Pacific Horizon has published results for the year ended 31 July 2015. Over the year the fund delivered an NAV return of -1.6% a bit behind the MSCI All Country Asia ex Japan Index which decreased by 0.9%. shareholders did better however as the share price increased by 2.2% and the discount narrowed from 11.5% to 8.2%. The Company’s NAV performance was hit particularly hard by falls in the Chinese market in the last ten days of July.
The managers say their technology holdings reduced overall performance, as markets concentrated on shorter term slowdowns in demand due to China economic weakness. NAVER was the biggest single detractor as its social media platform was de-rated due to worries over slower near-term growth and the need for more aggressive capital expenditure. They believe that the market currently fails to appreciate the potential comparative return on investment which this business has the ability to generate. The financial and industrial sector held back performance; the rally in Chinese banks had a negative impact on comparative performance as did moves in Chinese state owned enterprises, areas where the fund has little or no exposure.
On the positive side, Pacific Horizon’s healthcare investments had a strong year, rising on average 50%, and were the largest single positive contributor. Genexine was the best performing holding up 135%, in the year followed by Viromed. This performance supported their view that this sector is likely significant see significant future profitable growth.
Stock selection in Korea was the biggest positive contributor to performance. Hong Kong and China was the biggest relative detractor.
PHI : Pacific Horizon caught by Chinese market falls