Dividend & Portfolio Update: 1st Qtr. 2021

 Market continued the upward trend and rebounded strongly in 1^st Qtr. 2021 with STI Index up by around +9%. With improving economic situation and more good news on economy recovery and the progress on vaccination, “old economy “stocks like bank, Oil & Energy, Consumer staples are having a good run recently while the Tech or growth stocks having a pullback due to increase in US 10 Years Treasury Yield.

As I mentioned in my previous blogpost ( Volatile Market: A New Normal ), the pullback might just be a temporary “dip” in the market as market still being “flooded” with so much of liquidity, money just  moved around from one sector to another sector or so called "sector rotation". Increasing 10 years bond yield (or interest rate in general) might also be the good news for banking sector as this may improve their NIM while FED remain committed to keep the short-term rate "ultra low" for foreseeable future.

 

Is Market Valuation Still Cheap Now?

I am not sure how the market will move or turn out eventually since I do not have crystal ball to predict the future, but since the overall market valuation has increased from the March 2020 low, the “odds “of wining the market is getting lower and lower. With STI moving close to long term trend level, the “odds “of index staying +ve at this level may be just around 60+% as compared to more than 90% in March 2020.

* Hong Kong Hang Seng Index already moving above trend line.

 

SG Bank Long Term Trend Line :

 

As you may see from below SG bank stocks trend line, stock price for all 3 banks rebounded strongly recently and all are moving above long-term trend line now. Valuation is not as “cheap” as March 2020 but in the long run, the chances of wining or odds of price staying above this level is around 50+% (for OCBC/UOB), not that bad if you are just doing the long term DCA. But for me, I will not add any of banking stocks at this moment since I already have close to 35% of banking stocks in my portfolio. I will just let the “bullet fly” for a while if the price continues to increase and may consider to trim some of it if it hit +0.5SD level.

How About Valuation for S-REIT?

SG-REIT down by -2.4% YTD because of long term bond yield increase which is “bad “news for REITs as it depends on “leverage “to growth their portfolio in the long run. FTSE SG REIT Index is slightly below the long-term trend line, not really high in valuation but also not ridiculously cheap, just in fair valuation. The stock price of some so called “blue chip” REITs like Ascendas Ind Reit/ Keppel DC REIT and Mapletree Ind had suffered price pullback by around -15% to -25% from their record high achieved recently. I may consider switching some of my fund from bank to REIT if the price divergence between these two sectors continue, especially to REITs which have data center like Keppel DC, Mapletree Ind or Ascendas Ind REIT in their portfolio. Currently, these REITs are having around 4.5-5% Yield which I think is quite decent with DC’s growth prospect and stable long-term lease.

Portfolio & Dividend Update:

Total Dividend estimate to be collected in 1^st Qtr 2021: $ 22,314.24 with majority (49.2%) of it came from SGX (mainly from S-REITs).

As usual, 1^st Quarter dividend is usually much lower as compare to 2^nd and 3^rd when most of HKG stocks start to declare and giving out their dividend in 2^nd and 3^rd Qtr. This figure is lowest since 2012 and I hope it may rebound in next two quarters when HKG and SG Banks & Conglomerate starts to announce their result and dividend pay-out as well.

Portfolio YTD Return: +13.71 %

My 1^st Quarter YTD return outperformed STI by 4.6% since I am having more banks, Oil& Energy, Commodity also HKG Conglomerate where the price had increased by 10-20% vs last year.

You may notice that I have slowly increased my exposure in Tech stocks through HK Tech ETF and the only tech stock I have is Alibaba (9988). I have around 3.1% of tech stocks /ETF in my portfolio now and I intend to accumulate slowly if there are opportunities, like recently I bought more HKG Tech ETF (3067) at around HKD 16 to 18 +. I am still sitting with 5% paper gain for overall tech sectors since I have added some of these stocks from mid-2020 and I think tech stocks will still have an exceptionally good return and potential growth in the long run. But since as I mentioned before, is hard to pick the true winner like next “Amazon / Google /Facebook” and this sector is kind of “winner takes all “ market environment, I would rather go for ETF instead of individual stocks, whereby Alibaba is quite exceptional as the stock price been hammered down due to failing of ANT’s IPO.

I will also try to avoid those small techs startup which might have good price swing/ momentum in the short term, but the long-term success is still a big question mark. Remember, when market is flooded with liquidity, any stocks with good “story” will fly like no tomorrow, even if the company still not generating any decent cash flow or profit. Of course, high risk = high reward for such high growth company, you may need to control you risk or overall exposure for such stocks in your portfolio.  

 

Top 30 Stocks (79.8% of my Portfolio)

Basically not much changes in the composition of my top 30 counters except two newly added i.e HKG TECH ETF and Alibaba.

Happy Hunting & Huating!!!

Hope economic situation may improve when more and more people get vaccinated, and more country will proceed to re-opening their economy slowly and sooner.

 

Cheers!!

STE