Singapore Hot Stocks-Reits drop on Morgan Stanley downgrade

SINGAPORE, July 8 (Reuters) - Shares of Singapore real esate investment trusts, such as CapitaCommercial Trust CACT.SI, fell by as much as 5 percent after Morgan Stanley downgraded the industry to "equal-weight", dealers said.

CapitaCommercial Trust fell to a low of S$1.87 with over 2 million shares changing hands after the bank lowered its target price to S$1.86 from S$2.42.

Morgan Stanley analyst Melissa Bon downgraded Reits like CapitaCommercial Trust, CapitaMall Trust CMLT.SI and Suntec Reit (SUNT.SI: Quote, Profile, Research), but maintained an "overweight" rating for Ascott Residence Trust ASRT.SI.

"We are downgrading the S-reit sector as rising interest rates imply higher hurdle rates for new acquisitions and higher costs of funding," she said in the report.

CDL Hospitality Trust (CDLT.SI: Quote, Profile, Research) also dropped as much as 2.3 percent to hit S$1.70.

0700 GMT - Straits Times Index .FTSTI was down 1.67 percent. (Reporting by Charmian Kok, Editing by Jan Dahinten)