September 19 Review – Big Win for REITs

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September came and flew past. Events, both life and work, stacked up so closely that everything seemed to happen so fast. I had my 2 weeks reservist and it felt like a much needed vacation. The low point is when I had to fork out $2k for my car repair cost and my root canal treatment.

In Singapore, we see our REITS having an eventful month, with MCT, MINT and Keppel DC Reit making large acquisitions. Oh, there is also the Lendlease Reit IPO which closed this afternoon. Even though I did not participate in the IPO, I’m anticipating its opening as this is probably the biggest IPO in SGX for 2019.

In the rest of the world, the highlights of the month was probably WeWork’s flip flop story in its IPO, the Saudi oil attack, the inquiry into Trump’s impeachment and Hong Kong’s ongoing protest.

Portfolio Update

Portfolio improved by a few percentage points for September. It was due to Vicom(SGX:V01) and Powermatic Data (SGX:BCY) which had run up in share price a few weeks ago.

I purchased Straits Trading (SGX:S20) and Jumbo Group (SGX:42R) at 2.10 and 0.38 respectively. Straits Trading is still trading under huge discount to its book price and although I think that it will continue to stay that way, it has huge potential in its asset management business. As for Jumbo, I liked its business after trying its chili crab and I’m quite optimistic in their expansion plans.

My top 5 holdings are still unchanged;

  • Netlink Trust (SGX:CJLU)
  • Powermatic Data (SGX:BCY)
  • PNE Industries (SGX:MU7)
  • Vicom(SGX:V01)
  • Straits Trading (SGX:S20)

I’m starting to do more research on overseas stocks as I felt that I should expand the stocks available for investing instead of concentrating on SGX. Hong Kong and Japan are my first stops and my main targets would be stocks that have wide moats and competitive advantage which will continue to improve over the long run.

What to Expect in October

The “train wreck” Uber IPO in May warned that the feverish enthusiasm was waning. WeWork, though, has confirmed it. The peak is in and the gig is now up.

The latest startup that IPOed did poorly in its trading debut and it seems like people are starting to care about the numbers instead of just throwing their money at their story.

The threshold for US President Trump’s erratic behavior may be lower as he face possible impeachment and preparation for his election looms. What I’m saying is that his incentives could be about to change. But we should just expect the unexpected. Last Friday we were all blindsided by news that Trump is considering choking off portfolio flows to China. As such, we could be in for a volatile month as we see China’s next move to quell the protest in Hong Kong and the trade war.

Speaking of trade war, based on my sources, Singapore’s electronics sector has been hit bad as companies are taking a “wait and see” approach before making any capital commitment. Some electronics companies were even facing zero new orders for the month. As such, I think companies like Venture, Valuetronics and UMS could be looking at poor quarterly results.

As we enter the next phase in the Sino-US conflict where the trade war evolves to become financial war, combined with stock valuations at all time highs and an imploding global economy, we should be very cautious for the months ahead. Get strapped in for a wild ride.

Cheers

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