Admiral Investments: Asia Pacific REITs Underperformed In November On Lower Rates And Improved Sino-US Trade Talks

By Patrick Ma, Director, Listed Products and Research

Global equity markets continued to rally in November, helped by the U.S. Fed’s rate cut in end-October and a potential interim tariff agreement between China and the U.S.The agreement signalled a more stable Sino-U.S. relationship. The MSCI World rose 2.8% for the month.

For the Asia Pacific region, the GPR/APREA Investable REIT Index reported a 0.9 percent decline in November versus the MSCI AC Asia Pacific’s 0.5 percent increase over the same period. A benign interest rate outlook had spurred risk-on market sentiment for most Asian markets. Australian REITs are the only Asia Pacific REIT market to report an absolute increase of 0.3 percent, in part due to continued improvement of the housing sector. However, the stellar performance was still weaker than the 0.7 percent gain posted by Australian equities.

Singapore REIT market was the only market in the region that outperformed local equities.News about a merger between Frasers Logistics & Industrial Trust and  Frasers Commercial Trust sparked speculation of further M&A activity within the Singapore REIT sector. As the markets approach the end of the year, we expect the global equity markets to continue its outperformance vis-à-vis global REITs on expectations of lower interest rates. However, the market outlook for 2020 remains uncertain, with slower global economic growth dampening investor sentiment.