Friday, January 01, 2021

4Q 2020 Investment Strategy Update

What can I say, what a dramatic 2020 is finally coming to an end! A quick recap of a few notable event which shapes the world this year, in sequence of importance in my opinion:

  1. COVID-19 pandemic still raging in many parts of the world since Jan 2020. As of 31-Dec, 83.3 million people are infected, resulting in 1.8 million deaths. COVID-19 has now become the 9th highest death record pandemic in human history
  2. Global Stock Market plunge as COVID-19 spreads around the world in unprecedented speed, entering bear territory in record number of days. Countries globally enter lockdown period, bringing economic activities to a halt
  3. USA presidential election, which is really good enough to make a soap opera. President Trump unwilling to concede defeat, spreading unproven statement about election fraud attempting to overturn election results, some of which is plain ridiculous. Example include: Considering martial law in the battleground state to rerun election, Republican-led state legislatures to choose the members of the Electoral College, overturning the will of voters...etc
  4. Global Stock Market rebounded from the lows to enter bull market as the first wave of COVID-19 pass. Pfizer Biontech and Moderna achieve 95% effectiveness COVID-19 vaccine in less than 1 year of R&D and began distribution in Dec 2020
  5. Working from Home and digitalization become the new normal
  6. Record number of airlines either declaring bankrupt or nationalized as a result of travel restriction globally due to COVID-19. Tourism industry become severely impacted, leading to record number of job loss and unemployment globally
DJI ended at 30606, an increase of 2825 points (+10.16%) compared to 3Q 2020. For Singapore, STI ended at 2843, an increase of 377 points (+15.28%) compared to last quarter. For me, I have also went through a rather dramatic year, in the sense that I have watched a record number of dramas while coop up at home to stay away from the COVID-19 virus. =) About future potential market direction, my view is that in the next 6 months, as more of the Pfizer Biontech and Moderna vaccines reach more countries, the COVID-19 pandemic can be brought more or less under control. In this context, current battered hospitality stocks could benefit as tourism restarts again, though to reach pre-COVID level, it is estimated it will have to wait till 2022 earliest. Personally, I have already loaded Marriott during the big crash, waiting for the day (hopefully in a few months' time) when this pandemic is over to cash in some of the profits.

With 2020 drawing to a close, it is time for a review against my 3 year plan (Next 3 years (2020 - 2022) Investment Plan) set back in Dec 2019 and below are my result:

Original 2020-2022 plan: 
  1. 50% Equity, 50% Reits/Trusts 
  2. Portfolio Dividend Yield to be 3.50% in 2020, 4.20% in 2021, 4.80% in 2022.
End 2020 result: 
  1. 57.82% Equity, 42.18% Reits/Trusts 
  2. 82.82% SG Equity, 17.18% USA Equity
  3. Portfolio Yield at 2.65% in 2020 (+0.21% from 2019, but miss 2020 3.50% target)
Verdict: Miss Target

Below is my end 2020 portfolio snapshot:

Total dividend received in 2020: $3,313.53 (~$276.12/month)

Despite 2020 being a challenging year, I still managed to grow my overall portfolio value. This year, our very own MAS has also encouraged companies to conserve cash by reducing profit distribution to shareholders. Some of the companies have went even further by re-starting script dividend in lieu of cash. As I will most likely take up the script dividend option if there is such a choice, I do see that my dividend received in 2021 will most likely take a hit. Not to worry though, a small hit in 2021 means more dividend to be received once things are back to normal. Enough chatter, below are my transaction for this quarter:

Transaction 1: Participate in IREIT Global Rights Issue in October. 

Good yield and attractive rights issue price @ $0.49, what more can I say? Just subscribe and apply for additional shares!

Transaction 2: Participate in Fraser CenterPoint Trust Rights Issue in October. 

Taking opportunity of this pandemic to purchase the rest of Asia Mall shares not held by FCT, bringing in 5 additional malls and 1 commercial plaza into its portfolio. I find the opportunity to grow its DPU from the purchase a good and sound investment, hence subscribing for all my share of rights. Welcome Tiong Bahru Plaza, White Sands, Hougang Mall, Century Square, Tampines 1 and Central Plaza to the Fraser CenterPoint family.

Transaction 3: Participate in Credit Bureau Asia IPO in December. 

A fairly resilient business model against recession, no debt and a cash cow generator, potentially giving 3.46% yield and looking to expand overseas. Decided to invest in the company for the opportunity to grow further in the region. For more details, you can refer here. 

Transaction 4: Bought 1 batch DBS shares in December. 

I believe there is still further room for growth for DBS at the current $25++ price, especially so once the economy starts recovering post pandemic. Personally, I am looking at a TP of $30 to entice me to start consider taking profit. For now, just buy, hold and take the script dividend.

Transaction 5: Bought 1 batch Singtel shares in December. 

Severely impacted due to travel restriction, international roaming revenue almost grind to a halt, leaving the company surviving on domestic business. Dividend distribution are also cut to conserve cash. Current $2.30++ price do not take into account the value of Australia and Singapore business. An attractive price to accumulate and what else... hold and take the script dividend.

Transaction 6: Bought 1 batch China Everbright shares in December. 

Continue accumulating good quality company giving potential 6.09% yield. As a China government linked wastewater treatment company, I can hardly see it goes wrong, coupled with the fact that tariff treatment price will increase with China increasingly higher wastewater discharge standards.

That is all for now. See you all in Q1 2021 update and thank you for reading thus far. Wishing everyone a Happy New Year. Stay healthy, stay safe, stay mask up and may God Bless with a good year ahead~

No comments: