Monday, January 27, 2020

Sold some stocks

Last week I sold:
  • DKSH.  Too small an amount to keep track of.
  • Call options on an Italian bank.  They had been doing well, but dropped back down due to the Italian election
Made a negligible profit.

Last night, I sold:
  • Rolls Royce (RYCEY).  Big loss of around USD 8K on this.  This has been my worst position, because of the size of the loss and the time holding it.  My mistake was buying it based on earnings 5 years ago, where I did not realize how bad the cashflows were.  Operationally, cashflows have since recovered, but the current valuation is fair - not cheap - even at 20% below my purchase price.  I sold now due to the Wuhan Virus.  China's ban on international travel groups will hurt Engine Flying Hours if it continues.  And if the virus spreads (likely), I think people will be reluctant to fly, even in US/Europe.
  • Sold some small positions in oil stocks.  China's slowing economy will affect oil.
Normally I would wait for a rebound day to sell.  But I think the flu will get worse before it gets better, and the market may just be starting to price it in.

Am waiting for the chance to buy China/HKEX stocks.  If he virus peaks in April/May, when should I buy?  Got plenty of time to think about it.

Sunday, January 26, 2020

Wuhan Virus: What we know #2

How Transmissible is it?


How deadly is it?

Hard to tell now:
  • At the early stages when hospitals are overwhelmed, it is hard to identify who has the disease.  Many may have a bad common flu and go to hospital, others may have a mild version of the new virus and stay away.  The death statistics may be understated, as some who die are recorded as other causes.
  • There are reports that the virus can sicken healthy people.  Including killing a healthy 36 year old.
  • About a quarter of cases are severe (requiring hospitalization).
  • The official mortality rate is ~ 3%  (the 'sweet spot' to maximize transmissiblity).  But it could end up a lot higher or lower.

How likely is the containment to work?

The current quarantine of Hubei cities is probably too late.  Due to the transmissiblity, I would expect other Chinese cities to be affected, and possibly locked down as well.

I am guessing that other countries, like Singapore, will not be broadly affected.  Think we will only have to deal with few isolated case.   But its a matter of luck.  There's a chance that it turns out as bad as SARs.

Identifying/Stopping the Virus

A Singapore company has developed a device (chip-on-a-stick) that can identify the virus in 2 hours.  We will need such detection, due to the virus' wide range of symptoms, and how similar they are to other flu.  The question is how fast and cheaply they can be produced.

Vaccine development is expected to take 3 months to reach experimental testing.

The Stock Market

I think the outbreak will get worse before it gets better in China. There is a small chance it affects other Asian countries as badly as SARs.

Longer term there should be a buying opportunity for Chinese stocks.  But not yet.

Tuesday, January 21, 2020

What we know about the Wuhan Virus

It is less deadly than SARS.  SARS caused death through a severe immune response, which is why it killed healthy people, but not children.  The Wuhan Virus has mostly killed older people: out of 6 deaths to date, their ages were 61, 69, ??, 89, 66 and 48.

The incubation period is believed to be 2 weeks.

Most infected people have mild symptoms.  Its possible that some people have no symptoms.

We don't know how transmissible it is.  Can it be spread by casual contact (eg: touching a doorknob, sneezing), or does it require close contact?

My best guess is that it is already entrenched a large enough population to remain.  Hard to stop it spreading because of the long incubation, mild symptoms and CNY nationwide migration.  As viruses spread throughout a population (six months or a year?), they usually evolve to show less symptoms and become less deadly.  Eventually this becomes like the normal flu, maybe slightly deadlier.

What do I guess for the stock market?
  • Probably get a spiking number of cases 2-3 weeks after CNY.  Maybe the Asian markets sell off a bit more.
  • I think they will recover from this issue between today and the next two weeks.
So I think the impact will be a lot smaller than SARs.

Sunday, January 19, 2020

How to find Financial Statements on HKEX

Took me long enough to figure this out that its worth recording here.

Go to HKexNews website.  Not HKEX.  Type in the company code, select the company and dates.

Thursday, January 2, 2020


The news from India has been bad for the past few years.  There was a painful demonitization in 2016.  A GST in 2017.  GDP growth has been falling the past year, and last quarter's 4.5% growth is one of the lowest in the past 25 years:

Source: Trading Economics

Indian stocks are flat-to-down over the past 2 years:

I think India is due for a cyclical rebound in the next few quarters.  Helped by last September's fiscal stimulus, which should power their market for a few years like Trump's 2017 stimulus did.

I'm long several Indian ETFs: 2% INDA (large caps), 1% each SMIN and SCIF (small caps), and 1% Fairfax India (Prem Watsa's fund with interesting holdings, but very high fees).