Monthly Review- September 2012

This month has been a slightly positive month for the stock markets worldwide, largely attributed by the announcement of the unlimited bond buying programme by ECB in Europe to Eurozone countries that require it, as well as FED's newest QE3 in US, which promised to continually buy mortgage-backed securities till unemployment rate falls to acceptable levels.  This boosted the stock markets temporarily, but doubts began to spook the markets soon after on the effectiveness of these measures.  For the current month, in comparison with the previous, the total amount of unrealized profits increased by approximately 31% while the amount of realized profits increased by approximately 16% with the sale of my holdings in CapitaMall Trust. 

The biggest contributor to the rise is Wingtai, which has rebounded strongly since May's rangebound share price of between $1.145 to $1.355 till $1.710, an impressive 44%!  Wingtai has definitely been the main driver that boosted my portfolio from a net loss position to a net gain position.  With the continual sales of their remaining mid to high end residential properties, and the expected launch of a new project next year, I believe its prospects is still positive, barring any further cooling measures by the Singapore government.

In addition, for the month I have added positions in the new IPO counter Far East Hospitality Trust.  After failing to obtain any placement for its shares during IPO, I  went on to purchase its shares post IPO as I believe in the strong fundamentals in the tourism story in Singapore.  Furthermore, Far East has been a leader in the hospitality sector, thus I strongly believe its managers will actively manage the Trust with due diligence to improve its returns to all shareholders.  Indeed, within less than a month, the share price of Far East Hospitality Trust has rose by 6% above my purchase price.  I believe there will be more upside to come, and I am looking forward to its announcement of its first financial report post listing.

However, capping the gains in my portfolio is Rotary.  After announcing that it is expecting to post a full year loss in FY2012 due to its SATORP project in the Middle East, the share price plunged to its lowest since May 2009.  Since the sale of the biggest dragger First Ship Lease Trust in January this year, Rotary remains as the next biggest dragger in my portfolio since.  Although the fundamentals have changed, I will continue to wait for a better opportunity to divest.

The upcoming month is filled with uncertainty, as October has always regarded as a negative month for equities.  Moreover, companies will start reporting their third quarter financial results next month.  With the PMI numbers below expectations in many countries, the third quarter results may drag the equities market.

My Current Portfolio:

Lessons learnt: Keep to my forte, invest in high dividend paying counters and strong blue chip counters.  Growth counters do not seem to show any growth potential after I purchase them.

CapitaMall Trust (21st Mar 2011 to 7th Sep 2012)

CapitaMall Trust was bought with the intention to tap the growth in the retail sector, as well as to gain a steady stream of income from its steady dividends.  Being the first REIT to be listed on SGX, and the only Singapore-based REIT in the STI component stocks, I believe it is a safe and strong bet to own.  Hence after it dropped from a previous high of $2.16 in October 2010 to $1.75 in March 2011, I decided to buy 3 lots to keep for dividends.

Since the purchase, the share price have been rather volatile due to the uncertain macroeconomic conditions.  As observed, CapitaMall Trust showed its resilience throughout this period of uncertainty as the share price just fluctuate between a range of $1.61 to $2.07, while other shares experienced a much higher volatility.

The only regret I had is that I did not add on my positions in this strong counter when the share price dropped below my initial purchase price.  Even when opportunities presented themselves twice during this period, I did not act.

Overall, my total gains in this counter is a decent 22%, with total dividends collected accounting for 8%. 

In my opinion, with the current low interest environment and the on-going asset enhancement initiatives by CapitaMall Trust on a couple of its malls, I believe there is room for further appreciation in its share price.  However, as the STI moved above the 3,000 level and CapitaMall Trust retest the high of $2.00 level after a rather long period of volatility, thus I decided to sell my holdings to realize my profits first.

My thoughts at that time: Since I have already set a target price of $2.00, once it hit my target price, I shall be discipline to sell it and realize my gains.

Lessons learnt: Discipline is always great, as it increases my satisfaction with my gains if the share price drops after the sale.  On the other hand, it also minimizes regret if the share price rose further after the sale, as I am being discipline and sticking to my plan.