Phillip Fund Focus September 2025

Globally, the US market outlook remains cautiously optimistic into late 2025, supported by resilient consumer spending and easing labour tightness, though inflationary pressures linger. At Jackson Hole, Fed Chair Jerome Powell indicated rate cuts could begin in September, potentially lifting equities, but stretched valuations—highlighted by the Warren Buffett Indicator—warrant caution. In China, August delivered a solid rally as exports and high-tech sectors underpinned growth. Policy signals and supply-side reforms aim to address overcapacity and stabilise profitability, but weak domestic demand and execution risks remain key challenges. We recommend a barbell strategy through 2025, combining quality growth opportunities with defensive income assets to navigate potential volatility.

Phillip Fund Focus August 2025

The U.S. has reached tariff agreements with several key partners, including Japan, Korea, most ASEAN countries, the EU, and the UK. However, the tariff discussion deadline with China and Mexico has been extended, while Canada and India face higher tariffs. We view the overall trade environment as still uncertain, especially since major trading partners like China have yet to reach a resolution—making the eventual outcomes particularly important. On the monetary front, the Fed remains cautious about rate cuts, citing the need to assess the inflationary impact of tariffs. Our outlook for global equities remains cautious, as sentiment is expected to remain sensitive to policy signals from major economies. While there are selective opportunities—particularly in sectors supported by long-term structural trends—a disciplined and selective investment approach is essential amid ongoing uncertainty. Maintaining flexibility and staying responsive to potential market dislocations will be critical to navigating the rest of 2025 effectively.

Phillip Fund Focus July 2025

Global markets broadly rebounded in May and June, supported by a 90-day pause on key U.S. tariffs. By late June, only one formal trade deal—between the U.S. and U.K.—had been finalized. While U.S.-China tensions have eased slightly, we believe the overall trade environment remains uncertain, with geopolitical risks in the Middle East flaring up on and off, keeping investors cautious. Separately, on the monetary policy front, major central banks have shifted toward easing in response to softer growth and moderating inflation, though the U.S. Federal Reserve remains an exception, holding rates steady due to concerns over tariff-driven inflation. Although the Fed has maintained its projection for potential rate cuts this year, we believe it would not be surprising if rates remain elevated for longer in order to contain renewed inflationary pressures, given the continued strength of the economy and labor market. Against this backdrop, we emphasize the importance of diversification and a focus on quality amid volatility.

Phillip Fund Focus June 2025

As we enter June, equities may face headwinds in the near term due to rising geopolitical tensions, persistent inflationary pressures, and a slowdown in global economic growth. Trade negotiations are ongoing; however, a meaningful breakthrough appears unlikely before the 90-day tariff suspension expires on July 8 – a key milestone that could trigger new policy shifts. In the interim, markets may experience economic distortions stemming from pre-tariff stockpiling, supply chain disruptions, and decelerating growth, all of which could amplify earnings volatility. While several central banks have begun easing monetary policy, the US Fed has yet to follow suit. Investors are anticipating a potential Fed rate cut later this year, particularly in light of the US economy contracting by 0.3% in the first quarter of 2025 – its first decline since early 2022, and a high US debt ($36tn). Although rate cuts could help underpin equity valuations, lingering trade uncertainties and uneven regional growth may continue to dampen investor sentiment. Against this backdrop, we emphasize the importance of diversification and a focus on quality amid volatility.

Phillip Fund Focus May 2025

Global equities may encounter near-term challenges due to escalating geopolitical tensions, persistent inflation, and slower global growth. While some central banks have initiated rate cuts, the U.S. Federal Reserve has yet to follow suit. Markets anticipate a potential rate cut in June to support U.S. growth, especially after the economy contracted at an annualized rate of 0.3% in Q1 2025—the first decline since early 2022. While rate cuts may support valuations, trade uncertainties and uneven growth across regions could weigh on sentiment. As global markets grapple with heightened uncertainty, we emphasize the importance of diversification and a focus on quality amid volatility.

Phillip Fund Focus April 2025

The Malaysian market remained weak throughout the month, with mid and small-cap stocks lagging behind large-cap stocks. The results season was mixed, with sectors like oil & gas, technology, healthcare, rubber products, consumer, and auto underperforming, while plantations, transport, property, and basic materials exceeded expectations. Positive earnings revisions were seen in REITs, plantation, banking, and property. Valuation remains attractive with the KLCI trading at 13.8x P/E, 1 standard deviation below its 10-year mean. FBM Emas which comprises the big, medium and small cap companies in Malaysia now trades at 13.4x P/E, 1.3 standard deviation below its 10-year mean. We remain vigilant in our stock and sector selection against increasing macro risks from trade tensions and geopolitical uncertainties.

Phillip Fund Focus March 2025

Globally, amid growing concerns about potential overcapacity in AI infrastructure and its effect on overall market sentiment, investors are likely to remain on the sidelines. Additionally, ongoing worries about President Trump’s tariff plans and measures to limit investments between the US and China will continue to weigh on global trade and economic growth, dampening risk appetite. As global markets grapple with heightened uncertainty, we emphasize the importance of diversification and a focus on quality amid volatility.

Phillip Fund Focus February 2025

DeepSeek has become a key market concern in January, with its cost-efficient use of lower-tier chips challenging US tech dominance. Our analysis suggests that if this trend persists, it could reshape the global semiconductor industry. We believe it is crucial to monitor responses from major tech firms, which have committed billions to AI infrastructure, as demand for high-end AI chips may decline. Separately, after announcing a 25% tariff on imports from Canada and Mexico, President Donald Trump agreed to delay them for one month. However, the 10% tariff on China remains set to take effect from 4 February onwards. The tariffs are aimed at addressing the fentanyl crisis, protecting US industries, and negotiating better deals. We believe US Treasury yields are likely to stay elevated and the dollar is likely to strengthen amid tariffs. We favour the US over Asia-Pacific for now, as US equities are likely to benefit from tariffs and a stronger dollar. As global markets grapple with heightened uncertainty, we emphasize the importance of diversification and a focus on quality amid volatility.

Phillip Fund Focus January 2025

Global equities rebounded strongly in 2023 and 2024 following the 2022 correction due to the Ukraine-Russia war. With Trump back in office, his policies, including tax cuts, deregulation, and protectionism, are expected to benefit U.S. equities. While China may face challenges from increased tariffs, the overall impact on the market will depend on how swiftly regulators adapt their policies to ensure economic stability. Additionally, with the U.S. dollar expected to remain firm, fund flows are likely to favor the U.S., which may pressure regional currencies and impact market performance. Domestic-oriented economies such as India may fare better in this environment. Separately, Malaysia stands to gain from trade diversification, leveraging its strategic location, supply chain ecosystem, and skilled labor. While we remain cautiously optimistic about global equities, we believe that geopolitical tensions and protectionist trade policies could present risks to this outlook. As global markets grapple with heightened uncertainty, we emphasize the importance of diversification and a focus on quality amid volatility.

Phillip Fund Focus December 2024

With Trump’s 2024 trade policies are expected to mirror his “America First” approach, aiming to reduce the US trade deficit, protect American jobs, and challenge perceived unfair trade practices, particularly with China. Proposed measures include blanket import duties and a 60% tariff on Chinese goods, likely provoking retaliatory tariffs and raising import costs. This could lead to higher prices for US consumers and reduced demand, slowing global trade. In contrast, Malaysia has benefitted from the US-China trade war, with re-exports growing and foreign direct investment (FDI) surging, especially in sectors like electronics, semiconductors, and green technology. Our outlook on global equities remains cautiously optimistic. We favour US equities due to strong corporate earnings and positive economic data. Trump’s proposed corporate tax cut to 15% could further enhance earnings potential for US companies, providing additional support to the market. As we approach the tail end of 2024, we anticipate continued market volatility. In this environment, we are maintaining a cautious approach to sector and theme selection, particularly in areas where valuations appear stretched relative to fundamentals.

Phillip Fund Focus November 2024

Trump’s return for a second presidential term, investors should now shift their focus to how to strategically
position themselves moving forward. We argue that market performance does not necessarily depend on the outcome of the U.S. presidential election. Notably, “Change Election” has become the new norm in the U.S. Since 2000, 10 out of 12 federal elections—including all of the last five—have led to a change in the party controlling the House, Senate, and/or the White House. This trend significantly exceeds the average from the 1960s to the 1990s, during which only one or two elections per decade resulted in a shift in party control. Despite this, the S&P 500 index has historically returned about 10% per year on average before adjusting for inflation, although the market tends to be more volatile during election years.

Phillip Fund Focus October 2024

Chinese equities had a good run in September but the rally in Chinese markets lost momentum when trading resumed following a week-long holiday, as a briefing from the National Development and Reform Commission offered limited information on additional stimulus measures. For a more sustained recovery, we believe policymakers need to actively leverage fiscal policies and implement strategies to purchase excess housing inventory more decisively. In addition to that, the country must still tackle structural issues through both substantial fiscal measures and reforms. An upward revision of earnings is also a catalyst that is still on the horizon.

Phillip Fund Focus September 2024

The market is expecting a Federal Reserve rate cut in September and is pricing in 75bps to 100bps rate cut by year-end. Additionally, we will keep an eye on US election developments, as elevated uncertainty leading up to the November election and unexpected campaign events in late 3Q and 4Q could create market volatility, impacting sector positioning and security selection. In the long term, we believe the US market remains strong, supported by the resilience of corporate earnings. Additionally, the deeply discounted valuations in the Chinese market present potential for a mean reversion trade.

Phillip Fund Focus August 2024

The MSCI Asia Pacific Ex-Japan Index (-0.2%) remained flat in July, dragged by weak performance in key markets while the MSCI World Index (+1.7%) raced ahead. India (+3.9%) advanced further, continuing its post-election rally and bolstered by investor confidence as 70% of urban Indians are positive on the national trajectory according to a survey by Ipsos. Singapore (+3.5%) came in at a strong second as banking and telco stocks registered strong single-digit gains during the month. Philippines (+3.2%) on the other hand experienced a much-needed reversal, breaking a four-month streak of consecutive losses as property sector stocks posted double-digit gains. Taiwan (-3.6%) cooled off in July after a spectacular 8.8% rally in June, amidst reports that the United States was considering tighter curbs on exports of advanced chips to China. Hong Kong (-2.1%) slid further down as investors remained skeptical on a market revival following China Third Plenum in mid-July. Japan (-1.2%) pulled back slightly as rate expectations in the US fuelled a tactical rotation into US growth stocks and small cap equities.