gemasia - gemway
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Monthly REPORT - JANUARY 2020 (as of 01/31/2020)
GemAsiaInvesting in Emerging markets
2019-nCOV : an unprecedented health crisis!
MACRO VIEWBy mid-January, Asian emerging markets have been hit with full force by the Wuhan Coronavirus, which has also affected globalfinancial markets. Over the month, Asia ex Japan dropped by 3,2% in €, underperforming the MSCI World index (+0,7% in €), theAmerican S&P (+1,2% ) and European markets (Stoxx 600 -1,2%). Among Asian markets, China, Hong Kong and Taiwan are amongthe most affected by the risk of contamination. On the contrary, India is relatively stable despite mixed microeconomic news.
Regarding coronavirus, the number of infected cases as of February 4th
soared to 20,679 of which 20,483 in China and seems not yet slowingdown. This virus differs from SARS in 2003 on 3 points: its incubation periodis estimated at around 10 days vs. 2-7 days for SARS; it is more infectiousbut fortunately, with a lower mortality rate (2-3% vs. 10-12%). Facing thisthreat, Beijing has promptly implemented unprecedented measures:extend the Chinese New Year holiday, lock down several cities starting withWuhan, cancel New Year celebrations, restrict travels and populationmovements, close popular tourist destinations. Taking into account theincubation period, one should wait till 8-10 February to assess the efficiencyof the above quarantine measuress.
As to the economic impact, we could already make some assumptions. Basedon current size of Chinese consumption and its contribution to GDP (58% vs. 35% in 2003), current slowdown could be moreimportant compare to SARS. Chinese GDP could lose between 1 and 1.5 point of growth in the first half depending on when theoutbreak will peak: in February/March, or in 2Q20. After that, we should expect a relatively strong recovery (restocking, monetaryeasing, supportive fiscal measures). As such, it is also worth noting that the annualized growth of Chinese industrial inventory wasalready very low even before the virus outbreak. In the short term, we expect monetary authorities to announce measures of support(lower interest rates, easing in credit conditions). Expansionary fiscal measures could also follow. Such measures should beproportionate to the impact of health crisis and could be announced at next Poliburo meeting in April. As to financial markets, itseems too early to make an assessment. During the 2003 SARS crisis, we followed the new infected cases on a daily basis. As thistrend weakened in April 2003, markets recovered. Back then, the Hang Seng Index lost 17% between December and April andsubsequently recovered by almost 20% between April and June. History does not repeat itself but it often rhymes. The current virus,despite its lower mortality could last for longer compare to SARS. Therefore, we should remain cautious.
FUND POSITIONNING Since the beginning of December, exposure to China has been gradually decreased, even before the 2019-nCov virus breakout (we cutsome of our internet positions, sold Foshan Haitian and China Unicom): 45.6% of fund in November 2019 and 44.8% as of 17 January2020. Post coronavirus breakout, the fund exposure to China is at about 43%, of which 11% in A shares (valued as of 23/01/2020). Inthe short term, our position on CITS, China duty free operator (1% of GemAsia) could be negatively affected. Other than thisposition, we do not have investment in the most affected sectors such as transport, lodging and restaurants.Elsewhere in Vietnam, our position in Vinamilk was sold out for Vincom Retail (on better growth prospects over the next 3 years).We also closed our position in Jardine Matheson as its corporate governance continues to disappoint. In ASEAN markets, we haveincreased our position in SEA Ltd (e-commerce in Indonesia) to 2%. We have also increased our technology exposure from 25.5 to28.8% (including 12% on Korean semiconductor players).GemAsia is now 98% invested (66% in growth stocks and 32% in cyclicals).
FUND PERFORMANCE In January, GemAsia dropped 1,4%, outperforming its benchmark MSCI Asia ex Japan Total Return index that lost 3,2%in €. Over the month, our overweight Korea, our absence from Thailand and the Philippines have made positive contribution to ourrelative performance. However, our underweight India weighted negatively. As for our stock selection, let us highlight theoutperformance of technology names such as Samsung Electronics (7.2% of GemAsia), SDI and LG Chemical (2.1% of the fund).Our internet companies (Tencent, Alibaba and SEA– 19% of the portfolio on a combined basis) have also held up well. On thecontrary, our Chinese auto stocks (2.5% of fund) have been particularly affected by the Coronavirus and declined almost 17% over themonth.
EUROS
1 Year 5 YearsYTD 3 YearsAnnualized
since inception
1 Month
N/AI-share (€) -1.4% N/A +2.3%-1.4% +16.0%
N/AR-share (€) -1.6% N/A +1.3%-1.6% +14.9%
-3.2% +2.3%N/A-3.2%Index (€) N/A+8.9%
Category (€)(*) -3.7% N/A +2.0%-3.7% +7.5% N/A
DOLLAR
YTD 3 YearsAnnualized
since inception
1 Month 1 Year 5 Years
I-share ($) -2.7% N/A -1.5%-2.7% +12.1% N/A
-4.4% N/A -1.6%-4.4% +5.2% N/AIndex ($)
COUNTRY
Fund Asia ex Japan
Korea 13.8%15.6%13.8%12.1%Taiwan
43.5%China 40.3%Hong Kong 9.8%10.2%
3.6%1.5%SingaporeMalaysia 2.1%0.0%
0.0%Thailand 3.0%1.1%Philippines 0.0%2.3%Indonesia 3.2%
Vietnam 0.0%1.4%8.0% 10.2%India0.0% 0.0%Pakistan & Sri Lanka
Others 2.6%2.0%Cash
SECTOR
Asia x JapanFund
2.9%Energy 4.0%2.3%Basic Materials 4.3%
Industrials 6.7%1.6%14.3%6.0%Banks
11.1%Other Financials 8.7%Real Estate 5.8%1.4%
18.5%28.7%Technology10.9%Media & Internet 7.9%
Telecom 3.6%3.5%Consumer Durables 14.9%23.9%
4.3%Consumer Non-durables 5.1%Healthcare Services 3.0%1.5%Utilities 3.1%0.0%
2.0%Cash
PERFORMANCE
Source : Gemway Assets, Bloomberg
AUM $57M
GemAsiaInvesting in Asian markets
ASSETS BREAKDOWN
CAPITALIZATION
46,625Median Market Capitalization (Md$)Total number of holdings 41
REGION
Asia x JapnFund
27.6%27.7%Korea - TW
50.1%53.7%China HK
12.1%6.1%ASEAN
10.2%8.0%India
2.6%Others -
FundThematic Asia x JapanStructural Growth 52.4%65.6%
32.5%Cyclicals 47.6%
10 MAJOR HOLDINGS
Country Asia x JapanFund
China 6.8%Alibaba 8.3%
Tencent China 5.2%8.2%
7.2% 5.0%KoreaSamsung Electronics
TSMC Taiwan 6.0% 5.1%
4.9% 0.8%KoreaSK Hynix
Hangzhou Hikvision 0.0%China 4.9%
Hong KongTechtronics 4.2% 0.2%Ping An Insurance China 4.1% 1.4%
2.4%Hong KongAIA 4.0%
MAIN CONVICTIONS (BY STOCK)Stock Active Share (Σ of stock overweights ) 64.8%
Positive ConvictionsFund +/-Country
Hanzhou Hikvision +4.9%China 4.9%+4.1%4.9%KoreaSK Hynix
Hong Kong 4.2%Techtronics +4.0%4.0%Shenzhou International +3.8%China
+2.9%China 8.2%Tencent
Negative Convictions+/-Country Fund
China -1.6%China Construction Bank 0.0%Reliance Industries India 0.0% -1.1%ICBC 0.0% -1.0%China
-0.7%Hon Hai 0.0%Taiwan-0.7%ChinaBank of China 0.0%
MAIN CONVICTIONS (COUNTRY/SECTOR)Matrix Active Share (Σ of country/sector overweights) 42.1%
Positive Convictions+/-Fund
13.2%Korean Technology +6.9%China Consumer Durables +4.9%15.8%
+3.7%China Communication 12.1%+3.4%Hong Kong Consumer Durables 4.2%
4.9%China Technology +3.2%
Negative Convictions+/-Fund
China Construction Bank -4.2%0.0%0.0%Reliance Industries -2.3%0.0% -2.3%ICBC
Hon Hai 0.0% -2.3%-2.3%0.0%Bank of China
PERFORMANCE ATTRIBUTION YTDOver/under-performance : +1.8% o/w Stock Selection : +1.5% and Country and curreny allocation : +0.3%
Major contributors Major detractors
Stocks held0.22IndonesiaSea
Samsung SDI 0.10South Korea
Tencent China 0.090.09Hindustan Unilever India
China 0.07Netease
Stocks not heldChinaCCB 0.11ChinaICBC 0.11IndiaReliance Industries 0.06ChinaChina Ding Yi Feng 0.06
TaiwanHon Hai Precision 0.06
Stocks heldChinaGuangzhou Auto -0.37
-0.28ChinaShenzhou Int.Taiwan -0.17Yageo
-0.17ChinaCNOOC-0.15Vincom Retail Vietnam
Stocks not heldIndiaInfosys -0.05
-0.04JC.com ChinaBharti Airtel -0.02India
NCSoft -0.02South Korea
SMIC -0.02China
STATISTICS (3 YEARS IN €) VALUATION
N/AGemAsia VolatilityN/AIndex VolatilityN/ASharpe Ratio
N/ABetaN/AAlphaN/AInfo RatioN/ASharpe Ratio
26.0PER 2019 (X)20.7PER 2020 (X)
Dividend Yield : 1.9%
2019 EPS growth (e) : 18.7%2020 EPS growth (e) : 30.9%
ESG CONVICTION
A detailed ESG Investissement semi-annual report (impactreport, carbon footprint, etc.) is available on request or on thewebsite www.gemway.com.
ESG investment is fully integrated into our investment processthrough a best in class approach, in particular in order toreduce the risk of the portfolio.
The carbon footprint or WACI of the portfolio is 154 as ofDecember 2019. This compares with 455 for the market(source: Trucost).
(GemAsia is UCITS compliant. The index is the MSCI Asia ex Japan (dividend reinvested). GemAsia is primarily invested in equities and presents a risk of capital loss. Past performances do not guarantee future performances. This document, intended for professional investors, is not of a contractual nature. Itmay not be reproduced, distributed or passed on to third parties in whole or in part without the prior written authorisation of Gemway Assets SAS. The purpose of this document, which is commercial in nature, is to inform investors of the fund’s characteristics in a simplified way. For more information, pleaserefer to the KIID or consult your usual contact. Management fees are included in the performance.
Launch date :
December,14th 2017
Legal form :
UCIT-4 FCP under French law
Benchmark :
MSCI Asia Ex Japan
(net dividends reinvested)
Quote currency :
EUR and USD
NAV 01/31/2020:
104.81€ (I)
102.75€ (R)
98.11$ (I USD)
107.51$ (R USD)
I-Share ISIN : FR0013291879
R-Share ISIN : FR0013291861
I USD-Share ISIN : FR0013291895
R USD-Share ISIN : FR0013291887
I-Share Bloomberg : GWAGAUI FP
R-Share Bloomberg : GWAGAUR FP
Contacts :
Michel Audeban : +33 1 86 95 22 98
Pierre Lorre : +33 1 84 25 62 54
Stefano Franchi : +33 7 70 55 38 06
GEMWAY ASSETS - GemAsia - Monthly report - January 2020