February 2010
Market Review
Asian markets fell in January, with sentiment hurt by fears about monetary tightening in China, along with proposed banking reforms and disappointing employment data in the US. Among the laggards were China, Hong Kong and Taiwan, whereas Indonesia bucked the downtrend.
China unexpectedly raised the proportion of deposits that banks must set aside as reserves in an attempt to curb bank lending. China temporarily stopped several banks from extending new loans, while raising the reserve requirements for the sector. India similarly hiked lenders’ reserve ratios. Most central banks in the region continued to keep interest rates unchanged, even though inflation started to creep higher.
Exports saw a spurt across most of the region, boosted by China’s sharp fourth-quarter GDP growth. Only Korea’s economic growth rate decelerated amid declining exports and domestic demand.
In politics, Sri Lanka’s incumbent president Mahinda Rajapaksa was re-elected in the nation’s first peacetime election in decades. A religious row threatened to escalate in Malaysia after three churches were attacked by arsonists.
Portfolio Review
There were no major changes to the portfolio in January.
Our holdings posted largely positive results. Taiwan Semiconductor Manufacturing Company reported robust net profits in the fourth quarter, thanks to a recovery in global chip demand.
Taiwan Mobile’s results met expectations, with cable revenue growth offsetting the contraction in its mobile business. Elsewhere, Siam Cement’s full-year earnings rebounded on the back of rising volumes and margins.
Outlook
Source: Monthly Factsheet Aberdeen Asset Managers Limited