Kenanga Waqf Al-Ihsan Fund Report - November 2021

Transcription

1. November 2021 Market Review and Outlook Mixed Assets Market Review US markets recouped their losses from September and surged to an all-time high in October , with Wall Street indices extending their gains on the back of strong corporate earnings and optimism on the global economic recovery. The S&P 500 reached a new all-time peak of 4,605.38 points during the month and rose 6.9% in October to bring its 2021 YTD gain to 22.6% while the Nasdaq closed 7.3% higher in October, climbing to its all-time high at 20.3% YTD. With just over 55% of S&P 500 companies reporting third-quarter results in October, 82% saw positive earnings surprises, with an average beat of ~9.7%. These figures top the five-year average of 76% and 8.4% respectively. The US GDP grew at a 2% annualized rate in 3Q21, below 2.8% estimates, the slowest increase since the end of the 2020 recession according to preliminary federal estimates. The Producer Price Index rose less quickly than expected in September and the Fed’s preferred Personal Consumption Expenditures Price Index also signalled that prices were increasing less quickly on a MoM basis than they did over the summer. It was also a bullish start to the fourth quarter for the European markets. The EuroStoxx600 rallied by 4.6% as economic data and monetary policy sentiment continued to deliver support in spite of a further pickup in inflationary pressure. The European Central Bank (ECB) reaffirmed its views on inflation being transitory, delivering the strong support towards the end of the month. The Eurozone’s economic rebound gathered pace with growth of 2.2% in 3Q21, closing the gap with the US and China recoveries and is on track to regain its pre-pandemic level of output later this year according to a preliminary flash estimate published by Eurostat. The MSCI Asia ex-Japan started the month with a fairly strong rally driven by positive earnings reporting and guidance by the companies. Global Covid-19 cases continue to decline and mobility restrictions continue to be eased – with Singapore announcing new travel easing, and Australia and Thailand allowing international travel. China's GDP expanded 4.9% in 3Q21, below 5% estimates, slowing from previous quarters amid rising economic challenges including a power crunch and the global supply chain bottleneck. Later in the month, re-escalation in US-China geopolitical risk-impacted market returns, as the two economies clashed over issues ranging from Covid-19, cyber security to computer chips. Asia Pacific central banks have been relatively cautious in joining other EM regions’ central banks for policy normalization given the relatively stable inflation pressures so far, the nuances in policy stance are inching further toward a hawkish turn. The start of monetary policy normalization in the region has already begun in Korea in August and Singapore in October. Malaysia continued to outperform Asia and EMs in October ahead of the National Budget 2022. The FBMKLCI rose 24.5 points or 1.6% MoM in October to close at 1,562 points. The gain was driven by net buying by foreign investors on optimism that the Malaysian economy will rebound from the impact of Covid-19, following the reopening of its economy. Malaysia lifted its interstate and overseas travel ban which was in place since 13 January for fully vaccinated Malaysians effective 11 October. This comes after 90% of Malaysia’s adult population had been fully vaccinated. The negative surprise came from Budget 2022 which introduced a higher tax rate of 33% for company profits that exceed RM100m, alongside a higher stamp duty rate on trades for the Malaysia’s market. Foreign investors net bought RM1.6 billion worth of Malaysian equities in October, their third consecutive month of net buying and highest monthly net buy since January 2018. Net selling among local institutional investors remained high at RM1,897 million and retailers’ net buying declined 65% MoM in October to RM333 million. Average daily trading volumes fell 6% MoM to 4.5 billion units while average daily trading value declined 7% MoM to RM3.05 billion in October. 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. November 2021 Market Review and Outlook Both oil of the crude and vegetable varieties hit highs in October . Brent crude rose to an all-time high in 7 years of approximately USD86.4 on 26 October 2021 as consumption outpaced supply, draining stockpiles but tapered off towards the end of the month in anticipation of the OPEC+ meeting to close at USD84.4 per barrel, 7.5% higher from September. Meanwhile CPO prices increased by 9.4% to RM5,026/ton anchored by tight supply and sustained consumption. On the fixed income front, US Treasuries (UST) yields continued to rise in October, driven by positive economic data which fuelled expectations of monetary policy tightening by the Fed. Although US non-farm payrolls recorded the smallest gains YTD at 194,000 jobs (consensus: 500,000 jobs), wage growth continued to increase by 4.6% y-o-y in September, while the unemployment rate fell to 4.8% (August: 5.2%). UST yields remained elevated after US retail sales expanded by 0.7% MoM (expected: -0.2%), and the US CPI increased by 5.4% y-o-y. Overall, the UST yield curve flattened, as the front end of the curve reflected growing expectations of higher interest rates next year, while longer-tenured yields stayed relatively resilient. On a MoM basis, the 2Y UST yield rose 22bps to 0.50% at end-October, while the 10Y UST ended the month 6bps higher at 1.55%. Locally, the weaker sentiment in global bond markets spilled over into the domestic market, amid relatively thinner liquidity ahead of the Budget 2022 announcement. In line with expectations, Malaysia’s fiscal deficit ratio is projected to improve from 6.5% in 2021 to 6.0% of GDP in 2022. On a related note, the government’s total domestic debt is expected to rise to 63.4% of GDP, although still below the recently revised 65% limit. Nonetheless, primary government bond issuances continued to attract healthy demand during the month, with the RM4.5 billion 5-year MGS and RM3.5 billion 10-year GII auctions both oversubscribed by 2.0 times each. Overall for the month, the MGS yield curve shifted higher as the 3Y MGS yield rose to 2.72% at end-October (September: 2.44%) while the 10Y MGS yield stood at 3.58% (September: 3.35%). Mixed Assets Market Outlook For the equity market, global equities are expected to be volatile in the near term on concerns of rising inflation, start of FED balance sheet tapering in the US and supply chain disruptions. However low interest rates and solid corporate earnings would still provide support for equities. Domestically, investors will be focusing on the 3Q21 results season in November and particularly on how the various new taxes (including the Prosperity tax) will impact their earnings prospects in 2022. Plans to reopen the Malaysian borders to international travellers will also be in focus. On the monetary policy front, the Fed has signalled that while it would start scaling back its monthly bond purchases in November, policymakers can afford to be patient in raising interest rates, as the central bank awaits further recovery in the US labour market. The Fed’s patient stance provides some support for UST over the near term, as investors reassess the timing of the Fed’s first rate hike. Locally, Malaysia’s economy is projected to expand by 5.5%-6.5% in 2022 (2021e: 3.0%-4.0%), although downside risks remain. Average headline inflation is projected to range between 2.0%3.0% in 2021, and stay moderate in 2022. Underlying inflation is expected to remain benign due to continued spare capacity in the economy and the labour market. Given the delicate recovery momentum and moderate inflation ahead, we expect Bank Negara Malaysia (BNM) to remain accommodative in its monetary policy stance to support and sustain the recovery heading into 2022. BNM will remain data-dependent with a focus on the overall outlook for economic growth, labour market and inflation before policy normalisation begins. 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. November 2021 Market Review and Outlook Mixed Assets Fund Strategy On the equity side , we maintain a barbell investment strategy, focusing on recovery/re-opening and structural growth themes. For recovery themes, we focus on cyclical sectors such as consumer discretionary (retail and leisure), industrials, materials and commodities. For structural growth themes, we prefer sectors such as technology, electronics manufacturing services (EMS) and renewable energy. 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 credit-worthy 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. Kenanga Waqf Al-Ihsan Fund November 2021 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to primarily provide income distribution as well as achieve capital growth by investing in a diversified portfolio in accordance with Shariah requirements, and channel a portion of the income distribution of the Fund for waqf purposes. Fund Category/Type Mixed Asset (Shariah-compliant) / Income and growth Not applicable as the fund is less than one year Launch Date 13 April 2021 Trustee RHB Trustees Berhad Benchmark FTSE Bursa Malaysia Emas Shariah Index (60%) and Maybank 12-month Islamic Fixed Deposit-i rate (40%) CUMULATIVE FUND PERFORMANCE (%) # CALENDAR YEAR FUND PERFORMANCE (%) # Designated Fund Manager Lee Sook Yee Not applicable as the fund is less than one year Sales Charge Up to 5.00% Not applicable as the fund is less than one year Annual Management Fee Up to 1.50% p.a. Annual Trustee Fee Up to 0.10% p.a. FUND SIZE * RM 7.85 million NAV PER UNIT * RM 0.5095 HISTORICAL FUND PRICE * Date NAV 31-Oct-21 RM 0.5095 30-Sep-21 RM 0.5029 31-Aug-21 RM 0.5013 Redemption Charge Nil 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) * SECTOR ALLOCATION (% NAV) * October 100.0% September 100.0% August 100.0% Collective Investment Schemes 100.0% Collective Investment Schemes 1 2 3 4 5 TOP EQUITY HOLDINGS (% NAV) * KENANGA ASNITABOND FUND KENANGA DANA SAFA KENANGA SHARIAH GROWTH OPPORTUNITIES FUND KENANGA AMANAH SAHAM WANITA KENANGA EKUITI ISLAM FUND DISTRIBUTION HISTORY * 17.99% 17.98% 15.04% 15.01% 15.00% Not Applicable * Source: Kenanga Investors Berhad, 31 October 2021 The Prospectus dated 13 April 2021 has 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 and the relevant product highlights sheet (PHS) is obtainable at our offices. Application for Units can only be made on receipt of application form referred to in and accompanying the relevant Master Prospectus. Investors are advised to read and understand the prospectus and consider the fees and charges involved before investing. Unit prices and distributions may go down as well as up. 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. Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activitie its and betweens 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, credit and default risk, interest risk, currency risk, country risk, Islamic derivative risk, Shariah-compliant warrant risk and reclassification of Shariah status risk.