The title speaks for itself. Week 9 was an interesting one.
While we see the usual pattern that the Singapore STI took an opposite path to HK Hang Seng Index and US S&P500 and Nasdaq again, for a change, the STI went up 2% while the rest went down (HK was down 6%, Nasdaq down 4% as of Thursday close).
Within this week, several Tech companies on Nasdaq like Tesla, Zoom, Palantir etc showed moments of selling on Tuesday and Thursday. Panic selling was the best term to describe the start of Tuesday … some Tech companies share prices were down almost 10% on opening. For example, Tesla, it went to US$622 a share before bouncing back very quickly to > $700 as bargain hunters rushed in. On Thursday, we saw another bout of weakness in many tech companies, Tesla dropped to US$680 – a smaller drop but still a significant one nonetheless. I supposed the volatility in these tech stocks was enough to scare many investors or maybe not and they were excited by it … hmm …
The common quoted reason for the drop on Tuesday and Thursday was the sudden rise in interest rate, represented by the trend of the 10 years Treasury bond. At its peak on Thursday, it was 1.55%, up from 1.36% at start of the week. If you plot the interest rate for the last 6 months, you would see almost a straight upward line for 4 months and then an exponential rise in Jan and Feb 2021. Scary I must say !
A higher interest rate has many impacts on our lives and investment decisions. An obvious impact is our home mortgage installments. The other is perceived attractiveness by investors to put money in bonds over stocks.
Maybe that was really the reason for those reactions or maybe people are just looking for a reason to exit and take profit. Whatever it is, such unexpected drop is an opportunity for us to consider accumulating more quality stocks at lower price into our portfolio.
I took the opportunity to buy a few shares of Tesla, which has technically dropped into a bear zone (>20% drop from its peak) and added more Palantir shares. Buying the former was pure opportunistic while the latter was because I like their business model. It would be interesting to see how the US market moves from here.
With these recent US buys, my overseas holding (US + HK) has moved up to 24.4%; making small progress towards my 28% target.
While STI was up, for people who are familiar with the stock components of STI, you would know that it is an index driven mainly by the 3 local banks.
The 3 local banks – UOB, OCBC and DBS have done very well this week (in that order), rising an average of 3.6% and that really gave a strong push to STI. The rise in the banks stock could be the release of the results by OCBC and UOB plus the dividend announcement. It could also be related to the rise in interest rate which typically helps to increase the margin for banks.
Anyway, I am not complaining as I am quite exposed to these 3 banks and the STI ETF. Keep moving up please.
However, the broader market, particularly the SReit sector did not do well.
In fact, using the Lion-Phil SReit ETF as a barometer, this sector dropped about 2.5-3.0% this week.
I took the opportunity to accumulate more quality SReit into my portfolio. They were Keppel DC Reit, MapleTree Industrial Reit and Frasers Logistic and Commercial Trust. I have confidence that these quality SReits are financially strong, enjoy strong support from their sponsors and are likely to continue their growth path to create even more value for shareholders (like me).
One SReit that I really like is Ascendas Reit. If it extends its fall next week, I would be very happy to open my war chest further to add more of it to my portfolio. So far, in recent weeks, I have not bought any Ascendas shares but it is slowly moving into an attractive region and tempting me …
So, the last week of Feb 2021 was a Buy week for me. It was definitely an eventful week that kept me awake at night … in a positive sense.
Ok, that’s all I like to share folks … hope you find it useful and enjoyable to read.
Till next week, take care and stay safe.
Have a fun weekend and a great investment week ahead.