A positive close

 8 Jan 2022

Dear Fellow Investor,

We had a positive close last week and our managed account stocks were well supported both in Malaysia, US and Singapore.  Our focus has been on economic recovery and a gradual re opening . We have over weighted shares in technology  which has been the best performing Malaysian sector in 2021. As they are manufactures they benefit with increasing exports and demand for semiconductors. Our bank stocks such as OCBC, Public Bank and Maybank are supported by reopening and the possibility of higher interest rates. Well run banks are the foundation of economic recovery. While we wait they all pay handsome dividends.  

On the commodity side we hold United Plantation, Kim Loong ,  Dialog and Wellcall. Plantations will benefit from inflation and rising food prices worldwide. Dialog will  benefit with the Pengeran Phase 3 expansion in downstream activities and Wellcall as a supplier of rubber hoses to the oil companies. As crude oil advances with inflation, rising demand and economic recovery  should benefit our holdings.

From a macro perspective there should be more easy money- looser for longer . Central banks will raise interest rates but  only gradually and in tiny amounts. Rising interest rates will hurt high flying expensive shares with high debts.

and low revenues.  Some of these shares do not even pay dividends . We hold none of these.   

One positive news last week was the announcement of Charlie Munger partner of Warren Buffet buying a large holding in Ali Baba for his fund. This is an example of buying a quality value stock trading at a huge discount .  Sentiment for Hong Kong and China shares is at a historical low point and his purchase shows confidence in these beaten down markets. Despite the negative news and media propaganda, China will recover. I would bet on Buffet and Munger rather than CNBC or Bloomberg,

As mentioned last week the merger between Mapletree Commercial Trust and Mapletree North Asia Trust is a vote of confidence in Hong Kong, Asia and China. The synergy between these 2 reits should definitely benefit shareholders both in capital gain and rising income.

For us to prosper in 2022, we need to focus on dividend income and growth to overcome inflation. Bonds and cash are both losing investments. Our companies must have pricing power and deal in must have products that are necessities.  Reits such as Mapletree NA Trust fit this profile, They have the ability to raise rents with recovery, inflation and continue to generate increasing cash flow.  

With the November election in the US expect more easy money as Biden and his crew will do all to support stock markets.  Yes there will be volatility and fierce corrections but stand your ground and continue to hold your quality shares.

Take care, Bill

This dog an Alaskan Malamute saved its injured master and kept him from freezing on a mountain in Croatia. He laid on the body of his injured master and kept him warm for 18 hours before rescue.