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Asia Pacific REITs Outperform Equities Amid Coronavirus Outbreak

By Patrick Ma, Director, Admiral Investments, Listed Products and Research

Asia Pacific REITs Outperform Equities Amid Coronavirus Outbreak

Global equity markets had a dismal start to the year. 

February 5, 2020 — Market concerns about the impact of the Novel coronavirus (2019-nCoV) on a global economy already struggling with growth have led to the MSCI World to drop 0.6% in January.

The eruption of the 2019-nCoV in Wuhan has led China to shut down the city in Hubei province. Other regions in China have also imposed travel restrictions. Several countries, including the U.S. and Singapore, have refused the entry of Chinese citizens, disrupting global passenger traffic. So far, the worldwide number of confirmed cases and the death toll have shown no signs of abating.

The 2019-nCoV has hit Asia particular hard, as China’s lockdown affected tourism, transportation, and supply chains. The MSCI AC Asia Pacific reported a 2.8% decrease in January.

This is in contrast to REITs’ performance in the Asia Pacific region. The GPR/APREA Investable REIT Index posted a 2.2% increase during the period. Asia Pacific REITs’ outperformance reflected investors’ preference for defensive plays and REITs’ resilience at a time of uncertainty. 

As Hong Kong is among those most affected by the 2019-nCoV within the region, Hong Kong REITs have fallen 4.2%. However, REITs in Hong Kong still outperform general equities.

As the 2019-nCoV situation worsens in the near term, it would dominate market sentiment and will lead to increased uncertainty. Under such market conditions, the Asia Pacific REITs are likely to continue their outperformance against equities.

REIT Index Corresponding equity index
  Jan 2020 2020   Jan 2020 2020
GPR  250 REIT Index  1.28% 1.28% MSCI WORLD -0.58% -0.58%
GPR Aprea Investable REIT 100 Index 2.15% 2.15% MSCI AC ASIA PACIFIC -2.85% -2.85%
GPR Aprea Investable REIT Australia 1.15% 1.15% MSCI Australia 0.09% 0.09%
GPR Aprea Investable REIT Japan 3.90% 3.90% MSCI Japan -1.36% -1.36%
GPR Aprea Investable REIT Singapore 1.71% 1.71% MSCI Singapore -3.47% -3.47%

Based on market close at January 31, 2020

All performance numbers are based on total gross returns in USD

Sources: GPR and Bloomberg

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