Property counters continue to be sold down today. Mr. Market is really worried about the aggressive cooling measures announced by the government, it seems.
What do we do when there is lots of fear and prices are battered down? Ask ourselves if there could be some good stocks we might be able to buy on the cheap. I wondered especially if all property counters are going to be affected to the same degree?
Companies which develop luxury residential real estate like SC Global and Ho Bee are likely to be more affected by the new cooling measures as a bigger proportion of buyers of the properties they develop are foreigners. The impression I have is that they are also less diversified and have a bigger chunk of their business in Singapore luxury residential properties.
Fundamentally, in comparison, the more diversified Capitaland is probably less affected and, in fact, with plans to spin off more properties in China into two new REITs, it could see positive interest from the investment community in an otherwise down market. Capitaland is likely to weather the storm pretty well.
Technically, $2.35 looked like it could be a strong support, having been breached only once since April 2009. So, I put in an overnight buy order at $2.35 which was filled this morning.
Well, today marks the second time this support has been breached since April 2009. The counter's price managed to close at $2.35 but not after touching a low of $2.31. Volume, although still relatively high, reduced today as a black spinning top was formed. This is a possible reversal signal but in case of further weakness, next support is at $2.28.
Related post:
Selling a private property just got harder.
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