- 1Q24 Singapore stock market investment themes:
- Opportunistically start building positions in REITs;
- exposure to an improving outlook for manufacturing and tech sectors;
- high-yield opportunities beyond REITs;
- selective exposure to recovery in Chinese outbound travel and tourism amid a better 2024 economic outlook;
- - Read this at SGinvestors.io -
- bottom-up opportunities in small-cap space.
Opportunistically start building positions in REITs
- We recently upgraded the REITs sector to OVERWEIGHT from Neutral. Our optimistic view was premised on the expectation that we are nearing the peak of the interest rate cycle and that sector valuation has become more attractive. It creates a good entry level for most REITs. We believe negatives are largely priced in, and sector news flow is expected to turn incrementally more positive as we move into 2024.
- - Read this at SGinvestors.io -
- While operational cost pressures persist, most S-REITs believe that these are almost at peak levels, with many hedging utility costs and passing through inflationary costs to tenants upon lease renewals. Interest cost pressures remain the key focus and concern, but we expect this to peak in 2024.
- The FX effect remains a wild card, but here too, S-REITs generally remain well hedged (50-100% overseas income) and are well diversified, which mitigates this impact. Our overall DPU outlook for the sector for 2024 remains negative, with a recovery anticipated in 2025.
- Read the following for complete analysis:
- Read more at SGinvestors.io.
Shekhar Jaiswal RHB Securities Research | https://www.rhbgroup.com/ 2023-12-21
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