Portfolio Update - August

I want to thank a group of readers that have been following my blog regardless of my conditions. I thought readership could gone down to zero due to extreme inactivity on my part. Instead, you come back faithful to check out whether I've updated my blog. I can't thank you enough. Low activity was one thing but I also felt that I made posting for the sake of posting but you still leave encouraging comments. And your encouragement has kept my afloat. Thank you.

To blog is not easy, especially you have been doing it for a while. We can run out of words. After saying certain things for while, your readers will know almost exactly what you are going to say because they "know" you quite well already. The other aspect is preparation, when I was hard pressed for time this month, I really felt the pressure.

What is even more difficult is the lukewarm market conditions. The bulls and bears were fighting for control which make things very difficult. Writer can sound pretty stupid because when they sound bullish, the bears will whack them the moment they hit publish post button. When they try to sound bearish, the bulls will trample them. When they say something bullish one day and bearish another day, they will look fickle minded and truly will look like they don't know what they are doing. This happen to stock analysts as well.

Turtle portfolio crossed 50,000 for the first time. I am glad that I did not lose my pant while tracking this extremely difficult market. Sikit sikit lama lama jadi bukit is certainly works out well. I do not have intention to lecture anyone but this is a testimony of how our wealth will grow day by day as long as we form the saving habits. You can also see yourself in my portfolio that not every transaction will make money. You can also see my other mistakes like selling out too early for Sapura Crest and Genting. You can also see that I am hanging on to MUI(call it aversion to loss if you will). The point is you don't have to be perfect when comes to investing. I guess we should be okay as long as we win more than we lose.

I was glad that my dividend strategy and picking on plantation stock help me to preserve my portfolio. I think one should continue to stick to high dividend yield stocks strategy under this environment. We should also start to read up cyclical stocks, I am not asking you to rush in but I think they got beaten up pretty badly. One of them that I am watching is Unisem. I'm waiting for more disappointing news in their coming quarterly results and hope that they got bash down to crazy price.

ICAP, this cannot be right!

The gap between NAV of iCAP is growing bigger and bigger. It's almost 28% now. I do not know why vultures are not circling this closed-end fund yet.



The fund NAV gap and KLCI is also getting wider and wider. The fund is clearly outperforming the index. Again, why no vultures circling this closed-end fund yet?

Ignore the noise

First, Axiata is looking good from trading point of view, have a breakout with increasingly higher volume. I was away from the trading screen today(you know where am I-lah, outside the country again). And I missed out the action. But there is always tomorrow to catch up. So, don't have to ask me whether it is time to buy.

Secondly, ignore the dam debt ceiling cries. If we really think those politicians will want to shut down their country, then I think we are really stupid. It's a diversion. If the market want to sell off, it will not be droping like pondan. Thirdly, with 3 days wind, 2 days rain kind of see-saw up and down, is exactly what investors/pundits need to learn -- learn to ignore. The market is still in a trading range.

Fourth, I have been hearing more and more professionals think the market is still cheap. Trading at 12-14X is way off from the market peak that typically will sell for 20X. The other sign of market top is consumer confidence normally is 9 million miles outside an orbit. Again, we are far from it.

After this week, I hope to stay put in Malaysia at least for 2-3 weeks. Until then, happy trading.

Stock Watch : Axiata

Axiata stock price has been on the uptrend and has been trying to break out but failed to do so yesterday. The price seems to run out of steam. I'm watching this stock(for trading and buy and hold strategy too) as I think it is still under-appreciated.

I believe the CEO is building a solid foundation and the benefits can only be reaped in 2 - 3 years time.

The company is very busy recruiting the right people. They are willing get good people from other world class organizations like Vodafone, Motorola, etc.....With the right people with the right mindsets, it is much easier to implement high performance culture organization.

What I like about the CEO has always been focusing maximizing on return on capital. The idea of sharing towers squeezing its assets to maximum productivity is certainly a good idea.

If one is bullish about Indonesia, I think this is a good proxy. No further elaboration needed I presumed.

OSK recently upgraded the fair value to $ 5.77 based on SOP which I think is a fair price tag.



With the external market full of good news -- good earning surprise and European leaders telling the right things that the markets want to hear -- I think doing a bit of trading will be a good idea. I am still wait for a confirmation whether it can take out yesterday high with conviction.

Comments on Europen situation

As I'm getting more settle down with my new house, I hope to be active and certainly hope be able to think and reflect on investment issues. Moving to a new place is certainly not easy, just the notification of new address is enough to kill me. Then I need find a buyer for my old house but I think I should be thankful instead of complaining because there is a small price to pay for much better gains.

I finally decided to comment on the European situation even though this is a very old news and not many people commenting this. Every now and then, this headline seems to rattle the markets. Why is it so?

The key word like austerity scares a lot of people. Belt tightening means they are trying to rebalance their fiscal discipline. Does that means they are cutting public spending, restructuring bad debts, etc??? I don't have enough data at this point of time. All I read was people just making hypothesis of belt tightening = cutting spending = slower growth(could be negative too!). Shaking off excesses will sometime last at least 2 - 3 years. However, I opined that if they are serious about getting their house in order, post-restructuring will always bring about a much healthier and stronger economy.

The other implication is deleveraging. If banks holds a lot of European debts(bonds), currencies and etc...as the de-rating kicks in, that can cause sell-off somewhere to meet redemptions.

The other point is the European central banks face the problem of imported inflation such as excessive liquidity by the US easy money policies. This may cause them to raise interest rate. Traditionally, European central bankers are more hawkish to raise interest whenever they sense inflation threat. But with weak growth, do they really want to raise interest? Raising interest rate is not a good thing because that will discourage growth from private sector(nobody want to take risk). And that is a bad news for growth.

Forth point, I'm going back to decoupling theory. The last financial crisis taught us worldwide economy can be decoupled but financial markets cannot be decoupled. Some folks out there may believe decoupling theory for both economy and financial markets is a joke or a fairy tale. Hence these folks will believe that export dependent markets such as China and Asia will surely greet with slowdown. Even some believe economy can be decoupled, imported inflation will eat up all the quality of growth. Yeah, with China gun shy to stimulate their economy(due to strategic reason to engineer soft landing), where else can we look for economic growth?

Well, one possibility is QE 3. Well I don't think we can even consider this as an option to drive growth, even it does, it will be short-lived and inviting more QEs. Is the world digging into a deeper hole?

It is seems like not much good news to pick up from the economic fronts and only one hope left to catalyze the market...is...the hope of strong profit from listed companies. Any disappointment on the companies earnings will certainly pours fuel to the increasingly flaming fire.

Some notes taken while traveling to China

Traveled to China this week. Some hot topics.

House price appears to have stopped rising in major cities. In fact the developers are cutting prices. Some says the hot money begins to flow into some smaller cities but in my opinion, driving up prices in smaller cities is not going to be sustainable. Plus the government continues to battle this threat as they know this is key to their security. Will the bubble pop, may be. Will China go down with it? May be not. First, unlike the previous US debacles, these folks are not drawing their home equity to fund spending. These guys may just hold and suffer till it rebound. Secondly, most of these guys paid high substantial of their second or third houses with upfront cash. Lastly, these guys are funding it with their equivalent of our EPF saving to pay their house. It is very tough to prick this bubble. The concern that most have is when the bubble pops, many predict there will be high NPL on Chinese banks BS but I think I would rather worried of the bank loans to businesses and government projects rather than to retail investors.

The GDP number released this week brought about many relief sighs, it is a sign that China is heading towards soft landing. I think the Chinese leadership deserves applauds……I still think this is going to be the best managed economy in the world.

My assignment landed me in a smaller city of China. Surprisingly, many tourist spots full of local tourists during week days. They are taking time off and spending time with family. Good for them. I think the criticism of Chinese are not spending enough is not very fair. These folks will spend just like most people around the world. These folks are struggling with high food price and high property prices. Yeah, pork price gone through the roof again(higher than previous all time high). Unless their salaries continue to catch up, it is still a tough challenge for these folks to achieve good quality of life. While Malaysia is screaming and complaining about middle income trap, I think the Chinese is going to run before they learn to walk. Their government is forcing low value added industries to perish by keep raising the minimum wage. I think very soon, these guys will go outside China to set up a lot heavy polluting industries.

The cities I travelled such as Shanghai, Suzhou, Tianjin, Beijing, etc are full of trees. I think they spend tones of money trying to green the cities. I think the Chinese truly believes in sustainable development. While it is easy to criticize this may appear to be shallow by judging them from the outside. If you want to look something more solid, I think they have invested a lot in green technologies compared to many emerging economies. They are tapping a lot of energy from sun, wind, hydro etc. They are not only investing in technologies but they also make effort to conserve energy. Everywhere you go, you can see they are controlling their air condition temperature. It’s a bit uncomfortable for me at first when they maintain the temperature around 23 deg but I get used to it after a while.

Again, don’t get me wrong that China will have a straight smooth path, they will meet with set back but I think these folks are very tough people and capable of bouncing back very fast, especially with the huge reserves that they accumulated. Again some will start to worry what will happen to their reserves in USD, well, that is a topic for another day.

Let’s pretend that I am uncle Jim Rogers for a while. I’m not selling my Chinese shares. When Chinese market goes down, I will buy more.

Will back in a week later.........

Sorry folks, very busy to complete a few more things on my new house. I won't be able to post for whole of next week.

I have been saying this is a trader market now. True enough. The market did not collapse like what I have been highlighting. The battle between support and resistance will go on for a while. Timing of taking profit and buy on dips is key, if one wants to make some money. Take care.