Another Rebalancing Happened In My Portfolio Amidst The Crash

In the last week of July, Sing Investments & Finance Ltd (SIF) released their earnings for the first half of 2024, and the results were not pretty, as its profit after tax declined by 2% year-on-year and its total comprehensive income declined by a larger 20% year-on-year.  However, SIF is not part of my portfolio, so why am I interested in its earnings?  This is because, as one of the only 3 listed financial institutions in Singapore, it can somewhat fore-tell how the earnings of Hong Leong Finance (HLF) is going to be.  Recent performance of HLF has not been rosy.  In the last earnings report, HLF reported a massive 32% decline in dividends, prompting me to carry out my first portfolio balancing in March 2024.  With the earnings from SIF, I am wary of the latest earnings from HLF, and decided to make a speculative pre-emptive move to rebalance my portfolio to sell part of my HLF shares while the share price is still at decent levels.

As such, on the first week of August, I sold about a third of my holdings in HLF to reduce my exposure, and use the proceeds from the sale to buy more shares of United Overseas Bank (UOB), Development Bank of Singapore (DBS) and Oversea-Chinese Banking Corporation (OCBC).  My rationale for doing so is to increase my exposure to the local banks, and thus diversify my streams of dividend income to make it less lumpy, especially as DBS distribute dividends on a quarterly basis for now.  Do note that this decision was made prior to the massive crash on last Friday (2nd August) and Monday (5th August), thus, the shares are not sold at depressed prices.  However, my itchy fingers impatiently bought shares of DBS and UOB a day too early, so, the price I got for the shares were rather high (compared to current price).  As such, on Monday, I decided to sell another tranche of my holdings in HLF and use the funds to get more shares of DBS.  Once again, whether this move is a yay or nay remains to be seen, and the conclusion to this speculative move will be known when this post is released.

*So with the release of HLF's results the evening before, I am "slapped" in the face by the good results of HLF.  Contrary to the decline seen in SIF, HLF saw a 12.9% jump in profit year-on-year.  In addition, HLF has raised its dividends for this half of the year by 7.1% from SGD 0.035 to SGD 0.0375!  Thankfully I did not sell all my shares from HLF, but in fact retained about 50% of the shares I owned.  This move is another evidence that speculation is not for me.  Just buy and hold quality companies will be good.*

Do note that the price of the bank's share may go lower.  The bottom may not be near but as I am intending to hold it for the long term, I am fine to add some shares at this point in time.

Prior to this rebalancing, my top 5 non-REITs based on capital are OCBC, HLF, Singapore Technologies Engineering (STE), UOB and DBS.  After the rebalancing, the top 5 holdings reshuffled to become OCBC, STE, DBS, UOB and HLF.  As observed, after the sale, I still retain quite a number of HLF shares, as after the sale, I am very comfortable with holding on to the remaining shares of HLF at the lowered cost price.  I will continue to hold on to the remaining shares for its dividend income, until fundamentals changed for the worse, then I may consider selling all out.

I know that there will be investors out there criticizing this move, as moving forward, the likely outcome is a declining interest rate environment, which is not too positive for banks.  So why should I deploy the cash to banks, especially when their prices are relatively high now?  Two reasons.  Firstly, I will not be deploying the cash into REITs as my portfolio is already very REITs-heavy.  Secondly, I do not know any other non-REIT dividend counters well enough to feel comfortable to deploy my cash to.  Sheng Siong may be a good counter but its yield at 4% is below that of the banks.  Propnex also pay good dividends but with a high weightage in REITs, I think I should not add anymore property-related companies.  

This is all I have to update for my portfolio.  Hopefully this is the last rebalancing I have to do for my portfolio.  I just yearn to sit back, relax and collect dividends.  Barista FIRE, here I come...!