September, 2023
In September, the Fund recorded losses of 1.5% (in AUD), while the MSCI AC Asia ex Japan Index was down 2.3% (in AUD).
Despite the drag in the market, some of our stock picks yielded positively, supporting the Fund’s performance relative to the benchmark. These include some of our non-benchmark holdings of Chinese telecom operators and our overweight in select Chinese banks, as their businesses remained solid in spite of the ongoing concerns over the domestic economy. One of the largest oil companies in China also contributed to the Fund’s performance, as it continues to benefit from higher oil prices and is supported further by its efficient operating cost control measures. Our exposure to India also generated positive absolute returns during the month, including the contribution from a mobile tower installation company. The market continues to be resilient against global headwinds due to its strong macroeconomic trends and strengthened long-term growth profile.
On the other hand, the Fund’s gains were more than offset by our exposure to select regional technology names, such as some leading tech players in Taiwan and Korea. Nevertheless, we remain constructive about these holdings, which, in our view, should benefit from the growing investments in artificial intelligence (AI) over the long-term horizons. Our holdings of select internet names in China also detracted the Fund’s performance despite reporting resilient second-quarter results. These holdings are of high quality, and their business fundamentals are expected to remain resilient despite the ongoing drag in the economy.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/PAF-September-2023.pdfAugust, 2023
In August, the Fund was slightly down by 0.9% (in AUD), while the MSCI AC Asia ex Japan Index recorded losses of 2.6% (in AUD).1 Year-to-date, the Fund and the index were up 10.7% and 7.1%,1 respectively.
Our holdings of Chinese equities were among the main detractors to the Fund’s performance, given the general market weakness. Among them are industrial and insurance companies, which were dragged partly due to the subsided expectations on “SOE reforms”. Similarly, our holdings of select internet and consumer-related players also dragged the Fund’s performance. That said, our holdings in the China equity space are of high quality, and their business fundamentals are expected to remain resilient amid potential market volatility, especially given the slew of supportive measures released at the end of the month. In terms of sectors, industrials was the top detractor, which also included a South Korean construction company alongside Chinese names.
On the positive side, some of our bottom-up stock picks supported the Fund’s performance. Two of our Chinese holdings, particularly a telecom operator and a leading e-commerce player, were among the top contributors of the Fund, with both of them releasing solid second-quarter results. In addition, some of our holdings of technology-related companies in Taiwan’s IT and industrial sectors also yielded positively as they continue to benefit from the expected cyclical recovery ahead, supported by the growing demand for high-performance computing and artificial intelligence (AI)-related hardware demand. Elsewhere, our exposure to Indonesia and India also supported the Fund’s performance.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/PAF-August-2023.pdfJuly, 2023
In July, the Fund and the MSCI AC Asia ex Japan Index both performed 4.8% (in AUD). Year-to-date, the Fund recorded gains of 11.6%, while the index was up 10.0%. The positive contributors during the month were broad-based across geographies and sectors. Our holdings of Chinese equities were among the top contributors to the Fund’s performance. In particular, our holdings of internet names were boosted by the supportive policy stance from the central government toward private enterprises and platform companies. Outside of China, a leading Korean construction and project management company was also a top performer, supported by its strong first-half results. On the flip side, our holdings of two regional technology companies, one in Korea and another in Taiwan, dragged the Fund’s performance, as investors took profit following the sector’s strong performance in recent months. Nevertheless, we remain constructive about the sector and continue to be optimistic about our select holdings, which should benefit from the growing investments in artificial intelligence (AI).
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/PAF-July-2023.pdfJune, 2023
In June, the Fund was flat at -0.2% (in AUD), in line with the MSCI AC Asia ex Japan Index’s - 0.1% (in AUD) performance. Year-to-date, the Fund was up 6.6%, outperforming the index’s 5.0% performance.
During the month, our exposure to various Chinese SOEs across different sectors dragged the Fund’s performance as expectations of SOE reforms weakened. In particular, our off-benchmark position in a telecommunications operator was the top detractor to the Fund’s performance. That said, we remain positive about the company’s growth prospects, supported by the continued adoption of 5G in the country. Our exposure to financials, including those in China and South Korea, also dragged the Fund’s performance. The optimism toward Korean financial stocks, in particular, is losing steam, given expectations of diminishing interest profit growth as the country’s rate hike cycle appears to have come to an end.
On the positive side, our exposure to a leading skincare brand in Korea was among the top contributors to the Fund’s performance, driven by its successful IPO. Our select internet holdings in China also performed well, as they are expected to maintain revenue growth ahead despite the short-term bumpiness of the economy. Our holdings of technology names in Taiwan also yielded positively, given the sustained optimism toward the electronic sector, while our exposure to India also supported the Fund’s performance as the country continued to be supported by favorable economic prospects.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/202791744.pdfMarch, 2023
In March, the Fund was up 4.6% (in AUD), while the MSCI AC Asia ex Japan Index returned 4.2% (in AUD).1 In the first quarter of the year, the Fund was up 10.5% (in AUD), almost 500 basis points above the MSCI AC Asia ex Japan Index (which was up 5.6% in AUD).1
During the month, our exposure to regional technology names was among the top contributors to the Fund’s performance, as they were boosted by expectations of an improved sector outlook by the second half of the year. Our exposure to Chinese telecommunications was also boosted by expectations of further SOE reforms and the rapid development of industrial digitalization. Moreover, some Chinese internet names yielded positively on the back of the country’s macro recovery and the supportive policy stance toward private enterprises.
On the other hand, our exposure to certain financial companies dragged, given the weakened sentiment caused by the SVB and Credit Suisse incidents. However, we believe the impact of the recent events on the banking sector in Asia is rather limited. Other key detractors include a major e-commerce player in China, which reported weaker-than-expected results. Meanwhile, some A-share companies have seen their share prices ease, dragging the portfolio’s return.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/199325036.pdfFebruary, 2023
Asia equities dragged in February amid the stronger US dollar and renewed fears that the US might tighten more than expected. In February, the Fund and the MSCI AC Asia ex Japan Index performed -1.4% (in AUD) and -2.6% (in AUD), respectively. Our exposure to Chinese e-commerce and consumer names and a regional technology company were among the key draggers of the Fund’s performance during the month. We believe their share price corrections merely reflected the changed investor sentiment and were not driven by any significant fundamental deterioration.
On the other hand, some of our portfolio holdings yielded positively despite the market correction. They include our exposure to Chinese telecommunications names and a Taiwanese company providing testing and certification services. In particular, the Chinese telecom operators were boosted by expectations of further SOE reforms to bolster their shareholders’ returns and faster adoption of cloud infrastructure services.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/198345852.pdfDecember, 2022
In December, the Fund and the MSCI Asia ex Japan Index performed -0.4% (in AUD) and -1.4% (in AUD), respectively.
Our portfolio holdings in Hong Kong and China have continued to do well. The top performers coming from these markets during the month include various names from the internet, consumer, and finance sectors. They are expected to benefit from the improved market and macro conditions.
However, the solid share price performances of these Chinese companies were offset by a less stunning performance elsewhere, notably in Taiwan and Korea. In particular, some of our technology holdings in these markets have declined amid rising concerns over the global consumer electronic downturn. Despite the near-term challenges, we continue to see solid long-term business competitiveness on the back of their strong strategic positioning, sound business profiles, and solid balance sheets. Moreover, as they are trading at trough or close-to-trough valuations, we see limited further downside in these companies and remain faithful that they are well-positioned toward long-term technology business growth.
Looking forward, we see a rather mixed outlook in Asia in 2023. While the China market is poised to see a strong recovery, the looming recession in the US and further rate hikes from the FED may create further volatility in the stock market. In particular, some better-performing markets in Asia last year could come under pressure this year, while others may selectively benefit from China’s reopening.
Overall, we continue to see a bumpy recovery in the Asian markets ahead, but we remain optimistic about China’s long-term market outlook. We stick with our bottom-up stock selection approach and, at the same time, pay close attention to macro developments, including export trends, currency movements, and geopolitical events.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/195846695.pdfNovember, 2022
In November, the Fund and the MSCI AC Asia ex-Japan Index were up 13.3% (in AUD) and 13.4% (in AUD),1 respectively.
The key contributors to our portfolio were relatively widespread across different sectors, especially in China, which include internet, consumer, and financial names. These primarily reflected the renewed investor enthusiasm amid the fine-tuning of anti-Covid policies in China, as well as the strong funding support for property developers. A leading regional semiconductor foundry was also among the top contributors to the Fund’s performance.
On the other hand, our Fund’s exposures in India and Indonesia have slightly dragged the Fund’s performance, given the modest performance in these markets.
Following a sharp rally in November 2022, we expect market volatility to persist in the near term, as investor sentiment remains jumpy on different macro data points and economic events. For China, one key event to watch in the near term is the central economic working conference that will likely take place in the next few weeks, as it could outline top policy directions. Overall, we remain optimistic about China’s long-term market outlook and believe it offers good long-term risk-reward opportunities, even after the recent rebound.
In the other parts of Asia, we continue to adopt a selective approach toward different trends and characteristics. Although other regional markets have significantly underperformed China in the recent month, we believe that selective allocation in some markets could help shape a more balanced portfolio with reduced volatility over the longer term.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/193724232.pdfSeptember, 2022
In September, the Fund and the MSCI AC Asia ex-Japan Index were down 6.1% (in AUD) and 7.0% (in AUD), respectively.
The share price declines in September were broad-based across different sectors and markets. During the month, the key detractors to our fund’s performance include a semiconductor foundry in Taiwan and a leading technology company in Korea – both hit by concerns about weakened end demand. Our exposure to financial companies in China also dragged, as investor sentiment was partly impacted by the government’s circular encouraging fee reductions in the finance sector to support business activities.
On the other hand, some of the portfolio holdings have delivered resilient share price performance. These include two major telecom operators in China, offering some sound defense to the portfolio as they saw continued business growth. Our financial exposure in Indonesia also yielded positively, supported by the country’s resilient macro backdrop.
We expect market volatility to remain elevated near-term as investor sentiment remains jumpy on different macro data points and economic events. In China, the market could remain relatively muted as investors await the important party congress meetings in the middle of October. Despite the heightened uncertainties in the short term, we remain optimistic about China’s long-term market outlook and believe it offers good long-term risk-reward opportunities at current valuation levels.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/191941892.pdfJuly, 2022
In July, the MSCI All-Asia ex-Japan Index was down 2.6% (in AUD) during the month1 , while our Fund was down 3.5% (in AUD).
During the month, our China exposures dragged the Fund’s performance, as they have been broadly sold off amid soft macro numbers and spillover effect from dampened property market sentiment. News about the mortgage boycott has led to concerns about the spillover risks. Although our China property exposure was limited, our consumer, internet and financial holdings took a hit as economic recovery may be protracted. While recovery is likely to remain bumpy, we believe the diverging performance among companies and sectors presents good bottom-up stock picking opportunities.
On the positive side, the information technology sector has contributed positively during the month and supported our portfolio. This was mainly led by our holdings in the regional technology leaders, which were bolstered by the easing concerns about the demand in the US. In addition, the leading semiconductor foundry in Taiwan also released an upbeat set of quarterly results during the month, which defied doubts about its business outlook.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/190109753.pdfJune, 2022
The fund was down 1.8% (in AUD) in June 2022, while the benchmark MSCI AC Asia ex-Japan Index performed -0.4% (in AUD).
From a sector perspective, the information technology sector was the largest dragger, followed by the industrials and materials sectors. Our technology hardware exposures in leading Asian technology companies were hit by recession fears in the US, which may affect end demand. However, we continue to view that their robust technology leading positions – particularly in the advanced semiconductor foundry business – would not be affected by short -term volatility. Meanwhile, our holdings in industrials and materials corrected as global economic concerns kicked in and commodity prices retreated. On the other hand, our holdings in Chinese consumer and financials names yielded positively, reflecting the market’s enthusiasm towards China on the back of the government’s continuous fiscal stimulus, policy relaxation, and partial reopening that bolstered economic activities. Our holdings in quality leaders within these sectors continue to benefit from the consumption upgrade trend and increasing need for wealth management services. A Chinese real estate developer also contributed as property sales in China showed signs of recovery.
Looking forward, while we are positive about the China market on its counter-cyclical, pro-growth policies, we expect market volatility to persist given the unwavering concerns about rate hikes, quantitative tightening, and recession fears in the US, as well as their ripple effects to the Asian markets. In particular, for the Asian markets, we note rising price pressures, coupled with a weakening tech and export cycle, may exert further downward pressure. Despite potential volatility, we continue to stick with our bottom-up stock selection approach and invest in quality names and inflation beneficiaries which should position us well amid these macro uncertainties while capturing the recovery within the region.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/189229945.pdfMay, 2022
In May, the Fund was up 0.1% (in AUD), while the MSCI Asia ex Japan Index was down 0.5% (in AUD).
Our holdings of major semiconductor companies in Asia yielded positively on the back of improved investor sentiment from over-supply concerns. In particular, our position in a leading regional semiconductor player delivered a positive share price return, supported by its leading industry position, strong order book, and ability to raise prices further. Other key contributors included an oil company, which continued to benefit from the elevated oil price, and our holding of a Chinese internet company, which was backed by the government’s supportive stance toward the platform economy, as well as its better-than-expected first-quarter results.
On the flip side, our exposure to consumer-related names detracted amid concerns over macro weakness and consumer demand, especially in China where it intensified during the lockdowns in Shanghai. Our holdings in Chinese real estate also detracted as property demand remained low during the month, leading to renewed concerns about the financial strengths of some property developers, particularly privately-owned ones and their property management affiliates. That said, we expect ongoing policy support to cushion further downside and drive sales recovery in the second half.
Overall, we expect macro concerns and geopolitical events to continue to affect Asian markets. Further complicating the macro backdrop is the quantitative tightening in the US, which is somewhat countered by the monetary loosening in China. However, we view that the current investing landscape has created bottom-up opportunities, with diverged performances among sectors and companies. We continue to prefer high-quality companies with earnings visibility that should benefit from policy tailwinds and those that are defensive or resilient in an inflationary environment.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/188007312.pdfApril, 2022
In April, the Fund was up 1.9% (in AUD), while the MSCI Asia ex Japan Index was flat at 0.2% (in AUD).
Our China exposures yielded positively this month. Chinese consumer staples holdings were contributors, led by a fertilizer name that continued to appreciate on the back of elevated commodity prices. Our holdings in selective Chinese infrastructure also contributed on the back of the government’s announcement that it will strengthen infrastructure construction, with increased issuance of special local government bond to boost infrastructure spending. Our China internet holdings also yielded positively as sentiment recovered following the country’s calling to facilitate the healthy development of the platform economy. In addition, one of our top internet holdings is seeing improving profitability of its core businesses.
On the flip side, our regional technology holdings continued to be dragged by the tech sell-off globally, induced by the combination of end-demand concerns, inflationary pressure, and the tightening cycle. While we remain cautious of the near-term outlook of companies more related to consumer sectors, we are constructive on our holdings, which are high-quality industry leaders. We expect these names to continue to ride on the structural demand from data centers and high-performance computing. Our holdings in Chinese financials also detracted amid the disrupted macroeconomic conditions domestically. However, we continue to be positive about their long-term outlook, especially those that provide wealth management services, as they should ride on the structural trend of retail investors seeking more professionally-managed financial products. We expect near-term volatility to remain in the market as risks continue to loom on the horizon, including the hawkish stance of central banks globally, the ongoing military conflict between Ukraine and Russia, and geopolitical tensions between the US and China. Despite the challenging investing landscape, we see bottom-up opportunities where performances have diverged in sectors and companies. Overall, we continue to favor high-quality companies with earnings visibility that should benefit from policy tailwinds and those that are defensive or resilient in an inflationary environment.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/187239097.pdfMarch, 2022
In March, the Fund and the MSCI Asia ex Japan Index were down 9.7% (in AUD) and 6.0% (in AUD), respectively. Our regional technology hardware exposures were dragged amid end demand weakness, including smartphone and PC shipments, leading to fears of inventory correction in the semiconductor space. While we remain cautious of their nearterm outlook, our holdings should continue to benefit longer-term on the back of their technology lead and improving product mix. We continue to favor highquality leaders in the industry should benefit from the continued digitalization trend. Other detractors came from our China exposure as the nation was affected by sporadic lockdowns, posing further headwinds to economic growth. Our holdings in consumer-related names, in particular, were among the major detractors amid the weaker demand outlook. That said, we remain constructive on our consumption upgrade holdings as they continue to deliver decent long-term earnings growth. On the flipside, our holdings of various utilities, energy and food-related companies across the region yielded positively as they continue from rising commodity and food prices. Similarly, our exposure to Indonesia also contributed. Being a net-exporter, the country remains to be a beneficiary of elevated commodity prices.
Overall, we view that volatility will remain in the near term as geopolitical risks have created many uncertainties. However, the current investment landscape has also created bottom-up opportunities, with divergent performances in sectors and companies. This is especially apparent in China, which we continue to be overweight. While remaining cautious in assessing the impacts of COVID resurgence, we also view that the government’s pro-growth stance should eventually uplift market sentiment, although it will take time for monetary and fiscal actions to be reflected in the economy
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/186302140.pdfFebruary, 2022
In February, the Fund and the MSCI AC Asia ex Japan Index were down 5.6% (in AUD) and 5.2% (in AUD), respectively.
Our holdings of regional hardware technology names dragged, as investors continued to be concerned about the slowing demand globally. That said, we continue to hold a positive outlook on our holdings, as they continue to offer high earnings visibility and strong ongoing growth under the global structural trend of digitalization and electrification. Meanwhile, our selective holdings in China internet was hit on a policy statement that food delivery operators should offer temporary preferential rates to restaurants that are located in the “medium-to-high COVID risk areas”. While the risk-off sentiment ought to trigger over-reaction from investors on negative newsflow, we remain very selective in the sector to ensure its fundamentals remain intact and be cautious of potential policy changes as the government rolls out its common prosperity agenda.
On the other hand, our selective exposures in Chinese consumer-related names, which showed high earnings visibility, yielded positively. They rose as domestic consumption is expected to recover this year on the back of pro-growth policies from the government. These holdings in particular, which include clothing, dairy and beer names, remain to be beneficiaries of the country’s consumption upgrade trend, backed by their continued product mix upgrades that should provide earnings visibility in the medium term. Our holdings of energy-related names also contributed on the back of increasing commodity prices
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/185505274.pdfJanuary, 2022
In January, the Fund was down 2.0% (in AUD), while the MSCI AC Asia ex Japan Index was flat at 0% (in AUD). Our holdings in regional technology hardware names dragged the Fund’s performance. During the month, there was a sell-off in technology stocks globally as investors got concerned about oversupply and slowing demand. That said, we continue to hold a positive outlook on our holdings, particularly those that continue to benefit from the global structural trend of digitalization and electrification, which should offer earnings visibility. Our exposure to a basket of China A-share names, which include industrials, financials and consumerrelated names also retreated amid weaker sentiment due to moderating growth outlook and higher overseas market volatility. Despite the short-term setback, we view that growth continues to be sustainable, supported by accommodative policies, and the pullback in the market has also made their valuations more attractive. On the flip side, our exposure to dividend-yielding names, including Chinese telecommunications and real estate, yielded positively. The Chinese telecommunications company is riding on the continued roll-out of 5G in the country, which should further lift revenues in the next few years. Meanwhile, our bottom-up picks in China real estate benefitted from the more eased policy stance by the government, such as the reduction of the 5-year LPR. Our view remains the same that high-quality names will benefit from industry consolidation as sales and liquidity conditions are expected to be polarized between the healthy and high-geared developers.
Against the current macro backdrop, we expect volatility to carry into 2022, driven by various factors, including the pace of tapering by the Fed and regulatory uncertainty in China. That said, we expect bottom-up opportunities to persist among diverging sector outlook and valuation levels. In China, its more pro-growth policy stance should support a better environment for equities, while economic activities in South Asia are expected to catch up as they reopen.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/184124957.pdfDecember, 2021
In December, the Fund was up 0.3% (in AUD), slightly outperforming the MSCI AC Asia ex Japan Index’s -1.1% (in AUD) performance. Our holdings in regional technology hardware were among the top contributors of the Fund as they continue to ride on the digitalization wave globally. For instance, our key exposure in a South Korean technology hardware company was among the top contributors, as memory prices were bottoming out, which supports future earnings growth. Our holdings of Taiwan semiconductor companies also yielded positively, benefitting from supply tightness, which we expect to persist in 2022. This should help prop up their average selling prices and drive profit growth. Other hardware manufacturers are also riding on the 5G wave globally and we continue to see ample investment opportunities in the technology hardware sector as 5G applications mature. Our holdings in consumer-related names also yielded positively during the month. In particular, our exposure to Taiwan-based bicycle manufacturers continued to benefit from the rising e-bike trend globally.
On the other hand, a few of our China consumer discretionary stocks were impacted by the softer consumption demand. That said, the consumption contraction headwind should be short-term as pro-growth policies are expected to roll out in 2022, leaving the long-term consumption upgrade trend intact. Our selective exposure in China internet space also dragged the Fund’s performance in December. As increased scrutiny over the internet sector continues to moderate the sector’s growth outlook, we maintain our cautious view of the sector. Focusing on fundamentals, we remain underweight and selective in this space. Among these, companies with core competitiveness in providing online services should continue to see growth opportunities.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/182656708.pdfNovember, 2021
In November, the Fund was up 1.2% (in AUD), slightly underperforming the MSCI AC Asia ex Japan Index’s 1.8% (in AUD) performance. Our exposure to Chinese discretionary names was among the Fund’s detractors. In particular, a company engaged in duty-free sales dragged on slowing sales growth. That said, we continue to have a positive outlook on the company, as it should benefit from long-term catalysts such as increased domestic visitation, network expansion of downtown duty-free stores and policy relaxation. Our exposure in e-commerce names also detracted. As increased scrutiny over the internet sector continues to moderate the sector’s growth outlook, we maintain our cautious view of the sector and remain underweight and selective in this space. That said, longer-term, the internet space continues to play a key role in China’s recovery. Our holdings in Korean names also detracted amid the weakening sentiment in the market. Despite higher macro uncertainty, we continue to see bottom-up opportunities that are underpinned by structural growth trends.
On the positive side, our holdings in regional technology hardware were among the top contributors of the Fund as they continue to ride on the digitalization growth trend globally. For example, our semiconductor holdings across the region contributed to the Fund’s performance as they continued to benefit from supply tightness, which we expect to persist in 2022, leaving room for price hikes. A Chinese forerunner in electronic component parts and a major AR/VR headset assembler also contributed on the back of increasing demand for wearables, such as wireless earphones, as well as the growing revenue expected from new AR/VR models that will be released in 2022, driven by various companies’ adoption of the metaverse. Our exposure to telecommunications also yielded positively, benefiting from the increasing streaming and broadband penetration in the region.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/181884585.pdfOctober, 2021
In October, the Fund was down 3.6% (in AUD), underperforming the MSCI AC ex Japan Index’s -2.5% (in AUD) 1
The Fund’s exposure to regional technology hardware, including names in South Korea and Taiwan, detracted the portfolio’s performance amid the near-term uncertainty in global demand. However, we remain optimistic over the sector longer term as we are constructive on the demand setup for sustained strength given the secular growth of digital transformation. Our underweight in Chinese e-commerce names relative to the benchmark also detracted as the sector rallied from easing sentiment. While we remain cautious of Chinese e-commerce names, we continue to see long-term opportunities and are selective in the sector. One of our holdings in the space, for example, was among the top contributors of the Fund as it benefited from the less-than-expected amount of antitrust fine it received from regulators, also ending the months-long probe on the company, which offered relief to investors. Meanwhile, our holdings in Chinese names with business exposure to cleaner energy, including solar and wind power, contributed as they are poised to benefit from China’s carbon neutrality goals.
While we continue to be underweight in Southeast Asia, we are turning cautiously optimistic towards the region, as we are seeing improvements in the pandemic situation. In Greater China, we are also cautiously optimistic as valuations have become attractive, though policy risks continue to linger in the near- to medium-term. The FOMC meeting in the US and the sixth plenary session of the CPC Central Committee in November could offer more clarity on policy direction. Overall in Asia, stock picking remains crucial, and we maintain our focus on quality names with earnings visibility, including those that should benefit from structural growth trends, including tech leaders, consumer-related names, healthcare, and industrial companies
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/180943490.pdfSeptember, 2021
In September, the Fund was down 1.5% (in AUD), outperforming the MSCI AC Asia ex Japan Index’s -3.0% (in AUD) performance.
Our holdings in Chinese consumer staples and healthcare names were among the top contributors of the fund. A Chinese white liquor producer contributed as it expects to see quality growth opportunities from its plans to focus on direct sales. On the healthcare front, a leading biotechnology company is set to benefit from the long-term structural growth of China’s healthcare sector on the back of its continued development of innovative drugs. Our underweight in Chinese internet names also helped with the Fund’s outperformance. The Fund also does not hold Evergrande. On the flipside, our exposure in regional information technology, industrial and consumer discretionary names detracted. Our holdings in semiconductor names, for example, detracted amid concerns on weaker end-user demand for smartphones, wearables and other products.
We maintain the exposure as the persistence of the imbalance demand-supply shall continue to support margins and the robust demand offers great earnings visibility within the technology hardware space. Similarly, our holdings of industrial and consumer discretionary names, including a Chinese power tools and equipment manufacturer and Taiwanese bike manufacturers detracted amid weakening consumption outlook globally
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/180251295.pdfAugust, 2021
In August, the Fund and the MSCI AC Asia ex Japan Index were up 2.7% (in AUD) and 2.9% (in AUD)1 , respectively.
Our holdings in industrial companies in China were among the top contributors of the fund. A Chinese shipping company announced solid earnings results, supported by the addition of newly acquired terminals and new shipping routes in the first half of 2021, while a power tools and equipment manufacturer delivered robust results and strong margin expansion, leading to a re-rating of the stock. Other key contributors include Chinese financials and our Taiwanese semiconductor manufacturers. Our Chinese financials holdings rose on the back of good results and stable asset quality, while the Taiwanese semiconductor manufacturers grew on the back of continued strong global demand
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/179170079.pdfJuly, 2021
In July, the Fund and the MSCI AC Asia ex Japan Index were down 6.9% (in AUD) and 5.5% (in AUD)1 respectively.
Our holdings in Chinese internet-related names were among the top detractors of the fund amid policy headwinds. We expect the sector to remain jittery as China continues to step up its scrutiny of these companies. In light of the policy overhang, we have reassessed the valuations of our holdings due to the potential impacts and have trimmed our positions in the internet space, reflecting our cautious stance.
Our holdings in other sectors in China, including consumer and industrials, particularly shipping companies, also detracted amid the weakened sentiment. However, we continue to have a positive outlook on these sectors. In the consumer space, we view that fundamentals remain intact and companies continue to benefit from China’s premiumization story. Meanwhile, shipping companies continue to benefit from the rising freight rates resulting from tight supply and strong demand globally.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/176032472.pdfJune, 2021
In June, the Fund performed 3.0% (in AUD), while the MSCI AC Asia ex Japan Index rose 2.83% (in AUD) 4 . Our holdings in information technology and industrial names were among the top contributors during the month. Within information technology, regional semiconductor manufacturers continue to ride on the global semiconductor super-cycle, while our software exposures benefited from the ongoing structural digitalization trend. In industrials, Chinese shipping companies continue to benefit from the global shortage of shipping containers.
On the flipside, our exposure in Chinese financials slightly detracted on the back of moderating growth data. But we remain optimistic about our holdings in the sector, as we expect them to benefit from the growing demand for wealth management services from retail investors in the country.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/175013837.pdfMay, 2021
May was a month of mixed signals from encouraging 1Q results, resurging COVID cases and tapering concerns. In China, concerns about inflation and potential tightening monetary conditions continue. PPI in May reached 60.6, which is 5.7% higher than in April, driven mostly by the surge in commodity prices1 . The central bank also registered that Total Social Financing (TSF) dropped to RMB 1.85 trillion in April from RMB 3.3 trillion in March2 . On the upside, first
quarter earnings results remain robust. In Taiwan, investor sentiment was dampened amid a new wave of the pandemic. The government is now planning to implement control measures, including the rollout of an extra $15.2 billion relief package. Nevertheless, the pandemic did not impact Taiwan’s export-related activities. Exports were up 38.6% YoY, led by materials (up 74.7% YoY), followed by metals (54.2%)3
Other categories also posted double-digit YoY growth. The government also reiterated its optimistic view on global economy reopening and the ongoing digitalization trend. It now projects 2Q21 export scale to exceed US$100.0 billion, up more than 26.0% YoY
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/173160894.pdfApril, 2021
In April, the Fund and the MSCI AC Asia ex Japan Index rose 3.8% (in AUD) and 1%5 (in AUD) respectively.
South Korean and Taiwanese information technology names were among the top performance contributors in the fund last month, as global demand for technology products remains strong. Financials also gained, particularly a South Korean financial holding company, which became the top performance contributor. Its share price was boosted by the company’s plan to list its mobile retail banking service subsidiary. The Chinese shipping companies sustained their strong momentum in April
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/171484493.pdfMarch, 2021
In March, changing inflation expectations and policy tightening concerns continued to cause a cautious market sentiment. In China, the recovery path remains solid and investors began to be wary of policy normalization. Through the period, policymakers have made clear that monetary policies would remain flexible and precise, which is consistent since December 2020. The Two Sessions confirmed an emphasis on a sustained growth recovery. The policy agenda echoed the 14th Five-Year Plan on the support of innovation, urbanization, energy conservation and environmental protection.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/170555648.pdfFebruary, 2021
Asian equities were supported by vaccination and economic recovery in February. The swift pick-up in bond yields and inflation expectations later caused a shift in risk sentiment and positioning.
In China, domestic economic recovery continued to gather steam in February. Particularly, consumption recovery during the Lunar New Year was not impacted. The monthly manufacturing Purchasing Managers’ Index (“PMI”) saw a moderate drop but stayed in the expansionary terrain1
. The macro indicators have so far validated the sustained recovery. Taiwan continued to enjoy robust export performance, up 9.7% year-on-year2
, although February had fewer working days due to the Lunar New Year. Supported by robust export figures, the Taiwan administration upgraded 2021’s Taiwan GDP growth to 4.6% year-on-year3 , compared to an official 3.8% forecast made in November 2020.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/168493212.pdfDecember, 2020
The Fund increased 5.3% (in AUD) and the MSCI Asia ex Japan Index was up 2.0% (in AUD)2 . Within China, our core consumption related holdings extended the positive momentum to December. In particular, a Chinese e-commerce platform is expected to maintain a robust growth outlook heading into 2021, while the baijiu holdings continued to enjoy robust demand and price hikes. Another key contributor is China’s leading duty-free shop operator, which we recently added to the portfolio. The company benefits from favorable government policies and the reshoring consumption trend.
Also, technology hardware demand showed no signs of deceleration. This resulted in another month of strong performance from our top holdings in Taiwan’s largest semiconductor foundry and the world’s leading Korean flash memory chip maker. As a result, the two companies continue to be the top performers.
The 2021 outlook for equities is benign under accommodative policy, recovering earnings, and nascent vaccine adoption. Asian equities, especially China-related companies, are expected to lead the growth. Profit growth derived from old and new economy sectors is expected to be more balanced this year.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/163707148.pdfNovember, 2020
The Fund and the MSCI Asia ex-Japan Index both advanced 3.0%2 (in AUD).
The consistent export volume growth in Taiwan and South Korea, and China’s on-track consumption recovery contributed to North Asia’s equity outperformance.
The application of innovative technology and the demand from the stay-home economy remained positive for our Taiwanese and Korean technology hardware holdings. China’s aheadof-the-curve reopening is supported by a strong export and trade pickup, shipping companies rallied on solid data. Chinese financials also saw positive sessions as positive macro data sustained.
On the flip side, The release of anti-trust draft rules on the mainland clouded the outlook of some internet giants and caused detraction from performance this month. That said, anti-trust laws in internet space are not uncommon globally and are unlikely to derail the long-term structural growth outlook of the leading Chinese players.
Ample liquidity worldwide and hopes on economies reopening underpin the growth of Asian equities in the near-term. Going into 2021, we believe Asian equities continue to showcase solid fundamentals for the post-pandemic future. As a result, we continue to focus on quality companies with more room for growth amid the broader-based recovery in 2021.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/162439582.pdfOctober, 2020
The Fund advanced 5.1% (in AUD) while the MSCI Asia ex Japan grew 4.9% (in AUD).
North Asian equities continued to perform as China’s consumption recovery and Taiwan’s export growth have been strong. In China, the earnings resiliency supported the share prices of the consumer-related sectors and contributed to our portfolio returns. In particular, e-commerce and baijiu names rallied on the robust demand. The latest Five Year Plan confirmed the goals to digitize the economy and bring quality growth. This also reaffirmed the growth outlook of the consumer sector. The application of innovative technology and the demand from the stay-home economy remained supportive of our technology hardware holdings in Taiwan and Korea. Conversely, our Chinese education holdings pulled back due to the upcoming final regulation draft. Nonetheless, we expect the rules to tighten in the compulsory education space, while our focus the private higher education space would be less affected in regulatory terms.
The presumptive U.S. presidential result has brought relief to the market as its foreign policy is expected to turn friendly and welcome global trade. This shall put a positive spin on Asian equities in the short term. As the election is mostly settled, the recovery from the virus is back in the spotlight. We will continue to monitor the bumpy recovery and identify companies that have better fundamentals and the ability to weather volatility.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/160772020.pdfticker: MAQ0635AU
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factsheet_url:
https://www.premiumasiafunds.com.au/funds/premium-asia-fund/
Updates & Reports
Monthly Factsheet
release_schedule: Monthly
fund_features:
Premium Asia Fund aims to generate positive returns, consisting of both capital growth and income, over a three to five-year period prior to accounting for movements in currency exchange rates. It will seek to achieve this objective by constructing a portfolio of securities which provides exposure to the Asia ex-Japan region. It is denominated in Australian dollars and typically will not hedge its currency exposure.
- Managed by Value Partners using disciplined value-oriented approach supported by intensive, on-the-ground bottom-up fundamental research.
- The Fund may also invest in cash and money market instruments, depositary receipts, listed unit trusts, shares in mutual fund corporations and other collective investment schemes (including real estate investment trusts), derivatives including both exchange-traded and over-the-counter (“OTC”), convertible securities, participatory notes, bonds, and foreign exchange contracts.
manager_contact_details: Array
asset_class: Foreign Equity
asset_category: Asia Pacific w/o Japan
peer_benchmark: Foreign Equity - Asia ex Jap Index
broad_market_index: World Emerging Markets Index
structure: Managed Fund