DBS Group has signaled that real estate investment trusts (REITs) in Singapore, Hong Kong, and Thailand are positioned for a valuation rerating, even as global markets digest a sharply hawkish shift in US monetary policy expectations.
The research house argues that the upcoming earnings season will drive this revaluation, suggesting that underlying asset quality and income stability in these Asian markets can withstand the pressure from rising borrowing costs.
This view stands in contrast to the broader risk-off sentiment currently gripping rate-sensitive sectors.
The backdrop for this optimism is a significant repricing of US interest-rate futures.
Traders have sharply increased the probability of a rate hike at the Federal Reserve’s next policy meeting, driven by a resilient US labor market.
This data has reinforced Federal Reserve Chairman Kevin Warsh’s commitment to price stability, pushing yields higher and compressing valuations for income-generating assets globally.