Update 17 June on IOIPG
US stocks climbed Monday and oil prices dropped after The Wall Street Journal reported Iran is urgently signaling it wants to end hostilities with Israel.
The S&P 500 advanced 0.9% and US crude oil prices dropped 1.7%, reversing part of Friday’s runup. Israel and Iran struck at each other’s energy facilities over the weekend, and Israel said it had also hit command centers of Iran’s Revolutionary Guard.
Meanwhile, President Trump joined the leaders of G-7 countries, plus others, at a summit in Canada. Nations including Japan, Canada and Mexico hope face time with Trump will help them persuade the president to lower at least some of his tariffs.
European and Asian stocks gained Monday, as data from China showed retails sales grew faster than expected in May, although factory growth slowed in the first five months of the year.
US Treasury yields edged higher despite a $13 billion auction of 20-year bonds that attracted solid demand from investors. The yield on the 10-year note closed at 4.452%.
Israel hit Iranian state TV during a live broadcast
The New York Times, June 17, 2025
Israel struck the headquarters of Iran’s state television yesterday after ordering residents to evacuate part of Tehran. A female news anchor was speaking live on the air when an explosion shook the building. The screen filled with smoke and debris, and the sound of breaking glass and screams could be heard as the anchor hurried off.
Israel also struck the command center of the Quds Force, an elite, covert arm of the military that largely runs Iran’s foreign operations, including training and arming proxy groups like Hezbollah. Earlier in the day, Iranian missiles struck several Israeli cities, killing at least eight people, Israeli officials said.
Civilian casualties climbed on both sides, and experts believe that the fighting may last for weeks.
America’s role: Analysts said the war could be a critical decision point for President Trump, whose nuclear talks with Tehran were scrapped when Israel attacked on Friday. He must now decide whether or not the U.S. will intervene.
So far, his statements suggest that he wants to use Israel’s military gains as leverage for more nuclear talks with Tehran. At the Group of 7 summit in Canada, Trump called the fighting “painful for both parties,” but added, “I’d say Iran is not winning this war.” He urged Iran to negotiate.A White House official said that Trump had decided not to sign on to a joint statement from the G7 calling on Iran and Israel to de-escalate.
More news from Iran and Israel:
Many Iranians are trying to flee Tehran. But for some, the destination is unclear.
The strikes have shown just how compromised and weak Iran’s forces have become.
Oil prices dropped after an initial bump, but the conflict poses many risks for the energy market.
Tens of thousands of Israeli civilians are stranded overseas as Israel’s airspace remains closed.
Iran plots Israel retaliation that would hit world 'worse than Putin's war and Covid-19 combined'
Daily Mail, June 16, 2025
Iran's plot to retaliate against Israel for starting the latest round of escalating violence in the Middle East may hit the world worse than Vladimir Putin's invasion of Ukraine and Covid-19 combined, an economist has warned.
This weekend saw Iran and Israel fire wave after wave of missiles and drones at each other, beginning on Friday when Benjamin Netanyahu ordered the IDF to target Iran's nuclear infrastructure, as well as densely populated parts of Iranian cities.
Though the two nations have largely kept the latest violence between themselves, experts fear Iran may soon take actions that could draw the whole world into the conflict.
Over the weekend, Islamic Revolutionary Guard commander Sardar Esmail Kowsari told local media that closing the Strait of Hormuz 'is under consideration, and Iran will make the best decision with determination.'
The Strait is a pivotal trade route for the world. Around 20% of the world's oil flows through the tiny sea passage, along with a fifth of all Liquefied Natural Gas (LNG), making it the 'world's most important oil transit chokepoint', according to the the US Energy Information Administration.
But Kowsari said Iran was not limiting its options in dealing with Israel, telling local media: 'Our hands are wide open when it comes to punishing the enemy, and the military response was only part of our overall response.'
Trade Gerrit Heinemann told Bild that should Iran choose to close the Strait, which borders the country, the results would be 'catastrophic.'
'[It would be] worse than Corona and Putin combined! The second episode of the ongoing crisis would be even more severe than what we experienced at the beginning of the Ukraine war and during the Corona years. A disaster.'
He told the newspaper: 'A large part of the global supply chains runs through the affected region. This not only dramatically impacts energy supplies, but also the flow of goods.'
'All of a sudden, all the crises we had just overcome would return: the energy crisis, inflation, disrupted supply chains, and now the threat of mass unemployment.'
At its thinnest, it is just 21 miles wide, and the shipping lanes in the Strait are even smaller.
This makes it incredible vulnerable to attacks.
It isn't the first time a rogue group has threatened international trade this year. Since Israel began its invasion of Ukraine, the Yemeni Houthi group have been attacking ships in the Bab al-Mandeb Strait, the entry into the Red Sea, in an effort to pressure the West, which has largely backed Israel throughout its history.
But ships that ordinarily use the Bab al-Mandeb Strait can still avoid it by sailing round Africa.
In the case of the Strait of Hormuz, there is no way to get anything out of the Gulf of Persia, the single biggest source of petroleum in the world.
Cutting the world off from such a large source of energy would massively affect economies across the world, which still largely rely on non-renewable sources like oil for their needs.
There is precedent for this type of move from Iran. In April 2024, Iranian armed forced seized a container near the Strait of Hormuz following rising tensions across the Middle East after Israel launched a missile at its consulate in Damascus, Syria.
For now, Iran and Israel appear to be escalating their attacks on each other.
Iran fired a new wave of missile attacks on Israel early on Monday, killing at least eight people, while Israel warned residents of part of Tehran to evacuate ahead of new strikes.
The warning came on the fourth day of the conflict, as the Israeli military claimed to have achieved 'aerial superiority' over Iran's capital.
The military says it has degraded Iranian air defences and missile systems to the point that its planes can now operate over Tehran without facing major threats.
It says Israel now controls the skies from western Iran to Tehran.
Later, the Israeli military warned residents of part of Tehran to evacuate ahead of strikes on military sites in the city.
It came after Iran fired a new wave of missile attacks on Israel early on Monday, triggering air raid sirens across the country as emergency services reported at least five killed and dozens more wounded in the fourth day of open warfare between the regional foes.
Iran says parliament is preparing bill to leave nuclear non-proliferation treaty
Reuters, June 16, 2025
DUBAI: Iranian parliamentarians are preparing a bill that could push Tehran toward exiting the nuclear Non-Proliferation Treaty, the foreign ministry said today, while reiterating Tehran’s official stance against developing nuclear weapons.
“In light of recent developments, we will take an appropriate decision. Government has to enforce parliament bills but such a proposal is just being prepared and we will coordinate in the later stages with parliament,” the ministry’s spokesman Esmaeil Baghaei said, when asked at a press conference about Tehran potentially leaving the NPT.
The NPT, which Iran ratified in 1970, guarantees countries the right to pursue civilian nuclear power in return for requiring them to forego atomic weapons and cooperate with the UN nuclear watchdog, the IAEA.
Israel began bombing Iran last week, saying Tehran was on the verge of building a nuclear bomb. Iran has always said its nuclear programme is peaceful, although the IAEA declared last week that Tehran was in violation of its NPT obligations.
President Masoud Pezeshkian reiterated today that nuclear weapons were against a religious edict by Supreme Leader Ayatollah Ali Khamenei.
Iran’s state media said that no decision on quitting the NPT had yet been made by parliament, while a parliamentarian said that the proposal was at the initial stages of the legal process.
Baghaei said that developments such as Israel’s attack “naturally affect the strategic decisions of the state”, noting that Israel’s attack had followed the IAEA resolution, which he suggested was to blame.
“Those voting for the resolution prepared the ground for the attack,” Baghaei said.
Israel, which never joined the NPT, is widely assumed by regional governments to possess nuclear weapons, although it does not confirm or deny this.
“The Zionist regime is the only possessor of weapons of mass destruction in the region,” Baghaei said.
My take: This latest development in Iran parliament seems to go in contradict with the news below that says Iran foreign minister is seeking international mediation from Qatar and Oman to intervene in re-launching negotiations with the US.
If Iran parliament votes to exit the nuclear NPT, I am not sure what Iran could offer to the US and UN IAEA for reaching any agreement on its nuclear program.
Iran seeks international mediation amid conflict with Israel, Trump promises peace
Euronews, June 16, 2025
Almost 48 hours after the eruption of hostilities between Israel and Iran, concerted but limited diplomatic efforts appear to be underway to prevent the conflict from spiralling out of control and ultimately bring it to a resolution.
US President Donald Trump declared on Sunday that “we will have peace, soon, between Israel and Iran” and that the countries “should make a deal and will make a deal”.
“Many calls and meetings now taking place. I do a lot, and never get credit for anything, but that’s ok, the people understand. Make the Middle East great again," Trump said in a post on his social media on Sunday.
Meanwhile, as Israel has expanded its onslaught on Iran, Tehran has reached out to Qatar and Oman through diplomatic channels, asking for regional mediators to intervene in relaunching negotiations, multiple Israeli media outlets reported on Sunday, citing Israeli government sources.
According to the same Israeli sources, Iran is asking Qatar and Oman to act as intermediaries to inform the US of its willingness to negotiate a ceasefire or for Washington to urge Israel to stop its offensive, while Saudi Arabia may also be pursuing discreet diplomatic efforts to enable a de-escalation of the hostilities between Iran and Israel.
These diplomatic manoeuvres were echoed by Iran’s Foreign Minister Abbas Aragchi on Sunday when he said that Iran remains open to negotiating a nuclear deal, as a possible response to Trump’s calls for Iran to return to the negotiating table and make a deal on its nuclear activities.
“We are prepared for any agreement aimed at ensuring Iran does not pursue nuclear weapons,” Aragchi told foreign diplomats in Tehran.
However, the Iranian foreign minister still chose to add a defiant tone to his statement by saying that Iran would not accept any deal that “deprives Iran of its nuclear rights” and that continuing talks with the US in the current circumstances would be “unjustifiable”.
Europe 'left sitting on the sidelines'
Meanwhile Israel has pressed on with its operations on Sunday, warning Iran to evacuate the nuclear sites. Prime Minister Benjamin Netanyahu visited the attack site in Bat Yam, where he declared: "Iran will pay a very heavy price for the murder of civilians, women, and children that they committed intentionally."
Netanyahu added: "We are here because we are in an existential battle—something that is now clear to every Israeli citizen. Just imagine what would happen if Iran possessed nuclear weapons to launch against Israeli cities."
Israel remains sceptical that Iran would respect any future deal and instead asked the Trump administration to join its efforts to destroy Iran’s nuclear programmes, according to Israeli officials. However, Washington refuses to get involved directly.
Meanwhile, European leaders have been calling for a diplomatic solution to avoid an all-out war that could spiral across the Middle East and beyond, but security expert Claude Moniquet told Euronews that Europe has been left “sitting on the sidelines”.
Those talks may now be in doubt, but “the Europeans were excluded” from them anyway, Moniquet pointed out.
“Europeans have been pretty much excluded from all major diplomatic manoeuvres around the war in Gaza or the war in Lebanon,” the former French intelligence officer and author said.
Iran does not want conflict with Israel to expand but will defend itself
Reuters, June 15, 2025
DUBAI: Iran does not want its conflict with Israel to expand to neighbouring countries unless the situation is forced, foreign minister Abbas Araqchi said today, adding its response had been based on self-defence.
Araqchi said Tehran had been responding to foreign aggression, and that if this aggression stopped, Iranian reactions would also cease.
The foreign minister said the Israeli strikes on the offshore South Pars gas field Iran shares with Qatar were “a blatant aggression and a very dangerous act”.
“Dragging the conflict to the Persian Gulf is a strategic mistake, and its aim is to drag the war beyond Iranian territory,” he said.
The foreign minister accused Israel of seeking to sabotage ongoing Iran-US nuclear talks, which according to him could have opened the way for an agreement. Tehran was set to present a proposal this Sunday during a sixth round of talks, which were cancelled following recent escalations.
“Israel’s attack would never have happened without the US green light and support,” Araqchi said, adding Tehran does not believe American statements that Washington had taken no part in recent attacks.
“It is necessary for the US to condemn Israeli strikes on Iranian nuclear facilities if they want to prove their goodwill.”
My take: Iran has no choice but to persuade the US to ask Israel to stop the attacks. Iran does not have advanced weapons that can penetrate the air defense dome of Israel, as it appears that China did not agree to supply Iran with its advanced weapons when Wang Yi had a call with Iran foreign minister last Saturday. Russia is also backing off with any direct involvement in this conflict in the Middle East as it prepares for more aggression into Ukraine in a summer attack.
Hopefully, Donald Trump has a way to get Israel to stop further aggression in Iran and both sides can de-escalate the conflicts.
Netanyahu says regime change in Iran could be result of Israel’s attacks
Reuters, June 16, 2025
WASHINGTON: Regime change in Iran could be a result of Israel’s military attacks on the country, Israeli Prime Minister Benjamin Netanyahu told Fox News on Sunday, saying Israel would do whatever is necessary to remove the “existential threat” posed by Tehran.
Israel launched “Operation Rising Lion” with a surprise attack on Friday morning that wiped out the top echelon of Iran’s military command and damaged its nuclear sites, and says the campaign will continue to escalate in coming days. Iran has vowed to “open the gates of hell” in retaliation.
Israel’s military has said the current goal of the campaign is not a change in regime, but the dismantling of Iran’s nuclear and ballistic missile programmes.
Asked by Fox’s Bret Baier on his “Special Report” programme if regime change was part of Israel’s military effort, Netanyahu said: “Could certainly be the result because the Iran regime is very weak.”
“We’re geared to do whatever is necessary to achieve our dual aim, to remove … two existential threats – the nuclear threat and the ballistic missile threat,” Netanyahu said in one of his first interviews since Israel’s attacks began.
“We did act – to save ourselves, but also, I think, to not only protect ourselves, but protect the world from this incendiary regime. We can’t have the world’s most dangerous regime have the world’s most dangerous weapons,” he said.
Israel has said its operation could last weeks, and Netanyahu has openly urged the Iranian people to rise up against their Islamic clerical rulers.
Israel and Iran launched fresh attacks on each other overnight into Sunday, killing scores and raising fears of a wider conflict, as US President Donald Trump said it could be ended easily while warning Tehran not to strike any US targets.
Asked about a Reuters report that Trump vetoed an Israeli plan to kill Iran’s Supreme Leader Ayatollah Ali Khamenei, Netanyahu said: “I’m not going to get into that.”
But he said he had informed Trump ahead of Friday’s military action. American pilots are shooting down Iranian drones headed toward Israel, he said.
With worries growing of a regional conflagration, Trump has lauded Israel’s offensive while denying Iranian allegations that the US has taken part in it. He warned Tehran not to widen its retaliation to include US targets or else face the “full strength and might” of the US armed forces.
Trump has repeatedly said Iran could end the war by agreeing to tough restrictions on its nuclear programme, which Iran says is for peaceful purposes but Western countries say could be used to make a bomb.
The latest round of nuclear negotiations between Iran and the US, due to be held on Sunday, was scrapped after Tehran said it would not negotiate while under Israeli attack.
Trump vetoes Israeli plan to kill Iran’s supreme leader Ali Khamenei
Reuters, June 16, 2025
WASHINGTON: President Donald Trump vetoed an Israeli plan in recent days to kill Iran’s Supreme Leader Ayatollah Ali Khamenei, two US officials told Reuters on Sunday.
“Have the Iranians killed an American yet? No. Until they do we’re not even talking about going after the political leadership,” said one of the sources, a senior US administration official.
The officials, speaking on condition of anonymity, said top US officials have been in constant communications with Israeli officials in the days since Israel launched a massive attack on Iran in a bid to halt its nuclear programme.
They said the Israelis reported that they had an opportunity to kill the top Iranian leader, but Trump waved them off of the plan.
The officials would not say whether Trump himself delivered the message. But Trump has been in frequent communications with Israeli Prime Minister Benjamin Netanyahu.
When asked about Reuters report, Netanyahu, in an interview on Sunday with Fox News Channel’s “Special Report With Bret Baier,” said: “There’s so many false reports of conversations that never happened, and I’m not going to get into that.”
“But I can tell you, I think that we do what we need to do, we’ll do what we need to do. And I think the United States knows what is good for the United States,” Netanyahu said.
Trump has been holding out hope for a resumption of US-Iranian negotiations over Tehran’s nuclear programme. Talks that had been scheduled for Sunday in Oman were canceled as a result of the strikes.
Trump told Reuters on Friday that “we knew everything” about the Israeli strikes.
IOIProp poised for REIT listing in the second half of next year
The Star, June 16, 2025
PETALING JAYA: IOI Properties Group Bhd (IOIProp) will likely pursue a real estate investment trust (REIT) listing in the second half of 2026 (2H26), covering assets such as IOI City Mall Phases 1 and 2, offices, and hotels in Malaysia, with an estimated valuation of between RM7bil and RM8bil, says UOB Kay Hian (UOBKH) Research.
The research house said following the recent full acquisition of South Beach Development, management is also targeting a potential Singapore REIT listing in 2027, with combined assets from IOI Central Boulevard (IOICB) and South Beach Development and expected valuation at RM23bil to RM26bil.
“Assuming IOIProp retains a 50% stake in both REITs, it could reap total proceeds of RM15bil to RM17bil to pare down debt and gearing to around 0.3 times, per our estimates.
“As of end March 2025, IOIProp’s total borrowings stood at RM19.4bil, excluding the RM3.6bil (S$1.09bil) from the South Beach Development. Upon balance sheet consolidation, net gearing is expected to rise to 0.93 times, from 0.75 times as of end-March 2025,” UOBKH Research said in a report last week.
Earlier this month, IOIProp gained full control of Singapore’s South Beach project by acquiring the remaining 50.1% stake from Singapore-based City Developments Ltd.
UOBKH Research said while the acquisition of South Beach Development may have been priced at a slight premium, full ownership should provide IOIProp with greater flexibility to enhance yields over time.
The research house added that though South Beach Tower’s actual occupancy is 80% due to the departure of an anchor tenant, its committed occupancy remained high at 92.4% as of end-March 25.
“Currently, the 34-storey Grade A tower offers 509,000 sq ft of office space, and has anchor tenants such as Baker McKenzie Wong & Leow and Legos.
“Average monthly rental is currently around S$11 per sq ft (psf), higher than the average Central Business District Grade A office rents of S$9.80psf, according to Savills Research,” UOBKH Research said.
According to the research firm, the hotel component, JW Marriott (634 rooms), is running at close to breakeven (but cash flow positive) with an occupancy rate of 76% and average daily rate of S$460, largely due to reliance on corporate rates and a lack of major events.
“Nevertheless, we expect the hotel segment to gradually improve on the back of higher inbound tourists and less emphasis on corporate clients,” UOBKH Research said.
The research house said overall, South Beach Development recorded a profit after tax of RM63mil and net property income (NPI) of RM331mil in the financial year 2024 (FY24).
“Based on South Beach’s total asset valuation of RM5.5bil (as implied by the 50.1% stake acquisition), this translates to a net yield of 1.2% and NPI yield of 6%. The wide gap between net yield and NPI yield is largely attributable to the high depreciation and amortisation charges, as well as interest expenses,” UOBKH Research said.
That said, with the stake acquisition targeted for completion in September 2025, management aims to raise average room rate to S$600 by targeting more retail or rack-rate bookings, which could lift net yield to at least 3% by the fourth quarter of financial year 2026 (4Q26) (that is 2Q27).
Meanwhile, UOBKH Research said IOICB is expected to move into the black in the coming few months. IOICB currently has a committed occupancy rate of more than 85% (versus 80% as of end-March, 2025), with actual occupancy surpassing 70%.
My take: UOB is the second analyst to report on the REIT plan of IOIPG, after Hong Leong.
The information is consistent: a commercial REIT to be set up in Malaysia in 2H 2026 to house the shopping mall assets (IOI City Mall, IOI Mall Puchong & IOI Mall Kulai) and office towers in Malaysia; and a commercial REIT to be set up in Singapore in 2027 to house the South Beach complex and IOI Central Boulevard (IOICB).
The Malaysia REIT will have a valuation of RM7 billion to RM8 billion, and the Singapore REIT will have a valuation of SGD7 billion to SGD8 billion.
UOB assumes IOIPG to list up 50% stakes of the REITs while Hong Leong assumes 40% stakes for listing. In either way, IOIPG net gearing is expected to drop substantially after these two REIT plans to the 0.3x level.
One positive surprise from the UOB report is that IOICB has achieved a committed occupancy rate of over 85%, this is higher than the 80% occupancy rate as of 30 April 2025 as reported by Hong Leong on May 29. Hopefully its occupancy rate can achieve 90% by 30 Jun 2025 and over 95% in 2H 2025. The actual occupancy is at over 70% and expected to go up to 85% in coming weeks as new tenants move in. Then IOICB will start turning in profits.
After IOIPG completes the injection of South Beach complex and IOICB into a commercial REIT in Singapore, it will have plenty of cash proceeds to do other projects. Assuming a listing of 40% stakes in South Beach and IOICB, IOIPG will be getting SGD3.0 billion of cash proceeds, which it could use to pare down borrowings at South Beach (SGD1.05bn) and IOICB (SGD3.0bn). IOIPG may still have some SGD500m - SGD1.0bn to take up the Shenton House re-development project. Once it fully re-develops Shenton House, it may then inject it into the Singapore REIT to recycle the capital. The W Hotel at Marina View under construction will be ready for injection into the REIT later in 2029-2030 when the hotel occupancy rate reaches 80% or higher. Then the IOIPG Singapore REIT will have total assets value of close to SGD10 billion and rental income of over SGD400 million a year. Assuming IOIPG retains 60% of the Singapore REIT, IOIPG will be getting over SGD240 million of dividends from the REIT every year.
Back to Malaysia, the shopping mall assets including IOI Mall Damansara (previously Tropicana City Mall) will be ripe for a REIT injection in 2026. Some office towers may be ready too. But I do not think the hotel assets are ready in 2026, given the low profitability of the hotel division in past few quarters. Some of these hotels are relatively new (eg. Moxy Hotel, Grand Sheraton Hotel in Xiamen). The Malaysia REIT may have assets worth RM7-8bn when listed in 2026, it will grow in asset size when more mature office towers and hotels are injected into the REIT. I see that eventually the Malaysia REIT will have total assets value of over RM10 billion and net dividend income of some RM600 million a year. Assuming IOIPG retains 50% of the Malaysia REIT, it will be getting dividend payouts of RM300 million a year from the REIT.
By 2030, we can reasonably expect that the total net property income from its Investment Property segment (which will be largely housed under the Singapore and Malaysia REIT) will amount to over RM1.0 billion a year. Plus income from the property development segment, IOIPG will have net profit of over RM1.3 billion (EPS of 23.6 sen) a year then. The rental income from its investment properties will grow over time, at least 10% every 3 years. In 10 years time, IOIPG will grow its net profit and operating cashflows to over RM1.57 billion or EPS of 28 sen.
The net gearing of IOIPG will be at the low 0.3x level then and it will be able to declare high dividends. Assuming a 70% payout ratio, I project dividends coming in at 20 sen a year, supporting a share price of over RM3.50 then.
Net short positions on YTL Power remained steady at 22.6m shares at close Monday, while net short positions on YTL increased by 1.1m shares to 24.7m shares. IOIPG saw its net short positions decline to 15.16m shares.