Webb-site Total Returns launched
6th August 2012
Webb-site is pleased to announce the
beta-test launch of Webb-site Total Returns, a unique system that
will allow users to calculate the total returns on HK-listed stocks over any
period since 3-Jan-1994. The system includes:
Why are we doing this?
No other web site that we know of provides total returns time series for HK
stocks, including the reinvestment of distributions such as dividends, demergers
(distributions of shares in other companies) and bonus warrants. Distributions
are a huge component of the overall market return. This leaves retail investors
unable to know what their total investment return would have been over any
period, or to fairly compare the graphs of two stocks which have different
dividend yields. Instead, all you get is share price graphs, as if the distributions
belonged to someone else. The graphs for companies with high dividend payouts
can look like they are stagnant or losing money when in fact they are generating
very good total returns. Journalists regularly produce tables (particularly at
year-ends) comparing share price gains and losses over a period without taking
account of distributions, like comparing lychees with kumquats.
Information is the antidote to speculation. It requires a lot of work,
but Webb-site has produced the Webb-site Total Returns system to fill that gap.
We are aware that a professional terminal, which costs around US$2,000 per
month, includes a total returns service, although we doubt that it fully adjusts
for some of the more novel distributions in Hong Kong, such as bonus warrants
and warrants attached to rights issues. So even if professionals and academics
have access to that system, they may be relying on understated returns.
In the near future, we will link the past and present listed company directors
in our "Webb-site Who's Who" database to
the total returns during the period in which they were directors, so you can see
how the companies they directed performed. We can also do the same for sponsors
and auditors - so much fun ahead! Our system covers every HK-listed stock since
1994. Unlike many financial web sites, we also cover stocks which have delisted.
On most sites, key in a stock code for a delisted stock and you will find
nothing. Coverage of delisted stocks allows you to remove "survivor bias"
because you can look at all the stocks you could have bought at any point in
time, not just the ones which didn't go bankrupt or get privatised.
To find data on a historic stock, just key in its stock code in the blue bar
at the top of any page, and hit "past". For current stocks, hit "current" or
just hit your Enter key. If you don't know stock codes, you can look up
current ones here and
historic ones here.
Raw stock prices and other market data are facts, not creative works, and you
cannot copyright facts, but Webb-site Total Returns, like stock market indices,
are a creative work over which we sweat and for which we assert copyright.
However, we encourage media to quote them freely and academics to use them in
research, provided that attribution to "Webb-site.com" is
given. Our goal is for Webb-site Total Returns to become the "gold standard" in
the same way that students of US stock performance tend to use products from the
Center for Research in Security
Prices at the Booth School of Business of the University of Chicago.
If you operate a financial web site and wish to enhance your product with
Webb-site Total Returns, then
contact us for a confidential discussion on terms. Don't your users deserve
better? The fees would help support the running costs of Webb-site, which is not
Jump right in
If you want to get started on the system, jump into the
Compare Webb-site Total Returns page and enter a
stock code, and up to 4 more. There you will find instructions and a link to
detailed notes for
explanation and help. A warning: the graphs are rendered in your browser, and
Internet Explorer 8 cannot handle it. So if you are still on Windows XP, which
does not allow IE9, then you will need
Firefox or another browser.
IE9 works just fine. To see relative returns, check the box, and you will see
how the other stocks under-performed or out-performed the first stock. If you
want a benchmark, try using 2800, the Tracker Fund of HK, listed on 12-Nov-1999.
It does of course bear costs of about 0.2% p.a. and suffers withholding tax on
its mainland dividends.
15 years of the HKSAR
Now to demonstrate the system, let's pick a period of 15 years to
30-Jun-2012, the first 15 years (or 30%) of the HKSAR, which we've all recently
been celebrating, or at least commemorating. We will actually use 27-Jun-1997 as the base date, because
this was the last trading day before the Handover of sovereignty. So we go to
the "Database" link in the navigation bar above, and choose "All Webb-site Total
Returns", then we punch in the dates, and
click here to see what we get. You can sort the table by clicking on the
There were only 612 stocks you could have bought on the last ever trading day in
the Colony of Hong Kong. Of those, 258 would have made gains over the 15-year
period, including those which were delisted, for whatever reason (usually either
a privatisation or financial difficulties). On the other hand, 3 were unchanged
and 351, or about 57%, had negative total returns - even ignoring transaction
costs, you would have lost money in them over the 15-year period. We should note
that HK was in one of its market bubbles in 1997, so there is a high base point.
Of the 33 stocks in the Hang Seng Index on 27-Jun-1997, the best performer,
Henderson Investment Ltd (HI, 0097) was in 40th place out of
with a total return of 587.9%, or 13.71% p.a.. That was partly because at the
end of 2007, it realised the value of its controlling stake in Hong Kong and
China Gas Co Ltd (HKCG, 0003) in a deal with HI's parent,
Henderson Land Development Ltd (HLD, 0012). But shareholders in
HLD, one of HK's largest property developers, have seen a total return of just
0.73%, or 0.05% p.a. in the 15 years.
Property was in a bubble in 1997 (as it is now), but even so, some property
plays did better than others. In the index, 2nd and 3rd places were Hang Lung
Group Ltd (0010) which gained 502.8%, or 12.72% p.a., and its subsidiary Hang
Lung Properties Ltd (0101) which gained 475.8%, or 12.37% p.a.. Places 4, 5 and
6 were utilities: HKCG gained 306.8%, or 9.80% p.a., and the HK electricity duopoly Power
Assets Holdings Ltd (0006) gained 299.1%, or 9.66% p.a. and CLP Holdings Ltd
(0002) gained 280.3%, or 9.31% p.a.
The worst-performing index members were SCMP Group Ltd (0583), -64.97%, New
World Development Co Ltd (0017), -63.79%, and red chip CITIC Pacific Ltd (0267), -48.89%. That
figure is hardly surprising after the damage from its Australian dollar
speculation. Red chip Guangdong Investment Ltd (0270) lost 35.32% and Oriental
Press Group Ltd (0018) lost 20.58%, or 1.52% p.a.. These 5 were the only index members
to have a negative return in the 15-year period.
For reference, the US
Federal Funds Target Rate (roughly the risk-free rate for cash) returned
about 53.8% in that 15-year period, or about 2.91% p.a.. The HK dollar has been
pegged to the US dollar throughout the period. 21 of the 33 HSI stocks did
better than risk-free cash, and 12 did not. The HK Composite Consumer Price
Index gained 9.2% in 15 years, or about 0.59% p.a., so savers (assuming they got
close to market interest rates) have had positive real returns.
Top performers, anomalies
We should remind you at this point that the past stock performance is not
necessarily a guide to the
future (although past governance is). However, we would say that past governance is a guide to future
governance - it heavily affects our investment choices, and it should yours. Returns over fixed periods can be heavily affected by the choice of
starting date, and they can also be affected by anomalies.
A good example of anomalies is the stock in number 1 position over 15
years, now known as South China (China) Ltd (SCC, 0413). Its
total return of 8672% is affected by the fact that in 2009 it
in another company, South China Land Ltd (SCL, 8155), and on
4-Aug-2009, the last date before the ex-dividend date, the distribution was
worth about $1.1128 per SCC share, because SCL was in a bubble. SCC's share
price was only $1.18 per share that day, probably because SCC shareholders
didn't believe the SCL value would hold up. Consequently the theoretical
ex-dividend price for the total return calculation was about $0.067, flattering
the subsequent returns. By the time of the delivery of the SCL shares on
21-Aug-2009, it had fallen from $0.30 to $0.195. Such anomalies are fairly rare though,
and can work both ways, overstating or
understating actual returns. They just reflect the inefficiencies of markets,
particularly in small, closely-held companies.
The next stocks in the list, from positions 2 onwards, include a number of
success stories of small companies that have become very much larger since the
Handover, such as Luk Fook Holdings (International) Ltd (0590), ASM Pacific
Technology Ltd (0522) and Techtronic Industries Co Ltd (0669). Others have shown
very good total returns while remaining fairly small companies, because they
paid out high dividends. Shareholders who reinvested their dividends would have
captured these returns by building up their shareholdings (as your editor did in
several of the top performers), although of course, not all shareholders could
have done that, as they would be buying from other shareholders.
Of the companies still listed after 15 years, the worst performers include
many companies which have featured on Webb-site for their appalling governance.
We had to extend to 6 decimal places of percent (or 1 part in 100 million) to
show what has happened to Heritage International Holdings Ltd (0412), which has
lost 99.999993% in 15 years. Willie International Holdings Ltd (0273) lost
99.999984% and Freeman Financial Corp Ltd (0279) lost 99.999927%. All 3 of them
are in what we call the Chung Nam Network.
Looking over a
3-year period to 29-Jun-2012 (this time sorted from worst to best) you can
see much the same thing, with many names from our stories.
As we mentioned, this is a "beta-test" of the system: we want you to
tell us what features you would like us to add, and
also let us know if you spot any errors in the event data. In common with the
rest of Webb-site, we disclaim any liability for any reliance on Webb-site Total
Returns and for any errors or omissions.
© Webb-site.com, 2012