JOM SILKKITIE ASIA EQUITY INVESTMENT FUND Monthly Report April 2018

Transcription

1 JOM Silkkitie Asia Equity Investment Fund s NAV was at the end of April, so the performance during the month stood at +2.03%. Since fund inception (31 st July 2009) the NAV has increased by %, thus the annual performance has been %. In April, the cause of capital market stress shifted from trade war concerns to the US 10-year bond yield, which exceeded the psychologically important 3 percent level momentarily. For this reason, many emerging markets with foreign investors experienced more or less severe corrections. In Asia, the biggest sell-offs were seen in the Southeast Asian countries, such as Indonesia (-3.14%), the Philippines (-2.01%) and Vietnam (-10.58%), where institutional investors still have relatively weak buffers compared to e.g. Thailand and Malaysia. Also, countries with current account deficit, such as the Philippines and Indonesia, are more vulnerable when foreign investors are selling their holdings as the so called external risks increase. On the other hand, we believe that especially in Indonesia the lucrative valuations and cyclical growth are slowly beginning to attract foreign capital back to the market. JOM SILKKITIE, NET ASSET VALUE (30 April 2018) Fund size meur Number of fund units Inception date Last month s performance +2.03% Performance since inception % Annualised performance since inception % Accumulated management fee* 0.40% Accumulated performance fee* 0.00% Accumulated custodian fee* 0.05% Net investment position (prior to subscriptions on ) 94.7% Volatility** 11.3% Portfolio turnover 267.2% Name: JOM Silkkitie Fund (UCITS) Portfolio Manager: Juuso Mykkänen Custodian: SEB. Helsinki branch Benchmark index: No official index Profit sharing: The Fund has only accumulating units Fund rules last confirmed: OVERVIEW OF THE FUND Inception date: ISIN-code: FI Bloomberg-ticker: JOMSILK FH Fund target group: Demanding investors who understand the potential of Asian equity markets in the long run. Minimum subscription: Subscription account: IBAN: FI BIC: ESSEFIHXXXX Management fee: 1.2% p.a. Subscription fee: 1.5% - 0% Redemption fee: 1% (min. 20 ) Performance fee: 10% on the return exceeding the hurdle rate of 5%. (pls see Fund prospectus for details) shares. MSCI AC Asia ex-japan (EUR) is a price index, which takes dividends into account. Further details on JOM Silkkitie Investment Fund may be foundin thekeyinvestorinformation document,fundprospectus andfundrules,which areavailable by requestfromjom Fund ManagementLtd, or on the website *For the fiscal period since , % of fund average net assets. **Based on daily returns during 12 months. Detailed formulasavailablefromthefundmanagement Company.

2 Jakarta Composite Index JCI Equities by Investment Themes Financial & Property 23 % Global Leaders 3 % FUND CORRELATION (12M, DAILY) WITH SOME EQUITY INDICES (EUR) Philippine composite Index PCOMP Infra 16 % Green & Clean 3 % Consumers 55 % HK China H shares HSCEI MSCI Asia ex-japan Topix MSCI World S&P 500 Bloomberg Europe 500 Index Indonesia Philippines China Asia Japan World US Europe FUND PERFORMANCE MONTHLY (%) Equities Geographical Break-down Vietnam 12 % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year , India 5 % Philippines 9 % Pakistan 8 % China 34 % Indonesia 32 % JOM SILKKITIE NAV VS. THE REGIONAL EQUITY MARKET INDEX % + 40 % % % + 20 % % + 0 % -20 % FUND PERFORMANCE BI-ANNUALLY (%) % % MSCI AC Asia ex-japan (Total return, EUR) JOM Silkkitie % % % % % % % % % % % % % shares. MSCI AC Asia ex-japan (EUR) is a price index, which takes dividends into account. Further details on JOM Silkkitie Investment Fund may be foundin thekeyinvestorinformation document,fundprospectus andfundrules,which areavailable by requestfromjom Fund ManagementLtd, or on thewebsite

3 Vietnam s situation Vietnam s market has in every respect, been on fire for the past few years. GDP growth is flirting with 7% annually, exports are booming, credit growth is very robust, FDI and portfolio investments have been growing rapidly and stock market has reached new all-time highs. VNINDEX rose in local currency terms in 2016 by +14.8%, in 2017 by +48% and until early April YTD 2018 performance was 19.7%. As we have noted earlier, index valuation had climbed to relatively expensive levels. One of the notable bright spots of the economy has been the export sector. According to IMF, Vietnam s global share of low end manufactured goods have risen by +1.5% over the past five years, while in final electronic goods country s global market share has risen by 3% in the past three years these are very large leaps for a relatively small economy, and Vietnam has clearly been the export growth champion of ASEAN countries. Thus, country s current account is positive. However, given all the positives, it is currently easier to think of areas that may slow down a bit or can disappoint investors, than factors that could further make country s case even brighter. For example, within construction sector, while backlogs are still healthy, margins are under pressure as raw material prices and other costs have started to creep up. Also cyclical growth slowdown is also facing real estate market after gogo years of Finally, bank loan growth of +20% for the next few years is somewhat too high, in our opinion. Thus, expectations seem to be on the high side. Due to above mentioned factors, we have reduced weight of Vietnam during April as we believe that market will now consolidate after heavy returns of last few years. This is further supported by local broker s customer s very high margin lending levels, that are, according to market chatter, being tightened by the local regulator. In addition, as Vietnam was previously non-correlated to global equity markets given the vivid local investor base, during the last 12 months or so, foreign ownership of the market has grown substantially, and therefore market correlation to other equity markets have shoot up. From Vietnam, we cut jewelry company PNJ s weight by half, while we sold off CTD and PAN, as their profits are not expected to grow in Overall Vietnam s weight reduced from 20% in March to 12% in April. We also increased Indonesia s weight somewhat as market rout made some larger stocks very cheap. From Pakistan we acquired two new companies that operate in financial and industrial sectors. Both pay around 4% dividend and their PEs are 6x and 7.7x for Phu Nhuan Jewelry Phu Nhuan Jewelry (PNJ) is the largest jewelry retailer and manufacturer in Vietnam. Initially we bought PNJ back in October FOL (foreign ownership limit) has been full for many years, thus we managed to reduce PNJ s weight at 218,000vnd, that is a premium to selling point in early April. PNJ has returned over 700% since our purchase.

4 JOM KOMODO INDONESIA EQUITY INVESTMENT FUND Monthly Report April 2018 JOM Komodo Indonesia Equity Investment Fund s NAV was at the end of April, as it increased by +1.09% during the month. Since fund inception (15 th May 2012) the NAV has increased by %, thus the annual performance has been +8.63%. Indonesia s JCI-index declined by -2.91% in euro terms in April (-3.14% in IDR) as foreign investors reduced their holdings in Indonesia. On the positive side, Nikkei Indonesia Manufacturing index climbed to highest level in 20 months. Inflation was also stable at +3.4% in April. Finally many portfolio companies have returned dividend payments or increased dividends. This is a sign of improving confidence. We increased weights of some larger companies as stock prices became cheaper due to continuous foreign selling. JOM KOMODO, NET ASSET VALUE (30 April 2018) Size of the fund meur Number of fund units Inception date Last month s performance +1.09% Performance since inception % Annualiced performance since inception +8.63% Accumulated management fee* 0.50% Accumulated performance fee* 0.00% Accumulated custodian fee* 0.09% Net investment position (prior to subscriptions on ) 97.9% Volatility** 13.4% Portfolio turnover 188.7% Fund s correlation to JCI-Index (12m) 0.53 FUND OVERVIEW Equities by Investment Sectors Technology Basic Materials 3 % 10 % Consumer, Cyclical Communications 7 % Consumer, Non-cyclical 14 % Industrial Financial Name: JOM Komodo Fund (UCITS) Portfolio Manager: Juuso Mykkänen Custodian: SEB. Helsinki branch Benchmark index: No official index Profit sharing: The Fund has only accumulating units Fund rules last confirmed: Inception date: ISIN-code: FI Fund target group: Demanding investors who understand the potential of Asian equity markets in the long run. Minimum subscription: Subscription account: IBAN: FI BIC: ESSEFIHXXX Management fee: 1.5% p.a. Subscription fee: 1.5% - 0% Redemption fee: 2% (min. 20 ) Performance fee: 10% on the return exceeding the hurdle rate of 5%. (pls see Fund prospectus for details) Past performance is no guarantee for future returns. The Fund value may increase or decrease, and the investor may incur losses when redeeming his shares. Jakarta Composite Index (EUR) and MV Indonesia SmallCap Index (EUR) are price indices, which take dividends into account. Further details on JOM Komodo Investment Fund may be found in the key investor information document, fund prospectus and fund rules, which areavailable by request from JOM Fund Management Ltd, or on the website *For the fiscal period since , % of fund average netassets. **Will be calculated based on daily returns during 12 months. after the fund has sufficient track history. Detailed formulas availablefrom the Fund Management Company.

5 JOM KOMODO INDONESIA EQUITY INVESTMENT FUND Monthly Report April 2018 JOM KOMODO NAV VS. INDONESIA EQUITY INDICES JOM Komodo performance, EUR and IDR Year EUR IDR Currency effect % 3.08 % % % % % % % % % % % % % 6.74 % % % % YTD % 8.20 % % Performance since inception % % % JAKARTA COMPOSITE Index S&P Indonesia SmallCap Price (EUR) JOM Komodo FUND PERFORMANCE MONTHLY (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year , IDR Currency effect on returns Indonesia s rupiah (IDR) has had a large negative effect on fund performance over the years. IDR has been weak due to the fact that Indonesia s current account has been in deficit since 2012, but also developed countries central bank monetary policies have made monetary flows volatile for the past 10 years. We think that IDR weakness will persist until there are more concrete improvements in country s current account. shares.jakartacompositeindex(eur) andmv IndonesiaSmallCapIndex(EUR)arepriceindices,whichtakedividendsintoaccount.Furtherdetailson JOM Komodo Investment Fund may be found in the key investor information document, fund prospectus and fund rules, which are available by requestfromjomfundmanagement Ltd,oronthewebsitewww.jom.fi.