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Aberdeen All Asia Investment Trust PLC

 

Objective

The Company seeks to generate capital growth from a concentrated portfolio of companies domiciled,operating or generating revenue in the Asia Pacific region, including Japan. Owing to the concentration of investments, the performance of the Company’s investment portfolio may deviate significantly from its benchmark from time to time.

Manager's Monthly Report

August 2010


Market Review

Most Asian stockmarkets rose in July, backed by upbeat economic data and corporate results, along with positive stress test results for European banks, which outweighed fears of a doubledip recession. Economic growth was uneven in the region. China’s second-quarter growth decelerated; whereas Singapore registered record growth and Korea’s expansion exceeded expectations. Inflation remained a threat and Korea, New Zealand, Malaysia and Thailand responded with interest rate hikes. In India the rate rise was higher than anticipated. Conversely, Sri Lanka cut interest rates. In politics, Japan’s ruling Democratic Party was defeated in upper house elections, continuing the country’s stasis. Australia set its general election for late August. Hong Kong approved its first minimum wage bill, while agreeing with China to lift restrictions on using the yuan. Meanwhile, India will start conducting banking sector stress tests every six months.

Portfolio Review

During the month, we topped up Australian insurer QBE Insurance, on share price weakness. Its share price fell after the company downgraded its profit expectations because of rising claim liabilities and a fall in investment returns, which we had anticipated but do not consider detrimental to the insurer’s long-term attractiveness. In portfolio-related news, rejigging within the Swire Pacific ended with the group owning 75% of HAECO after failing to garner sufficient shareholder support. Swire also delivered very respectable first-half results.

Outlook

While the global economy did not suffer a severe relapse, the recovery in the West remains fragile, with deep structural problems are still unresolved. In Asia, leading indicators have undoubtedly started to signal slower growth after the sharp rebound, but governments have sufficient reserves to pump prime should the situation demand. Although we maintain a cautious outlook, we are confident that our holdings, which are characterised by solid balance sheets, experienced management and sound business practices, will be able to meet whatever challenges lie around the corner.


Source: Monthly Factsheet Aberdeen Asset Managers Limited