“Higher interest rates and flat property cap rates translate to negative carry from acquisitions, stifling inorganic growth. We also expect refinancing costs to spike not just from higher rates but costlier hedging to keep interest rates fixed,” says Chew, adding that the ability to maintain distributions per unit (DPUs) will be a challenge.
Head of research at PhillipCapital Paul Chew has suggested that “hibernating for winter” could be an appropriate strategy for Singapore investors in 4Q2022 as global growth continues to ease.
In his report dated Oct 4, Chew noted that the STI was up only by a “modest” 0.9% in 3Q2022, with only a third of the component stocks managing to eke out gains. Banks and selected cyclicals were the outperformers, while REITs bore the brunt of the sell-down as they face multiple challenges.
