Our new system allows investors, journalists and academics to know what the total return on investment in any HK-listed stock has been in the last 18 years, and to produce comparisons and rankings over any period. Say goodbye to bare price charts, where the dividends and other distributions belong to the fairies. We demonstrate with a review of 15-year returns in the HKSAR.

Webb-site Total Returns launched
6 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 for-profit.

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 column headings.

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.

Index members

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 612 stocks, 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 distributed shares 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.

Worst performers

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 shorter 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

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