Most of the dust has settled following a turbulent few months for the Resilient stable and now should be a good time to reflect back on what has happened since. All the focus has been on the plunge of these shares and its effect on the SA Listed Property Index (JSAPY), but how did the rest of the Property sector perform? The graph below shows that the Resilient linked shares were mostly to blame for the poor performance of the JSAPY index. Even though the JSAPY delivered a shocking -21% YTD, the Index Excluding Resilient lost 3.2% YTD.
Possible contributors to the poor performing sector is the policy uncertainty regarding land expropriation (which affects local asset prices) and concerns regarding the trade war and its effect on global growth. In addition, the problems surrounding Resilient are not completely resolved. There has been some restructuring to simplify the group’s ownership structure, yet many questions are still being asked. Investors could also be avoiding the sector completely until there is more certainty.
We see an opportunity in property when viewing from a yield perspective and if you do too, why not invest in the Sharenet Property Unit Trust? The property sector could provide value relative to bonds and equities based on the historic yield relationship over the past 2 years. This can be seen in the graph below which shows properties provide a higher relative yield (undervalued) compared to that of bonds and equities.
If you are interested in diversifying your portfolio with some property exposure or would like some guidance as to when might be a good time to include property shares you can contact our dealing desk at 021 700 4815 to find your suited solution. Otherwise, if you would like all the hard choices regarding which property shares to include to be made for you, you could invest in the Sharenet Property Unit Trusts by filling out the form below and we will get in touch with you shortly.
Joani van Wyk
Joani van Wyk joined the asset management team in January 2017, responsible for quantitative research of equities across all industries. Joani completed her degree in Mathematical Science in 2015, as well as an Honours degree in Financial Risk Management in 2016, both at the University of Stellenbosch. She is currently a CFA candidate.