Pick ESG-focused stocks

NEOH Jia Man's passion for investing was sparked at a young age, when it dawned on him that anyone could be a capitalist.

"Simply by buying shares in a company, one could let their money work for them," said the 32-year-old chartered financial analyst (CFA).

Neoh read all the books he could find that were related to finance and investment while still studying at Chung Ling High School, among the country's oldest and most reputable Chinese independent schools.

After a year at Taylor's College, Neoh headed to Canada to study at McGill University on a scholarship from the government in 2008.

At McGill, Neoh co-managed a student-run fund that invested a small portion (US$250,000) of the university's endowment in the North American markets. It outperformed the benchmark in 2011.

"I would attribute performance to sheer luck as we were holding gold miners and defensive plays when the market was hit by the European debt crisis. However, the experience further strengthened my resolution to enter the asset management industry."

Neoh also worked as a teaching assistant for an undergraduate finance course and took on the role as vice-president at McGill Management Consulting Association during his university days.

In 2012, Neoh graduated with a bachelor of commerce degree, also double majoring in economics and finance.

Upon graduation, he joined Public Mutual Bhd as an equity analyst, where he was tasked with carrying out research on Thai equities as a generalist.

To perform his duties, he had to work closely with fund managers, sell-side analysts and corporate management.

He was also required to travel to Thailand and Singapore regularly to assess investment opportunities.

After nearly three years with the company, he joined CFRA Malaysia (formerly known as Standard & Poor's Malaysia) where he stayed for over six years.

His tasks included providing primary research to clients from European private banks and wealth management firms and analysing macroeconomics and industry trends to generate thematic investment ideas.

He took charge of equity research coverage on European large-caps across the consumer staples, energy and utilities sectors, as well as the North American nuclear fuel industry.

Neoh will soon be starting a new chapter of his life with an asset management company, where he will take on the responsibility as a fund manager.

Neoh described his job as stressful at times but it was generally fun and challenging.

"I will never go into another industry because there's still so much for me to learn in this industry. It is a never-ending journey," he said.

Neoh likes stocks with strong environmental, social and governance (ESG) qualities and sees good prospect for such opportunities in the Malaysian stock market.

"I used to be an ESG sceptic who believed that the sole responsibility of corporates is to maximise shareholders' return. However, this has changed following years of covering the European markets as I witnessed the rising influence of ESG factors on stock valuation that I attribute not only to stricter regulatory requirements, but also to demands from institutional investors.

"I also took and passed the CFA ESG Investing course to stay ahead of the curve. I now believe that only those companies that have given adequate considerations to both ESG risks and opportunities could optimise returns to shareholders," he said.

"Locally, ESG investing is still in its nascency but this means opportunities for investors to position themselves ahead of market participants who could be slow in adapting to the rising trend.

"Regulators are already taking steps to drive such transformations and I am particularly excited with the pledge by the government for the nation to achieve net zero emission by 2050.

"While I think that fulfilling the pledge is a Herculean task given the amount of investments required to transform our energy mix that is still heavily reliant on fossil fuels, it also indicates upside for private sector participants should our government turn out to be serious in meeting the commitment," he added.

Meanwhile, Neoh's advice for retail investors would be for them to be aware that the institutional players hold an unfair information advantage. Hence, the odds are generally not in their favour when they pursue short-term profits via trading.

A focus on long-term fundamental investing should help to minimise the disadvantage that they were facing, he added.

The writer was a journalist with The New Straits Times before joining a Fortune Global 500 real estate company. This article is a collaboration between the New Straits Times and Tradeview, the author of 'Once Upon A Time In Bursa'.

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