Why Singapore REITs should expect bounce from Fed tapering's no-show

Asset purchases won't be reduced.

According to OCBC, this morning, the Fed announced that it would not reduce asset purchases in Sep-13 and reiterated that the job market remains a key economic concern. 

This outcome is above view, given that the consensus was for a tapering of US$5bS$10b.

Here's more from OCBC:

In addition, we note Chairman Bernanke also indicated that, even after winding down assets purchases ahead, the “Fed’s rate guidance and its ongoing holdings of securities will ensure that monetary policy remains highly accommodative, consistent with an aggressive pursuit of our mandated objectives of maximum employment and price stability.”

As a result of this dovish stance, the yield on the 10Y Treasury note dipped 15bp to 2.7% and the S&P500 rallied 1.22% overnight.

While our rating on the sector is NEUTRAL, we believe the REIT sector would likely see a short-term bounce ahead and continue to advocate counters that show significant value at current prices.