Henderson Far East Income Share Discussion Threads

[aleman] 30/1/2020 10:18

I also think the WHO will declare an emergency. There are 102 cases outside China and I think the expectation is it will double every 3 or 4 days. The whole world will go into lock down in a couple of weeks if the infection rate is maintained and death rates do not diminish.

Incidentally, trying to be objective, I see no reason for governments to cover up. If anything, exaggerating the danger would encourage people to self quarantine. Even government members are at risk, they will say whatever it takes to encourage ordinary people to stay home and not spread the disease. Underplaying the danger would be harming their own interest.

[essentialinvestor] 30/1/2020 10:09

Andy, appreciate the view from that part of the world.

Did you relocate from the UK, or elsewhere?.


10 days ago this looked like some new virus that may have a similar impact to seasonal flu,
It's beginning to look a lot more serious.

In retrospect the large clue was when China began locking down cities!.

[andyj] 30/1/2020 10:03

There is real fear out here in Vietnam, along with distrust of the official figures of 2 infections that have both been cured. There is a significant reliance here, as in most countries in the region, on big spending Chinese tourists. No one knows when normality will return. Remember the virus apparently came from just one infection so although when the virus peaks and fear subsides, it is not the end. For if one person still has it then the moment everything reopens what is to say that it will not start spreading again? A vaccine is rumoured to begin trials in the summer, but there are a billion people in China alone. As I said before, the virus is being dismissed by the markets as being 'over there' by the UK and USA. But it is not going away. When the fear here is apparent there, then the markets will truly plummet. Today I sold HFEL and continue to move into cash. You may dismiss me as scaremongering and I am not advising everyone else to sell, you make your own decisions. Based on what I see here I feel infinitely safer holding cash and waiting. The only thing I am certain of is that Asian markets are not going upwards in the near future. I suspect the WHO will declare a global emergency today.Good luck all!

[aleman] 30/1/2020 09:16

Infections and deaths have picked up in the last couple of days. Chinese football season has been postponed. Even where not in lock down. People in China and surrounding countries are going to avoid crowds and enclosed public spaces. It is going to hit spending significantly, I would imagine.

[essentialinvestor] 29/1/2020 15:24

Well let's just hope it can be contained here and elsewhere.

[hastings] 29/1/2020 15:10

Sadly and unfortunately these things happen and are ongoing. I remember as a kid having Hong Kong flu which I believe claimed over a million lives worldwide. More recently in the current US flu season October-January it's estimated that 140-250k people have been hospitalised with 8-20k deaths. No comfort of course but shines a light further afield.Hopefully the China outbreak will not prove as deadly as it could be.

[andyj] 29/1/2020 11:44

The headline figures of deaths are on the surface reassuring. Yet the fact remains that 20% are critically ill, in other words will almost certainly die too. That gives a very different perspective and a mortality rate similar to an aggressive cancer, only it is invisible and we don't know how it is spreading. There is understandably considerable fear out here. I agree about the use of alcohol though, thankfully I have several months supply of German beer. I sold FCSS the moment they confirmed human transmission but are holding HFEL, for the moment anyway, as the Chinese exposure is more limited. Young and healthy? Distant memories of that!

[aleman] 29/1/2020 11:20

epo001 - I've been monitoring the marginal rate - increase in deaths and cases each day. It was 5% at the start and dropped below 2% recently. It reached 1.4% yesterday but rebounded to 1.9% in the latest period. These are not panic numbers but do not account for the typical delay between confirmation and death, which is probably in the order of 4-6 days. I was going for lower but now guess at an ultimate mortality rate that is 3-8% after the setback. It was falling nicely and gave cause for optimism until now. It seems a setback and is too high but there are many variables and we can't know that reporting is timely. Hopefully, it's a blip or reporting issue. I thought markets might react to the worse numbers, though, but they don't seem to have. I think they're treating it as a China only problem. I think they might soon get a shock.

[aleman] 29/1/2020 11:13

andyj - I read in a medical paper that suggested the virus does not like heat and alcohol. Keep yourself and your dwelling warm and maybe a small spirit at bedtime (and gargle with mouthwash regularly?). This was pretty much how ordinary people tried to ward off viruses centuries ago.

There still does not seem to be many healthy young people have died. The one or two there have been may have had undiagnosed conditions. Of course, this only helps if you're young and healthy. (I'm probably borderline these days.) Good luck.

[epo001] 29/1/2020 11:06

There is another view by a health statistician who wonders if it might not be as bad as at first thought. That is, perhaps the virus was about for weeks before testing started and a lot of people got sick earlier who are only now being diagnosed; and so the increased numbers are not due to increased infection but increased testing, cf autism and other spectrum disorders.

EDIT and if that is the case then numbers should level out over the next couple of weeks.

[andyj] 29/1/2020 10:27

My opinion is that we are nowhere near the worst, even China admits it will be ten days before it peaks. That is a long time for an economy to virtually shut down and supposes that it can be controlled and not spread to other Asian countries. Other than it being highly contagious and leaving 20% of people dead or critically ill we know very little about it. If it continues much longer than societal breakdown looms its head and I speak from inside the region. Anger is rife and rising. Of course it may well fade away, but that's the least likely scenario. I will say this, if this was happening closer to the UK, the FTSE would be shredded. There will be an opportunity to invest in Asian funds, but the time is most definitely not now.

[essentialinvestor] 29/1/2020 10:04

Andy, it remains to be seen whether this takes hold in other countries,
as it has in China. The best case is this will be contained to sporadic
outbreaks elsewhere- whether that's fanciful or factual...

Agree there appears a fair deal of complancy in markets atm,
hopefully in this case it's correct.

[andyj] 29/1/2020 00:42

Over there in Europe you are gravely underestimating this virus and the affect it will have on the economy in China, if not the world. To suggest a 3p drop in NAV is ludicrous. The country is gradually being shut down indefinitely as will every country it enters. For the moment you are safe over there, but your money invested here is not. Wake up.

[aleman] 28/1/2020 14:04

That's good. NAV only dropped 3p yesterday. I suppose Chinese stuff is still at last week's price. But that should only be a 3p-4p drop. So NAV effectively is around 350p when China starts trading again, maybe.

[epo001] 28/1/2020 13:04

So many of our consumer goods are made over there and many firms use just in time supply chains. I wonder if shops will run out of stuff? There must be lots of container ships in transit but Apple for instance fly some (a lot?) of their stuff.

[essentialinvestor] 28/1/2020 11:24

Epidemiologists appear to suggest significant underreporting of China cases.
I've seen ranges between 30,000-200,000 mentioned.
If many of these turn out to be mild and so less likely unaccounted for,
it may be a positive?.

Hopefully this will be a clearer picture next week, with increasing data from
other countries.

China stock market now closed until 03 February.

[aleman] 28/1/2020 09:46

Japan down 0.5%. ASX down 1.4%. Chinese ETFs seem to be trading down around 1% after -5% yesterday. NAV looks likely to fall a little further today. I'd guess maybe 344p but it depends how close my 347p guess for yesterday was. Maybe Chinese and Asian income stocks have not been hit so much.

Hong Kong has started restricting transport to mainland China - fewer flights and high speed trains to stop.

[aleman] 28/1/2020 07:47

Now 106 deaths from 4515 confirmed cases. That's 24 new deaths on 1680 new confirmed cases. That's a marginal rate of 1.43%. Two days ago, the marginal rate was 1.94%. The trend is still improving.

[aleman] 27/1/2020 16:43

It sounds like Chinese futures and ETFs are down around 4-6% today and HEFL exposure is around 20%. Allow a 2% fall for other Asian markets (several were closed) and it would seem reasonable for HEFL NAV to fall 2.5 to 3%, so maybe 357p down to 347p or thereabouts.

Then see what tomorrow brings.

[skinny] 27/1/2020 16:19

Back to the 50MA.

[essentialinvestor] 27/1/2020 16:11

Andy, would hope the mortality rate is lower, perhaps due to a number of
unreported or unclassified milder infections, that may be wishful thinking.

[andyj] 27/1/2020 14:43

The problem is people are looking at the deaths so far, add in the critically ill and the death rate rises to 20-25%. If one looks at the survival rate it is even more worrying. Just 51 have survived and beaten the virus, out of several thousand. Remember, the virus does not want to kill people quickly.

[aleman] 27/1/2020 11:47

I think SARS was 10% and MERS was 30%. Fortunately they were not so contagious, unlike nCoV. nCoV seems much more contagious but much less deadly on numbers so far, It looks to be running around 1-2% mortality. It could be lower if there are already 100k infections as indicated by the WHO epidemiological model.

[essentialinvestor] 27/1/2020 11:20

Just over 20% if the HL data is accurate.

If there are anywhere near the 100,000 people already infected that
has been mentioned in the media, then this is a very different outbreak to SARS
or MERS. Hopefully the fatality rates are lower, MERS had a very high mortality
rate from memory, but was not that transmissible.

[aleman] 27/1/2020 11:10

20% of assets in China? 25% income I believe, and with a slight consumer bias? Neighbouring markets will take a hit, too, though. I expect this will be a global issue before markets reopen. The CNY holiday is being extended, though. Will Chinese markets closure be extended?