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As the stock market seems set on moving sideways with thinning volume, a downward bias is definitely stronger. Over time, even the most optimistic bulls will turn cautious and every rally attempt will see stale bulls reducing their exposure.
This is likely to continue until only the really longer term holders remain or when institutional buying interest returns in a meaningful way (read upward price movement with higher trading volume) or both.
As the high beta stocks turn quiet, the more boring high yielding counters might start to look more interesting. After all, achieving 10% yield per annum is not too shabby.
I am now looking to increase my investments in AIMS AMP Capital REIT (AA REIT) and Lippo Mapletree Indonesian Retail Trust (LMIR). It is no secret that I like these REITs. Their fundamentals are sound and they have attractive yields.
Using TA to look for entry points, it is obvious that the upward momentum in LMIR is over for now. The 20dMA seems poised to form a dead cross with the 100dMA soon. MFI has formed a higher low but with volume thinning, it is unlikely that LMIR is about to form a new high in price. Chances are higher that the price will continue declining and the rising 200dMA (at 44c today) should provide a stronger support. I would accumulate if price falls to 46c and lower.
Psychologically, this is very fresh in the minds of investors. 20.5c is a many times tested support and resistance level and I expect this to be a strong support in the absence of selling pressure. If this support breaks, 20c is likely to be a much stronger support and would be a great price to accumulate more units of AA REIT at.
Saizen REIT tried to rally today as it reached a high of 17c, only to fall back to close at 16c, forming a gravestone doji in the process. The fact that this attempt to move higher took place on the back of higher volume and failed is not positive. Nonetheless, with the longer term moving averages still moving up and being in close proximity to each other, together with the absence of selling pressure, the downside is likely to be limited. As I have a sizeable investment in Saizen REIT already, I would only accumulate further on dips.
Related posts:
Aims Amp Capital Industrial Reit.
Lippo Mapletree Indonesia Retail Trust.
Saizen REIT: Long-term buy.
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22 comments:
Hi AK71
Can i kindly ask if you know how and where we can purchase STI futures (long, short)? I was thinking of using futures as a tool as part of the portfolio strategy.
Pls advice.Thanks!
anthony
Hi Anthony,
You will have to start a Futures Margin Trading Account. Personally, I do not trade STI Futures. I am more of an investor than a trader and I like to own real companies.
A quick online search will give you quite a few links. Here's an article by Lorna Tan which explains how STI Futures work:
http://www.straitstimes.com/STI/STIMEDIA/sp/ftse08/STI_Futures_webpage.pdf
I see. Many thanks!
anthony
Hi AK
Though investing in REITS can give us passive income. However, consider the depreciation of its assets over a period of say 20 years, will share price of the REITS counter that we have bought in now, drop in value/share price by then, and will eventually 'eat up' our capital that we have initially invested on it ?
Hi Anonymous,
REITs are Real Estate Investment Trusts. Their assets are real estate. Real estate don't depreciate per se.
Real estate's values would go through ups and downs with the forces of supply and demand which could be linked to the business cycle as well. So, the value of a REIT's assets would be affected similarly.
I would treat REITs just like any other investment in the stock market. If a REIT becomes over-valued, it might be time to let go. Very few things in life is really forever.
Hi AK
Thanks for the reply. I have raised this question merely because today i came across a investing book talking abt investment. It state that the depreciation of assets is the risk faced by REIT. As is, say the lease is only offered for 30 yrs. Approching the expiry or upon expiry of the, the REIT is no longer able to generate any rental income and thus will affect its DPU per se or even the share price.
Hi Anonymous,
Yes, real estate have different tenures and could be leasehold or freehold. A 30 years lease is usually associated with industrial properties in Singapore. Some leases are 30 + 30. There are freehold industrial properties in Singapore as well. Most other types of real estate in Singapore have at least a 99 years lease.
To say "depreciation of assets is the risk faced by REITs" is not correct per se as it discounts the possibility of REITs owning freehold property. So, if this statement bothers you sufficiently, you want to make sure that the REITs you invest in own only freehold properties. :)
So, am I bothered? For me, what matter most are value and returns.
If I buy a property at a price lower than the market value and with returns higher than what is the norm in the market, I have a bargain. it does not matter to me if the property has a 30 years tenure or a 99 years tenure.
Since I treat REITs like a piece of real estate, I look for value and high returns too. Also, like a piece of real estate, if it becomes overvalued, I would sell for capital gains. It matters little to me what are the tenures of the properties, therefore.
I enjoyed your comments. Thank you. :)
Hi AK
Thanks.
I am actually invested in AMP AIM industrial REITS before its right issue. And still holding on to it now. I am also currently holding on to Parkway Life Reit, and has recently bought in 100 lots of Saizen Reit after reading your blog. Intending to buy in FIRST reit soon. All these REIT counters are meant for my passive income and i intend to hold for long. As REIT counter has currently account for half of my overall portfolios, i am actually quite worried if i am really 'over-exposed' to REIT counter. But since i am in for long term passive income, only REIT can give me this kind of high yield dividend income. So after reading abt the depreciation of assets risk faced by REIT, ya i must admit, has actually started to worry...sob...sob..
Hi Anonymous,
As long as things stay positive and we made purchases based on sound FA, I do not see any reason to worry. Knowing when to buy is a skill. Knowing when to sell is also a skill. I believe that this is the same for all our investments, REITs included.
If a person bought a condo for $680k and the property market goes crazy and a buyer offered $1.6m for the condo, should the owner sell? I would take into consideration the rental income that the condo commanded before making a decision.
If the condo commanded a rental income of $200k a year, why bother selling? In less than five years, the owner would make just as much from renting out the place!
If the condo commanded a rental income of just $50k a year, why not sell? The owner would have to rent out the place for 20 years to get that kind of profit! In that 20 years period, there could be a few recessions which could present some opportunities to purchase real estate again at a bargain. Last year was a good example.
Moral of the story: Don't blindly keep your properties for rental income forever. Similarly, don't blindly keep your REIT units for passive income forever. Then again, always hedge. No one can be 100% sure.
Hi AK
Really appreciate your comments and advise.
After knowing your blog, i have actually come back to get the update everyday.
Thanks for sharing whatever you know with us.
dear anonymous,
i wouldnt really say that real estate depreciate, but probably they are subject to fluctuations in terms of market valuation, or other costs such as maintance, or if they own and operate heavy equiptment the depreciation applies to these. it didnt really occur to me that there is real depreciation in the actual assets for Reits.
like you, of the 5 counters that i own (very young investor with small tight budget), 4 are Reits. i used to be worried but AK has convinced me that it's alright =) but of course, i'm looking at capital growth stocks now and he mentioned the marine stock...
Hi Anonymous,
I spend a lot of time thinking, doing analyses and coming up with ideas about investments. However, don't take what I say as the Gospel truth. Take your time and chew on them. Then, decide for yourself.
Actually, I feel bad whenever I say "Hi Anonymous". Next time, you might want to consider leaving your name or just your initials. ;)
Thanks for visiting daily and, remember, if you are travelling, click on the ZUJI banner in my blog's header to see what they have to offer. Haha.. A bit of shameless advertising here. ;)
Hi Raelynn,
Thank you very much for the vote of confidence. Now, I feel the pressure. ;) With thorough FA, we can invest with confidence. With knowledge of TA, we know when is a good time to buy and when is a good time to sell (notice I say "good" and not "best"). Otherwise, we would be fighting blind. :)
Courage Marine and CapitaMalls Asia are two companies I have identified for growth recently. As usual, do some independent research and thinking before deciding if they are suitable for you. :)
Hi AK
Sorri for not identifying myself. You can call me CK. Haha...i am also the same person who had asked you abt the question on risk of Rupiah devaluing. I am now the "fen si" for your blog.
Hi Raelynn
Thanks for letting me KNOW i am not alone in filling up majority only the REIT counter. Ya, i am also currently holding on to 10 lots of SPH and 7 lots of ST Engrg plus 20 lots of Hyflux Water Trust. Of course, i learnt my mistake and still holding on to some penny stock counter which after so many years, still account for paper loss of more than 80%.
I am also one of the victim for Chartered Semicon delisting and Jurong Tech liquidation now. Loss of $20k. So very scared now.
I am now wondering should i liquiate my Global Investment Ltd counter (F.K.A Babcock Brown)? Holding on to 100 lots of it. Bought at the price of $0.20.
Anybody can give comments on this counter (Global Investment Ltd) ?
Thanks in advance
Hi CK,
I did not invest in Babcock & Brown because I didn't understand their business. The yield was tantalising but I managed to hold back. That was one thing I did right back then.
I have SPH, STE and HWT too. Good stuff. :)
Thanks for being a "fen si". I hope you make some good money in 2010 and remember my ZUJI banner. hahaha... ;p
Hi AK
Hmmm....look like i will liquidate it soon...maybe use the $$ to buy in more HWT.
Ya will remember your ZUJI banner....hehe..Thanks.
Hi CK,
I like HWT and I am still holding on to those I bought at 31c. At the current price, I am not too crazy about it.
At the moment, I have a preference for AIMS AMP Capital Industrial REIT and LMIR when it comes to yield.
If you like HWT, go ahead. Don't be swayed by me. I am just trying to get the maximum yield. ;)
Thanks for remembering my ZUJI banner and Bon Voyage! ;-p
Hi AK
I had bought my 20 lots of HWT at the price of $0.685 (shld be consider quite a high price entry to get in). Ok.. will seriously consider LMIR if that is the case. I am already holding on to 150 lots of AIMS AMP ('force' to buy the 100 lots during their right issue.
Haha..will definitely click on your ZUJI banner when earn money lor...haha...
Hi CK,
With HWT, what you have to be aware of is that the income distribution to unitholders is quite high due to waiver by the sponsor (Hyflux). In the previous distribution, Hyflux waived their entitlement partially as well. Without the sponsor waiver, the income distribution would be lower.
However, I expect the plants operated by HWT to have increased utilisation over the course of the year as the Chinese manufacturing sector livens up and this should be good news overall. HWT is still a good investment but appropriately weighting your exposure to different stocks is something you have to think about and this would differ from person to person. Don't do what I do because it might not be for you. :)
If you are planning a holiday, just click on my ZUJI banner to see if they have a good deal. No need to wait till earn money lah. ;)
If ZUJI does not give a good deal, don't buy from them just because you want to help me out. Go for the best deals available, I always say. :)
Hi AK
Thanks. Look like i will have to do a balancing act liao.
OK, will click on ZUJI to find out any good deal.
THANK U :)
Hi Ak,
I am a fan of Zuji. My husband and I always buy package deal (hotel plus air ticket) from Zuji.They give discount vouchers to us as well. Managed to get S$80 discounts when they had a visa promotion with UOB. You get sth from Zuji when I click on your Zuji banner? Just curious!!
Back to stock, I am vested in Starhill Global but now it is trading in the overbought territory. Price also down from 0.64 to 0.62 currently. Better to wait during pullback or correction time? Is it better to buy Starhill or Lippo?
By the way, I managed to buy just 10 lots of Saizen at 0.165 2 days ago.
Tks,
Naomi
Hi Naomi,
Yes, if you click on my ZUJI banners and buy an air ticket from them, for example, I will be given 1% as a ZUJI affiliate. Hopefully, my readers will get great travel deals and I get something in return for running this blog. Thanks for your support! :)
Usually, I like to buy on retracements or weakness. There is more margin of safety that way.
Is it better to buy Starhill or LMIR? Personally, going by the numbers alone, LMIR is more of a bargain. Bigger discount to NAV, higher yield and very low gearing all make LMIR my preferred choice.
Starhill has a CMBS due very soon, if I am not mistaken. So, the debt profile of a REIT is an important consideration too.
However, I have learnt that the value of a REIT could be quite different from the market price. Some REITs are trading at a premium to their NAV, for example. So? Price is higher than the value in such a case but that's the stock market.
Congratulations on being a Saizen REIT unitholder. 16.5c is a fairly safe entry price, in my opinion. :)
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