Bright spot in the KLSE

6 April 2019

Dear Fellow Investor,

One bright spot in the KLSE is the REIT sector. Below is a chart of Sun Reit.

Daily chart of Sun Reit from Share Investor.com

After  major world wide panic selling in November/ December 2018, there was a shift to defensive assets. Notice the increase in volume as price rose  beginning in January 2019.  Increasing volume reflects increasing demand. High momentum favors higher prices.

Across the causeway, Singapore reits are the best performing sector so far in 2019. This reflects investor focus  on real assets providing value and high yield.

An example is an investment we made in Hong Kong Land which is listed in Singapore but has assets both in Hong Kong and Singapore.

Daily chart of HK Land from Share Investor.com

HK Land is a property developer and own prime assets in Hong Kong/ Singapore and Thailand. They have occupancy of  over 99 % and trade at a price to book of 0.6. PE is 6.8.  Management is by Jardine, a long established developer. A price to book of only 0.6 shows a wide margin of safety.   HK Land is an example of deep value, stability, attractive yield, and blue chip management.  Perhaps Warren Buffet might be interested.

Despite the trend of lower interest rates, growth in the world is slowing.  Debts worldwide are rising to historical highs which put a cap on growth. 

Governments must suppress interest rates to avoid defaults should interest rates rise. Japan and Europe are employing QE to keep interest rates low and the US may soon follow. Debts keep increasing.

How long can this debt party go on ? I do not know but at least I want to be protected with real income producing assets should the debt bubble burst. A small allocation in physical gold might be prudent.

Invest well and grow your wealth
Bill.

Critter of the week is a giant dog  The young lady found him abandoned so she adopted it. She said it is very loving and friendly even though it seems to mixed with wolf blood.