Japanese Yen at 15 year high.

I have been following news reporting on the strength of the Japanese Yen as well as the actions taken by Prime Minister Naoto Kan's team.  I am, naturally, very interested in economic and financial news from the Land of the Rising Sun as I am vested in Saizen REIT.

I applaud Bank of Japan's (BOJ) decision to cut its interest rate to zero recently.  This would, in theory, make credit cheaper and more readily available in the country. This would encourage borrowing and could possibly give the economy a shot in the arm. However, taking note that the interest rate was near zero to begin with (at 0.1%), cutting its rate to zero could have limited positive effects.

For investors in Saizen REIT, a strong Yen is good because we receive income distributions in S$. However, a strong Yen is not good for Japan as, being an exporting economy, a strong Yen reduces Japanese companies' competitiveness. As Japanese MNCs repatriate earnings back to Japan, a stronger Yen reduces the value of repatriated earnings. A stronger Yen could also propagate the deflationary spiral which Japan is suffering from.

While, as investors in Saizen REIT, we want to have a strong Japanese Yen, we want it strong enough to give us good returns (i.e. an attractive yield on our investment) but we do not want it so strong as to jeopardise the well being of the Japanese economy as that would, in time, have negative ramifications for Japanese residential real estate.

Latest update:
The dollar was trading at 82.36 yen in Tokyo midday.
08 October 2010 1231 hrs, CNA.

Related post:
Japan's debt issue and Saizen REIT.

AIMS AMP Capital Industrial REIT: Good value.

On 28 Sep, I mentioned that I bought more units at 21.5c believing that the REIT still offered good value at this price with a yield of 9.67%.  I also said that "21.5c is psychologically important as it is the midpoint of the old trading range of 20c to 23c".

Today, we see some quiet buying up in this REIT. Of the 2,085 lots which changed hands, 1,672 lots were bought up at 22.5c. Technically, this has created a buy signal in the MACD histogram. The MFI has just dipped into oversold territory while the RSI is bordering on oversold.

There are some who believe that the price would suffer on the 15th when the rights units commence trading with pessimistic forecasts of as low as 20c. If people are willing to sell at 20c, well, I am willing to buy as that would give me a yield of 10.4% per annum.

Related post:
AIMS AMP Capital Industrial REIT: Cheaper please.