Monday, 16 September 2013

Why I am not buying REITS now ...

Market has recovered last week and continue to sustain today. Most of the counters are back in the run and especially the REITS which have been beaten for a while, has made some gains. At the current price, it seems attractive to invest as passive income given that most will give about 5 to 6% dividend.
However, after thinking through, I have stopped my itchy finger from pressing the 'BUY' button. 
And here are the reasons:

  1. Based on the broad index(chart below), there seem to be a reversal looking at past week candle stick but 10MA is still pointing down. Would it be a case of rebound after deep correction and then continue downtrend again?
  2. How much of the QE will Fed withdraw, no one knows. Will there be a shock?
  3. And when interest rate increases, how will it impact REITS, especially those who's debt is on the high side.
  4. 10 yr SGS bond yield is close to 3%, is 5% from REITS attractive then?
As much as I want to collect them for passive income, I dont want to caught myself losing, due to capital loss.


HM Shak said...

Hi "Oldman",

If we look at 1 year charts, technically most of the REITs broke through the support level. Also dont feel so confident to buy.
Abt the QE withrawal from Markets:
- I think the market already reacted to this, very quickly and too much in fact. Will it continue to fall? Donno.

Oldman said...

Yes, most broke 200MA which technically it's downtrend. Yeap, market reacted in June and August, the next impact will be how the interest hike affect those reits with high gearing. I am just being cautious, when market corrects all stock regardless good or bad will fall too. Just my 2 cents.
Thks for visiting my blog shak

Cory said...

I am very interested in REITs too. However the current price is something to watch carefully. I would go for higher yield reits current or in near future as they will be much lesser impacted by rate hikes.

Oldman said...

Yeap, no one knows for sure what will happen to reits after interest hike although there are reports on this. Thanks for visit.