Malaysia’s top fund managers reveal the markets and sectors to invest in as the economy recovers


By Lee Min Keong

With the global economy poised for a major recession, the coming months may well provide great opportunities for smart investors to buy when markets are near the trough and reaping massive returns when it eventually recovers.

However, the million-dollar question remains – ‘Where is the smart money flowing into?’ 

Several fund managers that Smart Investor talked to believe that markets in the Asia-Pacific region, particularly China, and sectors that ride on global megatrends offer the best bang for your investment buck.

For those with an appetite for higher risk, the small-cap space also offers opportunities to savvy investors able to differentiate between the wheat and the chaff.

Easing back into the market

Affin Hwang Asset Management chief marketing & distribution Officer Chan Ai Mei says since markets have already corrected by quite a fair bit, some investors may want to start averaging in and ease their way into the market. 

“There could still be more volatility ahead, but if clients are prepared to sit through it, they would reap the returns when markets rebound.

“In terms of core allocation, our latest model portfolio for risk-moderate investors maintain a slight tilt towards fixed income compared to equities (55%:45%). 

“Diversification continues to be a key pillar in constructing allocation, be it through geographical, sector or currency exposure,” she says.

For tactical exposure, Chan says investors may consider allocating a portion into China-thematic funds that are set to benefit from a resumption of economic activities as businesses gradually re-open in the country after the lockdown.

“Other long-term trends driving particularly China’s A-share market such as increasing foreign participation in the onshore equity market, coupled with the ongoing urbanisation, premiumisation and innovation will create further investable opportunities,” she explains.

Importance of ‘staying the course’

In times of market uncertainty, Principal Asset Management Bhd advises clients to “stay the course” rather than trying to jump in and out of the market.

“This is because you never know when the market will start coming back, so if you jump out, you may miss out on the recovery portion,” says its chief investment officer Patrick Chang.

“We continue to believe that a disciplined, diversified, and far-sighted perspective to investing will remain the best way to grow capital over the long term.”

On investment strategies that Malaysian investors can adopt during market stress, Chang says there are always opportunities in every situation. 

Focus on fundamentals

“Investors can make an informed decision depending on their risk tolerance, investment goal, consider dollar cost averaging and make the best of opportunities due to the market correction.”

“As our DNA and investing philosophy is long-term, diversification is definitely key here and a well-balanced income and dividend focused portfolio is recommended as it can help investors generate better risk-adjusted returns – even more so in this period of extreme uncertainty to capture growth spots,” Chang says.

The company's stock selection criteria under the current circumstances will continue to focus on quality growth names, companies with resilient earnings, strong track record and ability to pay dividend.

Chang favours the Asia-Pacific region given its economic dynamism and demographics. “We also prefer certain secular growth sectors in China which benefit from the ongoing changes in the Chinese economy – domestic consumption, millennial spending, high-technology, e-commerce.” 

For conservative investors, the company recommends Malaysia focused bond funds and balanced funds that are income focused.  

“For investors with higher risk tolerance, we would recommend them to focus on growth-oriented funds that offer exposure to growth areas in China, Asia-Pacific and global technology,” he adds.

Betting on China’s recovery and growth

FSMOne assistant research manager Tan Wei Yine is also positive on Chinese equities for its long-term growth prospects and attractive valuations. 

“Within sectors, we are positive on healthcare and technology, as these sectors allow investors to ride on global megatrends (AI (artificial intelligence), 5G, aging demographics) and possess a huge market potential for long-term growth. 

Locally, the online investment platform is positive on the small-cap sector, particularly companies within the technology and semiconductor sectors. 

“It is impossible to catch the bottom, which is why we think investors should invest progressively. We do not hope for a further crash from here, but we believe investors need to be prepared for it.” 

Read the full article in the May/June issue of Smart Investor.  Download a free digital copy below.