personal investing } fund watch TA South East Asia Equity favours Singapore and Indonesia by Lim Siew May joutheast Asian economies S: ‘making headlines for their strong equity gains and economic growth this year. According to Standard & Poors, the Asean 5, which comprises the Philippines, Singapore, Malaysia, Indonesia and ‘Thailand, is expected to register an as another regional favourite on a longer-term basis. “With an improved ‘macro and political landscape, we believe that the country is undergoing a structural transformation,” he says, adding that tight fiscal control has kept Indonesia's deficit consistently below 2.5% of GDP. “In terms of capital expenditure, Indonesia stands ‘out as having one of the highest investment-to-GDP ratios in Asia” he says. “Also a positive is the country’s natural advantage of an abundant supply of commodity resources and average growth of 7.9% in 1H2010. TA South East Asia Equity Fund has generated 74% gains from its | inception in November 2005 to Sept ‘woe: Main theme forthe Asean region is that of increasing domestic 30, 2010, and 17.34% gains over the | _uumoton | favourable demographics” one year ended Sept 30, 2010. "Our | Onthe key risk to the Asean exposure in the cyclical sectors, management changes by its new markets, Wong says strengthening such as banking, industrial, energy | CEO, Piyush Gupta, could lead to | currencies may reduce their and material stocks, did well inan __—_better execution of its corporate | competitiveness, and a possibility environment of improving economic __ strategy” According to Wong, | of capital controls may result ina fundamentals and increasing investor __stock ideas are generated primarily disruption in trade, risk appetite” says Kelvin Wong, through the use of Lion Global filter, ‘The low growth environment in’ external investment manager for containing both fundamental and | the developed markets, particularly the fund and Lion Global Investors’ valuation screens. “We believe in | the US and Europe, are attracting ‘Malaysia and Philippines country maintaininga strong value discipline, investors to turn to Asia’ higher: specialist. and aim to buy stocksata prudent _—_—_growth outlook, Wong observes. Asat Sept 30, the fund was 97% discount to their intrinsic value” | main theme of increasing domestic invested in Southeast Asian markets) For the region, Wong favours consumption has been driving Asian ‘equities, with more than 40% | Singapore and its government's vision equities, especially in the Asean allocated to equities in the financial in defining the country asa“Global markets,” he says. “Despite Asean sector. Banks are favoured asa proxy |_ity’, “The two newly completed ‘economic growth having peaked, tothe economic cycle. Foreseeing -—~_—_integrated resorts are driving tourist growth going forward is expected to thata global economic recovery is arrivals he says, adding that recent expand at least in line with its long in place, the fund seeks to achieve -—=—=smonthly tourist arrivalshave crossed _term trend average, which is better exposure to the economic recovery, anew milestone of one million. than the global average” through an overweight investment in Although the main transformational |_—_Valuations are looking a litle cyclical, balanced by a commitment projects have already opened, there | stretched, Wong admit, but reckons to high-quality defensives. Low cash are still further phased openings | that it isnt in an unreasonable positions will be maintained, he adds. that wil be rolled out, he says. territory at this time. “With the ‘One of the fund’ top stock picks Given that the Singapore market | likelihood of an additional monetary is DBS, forits attractive valuations, has underperformed its Asean peers _|_stimulus in the developed world, ‘Wong says: “The stock is trading at this year, coupled with its relatively which will drive interest rates and adiscount toits 10-year mean,on |—--undemanding valuation, it maybe currencies in developed markets both earnings and book value bases” poised to play catch-up, he adds. lower, liquidity should continue to he says. “Moreover, the ongoing |" He also singles out Indonesia | flow into emerging market bourses” ‘40 PERSONAL MONEY . NovEMBER 2010