Upload
todd-jones
View
215
Download
0
Embed Size (px)
Citation preview
HSBC Asset Management
March 2004
HSBC Asset Management (Hong Kong) Limited15/F Citibank Tower, 3 Garden Road, Hong KongTelephone: +852 2284 1111 Facsimile: +852 2845 0226Web site: www.assetmanagement.hsbc.com.hk
Hong Kong Baptist University1998 Superannuation Fund
Investment review
2
HK
BU
27
E_H
C0
2
HSBC Asset Management
Agenda
Investment performance
Market outlook
Factors for consideration before switching
HSBC Asset Management
3
HK
BU
27
E_H
C0
2
Investment performance
4
HK
BU
27
E_H
C0
2
HSBC Asset Management
Currencies
Bonds *
Equities **
* Bonds: Citigroup World Government Bond Indices** Equities: USA (S&P 500), UK (FTSE-100), Germany (DAX), Japan (Nikkei 225), Hong Kong (HSI), Australia (All Ordinaries), Malaysia (KLSE Composite), Singapore (STI)Source: Thomson Financial Datastream
Market statistics : January 2004 (in HKD terms)
-1.4
1.8 1.21.4
JP Yen Euro UK GBP Aus Dollar
%
% Change (against HKD)
1.21.0 1.6
-0.8-1.6
-0.2
0.6
-0.4
0.40.80.7
1.8
US UK Japan Germany Canada Australia
%
Mkt price return % (Local) Mkt price return % (HKD)
-1.9
1.0
5.7
2.4
5.7 5.14.8
1.7 2.4
-0.7
3.1
-0.1
0.51.01.93.3
US UK Germany Japan Hong Kong Australia Malaysia Singapore
%
% Change (Local) % Change (HKD)
5
HK
BU
27
E_H
C0
2
HSBC Asset Management
Currencies
Bonds *
Equities **
* Bonds: Citigroup World Government Bond Indices** Equities: USA (S&P 500), UK (FTSE-100), Germany (DAX), Japan (Nikkei 225), Hong Kong (HSI), Australia (All Ordinaries), Malaysia (KLSE Composite), Singapore (STI)Source: Thomson Financial Datastream
Market statistics: 3 months to December 2003 (in HKD terms)8.6 8.0
11.6
4.5
JP Yen Euro UK GBP Aus Dollar
%
% Change (against HKD)
0.2 0.6
8.2 8.25.3
-0.3
0.10.7
-0.5 -0.2
11.8
5.2
US UK Japan Germany Canada Australia
%
Mkt price return % (Local) Mkt price return % (HKD)
9.418.2
4.512.0 8.28.24.1
21.811.6 9.2 12.0 10.48.511.9
32.2
16.2
US UK Germany Japan Hong Kong Australia Malaysia Singapore
%
% Change (Local) % Change (HKD)
6
HK
BU
27
E_H
C0
2
HSBC Asset Management
Currencies
Bonds *
Equities **
* Bonds: Citigroup World Government Bond Indices** Equities: USA (S&P 500), UK (FTSE-100), Germany (DAX), Japan (Nikkei 225), Hong Kong (HSI), Australia (All Ordinaries), Malaysia (KLSE Composite), Singapore (STI)Source: Thomson Financial Datastream
Market statistics: 1 year to December 2003 (in HKD terms)
19.710.7
33.2
10.2
JP Yen Euro UK GBP Aus Dollar
%
% Change (against HKD)
2.1 3.8 5.61.813.0
24.2 28.5
2.6
-0.7
2.3
36.7
9.4
US UK Japan Germany Canada Australia
%
Mkt price return % (Local) Mkt price return % (HKD)
13.624.5
34.9 31.622.811.1
37.126.4 25.8
37.2 34.9 33.822.325.8
64.048.0
US UK Germany Japan Hong Kong Australia Malaysia Singapore
%
% Change (Local) % Change (HKD)
7
HK
BU
27
E_H
C0
2
HSBC Asset Management
More suitable forrisk tolerant staff
Balanced FundMore suitable forrisk averse staff
High Growth Fund
Growth Fund
Risk (short-term volatility)
Global Money Funds (HKD/USD)
High
Low High
Stable Fund
Lo
ng
-ter
m p
ote
nti
al r
etu
rn
Risk profile of various investment options
8
HK
BU
27
E_H
C0
2
HSBC Asset Management
3.7
3.1
2.2
1.5
0.00.2
3.9
3.1
2.3
1.5
0.00.2
0
2
4
6
High GrowthFund
Growth Fund Balanced Fund Stable Fund GMF - HKD Fund GMF - USD Fund
Return %
HKBU Benchmark
Source: HSBC Asset ManagementPast performance is not necessarily a guide to future performance
Investment performance: January 2004
9
HK
BU
27
E_H
C0
2
HSBC Asset Management
22.7
19.6
15.1
11.0
0.3 -0.1
24.6
20.4
16.3
11.9
0.1 0.10
10
20
30
High GrowthFund
Growth Fund Balanced Fund Stable Fund GMF – HKDFund
GMF – USDFund
Return %
HKBU Benchmark
Investment performance: 6 months to December 2003
Source: HSBC Asset Management, Watson Wyatt Managed Fund ReportPast performance is not necessarily a guide to future performance
10
HK
BU
27
E_H
C0
2
HSBC Asset Management
32.228.3
22.9
18.2
0.9 0.4
34.4
29.3
23.7
17.4
0.5 0.5
35.4
30.1
25.1
19.9
0.0 0.70
10
20
30
40
50
High GrowthFund
Growth Fund Balanced Fund Stable Fund GMF – HKDFund
GMF – USDFund
Return %
HKBU Wyatt Median Benchmark
Investment performance: January to December 2003
Source: HSBC Asset Management, Watson Wyatt Managed Fund ReportPast performance is not necessarily a guide to future performance
11
HK
BU
27
E_H
C0
2
HSBC Asset Management
18.716.9
24.4
30.2
17.0
29.0
0
10
20
30
40
High GrowthFund
Growth Fund Balanced Fund Stable Fund GMF – HKDFund
GMF – USDFund
Return %
HKBU (3/99)
Investment performance since inception (March 1998 to January 2004)
Source: HSBC Asset ManagementPast performance is not necessarily a guide to future performance
12
HK
BU
27
E_H
C0
2
HSBC Asset Management
Equities
Hong Kong 30.0 32.2 24.0 26.7 17.0 17.7 10.0 11.7
Japan 12.0 10.5 9.0 7.8 6.5 5.0 4.0 2.8
Other Asia Pac. 12.0 14.1 9.0 10.4 6.5 7.6 4.0 5.1
N. America 18.0 16.0 14.0 13.4 10.0 8.6 6.0 5.6
Europe 18.0 18.3 14.0 15.0 10.0 10.2 6.0 7.1
Total 90.0 91.1 70.0 73.3 50.0 49.1 30.0 32.3 0.0
Bonds
US Bonds 1.6 1.1 5.7 4.3 7.4 13.6 10.0
Non US Bonds 5.4 5.0 19.3 19.3 33.2 46.4 46.6
Total 7.0 6.1 25.0 23.6 45.0 40.6 60.0 56.6 0.0
Cash 3.0 2.8 5.0 3.1 5.0 10.3 10.0 11.1 100.0
Equities
Hong Kong 30.0 32.2 24.0 26.7 17.0 17.7 10.0 11.7
Japan 12.0 10.5 9.0 7.8 6.5 5.0 4.0 2.8
Other Asia Pac. 12.0 14.1 9.0 10.4 6.5 7.6 4.0 5.1
N. America 18.0 16.0 14.0 13.4 10.0 8.6 6.0 5.6
Europe 18.0 18.3 14.0 15.0 10.0 10.2 6.0 7.1
Total 90.0 91.1 70.0 73.3 50.0 49.1 30.0 32.3 0.0
Bonds
US Bonds 1.6 1.1 5.7 4.3 7.4 13.6 10.0
Non US Bonds 5.4 5.0 19.3 19.3 33.2 46.4 46.6
Total 7.0 6.1 25.0 23.6 45.0 40.6 60.0 56.6 0.0
Cash 3.0 2.8 5.0 3.1 5.0 10.3 10.0 11.1 100.0
HKBU HKBU HKBU HKBU HKBU GMFHigh Growth Growth Balanced Stable HKD / USD
Bmk Fund Bmk Fund Bmk Fund Bmk Fund Fund
(%) (%) (%) (%) (%) (%) (%) (%) (%)
Asset allocation – 31 January 2004
HSBC Asset Management
13
HK
BU
27
E_H
C0
2
Market outlook
14
HK
BU
27
E_H
C0
2
HSBC Asset Management
US
– Q4 GDP growth was slightly weaker than expected, but growth should remain well above trend for the next two to three quarters.
– As the inventory cycle turns strongly positive and consumers benefit from further tax cuts in 1H2004, 5-6% growth rates in first half of 2004 are expected before slowing.
– Monetary policy should remain accommodative; interest rates at around 3% by mid 2005.
– We expect earnings growth has peaked even though Q4 earnings have been slightly better than expected, growing by 24%.
– The strong run since March 2003 has pushed valuations to slightly expensive, the market is looking for earnings strength to drive further gains.
Outlook– US - Moderate underweight
– GDP growth forecast for 2004 (+4.8%); 2005 (+3.6%)
Data as at 3 February 2004
15
HK
BU
27
E_H
C0
2
HSBC Asset Management
Europe Euroland
– Expect continued industrial recovery and supporting investment spending (German Industrial Production rose by 2.35% in 4Q 2003).
– Exports remain a positive growth contributor despite the rising Euro. – Steady economic improvement is expected in 2004, taking GDP growth back to slightly
above trend at 2.2%.– Market reasonably valued at a forward PE ratio of 15x and looks cheap if economic growth
remains strong.
UK– Consumer confidence and spending remain resilient.– Prospect of more rate hikes and a rising currency are not beneficial for larger and more
globally exposed stocks, but valuations are still supportive (12x of 2004 earnings).
Outlook– Euroland - Moderate overweight; UK - Neutral– GDP growth forecast for 2004 and 2005: Euroland (+2.2%, +2.5%); UK (+3.0%, +2.4%)
Data as at 3 February 2004
16
HK
BU
27
E_H
C0
2
HSBC Asset Management
Japan
– The economy is experiencing an export led recovery with positive investment.
– Recent better than expected unemployment figures would lead to an improvement in overall income growth, setting a more positive trend in future consumption.
– Further USD weakness will be a concern despite supports from the BoJ.
– Earnings estimates have been downgraded recently due to currency rise.
– Valuations reasonable but change to earnings expectations and a decreasing impact from foreign buying may hold the market back.
Outlook– Japan - Neutral
– GDP growth forecast for 2004 (+2.3%) and 2005 (+1.6%)
Data as at 3 February 2004
17
HK
BU
27
E_H
C0
2
HSBC Asset Management
Asia (ex-Japan)
– The actual impact on Asian economies of avian flu is relatively benign as growth momentum remains on track driven by both exports and private consumption.
– Thailand’s 2004 GDP could be reduced by as much as 1% on the back of avian flu, but growth is still expected to be around 4.5 to 5%.
– While avian flu serves as an excuse for short term profit taking in Asian equities, we remain positive over the medium term due to the region’s economic and corporate growth stories.
– Cash calls from companies and fund flows should be monitored closely (new equity issues/placements by companies in Hong Kong)
– Reporting season in markets such as Hong Kong and China is likely to be a catalyst for market sentiment.
Outlook– Asia (ex-Japan) - Moderate overweight
Data as at 3 February 2004
18
HK
BU
27
E_H
C0
2
HSBC Asset Management
Asia (ex-Japan)
Hong Kong (overweight)– Fundamentals stay firm : better employment conditions and lower deflationary pressure– Earnings revision remains upbeat, and positive management guidance in the forthcoming reporting season
would be the key to trigger another round of earnings upgrades– Risks are increased cash calls, and avian flu, though likely to be contained, that may provide excuse for profit
taking in the short term
Korea (moderate overweight)– The potential resolution of LG Card issue may gradually increase retail investors’ risk appetite. – More optimistic outlook for consumer spending and strong export will increase the possibility of positive
fixed capital formation in second half of 2004. – Nevertheless, major risks include the potential MSCI re-weighting; potential margin erosion on rising commodity
prices and the Won appreciation.
Taiwan (neutral)– Macro conditions still positive - expect pick up in domestic consumption to be another growth factor.– Potential MSCI re-weighting would drive the market positively.– Political noises in the run up to the election remain a concern.– Factors like corporate IT spending and the TWD rise are to be carefully monitored.
Data as at 3 February 2004
19
HK
BU
27
E_H
C0
2
HSBC Asset Management
Bond market outlook
– U.S.: We retain our central expectation of unchanged policy over 3 months, but a cumulative tightening of 1% over next 12 months. Fed’s evolution of policy rhetoric towards an eventual tightening will continue to challenge bond yields, particularly following the recent rally.
– Euroland: Despite the improvement in some business surveys, the general strength of the Euro and the lack of meaningful follow-through lessen the need for the ECB to follow the Fed and MPC in tightening policy. We do not expect ECB to start its tightening cycle over the next 3 or 12 months. However, the general drift towards higher global bond yields is likely to lead to rising bond yields across Europe. We therefore adopt a short duration position.
– Japan: Although economic outlook continues to improve, there is little prospect of an increase in official interest rates until inflation turns and remains in positive territory. While signals are more positive in Japan then in a number of other markets, the global backdrop, low absolute yields and concern over increasing supply make us unwilling to adopt a more positive position.
Data as at 3 February 2004
20
HK
BU
27
E_H
C0
2
HSBC Asset Management
Asset class rating :
US, Australia,Canada
UK, Japan,
Equity market rating :
Europe, HKAsia (ex JP/HK),
GEM
Most preferred market(s)
Neutral UnderweightOverweight ModerateOverweight
ModerateUnderweight
OverweightOverweight NeutralEquities, Bonds, Cash
NeutralEquities, Bonds, Cash
UnderweightUnderweight
Least preferred market(s)
HSBC Asset Management Investment Strategy
Data as at 3 February 2004
21
HK
BU
27
E_H
C0
2
HSBC Asset Management
Explanatory notes and disclaimers
The document is confidential and is supplied to you solely for your information. This document should not be reproduced or further distributed to any person or entities, whether in whole or in part, for any purpose.
Please also note that investment involves risk and past performance is not indicative of future performance.
The opinions expressed herein should not be considered to be a recommendation by HSBC Asset Management (Hong Kong) Limited to any reader of this material to buy or sell securities, commodities, currencies or other investments referred to herein. HSBC Asset Management (Hong Kong) Limited, its ultimate and intermediate holding companies, subsidiaries, affiliates, clients, directors and/or staff may, at any time, have a position in the markets referred to herein, and may buy or sell securities, currencies, or any other financial instruments in such markets.
HSBC Asset Management (Hong Kong) Limited has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. HSBC Asset Management (Hong Kong) Limited and the HSBC Group make no guarantees, representations or warranties and accept no responsibility or liability as to its accuracy or completeness. Information in this report is subject to change without notice.
22
HK
BU
27
E_H
C0
2
HSBC Asset Management
HSBC Asset Management (Hong Kong) Limited
HSBC Asset Management
23
HK
BU
27
E_H
C0
2
Factors for consideration before switching
24
HK
BU
27
E_H
C0
2
HSBC Asset Management
Principles of retirement investment3 major types of investment instruments
Equities– Ownership of companies
– Returns from dividends & capital appreciation
– High short term volatility
Bonds– Debt instruments issued by governments/corporations
– Returns from interest payments
– Short term volatility lower than equities
Cash– very low short term volatility
25
HK
BU
27
E_H
C0
2
HSBC Asset Management
Do not time / chase markets!Do not time / chase markets!
Please remember
Identify personal factors– Establish risk / return profile
– Understand investment choices
– Make investment decisions using a long-term approach
26
HK
BU
27
E_H
C0
2
HSBC Asset Management
Different people have different needs!!Different people have different needs!!
A guide to investing
Factors to consider– Years to retirement
– Other personal assets
– Planned uses for retirement assets
– Financial and other personal circumstances
27
HK
BU
27
E_H
C0
2
HSBC Asset Management
Therefore Therefore
Different people have different needs
Investment choices are provided for different risk profilesInvestment choices are provided for different risk profiles
Range of investment choices