If RM depreciate that means high inflation especially imported stuffs....
wonder if reits able to hedge against it or not....Just in case this things happen

Think further if RM depreciate, your FD, pocket money is more exposed than your reit investment.

If inflation is high, what you look for to protect?
A. Hard asset - land, gold, properties

If RM is depreciating, what you look for
A. foreign currency and asset.

Also if RM is depreciating, it just mean properties in the eye of foreigner become cheaper, unless Malaysia shut the door of properties for foreigner. So you might see properties price increase as well.

Reit although is not a good tool to hedge, at least it serves as hard asset.

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Added on April 30, 2009, 9:16 pmActually nothing can hedge against the real inflation, even gold itself. Although gold and most hard asset appreciated with inflation, if calculated properly, they just can hedge a certain % wise, definitely not close to 80% or 100% or so, except some hard asset/land with strategic location (remember strategic location only, not all)



This post has been edited by cherroy: Apr 30 2009, 09:16 PM

Lets put it this way. Have you ever thought what IF the situation is otherwise? The situation in US is shaky now, so is USD. RMB is going to create a bubble soon too (could be the next crisis?). The only safe bet now is Japan, where the interest is SO low your money is worth almost nothing. Well, what I am trying to say is that don't just think of it from one angle. During time of crisis, even a giant like US would go into trouble. Remember, this crisis wasn't started by us.

What we want to do now is to find an investment which is higher than inflation. As long as you have that, you don't worry than about MYR depreciating. We're only worried of another phase of this crisis, which is a deflation. But for now, it should not happen yet.

Cherroy and Jordy,

Thanks for your feeback. I don mean that reits are not good. Actually its yield is the highest compare with MOST dividend stock....Nevertheless we must know about it pros and cons ..there are no perfect investment tools which you can 100% rely on... you need to have combinations of few to balance up your investment portfolio to make it look perfect... let me share with you my portfolio

For me, i invest 300k. i will divide my portfolio like this

ASW and ASM - RM 100k+
Pros
can withdraw anytime (capital protected and so far the yield is around 8%)
In case anything bad happen to pnb i still can withdraw my $$

Cons

invested in domestic market only just in case RM depreciate against other currency like sing dollar....

YTL power - RM 100K++

Pros
Yield around 8% so far...
Diversified into several countries e.g UK, SINGAPORE, INDONESIA, AUSTRALIA, MALAYSIA. So i am protected against RM depreciate (just in case)
Unless all the currency in these countries depreciate then i consider myself really unlucky..

Cons
Since 80% of its business are oversea... like what Jordy mentioned if RM appreciated i beliv it will affect its earnings

Reits

Still considering the 80k cash in hand ... to put into which reits as its DY is higher compare with ASW and ytl power

After reading what cherroy mentioned on hard asset with goosd locality i beliv most reits have it....

So with this 3 ASW + YTL POWER + Reits. Does it look balance??

Just my personal view only :-

I prfer REits over normal dividend stocks for the following reasons :-

1) better tax advantage ( under the single tax system ). Let say both pay gross dividends of 10% a year. You might get about 2% extra that was about the current FD rate, I presume.

2) REits could be trading at attractive discounts to NAV. Whereas good dividend stocks could be trading at a high premium ( for higher confidence level ).

3) less gearings for REITs

4) Reits from my personal view might have added advantages over buying a property on your own.

a) liquidity issue- you still can sell partially and get cash quickly . For A normal traditional property, it is hard to sell 1/3 of the property. And you can buy back at anytime you have the spare cash. It is a form of good saving habit.

b) the most important of all . you have the ownership per se of REIts, whereless the property that you bought belongs to bank if you get loan to buy property. For a long time, you are just renting the property from the bank.

c) Difficult to take advantage of market situation if you have a property, if you think it trading at a peak, and you believe THERE ARE TRADE CYCLES IN YOUR LIFETIME. And you could not depend on luck for the next 30 years or so.

Not comparing apple with apple actually but

REITs such as Axreit have the future.

Correct me if I am wrong.

This post has been edited by SKY 1809: May 9 2009, 07:10 PM

Balance or not balance, it doesn't matter. What matter in investment is you are comfortable with the risk you have taken, be it high or low.

As said on your post, there is no perfect investment nor perfect investment strategy, it is about individual risk appetite.

Ok. noted. one question OT here which is actually my concern on my investment.... if i buy all ytl power... lets say RM really appreciate i may become loser .....

Seeing recently najib lift up the 30% equity quota for the bumis and loosen the quota for foreign investment... this will promote FDI... and RM by logic should appreciate if everything go smoothly...Pls advice....This is problem which i facing now... pls help sifu

Yes, higher FDI will definitely spur demand for MYR. If the financial situation in US deteriorates (or they print more money), then USD will definitely depreciate against MYR. I am not sure of YTLPOWER's portfolio, but if I remember correctly, they have no exposure in US. So, MYR may appreciate against US, but MYR could still hold against other currencies. Since YTLPOWER does not have any exposure in US, it still wouldn't affect its earnings (say, from Indonesia).

We have to see whether MYR appreciate because of higher demand OR USD depreciating. The former will affect earnings no matter which country it has exposure to, and the latter will affect earnings ONLY if it has exposure in US. You will need more study on this.

But in stock trading, it doesn't really matter about the currency (unless you are trading offshore). If you want better/direct exposure to currency, then you should go into Forex You will only see minor effect of currency on stocks locally.

Just sharing my two cents. You must make your own decision.

higher fdi impact on ytlpower
pros: (1) more funds may push up local equities esp those components in klci or soon to be fbm30. ytlpower being in fbm30 probably benefitted from more fdi support --potential capital gains (already moved off 1.70 to current >2.00 that is already >17.5% gain and hopefully higher) which i think is non-taxable. please correct me if otherwise.
cons: (2) myr appreciation may translate into lower profits in myr terms (but doesn't mean overseas units are not doing well) since ytlpower with >50% earnings in gbr/idr/aud --potentially lower dividends (but we aren't seeing any slow down of their dividend policy) currently at around 5-7% range which is taxable

based on the above i would personally have no problems holding ytlpower

however i think myr being a traded currency will have their up/down cycle (hopefully not like the zimbabwean dollar ). the question is how much myr will appreciate to the point it will start to impact negatively your invested myr in ytlpower? any economist and/or statisticians care to help out?

above are just my noob rambling . any other comments please . cheers

This post has been edited by Muliku: May 3 2009, 10:08 AM

Another way to mitigate any MYR depreciation or inflationary impact, maybe buy REIT in SG/AU
Any one with experience, knowledge on SG REIT like MIREIT, SAIZENREIT to share?
http://reitdata.blogspot.com/

Thanks for your comment. but i think i better discuss this issue in the ytl power topic before the moderators get irritate

plan to get some axreit after the ex date, aynne wanna join me?

me me me

anything below 1.40 is good.

Me too. TP below 1.40.

Somehow my portfolio starting to skew towards more REITs.

i read somewhere that Singapore REITs were in a bubble that has now more or less collapse.

Still has room to drop since property markets aren't gonna heat up there anymore.

But looking at the yield is not bad

hi
which of listed reits is/are syariah compliants?

thanks

Axis REIT

Atrium DPU 1.6cents onli.. hopefully next quarters will be better after signing new contract with CEVA

Ya, AXREIT is the only Syariah-compliant REIT that I know of at the moment.