Friday, December 29, 2017

Financial Review - December, 2017

December was another positive month for the portfolio with small gains and losses across all asset classes more or less offsetting each other leaving the net cash flow from investments and favourable FX movements to to produce a 0.69 percent increase in net assets. This is the first year that I can recall having positive outcomes every month of the year.

For the year, the portfolio is up 18.90 percent. The adjusted change from when I retired in September 2013 is a 26.67 percent increase. Hong Kong liquidity stands at 26.68 months of estimated outgoings, well down on January's 38.6 months due to new investments + transfers to New Zealand.

Here are the details:

1. my Hong Kong equities went sideways. I added to my position in Rosedale Hotels (HK:1189) - this is essentially an asset play trading at a substantial discount to the net cash on the balance sheet and CNOOC (HK:883);

2. my AU/NZ equities were were marginally ahead. There were no trades this month. I currently have too high a proportion of my New Zealand assets in cash; equity ETFs were up slightly (India, Hong Kong and China) in line with the local markets;

4. my position in silver rose and my small position in platinum recovered slightly before I sold it at a small loss;

5. all tenants are paying on time and all properties are let. I had some maintenance bills this month and will have to fork out for the pointless window inspection next month;

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

7. my position in bonds remains modest. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income. However, the spread between the interest earned and the interest paid has narrowed to about 2.2% and will likely narrow again on the next roll over date in February, 2018;

8. expenses were high with paying for one of 2018's trips to New Zealand, some medical bills (insurance will pay for most of them, but I won't see the money until January) and a host of minor things all falling due at once. I also settled all my HK tax bills due early next year and found that, once again, I have over provided for tax.

My HK cash position fell slightly during the month. I currently hold 26.68 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 9.72% of total assets. Property prices are as at 1 January, 2017, so this overstates the gearing ratio. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.

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 remain tempted by the carry trade and would do one or two more should the right offers be available. I am reviewing some of the smaller investments in the portfolio with a view to either exiting or adding to my positions - too many very small investments are taking up a disproportionate amount of time to monitor.


Anonymous said...

Great Post,!! do you understand this crazy "Administrative expense" amount at Rosedale Hotels income statement? Also the fact that they issue shares at such a discount to NAV on constant basis ?

traineeinvestor said...

Thanks for dropping by. These are good questions and ones that explain why the company's shares will never trade anywhere near NAV. I'll doc a more detailed post on Rosedale in a few days.