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The Week in Numbers: Singapore REITs Rally in First Quarter

Singapore Exchange said that the top five performing Singapore real estate investment trusts (REITs) achieved an average return of 20% in the first quarter of 2019. The strong showing was likely due to the United States Federal Reserve’s dovish stance on interest rates and hunt for higher yields amid volatile equity markets. The top two performing REIT were Sasseur REIT (up 25.0%) and CapitaLand Retail China Trust (up 19.4%).

Meanwhile, the top 20 REITs by performance this quarter averaged 15.7%. That brings their total return for one year, three year and five year periods to 10.6%, 37., % and 51.7% respectively. The top 20 REITs by performance now have an average dividend yield of 6.1%.

Singapore’s manufacturing output picked up pace in March. The Purchasing Managers’ Index (PMI) came in at 50.8, up from February’s 50.4. A reading over 50 indicates expansion. March’s reading was the 31st consecutive month of expansion. The electronic PMI edged up to 49.8 from 49.5 in February, but is still in negative territory.

Singapore’s PMI follows the same pattern seen in China and the United States. China’s PMI rebounded to 50.8 from 49.9 in February, while the PMI in the US rose to 55.3 from 54.2.

China has named a new chairman for its US$941 billion (S$1.28 trillion) sovereign wealth fund, ending a two-year period when the post was vacant. Peng Chun, chairman of Bank of Communications, will become the chairman of China Investment Corp (CIC). CIC plans to enlarge its alternative and direct investments to 45% or more of its overseas portfolio in three years to seek more stable returns.

Chief executives of United Overseas Bank Ltd (SGX: U11) and DBS Group Holdings Ltd (SGX: D05) enjoyed a pay raise in 2018 due to the strong performances of the two banks. UOB’s chief executive Wee Ee Cheong earned S$10.56 million in 2018, up 12% from the S$9.4 million he received in 2017.

DBS chief executive Piyush Gupta took home S$11.9 million in 2018, up 15.5% from 2017. The majority of his pay came from increases in his cash bonus and share plan to S$4.5 million and S$6.1 million respectively.

Private home prices declined for the second straight quarter. Prices are down 0.6% for the first quarter of 2019 from the previous quarter. The price drop was wider than the 0.1% decline in the fourth quarter of 2018.

The price decline was mostly due to a 1.0% fall in prices of non-landed condominiums and private apartments. Prices of landed homes rose 1.1%, following a 2% drop in the fourth quarter. However, prices are still well above the start of 2018. Prices of private homes rose 7.9% in 2018 and 1.1% in 2017.

Meanwhile, Genting Singapore Ltd (SGX: G13) and Las Vegas Sands Corp pledged to put S$9 billion into tourist attractions in Singapore to keep their exclusive casino operating licenses. However, analysts are not enthused, citing the heavy price tag for the license extensions and the government’s plan to raise gambling taxes after 2022. Shares in Genting fell by as much as 7.8% after the news.

Hotel room supply is one concern with an average of only 764 rooms a year to be completed from 2018 to 2022, compared to 3,357 per year from 2014 to 2017. Casino operators will also have to deal with greater hurdles for Singaporean residents to visit the casinos with casino entry prices raised to S$150 a visit, up from S$100.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia own shares in Sasseur Real Estate Investment Trust and DBS Group Holdings Ltd. The Motley Fool Singapore has a recommendation on CapitaLand Retail China Trust, DBS Group Holdings Ltd and United Overseas Bank Ltd.