In the U.S.:
- CIA Director Mike Pompeo traveled to North Korea to meet Kim Jong Un and prepare for a possible summit with President Trump. The trip raised optimism that the two sides could reach a denuclearization deal. In addition, it is expected that South Korea’s President Moon Jae-in and North Korea’s leader Kim Jong Un may release a joint statement saying they will seek to ease military tension and to end confrontation.
The Macerich Company (MAC) announced that Arthur Coppola will retire as Chairman and CEO of The Macerich Company after 25 years as CEO. Following the news, several research firms raised their outlook for the company given the increased likelihood of M&A activity.
- The PBoC stated that it would cut the reserve requirement ratio (RRR) by 100 bps for most commercial banks on April 25. The move, aimed at expanding growth, would unleash approximately $200B into the economy.
- The US Treasury Department is considering using an emergency law to curb Chinese investments in sensitive technologies. The law is aimed to punish the Chinese for previous violations of American intellectual property rights.
- Support for Prime Minister Shinzo Abe fell to 26.7%, the lowest since he took office in late 2012. The falling approval ratings, primarily caused by the ongoing scandal regarding a real estate transaction, raises doubts on whether Mr. Abe can win a third term as leader of the ruling Liberal Democratic Party.
- March Core CPI rose 0.9% y/y versus February’s 1.0% y/y reading. The main catalysts to the modest drop were a deceleration in leisure services and lower energy prices.
CapitaLand Mall Trust sold a suburban Singapore shopping center for S$248M to a joint venture between Lian Beng Group Ltd and Apricot Capital Pte Ltd. The deal, expected to close in June, will generate a net gain of approximately S$119.6M.
- BoE Governor Carney eased rate hike fears when he stated that the financial markets were wrong to assume that a May rate hike was a foregone conclusion. While he acknowledged the importance of looking through short-term volatility in economic data, he added that there were other meetings over the year when the BoE can consider raising rates.
- The EU rejected the UK proposal regarding the Irish Border. The EU, which wants to offer special status only to Northern Ireland, may concede if Prime Minister Theresa May were to reverse her decision and keep the U.K. in a customs union.
Paris focused Gecina SA provided a brief 1Q18 update this week that mostly reinforced the ongoing recovery of the Paris office market. Like-for-like rental income increased 1.8% overall with a breakdown as follows: offices +1.8%, traditional residential +1.7% and student residences +2.7%. The strongest rental growth was within the central Paris and Western Crescent submarkets. Gecina has made strong leasing progress within its office portfolio with nearly 75,000 sq. m. (807,000 sf) let, pre-let, re-let or renegotiated since the start of the year. The leasing activity enabled it to make significant progress with its development pipeline with 64% of 2018 deliveries pre-let and 55% of the entire committed pipeline pre-let. The company has also completed or secured €436M of non-core sales since the start of the year at ≈ a 10% premium to the latest appraised values at year end and has an additional €800M of sales currently subject to exclusive talks. Finally, Gecina reconfirmed its 2018 targets for recurrent net income (Gecina share) per share to increase by 3% – 6% depending upon the timeline for finalizing various sales being considered.
The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.