Entries by Affin Hwang Asset Management

What is Active Value Investing?

Walk the Talk That being said, it is important for sales and marketing professionals to have faith in their respective product offerings. What better way than to invest directly into their own stable of products and services, as exemplified by the phrases: “practice what you preach”, and “action speaks louder than words”. Believing in the performance or potential benefit and capability of one’s product offerings will inevitably reinforce confidence in those products and services. At the end of the day, everyone wants the best for themselves so if one would to invest in what they promote and market, it must say that they believe in what they promote and market. Staff Investing At Affin Hwang Asset Management, we firmly subscribe to the belief of practising ourselves what we preach to our clients and investors. It is not about “OPM” (Other Peoples’ Money) but our own too. This is evident from the AUM that our staff invest in our own funds. Chart 1 below shows our total assets under management (AUM) for our own staff investments totalling to RM27.5 million as at 31 August 2014. Cash and EPF (Employee Provident Fund) investments formed the bulk with RM13 million (47.3%) and RM11 […]

Malaysia’s First Japan Investment Solution: Hwang Select Japan Quantum Fund

KUALA LUMPUR, 4 MARCH 2014 – Hwang Investment Management Berhad (“HwangIM” or the “Company”) today unveiled Malaysia’s maiden Japan investment solution that is tailored to investors who have a medium-to-long term investment horizon. Known as the Hwang Select Japan Quantum Fund (“SJQF” or “the Fund”), its objective is to provide investors with capital appreciation over the medium-to-long term. The Fund is suitable for investors who seek exposure in Japanese equities and have a relatively higher risk tolerance level. The Fund employs an active value strategy which essentially focuses on investments in undervalued companies that offer growth opportunities. It utilises fundamental research to identify stocks that have been mispriced by the market. Over the long run, the Fund also aims to take opportunities in companies which have undergone changes in business strategy. Therefore, the stock prices of these undervalued companies are expected to rise and converge to their intrinsic valuations. During the launch of the Fund, Teng Chee Wai, Chief Executive Officer and Executive Director of HwangIM, said, “I am positive of the impact from Shinzo Abe’s policies on the Japanese economy. The present administration is firm on reflating the economy with its three-arrow policy goals; bold monetary policies, fiscal stimulus […]

Ukraine Crisis

Limited Conflict in Crimea There will be peace as long as the pro-EU regime does not directly or indirectly threaten the Russian navy base in Crimea. Chances of limited conflict (confined to only Crimea) are medium to high, while waging war with Ukraine is quite remote. In the event of a short military conflict with overwhelming Russian victory expected, the Crimean region will be declared an independent pro-Russia breakaway region. NATO/US armies are either too far and hence ineffective to intervene in the conflict, hence the risk of an all-out war is low. The Russians are mainly interested because this region has underground gas pipes running from Ukraine to Russia. The gas pipes issue had a reprieve in 2010 when Ukraine extended Moscow’s lease on Sevastopol until 2042 in exchange for a 30% reduction in gas prices for Ukraine’s daily energy consumption. However, Russia objected to certain conditions in the deal, including the need for obtaining consent from Ukraine to replace or upgrade ships at the port.   [Source: AFP / www.smh.com.au] Leasing Sevastopol to Russia Ukraine’s population of 45 million people are divided in its loyalties between Russia and Europe. Western Ukraine is closer to the European Union (EU) while […]

Emerging Markets Tumble, Dragging Asia Down

Market volatility has reared its ugly side again even though it is only the first month of 2014. Faced with renewed uncertainties, investors’ confidence waned and global financial markets took a beating. Investors scaled back their market participation on concerns of the current tapering of the quantitative easing (QE) stimulus in the US. Sentiment was also affected by the release of HSBC’s Flash Markit / Manufacturing Purchasing Managers’ Index (PMI) which came in at 49.6 for January 2014, suggesting a contraction in the world’s second largest economy. The combination of QE tapering, weaker economic data flowing out of China, coupled with the sudden rapid devaluation of the Argentinian Peso, had shaken investors’ confidence. The slew of negative newsflow drove investors to seek out safe haven assets as they re-evaluated their market positions. The Japanese Yen, which has long been viewed as a safe haven currency, bounced back to reach its 7-week high against the US Dollar. In similar fashion, gold prices also appreciated to a near 10-week high. Safe haven assets are expected to remain in demand as volatility continues to rattle global financial markets. Asia Gets Dragged Down EM currencies suffered major sell-off starting late last week, with the […]

Market Review and Outlook 2014

The year 2013 has mostly been challenging for investors, fraught with uncertainty and high volatility. In particular, Asian markets had a few critical turning points where fund managers needed to steer around to preserve capital and to generate positive returns. There was the shift from yield-centric dividend stocks to cyclical stocks after May 2013 due to concerns over the end of easy monetary policies. There was also the shift from Asean markets into North Asian markets, and the preference for Developed Markets over Emerging Markets. Currencies of countries that faced fiscal and balance of payments challenges were sold down heavily. Fixed income markets that had seen large inflows and strong performances since the end of the global financial crisis also corrected on the back of these concerns. Fiscal Reforms Budget 2014 initiatives to promote investment in services, public transport, as well as oil and gas should augur well for the manufacturing, service and mining sectors over the medium term. Subsidy rationalisation is one of the main measures under Budget 2014 with removal of the sugar and petrol subsidies. This was followed by the 10%-15% electricity tariff hike, potentially dampening purchasing power. While we may experience higher inflation (via subsidy cuts […]

2014 Outlook: Synchronized Global Expansion

Sustainable economic growth in developed economies like the United States (US), China, and Europe, should translate into better outlook for emerging markets. The global economy is expected to achieve growth of 3.7% in 2014 from 2.9% forecast this year, supported by a rebound in developed markets. Economic Growth Specifically, developed markets (DM) should almost double aggregate growth to 2.1% next year from the estimated 1.1% in 2013, while emerging market (EM) growth increases modestly to 5.3% from 4.7% this year. Hence, the spread between EM and DM growth rates is expected to narrow to 3.2 percentage points in 2014, the smallest since 2002. Excluding China’s growth, this suggests that the slowdown in EM economies is broad-based. The global economy in 2014 will be characterized by modest growth and low inflation. Upside risks will revolve around capital investment, while downside risks would emanate from the spillover financial stability effects of central bank policies, particularly the expected taper of US Federal Reserve (Fed) economic stimulus plan. Risks Central bank liquidity has provided some buffer first to bonds and now equities, but the key to medium-term prosperity comes from sustained levels in corporate investment, which so far has been only above-water. A rebound […]

Third Plenum: China Reform Agenda Continues

This marked the first policy blueprint under the leadership of President Xi Jinping, and Premier Li Keqiang after a four-day close door meeting. China’s Communist Party (CPC) outlined broad based policy reforms for the coming decade, covering the country’s economy, finance, law, rural life, and human rights. The absence of details earlier last week resulted in markets taking a dive leading to weaker performance of Asian markets. Nevertheless, as more details were made available as the week progressed, Asian markets recuperated on optimism that the government will be taking a more decisive role in the country’s economic growth. Pledges listed in a 60-point document published after the third plenary session, included establishing market-determined prices for resources, boosting private-sector and foreign investment, and encouraging urbanization by scaling back the hukou (or household registration system) to allow rural migration to smaller cities. Financial Reform Under the economic reforms, the government plans to encourage more private money into the banking system. This will be done through a more open banking sector where qualified private capital will be allowed to set up small to medium sized banks. Nevertheless, tighter regulations will have to be imposed before the plan proceeds. The government will also look […]

Malaysia: 3Q2013 GDP Growth

The Malaysian economy registered a stronger 5.0% gross domestic product (GDP) growth in the third quarter of 2013 compared to 4.4% the previous quarter. Domestic demand remained the key growth driver, expanding 8.3% (2Q2013: 7.4%), while exports turned around to grow 1.7% (2Q2013: -5.2%), according to Bank Negara Malaysia (BNM) today. The central bank forecasts growth for 2013 will range between 4.5% and 5%, with export recovery expected to continue into 2014. Moderate expansion in the global economy supported exports recovery. However, international financial markets experienced increased volatility amid uncertainties over the fiscal and monetary policies of the advanced economies, particularly the US. Consumption Private consumption expanded 8.2% (2Q2013: 7.2%), supported by sustained employment conditions and wages growth. Growth in public consumption moderated to 7.8% (2Q2013: 11.8%), reflecting lower government spending on supplies and services. Investment Private investment grew 15.2% (2Q2013: 12.7%), driven by capital spending in the services and manufacturing sectors, as well as the on-going implementation of projects in the oil and gas sector. Meanwhile, public investment growth improved but remained weak at -1.3% (2Q2013: -6.4%), driven mainly by public enterprises investing in the transportation, oil and gas and utilities sectors. (Source: Bank Negara Malaysia) On the supply side, growth […]

Connecting The Dots: Fund Management versus Football

For almost half time, the game drifted directionless until the ball rested at Messi’s feet. He took possession as if the ball had found a rightful owner. He jiggled and dribbled effortlessly around all those standing in his way. Almost like in a paperback novel, his team mates read the game like the back of their hands. Far from the deafening noise in the crowd, Messi knew he will be challenged, every step he took and every move he made. In his strides from midfield to deep inside opposing territory, the world’s greatest player meticulously positioned the ball for a clear and unobstructed view of the goal post. GOAL ! ! !  The thunderous roar of screaming fans echoed around the stadium. To an ordinary fan, there is always something extraordinary about every goal in football. To a professional money manager, sitting at the stadium intensely watching the game, it was a momentous occasion of sheer excitement. Despite the deafening crowds around him, he smiles quietly at the uncanny similarities between professional football and professional fund management. Deep down, he knows there is more than meets the eye. It is football season in Europe and the fever has begun with […]

Budget 2014: Fiscal Reforms for Malaysia

The Malaysian government has pledged to put the economy on a sustainable growth path while undertaking steps aimed at reducing the country’s budget deficit, a move widely expected by the market. Budget 2014 contains spending cuts and subsidy discipline that would ultimately contribute to a reduction in government debt. This year’s Budget focussed primarily on fiscal consolidation towards gradually reducing the budget deficit to the targeted 3.5% of GDP for 2014 (2013: 4% of GDP). This would form part of the roadmap to achieve a balanced budget even before 2020. Malaysia recorded a budget deficit of 4.5% of gross domestic product (GDP) in 2012, and a shrinking current account surplus of RM2.6 billion in the second quarter of 2013. The surplus is estimated to narrow to RM26.6 billion this year from RM57.3 billion in 2012. Apart from the fiscal discipline objective, Budget 2014 strives to sustain healthy GDP growth and improve living standards of the “rakyat”. The following are pertinent issues that were addressed: Goods and Services Tax (GST) Set at 6% with basic food items such as rice, flour, and cooking oil exempted, the GST would be effective 1 April 2015 to replace the current sales tax of 5%-10% […]