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Hong Leong Asset Management - Invest Facts February 2017

Mohd Noordin
By Mohd Noordin
6 years ago
Hong Leong Asset Management - Invest Facts February 2017

Ard, Mal


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  1. FEBRUARY 2017 Volatility Creates Opportunities
  2. Equities • Global: Global indices rallied as equity prices were driven higher by accelerating economic growth and higher corporate earnings optimism. The month was dominated by political headlines. Apart from the Europe market, the political noise did not appear to have any significant impact on the market rally. The Dow Jones Industrial Average Index rose 0.5% and the broader S&P Index rose 1.8% during the month. The Euro Stoxx Index declined 1.8% during the month while the FTSE 100 Index declined 0.6%. • Asia Pacific: The regional index rebounded strongly during the month as the improving global economic backdrop propelled equities higher. Hong Kong and Singapore posted the biggest gains while Australia and Japan were the laggards. The correction in US Dollar (USD) and improving emerging market growth prospects on the back of rising commodity prices also helped support market sentiment. • Malaysia: The Malaysia market had a good start to the year. The FTSE BM KLCI rose 1.8% to close at 1,672 points. The broader market outperformed as the FTSE BM EMAS Index rose 2.4% to close at 11,741 points. Small caps outperformed as the FTSE BM Small Cap Index rose 4.8% to close at 15,428 points. Global Asia Pacific Malaysia • In the US, the advance gross domestic product (GDP) reading showed that the US economy expanded at a slower pace of 1.9% in the fourth quarter of 2016 compared with the previous quarter of 3.5% and missed market expectations. For the year, the US economy grew 1.6%, lower than 2015’s 2.6%. • China’s economy expanded at the pace of 6.8% in the fourth-quarter of 2016 (Q3 2016: 6.7%) and fared slightly higher than the market consensus of 6.7%. This marks a full-year growth of 6.7% for 2016 (2015:6.7%), in line with the official growth forecasts of 6.5~7.0%. • Bank Negara Malaysia (BNM) opted to stand pat on its monetary policy by maintaining the Overnight Policy Rate (OPR) unchanged at 3.00% during the Monetary Policy Committee (MPC) meeting in January. • The US labour market posted a better-than-expected job growth in January with nonfarm payrolls creating 227,000 jobs, above the market forecast of 175,000 jobs. Meanwhile, the unemployment rate rose to 4.8% from 4.7% in December. • Manufacturing activity in China continued to expand in January as the Official Manufacturing PMI posted a reading of 51.3 and came in higher than market expectations. In the services sector, the Official Services PMI grew at a faster pace of 54.6 in January compared with December’s 54.5. • Despite the uptick in inflation rate, the European Central Bank (ECB) opted to stand pat on its monetary policy in January by keeping the benchmark interest rate at zero percent while keeping the asset purchases program unchanged. • In Japan, manufacturing sector posted a robust expansion in January. The Nikkei Flash Japan Manufacturing Purchasing Managers’ Index (PMI) climbed to 52.8 in January from December’s 52.4. • Indonesia’s economic growth moderated to 4.94% in the fourth-quarter from 5.01% in the third-quarter of 2016 and below market consensus. • Bank of Thailand decided to keep its benchmark interest rate unchanged at 1.5% during the monetary policy meeting in January, in line with market expectations. Local Currency (%) • Headline inflation posted a rise of 1.8% year-on-year in December and unchanged from November’s reading but slightly below market consensus of a 1.9% growth. • Export growth continued to gather momentum in December, thanks to strong performance in the electrical and electronic (E&E) products and palm oil and palm-based products segments. Export rose strongly to 10.7% from 7.8% in November and exceeded market expectations. • The Industrial Production Index (IPI) growth slowed to 4.7% in December from November’s 6.2% but higher than the market forecasts. Local Currency (%) Local Currency (%) DJIA 0.51 0.51 HSI 6.18 6.18 S&P 500 1.79 1.79 STI 5.76 5.76 Nasdaq Composite 4.30 4.30 SHCom 1.79 1.79 JCI FTSE 100 -0.61 -0.61 -0.05 -0.05 SET Nikkei 225 -0.38 -0.38 Kospi YTD (31 January 2017) MoM (31 January 2017) Source: Lipper For Investment Management 2.23 2.23 2.03 2.03 YTD (31 January 2017) MoM (31 January 2017) Source: Lipper For Investment Management 1 FTSE BM KLCI 1.82 1.82 FTSE BM Emas 2.40 2.40 FTSE BM Emas Shariah 1.77 1.77 Consumer Products 1.73 1.73 YTD (31 January 2017) MoM (31 January 2017) Source: Lipper For Investment Management
  3. Fixed Income MGS Yield 4 .90 Quant Shop MGS All vs Quant Shop Corporate All (Yields) Corp Yield 6.00 • Bond yields continued to inch higher post Fed December rate hike but dealt firmer as investors continued to fill their investments requirement for the year. 4.40 • During the month, we saw 3 government bond auctions i.e. 3-year and 15-year Malaysian Government Securities (MGS); and the new 10.5-year Government Investment Issue (GII). All 3 auctions saw robust demand with very good bid-to-cover signalling continuous support from onshore as well as foreign investors. 5.50 3.90 5.00 3.40 2.90 Jan 11 Jan 12 Source: Quant Shop Jan 13 Jan 14 Jan 15 Jan 16 • We saw some peaks of rally in the month but slowed down in thin liquidity towards month end due to the long Chinese New Year break. 4.50 Jan 17 Quant Shop MGS All Quant Shop Corporate All Market Outlook & Strategy Equities Fixed Income Global Malaysia • In the US, the fourth-quarter GDP release showed a 1.6% year-on-year growth for 2016, the slowest annual growth rate since 2011. • The US economy continued to thrive with stronger Labour Data reported in December despite uncertainty over Trump’s policies. • However, investors are confident growth will rebound in 2017, driven by expected fiscal expansion and deregulation. • On local monetary policy, as expected, BNM maintained its policy rate at 3.00% as the global economy continues to grow at a moderate pace. • We expect equity markets in the developed countries to consolidate in the near term as likelihood of rate hikes may rise and may dampen investors’ sentiment. • BNM has successfully reduced the volatility of the Ringgit towards the end of 2016 with its continuous intervention in the trading of the ringgit. Asia Pacific • Recent data flow from Singapore point towards a modest recovery, with industrial production accelerating and business surveys edging up. December saw a surge in electronics output and reflects acceleration in tech exports. • However, we do expect USD to remain strong in the near term backed by US’s encouraging economic data. • We opine that market liquidity will continue to build up as more primary issuances are expected post the Chinese New Year holidays. • For the Funds, we look to increase exposure in countries or sectors that will benefit from improving economic growth. Malaysia • We aim to take profit on government bond holdings when opportunities arise and look to add on position where possible as we still see some value in the sovereign bond market. • After a strong start to the year, we expect the local market to enter a period of consolidation. The upcoming results season is expected to be lackluster. Lack of positive catalysts is unlikely to result in any meaningful or sustainable market rally. • We maintain our preference for blue chip stocks that are trading at attractive levels, selected construction and consumer stocks that may benefit from government pump-priming. 2
  4. Hong Leong SEA-5 Equity Fund Grow your wealth through expanding your investment collection in South-East Asia HEADQUARTERS BRANCHES HONG LEONG ASSET MANAGEMENT BHD Level 26 , Menara LGB, 1, Jalan Wan Kadir, Taman Tun Dr. Ismail, 60000 Kuala Lumpur. Tel: 03-7723 3500 Fax: 03-7873 6088, 03-7873 6091 Email: inquiry@hlam.hongleong.com.my Website: www.hlam.com.my IPOH Tel: 05-255 8388, 05-255 9388, 05-253 4388 Fax: 05-255 8389 PULAU PINANG Tel: 04-228 8112, 04-228 9112 Fax: 04-228 3112 DISCLAIMER Investors are advised to read and understand the contents of the Prospectuses and Information Memorandums listed in the table, before investing. The Prospectuses have been registered, Information Memorandums deposited and Product Highlights Sheets (PHS) lodged with the Securities Commission Malaysia who takes no responsibility for the contents of the Prospectuses, Information Memorandums and PHS. A copy of the Prospectuses and Information Memorandums can be obtained from any of HLAM offices, agents or our authorised distributors. The PHS for the funds are also available and investors have the right to request for the PHS. You should consider the fees and charges involved before investing. Prices of units and distributions payable, if any, may go down or up, and past performance of the funds is not an indication of the future performance of the funds. You should also be aware of the risks associated with each fund. You are also advised to perform the suitability assessment to evaluate your risk tolerance level before making any investment decision. Where a distribution/unit split is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from cum-distribution NAV/pre-unit split NAV to ex-distribution NAV/post-unit split NAV. Where a unit split is declared, the value of your investment in Malaysian Ringgit will remain unchanged after the distribution of the additional units. Where unit trust loan financing is available, 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. Please note that the NAV per unit, sales charge and fees displayed in this document are quoted exclusive of Goods and Services Tax. All fees and expenses incurred by the funds are subject to Goods and Services Tax at the prevailing rate. Applications must be made on the Pre-Qualification Form*, Account Opening Form, Pre-Investment Form and Investment Application Form referred to and accompanying the Prospectuses and Information Memorandums. The funds may not be suitable for all and if in doubt, investors should seek independent advice. *Please note that wholesale fund is for Sophisticated Investors only. Prospectus/ Information Memorandum Hong Leong Master Prospectus Hong Leong Income Management Fund Replacement Information Memorandum Hong Leong Islamic Institutional Income Management Fund II Replacement Information Memorandum Hong Leong Wholesale Bond Fund Second Replacement Information Memorandum Hong Leong Regular Income Fund Prospectus Hong Leong SEA-5 Equity Fund Prospectus Supplementary Prospectus/ Information Memorandum Issue Date Expiry Date 30/04/16 29/04/17 First 08/02/17 02/11/15 First Second 23/06/16 08/02/17 02/11/15 First Second - 01/04/16 08/02/17 02/11/15 First Second - - 23/06/16 08/02/17 10/08/16 09/08/17 First 08/02/17 09/01/17 First 08/02/17 -