Thursday, March 29, 2018

Financial Review – March, 2018

March saw a further erosion of January's gains with declines in my equities compounded by weakness in the AUD. Bonds, silver and the NZD were more or less flat for the month. Positive cash flows from investments, were not enough to offset the mark-to-market losses and the end result was a 1.70 percent decrease in net assets.

For the year to date, the portfolio is up 0.82 percent. The adjusted change from when I retired in September 2013 is a 27.84 percent increase. Hong Kong liquidity stands at 41.74 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to asset sales.

Here are the details:

1. my Hong Kong equities fell. The only transaction this month was subscribing for and selling one board lot (2,000) shares in Most Kwai Chung in its IPO for a small profit;

2. my AU/NZ equities were were down, largely due to declines across the board in Australia and Fletcher Building in New Zealand. There were no transactions this month; equity ETFs were down (India, Hong Kong and China) in line with the local markets;

4. my position in silver was more or less unchanged;

5. all tenants are paying on time and all properties are let. I had to fork out for a pointless window inspection this month (delayed by an uncooperative tenant);

6. the AUD was down and the NZD flat 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 slightly below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. 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 2.1% and will likely narrow again as interest rates increase further;

8. expenses were low with no major items being incurred this month.

My HK cash position fell slightly during the month. I currently hold 41.71 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January). 

Total household gearing ((debt+accruals)/assets) is 8.79% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. In March, total debt declined but the gearing ratio increased due to declines in asset values.

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