Friday, June 30, 2017

Financial Review - June, 2017

June was another good month for the portfolio with small gains across the board producing a 2.07 percent increase in net assets.

For the year, the portfolio is up 10.10%. The adjusted change from when I retired in September 2013 is a 17.12% increase. Hong Kong liquidity stands at 28.0 months of estimated outgoings, well down on January's 38.6 months due to new investments + a transfer to New Zealand but ahead of last month's after I sold some investments.

Here are the details:

1. my Hong Kong equities increased. I sold my shares in COSCO Ports (HK:1199) and a very small position in China New Economy Fund (HK:80). I reinvested some of the proceeds in Kowloon Development (HK:34) which offers a higher yield (around 7% on cost) and a significant discount to NAV which may or may not improve once legal uncertainty over a property development project in Macau is resolved. While I booked a profit on COSCO Ports, the company has been a serial underperformer which has failed to meet expectations either in terms of growth or dividend levels. The Fund was ditched at a small loss after it appeared in David Webb's list of "50 stocks not to own". This is a lesson in not doing sufficient due diligence - at the time I invested, NAV was above HK$0.80 and the shares were trading ago around HK$0.24. I did check the values of the listed shares in the fund's portfolio to ensure that their values had not fallen significantly but I did not look into the merits of those shares individually. As it turns out a significant number of the Fund's investments were also on the list and plunged spectacularly wiping out a significant amount of investor value;

2. my AU/NZ equities rose slightly. I purchased additional shares in Automative Holdings (ASX: AHG), believing the market had over-reacted to a slowdown in Australian car sales + potential changes to the way car's are finance in Australia. My expected yield on purchase price is above 6%;

3.my equity ETFs were up slightly (India, Hong Kong and China) in line with the local markets;

4. my position in silver fell;

5. all tenants are paying on time and all properties are let;

6. the AUD and NZD were up against the HKD/USD;

7. my position in bonds remains small but improved this month when I purchased some 1 year notes issued by part of the Hainan Airlines group using a margin facility - this is a carry trade.

8. expenses were low with no travelling and no other non-regular domestic bills incurred;

My HK cash position rose during the month due to sales of HK equities mentioned above. I currently hold 28.0 months of expenses in HKD cash or equivalents (down from 38.6 months on 1 January).

I have revamped my spreadsheets to capture all debt (previously some accounts were entered on a net basis). Total household gearing ((debt+accruals)/assets) is 9.28% of total assets. Property prices are as at 1 January, 2017, so this overstates the gearing ratio.

I would like to make some additional investments but am struggling to find good value in the markets I follow. With expectations of further rises in interest rates muted, I was tempted by the carry trade, and purchased the Hainan Airlines notes using a margin facility.

Monday, June 05, 2017

Financial Review - May, 2017

May was another good month for the portfolio with small gains across the board producing a 2.02 percent increase in net assets for the second month in a row.

For the year, the portfolio is up 8.08%. The adjusted change from when I retired in September 2013 is a 14.92% increase. Hong Kong liquidity stands at 25.4 months of estimated outgoings, well down on January's 38.6 months due to new investments + a transfer to New Zealand. 

Here are the details:

1. my Hong Kong equities increased. I purchased a small position in Honma Golf (HK:6858);

2. my AU/NZ equities fell slightly. No transactions this month;

3.my equity ETFs were up slightly (India, Hong Kong and China) in line with the local markets;

4. my position in silver rose;

5. all tenants are paying on time and all properties are let. I secured I slight increase in rent on leasing one property to a new tenant;

6. the AUD and NZD were down slightly against the HKD/USD;

7. my position in bonds remains small;

8. expenses were moderate after replacing an aircon unit in our home and taking a short trip to New Zealand;

My HK cash position fell during the month due to expenses and new investments. I currently hold 25.4 months of expenses in HKD cash or equivalents (down from 38.6 months on 1 January).

I have revamped my spreadsheets to capture all debt (previously some accounts were entered on a net basis). Total household liabilities (debt+accruals) is 8.79% of total assets. Property prices are as at 1 January, 2017, so this overstates the gearing ratio.
I would like to make some additional investments but am struggling to find good value in the markets I follow. With expectations of further rises in interest rates muted, I am starting to get tempted by the carry trade, although the rise in funding costs currently makes this less attractive than it was a few months ago.

Wednesday, May 03, 2017

Financial Review - April, 2017

April was another good month for the portfolio with small gains across the board producing a 0.99 percent increase in net assets for the second month in a row.

For the year, the portfolio is up 6.14%. The adjusted change from when I retired in September 2013 is an 12.79% increase. Hong Kong liquidity stands at 27.5 months of estimated outgoings, well down on January's 38.6 months due to new investments + a transfer to New Zealand. 

Here are the details:

1. my Hong Kong equities increased. I have taken the dividend reinvestment option on my shares in NWD (HK:17), NWS (HK:659) and Huaxian Reit (HK:87001) and invested the proceeds of redemption of a small RMB bond in more Huaxian Reit units on the belief that being paid a yield of over 8% instead of 3% is adequate compensation for the risks of choosing a Reit over a bond;

2. my AU/NZ equities appreciated slightly. I purchased shares in two small companies, Augusta Properties (NZX: AUG) which offers a net yield of over 5% and Marsden Maritime Holdings (NZX: MMH) which only offers a net yield of around 3.2% but has a good track record of growing its distributions and a favourable macro environment;

3.my equity ETFs were up very slightly (India, Hong Kong and China) in line with the local markets;

4. my position in silver fell;

5. all tenants are paying on time and both vacancies have been filled. One tenant has given notice to vacate at the beginning of June;

6. the AUD and NZD were down slightly against the HKD/USD. I transferred some money from HK to NZ to pay for the new investments mentioned in #2 above which accounts for most of the fall in my HK liquidity;

7. my position in bonds remains small;

8. expenses were moderate with a pre-paid air ticket for visiting my daughter in boarding school later in the year paid for.

My HK cash position fell during the month due to the transfer of funds to New Zealand. I currently hold 27.5 months of expenses in HKD cash or equivalents (down from 30.6 months).

I would like to make some additional investments but am struggling to find good value in the markets I follow. With expectations of further rises in interest rates muted, I am starting to get tempted by the carry trade.