By Kim Lee, Senior Fund Manager
Asian equities fell slightly in the second quarter of 2019. In local currency terms, Australia was the strongest market as investors reacted positively to the return of the Liberal-National coalition government, particularly with regards to banks and other financial stocks.
The ASEAN nations also did well in Q2, with Joko Widodo re-elected as President of Indonesia in April causing an inflow of foreign capital back into the equity market. In addition, the region was supported by a more positive sentiment surrounding the global economy in general and the resumption in US/China trade talks specifically. Despite seeing negative returns earlier in the quarter, Chinese stocks rebounded on this optimism, ending June strongly. Indeed, right at the end of the month, President Trump and President Xi met at the margins of the G20 summit in Osaka and seemed to engage in constructive dialogue.
Looking ahead into the second half of 2019, this switch in sentiment should prove to be positive for Asian equity markets, although we remain aware that politics is a fickle business and news flow could surprise to the downside next month. Therefore, as well as monitoring wider macro news flow, we are also focused on a number of attractive stock-specific stories that should thrive irrespective of sentiment. Broadly, the Asia Pacific market is attractively valued, which gives us access to a number of stock stories across diverse areas, including Social Media & Social Networking, Semi-conductors, Convenience stores, Automobiles and Sports Apparel.
Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Income from investments can fluctuate. Currency fluctuations can also affect performance.
The information contained in this document is provided for use by investment professionals and is not for onward distribution to, or to be relied upon by, retail investors. No guarantee, warranty or representation (express or implied) is given as to the document’s accuracy or completeness. The views expressed in this document are those of the fund manager at the time of publication and should not be taken as advice, a forecast or a recommendation to buy or sell securities. These views are subject to change at any time without notice. This document is issued for information only by Canada Life Investments. This document does not constitute a direct offer to anyone, or a solicitation by anyone, to subscribe for shares or buy units in fund(s).
Canada Life Investments is the brand for investment management activities undertaken by Canada Life Asset Management Limited, Canada Life Limited and Canada Life European Real Estate Limited. Canada Life Asset Management Limited (no. 03846821), Canada Life Limited (no.00973271) and Canada Life European Real Estate Limited (no. 03846823) are all registered in England and the registered office for all three entities is Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Canada Life Asset Management is authorised and regulated by the Financial Conduct Authority. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
CLI01453 Expiry 30/09/2019