Summary of March 2020 Transactions

We are coming to the end of March 2020 and this is time to look at my stock portfolio. I have never expect the COVID-19 outbreak to have such a significant impact on the world wide economy which caused all the stock markets to plunge into a sea of red. I guess it was too early when I assess the impact of the COVID-19 outbreak with the previous outbreak as the stock market was still relatively stable at that time.

From 11th March 2020, this is the period whereby the impact could be felt and the worst is the Straits Times Index Fell 6.03% Due to Oil Price War between Saudi Arabia and Russia. I have sold off The Hour Glass and Kingsmen Creatives at reasonable prices when I read about the impact of COVID-19 to retail and entertainment industry. I feel that the risk of these two stocks will be impacted the most when shoppers avoid malls and attractions such as NERF experience are closed.

Taking opportunity of the market crash, I have bought OCBC Bank and Singtel as the dividend yield has turned attractive. Of course, I am expecting dividends to be cut but the dividend payout should turn positive when the economy recovers. There are other blue chips whereby the current prices are attractive but if you look at my stock portfolio, I have already own a couple of them such as ST Engineering. The others such as SBS Transit, VICOM can be found in my wife’s stock portfolio.

The stock prices of REITs have fallen as much as 58% this month. As I have a limited war chest, I have nibbled at US Manulife REIT and keep the rest for deployment in tranches in upcoming months.

Last, I will like to share the investment lessons I have learnt during this crisis.

Even though we had bought some shares at the prices prevailing before the fall, we welcomed the decline because it allowed us to pick up many more shares at the new panic prices.

Berkshire Hathaway shareholder letters, 1990

Keep calm and continue investing!

Straits Times Index Fell 6.03% Due to Oil Price War

Amidst the COVID-19 outbreak which has caused much volatility in the stock market, the stock market plunged further today on the news of Riyadh (Saudi Arabia) slashing crude for April delivery prices. This had sparked the massive sell off of oil related stocks.

The Straits Times Index (STI) took a beating and fell as much as 6.03%. With the massive sell off, this opens up an opportunity in the current stock market.

Below are the stocks that I currently held in my stock portfolio. With the dip in stock prices, the current dividend yield has increased which makes certain REITs attractive. For investors who have been hoping for a dividend yield of at least 5% and above, this is probably the moment you are waiting for.

Stock Name Total Dividends Paid (Cents) (FY19) Closing Price (9th March 2020) Current Dividend Yield (%)
OUE Commercial REIT 3.31 S$0.44 7.52%
Frasers Commercial Trust 9.60 S$1.59 6.04%
Frasers Logistics and Industrial Trust 7.00 S$1.20 5.83%
SPH REIT 5.60 S$0.97 5.77%
ComfortDelgro 9.79 S$1.81 5.41%
CapitaMall Trust 11.97 S$2.39 5.01%
Mapletree Commercial Trust 9.14 S$2.21 4.14%
Parkway Life REIT 13.19 S$3.46 3.81%
ST Engineering 15 S$4.03 3.72%

Goodbye The Hour Glass

The Hour Glass is a stock with deep value and it currently makes up 3% of my stock portfolio. This company had been consistently paying investors dividend over the years. In fact, The Hour Glass had increased their dividend to 3 cents from 2 cents last year.

The luxury sector has been suffering from sluggish demand over the past few years and just when things start to pick up in 2019, the economy was hit by the COVID-19 outbreak which impacted the tourism industry and indirectly the luxury retail sector. The Hour Glass who had over 40 boutiques in twelve key cities in the Asia Pacific region will surely be impacted by the COVID-19 outbreak.

Even though The Hour Glass had recognized the uptrend of eCommerce in the year 2017 and thus launched their Omni-Channel Strategy, The Hour Glass is still very focused on physical stores. I am not aware they have any online stores to sell their luxury watches. This is actually a disadvantage to The Hour Glass in situations like now whereby tourists from certain countries are banned from travel and shoppers shun shopping malls. Tenants like The Hour Glass still have to pay rent for their physical stores and of course their staff salaries.

The Hour Glass usually trades at S$0.82 which is 3.8% above premium to the Net Asset Value of S$0.79 per share. However, due to panic, the market starts selling off stocks. As of 6th March 2020, The Hour Glass closed at S$0.71.

Based on the current price of S$0.71 and historical dividend payout of 3 cents, the current dividend yield is 4.23%. There is a high chance The Hour Glass will not retain its highest payout of 3 cents should the COVID-19 situation persists.

It is unknown how long the current COVID-19 situtation will last. For the above reasons, I have divested The Hour Glass.