Asia in Choppy Water

Into 2004, the Asian stock markets become highly capricious. Last year's outperformers - Thailand, India and the Greater China region - underwent steep sell-off due to ......

Morningstar Analysts 06 May, 2004 | 0:00
Facebook Twitter LinkedIn



Into 2004, the Asian stock markets become highly capricious. Last year's outperformers - Thailand, India and the Greater China region - underwent steep sell-off due to outbreak of diseases and implementation of macroeconomic control measures, whereas the laggards like South Korea and Malaysia fared better on election results conformable to public wishes and improving economic situation. Overall, the stock markets in South Asia enjoyed a steadier ride so far this year.


By and large, equity funds with Asian regional focus differ primarily in whether they invest in Japan or not. For those that exclude Japanese equities from their selection universe, the major market focus tends to fall on the four little dragons with greater emphasis on South Korea. As most global equity funds do have a bit of Japanese investments, these Asian ex-Japan offerings could serve the purpose to increase exposure to Asia in a more diversified way.


Aberdeen IF - Asia Pacific
Morningstar Overall Rating:
Fund manager Hugh Young has been leading the management team since this fund's inception in 1992. The fund gained 61% last year, and its performance over the past two to five years stays at the top 10% in the Asia ex Japan Equity category. Moreover, it continues to be less volatile than most of its peers in the group.


Taking a growth-at-a-reasonable-price approach, Young looks for medium- to large-sized firms that have well-defined businesses, strong cash position and quality management in the region. The portfolio usually constitutes of 45 to 55 investments encompassing more than 10 countries in the zone; nonetheless, South Korea, Hong Kong and Singapore -- the three more developed markets typically account for 40% of the fund's assets. The fund has been benefiting from its financial basket of banks (including India's ICICI, Singapore's United Overseas Bank, Wing Hang Bank in Hong Kong and others) that achieved impressive quarterly results as investment sentiment and loan quality improved. Compared to its peers, this fund holds more assets in Singapore and India.


Hamon Asian Funds - Asian Market Leaders
Morningstar Overall Rating:
Fund manager Adrian Au joined the management team in January 2003 and took over the lead manager role in September 2003. The fund extended its strong performance to add 64% in 2003 and its nearly 20% annualized returns for 3- and 5-year terms continued to surpass many of its peers in the Asia ex-Japan Equity category.


Au prefers to medium- and small-caps in the region, but blue chips such as Samsung Electronics are also his longtime favorites. This portfolio is generally made up of around 60 holdings but the average weight of each item is kept below 2% of the total assets. Au has kept 40% to 50% stakes in the Greater China region over the year. Meanwhile, he raised the fund's cash level noticeably in the past 2 months and shifted the investment theme to the consumption sector, which helped the fund to weather the recent stock-market slump across the region. Moreover, the manager took the recent market weakness to pile on growth candidates, especially tech-related stocks in Taiwan and South Korea that have recorded strong results. For example, Au added wager on United Microelectronics Corp (UMC), which just announced a 17-fold increase in its quarterly earnings.


JF Eastern
Morningstar Overall Rating:
Edward Pulling assumed the manager role in June 2002. While this fund recorded a total return of 40% in 2003, its calendar-year achievement was below the average of the Asia ex Japan Equity category.


Pulling has a bias towards large-caps in the zone, particularly those in South Korea and the Greater China region. Last year, the fund's exposure to the technology sector was boosted by a revived demand in technology and electronic products; improved market sentiment also gave banking and property holdings a lift. Since the manager has not toned down his relatively aggressive positioning recently, investors should expect some wild swing in this fund.


    Trailing Total Returns Calendar Year Returns
Fund Name Morningstar Overall Rating 3 Months YTD 1 Year 2003 2002 2001 2000
Hamon Asian Market Leaders   -1.828% 3.794% 75.971% 64.741% -5.987% 6.999% -37.277%
JF Eastern   -4.534% -0.115% 50.618% 40.509% -13.172% -6.512% -22.972%
Aberdeen IF Asia Pacific   -4.697% -0.231% 61.728% 61.006% 6.218% -0.258% -17.076%
* Source: Morningstar Asia Limited. Return in USD through 4 May 2004 . Morningstar Overall Rating results based on the weighted average of the number of stars assigned to it in the 3-year, 5-Year and 10-year rating periods.

Facebook Twitter LinkedIn

About Author

Morningstar Analysts  -

© Copyright 2024 Morningstar Asia Ltd. All rights reserved.

Terms of Use        Privacy Policy         Disclosures