Southeast Asian funds shine, Indonesia tops

Southeast Asian funds shine, Indonesia tops

Sabyasachi Mitra, Reuters, Hong Kong

Investors in Indonesian focused mutual funds emerged as Asia winners in January getting staggering returns of nearly 20 percent over the previous month.

Japan-themed funds were the region's worst performers shedding some 7.2 percent in January, with Hong Kong in the penultimate position with a loss of 2.12 percent in a universe of 15 fund categories, according to data from fund tracking firm Lipper Asia, a Reuters company.

"In general, Southeast Asia outperformed North Asia in January," said Robert Conlon, chief investment officer at Investec Asset Management, which manages US$27 billion assets globally. "But we are still seeing Korea and Taiwan performing fairly well," Conlon added.

Funds concentrating on the Philippines and Thailand occupied the second and third spot in the league table with returns of 18.6 and 18.07 percent. The top three funds outperformed the regional benchmark, MSCI Far East ex-Japan ex-Hong Kong index which rose by just five percent in January.

Indonesia funds even outpaced the rise in the bellwether Jakarta stock index which added an impressive 15 percent in January.

Savers Thailand Fund, promoted by OCBC Asset Management Ltd, was the region's star performer in January, soaring 23.84 percent over the previous month.

ING Barings in a research report said foreign interest has been the main driver of market performance in Thailand, Indonesia and Philippines in January.

"With some of the highest returns and most attractive valuations in Asia, Indonesia and Thailand are our preferred markets after initial wave of liquidity driven buying," ING said.

Investors in ASEAN-themed funds on an average gained nearly 13 percent month-on-month in January, according to Lipper data.

ASEAN stands for Association of Southeast Asian Nations.

Some analysts said it was still early days and difficult to predict whether the Southeast Asian markets would be able to sustain the rally in the coming months.

"You got to remember that some of the Southeast Asian markets like the Philippines are very illiquid. Therefore, some of the rate of gain you saw in the some of the markets is unsustainable," Conlon said.

South Korea delivered returns of about 9.45 percent in January. Funds focusing on Korea grew 40.4 percent in 2001.

Singapore followed next with gains of 5.8 percent during the month, with Taiwan following closely at 5.45 percent.

Malaysia-themed funds were the laggard in Southeast Asia, delivering returns of about 4.3 percent.

But fund managers and analysts said Malaysia along with Singapore markets could outperform the region in the mid-phase of an economic rebound because of their strong export linkages to the U.S. economy.

China-focused funds delivered returns of 2.13 percent in January.

But most fund managers remained optimistic of higher annual returns from China-themed funds, eying gains flowing from strong economic growth during the year and after Beijing's entry into the World Trade Organization.

"I think China will outperform. The economic growth in China is stronger than others and I think it can be sustained," said Norman Ho, a fund manager at Value Partners Ltd.