Kenanga Ekuiti Islam Fund Report - June 2022

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1. June 2022 Market Review and Outlook Equity Market Review US equities ended the month flattish after rallying from a new 52-week low during the month as the prolonged Chinese lockdown , ongoing war between Russia and Ukraine and inflation concerns continued to weigh down on investor sentiment. With volatility from April bleeding into the first three weeks of the month, both the S&P 500 and the Dow Jones bottomed out on 20 May before recovering strongly to end the month flattish. However, the tech-heavy Nasdaq composite was down 2.1%. On the back of persistently high inflation and strong labour market recovery, the Federal Reserve (Fed) announced its second rate hike for the year with an aggressive 50 bps increase, the most in 22 years. US headline inflation jumped to 8.3% YoY in April which further fuelled speculations that the economy is overheating. The Fed also announced it will begin shrinking its US$8.9 trillion balance sheet in June. The Fed Chairman Powell acknowledged that getting inflation under control won’t be easy, but he believes there is still a path to a “softish” landing for the economy as opposed to a recession. Given the Fed’s increasingly hawkish stance, the markets are now expecting another two 50 bps rate increase during both the June and July FOMC meetings. At month’s end, the yield on the 10-year US Treasury stood at 2.84%. Chinese equities rallied after Beijing unveiled a raft of support measures to cushion an economic slowdown triggered by the country’s Covid-19 zero-tolerance approach. The markets also benefitted from the announcement of the end of a two-month long Covid-19 lockdowns in Shanghai. China’s State Council released a set of 33 measures titled Policy Measure Package to Stabilize the Economy (“the policy package”), covering a wide range of mechanisms aimed at supporting businesses impacted by the pandemic. The policy package comes after Shanghai issued a set of 50 policy measures to boost economic activity in the wake of the recent lockdowns. It also coincides with the reopening of Shanghai and the gradual resumption of normal life in Beijing. China’s factory activity shrank less sharply as virus restrictions eased and some production resumed. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to a strongerthan-expected 48.1 in May from 46.0 in April, where it hit its lowest level in 26 months. The latest Caixin/Markit reading reflected a similar improvement in the official manufacturing PMI in May, which also beat forecasts and signalled that the worst of the country’s lockdown-related disruptions was over. Locally, May was a volatile month for the KLCI which fell by 1.9% to close at 1,570 points. The benchmark index fell from 1,600 points to a low of 1,531 points on 24th May before rebounding on the last day of trading to 1,570 points due to the MSCI rebalancing. The volatility followed global markets as market sentiment continued to be weighed down by concerns over inflation and worries that rate hikes by the central bank could tip the economy into a recession. Key news flows for the month were a stronger-than-expected 1Q22 GDP growth of 5%, government efforts to tame inflation and resolve forced labour allegations. The markets were also surprised by the OPR rate hike of 25 bps to 2.00%, as well as the delay in plans to bring in foreign workers. Foreign investors’ net buying fell to RM77 million (versus RM826 million in April 2022) bringing the cumulative foreign net inflows for 5M22 to RM7.4 billion as compared to 5M21 net sell of RM3 billion. The top three best-performing sectors in May were energy (+7.9%), REIT (+1.7%) and finance (-0.1%). The top three worst-performing sectors were plantation (-9.7%), healthcare (-6.2%) and property (-5.7%). Onto commodities, oil continued its outperformance with the Brent rising 12.3% closing the month at US$122.8/bbl on the back of supply disruptions stemming from Russia’s ongoing invasion of Ukraine and the ban on Russian oil and natural gas. CPO prices however closed lower RM6,304/mt, declining 11.3%. Kenanga Investors Berhad Company No: 199501024358 Level 14, Kenanga Tower 237, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 1 Strictly for Clients of Kenanga Investors Berhad
2. June 2022 Market Review and Outlook Equity Market Outlook With US entering late cycle dynamics and decelerating growth , rising inflation and policy tightening would weigh on economic expansion. Key focus remains on the path of central bank monetary policy, easing of geopolitical tensions, China lockdown, as well as corporate earnings. China’s gradual re-opening and shift to more policy stimulus could lend support to its economic recovery. Increased infrastructure investment and looser monetary policy could help demand to recover and markets to bottom out provided that further lockdowns remain limited. Meanwhile, ASEAN continues to benefit from the reopening, with pent-up consumer spending supporting a cyclical upturn. Additionally, higher commodity prices will benefit certain countries within ASEAN. Equity Fund Strategy Kenanga Investors Berhad Company No: 199501024358 Level 14, Kenanga Tower 237, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my Overall, for Malaysia we adopt a defensive strategy, focusing on companies where fundamentals remain solid. We prefer sectors such as consumer discretionary, financials, industrials and commodities. For structural growth themes such as tech, we are buyers on market weakness for its longer-term potential. 2 Strictly for Clients of Kenanga Investors Berhad
3. Kenanga Ekuiti Islam Fund 3-year Fund Volatility 16 .5 (A fund under Kenanga OneAnswer™ Investment Funds) High June 2022 Lipper Analytics 10 May 2022 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to achieve long-term capital growth through investment in Shariah-compliant securities. % Cumulative Return, Launch to 31/05/2022 250 200 Fund Category/Type Equity (Islamic) / Growth 150 100 Launch Date 23 April 2004 50 0 Trustee CIMB Commerce Trustee Berhad Kenanga Ekuiti Islam : 186.51 Designated Fund Manager Lee Sook Yee CUMULATIVE FUND PERFORMANCE (%) # Period 1 month 6 months 1 year 3 years 5 years Since Launch Annual Management Fee 1.55% p.a. Annual Trustee Fee 0.07% p.a. # Redemption Charge Nil Fund -2.50 -8.12 -8.63 20.66 5.47 186.51 FUND SIZE * RM 13.28 million NAV PER UNIT * RM 0.6367 ASSET ALLOCATION (% NAV) * March 1 2 3 4 5 84.0% 12.8% 87.2% 9.5% 90.5% Equity TOP EQUITY HOLDINGS (% NAV) * MATRIX CONCEPTS HOLDINGS BHD TENAGA NASIONAL BHD KERJAYA PROSPEK GROUP BHD KUALA LUMPUR KEPONG BHD TELEKOM MALAYSIA BHD Jun 21 May 22 Dec 19 Jun 18 Dec 16 Jun 15 Dec 13 CALENDAR YEAR FUND PERFORMANCE (%) # Period 2021 2020 2019 2018 2017 Fund 4.30 16.07 17.24 -20.56 10.71 Benchmark -6.81 10.14 3.85 -13.52 10.72 HISTORICAL FUND PRICE * Since Inception Date Highest RM 0.9246 9-Apr-21 Lowest RM 0.3492 29-Oct-08 SECTOR ALLOCATION (% NAV) * 16.0% Liquidity Benchmark -4.26 -5.10 -9.89 -2.43 -10.11 84.07 Source : Lipper, 31 May 2022 All fees and charges payable to the Manager and the Trustee are subject to the goods and services tax /sales and services tax/other taxes of similar nature as may be imposed by the government or other authorities from time to time. April FTSE Bursa Malaysia Emas Shariah Index : 84.07 Source: Novagni Analytics and Advisory Sales Charge Max 6.50% May Jun 12 Dec 10 Jun 09 Dec 07 Jun 06 Apr 04 Benchmark FTSE Bursa Malaysia Emas Shariah Index Dec 04 -50 5.89% 4.84% 4.77% 4.35% 4.26% Short Term Islamic Deposit s and C ash Industrial Products Plantations Telecommunications Properties Utilities Consumer Products Const ruction Technology Healthcare Others Date 15-Apr-22 9-Apr-21 25-Jun-07 16.0% 12.0% 11.7% 11.5% 9.1% 8.7% 7.3% 6.9% 4.3% 4.0% 8.5% DISTRIBUTION HISTORY * Gross Distribution RM Yield (%) 7.50 sen 10.30% 11.04 sen 11.94% - Unit Split 3:5 * Source: Kenanga Investors Berhad, 31 May 2022 Based on the fund’s portfolio returns as at 10 May 2022, the Volatility Factor (VF) for this fund is 16.48 and is classified as “High”. (Source: Lipper). “High” includes funds with VF that are above 13.645 and less than or equal to 16.73 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised every six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future. Presently, only funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 29 March 2019 and the Supplemental Prospectus (if any), its Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. The fund fact sheet has not been reviewed by the SC. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our offices. Application for Units can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any), SDD (if any) and PHS. Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before investing. Investors are also advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the distribution of the additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust loan financing risk disclosure statement before deciding to borrow to purchase units.“Cooling-Off Period” or “Cooling-Off Right” is not applicable to EPF Member Investment Scheme (EPF MIS). Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activities and between its clients/directors/shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent, potential and perceived Conflict of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are equity and equity-related securities risk, derivative risk and reclassification of Shariah status risk.