Invesco Asia Trust Plc: Half-year Financial Report for the Six Months to 31 October 2021

by | Jan 24, 2022

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Invesco Asia Trust plc: Half-year Financial Report for the Six Months to 31 October 2021 and Fiona Yang appointed as co-manager.

Neil Rogan, Chairman of Invesco Asia Trust plc, comments on the appointment of Fiona Yang as co-manager:

“We are delighted to announce the appointment of Fiona Yang as co-manager of the Invesco Asia Trust (IAT). Fiona brings a wealth of stock and sector knowledge covering the wider Asia ex-Japan region with a focus on China H and A share markets. Working alongside Ian Hargreaves, Fiona will be responsible for portfolio construction, engaging with shareholders and attracting investment.”

Fiona joined Invesco in August 2017 and manages the Invesco Asian Equity Income Fund (UK). As a member of the Henley-based Asian & Emerging Market Equities team, she covers the entire Asia ex-Japan region with particular expertise in China’s equity markets. She started her career with Goldman Sachs in July 2012, initially within their graduate programme, before becoming a member of their Asian Equity sales team, where she was a China product specialist. Fiona will be based in Invesco’s Singapore office as of February.

Ian Hargreaves, co-manager of Invesco Asia Trust plc, comments on the below results:

“Having recovered strongly from last year’s lows, Asian markets have struggled for direction over the last six months. China concerns have dominated with the authorities’ pursuit of tighter regulation of the ‘new economy’ sectors causing a surprise to markets and a fall in valuations from over-extended levels. Yet against this backdrop, portfolio performance has proved to be relatively resilient, outperforming the benchmark index, the MSCI AC Asia ex Japan.

“This is attributable to strong stock selection in Hong Kong and Indonesia with exposure to cyclical and ‘old economy’ sectors adding value. Our underweight position in China has benefited portfolio performance. Across five years up to 31 October 2021, cumulative total return on a NAV basis has returned 61.5% against the benchmark index, the MSCI AC Asia ex Japan at 48.5%.

“At headline level, the valuations of Asian markets have pulled back from what we considered to be unsustainable levels at the turn of last year. We do not believe that this is the end of the cycle, more a time correction as earnings and growth of book value catch-up.

“We believe that the current environment suits our investment approach, with a laser focus on valuation, seeking to find opportunities where the market has failed to correctly price the multi speed nature of the recovery.”

  • Over the six months to 31 October 2021, NAV per share was -5.5%, share price total return was -4.9%, against benchmark MSCI AC Asia ex Japan Index -6.2% on a total return basis
  • India was the best performing market with ICICI Bank, Housing Development Finance Corporation (HDFC) and Shriram Transport Finance significant contributors, as asset quality and earnings proved less sensitive to the pandemic
  • Stocks in more cyclical areas, supported by reflation trends, have outperformed, previously favoured technology stocks have lagged
  • As conditions gradually normalise we find scope for optimism towards re-opening plays in areas such as Thailand and Indonesia
  • The negative headlines and market volatility in China mean that this has been an area of focus. We have been gradually reducing our underweight position in Hong Kong and China as policymakers remain committed to improving the quality, rather than quantity, of growth and reducing financial risk, while monetary policy in China appears relatively orthodox in comparison with that in developed markets.
  • Climate change and corporate responsibility remains top of mind and adopting a Net-Zero Alignment (NZA) strategy will be of growing importance. As of 31 October 2021, 24 companies within the portfolio of investments had made net-zero commitments
  • Lockdowns plus the disruptions to supply chains in 2021 led to a resurgence of inflation in Western economies, in contrast most Asia countries have manged to avoid inflationary pressure.

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