Daily Morning Note – 27 March 2018


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Singapore REITs – First rate hike in 2018 and implications for S-REITs
Recommendation: Equal Weight (Maintained), Analysts: Tan Dehong, Tara Wong
– The Fed raised rates by 25bps to 1.75% last week, while upgrading its outlook for
the economy.
– Maintained headline and core inflation forecast at 1.9% for 2018 despite the
rosier outlook.
– c.80% of all S-REITs have at least 70% of debt hedged on fixed interest cost.
– At 5.3%, S-REITs offer one of the highest absolute yields amongst major REIT
markets, though yield spreads are reflecting valuations on the high side vs
– Maintain Equal Weight on S-REIT sector.


The Dow Jones industrial average surged 669.40 points to 24,202.60. The S&P 500 gained 2.7 percent to close at 2,658.55. The Nasdaq composite advanced 3.3 percent to 7,220.54.

Brent crude futures slipped 33 cents, or 0.5 per cent, to settle at US$70.12 a barrel. US West Texas Intermediate (WTI) crude futures also lost half a per cent, or 33 cents, to end at US$65.55.

President Trump ordered the expulsion of dozens of Russian intelligence officers from the United States and the closure of the Russian consulate in Seattle due to its proximity to one of our submarine bases and Boeing.

China’s premier pledges to open markets in a bid to avert a trade war with the US. China has offered to buy more U.S. semiconductors by diverting some purchases from South Korea and Taiwan. Chinese officials are also working to finalize rules by May — instead of the end of June – to allow foreign financial groups to take majority stakes in Chinese securities firms.

Kim Jong Un made a surprise visit to Beijing on his first known trip outside North Korea since taking power in 2011.

Singapore factory output beats expectations; grows 8.9%, and the consumer price index rose 0.5 per cent in February.

Dairy Farm plans to acquire an 18.25 per cent stake in, and be a partner with, Robinsons Retail Holdings in a deal worth around US$520 million.

Food Empire, which owns several instant-coffee brands, on Monday said its auditors have issued a qualified opinion on its financial statement for the full year ended Dec 31, 2017, that relates to its investment in cafe chain Caffe Bene.

Competition Commission says it has not received notification about Grab-Uber merger. The Land Transport Authority said it will ensure that no one single market player dominates the sector to the detriment of commuters and drivers.

TT International Ltd said it has been granted by the High Court in Singapore a moratorium extension to Aug 11, 2018, effectively giving the distressed consumer electronics retailer more breathing room from creditors.

Source: SGX Masnet, CNBC, The Business Times, Phillip Securities Research

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