In the U.S.:
- A lot of speculation on what the main driver was that led to the sharp selloff this week. JP Morgan’s strategist Marko Kolanovic stated that the selloff was largely technical, driven by systematic strategies and that the majority of systematic selling has been completed but cautioned that further volatility could trigger more outflows.
Marriott International, Inc. (MAR) announced plans to expand its portfolio in the UAE to more than 80 Hotels by 2023. Marriott anticipates 11 new openings, the addition of 2,600 rooms, and the debut of two new brands by year-end.
- The PBoC announced a 100bps cut to the reserve requirement ratio effective October 15. The move was aimed at spurring on growth by injecting approximately 750B yuan into the banking system.
- September export growth accelerated to 14.5% y/y versus August’s 9.1% y/y reading. China posted a record trade surplus with the US although many economists deemed that metric to be unsustainable going forward as higher tariffs weigh on trade. In addition, there were reports this week that Beijing was looking into entering the TPP to cushion the impact of the ongoing trade war with the US.
- BoJ board member Makoto Sakurai warned that protectionist trade measures were creating global uncertainty and negatively impacting Japan’s growth. He reaffirmed his firm support for Japan’s easing measures but remained cautious of the side effects of easing on financial firms.
Blackstone is reported to be actively in talks to buy more than 10 shopping malls from Link REIT. The properties, including malls in Lei Tung Estate and Shan King Estate in Hong Kong, are valued at more than HK$10B.
- August Eurozone industrial production was 0.9% y/y versus July’s 0.3% y/y reading. An uptick of production of durable consumer goods, like cars and fridges, as well as non-consumer goods, like clothes, was cited as the main catalyst to the boost in production.
- Although a Brexit deal appears to be near, opposition to the agreement in parliament is growing. Several cabinet ministers have threatened to resign if the deal is agreed to and PM Theresa May could face significant backlash from Northern Ireland’s DUP allies.
UK student housing REIT Unite Group Plc held its annual capital markets day for investors and analysts this week. While the broader macro-economic environment in the UK and Europe remains clouded with uncertainty regarding the UK’s negotiations with the EU over the terms of its exit from the EU in March 2019, operating conditions for their student accommodation product remain very favorable. Their portfolio is 98% leased for the current 2018/19 academic year with full year rental growth in line with their 3.0% – 3.5% target. Unite continues to recycle capital and improve the overall quality of its portfolio, closing the sale of 13 properties (3,436 beds) in September for £180.5M. Unite opened up seven new residences totaling 3,074 beds in September. The new developments are effectively fully let with 52% of the beds leased subject to long term leases with universities that have an average life of ten years. The development portfolio remains a lucrative source of external growth and value creation for the company.
The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.