Kenanga Shariah OnePRS Moderate Fund Report - September 2022

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1. September 2022 Market Review and Outlook OnePRS Market Review Global equities were mixed in August , with most markets sliding towards the end of the month in reaction to more hawkish than expected signalling from the US Federal Reserve (Fed) at its Jackson Hole conference. US equities in particular were among the hardest hit, with the S&P 500 ending 4.1% lower for the month and giving up a chunk of gains from its bumper 9.1% MoM rise in July. The Nasdaq also dipped 4.6% following a 12.4% rise in July. At the conference, Fed chairman Powell mentioned the need for ‘a lengthy period’ of restrictive monetary policy and acknowledged ‘unfortunate costs’ of reducing inflation, shaking prior views of potential rate cuts as early as 1H23. The still strong US jobs market is a factor often attributed to the Fed’s drive to tighten; for which the end-Aug initial jobless claims data again came below expectations at 232k, easing from 243k the week before to a 2-month low. Notably, the US Dollar extended strength amidst the risk-off environment, with the Dollar spot index rising 2.6% MoM to reach a two-decade high. Over in Europe, the Euro STOXX 50 fell 5.1% MoM on similar concerns of inflation and rate hikes. Eurozone inflation pushed new record highs at 9.1% in August from 8.9% in July, with high levels expected to persist given the burgeoning energy crisis in the region. The market is expecting another 50-75bps hike of the benchmark deposit rate from the European Central Bank’s (ECB) September meeting, following its 50bps hike in July. Asian equities fared better in August, with the MSCI Asia ex-Japan easing 0.2% MoM, albeit following a 1.7% fall in July. China/HK continued to drag, with the Shanghai Composite and Hang Seng easing 1.6% and 1% respectively. The month saw the emergence of more support measures from the Chinese government including an additional CNY1 trillion in stimulus, while the People's Bank of China (PBOC) lowered multiple interest rates such as the loan prime rate, medium-term lending facility (MLF) rate, and repo rate. Other Asian markets posted positive returns in local currency terms such as India (Sensex +3.4%), Korea (KOSPI +0.8%), and Taiwan (TWSE +0.6%). ASEAN proved resilient with the MSCI ASEAN rising 1.3%, with leaders in local currency terms being Philippines (PCOMP +4.2%) and Thailand (SET +4%). Commodities generally remained soft in August. Brent crude oil fell 12.3% to USD96.5/bbl over the month, as fears of weakened demand in a recessionary scenario outweighed the threat of potential upcoming supply cuts from OPEC. CPO prices eased 3.4% over the month and has begun showing signs of stabilisation as Indonesia reported a decrease in its stockpiles and reinstated export taxes starting September. Locally, the FBM KLCI rose 1.3% in August, slightly edging out the broader FBM 100 which rose 0.9%. Sentiment was supported by relatively strong economic data over the month, chiefly 2Q22 GDP growth which came in at a bumper 8.9%, exceeding street expectations of 7% and accelerating from 5% in 1Q22. June industrial production growth of 12.1% also exceed an expected 4.9%, while July exports kept a strong pace at +38% YoY despite coming off 38.8% growth in June. The 2Q22 corporate reporting season was relatively inline though with some earnings beats in large caps especially in the financials and telco space. Notably, state-owned Petronas also announced strong 2Q22 results, supporting the declared doubling of dividends to government to RM50 billion. This inflow temporarily provides comfort to the domestic fiscal balances ahead of Budget 2023, which is planned to be tabled to Parliament in early October. Finally, foreign flows also picked up in August after dipping over June-July, notching RM1.98 billion in net inflows and bringing the YTD net foreign buying to RM8.25 billion. On the fixed income front, US Treasuries (UST) saw a reversal of July’s gains following continued emphasis from Fed officials that the central bank remains focused on tightening monetary policy to bring inflation back down towards its 2% target. Although the US Consumer Price Index (CPI) slowed from a forty-year high of 9.1% YoY in June, inflation remains elevated at 8.5% in July, thus supporting expectations of a ‘larger-than-usual’ rate 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. September 2022 Market Review and Outlook hike at the next Fed policy meeting . MoM, 2Y UST yield ended the month 61bps higher at 3.49% (end-July: 2.88%), while the 10Y UST yield rose by 54bps to 3.19% (end-July: 2.65%). Locally, the Malaysian Government Securities (MGS) market ended the month mixed, with the 10Y MGS yield edging higher as it loosely tracked the movements in UST. Primary government bond issuances remained well supported in August; the 5Y MGS, 15Y MGS and 20Y Government Investment Issue (GII) auctions were oversubscribed by between 2.0 to 2.7 times. Overall, the MGS yield curve steepened during the month, with the 3Y MGS yield shedding 16bps to 3.33% at end-August (vs. 3.49% at end-July), while the 10Y MGS yield rose by 9bps to 3.98% (end-July: 3.89%). OnePRS Market Outlook Global equity markets are expected to remain volatile in the near term reflecting the uncertainty around peak inflation, monetary tightening, and persistent geopolitical tensions. Key to watch are indicators of more substantial economic slowdown, corporate earnings weakness, and potential turning points in central bank or government policies. There remains pockets of opportunities in areas where fiscal support or still-strong end demand is present. Malaysia continues to benefit from robust domestic economic activity and controlled inflation via subsidies but remains sensitive to global growth given the high proportion of exports to GDP. On the monetary policy front, the Fed is likely to continue raising interest rates until it sees a sustainable reduction in US inflation. Locally, Bank Negara Malaysia (BNM) is anticipated to continue policy normalisation in view of the positive growth outlook and moderate inflation backdrop. Nevertheless, BNM reiterated that any adjustments to its policy settings will be done in a measured and gradual manner, in order to sustain the growth momentum. OnePRS Fund Strategies For all PRS funds (except Kenanga OnePRS Growth Fund); please refer to the respective underlying fund(s). For Kenanga OnePRS Growth Fund, our strategy remains tilted towards a defensive stance, with focus on recovery themes or companies with strong fundamentals and cash flow generation abilities. Sector wise, we prefer financials, consumer and industrials. For structural growth themes such as tech, we remain buyers on market weakness for its longer-term potential. 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. Kenanga Shariah OnePRS Moderate Fund September 2022 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to provide income and capital growth over the long-term % Cumulative Return, Launch to 31/08/2022 through investments in Shariah-compliant equities and sukuk. 30 25 Fund Category/Type Core (Moderate) 20 15 Launch Date 18 August 2016 10 5 Trustee CIMB Islamic Trustee Berhad 0 Jun 22 Aug 22 Dec 21 Jun 21 Dec 20 Jun 20 Dec 19 Jun 19 Dec 18 Jun 18 Dec 17 Jun 17 Jul 16 Benchmark Composite of FBM Emas Shariah Index (60%) and Maybank 1- Dec 16 -5 Kenanga Shariah OnePRS Moderate : 11.90 Month GIA rate (40%) FBM EMAS Shariah Index (60%) and Maybank 1-Month GIA rate (40%) : 7.57 Source: Novagni Analytics and Advisory CUMULATIVE FUND PERFORMANCE (%)# Period Fund Benchmark 1 month 0.63 0.59 6 months -3.23 -5.36 1 year -7.95 -7.08 3.69 3 years 1.56 5 years 7.74 3.30 11.90 Since Launch 7.57 Designated Fund Manager Lee Sook Yee Sales Charge Up to 1.50% Annual Management Fee 1.55% p.a. # Annual Trustee Fee 0.02% p.a. Source: Lipper, 31 August 2022 FUND SIZE * RM 0.64 million Redemption Charge Nil CALENDAR YEAR FUND PERFORMANCE (%)# Fund Period Benchmark 2021 3.12 -1.84 2020 7.33 11.95 2019 11.96 7.33 -8.19 2018 -5.72 8.37 2017 11.65 NAV PER UNIT * RM 0.5595 HISTORICAL FUND PRICE * Since Inception Date RM 0.6205 16-Feb-21 Highest RM 0.4658 19-Mar-20 Lowest 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. SECTOR ALLOCATION (% NAV) * ASSET ALLOCATION (% NAV) * August July June 2.4% 97.6% Shariah Collective Investment Scheme 2.0% 2.0% 98.0% Liquidity 1 2 97.6% 98.0% Short Term Islamic Deposits and Cash 2.4% Collective Investment Schemes TOP HOLDINGS (% NAV) * KENANGA SYARIAH GROWTH FUND KENANGA BON ISLAM FUND DISTRIBUTION HISTORY 56.9% 40.7% - 0 0.00% 0.00% Not Applicable * Source: Kenanga Investors Berhad, 31 August 2022 The Kenanga Disclosure Document (“DD”) in relation to the OnePRS Scheme dated 18 August 2016, its 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 Disclosure Documents are obtainable at our offices. Application for Units can only be made on receipt of application form referred to in and accompanying the DD. Investors are advised to read and understand the DD 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/exdistribution 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. 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 interest rate risk, liquidity risk, default and counterparty risk, stock-specific risk, collective investment scheme risk, currency risk and reclassification of Shariah status risk.