Month: September 2022

Fear Is At Its All Time High, BUT What Is Market Doing?

Kelwin & Roy S&P 500 ,
27th September, 2022, 4:33 PM

Image credit : https://edition.cnn.com/markets/fear-and-greed

Image credit: https://www.aaii.com/sentimentsurvey

Currency market is going nuts, pound making new low against USD, Jap yen is also at a an all time low while the USD index is strengthening. This together with Fed relentless effort to rein in inflation has caused markets to tumble and fall hard. With fear and volatility at its highest, one would expect even more selling in the market. BUT something we notice that is catching our attention. US markets are actually holding up.

Everyone is eyeing for markets to break June low and maybe a possible fake break before a rebound comes. But for the last two nights, markets has actually been able to hold its support of around 3641, very very close to the June low. With such brutal  sell down over the last week we might actually see some rebound coming in. Indicators are currently oversold and yes oversold can remain oversold for an extended period but at least we know we’re not at the top and we might be scraping the bottom. A positive sign is that the rebound is happening at the Friday’s low where is actually tried to rebound from.

We’re watching to see if this support can hold for another session or two and one more thing to look for is the momentum. If market is met with selling, we would see selling with intensity and that’s one sign to see that market is not ready for a rebound.  Another note to remember,  Oct will also kick start earnings. It may or may not bring cheer to the markets.

What’s your take? How are you positioning yourself?

Yours

Humbly

Kelwin & Roy

The Week Ahead Sept 2022 – [STI, HSI, NASDAQ & S&P]

Kelwin & Roy STI, Stock Market , , ,
25th September, 2022, 5:08 PM

0.75% rate hike and probably more pain ahead, as Fed remains its hawkish view which didn’t sit that well with the markets and we saw selling coming in throughout the week. As always we warned about going in before any big event and always waiting the day after before making an moves. Hopefully this saved those who were considering going LONG before a bloodbath happen.

As S&P500 comes very close to June low, this could give rise to an opportunity to add into our long term portfolio as this support becomes a significant point for the market to test. If this support holds, we might even see a rebound in the coming week. Head over to our Facebook page to read up more.

STI

STI also caved in on Friday as Singapore’s core inflation rises to 5.1% in August, inching towards 14-year high. Inflation is hitting countries hard and Singapore is not spared. We can see that STI broke the uptrend line on friday and a pullback to our second downside support of around 3190 might be seen in the coming weeks. Waiting for more pullback first.

HSI

HSI come down as expected and even broke the March low! Once again, looking ahead for Oct meeting before adding any position as market might drift a little lower and there is no real hurry to move in yet. We’re bullish on China/HK but looking for a better entry.

Do head over to our Facebook page for more updates on S&P500 and where it might head after the massive sell down. Updates for Nasdaq is also over there.

Yours

Humbly

Kelwin & Roy

 

The Week Ahead Sept 2022 – [STI, HSI, NASDAQ & S&P]

Kelwin & Roy STI , , , , ,
18th September, 2022, 4:30 PM

Another big week ahead as the Fed meets to decide on the interest rate. Fed will be meeting 20-21st Sept (Wed) and their announcement will be made 2am Thursday local time. Market is pricing in 0.75% hike anything more could results in another sell off. 1% might be possible after last week’s CPI data so don’t be surprise. What’s important is also their outlook, as market is also pricing in another 0.5% hike each for next two upcoming meeting in Nov and Dec. A more aggressive stand will also meet with more selling. As mentioned last week, whenever there is big data we would want to be more cautious as we don’t want to anticipate or take a HERO or ZERO approach to the markets.

STI

STI did see a rebound last week to our target of 3297 but as CPI data came out higher than expected, we saw markets sell off and that negative sentiment did affect our local markets too. A further pullback might be expected as market gets ready for the upcoming Fed meeting. Immediate support at the 20ema or 3249. Further downside might be to 3200. Remaining light before Fed’s decision as once again opportunity can be found after Fed’s meeting.

HSI

Unable to sustain its break above the downtrend resistance line, we see that HSI continues to slide and the next support level is at 18414. A slew of good news with tencent and netease gaining approval for their games couldn’t bring them up but saw more downside instead, Markets could still drift lower to our support before any temporary rebound. Looking forward to the upcoming meeting in Oct for further catalyst.

Do head over to our Facebook page for more updates on S&P500 and where it might head after the massive sell down. Updates for Nasdaq is also over there.

Yours

Humbly

Kelwin & Roy

Fraser Hospitality Trust – [Failed Privitization, What To Do Now?]

Kelwin & Roy Fraser Hospitality Trust ,
14th September, 2022, 11:44 AM

Fraser H trust saw a huge gap down of 24% after its privatization deal fell through falling short of its 75% approval by just 0.12%.

What are our thoughts?

Fraser H trust has 14 properties over Asia and Australia and some of its recognizable property includes Intercontinental at Bugis, Westin KL and Novotel Darling Square.

Its current book value is around 65 cents and with the drop bringing it close to its 50 cents support, this could present a good entry for longer term investors.

Before Covid, Fraser H trust’s dividend yield was around 7% but due to covid it dropped to around 1.3%.  With countries opening up, dividend might be restored in the future. “The global travel and tourism sectors are projected to return to pre-pandemic levels in 2023 and grow at a rate that will outpace global gross domestic product (GDP) growth”, the World Travel and Tourism Council (WTTC) said in an interview in April.

Assuming current price of around 55 cents and its future dividend go back to the 4 cents pre-covid level, that’s about 7.3% dividend yield.

Adding to that, a recovery in price also adds to a potential capital gain for investors.

With the failed privatization, it might take another 6 or more months for any fresh offer and if a new offer comes, it might be above 70cents but how much more is anyone’s guess. Even at 72 cents it would mean about 40% upside.

So if you ask us, we think that Fraser Hospitality trust might be a potential good stock to put in your dividend portfolio and even if no offer comes , with the opening and recovery of the tourism sector, we might see Fraser H trust’s stock price gradually recovering.  Also, in their report, Fraser Property Limited views hospitality as one of its core business, so growing it or privatizing it is something they are considering. As FraserHtrust might be too small to reap the benefit of being listed so taking it private might be more benefical.

Some possible levels to look at will be $0.53-0.54 and 0.485 (that’s when the stock started to turn and move up back in March) .

Just sharing our thoughts

Yours

Humbly

Kelwin & Roy

 

 

Frasers Property Five-Year Green Retail Notes – Whats Our Take?

Kelwin & Roy Fraser Property ,
12th September, 2022, 9:44 PM

Market has been a buzz with the newly launched Frasers Property Five Year Green Retail Notes.

We’ve been getting some questions with regards to the Frasers Property green retail notes. So we’ll just summarize some key points and give our thoughts. Remember these are just our thoughts and NOT A RECOMMENDATION. 

Frasers Property Limited is a S$4 billion market cap, “mid-sized” Singapore property developer. It has diversified property assets across Singapore, Thailand, Australia and Europe and develop properties across different sectors – retail, commercial, industrial and hospitality.

Image taken from FPL 1HFY22

What’s a green bond? A green bond is specifically used to raise money to invest in environmental projects — or green projects. That’s what Frasers Property intends to use the money for. It’s not the first time Frasers Property has raised money from green bonds. In fact, since 2018, this company has raised over S$8 billion of green loans and bonds.

9 Key Points To Note 

  1. It’s a 5 year tenor and so maturity is Sep 2027
  2. Its coupon payment is 4.49% Pa (payable two times a year) Mar 16 and Sep 16 each year
  3. Minimum subscription size is $1,000, with further amounts in multiples of $1,000
  4. Issue size is $420 million with potential upsize to $650M
  5. Public tranche 300million, $120 Million to institution.
  6. Subscriptions under the public offer will be subject to balloting if the total subscriptions exceed the amount available.
  7. Public tranche is open from 9th Sept till 14th Sept (Wednesday) Noon time.
  8. Retail application for the public offer may be made at the ATMs of DBS, POSB, OCBC and UOB. SRS and CPF can’t be used.
  9. Fraser just redeemed its 7 year retail bond of 500Million maturing 22May 2022 at 3.65%

Our Thoughts

Although 4.49% looks attractive but an investor has to hold till maturity (5 years) in order to get your full principal back. But lets look a little bit more into Fraser property and see if Fraser has what it takes to repay this debt.

Fraser Property was acquired by Thai Billionaire Charoen Sirviadhanbkakdi’s TCC group. It is not backed by Temasek unlike some other companies. So do take note of this if this is one concern.

We’ll take a quick look whether Frasers Property has the financial power to service their bonds.

Bonds are different from stocks as they work differently in terms of performance. Bond holders wouldn’t be too concern about the share price moving up or down and the only thing that they would be concerned is the ability to pay the debt

Image taken from 3QFy22 business updates

They have 2.7Billion of cash on their balance sheet.

Net Debt to equity ratio is 70.5%. They brought their net debt down from 73.7 to 70.5%

Net interest cover is 3 times which is actually on the low side.

Well positioned to service the debt in the coming years.

Strong pipeline of projects

Total of 1.3billion worth of pipeline projects for the next few years.

Concluding Thoughts

The greatest concern would be the default risk and with all investment we cannot say there is zero risk. Our take and view is that default risk is low but as a bond holder, you’ll have to hold it till maturity then you’re able to get back your full principal repayments. Anything else you’ll have to sell it in the open market which could result in a loss. So don’t expect any capital gains and know what the purpose of the bond is for.

As an investor, if you’re willing to take a longer term view and don’t mind a payout of 4.49% Pa then adding Fraser Property green note might be something to consider. The good thing is that the amount is at a smaller range of $1k and there are not many retail bonds that come onto the market with a strong brand name. We wouldn’t recommend going to big into this as we can wait for more opportunities as interest rates is still on the rise.

If you compare it to Reits which might give about 5% yield but you do risk a move in the share price. So there’s no one solution that fits all and if you’re looking to grow your income portfolio then this might be worth looking at.

Once again this is just our thoughts and its meant for educational purpose. If you need any help, feel free to contact us.

From Kelwin & Roy

 

The Week Ahead Sept 2022 – [STI, HSI, NASDAQ & S&P]

Kelwin & Roy STI , ,
11th September, 2022, 3:44 PM

Markets started off weak but regained some grounds towards the end of the week as bargain hunting started to come in. The KEY DATA to look out for this week would be inflation data! CPI data for Aug coming out this Tuesday night. If inflation remains high and over what market is expecting of 8.1% then we’ll probably meet with selling once again. As markets saw a rebound, disappointing data would result in another round of selling.

STI

STI 11th Sept 2022

A rebound came in slightly faster than expected as STI was pulling back very close to our 1st target. It broke the immediate downtrend line and rebound. First rebound target is 3297. Banks are leading the rebound with DBS being the leader this round. SIA is also looking good for a rebound.

HSI

HSI 11th Sept 2022

HSI reached our downside target of 18800 and started to show some strength rebounding off the support. It is currently resisted at the downtrend line and breaking above that then we might see more rebound to 20k. The biggest overhanging resistance would be China’s zero covid policy causing lockdowns and economic disruptions. The CCP is meeting in Oct which hopefully might shed some light on its covid’s policy if not market will be hard to move. Also, CPI coming out this week could put a brakes to the rebound so we got to watch that closely.

Do head over to our Facebook page for more updates on S&P500 and where it might head after the massive sell down. Updates for Nasdaq is also over there.

Yours

Humbly

Kelwin & Roy

The Week Ahead Sept 2022 – [STI, HSI, NASDAQ & S&P]

Kelwin & Roy STI , ,
4th September, 2022, 2:19 PM

Its been another brutal week for US with no end in selling. Ever since our post last week market still can’t find any strength and with ever rally it comes with fierce selling and with quantitative tightening doubling at the start of Sept. Markets will continue to look at inflation data and if there’s any surprises. Market will most likely sell off again.

STI

STI

STI also slowly drifting down to our target, it has been trying to resist the selling and putting up a strong fight despite all the negative sentiments surrounding it. More downside would be better to clear out weaker hands so that a rebound can come in.  3180 level would be the first level we’re watching for. Also, despite that we seen stocks like raffles medical, ifast all moving up. So there are still gems to look out for during this period.

HSI

HSI

HSI has pulled back to our support level of 19500 but it looks like more downside is ahead was BEARSIH action for Wednesday candle was spotted.  Warren Buffet’s sale of BYD also caused some rattle in the markets as investors dialed back on buying. We are likely to see HSI to 18800 level as market can’t rally despite some good news for the China market. Looking for more pullback before deciding on the next move.

Do head over to our Facebook page for more updates on S&P500 and where it might head after the massive sell down. Updates for Nasdaq is also over there.

Yours

Humbly

Kelwin & Roy