Entries by Affin Hwang Asset Management

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% […]

Obama Signs Bill to end Government Shutdown

President Barack Obama signed a bill that ends the 16-day partial government shutdown – which had cost the US economy USD24 billion – effectively ending the nation’s fiscal impasse and raising the debt ceiling. Policymakers worked round the clock with the October 17 deadline approaching amid warnings the government could run out of money to pay its bills if it did not raise the debt limit. With potential default averted, federal workers should be expected to return to work. The House of Representatives voted 285-144 to end the current fiscal impasse and pave the way for increasing the USD16.7 trillion debt ceiling. House Republicans were split, with 87 in favour and 144 opposed. All 198 Democrats who were present voted yes. The House vote came after the Senate had earlier passed the bill, 81-18. However, policymakers did not resolve their long-term divides on fiscal policy and will have to debate the same issues again in four months time. Washington Post earlier reported that US Senate leaders announced a bipartisan deal to avert a threatened default, possible downgrade of its AAA sovereign ratings, and reopen the federal government for business. The agreement would fund the government through January 15, 2014 and […]

US Government Shutdown and Debt Ceiling Concerns

US markets rallied overnight, recovering from losses since the partial government shutdown more than 10 days ago, on news of progress towards a potential deal with the Republicans to avert a debt default on October 17. A plausible breakthrough in the political stalemate seemed evident when House of Representatives Speaker John Boehner offered an olive branch to President Obama to extend the US borrowing authority for six weeks. But his proposal would not mean an end to the shutdown. What was significant about the development? It essentially suggests that both sides appreciate the gravity and the repercussions of a default on the global financial markets. Both sides of the political parties acknowledge that: ‘‘It’s not worth sending our country into a tailspin over ideological differences. I think investors are breathing a sigh of relief.’’ Bond prices fell. The yield on the 10-year US Treasury rose to 2.68% from 2.65% on Wednesday, while the 30-year increased to 3.74% from 3.72%. Prices and yields move inversely. We examine some of the issues, as well as the various scenarios and probabilities of a resolution in order to assist us in positioning our portfolios during this period, particularly the impact on the Asian markets […]

What’s happening in the markets?

What’s happening in the markets? Talks of the Federal Reserve (Feds) potentially tapering its Quantitative Easing (QE) program has caused major corrections in the global equity markets off their recent all-time highs. While improvement in US growth numbers are expected to compensate for the scaling down of the bond-purchase program by the Feds, markets remain more concerned on the Asian markets which has seen growth but not at a material pace. After being supported by liquidity in the past year, concerns of a tapering off saw global markets being sold down. Better economic data from the economic giant led the US markets to correct between 3 to 4% while its Asian counterparts slid between 10 to 15%. Income yielding investments such as Real Estate Investment Trusts (REITs) and bond like instruments experienced a larger impact after being priced off the US Treasuries. The rise in yields led to heavier borrowing costs leading these income yielding investments to take the brunt of the hit. Gold, which has always been seen as a safe haven asset has also not been spared. Financial investors, who remain the top 3 largest investors of the precious metal and likely to have took on additional positions […]

A Welcomed Market Correction

A Welcomed Market Correction Summary Pincer movement caught the market off-guard A welcomed market correction Highly invested equity positions & reduced fixed income portfolio durations Pincer Movement Caught the Market Off-guard Major global markets were caught off-guard by the pincer movement of the liquidity-tightening phobia and the worse-than-expected China manufacturing data. The fear of the end of Quantitative Easing (QE) has driven up the yields of US Treasury (UST) bills as well as Japanese Government Bond’s too. The combination of the US Federal Reserve Bank (The Fed) Chairman Ben Bernanke’s message this morning and the minutes from the Federal Open Market Committee (FOMC) meeting caused a stir among investors who become fixated with the possibility of the end of QE. Should The Fed pulls back QE, that may spell the end of the liquidity -charged rallies in the markets, which have been driven by shots QE in the past years since the onslaught of the Global Financial Crisis in 2008. Weak China manufacturing data, such as the Purchasing Managers’ Index (PMI), is a setback for them. The initial HSBC PMI for China in May 2013 came in below market expectations at a seven-month low of 49.6 (versus 50.4 in April […]

KLCI Post-Election

Market can now Move On & Move Up Summary Event risk is behind us Market can focus on the fundamentals Our equity portfolios are in a highly invested position Now that the event risk in Malaysia is behind us, it is time for our market to focus on the fundamentals driving it.  With the ruling party maintaining its position as the government, we believe our local bourse will continue its ascension as investors can now start deploying their cash to the market, which has been sitting on the sidelines waiting for the outcome of the election. We are expecting a surge in buying activities led by foreign and local institutional investors who are attracted by our lagging market performance versus the regional peers and strong economic fundamentals such as good foreign direct investment, a positive investment cycle and strong consumer confidence. Investment Strategy In our case, we had been gradually deploying our excess cash to work since end February and have been buying the financial, oil and gas, and some property development stocks.  This was to position the portfolio for what we expected to be a status quo election outcome. Now, we are adding on equity weight in sectors that […]

Catch the Equity Wave

The equity market is on the cusp of an upward path and is in a position it has not been in for over a decade. This ‘Goldilocks economy’ as David Shulman defines it, presents a conducive environment for equities to take off as economic growth is neither too hot nor too cold, inflation rates are low and there is plenty of liquidity to support the market. The main driver in the stock market last year was dividend-yielding stocks, which have already run up a lot by now. This year, the direction of equity markets will very much be determined by local events as opposed to the externally-driven trends of the past decade. As such, deep understanding of local fundamentals, forming and taking a view of it, and high conviction stock picking are the essential in generating performance. The success of our approach hinges on the conviction and courage in executing it. Here is a snapshot of our view on the major global economies we monitor, which sets the foundation of our investment strategies in Asian markets in the months ahead. Major Global Economies at a Glance Like it or not, US Sets the Tone of Global Economic Growth Façade Our […]

Podcast

Breakfast Grille Interview, BFM89.9 – 7 January 2014 Davig Ng, Chief Investment Officer, talks about 2014 Market outlook: The Continued Case for Equities. 1. Part One 2. Part Two 3. Part Three Breakfast Grille Interview, BFM89.9 – 1 October 2013 Teng Chee Wai, Chief Executive Officer and Executive Director, talks about the Affin Holding’s acquisition of Hwang Investment Management. 1. Part One 2. Part Two   Business Breakfast Edition – You Asked, We Answered! Speakers: 1. Teng Chee Wai, Executive Director & Chief Executive Officer, HwangIM HwangIM on hitting RM20b AUM target HwangIM sets a new AUM target: RM30 billion in 3 years! In-house Managed Funds The Industry Leader 2. David Ng, Chief Investment Officer, HwangIM The US market and monetary policy The Yen Movement The investment scenario in the Asia Pacific region 3. Gan Eng Peng, Head of Equities, HwangIM Malaysian Market Outlook The Banking Sector The Commodities and Plantation Sectors The Oil & Gas Sector 3. Esther Teo Keet Ying, Head of Fixed Income, HwangIM The Yen Movement Asian Bond Market The Interest Rates Fixed Income: Asset Allocation Strategy