Henderson Far East Income Share Discussion Threads

[gateside] 28/10/2022 07:55

Yield is now up to 9.75%They seem confident that the dividend will be held, if so, this could be an excellent buy at sub 250p

[mister md] 27/10/2022 15:09

Seems great value at 244p, so I've added a big chunk to my existing (long-term !) holding ...

[unastubbs] 27/10/2022 08:12

thanks rik, when i saw the price today i did wonder!

[rik shaw] 27/10/2022 07:59

Ex div today for 6p

[ramellous] 27/10/2022 07:12

Far East to dominate growth in 2023...

[superiorshares] 24/10/2022 20:58

Unfortunately for America, China is going nowhere, It will be the dominant Superpower within ten years .
It must be worth a monthly drip into this soon , perhaps I will wait another month or two and start the process.

[panshanger1] 20/10/2022 08:10

Hans Seng index hit a 13 year low yesterday and Asia Pacific markets generally having a dreadful time Need China to come out of Covid restrictions for some improvement in the region imo Still happy to accumulate a few more at these levels and hold on GLA

[2sporrans] 19/10/2022 14:16

On the Chinese exposure:

The HFEL webpages state that at 30Sep22:



So, 25.75% [Incld. HK].

Taiwan down to 6.8% from a tad over 14% at end of June.
I imagine this is down to Kerley either paring down hard, or exiting the previously substantial holdings in Taiwan Semi and Samsung Elec.
The right call; semis been sold down especially hard of late.
Political risk is bound up in this but fwliw, as i'm reading things, it is the general USA containment policy v China that is [for now] the greater investor concern than an invasion of Taiwan [something Xi/China would pursue as an ultimate, last resort].
Part of this containment strategy, is to starve PRC of all manner of top end technological imports, in as far as the US can impose this.

More generally, I noted that Nomura has just joined Morgan Stanley in forecasting a bottoming in the equities sell off in Asia over the next several weeks.
Fwiw, Mike Wilson [MS] has read the evolving general macro and fin. assets picture very well the past year or so.

Outside of China, there is still a decent growth picture:

Recent World Bank GDP F/c of 5.35% for East Asia/Pacific Ex. China for 2022 and similar for 2023.
PRC down to ~2% this year from ~8% last; a modest recovery penciled in for 2023.



Interesting that the Bank of Aus. is now exercising some restraint in pace of rates rises. If these are topping out, presages a favourable environment for divi. stocks there.

[rik shaw] 19/10/2022 10:59

Dividend declaration

[masurenguy] 19/10/2022 07:33

Excluding the very brief Covid shareprice spike down in early 2020, this is now at a six and a half year low. Currently yielding just over 9%. Having sold out at just over 300p in April this is now back on my re-investment watchlist although it is still at a slight premium to NAV.

[carpingtris] 18/10/2022 19:30

Thanks rik - confirms my point... not all HFEL's eggs are in China's basket.

[carpingtris] 18/10/2022 17:01

Exposure to China is only ~25% (according to HL) so not as bad as JRS (Russia situation which was no doubt ~100 exposed?)

[shalder] 18/10/2022 16:47

Yes, plus the nav has recently been on a consistently negative path and the share price is still at a slightly uncomfortable premium to nav. See also previous discussion re how the high dividend is sustained (so far!)

[wallywoo] 18/10/2022 13:54

I am tempted here. The thing holding me back is the possibility of China invading Taiwan. That would hit this fund hard. JRS for example fell from 700p to 70p when Russia invaded Ukraine. That stops me until the world looks more stable.

[superiorshares] 13/10/2022 18:15

Must be getting close to have a punt time

[zac0_4] 30/9/2022 19:33

Maybe of interest - hxxps://audioboom.com/posts/8165862-asia-the-structural-growth-story-remains-intact

[panshanger1] 30/9/2022 08:15

I notice that the allocation to China has increased significantly here

[2sporrans] 02/9/2022 16:21

On the HFEL dividend:

Whist it may well be sustainable, one ought to be aware that not all of the divi. paid out comes from dividend income paid out by the underlying company holdings.

I make it that around 70% comes from those, adjusted up for the gearing.

The remaining ~30% is partly derived from call option writing fees.
I've never been able to work out quite how much but the recent Edison report has this to say:
"The managers may write put or call options to generate additional income dependent on the pricing and attractiveness of the opportunity, and have on average written around 10 options per year since inception in 2006.
In H122, revenue from dividends increased 14.7% on the same period in 2021; however, total income growth was slightly lower at 11.9%, due to fewer options being written."

From what i've been able to divine, something like 10-20% of the HFEL dividend comes either from capital gains [from trades] or from income made at sacrifice of capital gain.
Example of latter is Kerley's selling and buying of holdings, made to maximise the dividend take from them [does he tend to sell XD?]
I guess both gain and sacrifice are crystalised for those call options where the call bargain is struck but the shares sold continue to gain in price...., assuming the asset sold was bought cheaper than the sell from the call.

Don't want to make overly much of why the above eats into the share price performance of HFEL but i expect it does explain a fair lot of price underperformance against peers and the Asian income High Dividend sector.

Generally, the post GFC environment of disinflation [until recently] and extremely low rates and NPV discount rates + easy credit has been unusually advantageous for growth/'long-duration' assets and to the relative detriment of value stocks.
This explains the great majority of HFEL's [and its sector's] poor share price performance over recent years.

Now the game has changed, question is what world will we be in, after the ongoing inflationary-downcycle and monetary tightening [not in PRC or Japan though] is done?
Will it be one more supportive of value stocks v growth?
Until we get there, i suppose one can make the observation that HFEL's distinct relative outperformance - such as orinocor has noted above - may not mean it actually makes a +ve total return, let alone a real one, inflation adjusted for 2022.

Still, it is highly cash generative and for certain long term holders [such as myself] this is, in itself, attractive.

The divi. does seem to be covered ok and there is about a year's divi-cash in reserve or at least was when i last checked some months back.

[2wild] 31/8/2022 16:16

Except of course all but 1, quoted in overseas currencies which have hugely outperformed UK £ since beginning of 2022.