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Sell in May and Go Away

The month of April is ending and the month of May is coming. As an investor, have you heard of the old saying “Sell in May and Go Away“? The phrase suggest that investors should sell off their stock portfolio in May and only return in fall. Fall is another term used for Autumn in America. There is no fall in Singapore.

Being curious about how the old saying came about, I decided to do some research. The full phrase actually goes like this

“Sell in May and go away, do not return until St. Leger’s Day.”

The saying actually dates back to old England whereby the stock brokers will go for their summer vacation in May. They will return to work in September. The final horse race season ends in September and the stocks brokers will only return to work after the horse racing season ends.

Does the phenomenon happen to Singapore stock market as well?

I used the STI ETF charts from year 2013 to 2015 since it tracks the Straits Time Index to find out.

STI ETF 2013

The STI ETF was on a downtrend from May to September.

STI ETF 2013

STI ETF 2014

The STI ETF was on an uptrend from May to September.

STI ETF 2014

STI ETF 2015

The STI ETF was on a downtrend from May to September.

STI ETF 2015

Conclusion

From the above charts, it seems that the Mr Market does not always follow “Sell in May and go away”. In year 2014, if you have sold in May, you have probably missed the market rally.

Do you believe in “Sell in May and go away”?

Frasers Commercial Trust DPU Rise for 2Q2016

Frasers Commercial Trust Logo

On 21st April 2016, Frasers Commercial Trust announce its 2Q2016 financial results. Distribution Per Unit (“DPU”) rises 2.9% to 2.45 cents as compared to 2.38 cents in the same quarter in 2015.

Higher Distribution Amount

The higher distribution amount was due higher rental rates and lower utilities expenses at Alexandra Technopark, contribution from 357 Collins street and lower repair and maintenance and painting expenses for Caroline Chisholm Centre.

2Q2016
(S$’000)
2Q2015
(S$’000)
YoY(%)
Gross Revenue 38,994 34,814 12
Net Property Income 28,836 24,716 16.7
Distributable Amount 19,348 16,189 19.5
Distribution Per Unit (“DPU”) (cents) 2.45 2.38 2.9

 Occupancy

Average occupancy stood at 92.6%.

Frasers Commercial Trust 2Q 2016 Occupancy

Weighted Average Lease Expiry

The Weighted Average Lease Expiry (“WALE”) stood at 3.3 years. There is low lease expiries for FY16. The well spread lease expiry provide income stability.

Frasers Commercial Trust 2Q 2016 Lease Expiry

Positive Rental Reversion

China Square Central achieved a positive rental reversion of 2.4%. 55 Market Street achieved a positive rental reversion of 5.4%. Alexandra Technopark achieved a positive rental reversion of 5.3%. What I like about Frasers Commercial Trust is that 52% of the leases have built in step up rents.

Top 10 Tenants

The leases of majority of top 10 tenants are expiring in 2017. Investors should monitor if the leases will be renewed.

Frasers Commercial Trust 2Q 2016 Top 10 Tenants

Debt

There is no financing required until FY17. 81% of gross borrowings are hedged on fixed rate.

Things to Note

Developments at China Square Central

Development works have started at China Square Central. The construction is expected to complete by 2019.

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