Market Matters Boom for property players By Jason Lee   The key property players in Singapore poised to benefit from the expected revival in Singapore’s real estate market, following the government’s announcement in July on the easing of financial regulations for purchases of properties. On July 19, national Development Minister Mah Bow Tan announced changes to policies concerning the property market in Singapore. Three key changes were easing the cap on bank financing for residential properties, limits on the use of the CPF for property purchases and restrictions on foreign ownership of land and properties. On that day, the benchmark Straits Times Index (STI) closed the trading session at 2,292.92 points, up 44.78 points from the previous day’s closing STI. This was led by advancers in the stock market such as key property and banking players. The shares of three local banks also seemed to receive a boost from the government’s announcement. A day following the announcement, the shares of three local banks all rose ranging from 2.8 per cent to 8.2 per cent. Rising was considered to be only a short term ‘knee-jerk reaction’ from investors, but that does not seem to be the case. Almost one month after the announcement, the shares of key property and banking players continued increasing as compared to their trading performance before announcement. Following the changes, property buyers would now be able to fork out less money upfront for the cash down-payment, and would also receive a higher loan amount. That would be a potential factor for young couples that have little savings to purchase a new flat. However, observers have cautioned that buyers should exercise caution in their calculations since they would probably have to pay more interest in the long term. Given that the downpayment for a property purchase is often the biggest obstacle for a potential buyer, the recent changes to the property sector would inevitably make it more affordable and appealing for buyers to purchase properties – at least from the short term prospective. This could lead to a ‘high demand, low supply’ situation, resulting in that of developers possibly raising the prices of their properties, noted market observers. Impact on property and bank stocks On July 19, 2005, the benchmark Straits Times Index (STI) closed the trading session at 2,292.92 points, up 44.78 points from the previous day’s (July 18) 2,248.14 points. Key property and banking players led the stock market. City Developments rose 9.3 per cent to $8.85 from $8.1, Keppel Land closed trading at $2.98 – an increase of 5.7 per cent from $2.82, while the shares of Wing Tai rose 21 per cent to $1.18, from 97.5 cents. On July 20, the three players closed trading at $8.9, $2.96, and $1.21 respectively, while the STI closed at 2,309.26 points. The shares of the three local banks also seemed to receive a boost from the government’s announcement. On July 18, the shares of DBS Group (DBS), United Overseas Bank (UOB) and Oversea-Chinese Banking (OCBC) closed at $14.7, $14.4 and $11.9 respectively. A day following the announcement on July 20, the banks’ counters rose 8.2 per cent ($15.9), 2.8 per cent ($14.8) and five per cent ($12.5) respectively. The rise in share prices of property and banking stocks was not a “knee jerk” reaction from investors. On August 12, almost four weeks after Mr Mah’s announcement, the shares of property stocks of City Developments, Keppel Land and Wing Tai closed at $8.55, $3.16 and $1.2 respectively. This translates to an increase of 5.6 per cent, 12 per cent and 23 per cent respectively, as compared to their closing prices on July 18, a day before the announcement. Similarly, for the banking stocks of DBS and UOB, they ended trading on August 12 at $15.8 and $14.4 respectively – an increase of 7.5 per cent and zero per cent (nil increase), as compared to their trading performance on July 18.