United ASEAN Income Fund

Transcription

1 United ASEAN Income 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 SUB-MANAGER UOB Asset Management (Malaysia) Berhad UOB Asset Management (Thailand) Co., Ltd. 348 Jalan Tun Razak 173/27-30, 32-33, South Sathorn Road, Thungmahamek, Sathorn Level 22, Vista Tower, The Intermark 25th Floor, Asia Centre Building Kuala Lumpur, Malaysia Bangkok 10120, Thailand -1-

4 A) Fund Performance Class USD Acc Fund Performance/ Benchmark Returns 3 mth % Growth 6 mth % Growth 1 yr % Growth 3 yr Ann Comp Ret 5 yr Ann Comp Ret Since Inception 15 December 10 yr 2014 Ann Ann Comp Comp Ret Ret United ASEAN Income Fund N/A N/A N/A Benchmark N/A N/A N/A 1.03 Source: Note: Lipper, a Thomson Reuters Company. The performance returns of the Fund are in Singapore dollar and United States dollar based on a NAV-to-NAV basis with dividends and distributions reinvested, if any. The benchmark of the Fund: MSCI South East Asia Index. For the six months ended 30 June 2017, the net asset value of Class USD Acc of the Fund rose 13.53% compared with a 15.66% increase in the benchmark MSCI South East Asia Index. The Fund s underperformance for the period under review was largely attributed to negative stock selection. Our overweight position in the best performing Singapore market contributed positively, as did the Fund s investments in Malaysia. However the Fund s investments in Indonesia and the Philippines did not perform as well as expected. On a stock basis, the Fund s investments in Oldtown Berhad, SAM Engineering & Equipment (Malaysia); Mitra Adiperkasa (Indonesia); City Developments, Global Logistic Properties, UOL (Singapore) and Advanced Info Service, Kiatnakin Bank (Thailand) were key contributors to performance. Key detractors to performance were Pembangunan Perumahan, Ciputra Development (Indonesia); GT Capital (Philippines); Deleum Berhad (Malaysia); Comfort Delgro (Singapore) and PTT Exploration & Production (Thailand). As at end June 2017, the Fund was 96.46% invested. In terms of markets, the Fund s allocation stood at Singapore (34.60%), Indonesia (20.06%), Malaysia (17.93%), Thailand (16.33%) and Philippines (7.54%) with the remainder in cash. In terms of sectors, the Fund s allocation stood at Financials (32.74%), Consumer Discretionary (14.21%), Real Estate (13.79%), Industrials (10.69%), Consumer Staples (8.80%), Telecommunication Services (6.58%), others (9.65%) with the remainder in cash. Economic and Market Review Equity markets in Asia outperformed global markets for the first half of Emerging Markets (EM) as a whole outperformed Developed Markets, as appetite for higher yielding assets increased with improved global economic momentum and a weaker US dollar. Asia markets rallied in the first half of the year, driven by strong earnings particularly in 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 outcome between President Trump and President Xi. The US Federal Reserve (Fed) hiked rates by quarter of a percentage point (25 basis points) in March and June, as it took a gradual and predictable path to normalising interest rates. The US dollar weakened against other major currencies including the Euro, Japanese yen and most Asian currencies. On the geopolitical front, markets brushed off concerns on North Korea s defiant missile launches, US President Trump s legal woes and welcomed the election of Pro-EU French President Macron. Closer to home, South East Asia markets also chalked up decent returns. -2-

5 A) Fund Performance (continued) Within ASEAN, Singapore was the top performer in South East Asia, lifted by better-than-expected economic growth over the period. The Singapore market started the period under review on a strong note, lifted by optimism that the worst of the slowdown in 2016 was over. Moreover the market was also cheered by initial signs of an impending global growth recovery that would also benefit the export oriented Singapore economy. In particular, a recovery in GDP growth with strength in both the manufacturing and services sectors and government policy relaxation in the residential property sector improved buyer sentiment. Accordingly this led to strong gains in the banks and real estate companies. The market also experienced a flurry of mergers and acquisition (M&A) activity in the form of privatizations and acquisitions. This served to generate heightened investor interest as it highlighted the relative attractiveness of the Singapore market s valuation multiples. Indonesia was next as stronger resource prices boosted economic growth and improved the trade balance and foreign reserves. Standard and Poor s upgrade of their credit rating to investment grade status 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 lagged the most, 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. Outlook and Fund Strategy Asia is seeing improving returns on equity (ROEs) and upward revisions in corporate earnings after many years, led by cyclicals as global growth recovers. China s economic recovery looks to have stabilized with the Purchasing Managers Index (PMI) above 50 and the rebound in the Producers Price Index (PPI) after many years in negative territory. Despite the US Federal Reserve raising rates, the US dollar has weakened slightly as questions arise over the execution of Trump s fiscal stimulus policies and economic indicators point to a mild recovery. This has helped Asian currencies and markets. Despite relatively soft US economic data, President Trump s recent legal troubles and elevated valuations, the US market has remained resilient. China economic growth activity moderated after accelerating late last year till the first quarter 2017 as the authorities tightened monetary conditions to control financial leverage. However, recent data points to continued economic stabilization rather than growth rolling. We are still in the first year of earnings recovery after many years of suppressed profit growth. Hence, we remain constructive on Asian markets. Turning to ASEAN, the region s valuations are relatively expensive and ASEAN has weaker earnings momentum compared to North Asia. Within ASEAN, we remain positive on Malaysia. We see upside to earnings growth expectations from strong construction orders, growth in palm oil volumes and drop in bank provisions as non-performing loans (NPLs) peak. Investment from China has risen significantly as Malaysia is a key destination for China s One Belt One Road projects. The upcoming elections early next year should also be another positive catalyst. After a strong showing in the first half of 2017, we have turned neutral on Singapore. Valuations have largely factored in the growth recovery and we believe the Singapore banks re-rating from reflation optimism has also been priced in to a certain extent. Singapore s pace of economic growth could also likely moderate in the later part of the year after a strong first half although the recovery trajectory is set to continue. We are neutral on Indonesia. The country s economic growth, trade balance and foreign reserves have improved on stronger resource prices. We are underweight on Thailand and Philippines due to valuation concerns, mixed corporate earnings outlook and policy risk. -3-

6 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$) % of NAV Indonesia 614, Malaysia 548, Philippines 230, Singapore 1,059, Thailand 499, Portfolio of investments 2,952, Other net assets/(liabilities) 108, Total 3,060, ii) Industry Fair Value (S$) % of NAV Consumer Discretionary 434, Consumer Staples 269, Energy 180, Financials 1,002, Health Care 56, Industrials 327, Information Technology 21, Materials 36, Real Estate 422, Telecommunication Services 201, Portfolio of investments 2,952, Other net assets/(liabilities) 108, Total 3,060, iii) Asset Class Fair Value (S$) % of NAV Quoted equities 2,952, Other net assets/(liabilities) 108, Total 3,060, iv) Credit rating of quoted bonds N/A -4-

7 C) Top Ten Holdings 10 largest holdings as at 30 June 2017 Fair Value (S$) Percentage of total net assets attributable to unitholders % DBS GROUP HOLDINGS LTD 159, TELEKOMUNIKASI INDONESIA PERSERO TBK PT 150, OVERSEA-CHINESE BANKING CORP LTD 140, UNITED OVERSEAS BANK LTD 118, ASTRA INTERNATIONAL TBK PT 110, SINGAPORE TELECOMMUNICATIONS LTD 108, BANK MANDIRI PERSERO TBK PT 92, PT BANK NEGARA INDONESIA (PERSERO) TBK. 77, PTT PCL 76, OLDTOWN BHD 69, largest holdings as at 30 June 2016 Percentage of total net assets attributable to Fair Value unitholders (S$) % SINGAPORE TELECOMMUNICATIONS LTD 173, PT TELKOMUNIKASI INDONESIA 162, DBS GROUP HOLDINGS LIMITED 154, PT ASTRA INTERNATIONAL 128, SAM ENGINEERING & EQUIPMENT (M) BHD 120, OVERSEA-CHINESE BANKING CORPORATION LIMITED 112, UNITED OVERSEAS BANK LTD 92, KIM LOONG RESOURCES BHD 90, PT BANK NEGARA INDONESIA 84, RAFFLES MEDICAL GROUP LIMITED 77, 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 922 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 -5-

8 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 1,065,008 Total amount of subscriptions SGD 39,747 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 104,846 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2017 Holdings of United ASEAN Income Fund Class USD Acc as at 30 June 2017 were as follows: Affiliated Companies No. of Units Unit Price SGD Market Value SGD a) United ASEAN Fund 1,576, ,038, b) United Asia Fund 788, ,019, iii) Investment in Initial Public Offerings managed by UOB Group N/A iv) As at 30 June 2017, the brokerage income earned by UOB Kay Hian Pte Ltd was SGD

9 I) Expense ratios $ $ Total operating expenses 127, ,709 Average daily net asset value 3,633,106 3,655,055 Expense ratio 3.52% 3.41% 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 944,724 2,355,870 Average daily net assets value 3,373,771 3,644,403 Turnover ratio 28.00% 64.64% 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 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. -7-

10 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. UOB Asset Management (Malaysia) Berhad, the Sub-Manager, may accept or receive soft commissions arising from transactions or orders on behalf of a client provided that: (i) (ii) (iii) the client s prior consent has been obtained; the relevant goods and services are of demonstrable benefit to the client; and the relevant goods and services are in the form of research and advisory services that assist in the decision-making process relating to the client s investments. Examples of goods and services that are not considered soft commissions and are prohibited include: Travelling costs Accommodation and entertainment costs Expenditure on hardware that is not incidental in providing the research and advisory services Membership fees to associations In addition, the Sub-Manager will take steps to ensure that soft-dollar commissions/arrangements will not include travel, accommodation, entertainment, general administrative goods and services, general office equipment or premises, membership fees, employees salaries or direct money payment. The Sub-Manager will disclose to the client details of any soft commission received as soon as practicable upon accepting or receiving the soft commission, and maintain a register of any soft commission accepted or received. The Sub-Manager has engaged a compliance officer to verify that any soft commission accepted or received by the Sub-Manager complies with the above requirements. The Sub-Manager does not retain for its own account any rebates it may receive arising from transactions or orders on behalf of clients. Any rebates received by the Sub-Manager (including without limit any soft commission received in advance by the Sub-Manager) will be directed to the account of the relevant clients. UOB Asset Management (Thailand) Co., Ltd., the Sub-Manager may enter into soft-dollar commissions/arrangements with a service provider as a result of the Sub-Manager s use of its services in the management of the Fund, provided that the following conditions shall be followed: (i) (ii) the soft-dollar commissions/arrangements shall be assets having economic value (which do not include travel, accommodation and entertainment), and can reasonably be expected to assist in the management of the Fund as prescribed by applicable laws concerning securities and exchange; and there shall not be any indication showing that the Sub-Manager has used the services offered by the service provider more often than is necessary in order to benefit the Fund (i.e. churning). In this connection, the Sub-Manager shall act with fairness and consider the character and types of securities as may be acquired by Fund. -8-

11 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 55,399 64,443 Total 55,399 64,443 Less: Expenses Management fee 25,090 27,242 Trustee fee 2,480 2,493 Audit fee 7,416 7,458 Registrar fee 7,490 7,490 Valuation fee 2,091 2,270 Custody fee 11,095 2,756 Transaction costs 22,465 29,860 Interest expenses 20 - Other expenses 8,621 7,543 Total 86,768 87,112 Net income/(losses) (31,369) (22,669) Net gains/(losses) on value of investments Net gains/(losses) on investments 323,669 76,047 Net gains/(losses) on financial derivatives (922) - Net foreign exchange gains/(losses) (12,300) 78, , ,828 Total return/(deficit) for the period before income tax 279, ,159 Less: Income tax (4,457) (5,876) Total return/(deficit) for the period 274, ,

13 STATEMENT OF FINANCIAL POSITION As at 30 June 2017 (Un-audited) 30 June 31 December $ $ Assets Portfolio of investments 2,952,679 3,729,068 Sales awaiting settlement 43,042 4,221 Receivables 61 4,409 Cash and bank balances 104, ,494 Total assets 3,100,628 3,849,192 Liabilities Purchases awaiting settlement 22,822 - Payables 16,833 37,579 Total liabilities 39,655 37,579 Equity Net assets attributable to unitholders 3,060,973 3,811,

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 3,811,613 3,656,894 Operations Change in net assets attributable to unitholders resulting from operations 274, ,760 Unitholders contribution/(withdrawal) Creation of units 39,747 40,959 Cancellation of units (1,065,008) - Change in net assets attributable to unitholders resulting from net creation and cancellation of units (1,025,261) 40,959 Total increase/(decrease) in net assets attributable to unitholders (750,640) 154,719 Net assets attributable to unitholders at the end of the financial period/year 3,060,973 3,811,

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 INDONESIA ASTRA INTERNATIONAL TBK PT 120, , BANK CENTRAL ASIA TBK PT 23,000 43, BANK MANDIRI PERSERO TBK PT 70,000 92, CIPUTRA DEVELOPMENT TBK PT 220,000 26, MITRA ADIPERKASA TBK PT 60,000 42, PEMBANGUNAN PERUMAHAN PERSERO TBK PT 92,000 29, PT BANK NEGARA INDONESIA (PERSERO) TBK. 114,000 77, SURYA CITRA MEDIA TBK PT 155,000 41, TELEKOMUNIKASI INDONESIA PERSERO TBK PT 322, , TOTAL INDONESIA 614, MALAYSIA CARLSBERG BREWERY MALAYSIA BHD 10,400 50, DELEUM BHD 123,100 35, DUTCH LADY MILK INDUSTRIES BHD 2,300 43, KIM LOONG RESOURCES BHD 55,200 68, LINGKARAN TRANS KOTA HOLDINGS 23,300 44, OLDTOWN BHD 75,200 69, PARAMOUNT CORP BHD 116,500 68, PECCA GROUP BHD 95,700 49, SAM ENGINEERING & EQUIPMENT M BHD 23,900 59, STAR MEDIA GROUP BHD 30,500 22, TUNE PROTECT GROUP BHD 92,900 36, TOTAL MALAYSIA 548, PHILIPPINES AYALA LAND INC 55,000 59, BDO UNIBANK INC 15,600 52, GT CAPITAL HOLDINGS INC , METROPOLITAN BANK & TRUST CO 24,000 57, ROBINSONS RETAIL HOLDINGS INC 16,000 37, TOTAL PHILIPPINES 230,

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 SINGAPORE AEM HOLDINGS LTD 10,000 21, CAPITALAND COMMERCIAL TRUST 18,000 29, CAPITALAND LTD 10,000 35, CITY DEVELOPMENTS LTD 3,000 32, COMFORTDELGRO CORP LTD 17,000 39, CWT LTD 15,000 33, DBS GROUP HOLDINGS LTD 7, , GENTING SINGAPORE PLC 22,000 23, GLOBAL LOGISTIC PROPERTIES LTD 15,000 42, HEALTH MANAGEMENT INTERNATIONAL LTD 83,950 56, HRNETGROUP LTD 13,100 11, JARDINE CYCLE & CARRIAGE LTD , KEPPEL CORP LTD 8,000 50, KEPPEL TELECOMMUNICATIONS & TRANSPORTATION LTD 17,000 29, OVERSEA-CHINESE BANKING CORP LTD 13, , SINGAPORE TECHNOLOGIES ENGINEERING LTD 8,000 29, SINGAPORE TELECOMMUNICATIONS LTD 28, , UNITED OVERSEAS BANK LTD 5, , UOL GROUP LTD 8,000 61, TOTAL SINGAPORE 1,059, THAILAND ADVANCED INFO SERVICE PCL 7,100 51, BANGKOK BANK PCL 3,900 29, KASIKORNBANK PCL - NVDR 5,400 43, KIATNAKIN BANK PCL 14,800 42, LAND + HOUSES PUB NVDR NVDR THB1.0 78,700 31, PTT EXPLORATION & PRODUCTION PCL 9,200 32, PTT PCL 5,100 76, SUPALAI PCL 32,500 34, THAI OIL PCL 11,400 36, THE SIAM CEMENT PCL 1,800 36, THE SIAM COMMERCIAL BANK PCL 4,900 30,

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 THAILAND (continued) TISCO FINANCIAL GROUP PCL 17,600 54, TOTAL THAILAND 499, Total Equities 2,952, Portfolio of investments 2,952, Other net assets/(liabilities) 108, Net assets attributable to unitholders 3,060,

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 Indonesia Malaysia Philippines Singapore 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 434, Consumer Staples 269, Energy 180, Financials 1,002, Health Care 56, Industrials 327, Information Technology 21, Materials 36, Real estate 422, Telecommunication Services 201, Utilities Portfolio of investments 2,952, Other net assets/(liabilities) 108, Net assets attributable to unitholders 3,060,

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