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.
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