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Asia Pacific REITs Mirror Equity Gains on Economic Recovery Hopes

Asia Pacific REITs Mirror Equity Gains on Economic Recovery Hopes

Hong Kong saw strong performance while Singapore slumped; global REITs outperformed equities.

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

March 4, 2021 – In Asia Pacific, both equites and REITs performed positively in February. REITs’ performance was almost parallel to that of equities during the period. The region’s top-100 most traded REITs gained 1.1% while equities climbed 1.2%. 

Hong Kong REITs’ performance was a standout, rising 7.3%, as the rollout of vaccination raised the prospect of a rebound in the retail sector. Japan REITs also saw gains, up 3.3%, led by hotel and office REITs. 

Australia and Singapore REITs were the only falling REIT markets in the region, dropping 0.2% and 4.3%, respectively. In both regions, the underperformance of industrial REITs drove weakness in the sector. However, rising retail REITs helped to offset some of the losses.

Globally, equities continued to rise, supported by positive sentiment regarding easy monetary conditions and hopes for a global economic recovery as the vaccination rollout appeared to have curbed infections. Bond prices, however, dropped due to inflationary concerns and rising yield. Notably, the US 10-year government bond yield rose to 1.614%, a new high since February 2020.

While Asia Pacific REIT and equity performance was similar, globally, REITs outperformed equities.

In February, global equities rose 2.6% after registering a 4.6% correction from its peak in mid-February. Meanwhile, global REITs climbed 3.6%. REITs in developed markets had been beneficiaries of the potential economic rebound, with US and UK REITs rising over 4%. 

Lately, investors have been concerned about inflation and rising bond yields. Despite such concerns, we believe that projections for a global post-pandemic economic recovery remain intact,  which should benefit global REITs, especially for sectors such as office, retail and hotel sub-segments.