Yesterday, the real estate sector of the usa stock market continued to perform strongly, among which $Iron Mountain (IRM.US)$ 、 $D.R. Horton (DHI.US)$ 、 $Simon Property (SPG.US)$ set new closing highs, and many real estate stocks had annual gains exceeding 20%, outperforming $S&P 500 Index (.SPX.US)$ An annual increase of 17.84%.

Citic Sec believes that the prosperity of the real estate market is negatively correlated with interest rates, so once the Federal Reserve begins its interest rate cuts, the investment symbols related to the USA's real estate market deserve attention.

The significant downward revision of non-farm employment may prompt the Federal Reserve to cut interest rates more aggressively.

On Wednesday, the USA Bureau of Labor Statistics announced that for the 12 months ending in March 2024, non-farm employment data was revised down by 0.818 million people. Previously released non-farm employment data showed a total of 2.9 million new jobs added in the adjusted reporting period, averaging 0.242 million per month. After deducting 0.818 million, the monthly average growth rate will decrease to 0.174 million.

In March 2022, the Federal Reserve raised interest rates from near zero to a range of 5.25% to 5.5% and maintained this level for more than a year. However, inflation is now subsiding, and investors have long been pricing in interest rate cuts. Wednesday's significant revision of past non-farm employment slightly strengthened this outlook: according to CME's "FedWatch," the probability of the Federal Reserve cutting rates by 50 basis points in September increased to 36%, up from 27.5% on Monday.

Institutions are optimistic about investment opportunities in the USA real estate sector.

Citic Sec expects that the upcoming cycle of interest rate cuts in the USA may also bring investment opportunities in the USA real estate sector. Overall, interest rates are a key factor affecting the real estate cycle in the USA, although the last rate hike cycle saw somewhat atypical performance in the USA real estate industry. Specifically:

The performance of the USA's large REITs is clearly negatively correlated with interest rates, but may change ahead of interest rate fluctuations.

Home builders in the usa have developed rapidly over the past period and may also benefit from rising housing prices, increased housing investment, and expanded construction scale in the future. However, history has shown that their ability to withstand risks under extreme conditions (such as financial crises, recessions, etc.) is not as strong as that of property holders.

The endogenous business capabilities and layout of real estate service providers have a greater impact on their market cap, while cyclical factors have less influence.

Wedbush believes that us reits are entering a good opportunity for investment. The Wedbush analyst team stated in a recent report: "Although the overall real estate transaction market has been slow over the past 18-24 months, reits that focus on net leasing largely depend on tenant relationships to continue their external growth pace, with more stability than real estate stocks."

The general trend of the Federal Reserve lowering benchmark interest rates may help to improve the capital costs of the entire real estate industry. The Wedbush report states that the group of private investors may rejoin the competition, and this could impact market trading volumes and yield ceilings. "Therefore, we are in a positive industry growth trend," the institution's analysts stated.

For specific symbols, Wedbush is initiating coverage on four net leasing-focused reits in the us market, including this institution's coverage of $Essential Properties Realty Trust Inc (EPRT.US)$ and $Broadstone Net Lease (BNL.US)$ Given a "outperform" rating, for $Netstreit (NTST.US)$ and $Realty Income (O.US)$ Given a "neutral" rating.

How to seize investment opportunities in the usa real estate sector?

The related symbols in the usa real estate market can be roughly divided into three categories:

As $D.R. Horton (DHI.US)$ Representing home builders.

As $CBRE Group (CBRE.US)$ Representing non-residential and residential real estate services companies.

As $Simon Property (SPG.US)$ Representing equity commercial property reits.

Due to the historical performance of the real estate sector being negatively correlated with interest rates, but with significant differences among various sub-sectors and companies, in addition to the individual stocks mentioned above, investors can also seize the opportunity for growth in the usa real estate sector by investing in etfs, specifically focusing on. $Vanguard Real Estate ETF (VNQ.US)$ 、 $iShares US Real Estate ETF (IYR.US)$ and other symbols.

In addition to the etfs mentioned above, there are still other usa real estate etfs available for investors to choose from, mooers can view them by clicking market > etf > thematic etf > north america real estate etf~

Editor/Jeffy