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Portfolio update

Carnage over the past month. Down -5.7% month-on-month and now down -0.5% over the first twelve months of the portfolio, measured in US Dollars.

It’s the strength of the US Dollar that’s wrecking markets across Asia. The Yen is now at 144, the Singapore Dollar at 1.44, for example. The only currency that has been spared is the Hong Kong Dollar, thanks to its peg, but unfortunately, I have little exposure to HKD-denominated assets.

The DXY shows the relentless rise of the US Dollar, at least against the other major currency pairs. The portfolio was funded back in early October last year, and since then, the DXY is up about +23%.

The only real impacts from the current US hiking cycle are higher debt burdens for those with USD borrowing and Asian rate hikes catapulting local economies into recessions. But most of my stocks are defensive consumer stocks with limited leverage.

Over the past year, I’ve had significant exposure to oil prices via CNOOC. That one has produced satisfactory returns thanks to massive dividend payments and despite a recent weakening in the oil price. I’ve had significant exposure to Indonesian and Japanese tourism through Multi Bintang, Ichigo Hotel REIT and Kyushu Railway. That bet has also turned out okay, despite the weakening of the Japanese Yen. And lastly, Indonesian auto producer and distributor Jardine C&C performed well, though I sold it far too early.

So while the performance is disappointing in terms of the numbers, I realise it could have been worse.

What have I learnt over the past year since I started tracking my portfolio?

• For one, the need to buy cheap. My biggest mistake was buying Sony after, admittedly, wanting to create content that would bring in subscribers and then getting excited by the stock. It traded at a fair multiple of 15x EBIT, and I still don’t know if the stock is undervalued at its current 12x EBIT.
• Another lesson is that you don’t want to buy stocks with near-term challenges, such as Ultrajaya. Up until now, at least.

I believe in the value-with-a-catalyst approach: buying cheap and looking forward to positive surprises. In my case, those positive surprises are mostly about tourism, an end to COVID-19, an end to supply chain constraints and strong cash flows from high commodity prices.

Here is my Asian portfolio as of 27 September 2022: