This is in contrast - some may say sharp contrast to the FTSE RE Index which includes the developers. The leading developers such as City Developments, Hongkong Land and UOL Group had all started rallying in 2025. Smaller quality names such as Bukit Sembawang Estates (a subject of a Right Timing column in June 2025) has rallied and continues to do so. Have a look at its chart. Elsewhere, Wing Tai Holdings has broken out as has Guocoland.
Why have the S-REITs underperformed? The blame lies with Trump. He has pressured the Federal Reserve to lower the federal funds rate (FFR) and this has indeed fallen by 175 bps to 3.75 since Jan 2024. In the same period the 10 year US treasury yield has risen from 4.05% to 4.17%. Michael Bloomberg, the founder and majority owner of Bloomberg LP, explains the impact of what happens if the Fed is pressured into cutting rates when the economy isn’t ready.
See also: This STI-laggard has broken out and looks set for higher levels; who will follow?
“The case for central bank independence really shouldn’t need restating. Once investors think that monetary policy is set according to short-term political calculations, they’ll expect lower interest rates and therefore, after a delay, higher inflation. That prospect in turn will raise longer-term rates (which the central bank can’t directly control), increase the cost of credit, discourage private investment and make public debt (which in the US is already rising unsustainably) harder to service,” Bloomberg says. You can read the editorial here.
The 10-year US treasury yield is a much-watched number as it is the risk-free rate. Yields on 10-year Singapore government bonds are some 200 bps lower than 10-year US treasury yields. But, despite being a haven currency, the SGD is not a reserve currency.
What S-REIT investors may be tussling with is whether Trump is taking the correct actions for the wrong reasons. For instance in Venezuela, he didn’t like Maduro because Maduro made fun of his dancing. Nonetheless, US actions bring Venezuela’s vast oil reserves under US purview (not quite control, not yet). Secondly, Iran. Trump may be tempted to interfere on the side of the protestors. With Venezuela’s and Iran’s crude oil reserves under US purview or guardianship, the petroyuan is put on abeyance, and the petrodollar reemerges as a force.
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Based on rough estimates by Opec and EIA, Venezuela’s crude oil reserves account to 17% to 18% of global oil reserves while Iran accounts for 9% to 10% of global reserves and the US is at 2% to 3%. Being in control of 30% of global oil reserves is significant.
If control of oil prices can drive down US inflation, and the Fed can lower rates independently of political interference, then perhaps the FTSE REIT Index can break out decisively and meet an upside target significantly above current levels.
