 • The tide is turning in stock markets' favour. The Fed is leaning towards cutting interest rates next year.• Fed chairman Jerome Powell has just said: “The question of when it will be appropriate to begin dialing back the policy restraint” was clearly “a discussion for us at out meeting today.” |
Excerpts from DBS report
| Technology and REITs: All eyes on rate cut beneficiaries |
• The Fed pivots to rate cuts as higher-for-longer expectations ease
» Officials’ forecast indicates no further hikes and 75 bps in cuts next year vs 50bps previously
» Futures markets are pricing in 6 cuts; DBS expects 4 cuts in 2H24
» Treasury yields across maturities tumbled with the 2-year treasury at 4.38% (declining by more than 30bps) and 5-year and 10-year treasury below 4%
• Rotation to S-REITS, Developers, and Technology could be rewarding
» Our REITS analyst sees a Santa rally (Singapore Property & REITs : A Santa’s rally?). Our preferred REITs picks are KREIT, MPACT, MLT, FCT
» Expectations of rate cuts are also positive for the rate sensitive technology sector.
Normalising inventory levels, bottoming of the memory segment, and artificial intelligence should drive the recovery in the semiconductor/tech sector. Our preferred picks are UMS and Venture.
DBS Equity PicksUMS Holdings: Add 14,000 shares @ $1.27 to Growth
MapleTree Pan Asia Commercial Trust: Increase exposure by 3,000 shares @ $1.42 Our first foray into MPACT in early November at $1.34 has performed well on easing rate hike fears. We increase exposure as the stock remains our office REIT sector pick. |
