Market Review

2 April 2022

 

Dear Fellow Investor,

Resilience characterizes price movement in our local market as well as Singapore. With extreme volatility in developed markets such as the US, UK and most developed markets the KLSE and SGX have been relatively stable.  A major support has been low inflation rates.  Annual inflation in Malaysia is well contained and according to Bank Negara is at 2.5 %. Singapore is higher at 4 % while in the US according to Bloomberg is at 7.9 % . Reasons include lower money supply growth and more conservative monetary policies. Malaysia has benefited because we are a  net exporter of crude oil and crude palm oil. and we are able to maintain trade surpluses.  The subsidized price of Ron 95 makes petrol the cheapest in Asia. 

Large inflows of foreign funds into Asia, China  as well as Malaysia and Singapore are evidence of smart money buying beaten down quality shares  trading at reasonable valuations compared to shares in developed markets.

This week Mark Mobius in the Edge recommends Asian shares as he sees inflation gradually rising and quality equities in this region offer the best inflation protection and offer reasonable risk to reward.  He likes shares with pricing power and ability to pass on costs to consumers. His funds are participating.

Every week I scan the sectors to identify where money is flowing. Flow is returning with the reopening of the borders and hospitality, tourism, retail and aviation are benefiting.    One very high quality Reit we hold for some clients is Sunway Reit. Occupancy rates are up, customer traffic in their malls has increased and they will benefit from the influx of tourists.  

Plantations should continue to benefit. The war in Russia/ Ukraine, supply chain disruptions, sanctions will lead to higher grain prices and shortages.   Now even Europe who has been anti palm oil for years has changed their tune and is buying palm oil.  Our holdings in United Plantations and Kim Loong should participate in this trend. 

To all our Muslim friends and clients we with you a safe and Happy Ramadan.

Bill