To The Moon

This Q3 earnings season is exposing a deep fracture in the Singapore market. The $Straits Times Index(STI.SI)$ is being pulled in two opposite directions, and the "easy money" trade that worked for the last two years is now broken.

For the first time since the rate-hike cycle began, we are seeing a clear, aggressive divergence between the "Old Kings" (the Banks) and the "New Challengers" (the SREITs).

The record-breaking profits from the banks are being met with a shrug, while the "just okay" results from SREITs are sparking rallies.

This isn't a glitch. This is the "Great Rotation" beginning in real-time. This post analyzes this critical inflection point and the one question every SG investor must now answer: Is it time to take profits from banks and redeploy that capital into the beaten-down REIT sector?

The "Old King": Banks Hit Their Peak

• WHAT: Record Profits Are Met with a "So What?"

  The Q3 earnings from $DBS(D05.SG)$, $UOB(U11.SG)$, and $OCBC Bank(O39.SG)$ are, by all accounts, fantastic. Profits remain at or near all-time highs.

  But look at the stock price reaction. It's been muted. Why? Because the market is a forward-looking machine, and it knows this is the "top of the mountain" for bank earnings.

• WHY: The NIM Tailwind is Now a Headwind

  The banks' record profits were not a miracle of genius strategy. They were a direct, mechanical result of rising interest rates.

  As rates soared, banks' Net Interest Margins (NIMs)—the spread between what they earn on loans and pay on deposits—exploded. This was a one-off, cyclical super-profit.

  Now, the entire macro story has reversed. With global rate cuts priced in for 2026, that NIM expansion is over. The market is now pricing in NIM compression. The "free money" engine is sputtering, and the banks' next act (wealth management) will be a much harder grind to replace those profits.

The "Challenger": SREITs Are Back from the Dead

• WHAT: SREITs Are Rallying on "Relief"

  Meanwhile, the $FTSE ST REIT Index(ES3.SG)$ has been surging. REITs like $CapitaLand Ascendas REIT(A17U.SG)$ and $Mapletree Pan Asia Commercial Trust(N2IU.SG)$ are hitting multi-month highs.

  This isn't because their fundamentals are suddenly perfect. It's because the one thing that was strangling them for 24 months is finally being removed.

• WHY: The "Great Unburdening" of Debt Costs

  The SREIT story is the exact inverse of the banks. High rates were a disaster for them. It meant their single biggest expense—interest on debt—was soaring, which directly crushed their Distribution Per Unit (DPU).

  Q3 earnings are providing the first "green shoots" that this nightmare is ending. We are seeing finance costs stabilize and even decline for the first time. This relief flows directly to the bottom line and into unitholders' pockets.

• THE KILLER CATALYST: The Yield Spread

  This is the most powerful part. As rate cut expectations grow, the Singapore 10-year bond yield has fallen.

  Why would a big pension fund accept a 2.0% yield on a "risk-free" bond when they can now buy a high-quality SREIT at a 6% yield?

  This "yield spread" is now becoming an irresistible black hole for capital. Big money is being forced to sell low-yielding bonds and rotate into SREITs to find returns. This is what's driving the rally.

HOW: The Head-to-Head Battle for Your Capital

This sets up the clearest strategic choice for Singapore investors. The entire market has pivoted from a "high rate" regime to a "falling rate" regime.

This is what the new battlefield looks like:

My Take: The Rotation is Real, and It's Just Starting

The "Great Rotation" is no longer a theory. This Q3 earnings season is providing the proof.

In my view, the "peak earnings" narrative for banks is correct. Their valuations already reflect the record-high profits they just posted. The upside from here is limited. Their high dividends (5-6%) will create a solid floor for the stocks, but the growth story is over.

The SREITs are the exact opposite. Their prices are still low, reflecting the past pain of high rates. They are not yet priced for the future relief of rate cuts.

This creates a powerful "total return" opportunity.

1. Yield: You collect a 6%+ DPU.

2. Growth: That DPU is set to grow as financing costs fall.

3. Capital Gains: The entire sector is poised to re-rate higher as big money flows back into the "yield spread" trade.

I am not "dumping" my bank shares, as their dividends are a core income stream. But all of my new capital allocated to the Singapore market is now targeting the SREIT sector. The forward-looking risk/reward is simply no longer a contest.

$DBS(D05.SG)$ $UOB(U11.SG)$ $OCBC Bank(O39.SG)$ $CapitaLand Ascendas REIT(A17U.SG)$ $Mapletree Pan Asia Commercial Trust(N2IU.SG)$ $Suntec REIT(T82U.SG)$ $FTSE ST REIT Index(ES3.SG)$ $Straits Times Index(STI.SI)$ $DBS(D05.SI)$ $UOB(U11.SI)$ $OCBC Bank(O39.SI)$ $CapitaLandInvest(9CI.SI)$ $Mapletree PanAsia Com Tr(N2IU.SI)$

📢 Like, repost, and follow for daily updates on market trends and stock insights.

📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

📌@Daily_Discussion @Tiger_comments @TigerStars @TigerEvents @TigerWire @CaptainTiger @MillionaireTiger