In many conversations this week, one topic kept popping up: the record-breaking S$1.73 million transaction for a five-room HDB flat at Margaret Drive. 

It’s a jaw-dropping figure, especially considering the ever-increasing number of million-dollar resale HDB flats. June alone saw nearly 100 units crossing that million-dollar threshold, setting an all-time high.

It’s no surprise then, that many Singaporeans I’ve spoken to seem to favour property investment over other asset classes. The allure of tangible assets like real estate is strong, and recent trends have only bolstered this sentiment.

But what about other popular investments? Take Real Estate Investment Trusts (REITs), for example. These have long been a favourite for their regular dividend payouts. 

However, the past year hasn’t been kind to Singapore REITs. With elevated interest rates, their ability to distribute dividends and share prices have taken a hit. Our latest outlook report delves into why we believe Singapore REITs’ dividends may remain under pressure in the near term.

Then there are T-bills, which have seen a surge in popularity as a safer investment option. Yet, even here, changes are afoot. The latest 1-year T-bill auction saw the cut-off yield drop to 3.38%, a notable decline. As we approach the upcoming 6-month T-bill auction on 1 August, we find out what to expect. 

So, with all these dynamics in play, I’m curious: what’s your preferred asset class these days? Are you leaning towards the tangible security of property, the dividend potential of REITs, or the relative safety of T-bills? Let’s discuss in the comments below!

Gerald, Founder of Beansprout

⏰ This week in markets

☹️ Earnings disappoint

What happened? 

The earnings season went into full swing as mega-cap tech companies started reporting their results in the past week.

Tesla reported a 45% slump in its second quarter net income compared to the previous year, as sales of its electric vehicles slowed and the company invested heavily in its artificial intelligence (AI) infrastructure. 

While Google’s parent Alphabet reported decent earnings, investors were disappointed by the weaker than expected YouTube ad revenue. 

What does this mean?

The lacklustre earnings reported by tech companies have made investors evaluate whether their share price rally can be justified. 

This has partly prompted a switch out of the high-flying tech names into sectors and stocks where investors find more value. 

Why should I care? 

The S&P 500 suffered its worst day of trading since December 2022, with tech stocks leading the declines. 

In Singapore, the Straits Times Index (STI) also retreated from its six-year high, as Singapore REITs also started reporting their earnings. 

Most REITs have reported a decline in distributions compared to the previous year, as higher interest expenses continue to weigh on distributable income. 

Losses were led by DigiCore REIT (-11.7%), OUE REIT (-5.0%) and Mapletree Logistics Trust (-4.4%). 

🚗  MOVING THIS WEEK

• Mapletree Logistics Trust reported a 8.9% year-on-year decline in DPU to 2.068 cents for quarter ended Jun 24. This was also 6.5% lower than the Mar quarter. The decline is due to higher borrowing costs and tax. Read our analysis on Mapletree Logistics Trust here.
• Mapletree Industrial Trust 1Q FY24/25 DPU increased 1.2% year-on-year to 3.43 cents. The improvement came from newly acquired data centre in Osaka, and new leases and renewals signed at an average rental reversion of +9.2%.  Read our analysis on Mapletree Industrial Trust here.
• CapitaLand Ascott Trust 1H24 distribution per unit fell 8.2% year-on-year to 2.55 cents, compared to 2.78 cents in 1H23. Read our analysis on CapitaLand Ascott Trust here.
• Suntec REIT 1H24 DPU fell 12.5% to 3.042 cents, due to a capital distribution of S$11.5 million in the previous year. Strong performance from the Singapore portfolio offset weak occupancy at 2 assets in Australia. Read our analysis on Suntec REIT here.
• Digital Core REIT’s 1H24 DPU fell 6.3% year-on-year to 1.80 US cents, of which 0.48 US cents was paid in April as an Advanced Distribution. Revenue and net property income declined due to the sale of two assets in Jan 2024.  Read our analysis on Digital Core REIT here.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

Is the worst over for Singapore REITs?

The share prices of Singapore REITs have rebounded from lows. However, we expect distributions to remain under pressure in the near term.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Tuesday, 30 July: CapitaLand Ascendas REIT, Mapletree Pan Asia Commercial Trust, CDL Hospitality Trust, Microsoft earnings
• Wednesday, 31 July: Singapore Airlines, Meta earnings
• Thursday, 1 Aug: UOB, Keppel, Apple, Amazon earnings, SIA, Singtel ex-dividend, 6-month Singapore T-bill auction
• Friday, 2 Aug: OCBC, Seatrium earnings, US payroll data 

Check out the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar

Source: SGX, Bloomberg, Refinitiv

🤑 PROMO

POSB Promo: Get up to S$1,250 guaranteed cash and a chance to win a pair of SIA Suites tickets

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