Wed. Dec 1st, 2021

Supply bottlenecks have pushed shares in European logistics groups such as Maersk to record highs. The phenomenon has also sparked interest in Asian goods movers. Singapore’s Mapletree and Japan’s Daiwa House have just announced their own investment plans. This could work out better in the long run, given the region’s stronger growth prospects.

Western media have recently been littered with stories about “the threat to Christmas”. Ports such as Long Beach, California and Felixstowe in the UK have been locked up with containers filled with consumer goods. But backlogs are starting in Asia.

Products manufactured in hubs, including China and Vietnam, are being halted by a shortage of ships and trucks. Profits from transport and warehouses are rising.

It encourages investment in a once unfashionable sector. Mapletree Logistics Trust, backed by Singapore state investor Temasek, will spend more than $ 1 billion to acquire assets across China, Japan and Vietnam. Japan’s largest developer Daiwa House Industry starts an international freight transport business in Southeast Asia. Its subsidiary Daiwa House Logistics Trust plans to raise about $ 343 million on Friday. This would be Singapore’s biggest listing this year.

The reading of Mapletree is discouraging. Its own shares have gone nowhere in the past year. Daiwa House’s share fell, which was weaker than the 14 percent rise in the benchmark Nikkei 225 index. He hopes for a boost as growth in the region’s logistics and industrial sector remains strong.

Even if global supply chain disruption normalizes earlier than expected, investors have a setback. Recent investment in logistics and manufacturing supply chains has been heavily weighted to Southeast Asian countries such as Vietnam, Thailand and Malaysia. All of these have local e-commerce markets that are far less mature than the rest of the region. Rapid growth in local demand is to be expected.

Dividends are another hedge. Mapletree’s payout exceeds 4 percent. The Daiwa House Trust has a projected return of 6.5 percent at the IPO price. This compares favorably with Maersk, although the company does not have the same price power.

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