June 2019

Market Review and Outlook

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Equity Market The renewed US-China trade tension with both countries raising tariffs against each other triggered a
Review widespread selloff in May. The selloff also spilled over into the technology sector as US companies were
banned from doing business with Huawei. In response to that, China toughened its stance on the trade
war in the White Paper and emphasized that a trade deal must be mutually beneficial, indicating further
delay of a potential trade deal. One of the non-tariff retaliatory measures China could take is to restrict
rare earth export to US as US imports up to 80% of its rare earth consumption from China. Brent oil price
fell 11.4% month-on-month (MoM) in May as trade tensions weigh on market sentiment and global
economy outlook.

Both the Dow Jones Industrial Average index and Euro STOXX 50 tumbled 6.7% MoM in May. MSCI Asia ex-
Japan fell 8.9% MoM with HSCEI (-10.0%) and HSI (-9.4%) being the worst performers, followed by
Singapore (-8.3%), Korea (-7.3%) and CSI300 (-7.2%). Outperformers were India (+1.8%), Australia (1.1%)
and Philippines (+0.2%). There is still downside pressures on China’s economy as May manufacturing
Purchasing Managers’ Index (PMI) came in below consensus at 49.4 (April: 50.1) although services PMI was
holding steadily at 54.3. Sentiment in India was boosted as the election confirmed a strong victory for the
ruling party and Prime Minister Modi secured an absolute majority for the Party for a second successive
term.

MSCI ASEAN was 4.8% lower MoM as Singapore, Indonesia and Thailand dropped 8.3%, 3.8% and 3.2%
respectively. Singapore, being one of the most exposed countries to slowdown in global trade, had its
worst monthly performance since 2015 and the three major banks were down 10% to 15% MoM.
Indonesian equities rebounded sharply in the second half of May, driven by Bank Indonesia’s liquidity
injection into the banking sector. S&P also raised Indonesia sovereign credit rating to BBB from BBB-. In
Philippines, BSP cut policy rate by 25 bps to 4.5% and announced staggered RRR cuts of 200bps while the
mid-term election was concluded with minimal changes.

On the domestic front, KLCI gained 0.5% in May despite the aggressive selloff in regional equities, partly
supported by foreign buying in the last three days of May. KLCI also outperformed FBM100 and FBMSC
that declined 0.2% and 7.9% respectively. On 7 May, BNM cut Overnight Policy Rate by 25bps to 3%, the
first change in 8 policy meetings which is negative for Banks’ net interest margins and companies with high
cash holdings. 9 May marked the first anniversary of the Pakatan Harapan government in power where it
made good progress in improving governance and addressing structural weaknesses. KLCI’s negative
performance of 12% since GE14 should be seen as short term pain. 1Q19 GDP growth came in above
expectations at 4.5% but there was a broad-based deceleration in demand.

Noticeable Merger and Acquisition deals include the proposed Telenor-Axiata merger, YTL Cement’s
acquisition on Lafarge Malaysia followed by Hong Leong Group’s privatisation of Tasek Corp. Overall 1Q19
corporate results was not inspiring but there were some positive surprises among the big caps including
Tenaga, Dialog, Telekom Malaysia and Malaysian Airports. FTSE Russell and Bursa Malaysia announced no
changes to the constituents of KLCI following the semi-annual review. Foreign investors remained net
sellers in May (RM2 billion) and brought cumulative outflows in 5M19 to RM4.8 billion.

Kenanga Investors Berhad (353563-P)

Level 14, Kenanga Tower
237, Jalan Tun Razak
50400 Kuala Lumpur
Tel: 03-2172 3000
Toll Free: 1800-88-3737
www.kenangainvestors.com.my 1
Strictly for Clients of Kenanga Investors Berhad
 June 2019
Market Review and Outlook

Equity Market All eyes will be on G20 meeting in Japan scheduled on 28-29 June where both President Trump and
Outlook Chairman Xi will meet to discuss on trade matters. Another key event to watch is the 18-19 June Federal
Open Market Committee meeting as the Fed is turning more dovish on the back of slowing US economy
momentum. Over in Europe, Teresa May will step down as the Prime Minister of UK on 7 June. While a 90-
day temporary waiver is granted on Huawei sanction, disruptions in the technology supply chain could
have long term implications to technology dependant countries including Korea and Taiwan. In China,
more easing and stimulus measures are expected as growth has yet to truly bottom out. The Chinese
government is managing expectations to prepare for RMB trading above 7 against USD in the event of
more US tariffs. Though valuations are looking more attractive following the correction in May, we remain
cautiously optimistic on the market and will manage our portfolios more proactively in order to
outperform amid volatile markets.

Equity Fund We remain Overweight on ASEAN in particularly Indonesia as compared to North Asia, Neutral on
Strategy Singapore and Thailand. In Malaysia, investors would monitor the decision on electricity tariffs before 30
June 2019 and potential power reform plans. Employers are also waiting for details on foreign worker
replacement scheme that has been delayed. We stay defensive and continue to focus on stocks with
sustainable earnings and solid growth prospects.

Kenanga Investors Berhad (353563-P)

Level 14, Kenanga Tower
237, Jalan Tun Razak
50400 Kuala Lumpur
Tel: 03-2172 3000
Toll Free: 1800-88-3737
www.kenangainvestors.com.my 2
Strictly for Clients of Kenanga Investors Berhad
 3-year

Kenanga Syariah Growth Fund ● KLIFF Islamic Finance Awards 2019

Most Outstanding Islamic Fund Product
Fund Volatility

8.0
Moderate
June 2019 Lipper Analytics
10 May 2019

FUND OBJECTIVE FUND PERFORMANCE (%)

Aims to provide unit holders with long-term capital growth by % Cumulative Return, Launch to 31/05/2019
investing principally in equities that comply with Shariah 450
requirements. 400
350
300
Fund Category/Type 250
Equity (Islamic) / Growth 200
150
100
Launch Date 50
29 January 2002 0
-50

Jan 02
Jun 02
Dec 02
Jun 03
Dec 03
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Dec 04
Jun 05
Dec 05
Jun 06
Dec 06
Jun 07
Dec 07
Jun 08
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Dec 10
Jun 11
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May 19
Trustee
CIMB Islamic Trustee Berhad
Kenanga Syariah Growth : 351.65 FTSE Bursa Malaysia Emas Sh ariah In dex : 127.67

Benchmark
Source: Novagni Analytics and Advisory
FTSE Bursa Malaysia EMAS Shariah Index
# #
CUMULATIVE FUND PERFORMANCE (%) CALENDAR YEAR FUND PERFORMANCE (%)
External Investment Manager / Designated Fund Manager Period Fund Benchmark Period Fund Benchmark
Syarifah Hidayatul Akmal 1 month -1.69 -0.35 2018 -14.47 -13.52
6 months 5.14 1.40 2017 12.96 10.72
Sales Charge 1 year 2.34 -3.12 2016 -2.29 -6.14
Max 5.50% 3 years 5.69 -1.06 2015 9.49 2.35
5 years 3.82 -10.20 2014 -1.20 -4.17
Annual Management Fee Since Launch 351.65 127.67
1.50% p.a. #
Source : Lipper, 31 May 2019

Annual Trustee Fee

0.05% p.a. FUND SIZE * NAV PER UNIT * HISTORICAL FUND PRICE *
RM 518.84 million RM 1.0492 Since Inception Date
Redemption Charge Highest RM 3.0262 4-May-12
Nil Lowest RM 0.9433 18-Dec-18

All fees and charges payable to the Manager and the Trustee are
subject to the goods and services tax /sales and services tax/other taxes
of similar nature as may be imposed by the government or other
authorities from time to time.

ASSET ALLOCATION (% NAV) * SECTOR ALLOCATION (% NAV) *

Trading and Services 33.6%
Industrial Products 14.2%
9.50%
May Technology 9.6%
90.50%
Short Term Islamic Deposits and Cash 9.5%
10.70% Construction 8.4%
April
89.30% Finance 7.6%
Consumer Products 6.9%
12.90%
March Energy 3.9%
87.10%
Properties 3.1%
Plantations 2.3%
Liquidity Equity
Others 0.9%
TOP EQUITY HOLDINGS (% NAV) * DISTRIBUTION HISTORY *
1 TENAGA NASIONAL BHD 8.52% Gross Distribution
2 AXIATA GROUP BHD 5.34% Date RM Yield (%) Unit Split
3 DIALOG GROUP BHD 4.42% 16-May-16 10.11 sen 9.31% -
4 PENTAMASTER CORP BHD 4.15% 26-Feb-15 10.50 sen 8.65% -
5 YINSON HOLDINGS BHD 3.92% 28-May-14 7.50 sen 5.83% -
* Source: Kenanga Investors Berhad, 31 May 2019

Based on the fund’s portfolio returns as at 10 May 2019, the Volatility Factor (VF) for this fund is 8.02 and is classified as “Moderate”. (Source: Lipper). “Moderate” includes
funds with VF that are above 6.595 and less than or equal to 8.795 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside
return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised
every six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future.
Presently, only funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 29 March 2019 and the Supplemental
Prospectus (if any), its Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission
Malaysia, who takes no responsibility for its contents. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our
offices. Application for Units can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any),
SDD (if any) and PHS. Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before
investing. Investors are also advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution
is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-
unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the
distribution of the additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust
loan financing risk disclosure statement before deciding to borrow to purchase units.“Cooling-Off Period” or “Cooling-Off Right” is not applicable to EPF Member Investment
Scheme (EPF MIS). Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activities and between its
clients/directors/shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent, potential and perceived Conflict
of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are equity and equity-related securities risk and
reclassification of Shariah status risk.