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Investment programme to strengthen China’s growth

Asian markets were up in March. After a weak February for equities there was a bounce-back from greater global risk appetite, resulting in large flows of capital to Asia. Carnegie Asia rose 3.0 percent in SEK terms.

The US Fed held off further interest rate hikes, and announced it wants to wait before raising interest rates further due to turmoil in world stock markets and uncertainty about developments in China. The dollar softened on the announcement, causing commodity prices, particularly oil, to make a sharp rebound from oversold levels. The weaker dollar eased pressure on Asian exchange rates, and most of the region’s currencies, particularly China’s, strengthened. The best-performing stock markets were those in China, Hong Kong, India and the Philippines.

China’s party congress early in the month saw the launch of several new investment programmes, intended to strengthen the country’s growth. This is a tried and tested tactic in China, and has been applied in previous economic downturns. However, there are still plenty of question marks hanging over China’s performance. In India, interest rate sensitive companies rose following presentation of the budget. Lower inflation from falling food prices fuelled expectations of a rate cut in early April.

The Philippines will hold presidential elections in May, and there are rising hopes the next leader will implement essential major infrastructure investment. However, opinion polls suggest the four main candidates are closely tied, making the outcome difficult to call. The people’s favourite is Grace Poe, who is considered the least corrupt of the candidates, while the business community favours the former mayor of Makati, who is seen as energetic and able to energise important investment. This hopefulness gave a pre-election fillip to the Philippine stock exchange, and positively influenced Carnegie Asia.

The fund’s holdings in Thailand and Indonesia also performed well in the period. We chose to reduce our stake in Airports of Thailand, following a sharp uptick.

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Carnegie Asia is for those who believe in the power of a young and increasingly well-educated population with high consumption needs. Nearly half the world’s population lives in Asia, and...

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