Thursday, June 20, 2013

Accumulation of REITS play in turbulent times

When I was in Kyoto recently, I climbed up multiple of stairs on my way to reach the Kiyomizudera temple. But on my way down, it was less tiring and it took me lesser time to reach the bottom. The stock market reacts the same way recently. It took a few months to gain momentum to reach the top only to give it back at a much faster rate in a few days time.

The recent market pullback was due to both fear of Fed ending stimulus as well as the weak China PMI index. For the former, this is probably not the first time you and I hear about this. We all know that the Fed is going to reduce its bond buying purchase later this year or early next year on condition that the economy becomes better. So economy better would translate to earnings better. The only jerk movement in the market currently is probably due to fear of easy money flowing out as a result of post QE, thus the huge selldown. 

I bought 2 lots of Ascendas Reit today at the price of S$2.17. Ascendas Reit has been on the uptrend from July 2012 till May 2013, only to give back all again in a few weeks. I personally find Ascendas Reit to be attractive at current levels. It is yielding back to the 6+% levels again after we saw a period of yield compression not too long ago (At the peak, it was only yielding 4.3%). My only concern would be the placement they had earlier in the year which would dilute DPU to shareholders. I certainly hope they can increase their DPU payout which will reward long term shareholders.

I will be a long term shareholder and the only thing that I care is the dividend cashflow I will get for the rest of my life. When market goes down, it presents the opportunity for both you and I to pick up these valuable shares at a cheaper price than before. Hence, it is important that you get your own cashflow going to make sure that you have the sufficient funds to add when such opportunity arises.

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