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Broker's Take: US policy uncertainty still dogs S-Reit sector, says OCBC Research

Friday, March 31, 2017 - 10:04

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The recent trading momentum for the S-Reit sector must be matched against the policy uncertainties in the US, said an OCBC Investment Research report.

THE recent trading momentum for the S-Reit sector must be matched against the policy uncertainties in the US, said an OCBC Investment Research report.

The FTSE ST Reit Index (FSTREI) has appreciated about 2.7 per cent since the FOMC meeting, outperforming the Straits Times Index's 1.1 per cent increase over the same period. The yield spread of the FSTREI is trading slightly below the five-year mean of the Singapore Government 10-year bond yield.

"We believe this was driven by the relatively dovish tone of the Fed's statement, coupled with unchanged expectations for three rate hikes this year as compared to December's FOMC meeting, based on the dot plot diagram. However, we believe there continues to be uncertainties on the policy front."

OCBC remains "neutral" on the sector, and recommends investors to be selective. Its top picks are Keppel DC Reit, Frasers Centrepoint Trust, and Frasers Logistics & Industrial Trust.

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