‘Attractive valuations:' DBS says it's time to buy these industrial S-Reits on easing trade tensions
Industrial S-Reits have declined by 5 per cent on average in share price since the beginning of the year.
But the research house said that progress in recent trade negotiations between Washington and Beijing has led to an improved near-term outlook for such S-reits, which have been affected by trade uncertainties, as well as interest rate and currency fluctuations.
This opens an 'attractive opportunity not to be missed' for the sector, which has an average DPU yield of 5.8 per cent to 9.8 per cent, more than 1 per cent higher than retail S-Reits, it added.
DBS also expects borrowing costs for large-cap industrial S-Reits to decrease amid falling interest rates, which have declined by 1.4 to 1.7 per cent year-to-date compared with 2024. Furthermore, the strengthening of the yen, euro and pound against the Singapore dollar could ease FX-related pressures on earnings for such S-Reits with exposure to these markets.
Altogether, this will better enable large-cap industrial S-Reits to capitalise on acquisition opportunities to achieve further growth, it added.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'Industrial and retail SREITs, given their stable income profiles, are seen as defensive plays,' said DBS.
But in recent years, industrial S-Reits have been especially affected by high interest rates and currency volatility. From FY2021 to 2024, DPUs for industrial S-Reits have suffered an average drop of 3.7 per cent, compared with 0.1 to 1.5 per cent growth for Singapore-focused retail Reits.
For FY2025-2027, however, the research house projects industrial and retail S-Reits to experience growth of 0.3 to 1 per cent and 1.2 per cent, respectively, driven by positive reversions from growing rental, contribution from acquisition and lower interest costs.
Top picks
Capitaland Ascendas Reit, Mapletree Logistics Trust and ESR Reit are DBS' top picks for potential 'alpha opportunities'.
These stocks have been supported by attractive valuations, with implied asset yields of 6 per cent (above book cap rates) at a five-year high, with further potential upside earnings on the back of declining interest rates.
Amid trade uncertainties caused by the US tariffs, DBS' sector preferences remained unchanged. It favours the retail, industrial, office and hotel sectors, in that order, with a focus on defensive names.
Retail S-Reits, on the other hand, have been resilient and stable in recent months, compared with the industrial S-Reit sector, said the research house.
It does not anticipate any immediate effects on the retail S-Reit sector despite possible prolonged tariff conflict fuelling inflation and further uncertainty, and attributes the resilience of the sector to record-high occupancy rates.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
28 minutes ago
- Straits Times
Hong Kong steps up defence of currency's US dollar peg as fixed range tested again
Sign up now: Get ST's newsletters delivered to your inbox Hong Kong's currency peg has been strained by volatility in the US dollar. - Hong Kong's de facto central bank ramped up purchases of the city's currency as it sought to defend a peg that has been strained by volatility in the US dollar. The Hong Kong Monetary Authority (HKMA) said on July 2 that it bought HK$20.02 billion (S$3.25 billion) of the city's currency after indicative pricing suggested the local dollar touched the weak end of its permitted trading range in late New York trading overnight. That is more than double the HK$9.42 billion it purchased last week. The Hong Kong dollar was little changed at 7.8497 on July 2, after the intervention. The Hong Kong dollar has been through a roller-coaster ride in recent months, swinging between both ends of its trading range. And for the first time since the current band came into effect in 2005, the authorities had to defend the peg on both sides within just one year. The wild swings have also intensified debate about the sustainability of the currency's peg, even though there are no signs that a change is imminent. Market watchers had talked about the possibility of widening the narrow peg, linking the Hong Kong dollar to China's renminbi or even free-float the currency altogether. Top stories Swipe. Select. Stay informed. World US Senate approves divisive Trump spending Bill World Trump escalates feud with Musk, threatens Tesla and SpaceX support Business Cathay Cineplexes gets demand for $3.4 million in arrears from Jem landlord Singapore 3,800 private candidates in Singapore to take O- and A-level exams in 2025 Multimedia Right on track: Meet the new JB-Singapore RTS Link train Business Binance to keep hundreds of staff in Singapore despite crackdown, sources say Singapore 'He fought till the end': Man who survived acid attack as a baby dies of cancer at 26 World Trump urges Hamas to accept 'final proposal' for 60-day Gaza ceasefire In May, a slump in the US dollar spurred a rush for Hong Kong's currency, prompting the HKMA to flood the financial system with cash in an effort to cool the rally that threatened the 7.75-per-US dollar strong end of the band. The operation, however, triggered a sharp reversal of the city's dollar, and it plunged all the way to 7.85, the opposite end of the trading range. Still, even after latest round of intervention this week, Hong Kong's aggregate balance – a component of its monetary base – will only fall to HK$144.2 billion. That means the supply of cash will remain abundant and local funding costs are still low. Therefore, the so-called carry trade, which involves traders borrowing the Hong Kong dollar cheaply and selling it against higher yielding greenback, is still lucrative. So the local currency can still hit the weak end of the band soon again, analysts say. 'It may take more time for liquidity conditions to normalize this time around, and intervention will go on as long as flush liquidity condition continues,' said InTouch Capital Markets strategist Andy Ji. Now, all eyes are on Hong Kong's interbank rates, known as Hibor, which has remained low despite the HKMA's liquidity drainage. The spread between one-month Hibor and its US counterpart stood near a record high earlier this week. BLOOMBERG
Straits Times
an hour ago
- Straits Times
Vietnam approves dual citizenship law to attract skilled foreign workers
Sign up now: Get ST's newsletters delivered to your inbox Vietnam is undergoing the largest reform in nearly 40 years. Vietnam has approved amendments to its nationality law, permitting both Vietnamese citizens living abroad and foreigners to hold dual citizenship, as part of efforts to attract more skilled workers to the country. According to Nikkei Asia, the legal changes, enacted last week, have removed requirement to renounce foreign citizenship for nationality applicants. Furthermore, the amendments eliminate the language proficiency and minimum residency requirements. Vietnam is undergoing the largest reform in nearly 40 years, which includes changes to laws, government structures, and a relaxation of investment regulations to stimulate economic growth. This year, Vietnam aims for an 8 per cent economic growth rate, with expectations of double-digit growth in the coming years, aiming to become a high-income nation by 2045. Vietnamese leaders see advanced technology as the key to progress, but the country is currently lacking individuals with cutting-edge experience in science and technology. The change in nationality law is seen as the first step in attracting more foreigners to live and work in Vietnam. The Vietnamese government believes this move will allow the country to leap ahead of its competitors in technology by 2030, especially in artificial intelligence and semiconductors. Top stories Swipe. Select. Stay informed. World US Senate approves divisive Trump spending Bill World Trump escalates feud with Musk, threatens Tesla, SpaceX support Business Cathay Cineplexes gets demand for $3.4 million in arrears from Jem landlord Singapore 3,800 private candidates in Singapore to take O- and A-level exams in 2025 Multimedia Right on track: Meet the new JB-Singapore RTS Link train Business Binance to keep hundreds of staff in Singapore despite crackdown, sources say Singapore 'He fought till the end': Man who survived acid attack as a baby dies of cancer at 26 World Trump urges Hamas to accept 'final proposal' for 60-day Gaza ceasefire On June 30, Mr To Lam, the General Secretary of the Communist Party and the highest-ranking leader in Vietnam, said: 'I urge overseas Vietnamese to return to their homeland, reconnect with their roots, support each other, and engage with the people in the country to make Vietnam stronger.' He added: 'The homeland is always open to welcome 'citizens far from home' to work together in building and developing the country.' Vietnam has historically been concerned about the security risks posed by dual nationals, as the country has faced long periods of foreign invasions. In the past century, Vietnam has fought wars against France, Japan, the US, Cambodia, and China, and the country was only unified 50 years ago. Additionally, Vietnam was involved in military conflicts until the 1980s. Today, many Vietnamese families send their children abroad to study, with many choosing the US, the United Kingdom, Australia, and Europe. A significant number of young Vietnamese have stayed abroad, working for major tech companies such as Google, Meta, IBM, and Microsoft, and are heavily involved in science, technology, and finance. Some have also immigrated permanently. According to a report from the state committee on overseas Vietnamese, there are approximately 6 million Vietnamese living in 130 countries and territories, with 80 per cent residing in developed countries. In reality, dual nationality holders can still live in Vietnam, but they face bureaucratic challenges and are restricted in certain rights. Foreigners living in Vietnam also face various restrictions, including stringent visa requirements, limited access to real estate, and restrictions on banking services, such as stricter requirements for opening bank accounts, accessing home loans, or obtaining attractive interest rates for savings accounts. However, last week, lawmakers relaxed name regulations to make it easier for foreigners to apply for Vietnamese nationality. Previously, Vietnam had strict regulations regarding the names of its citizens. Resolution 57, one of the key pillars of the country's reforms issued in December, focuses on developing science and technology and states that Vietnam will create a 'special mechanism' to attract skilled Vietnamese expatriates and foreigners to live and work in the country. This includes adjustments to nationality policies, granting the right to own homes and land, offering attractive salaries, and improving the work environment. However, government officials, military personnel, and security staff will still be required to hold Vietnamese citizenship, with some exceptions. THE NATIO N/ASIA NEWS NETWORK
CNA
an hour ago
- CNA
Singapore Tonight - Tue 1 Jul 2025
48:49 Min Singapore Tonight From business to politics, health to technology, we bring you up-to-date with the latest news on Singapore and analyze how these events may affect you tomorrow. Singapore Tonight About the show: From business to politics, health to technology, we bring you up-to-date with the latest news on Singapore and analyze how these events may affect you tomorrow.
