Thursday, November 14, 2019

Sold Wharf REIC (HK.1997)

Sold this stock yesterday for an SGD 600 loss.  Two reasons:

One: China is not stimulating.  They are still in a downturn from the 2016 credit expansion.

Source: CEIC

Maybe they need lower US rates in order to stimulate.  China is short USDs (too many USD denominated loans, plus a current account deficit), they need to borrow them, and high rates hurt.

Source: hedgeye webcast (6th Nov)

Or maybe the CCP is just waiting for the US election to be over, before giving global stock markets some juice.

Either way its not here yet. I should have waited for the stimulus to start first.  Wharf REIC is a cyclical China play, and we need cashed up Chinese tourists buying LVs and Rolexes for it to take off.

Two: protests are getting worse.  On Sunday, a student was shot.  School holidays have started.  Protesters are now trying to disrupt the city's transport on weekdays - previously the effect was limited to weekends.  Parts of the city look like CNY on weeknights.  People are leaving work early most days, and even many normal restaurants and shops in the CBD are closed.  The protests will not die down, as I initially expected.

Tsim Sha Shui: 8pm Tuesday night

I was too early.  This may be a better trade in 3 to 6 months.

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