Doses of Optimism

It just came alive when I was giving up on the lethargic STI at end Oct, after 4 consecutive months of decline. Within a week, it gained 7%. STI heavy weight like DBS gained 10%; even Singtel gained 8%. Many SReits also joined in.

As my portfolio was heavy weighted in STI, it benefited quite a fair bit. I just wish the momentum will continue. Having seen the strength of US stocks in the last few months, I hope it is the time now for the STI to show some strengths too and build into a great Christmas rally

Actually, there are quite a number of positive signs showing that the situations are either stabilizing or getting better. For instance, I observed that a few SReits were buying assets again like in the case of MapleTree Log, Suntec, Frasers Centrepoint etc. Companies will only acquire if they feel confident of their future. Some SReits also increased their dividend in the recent quarterly results; giving back to the shareholders the capital they withheld earlier in the peak of the crisis. They probably feel that their cash flow is more stable and liquidity situation is clearer now. The mergers of several SReits have also gone successfully as planned, eg CMT-CCT, ESR-SabanaReit, making themselves bigger and stronger companies to compete for capital.

The local banks’ half year results are not as bad as feared. They could restore dividends if not for the “advice” from MAS. The economic activities of the local manufacturers in Q3 were stronger than expected. Furthermore, China economy seems to be recovering well. The number of daily local COVID cases in Singapore and China are now only a handful. Our ministers are even talking about opening up further with Phase 3, post circuit breaker. Travel lanes are progressively being set up with other countries.

I know it is still early days. Many things can still turn bad. The number of COVID cases in US and Europe are reaching new highs and several countries are imposing second round of lockdowns.

However, I will take these optimism pills as they present to me now. The news of Biden’s win over the weekend may also help to lift optimism and continue the momentum.

All the best and have a great investment week ahead.



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