There you go. The protracted Hong Kong protests claimed its first casualty among the prestigious Straits Times Index (STI) when it was announced on 5 September 2019 that Hutchison Port Holding Trust (HPH) will be booted out of the index. Replacing HPH Trust will be Mapletree Commerical Trust (MCT). The move should be a bid to contain the fallout from the Hong Kong protests. And it is not difficult to see why HPH Trust was chosen for the axe.
Currently, Hong Kong stocks make up 20% of the STI constituents. Other than HPH Trust (which was backed by the famous Li Ka Shing), the other five Hong Kong counters are all linked to the conglomerate Jardine Group – Hong Kong Land, Dairy Farm, Jardine C&C, JMH and JSH. Between HPH Trust and the Jardine Group, the obvious candidate to be dropped is HPH Trust, which has been a perennial falling star among the STI constituents. The question now is: why was Mapletree Commercial Trust chosen for the slot?
With a market capitalization of $6.11 billion, MCT is the largest REIT sponsored by Mapletree Investments Pte Ltd. Temasek Holdings has a majority stake of 35% in this REIT while other big boys like Schroder Investment and NTUC Enterprise own stakes amounting to 10.2% and 2.35% respectively. With support from such stellar group of major shareholders, it is no wonder than MCT share price has been on fire.
Make no mistake, this article is not meant to bash MCT. On the contrary, I love this counter and had in fact written a positive article “Fairytale of Mapletree Commercial Trust” in 2018. With an asset portfolio of only 5 commercial properties in Singapore, MCT is the only local STI constituent without global footprint. In this regard, I thought Mapletree Logistics Trust would be a more suitable candidate to ascend the throne.
Notwithstanding the above, shareholders must have plenty to smile about. The ascend to STI came on the back of an impressive bull run in MCT share price and consistent financial performance. Where would MCT share price go from here?
Mapletree Commercial Trust in golden era
From a low of $1.60 in October 2018, MCT share price had been on a tear, reaching a record high of $2.26 on 2 September. The bullish form of the unit price should be attributed to the good financial results for FY18/19 and 1QFY19/20. The inclusion into STI heralds a new era and is likely to set fire to MCT share price.
Indeed, Mapletree Commercial Trust makes for a compelling investment case because [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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