Here are some snippets from trending topics that are in the market this week.
Special purpose acquisition companies (SPACs)
We wrote on SPACs in the fourth quarter of last year as we saw them as a key trend to watch for.
These new listing vehicles could certainly liven up the trading floors for Singapore Exchange Limited (SGX: S68), or SGX.
In just the first few days of 2022, there’s already been a flurry of activity concerning SPACs.
First off, Vertex Ventures, a venture capital firm backed by investment firm Temasek Holdings, has received an eligibility-to-list for its SPAC.
The company has wasted no time in lodging a preliminary prospectus for a S$200 million SPAC named Vertex Technology Acquisition Corporation (VTAC).
VTAC will be offering 11.8 million units at an offer price of S$5 per unit.
The listing of Singapore’s very first SPAC is expected to take place on 21 January.
European asset manager Tikehau Capital, together with its partner Financiere Agache, has also received an eligibility-to-list for their SPAC.
A company called Pegasus Asia was incorporated as a SPAC for an IPO.
Pegasus Asia became the second player to lodge a prospectus for a S$150 million SPAC listing, offering 25.6 million units at S$5 per unit.
A third SPAC listing may also be in the works as buyout firm Novo Tellus Capital Partners becomes the third company to receive permission to list its blank-cheque company.
It plans to raise between S$150 million to S$200 million from an IPO and could file a preliminary prospectus later this month.
With all this activity surrounding SPACs, 2022 may turn out to be an exciting year for growth investors who are looking to invest in popular and hot sectors.
VTAC has given us a glimpse of what it may acquire as it targets six themes.
These are — cyber security and enterprise solutions, artificial intelligence, consumer internet and technologies, financial technology, autonomous driving, and biomedical technologies cum digital healthcare.
Pending GST hike
The Singapore government has made moves to plan for an impending hike in the Goods and Services Tax (GST) in the upcoming Budget 2022, set to be unveiled on 18 February.
It was first announced back in 2018 that a GST hike from the current 7% to 9% was on the cards.
The timeline was for it to happen anytime between this year and 2025.
Additional revenues were cited as a reason for this move, and that the government needed “reliable and adequate revenue” to carry out social initiatives.
If there is indeed a GST increase this year, it may dampen consumer sentiment and cause people to tighten their purse strings.
Consumer businesses such as Jumbo Group Ltd (SGX: 42R), OTS Holdings Ltd (SGX: OTS) and Sheng Siong Group Ltd (SGX: OV8) may see a decline in spending as people hold back.
Luxury goods retailers such as The Hour Glass Ltd (SGX: AGS) and Cortina Holdings Limited (SGX: C41) may also suffer some negative impact from the GST rise.
Chinese New Year curbs
As the Omicron variant is spreading like wildfire around the world, the government has also announced that it does not plan to relax COVID-19 restrictions.
This decision means that the social gathering group size limit of five people will remain in place throughout the Chinese New Year (CNY) festive season.
The authorities are taking this step as they anticipate that the Omicron wave could result in peak infections of 15,000 a day, several times higher than that of the Delta variant.
The government will also reduce the quota numbers on vaccinated travel lane (VTL) flights and institute additional COVID-19 tests for passengers upon arrival.
Although there are no plans to completely halt VTL flights, this reduced quota will hurt the prospects for Singapore Airlines Limited (SGX: C6L) and SATS Ltd (SGX: S58).
Both blue-chip companies were seeing an uptick in passenger numbers that would have translated to better financial numbers for the fourth quarter of the calendar year 2021.
With the measures in place and the rapid spread of Omicron, it will also result in muted footfall for malls and lower tenant sales.
Investors will have watch to see if there are a negative impacts on retail REITs such as Frasers Centrepoint Trust (SGX: J69U), CapitaLand Integrated Commercial Trust (SGX: C38U), Mapletree Commercial Trust (SGX: N2IU) and Starhill Global REIT (SGX: P40U).
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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited.
