Singapore REITs - DBS Research 2024-09-27: Retail Investors' "Wall Of Money" Could Enter S-REITs In The Coming Months

• The cut-off yield for the latest six-month T-bill issue has declined to 2.97%, a new low since Sept 22 and the first auction after the US FED announced that it will start cutting rates. This is the first time T-bill yields have declined to the 3% mark since Sept 22.
• With the FED expected to maintain an interest rate normalisation trend in the coming quarters (DBS expects a further 200 bps in cuts till the end of 2025), T-bill yields could remain on a decline with possibly a lower participation rate from investors.

Our view.

Re-investment risk could prompt retail investors to relook at S-REITs when funds return.

• - Read this at SGinvestors.io -
• We believe that this calls for a potential reallocation into other asset classes (i.e., bonds, S-REITs) that offer higher returns than T-bills.

Up to S$4-7bn of potential inflows into S-REITs, assuming 5% to 8% of T-bill proceeds reinvested.

• - Read this at SGinvestors.io -
• With close to ~S$87bn in liquidity returning into the hands of these retail investors, assuming a conservative 5% to to 8% of these monies are deployed into “risker” asset classes within REITs, a potential S$4-7bn (or S$1-1.5bn net inflow monthly) could be invested in S-REITs.
• We assume that these retail monies are likely to seek the most conservative S-REITs (i.e., in terms of geographical exposure, familiarity with sponsors, etc.) and we believe that larger cap S-REITs will certainly benefit.

Our screening of possible S-REIT candidates that could attract investors

• Read more at SGinvestors.io.

Derek TAN DBS Group Research | Dale LAI DBS Research | Geraldine WONG DBS Research | https://www.dbs.com/insightsdirect/ 2024-09-27 SGinvestors.io

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