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AA-rated Kooi: where to position in the ASEAN market

AA-rated Kooi: where to position in the ASEAN market

Taiwan is a region with a good spread of companies but investors need to expand geographical reach when positioning their portfolios.

That is according to JO Hambro Capital Management's Cho-Yu Kooi, who runs the JOHCM Asia ex-Japan Small and Mid-Cap fund.

Citywire AA-rated Kooi, who currently has 17.9% of the fund allocated to Taiwan but is conscious of becoming over-dependent on one market.

'We have packed out our weightings in India and we have also expanded into other markets and sectors,' she told Citywire Selector.

'We have actually introduced quite a lot of stocks into some of the ASEAN countries such as; Singapore and Thailand, so we certainly have expanded our geographical reach in terms of the portfolio positioning.'

Over 12 months ago, Kooi said once the equity sell-off was over, certain parts of the ASEAN market would once again become attractive. Kooi is now positioning in the oil & gas sector following oil price volatility.

'There has been a sharp sell-off, especially in the oil & gas space, and certainly in Singapore. We have witnessed a lot of oil & gas companies actually going bankrupt because of the low oil prices.

'These companies have been scaling back on production and have been hit quite badly, which is why we have simply added into quite a few of the oil services companies, two in Singapore and one in Hong Kong.'

Value plays

Despite adding to the energy sector, Kooi still has a relative underweight of 1.7% to the energy sector, as well as underweights in both Hong Kong and Singapore.

'Increasingly we could see a bit more activity by the oil majors and hence that would actually benefit the survivors of the oil services companies. 

'We should expect more activity and business for them, so that’s one space where we have actually added quite a lot of new names.'

Even though Kooi seems to have made somewhat of value play on the energy sector, she said the fund’s performance last year had suffered due to a shift towards more cyclical stocks.

'There has been a move towards energy, commodities, steel and financials and value investing has come back into favour. Given our fund's focus is more on quality growth companies, where we tend to actually tolerate stocks at higher valuations, we have certainly suffered in terms of performance.

'We didn’t participate in the cyclical rally and the financials rally, especially towards the end of last year when Trump actually won the election and everyone was kind of playing the reflation trade.

'Towards the end of last year bond yields started to actually rise and that is usually also beneficial for financials, so certainly that’s been another headwind for the fund where it is not as focused on financials,' Kooi added.

The JOHCM Asia ex Japan Small & Mid Cap fund returned 22.91% in US dollar terms, over the three years to the end of February 2017. This compares with a 4.52% rise by its Citywire-assigned benchmark, the MSCI AC Asia ex Japan Small Cap TR, over the same time period.

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