[APPLE PROJECT] Performance as of 20.10.2021

PERFORMANCE

Since the inception of this fund in September 2021, this fund is up 4.2%. Overall, this fund is above the the US’s S&P 500 which stands at -1.72% and also the Dow Jones Index which stands at 1.69%.

HOLDINGS

Currently we are holding 8.2721 shares of APPLE in eToro CFD.

[BOOK] THE RICHEST MAN IN BABYLON 巴比伦致富圣经（漫画版）

If you dislike reading lengthy type of book, probably this comic is the best recommended book you can try for beginner. I found it interesting and easy to read.

如果你不喜欢阅读闷长的书籍，这漫画可能是就适合你。漫画要传放达的理财讯息简单易懂。

[INVESTMENT] MEMO – 18.10.2021

INVISIBLE HAND

The disconnection between economic realities and performance of the stock market in the past 1-2 years is somewhat perplexed.

To me, most of the companies are now overvalued. Countless unicorn companies are given record valuations despite not making any profit year after year. Some unicorn companies used heavy leverage to fund expansion in order to achieve the growth that they projected. This action is, to me, quite madness and dangerous especially in times of uncertainty.

One may ask what and who cause all this madness? I think, this is not easy to explain. The government and central banks around the globe promised and committed to provide unlimited quantitative easing, lower the interest rate, buy corporate bonds and even giving direct payment grant to businesses. Basically, they injected liquidity to these unicorn companies. The government and central banks around the world intervened substantially in the free market changed the rules of economy. In other words, the economic rules which would naturally correct the situation is unable to react accordingly.

  

A good example is the 2008 global financial crisis and the recent Covid-19 global pandemic driven recession. The consequences of default and bankruptcy or winding-up were negated but INFLATION is now inevitable. Another enemy would be the economic inequality - wealth disparity.

INFLATION

Let’s talk about the scariest: INFLATION. I will leave the topic of economic inequality to the next memo. 

We all understand the basic of inflation. According to Investopedia, inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising. In simple words, inflation means the price of goods and services are increasing. The same volume of food you eat costs USD2 five years ago may now cost USD2.5.

Scary, right? What scarier is the rising prices of energy and raw and building materials. At the same time, the disruption in the supplying chain cannot meet the surge in demand amid the easing of Covid-19 lockdowns. This is exactly what happen right now. When goods and service providers are faced with higher prices, they often pass those costs on to end consumers like you and me. Think about it, we all need energy utility, food and shelter in our daily life to survive. If the price in one or two of these items are rising to a irrepressible level, the value of our currency will become less and we will be paying more for less. Not to mention the wealth disparity will once again be widening.

RISK & OPPORTUNITY

My take: 1. The constantly interference of central bank and also stimulus packages grant from the government, all these actions cause a lot of liquidity in the stock market. The short-term bumpy ride may continue for a period of time and also still brace for volatility. 2. The overwhelming sales of the new Apple iPhone 13 worldwide, especially in Asia countries, shows sign of growth amid the pandemic. Hundreds of photographs showed people are crazy about new iPhone and even rushed to get one or to queued to be the first owner. They gave us an illusion that whether the economy is really in the bad shape? 3. Every crisis comes with an opportunity. If we look at each individual company, I always believe that a company with strong fundamentals and who can creates consistent earnings are the only reason you buy the shares of that company.

PORTFOLIO PERFORMANCE

Since my last Memo, I have substantially added my position in  $AAPL (Apple) as I believe in its solid fundamentals. My portfolio is strategically allocated and diversified across different business sectors and regions (US, China and Hong Kong). My portfolio performance, so far, for this month is up 4.39%. Overall, my whole portfolio currently is up at 28.31% since its inception in May 2021.

Stay safe.  

MNMLH

18.10.2021

[APPLE PROJECT] My Apple Project

On 14th day of September 2021, Apple Inc. held its Apple event and introduced its latest products, amongst others, latest iPad, Apple Watch and iPhone 13 series. What attracted me the most in this event was its iPhone 13 Pro Max. That maybe purely because of my current iPhone 6S Plus is already too old and its battery has started to fade out anytime in the future.

New iPhone does not come cheap. The iPhone 13 Pro Max (256GB) that I was looking at costs about USD1,199.00.

This event gave me an idea of buying Apple’s shares instead of its products. But of course, if I have enough budget, I will buy iPhone 13 Pro Max as well. And because of this, I have decided to conduct an experiment which I now called it MY APPLE PROJECT.

MY APPLE PROJECT

I set this project for 10 years. The rules of this My Apple Project is simple, I will buy Apple’s share if a new iPhone series is launched. The amount of shares I acquire would depend on the price of the iPhone launched by Apple.  A simple example will be as follows: - 

- Price of iPhone 13 Pro Max =USD1,199.00

- Then I will use this USD1,199.00 to acquire the share of Apple in eToro for same month when the new iPhone series is launched for the next 10 years.

PROJECT EXECUTION

As of today, I have put up the relevant fund to work on this Project, which is USD1,000.00 to purchase the share of Apple in eToro.

Let’s see how it would turn out to be in the next 10 years, which is YEAR 2031.

#AppleProject

[INVESTMENT] MEMO - 29.09.2021

Hello, everyone! Time flies and it is now end of September 2021.  

EVERGRANDE  

One of the largest real estate developers in China, Evergrande sparks fear among the investors worldwide couple weeks ago due to its fears in default on domestic bond.  

Over past years, Evergrande expanded aggressively and also at the same time stretched its financial leverage by borrowing more than $300 billion.  

Back in year 2017, the Chinese government acknowledged that the price of the real estate was just too high due to speculation, so they tighten the real estate market where President Xi Jinping’s comment at the 19th party congress that “houses are for living in, not for speculation.”  

The Chinese government then introduced the the “three red lines policy” on selected developers after an August 2020 meeting in Beijing that occurred against a backdrop of growing debt levels, rising land prices and booming sales.  

What are those three (3) red lines?  

1. 70% ceiling on liabilities to assets (excluding advance receipts) 

2. Net gearing ratio of less than 100% 

3. Cash to short-term debt ratio of at least 1  

In simple term, the Chinese government wants the developer to reduce their financial leverage and to maintain a healthy balance sheet.  

Unfortunately, Evergrande failed to meet most of the metrics above and is short on two (2) of them. Failure to meet these metrics means no access to new loans.  

TOO BIG TO FAIL?  

The serious potential fallout of such heavily-indebted company collapsing has led some analysts and investors to think that it may pose a risk to China’s financial system and also suggest that Beijing may step in to rescue it because it maybe “too big to fail”.  

I am not going to speculate any of the above. I believe Evergrande’s crisis is unlikely to create a shock to the entire China’s financial system. We have to look at the history that just in recent years, an insurance company, Anbang with similar debt burdens was successfully restructured without any systemic shock.  

By imposing the “3 red lines” policy, it clearly had shown that the Chinese government has been actively managing the amount of capital absorbed by the real estate industry. and putting stricter controls in place to ensure a more sustainable future. Such policy directly or indirectly mitigates the risks by preventing its liquidity problem turning into an insolvency problem in the Chinese financial system.  

As long as the Chinese government can create stability in the financial system, I have no doubt that China’s economy will boom.  

MY INVESTMENT  

Meanwhile, I have a made some adjustment and investment to my portfolio. I added my position in the following company in September: -  

1. APPLE $AAPL (Apple)

The Chinese company that I like which I am still holding in them are:-  

1. TENCENT $0700.HK (Tencent) 2. ALIBABA $BABA (Alibaba) 3. MEITUAN $03690.HK (Meituan Class B) 4. PING AN $2318.HK (Ping An Insurance)

PORTFOLIO PERFORMANCE  

Solely for the month of September 2021, my portfolio performance is down 4.65%. Overall, my portfolio performance currently is up at 22.61% since its inception in May 2021.  

Stay safe.  

MNMLH 

29.09.2021

[INVESTMENT] MEMO – 15.09.2021

Hello. I hope everyone of you are well.

 

Nothing much for me to update at the moment. Delta variant continue to spread fast in Asia, including my country, while the authority rolled out the vaccination as fast as they could to combat Covid-19.

 

We all know that variant is the one who is likely to further slow the economic rebound as employees and the mass public were still being held back from returning to office or gathering in the public space. Further, the regional supply chain can be further disrupted and consequently affecting growth due to the variant.

 

APPLE $AAPL (Apple)

 

Last Friday, the Apple’s App Store payment battle between Apple and Epic Games (Fortnite developer) came to an end, for the time being. The U.S District Judge ruled against Apple, saying that the company must let app developers direct their customers to alternate payment methods outside of the App Store. The Judge ruled that Apple has until 5th December to make changes to its App Store payment options. It basically means that Apple may lost their monopoly of taking a 30% cut on their App Store and they may not be able to request developers to use their in-app payment system. Apple has said it intends to appeal the decision.

 

The above decision certainly may affect Apple in the short term. Well, the thing is, I am not investing in Apple for short term. Looking back at the fundamental of Apple and its strong economic moat, I will continue to hold Apple for long term unless there is any substantial event(s) which can disrupt or shake the fundamental of Apple.

 

READING

 

I have been reading a lot for the pass two (2) weeks. Though I am not working from home, I spent all my reading times after work. I bought a book called PRINCIPLES by Ray Dalio last week and intending to start my reading this week!

 

PORTFOLIO PERFORMANCE

 

As of today, my portfolio for current month of September is down 0.74% mainly due to the bearish stocks in Chinese companies in $BABA (Alibaba) (Alibaba) , $03690.HK (Meituan Class B) and $0700.HK (Tencent) . But my portfolio is still able to withstand the bearish sentiment from China because of our strategy in diversification of portfolio.

 

Since the inception of our fund in May 2020, we have been up to about 38.24%. Our “average risk score” still remains at level 4.

 

Stay safe.

 

MNMLH

15.09.2021

[INVESTMENT] MEMO - 31.08.2021

THE CULTURE DIFFERENCE

Last couple of weeks ago, I came across an article written by Ray Dario where he states that most Western observers had tended to not believe that the Chinese Communist Party’s usage of capital markets.

Well, I am not too surprise to that averment because I experienced myself first hand when I was a student in Australia. There is so much culture difference between the East and the West. It is not easy for an English-speaking (or educated) person to understand China when your main sources of information are from Bloomberg or CNN. Most of the reporters or even the news anchor there do not even speak or read Chinese.

WHY THE WESTERN DOES NOT UNDERSTAND THE EAST?

The simple answer to that is HISTORY.

Confucianism has rooted deeply in China for several thousands of years. It still has its influence on all aspects of politics and economy in China. Confucian thoughts have been the most basic mainstream value of the people in China and other nationalities in East Asia all through ages. 

One of the most interesting teachings or ethic of Confucian is filial piety. It is a virtue of respect for one's parents, elders, and ancestors. Filial piety is considered a key virtue in Chinese and other East Asian cultures. Confucian ethics do not regard filial piety as a choice, but rather as an unconditional obligation of the child. The pre-eminence of filial duty is demonstrated by a Chinese saying: Of all virtues, filial piety is the first (百善孝为先). Now you can roughly understand how important it is for filial piety in Chinese society. From such ethics and also to read filial piety in a broader sense, hierarchy, authority and obedience become important aspect of the practice. Most of the time, the junior is unlikely to challenge the authority of the senior.

However, in the West, people believes that liberty (of FREEDOM) and EQUALITY are the most important aspect of life. Parents and children have the equal right at home. It is also very common for children to live an independent life when they turn majority age or when they are able to do so. To read equality in a broader sense, Westerners treat liberty, freedom, democracy and equality above all, focusing of “humanism” whereby “man is the measure of all things”. Thus, the financial or economic system and liberation are constantly advocated by the West.

LEARN, LEARN, LEARN

There you go. Now you can see the difference between the two. Under the tradition of hierarchy, authority and authoritarian form of business, it seems that it did not create democracy similar to the United States and European countries. But one cannot deny the fact that such policy making process creates a relatively fast and stable progress as the implementation can be moved on the ground instantly to increase its efficiency.

The former Premier of Singapore, the late Lee Kuan Yew ever said:-

“Democracy does not bring good government to new developing countries. What Asians admire is not necessarily what Americans or Europeans admire.”

I am not here to debate or to make a judgment on which system or culture are more superior than the other. Who am I to judge?

I am here to express my humble views and to show you briefly the difference of the two as sometimes they can be confusing by just solely looking at certain event without thinking or applying their deeply rooted cultural background.

Despite the different, what is more important is how we should learn from each other and the people of both cultures can respect and accept each other’s values and educational system. To the very least, learn how to be a HUMAN. 

PORTFOLIO PERFORMANCE 

As of today, my portfolio for current month of August is down 1.04% mainly due to the bearish stocks in Chinese companies that I have invested in $BABA (Alibaba) , $03690.HK (Meituan Class B) and $0700.HK (Tencent). But my portfolio is still able to withstand the bearish sentiment from China because of diversification in the US stocks.

Since the inception of our fund in May 2020, we have been up close to 43.62%. We are still able to maintain our risk level at 3 or 4 as can be seen from the “average risk score”.

Happy National Day, Malaysia! Stay safe.

MNMLH

31.08.2021

[INVESTMENT] MEMO - 21.08.2021

TENCENT HOLDINGS

Tencent Holdings Limited $0700.HK (Tencent) has released its financial results last week for the second quarter ("2Q2021") ended June 30, 2021. I would reproduce some key highlights hereinbelow.

KEY HIGHLIGHTS FOR 2Q2021 

Its total revenues were RMB138.3 billion, an increase of 20% over the second quarter of 2020 ("YoY"). On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:

- Operating profit was RMB42.8 billion - increase of 14% YoY.

- Profit for the period was RMB35.1 billion - increase of 13% YoY. 

- Profit attributable to equity holders of the Company for the quarter was RMB34.0 billion - increase of 13% YoY.

- Basic earnings per share were RMB3.574 and Diluted earnings per share were RMB3.504.

The 2Q2021 financial review for each segment is also reproduced below.

VALUE ADDED SERVICE (VAS)

Revenues from VAS increased by 11% to RMB72.0 billion for the second quarter on a year-on-year basis. Games revenues increased by 12% to RMB43.0 billion. Mobile games VAS revenues increased by 13% to RMB40.8 billion, while PC client games revenues grew by 1% to RMB11.0 billion for the second quarter of 2021. Social networks revenues grew by 9% to RMB29.0 billion, mainly due to revenue growth from digital content services, as well as in-game virtual item sales.

ONLINE ADVERTISING

Revenues from Online Advertising increased by 23% to RMB22.8 billion for the second quarter of 2021, reflecting rising demand from advertiser categories such as Internet services and consumer staples, as well as consolidation of Bitauto's advertising revenue, which outweighed weakness in education. Social and others advertising revenues grew by 28% to RMB19.5 billion, due to increased adoption of Mini Programs as landing pages, more video advertising inventories inside Weixin Moments, as well as revenue growth from the mobile advertising network. Media advertising revenues were RMB3.3 billion, broadly stable compared to the second quarter of 2020, as greater advertising revenues from the music apps offset lower news advertising revenues.

FINTECH AND BUSINESS SERVICE

Revenues from FinTech and Business Services increased by 40% to RMB41.9 billion for the second quarter of 2021 on a year-on-year basis. FinTech Services revenue growth primarily reflected increasing digital payment transactions. Business Services revenues increased rapidly year-on-year, due to digitalisation of public services and traditional industries, as well as consolidation of Bitauto's Business Services revenue.

In short, revenue growth for all 3 core segments was solid. Overall, it was up 20%.

WHAT THE CEO HAD SAID?

The CEO of TENCENT, Pony Ma Huateng said: 

"In the quarter, we enhanced our services and achieved healthy growth rates across our business lines, particularly Business Services and advertising, while our game revenue benefitted from international growth. We are increasingly deploying our technologies and expertise to help SMEs, public services, corporations collaborate internally, and connect with their users externally, which we believe contributes to the real economy and to society at large. During the recent Henan floods, Tencent Docs, our cloud-based productivity solution, played a valuable role assisting people providing and seeking help, thanks to its collaborative data editing functionality."

 

MY TAKE

I am still positively in holding TENCENT in my portfolio. From the latest financial results released last week, the fundamental of the company still intact and remain solid. Thus, I see no reason to make any investment adjustment to my portfolio in Chinese companies, especially, TENCENT HOLDINGS.

PORTFOLIO PERFORMANCE 

As of today, my portfolio for current month of August is down 2.63% mainly due to the bearish stocks in Chinese companies that I have invested in $BABA (Alibaba) , $03690.HK (Meituan Class B) and $0700.HK. 

Since the inception of our fund in May 2020, we have been up close to 41.51%. We are still able to maintain our risk level at 3 or 4 as can be seen from the “average risk score”. 

Stay safe. 

MNMLH 

21.08.2021