MAS Focus On Rising Property Prices Hits Shares In S'pore

Source : TODAY,Friday, July 27, 2007

SINGAPORE’S stocks fell, led by real estate and banking shares after the central bank warned it was studying the impact of rising property prices.

CapitaLand Ltd, the nation’s largest developer, and DBS Group Holdings Ltd, the biggest lender, paced the retreat.

“Just stay clear,” said Ms Daphne Roth, vice-president of equity research at ABN Amro Private Banking in Singapore.“There’s just too much uncertainty over further cooling measures.”

The ST Index fell 53.81, or 1.5 per cent, to 3,579.73 at the close — its biggest decline in a week. About four stocks fell for each one that rose. July futures
slipped 1.4 per cent to 440.1.

CapitaLand declined 2 per cent to $7.20. City Developments Ltd, the second-biggest developer, slid 2 per cent to $15.10. Keppel Land Ltd, the third-largest, dropped 0.6 per cent to $8.60.

A measure of property stocks has fallen 2.3 per cent since July 18, when the Singapore government raised a property redevelopment charge. The index had risen 38 per cent this year before the announcement was made.

Singapore’s prime office rents have gained more than three times as fast as those in rival hubs Hong Kong and Tokyo, as investment banks and insurers expand operations on
the island.

Investors are also paying record amounts for luxury apartments, prompting the central bank to warn yesterday it was studying such property price gains because of the implications for other industries.

“The banking sector’s exposure to the property and construction sectors as well as to housing loans is significant, and loans have grown over the last few quarters,” said central bank’s managing director Heng Swee Keat. “We are watching developments in the market very carefully.”

DBS, which is scheduled to report its quarterly earnings tomorrow, dropped 60 cents, or 2.6 per cent, to $22.70 — its steepest fall since April 19.

United Overseas Bank Ltd, the nation’s second-biggest lender, fell 40 cents, or 1.8 per cent, to $22.50.