Black­Rock un­der­weight on Malaysia

The Sun (Malaysia) - - SUNBIZ - BY EE ANN NEE

KUALA LUMPUR: As­set man­ager Black­Rock is un­der­weight on Malaysia’s fixed-in­come out­look and dis­likes Malaysia’s eq­uity mar­ket, given greener pas­tures in other parts of the world and pro­tracted struc­tural re­forms here, said Black­Rock manag­ing di­rec­tor and head of multi-as­set plat­form strat­egy Asia Pa­cific Steven Moeller.

“We con­tinue to be un­der­weight on Malaysia but we also see things be­gin­ning to im­prove. But we still need to see cer­tain things (struc­tural re­forms) hap­pen in Malaysia be­fore we move to an over­weight po­si­tion,” he told a me­dia brief­ing here yes­ter­day on 2017 Asia In­vest­ment Out­look.

Moeller is tak­ing a wait-and-see stance fol­low­ing Don­ald Trump’s vic­tory in the US pres­i­den­tial elec­tion and re­mains cau­tious on his views.

Black­Rock has been over­weight on the eq­uity mar­kets in Asia and the emerg­ing mar­kets given the eco­nomic re­forms and val­u­a­tions, as­sum­ing no ma­jor change to trade poli­cies. It is also over­weight on the fixed-in­come mar­ket in Asia and emerg­ing mar­kets given im­proved fun­da­men­tals.

AmIn­vest se­nior vice-pres­i­dent of re­tail and re­tire­ment funds Alex Tan said it is still a wait-and-see po­si­tion un­til the first quar­ter next year but the al­ter­na­tive plan for in­vestors is Asia.

“Asia is still a lu­cra­tive plat­form for all of us,” said Tan.

He said Malaysian in­vestors are putting their money into fixed in­come, go­ing into the Asia-Pa­cific mar­kets and opt­ing for al­ter­na­tive as­sets and the safe-haven type of funds.

“They’re not go­ing into ag­gres­sive global funds. We don’t see a trend of that just yet. It’s still Asia and Asia Pa­cific,” said Tan.

He said in­vestors hunt for yields and AmIn­vest must look for dif­fer­en­ti­ated as­sets that pro­vide such yields.

“At this point of time, we don’t see that much op­por­tu­ni­ties in Malaysia just yet,” Tan said.

Mean­while, Black­Rock’s head of Asian eq­ui­ties An­drew Swan said in a state­ment he is in­creas­ingly op­ti­mistic on Asia given pos­i­tive signs of re­fla­tion and a re­cov­ery of nom­i­nal gross do­mes­tic prod­uct growth in China; which should lead to dra­matic im­prove­ment in in­dus­trial prof­its and plays very pos­i­tively for the re­gion.

For Asia, the key near-term risk is a con­tin­ued strength­en­ing in the US dol­lar which puts po­ten­tial is­sues such as ren­minbi de­val­u­a­tion risk back on the ta­ble as well as al­low­ing less pol­icy flex­i­bil­ity among Asian cen­tral banks.

“Given tepid global growth, we do not fore­see a mean­ing­ful rise in US rates de­spite signs of de­fla­tion fad­ing,” Swan said.

Val­u­a­tions re­main be­low long-term his­tor­i­cal av­er­ages and al­ready re­flect neg­a­tive sen­ti­ment and po­si­tion­ing.

Asian Credit head Neeraj Seth said they have a broadly pos­i­tive view on Asian credit fun­da­men­tals go­ing into 2017. Val­u­a­tions re­main at­trac­tive rel­a­tive to tra­di­tional fixed-in­come as­sets, sup­ported by a good tech­ni­cal back­drop.

How­ever, given the shift in risk sen­ti­ment and US in­ter­est rate moves post elec­tion, Black­Rock is cau­tious in the near term un­til there is fur­ther clar­ity on US poli­cies.

Moeller: Wait & see Tan: It’s still Asia

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