The Chinese Crackdown Continues
Unless you tend to go business news-free during the weekend, you probably know about China’s newest business crackdown. Investors who were hoping Beijing would limit itself to pushing around tech companies have been disappointed, to say the least.
Yahoo Finance summarized the situation like this on Saturday:
“… China has announced a set of regulations that effectively ban the operation of for-profit education companies in the country. The new rules will no longer allow companies that teach school subjects to accept overseas investment, which could include capital from offshore registered entities of Chinese firms, according to a notice released by the State Council of China.”
The article continues with this…
“… The move is expected to cause a massive disruption to China’s $100 billion education sector, threatening companies like TAL Education Group (… TAL), New Oriental Education & Technology Group (… EDU), and Gaotu Techedu Inc. (… GOTU). Among the big investors in the sectors are Alibaba (… BABA)…”
That latter company just can’t seem to catch a break the past nine months. And I’m not confident its “bad luck” will change from here.
Neither is Bloomberg, which noted this mere hours ago:
“A selloff in Chinese private education companies sent shockwaves through the equity market Monday, as investors scrambled to price in the growing risks from an intensifying crackdown by Beijing on some of the nation’s industries.”
No doubt, that kind of heavy-handed government interference didn’t hurt Bitcoin’s movement this morning. Though that wasn’t the primary reason behind the boost.
There are apparently noteworthy rumors that Amazon (AMZN) could be poised to enter into the cryptocurrency arena soon… somehow, someway.
On that news, I guess I’m only surprised it’s taken the American tech giant this long to make its move.
The World According to REITs
There’s really not much real estate investment trust (REIT) specific news to report today. Just one update, in fact, according to The Daily REITBeat.
Four Corners Property Trust (FCPT) purchased a two-tenant property in Illinois leased to Aspen Dental and Starbucks. The purchase price was $3.4 million with a 6.5% going-in cash cap rate outside of transaction costs.
But to make up for our reduced update segment, here’s how U.S. REITs performed last week:
- The lodging/gaming sectors were up 2.9%
- Manufactured homes rose 2.5%
- Net lease increased 1.4%.
In the less impressive category were:
- Diversified REITs and data centers, both down 0.4%
- Office landlords, down 0.3%.
Overall, the MSCI U.S. REIT Index took on an extra 0.5%, though the S&P 500 GAINED 2%. Year-to-date though, the former is definitely beating the latter at 27.4% to 18.4%. And global REITs are at 17.4% while the 10-year yield has risen 36 basis points to 1.28%.
REITs currently trade at a 2021 adjusted funds from operations (AFFO) multiple of 27.2x with a 2.70% dividend yield – compared to a 1.28% yield on the 10-year Treasury – and a 8.1% net asset value (NAV) ratio, relative to our estimates.
(Source: The Daily REITBeat)
Brad Thomas is the Editor of the Forbes Real Estate Investor.
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