LF Canlife Asia Pacific Fund Update

fundamentals outweigh sentiment

BY KIM LEE, SENIOR FUND MANAGER

Asian equities struggled in the third quarter, as trade war rhetoric continued between the US and China. This caused a sell-off in the market as the outcome is still very uncertain. However, despite this short-term noise, we believe the long-term outlook remains fundamentally positive. Market falls in China have been very much sentiment-driven, as the US accounts for just 5% of the sales of listed Chinese stocks – the domestic market is much more important.

Foreign investment is also continuing apace, with BMW for example producing the new iX3 in the country. Therefore, although the US is pulling back, China remains an incredibly important market for global multinationals. Elsewhere, there are also numerous other opportunities across the region, with the ASEAN nations benefiting from the burgeoning middle classes, Australia offering value and M&A opportunities and Korea home to a high concentration of technology and biotech companies.

We have retained conviction in the Fund’s positioning, focusing on our favoured areas which include Chinese consumption, electric vehicles, innovation and automation and the urbanisation of the Greater Bay Area, linking South China, Hong Kong and Macau. Although the market may be driven more by noise and sentiment in the short-term, we believe these offer long-term value for investors in Asian equities.

Important Information

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. Currency fluctuations can also affect performance. Due to the underlying assets held, the price of the Fund is classed as having above average to high volatility.

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). Subscription for shares and buying units in the fund(s) must only be made on the basis of the latest Prospectus and the Key Investor Information Document (KIID) available at www.canadalifeinvestments.com.

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.

CLI01306 Expiry on 31 January 2019

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