KUALA LUMPUR – Affin Hwang Asset Management Berhad (“Affin Hwang AM” or “the Company”) believes that global economic growth is poised to continue on an even keel with expectations of single-digit growth returns this year as the economic cycle matures. Emerging markets (EMs) started 2019 on a strong note buoyed by trade optimism and policy support coming in from global central banks to shore-up the market.

In a media press briefing today, Teng Chee Wai, Managing Director of Affin Hwang AM said, “After the rout in EMs last year, we do see some of these headwinds now receding with the US Federal Reserve turning more dovish and the US dollar strength starting to top-out. Currently, Fed funds futures are pricing-in for a pause in interest rates this year with a chance of a rate cut in 2020.”

“Easing measures announced by China has also propped up the market, though closer monitoring would be needed to see if such stimulus has started to trickle-down to growth and GDP possibly sometime into the 2Q’19 due to lag effects. China’s growth responds well to the creation of liquidity and we need to see credit translating to higher velocity of money and transactions that would lead to stronger growth. This could bolster fund flows back into EMs as positioning has been light with global funds underweight EMs and lots of cash on the side-lines.

“We expect 2019 to be another front-loaded year for markets whereby expectations are currently leaning towards a base-case of no further escalation in the US-China trade war that could even open-up room for the deadline to be extended. Assuming a more positive outcome where tariffs are dismantled completely, markets could extend its rally further. However, moving into the 2H’18 we expect markets to focus its attention on growth again as we approach a late cycle and global growth starts to taper off. If earnings revision continues to decelerate, this would also put a drag on markets,” continued Teng.

On outlook for Malaysia, Teng adds, “Malaysia is still firmly on its path towards reforms and in rectifying the wrongs of the past. Whilst, the sweeping changes introduced by the new government will be beneficial in the long-term, it is also important for the country to move beyond kitchen-sinking and start to grow again. We saw how various sectors ranging from construction to utility whipsawed by policy changes and regulatory risk last year.’

“But over time, as the new government comes of age and learn the ropes of administering policies, we believe the foundation has been laid for a more vibrant market in the future. As confidence builds, we would then see the return of fund flows and FDIs that would lead to more resilient growth, especially with increased participation from the private sector and the economy becoming more efficient,” Teng said.

In a company update briefing, Teng continues, “Despite a challenging year for the asset management industry in 2018, we managed to achieve positive net sales for our funds and staved off severe outflows. We will continue to harness new innovative capabilities to expand our offerings in helping our clients navigate volatility ahead and also strengthen our distribution channels to penetrate the market further.”

In a separate development, the company added another feather to its cap bagging 2 awards at the ‘Best of the Best Awards 2019’ by Asia Asset Management recently. These are:-

1. Best Institutional House, Malaysia Winner: Affin Hwang Asset Management Berhad

2. CEO of the Year, Malaysia Winner: Teng Chee Wai, Affin Hwang Asset Management Berhad

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