http://www.businesstimes.com.sg/sub/...61540,00.html?
Published December 31, 2011
Dismal end to year for stocks; property sector badly bruised
CapitaLand, Keppel Land lose 40-50% of market cap; banks too come under pressure
By JAMIE LEE
IT was not a pretty picture for stocks across most sectors but especially nasty bruises showed up on the property scene.
The government earlier this month stunned the market by imposing an additional buyer's stamp duty of 10 per cent on foreigner home purchases, dealing a blow to property developers which were already bracing for some softening in demand.
Investors also took flight amid caution over property developers' exposure to China as Beijing intervened to cool down the market.
Besides tightening bank lending, the Chinese government has capped the number of mortgages for each individual bank borrower, lifted the downpayments for mortgages to as much as 40 per cent, and imposed property taxes in Shanghai and Chongqing that will also be implemented in other cities next year.
CapitaLand and Keppel Land stand as the two developers with the largest Chinese exposure.
CapitaLand lost $6.37 billion, or 40 per cent of its market capitalisation over the year. Its market cap on the last day of trading in 2011 was $9.44 billion.
Keppel Land - among the top 10 losers in terms of losses to its share price in absolute value - saw its market value plunge 53 per cent, or $3.65 billion, to $3.31 billion.
City Developments closed the year with a 29 per cent drop in market value to $8.09 billion, while China luxury real estate developer Yanlord Land lost 43 per cent of its market value and ended with $1.85 billion.
Banks, too, experienced some selling pressure, partly due to cooling measures imposed on the property market and their impact on home loans. Investors are worried that with interest rates staying persistently low, net interest margins for lenders are expected to stay depressed.
The market cap of DBS Group Holdings - ranked the sixth-largest company in Singapore by market value - dropped 18 per cent from last year to end at $27.1 billion, while that of OCBC, the seventh-largest company here, fell 18 per cent to $26.9 billion.
UOB finished 2011 with a market value of $24.3 billion, down 15 per cent. It was ranked eighth.
In a strategy report, DMG & Partners Securities advised investors to be prepared for market weakness in the first half of next year, but it expects a 15 per cent upside to the benchmark index if eurozone debt woes clear up in the latter part of the year.
'We recommend that clients stay defensive currently,' it said, putting bullish calls on land transport stocks such as ComfortDelgro.
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