Stocks decline while REITs bounce: Weekly Recap

The highlight for me this week was learning that Beansprout was nominated as #TheGoTo for enhancing financial education at the SGX Orb Awards 2024. 

While we didn’t bring home the award this time, I was truly touched by all the support from our community. Over just a few days, so many of you took the time to vote for us and send words of encouragement.

On behalf of the Beansprout team, I would like to say a big thank you. It really does mean a lot to us as a young startup and will motivate us to work even harder to bring you the best insights and tools to help grow your wealth.

It wrapped up a busy week, where we were focused on finding ways to earn a higher yield on our savings, especially after the T-bill yield took a dive to 3.13% in the last auction. 

With government bond yields continuing to fall, it’s likely we’ll see a lower cut-off yield at the upcoming 6-month T-bill auction on 12 September. 

The 10-year average yield of the latest Singapore Savings Bonds also dipped to 2.77%.

Fortunately, we discovered some attractive alternatives, including a 3-month fixed deposit rate of 3.35% p.a. and a 6-month rate of 3.2% p.a., while most banks have kept savings account interest rates steady.

As we get close to the potential first rate cut, we’ve compared the yields across these instruments to help you make your savings work harder. 

Happy growing!

Gerald, Founder of Beansprout

⏰ THIS WEEK IN MARKETS

📉 Worst week

What happened? 

The US labour market showed further signs of weakness, with 142,000 jobs added in August, below market expectations for a 160,000 increase. 

At the same time, the jobs added in July was revised downwards to 89,000, representing the slowest pace of increase since December 2020.

What does this mean?

The weakness in the jobs data led to further concerns about an economic slowdown. 

However, it did not fall sufficiently for investors to believe that a 0.50% interest rate cut in the upcoming Federal Reserve meeting in September is warranted. 

According to the CME Fedwatch Tool, investors are now assigning a 70% probability that interest rates will be cut by 0.25% in the upcoming meeting, followed by two further 0.50% rate cuts before the end of the year. 

We will be looking at the upcoming consumer price index (CPI) data to determine the Fed’s interest rate direction. 

Why should I care? 

The S&P 500 saw its sharpest weekly fall in 18 months, as technology stocks led the declines. Government bond yields continued to decline. 

The Straits Times Index (STI) bucked the decline and managed to close the week with a slight gain, as Singapore REITs bounced with lower bond yields. 

Amongst Singapore REITs, the names that saw the most significant gains were CapitaLand China Trust (+6.5%), Keppel REIT (+5.1%), ESR LOGOS REIT (+3.7%), Frasers Logistics and Commercial Trust (+3.7%), and iREIT Global (+3.6%).

Check out our Singapore REIT screener to discover the best REIT for your portfolio.

🚗  Moving this week 

• Capitaland Integrated Commercial Trust (CICT) has proposed to acquire 50% of ION Orchard for S$1.85 billion. CICT plans to raise S$1.1 billion through a combination of a placement and preferential offering, and expects the acquisition to lead to a DPU accretion of 0.9%. Read our analysis here. 
• Sembcorp Industries has signed a gas sales agreement to import up to 111 billion British thermal units per day of piped natural gas (PNG) from the Mako gas fields in Indonesia. The agreement is expected to be effective by 1H2025, with gas delivery anticipated to commence from 2026 for an expected tenure of approximately 11 years.
• ComfortDelGro was awarded three bus franchises worth around A$1.6 billion (S$1.4 billion) in Victoria, Australia, over a 10-year term starting in July 2025. The award will increase the company’s market share in Victoria’s public bus business by 30%. 
• Chinese EV maker Nio narrowed its second quarter loss as the company’s vehicle sales more than doubled in the quarter ending 30 June. The company expects its total delivery volume for the third quarter to set another record. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 The big important story

Here’s what to expect for the T-bill auction on 12 Sep

The closing yield on the 6-month Singapore T-bill is at 3.12%.

🤓 What we're looking out for next week

• Tuesday, 10 Sep: Beansprout Seminar: How to Tap on Opportunities in Gold
• Wednesday, 11 Sep: US Consumer Price Index (CPI) data
• Thursday, 12 Sep: Singapore 6-month T-bill auction

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

Source: SGX, Bloomberg, Refinitiv

💰 Promo

POSB Promo: Earn Up To $500 Guaranteed Cash On Your Salary Credit And Card Spend

Credit your salary into your POSB/DBS account and spend on your POSB/DBS Cards to earn up to $500 guaranteed cash

Join the Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs.