Financial Review – July, 2019

July, 2019 produced a a small decrease in net worth with small gains in underlying asset values offset by unfavourable currency movements. The end result was a 0.12 percent decrease in net assets.

For the year to date, the portfolio is up 7.88 percent. The adjusted change from when I retired in September 2013 is a 31.75 percent increase. Hong Kong liquidity stands at 43.75 months of estimated outgoings, up from the start of the year's 39.90 months due to sale proceeds being higher than new investments.

Here are the details:

1. my Hong Kong equities were mixed. There were no trades this month;

2. my AU/NZ equities were were up with gains in New Zealand and Australia. There were no transactions this month;

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

4. my position in silver was up;

5. all tenants are paying on time and all properties are let. There was only one minor repair bill this month;

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

7. my bonds increased in value on expectations of interest rate cuts. I purchased a perpetual bond callable in 2024 using margin finance. Yield to call is 5.9%;

8. expenses were low.

My HK cash position increased during the month. I currently hold 43.75 months of expenses in HKD cash or equivalents (up from 39.9 months on 1 January). It makes little sense to hold large amounts of cash while also having outstanding borrowings on which we pay interest.

Total household gearing ((debt+accruals)/assets) is 11.1% of total assets – with the increase from last month due to drawing down on a margin facility to purchase an additional bond.    Property prices are as at 1 January, 2019 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.

Value is hard to find: it has become increasingly difficult to find investments which represent good value whether real estate, equities or fixed income. This is particularly problematic when looking to rebalance away from HK/China/USD/HKD exposure which dominates our portfolio.

Financial Review – June, 2019

June, 2019 produced a solid increase in net worth with gains across most asset classes  compounded by marginally favourable currency movements. The end result was a 4.11 percent increase in net assets.

For the year to date, the portfolio is up 7.98 percent. The adjusted change from when I retired in September 2013 is a 31.88 percent increase. Hong Kong liquidity stands at 42.53 months of estimated outgoings, up from the start of the year's 39.90 months due to sale proceeds being higher than new investments.

Here are the details:

1. my Hong Kong equities were up. The only transaction this month was to swap my Swire Pacific A shares into Swire Pacific B shares. While each A shares is equivalent to 5 B shares, they trade at prices which do not reflect that ratio meaning each A share sold purchased about 6.3 B shares (after transaction costs). This will lift my dividends from the company by about 26%. Assuming that Swire pays the same dividends as last year, the increase in net dividends will be slightly less than costs of swapping the shares in 2019/20 but those costs are one time expenses while the extra dividends will continue for as long as I hold the shares. I'm embarrassed not to have done this years ago (or purchased the B shares from day 1;

2. my AU/NZ equities were were mixed with gains in New Zealand offset by losses in Australia (again!). There were no transactions this month;

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

4. my position in silver was up slightly;

5. all tenants are paying on time and all properties are let. There were several minor repair bills this month;

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

7. my bonds increased in value on expectations of interest rate cuts;

8. expenses were low.

My HK cash position was increase during the month. I currently hold 42.53 months of expenses in HKD cash or equivalents (up from 39.9 months on 1 January). It makes little sense to hold large amounts of cash while also having outstanding borrowings on which we pay interest. We applied some of our cash towards debt reduction this month.

Total household gearing ((debt+accruals)/assets) is 9.66% of total assets – with the effect of partially paying down loans adding to the effect of rising asset values on the calculation.   Property prices are as at 1 January, 2019 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.

Value is hard to find: it has become increasingly difficult to find investments which represent good value whether real estate, equities or fixed income. This is particularly problematic when looking to rebalance away from HK/China/USD/HKD exposure which dominates our portfolio.

Financial Review - May, 2019

May, 2019 produced a significant decline in net worth with losses across most asset classes  compounded by adverse currency movements. The end result was a 3.34 percent decrease in net assets.

For the year to date, the portfolio is up 4.48 percent. The adjusted change from when I retired in September 2013 is a 27.49 percent increase. Hong Kong liquidity stands at 41.30 months of estimated outgoings, up from the start of the year's 39.90 months due to sale proceeds being higher than new investments.

Here are the details:

1. my Hong Kong equities were down. There were no transactions this month;

2. my AU/NZ equities were were mixed with gains in New Zealand offset by losses in Australia. I sold my shares in Automative Holdings (ASX: AHG) into the market rather than wait for the takeover offer conditions to be satisfied;

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

4. my position in silver was down slightly;

5. all tenants are paying on time and all properties are let. There were several minor repair bills this month;

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

7. my position in bonds remains unchanged;

8. expenses were low.

My HK cash position was largely unchanged during the month. I currently hold 41.30 months of expenses in HKD cash or equivalents (up from 39.9 months on 1 January). It makes little sense to hold large amounts of cash while also having outstanding borrowings on which we pay interest. I partially paid down one loan and switched the balance from USD to HKD to take advantage of the lower interest rate and better align the loan currency with the cash flows which will be used to pay it down.

Total household gearing ((debt+accruals)/assets) is 10.41% of total assets – with the effect of partially paying down one loan outweighing the effect of falling asset values on the calculation.   Property prices are as at 1 January, 2019 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.