05 Nov 2024
Phillip Fund Focus November 2024

MARKET OUTLOOK The MSCI Asia Pacific Ex-Japan Index (-4.9%) severely underperformed the MSCI World Index (-2.0%) in October, as China markets reeled back from their September rally, while a last-day pullback dragged down other regions. Japan (+3.1%) managed to close in the green for the month despite the Liberal Democratic Party’s (LDP) loss in the recent snap elections, which cost them their outright majority for the first time in 15 years. Taiwan’s (+2.7%) GDP grew faster than expected at 3.97% in 3Q24 driven by strong demand for smartphone and AI chips. Thailand (+1.2%) also managed to outperform most global peers thanks to upbeat growth guidance from government figures. India (-6.2%) was the month’s biggest loser as foreign funds flowed out of India on account of concerns over high valuations, presumably leading to reallocation into other markets. HK (-3.9%) and China (-3.2%) stumbled this month after overextending by approximately 20% gain in September, as investors cooled down and scrutinized the efficacy of the latest announced stimulus plans.

22 Oct 2024
Phillip Fund Focus October 2024

Chinese equities had a good run in September but the rally in Chinese markets lost momentum when trading resumed following a week-long holiday, as a briefing from the National Development and Reform Commission offered limited information on additional stimulus measures. For a more sustained recovery, we believe policymakers need to actively leverage fiscal policies and implement strategies to purchase excess housing inventory more decisively. In addition to that, the country must still tackle structural issues through both substantial fiscal measures and reforms. An upward revision of earnings is also a catalyst that is still on the horizon.

23 Sep 2024
Phillip Fund Focus September 2024

The market is expecting a Federal Reserve rate cut in September and is pricing in 75bps to 100bps rate cut by year-end. Additionally, we will keep an eye on US election developments, as elevated uncertainty leading up to the November election and unexpected campaign events in late 3Q and 4Q could create market volatility, impacting sector positioning and security selection. In the long term, we believe the US market remains strong, supported by the resilience of corporate earnings. Additionally, the deeply discounted valuations in the Chinese market present potential for a mean reversion trade.

06 Aug 2024
Phillip Fund Focus August 2024

The MSCI Asia Pacific Ex-Japan Index (-0.2%) remained flat in July, dragged by weak performance in key markets while the MSCI World Index (+1.7%) raced ahead. India (+3.9%) advanced further, continuing its post-election rally and bolstered by investor confidence as 70% of urban Indians are positive on the national trajectory according to a survey by Ipsos. Singapore (+3.5%) came in at a strong second as banking and telco stocks registered strong single-digit gains during the month. Philippines (+3.2%) on the other hand experienced a much-needed reversal, breaking a four-month streak of consecutive losses as property sector stocks posted double-digit gains. Taiwan (-3.6%) cooled off in July after a spectacular 8.8% rally in June, amidst reports that the United States was considering tighter curbs on exports of advanced chips to China. Hong Kong (-2.1%) slid further down as investors remained skeptical on a market revival following China Third Plenum in mid-July. Japan (-1.2%) pulled back slightly as rate expectations in the US fuelled a tactical rotation into US growth stocks and small cap equities.

23 Jul 2024
Phillip Fund Focus July 2024

The US market has been reaching new highs since May 2024, driven by renewed hopes for early rate cuts following the latest inflation report. The market is now expecting the first rate cut in September, a view we agree with. China market remains attractive, buoyed by the government commitment to supporting the property sector. There is also potential for a mean revaluation trade, given China’s ultra-depressed valuations. The recent correction presents a trading opportunity. Investors are closely monitoring the latest developments in the HamasIsraeli conflict, Iran-Israel tension, the Russia-Ukraine conflict, global inflation trends, US 10-year bond yields, global growth projections, worldwide interest rate trajectories, as well as major elections (in France, UK, US, etc). We remain cautiously optimistic on global equities, favoring Hong Kong/China for valuations and the US for strong earnings quality.