2023 Portfolio & Dividend Update

A Rollercoaster Ride

I know, Uncle was really late to have this 2023 performance review as we are already in February 2024 😊. Pai-seh, I was busy with a family trip to Korea followed by a Cruise Trip onboard RCL. Also, during the school holidays, we went a few times short trips to Malaysia and back to my hometown. My younger daughter got her O Level result followed by searching and applying for JC. That’s why I have been delaying this update and dragging my feet to write this blog post.

I think most of us had the same feeling that 2023 was a challenging yet dynamic period for investors, marked by a series of unpredictable events that significantly affected our returns. I have seen my portfolio up by more than 10% in the early part of the year and it dropped by more than -8 % at one time and recovered slightly better at the end of the year with +2.3% (including dividend).

As an investor, navigating through such a volatile market requires adaptability, patience, resilience, and long-term strategic thinking. Otherwise, with such a market, we may end up with a “sell low buy high” kind of situation if we follow the market sentiment/mood to trade in / out accordingly.

Portfolio Review:

2023 was a great year for investors who have invested in the US and other developed markets. The S&P 500 was the star at +24.23% while Nasdaq100 went up by a whopping +43% because of the extraordinarily strong performance from Magnificent 7. Not to be left behind, India's BSE Sensex was up by +20%, and Japan was also up by +19%. Back in our home country, STI ended up just flat at -0.34% and FTSE S-REIT: at +0.27% while Hong Kong’s HS Index had the worst performance among the major markets with -13.82%.

You can see that my portfolio has returned almost flat since 2019 when I started to venture into Hong Kong and other markets like UK LSE and MY KLSE. Hong Kong market experienced almost -51.3% since 2018 after the US started the so-called “trade war” with China followed by crisis after crisis (HK Riots / Covid-19 / China Tech crackdown / Property control & meltdown and now the economy slowed down plus capital outflow from domestic and foreign investors. )

Below is the comparison for 5 Years of CAGR + Average Dividend Yield of the major markets since 2019:

Hang Seng Index = -4.83% (CAGR -7.99% + Averg Div Yield 3.16% )

STI = +4.61% ( CAGR 1.09% + Averg Div Yield 3.52%)

FTSE S-REIT = +5.53% ( CAGR 1.32% + Averg Div Yield 6.85% )

FTSE 100 = +6.69% ( CAGR 2.82% + Averg Div Yield 3.87%)

S&P500 = +15.3% ( CAGR 13.73% + Averg Div Yield 1.57%)

DJ 30 = +12.09% ( CAGR 10.07% + Averg Div Yield 2.02%)

STE Portfolio = +2.52% ( XIRR, including dividend )

Clearly, my portfolio return since 2019 was terrible after I ventured into the overseas market (especially the HK market where I have more than 50% exposure.) and only outperformed the HK market. ☹

The HK market was down for 4 years consecutively and it was a record since Hang Seng Index was created in 1969 and now YTD 2024, it continues to drop by another -8.8%. It is really a challenging year for investors investing in such a market. I think many have lost faith and jumped ship or cut losses due to this prolonged downtrend and severe negative market sentiment with huge capital outflow and overhang property issues. The market sometimes may rebound with some positive news like PBoC cutting rate or rumors of a USD 278 Billion rescue package to buy up the market, but it continues to drop and test the lower low if those so-called rumors do not happen eventually.

I have collected $896K of dividends for the past 5 years (2019-2023) but at the same time also incurred capital lost (paper / realized) of around -$501K, so the net gain in the past 5 years was $394K or XIRR of just 2.52%. The losses mainly came from the HK market as indicated below.

Total Return by Market :

As you can see, my gain from SGX/LSE/KLSE was almost wiped out by losses from the HK and US markets (US also mainly on China Tech ADR). If I exclude the HK Tech stocks, my return in the HK market still be able to generate a +ve return of $37K (including dividends), although just a mere 0.6% XIRR, not bad actually under the current severe downtrend HK market, with the power of dividend.

This is really a challenging and good experience from a portfolio management perspective when one is trying to venture out into new territory and market with much uncertainty about the country and geopolitical risk involved.

Although the valuation looks cheap from a “traditional” way of analysis e.g. PE/PB or Div Yield, the factor affecting a market is not just by these valuation matrixes, it involves much more complicated global capital flow/ geopolitical tension and sentiment.

Definitely, I will not be selling at the current price level and at the same time not buying much into this market with just selectively picking up some high FCF Yield companies / ETFs from time to time. As the policymaker emphasizes companies with good FCF could increase their dividend payout or do the share buyback (can see the increasing trend about companies doing this), I will just keep calm and collect dividends for the time being.

I am not sure what will happen in the next 5 years time, will it be :

柳暗花明又一村

一失足成千古恨

Let’s see ….. I don’t have a crystal ball and can’t predict what will happen in HKG/CHN Market in the coming years.

4^thQtr 2023 Dividend Update:

Total Dividend collected in 4^th Qtr 2023 = $31,270.92

Total Dividend collected in 2023 = $188,240.48

Portfolio-wise, I didn’t do much with just increased some S-REIT in 4Qtr 2023 and JMH / Ping An Insurance, as well as the HK Dividend ETF 03070. Added 3 stocks and 1 s-REIT and reduced (take profit) on small cap pharma Consun Pharma 01681.

Individual stocks performance in 2023 :

There were some ups and downs, the worst performance among my top 10 holdings was PingAn Insurance with -31.6% and the best was CNOOC with +30.3%.

Top 50 Holdings:

51-81 Holdings:

Lost Decades:

Since the start of the year, the HK Hang Seng Index lost another -8.8%! Will the HKG/CHN market face the same situation as JPN in the early 90s the economy and stock market were stagnant for almost 30 years and just recovered to the previous peak recently.

I think is still too early to predict what might happen as the comparison between China's economy and Japan's "Lost Decades" in the early 1990s is complex, and there are both similarities and differences. The trajectory of China's economy will depend on its ability to manage challenges e.g property sector / local government’s debt issue, implement effective policies to stimulus economy and promote domestic consumption as well as adapt to the global economy and political tension like “tech/chip war “from US lead alliance and increase exports to non-US / EUR markets.

At this moment, I think the best option for me is just “do nothing”, adopt the “wait and see” attitude, stay calm, and collect dividends.

From next onwards, I will not do the quarterly update as I feel no point in just publishing the dividend figures without much info or update. Initially, I was thinking of totally stopping blogging as most of the stuff I wanted to share (about investing philosophy/investor's behaviors towards market/ market valuation and cycles/regression to mean, etc. ) had already been mentioned and highlighted in my previous blog post. But I think to stay connected to fellow like-minded friends and investment communities, I think it would be better for me to just do the yearly review and update. Also, Uncle will spend more time traveling and staycation this year with Mrs. as kids are growing up. We are planning to travel to China ( 哈乐滨, 长白山, 雪乡, etc..) after CNY. 😊

Ah ok, I may continue to post and share photos taken during our trips from time to time!

As the Chinese New Year is just around the corner, taking this opportunity, I would like to wish you and your loved ones a year of prosperity, happiness, and triumphant success in the Year of the Dragon! Wishing you the strength and courage of the Dragon as you pursue your dreams in 2024 !!

龙年吉祥 , 龙腾虎跃、龙马精神, 龙年行大运 !

Cheers! Till next update …

STE

PS : World stock market regression Chart :

For the US market, it seems that the "party " may continue with trillions of excess capital sitting sideline in the money market to enter the stock market when the FED starts to cut the short-term FED Fund Rate. As I always emphasize, the stock market is 90% psychology and 10% economy/ valuation. Because of market sentiment/optimism, one of the greatest economists John M Keynes famously observed that the " market can stay irrational for longer than you can stay solvent !"

Stay safe with these so-called "Animal spirits " while enjoying the party!

In fact, even the more diversified index of the S&P500 as we think is quite concentrated with AI / Tech hypes with the "Magnificent 7 " outperforms the rest and contributes a big chunk of profit and growth of the S&P500 (with high PE now, of course, some may argue there is still pretty much of strong growth there, can't really measure it with standard PE valuation, no doubt). Anyway, as I said, the party may continue as long as capital/funds continue to pour into this market, just enjoy the ride! 👍

Ok, now they are talking about " Super 6 " without Tesla ... 😉

https://twitter.com/KobeissiLetter/status/1753478117111267691?t=iyKc76mG9_r6tXPNk5iVDA&s=03

"The Magnificent 7 has now added a combined $3 TRILLION in market cap in 2024.

Since the October 2023 low, total gains for the Magnificent 7 are approaching $5 trillion. This includes the $200 billion in lost market cap for Tesla, $TSLA, in 2024 so far. To put this in perspective, the Magnificent 7 is now the same size as the combined market cap of the stock markets in Japan, Canada, and the UK. Also, the Magnificent 7 has a market cap bigger than the GDP of every country in the world other than China and the US. These 7 stocks now account for 50% of the entire Nasdaq."