Well the truth is that no one really knows. I have remained mostly invested in the market despite taking heavy beating from the COVID-19 pandemic that lead to huge losses during the dreaded month of March 2020. But I took the opportunity to diversify some of my portfolio into stronger counters such as Mapletree Commercial Trust, Suntec Reit, DBS and OCBC which presented rather attractive entry price.
Some misadventures in my investment journey happens along the way- the receding tide caused by the pandemic induced recession ultimately revealed who has been swimming naked.
Eagle Hospitality Trust- Investment Write Off
News of the suspension of Eagle Hospitality Trust due to rental default of the sponsor was unfortunate but worse news of picking up additional USD44.6Mil due to conflict of interest of two of the sponsor's directors by signing agreements (prejudicial to the interest of unit-holders as per the Audit and Risk Committee) to transfer financial liability from lessee to the landlord, was like being struck by an armor piercing grenade. The Trust is currently under investigation by MAS and the Singapore Police Force. I was prepared to write off this investment totally but seems that a white knight had entered into the picture to save the business from forced liquidation and fire-sales during the pandemic.
First Reit- Good bye to high dividend yield counter due to Lippo Family dispute and pandemic
More recently, I was rather disappointed at having to bid farewell to most of my high yielding First REIT holdings due to the Indonesian Lippo family internal dispute that leads to huge plunge in valuation of the REIT when an uncoordinated release of a call for rental agreements restructuring in Lippo Indonesia was not communicated to the Singapore Manager under Lippo OUE beforehand. The sponsor Lippo Karawaci has its rating downgraded by Fitch Ratings again in April 2020 as it is unable to market and sell properties during the worsening pandemic. This is despite the US$1 billion rights issue that was recently completed in the prior year. To cut the story short, the sponsor subsidizing 80% rental income of underlying hospital properties in view of pandemic and depreciating Indonesian Rupiah (whereas rental is pegged to SGD and fixed) makes the overall charging mechanism no longer commercially viable anymore since IPO inception of the REIT. The good old days are over for First REIT.
Best story of the year so far that I heard about COVID-19
The most dramatic story I heard about COVID-19 came from my workplace. My Boss at work told me not to worry about COVID-19's impact on business. Just before the lock down earlier, my boss had played golf with his high net-worth good buddies (猪朋狗友) in pharmaceutical & medical businesses. So my Boss confidently told me that according to his trusted golf buddies, vaccine development are nonsense as the virus will mutate so fast that all vaccines will fail. However not to worry, the virus will mutate and go away by itself in 6 months time just like SARS and all economic activities will be back to normal.
I am not sure whether vaccine development is nonsense or my boss perhaps placed too much trust in his golf buddies (猪朋狗友). Next thing I know, my Boss asked me to take voluntary pay-cut of 10% which he subsequently increase to 30% for the entire company as it seems the virus will not go away in 6 months time and even lead to devastating economic lock-downs everywhere.
Parting thoughts on economic outlook
While the stock-market will play an extreme game of "yoyo" for many months to come during this pandemic, the future outlook remains bright. I am optimistic that at least 2 to 3 vaccine trials will turn out successful within this year itself. The UK Oxford team are already going ahead with mass production of their vaccine with the 1st batch for release in September 2020 once the phase 3 trials results are in. US and China side also offers good chances of developing a successful vaccine. In addition, governments across the world had quickly took out their playbook for GFC back in 2008 to quickly inject liquidity into financial market during this new crisis. With these 2 factors in place, the stock market will eventually recover.
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