Singapore’s data centre Reits fall on DeepSeek threat; analysts warn of fallout

SINGAPORE - Companies in the artificial intelligence (AI) ecosystem, including in Singapore, could be hit after the rise of Chinese AI firm DeepSeek caused a meltdown in US tech stocks, analysts warned.

Nvidia on Jan 27 suffered a

wipeout of US$589 billion (S$796 billion) in its market value

– the most for any stock ever on Wall Street.

Data centre-related real estate investment trusts (Reits) in Singapore fell on Jan 27 on the back of the saga surrounding DeepSeek.

On Jan 27, Keppel DC Reit dropped about 8 per cent to $2.09, and Digicore Reit fell around 6 per cent to US$0.545. Mapletree Industrial Trust lost 2.7 per cent to $2.14, while CapitaLand Ascendas Reit declined 0.8 per cent to $2.56.

On Jan 28, the Reits pared some losses, with Keppel DC clawing back 2.9 per cent to close at $2.15, Digicore Reit adding 0.9 per cent for US$0.55, Mapletree Industrial gaining 0.5 per cent to $2.15, while CapitaLand Ascendas ended 2 per cent higher at $2.61.

DeepSeek

soared to the top of Apple Store’s download charts

as an alternative that is said to be able to perform on a par with Open AI and Meta’s models – and can also be built at a much cheaper cost and take up less power.

“The announcement of DeepSeek advancement seems to have resulted in a recalibration of market outlook and earnings expectations across (the) entire AI ecosystem today,” said RHB analyst Vijay Natarajan.

“This, coupled with a recent sharp rally across the sector, makes AI-related beneficiaries vulnerable for profit-taking and short-term corrections,” he said.

This development has also had an impact on all data centre-related Singapore Reits such as Keppel DC Reit, Digital Core Reit and Mapletree Industrial Trust, he added.

“(That is) on concerns that AI capabilities could be achieved with affordable and accessible hardware solutions, thereby dampening the optimistic demand outlook for high-quality data centres,” he said.

Morningstar equity analyst Xavier Lee said a lower cost of building AI would directly affect companies.

“If what DeepSeek says is accurate – that one can build a solid AI system at limited cost – investment in AI is likely to drop, and it opens up to more competition. This is likely to curtail investment, as some companies may decide that the returns won’t justify the capex,” he said.

Are markets overreacting, however? Mr Natarajan believes the market correction seems “slightly overdone” as it is still early days in this development.

THE BUSINESS TIMES