BY KIM LEE, SENIOR FUND MANAGER
Following a difficult end to 2018, equities rallied strongly in the first three months of 2019, as investors took a more positive view on ongoing macroeconomic and geo-political issues. In particular, there was encouraging news-flow surrounding the US-China trade negotiations. A temporary truce was first initiated by both governments in December last year, with face-to-face talks then progressing in Q1. There was also an economic pick-up in the Chinese economy in Q1, driven in part by an increased availability in credit and many market participants believe the government will continue to adopt a supportive stance.
As a result, China was one of the strongest performing equity markets in the first quarter, with the Fund’s significant weighting here proving beneficial to overall relative performance. For example, large-cap technology giants Tencent and Alibaba saw significant gains. Markets linked to the Chinese economy, such as Australia, also performed well. Elsewhere in Asia, Korean stocks under performed due to a softer corporate outlook and the swift end to the US – North Korea summit. The ASEAN nations also lagged in performance terms, with the Thai election outlook remaining uncertain.
Looking forward, the ongoing negotiations between US President Trump and Chinese President Xi Jinping should help support the outlook for Asian equity markets, whilst valuations are also attractive. Importantly for us, looking past the macroeconomic and geopolitical news-flow, there also still remains a number of attractive stock-specific stories that we are invested in. These are based on a number of themes, such as the growth of electric vehicles, automation and the growth in domestic consumer spending across the region, that should remain uncorrelated to the wider market and deliver long-term growth to the portfolio.
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.
CLI01402 Expiry 30/06/2019