United Asia Pacific Infrastructure Fund

Transcription

1 United Asia Pacific Infrastructure 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 HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02, HSBC Building 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 Allen & Gledhill LLP One Marina Boulevard #28-00 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 17 October 2006 Ann Comp Ret United Asia Pacific Infrastructure Fund NA Benchmark NA 6.00 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: The performance of the Fund will be measured against an absolute return benchmark of 6% per annum. For the six months ended 30 June 2014, the net asset value of the Fund rose 12.3% compared with a 2.9% increase in the absolute return benchmark in Singapore dollar terms. Key contributors to performance included: Sino Thai Engineering (Thailand), ONGC (India), PGAS (Indonesia), Oil Search (Australia) and Coal India (India). The Fund benefited from its holdings in Sino Thai as the stock recovered from being oversold last year when investors were concerned that the infrastructure bill in Thailand was not being passed due to the political unrest. Similarly, ONGC which was earlier trading at low valuations, re-rated as a result of gas reforms being implemented amidst a stabilization of the Rupee. Key detractors included: CSR (China), Gamuda (Malaysia), Keppel Corp (Singapore), Melco Development (Hong Kong) and Lenovo (China). As at end 30 June 2014, the Fund had the following regional asset allocation: China (7.6%), Singapore (7.4%), Australia (7.2%), Hong Kong (6.6%), India (5.9%), Indonesia (5.2%), Others (10.4%) and the remainder in cash and fixed deposits (49.7%). Economic and Market Review Asia Pacific equity markets gained in the six-month period under review, in line with global equity markets. While economic data generally supported the view of a recovering global economy, there were sufficient negative data points to question the sustainability of the recovery. The interpreting of data was also complicated by various factors. In the United States, first quarter activity was impacted by unusually cold winter weather. In China, there was the usual fluctuation in economic activity around Chinese New Year followed by restructuring of certain shadow banking products in the first quarter, and then reported fraud related to commodity financing deals in the second quarter. Geopolitics was an additional unsettling factor, with crude oil prices spiking on reports of fighting in Iraq, Libya, Syria and Ukraine. 2

5 Offsetting any negative economic concerns was the continued supportive monetary policy from global central banks. While the US Federal Reserve (Fed) progressively reduced its asset purchases throughout the reporting period, new Fed Chair Janet Yellen signalled that US interest rates would remain at low levels for a prolonged period. The European Central Bank (ECB) became the first central bank to introduce negative interest rates, and announced additional targeted measures to boost loan growth and economic activity. The Bank of Japan continued to expand its balance sheet, supporting the aggressive economic policies of the government. All these actions are supportive of economic growth. The best-performing Asia ex-japan markets for the period were India and Indonesia. Both countries which had previously been hit by concerns over their deteriorating current account positions, growth and leverage saw renewed investors confidence as the government and central banks managed to staunch the weakening currencies and improve their external positions. Election results were 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 which would be positive for markets. In Indonesia, investors paid close attention to the tightly-fought Presidential election between Joko Widodo and Prabowo where the former is deemed to be more market friendly. The Fund was positioned favourably with almost 19% exposure in India and over 10% exposure in Indonesia at the start of reporting period. While many investors were avoiding these markets earlier, our bottom-up analysis showed deep value in selective stocks and we were able to add on opportunistic dips. The Hong Kong/China markets underperformed as weak economic data out of China continued to raise concerns on the country s growth trajectory. Economic data remains mixed with the official purchasing managers index (PMI) indicating expansion for most of the period while the private sector HSBC PMI indicated contraction before turning positive in the month of 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. Within the ASEAN markets, Indonesia led gains with improved investor confidence as appropriate fiscal and monetary policies earlier helped to stem capital outflows from the country, resulting in a stabilization of the rupiah as well as current account deficit. Thailand also outperformed as geopolitical risks eased 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 was supported by strong domestic economic growth, which attracted net foreign buying while Malaysia and Singapore markets underperformed as they are deemed to be defensive plays within the region. The infrastructure sector performance was mixed with great divergence in sub-sector returns. The information technology sector topped performance with strong gains. Other outperforming sectors included utilities, energy and industrials. The telecommunication services, materials and real estate sub-sectors underperformed. 3

6 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. The infrastructure sector benefits greatly from the economic development and urbanisation of the region and we believe the Fund offers ample investment opportunities in this area. 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 believe that the new Indian government has been given a strong mandate to push through progrowth reforms. The market continues to face structural problems such as high fiscal deficit and inflation but we view that the macro backdrop should improve with the appropriate reforms. There could be near term risks but the positive momentum from reforms could accelerate further economic expansion in the longer term. 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 derating 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 NAV as at 30 June 2014 under review classified by i) Country Fair Value (S$) % of NAV Australia 2,316, China 2,454, Hong Kong 2,112, India 1,899, Indonesia 1,676, Japan 459, Malaysia 73, Singapore 12,877, South Korea 1,349, Taiwan 349, Thailand 1,135, Portfolio of investments 26,702, Other net assets 5,513, Total 32,216, ii) Industry Energy 5,493, Financials 10,501, Industrials 6,503, Telecommunication Services 1,158, Utilities 3,045, Portfolio of investments 26,702, Other net assets 5,513, Total 32,216, iii) Asset Class Equities 16,200, Fixed deposits 10,501, Other net assets 5,513, Total 32,216, iv) Credit rating of debt securities 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$) % OIL SEARCH LTD 1,701, CNOOC LTD 1,535, HYUNDAI ENGINEERING AND CONSTRUCTION 1,349, KEPPEL CORPORATION LIMITED 1,240, HUTCHISON WHAMPOA LIMITED 1,142, PT PERUSAHAAN GAS NEGARA 1,129, GLOW ENERGY PCL - NVDR 1,035, YUEXIU TRANSPORT INFRASTRUCTURE LTD 969, CSR CORP LTD - H 918, POWER GRID CORP OF INDIA LTD 780, largest holdings at 30 June 2013 Percentage of total net assets attributable to Fair Value unitholders (S$) % GAMUDA 1,278, HYUNDAI ENGRG AND CONST 1,209, MAPLETREE COMMERCIAL TRUST 1,125, BHP BILLITON LIMITED 1,092, OIL & NATURAL GAS CORP LTD 1,087, LARSEN N TOUBRO (INR) 1,064, OIL SEARCH LTD 1,047, OIL INDIA LTD 1,021, ENN ENERGY HOLDINGS LTD 939, KEPPEL CORPORATION LIMITED 884, D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2014 ii) net gains/(losses) on derivative contracts realised during the financial period ended 30 June 2014 iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June

9 E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June 2014 F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2014 G) Amount of redemptions and subscriptions for the period 01 January 2014 to 30 June 2014 Total amount of redemptions SGD 4,089,427 Total amount of subscriptions SGD 1,529,427 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 162,949 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2014 iii) Investment in Initial Public Offerings managed by UOB Group iv) As at 30 June 2014 there was no brokerage income earned by UOB Kay Hian Pte Ltd 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 $666,848 (2013: $763,999) divided by the average net asset value of $32,064,138 (2013: $40,890,810) 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. 7

10 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 $5,325,782 (2013: purchases of $31,384,587) divided by the average daily net asset value of $31,244,253 (2013: $38,975,237). 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 2014 and 30 June 2013 ii) expense ratio for the period ended 30 June 2014 and 30 June 2013 iii) turnover ratios for the period ended 30 June 2014 and 30 June 2013 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. 8

11 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2014 (Un-audited) 30 June 30 June $ $ Income Dividends 751, ,740 Interest 2, , ,216 Less: Expenses Management fee 232, ,870 Trustee fee 6,199 7,730 Audit fee 7,984 7,240 Registrar fee 12,483 12,397 Valuation fee 19,371 24,156 Custody fee 16,046 16,442 Interest expenses Transaction cost 113, ,364 Other expenses 47,301 21, , ,831 Net income/(loss) 298,938 (189,615) Net gains or losses on value of investments Net gain/(loss) on investments 3,592,799 (1,114,626) Net foreign exchange loss (29,997) (51,033) 3,562,802 (1,165,659) Total return/(deficit) for the period before income tax 3,861,740 (1,355,274) Less: Income tax (26,036) (41,830) Less: Capital gain tax (185,934) - Total return/(deficit) for the period 3,649,770 (1,397,104) 9

12 STATEMENT OF FINANCIAL POSITION As at 30 June 2014 (Un-audited) 30 June 31 December $ $ ASSETS Portfolio of investments 26,702,810 28,071,905 Receivables 59,929 16,143 Cash and bank balances 5,886,910 3,649,737 Total Assets 32,649,649 31,737,785 LIABILITIES Payables 433, ,791 Purchases awaiting settlement - 284,233 Total Liabilities 433, ,024 EQUITY Net assets attributable to unitholders 32,216,531 31,126,761 10

13 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 31,126,761 40,969,488 Operations Change in net assets attributable to unitholders resulting from operations 3,649,770 (1,358,407) Unitholders contributions/(withdrawals) Creation of units 1,529, ,032 Cancellation of units (4,089,427) (9,140,352) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (2,560,000) (8,484,320) Total increase/(decrease) in net assets attributable to unitholders 1,089,770 (9,842,727) Net assets attributable to unitholders at the end of the financial period/year 32,216,531 31,126,761 11

14 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary Quoted Equities and Fixed Deposits Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June 30 June 30 June $ % AUSTRALIA OIL SEARCH LTD 149,520 1,701, SINO GAS & ENERGY HOLDINGS LTD 3,270, , TOTAL AUSTRALIA 2,316, CHINA CNOOC LTD 686,000 1,535, CSR CORP LTD - H 979, , TOTAL CHINA 2,454, HONG KONG HUTCHISON WHAMPOA LIMITED 67,000 1,142, YUEXIU TRANSPORT INFRASTRUCTURE LTD 1,364, , TOTAL HONG KONG 2,112, INDIA OIL & NATURAL GAS CORP LTD 67, , OIL INDIA LTD 43, , POWER GRID CORP OF INDIA LTD 270, , TOTAL INDIA 1,899, INDONESIA PT PERUSAHAAN GAS NEGARA 1,926,500 1,129, PT TELKOMUNIKASI INDONESIA 2,108, , TOTAL INDONESIA 1,676, JAPAN KUBOTA CORPORATION 26, ,

15 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary (continued) Quoted Equities and Fixed Deposits Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June 30 June 30 June $ % MALAYSIA DIALOG GROUP BERHAD 50,000 73, SINGAPORE KEPPEL CORPORATION LIMITED 115,000 1,240, REX INTERNATIONAL HOLDINGS 829, , SINGAPORE TELECOMMUNICATIONS LTD 159, , TOTAL SINGAPORE 2,375, SOUTH KOREA HYUNDAI ENGINEERING AND CONSTRUCTION 19,022 1,349, TAIWAN AIRTAC INTERNATIONAL GROUP 26, , THAILAND GLOW ENERGY PCL - FOREIGN 31,200 99, GLOW ENERGY PCL - NVDR 323,800 1,035, TOTAL THAILAND 1,135, Total Quoted Equities 16,200,

16 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Geography - Primary (continued) Quoted Equities and Fixed Deposits Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June 30 June 30 June $ % Fixed Deposits SINGAPORE OVERSEAS-CHINESE BANKING CORPORATION 5,500, UNITED OVERSEAS BANK LIMITED 5,001, TOTAL SINGAPORE 10,501, Portfolio of investments 26,702, Other net assets 5,513, Net assets attributable to unitholders 32,216,

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

18 STATEMENT OF PORTFOLIO As at 30 June 2014 (Un-audited) By Industry - Secondary Quoted Equities and Fixed Deposits Percentage of Percentage of total net assets total net assets attributable to attributable to Fair value at unitholders at unitholders at 30 June 30 June 31 December $ % % Consumer Discretionary Energy 5,493, Financials 10,501, Industrials 6,503, Information Technology Materials Telecommunication Services 1,158, Utilities 3,045, Portfolio of investments 26,702, Other net assets 5,513, Net assets attributable to unitholders 32,216,

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