REITs and CapitaLand Investment in focus: Weekly Review with SIAS

What happened?

In this week's Weekly Market Review in partnership with Securities Investors Association Singapore (SIAS), we discuss key developments in the global equity market and also share more about CapitaLand Investment.

Watch the video to learn more about what we are looking out  for this week.

Weekly Market Review

2:00 - Macro Update

• U.S. stocks performed strongly last week, with major indices closing at record highs.
• The S&P 500 and Nasdaq gained 1.1% while the Dow Jones rose by 1.4%.
• In contrast, the STI edged down 0.2% to 3,739 points but remained at a relatively elevated level.
• President-elect Donald Trump nominated an ex-hedge fund manager as Treasury Secretary. This move was positively received by investors, contributing to a decline in U.S. 10-year government bond yield from 4.5% to 4.25%.
• Similarly, Singapore’s 10-year government bond yield fell to 2.78%.

3:51 - Singapore market updates

STI Top performers:

• Thai Beverage
• Mapletree Logistics Trust
• CapitaLand Ascendas REIT
• Mapletree Industrial Trust
• DFI Retail Group Holdings Ltd

STI worst performers:

• Yangzijiang Shipbuilding Holdings Ltd
• ST Engineering Ltd
• Hongkong Land Holdings Ltd
• CapitaLand Investment
• SATS

5:14 - Singapore REITs

• The Monetary Authority of Singapore (MAS) has introduced new regulations for REITs, standardising a single leverage limit of 50% and requiring all REITs to maintain a minimum interest coverage ratio (ICR) of 1.5x at all times.
• Previously, REITs with an ICR above 2.5x were allowed a higher leverage limit of 45%.
• Additionally, REITs must now perform and disclose sensitivity analyses on how changes in operating profit or interest rates impact their ICR, enhancing transparency for investors.
• These changes offer greater capital management flexibility, particularly for REITs with an ICR between 1.5x and 2.5x, allowing them to explore growth initiatives more effectively.
• The sector has faced pressure from rising bond yields on expectations that the US will not cut interest rates sharply.
• Currently, investor expectations are more moderate with only two rate cuts expected in 2025. At, the same time, valuation of REITs has now become more attractive following the correction. 

Read more: Will Singapore REITs finally recover in 2025?

Read more: Singapore REITs - Single leverage limit positive for sector

9:52 - CapitaLand Investment

• CapitaLand Investment (CLI) outlined its growth strategy during its recent strategy day, targeting a significant increase in funds under management (FUM) from $99 billion in 2023 to $200 billion by 2028.
• This growth will be driven by expansions in its listed REITs, private funds, and strategic acquisitions, with fee-related earnings projected to grow from $318 million in 2023 to over $650 million by 2028-2030.
• A geographical shift is planned, reducing China’s FUM share from 27% to 10-20% while increasing exposure to markets like Australia, South Korea, and Japan from 18% to 25-35%.
• CLI’s share price rose to $3.10 following China stimulus announcements but has since fallen to $2.73 due to moderating expectations.
• In terms of the valuation, price-to-book ratio is just slightly above 1x and is below the historical average.
• The dividend yield is at 4.4%, which is slightly above the historical average. 

Related Links:

• CapitaLand Investment share price history and share price target
• CapitaLand Investment dividend history and dividend forecasts

13:51 - Technical Analysis

Dow Jones Technical Analysis

• The Dow Jones Index continues to show strong performance, gaining 1.4%.
• The MACD is showing a very strong positive reading.
• The RSI is approaching the overbought level of 70 but has room to climb further, potentially up to 80, as seen in July. Given this momentum, a technical retracement might occur but is not imminent.

S&P 500 Technical Analysis

• The S&P 500 hit an all-time high last week, breaking above the 6,000-point mark and entering uncharted territory.
• With no historical selling pressure above this level, resistance is projected at 6,100 points, aligned with the upper Bollinger Band.
• Positive momentum persists, as indicated by the MACD, while the RSI at 65 remains healthy and has room to rise further, referencing a peak of 81 in July.
• Macro data, such as the upcoming non-farm payroll report, will be critical to assessing economic conditions.

Nasdaq Composite Technical Analysis

• The NASDAQ Composite Index performed well last Friday, rising 0.83% to close at 19,218 points.
• Indicators present mixed signals. The MACD shows slight negative momentum, reflecting potential sector rotation out of tech and into industrials or financials.
• However, the RSI at 61 suggests healthy uptrend potential, with room to move up by at least 10 points before hitting the overbought level of 70.
• These contradictions indicate that no immediate action is necessary unless overbought or oversold conditions emerge.

STI Technical Analysis

• The STI ended last week down 0.2%, but opened strong on Monday, December 2, gaining 0.5% to reach an intra-day high of 3,771 points—a year-to-date and multi-year high.
• While it remains uncertain if the STI will close above its previous high today, indicators suggest range-bound movement, with the MACD showing subsiding negative momentum.
• For December, the STI is expected to trade within a range of 3,750 to 3,650 points, supported by September highs.
• While a challenge of the all-time high of 3,906 points from October 2007 seems unlikely this year, the outlook remains positive for 2025.

What to look out for this week

• Monday, 2 Dec: Singapore Savings Bond (SSB) application open
• Tuesday, 3 Dec: SIAS Corporate Connect: Sasseur REIT
• Thursday, 5 Dec: Singapore 6-month T-bill auction
• Friday, 6 Dec: US non-farm payroll data

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

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