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CapitaLand group of stocks outpaced global peers with 28% YTD return: SGX

Comprising real estate company CapitaLand Limited, five Reits, one hospitality trust and one business trust, the new unified entity has a combined market capitalisation of S$53 billion.

THE eight Singapore-listed stocks under the enlarged CapitaLand group generated higher average returns than their regional and global peers in the year to date (YTD), while also significantly outpacing broader benchmarks, the Singapore Exchange (SGX) said on Thursday.

They averaged a 3.3 per cent total return in the quarter to Sept 18, bringing their average total return to 28.2 per cent in 2019 YTD.

This is above the average and median returns of both the 100 largest capitalised property stocks in the world as well as the 100 largest in the Asia-Pacific (APAC), which stood at 20 per cent and 16 per cent respectively as at Sept 18.

Each of the eight CapitaLand group stocks also outperformed the average and median total returns of the 100 largest capitalised APAC real estate stocks YTD.

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Comprising real estate company CapitaLand Limited, five real estate investment trusts (Reits), one hospitality trust and one business trust, the new unified entity has a combined market capitalisation of S$53 billion.

For a global size comparison, the world’s biggest capitalised real estate stock in American Tower Corp with a market cap of about S$135 billion, while the 10th largest is Welltower Inc with a S$50 billion market cap, SGX said.

Following the completion of CapitaLand’s S$11 billion buyout of Ascendas-Singbridge on June 30, the group is now one of Asia’s largest diversified real estate groups, maintaining a portfolio of over 1,000 properties across more than 30 countries, with a combined assets under management (AUM) of S$129 billion.

The eight stocks accounted for close to 12 per cent of the average daily turnover on the Singapore bourse in 2019 YTD.

All eight of them maintain comparatively high free-float ratios, ranging from 55 per cent for Ascott Residence Trust (Ascott Reit) to 92 per cent for Ascendas Hospitality Trust (A-HTrust).

In July, the group proposed to combine Ascott Reit and A-HTrust to make the largest hospitality trust in Asia-Pacific. The merger is subject to unitholder approval, with the scheme meeting yet to be convened.

Aside from generating strong investor returns in the year to date, all eight stocks have provided short-term trading opportunities for the more active and experienced investors, said SGX. They averaged at least 1 per cent swings between their intraday highs and lows on a daily basis for the 12 months to June 2019, said the bourse operator.

Leading the short-term movers was Ascendas India Trust averaging 1.8 per cent swings between daily highs and lows. CapitaLand Mall Trust, CapitaLand Commercial Trust and Ascott Reit all averaged 1.6 per cent daily trading ranges. At the same time, intraday 1-minute volatility for all eight stocks was 17 per cent.

This momentum was driven by interest rate cuts and significant moves in US Treasuries this year, which affect interest rate-sensitive sectors such as Reits and banks, SGX noted. The US Treasury 10-year yields ended 2018 at 2.68 per cent, before sinking to a low of 1.43 per cent on Sept 3. Meanwhile, US Federal Reserve chair Jerome Powell has cited trade policy developments and unsolved geopolitical risk as two key reasons for cutting interest rates by 25 basis points.

In terms of distribution per unit (DPU), five out of of CapitaLand’s seven Reits and trusts have recently reported DPU growth.

For instance, for H1 2019 ended June 30, CapitaLand Mall Trust posted a DPU of 5.8 Singapore cents, up from 5.59 cents a year ago. However, CapitaLand Retail China Trust’s first-half DPU fell from 5.39 cents a year ago to 5.13 cents, while A-HTrust’s DPU for the first quarter ended June 30 slipped from 1.35 cents to 1.28 cents.

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