Justification Investment on Trading and Services Sector

Many companies in T&S sector possess investment characteristics that we see fit with our fund's objectives and quite favorable, which include diversified companies involved in different sector and relatively recession-resistant companies. As we know, the services sector is the largest contributor to the Malaysia's economy which accounts for almost 58% of Gross Domestic Product (GDP). Moreover, in the recent released Budget 2012, the Government said the Government targets Service Sector to contribute 60% of GDP by 2015 and the Government announced that they are going to further liberalize 17 services subsectors in phases include private hospital services; medical and dental specialist services; architectural services; engineering services; accounting and taxation; legal services; courier services; education and training services; as well as telecommunication services. We expect the Services sector to remain the key driver ofgrowth and we believe that the further liberalization of the services sector is a positive move. We expect the Services Sector will reap benefits from the government's planning to boost Service Sector. The recent stock markets around the globe are highly volatile as the investors all share a common fear that the world is slipping back into recession. This on-going global panic among investors will continue to weaken the external environment with consequential challenges to the Malaysian economy. Given the level of uncertainty in the market, our fund is of the opinion that the investors should be looking to recession-proof their portfolios to weather the impact of the likely recession and looking to invest in blue-chips stocks that are relatively stable no matter how is the macroeconomic state and strong in fundamental. As the history has proven, the Service companies are more stable and less cyclical, as compared to other sectors, especially manufacturing sector. This is one of the important reasons as to why we choose Trading & Services as our base sector. Besides investing in those companies in the Service sector that are relatively recession-resistant such as healthcare, utilities, telecommunications and gaming, we will also invest in a few companies from Trading & Services which are diversified companies that involved in different sector to diversify our portfolio risks and to lower the industry-specific or sector-specific risks that might happen to particular industry or sector. This is because investing in a particular industry might pose a threat to an investor cause if industry-specific risks happen, all the companies in that particular industry will be affected. In order to diversify away and lower our portfolio risk, we will invest in companies in Trading & Services sector that involved in diverse industries rather than an industry.