It has been a while since my last blog in mid May.
Looking back at the last few weeks, it is amazing to see the US market on an incredible climb to new records every few days. It has increased 4.0% since start of June and outperformed the local SG market and the HK market significantly. Both declined 1% and 8% respectively.
The HK market fared the worst probably on the back of the concerns by investors of how the National Security Law is being applied and how it may affect investments in the island. The actions taken by the China government on the Big Chinese Tech firms did not help to ease investors’ concerns too. The Hang Seng Tech Index fell by 11% over the same period – worse than the general HK market.
In the last two weeks, I have been loading up my portfolio with HK stocks while trimming my US holding and taking some profits.
The few HK stocks that I had purchased and added to my holding include Alibaba, Ping Ann Insurance, Tianneng Power and Guangdong Investments. I believe these are good Chinese companies for the long term. Furthermore, except for Alibaba, they are providing ~3% dividend yield. I believe the Alibaba’s issue with the Chinese government is now resolved and the worst is over for them.
However, these purchases were insufficient to offset against the sales of my US stocks. As a result, my overseas holding drops to 27% of total equity holding as of this weekend. My target is to achieve 28% by end of this year and it can be achieved once the HK market recovers. But if HK market continues to weaken, I would load up more HK stocks.
The bullish sentiment on the US market is incredible but I am not complaining as I am benefiting from it. The question on everyone’s mind is whether this rally would end soon. So, without any better knowledge, my strategy is to trade around the core – do some profit taking when the price seem to overshoot but still retaining a core of good US companies. And buy them back when they are experiencing moment of weakness. The transaction cost involving US stocks has fallen significantly in the last one year and this has greatly enabled many of us to trade US stocks at an affordable cost. For example, POEMS charges US$3.88 per transaction and I believe they are not the lowest. You can shop around for lower rate.
For the Singapore market where most of my equity holding is held, it has been relatively stable with a slight downward bias. The SG market has benefited from a global rotation out of growth stocks to value stocks in the first quarter of this year and has since gained 10% year-to-date. Again no complaint. The SG market is where I get most of my dividends from.
Year to date, I have received 2.4% dividend yield and on target to a 4.5% by end of this year. As COVID threat retreats with more vaccination globally, I believe the market outlook will improve and companies will feel more comfortable to dish out more dividends to shareholders. I am particularly looking forward to the three local banks to restore their dividends back.
I am happy with the current state of my portfolio and the diversification across the 3 markets. I wish I had invested more in US but I should feel contended with what I have. It is better than having zero exposure.
I am glad that my portfolio has withstood the test brought by COVID and continued to deliver stable dividends as passive income to me. It seems to be rather resilient!
With my active income under threat, this passive income has become even more importantly. Safeguarding this passive income is my key priority now.
Wishing everyone a great investment week ahead – I would share my reflections on my portfolio at the 6 months mark in the next few blogs. Hope you would look out for them.
Take care and stay safe.