WHICH STRAITS TIMES INDEX (“STI”) STOCKS ARE OVERSOLD NOW?

Dear readers, welcome to the start of a new trading week! Let us recall the oversold Straits Times Index (“STI”) stocks which are oversold as at the close of the previous trading week.

The Oversold STI stocks are:

1. Ascendas Reit

2. CapitaCommerical Trust

The two oversold Reits were part of the top 10 list of securities disposed of by institutional investors recently. It was also noteworthy that Asendas Reit announced on 1 November 2019 that it would be placing a rights issue to raise some SGD 1.3 billion.

It is not uncommon for Reits and Trusts here to raise funds via rights issue. Basically, that is one of the main reasons why I do not invest in Reits and Trusts. For Reits and Trusts to grow, they would normally do so acquisition so as to grow the Assets Under Management (AUM). And so often, when Reits and Trusts would like to raise capital for the acquisition, they are very likely to turn to placing rights issue. Normally, the continued holding of the Trusts and Reits for income dividend would then come at the costs of capital gains.

Unlike in the past when Reits and Trusts are new in Singapore, the current more volatile backdrop in the macro environment and a saturation of Reits and Trusts here makes them less appealing to invest in, in my humble opinion.

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