Financial Review - October 2013

October was a good month for my investments. Net worth increased. High income produced excellent savings* and the principal component of my mortgage repayments combined with solid gains on my equities and commodities more than offset a small adverse movement in FX rates.

Here are the details:

1. my Hong Kong equity portfolio appreciated. During the month, I purchased shares in Ping An (HK:2318) and added slightly to my shareholdings in Cosco Pacific (HK:1199) and K Wah (HK:173) through dividend reinvestment elections. I hold shares in CMR which is currently suspended following an attack by a short seller alleging fraud. I am currently assuming a 100% loss on this position;

2. my AU/NZ equities appreciated slightly;

3.my equity  ETFs increased in line with the local markets. There were no new purchases;

4. my commodities rose. Silver is my only position;

5. all of my properties were occupied with all tenants paying on time. There were only minor repair bills this month. Unfortunately, two buildings have received notices for a mandatory window inspection - I am hoping that I will not have to replace any windows. One property is now debt free;

6. currency movements were negative, with gains in the AUD being less significant than the fall in the NZD;

7. my position in bonds remains small. Some RMB bonds matured and I purchased some units in the iShares RMB Bond fund (HK:3139 and HK:83139);

8.I have no open derivative positions;

9. savings were high with high income and moderate expenses;

10. there was no transfer to Mrs Traineeinvestor this month.

My cash position rose due in spite of the new investment in Ping An. I currently hold 56.5 months of expenses in HKD cash or equivalents. The IShares RMB Bond fund is included a a cash equivalent. This is above my target floor of 24 months.

For the one month period, my net worth rose by 2.06%. The year to date increase is 13.54%. This means that my mark-to-market investments have appreciated this year.

* I retired on 30 September, 2013. Pay for September hit the bank account at the beginning of October.

Ping An purchased

This morning I added Ping An (HK:2318) to the portfolio.

Ping An is one of China's larger insurance companies. The company offers exposure to the growing insurance industry in the PRC and could be viewed as an investment in China's growing middle class consumer. While the historical fundamentals are not very exciting (trailing PE of 18.9 and Yield of 0.9 percent), I expect those numbers to improve as the company continues to grow.

I paid HK$59.30 per share.

Lease renewed

I have just renewed the lease on one of my properties. As this was the highest rental stream in the portfolio it was a relief to sign the tenant up for another two years (with break clause) at a rent that was only (approximately) two percent below the old rent. While the new rent is (probably) a little below the current market, I am still much better off having the unbroken cash flow from a lower rent than getting a higher rent after a short vacancy and incurring all the usual costs involved in renting to a new tenant.

While it is inevitable that there will be vacancies from time to time, starting my retirement with full occupancy on the Hong Kong properties (and having one mortgage free) is a nice.