Economic Armageddon? Where to allocate your assets now (Part 2/4) - SSB and Reits

SSB
I was analyzing the Singapore Savings Bonds - 5 issues to date.

Here were some interesting points
1. November continue to dominates all the bond issues
2. The demand is tepid but could likely be around 40m monthly
3. Some High Net worth individuals are trying to park more money than permitted (approximately 2+ million of oversubscription without getting allocated)

My takeaway:
1. It appears that fear is entering the market, 10 year bond prices are going up therefore pushing the yield curve down comparing Dec - Feb issue vs Oct and Nov
2. In the short term, interest rate is expected to hike so subsequent issues should be better
3. The rich are beginning to fear the markets, asset allocation to safer assets may be prudent for all investors now (smart money moves)

Appended is the comparison for your use.

Real Estate Investment Trust (REIT) and other Trusts

A REIT is a beautiful way to grow your assets and your nest egg. Now I don't advocate you to plonk your entire house (bet the house) in it, but it definitely plays a very important role in times like this.

Here are some interesting facts about REITS:

1. They have to distribute 90% of net income to unit holders

2. They are managed assets with built in inflationary contracts (i.e. revision to rental rates)

3. They can give good yield and are rather defensive in nature (i.e. will not fall much in times of recession)

The following was collated from SG Reits. A fantastic site for getting the latest data. After some data crunching. High Yield assets >7% and Debt Gearing <35% (Total Debt/ Total Assets). I came up with the following 10 cases.

Each has some compelling case and will likely be rewarding to the long term investor. 

This is not an advise to invest blindly, but certainly a decent allocation to REIT will help in asset growth. 

Caveat emptor. Please carry out individual in-depth analysis on each case.

Economic Armageddon? Where to allocate your assets now (Part 1/4)

Judging from the first two weeks of market movements. Some recurring themes appear more apparent now:

1. Oil prices is not coming back. Not for a while. Expect oil and offshore marine to be badly affected, possibly not coming back till 2018. If you are a long term investor it may pay to hold assets there in a cyclical run - but there is plenty of time to get back in on this trend. Oil is expected to go down to USD20 and maybe even USD10.

2. The interest rate hike in USA appears to have open up a can of worms. How can the Fed hike the rates when the economy does not look like it is on the growth path. Perhaps the rate hike has come a little too late. But that being said, slow hike will allow for gradual adjustments by companies. The debt binge has been a constraint on the US economy. Printing of money will not do when USD is no longer the major reserve. China is putting the CNH/CNY quite firmly on the map with the establishment of the AIIB (Asian Infrastructure Investment Bank) and addition to the Special Drawing Rights (SDR). It will join the euro, yen, pound and dollar in the reserves basket. The yuan will have about an 11 percent weighting in the SDR. This places China in a strong position to become the next superpower.

3.  In terms of attractiveness. Europe and USA appears quite attractive in terms of the quality of domestic consumption (or so the economists believe). One thing is for sure, hot capital is flowing out of Asia quite rapidly in the purported 'flight to safety', the flow back to the developed nations should give those countries some needed boost to their economy.

4. Europe remains a periphery of immigrant issues. The quack-mire mix of massive immigrants / distrust / lack of employment / politics and terrorism will continue to be the biggest risk for those countries

5. For USA, the future looks the brightest with capitalism leading the way. Having either president Trump or Hilary should not have a major impact on the direction of the country (being I believe they are both capable individuals quite befitting of the roles)

6.  The biggest risk for Asia remains the mountain of debt among Chinese companies. In addition, given that Asia has huge exposure to the chinese economy in terms of consumption, commodities and manufacturing. It is quite clear that NPL (Non Performing loans) of banks and defaults will occur more rapidly. The clock has turned for Asia and we are already in a recession.

Putting it altogether. Where is a good place to put your money?

Depending on your risk profile, I believe some blue chips value are starting to emerge, I have also begin to see companies that are potential multi-baggers, I will write about these cases on another article.

Part 2 - Discussion on safer/safest assets - Singapore Saving Bonds / Bank Deposits / REITS
Part 3 - Blue Chips
Part 4 - Multibaggers