Rocky road but still positive for Asian markets

Manager Comments

China not yet out of the woods

Asian markets saw modest gains in June, shaped by significant political and economic developments across the region.

Manufacturing across Asia showed widespread contraction, with China's official manufacturing PMI at 49.7 in June, marking a third consecutive month of contraction despite being slightly above consensus. Deflationary trends continued with May’s Consumer Price Index (CPI) extending downward and Producer Price Index (PPI) reaching its weakest level in 22 months.

The country’s real estate sector also faces ongoing weakness with home sales falling again in May. However, on a positive note, China's retail sales rose 6.4 percent year-over-year, beating consensus expectations, helped by trade-in programs and early holiday sales.

Mixed forces at work in Taiwan and Korea

Taiwan's market was influenced by geopolitical tensions as the country added SMIC and Huawei to its export control list. Meanwhile its semiconductor sector benefited from renewed optimism over AI that drove chip stocks higher.

In South Korea, market dynamics were transformed by the election of Lee Jae-Myung as president, ending months of political turmoil and triggering rallies in equities, sovereigns, and the won. The new president's pledge to revamp the tax system to boost dividend payments and protect minority shareholders helped push the Kospi into a technical bull market. However, enthusiasm was later tempered when MSCI maintained South Korea's emerging market status.

New tariff uncertainties for ASEAN¹

With the expiry of the 90-day extension, the revised tariffs for ASEAN countries have been mixed. Vietnam negotiated a trade deal with the US and tariffs for domestically produced goods were successfully reduced to 20 percent from 46 percent.

This was better than market expectations and raised hopes of positive outcomes for other ASEAN markets. However, these hopes were subsequently dashed when it was announced that Malaysia’s tariffs were set at 25 percent (marginally higher than the 24 percent announced on Liberation Day) and Thailand’s tariffs stay at 36 percent. Meanwhile, Indonesia and the Philippines have recently struck a deal with the US to reduce their tariff rates to 19 percent, down from 32 percent and 20 percent respectively. Singapore’s tariffs remain one of the lowest at 10 percent.

The new tariffs are expected to take effect on 1 August and many ASEAN countries will be taking this time to negotiate for a better trade deal, especially given US secretary of state, Marco Rubio’s reassurances at the recent ASEAN meeting.

Besides US tariffs, investors are also monitoring developments in the Israel-Iran conflict. The recent de-escalation in the conflict has brought oil prices back down from the temporary spike. Among ASEAN markets, this is expected to provide the most relief to the Philippines and Thailand.

AI-Augmented Asia Solutions

June Performance: Fund gained 4.51 percent

^{Source: Morningstar. Performance as of 30 June 2025, SGD basis, with dividends and distributions reinvested, if any. Fund refers to United Asia Fund – A SGD Acc. Benchmark: April 1992 – December 2011: MSCI AC FE ex-Japan; January 2012 to present: MSCI AC Asia ex-Japan. Performance figures for 1 month till 1 year show the per cent change, while performance figures above 1 year show the average annual compounded returns.}

• The Fund rose 4.51 percent in the month of June, slightly underperforming its benchmark which gained 4.75 percent.
• Positive contributors to our performance last month continued to be our stock picks in China/HK. Chinese consumer names such as Popmart, Laopu Gold, Mao Geping, and Xiaomi remained strong performers in June.
• Most of the detraction this month came from South Korea and Taiwan. Our underweight position in South Korea had hurt our performance because of the popularity of several speculative themes. For instance, several large cap stocks rallied on speculation that they might benefit from the introduction of stablecoins, which is becoming in a worldwide trend. No such legislation has yet been discussed, much less who the license might be given to.
• Another area of speculation appears to be potential order wins for nuclear plant construction contracts from the US. Investors appeared to have high hopes on what the new government can achieve and sentiment is running high at the moment. We remain cautious in the short term but believe that new opportunities may be emerging in Korea over the medium to long term.
• In Taiwan, our stock selection effect was positive but we were hurt by our overall underweight position. The tech sector has been recovering post the Liberation Day selloff, and our main bets - companies that have the potential to benefit from the continued strong demand for AI-server related products - have worked out well.

Rebalancing: Tweaks across Hong Kong, China, Taiwan

^{Source: Morningstar. Portfolio rebalancing as of 30 June 2025. Benchmark allocation as of 30 June 2025}

• This month we are making minor adjustments to our holdings in HK, China and Taiwan, replacing some old names with new ones and taking profit in some of our recent winners that outperformed.

Click here for more details on the Fund above.

June Performance: Fund gained 4.55 percent

^{Source: Morningstar. Performance as of 30 June 2025, SGD basis, with dividends and distributions reinvested, if any. Fund refers to United Greater China Fund – A SGD Acc. Benchmark: MSCI Golden Dragon Index. Performance figures for 1 month till 1 year show the per cent change, while performance figures above 1 year show the average annual compounded returns.}

• The Fund was up 4.55 percent in June, largely in line with its benchmark which rose 4.59 percent.
• The biggest positive contributor to our performance last month continued to be our stock picks in China/HK. Chinese consumer names such as Popmart, Laopu Gold, Mao Geping, and Xiaomi remained strong performers last month.
• In Taiwan, our stock selection effect had been positive but we are hurt by our overall underweight position. The biggest detraction came from our underweight in Taiwan tech specifically.

Rebalancing: Tweaks across Hong Kong, China, Taiwan

^{Source: Morningstar. Portfolio rebalancing as of 30 June 2025. Benchmark allocation as of 30 June 2025}

• This month, we are making minor adjustments to our holdings in HK, China and Taiwan, replacing some old names with new ones and taking profit in some of our recent winners that outperformed.

Click here for more details on the Fund above.

The United ASEAN Fund is a new addition to this newsletter. Similar to some of our other Asian funds, the United ASEAN Fund has applied AI-Augmentation strategies since 1 July 2023.

June Performance: Outperformed the market

^{Source: Morningstar. Performance as of 30 June 2025, SGD basis, with dividends and distributions reinvested, if any. Fund refers to United ASEAN Fund – A SGD Acc. Benchmark: Jun 86 - Jan 93: 100% DBS 50; Feb 93 - Aug 98: 50% DBS 50, 50% KLEMAS; Sep 98 - May 00: 100% DBS 50; June 00 - May 06: 50% STI Index, 50% KLEMAS; June 06 - June 13: 50% STI Index, 50% KLCI; Jul 13 - present: MSCI ASEAN. Performance figures for 1 month till 1 year show the per cent change, while performance figures above 1 year show the average annual compounded returns.}

• In June, the United ASEAN Fund’s return of -0.98 percent slightly outperformed the MSCI ASEAN index return of -1.09 percent.
• On a relative basis, the top contributors were Keppel Limited and the fund’s underweight positions in Gulf Development and Delta Electronics.
• Bank Syariah Indonesia, Digiplus Interactive and Converge Information were the key detractors.

Rebalancing: Continued focus on domestic sectors

^{Source: Morningstar. Portfolio rebalancing as of 30 June 2025. Benchmark allocation as of 30 June 2025}

• This month we are continuing to focus on domestic/regional centric companies to mitigate the direct effects from US tariffs.

Click here for more details on the Fund above.

¹Tariff information updated as of 24 July 2025