US office Reits rally on rate cut hopes; STI up marginally

THE Straits Times Index (STI) ended Wednesday (Jul 17) at 3,489.57, up a marginal 1.66 points or 0.05 per cent. Advancers beat decliners 304 to 244, after 1.1 billion securities worth S$1.1 billion changed hands.

Local bank DBS continued its downward course, falling 0.2 per cent to close at S$37.28. The bulk of the selling pressure, however, came from telco Singtel , which announced overnight an intention to increase its stake in its Thai associate AIS.

Singtel will participate in a voluntary tender offer for shares of AIS held by the public as part of a larger restructuring exercise that, among other things, will simplify AIS’ shareholding structure.

Shares of Singtel rose at the open, climbing as high as S$3.10, but began a steady decline after the midday break. They closed Wednesday at S$3.02, down 1 per cent.

The three US office real estate investment trusts (Reits) had a good day, on the back of speculation that the US Federal Reserve will cut interest rates soon. The CME FedWatch suggests a 91.6 per cent probability of a 25-basis-point cut in September and a 56.8 per cent probability of another 25-basis-point cut in November.

Prime US Reit rose 19.7 per cent to close at US$0.17, Manulife Reit rose 12.2 per cent to end at US$0.083, and Keppel Pacific Oak Reit rose 11.5 per cent to finish at US$0.175.

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Veteran Reit investor Gabriel Yap of GCP Global said the three Reits have been so beaten down that “it just takes an ounce of good news, speculative though it may be, for them to bounce back”.