The million dollar question this week is whether our Singapore REITs market will crash further after the 4.8% disastrous plunge last week. Well, so far so good as Monday today (23 October 2023), there is a slight rally. SREITs like Keppel Data Centre REIT (“KDC”) which has dropped -14.4% in a single week, from S$2.010 per unit to S$1.72 per unit, has since rebounded by +3.49%. However, I don't think we are out of the woods yet with the gloomy macroeconomic situation.
1. Risk of Israel & Hamas War Spreading.
Besides Gaza, Israel has been conducting airstrikes against Syria and Lebanon. Iran has also been aggressive towards Israel. US, China and Russia have also been joining in the fray. There are heighten risk of disruption to global supply chain and oil prices may spiral upwards and worsen energy price. Sticky inflation might also rear its ugly head once again.
Besides Gaza, Israel has been conducting airstrikes against Syria and Lebanon. Iran has also been aggressive towards Israel. US, China and Russia have also been joining in the fray. There are heighten risk of disruption to global supply chain and oil prices may spiral upwards and worsen energy price. Sticky inflation might also rear its ugly head once again.
2. Interest Rates Risk- Rates Maybe Raised Higher.
The Feds have mentioned that the inflation target is still way above their 2% target and that they may be raising the interest rates again in the future. For SREITs, the fear of higher borrowing costs leading to smaller distribution is certainly driving the market valuation down for most REITs.
3. Divesting DigiCore US REIT And Buying Keppel Corp Instead.
On 18 October 2023, I have disposed 13,000 units of DigiCore US REIT @ US$0.555 per unit and used the proceeds to buy into Keppel Corp when it dropped to S$6.36 per share in order to reduce my exposure to US REITs as well as to take advantage of the special dividend from the latter. This turned out to be a lucky move as DigiCore US REIT has since dropped to US$0.480 per unit as at 23 October 2023.
Parting Thoughts
Strangely, the earlier morning rebound in price for SREITs on 23 October 2023 morning trading session fizzled out by afternoon. Overall, prices of SREITs continued to drop with only a handful exceptions such as Keppel DC REIT, Capitaland Ascendas REIT & Frasers L&C Trust. I am tempted to inject additional funds into SREITs purchases to take advantage of the significant lower market pricing but have decided to wait till Israel commences their ground offensive into the Gaza which may mark further carnages in SREIT pricing.
Hi Blade! Actually picked up a bit of CICT yesterday morning. I believe with the recent price action, blue chip REITs are worth looking at. I'm heavily overweight REITs but Keppel Corp is also looking to be at a good price, especially with its recent business updates. Cheers!
ReplyDeleteHi PL, thanks for dropping by....always good to hear from you. Good pick up of CICT. Its price has dropped a lot from beginning of Oct. Today seems to be not too bad for SREITs in general as most have rebounded upwards a bit. Hope it is not just a game of them playing yoyo.
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