South African REIT sector experiences modest pullback in June

THE South African REIT sector experienced a modest pullback in June, declining by 1%, trailing both equities (+2.4%) and bonds (+2.3%) for the month, following a really strong April.

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However, analysts caution against interpreting the decline as a reversal in fundamentals, pointing instead to profit-taking in larger counters, following an extended period of outperformance. In April, South Africa's REIT sector gained 6.9% and outperformed equities (4.3%) and bonds (0.8%), despite a disrupted trading month due to public holidays.

“The June dip appears more technical and structural. Many of the more liquid stocks have delivered stellar returns over the past 18 months, so some rotation was inevitable, particularly in a month where global sentiment was otherwise risk-on,” said Ian Anderson, head of listed property and portfolio manager at Merchant West Investments, and compiler of the SA REIT Association’s monthly Chart Book.