Singapore REITs declined in May 2013

In just one month, Singapore real estate investment trust (REIT) declined substantially. There are 5 REITs which are in top 50 based on market capitalisation. They are listed in the table below.

  % Change from 30 Apr 2013 Share Price at 31 May 2013 Market Cap (S$m) at 31 May Share Price at 7 Sep 2011
Ascendas Reit – 15.6 $ 2.320 5,851.2 $ 2.12
Suntec Reit – 11.3 $ 1.725 3,892.3 $ 1.34
Capitacomm Trust – 10.6 $ 1.520 4,348.4 $ 1.18
CapitaMall Trust – 7.3 $ 2.150 7,447.3 $ 1.88
Keppel Reit – 5.8 $ 1.420 3,807.9 $ 1.14

Source: Business Times Weekend (1-2 June, 2013)

Market capitalisation declined between 5.8% to 15.6% from 30 April to 31 May. The worst performing REIT was Ascendas REIT followed by the rest. This drop in market capitalisation was steeper than the drop in Straits Times Index (STI). The STI declined1.68% during the same period.

REITs are sensitive to interest rate movement. When interest rate rises, value of REITs would decline and vice versa. Prices of REITs had been climbing for as long as I can remember. See my blog post on 8 September 2011. The share prices on 7 September 2011 are provided in table for comparison.

The price drop during month of May is indicative of this phenomena. Any fear of interest rate increases in the future would put additional pressure on share prices of REITs.

Copyright © 2013, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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