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					CEO sees region’s inflation cooling off and prices rising



KUALA LUMPUR: Investors should consider investing 50% of their money in
Asia Pacific, as this is the start of the Asian millenia, driven by
consumption from China and India.

MIDF Amanah Asset Management Bhd chief executive officer and chief
investment officer Scott Lim foresees inflation cooling off in the second
half of the year, and prices starting to rise again.

With negative external news dampening sentiment for the major part of the
year, Asian markets have been similarly moderated.

However, as inflation cools off, Asia countries which are in fact growing
very strongly will once again reflect its growth trend, and that's when
prices start rising.

“This is Asia's most exciting period. The slowdown in the US and the debt
problems in Europe does not derail Asia's growth trend. This simply means
that the upward momentum will come in a more ferocious manner,” said Lim.

Lim expects food industries and key industrialisations to do very well.

“Food is a basic necessity of all humans. We are already seeing a
shortage of food in Somalia and how the people there suffer. What we
don't realise is that this will eventually affect our monetary and
political systems as well. Food is the highest inflating asset class,”
said Lim.

He likes the industrial sectors because of China's growth, driven by its
manufacturing sector. China now controls 10% of the world's manufacturing
segment. This industrialisation drive will cause prices of key
commodities to continue rising as supply continues to outstrip demand.

“These are very challenging times because the world is now in a major
transition. The maturing economies of the west are undergoing structural
decline and the power is shifting to Asia,” said Lim.

“It is propoganda when they say that Asia cannot live without the US. We
have some 3 billion people in Asia, all who have savings rate of some 30%
to 50%. Furthermore, China now has some US$3.2 trillion in its banking
system, out of which US$1 trillion are in US treasuries. Meanwhile, the
US has some 300 million people who have no savings and are also suffering
from high unemployment rates. So no, US is no longer a major export
market.”

Lim sees a maximum 20% downside of the market from here, and an upside of
30% to 40%.
“We still like Malaysia, but its ability to outperform is low. Structural
changes are happening, but it is still half hearted. However, the people
are doing something about it now. People are waking up. If Malaysia can
get it right, it will have plenty of upside. Look at what happened to
Indonesia after it reformed.”

Nonetheless, he expects the FBM KLCI trending upward, as most of the
negative news have been priced into the market.

Lim believes that a successful fund manager must not just have IQ and EQ,
but discipline as well which is to sell when the market is going up, and
to buy when the market is going down.

“EQ alone is not enough. A lack of discipline will overwhelm all other
factors. My specialty is alpha generation, which is to beat inflation for
investors, and thus, raise the standard of their living,”

Lim practices an absolute return strategy, where he does not benchmark
his funds against the index and neither does he need to be invested in
the market all the time. He also practices a dynamic approach, where he
can allocate money to a certain sector, when he spots the coming of a new
trend.

MIDF Amanah recently launched two funds the MIDF Amanah Asia Pacific
Equity Fund and the MIDF Amanah Asia Pacific Islamic Equity Fund. They
are absolute return funds with a minimum return of 8% per year. The focus
will be on some 10 markets in Asia Pacific, except for Japan. Australia
is one of the markets featured in the funds, mainly because it controls
the world's mining sector.

Lim will be giving a presentation on his Asia Pacific outlook on Saturday

				
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posted:7/25/2011
language:English
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