Barings

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  • Barings

    1. 1. Colin Ng, Head of Asian Equities Baring Eastern Trust October 2011 For Professional Investors/Advisers Only Asian Equities Market Outlook and Investment Strategy
    2. 2. Baring Asset Management <ul><li>An international investment management company with a history dating back to 1762 </li></ul><ul><li>Operating in eleven countries with professionals from twenty five different nations </li></ul><ul><li>Providing investment management services in developed and emerging equity and bond markets to investors worldwide </li></ul><ul><li>Working in partnership with many of the world’s largest financial institutions </li></ul><ul><li>Owned by Massachusetts Mutual Life Insurance Company (MassMutual) </li></ul><ul><li>Current assets under management £30.1 bn </li></ul><ul><li>92 investment professionals </li></ul><ul><li>Winner of the Queen’s Award for Enterprise: International Trade 2010 </li></ul>The INVT PROF figure is updated on a MONTHLY basis. Source: RFP TEAM Investment Professionals List DO NOT ALTER CONTENT, THESE SLIDES ARE SIGN OFF BY DAVID BRENNAN & IAN PASCAL STERLING Draft assets as at 31 August 2011, Investment Professionals as 01 September 2011 London, Boston, Dubai, Frankfurt, Hong Kong, Paris, San Francisco, Santiago, Seoul, Taipei, Tokyo, Toronto
    3. 3. Diversity of funds under management Total assets – £30.1 billion Clients by Product Clients Assets Invested Draft assets as at 31 August 2011
    4. 4. Emerging market assets Draft assets as at 31 August 2011 3 0.3 Africa 2 0.2 South Asia 100 2 3 12 17 27 34 (%) 0.2 Middle East 11.5 0.4 Pacific Rim 1.4 Latin America 1.9 Asia Pacific 3.1 Europe Emerging 4.0 Hong Kong and China £ Billion
    5. 5. Investment Management Platform MARINO VALENSISE Chief Investment Officer EQUITIES Tim Scholefield MULTI-ASSET Percival Stanion FIXED INCOME Alan Wilde RISK MANAGEMENT Rob Chambers As at 01 September 2011 92 Investment Professionals comprising Investment Managers, Analysts and Dealers/Risk PORTFOLIO ANALYTICS Giuseppe Tedone COO DEALERS Adam Conn
    6. 6. Baring Asset Management Group staff This information is supplied by Paul Hanmore HR Systems, MI & Compensation & Benefits Analyst As at 01 September 11 Staff by role Staff by location 78 Sales/Client Service 30 81 98 19 85 11 81 391 Other professionals Investment Operations 487 TOTAL 4 Internal Audit Marketing & Communications IT and Change Management Investment Operations Investment Business Operations Investment 92 Investment Professionals 1 Korea 1 Dubai 487 TOTAL 11 Taipei 25 Tokyo 56 Hong Kong 2 San Francisco 1 Toronto 18 Boston 14 Frankfurt 4 Paris 354 London
    7. 7. Barings in Asia <ul><li>Long tenure of investing in the region </li></ul><ul><ul><li>Opened investment management office in Hong Kong in 1976 </li></ul></ul><ul><ul><li>Operating sales office in Taipei, Seoul and Tokyo </li></ul></ul><ul><li>Well resourced investment team </li></ul><ul><ul><li>13-strong Asian equity team, all based in Hong Kong </li></ul></ul><ul><li>Current assets under management: US$ 6.5 billion* </li></ul><ul><ul><li>Hong Kong China Equity: US$ 3.4 billion* </li></ul></ul><ul><ul><li>Asia ex Japan Equity: US$ 3.1 billion* </li></ul></ul>* Source: Barings, Draft assets as at 30 September 2011
    8. 8. Investment Outlook & Strategy
    9. 9. Global Economic Outlook Slower Global Economic Growth Source: JP Morgan (October 2011) Revision downward on lower demand growth … 5.1 (5.9) 7.0 (7.5) 8.5 (9.0) 1.9 (3.4) -0.5 (2.2) 1.3 (2.8) 2.0 (3.6) 2012F (May ’11 forecast) 5.7 (6.1) 7.3 Global Emerging 7.2 (7.6) 9.1 Asia ex Japan 8.9 (9.5) 10.3 China -0.6 (0.5) 4.0 Japan 1.6 (2.2) 1.7 Eurozone 1.6 (2.6) 3.0 US 2.5 (3.2) 3.9 World 2011F (May ’11 forecast) 2010E GDP Growth (%)
    10. 10. Double Dip or Soft Patch? Decelerating growth… Source: Credit Suisse as at September 2011 … But no sign of hard landing OECD Composite Leading Indicators (YoY%) European PMI (Manufacturing) TED Spreads US non-farm payrolls US non-farm payrolls
    11. 11. Asian Markets Gross returns (in USD ) (One month and twelve month periods as at September 30, 2011) Source: MSCI, Factset Asian markets sold off in September -25.1 -6.5 MSCI India -7.3 -17.1 MSCI Thailand 0.0 -9.9 MSCI Indonesia -11.4 -13.8 MSCI Singapore -13.0 -11.8 MSCI Germany 1.1 -7.0 S&P 500 -14.3 -13.2 MSCI Asia ex Japan -5.9 -10.5 MSCI Taiwan -17.2 -16.4 MSCI Hong Kong -23.8 -16.8 MSCI China -6.0 -12.9 MSCI Korea Country - Index 12 month Gross returns in USD (%) 1 month Gross returns in USD (%)
    12. 12. China Economy Signs of Hard Landing ? Source: Goldman Sach (September 2011) August data suggests that China is still growing healthily China Country YTD Aug Aug Aug Aug Aug Aug Aug Aug Aug Reporting Period +25.0 +13.5 +17.0 +16.4 +30.2 +24.5 +50.9 +7.3 +6.2 +13.5 Actual yoy % change yoy +20.4 Exports +50.7 PMI +7.5 PPI +6.5 CPI +14.7 M2 +25.4 Fixed Asset Investment +14.0 Industrial Production +17.2 Retail Sales +16.6 CNY Loans +22.9 Imports Previous yoy % change yoy Event
    13. 13. Asian Real Interest Rate Still negative, or already neutral ? Real interest rates (based on headline inflation) Source: Goldman Sachs (July 2011) Note Latest June 2011 data. May 2011 data used for Hong Kong, Singapore and Malaysia. Asian central banks have already done a fair amount, and likely to pause for next few months -1.0 -1.3 -0.4 -0.3 -4.1 -0.8 -5.1 -1.0 -1.3 -2.9 Real Interest Rate (based on headline inflation) (% p.a.) 4.1 4.6 3.3 5.5 4.5 4.1 5.3 4.4 9.4 6.4 Headline CPI Inflation Rate (% yoy) 3.1 3.4 3.0 5.3 0.4 3.3 0.2 3.4 8.1 3.5 1-year Government Bond Yield (% p.a.) 2.6 3.3 1.9 4.6 2.1 1.2 4.4 3.7 7.2 2.5 Core CPI Inflation Rate (% yoy) 2.1 Taiwan -4.2 Hong Kong -0.2 Korea 0.9 India 1.0 China 0.5 Thailand 0.0 Philippines 1.1 Malaysia 0.6 Indonesia -1.7 Singapore Real Interest Rate (base on core inflation) (% p.a.)
    14. 14. Medium-term Issue: China Inflation Serious or contained issue ? Source: NBS, CEIC, UBS estimates (August 2011) Rising property prices, food, energy and labour costs continue to present a risk of tighter monetary policy in China
    15. 15. Asian Inflation Monthly CPI momentum Inflation (MoM%) Source: CSFB as at August 2011 Some signs of peaking out 0.2 -0.1 0.6 0.1 0.2 0.7 0.7 0.7 -0.1 0.5 Jul-11 0.1 0.1   0.4 0.4   0.3 0.2 0.6 0.4 0.5  0.3 Jun-11 0.3 0.1 0.6 0.0 0.3 0.0 0.1 0.2 0.5 0.1 May-11 1.4 0.1 0.0 0.6 0.2 0.0 -0.3 1.7 0.7 0.1 Apr-11 0.5 0.1 0.3 0.3 0.1 0.5 -0.3 0.9 0.3 -0.2 Mar-11 0.4 0.4 0.0 1.1 0.5 0.8 0.1 0.1 1.1 1.2 Feb-11 0.5 0.3 1.3 0.8 0.6 0.9 0.9 1.8 0.6 1.0 Jan-11 0.2 -0.2 0.8 0.5 0.4 0.6 0.9 1.6 0.5 0.5 Dec-10 0.2 0.5 0.4 0.9 0.2 -0.6 0.6 0.5 0.4 1.1 Nov-10 0.0 -0.1 0.2 -0.2 0.2 0.2 0.1 0.6 2.2 0.7 Oct-10 -0.1 0.2 0.3 -0.3 0.1 1.1 0.4 0.6 0.3 0.6 Sep-10 0.2 0.0 0.3 0.3 0.3 0.3 0.8 0.1 -0.1 0.6 Aug-10 0.2 0.1 0.4 0.2 0.3 0.3 1.6 0.9 -1.3 0.4 Jul-10 0.3 0.2 -0.3 0.2 0.1 -0.2 1.0 0.4 0.2 -0.6 Jun-10 0.2 -0.2 0.6 -0.2 0.2 0.1 0.3 0.4 -0.2 -0.1 May-10 Thailand Taiwan Singapore Philippines Malaysia Korea Indonesia India Hong Kong China
    16. 16. Asian Equities Earnings growth forecasts and valuations Source: JP Morgan (September 2011) * Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. US trailing PE is calculated as per reported earnings. For all other markets and sectors, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest. Companies with different yearends are calendarised to December yearends and are free float adjusted for aggregation. Historical numbers are from MSCI. The 2009 earnings for MSCI Japan was negative. Although 2010 earnings are positive, but calculating growth is not mathematically meaningful. 6.4 16.8 51.1 NM 1.1 1.9 13.4 16.6 Japan * 21.5 7.5 12.5 14.6 1.5 3.7 8.4 11.4 Eurozone * 18.3 10.3 13.8 14.9 2.2 2.0 11.2 15.1 USA 14.5 12.0 13.0 25.5 1.8 2.6 10.1 13.5 Global * 13.5 2012E 11.9 2011E 32.9 2010E Earnings growth (%) 3.0 Current Trailing Div. Yield (%) 1.6 Current Trailing P/BV (x) 9.3 12m fwd 10.6 Current Trailing P/E (x) 16.2 2012E EMF Asia Country ROE (%)
    17. 17. Asian Equities Earnings growth forecasts and valuations Source: JP Morgan (September 2011) * Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. US trailing PE is calculated as per reported earnings. For all other markets and sectors, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest. Companies with different yearends are calendarised to December yearends and are free float adjusted for aggregation. Historical numbers are from MSCI. 18.0 14.3 8.1 36.7 2.3 3.2 12.3 13.8 Philippines 20.4 18.3 19.9 31.3 2.0 3.9 9.4 11.1 Thailand 26.8 21.2 19.3 21.0 3.3 2.8 11.2 13.6 Indonesia 15.9 17.3 11.2 27.0 1.9 3.6 11.8 13.7 Malaysia 17.7 17.6 15.6 14.0 2.3 2.0 11.1 13.0 India 14.6 28.9 -8.4 82.2 1.5 4.8 10.5 12.4 Taiwan 14.2 13.3 12.6 59.2 1.1 1.4 7.2 8.2 Korea 18.2 14.3 17.8 36.1 1.5 3.8 7.5 8.7 China 2012E 2011E 2010E Earnings growth (%) Current Trailing Div. Yield (%) Current Trailing P/BV (x) 12m fwd Current Trailing P/E (x) 2012E Country ROE (%)
    18. 18. Asian Equities Current valuation versus long-term history Source: MSCI, Datastream, Citi Investment Research and Analysis as at October 2011 Slightly cheap versus long-term average MSCI Asia ex Japan PBV MSCI Asia ex Japan PE
    19. 19. Asian Equities Price-to-Book Valuation Source: JP Morgan (September 2011) Opportunities in China and Korea PBR are close to crisis levels 1.0 2.1 1.1 Korea 1.8 5.3 1.5 China 1.3 2.9 1.5 MSCI Asia ex Japan 2.4 5.8 3.3 Indonesia 2.2 6.4 2.3 India 1.2 2.5 1.5 Taiwan 1.2 2.5 1.4 Singapore 1.0 2.5 1.2 Hong Kong PBR as at 2008 High end PBR (over past 5 years)  Current PBR  
    20. 20. Asia’s Balance Sheet Revisited: Healthy Asian banks have capacity to lend Asian corporate debt levels are close to 25 year lows ... as well as external debt levels The external position of Asia is healthier today than 20 years ago in terms of current account balance... Asia ex HK/Sing Current Account Balance as % of GDP Asia ex HK/Sing Total External Debt as % of GDP Source: Citi as at September 2011 Data prior to 1995 excludes Taiwan Data prior to 1995 excludes Taiwan It is most likely that Asia can weather this storm well Note: Countries include China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand
    21. 21. China GDP led by domestic consumption and Investment <ul><li>Economic targets </li></ul><ul><ul><li>GDP to grow by 7% every year </li></ul></ul><ul><ul><li>More than 45 million jobs to be created in urban areas </li></ul></ul><ul><ul><li>Urban unemployment at below 5% </li></ul></ul><ul><ul><li>Consumer product prices to stay stable </li></ul></ul><ul><li>Economic restructuring </li></ul><ul><ul><li>Rise in domestic consumption </li></ul></ul><ul><ul><li>Service sector value-added output to make up 47% of GDP (up by 4ppt) </li></ul></ul><ul><ul><li>Urbanization rate to reach 51.5% (up by 4ppt) </li></ul></ul><ul><ul><li>Minimum wage to rise by no less than 13% each year </li></ul></ul><ul><ul><li>Per capita disposable income to grow by 7% each year </li></ul></ul>Key targets of China’s 12 th five-year plan Source: (Composition of China’s GDP Growth) CEIC, NBS, CLSA as at January 2011; (Key targets of China’s 12th five-year plan) The National Congress of the PRC, Mirae Asset Research as at April 2011 Composition of China’s GDP Growth Re-defining the growth driver in economy
    22. 22. Asian Structural Themes Consumption Credit card penetration Source: CLSA as at September 2011 Great for banks and consumer-related stocks ! Under-leveraged Rising Asia Private Consumption Source: Citigroup as at June 2011 (Annual data)
    23. 23. Beneficiary of secular commodities boom Rising agriculture prices, leads to higher farm incomes… Agricultural value-added share of GDP % of total employment … ASEAN domestic consumption will benefit Source: Agricultural value-added share of GDP— UBS, September 2011 (2009 data, except Vietnam – 2010 data); % of total employment — UBS, September 2011 (Recent)
    24. 24. ASEAN: Deleveraging over last 10 years Indonesia: Posterchild of ASEAN Indonesia: Public Debt to GDP Source: Morgan Stanley as at September 2011 Credit penetration is lowest in the region Core inflation & policy rate – on a structural decline
    25. 25. Asian Technology: Smartphones and Tablets A US Fruit company….game changer iPhone and iPad shipment Smartphone market share Source: Morgan Stanley as at June 2011 And yet still in the early stages…
    26. 26. Capturing Asian Growth Key Risks <ul><li>Global macro risk factors: US growth, European sovereign debts </li></ul><ul><li>Higher than expected inflationary pressures in China, India </li></ul><ul><li>Higher oil prices which may adversely affect net oil importing Asian economies </li></ul><ul><li>Corporate governance issues in smaller China companies </li></ul><ul><li>China’s local government financing vehicles </li></ul>
    27. 27. <ul><li>Inflation vs. Growth </li></ul><ul><li>China to balance inflation and growth </li></ul><ul><li>We expect no further acceleration of tightening bias, although there is no loosening in sight yet. Interest rates could still go up </li></ul><ul><li>Given the current uncertain backdrop, there is a higher possibility of ‘target easing’ towards certain sectors </li></ul><ul><li>Local government financing vehicles </li></ul><ul><li>Banks are recapitalising to prepare for rising Non Performing Loans </li></ul><ul><li>Small to medium sized banks with weak balance sheets would be hit the most </li></ul>China Economic Outlook Key issues =22% of GDP =5.5% of GDP if we assume 25% loss (and no value in collateral) US$5.8 trillion ~Rmb 38.3 trillion China 2010 GDP =16.5% total o/s loan 51.4 trillion Total outstanding loan 10.7 trillion 8.5 trillion LGFV ( total) LGFV (sourced from bank loans) Size (Rmb)
    28. 28. Capturing Asian Growth Key themes <ul><li>Asset allocation: prefer China and Korea in North Asia, Thailand and Indonesia in South East Asia </li></ul><ul><li>Key macro risks in Asia: continuing rise in inflation and more aggressive monetary tightening </li></ul><ul><li>Bottom-up selection: favouring quality companies in industries with more secular themes </li></ul><ul><ul><li>Consumer (rise of middle class) : Belle, Lotte Shopping, Brilliance China Automotive </li></ul></ul><ul><ul><li>CAPEX & Infrastructure-related companies : Sany Heavy Equipment, Samsung Engineering, Hyundai Heavy, Changsha Zoomlion, Larsen & Toubro </li></ul></ul><ul><ul><li>Asian Emerging Brands: Samsung Electronics, HTC, Hyundai Mobis </li></ul></ul><ul><ul><li>Technology: Smartphones, Tablets and Ultra-thin notebooks </li></ul></ul><ul><ul><li>Banks : Attractive valuation, huge potential in consumer credit (Bank Raykat Indonesia, ICBC) </li></ul></ul>Focus on stocks which best capture the secular themes, at a reasonable price
    29. 29. <ul><li>Portfolio Positioning </li></ul><ul><ul><li>Baring Eastern Trust </li></ul></ul>
    30. 30. Baring Eastern Trust Improving performance recovery <ul><li>1-year top performance quartile in peer group 1 </li></ul><ul><li>1-year outperformance against benchmark index 2 : ~5% </li></ul><ul><li>Superior stock selection in Korea, Taiwan and China </li></ul><ul><ul><li>Korea: Hyundai Mobis, Samsung Engineering, Hyundai Heavy, LG Chemical </li></ul></ul><ul><ul><li>Taiwan: Catcher, Largan Precision, TPK, Formosa Plastic </li></ul></ul><ul><ul><li>China/HK: Belle, Sany Heavy, L’Occitane </li></ul></ul><ul><ul><li>ASEAN: AirAsia, Bank Rakyat </li></ul></ul><ul><li>GARP style, current tracking error of 4% (ex ante) </li></ul>1 Quartile Ranking is based on Morningstar’s UK Registered Universe of Asia ex Japan Equity. 2 Performance as at 31 st August 2011. Bid to Bid, in GBP, with net income reinvested. Benchmark index: MSCI AC FE ex Japan Total, Gross Return until 01/08/10 then MSCI AC Asia ex Japan Total, Gross Return. Source: © 2011 Morningstar, Inc. (See Regulatory Disclosure).
    31. 31. Baring Eastern Trust Performance (31 st August 2011) Source: © 2011 Morningstar, Inc. (See Regulatory Disclosure). Bid to Bid, in GBP, with net income reinvested. * Benchmark index: MSCI AC FE ex Japan Total, Gross Return until 01/08/10 then MSCI AC Asia ex Japan Total, Gross Return. Quartile Ranking is based on Morningstar’s UK Registered Universe of Asia ex Japan Equity. For risks associated with investment in securities in emerging and less developed markets, please refer to the Offering Document for details. Investment involves risk. Past performance is not a guide to future performance Performance, in GBP Terms 2nd 2nd 3rd 2nd 2nd 1st Quartile ranking -9.5 -19.1 2007 - 2008 40.1 61.7 2006 - 2007 9.2 4.8 2008 - 2009 23.6 15.1 2009 - 2010 3.7 9.2 2010 - 2011 Benchmark index* Fund % Change Rolling 12 month performance (GBP)
    32. 32. Baring Eastern Trust Performance – Recent Quarters * Benchmark index: MSCI AC FE ex Japan Total, Gross Return until 01/08/10 then MSCI AC Asia ex Japan Total, Gross Return. Reference to the index is for comparative purposes only. Source: © 2011 Morningstar, Inc. (See Regulatory Disclosure). Investment involves risk. Past performance is not a guide to future performance Performance, in GBP Terms Bid to Bid, in GBP, with net income reinvested. * Benchmark index: MSCI AC FE ex Japan Total, Gross Return until 01/08/10 then MSCI AC Asia ex Japan Total, Gross Return. Quartile Ranking is based on Morningstar’s UK Registered Universe of Asia ex Japan Equity. For risks associated with investment in securities in emerging and less developed markets, please refer to the Offering Document for details. 1st 1st 1st 2nd 2nd 1st Quartile ranking
    33. 33. Baring Eastern Trust Asset and Sector Allocations (31 st August 2011) * Benchmark index: MSCI AC Asia ex Japan Total, Gross Return. Source: Baring Asset Management Asset Allocation Sector Allocation 3.9 4.0 Indonesia 0.9 0.9 Philippines -- 0.2 [Cash] 4.5 1.6 Malaysia 4.6 5.1 5.2 6.6 16.3 24.5 31.0 Fund(%) Benchmarkindex* (%) 9.7 India 2.7 Thailand 7.1 Singapore 11.6 Hong Kong 15.4 Taiwan 20.1 Korea 24.1 China 0.9 0.7 Health Care -- 4.9 [Funds] 8.7 9.1 Materials 5.2 1.0 Consumer Staples -- 0.2 1.5 9.7 13.6 14.4 19.2 25.7 Fund(%) Benchmark index* (%) 3.6 Utilities -- [Cash] 6.4 Telecom Services 8.0 Energy 10.6 Industrials 9.8 Consumer Discretionary 15.9 Information Technology 30.9 Financials
    34. 34. Baring Eastern Trust Top Ten Holdings (31 st August 2011) Sources: Baring Asset Management 2.1 Hong Kong BOC Hong Kong 2.2 Thailand PTT Public Company 3.1 China Industrial & Commercial Bank of China 4.9 China A Baring China A-Share Fund plc 2.2 Korea LG Chemical 2.5 Korea Samsung Engineering 2.6 Taiwan Catcher Technology 3.0 Korea Hyundai Mobis 4.6 Korea Samsung Electronics China Country 2.1 Belle International (%)
    35. 35. Baring Eastern Trust Portfolio Characteristics (as at 31 st August 2011 ) Portfolio Characteristics Market Capitalization Comparison Risk Summary * Benchmark index: MSCI AC Asia ex Japan. Source : MSCI, Style Research, Barings Portfolio (%) Benchmark index* (%) Over US$10 bn 62.2 60.5 US$1-10 bn 37.6 38.5 Below US$1 bn -- 1.0 Weighted Avg (US$ bn) 25.0 27.7 Tracking Error vs. Benchmark index 4.3% Beta vs. Benchmark index 1.05 Portfolio Risk 27.1% Benchmark index Risk 25.6% 16.7% 26.3% EPS Growth (12 Mth Fwd) Portfolio (%) Benchmark index* (%) Forward P/E 11.4x 11.3x Price/Book 2.1x 1.8x ROE 22.2% 20.4%
    36. 36. Style Exposure Analysis Baring Eastern Trust Source: Barings, MSCI, Style Research. Data as at 31 August 2011 Benchmark index: MSCI AC Asia ex Japan.
    37. 37. What Sets Us Apart A Robust & Repeatable Process Vigorous & objective oversight  Independent risk management function No unintended positions  Conviction based implementation Multiple sources of thematic idea generation  Strong macro perspectives provided by multi-asset and global sector teams Early identification of growth opportunities  Locally based investment team with strong corporate access Long established process aligned with demands of high conviction portfolios  GARP philosophy focuses on identifying “unrecognised growth”
    38. 38. Appendix Team Biographies
    39. 39. Asia Pacific Equity Team Biographies Last updated: 27th June 2011 Colin Ng Head of Asian Equities Investment Director, Asia Pacific Equity Lead Manager for Baring Eastern Trust Location: Hong Kong Investment Experience: 18 Years Colin is Head of Asian Equities and takes the lead role in the management of Asia ex Japan products and mandates. He joined Baring Asset Management in 2009 from Manulife-MFC Global Investment Management where he was the Head of Asia Pacific Equities. Colin has extensive experience in the fund management industry, he was also the Head of Asia Equities and member of the executive management team at UOB Asset Management in Singapore where he led a team successfully managing a range of Asian core and sectoral mandates. Colin has collected several accolades for his success as a portfolio manager; he has the 2007 Lipper Award for his United Asia Fund; his United Greater China Fund and United Asia Growth Opportunities Fund were MorningStar 4/5-Star rated. In addition, his United Regional Growth Fund was awarded best performing Asia Pacific equities fund by MorningStar in 2008. Colin holds a Bachelor of Accountancy (Hons) from the National University of Singapore and a Masters degree in Applied Finance from Macquarie University in Australia. Colin speaks English, Mandarin and Cantonese fluently. Last updated: 27th June 2011 Soo Hai Lim, CFA Investment Director, Asia Pacific Equity Co-Manager for Baring Eastern Trust Location: Hong Kong Investment Experience: 14 Years Soo Hai is the lead manager of Baring Australia Fund and Baring Asean Frontiers Fund, and directs research in Australasia and Asean markets. He is also a key member of the portfolio construction team for our Asian regional mandates. He joined Baring Asset Management in November 2005. Prior to joining Baring Asset Management, he was the country specialist for Australia and Malaysia at Daiwa SB Investments (Singapore) where he spent 5 years. Other investment experience includes managing Thai and Malaysian equities at Singapore Telecom’s Asset Management department. Soo Hai is a CFA Charterholder and graduated from Nanyang Technological University in 1994 with a Bachelor of Accountancy (First Class Hons) Degree.
    40. 40. Asian Equities Investment Process <ul><li>Strategic Policy Group </li></ul><ul><li>Country and sector preferences </li></ul>TOP DOWN INPUTS <ul><li>Company meetings </li></ul><ul><li>Local contacts and newsflow </li></ul><ul><li>Interaction with Global Sector and GEM teams </li></ul><ul><li>Stocks scored 1 - 5 </li></ul>BOTTOM UP INPUTS <ul><li>Quantitative team </li></ul><ul><li>Stock screens </li></ul>QUANTITATIVE INPUTS <ul><li>Asia ex Japan team </li></ul><ul><li>Hong Kong China team </li></ul><ul><li>India team </li></ul>PORTFOLIO CONSTRUCTION <ul><li>Implied alpha </li></ul><ul><li>Portfolio style </li></ul><ul><li>Value at Risk </li></ul><ul><li>Macro sensitivities </li></ul>RISK MANAGEMENT
    41. 41. Implied Alpha Analysis Baring Eastern Trust Source: Barings, MSCI, Northfield System, as at 31 August 2011 * Benchmark index: MSCI AC Asia ex Japan 5.49% 5.56% 2 1.1 Hyundai Mobis Co. Ltd. 8.88% 6.02% 3 1.5 Brilliance China Automotive Holdings Ltd. -5.41% 6.07% 4 0.6 China Mobile Ltd. 6.47% 6.93% 2 1.4 Samsung Engineering Co. Ltd. 7.98% 9.32% 1 0.9 Catcher Technology Co. Ltd. -2.28% -0.79% 2 1.7 ICICI Bank Ltd. 5.67% 4.02% 1 0.7 Radiant Opto-Electronics Corp. 6.02% 5.50% 2 0.9 China Resources Cement Holdings Ltd. 8.20% 5.50% 1 1.5 Hyundai Heavy Industries Co. Ltd. #N/A 2 2 2 Stock Score 0.8 1.0 0.9 1.5 Beta to Benchmark index* -0.64% -1.50% Baring Intl (Ire) China A X Gbp Dis Name % Contribution to Tracking Error Implied Alpha Larsen & Toubro Ltd. -0.82% -1.77% Fubon Financial Holding Co. Ltd. -0.83% -1.64% Kia Motors Corp. -1.16% 4.00%
    42. 42. Stock Selection Example Catcher Technology Performance Source: Factset (July 2011) Please refer to Important Information <ul><li>Stock Score: 1 </li></ul><ul><li>Leading metal casing company benefiting from a favourable industry trend of “thin and light” form factor for portable devices </li></ul><ul><li>Beneficiary of both smartphone and ultra-thin notebook growth </li></ul><ul><li>Addressable market expanding from conventional notebook to smartphones and tablet PCs </li></ul><ul><li>High barriers to entry for competitors </li></ul><ul><li>Trading at 13X fwd-PER, premium to Asian notebook OEMs but justifiable on much stronger growth among component makers. </li></ul><ul><li>We see 15% upside risks to consensus earnings as margins are likely to surprise on the upside with improving yield. </li></ul>
    43. 43. Stock Selection Example Hyundai Mobis Performance Source: Factset (August 2011) Please refer to Important Information <ul><li>Stock score: 2 </li></ul><ul><li>Beneficiary of market share gain of Korean car makers in both developed and emerging markets </li></ul><ul><li>Defensive auto play with less cyclicality - after-service parts revenue depends on number of Hyundai/Kia cars on the roads, not the number of cars sold </li></ul><ul><li>Valuation is attractive at 10X PER’11 with continued earnings upgrades and a sustainable RoE of 20% </li></ul>Indexed price performance
    44. 44. Regulatory Disclosure <ul><li>For Professional Investors/Advisers only. It should not be distributed to or relied on by Retail Investors. This document is approved and issued by Baring Asset Management Limited, authorised and regulated by the Financial Services Authority and in jurisdictions other than the UK it is provided by the appropriate Baring Asset Management company/affiliate whose name(s) and contact details are specified herein. The information in this document does not constitute investment, tax, legal or other advice or recommendation. It is not an invitation to subscribe and is for information only. </li></ul><ul><li>Investment involves risk . The value of any investments and any income generated may go down as well as up and is not guaranteed. Past performance is not a guide to future performance . Where yields have been quoted they are not guaranteed. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. </li></ul><ul><li>There are additional risks associated with investments (made directly or through investment vehicles which invest) in emerging or developing markets. Investments in higher yielding bonds issued by borrowers with lower credit ratings may result in a greater risk of default and have a negative impact on income and capital value. Income payments may constitute a return of capital in whole or in part. Income may be achieved by foregoing future capital growth. We reasonably believe that the information contained herein from 3rd party sources, as quoted, is accurate as at the date of publication. The information and any opinions expressed herein may change at any time. Companies and employees of the Baring Asset Management group may hold positions in the investment(s) concerned. This document may include internal portfolio construction guidelines. </li></ul><ul><li>As guidelines the fund is not required to and may not always be within these limits. These guidelines are subject to change without prior notice and are provided for information purposes only. This document may include forward looking statements which are based on our current opinions, expectations and projections. We undertake no obligation to update or revise any forward looking statements. Actual results could differ materially from those anticipated in the forward looking statements. This document must not be used, or relied on, for purposes of any investment decisions. Before investing in any product, we recommend that appropriate financial advice should be sought and all relevant documents relating to the product, such as Reports and Accounts and Prospectus should be read. Compensation arrangements under the Financial Services and Markets Act 2000 of the United Kingdom will not be available in respect to any Offshore Fund. </li></ul><ul><li>Research Material Baring Asset Management only produces research for its own internal use. Where details of research are provided in this document it is provided as an example of research undertaken by Baring Asset Management and must not be used, or relied upon, for the purposes of any investment decisions. The information and opinions expressed herein may change at anytime. Lists of locations, or location indicators on maps, are non-exhaustive. They may include locations where Barings has an office and/or where Barings has appointed a local organisation or individual to act on its behalf for certain aspects of its business. For data sourced from Morningstar: © Morningstar, Inc. all rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. </li></ul><ul><li>An S&P Fund Management Rating represents an opinion only and should not be relied on when making an investment decision. “S&P” and “Standard & Poor’s” are trademarks of The McGraw-Hill Companies, Inc. Copyright 2010 © Standard & Poor’s Financial Services LLC. </li></ul><ul><li>Version 06/SD </li></ul>Date Complied (London):7 th October 2011

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