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Fund managers have mixed views on market

PETALING JAYA: Fund managers have mixed views when it comes to investing in the current stock market which is being impacted by negative sentiment due to the ongoing Covid-19 pandemic.

Some remain invested while some are holding on to cash, waiting for the right time to go into the equity market.

Areca Capital CEO Danny Wong (pic below) said he is 80% to 90% invested at the moment and is exposed to two main themes which are growth and recovery.

“ We have been using the barbell strategy since the start of the year, ” Wong told StarBiz, referring to the strategy of taking on both high-risk and low-risk investments with the aim of achieving an optimum balance in both risks and rewards.

According to Wong who currently helps manage RM2.8bil in funds for the firm’s clients, Areca has not changed much of its strategy year-to-date but has increased its holdings on “quality” stocks, given their price weakness in recent weeks.

“We remain positive on a recovery over the next 12 months, ” he said.

To be sure, his portfolio remains down at the moment, in line with the 30-stock benchmark index, the FBM KLCI which is also lower by some 13 points or 0.8%, year-to-date.

“We are affected by the short-term movements, ” he said, adding that the technology sector will be the main theme for the next few years.

Fortress Capital Group founder and CEO Thomas Yong (pic below) on the other hand, has switched to holding on to a higher level of cash for now.

“We are holding more cash as compared to the beginning of the year, and waiting for opportunities to re-enter the market as sentiment improves, ” Yong told StarBiz.

He said due to the resurgence of Covid-19 cases as well as a shortage of vaccines, the recovery of not only Malaysia but the whole of Asia where it sporadically invests in, is facing headwinds.

“We think recovery themes such as tourism and consumer plays might be affected.

“Market sentiment is rather poor and we are waiting for the opportunity to pick up value stocks that emerge from this, ” Yong said.

In Malaysia, he said Fortress was keeping a cautious view on the market as future economic and corporate earnings recovery may fall short of expectations due to the recent reimposition of restrictive measures.

“Having said that, once the virus infection issue is brought under control, the recovery of the economy would be much faster compared to last year, as part of the population would have been inoculated by then.

“Service sectors will lead the recovery, ” he added.

Bank Negara said earlier this month that Malaysia remained on track to achieve a growth of between 6% and 7.5% this year and that this forecast had already taken into consideration uncertainties surrounding the pandemic, including a possible spike in new Covid-19 cases across the nation.

In April, CGS-CIMB Research had warned that an increasing number of Covid-19 cases accompanied by a slow vaccination process and a possible reintroduction of movement restrictions could affect the recovery in corporate earnings and the economy as a whole.

source: The Star

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