It has been a momentous week for the securities market around the world, including stocks on the Singapore Exchange. Some counters took a double-digit percentage dives in the span of the week, with many reaching 10-year lows.
The already slowing economy was hit further thanks to the oil price crash, and intensified after the global COVID-19 situation reached “pandemic” levels. Across the board, trading volumes were up on the back of investors responding to the volatile market.
The fast-developing situation led to Deputy Prime Minister and Finance Minister Heng Swee Keat to indicate during a Strait Times-Business Times roundtable that a second, more comprehensive support package is in the works to help companies and workers in Singapore, a mere three weeks after he delivered his Budget 2020 Statement.
UOB (SGX: U11)
Cashflow is a critical component of businesses even during good times. During this difficult period, the government recognises the need for companies to be able to access working capital easily and at low cost.
Thus, one of the schemes Budget 2020 enhances is the Enterprise Financing Scheme (EFS) Working Capital Loan. The maximum loan quantum increased from $300,000 to $600,000 and the government’s risk-share also went up to 80%.
EFS is offered by local banks, including OCBC, DBS and UOB, and should be a welcome relief on the back of lower projected credit demand from the economic slowdown.
After starting the week at $23.20 a share, UOB’s stock dived about 14% to close this week at $20.14. UOB took advantage of this dip is prices and executed share buybacks every day this week from 9 to 13 March.
ComfortDelGro (SGX: C52)
The government announced a $77 million package to help taxi and private hire car (PHC) drivers, the majority of which ($73 million) goes to a fund to help drivers defray business costs, which would also mean preserving the rental income for taxi and PHC companies.
As the operator of Singapore’s largest taxi fleet, ComfortDelGro would undoubtedly see any move to delay or prevent drivers from returning taxis as a welcome move.
The Land Transport Authority would also waive 3-months worth of operator license fees for taxi and PHC companies, to the tune of $1.3 million.
ComfortDelGro closed at $1.71 on Friday, after starting the week at $2.45.
SATS (SGX: S58)
SATS is the main ground-handling and in-flight catering service provider at Singapore Changi Airport. SATS controls about 80% of Changi airport’s ground handling and catering business. Going beyond Singapore, SATS provides gateway services and food solutions in Asia.
With visitor arrivals and air traffic through Changi Airport plummeting, the aviation sector was highlighted by Deputy Prime Minister Heng during his Budget 2020 Statement as one of five sectors being directly affected by the COVID-19 outbreak.
For the aviation sector in particular, a suite of measures will be introduced, including rebates on aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport. The airport will also receive a 15% property tax rebate.
To support workers, redeployment programmes will be encouraged, with government funding for reskilling extended to a maximum of six months.
SATS opened the week at $5.09, and ended at $3.60.
Far East Hospitality Trust (SGX: Q5T)
Singapore has seen drops in visitor arrivals, and consequently, occupancy of hotels and footfall in the retail sector.
To support the industry tide through this period and be ready to absorb demand once the economy picks up, the government will introduce several tax treatments for companies for a year, such as faster write-down of investments in renovation and refurbishment, which hotels can take advantage of by upgrading and renovating amidst the lull.
There will also be a Property Tax Rebate of 30% for the accommodation and function room components of hotels, serviced apartments and MICE venues.
As the first and only Singapore-focused hotel and serviced residence hospitality trust listed on SGX, Far East Hospitality Trust currently has a portfolio of 9 hotels (2,775 rooms) and 4 serviced residences (368 units).
After starting the week at $0.66, Far East Hospitality Trust’s share price actually rose in the week as investors relished acquiring S-REITs at good prices, but along with the rest of the market, the share prices tumbled as the week ended to close at $0.53.
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