K Wah purchased

This morning I added a few more shares in K Wah (HK:173) to the portfolio. The mid-tier property developer has, like many, taken something of a hiding during the market down turn. However, it is well capitalised and salas of units in its developments (especially Marinello) are going well.

I paid HK$2.18 for the additional shares.

The quest for green shoots

Good news has been thin on the ground recently. Very thin. However, a number of positive items have made the headlines in the last few days:

1. the European Union reaching an agreement to deal with Greece and European banks . Sure, there are a lot of important details which are still missing and the fundamental problem of governments spending too much is not going to go away, but it's still a major step forward from where we were as recently as last week;

2. the inane Occupy movement has failed to gain mainstream support, has lost much of what limited media interest it ever had and is fading away . If anything, most people are sick of the self centred hypocrisy of the "movement" as are the overly tolerant politicians who are finally dealing with the disruption, sanitation and increased crime associated with the protesters' actions. Hopefully the people involved will go and do something constructive in the future;

3. US housing data has improved with both new home sales rising and the inventory of unsold homes falling. The improvements were modest and the overall numbers are still weak (especially average prices), but they are heading in the right direction;

4. US economic data has shown a small improvement;

5. expectations that China has finished monetary tightening and may actually consider easing;

6. declining oil inventories, may suggest that economic activity is picking up again;

7. fears that international trade would fall victim to protectionism have not eventuated....so far;

8. although I couldn't lay my hands on any consolidated data, generally I have been left with the impression that corporate earnings have, on average, exceeded estimates and, most importantly, there appears to be top line revenue growth.

Sure there are still huge problems out there - government spending (especially in the US and Western Europe), inflation (especially food inflation in developing nations), housing in the US and China and many other problems (not least on environmental issues), things look at least a little better now than they did a month ago.

AUD/HKD FX contract closed out at a profit

The AUD/HKD FX contract I opened late last month was closed out this week. As the contract was out of the money, I pocketed the premium for a total return of 2.02%. While this is many multiples of what I could have earned on a bank deposit over a month, it is less than half what I would have earned had I simply brought and sold the AUD over the same time period and a small fraction of the return that would have been generated by buying Hong Kong equities.

While it is not always the case the lower risk equates to lower return, this time it did.