As a background, the US Federal Reserve has turned significantly more hawkish than it was in December 2021. It has stated that it intends to start reducing its bond portfolio this year. This is also known as Quantitative tightening or QT. “And what to say of the European Central Bank (ECB) hinting last week that it might cut short its own bond-buying programme in the face of higher inflation?” wonders ING in an update.
The MSCI Singapore Index will include Grab Holdings on Feb 28. On that day, the MSCI Singapore Index will factor in 100% of Sea. While Sea’s market capitalisation is around US$90 billion ($120.7 billion), it had been as high as US$140 billion. Grab’s market cap is around US$20 billion. Together, the two stocks would account for an increase of US$110 billion in the MSCI Singapore Index. To make room for these two Nasdaq-listed stocks, other MSCI components may fall due to index fund realignment.
Interestingly, the S-REITs have already fallen to one-year lows. For instance ParkwayLife REIT fell from $5.13 at the start of the year to $4.63 as at Feb 10. PLife REIT had gone as low as $4.50 before rebounding. The decline could be a result of concerns that the Bank of Japan could turn hawkish.
