What's trending - National Day Rally in Focus

Q: Prime Minister Lee Hsien Loong delivered the National Day Rally speech on Sunday (21 August). What are some of the key implications for the stock market?

Masks off in most indoor settings. With the Covid-19 situation in Singapore stabilising, mask wearing will become optional indoors except for public transport and healthcare settings.  This represents a further step forward in Singapore’s re-opening.

Retail REITs get a boost. Frasers Centrepoint Trust, Lendlease Global Commercial REIT and Starhill Global REIT have seen significant improvements in tenant sales and shopper traffic with the relaxation of Covid-19 safe management measures. For example, Starhill Global REIT’s tenant sales rose by 44% year-on-year in 2H FY2021/22.

Hospitality REITs continue to shine on the back of increasing tourist arrivals. The highest revenue per available room (RevPAR) for Singapore hotels reached S$183 in June 2022, the highest level since the pandemic began. As a result, hospitality was the best performing sub-segment amongst the REITs in the first half of 2022, with the 5 hospitality trusts delivering an average total return of 17%.

Q: Are there any other key themes that emerged from the National Day Rally?

Transformation efforts key to remain resilient amidst economic challenges. In noting how the external economic environment has become more troubled, Mr. Lee shared that this will require Singapore to press on with economic upgrading and restructuring.

Significant restructuring initiatives amongst Singapore-listed companies in recent years. For example, Keppel Corp and Sembcorp Marine have signed a definitive agreement for the proposed combination of Keppel Offshore & Marine and Sembcorp Marine. Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) are currently going through a merger to create one of Asia’s 10 largest REITs.

Such restructuring efforts could continue as companies accelerate their transformation efforts to boost returns. The improving returns have helped to support the dividend yield of the Singapore market, with the Straits Times Index (STI) offering a 12-month average dividend yield of 3.7% as of 31 July 2022.

This article also appeared on SGX Market Updates.