Recap of 2018

22  Dec 2018

Dear Fellow Investor,

In this report, we recap 2018 and outlook for 2019. The year has been dull for global equities and this has made it difficult for our portfolios. However ; having taken a defensive stance we have beaten our benchmarks.

The outlook for 2019 is equally tough and the benefits of being cautious will be evident in the coming year and I will take you through the regional differences and effects on shares we hold in emerging markets such as Malaysia, Thailand and Singapore.

Our focus should be damage limitation which is our highest priority. This does not mean sell everything. It means owning assets that will survive now and thrive later plus collect dividends.

After a long bull run, we can see tougher times ahead for developed markets such as the US and Europe. . I have been cautious  since early 2018 as money has been moving from developed markets towards Asia where shares are not as overvalued.  

There are many solid companies in Malaysia/ Singapore  trading at very reasonable valuations of below 12 PE  compared to the popular FANG stocks such as Facebook and Amazon. Amazon before its 40 % drop had a PE of over 160.  HK Land traded in Singapore in contrast has a PE of only 5 and a price to book of 0.7 

They own quality properties in Hong Kong and Singapore that have occupancy levels of over 98 %.

They are managed by Jardine-Matheson   a reputable property company.

With a price to book of 0.7 which is the lowest since 1998  we have a margin of safety.  and limited downside. While we wait for trade and political uncertainties to be resolved we collect dividends and look forward to revenue increases.

HK Land retains 50 % of their earnings for growth and they are expanding into other Asian markets such as Cambodia, Thailand and Vietnam.

Our research team continually searches for undervalued high quality companies which offer a margin of safety plus dividends. This is our plan for 2019. We find shares with limited downside but a potential for large capital gains.

Dolly and I wilI be in Langkawi from 22-27 December to recharge our batteries and visit some attractions such as the eagle sanctuary and nature reserve. You can always contact me via email or WhatsAp.

Invest well and grow your wealth, Bill.

Critter of the week is a zebra from South Africa. The reflection is interesting.