The Malaysian stock market reacted far better than initial prognosis by most market analysts, on the heels of the shocking – though not wholly unexpected, if the mini rally for certain stocks earlier last week is any indication – defeat of the long ruling coalition, Barisan Nasional in the 14th general election. Even the ringgit is holding up fairly well, especially considering the external backdrop of strengthening US dollar and rising Treasury yields.
To be sure, the Bursa saw increased volatility when it resumed trading on Monday. There was a huge 79-point swing intra-day but market breadth was broadly positive on the back of brisk trading volume of 6.62 billion shares. The FBM KLCI ended the day 3.9 points higher.
We attribute this show of confidence to the swift, decisive actions taken in these early days, including the setting up of the 5-member Council of Eminent Persons to guide the crucial 100-day transition period. The council is tasked with drawing up and recommending institutional and economic reforms to the new government. One of its first moves has been to set up an Institutional Reforms Committee.
Confidence was likely further bolstered by the quick announcement of three key cabinet ministers, for the Finance, Defence and Home ministries. A functional cabinet of key ministries is expected by the end of the week.
Despite the inevitable uncertainties, the smooth transition of power and quick actions has clearly earned our government the benefit of the doubt.
Having said that, we did see heavy selloff in a handful of stocks. Construction stocks, in particular, were heavily sold off across the board given that the new government has promised a review of all mega infrastructure projects – that should include the ECRL, KL-Singapore HSR, MRT 3 and Gemas-JB double tracking rail project.
Of note though, shares for companies that are perceived to be more professionally run – the likes of Gamuda and Econpile – steadied quickly after the initial selloff. Should these mega projects be delayed or aborted altogether, prospects for orderbook replenishment may be negatively affected. So their share price drops are rational and reasonable. But at the end of the day, it would not undermine the companies’ underlying strength that is based on expertise and experience.
In fact, the worst affected stocks are those perceived to be closely linked to BN and had benefited (or will benefit) from lucrative government concessions and contracts.
At the worst, proprietary day trader and intraday short selling activities for My EG, George Kent, Excel Force and Gabungan AQRS were suspended (on Tuesday). On Wednesday, Bursa went further, freezing the lower limit price for My EG and George Kent after both stocks traded limit down for the previous two consecutive days.
We also looked at the other end of the spectrum, at the stocks that had rallied. Since we are quite sure that their underlying businesses have not changed drastically overnight, the only explanation is that the perception of close inter-relationship between politicians and businessmen – despite everything that has happened – remains well and alive.
Going forward, with the promised reforms and endemic corruption practices addressed, it is hoped that rent seeking would no longer be promoted.
We made several transactions for the Malaysian Portfolio this week. On one hand, we halved our holdings in Choo Bee, given the prevailing uncertainties in the construction sector.
On the other hand, we recycled the proceeds and put all our remaining cash balance to work – by acquiring shares for Maybank, Pantech, Panamy and SCGM.
Maybank, Panamy and SCGM should benefit from rejuvenated business and consumer confidence as well as consumption spending once GST is reduced to zero (starting June 1, 2018).
Meanwhile, Pantech is a good proxy for rising oil prices. Brent crude is now hovering just a shade below the US$80 per barrel threshold, compared with the average of US$55 per barrel last year.
After taking into account all the above, the portfolio is now, once again, nearly fully invested. This is our vote of confidence to the new administration.
Total portfolio value gained 4.2% from the last update (May 3, 2018), performing better than the FBM KLCI’s 0.1% advance.
The gains lifted total portfolio returns since inception to 66.8%, again, well ahead of the benchmark index’s 1.4% increase over the same period.
We acknowledge that short-term earnings could still be weak but we believe that market will be driven more by positive expectations for the longer-term.
The country has never been happier, more united and confident.
Performance Comparison Since Inception (%)
- Tong's Value Investing Portfolio
- FBM KLCI
|SHARES HELD||QUANTITY||AVERAGE COST||COST OF
|AJINOMOTO (M) BHD||12.278||18,417.5||23.800||35,700.0||17,282.5||93.8%|
|PANASONIC MANUFACTURING MSIA||24.955||9,982.0||38.020||15,208.0||5,226.0||52.4%|
|SUPERLON HOLDINGS BHD||1.175||14,100.0||1.360||16,320.0||2,220.0||15.7%|
|KERJAYA PROSPEK GROUP BERHAD||1.025||11,280.0||1.670||18,370.0||7,090.0||62.9%|
|Y.S.P.SOUTHEAST ASIA HOLDING||2.483||26,075.0||2.580||27,090.0||1,015.0||3.9%|
|LUXCHEM CORPORATION BHD||0.717||11,825.0||0.700||11,550.0||(275.0)||(2.3%)|
|CHOO BEE METAL INDUSTRIES BHD||2.190||17,520.0||2.450||19,600.0||2,080.0||11.9%|
|FORMOSA PROSONIC INDUSTRIES||1.540||27,720.0||1.580||28,440.0||720.0||2.6%|
|HONG LEONG INDUSTRIES BHD||9.276||18,551.0||11.420||22,840.0||4,289.0||23.1%|
|OKA CORPORATION BHD||1.541||18,488.0||1.310||15,720.0||(2,768.0)||(15.0%)|
|WILLOWGLEN MSC BHD||1.010||10,100.0||1.070||10,700.0||600.0||5.9%|
|HOCK SENG LEE BHD||1.534||22,243.0||1.450||21,025.0||(1,218.0)||(5.5%)|
|MALAYAN BANKING BHD||10.820||32,460.0||10.820||32,460.0||0.0||0.0%|
|PANTECH GROUP HOLDINGS BHD||0.580||24,940.0||0.595||25,585.0||645.0||2.6%|
|PANASONIC MANUFACTURING MSIA||36.000||7,200.0||38.020||7,604.0||404.0||5.6%|
|Total shares held||290,341.2||326,138.9||35,797.7||12.3%|
|CHOO BEE METAL INDUSTRIES BHD||2.190||17,520.0||2.440||19,520.0||2,000.0||11.4%|
|Realised Profits / (Losses)||97,793.8|
|Change since last update May 3, 2018|
|Portfolio Returns Since Inception||200,000.00||333,591.5||133,591.5||66.8%|
|Portfolio Returns (Annualised)||18.5%|
|Risk Adjusted Returns Since Inception||104.0%|
|Performance Comparison||At Portfolio Start||Current||Change||Relative Portfolio Outperformance|
*Current price is as at May 17, 2018.
*Portfolio started on Oct 10, 2014 with MYR200,000.
*This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell stocks.
|SHARES SOLD||DATE BOUGHT||DATE SOLD||QUANTITY||AVERAGE
|BATU KAWAN BHD||15-Feb-17||03-May-17||200||19.500||3,900.0||18.960||3,792.0||(108.0)||(2.8%)|
|BATU KAWAN BHD||15-Feb-17||04-May-17||400||19.500||7,800.0||18.900||7,560.0||(240.0)||(3.1%)|
|UNITED PLANTATIONS BHD||13-Feb-17||08-May-17||500||26.150||13,075.0||28.420||14,210.0||1,135.0||8.7%|
|UNITED MALACCA BHD||08-Feb-17||09-May-17||1,000||5.800||5,800.0||6.200||6,200.0||400.0||6.9%|
|UNITED MALACCA BHD||08-Feb-17||11-May-17||1,000||5.800||5,800.0||6.190||6,190.0||390.0||6.7%|
|WILLOWGLEN MSC BHD||23-Nov-16||30-May-17||13,000||0.768||9,985.9||1.720||22,360.0||12,374.1||123.9%|
|YEE LEE CORPORATION BHD||12-Jan-17||29-Jun-17||6,000||2.500||15,000.0||2.487||14,924.0||(76.0)||(0.5%)|
|CLASSIC SCENIC BHD||26-Jan-16||13-Jul-17||4,000||1.413||5,651.3||1.815||7,260.0||1,608.8||28.5%|
|MIKRO MSC BERHAD||01-Dec-16||27-Jul-17||42,000||0.331||13,920.0||0.545||22,890.0||8,970.0||64.4%|
|CLASSIC SCENIC BHD||01-Dec-16||27-Jul-17||4,000||1.413||5,651.3||1.790||7,160.0||1,508.8||26.7%|
|PANASONIC MANUFACTURING MSIA||21-Jan-16||27-Jul-17||400||26.125||10,450.0||37.100||14,840.0||4,390.0||42.0%|
|ELSOFT RESEARCH BHD||30-Mar-17||24-Aug-17||8,000||1.844||14,750.0||2.650||21,200.0||6,450.0||43.7%|
|JOHORE TIN BERHAD - WA 12/17||04-May-17||24-Aug-17||17,000||0.655||11,135.0||0.680||11,560.0||425.0||3.8%|
|FOCUS LUMBER BERHAD||03-May-17||30-Aug-17||6,000||1.660||9,960.0||1.530||9,180.0||(780.0)||(7.8%)|
|WILLOWGLEN MSC BHD||23-Nov-16||30-Aug-17||7,000||0.768||5,377.0||1.430||10,010.0||4,633.0||86.2%|
|WILLOWGLEN MSC BHD||23-Nov-16||28-Sep-17||7,000||0.770||5,377.0||1.180||8,260.0||2,883.0||53.6%|
|LII HEN INDUSTRIES BHD||14-Dec-16||28-Sep-17||5,000||2.820||14,100.0||3.720||18,600.0||4,500.0||31.9%|
|COMFORT GLOVES BERHAD||28-Aug-17||08-Dec-17||25,000||0.960||24,000.0||0.930||23,250.0||(750.0)||(3.1%)|
|JOHORE TIN BHD||08-May-17||08-Dec-17||9,000||1.600||14,400.0||1.180||10,620.0||(3,780.0)||(26.3%)|
|THONG GUAN INDUSTRIES BHD||12-Dec-16||08-Dec-17||5,000||4.243||21,215.0||4.100||20,500.0||(715.0)||(3.4%)|
|KERJAYA PROSPEK GROUP BERHAD||12-Jan-17||15-Mar-18||11,000||1.025||11,280.0||1.540||16,940.0||5,660.0||50.2%|
|KERJAYA PROSPEK GROUP BERHAD - WARRANTS B 2018/2023||08-Mar-18||15-Mar-18||3,000||0.000||0.0||0.330||990.0||990.0||-|
|LUXCHEM CORPORATION BHD||30-Aug-17||15-Mar-18||16,500||0.732||12,072.5||0.720||11,880.0||(192.5)||(1.6%)|
|WILLOWGLEN MSC BHD||14-Dec-17||22-Mar-18||20,000||1.010||20,200.0||1.260||25,200.0||5,000.0||24.8%|
|MUAR BAN LEE GROUP BERHAD||26-Oct-17||22-Mar-18||13,500||1.240||16,740.0||1.170||15,795.0||(945.0)||(5.6%)|
|CHOO BEE METAL INDUSTRIES BHD||07-Sep-17||16-May-18||8,000||2.190||17,520.0||2.440||19,520.0||2,000.0||11.4%|
A Note to Readers
It is my pleasure to share with you my Value Investing Portfolio. However, I must emphasize that it is by no means a recommendation or a solicitation or expression of views to influence you to buy or sell any stocks. I am just sharing openly on what I am doing with my stock portfolio.
Further, I like to remind all investors that investing is not just about the profits or returns. You will inevitably suffer stock losses too. You need to understand your own investment objective, risk appetite and the amount of loss you can afford to bear. So, while many investors talk only about absolute returns, I am also sharing the computed risk-weighted returns of my portfolio.
Tong Kooi Ong