Hektar – declining dividends per unit for the long-term investor

[i4value]

I think it all comes down to the numbers. At the end of 2000, the KLCI was 728. It was 1485 at the end of 2022. About double. On the other hand, the SGD to RM was 2.18 at the end of 2000 but became 3.24 at the end of 2022. If you work out the numbers, the capital gain (ignoring dividends) would be 104%. Now factor in the forex loss; the capital gain would be 37%. Still better off and without counting the dividend of about 2 % to 3 % per annum. Moral of the story? The gain from the stock market far outweigh the forex losses.

[weijian]

I think it all comes down to the numbers. At the end of 2000, the KLCI was 728. It was 1485 at the end of 2022. About double. On the other hand, the SGD to RM was 2.18 at the end of 2000 but became 3.24 at the end of 2022. If you work out the numbers, the capital gain (ignoring dividends) would be 104%. Now factor in the forex loss; the capital gain would be 37%. Still better off and without counting the dividend of about 2 % to 3 % per annum. Moral of the story? The gain from the stock market far outweigh the forex losses.

When over 65% of the capital gain ((104-37)/104)) is lost to FX losses , I don't really think "the gain from the stock market far outweigh the forex losses". Rather, the gains are largely eaten up by the FX losses.

Over 22 years, we are talking about 37/22 ~ 1.7% + 3% (dividend) = 4.7% per year. It may have beaten inflation in Spore but that's pretty much what it did. There has been almost no premium earned for the equity investor. I don't think the Spore investor has a lot of 22 years in their life time to spare.

[donmihaihai]

I think it all comes down to the numbers. At the end of 2000, the KLCI was 728. It was 1485 at the end of 2022. About double. On the other hand, the SGD to RM was 2.18 at the end of 2000 but became 3.24 at the end of 2022. If you work out the numbers, the capital gain (ignoring dividends) would be 104%. Now factor in the forex loss; the capital gain would be 37%. Still better off and without counting the dividend of about 2 % to 3 % per annum. Moral of the story? The gain from the stock market far outweigh the forex losses.

When over 65% of the capital gain ((104-37)/104)) is lost to FX losses , I don't really think "the gain from the stock market far outweigh the forex losses". Rather, the gains are largely eaten up by the FX losses.

Over 22 years, we are talking about 37/22 ~ 1.7% + 3% (dividend) = 4.7% per year. It may have beaten inflation in Spore but that's pretty much what it did. There has been almost no premium earned for the equity investor. I don't think the Spore investor has a lot of 22 years in their life time to spare.

STI was about 1,991 @ end 2000 & 3,276 @ end 2022. about 65% gain over 22 years. Lucky there is no forex...

It is not about who is better or worse. Think about all the retained earnings over 22 years and company that dilute retained earnings by issuing shares is doing disservice.

For one thing, I like the current SG and Msia equities way better than year 2000.

[weijian]

STI was about 1,991 @ end 2000 & 3,276 @ end 2022. about 65% gain over 22 years. Lucky there is no forex...

It is not about who is better or worse. Think about all the retained earnings over 22 years and company that dilute retained earnings by issuing shares is doing disservice.

For one thing, I like the current SG and Msia equities way better than year 2000.

Yes, I am definitely not interested in who's better or worst as well. Both markets practise commonwealth law, has similar accounting standards/format, similar culture and largely uses English in the communication - as such, a Sporean investor can easily leverage across. Most important thing is that both are small ponds and probably do not have enough big sharks swimming in them.

The Msia equity market has its allure but with the FX tail wind, I thought the investing methodology has to be slightly modified. Although the usual stuff like value, higher ROA/ROIC, share buyback etc are not any different. But as I mentioned earlier, one should try to turn the FX headwind into a tailwind and has to be wary as "time may not be your friend" here.

[donmihaihai]

Just look at the translation reserves of SGX listed co. with SGD or USD as functional currencies. USD was strong but SGX was like unstoppable not just against MYR but basically all currencies or maybe not all but i don't know. Just because it is a Singapore incorporated company reporting in SGD and listed in SGX doesn't mean the headwind isn't there.

I don’t have a crystal ball for forex and I am not an expert as well, but I would bet it will not continue.

[weijian]

Just look at the translation reserves of SGX listed co. with SGD or USD as functional currencies. USD was strong but SGX was like unstoppable not just against MYR but basically all currencies or maybe not all but i don't know. Just because it is a Singapore incorporated company reporting in SGD and listed in SGX doesn't mean the headwind isn't there.

I don’t have a crystal ball for forex and I am not an expert as well, but I would bet it will not continue.

hi donmihaihai,
I don't think we need to look at translation reserves of SGX listed co. We just need to look at MAS's headline grabbing 30.8billion translation loss (reported a few months back)...  Many folks are still scratching their heads thinking it is a real loss.

USD-SGD has generally traded in a range post GFC2008. The current strong SGD (Gov's intervention) performance is probably within that range and so no surprises what will happen next.