Eastspring sees conservative spending environment ahead

PETALING JAYA: Local companies will likely become more conservative in their spending in the next two to three years in the aftermath of Brexit and the United States presidential election, says asset management firm Eastspring Investment Bhd.

Chief investment officer (Fixed Income) Ooi Boon Peng said the two events are expected to create regulatory uncertainties worldwide that might affect trading markets.

“Companies will be more conservative, especially in terms of capital expenditure and this will generally bring down growth.

“As far as Malaysia and Asean are concerned, the impact (of Brexit and the US election) will be quite small but if it is prolonged, it could be difficult (for the country) to sustain growth,” he told reporters after the launch of an Eastspring new fund yesterday.

The Global Target Income Fund is an open-ended global bond portfolio that is designed to provide regular income with an initial offer period commences today for three weeks.

Ooi is also of the opinion that Asia would be the least affected by Brexit (the United Kingdom exiting the European Union) and this would help investors to hold on to their potential higher yield.

“Our corporate bonds are among the highest yield because of the level of liquidity.

This will help build a more stable income and reduce the impact from subscription or redemption flow,” he said.

Meanwhile, Eastspring Investment Chief Executive Officer Raymond Tang said the combination of low global interest rates and flush liquidity post quantitative easing would likely continue to drive investor demand for yield globally.

“In this environment it is imperative for investors to maintain a certain flexibility to find the best opportunities across global bond markets,” he said.

With no lock-in period, the fund aims to provide a stable income stream for three to five years.

Units of the fund are priced at 50 sen during its initial offer period after which its net asset value will fluctuate based on market movements.

The minimum initial investment is RM1,000. — Bernama

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