AUD

AUD: The Business Times highlighted that the Australian Dollar (AUD) fell to a more than five year low versus the SGD in Sept, as the currency continues to be pressured by concerns of a slowdown in China’s growth and weak commodity prices. For the next year, analysts are forecasting the AUD to trade at around $1.10 or lower, representing a more than 6% decline from the $1.175 seen at the beginning of Sep ’14, with some economists adding that the Reserve bank of Australia (RBA) has preference for a weaker currency in a bid to rebalance and prevent an overreliance on the mining sector. Given the precarious outlook of the AUD, those SGX-listed companies that have a significant exposure to the AUD, either in terms of revenue or asset base, may be adversely impacted by the anticipated depreciation in the currency. Singtel was cited as a most obvious example, via its Australian subsidiary Optus (Australia’s second-largest telco), which contributes to ~22.9% of the group’s MarFY14 net profit. A sensitivity analysis done by the group in its 2014 annual report highlighted that a 10% decline of the AUD/SGD would impact net profit by ~$98m. Other companies with revenue from Australia include ComfortDelgro, SIA, AusGroup and Sinwa, while notable property developers and REITs with notable Australian exposure include Frasers Commercial Trust, Keppel REIT, Frasers Centrepoint, CDL Hospitality Trust, UOL and Stamford Land. * Note that the list is by no means comprehensive and does not take into account net hedging effects.