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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.

Asian Pacific Equities Update

Hugh Young, Investment Manager, Aberdeen All Asia Investment Trust PLC provides a review of the recent performance of the trust and provides an outlook for Asian equities.



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Charles Luke

Manager's Monthly Report

June 2009


Markets & Economic Overview

Asian equities rose sharply in May, buoyed by the seemingly benign results of the US bank stress tests, hopes that India’s Congress Party election victory would speed up economic reform and tentative signs that the global recession may be abating. Inflation in Japan, China, India and Singapore eased in April. Central banks in Indonesia and the Philippines lowered interest rates. First-quarter GDP figures were disappointing: Thailand slid into recession, Japan and Taiwan contracted at a record pace, but India and Indonesia expanded. Japanese lawmakers approved a 13.9 trillion yen supplementary budget, while Hong Kong will spend HK$16.8 billion to lift the economy. In politics, Indonesian president Yudhoyono’s Democrat Party claimed victory in the parliamentary elections, while Pyongyang drew sharp criticism worldwide for conducting nuclear and missile tests.

Portfolio news

In portfolio activity, we exited Hong Kong Exchanges and Clearing on valuation grounds following the rapid rise in its share price. In quarterly results, our Singapore bank holdings United Overseas Bank and Oversea-Chinese Banking Corporartion’s operating profits held up well and their provisioning policies have been conservative in anticipation of tougher times ahead. In India, HDFC’s net interest income rose, while non-performing loans fell. Grasim was aided by good cost controls. In Japan, earnings were generally lacklustre, led by exporters such as Honda Motor. A major concern for these companies is the lack of visibility of medium-term demand, and margin pressures because of the strong yen.

Strategy and outlook

Looking ahead, the sheer weight of liquidity may help to maintain the recent rally’s momentum, despite the still uncertain outlook for both economic growth and corporate earnings. Any global economic recovery is likely to be drawn out, given the structural problems that persist in the West and China’s inability to compensate quickly enough for the collapse in demand for Asian exports. As such, we expect a pullback at some stage. But we remain positive about Asia’s long-term prospects, because of its better fundamentals with respect to debt levels and latent demand.


Source: Monthly Factsheet Aberdeen Asset Managers Limited