S-REITs rally on sigh of relief post June FOMC pause
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% to 5.25%.
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 $Straits Times Index(STI.SI)$ gained 2.3%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% during the same period.
Top 10 S-Reits & property trusts that gained during the week of FOMC June 2023 meeting
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 $KEPPEL REIT(K71U.SI)$ (5.9%), Mapletree Pan Asia Commercial Trust $Mapletree PanAsia Com Tr(N2IU.SI)$ (5.6%), Mapletree Logistics Trust $MAPLETREE LOGISTICS TRUST(M44U.SI)$ (5.5%), CapitaLand India Trust $CapLand India T(CY6U.SI)$ (4.7%), and CapitaLand Ascendas REIT $ASCENDAS REAL ESTATE INV TRUST(A17U.SI)$ (3.8%). On average, the 5 trusts gained 5.1%, 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% during the week until the end of Friday’s morning session. CSOP iEdge S-REIT Leaders Index ETF gained 3.9%, followed by both NikkoAM-StraitsTrading Asia ex Japan REIT ETF and Lion-Phillip S-REIT ETF at 2.5% each, Phillip SGX APAC Div REIT ETF at 2.3%, and UOB APAC Green REIT ETF at 1.6%.
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% just on Friday’s early session, followed by CSOP iEdge SREIT Leaders Index ETF which gained 3.6%.
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.
https://www.sgx.com/research-education/market-updates/20230619-reit-watch-s-reits-rally-sigh-relief-post-june-fomc
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