Real Estate Reflections - August 2015

Property companies added +4.1% in July. Their yields, low risk cashflows, and NTA and dividend growth continue to attract strong interest.

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Global Stocks Mixed

US, UK and Japanese stocks were relatively flat, while European shares ended a winning streak and Asian stocks rose, led by a rally in Chinese equities.

US stocks fluctuated on corporate results

US stocks fluctuated, after two days of declines, amid quarterly results. At the time of writing the S&P 500 and the Dow Jones Industrial Average were both down -0.1%.
Apple fell -3.3% to a six month low, while Allstate lost -11.0% as the insurer’s profit plunged. Baxalta surged +14.0% percent after Shire offered to buy the company for about US$30bn. Sprint gained +4.5% after its earnings exceeded forecasts.

European and UK stocks declined, led by Greek banks

European stocks snapped a five-day winning streak as declines in banks outweighed a surge in miners. Greek shares slid for a second day. The Stoxx Europe 600 retreated -0.2%, while Greece’s ASE Index slid -1.2% following yesterday’s -16.0% slump. Piraeus Bank tumbled the maximum -30.0% for a second day, to record low. National Bank of Greece crashed -29.0%, also to a new low. Credit Agricole dragged lenders to the worst performance on the Stoxx Europe 600, tumbling -10.0%.

UK stocks were unchanged as losses in banks offset gains in commodity shares. The UK’s FTSE 100 was flat. Smiths Group jumped +4.4% on speculation ValueAct Capital Management bought a stake in it, while Meggitt jumped +7.9% after the defence company posted a profit increase. Shire slid -5.9% after making an unsolicited bid to buy Baxalta (+14%).

Asian and Japanese shares gain

Asian stocks rose, led by a rally in Chinese shares, after regulators imposed limits on short selling equities on themainland in the latest effort to stabilize the market. The MSCI Asia Pacific Index advanced +0.4%, while the Shanghai Composite Index climbed +3.7%.

Japan’s Topix was flat for a second day as oil related shares fell and utilities gained. Oil explorer Inpex. slipped -1.6%. Fishing company Maruha Nichiro. tumbled -7.4% percent after reporting a -44% drop in net income. Power provider Kansai Electric Power. added +3.4%. Chemical maker Nippon Soda surged +6.0% after boosting its profit forecast. Noble Group soared +28.0%.

ASX 200 up

The ASX 200 gained +0.3%. Harvey Norman rallied +6.1%, the most since January, following a recommendation upgrade.

Crude and gold climb

WTI crude gained +2.0% to US$46.09 while gold rose +0.3% to US$1,089.53

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