General S-REITs Discussion Thread

[stanlawj]

Well, it has worked for me and many others

Choose your path and destiny

Will it work when SORA goes from 3.7% to 5%?

 

[DevilPlate]

Will it work when SORA goes from 3.7% to 5%?

I been thru 3-5% mortgage rates.
Must have holding power and quickly build up cash reserves.

*find an equally hardworking and like-minded spouse
Actually rn 3.2% fixed kinda no brainer also when CPI at 4% lol

 

[stanlawj]

I been thru 3-5% mortgage rates.
Must have holding power and quickly build up cash reserves.

*find an equally hardworking and like-minded spouse
Actually rn 3.2% fixed kinda no brainer also when CPI at 4% lol

I'm talking about 5% SIBOR/SORA for 10 years. Not just 1 or 2 years.

 

[DevilPlate]

I'm talking about 5% SIBOR/SORA for 10 years. Not just 1 or 2 years.

If u believe in that scenario, which asset class will outperform?

 

[stanlawj]

If u believe in that scenario, which asset class will outperform?

Something with the same qualities as Berkshire Hathaway Inc.
For property, need to be creative, eg partition more rooms, upsell, rezone etc.

 

[DevilPlate]

For me, i will lock up more cash in 5/10yr SGS if it hit 4%+

 

[foo9883]

lose a lot of money on s-reits

 

[limster]

We might be looking at capitulation soon if local investors start dumping their REITs and bidding for T-bills. If youtuber like Josh Tan releases a "I sold ALL MY REITS" clickbait video, maybe its time to start doubling down?

 

[Iyarash11]

history repeating

 

[direbmem]

lose a lot of money on s-reits

No sell not considered loss

 

[stanlawj]

More pain for US Treasuries when Japan ends negative rate policy​

https://www.straitstimes.com/busine...easuries-when-japan-ends-negative-rate-policy

BLOOMBERG: Japan’s era of negative interest rates will end in the coming months and the implications for world markets will be enormous, with US Treasuries set to suffer the most, according to the latest Bloomberg Markets Live (MLIV) Pulse poll.

The Bank of Japan (BOJ) is likely to unwind its unusual policy of sub-zero rates during the first half of 2024, the majority of 315 respondents said.

The move will bring an end to a bold experiment the bank embarked on in 2016 – one that has recently placed it at odds with other major central banks that have been tightening aggressively to combat inflation.

What the BOJ does, and when it does it, will reverberate through world markets. The biggest consequence, according to MLIV Pulse respondents, is more turbulence for the vast amount of Treasuries. This is as higher yields in Japan will encourage fund repatriation by Japanese investors whose huge holdings include US, European and Australian debt.

“A shift in the BOJ’s policy could slow the export of capital from Japan as yields become more attractive locally than they were before,” said Mr Martin Whetton, head of financial markets strategy at Westpac Banking Corp in Sydney.

Thirty-seven per cent of participants said Treasuries will face the most severe impact from BOJ governor Kazuo Ueda shifting away from super-accommodative policy. Declines in the US dollar may add to the misery; 36 per cent expect pain for the currency that the US debt is denominated in.

Portfolio managers and central banks around the world are keeping a watchful eye on any move by the BOJ, which has made negative rates and yield curve control the cornerstone of its policy to fight stagnant prices. It rocked global markets by raising the cap on benchmark 10-year bond yields in late 2022, and again at the end of July, pushing up bond yields.

“Some form of normalisation is probably necessary,” said DBS Bank senior rates strategist Eugene Leow. “This could mean upward pressure on five- to 10-year developed market yields as higher Japanese government bond yields spill over.”

Japanese investors are the biggest foreign holders of US government bonds, with more than US$1.1 trillion (S$1.5 trillion) at the end of August, according to data from the US Treasury Department.

Life insurers dumped a net 196 billion yen (S$1.8 billion) of foreign bonds in the April-to-September period, following a record 8 trillion yen of sales in the previous six months, according to Ministry of Finance data.

The MLIV Pulse survey shows that 61 of the respondents expect global bond market volatility to rise when the BOJ changes the policy, with most respondents predicting that the historic step will happen in 2024.

“The market will probably be very jittery until traders and investors get used to a world with positive yields,” said market strategist Ayako Sera at Sumitomo Mitsui Trust Bank in Tokyo. “It’s like a big stone being thrown into a pond where there has been no wind.”

Treasuries, traditionally the pillar of stability in many savings and investment portfolios, are already more volatile than stocks, at least by one measure. The combination of the aggressive policy tightening by the US Federal Reserve and the flood of bond sales by the US government has imposed historical losses, especially on long-duration debt.

This yield gap has been widening, making the yen the worst performer among Group of 10 currencies so far in 2023. The Japanese currency has lost more than 12 per cent against the greenback this year, ending last week at 149.86 per US dollar.

 

[stanlawj]

The BBG article above implies serious implications to the interest rate on JPY loans issued by banks to REITS, and the valuation of Japan real estate.

This JLL SG property agent gives the commercial cap rates and trend. Extrapolate to make your own conclusions.

https://www.jll.com.sg/en/trends-and-insights/research/will-long-term-interest-rates-affect-japans-real-estate-market

 

[zeroX26]

most rebounded today liao

 

[TehSi99]

most rebounded today liao

Why big sell down over last few days and rebound today?
What games are brewing>

 

[revhappy]

For me, i will lock up more cash in 5/10yr SGS if it hit 4%+

I think SG govt will just buy back their bonds if yields go that high.

 

[sohguanh]

Why big sell down over last few days and rebound today?
What games are brewing>

If you see the rebound are more for the blue chip REIT stocks. Just maybe there are enough BB behind propping up the price as they need to be accountable to their investors I guess? Hmmmm one can never fathom how stock market work becuz if one can, why need to have a full-time job working? Everyday play stocks can liao.

 

[churnmaster]

I think SG govt will just buy back their bonds if yields go that high.

Not sure if govt will buy back but a ton of money will flow into these bonds.

 

[revhappy]

Not sure if govt will buy back but a ton of money will flow into these bonds.

CPF special account offers 4%. Imagine if SG long term bonds open to all start offering 4%, CPF special account will have to start offering 6%. Since SG runs a surplus, they don't need the money to fund any deficit. So the money is used for making investment gain. At 6% risk free rates, there is no way to make any investment returns. So they would rather drop the long term risk free rate to prevent Special Account interest from increasing. This is my speculation, ofcourse.

 

[DevilPlate]

CPF special account offers 4%. Imagine if SG long term bonds open to all start offering 4%, CPF special account will have to start offering 6%. Since SG runs a surplus, they don't need the money to fund any deficit. So the money is used for making investment gain. At 6% risk free rates, there is no way to make any investment returns. So they would rather drop the long term risk free rate to prevent Special Account interest from increasing. This is my speculation, ofcourse.

https://www.cpf.gov.sg/member/growi...ng-higher-returns/earning-attractive-interest

CPF SA interest rate peg to 12 mth average yield of 10y SGS + 1%

*SA interest rate can drop back to 4% once 10y SGS starts to drop over time.

https://www.malaysianow.com/news/20...conventional-savings-4-75-for-shariah-savings
https://ringgitplus.com/en/blog/per...e last decade, the,in the EPF's dividend rate.

Malaysia garmen can afford to pay 5.35% for their EPF and went up as high as 6.9%

 

[churnmaster]

CPF special account offers 4%. Imagine if SG long term bonds open to all start offering 4%, CPF special account will have to start offering 6%. Since SG runs a surplus, they don't need the money to fund any deficit. So the money is used for making investment gain. At 6% risk free rates, there is no way to make any investment returns. So they would rather drop the long term risk free rate to prevent Special Account interest from increasing. This is my speculation, ofcourse.

The fact that SG is such a fiscally well managed economy it’s seen as a safe haven by the UHNW individuals from around the world. If long term yields go anywhere close to 4%, they will all jump in to invest in these govt bonds. There is always more demand than supply for these bonds and I don’t see it changing anytime soon.