Wilkie Edge, a 12-storey integrated development comprising office space, retail units and a serviced residence. (Photo: REITsWeek)Wilkie Edge, a 12-storey integrated development comprising office space, retail units and a serviced residence. (Photo: REITsWeek)

Singapore-listed office REIT, CapitaLand Commercial Trust (SGX:C61U), will be added to the benchmark Straits Times Index (STI) from 21 March following a quarterly review.

The REIT will replace embattled commodities trader Noble Group which has seen a plunge of over 65% in its market value in the past year, according to a report from Bloomberg.

The inclusion of CapitaLand Commercial Trust was announced on 3 March by FTSE Russel. The London-based index provider administers the STI in partnership with Singapore Press Holdings (SPH), publisher of the Straits Times newspaper, and the Singapore Exchange (SGX).

The STI is widely accepted as the benchmark indicator for the Singapore stock market and is used as the basis in a number of financial products in the country including exchange traded funds and derivatives. The index comprises of the top 30 companies by market capitalisation and its constituents are reviewed quarterly. Next review of the STI is scheduled to take place on 2 June 2016.

Comment

In theory, the addition of CapitaLand Commercial Trust to a benchmark like the STI will improve the counter’s liquidity. However this will still depend largely on the REIT’s performance in the coming quarters. In a January 2016 statement issued in conjunction with its 4Q 2015 results, CapitaLand Commercial Trust warned that it expects to continue facing headwinds in the Singapore office market.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.