The Singapore stock market rally after US Fed remarks signalling rate cuts in 2024. The resultant SGX run up seems to be more SREIT driven. Our local banks have not been performing well recently due to anticipation of lesser profits from weakening net interest margin. I thought that it is interesting that SREITs and our local banking stocks are having quite an inverse relationship in share price performance and makes a good playbook for future inflationary combat references. When SREITS are plunging due to ever increasing interest rates, local banks stock price went to all-time high- now it has turned the other way round.
1. SREITs Rally and Exceptions Update-Manulife US REIT and Keppel DC REIT
I am not sure whether the current rally is sustainable given that there is still grave market uncertainty. Gold price for example is expected to continue surging in 2024 due to macro-environmental risk factors. Market is just too volatile these days.
-Manulife US REIT ("MUST") shot up close to 7% today (15 Dec 2023) with the successful conclusion of its EGM whereby unit-holders voted an overwhelming 95%-97% for all the 3 inter-connected resolutions to pave the way for the recapitalisation rescue plan. I have sold off all my 9,900 units speculative trade after making a decent amount to have a meal at Jumbo Seafood.
Previously (July 2023), I have realised my losses in MUST when it was hovering around US$0.105 level and re-deployed the funds mostly into Keppel Pacific Oak REIT. Too much risk involved in holding MUST made me decide to throw in the towel then.
-Keppel DC REIT ("KDC") buck the trend on 15 Dec 2023 by dropping -9% in a single day due to the sudden announcement that its China Guangdong tenant (Guangdong Bluesea Data Development) has defaulted on its rental payment at the end of November 2023. This represents close to a 10% drop in distribution if the China tenant decided to just declare bankruptcy.
2. Bargain Deals Still Around Despite Recent Rally in Stock Market
I have took up close to S$20K of position in Thai Beverage ("ThaiBev") when its price keep dropping till S$0.50 per share level (and even below for a while recently) after its "disappointing" results announcement. Personally, I thought that it is a fairly decent set of numbers. FY2024 and FY2025 should turn out better for ThaiBev given the dominance of its market share in Thailand as well as in Vietnam and the increase in tourists visit from the economic recovery. Its dividend distribution remain unchanged and is giving a 4.5% dividend yield right now at a close to 52 weeks low pricing. I will probably share more details in another post if I have time.
Parting Thoughts
For those like myself who are more into dividend focused investing approach, the rally in SREITS does not have much impact. I intend to hold most of my current SREIT portfolio and will not be selling them. Instead I will be investing future dividends and excess funds into Non-REIT equities as well as bond funds via Endowus to diversify my over-concentration in SREITs,
Hi Blade, interesting update, curious to see what counters have caught your interest! I feel that if the banks see a further decline in share price, that it would be a good opportunity to accumulate them. I don't see the banks' performances being impacted too greatly over the next few years though I could be wrong should we see a recession. Just overall gut feeling. I'll be reallocating some capital from REITs should prices hit my sell target, definitely overconcentrated on REITs!
ReplyDeleteHi PL, thanks for dropping by again and sharing your thoughts. I do fully agree with you on your assessment of banking stocks. The drop I also think will not be too huge given that interest rate will drop a bit but not likely to go back to the previous decade of near zero interest rate.
DeleteSome of the counters that I am eyeing actually you have also covered in your blog before. I am still thinking whether to just buy more bonds (given higher chance of interest rate cut next year) or invest into at least 1 of these counters. Think next week will firm up the deployment of my final investment tranche for 2023.
I panicked. I sold half my Keppel Corp, and I missed the queue buy on landlease 2 times.
ReplyDeleteBut so far it looks like its following the success of SCI.
Hi Damn, good day to you. Wishing you an early Merry Christmas and Happy New Year!
DeleteKeppel Corp pricing see-sawing up and down for past year. I think execution plan on track to become asset manager....so I am keeping it for now and earning the dividends while waiting for the fruition of its grand transformation vision.