A short YouTube video (by Alberto Costa, Feb 2, 2020) discussing how the coronavirus situation in China may affect Singapore-listed REITs that hold properties in China—with a focus on Capitaland Retail China. The speaker explains a recent sharp price drop, interprets technical indicators (resistance, multi-tested support, 200-day moving average), and gives practical advice: long-term investors should be prepared for drawdowns, consider buying in partial positions (e.g., half-size entries) rather than full positions, or hedge existing holdings via CFDs since options/shorting are limited in Singapore.
Chapters
Hi guys, welcome to this video. Today I want to speak about something that probably you have seen in the news and is basically the situation that we have in China with the virus spreading and fear in the market. And specifically how this can affect your REITs, your real estate investment trust. If you follow this channel, you know that I like the Singapore REITs because you have around 40 or less, so not too many to analyze. And at the same time they have many advantages if you want to build a long term portfolio. For example, in Singapore, the dividends you get from the REITs are tax free and you can get a 6, 7% by investing in this sector. But maybe you don't know, but some of the REITs in Singapore are investing in overseas property. And today I want to talk about the capital retail China that as the name says, is investing in China mostly. So if you look at the chart, you will see that there was a huge drop in price here in the last days. And usually these drops in price are related to dividends. That is something that is going to happen soon. They will release the earnings and they will pay the dividends. But this may also be related to the situation in China because this is affecting the business. And of course you can expect that it will have an impact on your stocks that are investing in China. And the drop off is quite big. You see, the price was around 1.70, 1.69 and then it dropped to 152. Now if you look at the chart, first thing is you realize that actually the price was quite overextended already. So this is something to notice. You see, there was this resistance level here, okay? And actually the price hit the resistance and then it went down. So this is a first thing to notice. The second one is that yes, the price went down, but is already bouncing. Now there is this level that I want to highlight to you. That is a support level here, you see, was tested many times, okay? And at the same time the price is now bouncing on the 200 moving average. That is a strong support. And it was tested already here, here and here. Right? So now the big question, the $1 million question, what to do in this situation? Again, I made other videos where I discussed this because I want you to really understand what should be the right mindset to face this kind of situation that can happen. Nobody knew about the virus, I hope. But if this happens, it will have an impact on your portfolio. So you need to be ready and to know what you should do in this situation. Now the thing is this, as usual when you invest in something for the long term perspective, and I suppose that you are investing in REITs because you want to collect dividends and you are interested in a long term investing perspective and only a trading one, you should be able to face drawdowns. Because when you invest in the long term, something can happen. You can have a -10, -20, -30% in your portfolio. If you are not able to face these kind of situations, then maybe long term investing is not for you. Because at the end of the day, if you panic when the price is going down and you sell and then the trend will start again to rise, basically you do the opposite of what you should do. You buy high and you sell low. Now the second question is, okay, I should not sell just because there is this drop. Should I buy more? Well, it depends. It's true that from the technical point of view, the uptrend is still there. Okay, we are making higher highs here, higher lows here. We are touching a support level, a strong one I would say because it is between the previous Support and the 200 moving average. Now, because of the situation of China, that is still unclear. What I will do is okay, since I see the price here at this potential good level, if the yield at this price is good, then I will consider buying. But maybe not a full position. Let's say that you invest every time, I don't know, maybe 20,000, 10,000. Maybe you can enter with half position first. So if the price is later going up, well, you can wait or buy more later and at least you were able to enter at a good price. If the price will go down, what you should do, well, at least you didn't enter with the full position. You wait for the next, for the next reversal and then you can buy more here. Okay, so by buying with high position, you basically can kind of profit in both scenarios. Because if you don't buy now and the price goes up, you will maybe regret it later. If you don't buy now and the price goes down, yes, true, you can buy later, but you will not be able to buy in the previous situation. So by buying half position, you can kind of compensate for both scenarios. You, you did something that is not wrong. And again, I think we will see more volatility in the next days. You may think that, well, the crisis has been already this virus priced in with these big drops and now the price can start to go up again. But we don't know, we don't have the crystal ball. But again, from the technical point of view, as I say the uptrend is still there. There was this big drop. That is probably a good opportunity to buy some shares, maybe not full position as I said. Just to conclude I mentioned this in other videos. Another option if you have already a position is to hedge. Now unfortunately in Singapore you cannot hedge with options, but you can hedge with CFDs. You know, if you watch my videos that I don't really like CFDs because they have many disadvantages over shorting. But in this context, where in Singapore shorting is not allowed and options are not available, you can use CFD to short sell and basically partially hedge your positions. So this is another option that you can consider. Instead of selling your shares, you just hedge and then whenever you see that the trend is going up again and the crisis, the virus is over, then you can close your short position and just keep holding your shares. So I hope with this video you you get some information that can help you decide what to do in this situation. As usual, subscribe to this channel if you have not yet done so. So you will be uploaded when updated. When I upload new videos and if you have any questions, just write a comment. Usually I reply to all of them and with that, thank you again for watching and see you next time.
