United Asia Fund. Semi Annual Report. for the period 1 st January to 30 th June 2014

Transcription

1 United Asia Fund Semi Annual Report for the period 1 st January to 30 th June 2014

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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 Terence Ong Sea Eng Cheo Chai Hong Thio Boon Kiat TRUSTEE / REGISTRAR BNP Paribas Trust Services Singapore Limited 20 Collyer Quay #01-01 Singapore CUSTODIAN State Street Bank and Trust Company One Lincoln Street Boston, MA United States of America 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 Rodyk & Davidson LLP 80 Raffles Place #33-00, UOB Plaza 1 Singapore

4 A) Fund Performance Fund Performance/ Benchmark Returns 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 20 April 1992 Ann Comp Ret United Asia Fund Benchmark Source: Lipper, a Thomson Reuters Company. Note: The performance returns of the Fund are in Singapore dollars based on a NAV-to-NAV basis with net dividends reinvested. The benchmark of the Fund: Apr 92 Dec 11: MSCI AC FE ex Japan; Jan 12 to present: MSCI AC Asia ex Japan. For the six months ended 30 June 2014, the net asset value of the Fund rose 1.7%, compared with a 5.1% increase in the benchmark MSCI AC Asia ex-japan index in Singapore dollar terms. The Fund s underperformance was due to weak stock selection, particularly from the China/Hong Kong consumer sector. However, the Fund was helped by our overweight exposure in the information technology (IT) sector, especially in the Taiwanese IT component supply chain as well as our defensive positioning in Asian financials. Key contributors to performance included Coway (Korea Consumer Staple), Catcher Technology (Taiwan IT) and HDFC Bank (India Financials). Key detractors included Sa Sa (Hong Kong Consumer Discretionary), China Modern Dairy (China Consumer Staple) and Melco International (Hong Kong Consumer Discretionary). During the period under review, we pared down our positions in the consumer discretionary sector and increased our exposure in the Taiwan IT sector. As at end June 2014, the Fund had the following sector allocation: information technology (29.8%), financials (27.7%), consumer discretionary (10.0%), consumer staples (8.6%), industrials (9.2%), energy (4.8%) and others (8.4%), with the remainder in cash (1.5%). The Fund had the following country asset allocation: China (27.8%), Hong Kong (14.1%), South Korea (20.6%), Taiwan (13.2%), India (8.7%), Indonesia (4.8%), Singapore (4.0%), Thailand (3.1%), Philippines (2.2%) and the remainder (1.5%) in cash. 2

5 Economic and Market Review Asia equity markets gained in the six-month period under review, in line with global equity markets, where emerging markets marginally underperformed developed markets. Markets started the year 2014 on a weaker note, driven by concerns on global economic growth with below-expectation US economic data, deteriorating fundamentals in emerging markets particularly the fragile five (Brazil, India, Indonesia, Turkey and South Africa) and weak China economic data. Global events such as the geopolitical tension in Ukraine/Russia crimped sentiment while political events in Iraq kept oil prices supported. Markets steadily ground higher towards mid-year as it became apparent that the poor US data was weather-induced, and as emerging markets stabilized. The best-performing Asia ex-japan markets for the period were India and Indonesia. Both South Asian markets, which had previously been hit by concerns over their deteriorating current account positions, growth and leverage regained investors confidence as they managed to staunch the weakening currencies and improve their external positions. Politics was also in focus in both markets. In India, the BJP s historic win renewed hopes that the new government will implement structural reforms such as reducing the fiscal deficit, incentivising infrastructure investment and improving governance. In Indonesia, attention was on the tightly-fought Presidential election. The Hong Kong/China markets underperformed as weak economic data out of China raised concerns on the country s growth trajectory. The official purchasing managers index (PMI) hovered just above the 50 expansion level for most of the period, while the private sector HSBC PMI stayed below 50, though picking up to 50.7 in June. The Chinese government announced targeted measures to stabilize the economy, such as reducing the tax/fee burden for the corporate sector, ensuring financial sector support for small and medium enterprises and increasing reforms in environmental protection. The Asean markets as a whole outperformed the broader Asia ex-japan market. The Indonesian market led gains with a stabilization in the rupiah and a recovery in its external position. Thailand outperformed as political developments dominated with the installation of a new National Council for Peace and Order reducing some of the uncertainty businesses faced following the military coup. The Philippines market outperformed, buoyed by net foreign buying on an improvement in economic fundamentals. Malaysia and Singapore markets underperformed. In terms of sector performance, information technology continued to lead with the launch of new smart devices benefiting the Asia supply chain manufacturers. The defensive healthcare and utilities sectors also outperformed. The materials sector, which is more leveraged to global growth led losers. Other underperforming sectors included consumer discretionary, telecommunications and financials. Outlook and Fund Strategy We believe that Asia markets continue to offer opportunities for growth with the region trading at attractive valuations. Despite the short-term risks from a slowing China, Asia remains the fastest growing region in the world and a beneficiary of global economic recovery. Our current strategy is to overweight the technology, consumer discretionary, industrials, healthcare and consumer staples sectors. We are underweight the materials, utilities, telecommunications, financials and energy sectors. We expect the technology sector to benefit from the global launch of new smartphone products which would filter through to the supply chain producers in Asia. 3

6 In terms of markets, we are overweight China, Hong Kong, Indonesia and the Philippines. We are underweight Taiwan, Malaysia, Korea and Singapore. The economic reforms taking place in China present short-term challenges to growth but we view these reforms as positive steps towards ensuring sustainable long-term growth. We expect selected policy easing to cushion downside risks but no large-scale stimulus. We favour reform beneficiaries and companies in the new economy sectors. We turn incrementally positive on India on the positive political sentiment and a stabilising macro environment. We view that the new government has a strong mandate to push through pro-growth reforms. The market continues to face problems of a high fiscal deficit and inflation, but we view that the macro backdrop is improving. The reforms will take time, but the positive momentum towards reform could accelerate an economic recovery. We are positive on reform beneficiaries including banks, energy and consumption. We continue to favour the Asean markets and maintain our overweight in Indonesia and the Philippines on positive structural trends. We believe that the long-term structural growth potential in Asia, driven by favourable demographic trends and rising incomes make the region an attractive investment destination. Our strategy is to take advantage of these structural opportunities by investing in companies that have sound business models, are positioned in segments offering attractive growth and that have demonstrated operational and financial discipline in the way they manage their businesses. 4

7 B) Investments at fair value and as a percentage of NAV as at 30 June 2014 under review classified by Fair Value % of NAV (S$) i) Country China 22,808, Hong Kong 11,572, India 7,155, Indonesia 3,967, Philippines 1,802, Singapore 3,243, South Korea 16,843, Taiwan 10,816, Thailand 2,549, Portfolio of investments 80,760, Other net assets 1,242, Total 82,002, ii) Industry Consumer Discretionary 8,206, Consumer Staples 7,015, Energy 3,971, Financials 22,684, Healthcare 2,295, Industrials 7,566, Information Technology 24,411, Materials 1,082, Telecommunication Services 2,605, Utilities 921, Portfolio of investments 80,760, Other net assets 1,242, Total 82,002, iii) Asset Class Equities 80,760, Other net assets 1,242, Total 82,002, iv) Credit rating of debt securities N/A 5

8 C) Top Ten Holdings The top 10 holdings as at 30 June 2014 and 30 June largest holdings at 30 June 2014 Percentage of total net assets attributable to Fair Value unitholders (S$) % SAMSUNG ELECTRONICS COMPANY LIMITED 5,318, TAIWAN SEMICONDUCTOR MFG CO LTD 3,316, HUTCHISON WHAMPOA LTD 3,205, COWAY CO LTD 2,887, TENCENT HOLDINGS LIMITED 2,804, HYUNDAI MOTOR COMPANY 2,460, MEDIATEK INC 2,319, SUN PHARMACEUTICALS INDUSTRIES LTD 2,295, HDFC BANK LIMITED 2,083, HON HAI PRECISION IND 2,050, largest holdings at 30 June 2013 Percentage of total net assets attributable to Fair Value unitholders (S$) % SAMSUNG ELECTRONICS COMPANY LIMITED 6,948, TAIWAN SEMICONDUCTOR MFG CO LTD 4,594, KASIKORNBANK PCL - FOREIGN 3,990, AAC TECHNOLOGIES HOLDINGS LTD 3,297, HUTCHISON WHAMPOA LTD 2,888, AIA GROUP LTD 2,762, ITC LTD 2,548, PT MATAHARI DEPARTMENT STORE TBK 2,535, PT BANK MANDIRI 2,442, MELCO INTERNATIONAL DEVELOPMENT LTD 2,373,

9 D) Exposure to derivatives i) Fair value of derivative contracts and as a percentage of NAV as at 30 June 2014 N/A ii) Net gains/(losses) on derivative contracts realised during the financial period ended 30 June 2014 N/A iii) Net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2014 N/A E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June 2014 N/A F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2014 N/A G) Amount of redemptions and subscriptions for the period 01 January 2014 to 30 June 2014 Total amount of redemptions SGD 26,041,871 Total amount of subscriptions SGD 533,221 H) The amount and terms of related-party transactions for the period 01 January 2014 to 30 June 2014 i) As at 30 June 2014 the Fund maintained current accounts with the United Overseas Bank Limited as follows: Bank balances SGD 126,645 7

10 H) The amount and terms of related-party transactions for the period 01 January 2014 to 30 June 2014 (continued) ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2014 Holdings of United Asia Fund as at 30 June 2014 were as follows:- Affiliated Companies No. of Units Unit Price Market Value (S$) (S$) a) United Asia Active Allocation Fund 2,958, ,326, b) UOB Kay Hian Private Limited 1, , c) UOB Smart Asia Fund 6,885, ,394, iii) Investment in Initial Public Offerings managed by UOB Group N/A iv) As at 30 June 2014 the brokerage income earned by UOB Kay Hian Pte Ltd was SGD 2,323. I) Expense ratios 30 June % 30 June % 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 expense ratio at 30 June 2014 was based on total operating expenses of $1,633,812 (2013: $1,664,380) divided by the average net asset value of $99,385,998 (2013: $120,727,040) for the year. The total operating expenses do not include (where applicable) brokerage and other transactions 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 30 June % 30 June % 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, being purchases of $36,645,029 (2013: purchases of $50,166,080) divided by the average daily net asset value of $90,101,941 (2013: $118,327,862). 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 2014 and 30 June 2013 N/A ii) expense ratios for the period ended 30 June 2014 and 30 June N/A iii) turnover ratios for the period ended 30 June 2014 and 30 June 2013 N/A 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. 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. 9

12 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2014 (Un-audited) 30 June 30 June $ $ Income Dividends 1,372,262 1,856,256 Interest ,372,264 1,856,287 Less: Expenses Management fee 558, ,616 Trustee fee 20,103 26,410 Audit fee 7,835 7,091 Registrar fee 7,753 7,753 Valuation fee 55,841 73,362 Custody fee 43,283 54,665 Interest expenses - 1,431 Transaction cost 436, ,008 Other expenses 80,671 (205,589) 1,210,603 1,293,747 Net income 161, ,540 Net gains or losses on value of investments Net gain/(loss) on investments 1,269,294 (1,178,896) Net foreign exchange loss (140,562) (176,757) 1,128,732 (1,355,653) Total return/(deficit) for the period before income tax 1,290,393 (793,113) Less: Income tax (114,191) (193,585) Less: Capital gain tax - (2,546) Total return/(deficit) for the period 1,176,202 (989,244) 10

13 STATEMENT OF FINANCIAL POSITION As at 30 June 2014 (Un-audited) 30 June 31 December $ $ ASSETS Portfolio of investments 80,760, ,148,574 Receivables 313, ,616 Sales awaiting settlement - 1,691,579 Cash and bank balances 1,390,823 1,284,334 Total Assets 82,464, ,414,103 LIABILITIES Payables 461, ,365 Purchases awaiting settlement - 2,389,370 Total Liabilities 461,237 3,078,735 EQUITY Net assets attributable to unitholders 82,002, ,335,368 11

14 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 30 June 2014 (Un-audited) 30 June 31 December $ $ Net assets attributable to unitholders at the beginning of the financial period/year 106,335, ,157,613 Operations Change in net assets attributable to unitholders resulting from operations 1,176,202 6,845,511 Unitholders contributions/(withdrawals) Creation of units 533,221 5,734,277 Cancellation of units (26,041,871) (28,402,033) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (25,508,650) (22,667,756) Total decrease in net assets attributable to unitholders (24,332,448) (15,822,245) Net assets attributable to unitholders at the end of the financial period/year 82,002, ,335,368 12

15 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary Quoted Equities Percentage of total net assets attributable Holdings at Fair value at to unitholders at 30 June 30 June 30 June $ % CHINA CHINA CONSTRUCTION BANK - H 1,965,000 1,852, CHINA LONGYUAN POWER GROUP CORP 681, , CHINA MERCHANT BANK CO LTD - H 735,000 1,806, CHINA MODERN DAIRY HOLDINGS 3,000,000 1,471, CHINA OILFIELD SERVICES LTD - H 300, , CHINA OVERSEAS GRAND OCEANS GROUP LTD 1,100, , CHINA OVERSEAS LAND & INVESTMENT LTD 318, , CHINA PETROLEUM & CHEM CORP (SINOPEC) 1,066,000 1,267, CHINA RESOURCES LAND LIMITED 54, , CSR CORP LTD - H 1,810,000 1,697, GOME ELECTRICAL APPLIANCES HOLDINGS LTD 3,600, , INDUSTRIAL & COMMERCIAL BANK OF CHINA - H 1,995,000 1,572, JIANGXI COPPER COMPANY LTD-H 549,000 1,082, PETROCHINA COMPANY LIMITED 1,146,000 1,804, SUNNY OPTICAL TECHNOLOGY GROUP CO LTD 700,000 1,234, TENCENT HOLDINGS LIMITED 147,500 2,804, WANT WANT CHINA HOLDINGS LIMITED 963,000 1,725, TOTAL CHINA 22,808, HONG KONG AIA GROUP LTD 311,400 1,950, CHEUNG KONG HOLDINGS LTD 70,000 1,548, GALAXY ENTERTAINMENT GROUP LIMITED 122,000 1,216, GOLDPAC GROUP LTD 1,200,000 1,530, HUTCHISON WHAMPOA LTD 188,000 3,205, SA SA INTERNATIONAL HOLDINGS LIMITED 1,054, , SUN HUNG KAI PROPERTIES LTD 71,000 1,213, TOTAL HONG KONG 11,572,

16 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary (continued) Quoted Equities Percentage of total net assets attributable Holdings at Fair value at to unitholders at 30 June 30 June 30 June $ % INDIA HDFC BANK LIMITED 122,380 2,083, INFOSYS LIMITED 14, , ITC LTD 270,000 1,819, SUN PHARMACEUTICALS INDUSTRIES LTD 161,000 2,295, TOTAL INDIA 7,155, INDONESIA PT BANK MANDIRI 1,446,500 1,479, PT SUMMARECON AGUNG TBK 9,400,000 1,121, PT TELKOMUNIKASI INDONESIA 5,271,600 1,366, TOTAL INDONESIA 3,967, PHILIPPINES METROPOLITAN BANK & TRUST COMPANY 721,974 1,802, SINGAPORE CAPITALAND LTD 300, , DBS GROUP HOLDINGS LIMITED 50, , KEPPEL CORPORATION LIMITED 134,000 1,445, TOTAL SINGAPORE 3,243,

17 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary (continued) Quoted Equities Percentage of total net assets attributable Holdings at Fair value at to unitholders at 30 June 30 June 30 June $ % SOUTH KOREA COWAY CO LTD 27,671 2,887, HYUNDAI MOTOR COMPANY 8,700 2,460, KB FINANCIAL GROUP INC 27,900 1,210, LG DISPLAY COMPANY LIMITED 44,680 1,750, LG HOUSEHOLD & HEALTH CARE LTD 3,562 1,999, SAMSUNG ELECTRONICS COMPANY LIMITED 3,265 5,318, SAMSUNG ENGINEERING CO LTD 12,337 1,217, TOTAL SOUTH KOREA 16,843, TAIWAN CATCHER TECHNOLOGY CO LTD 168,000 1,953, HON HAI PRECISION IND 491,200 2,050, MEDIATEK INC 110,000 2,319, RADIANT OPTO-ELECTRONICS CORP 220,000 1,175, TAIWAN SEMICONDUCTOR MFG CO LTD 628,000 3,316, TOTAL TAIWAN 10,816, THAILAND ADVANCE INFO SERVICES (F) 150,000 1,238, KASIKORNBANK PCL - FOREIGN 166,500 1,311, TOTAL THAILAND 2,549, Portfolio of investments 80,760, Other net assets 1,242, Net assets attributable to unitholders 82,002,

18 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary (Summary) Quoted Equities Percentage of Percentage of total net assets total net assets attributable attributable to unitholders at to unitholders at 30 June 31 December % % China Hong Kong India Indonesia Malaysia Philippines Singapore South Korea Taiwan Thailand Portfolio of investments Other net assets Net assets attributable to unitholders

19 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Industry - Secondary Quoted Equities Percentage of Percentage of total net assets total net assets attributable attributable Fair value at to unitholders at to unitholders at 30 June 30 June 31 December $ % % Consumer Discretionary 8,206, Consumer Staples 7,015, Energy 3,971, Financials 22,684, Healthcare 2,295, Industrials 7,566, Information Technology 24,411, Materials 1,082, Telecommunication Services 2,605, Utilities 921, Portfolio of investments 80,760, Other net assets 1,242, Net assets attributable to unitholders 82,002,

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