Sunday, April 24, 2016

Metaphors of Ninja & Samurai In The Market


24 April 2016
 

Dear Fellow Investor,

I would like to thank all of you who attended our Asian market outlook at the Istana Hotel.

For those who were unable to attend, I will summarize the key points:

Mr Phua, Phillip chief market strategist gave his outlook on Japan: In search of Samurai and Ninja. The Samurai is a direct threat and something that we see. He is obvious.
 


The samurai is a metaphor for shares in plain sight that everyone knows about such as Toyota, Canon, Panasonic and Mitsubishi. These are shares in the popular press and recommended in most broker research reports.  We do not have an investing edge dealing in these types of shares.   Every factor influencing the price is discounted.




On the other hand for us to be profitable we must be like the Ninja.

 

A Ninja hides in the shadows and is a hidden threat. A Ninja does not reveal himself and waits until the odds are in his favour before striking.  This would be a metaphor for less researched   companies not popular with the investment crowd.

 
 






They could be smaller companies involved with the sharing economy such as tourism, restaurants, transportation with concepts of touch, taste, feel, pretty, health and comfort.  One example Mr Phua mentioned was Santen which offers a unique method of eye drop delivery. This product is very popular with China tourists.

 

Because tourism is a major growth catalyst in Japan and the majority of tourists come from China, Taiwan and Korea companies catering to their needs are performing well.

 

Many offer growth, quality management and rising sales and earnings. They profit no matter what happens to the huge multinational big caps. PE in Japan is only 12.2 which are the lowest in developed markets.

 

This theme also applies to investing in Malaysia, Thailand, Hong Kong and Singapore.   Be a Ninja and strike when the odds are in your favour.

 

Mdm Pikun, a fund manager with Phillip in Thailand spoke about opportunities in Thailand. FDI is the lowest in Asia and sentiment is overwhelmingly negative.  The severe El Nino drought has effected crop production, political uncertainty continues, infrastructure projects have been delayed due to bickering by politicians but the Thai index is up by 10 % this year driven by tourism and bargain hunting.  She recommended Threil an insurance company and    SVI a contract electronics manufacturer.

 

She also confirmed my decision to buy Thai Beverage, an established spirits and beer company. I bought these 3 years ago for some of my PGWA clients and continue to add for my new clients.  It has performed handsomely.   

 

Charles Lee, Portfolio Manager of Phillip Singapore spoke about opportunities in Singapore dividend shares. Singapore offers the highest dividend yields of the Asian markets. He likes selected Reits including Parkway Life Reit and Ascott Reit. Tourism arrivals he said are picking up so he likes hospitality Reits. 

 

He also likes SGX, the operator of the exchange as well as OCBC and DBS Bank, and Silverlake, a technology, Software Company.

 

The property market is picking up due to policy easing by the authorities and mild depreciation of the   Sing Dollar.  He showed a chart of the SGD/RM exchange rate and showed that because of the price correction this is an attractive time for Malaysian investors to enter the Singapore share market.

 

The last speaker was Mr Louis Wong, Director of Phillip Hong Kong.  He presented a positive outlook for China showing that property prices in the cities are picking up as there have been 6 interest rate cuts, 5 reserve requirement cuts and relaxed home purchase requirements.  Power consumption is also up 3.2 % last quarter, PMI is up to 50.2 % which shows expansion and consumer spending is up 10.5 % last quarter.

 

He said more than 40 different business sectors benefit from house price increases which is a crucial growth driver. As property prices recover, fiscal revenue increases for the government.

 

He recommends exposure to China via Hong Kong. He likes Bank of China Hong Kong, China Mobile, CLP and CKI Holdings which we hold for our PGWA accounts.  Peses in HK are also 1 standard deviation below mean which show there is value.

 

I do hope this summary is of value to you.  Should you wish to diversify some of your assets to these markets for currency stability and growth prospects do not hesitate to contact me.  They key is to be like a nimble Ninja and not get slaughtered by the Samurai.

 
Invest well and grow your wealth,

 

Bill

 

 



From 11 to 19  May,  Dolly and I will visit Taiwan on a Reliance Tour and it will be interesting to learn more about this place.   Many of you have recommended us to visit Taiwan so will keep you posted. The food looks clean, fresh and  delicious.

No comments:

Post a Comment