KUALA LUMPUR, 17 JUNE 2014 – Hwang Investment Management Bhd (“HwangIM” or “the Company”) believes Asia Emerging Markets will continue its upward trend but market condition will likely to remain bumpy in the interim. A forecasted rebound in US’ economic growth in the second quarter, stimulus programs from central banks in Japan, and Europe, as well as higher-than-expected corporate earnings are nudging investors’ confidence higher. HwangIM anticipate the improving economic conditions in the Developed Market to boost the Asian equities markets’ and fixed income markets’ performance. While volatility will likely be prolonged in the near-term, reversal of capital outflows are expected to continue within the region, and higher levels of liquidity will remain supportive of asset classes in the region over the medium to longer-term.
Teng Chee Wai, Chief Executive Officer of HwangIM said, “Most financial markets are easing into the new economic landscape. Equity markets which were sold down in 2013 have recovered since the start of the year till 6 June 2014; for example Thailand, Philippines, and Indonesia equity market are the top performers in Asia on year-to-date basis with gains of 15.4% , 14.9% , and 14.0% respectively in local currency terms.” He added that the manufacturing data for Indonesia improved, surging to a record high of 52.4 in May from growth in new orders. Whilst in Thailand, its political uncertainty eased after a military coup was staged in May. Thailand fund managers were confident that the Junta plans may benefit the country’s economy. Markets are now expecting a growth of 2-2.5% this year, disregarding the outflows by foreign investors, and a depreciating Baht in the backdrop.
Teng added that China has shown sign of economic revival after May’s HSBC Flash PMI was recorded at 49.7. Although the numbers indicates a contraction in its economy, it was the best reading in the past five (5) months. Contribution was seen coming from stronger output, higher new orders, and better export orders. Output prices have also increased for the first time since November 2013. The biggest risk to China’s economy is if escalation of defaults results in loss of confidence, and is decline in property prices leads to decline in construction activity.
On our local shore, the stellar first quarter Gross Domestic Product results of 6.2% indicates that Malaysia’s economy grew at the fastest pace in five (5) quarters due to recovery in exports, and the likelihood of Bank Negara to hike interest rates in July to address issues such as the high household debt. Asian markets are expected to continue its upward trend as we head into the second half of the year. The MSCI ASEAN Index has already recorded a gain of 6.6% since the start of the year till 6 June 2014, out-performing the broader MSCI Asia ex Japan Index, as well as the MSCI World Index which gained 3.7% , and 3.4% respectively over the same timeframe.
Teng advised, “Investors should always keep in mind the basics of investing, which are to understand your objective, risk appetite and investment horizon. Unit trusts are investments for the mid to long-term. There is no one formula to determine the duration in which investors will see returns. In a nutshell, the ability of the fund to generate returns depends on the fund type, market conditions and capability of the fund manager.” As a fund management house, HwangIM’s conviction remains in Asia. The Company believe the biggest growth opportunity exists in this region. However, the key to choosing winners is in high-conviction bottom up stock picking as opposed to blanket sector coverage within this region.
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