Yesterday, as the unusual share market rally remained in high level, banks gave way to property counters. Big guns of the property sector went sky-high and aided the market to increase by nearly 63 points up to 2,241.6.
The figures from two high-flyers were very surprising. Late last month, Keppel Land made a cash call in order to accumulate $712 million, which made it as the largest gainer in terms of percentage, increasing by 25.2 percent or 56 cents to $2.78. For only five days, it gained 66.47 percent.
City Developments seemed to be slacker, but it still soared up 85 cents, or 11.3 percent, to $8.35. Yesterday, the trading volumes of several property counters, such as the CapitaLand and City Developments, expanded by over 40 percent each.
The FTSE ST Real Estate Index increased 59.5 percent from its March slump, exceeding the standard Straits Times Index, up by 53.9 percent. Several market observers described the existing resurgence of the stock market as a “liquidity rally”, one forced by the recent capital flow into stocks. According to Donald Chua, the property analyst of CIMB-GK, “I think it’s simply because the sector is so under-owned over the last few quarters.”
“Once the market picks up and liquidity comes in, many fund managers have no choice but to buy into the sector,” he added.
However, he explained that basically, there was no change in the property sector, even though there will be several sales talk volumes taking in. ”I don’t think you can conclude that property prices have stabilised and I think that’s the key thing to look out for before you can say anything has changed,” he said.
Some developers, who have warned about the earning reports, said that the present year will stay tough as the property market stays cautious. Several fund managers are steadily moving back money into equities, assisting to cause a stock market rally all over the world.
Mister David Lee, the managing executive of Ferrell Asset Management or FAM, a hedge fund based in Singapore, told The Straits Times that he placed money in the property stocks earlier this year. “It was the best time to increase Asian allocation in risky assets such as property stocks.”
He added that real property shares were lagging. “Sentiment was very bearish; valuations of some stocks became very attractive”. He also explained, “The situation is a lot better now. For example, refinancing risk of properties is improving. People feel a lot better now with easier credit and better liquidity.”.
According to the latest UBS report, the economy of Singapore went down during Q1 of the year, giving the investors the opportunity to purchase banking stocks and properties as they will probably be the leading sectors to perform for the next six months.
Nevertheless, investors were positioned “exactly the other way round” with heavy allotments in defensive stocks, such as telecoms, said Tan Min Lan, UBS strategist.
While rising share prices were involved in the headlines, the CapitaLand also provided good news coming from the side of sales. It has accumulated payment for nearly all 542 units that were sold in its RiverGate condo located at Robertson Quay.
Almost 98 percent of the purchasers have paid, but the rest of the payments are still being collected. Buyers have chosen the Deferred Payment Scheme, raising 20 percent down payment. The remaining payments had been delayed until completion.