Country Weighting
Fund Review
12/30/2011
Asian stock markets were volatile in December as investors remained concerned over Europe's debt crisis, despite news of the European Central Bank injecting cash into euro-zone banks.
The Fund was largely flat, compared with the benchmark which rose 1.3%. Overweight positions in the ASEAN countries of Indonesia, Thailand and the Philippines performed well for the Fund, while Indian holdings pulled down the performance.
ASEAN consumer stocks were top performers for Fund, including Thai department stores and Philippine hypermarkets. Market friendly announcements such as interest rate cuts in Thailand and the approval of Indonesia's land acquisition bill, boosted our property holdings. A Thai telecom stocks also outperformed after the company announced a higher than expected special dividend.
Chinese banks and financials climbed modestly as the PBOC's reserve requirement ratio cut came earlier than expected. Easing monetary policies and more construction of low cost housing benefited our cement holdings.
Underperformers were mainly concentrated in Indian small caps stocks. The worst performer was an Indian luggage company, that was hit by a weaker Rupee. Interest rates sensitive stocks such as banks and financials, also lost ground after the RBI left interest rate unchanged. As such, the Fund reduced weighting in India after these disappointments.
The Fund believes that Asian markets are attractively valued, trading below long-term averages. Besides abating inflation pressure, leading market indicators such as the OECD and PMI readings appear to have bottomed and are now signaling a nascent recovery for 2012. The European debt crisis continues to be the main concern for the equity markets. As the issue is being resolved and policy makers across the region shift from anti-inflation to pro-growth, the Fund believes that equity markets should recover in 2012.
* The Fund has changed its index from MSCI AC Far East ex-Japan to MSCI Daily TR AC Far East ex-Japan Net with effect from 1 January 2007.
Important Information:
Investment involves risk. Past performance is not indicative to future performance. The fund may invest in emerging markets and derivative instruments and thus involve higher risk and volatility. Before investing, please refer to the offering document(s) for details, including the risk factors.
The document is issued by Hamon Investment Group and has not been reviewed by the SFC. It is not a recommendation, an offer or invitation to investment. Consult your financial advisor before making any investment decisions.
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