Low inflation

Low inflation recently, REITs are cheap?

JunJun
Publish date: Sat, 21 Apr 2018, 11:38 PM
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Consumer prices in Malaysia increased 1.3 percent year-on-year in March of 2018, after a 1.4 percent rise in the prior month while markets estimated a 1.6 percent gain. It was the lowest inflation rate since July 2016, due to a slowdown in cost of food & non-alcoholic beverages while prices of transport fell more than in a month earlier.
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  Consumer prices in Malaysia increased 1.3 percent year-on-year in March of 2018, after a 1.4 percent rise in the prior month while markets estimated a 1.6 percent gain. It was the lowest inflation rate since July 2016. 

  After hitting a high of around 5%, inflation has been on a downtrend ever since. Rather or not inflation continues to go lower, though unlikely, due to rising fuel prices and slowdown of strengthening of Ringgit recently, a rate of 1.3% is very favorable for REITs.

  REITS have an average dividend yield of 6.85% currently. Real yield (after inflation) nets 5.55%. This is slightly higher than ytd return on KLCI of 5.06%, however, REITs are generally less volatile than normal stock, good for risk adverse investors in 2018 due to GE

Discussions
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Flintstones

One month of low inflation and you conclude the whole year figure will be low?

2018-04-22 06:07

i3gambler

Why did you compare the REIT's yield against the ytd KLCI's gain?

Isn't it more logical to compare with KLCI's one year gain, i.e. from End April 2017 until now, which is 6.77%.

Another thing, is the REIT's yield of 6.85% net of the 10% tax?

Also don't forget, if you buy blue chips of KLCI, you get another around 3.2% dividend net of tax.

2018-04-22 10:10

ahbah

REIT got 10% tax ?

2018-04-22 11:57

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