Some analysts are looking at European stocks and investors are increasingly turning to European assets. “The ongoing rotation and growing investor preference for Europe (EU) equities is evident in its strong year-to-date outperformance – especially over the S&P 500 Index - and amid fluid tariff developments. The Euro’s strength, particularly during the European Central Bank (ECB) rate cut cycle, further reinforces the shifting sentiment,” says DBS Insights.
Its ETF picks are Amundi Stoxx Europe 600 UCITS ETF (MEUD FP), iShares Core MSCI Europe UCITS ETF (IMEU NA); and SPDR S&P Euro Dividend Aristocrats UCITS ETF (EUDV IM).
The other scramble is for SGD assets. Singapore is one of nine triple-A-rated economies. Along with Australia, Singapore is one of two triple-A-rated economies in the Asian time zone. No surprise then that Singapore assets remain in demand.
Gradually, investors are shifting from real estate to stocks. Developers and S-REITs trading at large discounts to their net asset values are attracting attention. This could also be a result of the incentive programme announced on Feb 21. The Monetary Authority of Singapore (MAS) and the Financial Sector Development Fund (FSDF) announced the launch of a $5 billion Equity Market Development Programme (EQDP) to boost the local market. Under this programme, MAS will invest with selected fund managers who have the capability to implement investment mandates with a strong focus on mid-cap Singapore stocks.
As part of the incentives, there will be a tax exemption on fund managers’ qualifying income derived from funds investing substantially in Singapore-listed equities. There will also be adjustments to the Global Investor Programme (GIP) to support more capital inflows into Singapore-listed equities.
Two S-REITs have only European assets. The case for Europe is de-dollarisation and the ECB’s easing cycle. This will most likely cause discount rates used in valuing the properties of IREIT Globaland Stoneweg European REIT to fall, causing capital values to rise.
See also: SGX stocks to ride out the trade war
While IREIT Global’s unit price has risen – partially because analysts are discussing whether IREIT Global’s manager may get a partner in for its Berlin Campus – Stoneweg European REIT’s stapled security price has not moved much this year. Some analysts believe its stapled security price could rise.
Elsewhere, Ho Bee Land’s net debt has eased following the sale of 49% of Elementum to a Brunei sovereign wealth fund (according to Mingtiandi) for $555 million. Ho Bee Land had been under pressure last year due to its investment in London properties. With the Bank of England easing, Ho Bee Land’s UK portfolio may have stabilised.
Bukit Sembawang Estates, which was featured in The Edge Singapore’s Right Timing on June 6, does not have a particular catalyst. Nonetheless, its 20-cent dividend for FY2025 translates into a yield of a tad below 5%.
See also: Look to domestic shelters in volatile times
All the stocks and S-REITs in the table titled The Renaissance Trade are trading at discounts to net asset value. Which stocks could recover further? The more liquid the balance sheet, the more likely for the stocks to rally. Among the stocks featured, Bukit Sembawang’s is the most liquid.
The Renaissance was a period in European history over a number of centuries, characterised by a renewed interest in art, literature, science and ideas. Similarly, de-dollarisation and flight from the US has rekindled interest in European equities, bonds and real assets. The reflation of the European economy led by Germany is likely to materialise, along with the movement of scientists, science and research, and students from the US to Europe, analysts point out.
