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Property vs Stocks – The Difference

Posted on 23 Aug 2009 | Comments Off

The Singapore property market has been creating alot of media coverage lately. Numerous advertisements in the major dailies have surfaced amidst the ‘buying frenzy’. In contrast, the talking point in the equities market has been over the sustainability of the rally. What are difference between property investment and equities (stocks) investment. Below is a brief discussion.

Lock In Purchase Price In Property Investment

The purchase price is locked-in once the investor signs on the dotted line in a property transaction. This can be a boon or a bane. If the purchase has been done at the bottom of the market, the returns could be lucrative. However, the opposite is true if the timing is wrong. Property investors who entered the market in 1997 are still suffering paper losses (not considering rental).

In the case of investing in equities, the purchase price can be spread over a long period using a Dollar-Cost-Averaging (DCA). Periodical purchase can be done over time. This reduces the risks of buying at the market high. Of course, the investor would not be able to buy at a lowest price either.

Ease of Leverage Continue reading →

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Posted in Property Market / Real Estate

Tagged General, Property, Property Investment, Stocks

CapitaLand in spotlight

Posted on 27 Jul 2009 | Comments Off

THE resurgence of the residential market had been capturing headlines lately, and this has energised interest in property counters.

For traders, one way to place huge bets on the reviving property market is to load up on the covered warrants issued on giant developers.

In particular, some are focusing on CapitaLand, which is releasing its half-year results on Thursday.

For those who believe there is more upside in CapitaLand, Macquarie Bank has a call warrant which gives its holder the option until November to buy into the stock at $3.80. This warrant is ‘in the money’ as its strike price is well below CapitaLand’s current price. Last Friday, the counter had ended eight cents higher at $3.97, taking its total gains over the past two weeks to 17.1 per cent.

Thus, any upward movement in CapitaLand’s price is likely to be accompanied by a similar gain in the warrant price.

For those who believe the counter may be ripe for a correction, after its rally in the past two weeks, Macquarie Bank has a put warrant where a holder is given the option until December to sell the stock at $3.70. In this case, any fall in CapitaLand’s price is likely to be accompanied by a gain in the warrant’s price.

Still, it may be worth noting that property analysts have been turning more bullish on the stock.

CLSA recently raised its target price on CapitaLand from $3.65 to $4 to take into consideration any upside the developer might get from its new residential land-bank acquisition.

‘While it is obvious the company has missed its first-quarter bottom prices for asset acquisition, we believe China still presents the company with a better avenue to access growth, when compared to Singapore,’ it said.

Source : Straits Times – 27 Jul 2009