S-Reits fall despite Fed’s 25-basis-point rate cut
They are often seen as immediate beneficiaries of easing moves, but American central bank is slowing the pace at which borrowing costs will decline further
SINGAPORE-LISTED real estate investment trusts (S-Reits) were a sea of red on Thursday (Dec 19) afternoon, even after the US Federal Reserve lowered interest rates by 25 basis points (bps).
As at 3.50 pm, retail plays BHG Retail Reit and Lippo Malls Indonesia Retail Trust were the largest percentage decliners. BHG Retail Reit was down 11.1 per cent or S$0.05 at S$0.40, and Lippo Malls Indonesia Retail Trust had fallen 5.6 per cent or S$0.001 to S$0.017.
These were followed by US office Reits.
Manulife US Reit shed US$0.005 or 5.1 per cent to US$0.093, while Keppel Pacific Oak US Reit fell US$0.01 or 4.6 per cent to US$0.21. Prime US Reit lost US$0.004 or 2.3 per cent to US$0.171.
Industrial and logistics Reits were not spared either, as Frasers Logistics & Commercial Trust declined 2.3 per cent or S$0.02 to S$0.86. Mapletree Reits were trading lower as well, with units of Mapletree Industrial Trust down 1.8 per cent or S$0.04 at S$2.18, and Mapletree Logistics Trust 1.6 per cent or S$0.02 lower at S$1.25.
Business trusts were on a general downtrend as well, with stapled securities of Frasers Hospitality Trust shedding 2.8 per cent or S$0.015 to S$0.525. Acrophyte Hospitality Trust slid 2.5 per cent or US$0.005 to US$0.195, and CapitaLand Ascott Trust fell 1.1 per cent or S$0.01 to S$0.865.
S-Reits, particularly those with overseas assets as well as higher floating and short-term debt, are often seen as immediate beneficiaries of interest rate cuts due to lower borrowing costs.
Their performance on Thursday was in tandem with other Singapore-listed stocks, which mirrored the slump in all three major Wall Street indices at the prior day’s close.
As at 3.59 pm on Thursday, the Straits Times Index (STI) had lost 0.4 per cent or 16.14 points to 3,763.48. Losers outnumbered gainers 333 to 167 after 794.6 million securities worth S$726.2 million changed hands.
Though the Fed had lowered interest rates by 25 bps, the central bank said that it would slow the pace at which borrowing costs would fall any further, citing a relatively stable unemployment rate and little recent improvement in inflation.
US central bankers now project just two quarter-percentage-point rate reductions by the end of 2025.
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