United Asia Pacific Infrastructure Fund

Transcription

1 United Asia Pacific Infrastructure Fund Semi Annual Report for the half year ended 30 June 2017

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3 MANAGER UOB Asset Management Ltd Registered Address: 80 Raffles Place UOB Plaza Singapore Company Registration No. : Z OPERATIONS ADDRESS 80 Raffles Place #06-00, UOB Plaza 2 Singapore Tel: DIRECTORS OF UOB ASSET MANAGEMENT Lee Wai Fai Cheo Chai Hong Goh Yu Min Thio Boon Kiat TRUSTEE State Street Trust (SG) Limited 168 Robinson Road #33-01, Capital Tower Singapore CUSTODIAN / ADMINISTRATOR / REGISTRAR State Street Bank and Trust Company, acting through its Singapore Branch 168 Robinson Road #33-01, Capital Tower Singapore AUDITORS PricewaterhouseCoopers LLP 8 Cross Street #17-00, PWC Building Singapore SOLICITORS TO THE MANAGER Tan Peng Chin LLC 30 Raffles Place #11-00, Chevron House Singapore SOLICITORS TO THE TRUSTEE Shook Lin & Bok LLP 1 Robinson Road #18-00, AIA Tower Singapore

4 A) Fund Performance 3 mth % Growth 6 mth % Growth 1 yr % Growth 3 yr Ann Comp Ret 5 yr Ann Comp Ret 10 yr Ann Comp Ret Since Inception 17 October 2006 Ann Comp Ret Fund Performance/ Benchmark Returns United Asia Pacific Infrastructure Fund Benchmark Source: Note: Lipper, a Thomson Reuters Company. The performance returns of the Fund are in Singapore dollar based on a NAV-to-NAV basis with dividends and distributions reinvested, if any. The benchmark of the Fund: The performance of the Fund will be measured against an absolute return benchmark of 6% per annum. For the six months ended 30 June 2017, the net asset value of the Fund increased 4.92% compared with a 2.95% increase in the absolute return benchmark in Singapore dollar terms. The broad Asia Pacific markets increased 10.3% with Asia Pacific Industrials increasing 7.4%, Materials rising 7%, Utilities rising 6.4% and Telecommunication Services rising 5.5%. The Energy sector was relatively subdued, inching up by 1.4%. The Fund benefited from holdings in Airtac International that derives most of its revenues in China one of the largest and fastest growing automation markets globally. Likewise, Maruwa Unyu Kikan which is one of the domestic logistics players in Japan contributed positively to the Fund s performance. The Fund also gained from its exposure into Hong Kong based power tools manufacturer Techtronics and the Indian grid monopoly Power Grid. The Fund also benefited from strong defensive franchises with very attractive dividend yields such as Singapore Telecom and PT Telekom. However, the Fund s holdings in Australian natural gas explorer Sino Gas, India s coal monopoly player Coal India and Japan s leading car parking player Park24 detracted from performance. Key contributors to performance included: Airtac International (Taiwan), Maruwa Unyu Kikan Co. Ltd (Japan), Techtronic Industries (Hong Kong), Power Grid Corp of India (India) and PT Telekom (Indonesia). Key detractors include: Sino Gas & Energy (Australia), Coal India (India), Park24 (Japan) and Inpex (Japan). As at end 30 June 2017, the Fund had the following regional asset allocation: Japan (22.77%), India (12.65%), Taiwan (7.54%), Indonesia (6.84%), Singapore (6.72%), Australia (6.00%), others (11.06%) and the remainder in cash (26.42%). Economic and Market Review The Asia Pacific equity markets advanced 10.3% in Singapore dollar terms in the six-month period under review, outperforming global equity markets. In terms of regional performance, Asia ex-japan was the best performing region rising 16.9% while Australia and Japan both lagged, rising less than 5%. In terms of sector performance, the InformationTechnology sector was the sole outperformer while the rest of the sectors lagged the index. Asia ex-japan markets rallied in the first half of the year, driven by strong earnings particularly in InformationTechnology. The softening of President Trump s trade protectionism rhetoric triggered a re-rating of Asian exporters. Concerns of Sino-US tensions faded after a successful meeting between President Trump and President Xi. On the geopolitical front, markets brushed off concerns on North Korea s missile launches and welcomed the election of Pro-EU French President Macron. -2-

5 A) Fund Performance (continued) Economic indicators in Asia ex-japan were generally strong over the period. In India, manufacturing activity strengthened as growth concerns from demonetisation receded. However, private capex remains subdued, having declined from peak of 17.3% in FY2008 to just 6.4% in FY2017. North Asian exports also benefited from a global growth upcycle. Korea and Taiwan manufacturers kick-started a new production cycle of mobile handsets launches while China s exports also accelerated more than expected on strong demand globally. North Asia drove the bulk of performance in the Asia ex-japan region. The China market outperformed amid better than expected economic growth, improvement in the Purchaser s Price Index (PPI), strong earnings and renminbi stability. MSCI s announcement that the country s A-shares would be added to its emerging market index also improved investor sentiment towards the Chinese market. However, credit growth in China continues to run ahead of GDP growth, with total debt to GDP rising to 268% in 2016 from 156% in 2008, driven by the state-owned-enterprises (SOEs). The Hong Kong market was amongst the best performers driven by financial and real estate stocks. On the other hand, Taiwan s gains were driven by optimism ahead of the Apple iphone 8 launch. South Korea was the strongest performer in the region despite concerns of geo-political tensions surrounding Pyongyang. The market was largely driven by strong earnings in the technology sector. The election of President Moon also helped to ease the geopolitical tension within the Korean Peninsula. Expectations of President Moon s stance on improving the country s corporate governance also resonated well with investors. South East Asia chalked up decent returns even as the region underperformed the North Asian markets. Within ASEAN, Singapore was the top performer due to cheap valuations and better economic growth. Indonesia was next as stronger resource prices, higher growth and improved foreign reserves boosted confidence. Standard and Poor s upgrade of Indonesia s credit rating to investment grade status in May 2017 also led to more Fund inflows. Malaysia did fairly well after posting strong first quarter GDP growth and foreign direct investments poured in especially from China as the country expands its One Belt One Road reach. Thailand was the worst performer in the region, reversing its position as the region s star performer for 2016 after posting disappointing first quarter 2017 corporate earnings. The Philippines market also lagged after posting mixed first quarter GDP growth numbers and weaker corporate earnings. The current account slipped to a deficit and overseas remittances contracted, putting pressure on the peso. Japan underperformed, on waning interest by foreign investors that was somewhat mitigated by BOJ s ETFs buying. Last year, the Japanese market had benefitted from a weaker Yen and relatively favourable earnings revisions as corporate managers focus on improving profitability but the recent strengthening of Yen eroded much of the competitive advantage. Economic data remains soft with both retail sales and industrial production below expectations. Inflation data came in at 0.4% in June which remains below Bank of Japan s (BOJ) target. Progress on the implementation of structural reforms remains slow amidst headwinds such as an ageing population and declining labour force but incremental improvements are now being seen in corporate governance Australian equities underperformed. Domestic growth is still struggling amidst the capital expenditure cliff in the commodities sector. Economic data such as domestic private demand and industrial production remains mixed. Volatility in energy and resource prices and weakness in the currency are also adversely affecting the market s performance. The Reserve Bank of Australia (RBA) retained its dovish stance by keeping the official cash rate at 1.5% which is the lowest record historically. Outlook and Fund Strategy Since Abenomics started in 2012, the Japanese market had benefitted from a weaker Yen which boosted tourist arrivals and exports. The Fund has exposure to companies that had benefited indirectly from the increased tourist spends. In addition, the Fund also has exposure to companies in Japan that are focused on the aged population where nearly a quarter of the population are above the age of 65. Furthermore, the Fund is also exposed to companies involved in automation where we see a secular growth trend in robotics investments given the increasing tight labour market amidst a decline in the Japanese working population. India had been suffering chronic power shortages with the situation resolved in 2017 where supply growth grow stronger than the demand after reforms which took place over the years especially with the election of Modi s administration was also the first year when the capacity addition of renewables exceeded that of conventional power. Going forward, it is expected that at least half the capacity addition of power will be driven by renewables, mainly solar and wind. The Fund is invested in companies that will stand to benefit from this. -3-

6 A) Fund Performance (continued) China, a global manufacturing hub, has seen annual wages rising by more than a compounded annual growth rate (CAGR) of 15% since This has made China the world s largest and fastest growing market for industrial robots. 30% of robots globally were sold in China last year, and due to still very low penetration levels compared to the Developed Markets, we continue to expect a very strong structural growth trend for the Chinese robotics market for years to come. The Fund has investments related to this space. The Fund s investment approach continues to be driven by bottom-up stock selection. The Fund favours companies with strong free cash flow generation and a focus on growing dividends. The Fund also invests in companies with thematic growth drivers for example automation where demand penetration in emerging markets such as China remains low compared to developed markets. The Fund looks at contrarian investments for good quality companies that might be facing temporary de-rating or oversold conditions but are fundamentally strong in the longer term. Lastly, given that the benchmark of the Fund is on an absolute return basis, the Fund will hold a higher level than normal cash levels at times when market valuation becomes rich or when markets are volatile. The Fund remains focused on generating positive absolute returns, while minimizing the downside risk. -4-

7 B) Investments at fair value and as a percentage of net asset value ( NAV ) as at 30 June 2017 under review classified by i) Country Fair Value (S$) % of NAV Australia 1,050, China 608, Hong Kong 633, India 2,216, Indonesia 1,198, Japan 3,988, Papua New Guinea 308, Singapore 1,177, Taiwan 1,321, United Kingdom 387, Portfolio of investments 12,890, Other net assets/(liabilities) 4,627, Total 17,518, ii) Industry Fair Value (S$) % of NAV Consumer Discretionary 1,665, Energy 1,684, Industrials 5,786, Information Technology 120, Materials 213, Real Estate 187, Telecommunication Services 1,163, Utilities 2,069, Portfolio of investments 12,890, Other net assets/(liabilities) 4,627, Total 17,518, iii) Asset Class Fair Value (S$) % of NAV Quoted equities 12,890, Other net assets/(liabilities) 4,627, Total 17,518,

8 B) Investments at fair value and as a percentage of net asset value ( NAV ) as at 30 June 2017 under review classified by (continued) iv) Credit rating of quoted bonds C) Top Ten Holdings 10 largest holdings as at 30 June 2017 Fair Value (S$) Percentage of total net assets attributable to unitholders % POWER GRID CORP OF INDIA LTD 1,389, SINGAPORE TELECOMMUNICATIONS LTD 1,177, TELEKOMUNIKASI INDONESIA PERSERO TBK PT 984, PARK24 CO LTD 913, HOSHIZAKI CORP 821, TAIWAN SECOM CO LTD 767, MARUWA UNYU KIKAN CO LTD 673, YUEXIU TRANSPORT INFRASTRUCTURE LTD 608, AIRTAC INTERNATIONAL GROUP 553, DAIKIN INDUSTRIES LTD 548, largest holdings as at 30 June 2016 Percentage of total net assets attributable to Fair Value unitholders (S$) % SINGAPORE TELECOMMUNICATIONS LTD 1,345, OSG CORPORATION 883, PT TELKOMUNIKASI INDONESIA 854, AIRTAC INTERNATIONAL GROUP 827, POWER GRID CORP OF INDIA LTD 812, SMC CORPORATION 784, NTPC LIMITED 752, KUBOTA CORPORATION 679, PT PERUSAHAAN GAS NEGARA 650, TECHTRONIC INDUSTRIES CO LTD 598, D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June

9 D) Exposure to derivatives (continued) ii) There was a net realised gain of SGD 3,395 on derivative contracts during the financial period from 01 January 2017 to 30 June iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2017 E) Amount and percentage of NAV invested in other schemes as at 30 June 2017 Please refer to the Statement of Portfolio. F) Amount and percentage of borrowings to NAV as at 30 June 2017 G) Amount of redemptions and subscriptions for the financial period from 01 January 2017 to 30 June 2017 Total amount of redemptions SGD 2,060,963 Total amount of subscriptions SGD 116,350 H) The amount and terms of related-party transactions for the financial period from 01 January 2017 to 30 June 2017 i) As at 30 June 2017, the Fund maintained current accounts with State Street Bank and Trust Company as follows: Bank balances SGD 1,720,767 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2017 iii) Investment in Initial Public Offerings managed by UOB Group iv) As at 30 June 2017, there was no brokerage income earned by UOB Kay Hian Pte Ltd. -7-

10 I) Expense ratios $ $ Total operating expenses 399, ,025 Average daily net asset value 18,645,256 19,921,651 Expense ratio 2.14% 2.25% Note: The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore ( IMAS ). The calculation of the Fund s expense ratio at 30 June 2017 was based on total operating expenses divided by the average net asset value respectively for the year. The total operating expenses do not include (where applicable) brokerage and other transaction costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is based on the daily balances. J) Turnover ratios $ $ Lower of total value of purchases or sales 2,438,243 4,302,416 Average daily net assets value 18,177,691 19,265,641 Turnover ratio 13.41% 22.33% Note: The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of the underlying investments divided by the average daily net asset value. K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts L) For schemes which invest more than 30% of their deposited property in another scheme, the following key information on the second-mentioned scheme ( the underlying scheme ) 1 should be disclosed as well i) top 10 holdings at fair value and as percentage of NAV as at 30 June 2017 and 30 June 2016 ii) expense ratios for the financial period ended 30 June 2017 and 30 June 2016 iii) turnover ratios for the financial period ended 30 June 2017 and 30 June where the underlying scheme is managed by a foreign manager which belongs to the same group of companies as, or has a formal arrangement or investment agreement with, the Singapore manager, the above information should be disclosed on the underlying scheme. In other cases, such information on the underlying scheme should be disclosed only if it is readily available to the Singapore manager. -8-

11 M) Soft dollar commissions/arrangements UOB Asset Management has entered into soft dollars arrangements with selected brokers from whom products and services are received from third parties. The products and services relate essentially to computer hardware and software to the extent that they are used to support the investment decision making process, research and advisory services, economic and political analyses, portfolio analyses including performance measurements, market analyses, data and quotation services, all of which are believed to be helpful in the overall discharge of UOB Asset Management s duties to clients. As such services generally benefit all of UOB Asset Management s clients in terms of input into the investment decision making process, the soft credits utilised are not allocated on a specific client basis. The Manager confirms that trades were executed on a best execution basis and there was no churning of trades. N) Where the scheme offers pre-determined payouts, an explanation on the calculation of the actual payouts received by participants and any significant deviation from the pre-determined payouts -9-

12 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2017 (Un-audited) 30 June 30 June $ $ Income Dividends 130, ,512 Interest 12,115 16,316 Total 142, ,828 Less: Expenses Management fee 135, ,071 Trustee fee 3,382 3,842 Audit fee 8,407 8,454 Registrar fee 11,269 12,168 Valuation fee 11,269 12,006 Custody fee 2,989 5,328 Transaction costs 30,088 33,905 Other expenses 32,913 35,068 Total 235, ,842 Net income/(losses) (92,714) (125,014) Net gains/(losses) on value of investments Net gains/(losses) on investments 1,058, ,055 Net gains/(losses) on financial derivatives 3,395 - Net foreign exchange gains/(losses) (109,621) (302,203) 951, ,852 Total return/(deficit) for the period before income tax 859, ,838 Less: Income tax (13,880) (14,122) Total return/(deficit) for the period 845, ,

13 STATEMENT OF FINANCIAL POSITION As at 30 June 2017 (Un-audited) 30 June 31 December $ $ Assets Portfolio of investments 12,890,570 10,636,417 Receivables 29,566 55,082 Cash and bank balances 1,720,767 2,434,041 Fixed deposits 3,011,346 5,681,282 Total assets 17,652,249 18,806,822 Liabilities Purchases awaiting settlement - 3,553 Payables 133, ,696 Total liabilities 133, ,249 Equity Net assets attributable to unitholders 17,518,360 18,617,

14 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 30 June 2017 (Un-audited) 30 June 31 December $ $ Net assets attributable to unitholders at the beginning of the financial period/year 18,617,573 19,960,012 Operations Change in net assets attributable to unitholders resulting from operations 845,400 1,766,571 Unitholders contribution/(withdrawal) Creation of units 116, ,820 Cancellation of units (2,060,963) (3,333,830) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (1,944,613) (3,109,010) Total increase/(decrease) in net assets attributable to unitholders (1,099,213) (1,342,439) Net assets attributable to unitholders at the end of the financial period/year 17,518,360 18,617,

15 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Holdings at 30 June 2017 Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % By Geography - Primary Quoted Equities AUSTRALIA BRAMBLES LTD 37, , SINO GAS & ENERGY HOLDINGS LTD 5,229, , VIVA ENERGY REIT 78, , TOTAL AUSTRALIA 1,050, CHINA YUEXIU TRANSPORT INFRASTRUCTURE LTD 616, , HONG KONG POWER ASSETS HOLDINGS LTD 12, , TECHTRONIC INDUSTRIES CO LTD 77, , TOTAL HONG KONG 633, INDIA COAL INDIA LTD 56, , NTPC LTD 157, , POWER GRID CORP OF INDIA LTD 309,783 1,389, TOTAL INDIA 2,216, INDONESIA SEMEN INDONESIA PERSERO TBK PT 206, , TELEKOMUNIKASI INDONESIA PERSERO TBK PT 2,108, , TOTAL INDONESIA 1,198, JAPAN DAIKIN INDUSTRIES LTD 3, , HOSHIZAKI CORP 6, , INPEX CORP 16, , KDDI CORP 4, , KEYENCE CORP , MARUWA UNYU KIKAN CO LTD 13, ,

16 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Holdings at 30 June 2017 Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % By Geography - Primary (continued) Quoted Equities JAPAN (continued) PARK24 CO LTD 26, , SECOM CO LTD 4, , TOTAL JAPAN 3,988, PAPUA NEW GUINEA OIL SEARCH LTD 42, , SINGAPORE SINGAPORE TELECOMMUNICATIONS LTD 302,700 1,177, TAIWAN AIRTAC INTERNATIONAL GROUP 34, , TAIWAN SECOM CO LTD 185, , TOTAL TAIWAN 1,321, UNITED KINGDOM ROYAL DUTCH SHELL PLC 10, , Total Equities 12,890, Portfolio of investments 12,890, Other net assets/(liabilities) 4,627, Net assets attributable to unitholders 17,518,

17 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Percentage of total net assets attributable to unitholders at 30 June 2017 % Percentage of total net assets attributable to unitholders at 31 December 2016 % By Geography - Primary (Summary) Quoted Equities Australia China Hong Kong India Indonesia Japan Papua New Guinea Singapore Taiwan United Kingdom Portfolio of investments Other net assets/(liabilities) Net assets attributable to unitholders

18 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % Percentage of total net assets attributable to unitholders at 31 December 2016 % By Industry - Secondary Quoted Equities Consumer Discretionary 1,665, Energy 1,684, Industrials 5,786, Information Technology 120, Materials 213, Real Estate 187, Telecommunication Services 1,163, Utilities 2,069, Portfolio of investments 12,890, Other net assets/(liabilities) 4,627, Net assets attributable to unitholders 17,518,

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