The Return of Bulls?

A quick glance on the charts of my two sole winners, there appears to be a turning point from August's stock market landslide to September's returning of optimism.

There is no difference between the charts of my two counters. It appears that the whole stock market is rebounding, exactly a month after the painful US debt crisis. But there is no guaranteed answer to that because the market sentiments are still relatively weak. Although the MACD line of both counters have crossed above the 9-day signal line, the momentum for an uptrend is absent because the lines are below the "zero". Furthermore, three of my longer-term moving averages are still suggesting bearish sentiments.

But Starhill Global, in particular, has broken the 200d resistance line. It could hop into an uptrend if it breaks the 50d and 100d next. No regrets investing in Starhill Global as it is fundamentally a strong company that regains public confidence fast during a downturn.

On the other hand, AIMSAMP still needs some more strength to push itself above the next three moving averages. But I believe it will eventually break through those resistance lines identified by the MAs.

More Good & Bad Days?

Well, the title may sound contradicting but that is the dilemma that I am facing right now as a REIT investor. Let's start with the bad news first (I always believe the bad one must go before the good one).

REIT Data (found on INVS 2.0's sidebar) reported that office REITs may not perform that well after all, given that the present economic climate is ill. Personally, I subscribed to this theory. Office and retail REITs are not very resistant to economic fluctuations. For example, office rentals based on the financial industry would be badly affected by a global economic recession. Retail industry, especially in the local context, depends heavily on tourist arrivals to sustain or boost their rental incomes. In a bad time like now, I expect tourism to decline which could spell troubles for office and rental REITs. Fortunately, things may not be as bad as I thought. My holdings on Starhill Global REIT, which based on office and retail industries, has a stable fundamentals and survived the 2008 crisis. I believe Starhill Global REIT's board of directors can partake defensive measures to ride out the latest series of economic shocks.

That's all for the bad news, shall we continue to the good news?

AIMSAMP-REIT has proposed unit consolidation. Under this practice, a shareholder could enjoy the privilege of a new share for every 5 shares held. Meaning, if this practice is voted in by shareholders in its upcoming annual general meeting, I could received an additional of 5200 shares for my existing 26000 shares of AIMSAMP-REIT. This is to reduce the risk of this stock via lowering volatility and market capitalisation.

I quote the S-REIT article on this latest unit consolidation by saying:

AIMS AMP Capital Industrial Reit Management Limited yesterday proposed a five-into-one share consolidation, which will see shareholders receive one new share for every five existing shares held as at a book closure date to be announced.

The company currently has 2.207 billion issued units.

The company believes that the proposed share consolidation ‘may serve to reduce the magnitude of volatility of (the Reit’s) unit price and market capitalisation’ as well as ‘improve the profile of (the Reit) among institutional investors’ and ‘improve the coverage of (the Reit) among research houses’.

Said Tang Buck Kiau, head of finance at Aims AMP Capital: ‘Based on the current units, a volatility of 0.5 cents in unit price impacts market capitalisation at 2.38 per cent. After consolidation, volatility will go down to 0.5 per cent.’

The company said that it is seeking unit-holders’ approval for the implementation of the unit consolidation by way of an ordinary resolution at an extraordinary general meeting to be convened.

Following this, it will make an application to SGX for approval for the listing and quotation of the new shares arising from the consolidation and will despatch a circular to shareholders setting out the details of the move.

The counter closed down 0.1 cent at $0.199 yesterday.

I am further convinced that the board of directors are taking care of the shareholders' welfare and have no regrets invested heavily on this REIT. I am planning to load up more shares this week, should the price hits another historic low of $0.195. And I wish Starhill Global could do the same. Wishful thinking? Well, it did it in the past, why not now?

Portfolio Update - 19/8/11

AIMSAMP-REIT - 26k

Starhill Global REIT - 15k

The financial bad blood is making headlines again. Just as the global stock market was settling down, things took a dive when disturbing news broke out. US and Europe are once again, stock market woes.

Upon realising the second bad blood is approaching, I quickly divest First REIT at a little profit before it gets knock down. It also reaches its NAV - an indicator that signals me to sell in my personal practice.

But I bought more shares of Starhill Global REIT at an even more remarkably discounted price! Remember in the previous post, I said $0.605 was a strong support line. It reached the line yesterday and I moved in to drop down my order but when today's stock market reopens, it dips further to $0.595 and my order was filled at this very amazing price. However, based on technical analysis, this new historic low now opens for more rooms for the price to dip. I won't rule out this counter hitting somewhere near to the 2008 crisis level, should more negative news emerge in coming days. And I would buy more to average down my cost if that happens.

Now I have succeed in my preemptive strike against Starhill Global REIT. The next one shall be AIMSAMP-REIT. I also mentioned its $0.195 historic low before. Let's see if it can reach that level based on my technical analysis. I would expect prices to fall anywhere between $0.19 to $0.2.

In the next few days, the complete divestments of First REIT and Cambridge and dividends from earlier investments will arrive at my base. In addition to my existing funds, I will more spare cash in hand to ready to take advantage of this stock dive. Cash is champion in difficult times, always bear this in mind.

Some may feel that my portfolio is very risky and dangerous. But I doubt so. Risk originates from ignorance and danger arrives from ill-timed decisions. I have none of both. Many people say "don't put your eggs in one basket", alright I put my eggs in two baskets then.

When stock market recovers, let's smile all the way to the bank!

How to invest in Singapore REITs?

I have found this excellent article that provides insights into Singapore REITs. This article greatly eliminates the time that I need to write a wholesome of blog posts to describe REITs.

From Yahoo! Finance:

It was recently reported that Far East Organization, a leading Singapore real estate developer, was planning to raise more than S$500 million via a Real Estate Investment Trust (REIT) by listing some of its hotel and serviced apartment assets next year.

Indeed Singapore's REIT market has been growing with a number of new listings despite the volatile market as investors are attracted to the prospect of the stable yields that these securities can provide. In this article we'll examine what REITs are, the type of yields you can get from them and their performance, and what to look out for when investing in them.

What are REITs?

A REIT is a tax-advantaged corporate vehicle that is used to provide a real estate investment structure that can accommodate a wide variety of investors, similar to what mutual funds do with stocks. In this way, even a retail investor can get exposure to real estate with just a small outlay. REITs are usually required to pay out more than 90% of their taxable investors as a distribution to investors.

There are currently around 27 REITs and Business Trusts with real estate exposure listed in Singapore, with a market cap of around S$40 billion. Singapore REITs (S-REITs) are a relatively recent phenomenon with the first one (CapitaMall Trust) listed in July 2002.

What sort of yields can you get from Singapore REITs (S-REITs)?

On average the S-REITs are trading at about 6% yield, but they range from 4+% to 9+%. At the lower end of the yield range are the "blue chip" names such as CapitaCommercial Trust and CapitaMalls Trust, which tend to be large, liquid and have ownership of a large portfolio of quality assets. For example, CapitaMall Trust's assets include Plaza Singapura, IMM, Bugis Junction and Tampines Mall. At the higher end of the range are the smaller and riskier names such as AIMS and Cambridge Industrial Trust.

In general office and retail REITs tend to trade at lower yields than industrial and logistics REITs as their rental income stream tends to be more stable and less volatile, especially during economic downturns.

From a capital gains perspective, so far this year the S-REITs as a whole have been relatively flat, with the retail names such as Starhill Global and Frasers Centrepoint slightly outperforming, and the office names such as Capitacommercial Trust and and KREIT Asia slightly underperforming.

What should you take note of when investing in REITs?

Before you start investing in REITs, there are several issues you need to take note of:

1. Composition of REIT assets

REITs are typically classified according to the type of assets they are comprised of: retail (i.e. shopping malls), office, industrial, diversified or specialised such as hotel or healthcare REITs. Each type of asset has its own characteristics and have different drivers that will determine how they perform. For example, how well a hotel REIT performs depends on the number of tourist arrivals.

2. Geographic diversification and currency risk

REITs are not just comprised of different types of assets, but these assets could also be located in different countries, such as Singapore, Hong Kong, Indonesia, China, and Japan. If the REIT does not hedge this currency exposure, then the investor could be exposed to currency risk, so a strong Singapore dollar could lead to translation losses when the overseas incomes are converted back to pay the dividend.

3. Growth of Dividend Per Unit (DPU)

A good REIT will not only have a high and stable yield but one that is also growing over time. The main source of a REIT's income is rental, and so you have to also consider how that rental will grow over time. This will depend on factors including GDP growth, and also what sort of rental increases are built into the lease contracts.

4. Spread over 10 year Government Bond yield

If REITs are trading at yields that are too close to the Government Bond yield (which is risk free), then the investor might not be being compensated sufficiently for that risk. The bigger the yield spread that REITs are trading over Government Bonds, the more potentially attractive they are.

5. Gearing

REITs are allowed to borrow up to 35% of their total assets without a credit rating from a major rating agency. If REITs are heavily geared (leveraged) this creates a risk that they may run into serious problems if financing becomes an issue, as we saw during the financial crisis. Also, any potential acquisitions that they do have to be done through raising equity (e.g. through a rights issue) instead of just borrowing more to pay for it.

REITs are a good way to get exposure to a diversified portfolio of commercial properties and to enjoy an attractive dividend yield, but do not come without investment risks. Please do your homework before investing!

http://sg.finance.yahoo.com/news/How-invest-Singapore-REITs-yahoofinancesgwp-2479978652.html?x=0

Technical Analysis: Days Ahead

The stock market domino effect has not stopped and is expected to rock STI again next week. I expect my REITs to endure another week of turbulence. But what's planned days ahead?

In this blog post, I shall provide pictures of technical analysis in the form of 6-months candlestick graph charts and technical lines. I intentionally stripped away the moving averages, bollinger band, MACD, resistance lines and stochastic indicator to simplify my analysis. Only support lines will be drawn since the stock market is currently bearish.

AIMSAMP-REIT

A total of 4 support lines are identified in the graph chart. They are current and previous lows achieved by the price movement for the past 6 months. Thanks to the US debt crisis, AIMSAMP-REIT has breached 3 support lines for the past 2 weeks and is currently resting on the $0.205 support line. I believe $0.195 is a very strong support line given that the sell volume is very high in comparison to the buy volume. There could be a chance for the price to breach the $0.195 support line next week. I am keeping a close watch on it.

First REIT

First REIT has breached a number of support lines since the market turned bearish 2 weeks ago. The sell volume is shockingly high and that could explain why the price fell from the high of $0.84 last month to the current $0.76. If market turbulence continues next week, we could see its price breaching $0.735 support line. As for $0.71 and $0.7 support lines, the chance of breaching them is getting less obvious due to the increased buy volume on Friday. I am hoping to accumulate shares on First REIT if its price reaches $0.74 or $0.735.

Starhill Global REIT

There was a moment where Starhill went all the way down to the lowest support price level of $0.585. I believe it won't happen again, should buy volume stabilise next week. I believe the price could still test $0.605 support line. I am looking to accumulate a small volume of shares if its price fall to my expected level.

Portfolio Update - 12/8/11

AIMSAMP-REIT: 26k

Starhill Global: 11k

Cambridge: 1k

First REIT: 1k

Looks like the big mess is ending its rage on the stock market. Market indexes around the world are reported green figures again. I believe the big one is over but due to the financial instability of US and Europe, small turbulence is expected.

The stock market landslide has given me a good opportunity to gobble up AIMSAMP-REIT shares at a discounted price. I also roped in First REIT but due to limited funds, I can only purchase 1 lot. I divested nearly all shares of Cambridge to supply funds to my other three counters. Cambridge is a stable stock but apparently its CEO doesn't perform well when comes to investor relations. It somehow didn't want to give shareholders much privileges even when the company is doing well. Read the post here.

On the future outlook, I am going to load up more shares on AIMSAMP-REIT and First REIT, should they experience a fall in prices again.

Portfolio Update - 8/8/11

AIMSAMP-REIT: 23k shares

Cambridge - 4k shares

Starhill Global - 11k shares

First REIT - 1k shares

The "Black Monday" ended with huge losses clocked around the world markets. My REITs are badly affected but not as doomsday as I initially thought.

I loaded another 3k shares this morning after AIMSAMP-REIT price reached the 1-day strong support line of $0.205. Which to say, I enjoyed a slight gain but not able to offset the massive 20k shares that were purchased at $0.22 previously. At 5pm just now, it moved back to the 1-day resistance line of $0.210. Not bad, that's why I really admire AIMSAMP-REIT's resilience to stock market crashes. In fact, it survived last "Black Friday" and only dealt with a small blow on "Black Monday".

Another piece of victory, I purchased First REIT at a decently discounted price of $0.755. This is really a huge fall from the previously $0.79 last friday. The price was very unstable in the morning and I eschewed it until in the afternoon where it began to hover between $0.75 - 0.755. It now rests at $0.76.

To liquidate more cash for upcoming crashes, I divested 3k shares of Cambridge and suffered a slight real loss. I know this is a gamble but I want to settle my cash on First REIT or AIMSAMP-REIT in the next few days. As for Starhill Global the biggest loser of the 4 counters, I can't touch it since it is making a huge paper loss. And some more, being a retail cum office REIT, it helps to widen up the diversification of my portfolio that already has 2 industrial REITs. Starhill Global is a fundamentally strong company and I would expect its price to massively recover once this August mess passes over.

I know it's really disheartening to see my portfolio in a reddish state now. But in a chaotic period like this, it is more essential for me to stay calm, be patient, apply all the lessons learnt in the past, and don't repeat old mistakes again.

My next goal is to use all the cash from divested Cambridge shares to either load up more Starhill Global shares to average down the purchasing price or load up First REIT shares when its price moves down again.

What A Busy Market!

Followed by the "Black Friday" on 5/8/11, today is set to become another "Black Monday". Why? This morning, I logged in to my DBS iBanking to check out my transactions and stock movements and found out that the portal was extremely slow, almost coming to a halt. I realised that a lot of people are camping on their iBankings/Vickers to do all the massive selling not seen since 2008. And when I checked out my portfolio - OH GOSH! WHAT A SEA OF REDDISH...!

It's okay, just paper loss as long as I don't touch anything. The REITs are fundamentally strong. This kind of market response is very well expected. I experienced this once during the Libya War + Japanese Disasters earlier this year but later enjoyed a decent rally. Now it's back to the "Red Sea" (pun not intended) again. But don't fear, I am in fact feeling joyful now and shall exercise some of the cash to do some quick purchases in the afternoon (the time when the market is more stable).

I am also keeping a watchful eye on SG Stock Investor. The blog owner is doing an impressive job of intensive technical analysis on AIMSAMP-REIT, a stock which I also have holdings on. So I am just going to wait for the price to fall a little more before I enter the market.

The Golden Opportunity Has Arrived!!!

Massive plunge on stock market. 

I was really surprised by financial headlines when I got home just now. Apparently there is a massive stock selloff happening around the globe. Due to the great fall in Wall Street (thanks to US debt crisis) last night, many panicking investors today sold off their stocks. This caused a huge earthquake on the stock market and rattled everything from market indexes to regular stocks that are not seen since 2008 recession. My REITs have been affected but not as serious compared to high-growth stocks. For the first time since June rally, I am seeing red figures everywhere on my portfolio but in a swift outbreak of joy, I loaded 1k shares on Starhill Global at a much cheaper price. I have also ordered another 3k shares on AIMSAMP-REIT but due to the unstable buy/sell volume happening now, my order is jammed. Guess I would do it next Monday then.

Thanks to Benjamin Graham and Warren Buffett - CASH IS KING.

Really, at such a critical time now, what you should have now is plenty amount of cash. In case some of you are wondering how come I only loaded 1k shares on Starhill Global and not more? Well, you can never predict the exact bottom line of the stock. I am practicing this Dollar Cost Averaging strategy at present. To consistently loading up small lots after small lots where the price of each session falls below the previous ones. For example, I bought 1k shares of Starhill Global at $0.635. If the price falls to $0.625 on Monday, I will load another 1k shares and this goes on and on until the bottom line is reached (that's when stock market experiences a massive bounce back). I will lower down the average purchasing price of Starhill Global and when the stock picks up strength again, it will break even at a much faster rate than those who didn't practice the strategy.

People, the golden opportunity has arrived. I used to hate US for all the stock market woes but I guess we need "sabotage kings" to bring down the prices and make it more affordable once again for the intelligent investors to build their fortunes.

Beginning of Another Stock-Picking Season?

I believe that the stock market functions much like our weather system. There are warm and cold seasons. A warm season in the stock market implies bullish run while cold implies bearish run. Since entering 2011, I have witnessed 3 cold seasons in the stock market, 1) Jan - Mar: Libya War + Japanese Earthquake & Tsunami, 2) May - June: Euro Debt Crisis, and 3) August: US Debt Crisis

I wrote on a previous post that another golden opportunity might be on its way, should US fail to raise its debt ceiling. I was somehow wrong. In fact, if we look at current situations, the stock market takes a blow even with a higher debt ceiling. The reason is that although raising the debt ceiling can prevent US from declaring bankruptcy, it also implies more funds will be borrowed to run the country, and thus more debts will be incurred. Already US is a debt-plunged country, more debts will spell more troubles in the future. Not to mention Europe is also drowning itself in the sea of debts, coupled with China's slowing economic growth.

There is literally no strong powerhouse in this world to "support the collapsing sky", unlike the 2008 global economic recession where we had China the red-hot machine to rescue US and Europe.

But what does this mean for the stock market? With so many negative news appearing everyday, naturally investors' confidence will suffer and so are stock prices. My REITs are taking a hit too, but at a much minimal effect due to the lower-risk nature of REIT (the risk factor of REIT is a little above govt bonds but lower than high-growth stocks). Instead of panicking like a typical ignorant investor, I am overjoyed by the latest market bearish season thanks to US. That implies I can buy my favourite stocks at an even amazing price! The lower they get, the lower my average purchasing price, but the higher capital appreciation I will get when market bounces back in the next bullish run.

Now, I have a load of cash ammo in my firearms store, ready to fire at cheap stocks again in this newest golden opportunity.

Portfolio Summary

I have loaded another 15k shares on AIMSAMP-REIT this morning. My order status was processed at 8.59am, which was a mere 1 minute short of the ex-date (today), 9.00am. Hope that AIMSAMP-REIT can recognise my VERY last minute 15k shares and grant me dividends on the 3Q distribution period.

Portfolio update as of today:

AIMSAMP-REIT: 20k 


Cambridge: 7k


Starhill Global: 10k 


Into the future:

As my portfolio is focused diversified, I won't look into too many stocks. My strategy is to pick only 3 stocks but are highly diversified within itself (5th criteria of my stock-picking policy). In this way, I can focus on boosting dividend yield and capital appreciation while maintaining minimal risk factor.

AIMSAMP-REIT has proposed rights issue that I believe may bring down its market price. If that happens, I would enter the market again and gobble its shares to lower down my average purchasing price. After all, what can be more fruitful to buy the highest dividend-paying REIT stock at an even cheaper price?

I am also looking for a healthcare REIT stock. This will automatically rope in First and Parkway Life REITs. I am filtering out Parkway Life for the following reasons:

1) Has too many healthcare properties in Japan which is disaster-prone

2) Current market price is a way above its NAV

3) Dividend yield is not as attractive as First REIT's

4) And besides, First REIT has proposed for rights issue which may see its price fall below its NAV again

This is the portfolio statistics as of now.

Another Recommended Investment Website

From the same dedicated team of REIT Data and S-REITs, I recommend this website that showcases some of the blue chips (local stocks) that pay the highest dividends on the market. Examples are Singtel, SPH, Starhub, vice versa.

I have linked the web domain to the Investorium 2.0 pages.

http://yieldstocks.reitdata.com/