Property Shares Slide Again

Source : TODAY,Friday,July 20, 2007

Bad performance due to concern over increased fees for redevelopment

SINGAPORE’S stocks rose yesterday but property shares fell for a second day on concern higher government fees for redevelopment projects will erode earnings.

“The drop in the market (on Wednesday) provided buying opportunities for bargain-hunters,” said Mr Leslie Phang, who helps manage $1 billion at the Commonwealth Private Bank in Singapore. “For property companies, however, the rise in development charges could hurt profitability.”

The ST Index gained 20.65, or 0.6 per cent, to 3604.62 at the close, having lost 1.8 per cent the day before. The measure is valued at 15 times earnings, compared with 20 times profit for the Morgan Stanley Capital International Asia Pacific Index.

DBS, the nation’s largest bank, gained 20 cents, or 0.9 per cent, to $23.60. UOB, the No 2 lender, advanced 30 cents, or 1.3 per cent, to $22.90. OCBC, the smallest
of the three local lenders, climbed 10 cents, or 1.1 per cent, to $9.40.

All three stocks fell the previous day on concern an increase in redevelopment fees will curb construction, damping loan demand.

CapitaLand declined 5 cents to $7.50. City Developments Ltd, the second-largest
property company, fell 1.3 per cent to $15.70. Allgreen Properties Ltd, which acquired a site for redevelopment last month, fell 4.1 per cent to $1.88. Wing
Tai Holdings Ltd, the best-performing property stock on the benchmark this year, fell 3.2 per cent to $3.58.

A measure of property shares lost 0.4 per cent, making it the worst performer among nine industry groups included in the Singapore All Equities Index.

Singapore levies a so-called development charge if the value of land increases
because of rezoning or due to the government easing restrictions on the size of a property project. The tax will rise to 70 per cent of the increase of the land’s value, up from 50 per cent, the Urban Redevelopment Authority said in a statement on its website yesterday.

“If the latest move is seen as only a first of more anti-speculation measures,
it could have a sustained adverse impact on sentiments for property stocks,” wrote Mr Sean Quek and Mr Kwee Hong Ching, Singapore-based analysts at the Credit Suisse Group, in a note yesterday.

Singapore Exchange, which operates the city-state’s securities and derivatives exchanges, climbed 2 per cent to $10.10. Turnover yesterday was $3.1 billion, higher than the 12-month average of $1.7 billion, but was below Wednesday’s $4.3 billion.

Twenty-seven of the 49 stocks on the benchmark advanced and 12 declined. July futures added 1.2 per cent to 445.2. — AGENCIES