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JSE's Property Sector forming a bottom? $JSE $PROPThe JSE's listed Property Index (J253) is looking for a bottom here with the formation of an inverted head & shoulders bottoming pattern. After failing and breaking through it's medium term horizontal support level at 450 pts, the index has more than halved. However, as things stand, (and analysed together with the H&S on the SA GOV 10 year bond yield which is breaking down from H&S top) i believe the sector is ready to put in a bit of a rally from current levels. A break above the neckline of the inverted H&S formation @ 236 pts could see the property index run up to a target of 280 pts (+- 19% rally) which is also where we find the daily 20 day moving average. In Addition, the RSI has broken its DT line, which gives me further clarity that the worst of the bearish momentum could be behind us. The Rand bears have also not managed to make any progress above the 18.0 level to the USD and this is starting to give us a clue that the downgrade to junk could just as well have been priced in. Putting everything together, i would take my chances and expect to see a bit of an oversold rally transpire on the JSE's beaten down property sector.
JLong
by MarcoOlevano
$JSEEMI Emira Property Fund giving us a shorting opportunity?The JSE's property sector has unfortunately been under immense pressure over the last 2 years and the weakness exhibited by these property counters have provided many opportunities for the bears to capitalize on. What I have identified on Emira Property fund is that the stock tends to trade in range bound rectangular consolidation pattern for a period of time before breaking down and starting a new leg lower. After consolidating between R13.00 and R14.50 between March and July this year, we finally saw the break below the R13.00 support which started the next leg lower in the counter. We have now formed a new trading range between R11.70 and R13.00 which i suspect could play out in a very similar fashion to previous consolidations. In Addition, the 89 and 100 day moving averages (red/orange lines) have also capped gains for the stock on every attempt to rally since May and we have once again reached these moving averages as indicated by the red boxes. The RSI indicator has also moved into overbought territory with the current peak coinciding with the two previous short term peaks in the name. With all the above in mind, i would favor my chances entering a short between R12.80 - R13.00 on EMI , using a stop loss as a convincing close above R13.00 (aggressive)/ R13.30 (passive) and looking to target the bottom of the range at R11.70 in order to take profits.
JSE:EMIShort
by MarcoOlevano
IS THE CORRECTION COMPLETE OR WILL WAVE 5 COMPLETE FIRST?Growthpoint Properties is a diversified property investment holding company incorporated and registered as a public company on 12 October 1987. Growthpoint shares are listed for sale under the Financial Services Real Estate Investment Trust sector of the Johannesburg Stock Exchange (JSE), and the group is today one of the biggest players within the sector. The company boasts a portfolio of 525 properties which provide 6.7 million m² of retail, office and industrial space to leading businesses in South Africa and Australia. They also have a majority stake in 53 Properties which are valued at R22 billion. One of Growthpoint‘s biggest investments is a 50% stake in the properties at Cape Town’s V&A Waterfront, valued at R6.8 billion. Technicals As you can see on the chart above, there was a spike down to the 50% Fib retracement level as indicated with the red arrow. This is a strong level of support and the rally from there could continue on upwards if this is the formation. I would not be surprised to see wave 5 complete to the 61.8% Fib retracement level before we see the break to the upside but due to the break of the structure at the top of wave 4, it is also possible that the rally will occur soon.
JSE:GRT
by Linton_White
NEPI ROCKCASTLE TRADING SCANDAL HURT, WILL IT RECOVER?NEPI Rockcastle owns and manages a portfolio of dominant retail properties in the following high-growth CEE countries: Romania, Poland, Bulgaria, Slovakia, Hungary, Croatia, Czech Republic and Serbia. The Group benefits from a highly-skilled internal management team which combines asset management, development, investment, leasing and financial expertise. Geographically diverse management skills allow NEPI Rockcastle to pursue Central and Eastern European (CEE) property opportunities more efficiently, benefiting from a strategic advantage in the acquisition, development and management of properties. The Group is well positioned for growth, driven by its best-in-class operating platform, as well as its historically proven capacity to deploy existing capital resources into attractive direct property investments. NEPI Rockcastle continues the active investment policy that supported the growth of NEPI and Rockcastle respectively over recent periods, with a strong pipeline of acquisitions and developments currently being pursued in its targeted region. NRP is however part of a large trading scandal where they were accused of overstating profits and have taken big hits in terms of share price. Technicals There are two options here but both setups indicate that there should be further downside. Option 1 Here we can see the initial impulse move to the downside on the left and I expect the second impulse to complete to the downside at a target price of around 3000. The corrective structure completed 4 waves and broke to the downside and is now on the retest level which means that the second impulse could begin shortly. Option 2 The same initial impulse move applies but we could see the formation of a larger correction as indicated above. The break to the downside for impulse two will have the same target as option 1 and could occur on wave 4 or alternatively after the completion of wave 5 to the top first.
JSE:NRP
by Linton_White
Brazil’s economic recovery to enrich small real estate developerClick tinyurl.com for the FULL REPORT Brazil’s record low interest rates, low construction costs and higher real estate prices will likely boost residential demand in the future. CR2 Empreedimentos Imobiliarios SA (CR2), a real estate developer in the states of Rio de Janeiro and the Sao Paulo metropolitan area, is poised to benefit from higher residential and commercial prices. The Monetary Policy Committee of the Brazilian central bank has left the country’s benchmark interest rate unchanged at a record low of 6.5 per cent as the economy emerges out of its worst recession ever recorded. The central bank’s latest statement in December pointed to a more dovish stance, meaning that interest rates could remain low before a likely hike next year. This could pressure mortgage rates lower, which has been on a downtrend which keeps the borrowing costs low for potential house owners. According to the Fundacao Getulio Vargas think tank, the cost of many construction projects is decreasing as firms cope with labour surpluses and decreased costs for many of the materials they need for projects. The cost index for new building construction has dropped and many contractors were probably caught by unexpected cost decreases in late 2018. Lower construction prices will increase the margins of CR2 and could improve the company’s bottom line in new private-sector development projects. On the demand side, real estate prices, albeit in negative territory has been falling at a slowing pace. The trajectory of national average housing prices trends upwards, and is likely to reach an annual gain by this year. The improvement in economic growth backed by higher credit lending will lift lending real estate demand and give CR2 in the real estate sector a much needed market cap increase. CR2’s valuation is close to the sector’s median although it operates with a net cash position and lower financial leverage than its peers. Net income growth for the last quarter has also been impressive which outpaced competitors. Receivables from clients in Q3 however added to BRL 24mn, which is a drop of 35% from Q2 as the firm is still recovering from a receivable loss of BRL 7.5 in Q1. Overall, the firm’s main assets reside in Cidade Paradiso and Parque das Aguas which represent 89% of the company’s land bank.
CLong
by EA7470R
Brazil’s economic recovery to enrich small real estate developertinyurl.com Brazil’s record low interest rates, low construction costs and higher real estate prices will likely boost residential demand in the future. CR2 Empreedimentos Imobiliarios SA (CR2), a real estate developer in the states of Rio de Janeiro and the Sao Paulo metropolitan area, is poised to benefit from higher residential and commercial prices. The Monetary Policy Committee of the Brazilian central bank has left the country’s benchmark interest rate unchanged at a record low of 6.5 per cent as the economy emerges out of its worst recession ever recorded. The central bank’s latest statement in December pointed to a more dovish stance, meaning that interest rates could remain low before a likely hike next year. This could pressure mortgage rates lower, which has been on a downtrend which keeps the borrowing costs low for potential house owners. According to the Fundacao Getulio Vargas think tank, the cost of many construction projects is decreasing as firms cope with labour surpluses and decreased costs for many of the materials they need for projects. The cost index for new building construction has dropped and many contractors were probably caught by unexpected cost decreases in late 2018. Lower construction prices will increase the margins of CR2 and could improve the company’s bottom line in new private-sector development projects. On the demand side, real estate prices, albeit in negative territory has been falling at a slowing pace. The trajectory of national average housing prices trends upwards, and is likely to reach an annual gain by this year. The improvement in economic growth backed by higher credit lending will lift lending real estate demand and give CR2 in the real estate sector a much needed market cap increase. CR2’s valuation is close to the sector’s median although it operates with a net cash position and lower financial leverage than its peers. Net income growth for the last quarter has also been impressive which outpaced competitors. Receivables from clients in Q3 however added to BRL 24mn, which is a drop of 35% from Q2 as the firm is still recovering from a receivable loss of BRL 7.5 in Q1. Overall, the firm’s main assets reside in Cidade Paradiso and Parque das Aguas which represent 89% of the company’s land bank.
CLong
by EA7470R
US Housing Market - Time to learn from the pastThere is no one clear index when it comes to following the property market. But looking at several property indices I'm able to see a distinct pattern and it appears to be a flat correction. Some countries like Dubai and UK appear to be further ahead in this correction. Obviously I'm not here to give anyone any personal advice, but I do recommend caution at these levels. It may be a bit early to say, but my view is that once S&P's bull run reaches exhaustion level that may trigger a down turn in the US property market. Let's wait. I'm keen that the first yellow line is broken so it allows the new property buyers to enjoy the positive equity until it reaches the next level. Happy to discuss if anyone is interested.
D
by Rizk