Henderson Far East Income Share Discussion Threads

[investingdad] 25/8/2023 09:22

Morgan Stanley have lowered growth rates of Chinese and Hong Kong indexes. Predicting negative 2 percent growth for 2023. Goldman Sachs have started to warn of the likelihood of Asian spill over. As someone with overweight exposure to Asia, I will be buying throughout and probably wondering why I didn't sell in 2021 when many were at all ATH.Though one thing - China still is the second biggest economy globally.Dividend will be paid today, and I will be reinvesting at a 3 percent discount.

[zac0_4] 24/8/2023 22:30

Mancman1 - in addition to LGGG I hold 2 other global ETF's, IUQF and RSGL. Just for info. Not a recommendation.

[essentialinvestor] 24/8/2023 14:11

I held RIT for years and also traded it in small amounts and still do the later.
Switched my core RIT holding for CLDN earlier this year.

As mentioned, if you are looking at recent RIT share price performance
that looks markedly worse over 5 years with the move from a NAV premium
to a sizeable NAV discount. RIT sold at a premium of up to 5/6 % at times.

Anyone paying a 5% NAV premium on an IT needs to give their head a wobble,
unless there are exceptional circumstances.


'Opaqueness' on some of their portfolio, coupled with high charges are central to recent criticism of RCP.
They vociferously counter the first point, as you might expect.

A lot of this relates to ZIRP unwind imv - the ultra low cost funding environment
ending and subsequent potential impact on (particularly unlisted) holdings.

[mancman1] 24/8/2023 13:55

2sporrans

Many thanks. RCP are trying to address the discount by large buybacks and more attention to marketing/publicity. I would buy more now but probably have enough, although I do have a small buy order in at 1810.

I don't feel as confident about HFEL, but who knows.

[2sporrans] 24/8/2023 11:01

Mancman

Just glanced at the RCP discount history; just the last 5 years.
Obviously you know all about it; just to summarise here:

Up until the Covid plunge [March 2020], traded at a modest premium.
Since then, the ~20% discount has emerged and grown; this despite a decidedly good year for the share price in 2021.
The discount has deepened through 2022+23, the 2021 share price gains pretty much reversed out through 2022.
Yet the NAV has held up much better; at a glance [off an x/y graph] it has put on over 20% since end of 2019. Pretty good in the circumstances.

So, i can well understand your point that the discount seems decidedly excessive wrt to both the RCP absolute and relative [to global indices] performances.

All the best for a share price upturn, boosted by an unwind of the discount.

[mancman1] 24/8/2023 08:55

Weird how every post on here, even the most bland, gets a single down vote!

zaco_4

I don't hold any global ETF's. LGGG has cropped up elsewhere. I will look at it.
I am perhaps in danger of being in love with RCP, which I have held on and off for a long time. I do think that its discount is way over-done and wouldn't dream of selling at this point. The other two are very minor holdings in my portfolio.

[skinny] 24/8/2023 07:41

free stock charts from uk.advfn.com

[gateside] 24/8/2023 07:40

bluemango totally agree there.If, and it's a big if, they don't cut the dividend, then a 11.5% yield here is a bargain. As China recovers, which I feel it will at some point, I can see this moving back up to around 240p

[bluemango] 24/8/2023 07:26

Charts in thread header don't show the RSI which is hovering just above 10, about as oversold as you'll ever see. Nobody has a good word for this, while the chart looks very much like capitulation.

Very tempted to add more as funds allow.

If the herd of doomsters have got it wrong, there's a 11.5% yield recovery play here.

[bluemango] 24/8/2023 07:21

That report again but this time with a clickable link::

[c29110] 24/8/2023 06:37

hxxps://www.edisongroup.com/research/a-fully-covered-dividend-yield-of-nearly-10/32495/

[zac0_4] 23/8/2023 22:27

mancman1 - I'm not trying to be clever here, but do you hold a simple global equity tracker fund / etf in your portfolio?

LGGG (legal and general global equity etf) has produced better results than the three ITs you've mentioned above over the last 5 years.

After many years investing I've finally seen the light and have begun to move a number of my investments into various global tracker funds based purely on historical, and hopefully future, performance.

[tim 3] 23/8/2023 20:17

2 sporrans Agree about covered call writing it could mean they lose out on the stocks with big gains which can have a big affect on capital growth.

[mancman1] 23/8/2023 16:57

Some useful comments here, above the standard of so many posts one these boards. Thanks 2sporrans and InvestingDad.

I too wonder about the appropriate discount for HFEL. I haven't checked but my impression from the ones I hold is that high yield IT's tend to have lower discounts or even trade at premium.

Those in my portfolio with the highest discount, around 20%+ are RCP, SMT and ICGT - each has a lot of unlisted securities and low yields.

[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.