Portfolio Plan for 2nd half of 2017

Stocks valuations are at historic highs after a long bull market, the risk of euphoria driven bubble has grown.

US stocks have been priced in for corporate tax cut. The risk for equities is that market will be disappointed when tax cut does not come in as expected.

Hence it is important to allocate a larger weightage of portfolio into bonds. Focus on bonds that are less sensitive to interest rate hike.

Media distributor companies such as Neflix, Amazon, Hulu Plus have been distributing content using steaming services.
=> This will benefit content providers like Walt Disney, Comcast, Time Warner & Twenty First Century Fox as media distributors need to buy content from them.

The centerpiece of Xi’s globalization drive is One Belt, One Road. OBOR, as it’s commonly known, will see the Middle Kingdom invest up to $500 billion in more than 60 emerging markets over the next five years, ranging from Kazakhstan to Kenya.
=> This will benefit China Communication Construction, China Railway Group, Industrial & Commercial Bank of China.

Everyone is buzzing about artificial intelligence right now. Before we know it, AI will be part of our everyday lives. Market experts say artificial intelligence will lead the next wave of economic growth and productivity for at least the next couple of decades.
=> The leaders in artificial intelligence are Alphabet, Baidu, Facebook, Alibaba, Microsoft.


These are my plans for portfolio management:

1. Reviews existing portfolio to check which stocks / bonds / currency need to cut loss or reduced.

2. Buy short term bonds or bonds with coupon reset feature:

HSBC 4.75% coco Perpetual (EUR)

HSBC 4.70% coco Perpetual (SGD)
ARA Asset Management 5.20% Perpetual (SGD)

HSBC 5.625% Perpetual (USD)
Swedbank 5.50% Perpetual (USD)
Parkway Pantai 4.25% Perpetual (USD)
Pershing Square 5.50% 15July2022 (USD)

3. Buy bond funds that will do well in rising interest rate environment (prefers to buy non USD class if using loan):

Gam Star Credit Opportunity Fund (EUR)
Allianz Dynamic Asian High Yield Bond Fund (EUR)
United Emerging Market Bond Fund (SGD)
AB Global High Yield (USD)

4. Stocks with prospect of earnings growth

Long term direction of share price follows earnings trend of the companies.

Investors may want to gain access to the stocks via Fixed Coupon Note or Bonus Enhance Note for better entry level or Upside Participation Note.

These are stocks (rated Neutral or Preferred) whereby earnings growth have been healthy:

Alibaba
AIA
Alphabet Class A
Amgen
Berkshire Hathaway Class B
Disney
Celgene
Cisco
Comcast
Home Depot
Nike
Starbucks
Visa
Mastercard

5. Deploys interest rate hedging tools, such as:

- Convert US loan to SGD loan at around 1.3400.

6. Buy dividend stocks to generate recurring income

History has shown that rising interest rate does not necessary push down quality dividend stocks.

It is important to buy dividend stocks that have rising earnings. Good entry point will be when dividend yield is near to 6%.

Ascendas REIT (SGD)
Capitaland Mall Trust (SGD)
Industrial & Commercial Bank of China (HKD)
Starhill Global REIT (SGD)

7. Buy gold when price is below 1200

Gold can act as a hedge to financial crisis. Gold rises when there is a finncial crisis. But entry price is paramount. All in cost of mining gold is between 800 to 1200.

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