Should You Buy Stockland Corporation Ltd at This Share Price?

What happened to the SGP share price?

Stockland Corporation Ltd [ASX:SGP] made a 0.47% gain by early afternoon. The stock was trading at $4.29 a share. The Aussie market has seen some choppy trading throughout the day. By early afternoon, the overall market was flat compared to yesterday’s close.

Oil prices rebounded which brought up energy companies, and is generally positive for miners. I am long on oil and iron ore in 2015. So far, my investment in oil has brought more than a 20% gain.

Banks continued to experience sell-offs due to a general sense of bearishness surrounding the sector. I believe this is an opportunity for investors to enter the banking sector. Banks will do well in a market of cheap capital. However, a more pronounced correction will come when Australia gets tougher banking regulations and rate hikes.

Why did this happen to SGP shares?

A recent report from a Hong Kong documentary maker on the Australian property market found that there is no ‘property invasion’ from Chinese investors in Australia. The documentary is called ‘property invasion’. The documentary said most buyers are third or fourth generation Australian-Chinese, rather than investors from China.

I have no idea how the documentary drew that conclusion. I am the emerging market analyst at Port Philip Publishing. I am a second generation Australian-Chinese myself. Just last year, I sold one property in Beijing and bought one here in Sydney. I am very glad I did, because I have made a handsome return so far.

Of course I am not the only one. A number of my Chinese friends have invested in the Sydney and Melbourne property markets. Australia is still very popular among Chinese investors.

From studying the Australian property index and its cyclicality, I found that the Aussie market is about to enter a period of slower price gains. Eventually, Australian property price gains will become more tempered. That is perhaps when I will want to buy more.

What now for SGP?

People overestimate short term trading and underestimate long term investing. If you bought SGP in 1990 and you were smart enough to get out of the stock market during the GFC, you would have made a lot of money on the stock over time. The stock is 62% correlated to the broad index. With the right diversification, leverage and stop-loss actions, any low frequency investor could have made millions on the stock in the span of two decades.

Ken Wangdong
Emerging Market Analyst, New Frontier Investor

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