Investing In Volatile Markets - An Outlook For The Fourth Quarter 2015

28 October 2015

Ms. Nicole Wong (Marketing & Communications)
+603 2027 5800 | nicole.wong@affinhwangam.com

KUALA LUMPUR – Affin Hwang Asset Management Berhad (“Affin Hwang AM” or “the Company”) believes that while the global markets may remain volatile in the near future, pockets of opportunity will continue to present themselves. Despite the current economy slowdown, China remains one of the fastest growing economies globally. The Asian giant's economic growth remained in the spotlight of global economies as it plays the role of key trading partner to many economies. Affin Hwang AM believes that an annual growth rate of 6%-7% for China would likely be a more sustainable pace as the markets ease into a new normal. The Company expects the People’s Bank of China to remain active in rolling out policy measures in a bid to spur its economy.

The anticipated rate hike by the US Federal Reserve continued to be what it has been - an anticipated move. Markets are again left guessing as to the timeline of the hike after the Federal Reserve kept US interest rates unchanged in September. While word on the street predicts a December hike, the US Federal Reserve may push the rate hike further back to March 2016. The timeframe of the hike remains unclear given the weak global growth environment and the Fed's next move are expected to be very much data dependent.

Closer to home, the domestic market remained under pressure amid weaker oil prices and on-going political noises. Affin Hwang AM expects Ringgit to remain weaker against the US Dollar in the near term, along with most emerging market currencies given investors’ stronger inclination towards developed market assets. Nevertheless, the Company believes the domestic economy remains well supported given its current account surplus and manufacturing / export oriented economy. The tilt away from being oil dependent will likely provide Malaysia with a competitive edge against countries with higher reliance on oil exports. Teng Chee Wai, Managing Director of Affin Hwang AM said, “This is especially advantageous given our expectations that commodity prices will remain under pressure on the back of the current slow global growth environment which will be keeping demand weak. We expect oil prices to remain range bound, trading between USD45 and USD55 per barrel in the near term as production continues to be strong from oil producing countries.”

On the issue of investing for the Company’s portfolios, Teng said, “We have not wavered from our investment philosophy and continue to focus on fundamentally strong companies - a selection of investments made through a stringent investment selection process. The global market volatility will remain bumpy in the interim but we believe that there are opportunities to make money regardless of market condition. As such, we have positioned our portfolios to take part in thematic plays that are able to address the current market environment. Non-cyclical stocks such as healthcare remain a sector that our portfolios have continued to explore.”

He said that the Company remains adamant on not sacrificing on quality for shorter-term gains given its aim to provide investors with stable and consistent medium term growth. Portfolios will continue to be managed on an absolute return strategy - whereby the Company aim to provide positive gains on investments over a 3-year rolling period, irrespective of market performance.

Teng continued, “This is proven in our internally managed funds which provide positive returns over the longer-term investment horizon. Our funds such as the Affin Hwang Select Bond Fund, Affin Hwang Select Income Fund, Affin Hwang Select Dividend Fund, Affin Hwang Select Opportunity Fund, Affin Hwang Select Asia (ex Japan) Opportunity Fund and Affin Hwang Select Asia (ex Japan) Quantum Fund have been able to recover from the market pullbacks and continued its upward trajectory over the longer term over-coming various market cycles.”