A slightly late update.
On Monday I added a few additional shares in K Wah (HK:173) and HKR International (HK:480) to the portfolio. I paid HK$2.12 for K Wah and HK$3.25 for HKR.
K Wah is a mid tier Hong Kong property developer (some projects in the PRC as well). Sales of its current JV project Marinella have been going well even without allowing for current market conditions. The balance sheet is strong. The discount to NAV is large - even if there is a very large write down in asset values - but so are most property companies. IMHO the shares have been oversold.
HKR is a smaller property investor and developer (with a few other businesses). The companies track record of delivering growth and keeping up a respectable dividend is excellent. The discount to NAV is huge and, together with a strong balance sheet, provides considerable long term downside protection.
Right now it seems a bit counter intuitive to be buying property companies.
I'm trying to get into the habit of funding new acquisitions by selling some existing investments rather than repeatedly running down my cash position - once I eventually stop working I won't have much choice in the matter. The K Wah and HKR purchases were funded by selling part of my position in CMOC (HK:3993) for HK$3.88. CMOC has been a disappointing investment (to put it mildly). That said, I have no particular views on whether to hold or sell my remaining shares in CMOC.
The amounts involved are not large.
Wednesday, November 02, 2011
Greece - digging a deeper hole
The announcement that Greece intends to put the austerity/bailout package to a national referendum undid much, if not all, of the positive that could be taken from the rather sketchy EU bailout plan.
There is widespread and probably realistic expectation that, when the time comes to vote, the Greek people will reject a package of tax increases and entitlement cuts. This is likely to be true, even if the alternative is the national equivalent of bankruptcy and even greater hardship. Even if the referendum is passed, it would be a safe assumption that no sane person would have failed to take their money out of the Greek banks, out of overseas banks based in Greece (ring fencing risk etc) and out of Greece generally. (Quite frankly, I'm a little surprised that Greece hasn't been stripped bare already.) At this point, no amount of regulation is going to stop that from happening and, one way or another, people will get everything they can off the ship before it finally sinks.
For what it's worth, matters have reached the point where the rest of the EU should wash its hands of Greece, let the country (and its creditors) sort out its own mess and put the stability fund to work to ensure that European banks do not fail (or, if they do, nationalise them to prevent a domino effect). Greece clearly wants to fail and should be allowed to do so as a lesson to other states that consistently spending beyond your means will, sooner or later, lead to considerable economic hardship. I'd say it would also teach lenders and investors to at least consider the possibility of country default risk when lending/investing but that would be a waste of effort - every few years they seem to need re-educating.
There is widespread and probably realistic expectation that, when the time comes to vote, the Greek people will reject a package of tax increases and entitlement cuts. This is likely to be true, even if the alternative is the national equivalent of bankruptcy and even greater hardship. Even if the referendum is passed, it would be a safe assumption that no sane person would have failed to take their money out of the Greek banks, out of overseas banks based in Greece (ring fencing risk etc) and out of Greece generally. (Quite frankly, I'm a little surprised that Greece hasn't been stripped bare already.) At this point, no amount of regulation is going to stop that from happening and, one way or another, people will get everything they can off the ship before it finally sinks.
For what it's worth, matters have reached the point where the rest of the EU should wash its hands of Greece, let the country (and its creditors) sort out its own mess and put the stability fund to work to ensure that European banks do not fail (or, if they do, nationalise them to prevent a domino effect). Greece clearly wants to fail and should be allowed to do so as a lesson to other states that consistently spending beyond your means will, sooner or later, lead to considerable economic hardship. I'd say it would also teach lenders and investors to at least consider the possibility of country default risk when lending/investing but that would be a waste of effort - every few years they seem to need re-educating.
Monday, October 31, 2011
Monthly Review - October 2011
Last month I reported that September had been the single worst month for my investment (in dollar terms) ever and that retirement plans were on hold. October was, in many respects, a mirror image of September with very strong gains across the board. Although I did not drain my cash reserves, I did make some additional investments near the bottom of the market and, importantly, didn't do any panic selling.
Mark to market appreciation in asset values, particularly equities, added to the gains from rental income and were compounded by favourable FX movements. A healthy savings rate also contributed to a very good monthly result.
Here are the details:
1. my Hong Kong equity portfolio appreciated sharply. During the month I purchased shares in K Wah, Yangzhou Coal, New World Services and Cosco Pacific;
2. my AU/NZ equities appreciated;
3.my ETFs were up sharply in line with the local markets. There were no ETF purchases this month;
4. my commodities gained, led by silver;
5. all of my properties are occupied, however, one tenant missed a payment and is being chased. There was only one minor repair bill;
6. currency movements were very positive, as the NZD and AUD rose against the HKD/USD;
7. my position in bonds remains small. No bonds were purchased this month;
8. I had onne open derivative position, a put written against the AUD, which was closed out at a profit;
9. savings were good with high income and low expenses.
My cash position decreased due to new investments. I currently hold 16.4 months of expenses in HKD cash or equivalents (compared to 26 months at the end of February).
For the month, my net worth increased by 10.47%. The year to date increase is 6.77%
Mark to market appreciation in asset values, particularly equities, added to the gains from rental income and were compounded by favourable FX movements. A healthy savings rate also contributed to a very good monthly result.
Here are the details:
1. my Hong Kong equity portfolio appreciated sharply. During the month I purchased shares in K Wah, Yangzhou Coal, New World Services and Cosco Pacific;
2. my AU/NZ equities appreciated;
3.my ETFs were up sharply in line with the local markets. There were no ETF purchases this month;
4. my commodities gained, led by silver;
5. all of my properties are occupied, however, one tenant missed a payment and is being chased. There was only one minor repair bill;
6. currency movements were very positive, as the NZD and AUD rose against the HKD/USD;
7. my position in bonds remains small. No bonds were purchased this month;
8. I had onne open derivative position, a put written against the AUD, which was closed out at a profit;
9. savings were good with high income and low expenses.
My cash position decreased due to new investments. I currently hold 16.4 months of expenses in HKD cash or equivalents (compared to 26 months at the end of February).
For the month, my net worth increased by 10.47%. The year to date increase is 6.77%
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