Monday, July 02, 2007
Asset Allocation Review
Industrials: 29.3%
Resources: 15.2%
Property: 14.7%
Financial: 11.6%
Shipping/Port: 9.5%
Conglomerate: 6.9%
Utilities: 6.5%
Construction: 3.4%
Retail: 2.8%
The industrials have grown quite a bit and now stand out visibly from the rest. I didn't add much to my positions so the difference came mostly from reflection of earnings increase. I expect a few of them will get re-rated in the 2nd half so there's no immediate need for trimming down, plus the overall sector valuation is still very reasonable.
On the other hand, the shipping stocks look very richly valued despite their good earnings prospect. I'll continue to reduce and probably replace them with pure port plays for a more defensive position and to complement the utility plays, which could occupy a larger space in the portfolio.
Other sectors look fine but I'd like to add one or two Chinese financial plays, which are sorely lacking and performance hurting too. I also plan to buy more Chinese property companies as by now the housing market looks more sane and healthy than the A-share market. Same as last time, China retail is another near-empty space which I need to focus harder.
The 2007 results are very encouraging but I'm not gonna say much here as there's quite a number of stocks in my portfolio which aren't mentioned here. But trust me nearly all of the better choices are already here! As I won't update the Report Card until the end of the year so check out the April post for past recommendations.
More importantly, there's no much to brag about when the H-share index has grown by 130% (135% including dividends) since 2006. I failed to match that kind of return but managed to close the total gap substantially in 2007. The obvious reason is that I didn't have as many H-shares and therefore I still underperformed although my other selections perform satisfactorily (earnings and share price wise). You could say I've made a wrong macro call since 2006 and hence had to double or triple my effort just to keep up with the pace.
In the next post I'll lay out my thoughts on investment value of H-shares and red chips going forward.
Resources: 15.2%
Property: 14.7%
Financial: 11.6%
Shipping/Port: 9.5%
Conglomerate: 6.9%
Utilities: 6.5%
Construction: 3.4%
Retail: 2.8%
The industrials have grown quite a bit and now stand out visibly from the rest. I didn't add much to my positions so the difference came mostly from reflection of earnings increase. I expect a few of them will get re-rated in the 2nd half so there's no immediate need for trimming down, plus the overall sector valuation is still very reasonable.
On the other hand, the shipping stocks look very richly valued despite their good earnings prospect. I'll continue to reduce and probably replace them with pure port plays for a more defensive position and to complement the utility plays, which could occupy a larger space in the portfolio.
Other sectors look fine but I'd like to add one or two Chinese financial plays, which are sorely lacking and performance hurting too. I also plan to buy more Chinese property companies as by now the housing market looks more sane and healthy than the A-share market. Same as last time, China retail is another near-empty space which I need to focus harder.
The 2007 results are very encouraging but I'm not gonna say much here as there's quite a number of stocks in my portfolio which aren't mentioned here. But trust me nearly all of the better choices are already here! As I won't update the Report Card until the end of the year so check out the April post for past recommendations.
More importantly, there's no much to brag about when the H-share index has grown by 130% (135% including dividends) since 2006. I failed to match that kind of return but managed to close the total gap substantially in 2007. The obvious reason is that I didn't have as many H-shares and therefore I still underperformed although my other selections perform satisfactorily (earnings and share price wise). You could say I've made a wrong macro call since 2006 and hence had to double or triple my effort just to keep up with the pace.
In the next post I'll lay out my thoughts on investment value of H-shares and red chips going forward.
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