The Lion-Phillip S-REIT ETF and the Nikko AM Straits Trading Asia ex-Japan REIT ETF are fair proxies to the performance of the S-REITs although ETFs have a little bit of leakage. Between the two ETFs, the Nikko AM Strait Trading ETF has greater relative strength.
The table of S-REITs (see table) is sorted based on their weights. The top performer this week was Manulife US REIT (MUST) followed by Lippo Malls Indonesia Retail Trust (LMRT) which are both troubled REITs. In third place was United Hampshire REIT.
In the week of August 25-29, the top performer could be another REIT that is under the radar and isn’t the year’s top performer. JP Morgan upgraded Suntec REIT from neutral to overweight on August 20. The top performing REIT this year in terms of total return was Acrophyte Hospitality Trust - another REIT that doesn’t have an institutional following.
See also: STI to continue correction; here are the supports for Sembcorp, DBS and STE
For the REIT Index to move higher as technicals and increasingly risk-free rates are indicating, the big-cap REITs would need to move. CapitaLand Integrated Commercial Trust (CICT) is already up more than 22% this year in terms of total return. Nonetheless, global investors' penchant for SGD assets, in particular property-related SGD assets would inevitably provide a tailwind for CICT. Frasers Centrepoint Trust with its all Singapore portfolio has underperformed CICT and could catch up. OUE REIT (all Singapore portfolio) is up 20% this year but in terms of total returns was flat in the past week.
Although the Straits TImes Index rose 23 points week-on-week to end at 4,253 on August 22, both quarterly momentum and 21-day RSI continue to move sideways to lower in a constant negative divergence with the index. Quarterly momentum has not broken below a support, but 21-day RSI appears poised to do so. Hence, technically, the STI remains in consolidation mode. The chart pattern resembles a triangle which is a continuation pattern.
See also: STI's consolidation is likely to persist; Sembcorp's decline should find support at $6.17
The weekly chart of the STI shows that 13-week RSI is fatigued but the one year rate of change appears intact, pointing to the main bull market and main uptrend remaining in force. The main support for the STI remains at 4,000, but the rising 50-day moving average at 4,116 could halt a near term retreat.
Sembcorp Industries appears to have encountered support at $6 but a recovery is unlikely in the near term. ST Engineering has fallen to its 100-day moving average at its current level of $7.84. Analysts have a fundamental target of $7.28 which appears attainable. Technically, $7 provides better support.
