Mapletree REIT Ready for Further Hong Kong Dollar Weakness

Mapletree Greater China Commercial Trust, which debuted in Asia’s biggest share sale this year, is ready for a further depreciation of the Hong Kong dollar against the Singapore currency, Chief Executive Officer Cindy Chow said.

“We are prepared to hedge up to a 100 percent of the Hong Kong dollar because we do see that the Hong Kong dollar might depreciate against the Singapore dollar,” Chow said in an interview in Singapore today. She didn’t elaborate on reasons for further weakness in the currency.

The Hong Kong dollar, which is pegged to the U.S. dollar, has declined about 4 percent against the Singapore currency from a high in June, eroding profits for Singapore-based companies with operations in the Chinese city. Mapletree Greater China Commercial Trust’s portfolio includes assets such as the Festival Walk shopping mall in Hong Kong.

Mapletree REIT, the fourth trust by Mapletree Investments Pte, a property unit of Temasek Holdings Pte, Singapore’s state-owned investment company, surged 11 percent yesterday on its first day of trading. The REIT gained 1.9 percent to S$1.05 at the close of trading in Singapore today.

The Hong Kong currency was little changed HK$6.2264 per Singaporean dollar as of 6:13 p.m. in Singapore. The Singapore currency, seen as a safe haven by investors, has appreciated against a basket of major currencies over the past three years, gaining about 12 percent versus the U.S. dollar in the period.

REITs have dominated Singapore’s IPO market in recent years as high-yielding assets gained popularity amid low interest rates. Singapore REITs have outperformed the city-state’s Straits Times Index this year, returning 5 percent compared with a 3.9 percent gain in the benchmark measure.

China Outlook

Mapletree Industrial Trust and Mapletree Commercial Trust have advanced about 50 percent from their offer prices, while Mapletree Logistics Trust is up more than 70 percent, according to data compiled by Bloomberg.

Still, the share sale comes as China’s growth slows. Expansion in industries including retailing, transportation and banking was the slowest in five months in February, according to an official survey of purchasing managers on March 3. Gauges released March 1 pointed to manufacturing growth cooling.

“The REIT is a long-term yield product,” Chow said when asked about China’s growth prospects. “We do expect the two assets will continue to see stable growth.”

Mapletree Greater China includes the Gateway Plaza office complex in Beijing, a sales document for the IPO showed.

The IPO was the biggest in Asia so far this year, followed by Nippon Prologis REIT Inc., which debuted last month in Tokyo, according to data compiled by Bloomberg. It is also the biggest for a real estate investment trust in Singapore, surpassing the previous offerings by Mapletree, the data shows.

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