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The Brexit Effect?

BusyBumbleBee
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The Brexit Effect?

#257201

Postby BusyBumbleBee » October 11th, 2019, 5:09 pm

A notable jump in the SP of many REITs today - just as positive news on a Brexit deal is emerging - or am I imagining things?

~~ BLND up 7.98%
~~ BYG up 6.2%
~~ DLN up 7/00 %
~~ INTU up 24 % !!!!
~~ HMSO up more than 10%
~~ NRR up 8.7%

for example but AEWU & RGL only up about 2.3%

gbjbaanb
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Re: The Brexit Effect?

#257209

Postby gbjbaanb » October 11th, 2019, 5:35 pm

No shopping disruption after Brexit? I'm not convinced but the market seems to have bought everything going. Lloyds is up 12%, Aviva up 7%, even Carnival that IIRC has only 2 smaller European cruises is up 6%.

The shopping REITs have done well, but maybe thats because they were practically bombed out already.

mc2fool
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Re: The Brexit Effect?

#257210

Postby mc2fool » October 11th, 2019, 5:36 pm

BusyBumbleBee wrote:A notable jump in the SP of many REITs today - just as positive news on a Brexit deal is emerging - or am I imagining things?

~~ BLND up 7.98%
~~ BYG up 6.2%
~~ DLN up 7/00 %
~~ INTU up 24 % !!!!
~~ HMSO up more than 10%
~~ NRR up 8.7%

for example but AEWU & RGL only up about 2.3%

No specific mention of REITs but presumably they're part of the FTSE 250 "surge"....

"The FTSE 250 index of 'mid-cap' stocks has surged 4.2% higher, the pound has soared while shares in banks and house builders have rallied by more than 10% amid mounting hopes a Brexit deal can be agreed.

A spectacular rally on the FTSE 250, which is more exposed to the domestic UK economy than the blue-chip FTSE 100, has gathered strength as optimism builds the UK will strike a deal with the European Union.
" https://citywire.co.uk/funds-insider/ne ... d/a1279848

colin
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Re: The Brexit Effect?

#257220

Postby colin » October 11th, 2019, 6:16 pm

IUKP reit etf rose 4.95% today. Sterling has risen against all currencies perhaps this is a good time to sell before the DUP throw a bucket of Irish sea water over it all.

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Re: The Brexit Effect?

#257233

Postby Spet0789 » October 11th, 2019, 7:13 pm

If we announced we were remaining in the EU, imagine the rally in these stocks! Just goes to show what the market thinks of Brexit’s impact on the U.K. consumer.

richfool
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Re: The Brexit Effect?

#257234

Postby richfool » October 11th, 2019, 7:15 pm

Whilst not a REIT, Mercantile (MRC), which targets mid cap stocks, rose by 8.30% today.

I topped up last month, ready to capitalise on a Brexit resolution.

johnhemming
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Re: The Brexit Effect?

#257235

Postby johnhemming » October 11th, 2019, 7:21 pm

I have not been quite sure that no deal was priced in. I think no deal could cause quite a bit of havoc and there are some shares where it clearly was not priced in. However, the uncertainty was/is keeping people out of the market. Although there is not yet certainty some people are buying on the basis of a higher probability of certainty of something other than no deal.

SalvorHardin
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Re: The Brexit Effect?

#257290

Postby SalvorHardin » October 12th, 2019, 8:03 am

johnhemming wrote:I have not been quite sure that no deal was priced in. I think no deal could cause quite a bit of havoc and there are some shares where it clearly was not priced in. However, the uncertainty was/is keeping people out of the market. Although there is not yet certainty some people are buying on the basis of a higher probability of certainty of something other than no deal.

Agreed. No deal cannot have been fully priced in because of parliament passing the Benn Act. A crude valuation model, with only two outcomes to consider is:

Fair value = Value if no-deal x Probability of no-deal + Value if deal x Probability of deal

Whilst the probability of no-deal was never zero, it has moved much closer this week. As always uncertainty creates opportunities for those of us who are prepared to take on more risk, which I've been doing in the last few months. I wrote this a month ago (link below):

"Ever since the Brexit vote the Central London property companies' shares have moved to a discount to NAV whereas well before the vote most were trading close to NAV (or at a slight premium). GPOR's discount is currently 17.4%; there have been buybacks at as low as 23%). Now I take the view that Central London isn't going to be hit by the problems plaguing the rest of the UK commercial property market, particularly retail (which is why we're seeing Land Securities shares trading at a discount of almost 40%). So GPOR's paying 77p to 83p for 100p worth of assets is good value in my book.

More importantly, I'd argue that whatever is the eventual outcome to Brexit that this will remove a tremendous amount of uncertainty and the share prices of companies like this will rise substantially. I've even been moving dollars into sterling to topup GPOR, Derwent London and Shaftesbury in the last few weeks."


viewtopic.php?t=19179&p=251151

I see nothing to change my mind. If anything I'll probably be buying more Central London property shares on Monday. Great Portland Estates shares are up by 9.5% in the last month (Derwent London +11.5%, Shaftesbury +3.8%)

redsturgeon
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Re: The Brexit Effect?

#257315

Postby redsturgeon » October 12th, 2019, 10:22 am

Moderator Message:
Please keep posts on topic. Any more general Brexit posts can be made on the many Brexit threads on Polite Discussions. Thank you

BrummieDave
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Re: The Brexit Effect?

#257394

Postby BrummieDave » October 12th, 2019, 4:19 pm

richfool wrote:Whilst not a REIT, Mercantile (MRC), which targets mid cap stocks, rose by 8.30% today.

I topped up last month, ready to capitalise on a Brexit resolution.


MRC had a funny week.

It did indeed rise 8.3% on Friday, but over a five day period, Thursday to Thursday it dropped 3.4%, whereas Monday to Friday it rose 4.65%.

This volatility was a combination of the ups and downs of the mid caps as seen in the FTSE 250 movements, and the company's announcement on Wednesday of its increased dividend: https://www.morningstar.co.uk/uk/news/A ... ayout.aspx

It's my 6th largest holding, of 18.

johnhemming
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Re: The Brexit Effect?

#257395

Postby johnhemming » October 12th, 2019, 4:23 pm

There is an interesting report of analysis in this article about Lloyds
https://www.sharecast.com/news/broker-r ... 72982.html

It has Lloyds estimates as to the potential cost to them of no deal (which is £2bn). I would be surprised if it were to be that low in which case no deal is priced in, but I would think it would be a higher cost to them.

gbjbaanb
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Re: The Brexit Effect?

#257589

Postby gbjbaanb » October 13th, 2019, 6:48 pm

I think this will need to be moved to general shares board soon - Mercantile, LLoyds, and Brexit all discussed rather than REITs.

but... in keeping with the idea that its Brexit that moves these, I doubt it very much. Its the sentiment that does it - eg what is a "no deal", we are all told is bad, very bad, very very bad. What's a "deal", we're told its somehow good, very good. But nobody bothers to mention what technical details are in a "deal" that would be reason for it to be good, the last one that May proposed was universally decried as useless by all (except extreme Remainers, and even then many of them agreed it was worse than simply staying in).

So the market prices here cannot be moving according to good reasons, just sentiment.

I think even if we end up with a "no deal", the market will plunge and then life will carry on as normal - particularly long term there will be little to no differrence to anyone who has not been watching any news over the last year. So I'm intrigued by the NAV differences mentioned SalvadorHardin, and how long it will take for everyone to realise that life continues post-Brexit, and when those NAVs will return to normal.

So.. LAND with 40% discount... hmm. if its only due to the mass hysteria over Brexit, that might be a very good buying opp. I don't think the rest of the UK will be any less affected by whatever Brexit outcome than Central London (possibly the opposite, given all the EU institutions that will have been set up there and not in, say, Bolton).

LAND BTW has 65% of its whole portfolio in London, they say they will continue to migrate asset distribution towards being London-centric, and more focussed on leisure (or "experience"). Its EPRA NAV is 1339p (current sp: 895).

TBH I think they are in love with London now and will be divesting more and more away from the regions, which may be a mistake as their profitable places are regional, but they claim London is "more opportunity for long-term value creation potential" (bingo!)

I don't think they have it right, but - if post-Brexit, London prices bump up regardless, then it'll be a good investment, but I'm not convinced of its long-term prospects if its getting rid of its best revenue producers because they're not glamourous enough.


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