October, 2022
The Fund outperformed the benchmark during the month in AUD terms.
Key contributors to relative performance:
• At the country level, China and Philippines contributed to performance.
• At the sector level, healthcare and industrials contributed to performance.
• Yonyou Network Technology, which rallied 35% in the month on positive read-through for domestic substitution from the China Party Congress.
• Hundsun Technologies rallied around 20% on strong quarterly results.
Key detractors from relative performance:
• At the country level, an underweight allocation to India and Korea detracted from performance.
• At the sector level, consumer discretionary detracted from performance.
• Holdings in Chinese internet company Baidu and e-commerce company JD.com underperformed, detracting from performance.
September, 2022
The Fund outperformed the benchmark during the month in AUD terms.
Key contributors to relative performance:
• At the country level, Indonesia and an underweight allocation to Korea contributed to performance.
• At the sector level, financials contributed to performance. • Indonesia’s Bank Central Asia outperformed on resilient and improving loan growth, and Bank Indonesia’s first interest hikes, which should eventually filter through to higher net interest margins.
• IndusInd Bank shares outperformed as the bank confirmed a return to asset growth following a number of years of balance sheet repair under the current CEO.
Key detractors from relative performance:
• At the country level, an underweight allocation to India detracted from performance. • At the sector level, consumer discretionary detracted from performance.
• Chinese automaker Geely Automotive and Chinese supply chain finance company Linklogis Inc. both saw their shares come under pressure owing to continued concerns on both the local property sector and poor consumer confidence impacting near-term sales.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Sept-2022.pdfAugust, 2022
The Fund underperformed the benchmark during the month in AUD terms.
Key contributors to relative performance:
• At the sector level, financials contributed to performance.
• At the country level, an overweight allocation to Indonesia contributed to performance.
• Indonesia’s Bank Central Asia outperformed after the company revised up its loan growth guidance along with a good set of results.
• Chinese internet company Baidu also contributed, reversing losses from last month as the company continued to gain share in its cloud business and received licenses to operate fully driverless robotaxi services in Wuhan and Chongqing.
Key detractors from relative performance:
• At the sector level, our holdings in industrials, information technology and healthcare detracted from performance.
• At the country level, China and India were the main detractors of the month.
• Chinese cosmetics company Proya Cosmetics, a strong performer for the year, saw some profit taking over the month.
• Waterproof service system company Beijing Oriental Yuhong was also under pressure due to concerns about further weakness in the Chinese property market.
June, 2022
in the US market, with inflation being a common theme across local markets. The MSCI Asia ex Japan Index fell by 4.5% in US dollar (USD) terms. Despite this tough external environment Chinese and Hong Kong stocks were up in absolute terms over the month and quarter whilst the rest of the region was impacted by foreign currency effects. Chinese stocks made headway, returning 6.6% in USD terms as China halved the quarantine period for inbound travellers. Its reopening earlier in the month allowed factories to ramp up production and eased snags in supply chains. China held steady its benchmark lending rates again and announced its intention to make port operations more efficient to boost trade. Hong Kong also outperformed at 1.2% even as the Hong Kong Monetary Authority raised its base rate by 75bps. Market sentiment was seemingly unaffected even as most businesses in Macau were closed due to a COVID-19 outbreak, with the city opting to adhere to China’s zeroCOVID policy. Taiwan (-14.2%) and South Korea (-17.1%) fell on the back of inflationary concerns, in addition to a drop in demand, sales and orders of chips, notebooks and smartphones.
The entire ASEAN region retreated in the wake of rising inflation. The Philippines fell by 13.6% as its central bank hiked policy rates by 25bps and indicated the likelihood of an increase of the same magnitude in August to combat inflation, with the CPI increasing 5.4% in May year-on-year. Food inflation in Malaysia (-8.2%) was the highest since 2017 in May, and apart from providing cash handouts to lower-income earners, exports of food products have been curbed to secure local supplies and to cap costs. The CPI of Indonesia (-9.3%) rose 3.55% on an annual basis in May, reaching the upper limit of Bank Indonesia’s target range of 2 to 4%. Singapore (-7.5%) introduced a support package exceeding USD 1 billion for lower-income groups to mitigate higher costs and inflation, which rose 3.6% in May year-on-year, on a core inflation basis. Thailand’s (-8.4%) CPI jumped 7.1% from a year earlier, and its central bank warned that delaying rate hikes would be detrimental whilst holding its key rate at a record low to aid economic recovery.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Jun-2022.pdfMay, 2022
The Fund marginally underperformed the benchmark during the month in AUD terms.
Key contributors to relative performance:
• At the sector level, materials contributed positively on the back of higher commodity prices. • At the country level, China added value owing to increased policy easing measures. • Vale Indonesia, one of the country’s largest nickel producers continued its strong performance after delivering a good set of results and benefitted from further market optimism in nickel prices. • Chinese internet company Baidu was another stock which benefitted from a good set of results, fuelling confidence in its transformation to become an AI, cloud and intelligent driving company.
Key detractors from relative performance:
• At the sector level, health care detracted from performance. • At the country level, holdings in Taiwan and Korea detracted the most. • Chinese pharmaceutical company Hutchmed underperformed after a series of negative changes. Not only did the company receive a big regulatory setback in the US for its Surufatinib drug, it also lost its highly regarded long time CEO due to his retirement.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-May-2022.pdfApril, 2022
Key contributors to relative performance:
• At the sector level, materials contributed positively. • At the country level, Taiwan and Indonesia added value. • In the energy space, our holding in Reliance Industries in India contributed notably as the outlook for refining margins improved.
• In Indonesia, holdings in Vale Indonesia, one of the country’s largest nickel producers and Merdeka Copper Gold, a copper and gold miner, contributed to performance as their shares well bid on continued elevated underlying raw material prices. Key detractors from relative performance:
• At the sector level, health care detracted from performance. • At the country level, holdings in China detracted the most owing to continued lockdowns across pockets of China. • Iflytek Co sold off circa 24% following results that revealed weaker-than-expected margins. With greater contribution from delayed government medical projects expected in the second half of 2022, the stock now looks attractively priced. • Sungrow Power also corrected sharply due to margin weakness. At the current share price, the risk-reward is particularly attractive given expected strength and resilience in demand for the company’s key products.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Apr-2022.pdfMarch, 2022
Key contributors to relative performance:
• At the sector level, healthcare, financial, and materials contributed positively. • At the country level, China, Hong Kong, and Indonesia added value. • iFlytek Co contributed to a performance by having upgraded its growth guidance for the year on the back of better visibility in its business outlook. • Proya Cosmetics continued to see strong demand for its flagship products from its Tmall and Douyin channels, which was especially apparent during Valentine’s Day sales period. • In the materials sector, nickel company PT Vale Indonesia and copper company PT Merdeka, which is primarily geared towards the electrification of the world, benefiting from the a strong rally in commodity prices.
Key detractors from the relative performance:
• At the sector level, industrials and information technology detracted from performance. • At the country level, Taiwan was the principal detractor. • Despite adopting a selective approach within the technology sector over the past few months, our stock holdings were not spared in a broad sell-down within the sector. The biggest detractor was Taiwan Semiconductor Manufacturing Company.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Feb-2022.pdfJanuary, 2022
Key contributors to relative performance:
• At the sector level, consumer discretionary and financial stocks contributed positively.
• At the country level, South Korea and Taiwan added value. • Financials broadly rallied on expectations of higher rates, following the December correction. Bandhan Bank in particular, rebounded on better-than-expected credit growth, and betterthan-feared credit costs in their latest quarterly reports. • Despite the sharp corrections in the information technology sector, with some stocks seeing corrections to the tune of 30% in the month, Taiwan Semiconductor was a notable exception as it outperformed the market.
Key detractors from relative performance: • At the sector level, health care and information technology detracted from performance. • At the country level, China was the principal detractor. • In healthcare, HutchMed China was a casualty of the biotech sell-off following the US Federal Reserve’s hawkish commentary. • Geely Automobile also detracted from performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Jan-2022.pdfDecember, 2021
GDP growth to 6.0% and kept its benchmark rate at a record low. In Korea, a rebound in services spending caused the average consumer inflation rate for 2021 to reach a decade high of 2.5%, leading the central bank to leave the door open for a further rate hike in January.
On the other hand, China (-3.2%) and Hong Kong (0.5%) underperformed the regional index. Chinese tech stocks continued to fall after the US placed several Chinese companies on investment and export blacklists. Meanwhile, a COVID-19 outbreak in Xi’an also weighed on sentiment, with chip makers Samsung Electronics and Micron Technology warning that the lockdown could affect their manufacturing bases in the area. To bolster the economy, the Chinese government cut its reserve requirement ratio (RRR) by 50 basis points, loan prime rate (LPR) by 5 basis points and signalled further stimulus measures including targeted lending to businesses and support for the housing market
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Dec-2021.pdfNovember, 2021
Key contributors to relative performance:
• At the country level, stocks in China A-shares contributed positively.
• Health food company Shandong Head Co rallied after insiders scrapped share sale plans. The company also disclosed that its production capacity for cellulose ether is now the biggest in China after recent growth plans.
• Goertek Inc, a supplier of augmented reality (AR) and virtual reality (VR) tech hardware, was also a notable outperformer due to upgraded expectations for metaverse-related sales. • Electrical power equipment company Nari Technology Co also contributed positively on the back of stronger growth prospects in grid automation, voltage source converter-based high-voltage direct current technology, and pumped storage hydropower in China.
Key detractors from relative performance:
• IndusInd Bank came under pressure in November following a management reshuffle and whistle-blower allegations in its microfinance division pertaining to ever-greening loans. The bank has initiated a full independent audit of the division and remains committed to cleaning up its balance sheet and preparing for better quality sustainable growth
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Nov-2021.pdfOctober, 2021
The ASEAN region outperformed in October. All markets saw positive returns, with Indonesia (8.3% in USD terms) and Singapore (4.2) gaining the most. The Indonesian finance ministry raised its 3Q21 GDP growth forecast to 4.5%, while the central bank extended policies to boost loan growth and consumption, seeking to bolster a recovery driven by commodity exports and border reopening. Reopening momentum also gathered pace in the rest of the region, with Singapore, Malaysia and Thailand expanding their vaccinated travel arrangements.
China (3.2%) and Hong Kong (1.3%) also ended the month higher, on expectations of Chinese policy loosening to combat an economic slowdown. China’s GDP increased by 4.9% year-on-year (YoY) in 3Q21, its slowest pace of expansion in a year. The official manufacturing Purchasing Manager’s Index (PMI) moderated to 49.2 in October from 49.6 in September, largely owing to the recent power shortages. A fresh COVID-19 outbreak and a sell-off in its property sector, fuelled by more Chinese real estate companies failing to make payments on their offshore bonds, weighed on sentiment toward month-end.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Oct-2021.pdfSeptember, 2021
The Fund outperformed the benchmark during the month in AUD terms.
Key contributors to relative performance: • At the country level, stocks in India and the Philippines contributed positively. • By sector, holdings in real estate and financials contributed to performance. • India’s Godrej Properties advanced over 50% during the month and was the largest contributor to performance. September highlighted the stark contrast in fortunes of two countries’ real estate sectors. Stocks in Chinese developers sold-off aggressively on deteriorating liquidity and sentiment brought on by the demise of China Evergrande. This contrasted with real estate stocks in India which saw strong buying interest on confirmation of pent-up demand resulting in exceptionally strong project launches.
• In the Philippines, new economy holdings AC Energy (renewables) and Globe Telecom (traditional telco with leading fintech platform) both continued to contribute to performance.
Key detractors from relative performance: • By sector, holdings in materials and health care detracted from relative performance. • At the country level, China detracted from performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-NA-Fund-Sept-2021.pdfAugust, 2021
The Fund underperformed the benchmark during the month in AUD terms.
Key contributors to relative performance:
• At the country level, stocks in the ASEAN contributed positively.
• By sector, holdings in communication services and utilities contributed to performance.
• As investors shunned North Asian internet companies that are under regulatory pressure, ASEAN and Indian new economy companies continued to do well. These included: ASEAN e-commerce and fintech firm SEA, Filipino telco Globe with its strong and fast-growing fintech business, and Indian conglomerate Reliance with its ecosystem of new retail and digital economy businesses.
Key detractors from relative performance:
• By sector, holdings in information technology and financials detracted from relative performance.
• At the country level, China was the biggest detractor.
• Shares of blood plasma company Hualan Biological detracted from performance. The company posted weak results owing to an increase in research and development and management costs of its vaccine business
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Nikko-AM-New-Asia-Fund-Aug-2021.pdfJuly, 2021
Key contributors to relative performance:
• At the country level, positions in China and India contributed positively.
• By sector, holdings in consumer discretionary and industrials contributed to performance.
• Chinese smart grid equipment maker NARI Technology benefited from higher grid spending, as well as comments from government bodies suggesting a focus on making China’s power grid more “intelligent”.
• Geely contributed strongly as the stock rallied on strong results at Volvo, as well as the set-up of joint ventures to make lithium batteries.
• Mahindra Logistics benefited from decent operating performance in a tough environment, as well as the addition of new clients in the logistics business.
Key detractors from relative performance:
• By sector, holdings in financials detracted slightly from relative performance.
• At the country level, Hong Kong was the biggest detractor.
• Baidu Inc dragged on returns, following China’s heavy-handed regulation which affected after-school tutoring businesses. Larger concerns on the risk premium underlying Chinese technology companies also weighed on performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/nnaf_fund_update-4.pdfJune, 2021
The Fund underperformed the benchmark during the month in AUD terms. Key contributors to relative performance: • At the country level, positions in the Philippines and Hong Kong contributed positively.
• By sector, holdings in materials and utilities contributed to performance.
• Oncology-focused biotech company Hutchmed China contributed to performance after one of its drugs, Savolitinib was approved in China for the treatment of chemo-intolerant NSCLC (non-small-cell lung carcinoma) patients.
• Chinese auto original equipment manufacturer, Geely, also outperformed following the roll-out of its new Zeekr brand, alongside a slight easing of concerns about chip shortages in the auto industry. Key detractors from relative performance:
• By sector, holdings in financials, health care and communication services detracted from performance. • At the country level, China and South Korea were the biggest detractors.
• Sinopharm, China’s leading pharmaceutical and medical products distributor, detracted from performance having retraced some of its gains from previous months.
• Chinese insurer, Ping An, also had a tepid month as premium growth remained elusive across the life insurance sector, with no signs yet of a post-COVID recovery
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/nnaf_fund_update-3.pdfMay, 2021
In India, stocks jumped 8.7% in USD terms in May as daily COVID-19 cases began to fall during the month, and some states, including Delhi, started easing lockdown restrictions. Fresh series of measures to support individuals and small- and mid-size enterprises rolled out by the Reserve Bank of India also boosted Indian stocks. In North Asia, stocks in Hong Kong and China turned in USD gains of 1.3% and 0.8% respectively in May.
Hong Kong stocks gained on easing worries over inflation as Beijing vowed to curb significant prices gains in the commodities market. During the month, soft domestic factory activity in China eased worries over policy tightening, while a stronger yuan boosted foreign inflows. Notwithstanding the underperformance of index-heavyweight Samsung Electronics, South Korean stocks managed to stay afloat in May with marginal gains of 0.4% in USD terms. The Bank of Korea kept monetary policy unchanged in May but hinted that it is preparing for an orderly exit from record-low level of interest rates amid the economic recovery in the country.
In Taiwan, stocks fell 1.2% in USD terms for the month, owing to a surge in domestic COVID-19 cases in the country. The tightening of COVID-19 control measures in Taipei and several other neighbouring cities, and the underperformance of global technology (tech) stocks also weighed down Taiwanese stocks in May.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/nnaf_fund_update-2.pdfApril, 2021
Despite renewed COVID-19 fears due to a surge in cases in India and several other Asian countries, regional Asian equities held on to gains for the month, which saw the MSCI AC Asia ex Japan Index rising 2.5% in US dollar (USD) terms. Within the region, Taiwan, Malaysia and Singapore were the best performers (as measured by the MSCI indices in USD terms), while Thailand and India were the worst performers.
In Taiwan, stocks jumped 7.7% in USD terms in April, boosted by the strong performance of electronic and export-oriented stocks amid growing confidence in the global economy. Taiwanese stocks were also lifted by the country’s solid 1Q21 GDP, which grew 8.16% from a year earlier; that’s the fastest pace in more than a decade. In other news, index heavyweight and chip manufacturer Taiwan Semiconductor Manufacturing Company posted a 19.4% rise in 1Q21 net profit due to strong chip demand.
In South Korea, stocks tracked the regional upswing and turned in USD gains of 3.0% in April. South Korea’s 1Q21 GDP grew at 1.8% year-on-year (YoY), beating market consensus. Index heavyweight and chip giant Samsung Electronics reported a 46% rise in firstquarter net profit, owing to strong profitability at its mobile business.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/nnaf_fund_update-1.pdfDecember, 2020
The Fund outperformed the benchmark during the month in AUD terms.
Key contributors to relative performance:
Stock selection in consumer discretionary, financials and information technology, especially in north Asia contributed outperformance. The largest contributor was Geely, as the Chinese automaker with a technological edge in electric vehicle (EV) reported strong sales in its premium Lynk & Co brand. There were also reports of the company’s plan to restart its negotiation with Volvo on merging the two companies after Geely completes its listing in China in 2021.
Chinese EV capital equipment company Wuxi Lead Intelligent Equipment was also a strong performer, as its main client Contemporary Amperex Technology Co. Limited, announced upward revisions to its capex plans.
Key detractors from relative performance:
Holdings in consumer staples and industrials also detracted. Not holding some large information technology-related benchmark stocks also detracted. Not owning big benchmark stocks like Baidu, Pinduoduo and Xiaomi detracted slightly from performance as these names performed well. Reopening-themed stocks such as Shanghai International Airport, also gave back some gains from a strong November.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/nnaf_fund_update.pdfasset_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
manager_contact_details: Array
ticker: TGP0006AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.yarracm.com/tools-and-resources/literature-centre/fund-commentaries/
fund_features:
Investment objective of Nikko AM New Asia is to achieve medium-to-long term capital growth through exposure to companies listed on the Australian Securities Exchange. In doing so, the aim is to outperform the S&P/ASX 200 Accumulation Index over rolling 3-year periods.
- Fund will usually hold approximately 40 – 60 different securities.
- The main investments of the Fund will include: • securities listed on stock exchanges across Asia, excluding Japan, but including Hong Kong, Singapore, China, South Korea, Taiwan, Malaysia, Thailand, Indonesia, Philippines, India, Pakistan and Sri Lanka.
structure: Managed Fund