This week, Singapore played host to the historic meeting between US President Donald Trump and Chairman Kim Jong Un of North Korea. Progress towards peace is significant and wonderful, both from a humanitarian perspective and an economic one.
While nuclear tensions are de-escalating on the Korean peninsular, the trade war between the US and China continues to simmer, with China announcing on Friday that “all economic and trade achievements previously reached by the two parties will no longer be valid”.
Singapore’s (relatively small) economy has large exposure to global trade and commerce, and investors have been concerned. The Straits Times Index (STI) closed at 3356.73 this week, the lowest it has been in a month.
Read Also: Complete Guide To Investing In The STI ETF
The STI Reserve List
The STI is often used as a proxy for the broader Singapore stock market, consisting of the 30 largest and most liquid blue chip companies on the Singapore Exchange (SGX). These 30 companies account for more than 70% of the market capitalisation of the entire SGX.
The next 5 largest and most liquid SGX stocks will make up the STI Reserve List, which is used in the event a STI stock is delisted or some other conditions is fulfilled that warrants the stock’s removal from the index.
Every quarter, a review will also be conducted to see if any of the STI constituents should be removed from the index to have another stock take its place.
The latest review was recently concluded at the end of May and no change to the STI was deemed necessary, effective 18 June 2018. The STI Reserve List also remain unchanged, which consists of: Suntec REIT, Sembcorp Marine, Mapletree Commercial Trust, Keppel REIT and Mapletree Logistics Trust.
As you can see, 4 members of the STI Reserve List are REITs. Together, these 4 REITs maintain an average indicative dividend yield of 5.7%.
On the whole, the 5 STI Reserve stocks have a combined market capitalisation of $21.4 billion, averaging 10% total returns over the past 12 months, with their average five year return being 29%.
For this episode of 4 Stocks This Week, we will be examining 4 stocks on the STI Reserve List.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust (MLT) is the first Asia-focused logistics REIT in Singapore and was listed on the SGX mainboard in 2005.
MLT has a portfolio of 135 logistics assets in Singapore (49), Hong Kong (9), Japan (20), Australia (9), South Korea (11), China (20), Malaysia (14) and Vietnam (3), with a total book value of more than $6.5 billion.
MLT is managed by Mapletree Logistics Trust Management Ltd, a wholly-owned subsidiary of Mapletree Investments Pte Ltd. Temasek is the largest single shareholder of MLT, owning 33.66% of shares.
MLT closed this week at $1.23.
Suntec Real Estate Investment Trust (SGX: T82U)
With a current market capitalisation of $4.5 billion, Suntec REIT holds properties in Singapore’s prime business districts as well as in Australia.
It has a 60.8% interest in Suntec Singapore Convention & Exhibition Centre, a one-third interest in One Raffles Quay, a one-third interest in Marina Bay Financial Centre Towers 1, 2 and the Marina Bay Link Mall as well as a 30.0% interest in 9 Penang Road.
In Australia, it holds a 100% stake in 177 Pacific Highway, an office development in Sydney, a 25% interest in Southgate Complex, an integrated development in Melbourne, as well as a 50% interest in a commercial building to be developed at Olderfleet 477 Collins Street, Melbourne.
Suntec REIT is managed by an external manager, ARA Trust Management (Suntec) Limited. It closed this week at $1.70, which is at a 52-week low.
Keppel REIT (SGX: K71U)
Listed in 2006, Keppel REIT has approximately $8.5 billion worth of assets under management, comprising interests in 9 office assets (completed and under development) strategically located in the central business districts of Singapore, as well as in Australian cities of Sydney, Melbourne, Brisbane and Perth.
Its Singapore assets in include Ocean Financial Centre (99.9% interest), Marina Bay Financial Centre (one-third interest), One Raffles Quay (one-third interest) and Bugis Junction Towers (100% interest).
Keppel REIT is managed by Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Capital Holdings Pte Ltd. It closed this week at $1.12.
Sembcorp Marine Ltd (SGX: S51)
Sembcorp Marine Ltd provides offshore and marine engineering solutions worldwide.
The company engages in the turnkey design, engineering, procurement, construction, and commissioning of offshore newbuilding and conversions, gas terminals, jack-ups, semi-submersibles, drill ships, and more.
It also engages in the repair, refurbishment, retrofitting, life-extension, upgrading, and conversion of vessels, marine and offshore structures, Liquefied Natural Gas and Liquefied Petroleum Gas carriers, cruise ships, ferries, mega-yachts, floating production vessels, tankers, containers, and cargo ships.
In addition, the company offers services like afloat and emergency repair, underwater cleaning and repair, tank cleaning, sludge and oily waste disposal, vessel towage and port clearance arrangement, specialists service and navigation, and fire protection services.
The company was founded in 1963 and is headquartered in Singapore. Sembcorp Marine Ltd is a subsidiary of Sembcorp Industries Ltd, which owns 61% of the company. Shares of Sembcorp Marine Ltd closed this week at $2.03
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