United Asia Pacific Growth Fund

Transcription

1 United Asia Pacific Growth 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 Since Inception 10 yr 07 April 1995 Ann Ann Comp Comp Ret Ret Fund Performance/ Benchmark Returns United Asia Pacific Growth 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: MSCI AC Asia Pacific. For the six months ended 30 June 2017, the net asset value of the Fund advanced 11.49%, compared with a 10.33% increase in the benchmark MSCI Asia Pacific index in Singapore dollar terms. The Fund s outperformance was largely due to positive stock selection, primarily in the Financials, Materials and Industrials sectors albeit partially offset by negative sector allocation. In terms of regional allocation, the Fund benefited from its overweight position in India and underweight position in Japan although this was partially offset by underweight position in South Korea. Key contributors to performance include Alibaba (CH), Samsung (SK), Bank Rakyat (ID), Taiwan Semiconductor (TW) and Housing Development Finance (IN). Key detractors included Subaru Subaru (JP), Brambles (AU), CNOOC (CH), Platinum Asset Management (AU) and Matahari (ID). As at end June 2017, the Fund had the following sector allocation: Financials (26.00%), Information Technology (21.58%), Industrials (12.97%), Consumer Discretionary (11.12%), Materials (5.06%), Consumer Staples (5.01%), Health Care (4.00%), Utilities (3.18%), Energy (3.06%), Telecommunication Services (3.01%) and Real Estate (1.92%), with the remainder in cash (3.09%). The Fund had the following country asset allocation: Japan (28.92%), Australia (12.24%), India (11.57%), Indonesia (11.51%), China (9.34%), Taiwan (8.35%), Singapore (3.97%), Hong Kong (3.88%), Thailand (3.43%), Philippines (2.52%) and Luxembourg (1.18%), and the remainder in cash (3.09%). 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 while Australia and Japan lagged. In terms of sector performance, Information Technology 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 Information Technology. The softening of President Trump s trade protectionism rhetoric calmed market fears on 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. Economic indicators in Asia ex-japan were generally strong over the period. In India, manufacturing activity strengthened as growth concerns receded. North Asian exports also benefited from a global growth upcycle. Korea and Taiwan kick-started a new iphone product cycle of 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 boosted investor sentiment. The Hong -2-

5 A) Fund Performance (continued) 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 on Apple s iphone8 launch. South Korea was the strongest performer in the region despite concerns of geo-political tensions surrounding Pyongyang. The strong performance was 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 We believe that Asia Pacific markets continue to offer exciting investment opportunities for growth investors. Valuations for Asia Pacific equities are mostly attractive. The Fund continues to be overweight on Asia ex-japan. While growth in Asia had decelerated in recent years due to a combination of domestic and external factors, we are now seeing growth reaccelerating. Despite the recent outperformance, Asia Pacific equities valuations remain compelling. Benign inflation rates in Asia should allow central banks to remain dovish and support growth. Structural reforms such as removing oil subsidies in various oil importing countries are being implemented. Chinese policy makers continue to face a difficult challenge of reforming the economy, weeding out corruption, restraining credit growth and achieving growth targets. Against this difficult economic backdrop, the government has been easing monetary conditions, enacting various capital market reforms and announcing stimulus plans such as the One Belt One Road initiative. Notwithstanding these positive market developments, we are mindful of the challenges ahead and we will vigilantly monitor operating conditions. We remain cautious on the outlook for Australia. We expect the economy to continue to be adversely impacted by the resource capex cliff. However, we expect that the RBA will continue to adopt dovish monetary policy to counter this slowdown. This could potentially benefit yield sectors. Weakness in the Australian dollar should reduce pressure on exporters. Japan market continued to be supported by domestic pension funds and loose monetary policies by BOJ. Corporate profits which had benefitted from a weaker Yen earlier are starting to reverse with the recent strengthening of Yen. Economic data remains soft with both retail sales and industrial production below expectations. Inflation data remains below BOJ targets despite all the quantitative easing measures. Progress on the implementation of structural reforms remains slow amidst headwinds such as an ageing population and a declining labour force but incremental improvements are now being seen in corporate governance. In terms of sector allocation, the Fund is overweight on the Financials and Information Technology sectors and underweight on the Real Estate, Heath Care and Telecommunication Services sectors. -3-

6 A) Fund Performance (continued) The Fund s investment approach continues to be driven by sector allocation and bottom-up stock selection. We continue to allocate capital to high-quality, growth companies that are reasonably priced. We believe the Asia Pacific region will continue to present good investment opportunities in the years ahead. -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$) % of NAV Australia 2,000, China 1,526, Hong Kong 634, India 1,891, Indonesia 1,880, Japan 4,726, Luxembourg 193, Philippines 412, Singapore 649, Taiwan 1,364, Thailand 559, Portfolio of investments 15,840, Other net assets/(liabilities) 504, Total 16,345, ii) Industry Fair Value (S$) % of NAV Consumer Discretionary 1,818, Consumer Staples 819, Energy 500, Financials 4,250, Health Care 653, Industrials 2,120, Information Technology 3,527, Materials 826, Real Estate 314, Telecommunication Services 491, Utilities 519, Portfolio of investments 15,840, Other net assets/(liabilities) 504, Total 16,345,

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) iii) Asset Class Fair Value (S$) % of NAV Quoted equities 15,840, Other net assets/(liabilities) 504, Total 16,345, iv) Credit rating of quoted bonds N/A C) Top Ten Holdings 10 largest holdings as at 30 June 2017 Fair Value (S$) Percentage of total net assets attributable to unitholders % ALIBABA GROUP HOLDING LTD 892, TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 783, PT BANK RAKYAT INDONESIA (PERSERO) TBK. 638, PT BANK NEGARA INDONESIA (PERSERO) TBK. 600, EVOLUTION MINING LTD 552, HOSHIZAKI CORP 522, POWER GRID CORP OF INDIA LTD 519, AXIS BANK LTD 517, DAIKIN INDUSTRIES LTD 505, BROADCOM LTD 481,

9 C) Top Ten Holdings (continued) 10 largest holdings as at 30 June 2016 Percentage of total net assets attributable to Fair Value unitholders (S$) % PT BANK NEGARA INDONESIA (PERSERO) TBK. 665, PT BANK RAKYAT INDONESIA (PERSERO) TBK. 637, POWER GRID CORP OF INDIA LTD 624, EVOLUTION MINING LTD 475, TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 454, AXIS BANK LIMITED 439, ASTELLAS PHARMA INC 430, HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED 402, CNOOC LTD 385, SAMSUNG ELECTRONICS CO LTD 382, D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2017 N/A ii) There was a net realised loss of SGD 3,478 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 N/A 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 N/A G) Amount of redemptions and subscriptions for the financial period from 01 January 2017 to 30 June 2017 Total amount of redemptions SGD 1,005,912 Total amount of subscriptions SGD 157,694-7-

10 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 488,701 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2017 N/A iii) Investment in Initial Public Offerings managed by UOB Group N/A iv) As at 30 June 2017, there was no brokerage income earned by UOB Kay Hian Pte Ltd. I) Expense ratios $ $ Total operating expenses 278, ,676 Average daily net asset value 15,881,984 15,488,549 Expense ratio 1.76% 1.77% 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 5,397,124 5,920,090 Average daily net assets value 16,015,032 14,937,131 Turnover ratio 33.70% 39.63% 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 N/A -8-

11 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 N/A ii) expense ratios for the financial period ended 30 June 2017 and 30 June 2016 N/A iii) turnover ratios for the financial period ended 30 June 2017 and 30 June 2016 N/A 1 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. 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 N/A -9-

12 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2017 (Un-audited) 30 June 30 June $ $ Income Dividends 236, ,122 Interest 87 5 Total 236, ,127 Less: Expenses Management fee 79,367 74,478 Trustee fee 2,972 2,979 Audit fee 9,247 9,298 Registrar fee 7,490 7,490 Valuation fee 9,920 9,310 Custody fee 3,545 6,616 Transaction costs 40,620 39,948 Other expenses 36,900 31,174 Total 190, ,293 Net income/(losses) 46,241 28,834 Net gains/(losses) on value of investments Net gains/(losses) on investments 1,742,119 (808,845) Net gains/(losses) on financial derivatives (3,478) - Net foreign exchange gains/(losses) (19,562) (10,168) 1,719,079 (819,013) Total return/(deficit) for the period before income tax 1,765,320 (790,179) Less: Income tax (36,652) (26,354) Total return/(deficit) for the period 1,728,668 (816,533) -10-

13 STATEMENT OF FINANCIAL POSITION As at 30 June 2017 (Un-audited) 30 June 31 December $ $ Assets Portfolio of investments 15,840,609 15,046,544 Receivables 93,102 39,817 Cash and bank balances 488, ,538 Total assets 16,422,412 15,550,899 Liabilities Payables 77,322 86,259 Total liabilities 77,322 86,259 Equity Net assets attributable to unitholders 16,345,090 15,464,

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 15,464,640 16,210,278 Operations Change in net assets attributable to unitholders resulting from operations 1,728, ,718 Unitholders contribution/(withdrawal) Creation of units 157, ,241 Cancellation of units (1,005,912) (1,826,597) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (848,218) (1,389,356) Total increase/(decrease) in net assets attributable to unitholders 880,450 (745,638) Net assets attributable to unitholders at the end of the financial period/year 16,345,090 15,464,

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 AUSTRALIA & NEW ZEALAND BANKING GROUP 15, , BRAMBLES LTD 20, , CSL LTD 1, , EVOLUTION MINING LTD 217, , MAGELLAN FINANCIAL GROUP LTD 9, , REGIS RESOURCES LTD 68, , TOTAL AUSTRALIA 2,000, CHINA ALIBABA GROUP HOLDING LTD 4, , ANTA SPORTS PRODUCTS LTD 42, , BAIDU INC 1, , TOTAL CHINA 1,526, HONG KONG CNOOC LTD 188, , TECHTRONIC INDUSTRIES CO LTD 55, , TOTAL HONG KONG 634, INDIA AXIS BANK LTD 47, , BHARAT PETROLEUM CORP LTD 15, , EMAMI LTD 7, , HOUSING DEVELOPMENT FINANCE CORP 13, , POWER GRID CORP OF INDIA LTD 115, , TOTAL INDIA 1,891, INDONESIA MATAHARI DEPARTMENT STORE TBK 258, , PT BANK NEGARA INDONESIA (PERSERO) TBK. 880, , PT BANK RAKYAT INDONESIA (PERSERO) TBK. 405, ,

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 INDONESIA (continued) TELEKOMUNIKASI INDONESIA PERSERO TBK PT 564, , TOTAL INDONESIA 1,880, JAPAN ALPS ELECTRIC CO LTD 5, , DAIKIN INDUSTRIES LTD 3, , GLP J-REIT , GMO INTERNET INC 7, , HOSHIZAKI CORP 4, , JAPAN HOTEL REIT INVESTMENT CO , JAPAN TOBACCO INC 4, , KAO CORP 3, , KOSE CORP 1, , MARUWA UNYU KIKAN CO LTD 4, , NIPPON TELEGRAPH & TELEPHONE CORP 3, , PARK24 CO LTD 8, , RAKUTEN INC 24, , SANTEN PHARMACEUTICAL CO LTD 8, , SECOM CO LTD 1, , SHIONOGI & CO LTD 3, , SUMITOMO MITSUI FINANCIAL GROUP 5, , SUZUKI MOTOR CORP 2, , TOKYO ELECTRON LTD 1, , TOTAL JAPAN 4,726, LUXEMBOURG SAMSONITE INTERNATIONAL SA 33, , PHILIPPINES METROPOLITAN BANK & TRUST CO 172, ,

17 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 SINGAPORE BROADCOM LTD 1, , SINGAPORE TELECOMMUNICATIONS LTD 43, , TOTAL SINGAPORE 649, TAIWAN AIRTAC INTERNATIONAL GROUP 12, , LARGAN PRECISION CO LTD 1, , SILICON MOTION TECHNOLOGY CORP 2, , TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 83, , TOTAL TAIWAN 1,364, THAILAND KASIKORNBANK PCL - FOREIGN 21, , THE SIAM COMMERCIAL BANK PCL 61, , TOTAL THAILAND 559, Total Equities 15,840, Portfolio of investments 15,840, Other net assets/(liabilities) 504, Net assets attributable to unitholders 16,345,

18 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 Luxembourg Korea Malaysia Philippines Singapore Taiwan Thailand Portfolio of investments Other net assets/(liabilities) Net assets attributable to unitholders

19 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 1,818, Consumer Staples 819, Energy 500, Financials 4,250, Health Care 653, Industrials 2,120, Information Technology 3,527, Materials 826, Real Estate 314, Telecommunication Services 491, Utilities 519, Portfolio of investments 15,840, Other net assets/(liabilities) 504, Net assets attributable to unitholders 16,345,

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