Pull back in fund has exponential effects on money supply especially so when it is leveraged.
In Singapore due to Property restriction, fund naturally flows into the Stock Market. Yield has been the main theme since January.
We see it this few weeks on the drastic meltdown in our market on slightest hint of QE withdrawal or reduction, despite improving US economy. It is suppose to be a good problem to have not a major correction or igniting a crisis.
The liquidity withdrawal has been intense but where can it go next ? Maybe I should worry about that later and hope we do not have another AFC like happening again. But why do Uncle Sam care ?
Reits suffer selldown in last GFC. Will it suffers similar fate in increasing rate but with improving economy ? Even if rates do materially increase over the course of few years, the yields and increasing rent would have cover sufficiently. Seems like a case of too early sell off and oversold. No one knows when it will stop. Maybe I should get my War Chest ready !
11th June 2013
PS: 40% in Reits ....