StockTalk(7.3): Chinese S-REITs & trusts in Singapore facing challenges

Kopikarp : In the past, I made an investment in Midas Holdings, an S-chip listed on the Singapore Exchange (SGX). Drawn in by its seemingly robust financial statements and promising position in the Chinese railway industry, I, like many other investors, failed to foresee the looming disaster. In 2018, Midas shocked the market by revealing severe liquidity issues and defaulting on loan obligations. This led to its eventual suspension and liquidation, and substantial financial losses for shareholders, myself included.

This painful experience taught me the importance of thorough due diligence and not to overly trust financial statements. Likewise, other investors should be cautious when considering S-chips, including REITs. Several high-profile cases such as China Sun Bio-chem Technology and FerroChina have been mired in financial irregularities. Even S-REITs, such as Eagle Hospitality Trust, have faced issues due to mismanagement, leading to significant investor losses.

Overall, while S-chips may offer an avenue to tap into China's high-growth economy, they come with too many potential hazards; around one third of all S chips were also in negative equity. Thorough scrutiny of the company's governance, operational track record, and management credibility is paramount. Or, you can take the easy way out by avoiding them altogether.

ZnWC : I think some may have a misconception that Chinese S-REITS are referring to property in China. It is referring to property in Singapore but targeting on Chinese foreign buyers or tourists. With the opening of travel, it makes sense that such businesses should strive.

But there are risks. First China's economy is facing recession or worse stagnation which implies the buying power of Chinese is weakening. Second China ageing and shrinking population will discourage people to save more than spend more.

The positive side is China government is lowering interest rate to encourage spending and introduce stimulus package to targeted sectors to revive the economy. Hence I'll wait and see before investing in Chinese S-REITS.

Biggy168 : I totally agreed with Kopikarp, look at all those Chinese stks listed in SGX, all hv melted and gone with the wind without any traces of ashes, like China Fishery, n other Chinese companies, my lost was painful too.... They never look good in Singapore. I rather buy from the China mkt than those listed in SGX.

102765799 : the China economy remains tepid and unable to mount a recovery.. all related stocks including reits will take some time to recover,  but the Chinese government would unlikely do nothing in near future

No_Horse_Run_4896 : China economy remain uncertain, ups and downs still largely depend on what Mr Xi thinks

Giovanni Ayala :