Start of the Great Stock Sale

When I look back at how the events unfold, I can't help but wonder how coherent everything is.

In end Jan, after Singapore banned China visitors from entering after the Chinese New Year weekend, everybody was saying that our government over-reacted. The novel coronovirus COVID-19 was no where nearly as fatal as SARS, the number of cases were so few, and precaution measures seemed grossly exaggerated.

In Feb, a Permanent Resident (PR) who refused to comply with his Stay Home Notice (SHN) was stripped of his PR status. Companies that hired staff on Employment Pass (EP) had their EPs revoked when their staff failed to comply with SHN. Citizens who didn't comply with the SHN were also charged in court. All these were also deemed excessive by some observers. Some say that the virus is just like the flu and it will be mainstream.

In early Mar, new cases start to decrease and it seemed like the storm had blown over, but in a twist of fate, there were cases of COVID-19 in all major cities in the world. All of a sudden, every government was not responding like it was just like the flu; they were responding to it like it was an ultra contagious virus that needs to be contained. That made the whole world panic and chaos ensued. Saudi Arabia's suddenly declaration to Russia that they will increase oil production to bring down oil prices also added to the frenzy. This was manifested in a consecutive stock market fall over the week of 9 - 13 Mar. Oil prices also fell to the lows seen in the last oil crisis in 2015.

And suddenly, it seemed like the country that will stand to benefit the most is China? During their crisis, their government exercised their supreme powers to convert automobile factories into production plants for Personal Protect Equipment (PPE) due to supply shortages. Exports of PPEs by factories owned by foreigners were banned. This created a sudden shortage of supply for other countries outside of China. If that didn't make the other countries think of starting to produce PPEs themselves, and hoping that China will lift the ban for their PPEs to be shipped out, they would be in deep trouble now because they just became even more dependent on their factories in China. Now that there is a worldwide outbreak, China factories will be singing and their logistics sectors will be dancing with higher exports of PPEs. I stab guess that the automobile factories may even turn in a profit from PPE sales in place of their vehicles.

If I have to put a date to the start of the Great Stock Sale (GSS), it will be 11 Mar, because I consider -20% the first trigger. There was a slight rebound on 12 Mar, but 13 Mar had extremely thin volume, probably a fraction of a normal day and prices ended up being discounted 20-40% (from 1 month ago) across the board. As I usually buy when there is a GSS, I don't have a "plan" ready on hand, so when I had to decide how much to budget, I came up with a rough plan:

10 bullets, ~$5000 each, hit targets which are on my shopping list, are at historic lows and dividend yields are at least 5% based on lowest of past 10 years figures.

The companies in my watch list that hasn't fully meet the criteria are

- banks DBS, UOB, OCBC

- REITS CapitaCommercial Trust, CapitaMall Trust, Keppel REIT

- moats Singtel, ST Engineering, QAF, Wilmar, HongKong Land

- airline-related SATS, SIA, SIA Engineering 

- conglomerates Keppel Corp, JMH

As there were so many stocks that I am interested in, I had to be very selective with how many bullets to use so this was how I used them:
- 6/3 (STI 3000 pts)

- 11/3 (STI 2800 pts) Bought Haw Par $11.10

- 13/3 (STI 2600 pts) Bought AIMS REIT $1.20

- 13/3 (STI 2600 pts) Bought SPH REIT $0.88

- 13/3 (STI 2600 pts) Bought Dairy Farm US$3.80

- 16/3 (STI 2500 pts) Bought AIMS REIT $1.15
- 19/3 (STI 2300 pts) Bought SPH REIT $0.70
-25/3 (STI 2500 pts) Sold Dairy Farm US$4.05

Haw Par and Dairy Farm didn't meet the dividend yield criteria, but they were my first positions, so I decided to take a gamble. Haw Par has good cash flow. Dairy Farm has good assets. And because I used 2 bullets, I gave Singtel a miss because I already have quite a lot of it, although it met the criteria.

I thought that if I used 1 bullet every 100 point drop of the STI index as a rough gauge of how low the tide can go, the index would be about 2000 points by the time I am done with 10 bullets, and then I will load another 10 bullets to buy the 3 banks at prices closer to the previous 2015 lows.

From past observations, it takes at least 3 years for prices to climb up, so I am swaying to be a little bit heavier on REITS to boost my base portfolio yield which had stagnated over the past few years.

[Edited to capture the transactions from 19/3]