Lipper FundMarket Insight Reports. Singapore Fund Market Summary Month End Analysis October 31, 2005

Transcription

1 Month End Analysis

2 WHO LET THE DOGS OUT? All key fund classes under review registered negative returns and declined 2.71% on aggregate in October. Equity funds fell 3.90% following a sell-off in global bourses, with Equity Philippines (+4.52%) and Equity Japan Small- & Mid-Cap (+1.90%) being the few sectors that bucked the trend. Fixed income funds lost 0.91% as rising yields eroded bond valuations, while emerging markets debt funds also pulled back. Mixed-asset funds lost 2.27%, while money market instruments slipped 0.03%. Kenneth Koh CK Head of Research Lipper Market Performance An attempt to rebound in early October quickly fizzled as the Singapore bourse succumbed to selling pressure. The mainboard Straits Times Index tumbled more than 150 points from the month s highs to close at 2, points, down 3.83%. Property stocks in particular fell, following downgrades in earnings, and led to a 1.98% drop in the Singapore SGX All Property Index. Selected REITs, however, enjoyed a boost from the Monetary Authority of Singapore s (MAS) decision to allow companies to raise their debt level to 60% from 35%. Mid- and small-cap stocks also lost ground, with the UOB SESDAQ Index declining 1.67%. Table 1 Performance of Singapore Versus International Markets in October 2005 % Growth % Growth TR LC TR LC Price Mid LC 1M 30/09/ M 31/12/2004 Name 31/10/2005 To 31/10/2005 To 31/10/2005 Philippine PSE Composite CR 1, Nikkei 225 CR 13, Jakarta SE Composite CR 1, Dow Jones Industrial Average CR 10, Kuala Lumpur SE Composite CR DAX 30 TR 4, FTSE 100 CR 5, CAC 40 CR 4, Singapore Straits Time CR 2, ASX All Ordinaries CR 4, Korean SE KOSPI Composite CR 1, Shanghai CR 1, Thailand SET Taiwan Weighted Price CR 5, Hang Seng CR 14, Bombay SE Sensex (BSE 30) CR 7, Source: Lipper Page 1 of 12

3 Figure 1 Performance of Key Singapore Indices (% Growth in SGD) (a) For the month of October 2005 (b) For the year of 2005 Singapore SES All CR (IN) Singapore Straits Time CR (IN) Singapore UOB SESDAQ CR (IN) Singapore SES All CR (IN) Singapore Straits Time CR (IN) Singapore UOB SESDAQ CR (IN) 5 Percentage Growth Total Return, Tax Default, In LC 17.5 Percentage Growth Total Return, Tax Default, In LC Percentage Growth Percentage Growth / Days From 30/09/2005 To 31/10/ / / / Days From 31/12/2004 To 31/10/2005 The Singapore dollar rebounded against the U.S. dollar in early October and briefly touched the S$1.68 level in intra-day trade, but it subsequently fell back against the greenback. It closed the month at S$1.70 to the U.S. dollar, down 0.36%. It also depreciated by a similar magnitude against the currencies of Singapore s regional trading partners Malaysia (-0.20%) and China (-0.69%) but advanced against other major currencies such as the euro (+0.30%) and the Japanese yen (+2.34%). Table 2 Performance of the Singapore Dollar Against Key Currencies, October 2005 % Growth 1M to 31/10/2005 Australian Dollar Chinese Yuan Euro Indonesian Rupiah Japanese Yen Malaysian Ringgit Pound Sterling U.S. Dollar Source: Lipper Page 2 of 12

4 Figure 2 Movement of the Euro, U.S. Dollar, Japanese Yen, and Pound Sterling Against the Singapore Dollar (a) For the month of October 2005 (b) For the year of 2005 Euro (CU) Japanese Yen (CU) US Dollar (CU) UK Pound Sterling (CU) Euro (CU) Japanese Yen (CU) US Dollar (CU) UK Pound Sterling (CU) 1.00 Percentage Growth Total Return, Tax Default, In SGD 5.0 Percentage Growth Total Return, Tax Default, In SGD Percentage Growth Percentage Growth / / / / Days From 30/09/2005 To 31/10/ Days From 31/12/2004 To 31/10/2005 NB: An increase in the index represents an appreciation of the currency against the Sing dollar. Fund Performance Registered Funds 1 October proved to be a miserable month for Singapore-registered unit trusts. All fund classes under review registered negative returns and fell 2.71% in value on average. Equity funds in particular bore the brunt of the slump in global bourses and lost 3.90% in Singapore-dollar terms. Bond funds too were not spared and fell 0.91% in anticipation of further interest rate hikes by the U.S. Federal Reserve. The latter has raised its short-term federal funds rate 11 times since June 2004 to 3.75% in September 2005, and market watchers now expect the benchmark federal funds rate to reach 4.75% with rate hikes in November, December, January, and March. 1 Include both Authorized Schemes and Recognized Schemes that are offered for sale to retail investors. The Restricted Schemes, which can be offered only to sophisticated investors, are not reviewed. Further information on the Collective Investment Scheme (CIS) regimes can be found on the MAS Web site. Page 3 of 12

5 Table 3 Performance of Funds Registered for Sale in Singapore % Growth % Growth TR SGD TR SGD 1M 30/09/2005 1M 31/08/2005 Asset Types To 31/10/2005 To 30/09/2005 Money Market Funds e 0.08 Hedge Funds e 2.07 Bond Funds e e Protected Funds e 0.56 e Guaranteed Funds e 0.48 e Mixed-Asset Funds e 1.25 Equity Funds e 4.19 e e 2.51 e Average Source: Lipper Global Classification (excludes ETFs and REITs) e Since not all fund NAVs are reported at the same intervals, the last available price is used for performance calculations. The preceding month s figures may also be readjusted as a result. The return of mixed-asset funds came in midway between those of the equity and bond sectors, averaging minus 2.27%, while protected and guaranteed funds under review fell 0.96% and 1.42%, respectively. Money market funds slipped 0.03%. Top and Bottom Ten Fund Sectors Only eight fund categories managed to eke out positive returns among the ten top-performing sectors for October. Heading the list was Equity Philippines, which rose 4.52% on the back of a recovery in the Philippines bourse, while Equity Japan Small- & Mid-Cap appreciated 1.90%. Gains were otherwise lackluster among the other winning fund sectors, which consisted mainly of money market and short-term bond funds. All of the ten bottom-performing fund sectors for the month were equity unit trusts. Equity India and Equity Indian Sub-continent were the worst overall performers, dropping 10.41% and 10.40% in value, respectively, on the back of an 8.60% correction in the Bombay Sensex Index. The latter had hit a historical high of 8, points in the early part of the month but succumbed to strong selling pressure as investors took profits amid extended market valuations. On a year-to-date basis, however, the Indian market still remains one of the best performing global bourses, with a healthy 19.5% gain. Resource-based and commodity unit trusts also lost ground during the month with the pullback in oil prices below the US$60 mark. Funds in Equity Sector Natural Resources finished third from last, declining 8.60% in value, while Equity Sector Gold & Precious Metals fell 7.41%. Page 4 of 12

6 Figure 3 Top and Bottom Ten Fund Sectors Registered for Sale in Singapore, October 2005 (by % Growth in SGD Dollars) Equity Philippines Average (1) 4.52 Equity Japan Sm&Mid Cap Average (10) 1.90 Money Market USD Average (10) Bond GBP Corporates Average (1) Bond GBP Average (2) Bond USD Short Term Average (3) Equity Switzerland Average (8) Money Market SGD Average (5) Money Market EUR Average (2) Bond Europe High Yield Average (1) Equity Hong Kong Average (3) Equity Emerging Mkts Far East Average (5) Equity Sector Gold&Prec Metals Average (1) Equity Taiwan Average (4) Equity Emerging Mkts Europe Average (13) Equity Greater China Average (31) Equity Italy Average (1) Equity Sector Natural Resource Average (6) Equity Indian Sub-Continent Average (2) Equity India Average (18) Source: Lipper Global Classification Monthly Average Total Return (%) Equity Funds Summary At the fund level the best performing equity portfolio for the month was the OCBC Philippines Fund, which appreciated 4.52%. It was followed by a series of six funds investing in the Japanese market and Japanese Small- & Mid-Cap stocks, with the PRU Japan Smaller Companies Fund and Fidelity Funds Japan Smaller Companies in second and third positions with returns of 2.25% and 2.05%, respectively. Credible performances were also seen from the OCBC Japan Growth SGD Fund (+1.57%), the Schroder ISF Japanese Smaller Companies A Acc Fund (+1.40%), and the ABN AMRO Japan Equity A USD Fund (+1.34%). Other outperformers for the month included the Aberdeen Indonesia Equity SGD Fund, which returned 1.83% to finish in fourth position. Page 5 of 12

7 Table 4 Top and Bottom Ten Equity Funds Registered for Sale in Singapore, October 2005 Name Lipper Global % Growth Std Dev % Growth Lipper Leaders 6M 1Y 1Y 3 years Value Rnk Value Value Consistent Preservation Return Total Return OCBC Philippines Equity Philippines 4.52 e e 4 PRU Japan Smaller Companies Equity Japan Sm&Mid Cap Fidelity Funds - Japan Smaller Com Fund Equity Japan Sm&Mid Cap Aberdeen Indonesia Equity SGD Equity Indonesia OCBC Japan Growth SGD Equity Japan Leader 2 Leader ABN AMRO Switzerland Equity A CHF Equity Switzerland Schroder ISF Japanese Smaller Com A Acc Equity Japan Sm&Mid Cap Leader 4 ABN AMRO Japan Equity A USD Equity Japan Fidelity Funds - American Diversified USD Equity North America OCBC Japan SGD Equity Japan Leader 3 Leader Deutsche China Equity A SGD Equity Greater China Commerzbank Global Ener & Resources Idx Equity Sector Natural Resource SGAM Golden China USD Equity Greater China Fidelity Funds - India Focus A Equity India Aberdeen India Opportunities SGD Equity India First State Regionale India SGD Equity Indian Sub-Continent HSBC GIF Indian Equity AD Equity India Leader HSBC Indian Growth Equity India ABN AMRO India Equity A USD Equity India Deutsche India Equity A SGD Equity India Source: Lipper Conversely, sharp losses were registered among the list of underperformers, of which seven were funds investing in India and the Indian sub-continent. Ranking at the bottom of the equity table was the Deutsche India Equity A SGD Fund, which slumped 11.34%, and the ABN AMRO India Equity A USD Fund, which was down 11.10%. Several funds investing in the Greater China region were also laggards, including the SGAM Golden China USD Fund (-9.73%) and the Deutsche China Equity A SGD Fund (-9.37%). Bond and Money Market Funds Summary The month of October was without a doubt a very poor month for fixed income funds, with nearly all bond classifications finishing in the red. Long-term U.S. bond prices fell with the upward shift of the U.S. yield curve and saw the yield on the ten-year U.S. bond rising a further 23.3 basis points to % at October month-end. Page 6 of 12

8 In European markets the benchmark yield curve also showed a similar shift, with the 30-year bond rising 19.7 basis points to 3.78%. The European Central Bank has to date kept its key official interest rate for the 12-nation Eurozone unchanged at 2% and has called for vigilance in providing price stability. Figure 4 Benchmark Yield Curves for Months Ending 31 October and 30 September 2005 (a) United States (b) European Union Yld Yld mo 6mo 2yr 3yr 5yr 7yr 10yr 15yr 20yr 30yr mo 6mo 2yr 3yr 5yr 7yr 10yr 15yr 20yr 30yr QUSBMK=, Native, Yield Curve 30/09/ yr QUSBMK=, Native, Yield Curve 31/10/ yr QEUBMK=, Native, Yield Curve 30/09/ yr QEUBMK=, Native, Yield Curve 31/10/ yr Source: Reuters Meanwhile, emerging markets bonds also gave way to selling pressure. The JP Morgan Emerging Market Bond Index Plus (EMBI+) corrected 1.56% in October, after six consecutive months of gains, although a pick-up in the prices of emerging markets debt was noted at month-end. Figure 5 Performance of JP Morgan Emerging Markets and Global Bond Indices for 2005 JP Morgan EMBI+ (IN) JP Morgan Global GBI TR (IN) 10.0 Percentage Growth Total Return, Tax Default, In LC Percentage Growth / / / / / / / / / / Days From 31/12/2004 To 31/10/2005 Source: Reuters Page 7 of 12

9 Gains among the fixed income fund classifications for the month were largely muted. While the Schroder ISF Emerging Markets Debt A Acc Fund returned 0.99% to finish in first place, most of the outperformers were money market instruments as well as selected bond funds, which benefited from a stronger U.S. dollar and pound sterling, with returns ranging from 0.64% to 0.33%. Nonperformers for the month were essentially emerging markets and high-yield funds as well as euro-denominated unit trusts. Finishing at the bottom was the ABN AMRO Global Emerging Market Bond (EUR) A Fund, which lost 3.74% in value, while the Deutsche Currency SGD Fund fell 3.00% to land in the second-to-last position. Table 5 Top and Bottom Ten Bond and Money Market Funds Registered for Sale in Singapore, October 2005 Name Lipper Global % Growth Std Dev % Growth Lipper Leaders 1M 1Y 1Y 3 years Value Rnk Value Value Consistent Preservation Return Total Return Schroder ISF Emerging Mkts Debt A Acc Bond Emerging Markets Global Leader 5 ABN AMRO Interest Growth (USD) A Money Market USD Fidelity Funds - US Dollar Cash Fund Money Market USD SBGH US Dollar Reserve A Acc Money Market USD OCBC USD Money Market Money Market USD Schroder Emerging Markets Bond Bond Emerging Markets Global Fidelity Funds - Sterling Bond Fund Bond GBP Leader 5 Leader SIS International Liquidity Money Market Global 0.40 e e DBS Enhanced Income USD Bond USD Short Term Leader 2 Leader UOB Optimix Worldwide Bond Fund Bond Global Leader 5 United GEMs Portfolio SGD Bond Emerging Markets Global Leader Leader Leader HSBC GIF Global Emerging Markets Bond AD Bond Emerging Markets Global PIMCO GIS Euro Bond II H Ret Acc Bond EUR e 99 HSBC ICSGF US Dollar Rising Dragon Bond CNY e 100 Schroder ISF Global Inflation Linked Bd A Acc Bond EUR Inflation Linked Schroder Global High Yield Bond Global High Yield ING (L) Renta Fund Emer Mkt Debt (HC) P Cap Bond Emerging Markets Global e e Leader 5 Leader ABN AMRO Czech Crown Bond Bond Emerging Markets Other Deutsche Currency SGD Money Market Global ABN AMRO Global Emer Mkt Bond (EUR) A Bond Other EUR Hedged Source: Lipper e Since not all fund NAVs are reported at the same intervals, the last available price is used for performance calculations. The preceding month s figures may also be readjusted as a result. / * a closed-end fund. Page 8 of 12

10 Authorized Funds The subset of Singapore-authorized unit trusts retreated 2.55% in October, reversing the previous month s 2.24% gain. As in the broader universe of registered funds, the OCBC Philippines Fund was the best overall performer (+4.52%), while the PRU Japan Smaller Companies Fund (+2.25%) and the Aberdeen Indonesia Equity SGD Fund (+1.83%) finished in second and third places, respectively. Table 6 Top and Bottom Ten Authorized Funds in Singapore, October 2005 % Growth Std Dev % Growth Lipper Leaders 1M 1Y 1Y 3 years Name Lipper Global Value Rnk Value Value Consistent Preservation Return Total Return OCBC Philippines Equity Philippines 4.52 e e 4 PRU Japan Smaller Companies Equity Japan Sm&Mid Cap Aberdeen Indonesia Equity SGD Equity Indonesia OCBC Japan Growth SGD Equity Japan Leader 2 Leader OCBC Japan SGD Equity Japan Leader 3 Leader SGAM US Concentrated Core USD Equity North America Citi Global Financial Services Equity Sector Banks&Financial HSBC USD US Perf Plus Gth Cap Prot Protected 0.88 e e Smith Barney Select Eq Div P'folio 04 SGD Equity North America HSBC USD Top Sectors Growth Cap Prot Protected 0.65 e e Henderson Pacific Dragon Equity Asia Pacific Ex Japan HSBC Chinese Growth Equity Greater China Leader 5 Leader OCBC India SGD Equity India Deutsche China Equity A SGD Equity Greater China Commerzbank Global Ener & Res Index Equity Sector Natural Resource SGAM Golden China USD Equity Greater China Aberdeen India Opportunities SGD Equity India First State Regional India SGD Equity Indian Sub-Continent HSBC Indian Growth Equity India Deutsche India Equity A SGD Equity India Source: Lipper e Since not all fund NAVs are reported at the same intervals, the last available price is used for performance calculations. The preceding month s figures may also be readjusted as a result. Nonperformers among the authorized funds included the Deutsche India Equity A SGD Fund, which ranked last overall with 11.34%, and several other funds investing in India and the Indian Subcontinent. Several Greater China funds also had a poor showing, including the SGAM Golden China USD Fund (-9.73%) and the Deutsche China Equity A SGD Fund (-9.37%). Page 9 of 12

11 Outlook Recent macroeconomic releases in Singapore indicate some variances in the closely watched non-oil exports index (NODX) because of volatile pharmaceutical exports. While August saw a 7.1% expansion from strong pharmaceuticals numbers, September s NODX dipped 0.4% as EU shipments slowed a 3.3% decrease on a month-on-month seasonally adjusted basis. Electronics exports, which currently account for about half of the country s NODX, were nonetheless positive and continued to rise 1.7% on a year-on-year basis, providing further reassurance of a pick-up in the electronics cycle. On an aggregate basis Singapore's total trade grew 12% in September 2005, easing from the 19% increase of the previous month. Total trade reached $58 billion in the month, bringing the first nine months' total trade to $477 billion. In fund markets equity unit trusts are expected to remain volatile, although selected bourses may rebound from October s sell-off. Key emerging markets economies may see continued investor interest, while bond funds are likely to underperform, given the U.S. Federal Reserve s current hawkish stance on containing inflation and continuing measured interest rates hikes. Similarly, the Singapore bourse is expected to range trade, while investors stay on the sidelines amid rising domestic interest rates. Analysts are divided on the prospects of a year-end rally, although a possible snap election may bring cheer to the market. Recent earnings estimates indicate the benchmark index is trading at a forward price-earnings ratio of 13.89X and a dividend yield of 3.36%. Figure 6 Singapore Benchmark Yield Curves for 31 October 2005 and 30 September 2005 Yld mo 6mo 8mo 10mo 2yr 3yr 5yr 7yr 10yr 15yr QSGBMK=, Native, Yield Curve 30/09/2005 QSGBMK=, Native, Yield Curve 31/10/ yr yr Source: Reuters Page 10 of 12

12 Table 7 Market PERs and Dividend Yields of Selected Asian Bourses as of 31-Oct-05 PE FY1 PE FY2 DIVY FY1 DIVY FY2 Thailand SET Index Korean SE KOSPI Composite Index Jakarta SE Composite Index 1, Philippine SE Composite Index * 1, Taiwan Weighted Index 5, Hang Seng Index 14, Straits Times Index 2, Bombay SE SENSEX Index Kuala Lumpur SE Composite Index Nikkei 225 Index 13, Source: Reuters NB: JKSE / KOSPI and TWII based on earnings Aug 2005 and 30 Sep 2005 respectively / PSE close 28 Oct Kenneth Koh CK kenneth.koh@reuters.com -END- Reuters All Rights Reserved. This report is provided for information purposes only and all and any part of this report may not be reproduced or redistributed without the express written consent of Lipper. All information in this report is historical and is not intended to imply future performance. Under no circumstances is it to be used or considered an offer to sell, or a solicitation of any offer to buy, any security. No guarantee is made that the information in this report is accurate or complete and no warranties are made with regard to the results to be obtained from its use. Page 11 of 12

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