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So, the technical reason I had for buying more shares in CapitaMalls Asia is no longer valid and I will not add to my long position anymore until the picture changes. Will I cut loss? I will only do so in a rebound. I will not do so as price goes lower. That has been my practice.
Prices rarely go up or down in a straight line. They climb a wall of worries and go down a river of hope. With CapitaMalls Asia, a rebound in share price could see gap filling at $1.325 per share. Whether this will happen or not, nobody knows for sure. If it happens, I will reduce my exposure.Fundamentally, I still like the company's exposure to the growing middle class in China. These people have greater discretionary spending power and shopping malls in China will see strengthening demand over time. This will translate to higher asking rents and higher valuations for malls.
I also like how the RMB is likely to strengthen in time and this would mean that the NAV of the company will only go higher in S$ terms. How long will this take? Your guess is as good as mine.Only one person knows for sure and he is Mr. Market. He will decide when the share price of the company will trade higher. Having failed to pre-empt Mr. Market's movements successfully, it is now back to basics while I wait for clearer signs.
Related post:
An elaboration on my methods.
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