Singapore REITs - OCBC Investment 2016-09-07: Share prices gained momentum following jobs data miss

SGinvestors.io

SREIT FRASERS CENTREPOINT TRUST J69U.SI KEPPEL DC REIT AJBU.SI ASCENDAS REAL ESTATE INV TRUST A17U.SI MAPLETREE GREATER CHINACOMM TR RW0U.SI SPH REIT SK6U.SI

Singapore REITs: - Share prices gained momentum following jobs data miss

• We note that the share prices of S-REITs have gained traction following the release of the U.S.
• non-farm payrolls data last Friday which missed the street’s expectations. The increase of 151k for the month of Aug came in below the Bloomberg consensus median forecast of 180k.
• The FTSE ST REIT Index has appreciated 1.9% in two trading sessions since the report. 
• In our view, the disappointing jobs data may have given the market impetus to believe that there is a lower likelihood of a rate hike in Sep. 
• In addition, the U.S. ISM Non-manufacturing Index for the month of Aug came in at 51.4, falling short of expectations and also the lowest level since Feb 2010. 
• The probability of a Sep rate hike happening currently stands at 24.0%, based on the fed funds futures rate, down 12 ppt before the release of the payrolls figure. As for the Dec FOMC meeting, the probability of a rate hike comes in at 51.8%. 
• We maintain our OVERWEIGHT rating on the S-REITs sector. 
• Our preferred picks are Frasers Centrepoint Trust [BUY; FV: S$2.32], Keppel DC REIT [BUY; FV: S$1.30], Ascendas REIT [BUY; FV: S$2.66], SPH REIT [BUY; FV: S$1.05] and Mapletree Greater China Commercial Trust [BUY; FV: S$1.18].

Wong Teck Ching Andy CFA OCBC Investment | http://www.ocbcresearch.com/ 2016-09-07

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