Kenanga SyariahEXTRA Fund Report - August 2022

Transcription

1. August 2022 Market Review and Outlook Mixed Assets Market Review On the equity front , US equities rallied in the month of July and rebounded from the steepest 1H drop in 52 years. The S&P 500 rose 9.1% month-on-month (MoM), its best monthly performance since November 2020. Meanwhile, the Nasdaq posted its best monthly return since April 2020, with a 12.4% gain in July while the Dow Jones was up 6.7% MoM. The July rally was fuelled by better-than-expected earnings from some of the biggest US companies and investors’ expectations that the U.S. Federal Reserve (Fed) could be looking to slow its pace of interest rate hikes as the economy begins to cool. US inflation accelerated to 9.1% in June 2022, the highest since 1981 and above the consensus of 8.8%. The high inflation was mainly driven by higher food and gas prices. Food prices increased 1% MoM from May and 10.4% year-on-year (YoY), while the cost of gasoline increased 11.2% from May and energy prices rose 60% over the past 12 months. As widely expected, the Fed announced a second consecutive 75bps interest rate increase in July to combat runaway inflation. This brings the Fed funds rate to 2.25–2.50%. The Fed anticipates that ongoing rate hikes will be appropriate with its continued focus on reining in inflation. The Fed Chairman, Jerome Powell did not rule out another ‘unusually high’ rate hike but signaled it will be data-dependent, giving less forward guidance. Powell also acknowledged signs that the US economy is slowing but does not think the US is in a recession, citing the unemployment rate which is still near a half-century low with solid wage growth and job gains. He also said that there will be a point where the Fed will start to slow hikes to assess their impact. Consensus expects another 50-75bps hike in September and 25bps hike each in November and December. The US second quarter 2022 GDP fell at an annual rate of 0.9% quarter-on-quarter (QoQ), after a 1.6% contraction in the first quarter, and was below the market estimate of a gain of 0.4%. Business activities in the US fell in July, the first time in two years. The S&P Global Manufacturing PMI fell to 52.3, the slowest since July 2020 while preliminary PMI for the services sector declined to 47.0, the lowest since May 2020. Moving to Europe, the Euro STOXX 50 closed 7.3% higher in July boosted by data showing that the Eurozone economy expanded at a higher-than-expected rate of 0.7% in the second quarter. Eurozone inflation hit a record high of 8.9% in July from 8.6% in June, mainly due to the soaring core and food prices. The European Central Bank (ECB) announced an unexpectedly large rate rise, its first in 11 years. The ECB raised its benchmark deposit rate by 50bps to 0%, above its own guidance for a 25bps point move. The ECB indicated that future policy rate path will continue to be data-dependent, and will help to deliver on its 2% inflation target over the medium term. It also announced a new Transmission Protection Instrument (TPI) to help ensure smooth transmission of monetary policy. The TPI enables the ECB to purchase specific securities to counter “unwarranted market dynamics”. Meanwhile in China, equities fell in July following signs of a renewed crackdown on the tech sector, escalation of the property sector woes, rebound in COVID-19 cases and lack of major stimulus from the Politburo meeting. Asian markets were up for the month except for Shanghai and Hong Kong. The MSCI Asia ex-Japan fell by -1.7%, underperforming MSCI ASEAN which gained by 2.8%. In local currency, outperformers were India (+8.6%), Japan (+5.3%) and Korea (+5.1%). Underperformers were Hong Kong (-7.8%), China (-4.3%) and Thailand (+0.5%). Locally, the KLCI index rose by 3.3% in July to 1,492 points driven by better sentiment across global markets. As expected, Bank Negara Malaysia (BNM) raised the Overnight Policy Rate (OPR) by 25bps to 2.25% at the July Monetary Policy Committee (MPC) meeting. Consensus expects another 25-50bps rate hike this year and 25-50bps rate hike in 2023 for the OPR to reach 3.0% by end 2023. The IMF cut its economic growth forecast 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. August 2022 Market Review and Outlook for Malaysia to 5 .1% from 5.6% previously as it warns of an increased risk of a global recession. The Parliament has passed the proposed anti-party-hopping law, with more than two-thirds majority. The anti-hopping law, which is expected to come into effect in September, will likely be enforced before the next general election, and will likely lead to better political stability in the country. Meanwhile, Indonesia lifted its restrictions on the entry of its workforce into Malaysia from 01 August and agreed to integrate the existing Malaysian and Indonesian recruitment system. In July, foreign investors reverted to a net buy position of RM175 million, after a brief net outflow of RM1,282 million in June. This brings the cumulative foreign net inflow to RM6.3 billion YTD. All sectors except Energy (-3.2%) ended the month in the green, with best performers from Technology (+6.2%), Telecom (+4.2%) and Finance (+4.1%). Onto commodities, Brent crude declined for a second consecutive month, down 4.2% MoM to close at USD110/barrel on worries that recession could affect demand. Meanwhile, Crude Palm Oil (CPO) prices closed at RM4,289/month, dropping 12.6% MoM following Indonesia’s decision to temporarily cut its export levy to zero. On the fixed income front, US Treasuries (UST) rallied in July on the back of weak economic data that spurred further recession concerns, easing bets on continued “largerthan-usual” hikes. Shrugging off the elevated inflation numbers, recession fears took the center stage as the US economy contracted for a second consecutive quarter and thus, met the standard criteria of a technical recession. As a result, the UST yield curve has inverted for a month with the 2Y UST closed 7bps lower at 2.88% (end-June: 2.95%), while the 10Y UST yield tumbled by 36bps to 2.65% end-July (end-June: 3.01%). On the local front, Malaysian Government Securities (MGS) rallied during the month, in line with global bond yield movements. BNM at its monetary policy meeting, continued to cast a positive economic growth outlook and reiterated that rate normalisation would be done in a measured and gradual pace as it continues to assess the impact from the global evolving conditions. Overall, the MGS yield curve bull flattened during the month with the 3Y MGS closing 2bps lower to 3.49% (end-June: 3.51%), while the 10Y MGS yield declined by 37bps to 3.89% end-July (end-June: 4.26%). Mixed Assets Market Outlook For the equity market, we expect volatile equity markets in the near term on the back of geopolitical tensions, high inflation, tighter monetary conditions across the globe and concerns on global economy slowdown/recession. The path of inflation and corresponding Fed policy will be key for global markets. While easing supply chain disruptions and lower commodity prices should help ease inflation, the tight labour market and sticky levels of shelter inflation could mean a higher base of inflation for longer. Meanwhile, Malaysia continues to benefit from economic reopening, with a post-lockdown cyclical rebound ongoing on the back of higher private consumption. Malaysia enjoys one of the lowest inflation rates in the region, due to various government subsidies which cap fuel prices and electricity tariffs. However, Malaysia still remains geared to global growth and economic conditions given its high dependence on exports. Investors will be closely watching the second quarter results season on how labour shortage and inflationary pressures will affect corporate earnings. Similarly, volatility in bond yields may persist as market participants weigh the Fed’s policy actions against incoming economic data. On the local monetary policy stance, BNM is expected to continue with its monetary policy normalisation in view of the positive growth outlook. Nevertheless, BNM reiterated that any monetary policy adjustments will be done in a measured and gradual manner. 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 2 Strictly for Clients of Kenanga Investors Berhad
3. August 2022 Market Review and Outlook Mixed Assets Fund Strategies On the equity side , we adopt a defensive stance, focusing on recovery themes and earnings resiliency amidst an inflationary environment. We continue to focus on companies where fundamentals remain solid. Sector-wise, we prefer financials, consumer and industrials. For structural growth themes such as technology, we are buyers on market weakness for its longer-term growth potential. For fixed income investments, the Fund will continue to invest in a diversified portfolio of fixed income securities and other permissible investments. Emphasis is placed on creditworthy issuers of debt and investment-grade fixed income instruments. 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 3 Strictly for Clients of Kenanga Investors Berhad
4. 3-year Fund Volatility Kenanga SyariahEXTRA Fund 18 .7 Very High August 2022 Lipper Analytics 10 Jul 2022 FUND PERFORMANCE (%) FUND OBJECTIVE The Fund aims to provide investors with medium to long term capital appreciation through investments in specified asset classes by adopting a relatively balanced approach towards Shariah-compliant equities and Islamic fixed income exposures. The Fund aims to achieve capital growth with lower short term volatility than is normally associated with a pure equity fund. % Cumulative Return, 31/07/2017 to 31/07/2022 90 80 70 60 50 40 30 Fund Category/Type Balanced (Islamic) / Growth and to a lesser extent income 20 10 0 Launch Date 12 March 1996 Trustee Maybank Trustees Berhad Jul 22 Dec 21 Jun 21 Dec 20 Jun 20 Dec 19 Jun 19 Dec 18 Jun 18 Dec 17 Jul 17 -10 Kenanga SyariahEXTRA : 32.09 FBM Emas Shariah Index (50%) & Maybank 12 months Islamic Fixed Deposit-i Rate (50%) : -4.64 Source: Lipper Benchmark FBM Emas Shariah Index (50%) & Maybank 12 months Islamic Fixed Deposit-i Rate (50%) Designated Fund Manager Lee Sook Yee Sales Charge Max 5.00% CUMULATIVE FUND PERFORMANCE (%)# Period Benchmark Fund 1 month 2.71 1.19 6 months -7.99 -3.04 1 year -4.43 -12.29 3 years 24.27 -1.44 5 years 32.09 -0.87 Since Launch 191.29 # Annual Management Fee 1.50% p.a. Source: Lipper, 31 July 2022 DISTRIBUTION HISTORY * Gross Distribution Date RM Yield (%) Unit Split 29-Dec-21 1.99 sen 4.94% 29-Dec-20 2.04 sen 5.04% 23-Dec-19 1.50 sen 4.63% - Annual Trustee Fee 0.06% p.a. Redemption Charge Nil CALENDAR YEAR FUND PERFORMANCE (%)# Period Fund Benchmark 2021 5.03 -2.42 2020 31.52 6.66 2019 17.01 3.56 2018 -8.84 -5.25 2017 14.05 6.90 HISTORICAL FUND PRICE * Since Inception Date Highest RM 0.4294 6-Aug-20 Lowest RM 0.1510 29-Oct-08 FUND SIZE * NAV PER UNIT * RM 333.02 million RM 0.3295 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. ASSET ALLOCATION (% NAV) * July SECTOR ALLOCATION (% NAV) * 30.4% 28.5% Corporate Sukuk (Unsecured) Short Term Islamic Deposits and Cash Technology Industrial Products & Services Consumer Products & Services Plantation Energy Construction Property Health Care Others 41.1% June 30.7% 26.8% 42.5% 33.4% May 24.0% 42.6% CP / Sukuk / Others 1 2 3 4 5 Liquidity TOP EQUITY HOLDINGS (% NAV) * FRONTKEN CORPORATION BHD DUFU TECHNOLOGY CORP BHD INARI AMERTRON BHD UWC BHD GREATECH TECHNOLOGY BHD Equity 2.4% 2.2% 2.2% 1.8% 1.6% 1 2 3 4 5 29.7% 28.5% 15.3% 13.9% 3.1% 2.4% 1.7% 1.5% 1.5% 0.9% 1.5% TOP FIXED INCOME HOLDINGS (% NAV) * OSK RATED IMTN 4.390% 28.04.2028 (SERIES 002) FARM FRESH IMTN 3.720% 28.05.2026-S1/TRANCHE 1 YNHP IMTN 5.500% 28.02.2025 - TRANCHE 1 SERIES 1 DRB-HICOM IMTN 4.550% 12.12.2024 PRESS METAL IMTN 4.810% 07.12.2028 2.7% 2.3% 1.8% 1.5% 1.5% * Source: Kenanga Investors Berhad, 31 July 2022 Based on the fund’s portfolio returns as at 10 July 2022, the Volatility Factor (VF) for this fund is 18.72 and is classified as “Very High”. (Source: Lipper). “Very High” includes funds with VF that are above 17.635 (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 30 November 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 is credit/default risk, interest rate risk, liquidity risk, inflation/purchasing power risk, Shariah status reclassification risk and warrants risk.