KUALA LUMPUR – Affin Hwang Asset Management Berhad (“Affin Hwang AM” or “the Company”) announced today the launch of Affin Hwang World Series – China A Opportunity Fund (“the Fund”). The Fund is a wholesale feeder growth fund that provides access to the vast opportunities in China’s domestic equity market by investing in a collective investment scheme, namely UBS (Lux) Investment SICAV – China A Opportunity (“Target Fund”).
The Target Fund is a Luxembourg-domiciled fund managed by UBS Asset Management (“Target Fund Manager”). To achieve its investment objective, the Fund will invest a minimum of 80% of the Fund’s net asset value (NAV) into the Target Fund and a maximum of 20% of the Fund’s NAV into money market instruments, deposits and / or liquid assets.
Chan Ai Mei, Chief Marketing & Distribution Officer of Affin Hwang AM said, “As China continues on its roadmap to liberalisation and demonstrate its commitment to opening up its capital market, we expect the Fund to be a beneficiary of inflows as reforms take root. The gradual inclusion of China A shares into the MSCI Emerging Market Index would see sizeable fund flows and draw greater global investor interest. In the event of full inclusion, the total weightage of China equities could make up to 40% of the entire index weight.”
“This Fund is a welcome addition to our World Series that will allow investors to tap into opportunities in China’s domestic or A-share market. The indiscriminate sell-off in emerging markets last year has created an attractive entry-point for investors to reposition themselves for the long-term and scoop up bargains. With structural growth trends intact and rapid urbanisation, China is easily the prime choice for investors to diversify their portfolios and participate in its next phase of growth. We advise investors to be patient when investing in China and stay focused on its longer term prospects,” Ai Mei said.
On the outlook for China, Bin Shi, Head of China Equities, UBS Asset Management believes that the recent policy developments could signal a turning point for China’s stock markets and could be an opportunity for investors to add or invest in China equities. “Looking at the series of recent policy statements and announcements, we believe there has been a significant change in the Chinese government’s attitude. This makes a compromise on the US/China trade issues more possible going forward,” said Bin. He cited BMW’s recent announcement to take majority control of its local joint venture which shows that the Chinese government has opened up key industrial sectors to investment from overseas companies. They have reversed their position of limiting investment into China that has been a key source of disagreement in the US/China trade dispute.
These moves could help boost investor confidence which has been hurt by the government’s previous policy attitude. Though we have seen numerous government announcements, Bin feels that the new policy support has not been fully appreciated by the market. However, going into 2019, these will positively impact investor sentiment and will help, in part help decrease the risk in Chinese equity market.
The valuations for Chinese equities are also compelling and currently trade at a P/E discount to other markets. Both onshore and offshore China equities are priced at a 12-month forward P/E of about 10x (as at 30 Nov 2018). This is about 30% below the valuation for global equities.
Given the attractive valuations, Bin reveals that he has been putting more cash to work compared to the first half of 2018. He and his team continue to be positive on ‘new economy’ companies in sectors like consumer, IT, and healthcare.
The Fund is available to Sophisticated Investors who seek capital appreciation through investments in China A-shares, have a long term investment horizon and have a high risk tolerance. The Base Currency of the Fund is in USD. The Fund is offered in five (5) currency classes, namely USD Class, MYR Class, MYR-Hedged Class, SGD-Hedged Class and AUD Hedged-Class. The minimum investment amount is $5,000 for all listed currency classes.
Investors are advised to read and understand the contents of the Fund’s Product Highlights Sheet and Information Memorandum dated 8 January 2019 before investing. Investors who are keen to learn more about the Fund can visit https://affinhwangam.com/ and invest through any of Affin Hwang AM sales offices.
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Lee Sheung Un | firstname.lastname@example.org | +603 2117 6592