Risk assets trading volatility heightened in November on fluctuating probability of Fed decision to reduce interest rate in the upcoming meeting in December. The World Index gained 0.18% in November. The MSCI Far East Ex. Japan index corrected, declining 3.68%, on profit taking in North Asia markets in particular Korea and Taiwan markets. ASEAN equities performed better with a return of +0.92%, led by Indonesia (+4.22%) and Vietnamese (+3.13%). The performance of regional currencies was mixed against the local currency. The best performing currencies were Malaysia Ringgit (+1.38%) and Thai Baht (+0.69%), while the weaker ones were Taiwanese NT (-2.08%) and Korean Won (-2.60%).

Performance of US indices diverged with technology sector underperforming. The market remained resilient on the back of the Federal Reserve’s dovish stance and corporate earnings remaining strong from previous quarter. Year-over-year earnings growth reached 13%, driven by over 7% revenue growth and 6% margin expansion. Technology-related earnings were particularly impressive. The 2025 consensus earnings-per-share growth expectation for the Magnificent Seven increased to over 22%, which is now significantly higher than the 15% estimate from seven months ago. For the month, Dow Jones Industrial Average (DJIA) and S&P 500 Index gained 0.32% and 0.13% respectively. Nasdaq Composite corrected 1.51% on profit taking.

The Stoxx Europe 600 Index added 0.79% from prior month, driven by potential US Fed rate cut and resilient European corporate earnings. The euro zone’s annual inflation rate edged higher to 2.2% in November 2025 marking a modest increase from October’s 2.1% reading and slightly exceeding economist expectations. This is above the European Central Bank’s 2% target, reinforcing market expectations that the central bank will maintain its current monetary policy stance through the remainder of the year.

Hong Kong and H shares indices witnessed continued profit taking in November. Hang Seng Index and Hang Seng China Enterprises Index declined 0.18% and 0.42% respectively. Chinese A shares also corrected, declining 2.46%. Chinese economy continued to face headwinds. The latest manufacturing purchasing manufacturing index (PMI) stood at 49 and remained in contraction stage. It dropped 0.8 from the previous month.  China’s exports unexpectedly contracted in October. Exports fell for the first time in eight months, dropping 1.1% from a year earlier. Shipments to all nations except the US rose 3.1%, not enough to compensate for the more than 25% decline to America.

South Korea’s KOSPI Index retraced, declining 4.40% in November on profit taking. South Korea’s industrial output posted its steepest decline in nearly six years in October, driven by a strong base effect from the robust readings in the previous month. The industrial output declined 2.5% to 112.9 in October from a month earlier. It is the largest decline since a 2.9% fall in February 2020.

Taiwan’s TWSE Index declined 2.15% on global risk off on technology sector. Taiwan export orders reached US$69.37bn in October, down 1.2% MoM, but up 25.1% Year-on-year, below consensus (median) of 28% Year-on-year growth, and last month’s unusually high 30.5% Year-on-year growth. Research Centre for Taiwan Economic Development said the consumer confidence index edged up 0.69 points to 64.65, marking improvements across most sub-indices. Consumers remained cautious amid tariff concerns but economic performance has been stronger than expected.

Singapore’s STI continued to move higher, gaining 2.15%. Singapore’s economy grew 4.2% Year-on-year in Q3 2025, supported mainly by manufacturing, wholesale trade and finance, with construction slowing but retail and accommodation improving, leading the government to raise full-year GDP growth forecast to around 4%. Singapore’s NODX jumped 22.2% Year-on-year in October, the fastest since 2021, driven by strong electronic exports (PCs, ICs, disk media) and non-electronics (gold, pharma, machinery), with sharp increases to Thailand, Hong Kong, Taiwan, South Korea and Malaysia, while exports to the US fell due to new tariffs.

Malaysia’s KLCI declined 0.29% on strong currency gain. However, mounting pressure on fiscal constraint arising from Sabah’s claim for a bigger share of oil revenue from Sabah affected domestic investors’ sentiment. On the economic front, the World Bank upped its projection for Malaysia’s economic growth in 2025 to 4.1% versus its earlier forecast of 3.9%.

Thailand’s SET Index declined 4.03%. Thailand’s economy contracted 0.6% Quarter-on-quarter in 3Q25, deeper than expected and marking its first decline in nearly three years due to weak domestic demand, external headwinds, and limited impact from new government measures. Private consumption slowed, government spending fell sharply, while fixed investment rebounded after four quarters of contraction. Net trade supported growth as exports rose modestly and imports shrank.

Jakarta Composite Index continued to strengthen with a 4.22% gain. Indonesia’s consumer confidence rose to 121.2 in October 2025, up from 115.0 in September. Retail sales growth accelerated to 4.3% Year-on-year in October from a revised 3.7% in September and 3.5% in August, driven mainly by higher spending on F&B and household equipment. On a monthly basis, retail sales rose 0.6% MoM, rebounding from a 2.4%.

The Philippines PSE Index recovered on bargain hunting after few months of correction, gaining 1.56%. The political risk continued to hinder government ability to boost economic activities. There has already been a sharp slowdown in infrastructure spending, a key factor in the economic slowdown to a four-year low of 4% growth in the third quarter of 2025.

Vietnam’s VN-Index gained 3.13%. The country’s inflation remained under control. Consumer prices in the first 10 months of 2025 rose 3.27% from a year earlier, with most monthly increases staying below 0.2%. Vietnam’s trade data shows that the US tariff has had limited impact thus far. Vietnam’s exports rose 18% Year-on-year and 10% Quarter-on-quarter in Q3, with September/ October growth at 17%/25% Year-on-year even after the front-loading period. PMI, new orders, and new export orders have recovered since July.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US had sparked a recalibration of macro variables and asset allocation decision. However, the US Administration’s subsequent tariff announcements and the inconsistent and frequent policy changes made in their wake had led to heightened market gyrations and volatility.  Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses as the shifting tariffs landscape seemed to have reached some stability.  With the finalization of tariff rates with majority of US’ trading partners, trade matters are heading into tailwind, at least for now. As for the US tariff for China, the US and China teams held talks in Kuala Lumpur followed by a meeting between President Trump and President Xi in Busan.  Both sides described the meetings as constructive.  The US did not proceed with the threatened 100% tariff, and agreed to cut tariffs on China goods from 57% to 47%, while the tariffs on fentanyl related chemicals were reduced from 20% to 10%.  The US also agreed to suspend port fees on Chinese shipments.  China, on its part, agreed to suspend export restrictions on rare earth elements, and committed to resume purchase of US soybeans.  It remains a matter of conjecture as to whether the tariff dusts have really settled for good.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick end to the Russia-Ukraine war should he be elected. Since his inauguration as US President, Trump has made moves, seeking to bring about a cessation of the conflict in Ukraine.  The latest being a face-to-face Summit between him and President Putin held in Anchorage on August 15. An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to be any nearer.  It remains to be seen if Trump and his Administration will succeed in orchestrating a cessation of the conflict in Ukraine.  If this does come about, it would change the geo-political situation in Europe and elsewhere. Meanwhile, in the Middle East, Israel and Hamas agreed to a fragile ceaseful at the behest of Trump.  That is very much welcome, but the geopolitical headwinds remain.

The shift of market focus to dovish monetary stance will likely be supportive of risk assets in near term. The Fed reduced rates by 25 basis points in November.  However, there is much uncertainty as to whether there will be a further reduction in December.  The market is still divided on impact of higher tariffs on macro variables such as inflation and economic activities. US corporate earnings especially in the technology sector continue to be key pillar to hold up risk assets. High valuation is further supported by strong capital expenditure drive for AI. However, questions are starting to emerge as to whether the humongous expenditures in AI will generate the anticipated returns.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US and in China. The market is still watchful of developments in Trump’s tariffs for the key trade partners.  The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications.  Investors, by and large, appear to be comfortable with Trump’s “Big Beautiful Bill” that has been signed into law, notwithstanding that it will substantially increase US federal deficit and government debt.  The US government went into a prolonged shutdown following failure by the US to pass a Bill to raise US’ debt ceiling.  However, US investors were not unduly concerned about this development, and the US market has taken it in its stride.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US and continuing efforts to broaden restrictions on sales of tech equipment and services to Chinese entities can only exacerbate the economic situation in China.  The Chinese property sector continues to face challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets.  The Chinese government continues to bring forth various measures to help the economy. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. The various measures have boosted market sentiments. However, the longer- term effectiveness on China’s economy continues to be closely watched.  It may take time for the initiative to bear fruits.  The focus will be on addressing the challenges in the property market, lifting consumer sentiments and consumption, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies, even at the agreed rates that are significantly below the levels announced by the US during the “Liberation Day”. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers in the importing country may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in US policies post the US Presidential election, the still rising and historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, and despite the upticks in recent months, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China. Also, the prospect of further softening of the US dollar could see increasing funds flow out of US assets which could be beneficial for emerging markets including China and ASEAN.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavor to protect and grow your capital.

Risk assets continued to move higher in October, particularly in markets which are beneficiaries of AI investments. As expected, the Federal Reserve further cut rates by 25 bps in October. The markets were driven by positive US corporate result announcements. The easing of trade tensions between US and China also lifted investors’ sentiment. The World Index gained 1.94% in October. The MSCI Far East Ex. Japan index chalked up further gain, adding 4.47%, driven by North Asia markets in particular Korea and Taiwan markets. ASEAN equities performance lagged with a return of +2.37%. Vietnam (-1.33%) and Philippines (-0.40%) stood out with negative returns. Hong Kong shares also saw profit taking after strong performance in past months. The performance of regional currencies was mixed against the local currency. The best performing currencies were Malaysia Ringgit (+0.42%) and Vietnamese Dong (+0.42%), while the weaker ones were Taiwanese NT (-0.89%) and Korean Won (-1.78%).

The US markets performed well with broad based gains driven by the Federal Reserve’s dovish stance and easing trade tensions between US and China. The Federal Reserve further cut rates by 25 bps in October as latest US inflation print provided confidence that the backdrop of higher tariff was not translating into higher inflation rate. However, Jerome Powell cautioned that a rate cut in December was not a foregone conclusion. The statement caused market to retrace. For the month, Dow Jones Industrial Average (DJIA) and S&P 500 Index and Nasdaq Composite gained 2.51%, 2.27% and 4.70% respectively.

The Stoxx Europe 600 Index added 2.46% from prior month. The eurozone underperformed as political noise in France and limited exposure to commodities and AI-related tech saw performance lag other regions like the UK and Asia. Europe’s economy continued to show weak but positive momentum heading into the winter. October’s composite PMI hovered at 50.4 supported by services resilience but continued industrial softness, particularly in Germany. The eurozone’s headline inflation eased further to 2.2%, its lowest since mid-2022

Hong Kong and H shares indices witnessed profit taking in October. Hang Seng Index and Hang Seng China Enterprises Index declined 3.53% and 4.05% respectively. Chinese A shares also stayed flat. Chinese economic indicators remained sluggish. Loan data was weak. The latest data in September showed both new social financing and new loans fell short of last year. New loans reached RMB1.29trn, down RMB300bn YoY. New social financing reached RMB3.53trn in September, down RMB229.7bn Year-on-Year. The growth of outstanding social financing moderated to 8.7% in September, from this year’s peak of 9% in July.  The Year-on-Year decline of new loans mainly came from short-term household loans and bill financing. However, China’s exports growth bounced up in September, expanding 8.3% Year-on-Year after rising 4.4% in August, beating market consensus. The surging exports growth reflected the tailwinds from low base last September, expanding global manufacturing activities, robust growth of exports to emerging markets and product competitiveness of machinery and high-tech products.

South Korea’s KOSPI Index surged 19.94% higher in October, driven by Samsung Electronics over positive outlook on memory sector recovery and strong global AI demand outlook. Bank of Korea (BOK) official announced that the Korean economy is likely to grow at a higher-than-earlier forecast rate, probably expanding by more than 1%, though structural reforms will be needed to support sustainable growth. In the July–September period, the economy expanded 1.2% on-quarter, surpassing the BOK’s forecast of 1.1% growth.

Taiwan’s TWSE Index gained 9.34%. The gain was driven by global technology sector strength. Taiwan export orders continued to show strength. Taiwan export orders reached US$70.22bn in September, up 17.0% MoM (up 5.1% MoM seasonally adjusted), and up 30.5% YoY, beating consensus of 18.7% YoY growth. On a quarterly basis, 3Q25 orders were up by 6.3% QoQ and 23.8% YoY, both reflecting a strong growth trajectory. On domestic consumer, the Taiwan Cabinet’s NT$10,000 (US$320) cash handout program will begin on November 12 and is expected to boost GDP by as much as half a percentage point.

Singapore’s STI gained 2.99%. On the economic front, retail sales rose 5.2% Year-on-Year, the strongest since February 2024, led by furniture, household goods, and recreational items, though department stores and mini-marts saw declines. PMI readings signalled broad strength: the S&P Global PMI jumped to 56.4 (fastest growth in a year) on stronger demand, employment, and purchasing activity, while the manufacturing PMI edged up to 50.1, with electronics leading gains. Inflation pressures resurfaced, with input costs and selling prices rising at the fastest pace since January.

Malaysia’s KLCI declined 0.17%. Advance official estimates indicated that Malaysia’s economy grew 5.2% in the third quarter of 2025, up from a 4.4% growth in the previous quarter. Economic momentum in Malaysia strengthened in the third quarter, underpinned by solid performance in all main sectors. Domestic demand continued to be the primary engine of growth, particularly in tourism-related activities during public and school holidays. Sustained capital investment and rising external demand further bolstered economic expansion, despite headwinds from uncertain trade policies.

Thailand’s SET Index strengthened further, gaining 2.77%. Thailand’s manufacturing PMI rose to 54.6 in September 2025 (Aug: 52.7), the strongest since May 2023 and marking five months of growth. Domestic demand drove higher new orders and output, while exports contracted for a second month. Firms boosted purchasing and employment at the fastest pace in a year. Input costs fell for the third month, prompting the first drop in selling prices since March. Business confidence improved to the highest in over two years

Jakarta Composite Index gained 1.28%. The S&P Global Indonesia manufacturing PMI slipped to 50.4 in September 2025 from August’s 51.5, still indicating a second month of factory activity expansion. New orders rose while output fell. External demand remained subdued. Firms raised input purchases and increased hiring for the second month to meet demand. Indonesia’s annual inflation rate accelerated to 2.65% in September 2025, up from 2.31% in August, driven mainly by food prices (+5.01% vs 3.99% in August). Core inflation edged up slightly to 2.19% from August’s 2.17%.

The Philippines PSE Index continued to correct, dropping 0.40%.  The Philippines’ annual inflation rose to 1.7% in September 2025 from 1.5% in August, the highest since March but below expectations of 2%, mainly due to higher food and transport costs. The unemployment rate eased to 3.9%, with employment rising to 50.1 million and the labour participation rate improving to 65.1%, reflecting stronger labour market conditions. However, domestic consumption remained fragile.

Vietnam’s VN-Index declined 1.33% on continued profit taking after strong performance in earlier months. The manufacturing PMI stayed at 50.4 in September, its third month of slight growth. New orders and exports improved, and output rose for a fifth month, though momentum eased. Employment fell for the 12th straight month, while input costs jumped, pushing selling prices up at the fastest pace in 14 months. Firms remained cautiously optimistic, supported by demand and public investment, though sentiment is weaker than average.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US had sparked a recalibration of macro variables and asset allocation decision. However, the US Administration’s subsequent tariff announcements and the inconsistent and frequent policy changes made in their wake had led to heightened market gyrations and volatility.  Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses as the shifting tariffs landscape seem to have reached some stability.  With the finalization of tariff rates with majority of US’ trading partners, trade matters are heading into tailwind, at least for now. As for the US tariff for China, the US and China teams held talks in Kuala Lumpur followed by a meeting between President Trump and President Xi in Busan.  Both sides described the meetings as constructive.  The US did not proceed with the threatened 100% tariff, and agreed to cut tariffs on China goods from 57% to 47%, while the tariffs on fentanyl related chemicals were reduced from 20% to 10%.  The US also agreed to suspend port fees on Chinese shipments.  China, on its part, agreed to suspend export restrictions on rare earth elements, and committed to resume purchase of US soybeans.  It remains a matter of conjecture as to whether the tariff dusts have really settled for good.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick end to the Russia-Ukraine war should he be elected. Since his inauguration as US President, Trump has made moves, seeking to bring about a cessation of the conflict in Ukraine.  The latest being a face-to-face Summit between him and President Putin held in Anchorage on August 15. An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to be any nearer.  It remains to be seen whether Trump and his administration will succeed in orchestrating a cessation of the conflict in Ukraine. If this does happen, it would change the geopolitical landscape in Europe and beyond. Meanwhile, in the Middle East, Israel and Hamas have agreed to a fragile ceasefire at the behest of Trump. This is very much welcomed, but geopolitical headwinds remain.

The US Fed lowered the rates further by 25 basis points in October. The market expects further reductions in the rest of the year and early 2026, although Fed Chairman, Powell, was somewhat ambivalent about the prospect of a December cut.  The shift of market focus to dovish monetary stance will likely be supportive of risk assets in near term. The market is still divided on impact of higher tariffs on macro variables such as inflation and economic activities. US corporate earnings especially in the technology sector continue to be key pillar to hold up risk assets. High valuation is further supported by strong capital expenditure drive for AI.Questions are starting to emerge as to whether the humongous expenditures in AI will generate the anticipated returns.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US and in China.    The market is keenly watching developments in Trump’s tariffs for the key trade partners. The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications. Investors, by and large, appear to be comfortable with Trump’s “Big Beautiful Bill” that has been signed into law, notwithstanding that it will substantially increase US federal deficit and government debt. Meanwhile, failure by the US to pass a Bill to raise US’ debt ceiling has resulted in a prolonged shutdown of the US government.  However, US investors are not unduly concerned about this development, and the US market has taken it in its stride.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected.  The tariff issues with the US and continuing efforts to broaden restrictions on sales of tech equipment and services to Chinese entities can only exacerbate the economic situation in China.  The Chinese property sector continues to face challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets.  The Chinese government continues to bring forth various measures to help the economy. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. The various measures have boosted market sentiments. However, the longer- term effectiveness on China’s economy continues to be closely watched.  It may take time for the initiative to bear fruits.  The focus will be on addressing the challenges in the property market, lifting consumer sentiments and consumption, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies, even at the agreed rates that are significantly below the levels announced by the US during the “Liberation Day”. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers in the importing country may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the still historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, and despite the upticks in recent months, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China. Also, the prospect of further softening of the US dollar could see increasing funds flow out of US assets which could be beneficial for emerging markets including China and ASEAN.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

Risk assets strengthened further in August across regions. Investor attention continued to focus on US corporate earnings announcement and Federal Reserve’s annual gathering at Jackson Hole for clue on interest rate decision. Fed chair Jerome Powell suggested the balance of economic risks had shifted, potentially warranting an adjustment to the Fed’s policy stance, and it brought cheers to US investors. The markets reacted positively, registering broad-based gains. The World Index gained 2.49% in August. The MSCI Far East Ex. Japan index continued to chalk up further gain, adding 1.91%, supported by Chinese markets. ASEAN equities performed well with a return of +2.39%, on good performance across the ASEAN markets. Within ASEAN equities, Vietnam, Malaysia and Indonesia stood out with strong returns. Vietnam shares (+11.96%) and Malaysia shares (+4.09%) were top gainers. Performance of regional currencies against the USD was mixed. The best performing currencies were Philippines Peso (+2.08%), Thai Baht (+1.33%) and Singapore Dollar (+1.10%), while the weaker ones were Taiwan NT (-2.26%) and Vietnam Dong (-0.56%).

The US markets performed well with broad based gains amidst heightened trading volatility caused by downward revisions to prior non-farm payroll numbers. Sentiment was supported by positive second quarter’s earnings. Strong earnings reports reinforced the view that the political turmoil of the past months has so far had only a muted impact on US company earnings, at least for now. The Purchasing Managers’ Index (PMI) business survey for August was optimistic, especially for the manufacturing sector. Dow Jones Industrial Average (DJIA) and S&P 500 Index and Nasdaq Composite gained 3.20%, 1.91% and 1.58% respectively. Fed chair Jerome Powell suggested the balance of economic risks had shifted, potentially warranting an adjustment to the Fed’s policy stance. As a result, rates markets now price in a high likelihood that the Fed will reduce the fed funds rate by 25 basis points at its September meeting.

The Stoxx Europe 600 Index recovered, gaining 0.74% driven by positive economic data. The eurozone composite PMI reached a flash 51.1 in August, driven by manufacturing, while loan growth remained strong in July. French equities weighed on overall European performance somewhat after a no confidence vote in the French government was announced and political uncertainty spiked.

Hong Kong and H shares indices extended their gains in July. For the month of August, Hang Seng Index and Hang Seng China Enterprises Index gained 1.23% and 0.73% respectively. Chinese A shares positive surged, returning 10.33%. However, the growth momentum of China’s domestic demand slowed in July as both goods retail sales and service sales weakened and fixed asset investment (FAI) contracted. The sluggish FAI reflected mixed headwinds including higher downward pressure of property market, industrial “anti-involution”, overseas trade conflicts dampening private sector’s confidence as well as the lagged effect of some fiscal supports towards equipment renewal and key infrastructure investment. China’s factory activity unexpectedly deteriorated in July despite a tariff truce with the US, as early signs emerged showing exports are slowing, and weak domestic demand persists. The official manufacturing purchasing managers’ index was 49.3, versus 49.7 in June according to the National Bureau of Statistics.

South Korea’s Index (KOSPI) corrected, declining 1.83% on profit taking. South Korea’s industrial output, retail sales and facility investment all rose from a month earlier in July. Industrial production edged up 0.3% last month, marking the second consecutive month of increase, according to the data compiled by Statistics Korea. Retail sales, a gauge of private spending, went up 2.5% over the cited period, also marking the second consecutive monthly increase. This also represents the sharpest on-month increase since February 2023, when the comparative figure rose by 6.1%.

Taiwan’s TWSE Index gained 2.93%, held up by global technology sector strength. Taiwan export orders totalled US$57.64bn in July, still up 15.2% Year-on-year, missing consensus of 16.7% Year-on-year growth. The new 20% tariffs on exports to US took effect on August 7, while July remained under the previous 10% tariff regime. Taiwan’s consumer confidence fell in August to its lowest level in nearly two and a half years, according to National Central University (NCU). The index slipped to 63.31, down 1.07 points from July and the weakest reading since May 2023. Of six sub-indicators, only stock market confidence improved, while household finances, job opportunities, price levels, durable goods, and the overall economy all declined.

Singapore’s STI continued to gain 2.30%, adding on to the 5.28% rise in July, on positive sentiment from government initiatives to strengthen the capital market. On economic front, Singapore’s non-oil domestic exports (NODX) fell 4.6% year-on-year in July 2025, reversing a downwardly revised 12.9% surge in June. This marked the third decline so far this year and the steepest contraction since October 2024, primarily due to a drop in non-electronic exports, which declined 6.6% (vs 14.4% rise in June). The weakness was led by sharp falls in pharmaceuticals (-18.9%), petrochemicals (-23.4%), and food preparations (-26.3%).

Malaysia’s KLCI gained 4.09% on value hunting, recovering from a 2.6% fall in July. Malaysia’s exports rebounded from contraction in July, mainly due to stronger electrical and electronic products shipments. Exports rose 6.8% from a year earlier to 140.45 billion ringgit marking the highest monthly value since September 2022, amid sustained international demand. Malaysia’s manufacturing industry capacity utilization remained high at an 82.5% rate in the second quarter of 2025 according to the Department of Statistics Malaysia (DOSM). The utilization rate increased by 0.4 percentage points compared to 82.1% in the same quarter of the preceding year.

Thailand’s SET Index stabilized, declining 0.46%, after the strong 13.06% rally in the prior month. Thailand’s economy grew 0.6% Quarter-on-quarter in Q2 2025, above market expectations of 0.3% and marking the sixth straight quarter of expansion. Growth was weighed by softer private consumption (0.2% vs 0.6%) amid high household debt, but supported by a rebound in government spending (0.4% vs -1.3%) on social transfers. Fixed investment contracted at a softer pace (-1.9% vs -2.3%).

Jakarta Composite Index gained 4.63%, adding on to the 5.73% rise in the previous month, on improved sentiment due to interest rate cut. The Bank of Indonesia (BI) further lowered the rate 25 bps to 5.00% during the month. Loan growth slipped further to 7% Year-on-year in July from 7.7% in June, well below the 8-11% target. BI kept its 2025 GDP forecast at 4.6-5.4% on expectations of stronger 2H momentum from fiscal measures and exports. Indonesia government proposed a lower fiscal deficit of 2.5% of GDP in 2026 vs 2.8% in 2025 budget.

The Philippines PSE Index declining 1.55% in August after a 4.92% loss last month. The central bank (BSP) cut another 25 bps in interest rate. The latest cut brings the BSP’s reverse repurchase rate to 5% and the interest rates on the overnight deposit and lending facilities to 4.5% and 5.5%, respectively. The BSP has so far reduced policy rates by a total of 150 basis points since last year.

Vietnam’s VN-Index continued to strengthen, gaining 11.96%, despite a good 9.19% run in the previous month. The market performance was driven by resilient domestic demand, government infrastructural spending and strong exports despite global headwinds. GDP growth in the first 6 months of the year reached 7.52%, the highest level in the same period in nearly 20 years. Trade activities maintained double-digit growth for the sixth consecutive month. Additionally, the PMI regained momentum as new orders rebounded. Exports in July surged by 16% year-on-year, while imports rose by 17.8% Year-on-year.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US had sparked a recalibration of macro variables and asset allocation decision. However, the US Administration’s subsequent tariff announcements and the inconsistent and frequent policy changes made in their wake had led to heightened market gyrations and volatility.  Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses as the shifting tariffs landscape seem to have reached some stability.  The US has announced the tariffs deals reached with the majority of its trade partners. With the finalization of tariff rates with majority of US’ trading partners, trade matters are heading into tailwind, at least for now. As for the US tariff for China, the US and China teams held the third round of bilateral meeting in Stockholm in late July. There was no announcement of any agreement, but both sides signalled willingness to continue negotiations.  It remains a matter of conjecture as to whether the tariff dusts have really settled, as there appears to be a propensity for issues to burst to the surface that could change what has been agreed.  Moreover, tied to the so called tariff agreements are commitments on investments and spending to be made by the trading partner, and it is uncertain how these would pan out.  In the light of the higher tariffs on imports into the US, economic forecast may have factored in slower global trade going forward, but actual impact may potentially result in disappointment.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick end to the Russia-Ukraine war should he be elected. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine.  The latest being a face to face Summit between him and President Putin held in Anchorage on August 15. An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to any nearer.  It remains to be seen if Trump and his Administration will succeed in orchestrating a cessation of the conflict in Ukraine.  If this does come about, it would change the geo-political situation in Europe and elsewhere. Meanwhile, the Middle East remains a hot spot given the tense situation between Iran and Israeli, and Israel’s continuing military actions in Gaza. The geopolitical headwinds remain.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China. The market is keenly watching developments in Trump’s tariffs for the key trade partners. The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications. Investors, by and large, appear to be comfortable with Trump’s “Bill Beautiful Bill” that has been signed into law, notwithstanding that it will substantially increase US federal deficit and government debt.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US can only exacerbate the economic situation in China. The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets. The Chinese government continues to bring forth various measures to help the economy. In September 2024, the Chinese government announced a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. Since then, there were additional measures taken. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. The various measures have boosted market sentiments. However, the longer- term effectiveness on China’s economy remains to be seen and will be closely watched. It may take time for the initiative to bear fruits. The focus will be on addressing challenges in the property market, lifting consumer sentiments and consumption, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies, even at the agreed rates that are significantly below the levels announced by the US during the “Liberation Day”. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers in the importing country may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the still historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, and despite the upticks in recent months, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

Risk asset trading volatility remained high across regions. Investor attention continued to focus on US tariffs development. The start of the corporate results announcement season saw some good numbers which brought cheers to US investors. The markets reacted positively, registering broad-based gains across risk assets. The World Index gained 1.23% in July. The MSCI Far East Ex. Japan index continued to chalk up further gain, adding 4.21%, largely due to strong performance across the various larger markets. ASEAN equities lagged with a return of +2.59%, on diverging performance among the ASEAN markets. Within ASEAN equities, Philippines and Malaysia stood out with negative returns. Thailand shares (+14.02%) and Vietnamese shares (+9.19%) were top gainers in the ASEAN region. Regional currencies mostly depreciated against the USD. The best performing currencies were Vietnamese Dong (-0.31%), Chinese Yuan (-0.50%) and Indonesia Rupiah (-1.33%), while the weaker ones were Philippines Peso (-3.41%) and Korean Win (-2.88%).

The US markets saw broad based recovery. Sentiment improved following announcements by the US on the tariffs set for its major trading partners which were above the baseline rates, but significantly lower than the rates set on “Liberation Day”. The US second quarter corporate results released so far mostly met market expectations. In the US, close to 80% of companies in the S&P 500 that have reported thus far have beaten consensus earnings and revenue growth expectations, which is better than the long-term average. Strong earnings reports reinforced the view that the political turmoil of the past months has so far had only a muted impact on US company earnings, at least for now. The information technology sector continued to outperform, but the rally extended to cyclical sectors such as industrials and consumer discretionary.

Dow Jones Industrial Average (DJIA) and S&P 500 Index and Nasdaq Composite gained 0.08%, 2.17% and 3.70% respectively. The Fed stated that economic activity has continued to expand at a solid pace although wide swings in exports have affected the data. The central bank is waiting for more clarity on the economic effect of the President’s tariffs, in particular its impact on inflation, before deciding whether to lower interest rates. The inflationary effect of tariffs is largely dependent upon where tariff rates settle.

The Stoxx Europe 600 Index gained 0.88% on profit taking. The warnings from continental technology heavyweights about the negative impact of US trade policy on 2026 growth targets prompted investors to lock in gain. Food and beverage companies also struggled, blaming increasing challenges from weak China demand.

Hong Kong and H shares indices strengthened on momentum. For the month, Hang Seng Index and Hang Seng China Enterprises Index gained 2.91% and 2.36% respectively. Chinese A shares registered positive return of 3.54%. The Chinese economy remained resilient with the second quarter GDP growth at 5.2% Year-on-year. Other economic indicators also showed stable economic activities. The industrial production was better than expectations, rising 6.8% Year-on-year in June. The Caixin manufacturing output purchasing managers’ index (PMI) moved above the 50-point threshold, denoting expanding activity, although new export orders fell.

South Korea’s KOSPI Index continued to gain, adding 5.66%. The 2nd supplementary budget launched in July further boosted sentiment. The budget projected W21.5tn of tax revenue, with expenditure of W17.3tn to stimulate consumption and investment, and W5.3tn towards social stability measures. South Korea’s annual rate of inflation picked up pace last month. Consumer price inflation rose to 2.2% in June, fueled by rising costs of industrial goods and processed food, according to official data from Statistics Korea. This marks the sharpest year-on-year increase since January due to weakening of the Korean won, which has increased the cost of imported industrial goods.

Taiwan’s TWSE Index made a gain of 5.78%, boosted by global technology sector strength. Taiwan export orders totalled US$56.77bn in June, down 2.0% Month-on-Month and up 24.6% Year-on-year, beating consensus of 23.2% Year-on-year growth. Electronics orders were mostly down Month-on-Month but up Year-on-year, indicating that order front-loading has reached its peak, while orders for raw materials were sluggish. Taiwan’s consumer confidence index (CCI) edged up by 0.68 points in July to 64.38, marking its first increase after nine

months of steady decline, a survey by National Central University showed. The rebound was mainly fueled by a sharp 5.15-point rise in sentiment towards stock investment.

Singapore’s STI gained 5.28% on government initiatives to strengthen the capital market. Singapore’s central bank allocated SGD 1.1 billion to three asset managers as part of its SGD 5 billion Equity Market Development Programme (EQDP) aimed at strengthening the local stock market. The move follows a broader review by the Monetary Authority of Singapore (MAS) launched in August 2023 to improve market structure and functioning.

Malaysia’s KLCI declined 1.29% on weaker economy growth outlook. Malaysia’s economy is forecast to grow by 4.5% in the second quarter of 2025 based on advance gross domestic product (GDP) estimates, slightly outpacing previous quarter’s 4.4%. Growth is expected to be driven by robust domestic demand amid global headwinds, according to the Statistics Department Malaysia.

Thailand’s SET Index recovered strongly, gaining 14.02% on bargain hunting. The cease-fire agreement reached between Thailand and Cambodia to end their border conflict boosted investors’ sentiment. Thailand’s exports rose 15.5% Year-on-year to USD 28.65bn in June 2025, marking the 12th straight month of growth, albeit slower than May’s 18.4% and below the 18.7% forecast. The increase was partly due to accelerated shipments ahead of a planned 36% US tariff taking effect in August, with exports to the US surging 41.9%.

Jakarta Composite Index gained 8.04% on improved sentiment due to interest rate cut. The Bank of Indonesia lowered the rate 25 bps to 5.25%. Indonesia consumer confidence increased slightly to 117.8 in June vs 117.5. Indonesia retail sales grew 1.9% Year-on-year in May, which rebounded from the 0.3% decline in April. The recovery came from sales of food, beverages and tobacco (4% vs 1.2% in April), and cultural and recreational goods (4.7% vs 3.6%), while sales fell lesser for household appliances (-5.8% vs -10.5%) but sales decline for  information and communication equipment deepened (-27.4% vs -5.1%). Car sales slumped 22.6% Year-on-year in June to 57.7k units, following a 15.1% drop in May.

The Philippines PSE Index declined further, losing -1.76% as weak peso hurt investors’ confidence. Trade deficit widened: Imports climbed by 10.8% year-on-year to USD 11 billion in June 2025, rebounding from a downwardly revised 1.1% fall in the previous month. This marked the highest inbound shipments since March.

Vietnam’s VN-Index continued to strengthen, gaining 9.19%.  Vietnam’s GDP expanded 7.96% Year-on-year in Q2 2025, accelerating from a 6.93% rise in Q1 and marking the fastest pace since Q3 2022, according to flash estimates. The latest result reflected solid progress toward the growth target of at least 8%. All sectors posted stronger increases, including services (8.46% vs 7.70% in Q1), industry and construction (8.97% vs 7.42%), and agriculture (3.89% vs 3.74%). Trade remained resilient despite global headwinds and rising U.S. tariffs, with exports and imports up by 18% and 18.8% Year-on-year, respectively. Vietnam was one of the first countries to secure a bilateral trade agreement with US that set the US tariff at 20%, down from the previously set rate of 46%.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US had sparked a recalibration of macro variables and asset allocation decision. However, the US Administration’s subsequent tariff announcements and the inconsistent and frequent policy changes made in their wake have led to heightened market gyrations and volatility.  Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses when Trump turned down the heat for most countries, at least for the time being, on April 9, and then on May 12 when US and China agreed on a framework to reduce substantially the tariffs that they had slapped on each other.  With the finalization of tariff rates with majority of US’ trading partners, trade matters are heading into tailwind, at least for now. As for the US tariff for China, the US and China teams held the third round of bilateral meeting in Stockholm in late July.  There was no announcement of any agreement, but both sides signalled willingness to continue negotiations.  It remains a matter of conjecture as to whether the tariff dusts have really settled, as there appears to be a propensity for issues to burst to the surface that could change what has been agreed.  Moreover, tied to the so called tariff agreements are commitments on investments and spendings to be made by the trading partner, and it is uncertain how these would pan out.  In the light of the higher tariffs on imports into the US, economic forecast may have factored in slower global trade going forward, but actual impact may potentially result in disappointment.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick end to the Russia-Ukraine war should he be elected. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine.  An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to any nearer.  It remains to be seen if Trump and his Administration will succeed in orchestrating a cessation of the conflict in Ukraine. If this does come about, it would change the geo-political situation in Europe and elsewhere. Meanwhile, the Middle East remains a hot spot given the tense situation between Iran and Israeli, and Israel’s continuing military actions in Gaza.  The geopolitical headwinds remain.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China. The market is keenly watching where Trump’s tariffs for the key trade partners will settle.  The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications. Investors, by and large, appear to be comfortable with Trump’s “Bill Beautiful Bill” that has been signed into law, notwithstanding that it will substantially increase US federal deficit and government debt.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US can only exacerbate the economic situation.  The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets. The Chinese government continues to bring forth various measures to help the economy. In September 2024, the Chinese government announced a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. Since then, there were additional measures taken.  The Chinese government remains constructive on policies to spur economic activities to achieve economic

growth target. The various measures have boosted market sentiments. However, the longer-term effectiveness remains to be seen and will be closely watched. It may take time for the initiative to bear fruits. The focus will be on addressing the challenges in the property market, lifting consumer sentiments and consumption, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies, even at the agreed rates that are significantly below the levels announced by the US during the “Liberation Day”. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the still historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China. However, in the investment space we are in, we believe there is room for cautious optimism. After years of prolonged sell down, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

Risk asset trading volatility remained high across regions, brought about by escalation in Israeli-Iranian conflict. Israel launched pre-emptive aerial bombardments of Iranian nuclear sites, and it was soon met with retaliatory strikes by Iran in Israeli cities. The situation took an ominous turn when the US joined in the fray by sending bombers to release deep-ground penetrating bombs at Iranian sites aiming to demolish Iran’s uranium-enrichment facilities. Paradoxically, Trump called for a ceasefire between Israel and Iran following the US bombing mission, and both sides agreed to a tentative ceasefire after 12 days of hostilities. The markets reacted positively, registering broad-based gains across risk assets. The World Index gained 4.22% in June. The MSCI Far East Ex. Japan index chalked up further gain, adding 6.36%, largely due to strong performance of Korea (+13.86%) and Taiwan markets (+4.26%) on the back of strong appreciation of the Taiwan Dollar and Korea Won against the USD. ASEAN equities lagged on relatively basis with a return of -0.07% on strong divergence in performance across the ASEAN markets. Within ASEAN equities, Singapore, Vietnam and Malaysia stood out with positive returns. The laggards were Thailand shares (-5.19%) and Indonesia shares (-3.46%). Regional currencies mostly appreciated against the USD. The best performing currencies were Taiwan NT (+2.21%), Korea Won (+2.11%) and Singapore Dollar (+1.52%), while the weaker ones were Philippines Peso (-1.02%) and Vietnamese Dong (-0.37%).

The US markets saw broad based recovery. Sentiment improved following US-China framework agreement to reduce US tariff on Chinese imports from 145% to 30%, and reduction of Chinese levies on U.S. goods from 125% to 10%.  The agreement was for a period of 90 days. The strong market performance was also underpinned by resilient economic data as indicated by steady US job growth and declining inflation. The information technology sector continued to outperform, but the rally extended to cyclical sectors such as industrials and consumer discretionary. However, policy uncertainty weighed on healthcare sector. Dow Jones Industrial Average (DJIA) and S&P 500 Index and Nasdaq Composite gained 4.32%, 4.96% and 6.57% respectively. The new job growth exceeded expectation. There were 177k jobs created in April, above the forecast (+133k), and the 12-month average (+152k). The unemployment rate was steady at 4.2%. A strong labour market could be the key to the U.S. avoiding an economic recession. A steady decline in new jobs or a rise in weekly jobless claims could be cause for concern.

The Stoxx Europe 600 Index down 1.33%. The continued flow of global funds into the region on allocation decision amid dollar weakness against euro supported the index strength. The earnings forecasts for European companies are nudging higher. A higher dividend yield of more than 3% is twice that paid by US companies. European companies return 5% of their value to shareholders through dividends and share buybacks this year versus 4% for US companies.  This has attracted investors’ interest into the region.

Hong Kong and H shares indices strengthened on momentum. For the month, Hang Seng Index and Hang Seng China Enterprises Index gained 3.36% and 2.92% respectively. Chinese A shares registered positive return of 2.50%. Economic activities data were mixed with services sector faring better than manufacturing. China’s services activity expanded at a faster pace in May. The Caixin China services purchasing managers’ index rose to 51.1 from 50.7 the month before, according to a statement from Caixin and S&P Global. China’s manufacturing sector had its worst slump since September 2022. The Caixin manufacturing purchasing managers’ index fell to 48.3 in May from 50.4 in the prior month, according to a statement released by Caixin and S&P Global, well below the 50-mark separating expansion from contraction.

South Korea’s KOSPI Index surged 13.86% on proactive economic measures introduced by the new government, although economic indicators continued to be muted.  The South Korean government announced its second supplementary budget for 2025, amounting to KRW 30.5tn, significantly larger than the first supplementary budget of KRW 12.2tn introduced in April. The new budget includes KRW 15.2tn to boost consumption and investment, KRW 5tn for support to SMEs and vulnerable groups, and KRW 10.3tn to offset the shortfall in tax revenues. The centrepiece of the stimulus is a universal cash handout program, offering KRW 150,000–500,000 in vouchers per citizen, totalling KRW 10.3tn. The fresh fiscal injection totals KRW 20.2tn (0.8% of GDP). The composite business sentiment index in all industries in South Korea decreased 0.5 points to 90.2 in June from the previous month.

Taiwan’s TWSE Index made a gain of 4.26%, boosted by global technology sector strength. Taiwan’s central bank (CBC) kept the policy rate, reserve requirement ratio, and credit controls unchanged. The CBC refrained from providing clear signals on potential rate cuts in the second half of the year, citing significant uncertainties related to US tariff policies. Taiwan’s industrial output surged over 22% in May from a year earlier, buoyed by booming tech demand and a rush by foreign buyers to beat looming U.S. tariffs- marking 15 consecutive months of growth according to the Ministry of Economic Affairs (MOEA). Taiwan’s unemployment rate in May was 3.30%, little changed from a year earlier, but still plumbing 25-year lows, reported the Directorate-General of Budget, Accounting and Statistics (DGBAS).

Singapore’s STI gained 1.79%. Singapore’s non-oil domestic exports (NODX) unexpectedly slumped 3.5% Year-on-Year in May 2025, reversing a 12.4% jump in April and missing expectations of an 8.0% rise. This marked the first decline in non-oil domestic exports since January and the strongest contraction in seven months. Monthly, NODX plunged 12.0%, the steepest decline since May 2023, reversing a 10.4% surge in April, which was the fastest pace in five months.

Malaysia’s KLCI recovered, gaining 1.63%. Malaysia’s Producer Price Index (PPI) declined by 3.6% in May 2025, marking a steeper drop compared to April’s 3.4% decrease, according to the Department of Statistics Malaysia (DOSM). All sectors recorded year-on-year declines except agriculture, forestry, and fishing. The mining sector continued its double-digit slump, falling 15%, driven by sharp drops in crude petroleum (15.7%) and natural gas extraction (13.1%).

Thailand’s SET Index declined further with a 5.19% drop on political uncertainty and weak economic activities. Thailand’s economy grew by 0.7% Quarter-on-Quarter in Q1 2025, slightly above expectations and faster than Q4 2024’s 0.4% growth. Exports rose 2.0%, especially to the US ahead of new tariffs, while imports fell by 2.4% due to weak domestic demand. However, government spending and fixed investment declined further. On a year-on-year basis, GDP rose 3.1% in Q1 2025, beating forecasts but easing from 3.3% in Q4 2024.

Jakarta Composite Index declined 3.46% on profit taking. Bank Indonesia (BI) held its policy rate unchanged at 5.5% during its June policy meeting, following a 25bps cut in May. Loan growth continued to ease to 8.43% in May 2025, down from 8.88% in April. BI urges lower lending rates to support loan growth. For the first five months, State revenue declined more than expenditure, resulting in higher deficit. Revenue was Rp995 trillion (-11% Year-on-Year, 33% FY2025 budget). Meanwhile, expenditure was Rp1,016 (-11% Year-on-Year, 28% of FY2025 budget).

The Philippines PSE Index gained 0.37%. The Central Bank of the Philippines lowered its benchmark interest rate by 25 bps to 5.25% during its June 2025 policy meeting, marking the lowest rate in two and a half years and in line with market expectations. The decision reflects a more moderate inflation outlook and the need to support growth with a more accommodative stance. The annual inflation rate edged down to 1.3% in May 2025 from 1.4% in the previous month, matching market forecasts and marking the lowest level since November 2019.

Vietnam’s VN-Index continued to strengthen, gaining 3.26%. Vietnam expects positive results from trade negotiations with the US will come sooner than the US tariff deadline, according to Prime Minister Pham Minh Chinh. Meanwhile, the government is rolling out a range of initiatives, including infrastructure projects, energy transition, trade diversification and promotion of domestic consumption, to boost economic activities. The Government proposed the National Assembly to allow private sector participation in the North-South High-Speed Railway project. This change signals a shift towards opening national projects to corporate investment following the issuance of Resolution 68 on private sector development.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US had sparked a recalibration of macro variables and asset allocation decision. However, as a result of concern about the potential impact of his broad ranging and stiffer than expected tariff policies announced on April 2, market expectation turned negative and US inflation and interest rate outlook turned less dovish. The tariff announcements and the inconsistent and frequent policy changes made in their wake have led to heightened market gyrations and volatility. Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses when Trump turned down the heat for most countries, at least for the time being, on April 9, and then on May 12 when US and China agreed on a framework to reduce substantially the tariffs that they had slapped on each other.  However, uncertainties remained. It remains a matter of conjecture as to where the tariffs will eventually settle. Trump is expected to announce what will be the tariffs that will apply to the various countries as we approach the July 9 deadline. Markets could be roiled along the way, although it appears that investors are relatively sanguine about what may come. However, should the outcome turned out to be way out of expectation, the economies and markets will be materially impacted.  Economist forecast may have factored in slower global trade going forward, but actual impact may potentially result in disappointment.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick cessation to the Russia-Ukraine war should he be elected. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine.  An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to any nearer.  It remains to be seen if Trump and his Administration will succeed in orchestrating a cessation of the conflict in Ukraine.  If this does come about, it would change the geo-political situation in Europe and elsewhere. Meanwhile, the recent flare up of the conflict between Iran and Israeli, with limited participation by the US, added to geopolitical risk premium. Although a cease fire was temporarily brokered, and appears to be holding, the geopolitical headwinds remain.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China. The market is keenly watching where Trump’s tariffs for the key trade partners will settle.  The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications.  Investors, by and large, appear to be comfortable with Trump’s “Bill Beautiful Bill” that is winding its way through the the US legislature, notwithstanding that it will substantially increase US federal deficit and government debt.  Trump has set July 4 as the deadline for passing the Bill.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US can only exacerbate the economic situation.  The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets. The Chinese government continues to bring forth various measures to help the economy. In September 2024, the Chinese government announced a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. Since then, there were additional measures taken. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. The various measures have boosted market sentiments. However, the longer- term effectiveness remains to be seen and will be closely watched. It may take time for the initiative to bear fruits. The focus will be on addressing the challenges in the property market, lifting consumer sentiments, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies, particularly if the tariffs remain at the levels announced by the US during the “Liberation Day”. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the still historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

This article is solely for information purposes. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The information contained herein does not have any regard to the specific investment objectives, financial situation or particular needs of any person. Investors may wish to seek advice from a financial advisor before making any investment decision. Past performance is not indicative of future results. An investment is subject to investment risks, including the possible loss of the principal amount invested.

Pheim Asset Management Sdn Bhd, Pheim Islamic Asset Management Sdn Bhd, and Pheim Unit Trusts Berhad (collectively known as “Pheim”) have been alerted to a scam circulating on Facebook and/or other social media platforms. The scam involves the misuse of Dr. Tan Chong Koay’s photo and name (in another Chinese dialect) — the Founder, Group Executive Chairman, and Chief Strategist of Pheim, a reputable fund manager with over 40 years of proven track record in the investment industry.

The scam falsely claims that Dr. Tan is offering gold investment recommendations, using fake Facebook pages, misleading advertisements, and unauthorized communication channels.

Pheim confirms that Dr. Tan Chong Koay does not provide any personal stock tips, investment advice, or endorse any investment schemes via social media or WhatsApp. Pheim has no association with these fraudulent activities, and the public is strongly advised to stay vigilant.

Members of the public are reminded to be cautious with unsolicited investment offers, especially those promising high or quick returns. Do not share personal information, do not make payments, and report any suspicious activities to the relevant authorities. Pheim has lodged reports to the authorities regarding this matter.

Risk asset trading volatility continued to heighten across regions amidst uncertainties. Against the backdrop US trade negotiations with the European Union (EU) and a temporary delay to planned tariff hikes, including agreement reached on May 12 between the US and China to bring down the tariffs imposed on each other, the markets registered broad-based gains across risk assets. The World Index gained 5.69% in May. The MSCI Far East Ex. Japan index regained strength with a 6.11% gain, largely due to strong performance of Korea and Taiwan markets on the back of strong appreciation of the Taiwan Dollar and Korea Won against the USD. ASEAN equities lagged on relatively basis with a return of 1.94% with strong divergence in performance across the ASEAN markets. Vietnam and Indonesia stood out with good gains. Vietnam shares (+8.67%) and Jakarta shares (+6.04%) were the top performers. The laggards were Thailand shares (-4.02%) and Malaysia shares (-2.07%). Regional currencies mostly appreciated against the USD. The best performing currencies were Taiwan NT (+7.01%), Korea Won (+3.09%) and Indonesia Rupiah (+1.69%), while the weaker ones were Hong Kong Dollar (-1.09%) and Vietnamese Dong (-0.12%).

The US markets saw broad based recovery. Amidst positive developments on the tariff front, the strong market performance was underpinned by a robust first quarter earnings season. The information technology sector outperformed, but the rally extended to cyclical sectors such as industrials and consumer discretionary. Dow Jones Industrial Average (DJIA) and S&P 500 Index and Nasdaq Composite gained 3.94%, 6.15% and 9.56% respectively. The US economy remained resilient, though it is expected to grow at slower rate for 2025, weighed down by Trump’s tariff policies. The Conference Board Leading Economic Index® (LEI) for the US fell sharply by 1.0% in April 2025 to 99.4 (2016=100), after declining by 0.8% in March (revised downward from the –0.7% originally reported). The LEI declined by 2.0% in the six-month period ending April 2025, the same rate of decline as over the previous six months.

The Stoxx Europe 600 Index gained 4.02%. The continued flow of global funds into the region on allocation decision improved investors’ risk appetite. Advancements in US–EU trade talks helped to alleviate fears of recession, while expectations for fiscal support and increased defence spending, and upward earnings revisions continued to underpin regional sentiment.

Hong Kong and H shares indices gained on bargain hunting. For the month, Hang Seng Index and Hang Seng China Enterprises Index gained 5.29% and 4.41% respectively. Chinese A shares registered positive return of 1.85%. Chinese government announced a new round of monetary and financial easing policies. The required reserve ratio (RRR) was cut by 50 basis points. The loan prime rate (LPR) was also reduced. The policy package emphasizes support for economic growth while maintaining the long-term resilience of financial institutions, especially protecting banks’ net interest margins. To further improve Hong Kong’s global competitiveness, the SFC will embark on initiatives to improve market access and broaden its product offerings.

South Korea’s KOSPI Index gained 5.52% on positive sentiment over potential presidential pre-election rally, although economic indicators were muted.  South Korea’s industrial output turned downward in April owing to the negative effect of the U.S. tariffs imposition. The seasonally-adjusted production index in all industries, which excludes the agriculture, livestock and fishery sector, fell 0.8% in April from a month earlier after rising 0.7% in February and 0.9% in March. The Bank of Korea sharply lowered its growth forecast for this year to 0.8%, confirming near-zero growth expectations. The central bank pointed to a prolonged domestic demand slump and the damaging effects of U.S.-led tariff disputes as key threats.

Taiwan’s TWSE Index made a strong gain of 13.53% as global technology sector advanced drive the technology centric Taiwan market. Taiwan’s CPI eased below the Central Bank 2% threshold in May, led by softer gains in food prices and declines in clothing and transportation. Taiwan export orders totaled US$56.4bn in April, up 6.3% Month on Month and up 19.8% Year on Year, beating consensus of 9.5% Year on Year growth. Electronics orders outperformed, bolstered by early pull-in demand. Among major products, ICT export orders were up by 5.7% Month on Month and 20.0% Year on Year to US$15.65bn in April, as demand uptrends for AI applications and from the cloud industry sustained, coupled with early pull-in demand from clients, resulting in stronger server and networking orders.  The Taiwan Dollar strengthened 7.01% against the USD.

Singapore’s STI gained 1.62%. Singapore’s annual inflation rate stood at 0.9% in April 2025, unchanged from the previous two months but slightly above expectations of 0.8%. This figure remained at its lowest level since February 2021, as prices edged higher for food (1.4% vs 1.3% in March), while they moderated for both housing and utilities (1.0% vs 1.2%) and transport (1.8% vs 1.9%). Singapore may slip into a technical recession after final GDP data confirmed the economy contracted in Q1 2025 even before U.S. tariffs took effect. It contracted 0.6% Quarter-on-quarter.

Malaysia’s KLCI declined 2.07%. Malaysia’s Ministry of Investment, Trade and Industry announced that the country’s exports expanded by 16.4% year-on-year to 133.56 billion ringgit in April. Malaysia’s headline inflation remained unchanged at 1.4% in April 2025, while core inflation edged up to two% from 1.9% in March 2025, according to Bank Negara Malaysia.

Thailand’s SET Index declined 4.02% on expectation of weaker economic activities going forward. Thailand’s economy grew by 0.7% quarter-on-quarter in Q1 2025, slightly above expectations and faster than Q4 2024’s 0.4% growth. Exports rose 2.0%, especially to the US ahead of new tariffs, while imports fell by 2.4% due to weak domestic demand. However, government spending and fixed investment declined further. On a year-on-year basis, GDP rose 3.1% in Q1 2025, beating forecasts but easing from 3.3% in Q4 2024.

Jakarta Composite Index continued to recover.  It gained 6.04% on short covering as investors’ sentiment improved on monetary easing. Bank of Indonesia (BI) cut interest rate 25bps to 5.50%, the second cut for the year. The lending facilities rate and deposit facility rate were also cut by 25bps each to 6.25% and 4.75% respectively. The decision is consistent with efforts to keep inflation within target, stabilize currency, and support economic growth. However, BI revised down Indonesia’s 2025 GDP forecast to 4.6 to 5.4% range (from 4.7 to 5.5%).

The Philippines PSE Index declined 0.21%. The Philippines’ total external trade of goods decreased 2% to $16.99 billion in April from $17.34 billion a year earlier, according to preliminary data from the Philippine Statistics Authority. Domestic economy confidence remained weak as loans from big banks or universal and commercial banks grew slower at 11.2% from March’s 11.8% expansion.

Vietnam’s VN-Index recovered strongly, gaining 8.67% after previous month’s sharp (-7.71%) decline amid concerns over the impact of the reciprocal tariff imposed on the country by the US which is the highest among ASEAN countries. The trade tariff issue remained a key factor that has affected trading sentiment. The country’s negotiating delegation and the US completed the 2nd round of trade negotiations in Washington DC. The next round will begin in early June.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US sparked a recalibration of macro variables and asset allocation decision. However, as a result of concern about the potential impact of his broad ranging and stiffer than expected tariff policies, market expectation has been negative and US inflation and interest rate outlook turned less dovish. The tariff announcements and the inconsistent and frequent policy changes have led to heightened market gyrations and volatility.  Following the broad sell off after the announcement of across-the-board reciprocal tariffs on “Liberation Day”, the markets have recovered much of their losses when Trump turned down the heat for most countries, at least for the time being, on April 9, and then on May 12 when US and China agreed to reduce substantially the tariffs they slapped on each other.  However, uncertainties remained.  It remains a matter of conjecture as to where the tariffs will eventually settle.  Markets could be roiled along the way.  The US economy and that of other countries are expected to be affected. Any adverse change in the US economic growth trajectory, the US inflation outlook and consumer sentiments,  with their  consequential effect on corporate earnings would have significant impact on the market.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick cessation to the Russia-Ukraine war should he be elected Escalation of geo-political conflicts and tensions  could also have major adverse impact on the markets. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine.  An end to the Ukraine conflict would be positive for the equity markets. However, a peaceful resolution of the conflict does not appear to any nearer.  It remains to be seen if Trump and his Admistration will succeed in orchestrating a cessation of the conflict in Ukraine.  If this does come about, it would change the geo-political situation in Europe and elsewhere.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China.    The market is keenly watching where Trump’s tariffs for the key trade partners will settle.  The market is also attentive to other US policy pronouncements that would have major fiscal, financial and economic implications.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected.  The tariff issues with the US can only exacerbate the economic situation.  The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets.  The Chinese government continues to bring forth various measures to help the economy. More can be expected in the wake of the new US tariff situation.  In further moves to address the economic situation, the Chinese government announced in September a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. While the move has boosted market sentiments, the longer- term effectiveness remains to be seen and will be closely watched.  It may take time for the initiative to bear fruits.  The focus will be on addressing the  challenges in the property market, lifting consumer sentiments, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

This article is solely for information purposes. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The information contained herein does not have any regard to the specific investment objectives, financial situation or particular needs of any person. Investors may wish to seek advice from a financial advisor before making any investment decision. Past performance is not indicative of future results. An investment is subject to investment risks, including the possible loss of the principal amount invested.

Risk asset trading volatility continued to heighten across regions amidst uncertain, unexpected and frequent policy changes by the US administration. Prices gyrated in response to Trump’s pronouncements of sudden changes to the US tariff measures.  The World Index recovered from last month’s 4.64% fall, gaining 0.74% in what is widely viewed as a relief rally. The MSCI Far East Ex. Japan index declined 0.61%, largely due to Hong Kong market’s decline.  ASEAN equities outperformed relatively with a return of  gaining 2.19% on fund flow into the region. Korea shares (+3.04%) and Philippines shares (+2.82%) were the top performers. The laggards were Vietnam shares (-6.16%) and Chinese H shares (-5.17%). Regional currencies mostly appreciated against the USD. The best performing currencies were Taiwan NT (+3.84%), Korea Won (+3.46%) and Singapore Dollar (+2.78%), while the weaker ones were Vietnamese Dong (-1.59%) and Indonesia Rupiah (-0.14%).

The US markets saw huge trading volatility on uncertainty in economic growth outlook amid the US tariff policies. US data released in April showed signs of economic moderation. The flash composite Purchasing Managers’ Index (PMI) fell to 51.2 from 53.5 in March, with the decline driven by the services sector, which registered at 51.4 compared to 54.4 in March. The manufacturing index rose slightly to 50.7. Dow Jones Industrial Average (DJIA) and S&P 500 Index declined 3.17% and 0.76% respectively, while the Nasdaq Composite gained 0.85%. The growth sector did better with major technology companies releasing positive first quarter earnings. US headline and core inflation rates for March declined, printing below expectations at 2.4% and 2.8% year over year respectively.

The Stoxx Europe 600 Index declined 1.21%. The ECB further lowered the three key interest rates by 25 basis points, as expected, reducing the deposit facility rate to 2.25%. The monetary policy statement viewed the disinflationary process as “well on track” and noted that the “outlook for growth” has deteriorated owing to rising trade tensions. Asset reallocation also favoured the region as global funds shifted away from US markets on geo-political and trade tension, more accommodative money policy and ramped up spending on defence and infrastructure in EU.

Hong Kong and H shares indices declined on profit taking amid China’s strong stance in response to the reciprocal tariff imposed by the US on China. For the month, Hang Seng Index and Hang Seng China Enterprises Index declined 4.33% and 5.17% respectively. Chinese A shares registered a milder decline of 1.06%. China’s GDP grew by 5.4% Year-on-Year in 1Q25, matching the 5.4% Year-on-Year growth in 4Q24 and exceeding market expectations. However, due to the persistent negative GDP deflator, nominal GDP growth was estimated at 4.6%, remaining flat compared to 4Q24. The relatively strong economic growth reflected the contribution of a series of pro-growth policies launched since last September to durable goods sales, infrastructure investment and manufacturing investment as well as the front-loading of shipment before the US reciprocal tariff took effect in early April. However, the property sector continued to weigh on the economy while the endogenous growth momentum of household consumption was insufficient as the average consumption ratio edged down Year-on-Year in 1Q25.

South Korea’s KOSPI Index gained 3.04%. South Korea’s industrial output grew for the second consecutive month in March due to surging semiconductor production. The seasonally-adjusted production index in all industries, which excludes the agriculture, livestock and fishery sector, rose 0.9% in March from a month earlier. Chip production jumped 13.3% on a monthly basis, the highest in 19 months since August 2023.

Taiwan’s TWSE Index declined 2.23%. Taiwan’s economy grew more quickly than expected in the first three months of 2025, buoyed by surging exports as businesses likely front-loaded shipments to get ahead of U.S. tariffs. Advance estimates showed that gross domestic product expanded 5.37% in the January-March quarter from a year earlier, above the market forecast of 3.2% growth. Exports of goods and services surged 20.11% during the first quarter, likely aided by a rush by importers to stockpile ahead of the Trump administration’s tariff  announcement.

Singapore’s STI declined 3.52%. Singapore’s economy expanded 3.8% Year-on-Year in Q1 of 2025, slowing from a 5.0% increase in Q4 2024  and falling short of market consensus of 4.2%, flash data showed. It was the softest growth since Q2 of 2024 amid mounting external headwinds. The Monetary Authority of Singapore (MAS) eased its monetary policy again, following a similar move in January, the first since 2020, amid weaker-than-expected Q1 GDP growth and a deteriorating global economic outlook following the Trump Administration’s tariff policies. Singapore’s non-oil domestic exports (NODX) increased 5.4% year-on-year in March 2025, much softer than market forecasts of a 13.6% surge, easing from a 7.6% rise in the previous month.

Malaysia’s KLCI gained 1.76%. Malaysia’s economy is expected to moderate with the leading index recording 112.4 points in February, according to the Department of Statistics Malaysia (DOSM). Malaysia’s inflation rate eased to 1.4% in March 2025, slightly lower than the 1.5% recorded in February, according to DOSM. The Consumer Price Index (CPI) increased to 134.1 points in March, up from 132.2 points in the same month last year.

Thailand’s SET Index gained 3.38%. Thailand’s consumer confidence index fell for the second straight month to 56.7 in March 2025, down from 57.8 in February, the lowest level since October 2024. The decline reflects weak economic recovery, high living costs, and concerns over U.S. tariffs. Fund flows into the region boosted the market sentiment.

Jakarta Composite Index continued to recover. It gained 3.93% on short covering as investors’ sentiment improved on surprising tax revenues collection. Indonesia tax revenues increased 9.1% Year-on-Year in March, though the YTD collections were down 18.1%. Tax revenue in March reversed the declines in January (- 13.4% Year-on-Year) and February (-9.1% Year-on-Year) which were attributed to teething problems with a newly introduced tax filing system. Minister of Finance Sri Mulyani said she wanted to provide assurance that tax revenues are still on track. CPI rose to 1% year- on- year (Feb -0.1%), due to expiration of electricity tariff discounts for pre-paid customers. Core inflation remained stable at 2.5%.

The Philippines PSE Index gained 2.82%. The Central Bank of the Philippines cut its benchmark interest rate by 25 basis points to 5.5% at its April 2025 policy meeting, in line with market expectations. The move was driven by easing inflation, with consumer prices rising just 1.8% year-on-year in March, the slowest pace since May 2020 and below the central bank’s 2% to 4% target range. The annual inflation rate in the Philippines slowed to 1.8% in March 2025 from 2.1% in the previous month, pointing to the lowest reading since May 2020.

Vietnam’s VN-Index declined sharply by 6.16% amid concerns over the impact of the reciprocal tariff imposed on the country by the US which is highest among the ASEAN countries. Vietnam Stock Exchange’s new KRX trading system officially came into operation. The new system will shorten the trade settlement cycle, improve liquidity and reduce counter-party risks, and offer a wider range of functionalities and lay the groundwork for the introduction of new products and services. The objective is to strengthen Vietnam’s stock market infrastructure.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US sparked a recalibration of macro variables and asset allocation decision. However, as a result of concern about the potential impact of his broad ranging and stiffer than expected tariff policies, market expectation has been negative and US inflation and interest rate outlook turned less dovish. The tariff announcements and the inconsistent and frequent policy changes have led to heightened market gyrations and volatility. The US market had made good gains in the period following Trump’s election win, but has since undergone major corrections following a host of factors, including the emergence of a rival AI platform in China that appeared to be able to achieve similar results as the likes of ChatGPT with a lot less resource inputs and chip investments, and increasing concerns about the economic and consumer impacts of Trump’s tariff policy. Any adverse change in the US economic growth trajectory, the US inflation outlook and consumer sentiments, with their consequential effect on corporate earnings would have significant impact on the market.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick cessation to the Russia-Ukraine war should he be elected Escalation of geo-political conflicts and tensions could also have major adverse impact on the markets. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine.  An end to the Ukraine conflict would be positive for the equity markets. It remains to be seen if Trump and his Administration will succeed in orchestrating a cessation of the conflict in Ukraine.  If this does come about, it would change the geo-political situation in Europe and elsewhere.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China. Trump is wasting no time in implementing his tariff policies. His broad and unconventional use of tariff policies has major and wide reaching impact on both the US and many other countries.  It has heightened volatility across markets and weighed on sentiment.  The broad sweep of tariff changes announced on April 2, evoked much consternation, both from within and without the US, and triggered significant falls in stock markets worldwide. The full ramifications are yet to be known. From reports, countries are engaged in negotiations with the US on bilateral tariffs and trade.  All eyes are on what these negotiations will settle on.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected. The tariff issues with the US can only exacerbate the economic situation. The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets. The Chinese government continues to bring forth various measures to help the economy. More can be expected in the wake of the new US tariff situation.  In further moves to address the economic situation, the Chinese government announced in September a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. While the move has boosted market sentiments, the longer- term effectiveness remains to be seen and will be closely watched. It may take time for the initiative to bear fruits. The focus will be on addressing the challenges in the property market, lifting consumer sentiments, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

This article is solely for information purposes. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The information contained herein does not have any regard to the specific investment objectives, financial situation or particular needs of any person. Investors may wish to seek advice from a financial advisor before making any investment decision. Past performance is not indicative of future results. An investment is subject to investment risks, including the possible loss of the principal amount invested.

IMPORTANT: PHYSICAL FORMS TO REACH PHEIM UNIT TRUSTS BERHAD OFFICE LATEST ON THE RESPECTIVE LAST DAY OF SUBMISSION, PLEASE PLAN AHEAD IF SUBMITTING THROUGH PLATFORMS/DISTRIBUTION CHANNELS.

Risk asset trading volatility heightened across regions on potential additional tariff implementation by US administration. The World index’s decline deepened, falling further by 4.64%. The MSCI Far East Ex. Japan index also declined 2.44%, reversing from February’s 3.37% rise, driven by Taiwan and Korea markets.  ASEAN equities outperformed relatively with a return of +0.81% on short covering. Philippines shares (+3.05%) and Indonesia shares (+3.83%) were the top performers. The laggards were Taiwan shares (-10.23%) and Malaysia shares (-3.88%). Regional currencies had a mixed performance against the USD. The best performing currencies were Philippine Peso (+1.27%), Thai Baht (+0.90%) and Singapore Dollar (+0.65%), while the weaker ones were Korean Won (-1.02%) and Taiwan NT (-0.89%).

The US markets saw continued correction on uncertainty economic growth outlook amid the upcoming tariff implementation. The University of Michigan consumer sentiment weakened to 57 in March, well below 64.7 in February. This is the third straight month of lower figure. Dow Jones Industrial Average (DJIA) and S&P 500 and Nasdaq Composite Index declined 4.20%, 5.75% and 8.21% respectively. Technology sector stocks were the hardest hit on relatively higher valuation. The Fed kept the federal fund rate unchanged during the March meeting. The latest annual inflation eased to 2.8% in February from 3.0% one month ago, below the forecast of 2.9%.  Presumably, given the prevailing policy implementation uncertainties, the Feb chose to wait for clearer signs of the economy.

The Stoxx Europe 600 Index declined 4.18%, also reversing from a gain last month. The ECB lowered the three key interest rates by 25 basis points, as expected, reducing the deposit facility rate to 2.50%, the main refinancing rate to 2.65% and the marginal lending rate to 2.90%. The rate decision reflects an updated assessment of the inflation outlook and monetary policy transmission. The annual inflation in the Euro zone eased to 2.2% in March, the lowest since November 2024.

Hong Kong and H shares indices posted gains, although much muted from the strong rise seen last month. The market gain was driven by ongoing revaluation of the technology sector on AI theme . For the month, Hang Seng Index and Hang Seng China Enterprises Index gained 0.78% and 1.18% respectively. Chinese A shares chalked up a milder gain of 0.22% amid a weak domestic investors’ sentiment. In the China’s National People’s Congress (“NPC”), the government continued to provide resilient economic outlook and set China’s GDP growth target for 2025 to be around 5%. It expected the consumer price increase in 2025 to be around 2%, and the fiscal budget deficit rate to be around 4%. At a press conference held after the NPC meetings, the Minister of Commerce of China said that this year, China will make every effort to stabilize foreign trade from three aspects: “strengthening policies, expanding growth, and helping enterprises.” It will support cross-border e-commerce and increase the expansion of trade in intermediate products. Meanwhile, continuing focus will be placed on measures to support consumption.

South Korea’s KOSPI Index declined 2.04%. S&P Global revised its 2025 gross domestic product growth forecast for South Korea to 1.2% from 2.0%. The downward pressures on exports due to US tariffs, weak domestic demand and political uncertainty led to the lower forecast. Consumer sentiment in South Korea took a downturn in March following two consecutive months of improvement, weighed down by political uncertainty.

Taiwan’s TWSE Index declined sharply by 10.23%, driven by index heavy counter TSMC on concerns over its capability expansion plan in the US. Taiwan’s consumer confidence weakened to an 11-month low in March amidst growing fears over a possible hike in electricity rates in April, according to National Central University (NCU). Taiwan’s unemployment rate edged up by 0.04 percentage points to 3.34% in February from 3.30% in the month prior, according to data from the Directorate General of Budget, Accounting and Statistics. On the positive, Taiwan’s industrial production rose sharply from a year earlier in February, the 12th consecutive month of year-on-year growth at a time when emerging technologies continue to boost global demand, according to the Ministry of Economic Affairs (MOEA).

Singapore’s STI gained 1.97%. Singapore’s annual inflation rate eased to 0.9% in February 2025 from 1.2% in the previous month, slightly below market expectations of 0.95%. It marked the lowest inflation rate since February 2021. Meantime, the annual core inflation rate edged lower to 0.6% from 0.8% in January 2025, the lowest reading since June 2021. Singapore’s manufacturing production dropped 1.3% Year on year in February 2025, reversing a downwardly revised 8.0% growth in the prior month and missing market consensus of a 7.5% rise. It was the first decline since last June, with electronic output down (-6.4% vs 15.4% in January), weighed by falls in semiconductors and computers.

Malaysia’s KLCI declined 3.88%. Bank Negara Malaysia (BNM) forecast Malaysia’s economy to grow between 4.5% and 5.5% in 2025, driven by sustained domestic demand despite heightened external uncertainties that could moderate export growth. BNM noted that headline inflation and core inflation in 2025 are expected to be benign with favorable domestic conditions expected, and that Malaysia will continue its pursuit of key structural reforms to ensure sustainable growth.

Thailand’s SET Index declined 3.79%. Thailand’s consumer confidence index fell to 57.8 in February 2025 from 59.0 in January, ending four months of improvement due to political instability and a fragile economic recovery. The impact of the second phase of the cash handout remains uncertain, as it began only at end-January and key details are still under review. The central bank warned of slow economic growth this year, citing weak manufacturing and rising import competition.

Jakarta Composite Index recovered and gained 3.83% on short covering as government sought to boost investors’ sentiment with the appointment of prominent international figures as advisors to DANANTARA, its newly established sovereign wealth entity. Indonesia’s consumer confidence fell to 126.4 in February from January’s 127.2 amid weakening purchasing power and shrinking middle class with decline in job availability, economic outlook and income expectation.

The Philippines PSE Index gained 3.05%. Moody trimmed Philippine economic growth forecasts to 5.9% for 2025, slightly slower than its 6% baseline forecast in November 2024, reflecting the impact of uncertainties arising from the United States’ tariff policies. In the just announced US tariffs, imports from the Philippines into the US will be subject to additional tariffs of 18%.  Private consumption and investment will be the key driver of growth, supported by a stable inflation and easing monetary policy. Household spending typically accounts for about three-fourths of the Philippine economy.

Vietnam’s VN-Index eked out a small gain of 0.11%. Vietnam signed agreements worth USD4.2bn with US companies to further promote economic, trade and investment cooperation amid tariff risks during the 2025 Vietnam Business Mission hosted by US-ASEAN Business Council. Additional agreements are expected to be negotiated with a potential value of USD36bn. More than 60 US companies including Amazon, Apple, Boeing, JPMorgan, Intel, Nike and Visa participated in the event. In the new US tariffs announced on April 27, 20257, US imports from Vietnam will be subject to tariffs of 46%, among the highest faced by countries in Asia.

Market optimism over the election of Donald Trump as the new US President on expectations that his policies would be positive for the US sparked a recalibration of macro variables and asset allocation decision. However, as a result of concern about the potential impact of his tariff policies, US inflation and interest rate outlook turned less dovish and USD strengthened. The US markets had made good gains in the period following Trump’s election win, but has since undergone major corrections following a host of factors, including the emergence of a rival AI platform in China that appeared to be able to achieve similar results as the likes of ChatGPT with a lot less resource inputs and chip investments, and increasing concerns about the economic and consumer impacts of Trump’s tariff policy.

During his Presidential election campaign, Donald Trump had also pitched to bring about a quick cessation to the Russia-Ukraine war should he be elected.  Any adverse change in the US economic growth trajectory, the US inflation outlook and consumer sentiments,  with their  consequential effect on corporate earnings would have significant impact on the market.  Escalation of geo-political conflicts and tensions  could also have major adverse impact on the markets. Since his inauguration as US President, Trump has made moves in seeking to bring about a cessation of the conflict in Ukraine.  It remains to be seen if and when this will come about, and how it would change the geo-political situation in Europe and elsewhere. An end to the Ukraine conflict would be positive for the equity markets.

We are watchful of geo-political developments as well as policy directions in the major economies, in particular US under a Trump Administration and in China.  Following his inauguration, Trump has initiated talks with Ukraine and Russia with the view of getting the adversaries to agree to a temporary cease fire, for a start.  So far, that has yet to materialize.  Trump is also wasting no time in implementing his tariff policies. His broad and unconventional use of tariff policies can have major and wide reaching impact on both the US and many other countries.  It will heighten volatility across markets and weigh on sentiment.  The broad sweep of tariff changes were finally announced on April 2, evoking much consternations, both from within and without the US, and triggered significant falls in stock markets worldwide.  The US markets were not spared.  The full ramifications are yet to be known.

In Asia, the focus is on the pace of China’s economic recovery which has been weaker than expected.  The Chinese property sector continues to face severe challenges, and any sign of stabilization and growth will have positive catalyst for China’s economy and risk assets.  The Chinese government continues to bring forth various measures to help the economy. In further moves to address the economic situation, the Chinese government announced in September a slew of monetary, fiscal and policy measures to stimulate investment and consumption, enhance liquidity and restore confidence in the property and financial markets. The Chinese government remains constructive on policies to spur economic activities to achieve economic growth target. While the move has boosted market sentiments, the longer- term effectiveness remains to be seen and will be closely watched.  It may take time for the initiative to bear fruits.  The focus will be on addressing the  challenges in the property market, lifting consumer sentiments, and countering the effects of the new US tariffs.

On external trade, countries with high export dependency for growth in the Asia region including ASEAN will face significant challenges arising from the US tariff policies. The disruption in supply chain realignment may result in temporary mismatch in corporate earnings delivery against market expectation during the initial stage of tariff implementation. This can result in further trading volatility for risk assets. Longer-term, higher tariffs may result in corporate margin erosion and slower earnings growth outlook. Consumers may have to pay higher prices, and this translates to higher inflation rate.

While interest rates have started to be eased, there remains headwind for risk assets, including the impact of the still high interest rate on business and economic activities, uncertainties in the US policies post the US Presidential election, the historically high market valuations in the US, the continuing geo-political tension in Europe, Middle East and in East Asia, and the still slower than expected economic growth in China.  However, in the investment space we are in, we believe there is room for cautious optimism.  After years of prolonged sell down, China equities are under-owned and their favourable valuation offer potential upside, particularly following the recent rounds of significant policy change initiatives from China.

We continue to apply our strategy of focusing on identifying fundamentally healthy companies with low valuations, low leverage, high growth, robust management and a strong track record, and adherence to our investment philosophy of “Never Fully Invest at All Times” which has served us well over the years.

We thank you once again for your continued faith in us, and hope to remain good stewards in our endeavour to protect and grow your capital.

This article is solely for information purposes. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. The information contained herein does not have any regard to the specific investment objectives, financial situation or particular needs of any person. Investors may wish to seek advice from a financial advisor before making any investment decision. Past performance is not indicative of future results. An investment is subject to investment risks, including the possible loss of the principal amount invested.