Portfolio Updates: July

Just wanted to pen a few thoughts and give a few updates on the state of the investment portfolio.

July presented a few opportunities to enter at a good price. The dual shock of a potential “trade war” and ABSD hike, sent the STI crashing to negative territory for the year. Fortunately, I have begun to rotate towards more resilient stocks.
I did not manage to average down for both Singtel and Raffles Medical. I remember thinking that prices could yet fall further and failed to act.

Notwithstanding the misses, I managed to add these to the portfolio, small nibbles, but good companies nonetheless.

Bought: Wilmar
I thought the prices were a good opportunity considering the possible listing of the China business next year. The price offered was less what ADM paid for their stake. I thought it was a knee jerk reaction to the trade war and china’s tariffs on soybean.

Bought: Mapletree North Asia Trust
I’ve always wanted to invest in this Reit, but its price has always seemed a little high, The price corrected by 10% after the acquisition of the Japan properties, which I thought was incorrect considering that the acquisition was likely to be accretive. Another upside to this counter is that while the HKD is pegged to the USD, it is also trading too low right now. I believe in the long term we should see the HKD revert to the mean.

I am hoping to save up and paydown the CPF loan taken for the house, this should mean fewer purchases in the meantime.

Till them keep saving..

Results of packing

Having read the book by Fumio Sasaki the man who lives in a 300-item house and wanting to make a change. I decided to set out on reviewing and relooking my wardrobe.

I begun by reviewing my clothes and wardrobe. After giving thanks for them, I threw out nearly 20 articles from my already very functional wardrobe. I managed to recover two pairs of pants, which I realized were hidden in an obscure corner of shelf. For these two, I intend to reincorporate them into my regular attire starting this week.

I also recovered a pair of burgundy trousers which have been in my cupboard for a while now. I remember buying them several years ago, but have rarely worn them because I couldn’t decide how long I should alter them to, ankle length or ¾. I’ve decided to tailor them tonight to ankle height and incorporate them into my wardrobe too.

Like many things in life, sometimes we dither on making tough decisions. We buy clothes that don’t fit, hoping one day we will “slim down” or “grow into” them. But really, we must ask if our purchasing decisions are driven by a reflection of “reality” or staring at purple unicorns. Making careful choices at the point of purchase means enjoying your purchases today and not kicking unnecessary decisions further down the road.

Yes, I might tailor the pants too short. Yes, it may not fit the style of shoes that I am wearing right now. Yet I’ll take the risk, so that I can make full use of them today. I’ll take the responsibility for decisions now, even though they have an impact down the road.

I think one of the main ideas I am trying to convey here is to live in the present. Doing things now and seeing them for what they are today, instead of waiting for the “appropriate time”. Till then..

Book Review: Goodbye things, hello minimalism

“I said goodbye to almost all my things and to my surprise, I found I had also changed myself in the process.” – Fumio Saski

One thing that I learnt from this book was that clutter reflected an indecisive mind. For example, everyday items that are neither indispensable nor in surplus are just “kept for another day”.

This is how clutter begins.

good bye things, hello minimalism - Fumio Sasaki
Fumio Sasaki lives in a house with only 300 items

Over the long term, these items can overwhelm our lives. When each item becomes an essential one, the cleanup process is immediate, we can’t move on to the next activity before completing this one.

Take cooking for example, we use so many kitchenware during cooking that it becomes a nightmare to cleanup. What if we only had one bowl? If we had used it to whisk an egg, we would have to clean it up on the spot to be able to serve food again. The process forces us to focus on the immediate task and not procrastinate. If cooking is such a small process of daily living, can you imagine how our lives look like?

The modern world has taught us to hate the repetitive and eschew the inefficient. It was through this book, that I understood why my elderly neighbor sweeps the leaf strewn corridor of her flat daily, when the leaves would fall again tomorrow. It wasn’t that she was sweeping away the detritus, she was sweeping away her laziness.

 

Read more about Fumio Sasaki’s journey here.

  1. Apartment Therapy: “Goodbye, Things” the New “Life Changing Magic of Tidying Up”?
  2. Cosmo interview : Why You Should Throw Out 90% of Your Possessions
  3. Japan Times: Taking minimalism to the next level

Same shirt, different day

Mark Zuckerberg has been known to wear the basic grey t-shirts to work daily, he mentions that this arrangement simplifies his life and allows him to concentrate on other more important stuff. When I first heard of the idea, it was so foreign to me. I remember thinking how this guy must either be absurdly busy or just absurd.

But recently, I found new reasons to rethink my position.

Novelty fatigue
The problem with things that are unique lies in the fact that they were designed to be different from each other. Without stimuli humans suffer from boredom. Something that looks nice once before can easily look less desirous once the novelty dies down.
I understand the need to want to look our best for any situation, but are our clothes a distraction from this or do they help us prepare better?

Under utilization
On the flip side, when things are different, there will always be favorites. Everyone has had a piece which at some point was worn almost daily, yet somehow that said piece has disappeared into some corner of their cupboard.

With the same shirt, one does not have to pick one over the other, instead clothes become functional item. Being a functional item means less fabric fatigue and increased utilization. By either numbering each piece or using a gravity feeder, you can identify and further spread out the “workload” of each piece. Ensuring that they collectively last a longer time with much less wastage.

Action plan
It’s funny how in such a simple thing like clothing we can find such inefficiency. I am going to start by reorganizing my cupboard and giveaway/dispose of items that I have not worn in the past year. For the other items I will do a stock count and see if I have too many of one item.

I hope to be able to more than halve my wardrobe and be able to fit everything into one storage bin. Wish me luck!

Big fat problem

I have a happy problem to resolve.

The girlfriend got her bonus yesterday, a rather fat one worth 4 month. The news has unsurprisingly left her grinning from ear to ear. It will no doubt be a useful bargaining chip for her as she negotiates her job change.

However, the small windfall also leaves her with another problem. How to minimize the tax payable on this amount? Being a permanent resident (PR), she does not qualify for many of the tax advantages that I (Singaporean guy) would typically be eligible for (i.e. being an NS-man or claiming parent’s support).

Even after contributing the max amount into the CPF-SA and deducting her CFA coursework amount, her income tax would likely be twice that of last year’s. As we are not married, she is also unable to “share” claim “in-law” support. Neither can she top up my CPF-SA while being reimbursed in cash from me.

I still have yet to figure out what to do. For now I think the only options are either to open an SRS account or suck up the income tax.

Allez les Bleus!

France has won the world cup again!

France World Cup Celebrations

20 years after my first FIFA game (France ’98) was given to me by my cousin, France has lifted the coveted trophy again. What nostalgia and a reminder that time really waits for no man. I remember back then, when you only played it P2P, as the computer’s AI were so lousy. Today, even medium difficulty would cause me slight panic.

What a time check this has been for me. I recall that many things which would have mattered 20 years ago do not seem to bother me now. Instead, new problems and anxieties have come in to fill the void.

The reality is that we do change and thus must seek to improve or be replaced by improvements. Our knowledge and abilities should neither be constrained by our employers nor our investment vehicles, but rather by our ingenuity and creativity.

On kinder note, my girlfriend has requested that we go and watch a live world cup match someday. I think that is such a good idea and I do hope that we get to do so someday. My friend went for the match in Yekaterinburg, I am sure it was a wonderful experience for him.

Work trip to Shanghai

I just returned from a work trip to shanghai recently. The work trip allowed me to meet up with a friend whom I have not seen in the last 3 years ago, as well as explore the city.
Shanghai as a city has developed so much and is continuing to grow. There is now a running track that runs from the north bund to the bund itself. We took a midnight run from the hotel to the bund and it was enjoyable. In fact, the MD of Shanghai told us that Shanghai is a very safe city and I must agree as well.

Wherever I go, the dynamism of the Chinese economy is still strong and has not diminished the least bit. While the prices of food and lodging has not increased to the levels seen in Hong Kong, I still sense that there is a large undercurrent of people who are still trying hard to make ends meet in this city.

The death of the brick and mortar is most apparent here, most of the cheaper products are now available online and those that remain need to be fashionable and upmarket enough for the face saving Chinese consumer. Most of these products have prices comparable to Singapore or any other international location.

On the work front, this trip has given me another opportunity to play a part in the new global HR setup. Even though HR is very far from what I want to achieve in my career, I am getting a better appreciation of how it is more than just payroll and more about people.

As of now, this opportunity is another stage for me to show what I am capable of. I hope the next 6 months will be one of opportunity.

2H 18 Targets

Here are a list of targets for SGX 2H 18. The counters were selected based on several ongoing themes in 1H 17. Right now, the STI is on jitters due to the impending trade tariffs to be implemented tomorrow as well as rising interest rates which has meant lower interest in Asian stocks.

Wilmar – I believe the near-term trade war hype has undervalued this giant  agribusiness player. A recent report by greenpeace on how Wilmar has been aiding the deforestation of forest for new palm oil plantations has added to the negative spotlight on this counter. The last time the prices fell to S$3, was when trump tweeted on trade, that time I rued not picking up the stock. I did not let this opportunity slip by again. While I am unsure how badly this trade war will blow over, I am certain that even the American’s know that it is not in their interest either.

Singpost – Poor governance and execution eroded a lot of shareholder value in 2016 after the saga over poor acquisitions of Tradeglobal and Jagged peaks. However, prices seem to have retraced back to the same level ignoring the increased dividend payout of S$0.2. It seems like investors are not convinced that the counter is able to fulfil its promise to deliver on ecommerce and logistics.

Raffles Medical – With the Chongqing hospital opening in phases from year 2H 18, we can expect profits to slide yet further before operations there start to stabilize. having said that, this is still very much a solid counter that has a trend of increasing its dividends. Having seen my position decline by more than 30%, I am not too incline to fire too early for this counter. Hoping Q4 would shed some light on its viability in China.

Singtel – Yet another quality stock that has been let down by its competitive environment. Prices have recently rebounded from its 8year low of S$3.02 to S$3.15. But like comfort delgro recently, I would not be surprised if the prices retrace to S$3.

Another sector I am keeping an eye out for are the S-Reits, especially retail reits both local and abroad, which I feel offer the best proxy to rising interest rates. In the near term however, the interest rate hikes are likely to depress Reit prices further.

For now, my main holdings is ESR, which I feel has the highest possibility of renegotiating their interest rates downwards among all the listed Reits. Let’s continue to monitor the situation moving forward.

Property cooling measures ABSD rises and LTV raised

The recent announcement of the increase in ABSD left many prospective homebuyers in shock. The news last night was rife with homebuyers who flocked to showrooms to secure a house. On paper the ABSD increase by 5% means that prospective buyers would have to pay more for the same unit if they waited for one more day.

I guess the anxiety and FOMO led to herd mentality forming, because when I thought about it again this clearly did not make sense.

At a stroke of a pen the government just made it a buyers’ market again. On what genius should buyers still be beholden to developers selling at S$1500psf in Serangoon North? Prices are instead going to start sliding towards more reasonable levels again.

If I were a developer, I would be more worried than a homebuyer who is on the lookout for a second property. This especially with the STI falling on the fear of trade war, investors have many more options at their disposal if they have ready cash on hand.

Moving forward, it is uncertain how much developers and resellers would allow prices to slide. While there is some clear demand, prices are clearly too high in the governments books. For now, we should see a convergence in prices between HDB and private property, which has been long overdue.

2.57% August 2018 SSB issuance

The latest round of SSB interest rates came as a surprise. While the short term interest rates went up by 0.06%, the long term interest rates actually fell by the same number.

Frankly, I was expecting both figures to go north after the last issuance, but I guess that was wishful thinking on my part. Still I think the latest issuance still meets the expectations of most investors and that the latest tranche will be over subscribed.

Aug_18_SSB

Comparing the with the last SSB issuance, it seems like most holders can still subscribe to the latest issuance, but with a time horizon of 6 years, before the bond begins to underperform the last issuance.

2018 Jul vs Aug SSB Compare

Here is an incomplete list of the past SSB issuances.