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The Week in Numbers: Singapore Property Stocks Hit By New Regulations

Property developers in Singapore were hit by a new round of regulations, causing property stocks to fall. The Urban Redevelopment Authority (URA) has cut the number of units allowed in a project and increased the minimum average size of new private flats outside the central area to at least 85 square meters. In addition, URA has also said that it will lower the 10% bonus gross floor area cap for outdoor space in private non-landed housing, such as balconies, private enclosed spaces and private roof terraces, to 7%.

Analysts estimate that annual transaction volume will drop to 7,5008,500 units, while land prices for development sites could go down by up to 40%, assuming that developers want to maintain a 10% profit margin.

Meanwhile, Netflix’s position as one of the best-performing stocks on Wall Street looks set to continue. It added 6.96 million customers in the third quarter of 2018, while earnings per share increased more than three-fold to 89 US cents, beating analysts’ estimates of 68 US cents. The company released a record 676 hours of original programming in the third quarter. This quarter, Netflix expects to sign up 9.4 million new subscribers globally. Its shares spiked more than 5% on Wednesday and now trades at a price-to-earnings multiple of 165.

Ride-hailing giant, Uber, could be valued at up to US$120 billion (S$165 billion) when it goes public next year. That is according to recent proposals made by US banks. Both Uber and its competitor, Lyft, are planning to go public in 2019. They have, however, been making massive losses to broaden their market share and expand their geographical footprint. Uber said that it expects to generate US$10 billion to US$11 billion in net revenue this year but will not log a profit for at least another three years. A US$120 billion valuation gives it a price-to-sales multiple of 12 times, compared to the Nasdaq 100 index average of 4.8 times.

Meanwhile, Temasek Holdings has launched its first public bond offer for retail investors. The bond has a five-year maturity and a fixed interest rate of 2.7%. Temasek is offering up to S$200 million of bonds to retail investors and another $200 million on placement for institutional, accredited and other investors. The bond offering could be increased to S$500 million if demand warrants it. Temasek has an overall credit rating of Aaa by Moody’s and AAA by S&P.

A poll of 68 economists showed that China’s GDP grew 6.6% in the July-September quarter, its slowest pace in nine years. The China-US trade war has dampened domestic demand as China export earnings are depressed. The yuan has lost 6% against the US dollar so far this year, which could prop up export numbers but could also increase the risk of capital outflows. Economists expect GDP to grow 1.6% quarter-on-quarter in Q3 compared to 1.8% in the second quarter.

Finally, the US budget deficit hit a six-year high of US$779 billion in the most recent fiscal year. Sweeping tax cuts were partly to blame as corporate tax receipts fell sharply. Government borrowings rose US$1 trillion to US$15.75 trillion, resulting in a 14% increase in interest expense. Notably, military expense rose 6% to US$32 billion, while education spend dropped US$48 billion, 43% lower than the previous year.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore contributor Jeremy Chia does not own shares in any company mentioned.