Keppel DC REIT (SGX: AJBU) share price in mystery slump?

LIFETIME MEMBERSHIP Keppel DC REIT (SGX: AJBU)’s ascend to the Straits Times Index (STI) has been the stuff of legend in SGX mainboard. Debuted in SGX only in 2014, the data centre REIT knocked the former CapitaLand Mall Trust off the pedestal in October 2020. That spectacular feat sent Keppel DC REIT (SGX: AJBU) share price flying to a record high of $3.04. Since then, the stellar form appears to lose plenty of steam in recent months. What on earth has happened?

Keppel DC REIT AJBU

A Lifetime Member has written in to request for an explanation of the recent downtrend of Keppel DC REIT (SGX: AJBU) share price. If you are keen on coverage of other stocks, do sign up as member! For the longest time, I have been contemplating to invest in an S-REIT with special focus in data centres. Hence, I have been monitoring Keppel DC REIT and Mapletree Industrial Trust (MIT). Both counters are majority-owned by Temasek Holdings and listed in the Straits Times Index (STI). Between the two players, Keppel DC REIT stands out for being a “pure-play” data centre REIT but the acquisition of M1 started to complicate things.

Year-to-date, Keppel DC REIT (SGX: AJBU) share price has slumped by 9.32%. Comparatively, its peer Mapletree Industrial Trust share price increased 1.74% on a year-on-year basis. Indeed, the subpar form of Keppel DC REIT (SGX: AJBU) is a concern among many investors. But to be fair to the S-REIT, the counter is still trading at 25% above the levels of pre-pandemic. Looking back, the onset of pandemic has triggered a surge in e-commerce activities and digital transformation of businesses. As a result, Keppel DC REIT (SGX: AJBU) rocketed to high heavens in 2020.

Then again, I have always stressed that what goes up must surely come down. The spectacular rise of Keppel DC REIT (AJBU) share price is simply not sustainable. The problem with this counter is that although it is a real estate investment, its underlying assets (data centres) are technology driven. For this reason, institutional investors tend to view Keppel DC REIT (AJBU) as a technology stock. Thus, when NASDAQ plunged in October 2020, Keppel DC REIT (AJBU) share price fell from $3.00 to $2.70 back then.

According to data extracted from SGX, for two consecutive months (May to June 2021), Keppel DC REIT shares had been on the top ten institutional net sell list. In May, institutional funds net sold $43 million worth of Keppel DC REIT shares. Then in June, $65.8 million of shares were net sold by funds. The ferocious sell-offs by the big boys caused Keppel DC REIT (SGX: AJBU) share price to tank to a low of $2.45 in early July. The counter managed to restore some level of sanity when the selling ceased in July and August.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested in Keppel DC REIT (AJBU) share currently. Whether Keppel DC REIT (AJBU) share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

BullionStar

Keppel DC REIT (SGX: AJBU) share price in strange journey

My last article on Keppel DC REIT (SGX: AJBU) share price was on 14 March 2021. That was before two major events occurred. In [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: September 7, 2021 — 10:12 am

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