Question
I was wondering what Sentiment Indicator and Target Price mean under your investment list?
Answer (Paul Rickard)
Target price – the consensus broker valuation of what a company is worth. Each broker values the company – this is the average of the valuations. Sentiment – uses a scale of -1.0 to +1.0, where 1.0 is most positive, -1.0 is most negative. Again, an average of the major brokers. A -1.0 sentiment is a “strong sell” recommendation, a +1.0 is a “strong buy”. These are recommendations from the brokers – but they don’t always get it right.
Question
When looking at the financial metrics of an LIC on CommSec’s “Financial” screen, I often come across negative numbers for, e.g. ROE, POR. What am I to make of this to better understand the LIC?
Answer (Paul Rickard)
I would ignore both. As they are an investment company, the only important measure, (assuming that the investments can be readily liquidated and the liabilities can be readily discharged) is the net tangible asset backing – and its relationship to the current share price. Most LICs aren’t allowed to borrow, and have no long-term liabilities.
Question
What are your thoughts on buying H-shares (Hong Kong listed Chinese Equities)? Where can I buy the H-shares in Australia and what are the ASX codes of the company? Can you please recommend a good equities company I can invest in?
Answer (Paul Rickard)
H-shares are shares of Chinese mainland companies that are listed on the Hong Kong Stock Exchange. They are not listed on the ASX. You can purchase these through a local broker – both CommSec and Nabtrade offer convenient and competitive broking services. If you don’t want to invest in the individual companies, you could purchase a managed fund. In addition to some active managers, there is also an ETF from iShares (ASX Code IZZ) that tracks an index of 50 larges cap Chinese companies (H-shares).
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