Singapore is reeling from its worst environmental disaster in years as smog pollution from neighboring Indonesia continues to blanket skies above the city. But as the pollutant index surges past hazardous levels, the benchmark Straits Times Index ended the trading day by plummeting 2.5 percent - its biggest drop in 19 months.
 |
| Concerns over Singapore's tourism and retail receipts as the haze persists may have partly contributed to plummeting REIT prices. |
Singapore REITs are once again among the biggest losers today as heavyweights Ascendas REIT and Keppel REIT each shedding more than 4 percent to end their day at record lows. Ascendas REIT in particular has wiped out all gains made since 17 August 2012. Other notables which have fallen significantly today include Hong Kong - focused Fortune REIT and CapitaRetail China Trust.
| REIT | Last ($) | Drop ($) | % Drop |
|---|---|---|---|
| Fortune REIT (HK$) | 7.17 | -0.380 | -5.033 |
| CapitaRetail China Trust | 1.45 | -0.070 | -4.605 |
| Suntec REIT | 1.59 | -0.075 | -4.518 |
| Keppel REIT | 1.34 | -0.060 | -4.301 |
| Ascendas REIT | 2.25 | -0.100 | -4.255 |
| Frasers Commmercial Trust | 1.37 | -0.060 | -4.211 |
| LippoMalls Indonesia Retail Trust | 0.48 | -0.020 | -4.000 |
| Starhill Global REIT | 0.85 | -0.035 | -3.977 |
| AIMS AMP Industrial REIT | 1.60 | -0.060 | -3.625 |
| Mapletree Industrial Trust | 1.35 | -0.050 | -3.584 |
| Frasers Centrepoint | 1.93 | -0.065 | -3.528 |
| Cambridge Industrial Trust | 0.71 | -0.025 | -3.425 |
| Parkway Life REIT | 2.41 | -0.080 | -3.213 |
| Ascott REIT | 1.31 | -0.040 | -2.974 |
| CapitaCommercial Trust | 1.48 | -0.045 | -2.951 |
| Mapletree Commercial Trust | 1.21 | -0.035 | -2.823 |
| CACHE Logistics Trust | 1.23 | -0.035 | -2.767 |
| Mapletree Greater China | 0.96 | -0.025 | -2.551 |
| Sabana REIT | 1.16 | -0.030 | -2.532 |
| Mapletree Logistics Trust | 1.12 | -0.020 | -1.754 |
| CapitaMall Trust | 2.00 | -0.030 | -1.478 |
| First REIT | 1.22 | -0.015 | -1.220 |
| Saizen REIT | 0.18 | -0.002 | -1.099 |
The slide in prices could have partly been caused by lingering concerns over the haze and how it will impact retail and tourism receipts over the next several months. REITSWEEK ran a short commentary on this earlier in the day.
But a more probable trigger would have been renewed concerns that interest rates are set to rise given that the US Federal Reserve has started winding down on its bond buying program.
As interest rates rise and the spread between safe rates and yields from securities start to narrow, the allure of REITs and dividend stocks as viable investment vehicles will begin to wane. This is why defensive counters such as telecommunication stocks were similarly pummeled throughout the trading day.
REITs are likely to flirt with their lowest-in-months prices over the next few days until a clear sign of reprieve avails itself. But till then, all eyes are going to be trained towards soon-to-be market entrants SPH REIT and OUE REIT.
Given current market sentiments, it is unlikely that the SPH REIT and OUE REIT will garner the same levels of interest that Mapletree Greater China Commercial Trust had at the point of its IPO. If these two REITS are not able to command IPO prices most conducive to their objectives, it will not seem too far fetched to suggest that the intended listings might be scrapped should market sentiments not improve.