Financial, Investment, OFW Finance, REITs, Stock Market, Stock Market Analysis
5 Key Insights on Stock Market and REITS this 2021
“Our quality of life depends on the choices that we make every day.”
-Anonymous-
Investing in Stock Market and REITs are too overwhelming. With so much information to learn about Stock Market and REITS, sometimes we felt discouraged to push through on our investing journey. Now that REITs are still young, many finance professionals will advise you to start investing in REITs while it is in their pioneering phase. However, you can’t start investing without learning the basics of the Stock Market and REITs. That’s why this article is made for giving you a glimpse of what Stock Market and REITs are. Gain some insights on the current situation of the market and how to gain from it whilst in the COVID-19 Pandemic.
Remember: The first step in investing journey is always the hardest step to take but once you’ve done it, everything will be achievable.
What is Stock Market?
First of all, what is the stock market? As per the Corporate Finance Institute, Stock Market focuses on public markets for issuing, purchasing, and selling stocks that trade over-the-counter or on a stock market. Stocks, sometimes known as equities, represent proportionate ownership in a corporation, and the stock market is a marketplace for investors to buy and sell such investible assets. A well-functioning stock market is crucial to economic development because it allows businesses to swiftly acquire funds from the general public.
What are Real Estate Investment Trusts (REITs)?
The Real Estate Investment Trust (REIT) Act of 2009 defines REIT as:
“A stock corporation established in accordance with the Corporation Code of the Philippines and the rules and regulations promulgated by the Securities and Exchange Commission principally for the purpose of owning income-generating real estate assets. For purposes of clarity, a REIT, although designated as a “trust”, does not have the same technical meaning as “trust” under existing laws and regulations but is used herein for the sole purpose of adopting the internationally accepted description of the company in accordance with global best practices.”
Republic Act 9859. Sec. 3, vi, cc
Insights on Stock Markets and REITs
The banking and Financial Sector are susceptible to be not right now because of high chances of incurring bad debts/loans from customers/businesses borrowing amidst the COVID-19 Pandemic to sustain their finances. Even though most banks report profitability, the financial implications brought by the Pandemic will appear these coming years.
- Advice: Invest your money in Banking and Financial Sector at small levels. Be cautious enough with the risks entailed.
The Industrial, Power, and Telecommunications Sector remains stable during the COVID-19 Pandemic. Most financial experts are speculating that they will have a bullish turnout in the next years.
- Advice: Invest and diversify your money with these sectors because they have the potential to become “COVID-19 Winners”
Holding Firms Sector like $AC (Ayala Corp.) and $SMPH (SM Prime Holdings) is too risky to invest in right now given the COVID-19 Pandemic situation. Given the uncertainties on mall reopening, it’s hard for them to stay profitable. Since not all mall establishments are allowed to open based on existing IATF resolutions, mall rents are not lucrative.
- Advice: Avoid investing in the Holding Firms sector as of now as the current situation and government rulings are uncertain.
REITs may be a little volatile within the year but they will be stable afterward because of the Business Processing Outsource (BPO) Industry resiliency. REITs may be subject to cyclical season trends. Currently, there are 2 REIT offerings in the Philippine Stock Exchange (PSE) and 3 REIT companies are planning their entry into the market.
- $AREIT (AREIT, Inc.) is a good investment but they are a little bit expensive.
- $DDMPR (DDMP REIT, Inc.) is a little bit risky investment because of its tenants which mostly comprise POGOs. It has risks that POGOs might leave anytime because of changes in tax imposition by the government to them.
- $FILRT (Filinvest REIT, Inc.) has a low occupancy rate that makes them risky to invest in but considers investing in them because they have good fundamentals.
- $RCR (RL Commercial REIT, Inc.) is a good investment because it has diversified real-estate locations. They also have a high dividend yield: 5.9%
- $MREIT (MREIT, Inc.) has an advantage because of its sponsor. Megaworld has a good real estate composition; however, it was speculated that it will have a low dividend yield.
- Advice: Lookout and study REIT disclosures and plans. The more transparent the REIT company, share prices/value will go up. Be vigilant on BPO-related developing stories that may affect the “occupancy rate” of the company.
As a beginner investor, start investing with blue-chip stocks. Avoid investing in “basura” stocks because of their high volatility due to traders that tend to “just play” the stock to make it move and make a profit out of it.
Note that these are my insights and personal takeaways with the current market situation and no one are certain if these forecasts will happen in the future.
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