Monday, March 14, 2011

ATR KimEng sees stellar performance of Asian equities in 2011

ATR Kim Eng Management expects the Asian equities to keep their strong performance this year.

According to Jun Tarrobago, Vice President and Equity Portfolio Manager for International Equities, the outlook for non-Japan Asian equity markets is positive, with potential returns of at least 20 percent as structural growth and balance sheet quality continue to make Asian stocks a magnet for liquidity inflows.

Given this scenario, he said the investment strategy is to “overweight” Asia with investments to Greater China and countries in the northern part of the region.

“Asian GDP growth is expected to decelerate from a high base, but toward a healthy and more sustainable rate of about 6 percent. This reflects a gradual departure from the old Asian growth model (investments-led) into a more consumer-led type of growth,” he said.

Also, tempered GDP and corporate earnings growth targets leave room for significant forecast upgrades.

“Valuations are below historical averages and far from bubble territory, in terms of both forward earnings (12x) and book value (1.7x). The strategy is to remain overweight, with meaningful upside seen in the financial, consumer, infrastructure and technology sectors,” added Tarrobago.

And while inflation risk is becoming significant, he said the situation is still manageable. “Asian central banks have in fact started monetary tightening as early as last year,” Tarrobago explained.

Nevertheless, there could be major challenges involving the policy makers' ability to contain inflation and capital inflows, so as not to threaten financial stability.

“This may usher creative policy responses, with interest rate hikes more pronounced in Latin America and Eastern Europe,” he said.

In 2010, ATR KimEng Asset Management launched the Asia Plus Recovery Fund with the aim of democratizing investments beyond the Philippines, primarily in Asia. It employs the multi-manager approach, investing in selected funds and listed stocks. The fund has returns of 12.44% as of February 3.

The AsiaPlus Recovery Fund is ideal for investors who are looking to diversify and take advantage of the strongest investment themes in Asia and other overseas markets. The fund is suited for investors pursuing a growth strategy and who have a medium to long-term investment horizon. It offers investors access to international stocks through an investment vehicle, which is registered with the Securities and Exchange Commission.

About ATR KimEng Asset Management

ATR AM is part of the ATR KimEng Group. The ATR KimEng Group operates in the capital markets, insurance and real estate businesses. The Group’s flagship holding company is ATR KimEng Financial Corporation (ATRKE Financial), which is publicly traded on the Philippine Stock Exchange under the ticker symbol ATRK.

ATR KimEng Financial is 32% owned by ATR Holdings, Inc., a privately-held Philippine corporation which in turn is partly owned by Messrs. Ramon B. Arnaiz, Manuel N. Tordesillas and Lorenzo Andres T. Roxas (whose surnames form the acronym “ATR”), along with other prominent investors.

Another 42% of ATRKE Financial is held by Kim Eng Holdings Ltd. (Kim Eng), Singapore’s largest independent stock broker, which has been an investor in the group since 1998. The 25% remainder of ATRKE Financial’s shareholder base consists of the investing public or free float.

ATR AM was established in July 1995 and was originally named The Mutual Fund Management Company of the Philippines, Inc. prior to the change in its corporate name in December 2009. ATR AM currently mages the following Funds:

a. The Mutual Fund Company of the Philippines, Inc. (a Balanced Fund)
b. ATR KimEng Equity Opportunity Fund, Inc.
c. ATR KimEng Money Market Fund, Inc.
d. ATR KimEng Total Return Bond Fund, Inc.

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