July 2019

Market Review and Outlook

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Equity Market Asian equities rallied as markets priced in an aggressive Fed easing this year as weak US jobs
Review data raised hopes for US interest rate cuts in addition to a tentative trade truce in the trade
dispute between US and China ahead of the G20. Unsurprisingly, economic data dampened as
the US–China trade war escalation continue to weigh on sentiment, with the US collecting 25%
higher tariffs on many Chinese goods arriving in US seaports at the start of the month. China’s
exports returned to growth in May despite higher US tariffs, but imports fell the most in nearly
three years in a further sign of weak domestic demand that could prompt Beijing to step up
stimulus measures. Trump threatened to hit China with another US$300 billion of tariffs, to
which China responded with tough stance by the commerce ministry. Tensions in the Middle
East rose after Tehran claimed it downed an American drone that violated its airspace.
Meanwhile, Huawei and Dubai signed an order close to 50 billion Yuan resulting in the world’s
leading 5G project for Dubai network construction. Brent oil price recovered 9.2% month-on-
month (MoM) in June on concerns of supply disruption following attacks on two tankers in the
Gulf of Oman as well as output production cuts which is expected to extend beyond June.

The Dow Jones Industrial Average index outperformed most indices with a 7.2% jump MoM as
compared to the 6.9% and 6.1% increase in the MSCI Asia ex-Japan and MSCI ASEAN
respectively. Outperformers were Thailand (+6.8%), Singapore (+6.5%), and Hang Seng (+6.1%)
while underperformers were Philippines (+0.4%) and India (-0.8%). Thailand’s military backed
Prime Minister was voted in to lead government with slim majority after weeks of backroom
talks while Maybank downgrades Singapore’s GDO growth forecast to 1.3% from 1.6%, citing a
potential recession in the near term. Hong Kong’s financial markets came under pressure as
protests against the territory’s controversial extradition shut down key parts of the city.

On the domestic front, the KLCI rose 1.3% MoM (or 21.4 points) in June but fell 1.1% in 1H19 to
close at 1,672 points at the end of June 2019. The market rebound was driven by optimism over
potential rate cuts in the US and easing US-China trade tensions. The performance was better
than the historical trend, as the Malaysian market had posted average MoM gain of 0.5% in June
over the past 10 years. Foreign investors turned net buyers of Malaysian equities of RM100
million in June. However, in 1H19, Malaysia witnessed net foreign outflow of RM4.8 billion due
to the uninspiring results released by Malaysian corporates, and global uncertainties. Mergers
and acquisitions (M&A) continues when the government on 21 June announced that it has made
a RM6.2 billion offer to take over Litrak and 3 other toll concessionaires linked to Gamuda. Litrak
also announced that it has received a RM2.75 billion takeover offer from the government to
acquire all its shares and its 50% stake in Sprint. The takeover offers for Litrak and Sprint will be
undertaken by a special purpose company wholly-owned by the Ministry of Finance and will
remain valid until 12 July, subjected to due diligence and the Cabinet’s approval. The ministry is
targeting to complete the acquisition by the end of this year.

Equity Market On the external front, investors will be tracking the latest developments on the US-China trade
talks for a possible deal, European Central Bank meeting on 25 July, and the US Federal Reserve
Outlook meeting on 31 July. China and the US had agreed to resume trade talks after the close of the G20
summit in Osaka, Japan. While President Trump declined to get into specifics of the deal with
China, he has agreed not to put new tariffs on Chinese goods (but the current US tariffs on
Chinese imports will remain in place). On a separate issue, President Trump also said he would
allow American companies to sell to Huawei which the US Commerce Department blacklisted
last month. All these positive developments will support trading/investment sentiment of the
local and regional markets in the immediate term. The easing bias by monetary authorities
globally attests to the mounting global risks given their goal of sustaining economic development
which could in turn provide some breathing space for equity markets.

Kenanga Investors Berhad (353563-P)

Level 14, Kenanga Tower
237, Jalan Tun Razak
50400 Kuala Lumpur
Tel: 03-2172 3000
Toll Free: 1800-88-3737
www.kenangainvestors.com.my 1
Strictly for Clients of Kenanga Investors Berhad
 July 2019
Market Review and Outlook

On the local front, the key events to watch are the Bills that will be tabled at the 14th Parliament
session which runs from 1 to 18 July 2019. Among the highly anticipated Bills that could be
tabled are the abolition of the mandatory death penalty and Independent Police Complaints and
Misconduct Commission (IPCMC). Investors will also be tracking the potential impact of the
sugar tax on soft drinks and juices—which came into effect on 1 July—on soft drinks
consumption. A poll conducted by international survey agency YouGov for The Star found that
59% out of the 1,022 respondents said they would drink less soft drinks while 13% said they
would stop drinking sugary beverages. Also in focus will be Bank Negara Malaysia’s (BNM)
Monetary Policy Meeting (MPC) on 9 July. The anticipated economic recovery in 2H19 is less
certain given the concerns of a prolonged US-China trade tensions despite the pre-emptive
interest rate cut of 25bps by BNM in May 2019. The persistently weak consumer and business
sentiments may continue to undermine economic growth which is now projected at 4.5% for
2019.

We expect the local market to remain volatile due to earnings risk and possible changes in global
Equity Fund bond indices which could potentially trigger outflows, though the recent truce in US-China trade
Strategy war and spate of M&A activities in the local market could boost near-term sentiment. We are
positive on selective stocks in the construction, oil and gas and export sector.

We remain cautiously optimistic on the market and will focus on stock selection in order to
outperform amid volatile markets.

Kenanga Investors Berhad (353563-P)

Level 14, Kenanga Tower
237, Jalan Tun Razak
50400 Kuala Lumpur
Tel: 03-2172 3000
Toll Free: 1800-88-3737
www.kenangainvestors.com.my 2
Strictly for Clients of Kenanga Investors Berhad
 3-year

Kenanga Syariah Growth Fund ● KLIFF Islamic Finance Awards 2019

Most Outstanding Islamic Fund Product
Fund Volatility

8.1
Moderate
July 2019 Lipper Analytics
10 Jun 2019

FUND OBJECTIVE FUND PERFORMANCE (%)

Aims to provide unit holders with long-term capital growth by
% Cumulative Return, Launch to 30/06/2019
investing principally in equities that comply with Shariah 450
requirements. 400
350
300
Fund Category/Type 250
Equity (Islamic) / Growth 200
150
100
Launch Date 50
29 January 2002 0
-50

Jan 02
Jun 02
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Trustee
CIMB Islamic Trustee Berhad
Kenanga Syariah Growth : 371.36 FTSE Bursa Malaysia Emas Shariah Index : 134.18
Benchmark
FTSE Bursa Malaysia EMAS Shariah Index Source: Novagni Analytics and Advisory

# #
CUMULATIVE FUND PERFORMANCE (%) CALENDAR YEAR FUND PERFORMANCE (%)
External Investment Manager / Designated Fund Manager Period Fund Benchmark Period Fund Benchmark
Syarifah Hidayatul Akmal 1 month 4.37 2.86 2018 -14.47 -13.52
6 months 13.34 5.46 2017 12.96 10.72
Sales Charge 1 year 5.24 0.33 2016 -2.29 -6.14
Max 5.50% 3 years 9.50 0.25 2015 9.49 2.35
5 years 6.78 -9.37 2014 -1.20 -4.17
Annual Management Fee Since Launch 371.36 134.18
1.50% p.a. #
Source : Lipper, 30 June 2019

Annual Trustee Fee

0.05% p.a. FUND SIZE * NAV PER UNIT * HISTORICAL FUND PRICE *
RM 528.10 million RM 1.0950 Since Inception Date
Redemption Charge Highest RM 3.0262 4-May-12
Nil Lowest RM 0.9433 18-Dec-18

All fees and charges payable to the Manager and the Trustee are
subject to the goods and services tax /sales and services tax/other taxes
of similar nature as may be imposed by the government or other
authorities from time to time.

ASSET ALLOCATION (% NAV) * SECTOR ALLOCATION (% NAV) *

Energy 14.8%
Technology 11.9%
7.10%
June Consumer Products 11.5%
92.90%
Telecommunications 9.0%
9.50% Utilities 8.1%
May
90.50% Healthcare 8.0%
Finance 7.7%
10.70% Short Term Islamic Deposits and Cash 7.1%
April
89.30% Industrial Products 7.0%
Construction 6.6%
Liquidity Equity Others 8.3%

TOP EQUITY HOLDINGS (% NAV) * DISTRIBUTION HISTORY *

1 TENAGA NASIONAL BHD 8.06% Gross Distribution
2 AXIATA GROUP BHD 5.57% Date RM Yield (%) Unit Split
3 YINSON HOLDINGS BHD 4.75% 16-May-16 10.11 sen 9.31% -
4 PENTAMASTER CORP BHD 4.62% 26-Feb-15 10.50 sen 8.65% -
5 DIALOG GROUP BHD 4.26% 28-May-14 7.50 sen 5.83% -
* Source: Kenanga Investors Berhad, 30 June 2019

Based on the fund’s portfolio returns as at 10 June 2019, the Volatility Factor (VF) for this fund is 8.09 and is classified as “Moderate”. (Source: Lipper). “Moderate” includes
funds with VF that are above 6.595 and less than or equal to 8.795 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside
return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised
every six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future.
Presently, only funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 29 March 2019 and the Supplemental
Prospectus (if any), its Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission
Malaysia, who takes no responsibility for its contents. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our
offices. Application for Units can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any),
SDD (if any) and PHS. Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before
investing. Investors are also advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution
is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-
unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the
distribution of the additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust
loan financing risk disclosure statement before deciding to borrow to purchase units.“Cooling-Off Period” or “Cooling-Off Right” is not applicable to EPF Member Investment
Scheme (EPF MIS). Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activities and between its
clients/directors/shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent, potential and perceived Conflict
of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are equity and equity-related securities risk and
reclassification of Shariah status risk.