General S-REITs Discussion Thread

revhappy

revhappy

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Singapore dollar is being kept too strong right now to fight inflation, but I think this will hurt growth and GDP. SGD is now almost 1.1 AUD and super strong against JPY, EUR, CNY, GBP etc I would imagine exports are going to be hit.

I am guessing, Singapore's policy of using exchange rate to manage monetary policy is going to be tested this time, as global trade regime has changed and domestic inflation is now mainly due to domestic factors like property prices and rent, COE etc not so much due to import costs. Singapore mortgage and other loan rates are still super cheap to prevent people from excessive speculation.
 
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churnmaster

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stanlawj

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revhappy said:
Singapore dollar is being kept too strong right now to fight inflation, but I think this will hurt growth and GDP. SGD is now almost 1.1 AUD and super strong against JPY, EUR, CNY, GBP etc I would imagine exports are going to be hit.

I am guessing, Singapore's policy of using exchange rate to manage monetary policy is going to be tested this time, as global trade regime has changed and domestic inflation is now mainly due to domestic factors like property prices and rent, COE etc not so much due to import costs. Singapore mortgage and other loan rates are still super cheap to prevent people from excessive speculation.
Click to expand...
I think we have the answer why MAS was able to strengthen SGD. $440 billion hot money inflows especially from North Asia as reported in the papers.

https://www.businesstimes.com.sg/go...o-singapore-jump-59-to-a-record-s448b-in-2021
Some of this money will end in real estate (especially commercial due to no ABSD), and this process will cause the printing up of large amounts of SGD (for every foreign currency converted to local SGD) => increase local price inflation.
If the foreign currency is just managed by asset managers, it won't drive up local prices.

(However, strangely enough when I looked at "capital flows", this actually represent how much the capital & financial account balance is, Jan - Jun 2022 reached record amounts. )
 
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stanlawj

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Ok I think I figured it out, I was talking bull in previous post. I analysed Singstat more deeply.
https://tablebuilder.singstat.gov.sg/table/TS/M060171
MAS strengthened SGD in spite of the negative balance of payments, most probably due to confidence in Singapore's economic strength. The strong current account surplus every quarter indicates that Singapore's economy continue to do well in spite of the negative global headwinds.

Although SG has maintained a solid quarterly current account surplus, there was record net investment outflows starting in Jan 2022 (= "capital flows", also the capital & financial account flows) leading to net outflow of money. The identified type of investment outflow is "other" which means this is taking place in the private institutional section.

Thus MAS was not looking at the hot money flows, when deciding to strengthen SGD.
 
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churnmaster

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stanlawj said:
I think we have the answer why MAS was able to strengthen SGD. $440 billion hot money inflows especially from North Asia as reported in the papers.

https://www.businesstimes.com.sg/go...o-singapore-jump-59-to-a-record-s448b-in-2021
Some of this money will end in real estate (especially commercial due to no ABSD), and this process will cause the printing up of large amounts of SGD (for every foreign currency converted to local SGD) => increase local price inflation.
If the foreign currency is just managed by asset managers, it won't drive up local prices.

(However, strangely enough when I looked at "capital flows", this actually represent how much the capital & financial account balance is, Jan - Jun 2022 reached record amounts. )
Click to expand...
Wow! So much of inflows. I guess majority of it must be getting invested in global assets via Singapore as a Wealth Management Center. Everything won’t go into SGD denominated assets in Singapore.
 
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churnmaster

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stanlawj said:
Ok I think I figured it out, I was talking bull in previous post. I analysed Singstat more deeply.
https://tablebuilder.singstat.gov.sg/table/TS/M060171
MAS strengthened SGD in spite of the negative balance of payments, most probably due to confidence in Singapore's economic strength. The strong current account surplus every quarter indicates that Singapore's economy continue to do well in spite of the negative global headwinds.

Although SG has maintained a solid quarterly current account surplus, there was record net investment outflows starting in Jan 2022 (= "capital flows", also the capital & financial account flows) leading to net outflow of money. The identified type of investment outflow is "other" which means this is taking place in the private institutional section.

Thus MAS was not looking at the hot money flows, when deciding to strengthen SGD.
Click to expand...
SGD would almost always have an appreciation bias. Singapore’s fiscal balance, trade balance and current account balance - all supports appreciation bias. Add to that, majority of consumables are being imported so a strong SGD helps in keeping imported inflation in control.
 
Forestraintree

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I buy the big cap, good cash flows companies with a core business that's generating positive cash flows which also continue to focus on R&D. I already set all my entry prices and when prices hit, I just buy. So excited when I see the prices drop and I scoop them at a cheaper price. Investment horizon is 20 years.
 
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stanlawj

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Don't catch a falling knife.
Fed funds rate up to 5% in 2023.
T-bond yields continue to rise.
REITS dividend yield need to rise, i.e. share price need to drop.

Take FCT for example, assuming DPU remains unchanged at 12c, then share price need to drop to $1.70 for 2% risk premium over 5%. Current price $1.98 still too high.

Now DPU is also going to drop because debt financing was locked in at low interest. If debt will be refinanced at higher rate, how??? Forecast reduced DPU will continue to pressure the share price down.
 
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