Briefs

Singapore’s investment banking, M&A activities hit record highs in 2019

Despite concerns over a slowing economy, Singapore has hit record highs in terms of investment banking activities as well as mergers and acquisitions (M&A) in 2019, according to data collated by Refinitiv.

M&A activity surged 57.5% y-o-y to US$116 billion ($157 billion) this year, making it the strongest annual period recorded by Refinitiv. This was led by The Blackstone Group’s US$18.7 billion acquisition of GLP’s US logistics assets, which is the largest deal with Singaporean involvement on record.

Singapore-targeted M&A activity came in at US$45.2 billion in terms of deal value, nearly doubling from the previous year, while domestic M&A more than trebled to US$27.4 billion.

The real estate sector accounted for the lion’s share of deal-making activity in Singapore, increasing 160% y-o-y to US$54.7 billion — almost half of the total M&A deal value this year.

Meanwhile, Singapore investment banking activities grew 22.1% to generate US$868.1 million in fees in 2019, making it the strongest annual period recorded since 2000.

On the equity capital market front, Singapore equity and equity-linked proceeds saw a 90.9% increase from the previous year, coming in at US$9.6 billion year to date. This also marked the best annual period since 2013.

Refinitiv noted that the increase was spearheaded by real estate investment trust IPOs, which saw a fivefold increase to US$1.9 billion. This was led by the US$833 million IPO of Prime US REIT this year. — By Uma Devi

Analysts see silver lining despite continued fall in exports

Singapore’s non-oil domestic exports (NODX) contracted 5.9% y-o-y in November — marking the ninth consecutive month of decline. But analysts are quick to highlight that it is not all doom and gloom for the city state’s economy.

UOB Group economist Barnabas Gan notes in a Dec 17 report that this was the smallest decline in nine months, and it had outperformed the market consensus of an expected 6.4% decline. “Despite clocking declines since March, it registered the smallest contraction over the last nine months, suggesting that a bottoming may be taking place,” says Gan.

On the whole, market watchers appear to remain upbeat on Singapore’s growth prospects, identifying bright spots in the NODX trend. In particular, analysts hone in on improved readings within the non-electronic NODX segment, which registered a growth of 1.3%, rebounding from the 11.2% decline in October.

Chua Hak Bin, an analyst at Maybank Kim Eng Research, points out that although the non-electronics segment had spearheaded the overall NODX recovery, the electronics segment should not be ignored.

“We think the electronics downturn is past its worst and a recovery, albeit sluggish, is underway. A partial US-China trade deal will help revive capex and exports, and electronics exports are likely to emerge out of contraction by early 2020,” he says.

The way Chua sees it, manufacturing and exports will emerge from recession in 2020, while services growth will strengthen on financial, business and tourism-related activities.

“Coupled with the positive industrial production growth levels in September and October as well as improving purchasing managers’ indices seen of late, Singapore’s macroeconomic fundamentals are likely to improve into 2020 as the global macroeconomic environment recovers,” adds Chua. — By Uma Devi

Retail trade records 4.3% drop in October on slowing motor vehicle sales

Singapore’s total retail sales value fell 4.3% y-o-y to $3.6 billion in October, led by a decline in motor vehicle retail sales, according to latest data by the Singapore Department of Statistics.

Motor vehicle retail sales dropped 22.7% y-o-y, owing to lower Certificate of Entitlement quota for the period of August to October. Excluding motor vehicles, retail sales declined 0.6%.

Other top declining industries in October include furniture and household equipment, which saw sales fall 10.6% y-o-y, while sales of optical goods and books as well as petrol service stations retreated 6.9% and 6.2% respectively.

Meanwhile, F&B services saw total sales value grow 4.5% y-o-y to $893 million, led by a 7.9% increase in turnover at fast food outlets and a 6.1% rise in restaurants turnover.

However, the better performance was partially offset by a 1.5% decline in sales of food caterers.

On a seasonally adjusted basis, fast food outlets, restaurants and food caterers recorded lower sales of between 0.8% and 2.9% in October over the previous month. Turnover of cafés, food courts and other eating places increased 0.9% during this period. — By Stanislaus Jude Chan

Singapore investors not saving enough for retirement

Some 18% of investors in Singapore feel that they do not have enough money saved up to retire, according to the Global Investor Study 2019 published by global investment manager Schroders.

ven then, this is better than the global average, where 24% of people are concerned that they are not saving enough ahead of retiring. The study also found that baby boomers are least comfortable with the amount they are saving for retirement.

The survey of over 25,000 investors across 32 locations around the world found that about 29% of non-retired baby-boomers in Singapore were significantly more apprehensive about the amount they are saving for retirement when compared with 16% of millennials.

Despite these misgivings, Singaporean investors believe they can withdraw 10.1% from their total retirement savings each year and not run out of money. This indicates that a mismatch exists between people’s current retirement provisions and what they are expecting to spend in retirement.

This could be because many people are underestimating their own lifespans or they may be more bullish about the amounts they plan to withdraw because they have other sources of income or wealth to rely on.

“People are living increasingly longer in retirement and should be able to enjoy their lives after work, safe in the knowledge that their retirement savings will sustain them. However, this study suggests that this may not be the case for many,” says Sangita Chawla, Schroders’ head of retirement savings. — By Samantha Chiew

Cross-border sales now account for 35% of Singapore businesses’ e-commerce revenue

International sales now account for an average of 35% of revenue of Singapore e-commerce businesses, according to a study published on Dec 19 by digital payments giant Visa.

But while 96% of Singapore business owners agreed that having an international presence is key to their company’s success in five years, only 72% are currently already engaging in cross-border sales.

On a positive note, the Singapore figures are higher than the global averages. Globally, only 66% of businesses that sell online have international customers, with cross-border sales accounting for 31% of these businesses’ revenues.

According to The Visa Global Merchant eCommerce Study, which analysed responses of 1,000 C-level executives or business owners across 10 global markets, e-commerce leaders globally view international expansion and finding new cross-border customers as critical to driving growth.

“Cross-border is a major growth opportunity for businesses. However, it is not easy, especially for small businesses,” says Kunal Chatterjee, Visa country manager for Singapore and Brunei.

Some 42% of businesses cite shipping issues as the leading barrier to international expansion, while 37% say the top challenge is accepting and processing foreign transactions.

“As a global network, Visa wants to ensure that we work with merchants to create frictionless and secure payment experiences for consumers when they shop online,” Chatterjee says. — By Stanislaus Jude Chan