4 REITs that defy interest rate Increase, more positive news for the China Market and my mini Retirement

Hi there! How are you on a Thursday morning? I am extremely tired as my 2 kids were down with a cold/flu for the past 2 weeks. My 1.5 years old had Covid months ago and it wasnt this bad! Needless to say, school is out for them. As I was already at the tailend of my career, I had a lot more time to care for them and i was much more patient as commented by my wife. 

1 more week, and this is it. The end of my 14 years career. Though financially, we are pretty much status quo, I cant help but to feel curious about how things will turn out 1 year later. Will I decide to just rejoin the rat race or? Time will tell.  

The talk recently is all about the Feds raising the interest rate and for REITs investor, how will it affect us? I am seriously not fretting too much about it. By the way, this is not the first time interest rate was increased. We have been kept at a low interest environment since 2008, but actually, starting from 2016, interest rate was rising all the way to 2.5% but then it went down again in 2019. Do you all remember what happened in 2018? The start of trade war between US-China from July 2018, and then Covid in early 2020. So really, its not the first time interest rate was increased! Did the market crash for REITs? Not really. 

Let's have a look at what happened to some of the REITs in that time span from 2016 to just prior to COVID to put it in perspective. 

Capland China Trust, previously known as Capita Retail China Trust. This baby has been in my portfolio since the first time I started buying REIT in 2013.  It started 2016 at around 1.40 SGD and peak at around 1.60 SGD just prior to the Covid Collapse. 14% in capital appreciation plus around 6-7% dividend per year. That's not bad at all. 

Aims APAC REIT, previously known as Aims Amp REIT. Also another old timer in my portfolio.  It started 2016 at 1.30 SGD and peak at around 1.46 SGD just prior to the covid Collapse.  That's a 10% capital appreciation with around 7% dividend per year. That's great!

Ascendas REIT. This is a fairly new addition to my portfolio. It started 2016 at 2.27 SGD and peak at around 2.83 SGD just prior to the Covid Collapse. 25% capital appreciation with around 4-5% dividend per year. Very Good! It didnt end there, it went on to make new heights of around 3.54 SGD in mid 2020.  That's a capital appreciation of 56%!

CICT. It was known as Capital Commercial Trust previously. Another old timer of mine. Started 2016 at 1.93SGD and peaked at 2.52 prior to Covid collapse. Almost 31% capital appreciation. around 5% dividend. Brilliant!

As you can see, some REIT actually mimic the uptrend of interest rate. The higher the interest rate, the higher the share price. Some will just bounce around in a band. Some will however react very negatively to the raise. Normally interest rate is increased because the Fed thinks that the economy is already doing well and doesnt need more support, so that's a good thing. The prolonged low interest rate environment was created so the economy can recover from the 2008 GFC.  However the environment seems to be abit different now. The world economy is still reeling from Covid and the Fed was very upfront to say rates need to be increased to control inflation. With this added to the equation, this makes it a little more complex to navigate. 

My portfolio has around 20% USA exposure, 35% China exposure. China's stock market has been down for a long time, due to trade war, tech crackdown, then Covid. 

I think there will be 3 main catalysts to ensure a China bull run.  

First, tech crackdown seems to be coming to an end, and now it seems like the rumor that Ant financial is going to try for IPO again may be true. Refer to this. I mentioned in my previous post that there should be some truth to the rumor a few weeks ago which the Chinese authority immediately shut it down. Now i feel vindicated. :)

Second, as for the trade war. the Americans are now thinking if they should remove the tariff to help with the inflation. Refer to this. This will be a win win for both countries. China has no problem with inflation and may in fact start on their own QE policy.  Australia has a new PM now. So perhaps, that trade war with Aust will ease as well? 

Third, to finally live with Covid. With every lock down, it gets a little closer to the end, though i am not sure where is the end of the tunnel. If i need to put a timeline, ill say in 6 months time? Things should get back to some sense of normalcy?

Happy to hear your thoughts! 

Ok that's it from me. I am going for a HIIT session to whip my ass into shape. 


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