Where Investors Should Turn as T-bill and SSB Yields Decline
As yields on Treasury bills (T-bills) and Singapore Savings Bonds (SSBs) fall, the pressing question for investors remains: where should they allocate their capital to ensure robust returns? Recent developments highlight a need for protective yet promising strategies.
The Downturn in Yields
Yields on six-month T-bills have plunged to 2.38%, marking a new low for the year. The trend continues with Singapore Savings Bonds, which saw a decline in the 10-year average return to 2.69% from previous months. These rates now pale in comparison to other asset classes, causing investors to seek better alternatives.
Defensive Stocks: A Haven
Analysts like Shekhar Jaiswal from RHB recommend a tilt towards defensive stocks amidst market uncertainties. Companies in sectors like consumer staples, healthcare, and land transport offer resilience during downturns. Notably, Singapore Exchange (SGX)-listed ST Engineering, Sheng Siong, and ComfortDelGro have been spotlighted for their steady earnings and dividend growth potential.
As stated in The Business Times, ComfortDelGro not only benefits from reduced oil prices but also boasts significant forward earnings prospects.
Real Estate Investment Trusts (Reits) Attract Attention
Real Estate Investment Trusts (Reits) remain appealing for their attractive yields, projected at 6.7% for FY2025. Despite market turbulence, retail and industrial Reits shine for their stability. Prominent performers include Frasers Centrepoint Trust and CapitaLand Integrated Commercial Trust, which continue to see net institutional inflows.
The Consistent Allure of Fixed Deposits and High-yield Savings
Despite the cuts in interest rates, fixed deposits and high-yield savings accounts maintain their charm. Banks such as OCBC and UOB have demonstrated steady uptake in these products, with interest in OCBC’s 360 Account growing markedly.
Global Insights: A Broader Scope
Globally, sectors like telcos and banks present robust yields, at 5.3% and 5.1% respectively. This trend is mirrored in Singapore and Southeast Asia, where telcos like Singtel attract substantial institutional inflows, capitalizing on the shifting economic landscape.
In conclusion, while declining yields in T-bills and SSBs pose challenges, opportunities abound in defensive equities, Reits, and stable banking products. However, vigilance and adaptability remain crucial in navigating this intricate financial terrain.
