SINGAPORE, Jan. 30 (Xinhua) -- The Singapore Exchange (SGX) has many reasons to cheer a lot when Hutchison Whampoa - the Hong Kong conglomerate controlled by Asian tycoon Li Ka Shing - announced that it would be spinning off its port assets in Hong Kong and Chinese mainland into a business trust to be listed in Singapore.

This is not only that it has emerged as the winner in the latest round of rivalry with its Hong Kong counterpart. After all, the new business trust encompassed with lucrative port businesses in Hong Kong and Chinese mainland, if successfully listed here, will also elevate the trading of the business trusts in the local bourse to the new level.

The new business trust is expected to have the largest market capitalization among the peers listed in the Singapore Exchange, and Singapore Exchange is one of the very few exchanges in Asia- Pacific region that offer a comprehensive platform for business trust listing.

Unlike real estates investment trusts (reits) which already has established presence in major regional bourses such as Hong Kong Exchange (HKex), business trust is a relatively new listing vehicle that has yet to take off in a big way in the region.

Some similarities and differences between a reit and business trust are often also seen as merits for companies to list their assets as business trust, provided that they meet the local regulatory requirements. For instance, a business trust, like a reit, can distribute dividends directly out of the income it get from its business.

Capital gain is possible for both reit and business trust if the value of their assets appreciates. Yet unlike a reit with its level of borrowings or gearing is limited to 35 percent of its asset for non-rated ones and 60 percent for rated ones, a business trust does not face any legal or regulatory restrictions on its level of borrowing.

The absence of restriction on borrowing enables the business trusts to expand their business more through debts. This certainly bode well for them under the low interest-rate environment, when their cost of borrowing is low due to the abundance of liquidity in the market, with the banks much more willing to lend deposits out to businesses which are seeking growth.

However, like all other investments, business trust can be impacted by economic downturns, and its price can fluctuate. When the financial crisis swept across the globe in the aftermath of Lehman Brothers' collapse, shipping trusts listed as business trusts in Singapore bourse were experiencing cash flow problems as many clients chose to default payments.

To make matter worse, some of them which had sought aggressive expansion now found themselves saddled with piles of loan facilities they could no longer pay on due date. As a result, their prices plummeted and have yet to recover to pre-crisis level to date.

Indeed, the financial woes are still felt by some business trusts as recent as late year despite the strong recovery of Asian economies in the last year and a half. On December last year, private investors chose to delist one of the business trusts engaged in water treatment after years of its depressed unit prices making new fund raising more difficult than expected amid the last global recession.

Hence, it comes as no surprise that Hutchison's latest move to list a business trust here is highly appreciated by the Exchange officials and market watchers. For now, a glimpse of hope has finally emerged out of the horizon for the trading of business trust in Singapore.