THE STORY OF US
Investors in Singapore’s Straits Times Index (STI) may have something to cheer about, especially given the comparatively subdued performance this year. In the first quarter, the STI grew a modest 0.23 per cent, compared with the US S&P 500 Index, which grew by 7.03 per cent.
First, there is the direct impact on entertainment companies. Shares for UnUsUaL Productions, the concert promoter behind the Jacky Cheung marathon, jumped more than 13 per cent in the days after his concerts were announced.
Another big beneficiary would be stocks that traditionally gain from increased tourism, such as hotels. This has been reflected in the performance of Singapore’s hospitality REITs. Following Jacky Cheung’s concert announcement, CapitaLand Ascott Trust’s stock price rose 4.67 per cent between April and July. A similar pattern was observed for Far East Hospitality Trust’s stock price, which increased 4.88 per cent in the same period.
Their positive performances came despite the high interest rate environment. Higher interest rates tend to decrease the value of properties and increase REIT borrowing costs, meaning downward pressure on S-REITs. However, taking reference from the US Fed fund futures, a rate cut is expected to happen by the Fed meeting in December, which could be beneficial for REITs.
Likewise, the transport sector has similarly trended upward. From April to July this year, the share price of Singapore Airlines increased by 29.38 per cent. While the surge could partially be attributed to post-COVID “revenge travel,” concerts have offered an added catalyst for travel. In-country travel stands to benefit as well; notably, ComfortDelGro stocks have gained 5.88 per cent between April and July.