20.12.2013

With a growing young workforce, a rapidly-expanding middle class driving rising domestic demand and outperforming regional markets, the South-East Asia region is one no investor can afford to overlook. Investing in equities and equity-related securities of companies located in the Association of Southeast Asian Nations (ASEAN), the WIOF South-East Asia Performance Fund offers investors the chance to take advantage of the growing economies and markets of one of the world’s most economically-dynamic regions.

 

PROVEN OUTPERFORMANCE

The Fund has repeatedly been awarded international fund ratings agency Morningstar’s top rating – its performance putting it in the top 10% of its peers in Morningstar’s ASEAN Equity category - since its inception.

 

And it is set to continue to outperform as it draws on the attractive investment fundamentals offered by some of the most dynamic economies in the world, including:

 

  • An estimated combined regional population of 500 million and GDP of USD2 trillion.
  • A combined market capitalization of USD1.9 trillion.
  • Strong and growing domestic demand driven by an expanding young workforce and a growing and affluent middle class.

 

PERFORMANCE (USD)

 

DEFINED BY GROWTH

The South-East Asia region is defined by its growth, both economically and physically. Domestic demand is expected to keep growing at the same time as the region’s young workforce and middle class expands, and FDI and infrastructure spending rises. Regional GDP growth has been strong in recent years and it is expected to continue to outstrip that of major western economies in the coming years.

 

 

GDP growth (annual %)

Country

2012

2013

2014F

2015F

Indonesia

6.2

6.3

6.4

6.4

Malaysia

5.6

5.1

5.2

5.2

Thailand

6.4

5.8

4.2

4

Philippines

6.5

6

5.4

5.3

Singapore

1.3

2

5.1

4.1

USA

2.2

1.8

3

3.5

United Kingdom

0.2

0.7

1.5

1.8

Source: IMF

 

But while there is often a perception that the ASEAN region’s growth is export dependent – something which could potentially hurt the region in the current global downturn - the reality is that domestic demand is now playing a much greater role in boosting growth, not just in larger, more closed economies like Indonesia, but even in traditionally more export-oriented economies like Thailand and Malaysia.

 

REFORMS AND SUPPORT

A number of other fundamental developments are also strengthening the region’s economic health and, subsequently, investment opportunities:

 

  • Governments in the region are moving to support their economies with a range of fiscal and other policy measures including income tax cuts, hikes in minimum wages and spending on infrastructure and rebuilding. Together these should bolster investment spending and domestic consumption.
  • China’s investment in Asia has been growing at double digit rates in recent years and between 2011 and 2012. Already the provider of more loans to developing countries than the World Bank, according to research by the Financial Times, China finances numerous agriculture, hydropower, housing, railway and mining projects in the region. While this creates job opportunities and provides an investment boost to the local economy, it also introduces an element of potential competition for domestic companies.
  • Governments in the region have been proactive in encouraging foreign direct investment into their respective economies in recent years. Given the prospects of lacklustre global growth, ASEAN economies are expected to pursue more active reforms to continue attracting more investment into the region.

 

GROWING CO-OPERATION

The region’s potential is also being seized upon by the countries within it. Over the past three decades, economic links between ASEAN members have grown tremendously and in the last ten years intra-ASEAN trade has grown faster than total ASEAN exports. ASEAN countries have all committed themselves to creating an ASEAN Free Trade Area, an ASEAN-wide manufacturing base, an ASEAN Investment area, and ultimately a single ASEAN integrated economy. The 1997 Asian financial crisis tested this commitment and found ASEAN to be committed in its programmes for economic integration. All this can only be good for investors in the longer term as an integrated ASEAN Economic Community (AEC) is expected to allow for easier liberalisation and facilitation of investments into the region which would help make ASEAN countries more globally competitive.

 

OUTLOOK

Regional economies such as Indonesia and Thailand are currently seeing a slowdown in growth momentum although they are still expanding at a fairly high rate. Coupled with weakening currencies, a more volatile period can be expected in the near-term. However, there are many exciting opportunities in the ASEAN region and prospects remain bright. ASEAN governments are committed to reforms in various areas to maintain growth and investment in the region. Gradual liberalisation, removal of subsidies and tariffs and other incentives are being seen in various ASEAN countries.

INVESTMENT ADVISER

The Fund’s investment adviser is the award-winning Asian investment specialist CIMB-Principal Asset Management, part of CIMB Group, South East Asia’s fourth largest banking group. It has USD10.2 billion of assets under management and an integrated team of more than 50 investment professionals across the region using their local knowledge and presence to ensure clients get the best possible service.

 

IMPORTANT NOTE: This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Investment Opportunities Funds (“WIOF”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 17 December 2010 on collective investment undertakings as an open-ended investment company. WIOF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WIOF prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser/legal adviser/tax adviser and refer to all relevant documents relating to the WIOF and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser/legal adviser/tax adviser, they should consider whether the WIOF is a suitable investment for them.