Stocks climb despite jump in bond yields: Weekly Market Recap

Why can wealth still leave us unhappy?

A comment by former Foreign Affairs Minister George Yeo caught my eye this week. Responding to why economic success does not necessarily translate into happiness, he said that “sometimes unhappiness may be a precondition for achievement”.

It made me think about what we are really trying to achieve when we invest.

For me, building wealth is not the end goal. It is about having greater security in retirement, being able to take care of the people I love, and having more choices over how I spend my time.

That feels especially important when the market environment can change so quickly, as we saw with the sharp rise in bond yields and interest rates this week.

The latest 6 month T bill yield jumped to 1.92%, from 1.70% just two weeks earlier, while the best fixed deposit rates in Singapore have also gone up. Against this backdrop, we looked at what to expect for the upcoming 15 year Singapore government bond auction for money we can put aside for longer.

Following the recent Fed rate hike, we dive into what higher interest rates could mean for DBS, OCBC and UOB. For income, we looked at 3 Singapore blue chip REITs with dividend yields above 6% and near 52-week lows

And for the money I am investing for long term growth, we dive deeper into four new UCITS ETFs coming to SGX. We also compare one of the ETFs with VWRA, as investors get another way to access global markets.

At the end of the day, there will always be new investment options and different opportunities to consider. 

Amid all that change, I think it is worth coming back to what we are ultimately investing for. And to me, wealth is only useful if it helps us build the life we actually want.

Happy growing!

Gerald, Founder of Beansprout

⏰ This Week In Markets

📊 Stocks rose despite a jump in bond yields

What happened? 

US Treasury yields climbed sharply this week as signs of a stronger US economy and comments from Federal Reserve officials raised expectations that interest rates could stay higher for longer.

Weak demand from foreign buyers at a five year US Treasury auction on 23 September added to the pressure on bonds.

The 10 year Treasury yield rose above 5.20%, reaching its highest level since June 2006. The 30 year Treasury yield climbed above 5.5%, while the 2 year yield briefly moved above 4.90%.

What does this mean?

Despite the rise in bond yields, US stocks remained resilient as strong corporate earnings and continued investment in artificial intelligence helped support technology stocks. 

The semiconductor sector was one of the strongest performers, while Meta rose 12.9% after its Muse AI agent attracted strong early interest.

Why should I care?

For now, optimism around earnings and AI appears to be outweighing concerns about higher interest rates.

The S&P 500 gained 1.2% for the week, while the Nasdaq Composite rose 2.1%.

In Singapore, the Straits Times Index gained 1.0%, as bank stocks continued to climb. OCBC’s share price rose by 2.0%, UOB’s share price rose by 1.9%, while DBS’ share price rose by 1.5%, as market concerns on their net interest margins eased with rising interest rates. 

Singapore REITs continued to be under pressure with higher bond yields, as Frasers Logistics and Commercial Trust’s share price fell 2.8%, while Mapletree Industrial Trust’s share price and CapitaLand Ascendas REIT’s share price fell by 2.6%. 

Why should I care?

🚗  Moving This Week

• Mapletree Logistics Trust has agreed to divest Mapletree Northwest Logistics Park in Shanghai for RMB323 million (S$61.3 million), in line with its latest valuation. The proceeds will provide MLT with capital to pursue investments in more modern assets and enhance the quality and resilience of its portfolio. Read more here
• Keppel REIT will divest its 99.38% stake in T Tower in Seoul at an agreed property value of 348.8 billion won (S$326.6 million). The sale price represents a 37.2% premium to its 2019 purchase price and a 7.4% premium to its latest valuation, with the transaction reflecting an exit NPI yield of 3.9%. Read more here
• Suntec REIT will launch a formal sales campaign for its three Australian assets at 177 Pacific Highway, 21 Harris Street and 477 Collins Street following a strategic review. The REIT plans to increase its focus on Singapore, citing the strong Singapore dollar, limited new commercial property supply and tight vacancy rates as supportive factors. Read more here
• UOB is looking to expand its financing of AI infrastructure in Southeast Asia as demand for data centres and computing capacity grows across the region. The bank recently joined a syndicate providing a US$3.1 billion GPU financing facility to ZanKore, an Indonesian AI infrastructure platform backed by partners including Nvidia, Ooredoo and Nokia. Read more here 
• CSE Global has secured two major US contracts worth a combined US$150 million to supply power distribution centres for LNG and data centre infrastructure projects. The contracts will support the CP2 LNG project in Louisiana and the Cheyenne Power Hub, with the latter providing critical power infrastructure for an adjacent data centre. Read our analysis here

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 The Big Important Story

4 new UCITS ETFs on SGX: What Singapore investors should know

Explore the four new Xtrackers UCITS ETFs on SGX, including their fees, market exposure, SRS eligibility and how Singapore investors can access them.

🤓 What we're looking out for next week

Key dates

• Wednesday, 30 Sep: Micron results
• Thursday, 1 Oct: Lion-OCBC Securities APAC Financials Dividend Plus ETF and Amova-Straits Trading Asia ex Japan REIT Index ETF ex-dividend. 

Get the full list of stocks with upcoming earnings and upcoming dividends. 

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