Thursday 5 September 2019

Stock Markets Rallied On Withdrawal of Extradition Bill In Hong Kong- Selling off Frasers Centrepoint Trust

The SGX suddenly soared yesterday mirroring the best month ever for Hong Kong Stock Exchange. I can only attribute this to the formal withdrawal of the extradition bill announced by Carrie Lam, the Chief Executive of Hong Kong. But the key question is whether this move is sufficient to quell the current unrest and whether it really mean the end of the Hong Kong protests? With this major concession, it seems to have given even more strength to the young extremist group that their grand objective of having universal suffrage (one of the key 5 demands) is coming close and that their violent actions have successfully brought about change. 

I have sold off around half (10,000 units) of my Frasers Centrepoint Trust ("FCT") holdings, as the price raged to an all time high of S$2.87 per unit yesterday, at an average price of S$2.85. I was very reluctant to have sold off the Frasers retail REIT units, which I have acquired 6 years ago in 2013 at around S$1.85 per unit, as it still has very good growth prospect. However, the dividend yield has hit a lowly 4% range at such a high valuation hence I intend to redeploy the capital after the current euphoria wears down. I am also considering divesting my remaining FCT stake if the price continues to rise so dramatically this week.

In addition, I really hope that Donald Trump can reach a truce on the current trade war with China. The damages done to international trade and growth have been considerable and evident throughout the economies of many countries including US itself. Singapore's 2019 growth forecast has been slashed to just a mere 0.6% by leading economists and analysts as compared to previous estimate of 1.6% growth for this year. Personally, I thought that even 0.6% growth maybe too optimistic at this juncture given the low volume challenging climate that I am witnessing daily on the supply chain side. 

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