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Banks as ‘only clear sector beneficiary’ while property and REITs to suffer amid Fed rate hikes: CLSA

Chloe Lim
Chloe Lim9/27/2022 02:18 PM GMT+08  • 5 min read
Banks as ‘only clear sector beneficiary’ while property and REITs to suffer amid Fed rate hikes: CLSA
The analysts’ top picks are DBS, UOB, Singtel, CICT, CDL, Sembcorp Industries, Yangzijiang Shipbuilding, MINT, MLT and VMS
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As the US Federal Reserve (US Fed) lifted interest rates by 75 basis points (bps) for the third consecutive time on Sept 22, CLSA Research analysts Neel Sinha, Yew Kiang Wong and Horng Han Low are expecting several industries such as the property and REITs sector to take a hit, with the exception of banks being the only net beneficiary of rising rates.

After the most recent Fed rates announcement, CLSA chief economist Eric Fishwick raised his outlook to 4.75% by February 2023. The estimate is before any easing, and with 75 bps, 50 bps and 25 bps hikes yet to come.

“This is approximately 50 bps to 75 bps higher than the estimates in our company forecasts, though the actual impact will be lower based on hedging ratios,” say the analysts. “We expect an approximate 2.5% to 3% mid-teen 2023 consensus index earnings growth to be shaved.”

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