January saw 2018 off to a good start with gains in Hong Kong and emerging markets, combining with positive cash flows from investments, appreciation in commodities and favourable FX movements more than offsetting small declines in my Australian and New Zealand equities and bonds to produce a 4.41 percent increase in net assets.
For the year, the portfolio is up 4.41 percent. The adjusted change from when I retired in September 2013 is a 32.52 percent increase. Hong Kong liquidity stands at 26.67 months of estimated outgoings, almost unchanged from the start of the year's 26.68 months.
Here are the details:
1. my Hong Kong equities appreciated. I sold my shares in Dynamic Japan (HK6889) at a 19% loss. The shares were purchased in the expectation that Japan would introduce casinos and the the company would be a front runner for one of the first batch of casinos to be built. The Japanese government has effectively stalled the necessary regulatory reform and there is no timetable for when it will resume (if at all). The company is well run but its existing businesses are in a declining industry denominated in a weak currency so I see no reason to keep holding. Most of the sale proceeds were reinvested in Hua Xian REIT (HK:87001). At the end of the month I sold a small number of shares in CNOOC (HK:883);
2. my AU/NZ equities were were marginally down. There were no trades this month. I currently have too high a proportion of my New Zealand assets in cash;
3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;
4. my position in silver rose slightly;
5. all tenants are paying on time and all properties are let. I had several maintenance bills this month and will have to fork out for the pointless window inspection next month (delayed by an uncooperative tenant);
6. the AUD and NZD were were up against the USD/HKD;
7. my position in bonds remains modest. Recent interest rate increases have pushed the holding values of some of my bonds to below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I unsuccessfully bid on two short term bond offerings and lost out on pricing showing that the demand for reasonably credit risk at the short end of the duration curve is very strong. 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 low.
My HK cash position fell slightly during the month. I currently hold 26.67 months of expenses in HKD cash or equivalents (down from 26.68 months on 1 January). This will increase once the CNOOC sale proceeds are received.
Total household gearing ((debt+accruals)/assets) is 8.73% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised.
May I remind you that both HLG and SKC are on special at the moment.
Thanks for the suggestions.
I have huge respect for HLG's management - they have done a superb job in keeping the company profitable and the dividends flowing in difficult conditions. I held them for several years in the 1990s. However, it will take a lot of convincing before I invest in a retail company at this time.
I like SKC - they have solid expansion plans and will continue to be a beneficiary of continued growth in tourism numbers and economic growth generally. My two concerns with the company are (i) the high level of debt may lead the company to do a capital raising which tends to be bad news for shareholders and (ii) the delays in completing the convention centre project. I'll have another look.
Incidentally, I will be down in Auckland in early May if you would like to meet up.
Yep...be keen for a meetup. Darren
Post a Comment