ASEAN Strategy
Lower volatility, higher returns

After the recent jump in volatility, we expect markets to remain calmer on the back of diffused risk factors. This should make way for mean reversion and bargain hunting opportunities for Singapore, the worst performer in ASEAN since the start of the year. We are maintaining Indonesia and Philippines as Underweight as their resilient performances YTD are likely to subject them to profit taking amid earnings growth downgrades. We believe the ASEAN currency slide should pause as trade balances improve across the region. The weak

ASEAN currency is no longer a strong theme. Interest rate sensitive sectors are likely to be hurt by rising interest rates and prudent tightening stance – Underweight banks, property and REITs. Focus on banks’ M&A where Philippines is the bright spot; prefer property developers with a more defensive business model; selective on Singapore REITs. Consumption slowdown is a concern for us. We pick

OSIM for stable earnings outlook and TUF for earnings turnaround. We believe the commodity sector should outperform in the coming month. Near term, palm oil and plantation shares to remain well supported on seasonal low yields and the rebound in soybean oil prices; base metal prices should be supported by tight supply arising from Indonesia’s mineral export ban. 

Source: HwangDBS Research - 17 Feb 2014