Markets
Mixed prospects for M-REIT stocks
Cheah Chor Sooi | 05 Jan 2018 00:30
Interest rate direction is one of the main factors influencing the performance of M-REITs in 2018, says Ng

THE recently-launched REIT index ended the last trading day of 2017 at an all-time high of 1,057.35 – surging 6.88% or 68.05 points – in tandem with robust window dressing which saw the FBM KLCI peaking at the year-high of 1,796.81.

Although this was by far the highest close in terms of percentage among Bursa Malaysia’s 27 indices on Dec 29, it beckons the question of the sustainability of the Malaysian real estate investment trusts (M-REITs), moving forward.

The Malaysian REIT Managers Association (MRMA) sees the interest rate direction as one of the main factors influencing the performance of M-REITs this year. REITs are expected to underperform in an interest rate upcycle environment, affected by outflow of funds arising from the narrowing of distribution yield and risk-free rates.

“At times like this, higher volatility in unit price is expected,” its chairman Datuk Jeffrey Ng Tiong Lip tells FocusM