore stock exchange yesterday, the last day of the offer. Hong Kong takeover rules required OCBC, Southeast Asia’s second-largest lender, to own at least 90% of Wing Hang’s shares before the target could be delisted..

OCBC is buying Wing Hang as it seeks more access to the Greater China region, allowing it to offer banking services to Chinese companies expanding in Southeast Asia. Samuel Tsien, the acquirer’s CEO, said earlier this month his bank intends to tap the owners of Wing Hang’s corporate clients, mainly small and medium-sized companies, for the Singaporean lender’s private- banking business.

“The urgent need will be to determine a sustainable strategy in such a competitive market, including being clear quickly on what business segments and areas to focus on,” Kevin Kwek, a Sanford C. Bernstein & Co. analyst based in Singapore, wrote in a note to clients yesterday. “There is pressure for management to show the deal is worth it.”

Shares of OCBC rose 1.8% to $9.94 as of 9:26 a.m. in Singapore, the biggest intraday gain since April 30. Wing Hang was suspended today in Hong Kong, where the stock closed at HK$121.80 ($19.52) yesterday.

Acceptances for the bid dragged earlier this month as hedge fund Elliott Capital Advisors LP boosted its stake in Wing Hang to 7.8%, which Mizuho Securities Asiasaid at the time could put pressure on OCBC to raise its HK$125 per-share bid price.

Hong Kong, Singapore popping housing bubbles London can't handle

Take a look at the world’s dizzying surges in the price of housing for 12 months at the end of June: London, up 20%. Manhattan, 18%. Sydney, 15.4%.

Then there are Singapore and Hong Kong: down 3.7% and 0.6%.

Prompted by concerns over potential property bubbles and affordability for the middle class, the governments of the two Asian cities have been reining in home prices by imposing measures including mortgage caps, taxes on property flippers, and levies on foreign buyers as high as 15%.

“Hong Kong has successfully cooled down the market in terms of transactions and turnover,” said Raymond Yeung, senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “Singapore has been more effective.”

So could New York, London and other global cities facing soaring housing prices pull off the same act?

Not really. Hong Kong and Singapore’s island geographies, preponderance of public housing resulting in two-tier housing markets and citizens willing to tolerate government directives make the cities unique, according to academics and researchers. London and New York have nowhere near the same level of control over their economies and the behavior of their residents.

Having Clout

Singapore and Hong Kong, as a special administrative region of China, have governments with policy-making power over their entire geographic areas, where they are relatively free of political opposition from neighborhood groups or borough councils that stymie directives or mitigate their effectiveness. The Asian cities control the land supply and are the biggest landlords.

That allows them to implement decisive policy measures. For example, in January 2013, the Monetary Authority of Singapore, effectively the central bank and chief regulator, cut the mortgage ratio allowable on purchases of second homes while more than doubling minimum down payments from 10% to 25%. The banks had no choice but to follow.

“Imagine doing something like this in the U.S. where there are 7,000 banks and many regulators,” said Sumit Agarwal, a professor in economics, finance and real estate at the National University of Singapore. “It’s a nightmare from the policy point of view and would be impossible.”

Hong Kong and Singapore haven’t shied away from using taxes to discriminate against foreign buyers -- something other locales with surging prices have yet to do. Non-permanent residents in both cities are subject to an additional 15% tax when they buy property, except in Singapore where Americans are exempted by treaty.

Free-Market

While such actions may seem contradictory to the cities’ stated free-market principles, “affordable housing is part of the legitimacy of any government, and government has a role to play in intervening in the market in periods where there are extreme circumstances,” said Michael Klibaner, who heads Greater China research at real estate firm Jones Lang LaSalle Inc. in Hong Kong.

The U.K. government has tried some measures. After it increased the stamp duty to 7% on high-value properties in March 2012, price increases for homes valued from 5 million pounds to 10 million pounds ($10.6 million to $21.1 million) slowed from 9.7% to 5.8% in the subsequent year, according to broker Knight Frank LLP.

Bank of England Governor Mark Carney announced another set of measures last month, citing concerns over household indebtedness and the threat of a property bubble. They limit mortgages to less than 4.5 times a borrowers’ annual income and require banks to refuse loans to those failing to prove they could afford a 3%age-point rise in interest rates.

Stagnant Prices

They may be working. Prices in the capital stagnated in July, the first month with no growth since December 2012.

Meanwhile the opposition Labour Party has backed away from a call for a flat tax on properties worth more than 2 million pounds, instead suggesting taxes that rise the more expensive a property is, if they win next year’s U.K. national election.

Least likely to be deterred are well-heeled buyers from Russia, the Middle East and Asia looking to park their money in tony London neighborhoods, the ones who have helped drive up the prices, said Matthew Pointon, a property economist at Capital Economics Ltd. in London.

“Wealthy people who buy these houses just pay it,” said Pointon, adding that the government isn’t interested in discouraging the influx of money. “The government is always very keen to portray London as open for business to the world.”

Preferential Treatment

Foreigners in Britain enjoy preferential tax treatment over locals, as they are currently exempt from paying capital gains. This benefit will cease when new legislation takes effect in April bringing the U.K. into line with the U.S. and Australia which charge capital gains on non-residents. (Hong Kong has no capital gains tax while Singapore taxes non residents.)

In Australia, foreigners bought a record 14% of new properties in the first three months of the year, based on a survey of property professionals by National Australia Bank.

In New York, there’s not much likelihood of foreign buyers facing additional costs, said Jones Lang LaSalle’s Klibaner, a native New Yorker.

“If you live in Manhattan, you aren’t going to blame the government for bad policies or become a xenophobe because too many rich Chinese and Russians are buying apartments on Central Park,” he said. “When you want to get on the property ladder, you start in Queens or Brooklyn or New Jersey.”

July 30: Starhill Global REIT, OCBC, Soilbuild REIT, Rotary Engineering

The Straits Times Index (STI) on Tuesday ended 5.91 points higher or +0.18% to 3356.08, taking the year-to-date performance to +6.04%. The top active stocks were DBS (+0.06 %), UOB (+1.27%), Keppel Corp (+0.45%), Global Logistic (+1.09%), SingTel (+0.50%). Here are some stocks and factors to watch this Wednesday morning:

The manager of AIMS AMP Capital Industrial REIT has announced a 2% year-on-year rise in Distribution Per Unit (DPU) to 2.55 cents per unit. Net property income rose 23.9% year-on-year to $19.5 million and Distribution to unitholders rose 26.9 per cent year-on-year to $15.8 million.

Starhill Global REIT’s (SGREIT) manager has reported income to be distributed to unitholders hit $26.9 million for 2Q 2014, 5% higher than that of $25.6 million in 2Q 2013.

Oversea-Chinese Banking Corp. said it now owns 97.52% of Wing Hang Bank as shareholders accepted its US$5 billion ($6.2 billion) takeover offer, allowing the acquirer to take its Hong Kong target private.

Singapore's central bank announced new proposals on Tuesday to regulate financial benchmarks, in the wake of a series of scandals around the world involving traders manipulating Libor and other key rates.

Soilbuild REIT posted a distribution per unit (DPU) of 1.5 cents for the second quarter ended June, 2014, 1.3% over its forecast of 1.481 cents during its initial public offer (IPO).

Rotary Engineering said it has disposed its 100-per-cent equity interest in Rotary Shanghai for 22.2 million yuan ($4.5 million) in cash.

AIMS AMP Capital Industrial REIT announces 2.55 cents DPU for 1Q FY2015

The manager of AIMS AMP Capital Industrial REIT has announced a 2% year-on-year rise in Distribution Per Unit (DPU) to 2.55 cents per unit.

Net property income rose 23.9% year-on-year to $19.5 million and Distribution to unitholders rose 26.9 per cent year-on-year to $15.8 million.

The manager’s Chief Executive Officer, Koh Wee Lih, said: “We achieved a solid result this quarter with a full quarter’s income contribution from our Optus Centre investment in Australia, secured new leases and renewals for nine per cent of our portfolio and achieved significant weighted average rental increase of 11.9 per cent from the renewals. The manager also continued to take a prudent approach to capital management. We improved the Trust’s debt maturity profile with a $50 million issuance under the Medium Term Notes programme. The proceeds were used to repay the $50 million development loan for 20 Gul Way ahead of its October 2015 due date, enabling us to extend a portion of our debt for a further five years.”

The Net Asset Value increased to $1.48 per Unit from $1.47 per Unit due to the recognition of the development profits at 103 Defu Lane 10 and Phase Two extension of 20 Gul Way following obtaining the temporary occupation permit on 28 May 2014 and 14 June 2014 respectively.

Tuesday, July 29, 2014

OCBC secures takeover of Hong Kong's Wing Hang Bank

Singapore’s Oversea-Chinese Banking Corporation has acquired a total of 97.52% of the issued share capital of Wing Hang Bank, closing the US$4.95 billion ($6.15 billion) bid for the Hong Kong lender, the banks said on Tuesday.

The Wing Hang Bank has made an application to the stock exchange for the suspension of trading in its shares from 9 a.m. on Wednesday until the delisting of the shares, a joint statement said.

Earlier in the month investors were concerned that OCBC might be forced to increase its offer after U.S. hedge fund manager Eilliott Management Corp took a near 8% stake in Wing Hang.

OCBC owns 97.52% of Wing Hang allowing it to delist lender: Update

Oversea-Chinese Banking Corp. said it now owns 97.52% of Wing Hang Bank as shareholders accepted its US$5 billion ($6.2 billion) takeover offer, allowing the acquirer to take its Hong Kong target private.

The Singaporean buyer, Southeast Asia’s second-largest lender, will delist Wing Hang, it said in a statement to the city’s stock exchange today, the last day of the offer. Hong Kong takeover rules required OCBC to own at least 90% of Wing Hang’s shares before the target could be delisted.

“Even at the 75% level, I suspect OCBC will be intending to do a lot with Wing Hang Bank,” Kevin Kwek, a Singapore-based analyst at Sanford C. Bernstein & Co., said before today’s statement. “Most banks would be happy enough with a 75% level of ownership. It gives you management control as well as sufficient financial upside and motivation to improve the subsidiary.”

Acceptances for the bid dragged earlier this month as hedge fund Elliott Capital Advisors LP boosted its stake in Wing Hang to 7.8%, which Mizuho Securities Asia said at the time could put pressure on OCBC to raise its HK$125 ($20) per-share bid price.

Richard Barton, managing partner at Newgate Communications in Hong Kong, declined to comment on behalf of Elliott.

On completing the compulsory acquisition of the remainder of the shares, Wing Hang will become a subsidiary of OCBC, the Singapore lender said in today’s statement.

Integrating Operations

“Integrating the operations and businesses of Wing Hang Bank with OCBC will now pick up speed,” Samuel Tsien, Chief Executive Officer of OCBC, said in a separate statement.

The acquisition will give OCBC more access in the Greater China region and enable both banks to offer services to Chinese companies expanding in Southeast Asia, where the Singaporean lender has a larger presence, Tsien said. Wing Hang gives OCBC a network of about 70 branches spanning Hong Kong, Macau and mainland China.

The owners of Wing Hang’s corporate clients, comprising primarily of small and medium-sized companies, are also targets for OCBC’s private-banking business, Tsien said in a July 10 interview.

Shares of OCBC rose 0.21% to $9.76 in Singapore today. Wing Hang lost 1.77% to HK$121.80 in Hong Kong, paring its gain in the past year to 69%.

The Hong Kong bank’s shares traded as high as HK$127 on July 7 after Elliott Capital said in a July 3 filing it had paid HK$125 a share -- the same as OCBC’s offer price -- to increase its stake.

Offer Price

OCBC said through its advisers on the deal that it won’t raise its offer price, according to a July 15 statement. OCBC’s Tsien said in this month’s interview the bank would keep Wing Hang listed should it fail to get 90% of the target’s stock. At least 25% of Wing Hang stock must remain public to maintain its listing in Hong Kong.

Hong Kong banks are luring foreign buyers seeking to tap China-related business in a city that is the biggest center for offshore yuan trading. Outstanding loans in Hong Kong made in China’s currency surged 46% last year to 115.6 billion yuan ($23.2 billion), Hong Kong Monetary Authority data show.

The Wing Hang bid is the largest takeover of a Hong Kong bank since DBS Group Holdings, OCBC’s biggest competitor in Singapore, offered US$5.4 billion for Dao Heng Bank Group in April 2001. Yue Xiu Group, controlled by the Guangzhou city government in southern China, completed in February a US$1.5 billion purchase of a majority stake in Chong Hing Bank.