Trailblazing technologies and transformative infrastructure – Asia is a leader in both growth and innovation. How can we leverage these dynamics into investable opportunities?
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We believe incorporating environmental, social, and governance (ESG) issues in investing is not a zero-sum game. By integrating ESG factors into our investment process, we can better fulfill our mission of partnering with clients to achieve their specific investment objectives. PineBridge is a signatory of the Principles for Responsible Investment (“PRI”), and rated A+ for our overall approach to Strategy and Governance and A for our equity and fixed income direct and active ownership activities. As active managers, we are able to advocate for, and hasten, change in the select companies we invest in. We take an analytical approach that considers how companies are seeking to improve upon ESG issues. Our approach considers ESG factors from both an investment return and risk mitigation perspective over the medium to long term.
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In our view, ESG should not be an “add-on” analysis used to score companies after the “main” due diligence has been completed. Our global equity team fully integrates ESG in its investment process using proprietary tools and a "consultivist" approach in its engagement with management in order to nurture corporate change. We believe that long-term value creation comes from having a sustainable business model, with strong corporate governance as its cornerstone.
Our research analysts have long integrated the analysis of ESG risks in their credit work by monitoring company financial and corporate social responsibility reporting, news flow, and in-person engagement with sustainability personnel as well as management teams. Each issuer under our coverage is assigned a score, including a score for each of the E, S, and G pillars. The ESG process is fully integrated into the credit analysis process alongside the fundamental credit analysis platform, as well as our portfolio management systems — allowing for swift action when we see meaningful changes in the ESG scores.
Although not individual stock selectors, our multi-asset team integrates ESG in a two-pronged approach: top down and bottom up. From a top-down perspective, the team determines the ESG outlook for a particular asset class e.g. improving, stable, or deteriorating. From a bottom-up approach, the team looks at implementation. Based on the ESG outlook for the asset class, the team assigns a high or low level of engagement, which helps determine active or passive implementation. Even with a passive implementation, the team believes it is necessary to be active in being passive via proxy voting, engaging ESG laggards through Stewardship Committee efforts.
What Drives Asian Opportunities Beyond the Post-Pandemic Era?
Urbanization
Growing wealth and consumption power
Rapid technological advances
Environmental, social, and governance (ESG)
China to reach carbon neutrality
All new cars sold in China to be ‘eco-friendly’
billion people
1.2
will move to urban areas in Asia Pacific between now and 2050
Over the last decade, Asia contributed :
of global growth in tech revenues
of spending on tech R&D
of patents filed
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From broad regional to market-specific strategies, we focus on uncovering those rare companies that can generate consistent returns in any environment – before the market realizes their value. Benchmark agnostic, our Asia equity strategies recognizes the dynamic nature of opportunities in Asia, which calls for active management and flexibility in navigating the full investment universe. Anchored by our time-tested Lifecycle Categorization Research framework and proprietary ESG risk assessment process, our Asia equity strategies are well positioned to deliver high active share and consistent alpha over the long term.
Spanning equities, fixed income and alternatives, our Asia dynamic asset allocation strategy differentiates through a nimble approach to asset class positioning based on our forward-looking views of fundamental economic and market conditions across the region. The multi-asset team leverages the expertise across the firm’s regional and global equity, fixed income, and alternatives platforms to build a portfolio that can navigate market cycles and deliver stable long-term returns. The team believes that fundamentals ultimately drive markets. Key to this is an intermediate time horizon (nine to 18 months) over which market prices can converge towards fundamentals.
Japan and South Korea to reach carbon neutrality
50%
40%
Current Opportunities
These intersecting structural trends are remaking business models and generating new opportunities for investors.
In this post-pandemic world, disruptions and volatility will be part and parcel of the landscape. That’s why we believe an active and selective investing approach — informed by local insights, with the flexibility to position across the full investment universe — is essential. Click to explore current opportunities in Asia
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1 Source: World Bank, Bloomberg, PineBridge calculations, data as of December 2019, accessed in February 2021. Asia consists of Vietnam, Thailand, Singapore, Philippines, Malaysia, Korea, Indonesia, India, Hong Kong, and mainland China. Euro consists of Spain, Slovenia, Slovak Republic, Portugal, Netherlands, Malta, Luxembourg, Lithuania, Italy, Ireland, Greece, Germany, France, Ireland, Estonia, Cyprus, Belgium, and Austria. LatAm consists of Venezuela, Uruguay, Puerto Rico, Perú, Paraguay, Panamá, Nicaragua, México, Honduras, Haití, Guatemala, El Salvador, Ecuador, Dominican Republic, Cuba, Costa Rica, Colombia, Chile, Brazil, Bolivia, and Argentina. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 2 See “The Future of Asian and Pacific Cities,” United Nations Economic and Social Commission for Asia Pacific, 2019. 3 See “Asia’s Future is Now,” McKinsey, 14 July 2019, https://www.mckinsey.com/featured-insights/asia-pacific/asias-future-is-now 4 See “China’s Influence on the World’s Middle Class,” Brookings Institution, October 2020, https://www.brookings.edu/wp-content/uploads/2020/10/FP_20201012_china_middle_class_kharas_dooley.pdf 5 See “How Asia Can Boost Growth Through Technological Leapfrogging,” McKinsey, December 2020 https://www.mckinsey.com/featured-insights/asia-pacific/how-asia-can-boost-growth-through-technological-leapfrogging 6 Various government announcements. See “Xi Focus: Xi Announces China Aims to Achieve Carbon Neutrality Before 2060,” Xinhua, 23 Sept 2020, http://www.xinhuanet.com/english/2020-09/23/c_139388764.htm; “Japan Aims for Zero Emissions, Carbon Neutral Society by 2050 – PM,” Reuters, 26 Oct 2020, https://www.reuters.com/article/japan-politics-suga-idINKBN27B0FB; “South Korea’s Moon Targets Carbon Neutrality by 2050,” Reuters, 28 October 2020, https://www.reuters.com/article/us-southkora-environment-greenewdeal-idUSKBN27D1DU 7 See “China plans to phase out conventional gas-burning cars by 2035,” Asia Nikkei, 27 October 2020, https://asia.nikkei.com/Business/Automobiles/China-plans-to-phase-out-conventional-gas-burning-cars-by-2035 8 As of 30 June 2021. For illustrative purposes only. To access the Full Assessment Report, please visit https://www.pinebridge.com/PRI-assessment. To access the Transparency Report, please visit: https://www.pinebridge.com/PRI-transparency. Principles for Responsible Investment (PRI) ratings are based upon information reported by PRI signatories. For further details on PRI methodology, please visit www.unpri.org/signatories/about-pri-assessment. Third-party rankings and recognition are no guarantee of future investment success. Working with a highly rated advisor does not ensure that a client or prospective client will experience a higher level of performance or results. Ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation. Moreover, the underlying information has not been audited by the PRI or any other party acting on its behalf. While every effort has been made to produce a fair representation of performance, no representations or warranties are made by PRI as to the accuracy of the information presented, and no responsibility or liability can be accepted for damage caused by use of or reliance on the information contained within this report. Information regarding PRI methodology and grades is sourced from PRI. PineBridge Investments makes no representations, warranties, or opinions based on PRI methodology, ratings, or other data. This website and the materials that contained herein have not been reviewed by the MAS.
billion urban residents
2.3
will make up more than half of all urbanites on the planet
The region’s
billion Chinese
will be middle class by 2027 – a quarter of the world’s total
of global GDP
of the world’s consumption
2060
2050
2035
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Perspective and Experience Matter
of our global AUM
Over
is in Asia Pacific
years of industry experience on average
14
among investment team members in Asia ex Japan
mainland
China
17 years presence in
through our joint venture, Huatai-PineBridge
employees
300+
based in Asia Pacific
year track record
30
of our longest-running Asia-focused fund
PineBridge’s Heritage in Asia Runs Deep
As the former investment management arm of AIG (which was founded in Shanghai in 1919) and now part of Hong Kong-based Pacific Century Group, PineBridge Investments’ history reflects Asia’s dynamism, resilience, and ambition. While we are a global asset manager, the share of our global assets under management (AUM) in the region and local resources deployed on the ground represent an entrenched commitment that is difficult to find among our peers. Asia is in our DNA, and we are fully invested in its success.
Active, High Conviction Approach
We are bottom-up focused investors, who seek to generate alpha by understanding companies’ fundamental evolution, which the market often fails to recognize. Our collaborative culture allows us to harness the local knowledge and global industry expertise of our investment professionals to generate non-consensus views and focus on alpha for our clients.
52%
51%
84%
By 2040, Asia will make up
$
2
4
5
6
7
8
As of 30 June 2021
In the last quarter of a century, the world’s economic center has shifted to the East. Asia’s phenomenal economic growth has reshaped the global economy and opened up new opportunities in markets that today merit standalone allocations in global portfolios. At its core, powerful forces are building up to drive the next wave of growth opportunities. Explore these structural drivers and zoom in on some of the standout alpha opportunities uncovered by our active, on-the-ground investment teams.
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Capital at Risk All investments involve risk. The value of your investment and the income from it will fluctuate and a loss of capital may occur.
1
From investment grade to high yield, hard currency to local currency, regional to country-specific, our Asia fixed income strategies seek to deliver value from a broadly diversified opportunity set. Capitalizing on our deep regional experience, on-the-ground presence, and global integrated fixed income platform, our team skillfully navigates cycles and markets to be both strategic and tactical, defensive and income-oriented in a region differentiated by its idiosyncratic opportunities as well as risks. Central to this is the comprehensive fundamental analysis of securities, companies, and industries that allows us to build strong portfolios and position them ahead of the market. With Asia still underrepresented in global fixed income benchmarks, our Asia fixed income offerings deliver enhanced exposures for global investors seeking to capture the region’s growth and income potential.
3
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In the last quarter of a century, the world’s economic center has shifted to the East. Asia’s phenomenal economic growth has reshaped the global economy and opened up new opportunities in markets that today merit standalone allocations in global portfolios. At its core, powerful forces are building up to drive the next wave of growth opportunities. Explore these structural drivers and zoom in on some of the standout alpha opportunities uncovered by our active, on-the-ground investment teams.”
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While the weightings of large Asian economies in global equity indexes have increased in recent years, investors seeking to capitalize on Asia’s rich diversity of growth opportunities are still left wanting for more. For instance, there remains a disconnect between the revenues generated by Asian companies and their representation in global benchmarks. Companies in China, Taiwan, Korea, and India make up three-fourths of the MSCI Emerging Markets Index’s market capitalization. The index, in turn, contributes 34.1% to the global revenues represented by the broader MSCI All Country World Index (ACWI), but only accounts for 12.10% of the ACWI’s total market cap.
For Over a Decade, Index Returns in Asia Have Lagged GDP Growth
Free from the constraints of index weightings, our active, all-caps approach has the flexibility to adjust capital allocations amid changing company, industry or macro dynamics — making it a potentially better fit for Asia’s constantly evolving markets,” says Caroline Loke, Portfolio Manager, Asia ex Japan Equity.
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14 years of industry experience
Caroline Loke
Portfolio Manager
Portfolio of 40-60 stocks
Core, fundamental research-driven
All-cap strategy
Key Features
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While other Asia ex Japan equity strategies may tilt towards large caps or mirror the benchmark’s holdings, our strategy is benchmark agnostic and seeks stock-level market inefficiencies across sectors, markets, and company sizes and types. The result: a high-conviction portfolio markedly different from the benchmark.
Peer Analysis in This Sector in USD
Risk Metrics
Continue to explore our Asia investment capabilities
1 MSCI as of 30 June 2021 2 MSCI as of December 2020 3 MSCI as of December 2020. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 4 Digital natives are generally defined as persons born after 1980. We estimate the figure based on UN Population data for 2020. There are 3.5 billion people in Asia aged 49 years and under, more than any other region in the world. 5 See “Asia’s Future is Now,” McKinsey, 14 July 2019, https://www.mckinsey.com/featured-insights/asia-pacific/asias-future-is-now Source: World Bank, Bloomberg, calculated based on data from end-2008 to end-2019. As starting points, we used the peak points achieved before the Global Financial Crisis hit these markets through 31 December 2020. The starting dates are as follows: MSCI China, 10 October 2007; MSCI India, 31 December 2007; MSCI Korea, 31 October 2007; MSCI Indonesia, 29 February 2008; and MSCI Malaysia, 31 December 2007. 6 See “The Future of Asian and Pacific Cities,” United Nations Economic and Social Commission for Asia Pacific, 2019. 7 Citywire Discovery/Morningstar as of 30 June 2021. Performance is based on total return in USD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is the based upon the managers tracked globally in Citywire's Equity - Asia Pacific Excluding Japan peer group. PineBridge Investments relates to Caroline Loke’s three-year anniversary in the sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 8 As of 30 June 2021
All Caps. All Active. All Seasons
All Cap, All Active, All Seasons
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As the region navigates a world reshaped by Covid-19, finding high-quality companies that can seize opportunities from the secular trends converging in Asia and compound capital over the long term will be key to investment success. An experienced 25-member on-the-ground team in Asia underpins our robust fundamental, bottom-up stock selection process, which, in turn, drives the strategy’s alpha generation through market cycles. Rather than for trending names, we focus on companies that can generate persistent returns over the long term — their competitive advantages, management excellence, and valuations. Our team has the flexibility to research deeper into industries and sectors to identify compelling companies whose value the rest of the market has yet to realize. We believe these opportunities can be found at any point of a company’s lifecycle – whether at their early-growth stage or at their mature stage. As such, this core Asia all-caps strategy taps into broad-based and stable sources of potential alpha as enduring as the region’s growth story itself.
In just the last quarter-century, Asia has contributed an outsized share to global GDP and incremental global growth. Asia is home to the world’s largest population of “digital natives,” will make up 40% of global consumption by 2040, and will be home to the world’s largest urban population by 2050. We believe the convergence of several powerful structural trends will set the stage for a seismic shift in global economic dynamics that will create unique investment opportunities. As Asia’s growth trajectory continues to diverge from the rest of the world, we believe it’s time for investors to consider not only a stand-alone allocation to Asia ex Japan equities, but an actively managed, all-caps strategy that captures the variety of opportunities across the entire investment universe.
Asia Ex Japan Equity
All Active, All Caps, All Seasons
1 As of 30 June 2021 2 Citywire Discovery/Morningstar as of 30 June 2021. Performance is based on total return in USD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is the based upon the managers tracked globally in Citywire's Equity - Asia Pacific Excluding Japan peer group. PineBridge Investments relates to Caroline Loke’s three-year anniversary in the sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 3 MSCI as of 30 June 2021 4 MSCI as of December 2020 5 MSCI as of December 2020. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 6 Digital natives are generally defined as persons born after 1980. We estimate the figure based on UN Population data for 2020. There are 3.5 billion people in Asia aged 49 years and under, more than any other region in the world. 7 See “Asia’s Future is Now,” McKinsey, 14 July 2019, https://www.mckinsey.com/featured-insights/asia-pacific/asias-future-is-now Source: World Bank, Bloomberg, calculated based on data from end-2008 to end-2019. As starting points, we used the peak points achieved before the Global Financial Crisis hit these markets through 31 December 2020. The starting dates are as follows: MSCI China, 10 October 2007; MSCI India, 31 December 2007; MSCI Korea, 31 October 2007; MSCI Indonesia, 29 February 2008; and MSCI Malaysia, 31 December 2007. 8 See “The Future of Asian and Pacific Cities,” United Nations Economic and Social Commission for Asia Pacific, 2019.
Covid-19 is leaving a profound impact on the Indian economy and the global flow of goods, capital, and people. Force vectors such as digitalization, direct-to-consumer commerce, decarbonization, the geopolitical rewiring of supply chains, and new demand for health and home, which were already building up before the pandemic, have now become even more powerful. We believe this phase of the cycle will be less beta-driven and more alpha-driven as these force vectors broaden out to impact more industries. As such, we expect greater opportunities for differentiated returns within sectors as the differences between relative winners and losers across industries become more prominent.
The investment opportunities arising from these disruptions are rare and play to a stock picker’s strength,” says Elizabeth Soon, CFA, Head of Asia ex Japan Equities and Portfolio Manager, India Equity.
Low Interest Rates Provide Fillip to The Economy
TIME 04:33
Vibrant investment opportunities in India
Peer Analysis in This Sector in INR
1 Source: Reserve Bank of India, Bloomberg, June 2021. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 2 IMF data accessed 19 July 2021 3 MSCI as of 30 June 2021 4 Source: CDSL, SEBI, Bloomberg, PineBridge Investments, July 2021. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 5 NSE, BSE as of 31 March 2021 6 Citywire Discovery/Morningstar as of 30 June 2021. Performance is based on total return in USD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is the based upon the managers tracked globally in Citywire's Equity - Asia Pacific Excluding Japan peer group. PineBridge Investments relates to Caroline Loke’s three-year anniversary in the sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 7 As of 30 June 2021 8 Provides non-binding advisory services to PineBridge Investments Asia Limited
Corporate balance sheets are also benefitting from abundant liquidity and a lower cost of capital, particularly in the primary markets, which has allowed start-ups to raise funds through initial public offerings amid the pandemic. These offerings have unlocked domestic savings to finance corporate expenditures and allowed a wide range of investors to participate in this thriving and fast-growing ecosystem. The strong foreign inflows seen since the start of the year underscores the confidence of global investors in India’s prospects and reflects the relative underrepresentation of India equities in global indexes. despite it being the world’s fourth-largest economy. For example, India’s weighting in the MSCI Emerging Markets index is only less than 10%.
Foreign Capital Flows Have Rebounded to Pre-Covid Second Wave Levels
32 years of industry experience
Elizabeth Soon, CFA
Head of Asia ex-Japan Equities
Active, fundamental, research-driven
Benchmark agnostic
15-year track record
24 years of industry experience
Huzaifa Husain
Head of India Equities
Unlocking Catalysts of Long-term Growth
And as global supply chains reorient, we are seeing India’s export-oriented companies and those manufacturing import substitutes such as chemicals and electronics benefiting from higher demand for their products. Historically low real interest rates continue to infuse new vigour into companies to invest in these growth areas, and thus we expect this growth acceleration to percolate throughout the economy.
In-depth company research by our India-based team is at the core of our investment approach, allowing us to thoroughly assess the risks and returns of each potential investment from the bottom up, leveraging company visits and management team interactions, and various local sources. Out of a universe of approximately 7,000 listed companies in India, we select around 40-50 high-conviction stocks based on the strength of the company’s business model, the quality of management, and valuations. Sustainability factors (environmental, social and governance) are also incorporated through the stock selection process. In periods of economic stress, we believe these companies are highly likely to survive and even gain market share; in periods of economic booms, they are likely to be at the forefront of reaping the benefits. ‘We believe vigilance and patience will be essential to creating wealth from investing in India. That’s why our approach is to carefully select companies that can see opportunities in the shifting landscape and navigate their way through the transformation,’ Soon adds.
Foreign capital flows have rebounded to pre-Covid second wave levels
1 As of 30 June 2021 2 Citywire Discovery/Morningstar as of 30 June 2021. Performance is based on total return in USD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is the based upon the managers tracked globally in Citywire's Equity - Asia Pacific Excluding Japan peer group. PineBridge Investments relates to Caroline Loke’s three-year anniversary in the sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 3 Provides non-binding advisory services to PineBridge Investments Asia Limited 4 Source: Reserve Bank of India, Bloomberg, June 2021. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 5 IMF data accessed 19 July 2021 6 MSCI as of 30 June 2021 7 Source: CDSL, SEBI, Bloomberg, PineBridge Investments, July 2021. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 8 NSE, BSE as of 31 March 2021
Portfolio ManagerS
Pure investment grade, USD exposures
Seeks stable returns and long-term capital growth
Active, fundamental research-driven
TIME 01:39
Capturing Opportunities in Asian Fixed Income, A dynamically changing Asset Class
Asian IG Offers Attractive Risk-Adjusted Returns
Asia IG Offers Shorter Duration Than Peers, With Higher Yield
Asia is amid an uneven recovery from Covid-19 and transformative structural trends, which suggest significant returns dispersion across the credit spectrum going forward. Selectivity and flexibility in managing your Asian bond exposures across duration, ratings, and yield will be key to portfolio returns." Arthur Lau, CFA, Pinebridge Investments
As policy makers change gears, selectivity and flexibility in managing your Asian bond exposures across duration, ratings, and yield will be key to portfolio returns,” says Arthur Lau, CFA, head of Asia ex Japan fixed income, based in Hong Kong.
In times of volatility and basement-low yields, Asia investment grade (IG) bonds— which make up approximately 80% of the Asia US dollar bond market — stand out for their attractive yields. But institutional investors such as those in Asia, the largest buyers of Asia IG bonds, know the benefits aren’t limited to yield. The asset class also offers relative stability from external shocks, robust credit quality, and protective characteristics such as low duration as buffer for potential interest rate hikes and low volatility.
1 JP Morgan, as of 31 December 2020 2 Source: Bloomberg. Rolling 5-year data as of 31 March 2021.Commodities represented by the Bloomberg Commodity Index, Asia USD Bonds by the JPM JACI index, Asia IG USD Bonds by JPM JACI Investment Grade, Emerging Markets (USD) by the JPM EMBI Global Diversified index, US Inflation Linked by Bloomberg Barclays US Inflation Linked index, US Equities by S&P 500 index, Asia ex Japan Equities by the MSCI MXASJ index, UK Gilt Inflation Linked by S&P U.K. Gilt Inflation-Linked Bond Total Return Index, UK IG Corporate Bond by S&P U.K. Investment Grade Corporate Bond Index Total Return, and UK Gilt by Bloomberg Barclays Sterling Gilt Total Return Index. Diversification does not insure against market loss. For illustrative purposes only. We are not soliciting or recommending any action based on this material. There is no assurance that the investment strategies and processes mentioned herein will be effective under all market conditions. investors should evaluate their ability to invest for a long-term based on their individual risk profile, especially during periods of downturn in the market. Past performance, or any prediction, projection, or forecast, is not indicative of future performance.1 Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. 3 Source: Bloomberg, PineBridge Investments as of 12 March 2021. Any opinions are valid only as of the date indicated and are subject to change. For illustrative purposes only. We are not soliciting or recommending action based on this material. 4 JPMorgan, as of 31 March 2021 5 As of 31 March 2021 6 Source: Citywire Discovery/Morningstar, as of 30 June 2021. Performance is based on total return in USD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is the based upon the managers tracked globally in Citywire's Bond - Asia Pacific Hard Currency peer group. PineBridge Investments relates to the complete track record of Arthur Lau and Omar Slim in this sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 7 As of 30 June 2021
18 years of industry experience
Omar Slim, CFA
portfolio manager
34 years of industry experience
Arthur Lau
head of Asia ex Japan fixed income
Andy Suen, CFA
Global investors are increasingly paying attention to the market, which has grown to nearly US$1 trillion in market capitalization. But it remains underrepresented in global fixed income indexes. A diverse market in terms of issuer types (from sovereigns to supranationals to corporates), markets, and sectors with a dynamic underlying environment, Asia IG bonds lend themselves to the nuanced approach of active investing.
Access to the Highest-Rated Asian Bonds
With highly experienced managers at the helm, our team seeks to deliver strong risk-adjusted returns from a portfolio of carefully selected, purely IG exposures — in contrast to some IG strategies in the market that add on high yield exposures to boost returns. With decades of experience investing in emerging market fixed income, the team utilizes a time-tested investment process built on a robust fundamentals, valuations, and technical framework. Key to credit selection decisions are the output of a well-placed network of Asia-based analysts and a truly integrated global fixed income research platform that examines credit from both the top down and bottom up to extract the most attractive risk/return profiles among the highest-quality bonds in Asia. This process has been honed over more than 20 years of managing Asian fixed income strategies through different market cycles and integrates environmental, social, and governance (ESG) considerations. This ESG process has contributed to the firm’s Asia ex Japan team’s zero-default track record in the strategies it manages. With Asia’s rising global economic leadership and China’s inclusion in global bond benchmarks, Asia IG is expected to continue to attract strong flows — all the more ensuring the asset class’ relevance in global portfolios.
1 As of 30 June 2021 2 Source: Citywire Discovery/Morningstar, as of 30 June 2021. Performance is based on total return in USD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is the based upon the managers tracked globally in Citywire's Bond - Asia Pacific Hard Currency peer group. PineBridge Investments relates to the complete track record of Arthur Lau and Omar Slim in this sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 3 JP Morgan, as of 31 December 2020 4 Source: Bloomberg. Rolling 5-year data as of 31 March 2021.Commodities represented by the Bloomberg Commodity Index, Asia USD Bonds by the JPM JACI index, Asia IG USD Bonds by JPM JACI Investment Grade, Emerging Markets (USD) by the JPM EMBI Global Diversified index, US Inflation Linked by Bloomberg Barclays US Inflation Linked index, US Equities by S&P 500 index, Asia ex Japan Equities by the MSCI MXASJ index, UK Gilt Inflation Linked by S&P U.K. Gilt Inflation-Linked Bond Total Return Index, UK IG Corporate Bond by S&P U.K. Investment Grade Corporate Bond Index Total Return, and UK Gilt by Bloomberg Barclays Sterling Gilt Total Return Index. Diversification does not insure against market loss. For illustrative purposes only. We are not soliciting or recommending any action based on this material. There is no assurance that the investment strategies and processes mentioned herein will be effective under all market conditions. investors should 5 Source: Bloomberg, PineBridge Investments as of 12 March 2021. Any opinions are valid only as of the date indicated and are subject to change. For illustrative purposes only. We are not soliciting or recommending action based on this material. 6 As of 31 March 2021 7 As of 31 March 2021
Asia is amid an uneven recovery from Covid-19 and transformative structural trends, which suggest significant returns dispersion across the credit spectrum going forward. Selectivity and flexibility in managing your Asian bond exposures across duration, ratings, and yield will be key to portfolio returns." Arthur Lau, CFA, Pinebridge Investmenst
Peer Analysis in This Sector in SGD
TIME 02:00
Seizing the Opportunities in Singapore Bond Market
The SGD Bond Market Is Seeing Healthy Growth
This year, Singapore will witness a sharp economic recovery, but it will be uneven and incomplete. This leads us to be more selective in our industry and issuer selection, still shying away from Covid-impacted sectors. We continue to favour high quality investment grade corporate bonds while staying cautious on our duration positioning,” says Omar Slim, CFA, Senior Portfolio Manager, Singapore Dollar Bond Strategy
For income-seekers, Singapore dollar (SGD) bonds can potentially offer an enhanced income without the foreign exchange risk from investing in offshore bonds. The market is diverse in terms of credit risk, from the triple A-rated government bonds and quasi-sovereign issues to corporate issues. The corporate market itself offer a variety of investible sectors, industries, and credit profiles. Given the uneven economic recovery this year, we expect high return dispersion, which is suitable for active credit selection. The corporate bond market, for example, offers a lot of room for duration and curve management. In general, Asian bonds have lower duration than US IG, so we think the local market can buffer any potential interest rate hike, which should be beneficial for investors in the near term.
1 Source: Upper: Markit iBoxx SGD Overall SGS as of April 2021. There is no assurance that any forecasts or estimates illustrated will be met. Lower: as of 30 April 2021, the Singapore bond market is represented by the Markit iBoxx SGD Corporates Index. Any opinions, projections, forecasts, or forward-looking statements presented are valid only as of the date indicated and are subject to change. For illustrative purposes only. We are not soliciting or recommending any action based on this material. 2 Source: Citywire Discovery/Morningstar as of 30 June 2021. Performance is based on total return in SGD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is based upon the managers tracked globally in Citywire's Bond - Singapore Dollar peer group. PineBridge Investments relates to Omar Slim’s five-year track record in the sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 3 As of 30 June 2021 4 As of 30 June 2021
Senior Portfolio Manager
Seeks stable income with capital preservation
Invests in SGD fixed income securities issued by Singapore and non-Singapore-domiciled entities
19-year track record
Leveraging the Home Market Advantage
1 As of 30 June 2021 2 Source: Citywire Discovery/Morningstar as of 30 June 2021. Performance is based on total return in SGD calculated gross of tax, bid to bid, ignoring the effect of initial charges and with income reinvested at the ex-dividend date. Average manager is based upon the managers tracked globally in Citywire's Bond - Singapore Dollar peer group. PineBridge Investments relates to Omar Slim’s five-year track record in the sector. Past performance is not indicative of future results. The information contained herein is based on sources that the Manager believes to be accurate and reliable at the date it was made, and there is no guarantee or warranty on its accuracy or completeness. For illustrative use only. We are not soliciting or recommending any action based on this material. For further information, please see www.pinebridge.com. 3 As of 31 March 2021 4 Source: Upper: Markit iBoxx SGD Overall SGS as of April 2021. There is no assurance that any forecasts or estimates illustrated will be met. Lower: as of 30 April 2021, the Singapore bond market is represented by the Markit iBoxx SGD Corporates Index. Any opinions, projections, forecasts, or forward-looking statements presented are valid only as of the date indicated and are subject to change. For illustrative purposes only. We are not soliciting or recommending any action based on this material.
2 See “The Future of Asian and Pacific Cities,” United Nations Economic and Social Commission for Asia Pacific, 2019. 3 See “Asia’s Future is Now,” McKinsey, 14 July 2019, https://www.mckinsey.com/featured-insights/asia-pacific/asias-future-is-now 4 See “China’s Influence on the World’s Middle Class,” Brookings Institution, October 2020, https://www.brookings.edu/wp-content/uploads/2020/10/FP_20201012_china_middle_class_kharas_dooley.pdf 5 See “How Asia Can Boost Growth Through Technological Leapfrogging,” McKinsey, December 2020 https://www.mckinsey.com/featured-insights/asia-pacific/how-asia-can-boost-growth-through-technological-leapfrogging 6 Various government announcements. See “Xi Focus: Xi Announces China Aims to Achieve Carbon Neutrality Before 2060,” Xinhua, 23 Sept 2020, http://www.xinhuanet.com/english/2020-09/23/c_139388764.htm; “Japan Aims for Zero Emissions, Carbon Neutral Society by 2050 – PM,” Reuters, 26 Oct 2020, https://www.reuters.com/article/japan-politics-suga-idINKBN27B0FB; “South Korea’s Moon Targets Carbon Neutrality by 2050,” Reuters, 28 October 2020, https://www.reuters.com/article/us-southkora-environment-greenewdeal-idUSKBN27D1DU 7 See “China plans to phase out conventional gas-burning cars by 2035,” Asia Nikkei, 27 October 2020, https://asia.nikkei.com/Business/Automobiles/China-plans-to-phase-out-conventional-gas-burning-cars-by-2035
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