- While we expect the S-REIT sector to be range-bound in the near term following a 15% run up of S-REITs share prices over the past 3 months, our POSITIVE sector stance is unchanged.
- - Read this at SGinvestors.io -
Bull rage or Bull trap?
- The Fed’s 50bps cut is in line with market expectation and hence not an incremental positive or negative. S-REITs have benefitted from lower discount rate (S$ 10-year yield down 60bps since mid-July).
- If rate cuts are further front loaded without sacrificing growth, distribution growth for the S-REITs may kick in early. Currently, consensus and MIBG expect y-o-y distribution growth for FY2 while falling for FY1.
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- That said, we remain watchful of inflation driven by shelter and services. Rate cuts are asynchronous globally and closer home, Taiwan, South Korea and Australia are seeing rising home prices. Any change in MAS policy stance may weigh on the S$ yield curve. Base case remains that banks will not change the supportive margin stance on loans.
Revisiting rate sensitivity to DPU
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