Is now the time to buy S-REITs? Everyone is talking about them!
Over the past month or so S-REITs have done very well. Dr. Wealth blog post, ‘19 S-REIT gained 10% or more in just one month’ discusses this.
This rally has led to the talking heads on social media, waxing lyrical about a 2025 S-REIT bull market on the way.
See Josh Tan here to see what I mean
The purpose of this post is not to argue against commentators like Josh Tan. In fact, I have learned from his videos in the past and value his contributions to Singapore investing analysis.
However, something about the rapid nature of this rally and the fact that everyone and his Grab driver are talking about S-REITs makes me urge on the side of caution.
Now, full disclosure. I own sizeable bags of S-REITs and have done for many years. Here’s the S-REITS I currently hold:
Kepple DC
AIMS AMP
Capitalland Inter Trust
Ascendas
First
Frazer Log and Com
Frazer Centerpoint
Mapletree Pan Asia
Parkway Life
I-REIT Global
I’m bullish on the long-term future of the majority of my S-REITS with one or 2 exceptions, but this conversation I will save for a later date.
Presently, these S-REITs provide a stable income, which I re-invest into the Singapore stock market every 12 months. That said, I don’t limit myself to investing in S-REITs, and I have a comprehensive, diversified portfolio in other Singapore blue chips for income. Outside Singapore, I invest in Hong Kong, China, the USA, gold and Bitcoin.
More on my other portfolios at a later date.
Now back to the real focus of this post - why I think investors should be careful piling into S-REITs with the Fed meeting looming in a few days.
After being in the markets for over a decade and making many silly mistakes, when I hear people getting excited about particular investments, my warning sensors ring.
Experience has shown me that often the market does the opposite of what the tribe believes. Nine times out of ten, if a particular narrative is hot on social media and in the blogsphere, then it’s time to take a step back, breathe deeply and look critically at the situation.
Expensive mistakes in the past have sharpened my ability to control emotions and avoid FOMO.
This S-REIT rally feels like it could be short lived. It is true that the FED is going to cut rates by .25 or .5 basis points, but surely this is now priced into S-REITs after a month of anticipation and non-stop chattering.
Also, the elephant in the room is the potential for war escalation, and the devastating effects this could have on investor sentiment and global business.
It’s only a few days since Putin threatened the west, mentioning that certain weapon strikes on Russian would result in an immediate response. Putin has his back against the wall now and who knows what the Chinese military are planning.
Compounding this is the Israel situation and their potential conflagration with Iran.
All of this, I’m sure, you will agree, is far from bullish for S-REITs.
Both of these factors, the possible pricing in of the FED cut combined with the specter of war make me think this recent S-REIT move should be approached with extreme caution.
There could be better buying opportunities in the not-too-distant future.
IB