Singapore shares edged down, with Singapore Telecommunications Ltd declining 2 percent after OCBC cut its rating on the sector.
"In the search for yield, telco stocks have done very well, rising some 14 percent to 26 percent year to date, versus the STI's 9 percent climb," OCBC said in a report.
"However, given the still-muted outlook, we believe that the share prices have run up too much, too quickly, and this has driven yields down to below 5 percent."
It downgraded the sector to "neutral" from "overweight".
The brokerage noted that with the exception of M1 Ltd , which expects to see moderate earnings growth this year, both SingTel and StarHub LTd were muted in their outlook.
The Straits Times index lost 0.6 percent to 3,433.15, while MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.2 percent.
Shares of CapitaLand Ltd fell as much as 2.4 percent to their lowest in nearly two weeks after the property developer announced plans to raise up to $520 million in convertible bonds due 2020.
1245 (0445 GMT)
(Reporting by Joyce Lim; Editing by Prateek Chatterjee)
(lim.huilian@thomsonreuters.com)(+6564035659)(Reuters Messaging: lim.huilian.thomsonreuters.com@reuters.net)
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11:49 STOCKS NEWS SINGAPORE-Keppel REIT falls after parent firm trims stake
Units of Keppel REIT dropped more than 2 percent after its parent, Keppel Corporation Ltd, said it would sell a 6.7 percent stake in the trust for S$280 million ($223 million).
The price fall came after Keppel REIT marched to a 5-1/2-year high of S$1.63 last week, rallying more than 20 percent so far this year and outperforming a 13 percent rise in the sector index.
An analyst at a foreign brokerage said the uncertainty of a new shareholder and concerns about further stake sales by Keppel Corp weighed on the trust.
Keppel REIT stood at S$1.57 per unit but still above the selling price of $1.555 for the 180 million units or 6.7 percent of the total issued units of the trust. It was the second most actively traded stock.
Brokerage UOB Kay Hian said it remained positive on Keppel REIT because of the trust's strong office portfolio in Singapore, and retained its target price of S$1.64.
