SGX Market Updates

REIT Watch – S-REITs Rally on Sigh of Relief Post June FOMC Pause

Publish date: Mon, 19 Jun 2023, 10:10 AM

Top 10 S-Reits & property trusts that gained during the week of FOMC June 2023 meeting

Key news last week was the US Federal Reserve’s decision to put a pause on interest rates, keeping them unchanged as announced during this month’s Federal Open Market Committee (FOMC) meeting. This is the first pause in rate hikes since early 2022 and the benchmark rate remains at 5 per cent to 5.25 per cent.

While interest rates were kept unchanged, the Federal Reserve signaled that interest rates could see two more increases for the rest of this year.

Perhaps a sigh of relief for many as the STI gained 2.3 per cent over the past week until the end of Friday’s morning session. S-REITs were one of the better performing sectors of the STI, post the FOMC meeting, with the iEdge S-REIT Index gaining over 3.5 per cent during the same period.

Across the 40 actively traded S-REITs & Property Trusts on Thursday’s session after the FOMC meeting, there were 23 gainers and only 6 decliners, while the remaining 11 REITs ended the day flat.

The top 5 gainers among S-REITs & Property Trusts during the week until Thursday’s close were: Keppel REIT (5.9 per cent), Mapletree Pan Asia Commercial Trust (5.6 per cent), Mapletree Logistics Trust (5.5 per cent), CapitaLand India Trust (4.7 per cent), and CapitaLand Ascendas REIT (3.8 per cent). On average, the 5 trusts gained 5.1 per cent, outperforming the S-REITs benchmark. 4 out of the 5 recorded net institutional inflows during the week with Keppel REIT leading net inflows exceeding S$6 million.

Singapore’s 5 REIT ETFs have also trended upwards, gaining an average 2.6 per cent during the week until the end of Friday’s morning session. CSOP iEdge S-REIT Leaders Index ETF gained 3.9 per cent, followed by both NikkoAM-StraitsTrading Asia ex Japan REIT ETF and Lion-Phillip S-REIT ETF at 2.5 per cent each, Phillip SGX APAC Div REIT ETF at 2.3 per cent, and UOB APAC Green REIT ETF at 1.6 per cent.

NikkoAM-StraitsTrading Asia ex Japan REIT ETF was among top traded ETFs over the past week and recorded net inflows. Phillip SGX APAC Div REIT ETF gained close to 10 per cent just on Friday’s early session, followed by CSOP iEdge SREIT Leaders Index ETF which gained 3.6 per cent.

And as shared by advisory platform Beansprout in an insight, while the expectation that interest rates are close to peak might lead to improved sentiments for REITs, market participants will still consider a REIT’s ability to generate higher rental income from its properties to offset higher interest costs.

REIT Watch is a weekly column on The Business Times, read the original version.

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