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股票

Interactive Brokers - Chinese Media Sector Stocks Remain In a Rout as the Film Industry Grapples to Find Ground


Investors have been generally punishing Chinese film production companies for promoting quantity over quality, amid an overall slowing of China’s economic growth and continued trade disputes with the U.S.

Shares of several media companies in China have recently taken a nosedive, including Wanda Film Holding (SHE:002739), Beijing Enlight Media (SHE:300251) and Yinji Entertainment and Media (SHE:002143), as the nascent industry, which has been propelled by a surge in consumption, appears to have reversed course.

The Chinese economy has been facing a gradual, steady slowdown since its last quarterly rate of double-digit growth of 10.2% more than seven years ago. The nation’s most recent reading of 6.5% disappointed market expectations and marked the slowest pace of growth since the first quarter of 2009.

The latest GDP data also spurred uncertainties over the potential harm China’s trade feuds with the U.S. may be inflicting on the country’s economic well-being, casting a shadow of bearish sentiment among many market participants about the nation’s financial health.

Meanwhile, the People's Bank of China has made frequent cuts to banks' reserve requirements in 2018 – likely to boost liquidity and promote growth.

Chinese central bank governor Yi Gang said at the International Monetary and Financial Committee meeting in mid-October that downside risks to global growth “warrant close attention, with trade protectionism and rising trade tensions being major risks facing the global economy.”

Gang noted that “rising trade protectionism, friction and policy uncertainties have begun to dampen global business confidence and resulted in increased financial market volatility. Investment and trade as well as economic growth have also been dragged.”

In the first half of 2018, consumption contributed 78.5% to China’s GDP growth, an increase of 14.2% over the same year-ago period.

 

More bang for the yuan

Against this backdrop, China’s domestic box offices have been suffering, as consumers have generally become more sensitive to entertainment value and appear to have grown increasingly cautious about their movie ticket purchases.

Intake for the top ten highest-grossing films in China fell by roughly US$381m (-4.8%) year-to-date in 2018 from the prior year, amid a decline of almost 4.5% since February in the level of consumer confidence.

According to Gary Guo, HSBC’s head of media and internet research for China, after 2012’s hit film Lost in Thailand, sales of Chinese local productions more than doubled, with the number of screens (around 440,000) and audiences having soared tenfold since 2009.

However, Guo said that while more Chinese films were produced, “the quality declined, and a glut of movies fought to get screened. In 2016, audiences for domestic films fell for the first time in a decade, while foreign pictures gained.”

Indeed, Hollywood productions appear to remain a threat to China’s domestic offerings.

Guo observed that in 2017, local films raked in only 52% of their share of box office receipts, largely due to strong imports, including The Fate of the Furious – one of six blockbusters with ticket sales exceeding ¥1bn.

Given the increasingly competitive environment, Chinese film-makers have ratcheted-up the level of production technique and value, pouring more funds into technology and special effects.

Guo added that budgets for local fantasy and war blockbusters are approaching U.S. levels. 

Wolf Warriors 2 – China’s top-grossing film of 2017 – cost ¥200m, while Operation Red Sea –to date, the number one film of 2018 – cost ¥500m. These two movies have earned total ticket sales of around US$854m and US$576m, respectively, according to Box Office Mojo.

By comparison, top U.S. box office films Black Panther (2018 year-to-date) and Star Wars: The Last Jedi (2017) reaped domestic revenues of more than US$700m, and US$620m in 2017, respectively. Production budgets for the movies ran US$200m and US$317m, respectively, according to The Numbers.

Total U.S. movie ticket sales have amounted to over US$10.1bn in 2018, a 10.7% surge over the same prior year period.

 

Shaky business

Meanwhile, many investors in Chinese equities have grown more averse to several of the country’s media sector stocks.

While some market players may have considered certain companies relatively undervalued, a blanket of bearishness appears to remain firmly in place.

Wanda Film Holding, a subsidiary of the massive Dalian Wanda Group conglomerate and owner of Legendary Entertainment, for example, saw its share price plummet by Shenzhen’s 10% daily limit in early November. The company’s stock had resumed trading after having been halted since July 2017 due to company restructuring.

The firm’s stock plunged a little more than 36.7% from its five-year high of US$42.93 set in early December 2016 and was last quoted at US$23.70 Thursday, according to the IBKR Trader Workstation.

Wanda has been grappling for a strategy for its film division as it aims to reduce its debt burden, having reportedly revised some terms related to its planned purchase of its Wanda Pictures affiliate, as well as having shed about a third of its stake in U.S.-based mammoth movie exhibitor AMC Entertainment (NYSE:AMC), amid federal foreign ownership policy.

Among other corporate actions, Wanda earlier in 2018 had also offloaded an almost 7.7% stake in Wanda Film Holding to Alibaba Group, as well as 5.1% to the government-backed Beijing Cultural Investment Holdings for a total of about US$1.2bn.

Wanda is not the only Chinese media company to see a precipitous fall in its shares.

Yinji Entertainment’s stock lost more than 88.6% of its value from late March 2017 through mid-October 2018. While there has been a recent uptick in the company’s interest, its shares remained down around 2.85% intraday Thursday to US$3.75 – a far cry from their five year high of US$24.25. Also, Beijing Enlight Media’s shares have sunk by around 41.3% since mid-March 2018, after recouping about 13% of its losses since mid-October.

In the meantime, trade concerns between the U.S. and China have instilled some fears about any further escalation, which may harm the Hollywood industry.

Uncertainties over whether China will decide to cease on-going negotiations to increase the number of revenue-sharing foreign film imports has generally made Hollywood executives somewhat nervous. The Chinese government could also decide to place a ban on the exhibition of U.S. films in China in retaliation against any further U.S.-imposed tariffs. 

--

The author does not hold any positions in the financial instruments referenced in the materials provided.

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


21536




宏观分析

Franklin Templeton - Finding Value among Stretched US Valuations, Market Dislocations - By Anthony Docal, Alan Chua, Peter A. Nori, & Tian Qiu


In recent years, US market strength has lifted markets globally, despite recent bouts of market volatility. According to Templeton Global Equity Group, that US market strength has led to a widening valuation gap between US and global equities. As global markets focus more on US economic expansion and a series of macro risks, the group shares where they are looking for pockets of opportunity outside the United States.

 

Third-Quarter Market Recap

The market focused on a few macro risks in the third quarter. Concerns about trade wars, Brexit negotiations, the Italian budget, emerging-market volatility and interest rates seemed to escalate during the period.

In retrospect, it wasn’t all risks. The market also focused on recent strength in the US economy, corporate earnings and, until recently, the leadership of US technology stocks.

That said, the euphoria around the US gross domestic product (GDP) growth in the second quarter—which came in at a solid 7.6% (in nominal terms)—turned into concerns about how long this economic expansion could continue and, importantly, the pace of Federal Reserve Board (Fed) interest-rate hikes.

 

Valuations Appear More Attractive Outside the United States

In the third quarter, US economic strength led market sentiment, a pattern we have seen in most of the last few years. This has resulted in a widening valuation gap between the US market and the rest of the world.

We believe this widening valuation gap implies a much more favorable backdrop for long-term returns outside the United States. Expectations are not only lower, but the economic cycles are lagging behind the United States.

We think there is an opportunity to close the valuation gap between the United States and cheaper international markets in coming years, thereby closing the performance gap as well. Many of the US companies we analyze are reporting margins that look to us to be very close to peak levels, and corporate tax rates are currently at the lowest levels in decades.

That makes it a bit more difficult for us to find value in some US companies. So, while we are able to find some individual bargains in the United States, we are finding greater value abroad.

 

Finding Value in Europe

The United Kingdom’s planned departure from the European Union next year presents a risk that is hard to analyze, so our strategy has been to focus on UK-domiciled multinationals that source most of their revenue abroad. We also favor companies that are defensive in nature and less likely to be impacted by an economic slowdown.

In addition, we continue to find attractive opportunities in European financial stocks. According to our analysis, profits have improved and we’ve seen steady lending growth overall. Bank balance sheets are stronger and the bulk of the destabilizing post-financial-crisis reregulation efforts is now also complete.

Looking ahead, we think a less-accommodative European Central Bank policy stance could be positive for bank earnings as higher rates support higher net interest margins. Recent weakness in the European banking sector has resulted in compelling valuations, in our view.

 

Emerging Markets Hit a Series of Headwinds

In the third quarter, we continued to see volatility and vulnerability in emerging markets, which were much weaker than developed markets. A series of headwinds have hit emerging markets. These include a stronger US dollar, lower liquidity due to rising US interest rates, China’s attempts at deleveraging and uncertainty surrounding trade.

Keep in mind, in 2017, emerging markets delivered some of their best returns since 2009.1 So we’re not totally surprised to see some of those gains given back.

Emerging-market valuations have declined a long way from their recent peak, though the consolidation merely brings them back to long-term historical averages.

The selloff in emerging markets has not been indiscriminate. In general, the countries that run both a fiscal and current account deficit and have a high level of US-dollar debt have seen more weakness than countries with relatively healthy external positions or those willing to make policy changes to reduce imbalances. We continue to be constructive on some Asian emerging markets such as China, Thailand, South Korea and Taiwan, where the fiscal and current accounts appear to be in good shape.

China is trying to pivot away from an economy driven by fixed-asset investment to one that is more balanced, with a lower reliance on exports and a higher consumption component. Trade wars have introduced an element of uncertainty in the region and are causing a delay in investment decisions. This will likely have an impact on the profit outlook for the more cyclical or industrial companies, and this is consistent with the opportunity set we are finding among “defensive growth” stocks.

 

Outlook

Of all the different macroeconomic and political factors that have been on investors’ minds over the last few months, we think interest rates are likely to be the most important. As we continue to see central banks reduce quantitative easing and move toward interest-rate normalization in the major regions of the world, we are going to continue to focus on the dislocations that this may cause for currencies, equity markets and valuations.

On trade wars, China remains the focus, and we will continue to monitor the situation and assess the relative competitiveness of various industries with supply chains going back to China. Meanwhile, European politics are also likely to be messy, with Brexit and Italian budget deficit proposals the two immediate issues. Although these events may impact valuations in the short term—in fact, they already have—as we move through these events, we believe the market is going to unlock the substantial value that we find in the region.

The late Sir John Templeton had a lot of sayings, and one of our favorites is, “To beat the index, you have to be positioned differently than the index.” The reality is that sometimes a contrarian view will lead to periods of underperformance, particularly when momentum is strong and prevailing trends are being supported by powerful central banks. But, the assets that tend to perform best in those environments can end up becoming the ones most vulnerable to a future correction or trend shift. For example, some of the markets and sectors that have benefited the most from momentum and flows and whose valuations seem to be the most stretched were the weakest performers during the October market correction. Perhaps this move to higher interest rates will trigger the long-awaited rotation out of the expensive growth stocks that have led this market cycle and into historically cheap value shares.

 

1. Source: MSCI, September 28, 2018. The MSCI Emerging Markets Index captures large- and mid-cap representation across 24 emerging-market countries. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses and sales charges. Past performance is not an indicator or guarantee of future performance. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at www.franklintempletondatasources.com.

--

Originally Posted on November 13, 2018

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.

This information is intended for US residents only.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

What Are the Risks?

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments.

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Value securities may not increase in price as anticipated, or may decline further in value. To the extent a portfolio focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a portfolio that invests in a wider variety of countries, regions, industries, sectors or investments. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors.

To get insights from Franklin Templeton delivered to your inbox, subscribe to the Beyond Bulls & Bears blog.

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Franklin Templeton and is being posted with Franklin Templeton’s permission. The views expressed in this material are solely those of the author and/or Franklin Templeton and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


21506




股票

Interactive Brokers Asset Management - Why The Oil Market's In A Free-Fall


It’s as if a trap door has suddenly opened underneath the oil markets.

In the span of just six weeks, West Texas Intermediate (WTI) crude oil prices have tumbled by some 25% to about $56.15 per barrel as of November 13, according to analysis by Bespoke Investment Group.

Let that sink in: As recently as October 3, oil prices were north of $75 per barrel.

 

Precipitous Slide

Energy traders haven’t seen that kind of collapse in oil prices since the 2015 crash.

From late 2014 until the start of 2016, oil prices plummeted by 75%, but that was over a much longer period of time.

 

Iran

What gives? In my opinion, a confluence of factors have come together to hit the oil industry.

First off, there’s the renewed US sanctions on Iran, OPEC’s No. 3 oil producer.

In May, the Trump Administration pulled out of a seven-nation deal to curb Iranian nuclear efforts in exchange for sanctions relief.

Now, Washington is readying sanctions aimed at the country’s shipping industry, banks, and ports to convince Tehran to change its aggressive political and military policies in the Middle East.

 

Correlated Moves

Oil prices and stocks don’t always move in tandem, but they have this time around since US equity markets turned volatile in October.

Then there’s the more bearish global economic outlook, thanks to the US-China trade war, weaker emerging market currencies and rising American interest rates.

That has prompted both OPEC and International Energy Agency (IEA) to trim their oil consumption forecasts.

Emerging market energy importers have felt a double whammy from weaker currencies and higher oil prices denominated in US dollars.

As the IEA pointed out last month according to a post by CNBC:

“For many developing countries, higher international prices coincide with currencies depreciating against the U.S. dollar, so the threat of economic damage is more acute.” 

 

Takeaway

At the same time, in my view, there’s a supply glut in oil.

The world’s three biggest oil producers–the US, Saudi Arabia and Russia–are pumping at or near all-time highs.
The 15-member OPEC cartel is also increasing production.

While oil producers say they will reverse course, they haven’t yet slammed on the brakes dramatically enough to make a big dent.

In my view, if that doesn’t change in 2019, supply will continue to outstrip demand and weigh heavily on oil prices.

--

Originally Posted on November 14, 2018

Xavier Brenner has covered global market, business and economic trends since 2013 for Interactive Brokers Asset Management. As an experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.

This material is not intended as investment advice. IBKR Asset Management or portfolio managers on its marketplace may hold long or short positions in the companies mentioned through stocks, options or other securities.

This material is from Interactive Brokers Asset Management and is being posted with Interactive Brokers Asset Management’s permission. The views expressed in this material are solely those of the author and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


21529




宏观分析

Singapore Exchange - New Developments in China-Focused Indices, Stocks & Products


  • Bilateral China & Singapore trade increased 15% over the first 7M of 2018. In addition increased financial cooperation between the two countries has seen four milestone agreements conclude this week between financial regulators & financial institutions from both countries.
     
  • Last week SGX launched 5x leveraged single stock DLCs, that include DLCs on Tencent, Ping An, CNOOC & PetroChina. Following the first week of trading, Tencent DLCs were the most actively traded, with implied volatility of the underlying stock as high as 41% on 13 Nov.
     
  • In the 2018 YTD, the FTSE ST China Index generated less than half the losses of China’s CSI 300 & the FTSE China Small Cap Index. For the past three years, the FTSE ST China Index generated a 4% total return, compared to an 18% decline for the FTSE China Small Cap Index.

Singapore Exchange recently launched 5x leveraged single stock DLCs, that include DLCs on Tencent, Ping An, CNOOC & PetroChina. Following their first week of trading, Tencent DLCs were the most actively traded, with implied volatility of the underlying stock as high as 41% on 13 November. 

The surge in implied volatility, which has effectively doubled from 20% levels five months ago, has coincided with an increase in big internet-based technology stocks across the world.  Looking back over the past two-three weeks alone, the price of the underlying Tencent shares have swung from an intraday low of HK$251.4 in the afternoon of 30 October, to an intraday high of HK$303.8 in the afternoon of 2 November.  This saw the implied volatility of the stock surge to 46% as illustrated below. 

The basic 5x DLC principle is simple - if the underlying asset moves by 1% from its closing price of the previous trading day, the value of a 5x DLC will move by 5% before cost and fees. With five times leverage on the daily performance of the underlying stock, the DLCs provide investors with the ability to make enhanced returns within a short period of time but also the risk of substantial losses if the underlying stock moves against the investor. For more information on the stock and the DLC products, which is categorised as a Specified Investment Product (“SIP”) click here.

Adding to the stock market volatility, there has also been a performance divide of approximately 30% between the S&P 500 Index and CSI 300 Index in the 2018 year thus far, with week-to-week data showing growth acceleration in the United States remains on track for 2018, whilst China, and most of Asia, expect deceleration in growth from 2017 levels.  

 

Current Structural Reforms Focused on Private Sector & SMB

This morning China released its usual monthly ledger of industrial production, retail sales, property and ex-rural fixed assets investment, in addition to the surveyed unemployment rate. The October numbers saw industrial production and property and ex-rural fixed assets investment beat the consensus estimates, while retail sales came in below the 9.2% consensus,  growing 8.6% YoY. 

As reiterated by the People’s Bank of China (“PBC”) Governor Yi Gang on 14 October, China’s economy has continued to grow steadily in 2018, with progress achieved in structural upgrading and efficiency improvement (click here for full speech). 

Preceding Monetary Policy Reports (click here) have PBC reiterating its role in the combined promotion of supply-side structural reforms and structural adjustments of credit policies. This is to “promote optimisation of the economic structure and upgrading of the industrial structure, transformation of the energy mix, financial inclusiveness, and the people's livelihood, and to guide financial resources to key fields for economic and social development and to weak sectors so as to meet the effective financing needs of the real economy”. 

From a policy perspective, increased assistance to non-state owned businesses and Small and Micro Businesses (“SMB”) remain a key priority. The aforementioned PBC reports have also maintained a combined step up in implementation of SMB policies, further improve the quality and efficiency of financial services provided to SMBs, and ensure that the objectives of expanding inputs and reducing costs of these financial services will be achieved.

It is generally recognised that SMBs provide 80% of the jobs in China cities. The segment is thus a key segment for development particularly when China maintains four times the population of the US, and its GDP per Capita is just one-sixth of US GDP per capita. In addition, on any past timeframe for the month of October right through to last five years ending October, the FTSE China Small Cap Index has underperformed the FTSE China Large Cap Index and the FTSE China Mid Cap Index. 

 

FTSE ST China Index Provides Competitive China Exposure 

China is Singapore’s biggest trading partner. Bilateral trade value between the two countries value also increased 15% over the first seven months of 2018.  From a stock market perspective, the China market is much bigger with between 1000 to 1500 stocks with billionaire market capitalisation in SGD terms, compared to approximately 100 stocks in Singapore (click here for more).

Moreover, Singapore lists more than 200 stocks that report between one-tenth to all of their revenue to Mainland China. The FTSE ST China Index consists of SGX-listed stocks of the FTSE ST All-Share Index that have reported either at least 50% of their revenues from China, or reported at least 50% of their operating assets are located in China.

In the 2018 year to 13 November, the FTSE ST China Index has generated less than half of the losses of China’s CSI 300 and the FTSE China Small Cap Index. For the past three years, the FTSE ST China Index generated a 3.5% total return compared to an 18.1% decline in total return for the FTSE China Small Cap Index. Some recent highlights include:

  • The FTSE ST China Index includes eight stocks with market capitalisation of S$1 billion above including four STI constituents - Wilmar International, Hongkong Land Holdings, Yangzijiang Shipbuilding and Hutchison Port Holdings Trust;  
     
  • The fifth largest capitalised stock of the Index is Yanlord Land Group which reported its 3QFY18 results last night, and highlighted its 64% jump in earnings per share for its 9MFY18 – the full report can be read here;
     
  • The three strongest performing stocks of the FTSE ST China Index in the year to date, by total return were Delong Holdings (+165%.0), China Sunsine Chemical Holdings (+31.0%) and Wilmar International (+7.0%). 
     
  • Hi-P International was the least performing stock of the Index in the 2018 year-to-date which has declined 54.4% in total return in the 2018 year to date, following its 326.5% total return in 2017; and 
     
  • These comparative performances compared to the non-weighted average performance of the Index constituents at a decline of 5.1% in total return for the 2018 year-to-date. 

 

Over the past 10 years, China policymakers have moved from a high speed growth focus to a high quality growth focus. Of the current FTSE ST China Index constituents that have been listed for the 10 year period, the strongest performing three stocks spanned the Technology, Health and Raw Material Sectors.

These three stocks, Valuetronics Holdings, TZXP and China Sunsine Chemical Holdings, averaged 28.8% annualised total returns over the 10 years. The three least performing stocks of the Index averaged a 6.3% annualised decline in total return, while the 16 constituents listed for the duration averaged 11.0% annualised total returns for the 10 years.   
 
 

Strategic Cooperation Agreement on CFETS-BOC Bond Indices

Bank of China Limited (“BOC”), China Foreign Exchange Trade System (“CFETS”) also known as the National Interbank Funding Center and SGX have announced the signing of  a strategic cooperation agreement to jointly promote the CFETS-BOC Traded Bond Index and its sub-indices, outside of China to international investors, as well as to explore the feasibility of developing products based on the Bond Indices. CFETS is a sub-institution directly affiliated to the People’s Bank of China (PBC). 

As discussed in the Monetary Authority of Singapore (“MAS”) media release: 

  • The Bond Indices, designed by CFETS and BOC, track the movements of the Chinese bond market and can be used by investors to benchmark their Chinese bond portfolio performance. 
     
  • SGX will be the first exchange to distribute the CFETS-BOC Traded Bond Indices outside of China. 
     
  • The launch of the Bond Indices can catalyse the development of tradable China bond products and facilitate greater investments into China’s bond market by international investors.

As highlighted by the media release (click here) 2018 has been a landmark year for financial cooperation between China and Singapore - seeing four milestone agreements concluded this week between financial regulators and between financial institutions from both countries.

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Originally Posted on November 14, 2018

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Singapore Exchange and is being posted with Singapore Exchange’s permission. The views expressed in this material are solely those of the author and/or Singapore Exchange and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


21528




宏观分析

Interactive Brokers Asset Management - Here's A Potential Real Estate Play


The past decade has been anything but a bull market for my favorite sector: income-producing real estate.

In fact, prices today are sitting at 2006 levels, and this despite the most accommodative Federal Reserve policies in history over most of this period.

 

Stuck

Prices started to sag in early 2007 and then rolled over and died over the next two years.

Today they are no higher than they were in 2013 and are still a decent bit below their old 2006 peak.

If you’re a value investor like me, that’s the sort of thing that ought to get you excited.

At a time when the major indexes are coming off of their best run since the go-go years of the 1990s, this is a sector that investors have mostly left for dead.

 

Dividend Power

When you include dividends paid, the returns look a lot better. My favorite asset class is up about 46% from its pre-crisis top and up 440% from its 2009 bottom.

So, lest there be any doubt, in my opinion dividends matter. In this case, they make the difference between having losses over the past 12 years and having returns of nearly 50%.

 

Unfashionable

Real estate stocks haven’t exactly been popular of late. The sector got its butt kicked during the 2008 meltdown, and investors have been reluctant to touch that hot stove again.

This is particularly true given that the sector was popular with retirees who liked the stocks for their income potential.

It’s been a particularly rough ride since 2013. That year, Fed Chairman Ben Bernanke merely mentioned the possibility that he might scale back the Fed’s quantitative easing program, and that was enough to rattle the bond market and send high-yielding real estate shares sharply lower.

 

Yellen Era

Two years later, Bernanke’s replacement, Janet Yellen, rattled the sector again when she hinted that rate hikes would be coming soon.

Real estate stocks had one last hurrah into mid-2016, but rising bond yield took the wind out of their sails. And the “volpocalypse” this past February slapped the sector around yet again.

Frankly, in my view it’s been a miserable five years to be invested in real estate. But I believe conditions are finally right to see this sector outperform.

 

Walking Dead

To start, real estate stocks are worth more dead than alive at current prices.

Recent estimates by real estate consultancy Green Street Advisors show real estate stocks selling at a 5% discount to the value of the actual property they own.

In my view, that should never happen.

Barring a financial panic that sees prices temporarily dip below fair value, I think real estate stocks should literally always trade at significant premiums to the value of the real estate they own.

 

Discount

Investors pay a premium for professional management and for the ease of buying and selling with a mouse click rather than with a room full of lawyers with contracts.

Yet for most of the past five years, real estate stocks have traded at a discount. My view: that kind of pricing won’t last forever.

But I think the bigger short-term catalyst will be a moderation in the rise of bond yields we’ve seen recently.

 

Yield Dynamics

Barring a major recession, I don’t necessarily see bond yields dropping all the way to new lows. But at the very least, I see yields leveling off around today’s levels and probably falling slightly.

Unlike bond coupon payments, which are fixed, rents from real estate tend to rise over time.

Rising rents translate into higher dividends for investors.

So, even if we’re stuck with 10-year Treasuries yielding over 3%, owning real estate with yields of 5% to 8% and rising payouts makes all the sense in the world, in my opinion, if you want to boost your income.

--

Originally Posted on November 10, 2018

Charles Sizemore

Sizemore Capital Management LLC is a registered investment advisory firm located in Dallas, Texas. Charles Lewis Sizemore, CFA is the founder and Chief Investment Officer of the firm.  

This material is not intended as investment advice. IBKR Asset Management or portfolio managers on its marketplace may hold long or short positions in the companies mentioned through stocks, options or other securities.

This material is from Interactive Brokers Asset Management and is being posted with Interactive Brokers Asset Management’s permission. The views expressed in this material are solely those of the author and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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