China has a Flu and the Whole World Gets Sick

Taxi drivers are complaining about low pick up rate and are suffering from massive income cut. SMRT and Comfort Delgro will suffer.

Tourists are not coming to Singapore. So the likes of Gentings and Straco are suffering from zilch revenue.

Tourists are staying away from flying into Singapore given the number of cases. Singaporeans are also worried about flying out. So SIA will suffer, and the effect will cascade to SATS.  SIA has already cut large number of flights in the months ahead and staff are surplus a plenty.

No tourists, no major events, the MICE sector also suffers. So Kingsmen will suffer.

Trade grinding to a halt because China factories are only slowly trying to resume amidst their lockdowns and containment. So all the industrial and shipping side are facing slowdowns. I think Yangzijiang and industrial REITs will suffer.

Malls are pretty empty these days. All staying home to avoid crowded places.  So REITs like Suntec REIT will suffer.

Who gains in times like this? Maybe the likes of TopGlove and Riverstone, and hospitals (Raffles Medical, First REIT). Maybe the supermarket chains too, if they have a strong Internet ordering front with home delivery service.

Banks are going to suffer from increasing bad loans and slow down in loans for business.  OCBC, UOB, DBS will suffer.

Will the Telcos (Singtel, Starhub) do better as there could be more Internet traffic? But the margins are poor, and if the traffic are largely generated while at home with their existing broadbands, the effect is likely neutral.

Capitaland and even Temasek Holdings are tightening their belts and freezing pay. They are trying their best not to retrench the workforce.

Meantime, Breadtalk is being taken private. Alas.

All in, a bleak picture of downtrend in the months ahead. Another Black Swan event as nature rears its head. Definitely BUY opportunities if they survive this. Only a question of when?

I pity the graduating students from all walks joining the workforce this year.

A Review of Investments for 2015

2015 has actually turned out to be a horrendous year, or a wonderful year, depending on how you look at it as an investor. Checking against the STI, I realised it has actually suffered a -14.3% dropped compared to this time last year. Taking into account 3% of dividends which the STI index would not have accounted for, that would actually be -11.3% net in terms of total returns.

So if you're sitting on a 11.3% loss, you're pretty much doing market normal. You're normal. On the other hand, if you've been buying throughout the year when the market dropped, it's probably going to turn out great in the longer run. That is, provided you didn't buy a bunch of junk! You had a lot of guts and I wish you success! You're probably abnormal.

My stock investment has returned an IRR of -1.2% for 2015 inclusive dividends reinvested into the portfolio. So I guess I should take some satisfaction that I have outperformed the market for the 6th year running. Can I gloat somewhat?

However, my long term IRR has continued to slide: from ~20% (2012-13, 4-5 years), to 17.3% (2014, 6 years), and now ~12% (2015, 7 years). A case of reversion to mean? Still, 12% over 7 years is not a bad long term performance. I'm consoling myself.

The shares portfolio is taking on a more global outlook as I've started investing into other regional ETFs (esp. Europe, Asia-Pac and Japan) on top of my current holdings of Singapore and US shares. If this was a fund management company, I should probably use some other global benchmarks. But I'm not, so I will continue to reference STI as my benchmark, because that's what my opportunity cost is. I'm only accountable to myself.

Bought:
  Anheuser Busch (US)

  ARA Asset Mgt
  Aspial (bonds)
  Boustead
  Capitacom Trust
  Capitaland
  CIMB Asiapac Div ETF
  Exxon Mobil (US)
  Global Logistic
  HongKong Land
  JMH
  Keppel
  Lyxor Europe10 ETF
  Lyxor Japan10 ETF
  M1
  OCBC
  Second Chance
  The Hour Glass
  Union Pacific
  YZG
  Zagro Asia

Rights Issues Subscribed:
  ARA Asset Mgt

Sold:
  nothing!

Lots of buying, not much selling. To be precise, I've sold nothing throughout the year. I've been a stooge. Gave nothing away.

Dividend income grew marginally to $11,168 for 2015. This would have been higher of course, except that I chose to accept all options offered in the form of scrip dividends (i.e. additional shares in lieu of cash) as per previous year. I'm too lazy to figure out what the exact dividend amount would have been. But I estimate it would likely be in the region of $14,000 for the shares portfolio. That's not enough to live off my lifestyle on, yet.

But from an overall perspective, the total portfolio of shares, unit trust, investment-linked and cash/bonds has finally breached the 7-figure zone. The journey is progressing well. The point of "inflexion" (a.k.a. financial independence) is coming.

Despite a tumultuous 2015, here's wishing you a wonderful 2016 next. Happy New Year!

My Singapore Team of Dividend Stocks 2015

My first 11 team of dividend shares have remained largely unchanged over the past year.

Goalkeeper

(1) OCBC remains my stalwart to guard the goalpost. An increasing interest rate environment can only benefit the banks.

Defenders

My defence is built around Real Estate Investment Trusts (REIT) in the form of (2) Capita Commercial Trust, (3) Capita Retail China Trust and (4) Mapletree Industrial Trust.  That gives me 3 REITs covering commercial, retail and industrial properties, with some exposure to China. 

My fourth defender is (5) Vicom.  a proxy play for car ownership in Singapore. It could be facing some windy resistance as there are supposedly less cars that require routine inspections over the next 3 years. But will there ever be less cars in Singapore? Not in my view. So long as there is a high level of demand for car ownership, there will be business in car inspections and Vicom is dominant in this regard.

Midfielders

Midfielders need to control the play. They have to create opportunities for offensives, and at times have to roll back to the defensive. For this, I am standing by (6) Boustead, (7) Hour Glass, (8) Kingsmen Creative and (9) SATS.

Boustead is about to break off its property business. For Hour Glass, its founders continue to buy its stock. I view that as positive. Kingsmen Creative has been doing well, expanding regionally and in Greater China. There are many MICE events and theme parks being built in the region. SATS on the end could face some issues with the airline business somewhat affected by negativity with the number of unfortunate air crashes and economic challenges.

Strikers

For the offensive play, I am looking for some excitement, in particular, growth players that may not be as yet high yielding but have the potential to go far. No change to my strikers with (10) Global Logistic Properties (GLP) and (11) Yangzijiang, giving me exposure to China, Japan and Brazil.

The poor outlook of the shipping industry could well affect Yangzijiang. Likewise, the slowdown in China could well see impacts to both. I'm normally averse to holding China plays. But I'm making an exception for Yangzijiang. It however requires some close watching.

Reserves

Nothing has therefore changed after a year to the team composition. But it looks like there could be some challenges in the performance of my first 11 in the year ahead. To mitigate, I've expanded my team by beefing up the bench strength and recruited (12) GK Goh, and (13) Keppel.

GK Goh holds a portfolio of interesting investments (more) with significant insider buying in recent months. Keppel on the other hand is my contrarian play. There is much fear in the market given its lack of new contracts and poor segment outlook in oil and gas. But with a Price-Earning ratio so low, it's too good to ignore given my long term outlook towards my investments.

Play ball! Oh wait, wrong game.

[Disclaimer: I hold all the above stocks. But this is not a recommendation to buy any of these. Do make your own assessment before investing, always. I acquired them at different times over the past five years (post Global Financial Crisis) and have benefited from their growth and reinvestment of dividend payouts since.]

My World Cup Team (of Dividend Value Stocks)

Warren Buffet in several of his talks cited a hypothetical situation for the audience to consider. If you only have a ticket on which you can only punch 10 holes, and each of these holes represent one stock you could invest in, and you can never change your mind thereafter for the rest of your life, what would you choose?

[You can find some of these videos of the talks on YouTube.]

Well, it's the World Cup season right now, so in the spirit of this global event taking place in Brazil, I shall extend that to a fantasy soccer team of 11 first team players. What would my first 11 be for a team of largely dividend-yielding samba stocks?  

I am going with a conservative and defensive oriented 4-4-2 formation.

Goalkeeper

There can only be one goalkeeper. This guy has to ensure that the opponents would not score and is the last man. For this, I would go with (1) OCBC. A big strong and friendly bank to hold the last line.

Defenders

For my defenders, I'm going with the two things that are the cause of  lots of heartburn - property and cars. The main reasons for our high headline inflation. Defensive stocks with high yields.

For property, I'm going with a couple of REITS, namely, (2) Capita Commercial Trust, (3) Capita Retail China Trust and (4) Mapletree Industrial Trust.  So that gives me 3 REITs covering commercial, retail and industrial properties. 

To round off the fourth player, I would go with (5) Vicom, a proxy play for car ownership.

Midfielders

Midfielders need to control the play. They have to create opportunities for offensives, and at times have to roll back to the defensive. For this, I would go with (6) Boustead, (7) Hour Glass, (8) Kingsmen Creative and (9) SATS.

Strikers

For the offensive play, I am looking for potential value-growth players that may not be as yet high yielding but have the potential to go far. For this, I pick (10) Global Logistic Properties and (11) Yangzijiang. Exposure to China, Japan and interestingly Brazil. 

It's pretty much a 80-20 rule. So that rounds up my first 11. What's yours?

[Disclaimer: I hold all the above stocks. But this is not a recommendation to buy any of these. Do make your own assessment before investing, always.]