Singapore's property shares, already on the back foot from expectations of rising interest rates, have taken a beating since China devalued its currency on Tuesday and more pain may be on the cards.
"Given that the majority of property stocks with China exposure do not hedge the currency exposures of their incomes and balance sheets, a weaker renminbi suggests that both asset values and earnings/dividends would be negatively affected," analysts at JPMorgan said in a note Wednesday. "Book values and dividend per unit (DPU) would be affected."
Singapore real-estate investment trusts (S-REITs) are also likely to take a hit as the moves Tuesday and Wednesday by the People's Bank of China to push down the Chinese currency also caused the Singapore dollar to weaken.
"The weakening Singapore dollar would result in upward pressure on interest rates," it said, estimating that every 100 basis point rise in interest rates pushes S-REITs' DPU down by 2.7 percent because of increased costs.
Singapore property shares with China exposure based on earnings and assets under management include CapitaLand Retail Trust China, Global Logistic Properties, CapitaLand and City Developments, JPMorgan noted. Those shares are down 1.2-5.5 percent so far this week, after a bit of a recovery Thursday.
Singapore may not be alone in feeling property pain from China.