Traineeinvestor's diary - HK and Far East Focus

[Traineeinvestor]

I added some shares in China Blue Chemical (HK:3983) to the portfolio this morning.

 

I've held a modest position in this company for a while and am slightly behind on my investment, but it has been a steady dividend payer and the share price appears to have stabilised after its recent decline. The balance sheet is cash rich and debt free and the trailing dividend yield is 4.5%. The auction of the assets of a defaulting JV on 15 August should remove some uncertainty and (possibly) be a catalyst for a re-rating (one way or the other).

 

I paid HK$3.97 for the additional shares.

 

Note: edited to correct stock code reference

[drbubb]

China Blue Chemical (HK:3993) / China Moly ?

 

It has had a nice run-up

[Traineeinvestor]

Sorry - mistyped the HKEX code:

 

China Moly (HK:3993) has done well - possibly a bit more to go as the A shares are still at a premium to the H shares.

 

China Blue (HK: 3983) does not have A shares/H shares so it's a different proposition - a a straight value play.

 

I will edit my previous post.

[Newby]

Trainee, greetings from someone from AX (seems to have gone dead). I checked some of your posts, and see that some of the shares you bought went down, and some went up. I wonder how much has been your average return over the last 12 months (on shares and bonds, excluding properties)?

 

Of course nobody can always get it right, but is your time well served (financially) buy buying and selling shares, or would you earn more by going back to your previous job? (of course this excludes the pleasure you get from being an investor v. the pleasure from being a lawyer).

 

And you, Dr. Bubb?

[drbubb]

It's hard for me to answer that, since I do not keep tabs.

 

I have a large portfolio, with many resource-related positions.

So my returns are probably somewhat similar to the returns on Gold, or mining related shares.

 

Occasionally, I will keep track of a specific portfolio here for a period of time.

When I have, it has typically outperformed the markets (with honest figures.)

 

But maybe the ability I would have to choose WHEN to start such a portfolio,

as something to do with those high returns

 

The Videos I have done on Gold:

https://www.youtube.com/channel/UCS-62aTJ6jBGloc6QTQksHQ/videos

... may give you an idea of how useful my Timing ideas are.

And THIS 2014 thread too:

https://www.youtube.com/channel/UCS-62aTJ6jBGloc6QTQksHQ/videos

[Traineeinvestor]

@ Newby - apologies for the delayed response. I've spent the last week and a bit in Northern Hokkaido with very patchy Wifi access and a self imposed digital detox.

 

To answer your question, I make no claims to be a Warren Buffet or George Soros. My financial record keeping does not facilitate picking out annualised returns on my equities as a portfolio. I can say that for the period 1 January, 2014 to 31 July, 2014, my net assets have increased by 6.49% plus my families living expenses plus a modest transfer to Mrs Traineeinvestor. The denominator is all my assets (real estate, equities, cash, bullion etc). Since I am largely retired income from employment is not material.

 

I do keep track of how my individual investments do - but in a slightly unorthodox manner. I look at total cost less distributions received to show the price I need to sell at to at least break even.

 

As far as objectives are concerned, so long as I can generate enough to cover living expenses and more or less maintain the real value of my net assets, then I have succeeded. You can read a bit more about what I am doing here: http://aprivateportfolio.blogspot

[Traineeinvestor]

Before I left for holiday in Japan with the family, I put in limit orders to sell some of my shares in Sinolink Holdings (HK:1168) at HK$0.70 and HK$0.72. I have mixed feelings about selling at these levels given the massive discount to NAV (they are even selling at a discount to net cash meaning that the properties are being thrown in for free).

 

I continue to hold most of my position in Sinolink and would be tempted to repurchase if the share price falls back to HK$0.65 or less.

[drbubb]

(I had suggested hedging rates with TBT calls sometime ago - I got around to doing it today):

 

 

 

PM FUND MANAGER: “30-YR TREASURY MARKET IS STARTING TO PRICE IN ECONOMIC ARMEGEDDON”

Low inflation would not explain the 80 basis point drop in long bond yields since January 1st.
“Flight to safety” would flow either into the very short end of the yield curve or into gold or under the mattress.

With retail sales, auto sales, and home sales all collapsing, the only explanation left is that the Treasury bond market is pricing in a severe economic downturn. This would explain also why high yield bond spreads have widened considerably over the past month. The big drop in oil prices this week would further affirm this.

The Treasury bond market is starting to price in economic Armegeddon.

more -
http://www.silverdoctors.com/pm-fund-manager-30-yr-treasury-market-is-starting-to-price-in-economic-armegeddon/#more-46048

 

 

I bought CALLS on TBT today - that's a way to go Short on Bonds - expecting a rate rise.

Today looks like an extreme to me.

 

I bought TBT. Jan.$56 Calls at $3.05

[Traineeinvestor]

Interesting - even if one does not subscribe to the armageddon view it is quite possibly a good time to make a bet on a decline in bond prices.

 

Another speculation - the HKSAR Govt introduced the cooling measures (double stamp duty on second properties, 15% special stamp duty on non-HK permanent residents and a punitive expropriation on people selling within three years of purchase) and increased the supply of land in response to demand from non-owners for cheaper property prices. If those measures have failed and prices are in the process of resuming their march upwards, what are the chances of more cooling measures being introduced? Right now, I would say it is unlikely - all the societal whinging has been directed either for or against the inane Occupy Central movement so I suspect we will see no additional measures unless that changes. Unfortunately, the rise in prices also means that the government is unlikely to relax any of he measures soon either.

[drbubb]

I think, if the Centaline index crosses 130 (or so), which it may soon, they will have to do something

[Traineeinvestor]

I added to my position in paper silver today, paying the equivalent of USD19.83 per oz.

[drbubb]

I added to my position in paper silver today, paying the equivalent of USD19.83 per oz.

 

Great.

I hope it works out for you.

Are you willing to share HOW you bought Silver?

 

Was this what you bought?

 

HK:3117/ ETFS Physical Silver ETF ... update

 

[Traineeinvestor]

Sure - I purchased paper silver through BOCHK's precious metals account: http://www.bochk.com/web/common/multi_section.xml?section=investment&level_2=precious_metals&fldr_id=251

 

When I first looked at purchasing silver several years ago the available options in Hong Kong were physical bars, coins and notional accounts with some of the banks. The spreads on the physical products were huge which rendered them a non-starter and BOCHK offered the best pricing on paper silver. I had a look at the ETFs when they were introduced but (at the time) concluded that BOCHK was still a better deal on price (although with the risk that there is no underlying silver backing the product and they could change the terms on me). Things may have changed since then, but I've been happy enough with this product that I haven't looked around for alternatives since then.

 

There's a pricing sheet here showing the buy sell spread at HK$18 per 10 oz (about USD0.23 per oz) and there are no account fees or transaction, holding or storage costs : http://www.bochk.com/web/market/trading_rates/precious_metal_trading_prices.xml?section=market&level_2=trading_rates&fldr_id=279

[drbubb]

Sure - I purchased paper silver through BOCHK's precious metals account: http://www.bochk.com/web/common/multi_section.xml?section=investment&level_2=precious_metals&fldr_id=251

 

When I first looked at purchasing silver several years ago the available options in Hong Kong were physical bars, coins and notional accounts with some of the banks. The spreads on the physical products were huge which rendered them a non-starter and BOCHK offered the best pricing on paper silver. I had a look at the ETFs when they were introduced but (at the time) concluded that BOCHK was still a better deal on price (although with the risk that there is no underlying silver backing the product and they could change the terms on me). Things may have changed since then, but I've been happy enough with this product that I haven't looked around for alternatives since then.

 

There's a pricing sheet here showing the buy sell spread at HK$18 per 10 oz (about USD0.23 per oz) and there are no account fees or transaction, holding or storage costs : http://www.bochk.com/web/market/trading_rates/precious_metal_trading_prices.xml?section=market&level_2=trading_rates&fldr_id=279

 

Thanks. I see that the HK-traded Silver etf doesn't trade much, and can go to a discount or premium.

BOCHK financial risk should be solid. Better than HSBC, if some sort of global meltdown happens.

The move from the paper to physicals can be expensive, and is cheaper with Gold.

I have done it at Hang Seng bank, and if I am careful, I lose only a few dollars an oz. on Gold.

[Traineeinvestor]

Credit risk was a consideration - I took the view then (which I still hold) is that if the world's largest creditor nation lets the bank bearing the country's name default on its obligations then nowhere is safe.

[Traineeinvestor]

Very frustrated with the latest iBond allocation - only HK$20,000 worth. It's still better than nothing and better than cash in the bank, but if it was anymore work than a few clicks of a mouse to apply I wouldn't bother.

 

More substantially, Mrs Traineeinvestor went shopping yesterday (clearly she didn't do enough in Hokkaido) and purchased a carparking space in Kennedy Town. In absolute terms, it's hardly a bargain. Net yield on gross cost is about 2.2% which is better than cash in the bank but lower than the HK Tracker fund.

 

In relative terms, she paid less than half what it would cost to but one in our building (assuming you could find one for sale). Also, the profile of the area is changing and the expectation of the real estate agent we are dealing with is that the current shortage is likely to be exacerbated by several new buildings being completed this year and next. Having done a walk around and made a few inquiries, the agent's expectation may well be the right one.

 

For those who follow the HK cooling measures, stamp duty is 1.5% and the three year rule does not apply.

[drbubb]

$2 million sounds a lot -

But as you say, it is definitely an up-and-coming area.

 

Maybe you should drag her over to TKT sometime, so she can see what my partner got for $2.7mn,

and that now comes with a 4.0% NET Return, after mgmt. fees

[Traineeinvestor]

A bit less than that but it is a lot and not really a yield investment - more a punt on scarcity.

 

The greatest risk is that Mrs TI will decide that we need a car to go with the carpark.

[drbubb]

LOL

That could be stage two of her investment strategy. (just kidding)

[Traineeinvestor]

Unfortunately, I am not .....

[drbubb]

Well, it's better than HK$ 2 Million worth of designer shoes, and clothes

[Traineeinvestor]

From AA Stocks:

 

 

 

JP Morgan, in its latest research report, said Hang Seng Index, after breaking above the 6-year resistance of 25,000, may further test 32,000, near the historical high made in 2007 as the resistance is easing.

The research house expects supports after the 25,000 breakout, and further momentum may emerge if the index can stand solidly above 25,000 this week. Telecom, Internet, energy and conglomerate sectors are the top picks.

 

My initial reaction was that someone had been taking a little too much medication but on further reflection, this might not be beyond the realms of possibility given (i) continuing recovery in the US (ii) further growth in international trade (iii) extension of ZIRP (iv) the PRC focusing on growth targets (v) the series of good company results continuing (vi) high savings rates producing additional net inflows to equities (vii) increased allocation to equities from real estate in the PRC and (viii) the HK-Shanghai link. While none of these are assured they could happen and at least some of them probably will happen. The other factor is that the HSI (and China more generally) has lagged US and European indices for a few years and has only recently started playing catch up.

 

It goes without saying that there are a lot of negative things that could happen as well.

[Traineeinvestor]

Well, it's better than HK$ 2 Million worth of designer shoes, and clothes

 

Fortunately, Mrs TI does a good job in keeping her instincts under control in that area.

[Traineeinvestor]

It is hardly news that China's real estate market is (like the US and many other countries) made up of many local markets each with its own supply and demand characteristics. What makes this interesting is that is one of the rare instances where the MSM has not treated China as a single market: http://www.scmp.com/comment/insight-opinion/article/1580517/bnp-report-pinpoints-mainlands-healthiest-property-markets

[drbubb]

Did you seen this, TI?

I am surprized to see Singapore so far below Hong Kong

 

Chinese Cities become the Least Affordable in the World

 

Beijing ----- : 23x

Shanghai - : 16x

Shenzhen- : 13x

Hong Kong : 13x

Tiajin------- : 10x

Tokyo------ : 10x

Sydney----- : 9x

Guangzhou : 8x

London----- : 7x

Chongqing- : 6x

New York--- : 6x

LosAngeles : 5x

Toronto ---- : 5x

Wellington-- : 5x

Singapore- : 4x

==

> From Chart, per today/s FT: pg. 20