Taking a Risk on Election Day - Taking a Look at the Future

2016 has been a year of change. Brexit shook the world in the middle of the year, sending markets into flux. Yesterday, it was the US Election. I had to head into the office early to prep, and even that early in the morning, Forex prices on my screen were already going nuts. All of us were on Bloomberg, watching the US slowly turn red.

I still tried my best to keep an eye on the stock market - I was trying to look for opportunities, which were all over the place, since almost all the counters on the front page of the SGX website were in the red. Midday, the bank stocks dropped like flies - DBS, OCBC and UOB went down. When I saw that UOB's price had hit close to 18.00, I decided to take the plunge and pick up 1,000 shares. I managed to get in at 18.13, and I held it overnight. At 18.13, I figured it was at a big-enough discount, so I wouldn't be too badly affected even if the price continued to drop.

Behold, America - your new President.

I was expecting another red day for the stock market on Thursday, but prices recovered really sharply. Today (Friday), I was prepared for UOB to correct and head further down, but UOB prices remained strong over the course of the day. Due in great part to uncertainty about next week, I decided to replenish my war chest by taking profit on UOB. I think I'll be needing it for the next couple of months.

So, with a surprising stock market surge, and with relative uncertainty in the weeks to come, these are the areas I'll be watching over the next few weeks:

1) REITS (Keppel DC)

I've been wanting to get into REITS for a while, more specifically Keppel DC REIT (AJBU). I missed the opportunity to buy in at $1.00+, so I've been waiting for the price to come down before entering. The need for data centres should only increase going forward, its numbers are solid, and this particular REIT has demonstrated decent growth since its inception. REIT prices tend to drop when the US raises interest rates, and an upcoming rate hike is due, should nothing else change.

It is yet unknown if the rate hike will continue as planned (although several analysts so it will), because the USD has strengthened over the last couple of days, with USD/SGD moving into the 1.41 region. Regardless, I would considering entering Keppel DC REIT when the price moves closer to $1.10. It closed at $1.195 on Friday. There is a preferential share distribution due next week, so I will wait to see if the price gets diluted.

2) Telcos (Singtel)

Price closed at $3.77 on Friday. With the potential fourth Telco incoming, I expect that Singtel (Z74) would be the least affected. Out of the current three, Singtel is the most diversified overseas, even though Australian subsidiary Optus is facing stiff and cutthroat competition Down Under. A 6.8-cent dividend will be paid out in January 2017. If Singtel continues paying >4% dividends per year, it might be worth a pick up.

I remember picking it up at the beginning of the year at 3.49. I would consider going in again if it drops to 3.50+.


I will also be watching the banks over the next few weeks, to see what happens. To any and all of you trading or investing next week, all the best.

Until next time.


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