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STANLIB Global Emerging Markets Fund STANLIB Offshore Ltd STANLIB Global Emerging Markets Fund News Stanlib Global Emerging Markets Fund - Sep 19 Monday, 9 December 2019 Fund Manager Comment Market Background The MSCI Emerging Markets (EM) index fell in the third quarter. Global and EM equities traded with heightened volatility on US-China trade concerns and related worries about the global economy. A strong US dollar was an additional headwind for EMs. However, an increasingly dovish stance by the Federal Reserve, which cut US interest rates twice over the quarter, supported the asset class. Meanwhile, monetary policy easing in China helped EM markets to rebound in September. Chinese equities sold off in August after President Trump’s announcement of a new 10% levy on $300bn of Chinese imports. The US later stated that it may restrict portfolio flows into China. The Chinese central bank unveiled monetary stimulus, cutting banks’ reserve requirements to improve liquidity. Indian equities were hurt by disappointment over the government’s new budget but later rallied amid optimism around a cut to the corporate tax rate. Taiwan enjoyed a positive quarter, helped by a recovery in technology stocks, and indications of strong demand for smartphones and 5G. In Latin America, there was continued progress in the Brazilian pension reform bill, which is viewed as an important tool to increase further growth potential. Argentine stocks sold off sharply as incumbent President Macri unexpectedly lost a primary election, stoking concerns that populists could triumph in the upcoming elections. In EMEA, Russian stocks were affected by oilprice volatility. In South Africa, there were concerns over President Ramaphosa’s ability to focus on economic reform. Performance Gross of fees, the fund outperformed its index in the third quarter. At the sector level, selections in financials contributed most to outperformance, further helped by selections and the underweight in materials, and picks in healthcare. Selections in technology and industrials also added alpha. By country, selections in Brazil, India, South Korea and South Africa proved most supportive. On a stock level, HDFC Life Insurance was the main contributor over the quarter, as robust growth continues to be supported by the quality franchise while India’s life insurers are enjoying strong new-sales volume. Brazil’s Notre Dame also added alpha, continuing to reap the benefits of growth in the Brazilian healthcare sector. Chinese pharmaceutical company WuXi Biologics contributed, as the company has a positive outlook due to the strong growth in its drug order backlog. Detractors over the quarter included AIA, HDFC Bank and BK Brasil. Outlook EM equities have been supported by the Fed’s dovish stance, following recent rate cuts, which should limit further US dollar strength. Selective stimulus by Chinese policymakers has also helped, whilst uncertainty around US-China trade talks has swayed market sentiment. A key risk over the coming months relates to the progression of a US-China trade deal, with extended negotiations likely to cause uncertainty in markets. Going forward, we anticipate both positive and negative surprises, considering issues such as deficit reduction, market access, intellectual property protection and industrial policy. In China, the government’s focus has shifted, with the start of stimulus to stabilise the economy. Reforms in EMs can be transformational in unlocking growth potential. Key developments in countries such as Brazil, Indonesia, China and India are paving the way for greater macro stability and stronger structural growth. The valuation case remains compelling, with metrics below their respective historical means.   STANLIB Global Emerging Markets comment - Mar 19 Wednesday, 12 June 2019 Fund Manager Comment Market Background The MSCI Emerging Markets (EM) index fell 7.4% in US dollar terms in a challenging quarter for the asset class. US-China trade tensions impacted EMs, though investors welcomed a temporary truce in the trade war after the G20 summit. Overall, the rotation from growth to value, which began in the third quarter, continued. Asian equities suffered across the board, particularly index heavyweights China, Korea and Taiwan. However, Indian equities were resilient, supported by lower oil prices and liquidity support from the central bank. Latin American equities were the bright spot within EMs, specifically Brazil, following Jair Bolsonaro’s presidential election. Mexican equities had a challenging quarter, owing to rising concerns about political uncertainty from the incoming administration. Activity New additions over the quarter included China’s CNOOC and Brazil’s StoneCo. During the quarter, several existing positions were topped up, including BeiGene, Mexichem and Asmedia Technology. In terms of sales, positions in NAVER, Galaxy Entertainment, and Melco Resorts & Entertainment were sold. The fund reduced its exposure to Techtronic Industries, Samsung Electronics and Industrial and Commercial Bank of China. Performance Gross of fees, the fund underperformed its index by 207 basis points. At the sector level, selection detracted, as positive picks in industrials, energy and real estate were offset by the technology, materials and consumer sectors. Allocation effects were marginally positive, due to the underweight position in materials and overweight in financials. On a country basis, stock selection detracted, especially in China and Brazil, though picks in Indonesia and Thailand added alpha. Allocation added value, due to overweight positions in Indonesia and Brazil, and the underweighting in Taiwan. Key detractors included PagSeguro, Banorte and Wuxi Biologics. Contributors included Bank Rakyat, Bank Central Asia and Brazilian airline Azul. Outlook The key concerns for EM equities are US-China trade relations, the slowdown of China’s economy and a tightening in global liquidity. In China, the focus on deleveraging has begun to slow. It seems to have turned a corner, with the government pursuing stimulus measures aimed at stabilising the economy. Structural progress is ongoing, with reforms and favourable demographics providing a compelling investment argument. The key driver for the market over the next six to 12 months is likely to be the US-China trade war, and whether we see a negotiated outcome. The recent truce increases the probability of a possible deal, which is likely to trigger an Asia-led rally. After a fall from the peak earlier in 2018, given the resilient fundamental story, current stock market valuations offer investors an attractive opportunity into solid businesses supported by structural growth trends.   Sector Changed Monday, 18 December 2017 Official Announcement The fund changed sectors from Far East--Equity--General to Global--Equity--General on 18 Jan 2014   Stanlib South East Asia comment - Mar 16 Wednesday, 15 June 2016 Fund Manager Comment Fund Review The fund returned +7.7% in dollars during the quarter to end March, outperforming the benchmark’s +5.7% return. In the year to end December the fund returned -12.4% in dollars, below the benchmark’s -11.7% return, in a mostly torrid period for emerging market equities and currencies. The fund beat the index during the quarter, mainly due to regional asset allocation decisions and also share selection added value. The underweight in China proved especially helpful, principally due to the fact that the fund had no exposure to Chinese banks and insurers. Overweights in Turkey, Thailand and in South African also added value. Share selection was strongly positive during the quarter, particularly in South Africa and in China. In South Africa the fund benefited from exposure to precious-metal producers Anglogold and Anglo American Platinum. Financials still represent the largest industry allocation at 31.1%, 2.6% above benchmark, although 9.5% of this exposure is via the Ishares India exchange traded fund. Banks are another 13.6% of this allocation. The portfolio is still very overweight in diversified financials at 13.8% versus 3.2% for the benchmark. Information Technology is the second biggest allocation at 16.3% versus 20.7% for the benchmark. Otherwise the fund is well diversified amongst a large range of industries, with Materials (including mining) at 4% versus 6.6% for the benchmark and Energy at 3.5% versus 7.7% for the benchmark. Materials produced the best return in the quarter at 51.5% (benchmark just 15.4%), followed by Financials at 13.2% (benchmark just 3.4%), then Industrials at 9.9% (benchmark 3.2%). Energy lagged at 7.5% (benchmark 15%). Looking Ahead The entire 2015 was a very challenging year for Emerging Market currencies and equities. Monetary conditions in developed markets are likely to remain accommodative for a prolonged period of time and the US tightening cycle is likely to be very shallow, alleviating pressure on emerging markets, as the cost of attracting foreign capital remains low. ColumbiaThreadneedle, the fund manager, is focusing on opportunities in markets that have made the most progress in addressing their economic imbalances, including India, Mexico, Poland, Hungary and the Czech Republic.   Stanlib South East Asia comment - Jun 14 Monday, 15 September 2014 Fund Manager Comment Fund Review The fund has returned 7.36% in dollars in the first six months of 2014, which is exactly the return for the quarter to end June too. The fund enjoyed a strong quarter, outperforming the market. Share selection, particularly in the telecoms and financials sectors, was the key driver. Overweight positions in Megafon and SK Telecom benefited the fund in the telecoms sector. Russia's Megafon continued to display strong revenue growth despite the challenges facing the Russian economy. Asset allocation also contributed to the fund's outperformance, mainly due to an overweight in IT and the underweight in materials. However, the underweight in energy detracted slightly. At the country level underweights in Indonesia and China and an overweight in the Philippines proved beneficial. Outlook Lately the Chinese economy has seen a modest cyclical rebound, in response to the government's efforts to stimulate the economy, with a nice rebound in the share market too, from a very low base. There is some optimism in India and the secondary legislation related to Mexico's far-reaching energy reform is also positive. Emerging markets generally appear to be outperforming the developed markets so far in 2014, helped too by some pickup in mining shares of late, also banking shares.   Stanlib South East Asia comment - Mar 14 Friday, 6 June 2014 Fund Manager Comment Market Background The MSCI Emerging Markets index finished March down around 40bps from the start of the year. However, this small percentage move masked a substantial amount of volatility during the quarter, as markets experienced a sharp sell-off in January, which was then made up over the course of the following two months. Tensions between Russia and the West over events in the Ukraine and political noise ahead of what will be a busy election year for emerging markets contributed to the volatility. On top of this markets saw a dramatic shift in leadership from higher-quality growth stocks towards more deep-value names in the final few weeks of the quarter. In terms of regions, LatAm was the strongest performer, driven by a sharp upturn in the Brazilian market, on signs that the incumbent president, viewed as business unfriendly, has been losing ground in the polls. Meanwhile EMEA underperformed, largely due to the selloff in Russia following the escalation of tensions in the Ukraine. Greece, a new entrant in the index, however, outperformed significantly as the Euro periphery markets remained buoyant on expectations that the European economy is finally starting to improve. Activity We initiated positions in the Turkish bank Garanti and in two Indian banks, HDFC and ICICI, and invested in the Taiwanese electronics firm Hon Hai, a Mexican media firm Televisa and the Mexican stock exchange Bolsa Mexicana. We participated in the share issuance of Alpha Bank in Greece, where the domestic macro picture shows tentative signs of stabilisation and the bad loan cycle might be peaking. We sold out of AmBev, the Brazilian beverage company and added to the exporter, Brasil Foods. We also sold out of Enka Insaat, a Turkish construction company as it reached our price target, the Taiwanese bank CTBC Financial and took profits in the Chinese internet company Baidu. Performance Sharp shifts in market leadership proved tricky to navigate and the fund underperformed. Asset allocation level was neutral. Our overweight in the Philippines, where the domestic economy remains relatively resilient, proved positive, but was offset by our underweight in Indonesia, which rallied on the nomination of a market-friendly presidential candidate. Our small overweight in Russia at the start of the quarter detracted. At the stock level, our positioning in EMEA detracted, particularly in Russia, where names such as Mail.Ru and Novatek suffered as foreigners withdrew money. Alpargatas, the Brazilian maker of Havaianas shoes, underperformed following softer 4th quarter results, as did the Chinese oil services company COSL, on the back of deteriorating sentiment towards the offshore drilling sector. Encouragingly, stock selection in Asia added value, particularly in Taiwan where the chipmaker TSMC performed strongly on seasonally robust demand from mobile device customers. Outlook Elections and political newsflow will likely remain the dominant drivers of performance for many of our markets over the coming months. So far the polls suggest that, at least in India and Indonesia, markets could get the results they want, but ultimately the decision remains in the hands of the electorates. Certainly in Turkey and Brazil, the chances of a "market friendly" result look less likely. Though investors' concerns regarding the Chinese economy may have been temporarily assuaged by the expectation of government's stimulus, the underlying issues relating to the rapid expansion of domestic credit have yet to be resolved and we would expect credit-related issues to continue to flare up over the course of the year. However, in other markets such as India and Turkey there are signs that external imbalances have started to be corrected which, combined with the more attractive yields these markets now offer, has begun to tempt investors back   Fund Name Changed Thursday, 9 January 2014 Official Announcement The STANLIB Offshore South East Asia Fund will change it's name to STANLIB Global Emerging Markets Fund, effective from 09 January 2014   Stanlib South East Asia comment - Sep 13 Thursday, 2 January 2014 Fund Manager Comment The fund returned 5% in dollars in the quarter to end September, whereas its underlying fund, the Fidelity Funds South East Asia Fund returned 5.7%, a little less than its benchmark's 6.8% (MSCI All Countries Far East, excluding Japan). For the year to end September the STANLIB Fund returned 3.3%, whereas the underlying Fidelity Fund returned 4.5%, somewhat behind the benchmark's 7.2%. The fund is also well behind the benchmark over 3 years (5.6% versus 12.6%), but is not far behind over 5 year period. The fund's underperformance may have to do with its overweight in China (32.9% versus 27.1% for the benchmark), because China has been very disappointing. The fund is equal weight in S Korea (22.4%) and a bit overweight in Hong Kong (15.8% versus 14%), but underweight in Taiwan (15.2% versus 16%). The biggest sector is Financials (28.9% versus 33.3% for the benchmark), followed by IT at 25.4% versus 19.1% for the benchmark and 15.7% in Consumer Discretionary versus 10.4% for the benchmark.   Stanlib South East Asia comment - Jun 13 Friday, 20 September 2013 Fund Manager Comment The fund generated positive returns but underperformed the index over the quarter. Security selection in Korea and China weighed on performance, as did holdings in the financials and consumer discretionary sectors. Meanwhile, selected telecommunications stocks supported returns. Selection in financials hampered returns Positions in property developers Evergrande Real Estate and Country Garden Holdings disappointed on account of their lacklustre earnings and slower contract sales momentum. An overweight stance in Bank of China also hurt performance. Its shares retreated on concerns over asset quality and pressure on net interest margins in China. Consumer discretionary stocks disappointed The overweight holding in Kia Motors held back performance. An employee strike over wages weighed on the Korean automakerÕs sales and will likely impact its third quarter earnings. The exposure to China-based Dongfeng Motor Group detracted from returns as it announced weak earnings and sluggish margins. Telecommunications holdings added value Thailand's Advanced Info Service and Taiwan's Far EasTone Telecommunications rose on the back of robust earnings. The lack of exposure to China Mobile also supported relative performance as its share price succumbed to disappointing results. Elsewhere, a stake in Chinese internet firm Sina boosted returns given its healthy earnings and upbeat guidance. South East Asian equities surged during the quarter as policy stimulus measures unveiled around the world buoyed investor sentiment. China announced a series of infrastructure investment programmes to support its faltering growth. The US Federal Reserve embarked on a third round of quantitative easing following the European Central Bank's new bond purchase plan. Moreover, the People's Bank of China eased its policy further and the Bank of Korea cut its key policy rate. On the macroeconomic front, China's second quarter GDP growth slowed to 7.6% year-on-year, its slowest pace in three years, whilst Hong Kong and Singapore shrank during the same period over the previous quarter. The weakness in the region's exports persisted, whilst activity in the manufacturing sector in China, Taiwan and Korea was sluggish. On a positive note, growth in smaller economies such as Malaysia and Thailand remained buoyant over the second quarter. All sectors ended in positive territory, with telecommunications, information technology (IT) and health care among the best performers. Meanwhile, industrials and consumer stocks lagged average market returns. The fund continues to focus on high-quality growth stocks that benefit from the region's strong structural growth drivers and are better placed to survive during tough times. Trimmed selected consumer discretionary holdings The portfolio sold positions in consumer products exporter Li & Fung and consumer electronics manufacturer LG Electronics owing to a weak earnings outlook and limited upside potential. Meanwhile, It remain biased towards automakers Hyundai Motor and Kia Motors due to their strong brand names and continued market share gains globally. Increased exposure to telecommunications It enhanced the overweight stance in telecommunications to benefit from rising smartphone penetration and data usage in the region. We purchased shares in China Unicom as its earnings should benefit from improved distribution and continued gains in 3G subscribers. Moreover, many stocks in the sector, such as Far EasTone Telecommunications and Advanced Info Service, also offer attractive dividend yields. Enhanced bias towards IT stocks We raised the exposure to online social networking firm Tencent given its solid internet platform with the largest user base in China as well as its robust gaming business. We initiated a position in Taiwan's integrated circuit chipsets maker MediaTek in anticipation of acceleration in its earnings, led by increased focus on the low-cost smartphone segment.   Stanlib South East Asia comment - Mar 13 Thursday, 30 May 2013 Fund Manager Comment Fund Performance The fund generated positive returns but underperformed the index over the quarter. Security selection in Korea and China weighed on performance, as did holdings in the financials and consumer discretionary sectors. Meanwhile, selected telecommunications stocks supported returns. Selection in financials hampered returns Positions in property developers Evergrande Real Estate and Country Garden Holdings disappointed on account of their lacklustre earnings and slower contract sales momentum. An overweight stance in Bank of China also hurt performance. Its shares retreated on concerns over asset quality and pressure on net interest margins in China. Consumer discretionary stocks disappointed The overweight holding in Kia Motors held back performance. An employee strike over wages weighed on the Korean automaker's sales and will likely impact its third quarter earnings. The exposure to China-based Dongfeng Motor Group detracted from returns as it announced weak earnings and sluggish margins. Telecommunications holdings added value Thailand's Advanced Info Service and Taiwan's Far EasTone Telecommunications rose on the back of robust earnings. The lack of exposure to China Mobile also supported relative performance as its share price succumbed to disappointing results. Elsewhere, a stake in Chinese internet firm Sina boosted returns given its healthy earnings and upbeat guidance. South East Asian equities surged during the quarter as policy stimulus measures unveiled around the world buoyed investor sentiment. China announced a series of infrastructure investment programmes to support its faltering growth. The US Federal Reserve embarked on a third round of quantitative easing following the European Central Bank's new bond purchase plan. Moreover, the People's Bank of China eased its policy further and the Bank of Korea cut its key policy rate. On the macroeconomic front, China's second quarter GDP growth slowed to 7.6% year-on-year, its slowest pace in three years, whilst Hong Kong and Singapore shrank during the same period over the previous quarter. The weakness in the region's exports persisted, whilst activity in the manufacturing sector in China, Taiwan and Korea was sluggish. On a positive note, growth in smaller economies such as Malaysia and Thailand remained buoyant over the second quarter. All sectors ended in positive territory, with telecommunications, information technology (IT) and health care among the best performers. Meanwhile, industrials and consumer stocks lagged average market returns. The fund continues to focus on high-quality growth stocks that benefit from the region's strong structural growth drivers and are better placed to survive during tough times. Trimmed selected consumer discretionary holdings I sold positions in consumer products exporter Li & Fung and consumer electronics manufacturer LG Electronics owing to a weak earnings outlook and limited upside potential. Meanwhile, I remain biased towards automakers Hyundai Motor and Kia Motors due to their strong brand names and continued market share gains globally. Increased exposure to telecommunications I enhanced the overweight stance in telecommunications to benefit from rising smartphone penetration and data usage in the region. I purchased shares in China Unicom as its earnings should benefit from improved distribution and continued gains in 3G subscribers. Moreover, many stocks in the sector, such as Far EasTone Telecommunications and Advanced Info Service, also offer attractive dividend yields. Enhanced bias towards IT stocks I raised the exposure to online social networking firm Tencent given its solid internet platform with the largest user base in China as well as its robust gaming business. I initiated a position in Taiwan's integrated circuit chipsets maker MediaTek in anticipation of acceleration in its earnings, led by increased focus on the low-cost smartphone segment.   Stanlib South East Asia comment - Dec 12 Wednesday, 29 May 2013 Fund Manager Comment Fund Performance The fund generated positive returns but underperformed the index over the quarter. Security selection in Korea and China weighed on performance, as did holdings in the financials and consumer discretionary sectors. Meanwhile, selected telecommunications stocks supported returns. Selection in financials hampered returns Positions in property developers Evergrande Real Estate and Country Garden Holdings disappointed on account of their lacklustre earnings and slower contract sales momentum. An overweight stance in Bank of China also hurt performance. Its shares retreated on concerns over asset quality and pressure on net interest margins in China. Consumer discretionary stocks disappointed The overweight holding in Kia Motors held back performance. An employee strike over wages weighed on the Korean automaker's sales and will likely impact its third quarter earnings. The exposure to China-based Dongfeng Motor Group detracted from returns as it announced weak earnings and sluggish margins. Telecommunications holdings added value Thailand's Advanced Info Service and Taiwan's Far EasTone Telecommunications rose on the back of robust earnings. The lack of exposure to China Mobile also supported relative performance as its share price succumbed to disappointing results. Elsewhere, a stake in Chinese internet firm Sina boosted returns given its healthy earnings and upbeat guidance. Market Environment South East Asian equities surged during the quarter as policy stimulus measures unveiled around the world buoyed investor sentiment. China announced a series of infrastructure investment programmes to support its faltering growth. The US Federal Reserve embarked on a third round of quantitative easing following the European Central Bank's new bond purchase plan. Moreover, the People's Bank of China eased its policy further and the Bank of Korea cut its key policy rate. On the macroeconomic front, China's second quarter GDP growth slowed to 7.6% year-on-year, its slowest pace in three years, whilst Hong Kong and Singapore shrank during the same period over the previous quarter. The weakness in the region's exports persisted, whilst activity in the manufacturing sector in China, Taiwan and Korea was sluggish. On a positive note, growth in smaller economies such as Malaysia and Thailand remained buoyant over the second quarter. All sectors ended in positive territory, with telecommunications, information technology (IT) and health care among the best performers. Meanwhile, industrials and consumer stocks lagged average market returns. Fund Positioning The fund continues to focus on high-quality growth stocks that benefit from the region's strong structural growth drivers and are better placed to survive during tough times. Trimmed selected consumer discretionary holdings I sold positions in consumer products exporter Li & Fung and consumer electronics manufacturer LG Electronics owing to a weak earnings outlook and limited upside potential. Meanwhile, I remain biased towards automakers Hyundai Motor and Kia Motors due to their strong brand names and continued market share gains globally. Increased exposure to telecommunications I enhanced the overweight stance in telecommunications to benefit from rising smartphone penetration and data usage in the region. I purchased shares in China Unicom as its earnings should benefit from improved distribution and continued gains in 3G subscribers. Moreover, many stocks in the sector, such as Far EasTone Telecommunications and Advanced Info Service, also offer attractive dividend yields. Enhanced bias towards IT stocks I raised the exposure to online social networking firm Tencent given its solid internet platform with the largest user base in China as well as its robust gaming business. I initiated a position in Taiwan's integrated circuit chipsets maker MediaTek in anticipation of acceleration in its earnings, led by increased focus on the low-cost smartphone segment.   Stanlib South East Asia comment - Sep 12 Tuesday, 20 November 2012 Fund Manager Comment The fund generated positive returns but underperformed the index over the quarter. Security selection in Korea and China weighed on performance, as did holdings in the financials and consumer discretionary sectors. Meanwhile, selected telecommunications stocks supported returns. Selection in financials hampered returns Positions in property developers Evergrande Real Estate and Country Garden Holdings disappointed on account of their lacklustre earnings and slower contract sales momentum. An overweight stance in Bank of China also hurt performance. Its shares retreated on concerns over asset quality and pressure on net interest margins in China. Consumer discretionary stocks disappointed The overweight holding in Kia Motors held back performance. An employee strike over wages weighed on the Korean automaker's sales and will likely impact its third quarter earnings. The exposure to China-based Dongfeng Motor Group detracted from returns as it announced weak earnings and sluggish margins. Telecommunications holdings added value Thailand's Advanced Info Service and Taiwan's Far EasTone Telecommunications rose on the back of robust earnings. The lack of exposure to China Mobile also supported relative performance as its share price succumbed to disappointing results. Elsewhere, a stake in Chinese internet firm Sina boosted returns given its healthy earnings and upbeat guidance. South East Asian equities surged during the quarter as policy stimulus measures unveiled around the world buoyed investor sentiment. China announced a series of infrastructure investment programmes to support its faltering growth. The US Federal Reserve embarked on a third round of quantitative easing following the European Central Bank's new bond purchase plan. Moreover, the People's Bank of China eased its policy further and the Bank of Korea cut its key policy rate. On the macroeconomic front, China's second quarter GDP growth slowed to 7.6% year-on-year, its slowest pace in three years, whilst Hong Kong and Singapore shrank during the same period over the previous quarter. The weakness in the region's exports persisted, whilst activity in the manufacturing sector in China, Taiwan and Korea was sluggish. On a positive note, growth in smaller economies such as Malaysia and Thailand remained buoyant over the second quarter. All sectors ended in positive territory, with telecommunications, information technology (IT) and health care among the best performers. Meanwhile, industrials and consumer stocks lagged average market returns. The fund continues to focus on high-quality growth stocks that benefit from the region's strong structural growth drivers and are better placed to survive during tough times. Trimmed selected consumer discretionary holdings I sold positions in consumer products exporter Li & Fung and consumer electronics manufacturer LG Electronics owing to a weak earnings outlook and limited upside potential. Meanwhile, I remain biased towards automakers Hyundai Motor and Kia Motors due to their strong brand names and continued market share gains globally. Increased exposure to telecommunications I enhanced the overweight stance in telecommunications to benefit from rising smartphone penetration and data usage in the region. I purchased shares in China Unicom as its earnings should benefit from improved distribution and continued gains in 3G subscribers. Moreover, many stocks in the sector, such as Far EasTone Telecommunications and Advanced Info Service, also offer attractive dividend yields. Enhanced bias towards IT stocks I raised the exposure to online social networking firm Tencent given its solid internet platform with the largest user base in China as well as its robust gaming business. I initiated a position in Taiwan's integrated circuit chipsets maker MediaTek in anticipation of acceleration in its earnings, led by increased focus on the low-cost smartphone segment.   Stanlib South East Asia comment - Jun 12 Thursday, 23 August 2012 Fund Manager Comment The fund outperformed its index over the quarter due to rewarding security selection within the financials and telecommunications space. Security selection in the utilities and materials sectors also contributed to performance. Chinese financials bolstered returns The overweight position in Chongqing Rural Commercial Bank bolstered performance as its earnings rose in-line with expectations and loan growth and fee income surged. The overweight stance in Industrials and Commercial Bank of China also benefited as a strong low-cost deposit base helped it to report healthy earnings growth. Telecommunications names advanced Not holding China Mobile continued to add value as share prices retreated. The overweight stance in Taiwan-based Far Eastone Telecommunications contributed to performance as it delivered strong revenue growth driven by smartphone adoption and rising mobile data usage. The position in Australia-based Telstra also buoyed returns. Selected discretionary and IT names disappointed The holding in social media and internet services firm SINA weighed on performance following reports that the number of visitors as well as the time spent on its micro-blogging site Weibo declined for two consecutive months. Elsewhere, exposure to Ctrip.com International declined owing to a rise in competitive pressures and lacklustre earnings projection. The position was reduced over the quarter. South East Asian equities advanced during the fourth quarter on the back of moderating inflation and signs that central banks across the region may ease their monetary policy. Furthermore, better-than expected economic data from the US and hopes of a resolution to the European debt crisis boosted share prices. However, over most of the quarter, newsflow related to the debt crisis played on investor sentiment and kept stock market volatility high. In South East Asia, all sectors added value. Cyclicals were driven primarily by gains registered in October, when European policymakers began to engineer a plan to refinance peripheral debt and recapitalise banks, and the US and China reported better-than-expected economic data. Defensive names benefited from increased risk aversion, whilst the consumer discretionary and staples sectors advanced on the back of rising consumer demand. The sharp decline in Asian markets offers attractive investment opportunities in good quality companies with strong long-term growth prospects, particularly in firms that are positioned to benefit from growth in Asia. Increased exposure to telecommunications names I raised the overall positioning within the telecommunications space by increasing the stake in Far Eastone Telecommunications, Telstra, Telekom Malaysia and Taiwan Mobile as a safeguard against volatility. Moreover, these companies have strong growth potential driven by increased smartphone and data usage. Raised consumer discretionary holdings I initiated a position in South Korea-based Hankook Tire as it is expected to benefit from strong tire demand and a fall in raw materials prices. The South Korean industry leader has been able to raise tire prices in 2011 and is expected to push through further price increases in 2012. A new holding was also added in Indonesian car manufacturer Astra International, which is benefiting from its leadership position in a fast-growing market. Reduced financials positions I took profits in China Life Insurance and Ping An Insurance for better opportunities elsewhere. The tight monetary environment, continued regulatory interventions and a weak A-share market means that Chinese life insurers are likely to face operating and investment challenges. I also reduced the stake in Taiwan-based Mega Financial Holding and Singapore-based United Overseas Bank due to the Former's weak capital position and lower earnings expectations in the latter.   Stanlib South East Asia comment - Mar 12 Friday, 1 June 2012 Fund Manager Comment The fund outperformed its index over the quarter due to rewarding security selection within the financials and telecommunications space. Security selection in the utilities and materials sectors also contributed to performance. Chinese financials bolstered returns The overweight position in Chongqing Rural Commercial Bank bolstered performance as its earnings rose in-line with expectations and loan growth and fee income surged. The overweight stance in Industrials and Commercial Bank of China also benefited as a strong low-cost deposit base helped it to report healthy earnings growth. Telecommunications names advanced Not holding China Mobile continued to add value as share prices retreated. The overweight stance in Taiwan-based Far Eastone Telecommunications contributed to performance as it delivered strong revenue growth driven by smartphone adoption and rising mobile data usage. The position in Australia-based Telstra also buoyed returns. Selected discretionary and IT names disappointed The holding in social media and internet services firm SINA weighed on performance following reports that the number of visitors as well as the time spent on its micro-blogging site Weibo declined for two consecutive months. Elsewhere, exposure to Ctrip.com International declined owing to a rise in competitive pressures and lacklustre earnings projection. The position was reduced over the quarter. South East Asian equities advanced during the fourth quarter on the back of moderating inflation and signs that central banks across the region may ease their monetary policy. Furthermore, better-than expected economic data from the US and hopes of a resolution to the European debt crisis boosted share prices. However, over most of the quarter, newsflow related to the debt crisis played on investor sentiment and kept stock market volatility high. In South East Asia, all sectors added value. Cyclicals were driven primarily by gains registered in October, when European policymakers began to engineer a plan to refinance peripheral debt and recapitalise banks, and the US and China reported better-than-expected economic data. Defensive names benefited from increased risk aversion, whilst the consumer discretionary and staples sectors advanced on the back of rising consumer demand. The sharp decline in Asian markets offers attractive investment opportunities in good quality companies with strong long-term growth prospects, particularly in firms that are positioned to benefit from growth in Asia. Increased exposure to telecommunications names I raised the overall positioning within the telecommunications space by increasing the stake in Far Eastone Telecommunications, Telstra, Telekom Malaysia and Taiwan Mobile as a safeguard against volatility. Moreover, these companies have strong growth potential driven by increased smartphone and data usage. Raised consumer discretionary holdings I initiated a position in South Korea-based Hankook Tire as it is expected to benefit from strong tire demand and a fall in raw materials prices. The South Korean industry leader has been able to raise tire prices in 2011 and is expected to push through further price increases in 2012. A new holding was also added in Indonesian car manufacturer Astra International, which is benefiting from its leadership position in a fast-growing market. Reduced financials positions I took profits in China Life Insurance and Ping An Insurance for better opportunities elsewhere. The tight monetary environment, continued regulatory interventions and a weak A-share market means that Chinese life insurers are likely to face operating and investment challenges. I also reduced the stake in Taiwan-based Mega Financial Holding and Singapore-based United Overseas Bank due to the formerÕs weak capital position and lower earnings expectations in the latter.   Stanlib South East Asia comment - Dec 11 Thursday, 22 March 2012 Fund Manager Comment Market Environment South East Asian equities advanced during the fourth quarter on the back of moderating inflation and signs that central banks across the region may ease their monetary policy. Furthermore, better than expected economic data from the US and hopes of a resolution to the European debt crisis boosted share prices. However, over most of the quarter, news flow related to the debt crisis played on investor sentiment and kept stock market volatility high. In South East Asia, all sectors added value. Cyclicals were driven primarily by gains registered in October, when European policymakers began to engineer a plan to refinance peripheral debt and recapitalise banks, and the US and China reported better-than-expected economic data. Defensive names benefited from increased risk aversion, whilst the consumer discretionary and staples sectors advanced on the back of rising consumer demand. Fund Performance The fund outperformed the index over the quarter due to rewarding security selection within the financials and telecommunications space. Security selection in the utilities and materials sectors also contributed to performance. Chinese financials bolstered returns, the overweight position in Chongqing Rural Commercial Bank bolstered performance as its earnings rose in-line with expectations and loan growth and fee income surged. The overweight stance in Industrial and Commercial Bank of China also benefited as a strong low-cost deposit base helped it to report healthy earnings growth. Telecommunications names advanced Not holding China Mobile continued to add value as share prices retreated. The overweight stance in Taiwan-based Far Eastone Telecommunications contributed to performance as it delivered strong revenue growth driven by smartphone adoption and rising mobile data usage. The position in Australia-based Telstra also buoyed returns. Selected discretionary and IT names disappointed The holding in social media and internet services firm SINA weighed on performance following reports that the number of visitors as well as the time spent on its microblogging site Weibo declined for two consecutive months. Elsewhere, exposure to Ctrip.com International declined owing to a rise in competitive pressures and lacklustre earnings projection. The position was reduced over the quarter. Fund Positioning The sharp decline in Asian markets offers attractive investment opportunities in good quality companies with strong long-term growth prospects, particularly in firms that are positioned to benefit from growth in Asia. Increased exposure to telecommunications names I increased the overall positioning within the telecommunications space by increasing the stake in Far Eastone Telecommunications, Telstra, Telekom Malaysia and Taiwan. Mobile as a safeguard against volatility. Moreover, these companies have strong growth potential driven by increased smartphone and data usage. Raised consumer discretionary holdings I initiated a position in South Korea-based Hankook Tire as it is expected to benefit from strong tire demand and a fall in raw materials prices. The South Korean industry leader has been able to raise tire prices in 2011 and is expected to push through further price increases in 2012. A new holding was also added in Indonesian car manufacturer Astra International, which is benefiting from its leadership position in a fast-growing market. Reduced financials positions I took profits by selling shares in China Life Insurance and Ping An Insurance for better opportunities elsewhere. The tight monetary environment continued regulatory interventions and a weak A-share market means that Chinese life insurers are likely to face operating and investment challenges.   Stanlib South East Asia comment - Sep 11 Friday, 23 December 2011 Fund Manager Comment Market Environment Far East ex Japan equities endured a negative quarter as the worsening economic crisis in advanced economies led to heightened risk aversion and redemption by foreign funds. Continued uncertainty over the resolution of the European sovereign debt crisis, fears of a double-dip recession in the developed world and the downgrade of US sovereign debt by a ratings agency led to a sharp rise in volatility. Countries with high levels of dependence on exports suffered the most as consumer confidence indicators declined in the eurozone and the US. At a sector level, industrials, information technology (IT), energy and materials led the decline as inventory levels rose, capital spending fell and international commodity prices plummeted. Relatively defensive names such as consumer staples and utilities outperformed the benchmark, whilst telecommunications ended the quarter in positive territory. Policies to control inflation bore fruit in China as production, investment and retails sales softened. GDP growth moderated in Hong Kong, Malaysia, Taiwan and Singapore. Fund Performance The fund underperformed its benchmark due to unfavourable security selection within the financials, utilities and information technology sectors. Financials disappointed Exposure to real estate and banking names such as Evergrande Real Estate Group, Hong Kong Land Holdings, Chongqing Rural Commercial Bank and Industrial Commercials Bank of China eroded value. Concern over falling demand, high debt levels and earnings growth for banks were accentuated by the slowdown in global economic growth. Underweight in defensives hurt performance Not holding China Mobile, Singapore Telecom and China Unicom, as well as Hong Kong-based electrical utilities provider CLP Holdings hurt relative returns as their share prices advanced in view of their defensive earnings base. Elsewhere, an overweight position in China State Construction International detracted as its share price fell despite healthy earnings and new order growth. Selected discretionary and telecommunications names added value The underweight exposure to telecommunications detracted from performance, although selected names such as Thailand-based Advanced Info Services, Australia's Telstra and Taiwan-based Chunghwa Telecom helped limit losses. Elsewhere, an overweight stance in Kia Motors proved beneficial as continued growth in US and European sales helped the stock recover from sharp declines at the start of the quarter.   Stanlib South East Asia comment - Jun 11 Tuesday, 20 September 2011 Fund Manager Comment Market Environment Equities in the Far East ex Japan region ended the quarter in positive territory, underperforming European and world equities but ahead of emerging markets, US and Japanese stocks. The review period began on a positive note, due to strong foreign fund inflows and better-than-expected first quarter results. However, concerns over the sovereign debt crisis in peripheral Europe and the potentially negative impact of Greek debt restructuring led to bouts of volatility. In addition, weak macroeconomic data in the US against a backdrop of the end of the second round of quantitative easing (QE2), rising inflationary risks in the region and tighter monetary policy weighed on investor sentiment. Consequently, consumer staples, telecommunications and utilities benefited from risk aversion and outperformed the benchmark. Meanwhile, strong earnings expectations bolstered consumer discretionary names. Weaker commodity and energy prices hurt performance in both these sectors. Information technology was the worst performing sector over the quarter, dragged down by lower-than-expected results and guidance by South Korean and Taiwanese firms. Inflationary pressures and monetary tightening in China led to a weak performance on its bourses. Fund Performance The fund outperformed its benchmark, as security selection in the financials, materials and industrials sectors were supportive. Positioning in consumer discretionary and information technology (IT) also helped. Consumer and IT added value The overweight stance in car manufacturer Hyundai Motor, automobile component producer Hyundai Mobis and retailer Far Eastern Department Stores were among the leading contributors. The two automobile firms benefited from strong sales growth and diversification in their customer base, respectively. Not holding mobile handset producer HTC helped as its share price declined on concerns about its ability to maintain margins. Industrials and financials contributed In industrials, the overweight stance in Samsung Engineering benefited from robust new order growth, particularly from the Middle East and South Korea. In financials, Taiwan-based Prince Housing and Development bolstered performance on strong earnings and expectations of higher profits from commercial property. Defensive and selected discretionary hurt performance. The non-benchmark holding in Beijing Enterprises Water, which saw strong gains in recent months, disappointed. I hold the stock for its growth prospects in China and overseas expansion. Retailer Esprit Holdings declined on continuing fears about the outlook for European consumers, which contributes significantly to its earnings. Fund Positioning As earnings expectations and corporate fundamentals remain healthy, I retained my overweight exposure to companies that offer superior long-term growth. Chinese demand to aid construction-related materials I introduced a position in Taiwan Cement because of its exposure to China, where it is likely to see strong sales growth on the back of government sponsored housing programmes. Similarly, I bought shares in Jiangxi Copper given an improved outlook due to China's urbanisation and industrial production. Raised exposure to coal miners I initiated a holding in China Shenhua Energy at an attractive valuation in view of strong coal demand for power generation to maintain the country's robust economic growth. Additionally, I bought Singapore listed Straits Asia Resources, which supplies to China after it received a mining permit that allows it to expand production and lower costs. Reduced overweight in industrials and consumer discretionary I sold China Railway Construction in anticipation of softer growth in railway construction projects. I also exited Yangzijiang Shipbuilding Holdings as it reached full valuation. Within consumer discretionary, I offloaded shares in retailing group Esprit Holdings, given an unfavourable outlook in its key Western European markets.   Stanlib South East Asia comment - Mar 11 Tuesday, 14 June 2011 Fund Manager Comment Market Environment Equities in South East Asia endured market volatility related to concerns arising from Japan's natural disaster and subsequent nuclear problems, the Middle East and North African unrest and Europe's fiscal problems. Inflationary pressures and the resultant monetary and administrative tightening further hurt investor sentiment in the region. Although the quarter started with strong foreign investment outflow, flows recovered in March in anticipation of continued economic growth and softer inflation in coming months. Among sectors, consumer discretionary, energy and materials were the best performers. Whilst the latter grew in light of rising international prices, consumer discretionary shares were favoured due to continued growth in earnings expectations. As investors shunned defensive stocks, health care, telecommunications and consumer staples ended the quarter in negative territory. Information technology (IT) shares also underperformed, mainly on account of worries over the supply of key components from Japan, which could lead to production delays. Fund Performance The fund outperformed its benchmark over the quarter, driven by security selection in the IT sector and positioning within materials. Rapid user growth boosted internet stocks The non-benchmark holding in social media firm SINA surged as investors appeared optimistic about its plans to focus on building scale and monetising more products and services in light of growing competition. A holding in Chinese language internet search provider Baidu and instant messaging and gaming firm Tencent continued to add value on account of growth in advertising revenue. Underweight in telecommunications and overweight in materials added value Not holding a stake in China Mobile bolstered relative performance as shares fell after the company missed its earnings forecast. Within the materials space, holdings in South Korea-based LG Chemical and Taiwan-based Formosa Chemicals & Fibre proved beneficial because higher petrochemical prices boosted operating profits. IT and component manufacturers hurt returns Not holding smartphone manufacturer HTC continued to erode value as shares rose on the back of rising demand. The overweight position in ACER declined due to weaker computer demand in Western Europe and the US. Meanwhile, concerns about supply disruptions caused by the Japanese earthquake adversely impacted share prices of firms such as Samsung Electronics. Fund Positioning Although my primary focus remains on Asia's strong domestic growth, lately, I increased exposure to sectors that could benefit from a global economic recovery. I have not made any significant change in response to the Japan disaster because the fund has no direct exposure there. However, I am assessing its impact in Asia, if any, on a company-by-company basis. Raised exposure to Chinese financials I added to the holdings in Chinese banks, such as Industrial and Commercial Bank of China and China Merchants Bank as a recent fall in share prices made them attractive relative to their growth potential. I also introduced a new position in Bank of East Asia, which has a strong branch network in mainland China that helps expand margins. Increased stake in IT and materials I bought Korea-based Hynix Semiconductor given the potential for higher demand for memory chips, particularly from smartphone manufacturers. I also raised exposure to materials from underweight to overweight in view of strong commodity prices by adding positions in Hyundai Steel and Sinopec Shanghai Petrochemicals. Reduced exposure to industrials I sold a number of airlines names, such as AirAsia and Singapore Airlines due to rising fuel costs. I also trimmed the stake in South Korean shipbuilder Daewoo Shipbuilding & Marine after recent gains and offloaded China Merchants Holdings for better opportunities elsewhere.   Stanlib South East Asia comment - Dec 10 Friday, 25 February 2011 Fund Manager Comment Market Environment Far East ex Japan equities ended a volatile quarter with significant gains. Investor confidence rose following the announcement of a second round of quantitative easing in the US and less-than-expected decline in Chinese economic growth. Strong foreign fund flows also proved supportive of overall gains. Renewed confidence in the global recovery lifted industrials stocks and the export-dependent information technology (IT) sector. Rising oil and commodity prices buoyed energy and materials stocks Meanwhile, Chinese equities underperformed because of monetary and property tightening measures introduced to combat inflation. Investors also kept a close watch on the escalating sovereign debt crisis in the eurozone and geopolitical tensions in the Korean peninsula. Meanwhile, China's industrial production, retail sales and fixed asset investment remained robust. Growth in industrial output also supported expansion in Singapore and Korea. With the exception of Singapore, export growth in Asia ex Japan countries increased in the month of November. Fund Performance The fund outperformed its benchmark over the quarter, driven by security selection in the industrials, telecommunications and selected IT holdings. Industrials boosted performance The overweight holdings in South Korean industrial groups Hyundai Heavy Industries and SembCorp Marine, and in Singapore-based Keppel, an oilrig manufacturer, underpinned gains as the companies' order book positions improved over the quarter and earnings were strongly higher. Meanwhile, not holding Chinese telecommunications service provider China Mobile buoyed returns as its share prices faltered in absence of a clear growth outlook. Electronics and automobile producers added value The overweight stance in South Korean automobile manufacturer Kia Motors continued to support performance on account of higher earnings due to surging sales. Elsewhere, the overweight position in electronic component manufacturer Samsung Electronics benefited from expectations that demand for its semiconductors would strengthen because of rising smartphone sales. Selected consumer and internet holdings held back performance The ex-benchmark holding in travel services provider Ctrip.com hurt relative returns as its share prices fell after recent gains. Not holding communications equipment manufacturer HTC also eroded value against the backdrop of rising sales of its handsets. Fund Positioning The fund remains positioned to benefit from the rapid growth of domestic economies and sustained infrastructure build-up. However, I also took some profits where valuations looked stretched and my investment thesis reached fruition. Raised exposure to industrials In light of a recovery in international trade, I initiated positions in shipbuilding names such as Daewoo Shipbuilding, Cosco Corporation and STX Engine. I found that many of these stocks were attractively priced as they were out of favour in view of slow growth in new orders. Meanwhile, I offloaded stakes in certain airline companies including China Southern Airlines and China Eastern Airlines. Increased positions in energy Improving global environment and lack of significant capacity additions in the near future led me to reduce the underweight in oil & gas refiners and petrochemicals manufacturers. For instance, I introduced SK Energy and Thai Oil to the portfolio. I also bought a stake in Thailand-based PTT Aromatics & Refining, which is likely to see its margins improve in light of higher oil prices. Reduced exposure to financials I trimmed the stake in China Merchants Bank, which is adversely impacted by Chinese regulators' continuing focus on restricting liquidity. I also reduced the holding in Singapore-based United Overseas Bank to an underweight stance in absence of any growth catalyst.   Stanlib South East Asia comment - Sep 10 Wednesday, 5 January 2011 Fund Manager Comment Market Environment Equities in the Asia Pacific region staged a robust comeback in the third quarter, after a lacklustre performance in the April-June period. Global environment improved as concerns about the European sovereign debt crisis eased and there were signs of intervention by the US Federal Reserve to boost the economy. In the Far East ex Japan region, corporate earnings were better than expected and the Chinese economy was expected to continue growing at a robust pace, despite a slowdown from previous levels. The industrials and consumer discretionary sectors were at the forefront of gains during the quarter, buoyed by an expansion in consumption and infrastructure facilities continued to expand. A rise in commodity prices supported materials stocks. Meanwhile, the defensive tecommunications and utilities areas lagged as investors sought riskier investments with higher earnings potential. Smaller exchanges in the region were among the best performers. In particular, Thai equities rose as strength of the underlying economy outshone political issues. The Philippines was driven by optimism following a change in the government. Fund Performance The fund outperformed its benchmark over the quarter mainly due to the positioning in the industrials and information technology sectors and an underweight in telecommunications. Internet services drove returns Non-benchmark holdings in online portal SINA Corp, and Chinese language internet search provider Baidu as well as the overweight stance in instant messaging and gaming firm Tencent bolstered performance. Growing internet usage in China and rising advertising expenditure helped these fi rms beat earnings expectations and report an optimistic outlook. Industrials supported performance The overweight holdings in South Korea's Hyundai Heavy Industries and Hyundai MIPO Dockyard enhanced performance. Despite an uncertain global economic outlook, Korean machinery and vessel manufacturers did well on account of strong order momentum. Additionally, not holding telecommunication services provider China Mobile contributed significantly amid rising uncertainty about earnings growth in a challenging environment of rising competition. Selected financials detracted from returns A stake in China Merchants Bank proved detrimental because stricter measures applied to contain the mortgage loan growth hurt investor sentiment. Meanwhile, the underweight in property firm Cheung Kong Holdings held back returns. Fund Positioning The fund is positioned to benefit from rapid growth of the region's economies. Capacity expansion by corporates and infrastructure development to buoy expansion potential in many Asian countries would also drive performance. Raised exposure to financials I moved to an overweight position in the financials sector mainly by adding to the holdings in Chinese banks such as Industrial and Commercial Bank of China and China Merchants Bank. Many of them have been out of favour with investors and any rise in interest rates would improve their operating margins. I also added Bank of China Hong Kong after Chinese authorities allowed the bank to offer offshore yuan cash settlement services. Increased stake in industrials I introduced a position in Yangzijiang Shipbuilding Holdings as it is likely to benefit from a consolidation in the industry and acquires new assets. The company has a good delivery track record, and a significant order book, making it an attractive buy. I also bought shares in airlines companies in view of a substantial growth in air travel. Reduced exposure to consumer discretionary firms I took profits in certain consumer discretionary stocks where investment thesis reached fruition. For instance, I trimmed the stake in automobiles and batteries maker BYD Company and consumer products supplier Li & Fung and sold sports and leisure goods producer Li Ning.   Stanlib South East Asia comment - Jun 10 Thursday, 9 September 2010 Fund Manager Comment Market Environment The correction in Far East ex Japan markets since April largely reflected a rise in perceived risks, even as the underlying macroeconomic and earning fundamentals remained strong. Most of the worries revolved around sovereign debt issues in Europe, concerns about the impact of monetary tightening in China, and uncertainties over the timing and extent of policy and tax changes in many markets. Strong first quarter GDP growth in China was mirrored by the rest of the region. Singapore, Korea, Taiwan and Malaysia benefited from a revival in exports that stimulated industrial activity. Consequently, key interest rates were raised in Taiwan and Malaysia, expressing confidence in the recovery. Chinese stocks suffered on account of regulatory focus on curbing property demand and restricting local government investment activities. A fall in commodity prices hurt materials producers, while financials and industrials came under pressure in view of rising risk aversion. Among smaller exchanges, Indonesia remained resilient, helped by a ratings upgrade by Moody's and robust consumption growth. Fund Positioning The fund underperformed its benchmark over the quarter mainly due to an overweight in China and underweight in the more defensive telecommunications and utilities sectors. Underweight in defensives detracted from returns Non-exposure to mobile phone operators China Mobile and Chunghwa Telecom as well as power and gas utility firms Hong Kong & China Gas and CLP Holdings hurt relative returns as investors favoured defensively positioned companies with stable earnings. I have an underweight in telecommunication stocks because of unfavourable regulatory environment, and in utilities due to limited growth prospects. Overweight in China held back performance The positions in automobile manufacturer BYD Company and internet messaging services provider Tencent Holdings eroded value as these shares underperformed. Shares in consumer electronics producer Skyworth Digital also hampered performance despite a strong growth in profits in 2009. I continue to hold these stocks for their strong long-term growth prospects. Consumer holdings added value An overweight stance in Gudang Garam was the single largest contributor to overall returns. The Indonesian tobacco producer reported increased sales and raised product prices. Further, holdings in South Korean car producers Hyundai Motor and Kia Motor proved supportive as strong sales growth across regions and rising profitability boosted share prices. Fund Performance I am optimistic about sectors that are likely to benefit from structural growth in domestic consumption and increased prosperity in the region. Raised exposure to consumer discretionary I increased the stake in apparel manufacturer China Lilang, which benefited from rising sales mainly through wholesale distribution, and cost effective production. I also added to the holding in Ctrip.com, taking advantage of a drop in share prices, due to optimism about the potential of China's travel market. Further, I added Gome Electrical Appliances as the government continues to subsidise purchase of new consumer electronics. Trimmed information technology holdings I reduced stake in the information technology sector, in particular high-tech electronic equipment manufacturers, in light of renewed concerns that global growth could remain soft. For instance, I trimmed the positions in Hon Hai Precision and MediaTek. Cut exposure to real estate I trimmed the position in the real estate sector in view of adverse regulatory developments in China and limited sales growth elsewhere. I sold Hong Kong-based Henderson Land Development, Sino Land and New World Development due to a weak outlook. I used the proceeds to increase the stake in regional banks. I introduced a position in Singapore's United Overseas Bank and Indonesia's Bank Mandiri for strong growth prospects.   Stanlib South East Asia comment - Mar 10 Tuesday, 29 June 2010 Fund Manager Comment Market Environment After a robust performance in 2009, Far East ex Japan markets succumbed to valuation concerns before rising on account of renewed confidence in the strength of global economic recovery and upbeat earnings outlook. Economic growth for the October-December quarter in most countries in the region surpassed expectations, underpinned by a broad-based improvement in external as well as domestic demand. The strong trend continued this year. Buoyant retail spending, due to more jobs and fi scal incentives, supported consumer discretionary stocks. Health care, industrial and utilities stocks too held up well due to strong earnings growth. Equities in Thailand were among the best performers as foreign funds found market valuation compelling. The Indonesian market posted healthy gains underpinned by the country's strong GDP growth, healthy fiscal situation and stable political backdrop. Rating agencies Fitch and S&P upgraded the country's sovereign debt rating during the quarter. Malaysian stocks were buoyed by its central bank's decision to raise key interest rates sooner than expected, showing confidence in the country's economic recovery. Meanwhile, Chinese equities fared the worst because of fears of additional curbs on lending, as its 10.7% year-on-year GDP growth in the fourth quarter stoked concerns about potential overheating in certain sectors. Fund Performance Against the backdrop of robust consumption and resurgent exports, the fund outperformed its benchmark over the quarter. Stock selection in the information technology and consumer discretionary sectors proved particularly rewarding. Strong automobile sales drove performance Korean car manufacturer Kia Motors gained market share and improved operating margins by selling more profitable models. This helped the firm generate higher free cash flows and pay down debts. China's BYD Company also benefited from higher sales at its automobile division as it expanded product offerings and enhanced dealership. Technology sector contributed A non-benchmark stance in the Chinese internet search firm, Baidu, was the single largest contributor to relative returns. The firm is expected to gain market share from Google, which closed its Chinese-language search engine and diverted traffic to its non-censored Hong Kong website. Valuation concerns hampered returns Non-benchmark positions in Sina, the online media company, and internet messaging firm Tencent hurt relative returns due to valuation concerns. I continue to hold these stocks as they stand to gain from rapidly expanding online advertising market given their dominant industry positions.   Stanlib South East Asia comment - Dec 09 Friday, 19 March 2010 Fund Manager Comment The fund is positioned to take advantage of the healthy domestic demand in the region and a recovery in the global economy. Raised exposure to the materials sector to overweight I initiated positions in Indonesian cement producers Semen Gresik and Indocement Tunggal, given their strong operating margins. Indonesia is a cement deficit market with high entry barriers, which benefits these firms. I also invested in China's Jiangxi Copper in view of growing demand for copper even as supply remains tight. Holdings in information technology firms increased I bought shares in Hong Kong-listed manufacturer of back-end semiconductor equipment ASM Technology as demand remains strong. The firm successfully implemented a cost reduction plan which enhanced its free cash flows. I also raised exposure to internetbased services firms, such as Tencent Holdings, Sin a and Baidu, for their strong growth trend. Reduced exposure to banks The above positions were financed by trimming exposure to the financials sector. Allocation to Bank of China was reduced due to limited upside opportunities. Taiwan's Taishin Financial was sold off as aggressive growth in its credit card issuance could dilute its asset quality. Instead, I added to holding in China Life Insurance and initiated a position in Taiwan-based insurer Cathay Financial, where growth remains healthy.   Stanlib South East Asia comment - Sep 09 Monday, 30 November 2009 Fund Manager Comment The fund has outperformed its benchmark over the quarter, largely driven by stock selection within the information technology and consumer discretionary sectors. Among technology stocks, shares in BYD Company and Tencent Holdings contributed the most. BYD's mobile batteries division gained market share with Nokia and its automobile division grew rapidly in the local Chinese market. The networking and internet messaging firm Tencent is benefiting from strong growth in user base and improved monetisation of its services. Within the discretionary space, Hyundai Motor and its component manufacturer Hyundai Mobis, proved rewarding. Hyundai's portfolio of more fuel-efficient cars helped it gain market share in the US. Further value was added by stocks that benefited from a recovery in demand, namely Indonesia's coal miner Bumi Resources and, packaging and paper products ma nufacturer Nine Dragon Paper. Conversely, selected holdings in the Chinese real estate sector hampered performance, owing to concerns about a slowdown in lending growth.   Stanlib South East Asia comment - Jun 09 Friday, 18 September 2009 Fund Manager Comment The fund generated decent returns, but underperformed its benchmark over the quarter, as investors' risk appetite increased and they chased growth stocks. Against this backdrop, the exposure to selected telecommunications and consumer staples holdings, which are considered defensive, hampered performance. Within this space, Chughwa Telecom and Philippine Long Distance as well as tobacco company KT &Ghurt returns. Among technology companies, an underweight stance in Hon Hai Precision was the biggest detractor from relative performance. Its shares rose sharply despite continued sluggishness in overseas sales. Meanwhile, the position in BYD Company contributed. The Chinese firm's battery and automobile divisions are growing rapidly and its mobile component business is gaining market share with Nokia. Exposure to real estate stocks, such as China's Shimao Property Holdings and Singapore's Yanlord Land Group added value, as lower interest rates helped underpin a recovery in property sales.   Stanlib South East Asia comment - Dec 08 Wednesday, 25 March 2009 Fund Manager Comment Over the quarter, the fund generated negative returns but outperformed its benchmark. My strategy to underweight technology hardware exporters based in Taiwan and Korea proved beneficial as overseas demand remained weak. An overweight allocation to telecommunications companies, such as Chughwa Telecom, contributed given their robust free cash flow generation and a healthy dividend yield. Overweight positions in certain Chinese domestic consumption-related names, including Tsingtao Brewery and medical disposables manufacturer Shandong Weigao, also added value. These stocks were bought at attractive levels and benefited from robust demand for their products. Conversely, an off-benchmark position in Focus Media was the biggest detractor. Share prices fell after the company agreed to sell its entire digital out-of-home business to SINA Corporation. An overweight in Hyundai Motor and its components manufacturer also hurt returns on account of a slowdown in US sales.   Stanlib South East Asia comment - Sep 08 Monday, 1 December 2008 Fund Manager Comment Over the quarter, the fund marginally underperformed its benchmark. An off-benchmark holding in oil & gas producer Oil Search detracted due to a correction in crude prices. However, I retain this stock given that there are fewer regulatory risks in Australia than in other Asian countries. Selected stocks such as Fubon Bank and Bank of East Asia fell amid global worries about the sector. The latter was further impacted as unconfirmed reports raised questions about its stability, which caused depositors to withdraw money. China Mengniu Dairy was also unrewarding after its products were found to contain an industrial chemical linked to infant deaths. I sold the stock because the company's financial position weakened as a result. In contrast, an overweight in defensive sectors such as telecommunications and consumer discretionary paid off. Of note, Chunghwa Telecom, which plans to invest in a rival firm, boosted returns, as did a position in Focus Media amid robust personal consumption.   Stanlib South East Asia comment - Jun 08 Tuesday, 16 September 2008 Fund Manager Comment Over the quarter, the fund underperformed its benchmark, due mainly to stock selection in Korea. A holding in internet search company NHN detracted amid concerns that its revenues could soften and that the government might tighten regulations for online gaming. I believe NHN's dominant market position will be a key driver of advertising revenues. An underweight in Korean steel major POSCO also hurt fund performance, as robust demand kept prices at higher levels. In Indonesia, an underweight in coal miner Bumi Resources weighed upon relative returns, as the firm's shares advanced, tracking the strong trend in coal prices. Conversely, an off-benchmark holding in Oil Search, an Australia-based oil & gas exploration and production company, benefited from the rise in crude prices. Selected Taiwanese technology hardware firms further enhanced fund performance. For instance, an overweight in phone camera lens manufacturer Largan Precision was supported by increased outsourcing from Nokia.   Stanlib South East Asia comment - Mar 08 Friday, 11 July 2008 Fund Manager Comment The fund lagged its benchmark due to underweight exposure to Hong Kong's real estate and banking sectors. An overweight position in Chinese stocks also detracted from performance after share prices corrected sharply. In Korea, exposure to Samsung Group companies - Samsung Engineering and Samsung Techwin - weighed on relative returns after the government started an investigation into the group. The manager continues to hold Samsung Engineering, however, impressed by its sustained growth in higher-margin orders. Meanwhile, positions in Korean non-life insurers aided performance after they reported robust financial performance for the third quarter. Overweight exposure to many coal producers in Indonesia, Singapore and China boosted the fund's relative returns. Coal prices rose, as demand from China, Korea, Taiwan and India continued to increase, while supply was constrained due to infrastructure issues.   Stanlib South East Asia comment - Dec 07 Thursday, 6 March 2008 Fund Manager Comment The fund lagged its benchmark due to underweight exposure to Hong Kong's real-estate and banking sectors. An overweight position in Chinese stocks also detracted from performance after share prices corrected sharply. In Korea, exposure to Samsung Group companies - Samsung Engineering and Samsung Techwin - weighed on relative returns after the government started an investigation into the group. The manager continues to hold Samsung Engineering, however, impressed by its sustained growth in higher-margin orders. Meanwhile, positions in Korean non-life insurers aided performance after they reported robust financial performance for the third quarter. Overweight exposure to many coal producers in Indonesia, Singapore and China boosted the fund's relative returns. Coal prices rose, as demand from China, Korea, Taiwan and India continued to increase, while supply was constrained due to infrastructure issues.   Stanlib South East Asia comment - Sep 07 Tuesday, 27 November 2007 Fund Manager Comment Over the quarter, the fund significantly outperformed its benchmark, despite the turmoil in the equity markets. The manager's focus on blue-chip companies and the lack of exposure to the sub-prime mortgage market shielded the fund during the correction. COSCO Corporation, a Singapore-listed Chinese shipbuilder, was a key contributor to returns. Its share price rose amid expectations that strong global demand and an increase in yard capacity should result in higher sales. A position in container shipping services provider China COSCO Holdings, also proved rewarding, with the company benefiting from the acquisition of a large shipping fleet from its parent company. China Oilfield Services also added value. Its shares rose amid increased offshore exploration and development activities, driven by high global oil prices. Conversely, absence of exposure to the coal mining company China Shenhua Energy hurt relative performance. The stock advanced in light of a rise in coal prices.   Stanlib South East Asia comment - Jun 07 Thursday, 27 September 2007 Fund Manager Comment During the quarter, the fund outperformed its benchmark, boosted by strategic stock selection in Korea, Singapore and China. Exposure to shipping-related companies such as Singapore's COSCO Corporation and Korea-based Hyundai Heavy Industries contributed the most to returns. Ship prices rose sharply and outstanding orders touched record levels, amid strong global demand for various types of vessels. Above-benchmark holdings in Korean engineering and construction companies, including Samsung Engineering and Doosan Heavy Industries, also proved rewarding after they won large contracts in the Emerging Asian markets. Elsewhere, stock exchange operator Singapore Exchange contributed to returns, as its revenue was boosted by growing market turnover, partly due to increased interest in Chinese companies, and heightened fund raising activity. Conversely, an underweight position in certain oil & gas companies hurt performance. The rise in crude oil prices had buoyed these stocks.   Stanlib South East Asia comment - Mar 07 Thursday, 24 May 2007 Fund Manager Comment During the quarter, the fund outperformed its benchmark, boosted by strategic stock selection in Korea, China and Singapore. In Korea and Singapore, exposure to shipbuilders such as Hyundai Heavy Industries, Hyundai Mipo Dockyards and COSCO proved rewarding. These companies gained largely due to strong demand for new ships, better price realisation and continued margin expansion. Leading engineering and construction companies in Korea, including Samsung Engineering and Doosan Heavy Industries, also contributed, having won large contracts in emerging Asian markets. Domestic-focused Chinese companies boosted returns due to growing demand. An exposure to Li Ning, a branded sportswear manufacturer, aided performance, as the firm profited from robust sales growth and margin expansion. Above-benchmark holdings in stock exchange companies such as Bursa Malaysia and Singapore Exchange proved profitable, as revenues picked up after robust trading activity.   Stanlib South East Asia comment - Sep 06 Monday, 26 March 2007 Fund Manager Comment During the quarter, the fund returned 6.8% in US dollar terms, outperforming the benchmark, which returned 6.1% over the same period. Rewarding stock selection in Taiwan, Singapore, Korea and Hong Kong was the main contributors to outperformance. In Taiwan, the fund profited from selected holdings in the technology sector, which gained from improved demand from overseas markets, as global inventory levels moderated. Technology stocks in Hong Kong and Korea also benefited from higher exports, boosting fund performance. In Korea and Singapore, holdings in shipbuilders surged amid strong order flows, especially from overseas, and robust earnings growth. Returns in the two countries were also boosted by selected financial-service stocks, which benefited from renewed interest in the region's capital markets. In contrast, China proved a key detractor, as holdings in manufacturers of electrical equipment corrected (in spite of strong order growth) as investors worried about a slowdown in orders from 2007 onwards. Furthermore, several commodity related stocks fell after a recent drop in metal and mining prices. Energy stocksin Australia, Singapore and Indonesia were also negatively affected by the recent fall in crude-oil prices.   Stanlib South East Asia comment - Dec 06 Monday, 26 March 2007 Fund Manager Comment Over the quarter, the fund generated 18.0% in US dollar terms, outperforming the benchmark index, which returned 15.7% over the same period. Overweight exposure to the robust Chinese market, rewarding stock selection in Korea and Hong Kong, and off-benchmark exposure to Australia were the key contributors to performance. Above-benchmark holdings in a Chinese bank supported returns, given the bank's strong retail franchise and leading position in the credit card market. Select holdings in the materials sector also proved rewarding. The fund benefited from an underweight position in Korean semiconductor manufacturer Samsung Electronics, as the company was hurt by weak demand and continued pressure on prices. Exposure to select real-estate stocks in Singapore, Hong Kong and Taiwan supported fund performance. Returns were also enhanced by above-benchmark holdings in the region's major stock exchange companies, which benefited from higher market activity.   Stanlib South East Asia comment - Jun 06 Tuesday, 28 November 2006 Fund Manager Comment During the quarter, the fund returned -2.0% in US dollar terms, underperforming its benchmark index, which returned - 0.7% over the same period. Significant exposure to higher beta technology stocks in Taiwan proved a key detractor as risk aversion among investors heightened in May and June. In Korea, significant holdings in a number of exportorientated companies, which suffered from a sharp appreciation in the Korean won, hurt performance. Lower exposure to the better performing banking and insurance sectors of Singapore and Taiwan also reduced fund returns. Conversely, prudent stock selection in China and non-benchmark exposure to Australia bolstered fund performance. Major positions in media and internet-technology companies in China and Australia, which benefited from strong positions in their respective markets, also boosted returns. Construction and engineering holdings in Taiwan and Korea proved beneficial. In addition, underweight exposure to Thailand, whose market fell amid political uncertainty, aided returns.   Stanlib South East Asia comment - Mar 06 Friday, 25 August 2006 Fund Manager Comment Stock selection in Indonesia continued to boost relative returns. In particular, the fund's position in Perusahaan Gas Negara added value. The company is a leading gas-transmission and distribution company in Indonesia that is benefiting from strong volume growth due to the establishment of a new gas pipeline that will help meet growing demand for gas in Indonesia. Performance was further lifted by stock selection in Singapore, despite the fund's underweight exposure to the country, which outperformed the broader region. Overweight positions in oil service-related companies, property-related stocks, and financials all contributed to relative returns. contrast to the previous two quarters, holdings in Korea detracted from returns during the quarter, following a correction in key positions that included Hyundai Motor and selected technology and financial stocks. aggregate, there were few changes in the fund's active positioning at country or sector level. However, the manager utilised relative weakness in markets such as Korea and Taiwan to diversify holdings at more attractive valuations, leading to a significant increase the number of holdings over the review period. The manager maintained the fund's overweight exposure to Korea, taking profits and trimming existing positions that had performed well. He added positions in consumer discretionary and financials companies, including brokerage companies and insurers, given continued strength in the domestic economic recovery. The manager maintained the fund's low weighting in Taiwan, with exposure primarily in export oriented technology companies. Underweight exposure property companies and banks in Hong Kong continued amid ongoing uncertainty over US interest rates. Exposure to China remains broad based and includes consumer-related companies, insurance, and infrastructure.   Standard Bank South East Asia comment - Sep 05 Tuesday, 20 December 2005 Fund Manager Comment During the quarter, stock selection in Korea was a key driver of performance. Top contributors included Shinhan Financial Group, Korea's second-largest bank, which benefited from the nascent domestic recovery and improving asset quality. Hyundai Motor also performed strongly on expectations for improvements in domestic car sales, and for longer-term gains in global market share. The fund's underweight exposure to Taiwan benefited returns, given the market's underperformance. Underweight positions in selected electronics companies added value as share prices were hurt by concerns over slowing global growth and potential earnings disappointments. Detractors from performance were very stock-specific, and included an overweight position in a Hong Kong-listed laminate and chemical manufacturer, which suffered from short-term margin deterioration due to a recent acquisition. The manager found an increasing number of opportunities in China, raising the fund's exposure to the country to an overweight stance. He added holdings that appeared to be attractively valued across a variety of sectors, including media, integrated energy, real estate and gas utilities. The manager took advantage of the recent underperformance of the Taiwanese market to add to positions in semiconductor and technology stocks trading at attractive levels. He continued to believe that the technology cycle has further potential for gain. The fund's exposure to off-benchmark Australian companies was raised through the addition of metals & mining and mineral companies, which are expected to continue to benefit from long-term growth in demand from China. Exposure to Hong Kong was reduced through the disposal of positions in selected banks and property related conglomerates, given concern over the environment of rising interest rates, and competition for lending in Hong Kong.   Standard Bank South East Asia comment - Jun 05 Thursday, 17 November 2005 Fund Manager Comment During the quarter, security selection in Singapore was a key driver of performance. Overweight positions in oil-related stocks added to relative returns, given the sustained high oil price and robust refining margins. Exposure to the smaller markets of Indonesia and the Philippines also proved positive. A key detractor from fund performance was the fund's underweight position in a leading Chinese wireless operator, which strongly outperformed due to higher-than-expected net additions to its subscriber network. In addition, selected overweight holdings in Korea among banking and shipping stocks succumbed to profit taking after a strong first quarter. The manager increased the fund's exposure to Indonesia as valuations became increasingly attractive given the market's correction in April and May. The fund's position in Hong Kong was also increased by adding to positions in consumer-related stocks, primarily retailers and consumer-services companies. These stocks are expected to benefit from an improving consumption environment given falling unemployment, rising incomes, robust retail sales and growth in tourism from mainland China. The fund's weighting in Taiwan was broadly unchanged over the period, with the bulk of exposure in information technology stocks where earnings downgrades appeared to have bottomed. The manager diversified holdings in Korea, adding primarily to stocks in the consumer, industrials and information technology sectors. In addition, the manager increased the number of individual holdings in the portfolio, adding to positions in attractive small and medium-sized companies.   Standard Bank South East Asia comment - Mar 05 Friday, 1 July 2005 Fund Manager Comment Rewarding security selection in the Taiwanese market was the largest contributor to relative performance. In particular, selected overweight positions among information technology and high-tech consumer discretionary companies added value, as did underweight positions in domestically-oriented financials stocks, which suffered as investors rotated into cyclical sectors early in the review period. Although information technology was among the region's weakest sectors, it was a key contributor to fund performance. Security selection in Taiwan and Korea among TFT-LCD companies was beneficial as investors began to anticipate a bottoming of the supply cycle. Meanwhile, the fund's exposure to Malaysia detracted from performance. The fund's underweight exposure to China also detracted as the market outperformed the broader regional index over the review period. In Korea, exposure to materials stocks was reduced in favour of consumer electronics and semiconductor companies. The fund's exposure to Singaporean equities moved from underweight to overweight over the review period. The manager substantially reduced holdings in the materials sector in Taiwan, China, Korea and Thailand following the sector's strong outperformance in February.   Standard Bank South East Asia comment - Dec 04 Thursday, 17 March 2005 Fund Manager Comment The fund's exposure to the Korean market was the largest detractor from relative performance. Despite an average overweight position in Korea, where the market rose considerably, unrewarding stock selection in the information technology sector negatively impacted relative returns. The fund's exposure to China detracted from relative performance; holdings in the energy and materials sector suffered as the oil price began to recede towards the end of the quarter, and profits were taken on resources and steel stocks. Rewarding security selection in the Hong Kong market mitigated the degree of underperformance. In particular, the fund's overweight position in a number of real estate stocks, and underweight exposure to leading Hong Kong utilities, provided a boost, as the reflation theme continued to prove supportive. During the review period, the manager reduced the fund's underweight position in Singapore by decreasing exposure to transportation stocks in favour of more attractive companies, and adding to holdings of property-related stocks, which are expected to benefit from the reflation theme.   Standard Bank South East Asia comment - Sep 04 Monday, 29 November 2004 Fund Manager Comment During the quarter, the fund returned 7.3% in US dollar terms, outperforming the benchmark index, which returned 6.1% over the same period. The fund's overweight exposure to the materials sector was the largest positive contributor to performance, with selected stocks in the metals and mining and chemical industries enjoying healthy returns due to continued strong commodity markets and reduced fears of a serious slowdown in regional economic growth. At a country level, rewarding security selection in China was an important contributor to fund performance, particularly an overweight exposure to selected transportation and resource stocks, which saw considerable gains over the period. The fund's overweight position in Indonesia was also positive for relative returns as Indonesian equities rose strongly following the results of the final round of the presidential elections. Over the period, the fund was underweight the Taiwanese market, which under-performed relative to the benchmark index. However, this contribution was somewhat negated by security selection among Taiwanese technology names, which under-performed on concerns over a weakening outlook for global technology demand.

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