The interest rate cut news has basically been digested, and the short-term market is expected to remain stable, which is beneficial for long-term real estate investment trusts | Lianhe Zaobao
Global stock markets rose on expectations of interest rate cuts by the Federal Reserve, but the market has already digested the news of the rate cuts and will not react significantly in the short term. In the long run, Singapore real estate investment trusts may benefit. The FTSE Straits Times Index slightly declined, with market sentiment influenced by Federal Reserve policies. The Federal Reserve is expected to cut rates by 25 basis points, with inflation data close to expectations
Driven by investor bets that the U.S. Federal Reserve will initiate interest rate cuts next week, global stock markets rose broadly on Friday (December 6). Analysts pointed out that since the expectations for rate cuts have been largely priced in by the market, the local market is not expected to react significantly. In the long term, Singapore Real Estate Investment Trusts (S-REITs) may benefit.
The Straits Times Index in Singapore closed at 4,531.360 points on Friday, down slightly by 6.77 points or 0.15% for the week, showing little change.
FSMOne Singapore Senior Portfolio Manager You Weiren stated in an interview with Lianhe Zaobao that the expectations for a rate cut in December have been largely absorbed by the market. Looking ahead to the recent trends in the stock market, if the Federal Reserve acts as expected, the market will not show significant reactions.
"However, if the Federal Reserve does not cut rates or provides a more hawkish policy outlook, a correction is more likely, and both scenarios could put pressure on market sentiment."
Ian Lyngen, Head of Rates at Bank of Montreal (BMO), said that overall, the Federal Reserve is expected to cut rates by another 25 basis points next week. "But this does not mean the Federal Reserve is in a hurry to accelerate the pace of rate cuts in 2026."
The inflation indicator Personal Consumption Expenditures (PCE) data released by the Federal Reserve on Friday showed a year-on-year increase of 2.8%, close to expectations, and is not expected to affect next week's policy decisions.
Technology and AI Investments May Mask Real Issues in the U.S. Economy
Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, warned that even though U.S. stock indices remain at historical highs, investments in technology and artificial intelligence may significantly mask underlying issues in the U.S. economy, including the continuously expanding debt approaching $40 trillion.
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Regarding the local market, You Weiren pointed out that Singapore Real Estate Investment Trusts may become the main beneficiaries of the rate cuts. He stated that the potential for lower interest rates in 2026 could reduce financing costs and further support valuations, especially as investors seek higher-yield alternative investment options.
"Additionally, the fundamentals of Singapore Real Estate Investment Trusts seem to be improving. High occupancy rates and positive rental returns provide support for them." He also stated that with the advancement of the Asset Management Company appointments under the Securities Market Development Plan (EQDP), the deployment of 5 billion is expected to bring liquidity benefits to the local market, attracting more institutional and retail funds.
In terms of individual stock news, Singapore Paincare Holdings announced after the market closed on Friday that its privatization plan has failed. Paincare Holdings received a proposal in May from medical service management consulting firm Advance Bridge Healthcare to privatize the group at S$0.16 per share.
The Singapore Investors Association (SIAS) subsequently pointed out that this acquisition price is too low. As the privatization plan did not meet conditions such as obtaining shareholder approval within six months, the plan has officially failed. The group's stock will resume trading. The last trading price of the group was S$0.16.
United Food Holdings, which is on the watchlist, announced on Saturday (6th) that it has received two letters from WongPartnership demanding the repayment of over S$350,000 in unpaid amounts for services rendered by the law firm in the past. The other party requires the company to repay by December 17, or legal action will be taken to recover the amount. The last trading price of United Food was S$0.043
