Entries by Affin Hwang Asset Management

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

Yen Carry Trade

Do you foresee the Yen carry trade/ hot money and currency war become the main theme driving the global capital market this yearYes, for the next few months markets and central banks will likely refocus their attention to the issue of currency war. This beggar-thy-neighbour economic policy impacts the Asian (ex-Japan) countries, especially the exporting nations and those with higher export-to-GDP ratios. As such a weaker Yen is like adding fuel to the already heated competition for exports. If yes, which markets you believe will mostly likely benefit from the Yen carry trade and whyThe beneficiaries of a weaker Yen are the higher yielding EM local currency markets such as Brazil, Indonesia, Malaysia, South Africa and Poland. This is compared to the low interest rate-bearing currencies such as GBP and EUR, which leaves EM markets looking attractive. Will the impact of a Yen carry trade this round greater than the one in 2004-2008, given Abe’s determination to reboot Japan’s economy with an aggressive monetary policyShould the aggressive monetary policy by Bank of Japan comes to fruition such as hitting a 2% inflation target (although many argue against achieving this), USD/JPY needs to weaken past the JPY 100 mark, so there […]

Heed the Storm in the Teacup

  Summary A knee-jerk reaction in KLCI despite knowledge of the GE Equity: Underweighted Malaysia since 2012 Fixed income: Trimmed Malaysia’s exposure & shortened duration since late-2012 Sell first, Question later What happened these two days was a knee-jerk reaction towards the 2.4% correction in our KLCI on the back of strong rumours of the impending General Election (GE). The severity of the correction did catch many off-guard as GE is a widely expected and inevitable event in the near term. We think this is a case of ‘sell first and question later’ as some fund selling activities triggered a small domino effect within local funds. In addition, the lack of government fund participation in the market, which traditionally accounted for 30% to 60% of the market trading activities, meant there was not much support provided. We certainly do not expect the market to correct 10% to 15% in the next couple of weeks as the short-term selling activities were overdone. Our view and strategy is more long-drawn. Equity Investment Strategy For our Malaysian-focused funds, we have been underweight the Malaysian market with about 15% to 20% cash levels and we have been avoiding politically-linked stocks since last year. This […]

From the MD’s Desk: 2013 Market Outlook & Investing Guide

Will the strong bond fund buying and subdued equity continue in 2013? What are the key drivers to encourage investors to overweight in their equity exposureDrivers to encourage investors to overweight equities: Sustained economic growth as growth is not visible in the last 4 years due to unexpected events (ie; 2008 global financial crisis, European debt crisis, slowdown of BRIC). Decline in contagion risk (EU and US debt crisis). It is better now as debt is under control and balance sheet is normalising. However it will take a while to see confirmation of a full recovery.   The financial sector in the US had its run in 2012. What resulted in such good performance and will the party continue in 2013 Financial sector rallied due to: The US debt crisis, which resulted in dismal 2011 performance. By 2012, things started to take a better turn and that is showing it the banking sector’s earnings. There were more good news coming through in 2012, especially 2H12. Housing price starts to show signs of recovery & it helps when the US banks are less exposed to the domestic housing market after the sub-prime crisis. This helps to improve their balance sheet.   […]

Business trust vs REITs structure

Rules to allow the listing of business trusts in Malaysia are out and several listings are being pitched by bankers. In your view, how much more yield do you reckon business trusts should offer relative to REITs to be attractive in Malaysia, given their difference in risk profiles  Business trusts listed in Singapore have not done well in general. A few business trust IPOs in Singapore was also cancelled or postponed due to poor demand. This is despite high yields of 8-11% and good sponsor names.Business trust assets tend to be of limited life span, like a ship or a concession to a port. This is unlike freehold properties in REITs which last into perpetuity. Business trust assets also tend not to appreciate in value over time, again also unlike properties which have a long term capital appreciation tendencies.This basically means investors of business trust need to be compensated to hold a depreciating asset with limited income generating lifespan. So for example, if the asset life lasts for 10 years, then investors need to be paid 10% per year for the return OF their capital invested. On top of that, they need to be paid the risk of holding on […]

Investing in Gold 2013

Gold price ended the year 2012 higher, but has not delivered the spectacular gains of the previous years. What was the key reason gold prices performed as it did?Gold had a spectacular run from 2008 at around US$800/ounce to a high of US$1900/ounce in mid-2011. Since then it has traded sideways at a range of US$1500/ounce to US$1800/ounce.The run up in gold price was due to the massive central bank expansion globally, which was needed to get the world economy moving again financially. This frightened investors as the creation of so much fiat money caused some to believe people will not believe in it. That explains the buying of gold by investors as a hedge against the collapse of the paper/fiat money. In 2012, we had more of the same central bank pump priming, but this time, investors were more confident of the economic recovery prospects of the world. This basically meant the belief that central banks could handle the situation and hence, confidence in paper money was stable. As a result, the desire to invest in gold was not strong. What are the implications of this? Does it signal returning investor confidence in risky assets and the US dollar?Risky […]