[INVESTMENT] MEMO – 30.07.2021

On 27.07.2021, the Heng Seng Tech Index was down 8%. $9988.HK (Alibaba Group Holding Ltd (Hong Kong)) was down 5% and Tencent was not spared as well, was down 10%. The following day, the downtrend continued.

If you compare the peak of Tencent at HKD757.00 with the current price of HKD446.00, you can feel is crash is real and solid. About 41% of its market capital has been vanished from the crash. The peak of $03690.HK (Meituan Class B) (in February 2021) at HKD445.00 and current stock price at HKD194.00, more than 50% of its market capital has been wipe out. This is quite a madness to me. Is it over for Chinese tech stocks? Well, I do not think so. I still stand by my opinion as per my Memo dated 09.07.2021. Thus, I have added a few positions to my current portfolio. There are:- 1. $BABA (Alibaba) 2. $0700.HK (Tencent) My reasons are simple. 1. I want to take this advantage of the permissive sentiment on the Chinese tech market. Lately, regulatory scrutiny in China over the issues of anti-trust law and crack down on big technology companies had sent the share price of some big tech companies into downtrend. But I do not see this as a long-term issue with them. 2. Yes, Chinese government may have been tightening the rules on all Chinese tech companies, but what I see here is that such regulatory control (such as improve in social security or working condition, anti-competition) is beneficial to all the Chinese community, consumers and small businesses as a whole. It actually forces the companies to enhance its services and platform. In the long run, the business of the tech companies can grow in a positive way. 3. Why Alibaba? It is simple, you can refer to my MEMO dated 14.06.2021. Cloud business in Alibaba is still growing, and it is not show any sign of stopping. 4. Why Tencent? The gaming business is booming and, from the past records, Tencent is in decently high profit margin businesses. RISK Not that investing in those companies are completely risk free. Risks always existed in investment, especially investing in the above-mentioned companies. Can the stock price of those companies crash further? Will they rebound to its peak again? What is the bottom price? When to buy? When to sell? Is this an opportunity to buy? I have no answer to all of the above questions because I do not know. What I know is that I am comfortable (within my financial ability) to add some positions to the above-mentioned companies, by not holding too much cash, for now. PORTFOLIO PERFORMANCE As of today, my portfolio for current month of July is down 3.51% mainly due to the Chinese tech companies stock crash. Since the inception of our fund in May 2020, we have been up close to 48.66%. We are still able to maintain our risk level at 4 as can be seen from the “average risk score”. Stay safe. Norman Liew MNMLH 30.07.2021

[RESTAURANT] 长春青面 （菠菜面）Green Noodle of CHONG CHON CAFE, Kuching

 

CHONG CHON CAFE

Address: Central Park Commercial Centre, 93200 Kuching, Sarawak

Google Map: https://goo.gl/maps/mq3WSD6VdqL7mGgt8

[RESTAURANT] 山河 Sanga Japanese Food, Restaurant - Kuching

 

山河 Sanga Japanese Food, Restaurant - Kuching

Address: 164, Jalan Chan Chin Ann, 93100 Kuching, Sarawak

Contact: 082-250 433

Google Map: https://goo.gl/maps/9aC4GHYxMVXS1oQJA

Dine In requirement: patron(s) must at least received first dose of Covid-19 vaccine

[RESTAURANT] SEOUL GARDEN, BBQ Buffet Restaurant

 

SEOUL GARDEN BBQ Buffet

Map: goo.gl/maps/rH1ACsdaFwf5pWeY6

Address:

Lot 2818 Block 10, 

Central Park Commercial Centre 3rd Mile, 

Jalan Tunku Ahmad Zaidi Adruce, 

Central Park Commercial Centre, 

93150 Kuching, Sarawak

Contact: +6082-424 870

Dine In requirement: patron(s) must at least received first dose of Covid-19 vaccine

[INVESTMENT] MEMO – 21.07.2021

It is very difficult to find some attractive investments in the market at the moment. The market now is a bit heated. This month, I have no plan for any investment or to add any position to my current portfolio. But I am still closely watching over some Chinese tech companies like $03690.HK (Meituan Class B) , $BABA (Alibaba) and $0700.HK (Tencent) because some of them may be a bargain now to add to my current portfolio. ESG Lately I came across a YouTube ( $GOOG (Alphabet)) video talking about ESG. Out of curiosity, I dived into this topic and read a lot about ESG. What is “ESG”? ESG is the acronym for Environmental, Social and Governance where investors used these three (3) broad categories to measure the ethical impact and sustainability of investment in a company.

ENVIRONMENT – Environmental criteria include how companies use energy and manage their waste materials, water pollution or deforestation issues (if any) which would have far-reaching environmental impact and consequences on society and the planet. SOCIAL – Social criteria cover wide range of issues. One of them is how a company fosters its people and culture. Workplace policies regarding diversity prevention of sexual harassment are factors that to be considered. Whether the company has a comprehensive plan on employees’ training and education, engagement of employees and its executive etc. All these will have effects on the community which will pave the way for a sustainable future. GOVERNANCE – Corporate governance has two (2) fold. The first type is more on external governance. Prevention of any violations or tighten of compliance, ensuring transparency and industry best practices, and more dialogue with regulators. The second type is internal governance whereby the implementation of the company own system of controls, practices, and procedures to make effective decisions. WHY ESG IMPORTANT? As many countries have implemented regulations to fight climate change, data security concern and also change of consumer behaviour, instigating carbon emission tax, sugar tax or even pollution tax are the “trend” now. Many companies are experiencing the financial consequences of failing to act on sustainability. Some financial institutions even have their own ESG rules in their funding criteria. All these represent new risks for investors. There were data showed that companies that have successfully implemented ESG strategies tend to outperform in the market. This is why investors nowadays are increasingly considering ESG issues to help manage investment risks. BENEFITS There are benefits for investors to invest in development and implementation of robust ESG strategies. Companies with strong ESG proposition can create values across it businesses. In ENVIRONMENTAL side, they believe good implementation of sustainable practices can have better access to resources, lowers energy and water consumption and therefore also can reduce operational costs. In SOCIAL side, good implementation of sustainable practices can attract talent, boost employee morale, and build stronger industrial relations. In GOVERNANCE side, implementation of sustainable practices can lead to government support, subsidies, overcoming regulatory pressure and better investor relations which ultimately lead to better fund raising position, loan conditions or lower capital costs. CHALLENGES AHEAD Going forward, I believe more and more companies may put sustainability and ESG strategies in place as priority. But, I think it will come at a cost. Companies may need to invest in innovative product development to create new technologies. They also need to implement a strong sustainability and ESG policies which will make them more resilient during crises. Lately, the economic pressure from the Covid-19 pandemic has placed some companies on the blink of collapse and also put companies’ exposure to ESG risk and their ability to manage them. These companies may face complexities and scrutiny if they do not manage their ESG issues efficiently. CONCLUSION Good news is that, there are a lot of companies are creating products that can indirectly help our planet more sustainable, such as BEYOND MEAT, IMPOSSIBLE and NESTLE which produce meat alike products or non-dairy milk, indirectly they are reducing greenhouse gases and energy.

PORTFOLIO PERFORMANCE

This month, I have no plan for any investment or to add any position to my current portfolio. However, I may increase some of the shares in Chinese tech companies to take advantage of its permissive sentiment. Since the inception of our fund in May 2020, we have been up close to 43.93%. We are still able to maintain our risk level at 4 as can be seen from the “average risk score”. Stay safe. Norman Liew MNMLH 21.07.2021

[INVESTMENT] MEMO - 09.07.2021

Welcome to July 2021.

I have gotten my covid vaccination last month and I had two (2) days of fever due to its side effect. Apart from that, I also had sore arm (vaccinated area) and body fatigue for two (2) days.

I sincerely hope everyone has gotten your vaccination done.

CHINESE STOCK MARKET CRASH?

Once again, the Chinese stock has taken a setback today. Many believe that Chinese regulators have embarked on a wide-ranging crackdown on Chinese tech companies, based on the reasons from anti-monopoly to data-privacy/national security.

Since last year, $BABA (Alibaba) ’s Ant Financial IPO has been halted by regulator. In April 2021, ALIBABA received a $2.8 billion fine on charges of suppressing competition. Just recently, Chinese authorities order Didi Global to taken down its application just days after its U.S. IPO, essentially preventing the company from adding new users (but existing users can still continue to use its application) to its platform.

However, the current pessimism sentiment could be a good opportunity to increase exposure to the best Chinese tech stocks, such as $0700.HK (Tencent) , $03690.HK (Meituan Class B) $BZUN (Baozun Inc) . If you look back on history, China has been through all kinds of pessimism sentiment due to the government regulation before, such as the gaming rules imposed on minors and anticorruption campaign launched a decade ago. During Trump administration, Chinese stocks also took a hit on the trade war in 2018, but then eventually not only they recovered but also make new all-time highs.

Having said that, the risk of investing in Chinese tech companies cannot be ignored completely. We do not know what are the new regulations to be imposed on the tech companies and its implication for now. Further to that, the fast-spreading Delta variant of Covid-19 may hurt global recovery and sent stocks sliding. I strongly that believe that some of the regulations are necessary to control the fast-growing technology sector such are big data and artificial intelligence (AI). Though all these technology sector have in a way disrupted the way we live, but I believe the China government would not want to kill their own technology companies by imposing harsh regulations on them. Do not forget that China is catching up very fast in technology sector to win the 21st century. PORTFOLIO PERFORMANCE Since my last Memo on 29.06.2021, there is no investment from me. However, I am still thinking of whether or not to take the advantage of the current pessimism sentiment in Chinese stocks by increasing my position in them. Since the inception of our fund in May 2020, we have been up close to 43.51%. We are still able to maintain our risk level at 4 as can be seen from the “average risk score”. Stay safe. Norman Liew

09.07.2021