Author: The Asia Report

Looking Back To 2015 – What Happens When Bubbles Burst?

With a difference two years makes. The Chinese stock market was truly something to behold. I recall vividly watching on CNBC one particular segment where farmers remarked that trading the stock markets was far easier than farming. Warning signs don’t come more vividly than that. As always, the party in China soon ended as markets deflated. I was a value investing seminar in Italy where a fellow investor asked me just what was going on in China. After all, trading activity had dropped dramatically with a multitude of the largest companies being suspended for falling too much. I was...

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Reflections on Brexit & The Presidential Elections

  I decide to take the events of the past two weeks to reflect about the mis-priced events and expectations. This year has seen two such situations present themselves – namely Brexit in the UK and the Presidential Election in the United States. Both situations had binary outcomes. Markets mis-priced the outcome wrongly in both instances, and reacted violently initially when it became apparent they had misjudged the situation. There are a couple of points I like to draw from these two events. Firstly, predicting the outcome of major events and taking huge directional bets on it is a...

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Updates From 6 Months Later… The Pendulum Has Swung

It’s been 6 months since my last update, and how the pendulum has swung. Just look at the headlines on Bloomberg in January. Contrast this to the headlines earlier this month. The pendulum has swung strongly to the other end of the spectrum. Back in January, I posted an article which I’ve reproduced here which captured my thoughts on Hong Kong developers. Many of my comments still remain valid. You can check out the original article here: Here’s a snippet of one of the key points raised: Still, this says nothing about the short term price movements and if...

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Updates: Book Give-away Lucky Draw + Top Reads From The Web

Book Give-away Lucky Draw The Asia Report has always been practical, actionable knowledge. There’s a huge gulf between theory and practise, and my goal has always been to bridge that gap. In the spirit of this, I am happy to announce the start of our Book Give-Away project. From time to time, I will be giving away to readers books that have had the most influence on my own education. To kick it off, we have a copy of Warren Buffett’s Biography by Roger Lowenstein. It got me started years ago, and its fitting that this is the first book...

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Sharing The Yeoman Experience: Applying Value Investing in Japan

Regular readers will know that we are big fans of Yeo Seng Cheong of Yeoman Capital, which we regard as extremely disciplined practitioners of value investing in South East Asia. We had the pleasure of interviewing them last year, and you can check out some extracts at the end of the article. Their long term track record speaks volumes: For those not lucky to attend the previous Asia Value Investor Conference in Hong Kong, he has kindly agreed to share his video of his experience investing in Japan at the last MOI Asian Investing Summit. [embedded content] Looking Beyond the Numbers Mr...

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Investment Journal 12/02/2016 – Charting the Markets: The 2016 Equities Sell-Off Continues

Note: For the title of each post, I have now decided to use an article from Bloomberg that describes the current sentiment of the day: Charting the Markets: The 2016 Equities Sell-Off Continues Its a day more before I leave for London, and much has been accomplished. We had an intensive reshuffling of our portfolio, trimming positions of stocks that had appreciated significantly since our purchase, and adding to our current positions. I am not too keen on portfolio churning, but in this instance, I find it necessary for us to take small losses on our positions given the...

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Insider Buying to Selling Ratio on the SGX Hits an All Time High

So the ratio of insider buying to insider selling has hit an all time high of 4.7x. One other point which I find really interesting is that the greatest cumulative value of buying and selling was done in 2007. It seems half the people in the room drank their own cool-aid. Thoughts on Insider Buying/Selling I don’t think we have enough data here to form a clear conclusion from the Singapore markets. But there’s been quite a bit of academic research showing that heavy insider buying does lead to out-performance. For me, its a matter of common sense. If I...

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Investment Journal 01/01/2016 – Value in Hong Kong Property Developers?

The current economic climate has produced incredible investment opportunities. The trip to Hong Kong led me to conclude two things: 1) Residential housing prices are due for a major correction 2) The demand for prime district commercial properties will continue to be strong with Hong Kong serving as the financial hub for Asia to access China. Legal systems and financial hubs are not built overnight – as China came to learn last year. Such systems take decades of mistakes and experiences to build up, painful lessons which Hong Kong endured in 1997. Interestingly enough, the dramatic increase in price...

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Debunking Myths & Fear With Data – Markets Insights for Singapore Stocks – Part 1

In continuing with the series, I like to draw attention to the valuations of the STI Index, which notoriously received the dubious distinction of having as bad a year as Greece. It’s probably worthwhile to note that the last 5 years have not been by any measure a particularly exuberant time in the stock market (especially in comparison to 2005 – 2007). This lower valuations have also resulted in a corresponding surge in the dividend yield of the STI to close to 4%, a near record high. Some large capitalization stocks are extremely cheap, trading at close to 2008 levels....

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Putting China in Perspective – Valuations of Top 10 Largest Shanghai Stock Exchange Stocks

There’s plenty of noise in the markets at the moment. Plenty of market manipulation (whether true or perceived!). It reminds me of the time that Asia went through its own “learning lessons” in the 1990s. That’s just part and parcel of the capital markets. But ultimately, valuations are what really drives stock market returns in the long run. The below charts serve as a signpost to know where we are in terms of market valuations…...

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Updates & Future Plans for 2016

The previous two months have been one of the busiest on record, with us selling holdings that had reached close to their fair values, and switching out to companies which were far more attractively priced. The upcoming 2016 will be an exciting one. We have one last interview with a well known fund manager based in Singapore that will be released shortly (as time permits!) this month. An exciting partnership is also in the works, and more details will be disclosed soon. One new segment of the site will be journal entries which are curated from my own investment records....

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How We Think About Investing

Short excerpt from our internal owners manual: We live in a world where people of hyperactivity.  Attention spans of investors have gotten progressively shorter. What used to be measured in years are now measured in months, days or even minutes. In light of this, our approach is different and deliberately old fashioned. Building an Enduring Business Dynastic wealth has always been built on the solid foundation of good business fundamentals, and our approach to investing is the same. At the heart of our thinking is that we invest in businesses – not pieces of paper. We focus unapologetically on...

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Open Letter to Zagro Asia about Proposed Voluntary Delisting

Zagro Asia released a formal proposal to seek the voluntary delisting of the Company which I think greatly undervalues the company. I have sent an open letter to company reflecting my stance that the offer should be revised upwards to reflect the true intrinsic value of the company. The original letter can be found here. The proposed voluntary delisting at 30 cents came as a surprise to us. It deeply undervalues what is an intrinsically high quality business. In our opinion, a conservative appraisal of Zagro Asia would yield a valuation of at least 35 – 40 cents. First off,...

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InvestX Congress 2015 Wrap-Up & Photos

First off, thanks for everyone who came down on Saturday and said hi to me. I had a lot of fun both during the presentation and the Q & A. The Fifth Person did a post-event write up which you can find here. A copy of the slides can also be downloaded here. Popular Holdings Divestment During my presentation, I also talked about an idea of mind that had worked out well – Popular Holdings.  Its was taken private earlier this year. I wrote up “post-mortem” of the investment which was picked up by Nextinsight. Powermatic Data Systems Case Study I also...

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An Hour With Yeo Seng Chong of Yeoman Capital

I sat down recently with Mr. Yeo Seng Chong in his office at Robertson Walk.  He is the founder and CIO of Yeoman Capital Management, which in turn manages the Yeoman 3-Rights Value Asia Fund. Since inception, his fund has yielded an absolute cumulative return of +788.16% or a CAGR of +12.96% p.a. nett of all fees, in SGD terms with dividends re-invested. Over the same period, this Index increased by +91.61% implying a CAGR of +3.70% p.a. I think its safe to say that his results have been most satisfactory, and that investors in Yeoman are happy with his...

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