Before I begin, a disclaimer – I am not a certified financial advisor, and the views that you’re about to read below are my personal views based on my analysis of the STI which I am sharing for educational purposes only. Also, whatever companies which I may mention in this post below are by no means a recommendation to buy/sell shares in them.
If you have been following my weekly technical analysis of the STI, you will know that I have been waiting for the STI to go above 2,650 points – which implies a recovery of 20% from the trough of 2,208 points around mid-March 2020, and a birth of a new bull market.
Yesterday, the STI went up by 88.86 points, or +3.4% compared to the previous day to close at 2,700.39 points – implying the start of a new bull market (the following screenshot is a daily movement of the STI):
There are a couple of reasons for the optimism, and one of them is due to the relaxation of the two-month circuit breaker measures with effect from 02 June 2020, as Singapore moves into Phase One of post-circuit breaker. Also, there is optimism that Phase Two (which includes the re-opening of retail shops, and dining in at F&B outlets) may be implemented sooner rather than later (we await for further news to be announced in the middle of June.)
Additionally, there are also discussions to resume essential business travels between Singapore and other countries (and this bodes well for businesses in the aviation industry and hotels.) Personally, I feel that any confirmation as to when Phase Two will start, and also the further lifting of travel restrictions will lead to the STI leaping higher.
Despite all the positivity, however, there may be events which may peg back the climb of the STI – chief of which is the second wave of Covid-19 in the country, leading to the re-implementation of the circuit breaker measures (to prevent that from happening, all of us have a part to play here to adhere to the safe distancing measures, and putting on a mask at all times whenever we are outside of our residence to stem the community spread of the virus), and another being the further deterioration of relationship between the United States and China – which may negative impact trade further straining the growth of the global economy.
Moving on to talk about investments, for those of you who made the decision to invest in fundamentally sound companies when the market was at its lowest around mid-March 2020, congratulations, you are now likely to be sitting on a pile of profits right now.
For those of you who have been following my posts (since the first version of The Singaporean Investor last year), you will know that I have a “shopping list” prepared with companies I am waiting to add to my portfolio, and the massive selldown in mid-March 2020 represented a golden opportunity for me to add on to my long-term investment portfolio, and I have added 5 companies into my long-term investment portfolio – they are DBS Group Holdings, United Overseas Bank, Frasers Centrepoint Trust, Mapletree Commercial Trust, and SPH REIT.
While some of the companies saw their share prices continue to slump ahead, I did not worry, simply because those 5 companies have rock solid business fundamentals, and I am very confident that their share prices will be one of the first to bounce back up when the market recovers.
I am proved correct when the market eventually recovered. Even though the 2 banks have not recovered to my initial buy prices, but the 3 REITs saw an unrealised gain of more than 30% (from my buy prices) at the time of writing:
|DBS Group Holdings (SGX:D05)||04 Mar 2020||S$24.00||S$21.90||-8.8%|
Bank Limited (SGX:U11)
|06 Mar 2020||S$23.26||S$21.66||-6.9%|
|Frasers Centrepoint Trust (SGX:J69U)||02 Apr 2020||S$1.85||S$2.54||+37.3%|
|Mapletree Commercial Trust (SGX: N2IU)||03 Apr 2020||S$2.00||S$2.08||+4.0%|
|SPH REIT (SGX:SK6U)||03 Apr 2020||S$0.675||S$0.895||+32.6%|
The moral of the story here is this: As long as you invest your money into companies which have a history of improving financial performances over the years, there is no need for you to worry about the short-term share price volatility, as over time, the share prices of such companies will only move in one direction – and that direction is up. Also, these companies will also be the first to see their share prices recover when the market bounces back up.
Hope you’ll find this personal share of mine today useful, and I’d like to take this opportunity to congratulate all those who had done your homework (to shortlist and research about companies you’re interested in), and actually dived in to invest when their share prices were trading at a huge discount. Your hard work have indeed paid off. 🙂
Disclaimer: At the time of writing, I am a shareholder of DBS Group Holdings, United Overseas Bank Limited, Frasers Centrepoint Trust, Mapletree Commercial Trust, and SPH REIT.
Launch Event for My First Book: building your REIT-irement portfolio
After months of hard work, my first book, 'Building Your REIT-irement portfolio' is finally ready! In this easy-to-follow 178-page guide, you'll learn everything you need to know about building a REIT portfolio that can provide for you in your retirement years. You can check out a preview of the book here.
I'm extremely thankful to the team at InvestingNote and ShareInvestor for their help to organise a book launch event for me on Tuesday, 26th September 2023, from 6:00pm to 8:00pm at their office in New Tech Park.
For more details and to RSVP (seats are extremely limited), click on the link below: