UOB Kay Hian is keeping its “overweight” rating on the Singapore REITs (S-REITs) sector despite the country’s recent surge in daily Covid-19 infections. This is as most of the new infected cases are asymptomatic or have mild symptoms. Thankfully, this means that ICU admission and deaths remain low.
Based on experiences of European countries, a transmission wave takes four to eight weeks (28 to 56 days). Daily cases in Singapore could double every 10 days and hit a peak of 3,200.
See also: Current S-REIT levels 'opportunity to re-enter' as 'patient' FED conducive for sector to re-rate: DBS
In a Sept 17 report, analyst Jonathon Koh notes that the FSTREI has in the past two weeks dropped 0.5% as infection cases rise.
Some of the outperformers on Koh’s list include OUE Commercial REIT (OUECT) (+8.5%), Far East Hospitality Trust (FEHT) (+6.8%), Cromwell European REIT (CERT) (+6.4%), Starhill Global REIT (SGREIT) (+4.9%), ESR-REIR (EREIT) (+3.2%), Prime US REIT (PRIME) (+3.0%), ALLT (+2.8%), SPH REIT (+2.7%) and Keppel Pacific Oak US REIT (KORE) (+1.3%).
These REITs were some of the new constituents added to FTSE EPRA Nareit Developed Asia Index and rallied with sizeable gains. A total of 11 S-REITs were included during the latest quarterly review conducted in September, which become effective on Sept 20.
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On the other hand, the top losers were mainly casualties of the outbreak of Delta variant, putting a small dent on the reopening theme. Hospitality REITs Frasers Hospitality REIT (FHT), CDL Hospitality Trusts (CDLHT) and Ascott Residence Trust (ART) declined 7.0%, 5.1% and 3.9% respectively. Retail REITs Suntec REIT, Sasseur REIT, Lendlease Global Commercial REIT (LREIT) and United Hampshire US REIT (UHU) declined 4.8%, 3.8%, 3.4%, 3.0% and 2.8% respectively.
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