Investors piled into Singapore real estate investment trusts (S-Reits) after the 50 basis point emergency rate cut in the United States in the wake of the coronavirus outbreak.
Reits - often viewed as key beneficiaries of reduced borrowing costs - outperformed the broader market yesterday.
The iEdge S-Reit Index, which tracks all local Reits, gained 47.4 points or 3.3 per cent to 1,468.78, its biggest single-day jump. Industrial-and retail-related Reits performed best in the asset class.
Ascendas Reit climbed 4.1 per cent to $3.33, CapitaLand Commercial Trust jumped 5.7 per cent to $2.03 and CapitaLand Mall Trust surged 5.1 per cent to $2.46.
Mapletree Commercial Trust added 5.2 per cent to reach $2.24 while Mapletree Logistics Trust, which received an upgrade from UOB Kay Hian to "buy" with a higher target price of $2.08, gained 3.7 per cent to $1.96.
With other central banks likely to follow the US path, Mr Eli Lee, head of investment strategy at Bank of Singapore, noted that "the search for yield will continue to be a powerful structural driver of markets".
He recommended that clients switch "from poorer-quality assets into steady dividend-yielding stocks, such as Singapore Reits".
While property plays benefit from looser financial conditions, OCBC Investment Research analysts prefer S-Reits over Singapore developers in the near term, owing to their "more defensive positioning and less impact from the supply chain disruption from Covid-19".
The Reits gains came at the expense of local lenders, which were laggards owing to the effect rate cuts will have on net interest margins.
DBS fell 1 per cent to $23.91, OCBC Bank lost 0.9 per cent to $10.55 and United Overseas Bank dipped 1.1 per cent to $24.
The local banks' performance tempered gains on the Straits Times Index (STI), which ended 5.47 points or 0.18 per cent higher at 3,025.03.
Singtel was another notable STI laggard, down 0.3 per cent to $2.97.
Citi Research analyst Arthur Pineda noted that telcos such as Singtel are a good hedge in the current climate as they offer one of the lowest correlations between gross domestic product and earnings growth. He also favours fibre network infrastructure plays such as NetLink NBN Trust, which closed 1 per cent higher at $1.01.
Trading volumes were 1.63 billion shares worth $1.94 billion, with losers beating gainers 242 to 208.
Elsewhere, benchmarks were mixed. Australia and Hong Kong slid while China, Japan, Malaysia, South Korea and Taiwan rose.