Warrants Highlight

Party over for property developers?

Yesterday, the Urban Redevelopment Authority (URA) released data that Singapore home sales fell 44% in November compared to October. According to Bloomberg, home sales last month declined to 1,087 units and were the lowest in 11 months, as developers scaled back on project sales.

Macquarie’s Capitaland warrants

The property industry is cyclical and the slowdown may have been expected as mentioned by David Neubronner, head of Jones Lang LaSelle Singapore residential business. He said that “November and December are traditionally slow months” and that “developers have slowed sales”.

However, Grace Ng, deputy managing director of Colliers International begged to differ after the Singapore property auction market falls to historic low in 2012. Out of 377 properties that were put up for sale, only 24 properties were sold and the total sale value for 2012 is the lowest in 15 years. Grace attributes the disappointing auction markets to the cooling measures implemented by the government recently. She said that the measures which are effective from October 2012 “resulted in a lacklustre secondary residential market and thinner interest in the high-end/luxury residential market”.

Curbing housing prices is important to avoid bubble
Starting from October, loans and refinancing can only be maximised to 35 years regardless of whether the property is privately or government owned. In addition, the loan to valuation (LTV) will be lowered if the loan tenure is more than 30 years or if the loan period extends beyond the retirement age of 65 years. For a borrower without an outstanding loan, the LTV will be lowered to 60% from 80% while a borrower with outstanding loans, the LTV will be lowered to 40% from 60% previously.

Deputy Prime Minister Tharman Shanmugaratnam previously said that “We will do what it takes to cool the market, and avoid a bubble that will eventually hurt borrowers and destabilise our financial system”. He explain that If interest rates were to rise, borrowers may find it hard to repay their loans and if interest rates were to fall further, lenders will find themselves stuck with the bad loans. Hence, there is an impending need to curb the housing situation.

Property developers led decline in STI
With the disappointing November home sales, property developers like City Development and CapitaLand were the worst performers in the index.

CapitaLand had reached a high of $3.76 last Friday on volumes lower than the 15-day moving average. The last time the counter closed above $3.76 was in January 2011. Unfortunately, CapitaLand dipped 2.1% yesterday.

Singapore Market Wrap

Singapore's domestic exports fell in November

The non-oil domestic exports (NODX) fell 2.5% month-on-month in November compared to a 7.9% increase in October. This figure fell short of economists' expectation of 1.9%, a figure polled by Reuters. The STI declined 0.3% to 3,158.7 day-on-day.

Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Put STI 2950MBePW130228 (RG0W) exercise level 2,950.*

GLP leases to Vipshop
Vipshop, a leading China e-commence company, has signed 2 leases of a total of 33,500 square metres (sqm) with GLP. Together with another 21,500 sqm, Vipshop now takes up a total of 85,000 sqm with GLP in China. GLP dropped 1.4% to $2.75 on Monday.

Call GLP MB eCW130603 (Q8UW) exercise price $2.90.*

Home sales dropped to lowest in 11 months
Data by Urban Redevelopment Authority showed that home sales fell 44% month-on-month from 1,948 to 1,087 units in November. This represents a 36% drop year-on-year with home prices reaching a record high during the third quarter of 2012. CapitaLand fell 2.1% to $3.68 for the trading day.

Long-dated Call CapitalaMBeCW131202 (Q7YW) exercise price $3.60.*
Put CapitalaMBePW130903 (R5TW) exercise price $3.50.*

Overnight Market Wrap

Starting the week with the biggest rally in a month

The S&P jumped 1.2% last night although manufacturing contracted more than expected. However, the budget talks took a step forward.

President Barack Obama and House Speaker John Boehner met at the White House yesterday to continue their negotiations. According to Bloomberg, Obama is considering a possible budget concession on Social Security cost-of-living increases. This came after Boehner dropped his opposition to raising tax rates for the top earners.

Overnight Markets

Indices	Last	Change
STI	3158.70	-0.3%
HSI	22513.60	-0.4%
DJIA	13235.40	0.8%
S&P 500	1430.36	1.2%
Nasdaq	3010.60	1.3%
China A50	7807.00	0.6%

Corporate News

Corporate Announcements

GLP announces a lease of 33,500 square metres to Vipshop in China.

Ex-dividend dates:
Mon 24 Dec: Singtel ($0.068)