Very true... price NOT EQUAL value...

Like all stocks and investment.. it depends on your entry price/valuation. If good entry valuation then everything good, if buy at peak.. amitofo.

hmm...

That's why hmmm.... lets look at further out....

Previous peaks was 5%.. so no.. we are not at the peak, but already near multi year average.. there still could be further downside, but the risk is lower now compared to buying near the bottom during 2011-2012.



This post has been edited by gark: Dec 5 2013, 02:56 PM

Now already 4.1%...

I would think at most yield expansion will be +50 to +100 bps.. means another 10-15% more downside IF it breaches 4.15% (previous max) .

This post has been edited by gark: Dec 5 2013, 03:56 PM

MGS yields do influence BLR and FD rates, although that is the decision by BNM. If the MGS yields is high, cost of capital will be high, similar to raising interest rate. Inflation rates is mostly passed on to the consumer in REIT via adjustment of rental. In times of low inflation, poor econcomy, you might see the rental rates will be stagnant or stay still.

Govt deficit and trade balance also affects MGS yield as high deficit and negative trade balance will cause MGS yield to be higher. So will 'tapering' as it affects US bond yields which in turn affect MGS yield. Reduction of fuel subsidy, electricity subsidy, higher taxes is generally good for fiscal balancing, and does actually promote lower MGS yield.

Yes, you are correct that in a sense that looking at MGS is not possible the answer to everything, but but serve as general guideline of where the REIT market is heading. Like all investment, never put all your eggs in one basket, keep a diversified portfolio as 'hot sectors' always rotates.

This post has been edited by gark: Dec 5 2013, 05:01 PM

Yes for BNM to adjust interest rates they will need to see the impact from MGS yields, monetary policy, inflation, state of the economy, trade deficits etc etc. Everything is connected to each other and everything influences everything. Thats what makes macro economics so hard to predict.

For example in Indonesia interest rates have been steadily rise from 5.25% to now 7.5%, the 10 year govt yield is actually leading the way and moving ahead of the interest rate rise. (ie spike before BI adjust the rate to correct the 'imbalance')

Therefore we use govt yield as a 'yardstick' only...

IF tapering really happens, we would likely to have deflation as assets are being pulled rather than inflation.. which is when QE started.

This post has been edited by gark: Dec 5 2013, 05:09 PM

Yes the biggest taiko is US10Y Treasury.. influence the entire world from forex, govt yields and interest rate.

If the taiko makes a move, stand up and listen.

This post has been edited by gark: Dec 5 2013, 05:08 PM

As you can see now Malaysia MGS yield has also run ahead of BNM.. MGS yield went up from 3.2% to now 4.1%, which BNM overnight rates is still 3%. This is the same as what happen to Indo govt yields before BI decide to raise interest rate.

For retail lending purpose, yes, BNM rates are used as reference as in BLR.

For commercial lending purpose like MTN, sukuk, fixed rate instruments, interest rate swaps, commercial bonds, perpetual bonds, revolving credit actually use MGS yield is used as reference and not BNM overnight rates. As evidently can be seen in 1st tranche sukuk at 4% and later 2nd tranche at 4.58% even though BNM over night rates still stay the same.

Not everything can be based on BNM rates, sometimes the market adjust it self faster than BNM. Hence we observe govt bond yield to see further down the curve.

This post has been edited by gark: Dec 5 2013, 06:10 PM

Yes, i did before see a graph of asset value vs tapering.. but i can't seem to remember where. The drop will be gradual and not overnight crash. Less demand (from FOC QE money) will slowly affect asset price.

NTA of reits MIGHT reduce, therefore low D/A reits is safer IMHO, higher D/A reits might need to raise capital. This can be seen in SGX reits in 2008-2009.

This is exactly happen to USA in 2008, in the end the house is cheaper than their loan, end up a lot of people abandon paying loan and let the bank take their houses.
\
Anyway these are all theories, sometimes the economy moves in ways we cannot anticipate.

More like BLR for retailers, MGS for commercial..

from website, books etc...

Singapore REIT is not weak, but they have much higher percentage of FF which makes the price swing more volatile than Malaysia. Malaysia we have lots of institution which end up most of the price being 'controlled'. Also Singapore REIT is more international (Japan, India, Indonesia, China, etc etc) is more receptive to global macro changes.

That is why REITs with lower D/A is always consider safer and lower risk than those with high D/A. SG REits have learned their lesson well, they used to be D/A ratio of 0.5-0.6 before 2008 and then the debt rolling problem hits them severely. There is one REIT was criticized so badly and heavily sold down because due to the poor cashflow, they have to resort to have PP just to pay dividends...

Now SG REITs is a whole different animal, their D/A has been relatively more conservative at 0.35-0.4, takes on longer term debts and have more ample cash supply for cashflow. But the tragedy of 2008 still haunt many reit holders hence is still selling at relative higher yields.

On the other hand most Malaysian are more complacent on REITs, thinking it is a 'sure' and 'safe' way to earn passive income, hence now you are hearing a lot of people getting trapped. There is no 'sure' and 'safe' way, as in all equities you need to do your valuation and adapt to macro changes. They have yet to encounter like what Singapore investors faced during the GFC.

REITs perform like bond during good times, but will act like equities during a downturn. This represents both opportunity and risk for investor.

This post has been edited by gark: Dec 6 2013, 10:46 AM

This morning MGS10Y yield touched 4.15%.. the highest since August 2013... if it breach then...

Wokey... let it drop another 10% then...

This post has been edited by gark: Dec 6 2013, 04:32 PM

Mah go loh.. seems like you always very free de mah..

No need so difficult.. here is a picture of Bursa IT center...



This post has been edited by gark: Dec 6 2013, 05:32 PM

Not gonna issue rights.. all gonna be PP

A plantation REIT and a plantation stock is different animal...know what you are getting into.

A plantation REIT earn money from renting the land. A plantation company earns money by growing and harvesting and processing the harvest into CPO.

Plantation reit income is stable as long term contract for the land rental, a plantation however earnings is volatile due to CPO price, fertilizer cost, labor cost, harvest yield, OER and seasons (dry and wet season different earnings).

Anyway I don't really like Boustead's plantations.. all older trees with poor yield and OER.. Better off take the money and BUY other more reputable plantations...

This post has been edited by gark: Dec 7 2013, 01:46 PM

calling cscenic expert Pink Spider

Help a lady out..?