| Chart 1: Year-to-date performance of the FEFI |
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| Source: iFAST Compilations |
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In January, the FEFI dipped by 1.9% month-on-month to 1,351.21, in tandem with the tumble in stock markets. MSCI World was down by 4.9% while MSCI Asia Ex-Japan was 6.9% lower as compared to the previous month (All performance data are in RM terms). The global correction was triggered by China’s unexpected hike in bank reserve requirements. The central bank raised the required reserve ratio by 50 basis points to 16.0% in order to curb excessive banking lending. In addition, US president Obama’s plan on the “Financial Crisis Responsibility Fee” and the reformation of the financial sector triggered another wave of sell-down.
Table 1: FEFI Index Levels |
31-Dec-08 |
1,000.00 |
|
|
31-Jan-09 |
993.09 |
-0.7% |
-0.7% |
27-Feb-09 |
983.80 |
-1.6% |
-0.9% |
31-Mar-09 |
997.40 |
-0.3% |
1.4% |
30-Apr-09 |
1,095.10 |
9.5% |
9.8% |
29-May-09 |
1,187.70 |
18.8% |
8.5% |
30-Jun-09 |
1,196.30 |
19.6% |
0.7% |
29-Jul-09 |
1,273.90 |
27.4% |
6.5% |
31-Aug-09 |
1,307.36 |
30.7% |
2.6% |
30-Sep-09 |
1,333.65 |
33.4% |
2.0% |
30-Oct-09 |
1,339.68 |
34.0% |
0.5% |
30-Nov-09 |
1,349.65 |
35.0% |
0.7% |
31-Dec-09 |
1,377.68 |
37.8% |
2.1% |
28-Jan-10 |
1,351.21 |
35.1% |
-1.9% |
Source: iFAST Compilations, as at 28 Jan 2010.Performance figures in the table are in RM terms, calculated using bid-to-bid prices, with any income or dividend reinvested. |
Malaysia – The Safe Haven
The top five equity funds in January are Malaysia equity funds. The FBMKLCI Index recorded -1.1% (in RM terms) in the same period but FEFI’s top five equity funds outperformed the Malaysian benchmark with positive performances ranging from 2.3% to 3.8%. The Malaysia market underperformed its regional peers in 2009. With lower foreign fund inflows as compared to its regional peers, the market is somewhat more defensive in withstanding the sell-down.
Asia Ex Japan Region is the Laggard
Two out of our bottom five equity funds are Asia ex-Japan funds. MSCI Asia Ex-Japan Small Cap Index posted a 6.4% decline within the same period. OSK-UOB Asian Growth Opportunities Fund underperformed with an 11.4% contraction in January, mainly due to its greater allocation into Taiwan, China and Hong Kong markets which dropped by 7.3%, 8.9% and 8.9% respectively within the same period.
OSK-UOB Big Cap China Enterprise Fund posted a negative return of 6.8%. Still, it outperformed the China market (represented by the Hang Seng Mainland Composite Index), which was down by 8.9% in January. Prudential Global Emerging Markets posted a negative return of 5.9%, slightly better than the -6.4% return of the MSCI Emerging Markets index.
As countries begin to withdraw their stimulus, more volatility is expected in equity markets. The announcement in China’s hike in bank reserve requirements and Obama’s financial sector reformation plan caused the global market correction in January. Despite the sell down, there is a lack of substantial negative developments which suggest a return of the bears. Therefore we believe this correction to be temporary and the market will eventually pick up once again and continue its upward trend. |
