CIMB Principal Asset Management is shifting its investment focus from global equity funds and paying more attention to the segmentation market, in order to guarantee high returns for a rising number of wealth customers.
CPAM and its parent company, CIMB Thai Bank, yesterday signed an agreement with South Korea’s largest asset manager, Mirae Asset Global Investments, to launch the CPAM Korea Equity Strategic Fund (CPAM KEQ) to Thai investors.
CPAM KEQ will invest in the units of the Mirae Asset Equity Fund (Master Fund), which is managed by Mirae Asset Global Investments in South Korea.
The South Korean equity market has become a spotlight for investors because the country’s economy is outperforming other G-20 major economies, said Jumpon Saimala, chief executive officer of CPAM.
Economic growth is driven by domestic consumption and the export sector, which will benefit greatly from the global economic recovery, he said.
The lower price-to-earnings (P/E) ratio of equities in the South Korean stock market, the KOSPI Index, compared with elsewhere in Asia – and more widely with major markets such as the US – is an attractive story for those considering investing there, he added.
The CEO said the company had acknowledged that standard wealth products might not be enough to cope with the requirements of an ageing society, rising overall incomes and more middle-income people in Thailand.
The products offered to individuals in these categories should, therefore, be more complex and segmented.
"Selecting investment in equities in the global and regional markets is not enough, and we have to segment the potential growth markets to offer [something more attractive] to wealth customers. By forming a partnership with this South Korean fund manager, we will help our clients to achieve a high return because Korean equities contribute an annual return rate of 18 per cent," said Jumpon.
CPAM KEQ’s initial public offering will take place from April 1-8, with the minimum subscription required being Bt5,000.
Park Ryan, head of Korea Equities Research at Mirae Asset Global Investments, said the lower P/E ratio in the South Korean stock market was due to Korean firms such as Samsung preferring to allocate profits to reinvestment rather than in the form of dividend payments.
Yet, the company sees it as a good sign that Korean giants, including Samsung, are also increasing their dividends.
The P/E ratio of KOSPI Index equities is expected to rise in the near future because the relationship between South Korea and North Korea has improved, he added.
Subhak Siwaraksa, president and chief executive officer of CIMB Thai Bank, said South Korean stocks were an investment option for retail customers who wanted to diversify risk from investment in the Thai equity market.
Meanwhile, Malaysia-based CIMB Group – CIMB Thai Bank’s parent company – recently terminated its plan for a dual stock listing in Thailand because the political unrest had eaten into the equity market and investor sentiment, he said.
The Thai economy is facing a downside risk from lower consumption and investment, as well as from lower public spending as long as the country does not have a functioning government, he added.
Given the downside risk, lending growth at CIMB Thai will be dependent on the bank’s existing customers.
Subhak said non-performing loans this year might rise in line with its peers, but CIMB Thai will attempt to control the ratio at 3 per cent of outstanding lending – compared with 2.3-2.4 per cent as of the end of last year.