Hi Experts!
I have come to a horrifying conclusion. My portfolio is >70% locked up in property stock (various REITS, Construction companies & related building industries).
I want to diversify away and I'm going through my stock screeners.
Any suggestions on what I can look into?
I know, caveat emptor, and all that.
semiconductor sector is doing ok/well at the moment.
could also look blue chips in other sectors which have been beaten down recently for various reasons.
Property is quite a risky sector now with interest rates poised to rise and local market cooling.
Just IMO,
Trim down your high exposure in property related stocks to your comfort level.
Cut the flower and save the weed or other way round?
If nothing to invest, keep cash first and reinvest when opportunity arise in other sector arise.
just a question..are property stock prices really overvalued?
was just comparing them with Singapore property price index, during the last major bottom which was in 2009, where the property index was around 95, property stocks were roughly trading 1 to 3 PE, 0.6-0.7 Price to Book, which is also roughly what we are looking at now. If there is further interest rate rise and cooling, what are stocks going to be? 0.5 PE??
Since then, the property price index has rose to over 150, a record high over year 2008's 130. However, property stock prices are now still trying to breakthrough their 2008 price high, considering the fact that company assets should have increased, business expansions, inflation etc.
Price to book on property stocks like OUE are 0.5x. I won't rate that as overvalued and personally won't flee. In fact i would rate them as way undervalued.
The only exception for me, are developers who have lots of unsold units. These RNAVs are unreliable. Those cheerleaders of stocks like WingTai are reliant on govt reversing prop cooling measures. Its a dangerous assumption or anticipation to have.
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Exactly ! The RNAV of the developers who still sit on many unsold units are still unknown. Some may eventually have to sell at a loss .
RNAV aside, looking at price to NAV is already undervalued
in the long term, IMO, if Singapore's economy continues to do well, which I think it will, the only way for property prices, is up
I think also important to look at the fundamentals of the property counter. I seen (previously bullish) counters tanked literally, with the share consolidation and this can be scary if the company has no good business to continue operating.
Recently, I came across a listed co with property leasing business. The operating revenue is lower than some catalist stocks. Business is bleeding and management doesn't seem to care about shareholders.
Its important to hold not just undervalued property counters, but those with proper management who acts in the best interest of shareholders. Thats very important over the longer term. Value and price should meet in due course, if a good business model is in place.
Very important finally is DYODD and not just buy cos cheap. Cheap can become cheaper in many cases.
To add-on one more speculation, from UOB Kay Hian
Property easing measures possible as election looms
SINGAPORE (June 16): Following another month of declining home sales, the raft of cooling measures weighing on Singapore’s property market is poised for relaxation, as the government does not wish to risk inflicting pain on a nation of more than 90% home owners, says UOB Kay Hian.
A key catalyst is a likely general election that will be called before end of the year, which, in turn, is timed to ride on the residual feel good factor right after the nation’s 50th birthday celebration this August.
“We believe the newly elected government could look into demand-side policy easing towards the middle of next year after a 10-15% correction in property prices,” state UOB KayHian analysts Vikrant Pandey and Derek Chang in a June 16 note.
“Singapore has among the world’s highest home ownership rates at over 90% and a drastic correction may result in alienating its voter base,” they add. If and when easing takes place,
the first to go will likely be the “onerous” buyers and sellers stamp duties, they state.
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http://www.theedgemarkets.com/sg/article...tion-looms