PETALING JAYA: Asian equities are seeing signs of a bear market or a correction judging from the current macroeconomic environment, according to Aggregate Asset Management (AAM).
“Intensifying trade rhetoric and policies from the US against the EU and China and vice versa have sent shockwaves throughout the markets. This has caused treasury curves to flatten over the last few months prompting some analysts to raise the alarm,” the Singapore-based fund management company's co-founder and executive director Wong Seak Eng told SunBiz via an email interview recently.
Asian stocks have nosedived in recent weeks, on heightened tensions between the US and China over tariff issues.
Wong pointed out that the probability of an economic contraction increases as the market is approaching the end of an economic cycle.
“However, how the future plays out still remains a big question mark. We can only say that given uncertainty in the market right now, there are a lot of opportunities and bargains stocks to capitalise on.”
Despite the continued fund outflows from the emerging markets, he said, the rate of outflows from its portfolio is not a major concern as it only equals to 0.56 times of the net tangible asset value. Dividend yield for its portfolio currently stands at 3.6%.
“When there is an inflow of cash, we go on a hunt for bargains. This only works for investors with a long-term investment horizon. We do not think it is easy to make big money if one just focuses on the short-term movements.”
Wong said the company sees opportunities in almost all market conditions, unless the valuations turn extremely high.
“We buy stocks that give a decent dividend yield and are selling at below their net asset value. We invest in companies with strong balance sheets. We are willing to buy and hold.
“We consider ourselves to be very patient. We think big money is made by investors who are willing to be contrarian, and willing to wait. Investors who act irrationally will usually end up with poor results.”
For Wong, Asia remains a good investment destination as it trades less than 15 times in terms of price-to-earnings ratio.
AAM, which has S$500 million (RM1.5 billion) assets under management, was founded by two Malaysians, Wong and Eric Kong, as well as Singaporean Kevin Tok five years ago. Its single flagship fund – Aggregate Value Fund – offers the zero management fee model, which means the company makes money from performance fees and the clients only pay when the fund is profitable.
“On the off chance that there is no performance, we pay our managers and staff through cash reserves that we have saved up over time. We believe that this compensation system puts the clients' interests first, as managers have to deliver performance to earn their keep.”
Based on its track record, the fund generates an average net return of 10.59% per year. It has about 600 stocks in its portfolio with presence in Asian markets such as Hong Kong, Malaysia and Singapore.
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KUALA LUMPUR: Bursa Malaysia extended gains for a fourth consecutive day with the benchmark index closing at a near three-week high today, bolstered by positive regional sentiment and strong gains in index-linked counters led by Maybank.
At 5pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 14.8 points higher to close at 1,703.57 from yesterday's close of 1,688.77, after moving between 1,686.14 and 1,704.34 throughout the day.
Gains in Maybank lifted the composite index sharply by 7.015 points. The banking stock climbed 36 sen to end the day at RM9.50 with 10.61 million shares changing hands.
The overall market breadth was bullish with gainers thumping losers 598 to 294, with 364 counters unchanged, 614 untraded and 19 others suspended.
Volume increased to 2.69 billion units valued at RM2.51 billion, from 2.08 billion units valued at RM2.03 billion recorded yesterday.
Hermana Capital Bhd chief executive officer and chief investment officer Datuk Dr Nazri Khan Adam Khan said Asian equities strongly rebounded from earlier losses, showing some stabilisation as fears over trade war between the United States and China had subsided.
“The worry is over. It's a sign of bottoming,” he told Bernama.
He said there were growing optimism in the global market, with the hope that the world's two largest economies would discuss to cool off the trade war and tariff retaliations.
Most of Asian bourses, including Bursa Malaysia, started the day weaker but rebounded thereafter following a positive recovery in Chinese indexes amid improved crude oil prices, which is an advantage to Malaysia.
China's SSE Composite Index surged 2.16% to 2,837.66, Japan's Nikkei 225 jumped 1.17% to 22,187.96, Hong Kong's Hang Seng gained 0.60% to 28,480.83 and Singapore's Straits Times added 0.12% to 3,253.01.
Nazri Khan said gains in banking stocks, following Bank Negara Malaysia's decision to keep the overnight policy rate unchanged at 3.25%, also partly contributed to the better performance today.
Among banking stocks, CIMB rose 25 sen to RM5.63, Public Bank and Hong Leong Financial Group soared 20 sen each to RM23.00 and RM18.04 respectively, RHB Bank increased six sen to RM5.30, and Hong Leong Bank gained four sen to RM18.46.
Of the heavyweights, IHH Healthcare perked seven sen to RM5.97, but Tenaga eased two sen to RM14.48, Petronas Chemicals slipped one sen to RM8.53, and Maxis shed three sen to RM5.37.
Among actives, MRCB improved 16 sen to 74 sen, George Kent bagged 30 sen to RM1.29, MyEG earned 6.5 sen to 86 sen, but Sapura Energy shed half-a-sen to 59 sen.
Malaysian Pacific Industries was the biggest gainer today, bagging 54 sen to RM10.70, while BAT topped the losers list falling RM1.00 to RM32.40.
The FBM Emas Index chalked up 126.14 points to 12,014.89, the FBM70 climbed 217.86 points to 14,619.44, the FBMT100 Index soared 120.91 points to 11,819.33, the FBM Emas Syariah Index increased 86.84 points to 12,095.34 and the FBM Ace Index advanced 102.11 points to 5,317.74.
Sector-wise, the Finance Index rose sharply by 351.1 points to 16,911.96, the Industrial Index bagged 5.38 points to 3,149.71 but the Plantation Index slid 22.09 points to 7,489.76.
Main Market volume expanded to 1.79 billion shares valued at RM2.27 billion, from 1.15 billion shares worth RM1.73 billion recorded on Wednesday.
Warrants turnover decreased to 646.28 million units valued at RM183.91 million, versus yesterday's 731.25 million units worth RM266.24 million.
Volume on the ACE Market improved to 247.06 million shares valued at RM52.7 million, from 200.68 million shares worth RM35.7 million yesterday.
Consumer products accounted for 59.87 million shares traded on the Main Market, industrial products (266.36 million), construction (196.24 million), trade and services (760.43 million), technology (50.31 million), infrastructure (22.96 million), SPAC (27.36 million), finance (55.95 million), hotels (5.26 million), properties (307.84 million), plantations (31.77 million), mining (19,200), REITs (6.87 million) and closed/fund (200,500).
The physical price of gold as at 5pm stood at RM156.50 per gramme, down 30 sen from RM156.80 at 5pm yesterday. — Bernama
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