The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
As a result of last monthÆs pullback, Singapore-registered funds have now given back a large part of the gains for the year to date, posting an average return of only 8.63% in the first 11 months of 2007.
Apart from commodities funds, which were up 2.75% on-average, and guaranteed products, which were up 0.41% on-average, all other asset classes finished the month in the red on-average.
Equity funds were hardest hit by the downturn, posting an average 5.40% loss, with Greater China and real estate plays recording steep falls.
ôNovember saw global stock markets awash in a sea of the red, following the worsening credit crisis in the United States,ö says Singapore-based Kenneth Koh, head of research for Asia ex-Japan at Lipper. ôInvestors were spooked by surging oil prices, while CitigroupÆs subprime losses exacerbated fears of a full-scale meltdown in global markets.
Along with regional bourses, SingaporeÆs Straits Times Index took its cue from a tumbling Wall Street and slumped nearly 13% at one stage to touch a low of 3,306.53 points. News of a capital injection into the US financial giant helped to calm frazzled nerves, while The Straits Times Index managed to close on a slightly firmer note at 3,521.27 points, sustaining nonetheless a rather hefty 7.47% hit for the month.
ôOn the home front the once-torrid property market saw an erosion in sentiment and a drop in prices of land sales, following the stock market turmoil,ö Koh notes. ôMacro risks have risen for the countryÆs key conglomerates on the back of tightening credit markets, the depreciating greenback, and an increasingly stretched China market.ö
Recent macroeconomic data show SingaporeÆs electronic domestic exports continued to contract for the ninth consecutive month, declining 7.2% on a year-on-year basis in October 2007. Electronic shipments to SingaporeÆs two largest market û the US and the European Union û both shrank. The shortfall was cushioned, however, by a 19.8% surge in pharmaceutical and petrochemical exports, underscoring the countryÆs success in diversifying itself away from the electronics sector. This helped SingaporeÆs closely watched non-oil domestic exports expand 6.8% year on year in October to S$15.8 billion and to improve on the previous monthÆs 2.2% growth.
The Monetary Authority of Singapore (MAS) has indicated the countryÆs outlook for 2008 is more uncertain because of a sluggish US economy, which would impact on Singapore's trade-led economy. The latter is expected to grow at a slower pace of 4.5%-6.5%, compared with a 7.5%-8.0% expansion this year, because of the anticipated short-term weakness in external demand in the first half of the year. Inflation is also seen to accelerate because of rising rents, wages, and global oil prices.
As markets head toward the final leg of the quarter expectations of a further 25-basis-point cut in the US benchmark interest rate in December have lent some support to nervous investors, while recent stronger economic data have eased concerns about the flagging United States economy, Koh notes.
æThe US presidentÆs announcement of measures to help contain the subprime mortgage crisis by stemming rising home foreclosures, while far from being universally accepted, has also brought some semblance of calm to the markets,ö Koh says. ôTrading in the regional bourses is, however, likely to remain cautious until a clearer picture emerges, while profit-taking on the upside is likely to keep a cap on valuations.ö
Average November performance of fund groups registered for sale in Singapore, by asset types:
Guaranteed Funds 0.41%
Bond Funds -0.27%
Money Market Funds -0.32%
Protected Funds -0.98%
Hedge Funds -0.99%
Mixed-Asset Funds -2.42%
Equity Funds -5.40%
Top 5 fund sectors in terms of performance in November, with their average gain:
Bond EUR Inflation Linked +3.64%
Bond Emerging Markets Europe +2.01%
Bond EuroZone +1.66%
Bond EUR Short Term +1.65%
Bottom 5 fund sectors in terms of performance in November, with their average loss:
Equity Taiwan -12.40%
Equity China -11.54%
Equity Sector Real Estate -10.54%
Equity Greater China -10.46%
Equity Korea -9.48%
Top 5 equity funds in November, with gain:
ABN AMRO Health Care A EUR +1.64%
ABN AMRO Utilities A EUR +1.31%
ABN AMRO Consumer Goods A EUR +0.81%
Fidelity Funds - Global Health Care A +0.80%
Lion Capital Glob Healthcare A +0.54%
Bottom 5 equity funds in November, with loss:
Celsius China Accelerated Growth HKD A -15.19%
HSBC GIF Chinese Equity AD USD -14.40%
Parvest China C -13.81%
ABN AMRO China Equity A USD -13.77%
UniFund Equity Malaysia/Singapore -13.30%
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
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