Report - Nikko AM Asia Limited

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Composite A - 35% Barclays Capital Global Aggregate Index, S$ Hedged - 45% UOB Singapore Government Bond All Index - 15% composite index comprising 5 regional equity indexes:- (1) FTSE All Share Index (2) TOPIX Dividend Included Index (3) Russell Developed Europe ex-UK Large Cap Index (Net) (4) Russell Asia Pacific ex-Japan (All Cap) Index (5) Russell 1000® Net 30% Index according to their regional weights from time to time - 5% Straits Times Index Composite B - 30% Barclays Capital Global Aggregate Index, S$ Hedged - 30% UOB Singapore Government Bond All Index - 35% composite index comprising 5 regional equity indexes:- (1) FTSE All Share Index (2) TOPIX Dividend Included Index (3) Russell Developed Europe ex-UK Large Cap Index (Net) (4) Russell Asia Pacific ex-Japan (All Cap) Index (5) Russell 1000® Net 30% Index according to their regional weights from time to time - 5% Straits Times Index Composite C - 20% Barclays Capital Global Aggregate Index, S$ Hedged - 20% UOB Singapore Government Bond All Index - 50% composite index comprising 5 regional equity indexes:- (1) FTSE All Share Index (2) TOPIX Dividend Included Index (3) Russell Developed Europe ex-UK Large Cap Index (Net) (4) Russell Asia Pacific ex-Japan (All cap) Index (5) Russell 1000® Net 30% Index according to their regional weights from time to time - 10% Straits Times Index Composite D - 10% Barclays Capital Global Aggregate Index, S$ Hedged - 10% UOB Singapore Government Bond All Index - 70% composite index comprising 5 regional equity indexes:- (1) FTSE All Share Index (2) TOPIX Dividend Included Index (3) Russell Developed Europe ex-UK Large Cap Index (Net) (4) Russell Asia Pacific ex-Japan (All Cap) Index (5) Russell 1000® Net 30% Index according to their regional weights from time to time - 10% Straits Times Index Composite E - 85% composite index comprising 5 regional equity indexes:- (1) FTSE All Share Index (2) TOPIX Dividend Included Index (3) Russell Developed Europe ex-UK Large Cap Index (Net) (4) Russell Asia Pacific ex-Japan (All Cap) Index (5) Russell 1000® Net 30% Index according to their regional weights from time to time - 15% Straits Times Index With effect from 1 April 2011, the portion of the composite benchmarks of the Funds which previously reflected FTSE World Europe ex-UK Index was changed to Russell Developed Europe ex-UK Large Cap Index (Net). With effect from 1 August 2006, the portion of the composite benchmarks of the Funds which previously reflected MSCI All Country Pacific Basin ex-Japan Free Index will be changed to the MSCI AC Asia Pacific ex-Japan Index. This portion of the composite benchmark was subsequently changed to Russell Asia Pacific ex Japan (All cap) Index from 1 April 2011. 3
The portion of the composite benchmarks of the Funds which previously reflected the 3-month SIBID rate was also changed to the UOB Singapore Government Bond All Index with effect from 1 August 2006. With effect from November 2008, the benchmark component of Lehman Brothers Global Aggregate (SGD Hedged) Index was renamed as Barclays Capital Global Aggregate Index, S$ Hedged. With effect from 16 December 2013, the composite benchmark of the former Horizon Global Equity Fund (now reshaped to “Nikko AM Global Dividend Equity Fund”) has been changed to the MSCI All Country World Index, USD base. Prior to 16 December 2013, the composite benchmark consists of the Russell 1000® Net 30% Index; FTSE All Share Index; TOPIX Dividend Included Index; Russell Developed Europe ex-U.K. Large Cap Index (Net) and Russell Asia Pacific ex-Japan (All Cap) Index, according to their regional weights from time to time. Singapore Dividend Equity Fund Portfolio Review Fund outperformed benchmark For the year ended 31 December 2013, the Singapore Dividend Equity Fund (the “Fund”) posted a return of 7.85% (SGD terms, NAV-NAV basis), outperforming the benchmark FTSE Straits Times Index, which returned 0.01% over the same period. The Fund gained most from stock selection, particularly in the Financials, Consumer Discretionary and Consumer Staples sectors. The Fund performed well on the back of its overweight positions in Thai Beverage, Guocoleisure and high yielding stocks, Mobileone, Starhub and SIA Engineering. The Fund also benefitted from its underweight position in City Developments, Fraser and Neave and Singapore Press Holdings. Finally our position in CNOOC, a non-Singapore stock, also added value. The FTSE STI gained 0.01% in 2013 Asian equity markets delivered a modest return for the full year of 2013, with Hong Kong, Taiwan, New Zealand and Malaysia being the outperforming markets with an average gain of 6-11% while India and ASEAN ex Singapore suffered losses. Indonesia and Thailand suffered sharp correction and both registered double-digit decline. Similarly, other South East Asian markets in general were negatively impacted, and this was mainly driven by the sharp fall of ASEAN currencies against the USD in the 4th quarter on concerns of the US quantitative easing (QE) tapering, resulting in considerable outflows of funds. Q4 2013 growth slowed to 4.4% year-on-year (YoY), bringing the full year 2013 growth to 3.7% Advanced estimates revealed that the Singapore economy grew by 4.4% YoY in 4Q 2013, compared to 5.9% in the previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted 2.7% in 4Q 2013, a reversal from the 2.2% expansion in 3Q 2013. Growth in 4Q 2013 was supported by the construction and services sectors, albeit at slower paces, with the manufacturing sector also languishing. Specifically, the construction sector grew by 4.7% YoY, moderating from the 5.8% growth in the previous quarter, mainly due to a moderation in the growth of private sector construction activity. Similarly, the services sector grew by 5.5% YoY in 4Q 2013, easing slightly from the 6.5% expansion in the previous three months. The slowdown was largely due to weaker growth in the wholesale and retail trade as well as finance and insurance sectors. Meanwhile, the manufacturing sector grew by 3.5% YoY in 4Q 2013, lower than the 5.3% growth in the preceding quarter, attributed to a sharper contraction in biomedical manufacturing output and a slower pace of growth in transport engineering output. With the economy growth of 4.4% in 4Q 2013, Singapore expanded by 3.7% for the whole of 2013, which is in line with the Ministry of Trade and Industry Singapore’s growth forecast of 3.5-4.0%. Monetary Authority of Singapore (MAS) maintained policy stance as outlook remains upbeat During the semi-annual policy review meeting in October, the MAS decided to retain its policy stance of targeting a modest and gradual appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. The MAS noted that the current policy stance is “appropriate in containing inflationary pressures and keeping the economy on a path of restructuring towards sustainable growth”. Inflation eased on lower private road transport costs Singapore’s headline inflation rose 1.5% in December from a year earlier, easing from an eight-month high of 2.6% in November. This was mainly due to lower private road transport costs, which declined 2.8% in December on account of lower certificate of entitlement premiums. Meanwhile, the accommodation cost inflation which has been the main 4
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IMPORTANT INFORMATION This document
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Report - Nikko AM Asia Limited

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