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29-01-07, 13:08
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Published January 29, 2007
SGX cautions developers about price projections
By WONG WEI KONG
(SINGAPORE) With the property market sizzling at the top end and with talk of record prices with every new launch, the Singapore Exchange (SGX) is keen to remind listed developers of their obligation to observe disclosure standards when they make projections on the selling prices of their projects.
The exchange will take action if disclosure rules are breached, it said
BT had asked the SGX for its comments following a commentary the newspaper published last week which argued that property developers should be subject to greater scrutiny and bound by disclosure rules when they make price forecasts for their projects, just as other listed companies are when they make earnings projections.
Typically, developers make forecasts on the selling prices of their projects to the media but not on SGXNET, the exchange's official electronic dissemination platform.
'We would like to highlight that all listed companies, including developers, have to observe the same high standards of corporate disclosure,' said Yeo Lian Sim, executive vice-president and head of risk management and regulation at the SGX.
'The listing manual gives guidance on disclosing material information to analysts, investors, stockholders and media parties, without being faulted for selective disclosure.'
Under listing rules, material information includes information concerning, among other things, the issuer's property, assets, business, financial condition and prospects.
The rules also make it clear that if an issuer releases material information to the media but does not announce it to the market via SGXNET, it would be in breach of selective disclosure rules.
Ms Yeo noted that a price estimation or a target selling price of an individual property launch does not automatically translate into profit forecast for the whole company.
The number of projects, completion dates, cost factors and take-up rates are some of the other elements that have to be taken into account for making a profit forecast.
'The property developer, like other listed companies, will judge the materiality of the information at hand and make the necessary disclosure,' she said. 'As such, SGX does not second-guess disclosures of listed companies. If inadequate disclosure comes to light, we will take the necessary action.'
Said a corporate watcher who works with listed companies: 'We have a situation where other listed companies are so cautious about making any statement that would suggest an earnings projection. If they say anything on earnings to the media or analysts, they have to announce it to the SGX immediately, which will then hold them accountable for what they say. And here we have developers freely making forecasts on the selling prices for their projects without announcing it to the SGX and being held accountable.'
The property market is so upbeat that target prices for projects are being revised by the week. Two weeks ago, upmarket developer SC Global told the media it hoped to set a new benchmark with the launch of its latest luxury project, the marQ on Paterson Hill, which is expected to fetch prices upwards of $2,800 per square foot (psf). Just a week later, SC Global said in another media interview that it planned to price the project at 'north of $3,000 psf'.
It is little wonder then that SC Global's shares have surged some 70 per cent since the start of the year and it is the best performer on the Singapore property index.
Published January 29, 2007
SGX cautions developers about price projections
By WONG WEI KONG
(SINGAPORE) With the property market sizzling at the top end and with talk of record prices with every new launch, the Singapore Exchange (SGX) is keen to remind listed developers of their obligation to observe disclosure standards when they make projections on the selling prices of their projects.
The exchange will take action if disclosure rules are breached, it said
BT had asked the SGX for its comments following a commentary the newspaper published last week which argued that property developers should be subject to greater scrutiny and bound by disclosure rules when they make price forecasts for their projects, just as other listed companies are when they make earnings projections.
Typically, developers make forecasts on the selling prices of their projects to the media but not on SGXNET, the exchange's official electronic dissemination platform.
'We would like to highlight that all listed companies, including developers, have to observe the same high standards of corporate disclosure,' said Yeo Lian Sim, executive vice-president and head of risk management and regulation at the SGX.
'The listing manual gives guidance on disclosing material information to analysts, investors, stockholders and media parties, without being faulted for selective disclosure.'
Under listing rules, material information includes information concerning, among other things, the issuer's property, assets, business, financial condition and prospects.
The rules also make it clear that if an issuer releases material information to the media but does not announce it to the market via SGXNET, it would be in breach of selective disclosure rules.
Ms Yeo noted that a price estimation or a target selling price of an individual property launch does not automatically translate into profit forecast for the whole company.
The number of projects, completion dates, cost factors and take-up rates are some of the other elements that have to be taken into account for making a profit forecast.
'The property developer, like other listed companies, will judge the materiality of the information at hand and make the necessary disclosure,' she said. 'As such, SGX does not second-guess disclosures of listed companies. If inadequate disclosure comes to light, we will take the necessary action.'
Said a corporate watcher who works with listed companies: 'We have a situation where other listed companies are so cautious about making any statement that would suggest an earnings projection. If they say anything on earnings to the media or analysts, they have to announce it to the SGX immediately, which will then hold them accountable for what they say. And here we have developers freely making forecasts on the selling prices for their projects without announcing it to the SGX and being held accountable.'
The property market is so upbeat that target prices for projects are being revised by the week. Two weeks ago, upmarket developer SC Global told the media it hoped to set a new benchmark with the launch of its latest luxury project, the marQ on Paterson Hill, which is expected to fetch prices upwards of $2,800 per square foot (psf). Just a week later, SC Global said in another media interview that it planned to price the project at 'north of $3,000 psf'.
It is little wonder then that SC Global's shares have surged some 70 per cent since the start of the year and it is the best performer on the Singapore property index.