Low buying conviction expected to limit gains in Singapore shares for rest of day, says Dow Jones. STI +0.5% at 3211.24, with immediate resistance at current 2010 high of 3220.  
“The STI opened nearly flat and climbed steadily for the rest of the morning. This suggests that investors are generally still fairly optimistic about the near-term market outlook,” says OCBC Investment Research analyst Philip Teo, but adds upside in afternoon likely minimal based on technical indicators. 

 

Overall volume remains light, at under 1 billion shares, with top-volume plays including Genting Hong Kong (S21.SG), +3.5% at US$0.445 ($0.577), Berlian Laju Tanker (B66.SG), +10.0% at $0.055, Genting Singapore (G13.SG), +1.5% at $2.08, Golden Agri-Resources (E5H.SG), flat at $0.66, Healthway Medical (5NG.SG), flat at $0.165.

 

Two industrial property IPOs worth about US$3.7 billion ($4.8 billion) are expected to surge when they debut in Singapore next week thanks to their high yield and exposure to China’s fast-growing economy.

Global Logistic Properties (GLP), the logistics unit of Singapore sovereign wealth fund GIC (GIC.UL), is set to raise up to $3.9 billion in Singapore’s second-largest initial public offering.

 

Its shares could jump by up to 10% when they debut on Monday as the company is viewed as a good proxy for China’s exponential trade growth, analyst said.

 

Units in Mapletree Industrial Trust, which owns factories and other industrial properties in Singapore, meanwhile may rise to as much as $0.99 on their first trading day on Thursday, 6.5% higher than the offer price of $0.93, according to the median forecast of five analysts polled by Reuters.

 

The listing could raise as much as $940 million.

 

The IPOs hit the market within days of each other, but analysts say there is enough liquidity to digest both since GLP and Mapletree Industrial, a property trust linked to Singapore wealth fund Temasek (TEM.UL), appeal to different investors.

 

“The value proposition is different,” said UOB Kay Hian analyst Vikrant Pandey. “Investors looking for yield and growth in the industrial segment in Singapore would rather go for Mapletree Industrial Trust and investors looking to ride the growth in China would go for GLP.”

 

GLP, led by former ProLogis CEO Jeffrey Schwartz, owns over 290 logistics properties across China and Japan, making it well-positioned to ride on the coat tails of China’s industrial production boom and economic growth.

 

Shares of GLP may rise to as high as $2.16 on their first trading day, 10% higher than the IPO price of $1.96, according to the median forecast of the analysts.

 

It is set to be Singapore’s second-largest IPO after Singapore Telecommunications’ (STEL.SI) $4 billion share offering in 1993.

 

It is also the first of several large IPOs in Asia that take place in coming weeks. These include AIA, the Asian life insurance arm of American International Group and a proposed US$4.2

 

Asian equity markets have seen solid gains this year, helped by a pick up in economic growth. Singapore’s benchmark Straits Times Index <.FTSTI> has risen 10% so far in 2010 compared with a 12% gain in the MSCI index of Asia-Pacific stocks excluding Japan.

 

“We expect both GLP and Mapletree Industrial to perform well on their respective first day of trade. Both companies are high profile listings and have substantial institutional support behind them,” said Moh Tze Yang, an analyst at SIAS Research.

 

GLP will be the first listing by a firm majority-owned by GIC in Singapore and the sovereign fund will continue to have a controlling stake in GLP after the IPO.

 

“It doesn’t seem like the market could be running out of liquidity or get exhausted,” said Janice Ding, an analyst at CIMB research.

 

“Both (GLP and Mapletree) were able to price on the high end (of the indicative price range) so that’s an indication of the demand out there.”

 

But Ding said Mapletree’s offering could fare better given strong demand for assets with higher yields in the market.

 

Mapletree Industrial has said it expects to see a distribution yield of about 7.6% for the 12 months ended March 2011.

 

“Mapletree could do slightly better. The story is easier to understand and it’s a REIT with a visible cash flow and distribution, and there’s quite a lot of liquidity out there looking for high yield products,” said Ding.

 

Singapore’s retail sales excluding motor vehicles rose at the fastest pace in three months, a sign that consumer spending is holding up even as easing demand for the nation’s drugs and electronics hurt growth last quarter.

The index measuring purchases excluding automobiles climbed 6.2% from a year earlier in August, after gaining 6% in July, the Statistics Department said today. Including vehicles, which are sold subject to government caps, total retail sales fell 1.2 percent, less than the median forecast for a 5.3% decline in a Bloomberg News survey of 8 economists.

 

Singapore’s services industry is still expanding even after weakening overseas demand for manufactured goods caused the economy to contract last quarter. The city state added more than 61,000 jobs from January to June while tourists are flocking to new attractions including two casino resorts run by Genting Singapore Plc and Las Vegas Sands Corp.

 

“Record inflows of tourists into Singapore during August kept the cash registers busy in the shopping centers,” Alvin Liew, a Singapore-based economist at Standard Chartered Plc, said before the report. “Excluding car sales, the retail outlook continues to look healthy on strong employment and wage growth.”

 

Adjusted for seasonal factors, overall retail sales rose 2.2% from July, today’s report showed.

 

Singapore controls pollution and congestion on its roads by selling limited permits for each automobile category, and the quotas may distort sales figures because motor vehicles are the biggest component of the retail index, accounting for a third of the gauge.