Technical Analysis

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increases slightly from 805.48 to 811.22 (+0.7%) as compared to last post on Singapore REIT Fundamental Comparison Table on Feb 12, 2017.  The REIT index up trend is definitely over and looks like going to reverse to down trend after breaking the 200D SMA support. There are a few bearish signals from the charts:

• 20D has crossed down 50D and 200D SMA.  This is the 2nd warning signal the FTSE ST REIT index will start the down trend.
• A Bearish Pennant is in formation. Breaking down this pennant will send the index down to 740-750 region.
• 200D SMA is served as tough resistance now and will turned down pretty soon if index cannot get back above the 200D SMA.
• The index now is consolidating around the 61.8% Fibonacci Retracement Level.
• The immediate important support is 800. Breaking this 800 support is the confirmed signal for the bearish trend starts as a “Lower Low” will be formed.

Fundamental Analysis

• Price/NAV increases from 1.04 to 1.05 (Singapore Overall REIT sector is still over value now after the recent sell off).
• Distribution Yield decreases from 6.54% to 6.47% (take note that this is lagging number). About one quarter of Singapore REITs (9 out of 39) have Distribution Yield > 7%.
• Gearing Ratio increases from 34.4% to 34.8%.  20 out of 37 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy.
• Most overvalue REIT is Parkway Life (Price/NAV = 1.62), followed by Keppel DC REIT (Price/NAV = 1.49), First REIT (Price/NAV = 1.34) and  Mapletree Industrial Trust (Price/NAV = 1.36).
• Most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.66), followed by OUE Comm REIT (Price/NAV = 0.77)  and Sabana REIT (Price/NAV = 0.74).
• Highest Distribution Yield (TTM) is Lippo Mall Indonesia Retail Trust (8.94%), followed by SoilBuild BizREIT (8.72%), Viva Industrial Trust (8.59%), Sabana REIT (8.28%), and Cache Logistic Trust (8.02%).
  
• Highest Gearing Ratio are Soilbuild BizREIT (40.6%) and iREIT Global (40.3%).

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Seminar here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

Interest Rate

• 1 month increases from 1.00879% to 1.12625%
• 3 month increases from 1.12691% to 1.24563%
• 6 month increases from 1.33784% to 1.39888%
• 12 month increases from 1.46634% to 1.52796%

Summary

Fundamentally the whole Singapore REITs is still over value now after the recent sell off.  Overall yield for Singapore REIT is still attractive (average yield of 6.47%) but we have to watch closely the US interest rate hike (84.5% probability US Fed is going to increase another 25 bps to 1.75%). The FTSE ST REIT Index has already moved ahead before the next interest rate announcement on Mar 21, after dropping about 7.4% from the peak.  Currently the REIT index is trading in consolidation phase.  The index may have another big move after reaching the apex of the bearish pennant pattern. Technically the direction of the REIT index is short term side way and medium term down trend.

What Should You Do?

• If you are holding any big REIT position, you may want to reduce your exposure or hedge your portfolio. You have to proactively manage (making decision logically) your portfolio instead of reacting to the event (emotion takes over) when things happen. Be prepared for another huge leg down after the Mar 21 Fed announcement of the rate hike.
• If you do not have any REIT now but want to build up your REIT portfolio for passive income, it is time to do homework now to put fundamental strong REIT into your watch list. You can do a great shopping when there is panic selling.
• I receive many emails asking me when is my next REIT class. Unfortunately there is NO firm schedule at the moment. Tentatively I am planning in May or June 2018 but it is very much depends on my schedule. I would suggest you subscribe through my mailing list to be kept posted on the next REIT class schedule. https://mystocksinvesting.com/course/singapore-reits-investing/
• If you need an independent professional review on your current REIT portfolio and need any recommendation, you may engage me in the REIT portfolio Advisory. REITs Portfolio Advisory.  https://mystocksinvesting.com/course/private-portfolio-review/

See all other relevant  Singapore REITs blog posts here.