The first quarter of 2020 has been nothing short of terrifying with the unfolding of Coronavirus pandemic. In recent weeks, countries have enforced lockdowns and imposed draconian restrictions on movement as part of necessary measures to curb the spread of the respiratory illness that has stubbornly defied containment.
To amplify the Coronavirus mayhem on the global economies, the oil and gas markets were ensnared by oversupply and collapse in oil price resulted from the unforeseen battle for oil domination between Russia and Saudi Arabia, two of the world's oil superpowers.
The constriction of travels and broader economic activities due to the Covid-19 virus, together with the suicidal oil price war initiated by Saudi Arabia, have completed the perfect storm for global market selldown. In the short span of weeks, trillions in wealth were erased from the stock markets as investors pulled out of equities and forced to liquidate positions to cover margin calls.
The three most widely followed indexes in the U.S. have fallen over 30% from their recent highs, starting one of the most volatile periods in the past decade. Amid the market upheaval, traditional safe haven assets like gold and high quality bonds were not spared either. The U.S. dollar has surged as investors dumped everything to hoard the greenback. In the age of Coronavirus, cash is indeed king.
The three most widely followed indexes in the U.S. have fallen over 30% from their recent highs, starting one of the most volatile periods in the past decade. Amid the market upheaval, traditional safe haven assets like gold and high quality bonds were not spared either. The U.S. dollar has surged as investors dumped everything to hoard the greenback. In the age of Coronavirus, cash is indeed king.
To cushion the blow from Coronavirus pandemic, governments and central banks globally have unleashed unprecedented fiscal and monetary stimulus over the past few weeks. The Fed has announced the first unscheduled emergency interest rate cut since 2008 to near zero. Unlimited quantitative easing program to buy unlimited amounts of Treasury bonds and mortgage-backed securities has also been launched to stave off an economic crisis. Mounting fear about imminent recessions has rippled across countries.
Action in Q1
Personally, the 2003 SARS outbreak had not left a strong impression during my schooling days. I vaguely recalled that schools were closed and the whole outbreak was short-lived. During the 2008 Global Financial Crisis, I still buried my head in textbooks, largely in my own world and not giving a care to the current affairs.
So it is perhaps the first time that I am going through a worldwide crisis like this. And it certainly does not help that the proliferation of social media has sparked an epidemic of online panic.
As we are currently in unchartered waters, it may be flawed to predict the market bottom based on past events related to SARS/GFC. So far, the magnitude of the virus' impact on the economy appears to be more profound than before.
When the Asia-centric Coronavirus seems to be petering out in February, I have initiated positions in a few counters in tranches but only to witness US and Europe becoming the next virus epicenters. In hindsight, those positions were entered too early.
In a bear market, it can be challenging to maintain a dispassionate attitude. When you have bought a stock at a bargain price and managed to time the bottom of the trading day, you might feel relieved but only to see it decline further the following day, which induces fear of losses and demotivates investing.
But trying to catch the absolute bottom can be a fool's endeavor. In a bear market, it would probably be wise to invest in tranches with each percentage decline and not a whole lump sum.
And as Howard Marks, the co-founder of Oaktree Capital Management has said, "Which is more important to you? To get some of the values that exist today, or to have more dry powder ready to go in if it goes lower? And you can’t accomplish both goals simultaneously"
With global economies adversely impacted by the virus outbreak, my portfolio, too was not spared in the recent market carnage. Despite the capital injection, the portfolio value has fallen by approximately 22%.
The 1st quarter has recorded the collection of dividends at $1,360.11. Compared to 1Q2019, the dividend collected has increased by approximately 10% from $1,235.21.
The dividend collected from this quarter is contributed by the following securities:
However, with the economy ravaged by the Coronavirus pandemic, it is highly likely that we may be confronted with dividend suspensions and cuts in the next few quarters. This could possibly delay my 2020 financial target of reaching $6,000 dividend.
Total Dividend Collected : $ 1,360.11
Average Dividend/Month : $ 453.37 (over 3-months period)
* Exchange Rate
1 EUR : 1.570417 SGD
1 USD : 1.423795 SGD
So it is perhaps the first time that I am going through a worldwide crisis like this. And it certainly does not help that the proliferation of social media has sparked an epidemic of online panic.
As we are currently in unchartered waters, it may be flawed to predict the market bottom based on past events related to SARS/GFC. So far, the magnitude of the virus' impact on the economy appears to be more profound than before.
When the Asia-centric Coronavirus seems to be petering out in February, I have initiated positions in a few counters in tranches but only to witness US and Europe becoming the next virus epicenters. In hindsight, those positions were entered too early.
In a bear market, it can be challenging to maintain a dispassionate attitude. When you have bought a stock at a bargain price and managed to time the bottom of the trading day, you might feel relieved but only to see it decline further the following day, which induces fear of losses and demotivates investing.
But trying to catch the absolute bottom can be a fool's endeavor. In a bear market, it would probably be wise to invest in tranches with each percentage decline and not a whole lump sum.
And as Howard Marks, the co-founder of Oaktree Capital Management has said, "Which is more important to you? To get some of the values that exist today, or to have more dry powder ready to go in if it goes lower? And you can’t accomplish both goals simultaneously"
Portfolio
With global economies adversely impacted by the virus outbreak, my portfolio, too was not spared in the recent market carnage. Despite the capital injection, the portfolio value has fallen by approximately 22%.
If the balance sheets of the companies you are vested in, are sturdy enough to weather through the crisis, it probably helps to not monitor your portfolio value on a daily basis. On the other hand, those which are not fundamentally resilient will not be able to escape unscathed and eventually bite the dust.
In a dramatic turn of events, the Eagle Hospitality Trust (EHT) has received a notice of default as its sponsor and master lessee, Urban Commons has reneged on its rental payment to EHT. To exacerbate the situation, its lenders have exercised their rights to accelerate the entirety of a syndicated loan of US$341 million. EHT is also restricted from paying out the maiden distribution which is due at the end of the month. This comes barely a year after EHT has been listed on the local bourse.
But its woes predates the Coronavirus with multiple warning signs and red flags that I should have heeded, such as the paring down of stakes by cornerstone shareholders and the resignation of management.
Given the suspension of the stock, I am prepared to write it off completely from my portfolio. Warren Buffet's advice to never lose money, could not have been more apt in this scenario. Blindly chasing dividend yield is perilous with exposure to potential loss of capital. It is a necessary and important lesson for me to pick up.
In such a market selldown, it is certainly better to focus on larger caps or blue chips entities with longer track records, such as the Ascendas, Capitaland, Frasers and Mapletree groups for REITS related investment. In the face of crisis, they usually benefit from the relatively lower cost of debt, with generally healthier balance sheets to cushion the blow from the virus.
But its woes predates the Coronavirus with multiple warning signs and red flags that I should have heeded, such as the paring down of stakes by cornerstone shareholders and the resignation of management.
Given the suspension of the stock, I am prepared to write it off completely from my portfolio. Warren Buffet's advice to never lose money, could not have been more apt in this scenario. Blindly chasing dividend yield is perilous with exposure to potential loss of capital. It is a necessary and important lesson for me to pick up.
In such a market selldown, it is certainly better to focus on larger caps or blue chips entities with longer track records, such as the Ascendas, Capitaland, Frasers and Mapletree groups for REITS related investment. In the face of crisis, they usually benefit from the relatively lower cost of debt, with generally healthier balance sheets to cushion the blow from the virus.
Dividend
The 1st quarter has recorded the collection of dividends at $1,360.11. Compared to 1Q2019, the dividend collected has increased by approximately 10% from $1,235.21.
The dividend collected from this quarter is contributed by the following securities:
Month
|
Payment Date
|
Security
|
Dividend
|
January
|
2 Jan
|
SSB Jan 2019
|
$50.25
|
15 Jan
|
ABF SG Bond ETF
|
$124.50
| |
February
|
24 Feb
|
STI ETF
|
$84.00
|
28 Feb
|
Starhill Global REIT
|
$192.10
| |
March
|
27 Mar
|
Far East HTrust
|
$114.00
|
30 Mar
|
CapitaRetail China Trust
|
$180.50
| |
30 Mar
|
Cromwell European REIT
|
$614.76
|
Total Dividend Collected : $ 1,360.11
Average Dividend/Month : $ 453.37 (over 3-months period)
* Exchange Rate
1 EUR : 1.570417 SGD
1 USD : 1.423795 SGD
Personal Thought
With growing concerns about the Coronavirus, I have been working from home every now and then. Like many others who were affected by the virus outbreak, we were supposed to travel to Japan these 2 weeks but it was disrupted. The process of claiming for refunds is still ongoing with our travel insurer. Given the situation, it is necessary to defer non-essential travels during this period.
It definitely hits the hardest when a family member of mine was identified with a need to serve the Stay Home Notice via contact tracing. I have mainly been staying indoors unless purchasing of essential necessities and household items is required.
Source: coronastats.co
The global trend for daily new infections seems to have tapered down a little but the number of daily new deaths is still making new highs. Though China seems to be out of the woods for now, all eyes are now on Europe and US as they struggle to battle the spread of COVID-19.
The importance of health has never been more pronounced, especially in this current pandemic. Hope everyone can remain safe and sound during this period. That's what matters at this point.
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