Henderson Far East Income Share Discussion Threads

[essentialinvestor] 01/2/2020 17:01

There could also be significant under reporting of milder cases, people
who either don't seek or need medical attention?.

The virus could potentially weaken as it mutates, the flipside also.

Equity markets will at least attempt to price scenarios in quite quickly,
so for equities to continue to weaken, the newsflow may also need to get worse.

We were overdue some increased market volatility, mentioned on the SHA board 2 weeks
ago than only perhaps the later stages of the tech boom mirrored the lack of fear in markets. That being said, the VIX did slip into single figures briefly 2 years ago.

[aleman] 01/2/2020 16:36

Better still, the current US flu season lists 15m estimated cases, 140k hospitalisations and 8200 deaths. A death rate of 0.05-0.06%. A bad flu would be maybe 0.1-0.25%. It makes nCoV look much more deadly. It's 3.3% in Hubei but that's on confirmed cases which could be misleading for all sorts of reasons. nCoV in Hubei has 249 deaths from 7153 cases but more than 10 times that are under observation and how many (with mild symptoms) missed?

[hastings] 01/2/2020 15:38

Very interesting to compare this novel Virus with that of Influenza H1N1 from 2009 which emerged in Mexico but really manifested in the US.265k hospitalised there and 12k deaths.

[essentialinvestor] 01/2/2020 15:10

Sure, there could be dividend cuts in China and elsewhere in the region,
particularly if other countries mirror the China outbreak.
Have not looked at their reserves, would expect they would hold the payout
for a time, but ultimately it has to reflect income.

Looking at the press commentary we may get some pockets of market panic next week.
hoping some longer term opportunities will be thrown up.

I've been way too cautious on equity markets since early June last year,
which has been painful. Around 48% invested as of the close Friday.

[aleman] 01/2/2020 14:59

HFEL does no invest in this end of the world. About 25% of income is from China. The way that is being disrupted, Chinese dividends could drop sharply. They've already lost 3 business days' income but overheads will be similar. That could shred profit margins.

[essentialinvestor] 01/2/2020 14:45

red, interesting question. China is around 20% of exposure?.
Dividend yield got to around 7% in 2015.
Would be surprised if yield got much over that, just guesswork.

[redponza] 01/2/2020 14:43

Stay calm, the sky isn't collapsing in this end of the world!

[aleman] 01/2/2020 14:34

Well it is starting to look like neither might be up with events. Numerous countries are now not allowing entry to anyone - Chinese or not - who has been in China inside the latest two weeks. This could easily spread to include people that have been in Thailand, South Korea, Singapore and Japan in the last two weeks, as they've all have reported 10+ cases. The only cause for optimism at the moment is that death rates outside Hubei, are lower - and some much lower - than they were for Hubei with similar numbers of infections, though Hubei's death rate is now up to 3.34% which is closing in on Spanish flu rates of 1918 which was global disaster. It all paints a very confused picture of variability. We expected a clearer picture as the disease spread but that is not the case in recent days.

[redponza] 01/2/2020 12:00

Should we price this according to the yield or the NAV?

[essentialinvestor] 01/2/2020 11:51

Vietnam has declared a public health emergency and is stopping all flights
to and from China.

[essentialinvestor] 31/1/2020 20:54

Around 3.31 the November '18 low. Tuesday's update may have the China held inclusive NAV. China stocks to fall 6-7٪ Monday?. Depends also on how the virus newsflow
develops this weekend.

[masurenguy] 31/1/2020 15:54

Having gone xd I've taken a reduced profit and completely sold out today since the shareprice could continue to fall when the Chinese market reopens next week. Now closing on the current net asset value which has fallen by 7% over the past week and it could decline further. Will look to buy back in when the current coronavirus scenario has stabilised.

[essentialinvestor] 31/1/2020 15:07

I've added to AAIF, SOI, TEM today and bought some BRFI. Sold the rest
of my JEFI as they had some recent marked outperformance.
Gut feel is next week may be ugly.

[gateside] 31/1/2020 15:03

Feb 2016, saw the price as low as 252pCould have further to fall. Will watch and wait for now.

[gateside] 31/1/2020 15:01

Believe China's stock market reopens on Monday.Good point about the NAV falling further.

[essentialinvestor] 31/1/2020 14:47

Yup, that's what I've concluded, may be a mistake.
Dont think the NAV update can include China listed stocks
as how could they price a closed market?.

3.46 was my buy target price here.

[redponza] 31/1/2020 14:41

Waiting the premium to NAV to close before considering!

[gateside] 31/1/2020 14:32

I'm tempted too!

[essentialinvestor] 31/1/2020 06:53

I'm looking at the same sector for long side opportunities,
but not yet. Best time to buy is often when consensus says the sky is falling in.

On the LSE, RYA and EZJ were two nice examples of that last year,
I got quite a few RYA under 9.

It can pay handsomely going against consensus provided a stock in question
is a fundamentally sound business, rather than a value trap.
Would only take a contrarian view on companies I know well.

[andyj] 31/1/2020 01:49

I agree. The safest investments at the moment are taking shorts in travel, leisure and indices, but I have no interest in profiting from the misery of others. It is hard to see when things can return to normal. Regarding seasonality, it is an interesting point although regionally specific. Vietnam and Thailand et al are in the middle of our hot dry seasons, cloudless skies until May, then it will turn warm and very damp, as China and Japan move into their hot summer seasons.

[aleman] 30/1/2020 16:34

If the WHO and UK epidemiological models are right, there's already in the order of 3000 cases in the rest of the world, though this probably suggests a lower death rate. If nCoV is like other corona viruses. Spring weather will greatly reduce the rate of spread. Also, this year's flu inundated western hospitals with pneumonia cases so there is the possibility that nCoV is more potent to start with if it feeds off these weakened victims - or they might even be some confusion over which pneumonia is killing people in diagnosis and statistics. Flu has already killed around 8000 people this season just in the USA and the majority will probably be through pneumonia.

There's a lot we don't know yet. I think it's quite possible it might not be as bad a seems, though it seems a little like clutching at straws and I have little doubt that authorities will very soon be planning for the worst and it will have a significant economic impact.

Stimulus will do nothing. People won't go to shops, theatres and restaurants and other leisure venues at the risk of infection just because interest rates drop a bit.

[essentialinvestor] 30/1/2020 16:33

The Chinese likely to unleash stimulus, in large quantity if necessary.
Need to keep in mind.