Tài liệu Investment Views Asia 1st quarter 2013 pptx

Current market assessmentKey interest rates Japan China Hong Kong South Korea Malaysia Thailand Equities Europe North America Pacific Bond yields, key interest rates – Upside/downside ra

Investment Views Asia

Asia – the bright spot

Dear Reader

The start of a new year is traditionally a time for crystal ball gazing We peer into the future with

a mixture of hope, anxiety and foreboding Will we stay healthy? What challenges will face us

at work? Will the world stay safe for our loved ones? We simply don’t know, of course But we are not powerless By taking sensible precautions we can make it more likely that things will turn out the way we want This also applies to VP Bank’s investment strategy We cannot change the economic realities, but we can still make sensible and rewarding investment decisions based

on a careful assessment of risks and opportunities

Economic reality in 2013 will again be rather sombre in many parts of the world Progress has been made in tackling the eurozone debt crisis, but the economic consequences of this financial debacle have left deep wounds in the affected countries and are seriously undermining the performance of the global economy World trade is stagnating, and investment growth is being stifled by uncertainty The eurozone will register zero growth in 2013, while America will feel the impact of the compromise agreement on circumnavigating the “fiscal cliff” We expect USgrowth in 2013 to lag behind the consensus forecast It is now clear that the industrialised world

is facing a succession of lean years The 2009 crisis and its economic repercussions were estimated The clean-up of public finances and the restructuring of economic models will takelonger than even the pessimists expected

under-The bright spot is Asia Here too, economic momentum is less vigorous than in the past, but the Asia-Pacific region is buoyant compared with the rest of the world Indeed, these economies are now the driving force behind global growth

This second issue of Investment Views Asia will, we hope, provide you with useful guidance whenmaking investment decisions in Asian markets Our analysts paint a mixed picture While China

is getting into its stride again thanks to massive infrastructure spending, other countries (notablyThailand) will face slower growth this year Equity market prospects vary greatly from country

to country This makes it all the more important to carry out a detailed assessment that takes due account of economic fundamentals, corporate positioning and market valuation Asia cannot betreated as a homogeneous whole Our analysis focuses on the specifics of each country and market

A new feature of this issue is the article on Australia This country deserves special attention as

an important investment destination in the Asia-Pacific region

We wish you an enjoyable read and a successful 2013

Reto Isenring

Managing Director

VP Bank (Singapore) Ltd

Current market assessment

Key interest rates

Japan China Hong Kong South Korea Malaysia

Thailand

Equities

Europe North America Pacific

Bond yields, key interest rates – Upside/downside ranges indicated by our 3–6 month absolute performance assessments:

> +50 basis points +25 basis points No change –25 basis points < –50 basis points

Equities – Upside/downside ranges indicated by our 3–6 month absolute performance assessments:

Emerging market bonds, general

Hard currency EMA

Local currency EMA

January 2013

n.a.

n.a.

1 Focus

Asian outlook | Dr Thomas Gitzel

Asia powering global growth

According to the Mayan calendar the world should have

ended on 21 December 2012 It didn’t, and it won’t end

in 2013 either Nor will the global economy, despite the

apocalyptic chanting of the gloom-mongers World

eco-nomic growth will be slow compared with the past, but we

are not facing meltdown While the industrialised nations are

unlikely to provide much stimulus in 2013, the Asian region

is becoming the central pillar of global economic growth

Industrialised economies tread water

We see no evidence of an accelerating global economy in

2013 Growth will be at about the same level as last year

Uncertainty about the eurozone debt crisis and fears of a

protracted period of macroeconomic doldrums are

discour-aging business investment At the same time most

industri-alised countries are being forced to tighten their belts This

does not apply only to the eurozone We expect the US

economy to grow by only 1–1.5% in the coming year Even

the flamboyantly successful Australian economy is facing

leaner times Confronted with a relatively high budget deficit

of 3.7% of GDP, the Australian government now intends to

put a brake on public expenditure

These negative factors are stifling world trade International

flows of goods are stagnating This is putting a serious

damper on export-driven growth in the emerging markets

Flagging exports result in weaker investment growth On

balance, the emerging markets will therefore also be feeling

the pinch Structural problems in the BRIC economies are

adding to the difficulties Russia and Brazil have relied too

heavily on the commodities boom and failed to make

neces-sary investments outside the resources sector Brazil’s

problems have been exacerbated by a massive currency

appreciation, which has seriously dented the country’s

competitiveness India, meanwhile, has sealed itself off from

inflows of international capital and now seems to be paying

the price in the form of a structural slowdown of growth

World trade

Asia still the powerhouseThus the Asian region is yet again functioning as the power-house of the global economy Healthy public finances enablegovernments in these countries to combat deceleratinggrowth by mounting large-scale public infrastructure projects.The best example is China Hard macro data in China haveshown a positive trend in recent months, with industrial out-put, investment growth and retail sales all picking up again

We expect this improvement to continue in the coming quarters We regard Chinese GDP growth of 8.5% for 2013

as realistic

The ASEAN 5 countries (Malaysia, Indonesia, Philippines,Singapore and Thailand) will also be able to accelerate,though growth rates here will remain relatively low GDPgrowth of 5.8% in 2013 looks feasible, following an estimated5.4% in 2012

World trade volume (% yoy) -20

-15 -10 -5 0 5 10 15 20 25

Asian currencies: where now for the renminbi?

Our baseline scenario for 2013 includes a further moderate

appreciation of the Chinese renminbi Further liberalisation

measures should encourage continuing high inflows of capital

and push the renminbi higher against the US dollar But this

is not a foregone conclusion The Chinese government has

often sprung surprises in the past If the economy expands

less vigorously than expected in the weeks ahead, Beijing

might decide to push down the exchange rate As the renminbi

now functions as the anchor currency of the Asian region,

a depreciation against the US dollar would pull down other

Asian currencies in its wake Monetary authorities in the

rest of Asia would hardly be inclined to accept a loss of

com-petitiveness against China

Attractive equity market valuations

Equity markets in many Asian emerging countries have

presented a much stronger picture since September Their

relative performance compared with the industrialised

countries, South America and Eastern Europe has now taken

a positive turn, and this trend looks set to continue

Above-average profit growth should ensure relative upward

momentum in these markets, while the downside is limited

due to attractive valuation ratios But Asian markets should

not be lumped together indiscriminately Investors are

advised to adopt a differentiated approach We still see the

biggest upside potential in China, where we continue to

recommend the classic H shares market even after its recent

outperformance of A shares We are also confident about the

outlook for the South Korean market, which stands to benefit

from Korea’s easing of monetary policy and the attractive

profit growth of various Kospi heavyweights We remain

cautious towards Malaysia and Indonesia We also see risks

in Australia, which we cover for the first time in this issue

Here we have a clear preference for mining over banks

Australia Indonesia

South Korea Malaysia

Hang Seng China Enterprises 80

85 90 95 100 105 110 115 120 125

Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12

Selected products Asia

Actively managed funds

Emerging markets – equities

VP Bank Fund Selection Emerging Markets MSCI Emerging Markets Index LI0020062001 USD 1,866.29 no 1.62 1.87

Thames River Global Emerging Markets MSCI Emerging Markets Index IE00B1FGDG68 USD 15.16 no 2.08 2.57

Emerging markets – fixed income

Asia – equities

VP Bank Fund Selection Emerging Asia MSCI Emerging Asia Index LI0014803600 USD 2,498.07 no 1.91 2.00

Asia – fixed income

Aberdeen Asian Debt Local Currency short term iBoxx Asia ex Japan Sovereign Index LU0094548533 USD 7.01 no 1.29 0.46

Exchange traded funds (ETFs)

Emerging markets – equities

db x-trackers - MSCI Emerging Markets MSCI Emerging Markets LU0455009778 USD 4.20 Derivative 0.65 2.94

Asia – equities

Asia – fixed income

iShares J.P Morgan Asia Credit J.P Morgan Asia Credit (USD) SG2D32970329 USD 10.78 Optimised 0.3 0.75 iShares Barclays Capital Asia High Yield Barclays Asia High Yield (USD) SG2D83975482 USD 11.21 Optimised 0.5 0.63

1 as of 03/01/2013

2 Countries

Turnaround accomplished

China’s GDP growth decelerated from 7.6% year on year in

the second quarter to 7.4% in Q3, but the latest data indicate

that a rebound is now under way This positive trend looks

set to gather strength in the first half of 2013 The mammoth

infrastructure projects initiated by the Chinese government

will take full effect in the months ahead Consumers are also

showing more confidence again Retail sales should

there-fore gain momentum All in all, a GDP growth rate of 8.5% in

2013 seems realistic

Unpredictable renminbi

The renminbi has appreciated strongly against the US dollar

since last summer, chalking up a net gain of over 3% Recent

months have seen a sharp rise in the flow of capital into

Asia as the Fed, ECB and Bank of Japan have flooded their

markets with liquidity

The Bank of China has done nothing to curb the renminbi’s

advance Its currency reserves have stayed almost unchanged

for over a year now Thus the renminbi’s performance is

in-creasingly being determined by market forces Our baseline

scenario sees a continued appreciation It should not be

forgotten, however, that the exchange rate is susceptible to

manipulation by the Chinese government as an instrument

of economic policy

Chinese exchange rate

China / Hong Kong

deval-of its range, reflecting vigorous inflows deval-of foreign capital

In view of the subdued inflation risk in Hong Kong, we believe that the Hong Kong dollar’s peg to the US dollar will be maintained

Chinese equities still cheapThe Chinese equity market has continued to post a mixedperformance in recent months, with a marked divergence between Hong Kong and the mainland Hong Kong compa-nies (Hang Seng 35) have advanced by over 20% since the start of June, while the hard-to-access mainland Chinamarket (CSI 300) has been in continuous retreat since mid-year Current low valuations (absolute and relative) and the gradual levelling out of downward profit revisions arefundamental arguments in favour of a long-term investment

in Chinese equities The macro turnaround could provide the trigger for a renewed equity market advance Investorsshould focus on mainland shares with a primary listing inHong Kong (China Enterprise Index) This market is trading at

a price/earnings ratio of 8.8, around 40% below its historicalaverage It is also cheaper than the Hang Seng and CSI

USD/CNY 6.0

•This is a good moment to move into Chinese equities

Selected products China / Hong Kong

Recommended stocks

(millions) 2013E 2

China Communications Construction Construction & engineering CNE1000002F5 HKD 7.64 113,921 8.6 2.1

Industrial & Commercial Bank of China Commercial banking CNE1000003G1 HKD 5.81 1,880,504 7.0 5.6

Actively managed funds

Exchange traded funds (ETFs)

Central bank key interest rate

Stabilisation in China should have positive impact

Singapore’s growth rate has continued to sag This city state,

with its heavy reliance on exports, is a victim of the faltering

global economy As no significant improvement in the world

economic situation is likely until mid-year, Singapore’s

economic momentum will be very meagre compared with

previous years Accelerating growth in China should have

a stabilising effect, but the Chinese government’s stimulus

measures are directed primarily at the domestic economy

Thus the impact on Singapore, though beneficial, will not

be on the same scale as in 2009 We are predicting GDP

growth of 3% for Singapore in 2013

Monetary Authority of Singapore sticks to course

Many observers had expected the Singapore dollar to lose

ground against the US dollar in reaction to Singapore’s

lacklustre economic growth But our forecast of continuing

SGD strength has proved correct The Monetary Authority

of Singapore (MAS) is still battling with a relatively high

inflation rate, which was running at 3.6% in November No

improvement is in sight Full employment is keeping wage

growth at a high level, and the inflation situation is now

being aggravated by rising food prices Against this

back-ground we expect the MAS to continue to prefer a stronger

exchange rate

Long-term Singapore government bonds will probably

continue to track US Treasuries We regard a substantial

rise in yields as unlikely

Equities: high valuations and downturn in profit

revisions

The Singapore equity market’s strong correlation with the

global market resulted in a period of relative weakness

after the start of August Recent weeks have seen some

stabilisation, but the time is not yet ripe for buying into

this market

A particular concern is the elevated level of valuation ratios.With a price/earnings ratio of 12.9 for the next 12 months,Singapore is slightly below its historical average but remainsrather expensive in absolute terms compared with the rest

of Asia and the global average

Singapore: equity market valuation

Singapore had previously been able to buck the trend wards downward profit revisions, but this immunity nowappears to be over The analyst community is currently fore-casting profit growth of 4.8% in 2013 – a figure that hardlyjustifies the market’s high price/earnings ratio

to-We are sticking to our neutral assessment of Singapore, thoughhigh valuations and downward profit revisions suggest that thebalance of probability is slightly on the downside

F M A M J J A S O N D J F M A M J J A S O N D

0 2 4 6 8 10 12 14 16

•Singapore is being negatively affected

by its openness to the global economy The consensus growth forecast for the year ahead looks overoptimistic

•The Monetary Authority will stick to its present course and continue to favour astrong exchange rate

•The Singapore stock market is highly correlated with global equity markets

Selected products Singapore

Recommended stocks

(millions) 2013E 2

Actively managed funds

Equities

Fixed income

Exchange traded funds (ETFs)

Source: VP Bank; Oxford Economics

Focus on elections

The mainstay of the Malaysian economy this year will be

domestic demand Capital spending will provide major

impetus, while tax cuts for low incomes will underpin private

consumption Net exports, however, will have a negative

effect on GDP growth, reflecting the becalmed global economy

Attention is focusing on the upcoming parliamentary elections

A date for the ballot has not yet been set, but it has to be

held no later than June The outcome is uncertain, but we

expect the ruling National Front coalition to be confirmed in

office If that happens, the process of budget consolidation

will continue Reductions of high government subsidies

will probably be near the top of the agenda We regard GDP

growth of 4.2% for 2013 as a whole as realistic

Inflation likely to rise

We believe the Malaysian government will stick to its policy

of subsidy reduction, notably in the sugar and oil sectors

This, together with the recent jump in agricultural prices,

suggests an acceleration of inflation The Central Bank of

Malaysia is expected to keep its key rate steady at 3% for

the time being In view of the robust economy, we forecast

a further gradual appreciation of the ringgit

Equities: high valuation and weak performance

Despite the weak long term performance of Malaysian

equi-ties the market has recovered significantly in recent weeks

However, investors should not be tempted to move into

this extremely defensive and somewhat to move into this

extremely defensive and somewhat illiquid market

Relative performance of Malaysian equities

Malaysian equities are fairly valued compared with their historical average, but the (absolute) premium over otherAsian countries is an anomaly that cannot be explained away by differences in long-term profit growth Profit forecasts are being continuously downgraded, and any investment decision should be postponed until this processlevels out When that will happen is hard to say Profit forecasts for 2013 have already been pruned by 3% since last July

Like most Asian emerging markets, Malaysia is interesting onthe basis of its long-term growth outlook and as a portfoliodiversifier But there are much more attractive markets else-where in Asia

Dec

10 Feb11 Apr11 Jun11 Aug11 Oct11 Dec11 Feb12 Apr12 Jun12 Aug12 Oct12 Dec12

•Unlike the economy, Malaysia’s equity market

is rather domestically oriented Shares arenow expensive

Selected products Malaysia

Recommended stocks

(millions) 2013E 2

Actively managed funds

Exchange traded funds (ETFs)

Central bank key interest rate

Trade deficit

Indonesia’s economic growth last year was in line with our

expectations Performance was dynamic compared with

most of Asia An estimated GDP growth rate of 6.2% in 2012

makes Indonesia one of the fastest-growing economies in

the world All the signs are that this momentum will be

main-tained Rapid investment growth and strong private

con-sumption are the mainstays of expansion Foreign trade, by

contrast, has been extremely disappointing, with nominal

exports suffering massive falls since spring 2012 This partly

reflects the softness of global demand Another factor

was the failure of palm oil and coal to recover from the price

collapse in September These commodities are important

components of Indonesia’s export effort As import growth

remained relatively robust, the merchandise trade balance

was in the red Thus the current account is now in deficit

again for the first time since the Asia crisis in the late 1990s

We expect little change in the fundamental macro situation

this year GDP growth in 2013 should be on levels seen in

2012

Investors expected to favour rupiah

The Indonesian rupiah continued to backtrack in 2012,

shed-ding 7% of its value against the US dollar The Indonesian

central bank is already intervening on the forex markets to

head off a further retreat The appreciation that we forecast

has not yet materialised, but we expect to see a turnaround

in 2013 Stable economic growth and interest rate hikes

argue for appreciation Moreover, the rupiah has ground

to make up against other Asian currencies, some of which

have posted significant gains We expect investors to focus

on this upside potential in 2013 and to take long positions

in the rupiah The Indonesian central bank will probably

continue to raise its key interest rate step by step, but

long-dated Indonesian government bonds will largely move

side-ways in the wake of US Treasuries

Equity market valuation: Indonesia vs other markets

Equities: high valuations and structural headwindThanks to its strong domestic orientation, the Indonesian equity market has not been affected by the prevailing uncer-tainty about global economic growth in recent months This

is also reflected in the fundamentals Price/earnings andprice/book ratios are very high compared with other Asianmarkets and also well above the historical average At thesame time, earnings revisions and reported profit growth aretrending downwards Sales growth is extremely buoyantcompared with other countries, but rising costs (due mainly

to the hike in the minimum wage) will prevent this fromtranslating fully into higher profits The increased minimumwage will give a further boost to already solid consumerspending Shares in the consumer goods and retail sectorswill benefit from this, though the upside potential is limited

by already high valuation ratios On the other hand, higherwage costs are squeezing margins in manufacturing compa-nies and the energy sector Energy companies are also having

to cope with a steep fall in the price of coal

We regard the opportunity/risk ratio of the Indonesian equitymarket as unattractive in view of elevated valuations and thegenerally negative impact of the higher minimum wage.Indonesia

13.9 12.8 10.5 9.8 10.1

11.9

3.0 1.3 1.0 1.9 1.3 1.9 1.3 1.4 1.5 0

2 4 6 8 10 12 14 16

•The Indonesian rupiah is likely to appreciate

in the medium term

•The equity market is expensive, and earnings revisions and profit growth are trending downwards

•The hike in the minimum wage reduces profitability in the energy and industrialsectors

Selected products Indonesia

Recommended stocks

(millions) 2013E 2

Indo Tambangraya Megah Oil, gas & consumable fuels ID1000108509 IDR 42,650.00 47,004,880 10.2 2.6

Telekomunikasi Indonesia Persero Diversified telecom services ID1000099104 IDR 9,000.00 185,472,000 13.4 –0.6

Actively managed funds

Exchange traded funds (ETFs)

Central bank key interest rate