Appetite for thematic investment grows amid rates and inflation concerns
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If inflation were to move up in ways that are unwelcome, we have the tools for that, and we will use them. No one should doubt that.

Jerome Powell
Concerns around potential interest rate hikes and inflation expectations have cast a shadow on the outlook for the second half of 2021. However, we continue to take a positive view on the market, as rising interest rates have limited impact on markets, and the inflation spike we are seeing at the moment could be short-lived.

Our outlook for equities continues to be positive. Even if central banks are to raise interest rates due to the economic upturn, pressure on markets shall be limited. We also believe inflation is short-term because of the lower base we had from the previous year.

Despite the market jitters, equity valuations of certain industries remain attractive due to some long-term structural trends. We believe investors should pay more attention to industries that are benefiting from mega themes such as Millennials and Changing Lifestyles, and Environment and Sustainability – all of which are already impacting our daily lives and presenting some interesting investment opportunities.
Low e-commerce penetration rate reflects market growth potential
Online shopping is a prime example of the Millennials and Changing Lifestyles theme. The pandemic has accelerated the growth of the e-commerce industry as online shopping is now further integrated into our everyday activities.

E-commerce has brought in worldwide sales of $4 trillion in 2020, and this is expected to grow to $5 trillion in less than two years’ time.

Despite the expansion of e-commerce witnessed last year, market penetration rate remains low, which means there is still much room for growth. Take online grocery shopping as an example, Japan and South Korea have relatively high penetration rates, but that still only account for 7% of the overall grocery sales. This not only reflects the growth potential of the market, but also reveals investment opportunities around this phenomenon.

From an investment perspective, online shopping is not just about purchasing goods with our smart devices. It extends to the backend of these e-commerce retailers from online payment systems, information technology, financial technology, financial infrastructure, through to automated warehouse management, logistics and transportation - all of which transcends industry boundaries and geographies.
Retail e-commerce sales worldwide from 2014 to 2020
Source: Statistica, 2021
The future trend of low-carbon and sustainable developments
The other relevant investment theme is Environment and Sustainability. In recent years, governments around the world have placed stronger emphasis on environmental protection and sustainable development and have set various carbon reduction or zero-emission goals.
Renewable energy is certainly an area of attention, as it only accounts for less than 30% of today’s overall energy mix, reflecting further room for growth. But that is not all.

When thinking about investment opportunities in renewable energy, we need to go beyond clean energy generation and look at the entire value chain. A wide range of industries can benefit from this energy transition story, for example, companies involved in building out the broader infrastructure (such as cables connecting offshore wind farms to energy grids), as well as companies that can transport or store renewable energy at the point of consumption.

Not to ignore is the electrification of energy. Renewables produce electricity, but electricity is only 20% of all the energy people consume today. To maximise the benefits of renewables, we need to increase the amount of electricity use to 50% by 2050. One of the best ways to get to a more electrified energy system is by using things like electric vehicles.

As with all investments, thematic investing involves investments in securities that could be impacted by cyclical factors. Taking a “multi-thematic” approach enables investors to tap into a broad set of opportunities, whilst managing the risks associated with investments in companies that have long-term growth potential.
Global annual renewables (ex-hydro) investments could double by 2050E
Source: BNEF, Bernstein analysis and estimates
Disclaimer
This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, Affin Hwang AM makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. Affin Hwang AM is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. Affin Hwang AM and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither Affin Hwang AM nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.

WARNING STATEMENT
A copy of the Prospectus and Product Highlights Sheet ("PHS") can be obtained at Affin Hwang Asset Management Berhad's sales offices or at www.affinhwangam.com. Investors are advised to read and understand the contents of Affin Hwang Aiiman Global Multi Thematic Fund’s (or the “Fund”) Prospectus dated 12th August 2021 and corresponding PHS before investing. There are fees and charges involved when investing in the Fund. Investors are advised to consider and compare the fees and charges as well as the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. The price of units and distribution payable, if any, may go down as well as up and the past performance of the Fund should not be taken as indicative of its future performance. The Securities Commission Malaysia has not reviewed this marketing/promotional material and takes no responsibilities for the contents of this marketing/promotional material and expressly disclaims all liability, however arising from this marketing/promotional material.

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TENG CHEE WAI

Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
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