Kenanga Islamic Balanced Fund Report - November 2020

Transcription

1. November 2020 Market Review and Outlook Mixed Assets Market Review On the equity front , the S&P 500 Index declined for a second consecutive month, dropping 2.8% in October and the Dow’s 4.6% monthly loss took its year-to date decline to 7.1%. Even the Nasdaq Composite Index, the persistent outperformer among the three, lost 2.3% and saw its gains for the year reduced to a still respectable 22%. All three indexes closed the month with their worst weekly decline (5% – 7%) since March. New COVID-19 cases are surging to new highs across the globe. Friday, October 30th was the worst day of the pandemic, with new cases growing by 569,000 worldwide, including more than 99,000 in the US. Many European governments are implementing fresh lockdown measures in response and in the UK, a four-week partial lockdown is scheduled to start on the 5th of November. Total cases have now risen to more than 46.4 million, with deaths topping 1.19 million. Despite the resurgence of COVID-19 cases, US Q3 GDP showed growth of a 33.1% QoQ (seasonally adjusted annualised rate) above estimates of 30.9% (from -31.4% in 2Q and -5.0% in 1Q 2020), largest quarterly gain on record. However, GDP was still down 3.5% YoY after contractions in Q1 and a record Q2 decline. Personal consumption was the key contributor which was up by 40.7% on an annualised rate. The Eurozone’s GDP also saw its sharpest recorded increase in Q3, up 12.7% QoQ, but still remains well below YoY. European Central Bank kept Eurozone interest rates unchanged at 0.0% as forecast and hinted at more stimulus in December as new COVID-19 lockdowns are imposed. The KLCI continued its losing streak as it posted a third consecutive month of losses in October amid profit-taking across all key sectors except healthcare, technology and utilities. Investors generally fled to export-oriented sectors due to concerns over rising new COVID-19 cases in Malaysia and local political uncertainty. It was the worst month for COVID infections with a total of 19,629 new cases reported in the month alone, significantly higher than the total numbers reported between January to September at 11,919 cases. Hence KL, Putrajaya, Selangor and Sabah went back into CMCO. Political developments also abounded as the government seeks to garner support for the upcoming tabling of the Budget in November. The FBM KLCI fell 38 points (-2.5% MoM) in October to close at 1,467 points, setting the index back by 7.7% (YTD ending October). Retail participants’ daily trading activities rose 2% points MoM to 40% in October as trading interest returned following the implementation of CMCO in the Klang Valley on 14 October. Foreigners remained net sellers in October, though the net selling values were 68% lower MoM. Meanwhile, Brent Crude Oil declined 8.5% due to continued demand concerns, the lowest level since late May, but on a positive note the MYR traded flat versus the USD at 4.1558. CPO futures traded higher to RM3,252, +14.5% MoM on the back of potential decline in production due to shortage of workers in the sector. On fixed income front, yields on US Treasuries (UST) trended higher as optimism grew over another fiscal stimulus plan aimed at countering the impact of COVID-19 on the US economy. Risk appetite was also boosted by stronger-than-expected consumer spending data, alleviating concerns that the US economic recovery may be slowing down. Expectations of greater fiscal spending leading to a higher supply of government bonds drove 10Y UST yields 19bps higher during the month. Nonetheless, the continued rise in COVID-19 cases (both in the US and globally) as well as uncertainties ahead of the upcoming US Presidential elections, continued to support demand for safe haven assets. MoM, the UST yield curve shifted higher, with 2Y and 10Y UST yields ending the month at 0.15% and 0.87% respectively (end-September: 0.13% and 0.68%). Kenanga Investors Berhad Company No: 199501024358 (353563-P) 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. November 2020 Market Review and Outlook Locally , the Malaysian Government Securities (MGS) market was relatively subdued in October, despite the movements in UST. Towards month-end, investors remained side lined ahead of key events in early November i.e. Bank Negara Malaysia’s (BNM) monetary policy meeting, the US Presidential election and the highly anticipated Budget 2021 announcement. Meanwhile, demand for primary MGS issuances remained healthy, as the RM4.5 billion 3Y Government Investment Issues (GII) auction attracted a robust oversubscription rate of 3.1 times. The primary corporate bond market was also active in October as issuers took the opportunity to lock in their funding requirements for the year at attractive interest rates. MoM, 3Y and 10Y MGS yields ended the month at 1.75% and 2.61% respectively (end-September: 2.00% and 2.68%). Mixed Assets Market Outlook For equity market, the record surge in new cases, increasing lockdowns, and its impact on consumers and corporations has led to a slowdown in the economic recovery. On the regional front, investors will be closely tracking the 2020 US presidential election that will be held on 3rd November, latest developments on the Brexit trade deal negotiations, the FOMC meeting on 4th and 5th November and the OPEC meeting on 30th November. November will be an eventful month for the market, with various developments such as: 1) Tabling of Budget 2021 on 6th November, 2) MPC meeting on 3rd November, 3) Release of 3Q GDP numbers on the 13th November, 4) 3Q20 corporate earnings reporting season, and 5) New COVID-19 cases and potential extension of the CMCO beyond 9th November. In view of the factors highlighted above, the market could potentially be volatile, unless the Budget 2021 stimulus and results season exceed market expectations. For fixed income market, the US Federal Reserve (Fed) has emphasized the need for further fiscal stimulus to support the US’ economic recovery. The central bank also signalled that interest rates will likely remain low for a prolonged period of time to support the US economy. Over the near term, given the heightened uncertainties ahead, demand for UST may continue to be supported by accommodative monetary policies by global central banks and safe haven demand. As expected on 3rd November, BNM kept the Overnight Policy Rate (OPR) unchanged at 1.75% at its final monetary policy meeting for the year. In its policy statement, BNM noted that the latest indicators point towards significant improvements in 3Q2020 economic activity, although the recent CMCO could affect the momentum of recovery in 4Q2020. While domestic growth is expected to improve further in 2021, the outlook is still subject to downside risks, stemming from uncertainties surrounding the course of the pandemic, both domestically and globally. Meanwhile, headline inflation remained negative at 1.4% YoY in September (August: -1.4%), reflecting the substantially lower fuel prices this year. Headline inflation is likely to remain negative in 2020, before trending higher in 2021, depending on global oil and commodity prices. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy. Given the muted inflation outlook and continued uncertainties ahead, BNM is widely anticipated to remain accommodative to support domestic growth, with the central bank assuring that it would utilize its policy levers as appropriate to enable a sustainable economic recovery. Kenanga Investors Berhad Company No: 199501024358 (353563-P) Level 14, Kenanga Tower 237, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 2 Strictly for Clients of Kenanga Investors Berhad
3. November 2020 Market Review and Outlook Mixed Assets Fund Strategy On equity side , we stand by our stock picking strategy to remain selective towards sectors that are more resilient in growth. We continue to overweight on sectors such as technology and exporters due to decent earnings growth while also favouring high dividend yielding stocks which provide some defensiveness and should continue to do well in a low yield environment. Meanwhile, we are also looking to increase cyclical stocks on weakness to position for a rebound. We maintain a trading bias to take advantage of market volatility in the near term. For fixed income investments, the Fund will continue to invest in a diversified portfolio consisting principally of fixed income securities and other permissible investments. Kenanga Investors Berhad Company No: 199501024358 (353563-P) Level 14, Kenanga Tower 237, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 3 Strictly for Clients of Kenanga Investors Berhad
4. 3-year Fund Volatility Kenanga Islamic Balanced Fund 11 .5 Moderate November 2020 Lipper Analytics 10 Oct 2020 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to achieve steady capital growth and income distribution (if any) over the medium to long-term period by investing in a diversified portfolio in accordance with Shariah requirements. % Cumulative Return, Launch to 31/10/2020 180 160 140 120 Fund Category/Type Balanced (Islamic) / Growth & Income 100 80 60 Launch Date 06 December 2004 40 20 0 -20 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Oct 20 Trustee CIMB Islamic Trustee Berhad Kenanga Islamic Balanced : 160.81 Benchmark 60% FTSE Bursa Malaysia Emas Shariah Index and 40% Maybank 12-month GIA Rate 60% FTSE Bursa Malaysia Emas Shariah Index and 40% Maybank 12-month GIA Rate : 87.77 Source: Novagni Analytics and Advisory CUMULATIVE FUND PERFORMANCE (%) # Designated Fund Manager Lee Sook Yee Period 1 month 6 months 1 year 3 years 5 years Since Launch Sales Charge Max 5.50% Annual Management Fee 1.50% p.a. # Annual Trustee Fee 0.05% p.a. Fund -1.21 17.92 14.34 16.58 23.13 160.81 Benchmark -0.74 10.80 5.88 1.56 7.84 87.77 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. Period 2019 2018 2017 2016 2015 Fund 12.93 -7.74 4.29 -0.77 6.56 Benchmark 3.70 -7.92 8.20 -2.95 2.74 Source : Lipper, 31 October 2020 DISTRIBUTION HISTORY * Gross Distribution Date RM Yield (%) Unit Split 16-May-16 2.79 sen 6.62% 26-Feb-15 4.00 sen 8.71% 26-Feb-14 3.00 sen 6.27% Redemption Charge Nil CALENDAR YEAR FUND PERFORMANCE (%) # ASSET ALLOCATION (% NAV) * HISTORICAL FUND PRICE * Since Inception Date RM 0.6885 Highest 11-Jan-08 19-Mar-20 Lowest RM 0.3664 FUND SIZE * RM 12.71 million NAV PER UNIT * RM 0.4823 SECTOR ALLOCATION (% NAV) * Corporate Sukuk (Unsecured) October 38.10% 10.70% Healthcare 51.20% Technology 36.50% September Industrial Products 9.80% Consumer Products 53.70% 34.60% August 10.70% 54.70% CP / Sukuk / Others 1 2 3 4 5 Liquidity TOP EQUITY HOLDINGS (% NAV) * KOSSAN RUBBER INDUSTRIES BHD TENAGA NASIONAL BHD GREATECH TECHNOLOGY BHD HARTALEGA HOLDINGS BHD MATRIX CONCEPTS HOLDINGS BHD 38.1% Short Term Islamic Deposits and Cash Equity 1 2 3 4 5 10.5% 8.8% 8.1% 5.8% Utilities 3.7% Properties 3.3% Energy 2.8% Telecommunications 2.6% Others 4.86% 3.72% 3.36% 2.96% 2.81% 10.7% 5.6% TOP FIXED INCOME HOLDINGS (% NAV) * WESTPORTS MALAYSIA S/B 4.68 20251023 DRB-HICOM BHD 4.55 20241212 TNB NORTHERN ENERGY BHD 4.72 20341129 MALAYAN BANKING BHD 4.71 20310131 AMAN SUKUK BHD 4.100 20211021 11.97% 4.87% 4.58% 3.89% 3.61% * Source: Kenanga Investors Berhad, 31 October 2020 Based on the fund’s portfolio returns as at 10 October 2020, the Volatility Factor (VF) for this fund is 11.50 and is classified as “Moderate”. (Source: Lipper). “Moderate” includes funds with VF that are above 10.39 and less than or equal to 13.905 (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 stock specific risk, currency risk, country risk, credit and default risk, interest rate risk, reclassification of Shariah status risk.