Cromwell European REIT’s (CEREIT) technical outlook is a trifle weaker than industrial and commercial REITs such as Frasers Industrial and Commercial Trust (FLCT). FLCT is entrenched within a narrow range and failed to move above at a confluence of resistance and its flat 50-day moving average at $1.44 despite a surge In volume on March 17, which was accompanied by a black candle.
Since testing a high of EUR0.50 ($0.802), CEREIT’s unit price fell on somewhat higher volume, an indication that sellers have emerged. Prices managed to find some support at EUR0.42. While 21-day RSI has bounced off the low end of its range, ADX is rising and the DI’s are negatively placed suggesting that the easier phase has yet to run its course. Prices need to hold at EUR0.42, as a break below this level indicates a downside of EUR0.36.
Traders and investors are flummoxed by an announcement by CEREIT’s manager to consolidate the units in the ratio of five to one. The rationale is that it would lead to lower brokerage costs. “Trading in Singapore’s stock market involves certain minimum fixed expenses (including but not limited to minimum brokerage fees, clearance fees, and settlement fees). Consequently, trading in the Units with small denominations results in higher costs relative to the trading price, for each board lot of Units and also results in greater price fluctuations,” CEREIT’s manager says.
Not so, say brokers The Edge Singapore spoke to. Rarely would anyone buy just 1,000 shares in CEREIT. They would automatically opt for a minimum value such as $6,000. “Waste of time,” says another broker. The consolidation would, of course, result in higher unit price denomination.
On March 4, CEREIT raised EUR100 million in a placement. On March 12, CEREIT completed the acquisition of 11 light industrial and logistics assets in the Czech Republic and Slovakia, for EUR113.2 million. The acquisition is DPU accretive and NAV neutral, according to the REIT’s SGX filings.
CapitaLand Integrated Commercial Trust (CICT) is attempting to strengthen following a temporary hiatus. It has moved above its 50- day moving average at $2.16, accompanied by strengthening momentum, and rising stochastics and 21-day RSI. Resistance appears at the $2.35 to $2.36 level. If the current rising volume trend persists into the week of March 22– 26, prices may be able to challenge this resistance level successfully, since ADX appears to have bottomed, and would be able to turn up while the DIs remain positively placed.
On the fundamental front, sentiment in the office sector could be buoyed by a Financial Times report that ByteDance has embarked on a hiring spree in Singapore.
United Industrial Corp (UIC), which traded at $2.43 on March 18, has crept up as its technical indicators strengthened. Resistance is at the thrice-tested $2.45 level and support is at the 50- and 100-day moving averages at $2.35 and $2.32 respectively. A successful breakout of $2.45 indicates a target of $2.90. Since annual momentum is turning up, a breakout is a possibility. Volume is usually required for a breakout, but the free float of UIC is very low, of less than 13%.
The Straits Times Index appears to have broken out of a two-week very narrow sideways range of between 3,072 and 3,118. This break — although not accompanied by volume confirmation — could send the STI on its way to the 3,368 to 3,377 region in the next few weeks. The index’s long-term indicators continue to rise and should be able to support the STI’s uptrend. Rotational interest could move away from some sectors to focus on banks and cyclicals.
