5 Singapore Stocks Poised to Benefit from China’s Reopening
It was a breath of fresh air to learn that China loosened its strict COVID-zero restrictions in December last year.
The country was one of the last major economies to insist on a tough stance against the virus as it sought to track and stamp out all transmissions.
A month later in January, China reopened its borders in its final farewell to its COVID-zero policy.
And in the middle of this month, visas to foreign tourists were issued for the first time in three years as China opened its borders wider.
The resumption of normal activities in the world’s second-largest economy looks set to benefit a wide swath of businesses.
Here are five Singapore stocks that should enjoy an uplift as they have investments, assets or operations in the Middle Kingdom.
CapitaLand Investment Limited (SGX: 9CI)
CapitaLand Investment Limited, or CLI, is a real estate investment manager with S$132 billion of assets under management (AUM) and S$88 billion of funds under management (FUM) as of 31 December 2022.
The blue-chip property giant has pumped large sums of money into China over the past six months.
In November last year, CLI established two onshore RMB funds totalling around RMB 4 billion to invest in business parks in China.
These are CLI’s first business park private funds in China and will add around S$1.6 billion to FUM once fully deployed.
Last month, the group set up a China data centre development fund to invest in two hyperscale data centre developments in the Greater Beijing region.
Once completed, these two properties will add S$1 billion to its FUM.
Elsewhere, CLI also established a programme to commit a total of S$1.1 billion to invest in special situations in China.
The property group will hold a 20% stake in this venture as part of its asset-light strategy to grow its FUM.
Raffles Medical Group (SGX: BSL)
Raffles Medical Group, or RMG, is an integrated healthcare player with a network of three tertiary hospitals and more than 100 multi-disciplinary clinics.
Employing 2,800 staff, the group serves more than two million patients across its entire network.
RMG operates Raffles Hospital Chongqing, a 700-bed hospital that opened in January 2019 with a gross floor area (GFA) of more than 100,000 square metres (sqm).
It also operates Raffles Hospital Shanghai, a 400-bed tertiary hospital spanning 70,000 sqm that opened in July 2021.
These two hospitals should enjoy seeing a resumption of normal activities with the lifting of COVID-related restrictions.
In addition, RMG has also received approval to set up an in-vitro fertilisation and assisted reproduction therapy centre in Le Cheng, Hainan.
This new venture should help to boost the group’s revenue with China’s reopening.
CapitaLand China Trust (SGX: AU8U)
CapitaLand China Trust, or CLCT, owns a portfolio of 11 shopping malls, five business parks and four logistics parks in China with an AUM of RMB 25.2 billion as of 31 December 2022.
The China-based REIT saw a dip in its distributable amount from S$135.5 million in 2021 to S$125.6 million in 2022 as the manager had to dole out higher rental reliefs for tenants that were affected by China’s COVID-zero lockdowns.
Consequently, its distribution per unit (DPU) fell by 14.1% year on year to S$0.075.
With the reopening of China’s economy, CLCT’s retail malls should enjoy increased footfall and the manager should no longer need to hand out rental reliefs.
The REIT’s business and logistics parks should also see increased activity levels that will benefit its tenants.
Mapletree Pan Asia Commercial Trust (SGX: N2IU)
Mapletree Pan Asia Commercial Trust, or MPACT, is a retail cum commercial REIT with 18 properties with an AUM of S$16.7 billion as of 31 December 2022.
Of its total AUM, around 37% is concentrated in Hong Kong (Festival Walk mall) and China.
Festival Walk saw a 2.3% year on year dip in tenant sales for the first nine months of fiscal 2023 (9M FY2023) while shopper traffic inched down 0.7% year on year.
The lifting of restrictions in China and Hong Kong should benefit MPACT’s assets there as these two countries contribute close to a quarter of net property income for 9M FY2023.
Rental reversion was also negative for these two countries but the REIT should see better reversion in time to come once conditions normalise.
Straco Corporation Limited (SGX: S85)
Straco is an owner and operator of tourism-related facilities in both China and Singapore.
In China, its assets include the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lixing Cable Car in Lintong, Shaanxi province. For Singapore, the group owns the Singapore Flyer giant observation wheel.
The group booked a loss of S$1.3 million for 2022 as revenue plunged 32.7% year on year to S$28.2 million because of lower visitor numbers to its Chinese attractions.
Despite the weak numbers, Straco still declared a final dividend of S$0.01.
With the loosening of COVID-19 measures, the group is optimistic that there will be a rebound in visitor numbers for its Chinese attractions.
Singapore should also enjoy higher tourist numbers from China which should boost the fortunes of the Singapore Flyer.
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Disclosure: Royston Yang owns shares of Raffles Medical Group.
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