Wednesday, July 31, 2019

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; 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.