The premise for this REIT appreciation seen in the Singapore stock market has been this global cheap money search for a safe yield.
These REITs are the most visible out of the Singapore stocks.
If you have chased these REITs up with only analyzing the REIT fundamentals and the yield and not thinking about the price you pay for them, you may be left with holding these assets at this price for a prolong period.
Think about this, absence of this cheap fund flows, what would cause your REITs to go back to that price.
REITs are not bad investments, but in all assets there is always the evaluation of price and value.
The IPAD is a great product but if you purchase it at $3,000, would that be great value?
In the four years through 2012, investors poured $3.9 trillion into emerging markets, outstripping the $3.1 trillion they added in the same period leading up to the global financial crisis, said SLJ Macro’s Jen, citing data from Institute for International Finance Inc.
In another sign international investor appetite is waning, South Korea raised less than a 10th of the amount planned in an auction of inflation-linked bonds today. The Finance Ministry sold 55.6 billion won ($49 million) of 10-year linkers, having offered 600 billion won, according to its website.
International investors have less incentive to provide that cash while rates at home are rising. The yield on the benchmark 10-year U.S. Treasury (USGG10YR) note jumped to 2.47 percent, the highest since August 2011.
Emerging Markets Crack as $3.9 Trillion Funds Unwind: Currencies
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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Musicwhiz
Friday 21st of June 2013
Previously, the buzz words were "yield compression". Now, people are demanding an equity risk premium above the risk-free rate, which is rising. If investors chase the flavour of the day without regard to capital preservation, then there is a high risk of permanent capital loss.
Betcour
Friday 21st of June 2013
I make it a rule to not buy REITs above their NAV. Whereas a business might be worth a lot more than book value, a real estate trust can't really be worth that much more than the sum of its parts. Add or remove a few % depending on how good/bad the manager is.
Kyith
Friday 21st of June 2013
I agree, but the manager may command some value.