US office Reits rally on rate cut hopes; STI up marginally

SINGAPORE – Local issues came to the fore on July 17 with key blue chips under strain, although the index itself eked out a modest rise.

DBS Bank continued its slide, falling 0.2 per cent to $37.28, but the bulk of the selling pressure came from Singtel, which announced overnight its intention to increase its stake in its Thai associate AIS. Singtel will participate in a voluntary tender offer for AIS shares held by the public as part of a larger exercise that will simplify the AIS shareholding structure.

Singtel rose at the open, climbing as high as $3.10, but began declining after the midday break to close at $3.02, down 1 per cent.

The wash-up left the Straits Times Index at 3,489.57, up just 1.66 points or 0.05 per cent, with gainers beating losers 304 to 244 on trade of 1.1 billion shares worth $1.1 billion.

It was a better day for the three US office real estate investment trusts (Reits), thanks to speculation that the United States will cut interest rates soon. One gauge tips a 91.6 per cent probability of a 25 basis-point cut in September and a 56.8 per cent probability of another one in November.

Prime US Reit rose 19.7 per cent to 17 US cents, Manulife US Reit added 12.2 per cent to 8.3 US cents and Keppel Pacific Oak Reit advanced 11.5 per cent to 17.5 US cents.

Veteran Reit investor Gabriel Yap of GCP Global said the Reits have been so beaten down that “it just takes an ounce of good news, speculative though it may be, for them to bounce back”.

The subdued action here came despite another record session on Wall Street with small-cap companies and industrials thriving.

The S&P 500 rose 0.6 per cent for its 38th record close in 2024, the Dow Jones Industrial Average advanced 1.8 per cent to a new high, while the Nasdaq inched up 0.2 per cent.

THE BUSINESS TIMES