Asian Market Outlook - April 2025 (B&I Capital) 09 April 2025
Overall: REITs are providing some relative shelter from the tariff storm. The business of REITs is more domestic in nature than most of the other sectors. Lower interest rates will likely benefit the sector, and the JPY tends to strengthen when financial markets suffer. We continue to view Asian REITs as defensive and under owned.
- Japan: JREITs and Developers, despite suffering from the tariff sell-off, have outperformed. We expect defensive sectors to start outperforming, with JREITs taking the lead over Developers. Second quarter reporting will affect the sector in Japan as well.
- Australia: Australia has had the largest correction in Asia Pacific (-13% YTD), mostly on Goodman (GMG) due to its size in the index. Overall, sell-off in Data Centers might be overdone, and we believe RBS is poised to continue easing as well. We remain optimistic in other sectors with a preference for living stocks. The Abacus Storage King and National Storage story is developing and should be navigated carefully. We would not be surprised to see more consolidation in the AREIT sector among smaller names.
- Hong Kong & Singapore: Despite sharp falls in HK due to Chinese trade tariff retaliation, we see several drivers to support the HK REIT sector. HK Stock Connect should include HK REITs soon (Link REIT and Fortune REIT likely inclusions). We prefer REITs over Developers in HK currently, but could see recovery in both. Anticipated stimulus from Chinese Government to offset tariffs could improve HK sentiment. Singapore REIT (SREIT) sell-off due to trade war presents a good opportunity as falling rates have led to positive refinancing rates and acquisition cycle could restart. Rotational buying in Singapore out of large cap banks could be a tailwind for SREITs as well.
