Affin Hwang Asset Management managing director Teng Chee Wai
KUALA LUMPUR: Affin Hwang Asset Management Bhd remains positive on Asia as a weaker US dollar environment and higher commodity prices across the board provide the uplift for Asian equities.
Its managing director Teng Chee Wai said on Wednesday the earnings revision cycle out of Asia continue to point towards strength, with earnings having been revised upwards by 5% on a three-month rolling period.
“Valuations remain attractive from a forward P/E valuation standpoint, whereby Asia ex Japan still trades at a 18.7% discount compared to developed markets. In an era of low or negative yield rates, bond yields in Asia stands as an outlier providing positive yields for bond investors,” he said at a company update briefing.
As for emerging and developed markets, he said synchronised growth across will be positive for risk assets, as a positive earnings revision cycle continue to underpin markets.
Asia remains one of the top-performers, with the MSCI Asia ex-Japan Index advancing 41.8% in US dollar terms, compared to the MSCI AC World Index which gained 21.6% year-to-date.
As for the 2018, Teng pointed out that it would be a front-loaded market, with a risk-on script continuing into the first half and investors riding on the momentum to extract as much returns as possible in this period.
“Positive sentiment in markets and the recovery in crude oil prices will help fuel the momentum and cheer on the rally. Markets remain in a sweet-spot position with positive growth, and benign inflation which has kept policy tightening at bay and created the right conditions for risk-assets to perform well,” he said.
However, Tenag cautioned that volatility could pick up in the second half, as markets adjust to a reversal of a rate-cut cycle, with global central banks expected to gradually lift interest rates and embark on their balance-sheet unwinding.
“The gradual withdrawal of monetary stimulus would be a key focal point in markets, where there would be a need to now adapt to an environment of higher rates and lower liquidity in the system,” he added.
On the plans for Affin Hwang AM, Teng said it was on track to meet its RM50bil assets under administration (AUA) target by 2018.
Its AUA grew by over RM 11 bil last year to reach RM47.3bil as at December 2017.
“We aim to sustain our growth momentum by building on our existing capabilities and knowledge-base to harness operational efficiencies within the company,” he said.
Teng added that to stay at the forefront of the industry, Affin Hwang AM will continue to expand its investment offerings including alternative asset-classes such as private equity, real estate and low-cost solutions such as ETFs.
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