<commit_before>---
layout: post
title: 'Short-term pain, long term opportunities'
date: {}
tags: finance brexit EU developers REITs
published: false
---
The extreme volatility in global markets post-Brexit is a knee-jerk reaction to the uncertainty and lack of confidence in the world's economy, particularly Europe. The bigger implication, however, is the risk of a [Brexit contagion]( http://www.express.co.uk/news/world/684131/brexit-eu-referendum-tsunami-france-italy-netherlands) to Europe with negotiation on the Brexit terms expecting to take years at least. While many investors are understandably feeling uncertain during this period, we should stay focus on the longer term opportunities that arises despite the political chaos.<!--more-->

![Brexit]({{ site.url }}/assets/Brexit_flag.png =300x)<br>
<sup>Background vector designed by Starline - Freepik.com</sup>

We believe the economic fallout will be largely confined to Britain, and to a lesser degree, Europe. [Asia](http://www.bloomberg.com/view/articles/2016-06-24/china-could-be-the-biggest-winner-from-brexit) has strong fundamentals that should hold up well, if not actually gain positively from Brexit. We believe that the markets have oversold Asian equities with solid fundamentals, and the current volatility may now present a good opportunity to re-examine strong dividend yielding stocks again with a view towards the long term. For example, many property developers and REITs listed in Singapore has no or little exposure to UK or Europe, but may see prices dragged down with the broader market. This could present an attractive entry point for people who are interested in the sector.

We expect to see stronger capital flows back to Asia over the next few months, reversing a trend of positive fund flows into Europe over the last three years. We believe these investments would first find their way into the more developed markets of Asia such as Japan, Australia, Singapore and Hong Kong. As a result, asset prices in these countries should continue to stay expensive due to the demand amid the low interest rates environment. For Singapore, the growth trajectory is still weak and we do not expect significant rental growth in the next 1-2 years. However, we believe that the inflow of capital would support asset prices in the near term.

Another major theme we expect to see is the focus on quality. There will be a divergence in share price performance between the two - almost a two speed market. Property developers with financial strength, strong track record and reputable brands would emerge stronger from this volatility, and simiarly for REITs backed by strong sponsors and a strong portfolio would hold up well. The key to riding out this volatile market where valuations are still slightly expensive is finding the right entry price for good quality companies and assets. We intend to expand on this in more detail in our subsequent posts.<commit_msg>Updated short-pain-long-opportunities.md<commit_after>---
layout: post
title: 'Short-term pain, long term opportunities'
date: {}
tags: finance brexit EU developers REITs
published: false
---
The extreme volatility in global markets post-Brexit is a knee-jerk reaction to the uncertainty and lack of confidence in the world's economy, particularly Europe. The bigger implication, however, is the risk of a [Brexit contagion]( http://www.express.co.uk/news/world/684131/brexit-eu-referendum-tsunami-france-italy-netherlands) to Europe with negotiation on the Brexit terms expecting to take years at least. While many investors are understandably feeling uncertain during this period, we should stay focus on the longer term opportunities that arise despite the political chaos.<!--more-->

![Brexit]({{ site.url }}/assets/Brexit_flag.png =300x)<br>
<sup>Background vector designed by Starline - Freepik.com</sup>

We believe the economic fallout will be largely confined to Britain, and to a lesser degree, Europe. [Asia](http://www.bloomberg.com/view/articles/2016-06-24/china-could-be-the-biggest-winner-from-brexit) has strong fundamentals that should hold up well, if not actually gain positively from Brexit. We believe that the markets have oversold Asian equities with solid fundamentals, and the current volatility may now present a good opportunity to re-examine strong dividend yielding stocks again with a view towards the long term. For example, many property developers and REITs listed in Singapore has no or little exposure to UK or Europe, but may see prices dragged down with the broader market. This could present an attractive entry point for people who are interested in the sector.

We expect to see stronger capital flows back to Asia over the next few months, reversing a trend of positive fund flows into Europe over the last three years. We believe these investments would first find their way into the more developed markets of Asia such as Japan, Australia, Singapore and Hong Kong. As a result, asset prices in these countries should continue to stay expensive due to the demand amid the low interest rates environment. For Singapore, the growth trajectory is still weak and we do not expect significant rental growth in the next 1-2 years. However, we believe that the inflow of capital would support asset prices in the near term.

Another major theme we expect to see is the focus on quality. There will be a divergence in share price performance between the two - almost a two speed market. Property developers with financial strength, strong track record and reputable brands would emerge stronger from this volatility, and simiarly for REITs backed by strong sponsors and a strong portfolio would hold up well. The key to riding out this volatile market where valuations are still slightly expensive is finding the right entry price for good quality companies and assets. We intend to expand on this in more detail in our subsequent posts.
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