Henderson Far East Income Share Discussion Threads

[2sporrans] 23/8/2023 14:36

ID

Good post.

"They are pinning their hopes on making credit more desirable, however the interest reduction is having limited impact on appetite."

The cuts to date have been very timid.
A few of only 0.1% or 0.2% at most.

Problem is, the banks are getting squeezed by the cuts; they aren't that flush as it is.
Cuts maybe also at variance with supporting the depreciating yen; that is while a cheaper yen [exports] could maybe be net beneficial to stagnant growth, a sudden plunge will cause big problems.

Somehow, there needs to be a shift to job creation, especially for the younger cohort, commensurate with their relatively high educational level, v older ones.
That, and stabilising the property market, still high prices notwithstanding. ["Homes for living in, not speculation"].
All wrapped up with the greatly over indebted local gov. bodies that own the land.

If that can be cracked, then i guess, there will be an open road ahead for consumer led growth and also for Xi to realise progress towards his "Common prosperity" goal.

The ageing population is another headwind; a growing one.
Unlike Japan, or 'the West' generally, China does not have a huge per capita cost to the fund welfare nets, not least state pensions.
Then again, the absence of such, explains why the Chinese, [maybe the rich excepted] have a much higher propensity to save, rather than spend v Japan, US, Europe etc.
Still, the young especially will spend a lot more, if they have a home sorted and a dependable job-career with income above base needs and expect remunerations to rise.

Encouraging new industries [consumer+tech focused] to invest and grow must be key for things to head that way.
That at least, is accepted by Xi / the Gov't and a main objective.

[2sporrans] 23/8/2023 13:52

Another observation, on the ridiculous premium to NAV that for ages was around 2 to 3%:

Well, the past few days the premium has finally crumbled.
The HFEL website says it has turned to a ~2% discount, as the share price plunge headed to ~210p.

This is not trivial.
That's a -4% swing over a few days, substantially exacerbating the share price decline.

The question is, what discount is appropriate?
Methinks a much deeper one, albeit i'm hoping it won't materialise, still with substantial holding.
Take AAIF, with a decidedly superior total return over and pretty much throughout the past 3+1/2 years.
Currently on a 12.5% discount.

Why should the HFEL discount not be some way greater than that, like 20% or lower?
Just saying.

[investingdad] 23/8/2023 13:04

SS is the forever doomsayer here, often has some points correct but confuses them with idiotic statements and a fully right wing bias.I mean, the ruling party, the CCP, are Communist. They say that in their name - they are conducting very communist polices already. Look at the technology and education shares a couple of years ago for instance. The issue with China is that they have multiple problems at the same time. They can prop up the building sector (which they have already done) but realise they need ti let that fail to a point. Many Chinese workers are priced out of the market and the property boom of the last two decades or so have only added to that. The Chinese debt, again, they have the resources to give a stimulus but they aren't going to give out stimulus to all - for now. They are pinning their hopes on making credit more desirable, however the interest reduction is having limited impact on appetite. If Xi wants them to invest in the market, he has some confidence to inspire following his decisions on tech etc. The added issue of youth unemployment is a further issue for the country. Xi wants them to work hard and endure yet the youth don't see that as the desired outcome. Seems to me that Xi is out of step with the younger generation, however it is hard to see that changing things. All in all, if China gets through this and makes more positive growth then investors will give it another go, we saw that this year. There were plenty of people and pension funds, trading houses still invested and investing in JRS and now the Russia plus Africa fund it has become. I will be interested in seeing the factsheet in September to see any changes they have made to the portfolio in response. Or whether they are adding to positions with what could turn out to be value (of the highest risk). There are plenty of outflows from sino markets this week and thr ftse and india will likely benefit most. Though, I feel worst case scenario, if China does Collapse, the ripples will be like waves in the global economy.

[scruff1] 23/8/2023 10:43

It only works one way of course.

[mancman1] 23/8/2023 10:41

A useful account of the Chinese crisis:

Nothing to do with HFEL but I do wonder about all the Chinese investment in property in my home city!

[carpingtris] 23/8/2023 08:56

Not sure the US markets have had any influence on the FTSE! look how they've grown and we've gone nowhere..

[scruff1] 23/8/2023 08:03

Thats true but China's fate influences the other far eastern markets in the way the US does the west. Kick one and they all limp on the markets

[carpingtris] 23/8/2023 07:43

They are not entirely invested in China? what's it like 20%? yet you make it sound like they are fully invested in just one country..

[scruff1] 22/8/2023 14:29

I dont know if anyone has looked at the trading pattern today but its a bit strange. The same number trades keep being repeated 3 or 4 times.

[bankprofits2023] 22/8/2023 14:09

I read their option writing income rose by 35% compared with the previous year.

[tim 3] 22/8/2023 14:08

Interesting that their option writing income rose by 25% compared with the previous year.

Option writing is not without risks or everyone would do it.

Infact "naked writing" can potentially have unlimited losses.

[essentialinvestor] 22/8/2023 13:07

FAB, appreciated.

[c29110] 22/8/2023 13:02

£1.10 £1.30 sounds like a random wild guess to me, will be interested to know how you came up with those figures???

A 61.8 retracement takes us down to around £1.96 and theres a support area at around £1.77

Those are the two prices I will adding to my position.

If we have another sell off as we did in 93 expect it to go down to around £1.52

In the mean time continue collecting the dividend.

[essentialinvestor] 22/8/2023 12:24

FAB, does TA work here through as HFEL is an IT ?.

Something extraordinary might need to happen for those levels,
Taiwan invasion..huge credit dislocation in China significantly impacting
the wider region ..

[fabius1] 22/8/2023 12:18

Superiorshares, interesting call on @ 1.10-1.30. Certainly a few gaps to fill and a line of support @130. On the divi value trap bit, seems to me that Henderson High Income plays a similar game to this. I note the HFEL fund manager's general upbeat take on things in their latest factsheet. Trouble is, in my experience, such pronouncements are right until they are wrong and then the usual defence and get out clause is the time honoured one of 'events, dear boy'. Yep, as IT investors, we still have to do a fair bit of work and take an active interest in our own affairs :).

[lord gnome] 22/8/2023 07:52

The day before the shares went ex-div for the last dividend they closed at 243p bid. They are now 211p bid. A drop of 32p and still going down, cf the annual divi of 24.4p. The high yield is an illusion. This is a capital destruction mechanism par excellence.

[trader465] 22/8/2023 07:47

“Superiorshares - 27 Apr 2023 - 17:48:50 - 1377 of 1542 Henderson Far East Income Ltd - HFEL
I am starting a monthly drip May the 7th. How low HFE will go who knows ?.. I am hoping I will have missed most of it”

[superiorshares] 21/8/2023 22:54

This could make history.
The first stock to have a higher yield than a share price 😀

I repeat my call somewhere between
£1.10 and £1.30, in quick order .

[tim 3] 21/8/2023 22:49

Yield may be high but just look at that long term chart.

A rapidly decreasing share price coupled with a very high and increasing dividend surely has to be a major red flag.

[gateside] 21/8/2023 22:03

New Factsheet for July is now on their website.

[scruff1] 21/8/2023 21:49

Trouble is the share price de-yield is 25% since the start of Q1 and rising rapidly !

[gateside] 21/8/2023 19:57

Yield is up to 11.5% now!