Edinburgh Dragon‘s recent half yearly results report a rise in NAV of 3.7% during the six-months to 28 February 2015, underperforming its MSCI All-Countries Asia (ex-Japan) Index which rose 5.9% (all in Sterling adjusted terms). The company reports that this was due to be underweight China (the Chinese stock market outperformed the broader region during the period) whilst EFM’s financial holdings, particularly HSBC and Standard Chartered which faced regulatory challenges, generally faced tough operating conditions. However, the trusts exposure to India and the Philippines generally performed well. The manager’s highlight that Housing Development Finance Corp posted robust loan growth and higher margins, amid stable asset quality, whilst Ayala Land posted decent revenue growth, as land sale prices reached new highs.
Two stocks were added during the period. MTR Corp, a city rail operator in Hong Kong and mainland China with property assets that also develops properties (it is the largest land-bank owner in Hong Kong) . Management say MTR generates steady cash flows from its defensive rail business. China Resources Enterprise is a conglomerate with interests in retailing, beverage, food, textiles and real estate in China and Hong Kong. It is a joint-venture partner of SABMiller in China and a market leader in beer. The company acquired Tescos operations through a joint venture and is integrating these. Management expect that this will place the company on a firm footing in the retail segment.
EFM : Chinese underweight contributes to Edinburgh Dragon’s mild underperformance