Monday, October 03, 2011

Monthly Review - September 2011

Last month I reported that August had been the single worst month for my investment (in dollar terms) ever. The losses in September were nearly three times those of August. Retirement plans are on hold, which raises the likelihood that I will need to start looking for a job when I my contract finishes early next year.

Mark to market declines in asset values, particularly equities, were massively greater than the gains from rental income and were made much worse by adverse FX movements. Even a healthy savings rate and positive cash flow from the properties were unable to make more than a token offset of the losses. My equity investments have produced negative returns this year and many positions are now below cost.

Here are the details:

1. my Hong Kong equity portfolio declined sharply either in line with the market or due to industry or company specific factors. Some of my largest holdings (HWL, CCB, Hua Han, Yanzhou) recorded particularly large losses (on top of the large losses incurred in August). A few companies dropped by more than 50% during the month. In no case was the fall in share price accompanied by a negative company specific announcement (although in some cases there were broker downgrades). During the month I purchased shares in Tontine Wines, China VTM, Sinopec, Hang Seng Bank, CNOOC and Jiangsu Expressway; ETFs were down sharply in line with the local markets. There were no ETF purchases this month;

3. my commodities fell significantly, led by silver;

4. all of my properties are occupied (the one vacant unit will be occupied at the end of this week), the tenants are paying on time. There were some minor repair bills which needed paying;

5. currency movements were very negative, as the NZD and AUD fell against the HKD/USD;

6. my position in bonds remains small. No bonds were purchased this month. One of my early RMB bond purchases matured;

7. I have one open derivative position, a put written against the AUD;

8. savings were good with high income and low expenses.

My cash position decreased due to new investments. I currently hold 18.1 months of expenses in HKD cash or equivalents (compared to 26 months at the end of February).

For the month, my net worth fell by a staggering 10.70%. The year to date decrease is 3.35%%

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